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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Commission file number 000-50671

Liberty Media International, Inc.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code:

(720) 875-5800

          Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

          Indicate by check mark whether the Registrant is an accelerated filer as defined in Rule 12b-2 of the Exchange Act.     Yes o          No þ

          The number of outstanding shares of Liberty Media International, Inc.’s common stock as of April 29, 2005 was:

Series A common stock 165,554,207 shares; and

Series B common stock 7,264,300 shares.

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LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2005

(unaudited)

      The accompanying condensed consolidated financial statements of Liberty Media International, Inc. (LMI) include the historical financial information of (i) certain international cable television and programming subsidiaries and assets of Liberty Media Corporation (Liberty), which we collectively refer to as LMC International, for periods prior to the June 7, 2004 consummation of the spin off transaction described in note 2 and (ii) LMI and its consolidated subsidiaries for periods following such date. Upon consummation of the spin off, LMI became the owner of the assets that comprised LMC International. In the following text, “we,” “our,” “our company” and “us” may refer, as the context requires, to LMC International (prior to June 7, 2004), LMI and its consolidated subsidiaries (on and subsequent to June 7, 2004) or both.

      Our operating subsidiaries at March 31, 2005 are set forth below:

      UGC — UGC is an international broadband communications provider of video, voice, and Internet access services with operations in 13 European countries and three Latin American countries. UGC’s largest operating segments are located in The Netherlands, France, Austria and Chile. At March 31, 2005, we owned approximately 423.8 million shares of UGC common stock, representing a 53.51% economic interest and a 90.99% voting interest.

      On January 17, 2005, we entered into an agreement and plan of merger with UGC pursuant to which we each will merge with a separate wholly owned subsidiary of a new parent company named Liberty Global, Inc. (Liberty Global), which has been formed for this purpose. For additional information, see note 5.

      Super Media/J:COM — J:COM owns and operates broadband businesses in Japan. At March 31, 2005, we owned a 67.60% controlling ownership interest in Super Media and Super Media owned a 55.46% controlling interest in J:COM. We began consolidating Super Media and J:COM on January 1, 2005. Prior to January 1, 2005, we used the equity method to account for our investment in Super Media/ J:COM. For additional information, see note 5.

      Liberty Cablevision Puerto Rico and Pramer — Liberty Cablevision Puerto Rico is a wholly owned subsidiary that owns and operates cable television systems in Puerto Rico. Pramer is a wholly owned Argentine programming company that supplies programming services to cable television and direct-to-home (DTH) satellite distributors in Latin America and Spain.

      The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information required by GAAP or Securities and Exchange Commission regulations for complete financial statements. In the opinion of management, these statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto included in our December 31, 2004 Annual Report on Form 10-K/ A.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, the valuation of acquisition-related assets and liabilities, allowances for uncollectible accounts, deferred income taxes and related valuation allowances, loss contingencies, fair values of financial instruments, fair values of long-lived assets and any related impairments, capitalization of construction and installation costs, useful lives of property and equipment, restructuring accruals and other special items. Actual results could differ from those estimates.

      We do not control the decision making process or business management practices of our equity affiliates. Accordingly, we rely on management of these affiliates and their independent auditors to provide us with accurate financial information prepared in accordance with GAAP that we use in the application of the equity method. We are not aware, however, of any errors in or possible misstatements of the financial information provided by our equity affiliates that would have a material effect on our condensed consolidated financial statements. For information concerning our equity method investments, see note 6.

      Unless otherwise indicated, convenience translations into U.S. dollars are calculated as of March 31, 2005.

      Basic earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share presents the dilutive effect on a per share basis of potential common shares (e.g. options and convertible securities) as if they had been exercised or converted at the beginning of the periods presented.

      On June 7, 2004, our common stock was distributed on a pro rata basis to Liberty’s shareholders in a spin off transaction. In connection with the spin off, holders of Liberty common stock on June 1, 2004 received in the aggregate 139,921,145 shares of LMI Series A common stock and 6,053,173 shares of LMI Series B common stock.

      On July 26, 2004, we commenced a rights offering (the LMI Rights Offering) whereby holders of record of LMI common stock on that date received 0.20 transferable subscription rights for each share of LMI common stock held. Pursuant to the terms of the LMI Rights Offering, we issued 28,245,000 shares of LMI Series A common stock and 1,211,157 shares of LMI Series B common stock. As a result of the LMI Rights Offering, certain terms of the then outstanding LMI stock options were modified. All references herein to the number of outstanding LMI stock options reflect these modified terms.

      The pro forma net earnings (loss) per share amounts set forth in the accompanying condensed consolidated statements of operations were computed assuming that the shares issued in the spin off were issued and outstanding since January 1, 2004. In addition, the weighted average share amounts for periods prior to July 26, 2004, the date that certain subscription rights were distributed to stockholders pursuant to the LMI Rights Offering, have been increased by 6,866,484 to give effect to the benefit derived by our

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

stockholders as a result of the distribution of such subscription rights. The details of the calculations of our weighted average common shares outstanding are set forth in the following table:

      At March 31, 2005, 4,737,390 potential common shares (as adjusted) were outstanding, of which 21,277 have been excluded from the pro forma calculation of diluted earnings per share for the three months ended March 31, 2005 because their inclusion would be anti-dilutive. All potential common shares represent shares issuable upon the exercise of stock options.

      We account for stock-based compensation awards to non-employees and employees of nonconsolidated affiliated companies using the fair market value based method. Under this method, the fair value of the stock based award is determined using the Black-Scholes option-pricing method and is remeasured each period until a commitment date is reached, which is generally the vesting date. Only J:COM had such awards outstanding during the periods presented. J:COM has calculated the fair value of its non-employee stock-based awards using the Black-Scholes option-pricing model with the following assumptions: no dividends, volatility of 40%, a risk-free rate of 3.0% and an expected life of three years. See below for additional information concerning J:COM stock options.

      We account for our stock-based compensation awards to our employees using the intrinsic value method. Generally, under the intrinsic value method, (i) compensation expense for fixed-plan stock options is recognized only if the estimated fair value of the underlying stock exceeds the exercise price on the date of grant, in which case, compensation is recognized based on the percentage of options that are vested until the options are exercised, expire or are cancelled, and (ii) compensation for variable-plan options is recognized based upon the percentage of the options that are vested and the difference between the estimated fair value of the underlying common stock and the exercise price of the options at the balance sheet date, until the options are exercised, expire or are cancelled. We record stock-based compensation expense for our variable-plan options and stock appreciation rights (SARs) using the accelerated expense attribution method. We record

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

compensation expense for restricted stock awards based on the quoted market price of our stock at the date of grant and the vesting period.

      In connection with the spin off and related adjustments to Liberty’s stock incentive awards, options to acquire LMI common stock were issued to our and Liberty’s employees. Consistent with Liberty’s accounting for the adjusted Liberty options and SARs prior to the spin off, we use variable-plan accounting to account for all of such LMI stock options. We also use variable-plan accounting to account for certain LMI stock options granted to LMI employees and directors prior to the LMI Rights Offering. We began to use variable plan accounting for these LMI options as a result of the modification of certain terms of these options in connection with the LMI Rights Offering.

      As a result of the modification of certain terms of its stock options in connection with its February 2004 rights offering, UGC began accounting for stock options that it granted prior to February 2004 as variable-plan options. UGC stock options granted subsequent to February 2004 are accounted for as fixed-plan options.

      The exercise price of employee stock options granted prior to the initial public offering (IPO) by J:COM on March 23, 2005 was subject to adjustment depending on the IPO price. As such, J:COM uses variable-plan accounting for such stock options. Prior to March 23, 2005, no compensation was recorded with respect to these options. See below for additional information concerning J:COM stock options.

      All other employee stock options granted by LMI and its consolidated subsidiaries were granted at fair market value and, as such, are accounted for using fixed-plan accounting.

      As a result of the spin off and the related issuance of options to acquire LMI common stock, certain persons who remained employees of Liberty immediately following the spin off hold options to purchase LMI common stock and certain persons who are our employees hold options, SARs and options with tandem SARs with respect to Liberty common stock. Pursuant to the Reorganization Agreement between our company and Liberty, we are responsible for all stock incentive awards related to LMI common stock and Liberty is responsible for all stock incentive awards related to Liberty common stock regardless of whether such stock incentive awards are held by our or Liberty’s employees. Notwithstanding the foregoing, our stock-based compensation expense is based on the stock incentive awards held by our employees regardless of whether such awards relate to LMI or Liberty common stock. Accordingly, any stock-based compensation that we include in our condensed consolidated statements of operations with respect to Liberty stock incentive awards is treated as a capital transaction that is reflected as an adjustment of additional paid-in capital.

      We also record stock-based compensation expense with respect to an LMI junior stock plan pursuant to which certain LMI officers and an LMI director have an indirect ownership interest in J:COM.

      As further described in note 5, UGC is recording stock-based compensation expense in connection with shares of UGC Class A common stock issued to, and certain Zone Vision Networks Ltd. (Zone Vision) common stock held by, certain selling shareholders of Zone Vision.

      The following table illustrates the effect on net earnings (loss) and earnings (loss) per share as if we had applied the fair value method to our outstanding stock-based awards that we have accounted for under the intrinsic value method. As the accounting for the liability-based SARs is the same under the intrinsic value

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

method and the fair value method, the pro forma adjustments included in the following table do not include amounts related to our calculation of compensation expense related to SARs or to options with tandem SARs:

      J:COM maintains subscription-rights option and stock purchase warrant plans for certain directors and employees of J:COM’s consolidated managed franchises and for directors and employees of J:COM’s nonconsolidated managed franchises and other non-employees. Pursuant to these plans, J:COM’s board of directors and shareholders approved the grant of J:COM’s ordinary shares at an initial exercise price of ¥92,000 ($859) per share. The exercise price was subject to adjustment upon an effective IPO to the lower of ¥92,000 per share or the IPO price. The exercise price was adjusted during the first quarter of 2005 to ¥80,000 ($747) per share in connection with the consummation of J:COM’s IPO. For additional information concerning J:COM’s IPO, see note 5.

      The following table summarizes certain information concerning the shares underlying J:COM’s outstanding employee and non-employee stock options and warrants at March 31, 2005:

      In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (Statement No. 123(R)). Statement No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values, beginning with the first interim or annual period after December 15, 2005, with early adoption encouraged. In addition, Statement No. 123(R) will cause unrecognized expense (based on the amounts in our pro forma footnote disclosure) related to options vesting after the date of initial adoption to be recognized as a charge to operations over the remaining vesting period.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      We are required to adopt Statement No. 123(R) beginning January 1, 2006. Under Statement No. 123(R), we must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. The transition alternatives include prospective and retroactive adoption methods. Under the retroactive methods, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and share awards at the beginning of the first quarter of adoption of Statement No. 123(R), while the retroactive methods would record compensation expense for all unvested stock options and share awards beginning with the first period restated. We are evaluating the requirements of Statement No. 123(R) and we expect that the adoption of Statement No. 123(R) will have a material impact on our results of operations and earnings per share. We have not yet determined the method of adoption for Statement No. 123(R).

      On January 17, 2005, we entered into an agreement and plan of merger with UGC pursuant to which we each will merge with a separate wholly owned subsidiary of Liberty Global. In the mergers, each outstanding share of LMI Series A common stock and LMI Series B common stock will be exchanged for one share of the corresponding series of Liberty Global common stock. Stockholders of UGC (other than LMI and its wholly owned subsidiaries) may elect to receive for each share of common stock owned either 0.2155 of a share of Liberty Global Series A common stock (plus cash for any fractional share interest) or $9.58 in cash. Cash elections will be subject to proration so that the aggregate cash consideration paid to UGC’s stockholders does not exceed 20% of the aggregate value of the merger consideration payable to UGC’s public stockholders. Completion of the transactions is subject to, among other conditions, approval of both companies’ stockholders, including an affirmative vote of a majority of the voting power of UGC Class A common stock not beneficially owned by our company, Liberty, any of our respective subsidiaries or any of the executive officers or directors of our company, Liberty, or UGC. UGC has set June 14, 2005 and we have set June 15, 2005 as the dates that our respective shareholders will vote on the mergers.

      The proposed mergers will be accounted for as a “step acquisition” by our company of the remaining minority interest in UGC. The purchase price in this step acquisition will include the consideration issued to UGC public stockholders to acquire the UGC interest not already owned by our company and the direct acquisition costs incurred by our company. As UGC currently is one of our consolidated subsidiaries, the purchase price will first be applied to eliminate the minority interest in UGC from our consolidated balance sheet, and the remaining purchase price will be allocated on a pro rata basis to the identifiable assets and liabilities of UGC based upon their respective fair values at the effective date of the proposed merger and the minority interest in UGC (46.49% at March 31, 2005) to be acquired by Liberty Global pursuant to the proposed mergers. Any excess purchase price that remains after amounts have been allocated to the net identifiable assets of UGC will be recorded as goodwill. As the acquiring company for accounting purposes, our company will be the predecessor to Liberty Global and our historical financial statements will become the historical financial statements of Liberty Global.

      On December 28, 2004, our 45.45% ownership interest in J:COM, and a 19.78% interest in J:COM owned by Sumitomo Corporation (Sumitomo) were combined in Super Media. Super Media’s investment in

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

J:COM was recorded at the respective historical cost bases of our company and Sumitomo on the date that our respective J:COM interests were combined in Super Media. As a result of these transactions, we held a 69.68% noncontrolling interest in Super Media, and Super Media held a 65.23% controlling interest in J:COM at December 31, 2004.

      Due to certain veto rights held by Sumitomo, we accounted for our 69.68% ownership interest in Super Media using the equity method of accounting at December 31, 2004. On February 18, 2005, J:COM announced an IPO of its common shares in Japan. Under the terms of the operating agreement of Super Media, our casting or tie-breaking vote with respect to decisions of the management committee of Super Media became effective upon this announcement. Super Media is managed by a management committee consisting of two members, one appointed by our company and one appointed by Sumitomo. From and after February 18, 2005, the management committee member appointed by our company has a casting or deciding vote with respect to any management committee decision on which our company and Sumitomo are unable to agree. Certain decisions with respect to Super Media will continue to require the consent of both members rather than the management committee. These include any decision to engage in any business other than holding J:COM shares, sell J:COM shares, issue additional units in Super Media, make in-kind distributions or dissolve Super Media, in each case subject to certain exceptions contemplated by the Super Media operating agreement.

      Super Media will be dissolved in February 2010 unless we and Sumitomo mutually agree to extend the term. Super Media may also be earlier dissolved under specified circumstances.

      As a result of the above-described change in the governance of Super Media, we began accounting for Super Media and J:COM as consolidated subsidiaries effective January 1, 2005. As we paid no monetary consideration to Sumitomo to acquire the above-described casting vote, we have recorded the consolidation of Super Media at the historical cost bases of our company and Sumitomo. The following table sets forth the

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

adjustments to our consolidated assets and liabilities upon the consolidation of Super Media and J:COM on January 1, 2005:

      On March 23, 2005, J:COM received net proceeds of ¥82,059 million ($774,430,000 at March 23, 2005) in connection with an IPO of its common shares, and on April 20, 2005, J:COM received additional net proceeds of ¥8,710 million ($81,577,000 at April 20, 2005) in connection with the sale of additional common shares upon the April 15, 2005 exercise of the underwriters’ over-allotment option. Also on March 23, 2005, Sumitomo contributed additional J:COM shares to Super Media, increasing Sumitomo’s interest in Super Media to 32.40%, and decreasing our company’s interest in Super Media to 67.60%. Sumitomo is obligated to contribute to Super Media all of its remaining equity interest in J:COM during 2005. Sumitomo and our company are generally required to contribute to Super Media any additional shares of J:COM that either party acquires and to permit the other party to participate in any additional acquisition of J:COM shares during the term of Super Media. After giving effect to Sumitomo’s additional contribution of J:COM shares to Super Media and the consummation of J:COM’s IPO, including the subsequent exercise of the underwriters’ over-allotment option, Super Media’s ownership interest in J:COM was approximately 54.46%. At April 15, 2005, Sumitomo also held an 8.31% direct interest in J:COM and Microsoft Corporation (Microsoft) held a 14.15% beneficial interest in J:COM.

      In connection with the dilution of our ownership interest that resulted from J:COM’s issuance of common shares in March 2005 pursuant to its IPO, we recorded a $110,512,000 gain, which is reflected as an increase to additional paid-in capital in our accompanying condensed consolidated statement of stockholders’ equity. We provided no income taxes on this gain as we ceased providing income taxes on our outside basis in Super Media/ J:COM when we began consolidating these entities on January 1, 2005.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      On July 1, 2004, UPC Broadband France SAS (UPC Broadband France), UGC’s indirect wholly owned subsidiary and owner of UGC’s French broadband video and Internet access operations, acquired Suez-Lyonnaise Télécom SA (Noos), from Suez SA (Suez). Noos is a provider of digital and analog cable television services and high-speed Internet access services in France. The preliminary purchase price was subject to a review of certain historical financial information of Noos and UPC Broadband France. In January 2005 UGC completed its purchase price review with Suez, which resulted in the return of €43,732,000 ($56,493,000 as of January 19, 2005) to UGC from an escrow account.

      On April 6, 2005, UGC exercised its call right and purchased the remaining 19.9% minority interest in UPC Broadband France for €90,105,000 ($116,189,000 at the transaction date) in cash. This acquisition will be accounted for as a “step acquisition” by UGC. As UPC Broadband France was a consolidated subsidiary of UGC at December 31, 2004, the purchase price will first be applied to eliminate the minority interest in UPC Broadband France from the consolidated balance sheet of UGC, and the remaining purchase price will be allocated on a pro rata basis to the identifiable assets and liabilities of UPC Broadband France based upon their respective fair values at April 6, 2005 and the 19.9% minority interest in UPC Broadband France acquired by UGC on that date. Any excess purchase price that remains after amounts have been allocated to the net identifiable assets of UPC Broadband France will be recorded as goodwill.

      The following unaudited pro forma condensed consolidated operating results for the three months ended March 31, 2004, give effect to the January 1, 2005 consolidation of Super Media and J:COM and the July 1, 2004 acquisition of Noos (exclusive of the effects of the April 6, 2005 acquisition of the 19.9% minority interest in UPC Broadband France) as if such transactions had been completed as of January 1, 2004. These pro forma amounts are not necessarily indicative of the operating results that would have occurred if the consolidation of Super Media and J:COM and the acquisition of Noos had occurred on January 1, 2004. The pro forma adjustments are based upon currently available information and upon certain assumptions that we believe are reasonable.

      On May 9, 2005, UGC announced that its subsidiary UPC Ireland B.V. (UPC Ireland) had signed a sale and purchase agreement to acquire MS Irish Cable Holdings B.V. (MS Irish Cable), subject to regulatory approval. MS Irish Cable, an affiliate of Morgan Stanley, owns NTL Communications (Ireland) Limited, NTL Irish Networks Limited and certain related assets (together NTL Ireland), which MS Irish Cable acquired from the NTL Group on May 9, 2005. NTL Ireland, Ireland’s largest cable television operator, provides cable television and broadband Internet services to residential customers and managed network services to corporate customers. Certain obligations of UPC Ireland are guaranteed by UGC’s subsidiary United Pan Europe Communications, N.V. (UPC).

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      MS Irish Cable acquired NTL Ireland on May 9, 2005 for approximately €325 million ($416,485,000 at May 9, 2005) in cash, excluding an adjustment for cash in the business at closing. On that date, UPC Ireland loaned MS Irish Cable approximately €338.6 million ($433,913,000 at May 9, 2005) to fund the purchase price for NTL Ireland and MS Irish Cable’s working capital needs pursuant to a loan agreement (the Loan Agreement). Interest accrues annually on the loan in an amount equal to 100% of MS Irish Cable’s profits for the interest period and becomes payable on the date of repayment or prepayment of the loan. The final maturity of the loan is May 9, 2065, but the indebtedness incurred under the Loan Agreement may be prepaid at any time without penalty.

      UPC Ireland’s acquisition of MS Irish Cable from MS Irish Cable’s parent company, Morgan Stanley Dean Witter Equity Funding, Inc. (MSDW Equity), is subject to receipt of applicable Irish regulatory approval. Upon closing, UPC Ireland will pay MSDW Equity, as consideration for all of the outstanding share capital of MS Irish Cable and any MS Irish Cable indebtedness owed to MSDW Equity and its affiliates, an amount (the Purchase Price) equal to MSDW Equity’s net investment in MS Irish Cable plus interest on the amount of the net investment at a rate per annum equal to EURIBOR (which stands for Euro Interbank Offered Rate) + 1.2%, compounded daily, for the period of its investment through the date of the disposition, together with any value added tax thereon plus an amount equal to certain costs and expenses incurred by MSDW Equity in connection with the transaction.

      If regulatory approval for UPC Ireland’s acquisition of MS Irish Cable (including its subsidiary NTL Ireland) is not received by February 3, 2006 or, if prior to that date, the appropriate authority has expressly and conclusively refused to grant the necessary approval, MSDW Equity may sell its direct or indirect interest in NTL Ireland to any third party for such consideration and on such terms and conditions as MSDW Equity determines in its sole discretion. UPC Ireland has agreed to make MSDW Equity whole with respect to any economic effect on MSDW Equity regarding the acquisition, ownership and subsequent transfer of the NTL Ireland interest. In connection with such a sale of the NTL Ireland interest to a third party, UPC Ireland has granted MSDW Equity an option to require UPC Ireland to sell to MSDW Equity or its nominee (the Call Option) all of UPC Ireland’s interest in the indebtedness owed to it under the Loan Agreement at a price equal to the total consideration (including the amount of debt directly or indirectly assumed) that MSDW Equity and its affiliates will receive for sale or liquidation of the direct or indirect NTL Ireland interest, less the Purchase Price and the amount of certain expenses and costs, without duplication, incurred by MSDW Equity and its affiliates in connection with the sale, ownership and earlier acquisition of NTL Ireland and a customary advisory fee to be agreed upon. UPC Ireland’s obligations under the Call Option are secured by a security assignment of UPC Ireland’s right to the receivable under the Loan Agreement and a Dutch pledge over such receivable.

      In connection with the transaction, UPC Ireland has agreed to pay MSDW Equity or its affiliates an arrangement fee of €4.0 million ($5,126,000 at May 9, 2005) and €150,000 ($192,000 at May 9, 2005) for each month that MS Irish Cable holds its interest in NTL Ireland as well as to reimburse it for its reasonable costs and expenses associated with the transaction. UPC Ireland has agreed to indemnify MSDW Equity and its affiliates with respect to any losses, liabilities and taxes incurred in connection with the transaction.

      The make whole arrangement with MSDW Equity is considered to be a variable interest in MS Irish Cable, which is a variable interest entity under the provisions of FASB Interpretation No. 46R, Consolidation of Variable Interest Entities. As UGC is responsible for any losses to be incurred by MSDW Equity in connection with its acquisition, ownership and ultimate disposition of NTL Ireland, UGC is required to consolidate MS Irish Cable and its subsidiaries, including NTL Ireland, as of the closing date of MS Irish Cable’s acquisition of NTL Ireland. If MS Irish Cable reports consolidated net earnings during periods in

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

which the make whole arrangement is in effect, UGC will allocate the full amount of any such net earnings to minority interests’ share of earnings. However, if MS Irish Cable reports a consolidated net loss, UGC will not allocate any portion of such net loss to the minority interests’ share of losses. MS Irish Cable’s acquisition of NTL Ireland will be accounted for using the purchase method of accounting.

      Zone Vision — In January 2005, chellomedia acquired the Class A shares of Zone Vision. The consideration for the transaction consisted of $50,000,000 in cash and 1,629,284 shares of UGC’s Class A common stock valued at $14,973,000. UGC incurred $2,154,000 of direct acquisition costs related to this transaction. As part of the transaction, chellomedia contributed to Zone Vision its 49% interest in Reality TV Ltd. and chellomedia’s Club channel business. Zone Vision is a programming company focused on the ownership, management and distribution of pay television channels.

      The Zone Vision Class A shares purchased by chellomedia represent an 87.5% interest in Zone Vision on a fully diluted basis. A group of the selling shareholders have been retained as employees of Zone Vision after the acquisition. These employees hold Class B1 shares of Zone Vision (representing the remaining 12.5% interest in Zone Vision) and, subject to the terms of an escrow agreement, are entitled to the UGC Class A common stock that UGC issued as purchase consideration. The Class B1 shares and the UGC Class A common stock vest through the continuing employment of one or more of such employees over five years at a rate of 5% per quarter. However, the vesting of 40% of the UGC Class A common stock also is subject to the achievement of performance targets by the end of 2006. As the vesting of the Class B1 shares and the shares of UGC Class A common stock are linked to continuing employment, UGC accounted for these shares as stock-based compensation. At the closing date, UGC did not record a minority interest in Zone Vision as the Class B1 shares were not then vested.

      Zone Vision’s Class B1 shareholders have the right, subject to vesting, to put 60% of their Class B1 shares to chellomedia on the third anniversary of the closing, and 100% of their interest on the fifth anniversary of the closing. Chellomedia has corresponding call rights. The price payable upon exercise of the put or call will be the then fair value. The fair value to settle the put is capped at an amount equal to ten times earnings before interest, taxes, depreciation and amortization (EBITDA), as defined in the Zone Vision shareholders agreement, calculated on a run rate basis for the full financial quarter immediately preceding the date of any exercise of a put.

      Telemach — On February 10, 2005, UPC Broadband Holding, B.V. (UPC Broadband Holding), UGC’s wholly owned subsidiary, acquired 100% of the shares in Telemach d.o.o., a broadband communications provider in Slovenia, for €70,985,000 ($91,370,000) in cash. UGC purchased Telemach to increase its market presence in Central and Eastern Europe.

      Chofu — On February 25, 2005, J:COM completed a transaction with Sumitomo, Microsoft and our company whereby J:COM paid aggregate cash consideration of ¥4,420 million ($41,932,000 at February 25, 2005) to acquire each entities’ respective interests in Chofu Cable, Inc. (Chofu Cable), a Japanese broadband communications provider, and to acquire from Microsoft equity interests in certain telecommunications companies. Our share of the consideration was ¥972 million ($9,221,000 at February 25, 2005). As a result of this transaction, J:COM owns an approximate 92% equity interest in Chofu Cable.

      Accounting Treatment of Zone Vision, Telemach and Chofu Acquisitions — UGC accounted for the Zone Vision and Telemach transactions and J:COM accounted for the Chofu acquisition using the purchase method of accounting. Under the purchase method of accounting, the preliminary purchase price was

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

allocated to the acquired identifiable tangible and intangible assets and liabilities based upon their respective fair values, and the excess of the purchase price over the fair value of such net identifiable assets was allocated to goodwill. The preliminary accounting for these transactions, as reflected in these condensed consolidated financial statements, is subject to adjustment based upon the final assessment of the fair values of the identifiable tangible and intangible assets and liabilities of Zone Vision, Telemach and Chofu. Such potential adjustments could result in significant changes to the preliminary accounting for these transactions and to the impact of these transactions on our company’s condensed consolidated operating results.

      EWT Holding GmbH — In January 2005, UGC sold its indirect 28.7% interest in EWT Holding GmbH (EWT), which indirectly owned a broadband communications provider in Germany, for €30,000,000 ($39,241,000) in cash. UGC received €27,000,000 ($35,439,000) of the sale price in January 2005, and expects to receive the remainder in the next few months. UGC recorded a gain of $28,186,000 on this transaction.

      In March 2005, we completed the sale of a subscription right with respect to Cablevisión S.A. (Cablevisión) to an unaffiliated third party for aggregate cash consideration of $40,527,000. For additional information, see note 12.

      In April 2005, we completed the sale of our interests in Torneos y Competencias S.A. (TyC) and Fox Pan American Sports, LLC (FPAS). For additional information, see note 6.

      Our affiliates generally are engaged in the cable and/or programming businesses in various foreign countries. The following table includes our carrying value and percentage ownership of certain of our investments in affiliates:

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      The following table reflects our share of earnings (losses) of affiliates including any other-than-temporary declines in value:

      Due to certain veto rights held by Sumitomo, we accounted for our 69.68% ownership interest in Super Media using the equity method of accounting at December 31, 2004. As a result of the change in the governance of Super Media (as further described in note 5), we began accounting for Super Media and J:COM as consolidated subsidiaries effective January 1, 2005.

      Summarized financial information of J:COM for the periods in which we used the equity method to account for J:COM is as follows (amounts in thousands):

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      On December 16, 2004, chellomedia Belgium I BV and chellomedia Belgium II BV, UGC’s indirect wholly owned subsidiaries (collectively, chellomedia Belgium), acquired our wholly owned subsidiary Belgian Cable Holdings (BCH) for $121,068,000 in cash. BCH’s only assets were debt securities of Callahan Partners Europe (CPE) and one of two entities majority owned by CPE (the InvestCos) and related contract rights. The purchase price was equal to our carrying value for the debt securities, which included an unrealized gain of $10,517,000. On December 17, 2004, UGC entered into a restructuring transaction with CPE and certain other parties. In this restructuring, BCH purchased equity of Belgian Cable Investors, LLC (Belgian Cable Investors), consisting of a 78.4% common equity interest and a 100% preferred equity interest for cash proceeds of $137,950,000 and the InvestCo debt security. Belgian Cable Investors then distributed $115,592,000 of these proceeds to CPE, which used the proceeds to repurchase the CPE debt securities held by BCH. CPE owns the remaining 21.6% of the common equity of Belgian Cable Investors. Belgian Cable Investors holds an indirect 14.1% interest in Telenet, and certain call options expiring in 2007 and 2009 to acquire 3.36 million shares (11.6%) and 5.11 million shares (17.6%), respectively, of the outstanding equity of Telenet from existing shareholders. Belgian Cable Investors’ indirect 14.1% interest in Telenet results from its majority ownership of the InvestCos, which hold in the aggregate 18.99% of the common stock of Telenet, and a shareholders agreement among Belgian Cable Investors and three unaffiliated investors in the InvestCos that governs the voting and disposition of 21.36% of the stock of Telenet, including the stock held by the InvestCos. As further described in note 13, CPE has the right to require BCH to purchase all of CPE’s interest in Belgian Cable Investors for the then appraised fair value of such interest during the first 30 days of every six-month period beginning in December 2007.

      On April 13, 2005, VTR GlobalCom S.A. (VTR) completed its previously announced merger with Metrópolis. Prior to the merger, Metrópolis was owned 50% by our company and 50% by Cristalerías de Chile S.A. (Cristalerías). In exchange for its equity interest in Metrópolis, Cristalerías received a 20% interest in VTR and an option to require UGC to purchase Cristalerías’ equity interest in VTR at fair market value, subject to a $140,000,000 floor price, and its debt interest in VTR at par plus unpaid interest. This put option, which is payable in cash or stock of UGC, our company, Liberty or, if we complete our proposed merger,

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

Liberty Global, or a combination of cash and stock, at UGC’s option, may be exercised at any time between the first and tenth anniversaries of the closing date. We have guaranteed UGC’s obligations under this put option, and UGC has agreed to indemnify us for any losses arising as a result of our guarantee of its obligations under this put option. For our equity interest in Metrópolis, we received VTR indebtedness which the parties valued at approximately $100,000,000 at the time of issuance. We have also agreed with UGC that UGC will acquire our subsidiary that holds this VTR indebtedness if the proposed merger between UGC and us does not close for consideration of 10,000,000 shares, subject to adjustment, of UGC’s Class A common stock. In connection with the merger, VTR also assumed Metrópolis indebtedness owed to subsidiaries of Cristalerías and our company with an aggregate value of approximately $21 million.

      In connection with the Metrópolis merger, VTR borrowed ChP35.337 billion ($60,163,000) on the VTR Bank Facility (see note 9) and received binding commitments for an additional ChP14.7238 billion ($25,068,000). Net proceeds were used to refinance Metrópolis bank debt, payment of fees arising from this transaction and working capital requirements. Binding commitments are available solely to refinance a promissory note between Metrópolis and a third party which is due on July 3, 2005.

      On April 29, 2005, we sold our entire equity interest in FPAS, and a $4 million convertible subordinated note issued by FPAS, to another unaffiliated member of FPAS for a cash purchase price of $5,000,000. In addition, our majority owned subsidiary, Liberty Programming Argentina, LLC (LPA LLC), sold its entire equity interest in TyC to an unrelated entity for total consideration of $20,940,000, consisting of $13,000,000 in cash and a $7,940,000 secured promissory note issued by FPAS and assigned to our company by the purchaser. The minority owner of LPA LLC is entitled to approximately $4.4 million of the total consideration received in connection with the sale of TyC. At March 31, 2005, we considered our investments in TyC and FPAS to be held for sale. As a result, we included cumulative foreign currency translation losses of $85,984,000 in the carrying value of our investment in TyC for purposes of our March 31, 2005 impairment assessment. As a result of this analysis, we recorded a $25,389,000 impairment charge during the three months ended March 31, 2005 to write-off the full amount of our investment in the equity of TyC at March 31, 2005. This impairment charge is included in share of earnings (losses) of affiliates, net in the accompanying condensed consolidated statement of operations. In the second quarter of 2005, we will recognize an additional pre-tax loss of approximately $65 million in connection with the April 29, 2005 sale of TyC and the related realization of cumulative foreign currency translation losses. Pursuant to GAAP, the recognition of cumulative foreign currency translation gains or losses is permitted only when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      The following table provides detail of the fair value of our derivative instrument assets (liabilities), net:

      Realized and unrealized gains (losses) on derivative instruments are comprised of the following amounts:

      The most significant embedded derivative is the equity derivative that is embedded in the UGC Convertible Notes. For additional information, see note 9.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      During the first and second quarter of 2004, UGC purchased interest rate caps for a total of $21,442,000 capping the variable interest rate at 3.0% and 4.0% for 2005 and 2006, respectively, on notional amounts totaling €2.25 billion to €2.6 billion. In June 2003, UGC entered into a cross currency and interest rate swap pursuant to which a notional amount of $347.5 million was swapped at an average rate of 1.133 euros per U.S. dollar until July 2005, with the variable LIBOR (which stands for London Inter Bank Offer Rate) interest rate (including margin) swapped into a fixed interest rate of 7.85%. Following the prepayment of part of Facility C of the UPC Broadband Bank Facility (see note 9) in December 2004, UGC paid down this swap with a cash payment of $59,100,000 and unwound a notional amount of $171,480,000. The remaining notional amount of $176,020,000 was reset at a euro to U.S. dollar exchange rate of 1.3158 to 1 until the refinancing of the UPC Broadband Bank Facility (see note 9) in March 2005, when this swap was terminated.

      In connection with the refinancing of the UPC Broadband Bank Facility (see note 9) in December 2004, UGC entered into a seven year cross currency and interest rate swap pursuant to which a notional amount of $525.0 million was swapped at a rate of 1.3342 euros per U.S. dollar until December 2011, with the variable interest rate of LIBOR + 300 basis points swapped into a variable rate of EURIBOR + 310 basis points for the same time period.

      In connection with the refinancing of the UPC Broadband Bank Facility (see note 9) in March 2005, UGC: (i) entered into a seven and a half year cross currency and interest rate swap pursuant to which a notional amount of $1.225 billion was swapped at a rate of 1.325 euros per U.S. dollar until October 2012, with the variable interest rate of LIBOR + 250 basis points swapped into an all inclusive fixed rate of 6.06%; (ii) entered into a five-year interest rate swap pursuant to which a notional amount of €1.0 billion was swapped into a fixed interest rate of 3.28% until April 2010; (iii) entered into an interest rate swap pursuant to which a notional amount of €525.0 million was swapped into a fixed interest rate of 2.2625% from April through December 2005; (iv) entered into an interest rate swap pursuant to which a notional amount of €550.0 million was swapped into a fixed interest rate of 2.325% from July through December 2005; and (v) purchased interest rate caps that capped the variable EURIBOR interest rate at 3.5% on a notional amount of €750.0 million for 2007.

      In order to reduce our foreign currency exchange risk related to our cash balances that are denominated in Japanese yen and our consolidated investment in Super Media/ J:COM, we have entered into collar agreements with a notional amount of ¥ 20 billion ($186,654,000). These collar agreements have a weighted average remaining term of less than one month, an average call price of ¥ 101/ U.S. dollar and an average put price of ¥ 106/ U.S. dollar. During the three months ended March 31, 2005, we paid $1,918,000 to settle yen collar contracts.

      Prior to the spin off, Liberty contributed to our company 10,000,000 shares of News Corp. Class A common stock, together with a related variable forward transaction. In connection with the sale of 4,500,000 shares of News Corp. Class A common stock during the fourth quarter of 2004, we paid $3,429,000 to terminate the portion of the variable forward transaction that related to the shares that were sold. At March 31, 2005, the forward, which was scheduled to expire on September 17, 2009, provided (i) us with the right to effectively require the counterparty to buy 5,500,000 shares of News Corp. Class A common stock at a price of $15.72 per share, or an aggregate price of $86,460,000 (the Floor Price), and (ii) the counterparty

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

with the effective right to require us to sell 5,500,000 shares of News Corp. Class A common stock at a price of $26.19 per share. On April 7, 2005, we terminated the variable forward transaction and received cash proceeds of $1,650,000.

      During the fourth quarter of 2004, we entered into call option contracts pursuant to which we contemporaneously (i) sold call options on 1,210,000 shares of LMI Series A common stock at exercise prices ranging from $39.5236 to $41.7536, and (ii) purchased call options on 1,210,000 shares with an exercise price of zero. As structured with the counterparty, these instruments have similar financial mechanics to prepaid put option contracts. We received cash proceeds of $49,387,000 in connection with the expiration of these contracts during the first quarter of 2005.

      At December 31, 2004, we were a party to total return debt swaps in connection with (i) bank debt of a subsidiary of UPC, and (ii) public debt of Cablevisión. During the first quarter of 2005, we received cash proceeds of $21,952,000 upon termination of the Cablevisión and UPC subsidiary total return swaps.

      Foreign Currency Forward Contracts — J:COM has several outstanding forward contracts with a commercial bank to reduce foreign currency exposures related to U.S. dollar-denominated equipment purchases and other firm commitments. As of March 31, 2005 such forward contracts had an aggregate notional amount of ¥1,484 million ($13,849,000), and expire on various dates through December 2005. The forward contracts have not been designated as hedges. Accordingly, changes in the fair value of these contracts are recorded in operations. The fair value of these contracts at March 31, 2005 was not material.

      Interest Rate Swaps and Caps — At March 31, 2005, the aggregate notional amount of J:COM’s interest rate swap agreements was ¥45 billion ($419,972,000). These swap agreements, which expire on various dates through 2009, effectively fix the TIBOR (which stands for Tokyo Interbank Offered Rate) component of the variable interest rates on borrowings pursuant to J:COM’s Senior Facility (see note 9). J:COM accounts for these derivative instruments as cash flow hedging instruments. Derivative instruments that are accounted for as cash flow hedging instruments are carried at fair value, with changes in fair value reflected in other comprehensive earnings (loss), net. The fair value of these swap agreements at March 31, 2005 was not material.

      In January 2005, J:COM settled interest rate swap agreements and an interest rate cap agreement with an aggregate notional amount of ¥24 billion ($223,985,000). The loss recognized in operations during the three months ended March 31, 2005 in connection with the settlement of these swap and cap agreements was not material.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      The details of property and equipment and the related accumulated depreciation are set forth below:

      Depreciation expense related to our property and equipment was $306,196,000 and $205,483,000 for the three months ended March 31, 2005 and 2004, respectively.

      At March 31, 2005 and December 31, 2004, the amount of property and equipment, net, and other assets, net, recorded under capital leases was $327,396,000 and $335,555,000, respectively. Amortization of assets under capital leases is included in depreciation and amortization in the accompanying condensed consolidated statements of operations. Equipment under capital leases is amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.

      During the three months ended March 31, 2005, we recorded $30,183,000 of non-cash increases to our property and equipment as a result of assets acquired under capital lease arrangements, including $29,595,000 that were acquired by J:COM.

      Changes in the carrying amount of goodwill for the three months ended March 31, 2005 are as follows:

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      The U.S. dollar equivalents of the components of our company’s consolidated debt are as follows:

      The U.S. dollar equivalents of the components of UGC’s debt are as follows:

      The UPC Broadband Bank Facility is the senior secured credit facility of UPC Broadband Holding B.V. (UPC Broadband), an indirect wholly owned subsidiary of United Pan-Europe Communications N.V. (UPC), a subsidiary of UGC. The UPC Broadband Bank Facility, originally executed in October 2000, is secured by the assets of UPC Broadband’s majority-owned operating companies, and is senior to other long-term debt obligations of UPC. The indenture governing the UPC Broadband Bank Facility contains covenants that limit among other things, UPC Broadband’s ability to merge with or into another company, acquire other companies, incur additional debt, dispose of any assets unless in the ordinary course of business, enter or guarantee a loan and enter into a hedging arrangement.

      The indenture also restricts UPC Broadband from transferring funds to its parent company (and indirectly to UGC) through loans, advances or dividends. If a change of control exists with respect to UGC’s ownership of UGC Europe, UGC Europe’s ownership of UPC Broadband or UPC Broadband’s ownership of its respective subsidiaries, the facility agent may cancel each Facility and demand full payment. The UPC Broadband Bank Facility requires compliance with various financial covenants such as: (i) senior debt to annualized EBITDA (as defined in the UPC Broadband Bank Facility), (ii) EBITDA to total cash, (iii) EBITDA to senior debt service, (iv) EBITDA to senior interest and (v) total debt to annualized EBITDA.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      On March 8, 2005, the UPC Broadband Bank Facility was amended to permit indebtedness under: (i) a new €1,000.0 million term loan facility (Facility G) maturing in full on April 1, 2010; (ii) a new €1,500.0 million term loan facility (Facility H) maturing in full on September 1, 2012, of which $1,250,000 million was denominated in U.S. dollars and then swapped into euros through a 7.5 year cross-currency swap; and (iii) a €500.0 million revolving credit facility (Facility I) maturing in full on April 1, 2010. In connection with this amendment, €166.8 million of the existing revolving credit facility (Facility A) was cancelled, reducing Facility A to a maximum amount of €500.0 million. The proceeds from Facilities G and H were used primarily to prepay all amounts outstanding under existing term loan facilities B, C and E, fund certain acquisitions and pay transaction fees. The aggregate borrowing capacity of €1,000.0 million under Facilities A and I can be used to fund acquisitions and for general corporate purposes, subject to compliance with applicable covenants, as further described below. As a result of this amendment, the weighted average maturity of the UPC Broadband Bank Facility was extended from approximately 4 years to approximately 6 years, with no principal payments required until 2010, and the weighted average interest margin on the facility was reduced by approximately 0.25% per annum. The amendment also provided for additional flexibility on certain covenants and the funding of acquisitions.

      The U.S. dollar equivalents of the components of the UPC Broadband Bank Facility are as follows:

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      On April 6, 2004, UGC completed the offering and sale of €500.0 million ($654 million) 1³/4% euro-denominated convertible senior notes (UGC Convertible Notes) due April 15, 2024. Interest is payable semi-annually on April 15 and October 15 of each year, beginning October 15, 2004. The UGC Convertible Notes are senior unsecured obligations that rank equally in right of payment with all of UGC’s existing and future senior unsubordinated and unsecured indebtedness and ranks senior in right of payment to all of UGC’s existing and future subordinated indebtedness. The UGC Convertible Notes are effectively subordinated to all existing and future indebtedness and other obligations of UGC’s subsidiaries. The indenture governing the UGC Convertible Notes (the Indenture) does not contain any financial or operating covenants. The UGC Convertible Notes may be redeemed at UGC’s option, in whole or in part, on or after April 20, 2011 at a redemption price in euros equal to 100% of the principal amount, together with accrued and unpaid interest. Holders of the UGC Convertible Notes have the right to tender all or part of their notes for purchase by UGC on April 15, 2011, April 15, 2014 and April 15, 2019, for a purchase price equal to 100% of the principal amount, plus accrued and unpaid interest. If a change in control (as defined in the Indenture) has occurred, each holder of the UGC Convertible Notes may require UGC to purchase their notes, in whole or in part, at a price equal to 100% of the principal amount, plus accrued and unpaid interest. The UGC Convertible Notes are convertible into 51,250,000 shares of UGC’s Class A common stock at an initial conversion price of €9.7561 per share, which was equivalent to a conversion price of $12.00 per share and a conversion rate of 102.5 shares per €1,000 principal amount of the UGC Convertible Notes on the date of issue. Holders of the UGC Convertible Notes may surrender their notes for conversion prior to maturity in the following circumstances: (1) the price of UGC’s Class A common stock issuable upon conversion of a UGC Convertible Note reaches a specified threshold, (2) UGC has called the UGC Convertible Notes for redemption, (3) the trading price for the UGC Convertible Notes falls below a specified threshold or (4) UGC makes certain distributions to holders of UGC’s Class A common stock or specified corporate transactions occur.

      The UGC Convertible Notes are compound financial instruments that contain a foreign currency debt component and an equity component that is indexed to both UGC’s Class A common stock and to currency exchange rates (euro to U.S. dollar). UGC accounts for the embedded equity derivative separately at fair value, with changes in fair value reported in operations. The U.S. dollar equivalents of the fair value of the embedded equity derivative and the accreted value of the debt host contract are presented together in long-term debt and capital lease obligations in our condensed consolidated balance sheet as follows:

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      Other UGC debt includes Chilean peso-denominated borrowings by VTR pursuant to a six-year amortizing term senior secured credit facility (the VTR Facility) and securities issued by the InvestCos, UGC’s consolidated subsidiaries that own a direct investment in Telenet. See note 6. As of March 31, 2005, amounts outstanding pursuant to the VTR Facility aggregated ChP54.7675 billion ($93,236,000). As the securities issued by the InvestCos are mandatorily redeemable on March 30, 2050, or upon an IPO of Telenet or the occurrence of certain other events, we have classified the fair value of these securities ($72,269,000 at March 31, 2005) as debt.

      The U.S. dollar equivalents of the components of J:COM’s debt at March 31, 2005 are as follows:

      On December 15, 2004, J:COM entered into a ¥ 175 billion ($1,633,224,000) senior syndicated facility (Senior Facility) which consists of a ¥ 130 billion ($1,213,252,000) term loan facility (Term Loan Facility), a ¥ 20 billion ($186,654,000) revolving facility (Revolving Facility) and a ¥ 25 billion ($233,318,000) guarantee facility (Guarantee Facility). Concurrently J:COM entered into a ¥50 billion ($466,636,000) subordinated syndicated loan facility (Mezzanine Facility). On December 21, 2004, J:COM made full drawdowns from each of the Term Loan Facility and the Mezzanine Facility. Subsequent to the completion of J:COM’s IPO in March 2005, the Mezzanine Facility was repaid in full. The Mezzanine Facility is not available for future borrowings.

      The Term Loan Facility consists of a five year ¥90 billion ($839,944,000) Tranche A Term Loan Facility (Tranche A Facility) and a seven year ¥40 billion ($373,308,000) Tranche B Term Loan Facility (Tranche B Facility). Final maturity dates of the Tranche A Facility and Tranche B Facility are December 31, 2009 and December 31, 2011, respectively. Loan repayment of the Tranche A Facility and the Tranche B Facility commence on September 30, 2005 and March 31, 2009, respectively, each based on a defined rate reduction each quarter thereafter until maturity.

      The Revolving Facility will be available for drawdown until one month prior to its final maturity of December 31, 2009. At March 31, 2005, J:COM had ¥20 billion ($186,654,000) of borrowing availability pursuant to the Revolving Facility. A commitment fee of 0.50% per annum is payable on the unused available Revolving Facility during its availability period.

      The Guarantee Facility provides for seven years of bank guarantees on loans from the Development Bank of Japan. The Guarantee Facility commitment reduces gradually according to the amount and schedule as defined in the Senior Facility agreement until final maturity at December 31, 2011. As of March 31, 2005 the guarantee commitment was ¥24.7 billion. Such guarantee commitment will be further reduced to ¥23.1 billion

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

by December 2005; ¥21.6 billion by December 2006; ¥20.0 billion by December 2007; ¥18.6 billion by December 2008; ¥17.2 billion by December 2009; ¥15.8 billion by December 2010; and to ¥13.2 billion by December 2011. A commitment fee of 0.50% per annum is payable on the unused available Guarantee Facility during its availability period. Depending on the leverage ratio, as defined, the fees due on the Guarantee Facility will range from 0.50% to 3.00%.

      Interest on the Tranche A Facility, Tranche B Facility and the Revolving Facility is based on TIBOR, as defined in the agreement, plus the applicable margin. Each facility’s applicable margin is based upon a leverage ratio of Senior Debt to EBITDA as such terms are defined in the Senior Facility agreement. Depending on the leverage ratio, as defined, the margin on the Tranche A Facility and the Revolving Facility will range from 1.00% to 1.50% and the margin on the Tranche B Facility will range from 1.35% to 2.00%.

      As of March 31, 2005, the interest rate for the amounts outstanding under the Tranche A Facility and Tranche B Facility was 1.6% and 1.9% respectively, and the fee due under the Guarantee Facility was 1.0%.

      The Senior Facility contains requirements to make mandatory prepayments under certain circumstances and requires compliance with various financial covenants, such as Maximum Senior Debt to EBITDA Ratio, Maximum Senior Debt to Combined Total Capital Ratio, Minimum Debt Service Coverage Ratio and Minimum Interest Coverage Ratio as such terms are defined in the Senior Facility agreement. In addition, the Senior Facility contains certain limitations or prohibitions on additional indebtedness. Additionally, the Senior Facility requires J:COM to maintain interest hedging agreements on at least 50% of the outstanding amounts under the Tranche A Facility.

      Other J:COM debt includes loans from the Development Bank of Japan. These loans represent institutional loans from the Development Bank of Japan, which have been made available to telecommunication companies operating in specific local areas. Certain of these borrowings are non-interest bearing while others bear interest at rates up to 6.8%. The maturity dates of these borrowings range from 2005 to 2019.

      At March 31, 2005, the capital stock of J:COM subsidiaries, trademark and franchise rights held by J:COM and substantially all equipment held by J:COM’s subsidiaries were pledged to secure the loans from the Development Bank of Japan and the Senior Facility.

      Liberty Cablevision Puerto Rico had outstanding borrowings of $127,500,000 at March 31, 2005 pursuant to a $140 million secured bank facility consisting of a $125 million six-year term loan facility and a $15 million six-year revolving credit facility. At March 31, 2005, Pramer’s U.S. dollar denominated borrowings under a secured bank facility aggregated $10,334,000.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      Debt maturities for the next five years and thereafter are as follows (amounts in thousands):

      Maturities of capital lease obligations for the next five years and thereafter are as follows (amounts in thousands):

      J:COM and its subsidiaries provide rebroadcasting services to noncable television viewers suffering from poor reception of television waves caused by artificial obstacles. J:COM and its subsidiaries enter into agreements with parties that have built obstacles causing poor reception for construction and maintenance of cable facilities to provide such services to the affected viewers at no cost to them during the agreement period. Under these agreements, J:COM and its subsidiaries receive up-front, lump-sum compensation payments for construction and maintenance. Revenue from these agreements has been deferred and is being recognized on a straight-line basis over the agreement periods, which are generally 20 years. At March 31, 2005, the deferred revenue under these arrangements amounted to ¥43,092 million ($402,165,000). During the three months

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

ended March 31, 2005, the revenue recognized under these arrangements was ¥818 million ($7,826,000 at the average exchange rate for the period).

      UGC’s related party revenue during the three months ended March 31, 2005 was $1,769,000, which consisted primarily of management, advisory and license fees, call center charges and uplink services charged to its equity method affiliates. UGC’s related party operating expenses during the three months ended March 31, 2005 were $6,191,000, which consisted primarily of programming costs and interconnect fees charged by its equity method affiliates.

      J:COM provides programming, construction, management and distribution services to its affiliates. In addition, J:COM sells construction materials to such affiliates. The revenue from affiliates for such services provided and the related materials sold amounted to ¥1,268.2 million ($12,130,000 at the average exchange rate in effect for the period) during the three months ended March 31, 2005.

      J:COM purchases certain cable television programming from JPC. Such purchases amounted to ¥1,008.7 million ($9,648,000 at the average exchange rate in effect for the period) during the three months ended March 31, 2005, and are included in operating costs in the accompanying condensed consolidated statements of operations.

      J:COM pays monthly fees to a certain affiliate for Internet provisioning services based on an agreed-upon percentage of subscription revenue collected by J:COM from its customers. Payments made to the affiliate under these arrangements amounted to ¥804.8 million ($7,697,000 at the average exchange rate in effect for the period) during the three months ended March 31, 2005, and are included in operating costs in the accompanying condensed consolidated statements of operations.

      J:COM has management service agreements with Sumitomo under which officers and management level employees are seconded from Sumitomo to J:COM, whose services are charged as service fees to J:COM based on their payroll costs. The service fees paid to Sumitomo amounted to ¥76.3 million ($730,000 at the average exchange rate in effect for the period) during the three months ended March 31, 2005. These amounts are included in SG&A expenses in the accompanying condensed consolidated statements of operations.

      J:COM leases, primarily in the form of capital leases, customer premise equipment, various office equipment and vehicles from two subsidiaries and an affiliate of Sumitomo. Such purchases amounted to ¥3,055.3 million ($29,223,000 at the average exchange rate in effect for the period) during the three months ended March 31, 2005. Interest expense related to assets leased from these Sumitomo entities amounted to ¥251.0 million ($2,401,000 at the average exchange rate in effect for the period).

      As discussed in more detail in note 5, on February 25, 2005, J:COM completed a transaction with Sumitomo, Microsoft and our company whereby J:COM paid aggregate cash consideration of ¥4,420 million ($41,932,000 at February 25, 2005) to acquire each entities’ respective interests in Chofu Cable, and to acquire from Microsoft equity interests in certain telecommunications companies.

      During the three months ended March 31, 2005 and 2004, we recognized interest income from equity method affiliates (including J:COM in 2004) and other related parties aggregating $450,000 and $2,804,000, respectively.

      John C. Malone beneficially owned shares of Liberty common stock representing approximately 29.7% of Liberty’s voting power at February 28, 2005 and beneficially owned shares of LMI common stock which may represent up to approximately 33.2% of the voting power in our company at March 31, 2005, assuming the

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

exercise in full of certain options to acquire shares of LMI Series B common stock granted to Mr. Malone at the time of the spin off. In addition, six of our eight directors are also directors of Liberty. By virtue of Mr. Malone’s voting power in Liberty and our company, as well as his position as Chairman of the Board of Liberty and positions as Chairman of the Board, President and Chief Executive Officer of our company, and the aforementioned common directors, Liberty may be deemed an affiliate of our company.

      J:COM receives commission revenue from a subsidiary of Liberty in connection with J:COM’s carriage of the Liberty subsidiary’s programming service. During the three months ended March 31, 2005, such commission revenue aggregated ¥141 million ($1,349,000 at the average exchange rate in effect for the period).

      In the normal course of business, Liberty Cablevision Puerto Rico purchases programming services from subsidiaries of Liberty. During the three months ended March 31, 2005 and 2004, the charges for such services aggregated $514,000 and $394,000, respectively, and are included in operating expenses in the accompanying condensed consolidated statements of operations

      Pursuant to agreements between our company and Liberty, Liberty provides us with office space and certain general and administrative services including legal, tax, accounting, treasury, engineering and investor relations support. Our company and Liberty also share the costs of Liberty’s flight department and the costs of maintaining and operating two jointly owned aircraft, in which we hold 25% ownership interests. Amounts charged to us by Liberty pursuant to these agreements aggregated $626,000 during the three months ended March 31, 2005 and are included in SG&A expenses in the accompanying condensed consolidated statements of operations.

      Prior to March 2, 2005, Liberty owned an indirect 78.2% economic and non-voting interest in VLG Argentina LLC (VLG Argentina), an entity that owns a 50% interest in Cablevisión, the largest cable television company in Argentina. VLG Acquisition Corp. (VLG Acquisition), an entity in which neither Liberty nor our company has any ownership interests, owned the remaining 21.8% economic interest and all of the voting power in VLG Argentina. An executive officer and an officer of our company were shareholders of VLG Acquisition. Prior to joining our company, they sold their equity interests in VLG Acquisition to the remaining shareholder, but each retained a contractual right to 33% of any proceeds in excess of $100,000 from the sale of VLG Acquisition’s interest in VLG Argentina, or from distributions to VLG Acquisition by VLG Argentina in connection with a sale of VLG Argentina’s interest in Cablevisión. Although we have no direct or indirect equity interest in Cablevisión, we had the right and obligation pursuant to Cablevisión’s debt restructuring agreement to contribute $27,500,000 to Cablevisión in exchange for newly issued Cablevisión shares representing approximately 40.0% of Cablevisión’s fully diluted equity (the Subscription Right).

      On November 2, 2004, Liberty, a subsidiary of our company, VLG Acquisition and the then sole shareholder of VLG Acquisition entered into an agreement with a third party to transfer all of the equity in VLG Argentina and all of our rights and obligations with respect to the Subscription Right to the third party for aggregate consideration of $65 million. This agreement provided that $40,527,000 of such proceeds would be allocated to our company for the Subscription Right. We received 50% of such proceeds as a down payment in November 2004 and we received the remainder in March 2005. We recognized a gain of $40,527,000 during the three months ended March 31, 2005 in connection with the closing of this transaction.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      As a result of the foregoing transactions, the executive officer and officer of our company who retained the above-described contractual rights with respect to VLG Acquisition received aggregate cash distributions of $7.3 million in respect of such rights during the fourth quarter of 2004 and the first quarter of 2005.

      In the normal course of business, we have entered into agreements that commit our company to make cash payments in future periods with respect to non-cancelable leases, programming contracts, unfunded noncontributory defined benefit severance and retirement plans of J:COM, purchases of customer premise equipment, construction activities, network maintenance, and upgrade and other commitments arising from our agreements with local franchise authorities. We expect that in the normal course of business, leases that expire generally will be renewed or replaced by similar leases. As of March 31, 2005, the U.S. dollar equivalents (based on March 31, 2005 exchange rates) of such commitments are as follows:

      Programming commitments consist of obligations associated with certain of our programming contracts that are enforceable and legally binding on us inasmuch as we have agreed to pay minimum fees, regardless of the actual number of subscribers to the programming services or whether we terminate cable service to a portion of our subscribers or dispose of a portion of our cable systems. Other purchase obligations consist of commitments to purchase customer premise equipment that are enforceable and legally binding on us.

      Other commitments consist of commitments to rebuild or upgrade cable systems and to extend the cable network to new developments, and perform network maintenance, and other fixed minimum contractual commitments associated with our agreements with franchise or municipal authorities. The amount and timing of the payments included in the table with respect to our rebuild, upgrade and network extension commitments are estimated based on the remaining capital required to bring the cable distribution system into compliance with the requirements of the applicable franchise agreement specifications. Other commitments also include J:COM’s commitments pursuant to unfunded noncontributory defined benefit severance and retirement plans.

      In addition to the commitments set forth in the table above, we have commitments under agreements with programming vendors, franchise authorities and municipalities, and other third parties pursuant to which we expect to make payments in future periods. Such amounts are not included in the above table because they are not fixed or determinable due to various factors.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      During 2004, we completed three transactions that resulted in the acquisition of our equity method investment in Mediatti through our consolidated subsidiary, Liberty Japan MC, LLC, (Liberty Japan MC). Olympus Mediacom L.P., (Olympus) another shareholder of Mediatti, has a put right that is first exercisable during July 2008 to require Liberty Japan MC to purchase all of its Mediatti shares at fair market value. If Olympus exercises such right, the two minority shareholders who are party to the shareholders agreement may also require Liberty Japan MC to purchase their Mediatti shares at fair market value. If Olympus does not exercise such right, Liberty Japan MC has a call right that is first exercisable during July 2009 to require Olympus and the minority shareholders to sell their Mediatti shares to Liberty Japan MC at fair market value. If both the Olympus put right and the Liberty Japan MC call right expire without being exercised during the first exercise period, either may thereafter exercise its put or call right, as applicable, until October 2010.

      On October 28, 2004, we received $60 million in cash from the purchaser of our interest in a direct-to-home satellite provider that operates in Brazil (Sky Brasil). The $60 million is refundable by us if the Sky Brasil transaction is terminated. It may be terminated by us or the purchaser if it has not closed by October 8, 2007 or by the purchaser if certain conditions are incapable of being satisfied.

      Pursuant to the agreement with CPE governing Belgian Cable Investors, CPE has the right to require BCH to purchase all of CPE’s interest in Belgian Cable Investors for the then appraised fair value of such interest during the first 30 days of every six-month period beginning in December 2007. BCH has the corresponding right to require CPE to sell all of its interest in Belgian Cable Investors to BCH for appraised fair value during the first 30 days of every six-month period following December 2009. For additional information, see note 6.

      As further described in note 5, Zone Vision’s Class B1 shareholders have the right, subject to vesting, to put 60% of their Class B1 shares to chellomedia on the third anniversary of the closing, and 100% of their interest on the fifth anniversary of the closing.

      In connection with the April 13, 2005 combination of VTR and Metrópolis, Cristalerías acquired an option to require UGC to purchase Cristalerías’ equity interest in VTR at fair market value, subject to a $140,000,000 floor price, and its debt interest in VTR at par plus unpaid interest. For additional information, see note 6.

      We and UGC have entered into indemnification agreements with each of our respective directors, our respective named executive officers and certain other officers. Pursuant to such agreements and as permitted by our and UGC’s Bylaws, we each will indemnify our respective indemnities to the fullest extent permitted by law against any and all expenses, judgments, fines, penalties and settlements incurred as a result of being a party or threatened to be a party in a legal proceeding as a result of their service to or on behalf of our company or UGC, as applicable.

      At March 31, 2005, Liberty guaranteed ¥4,605 million ($42,978,000) of the bank debt of certain J:COM affiliates. Liberty’s guarantees expire as the underlying debt matures and is repaid. The debt maturity dates range from 2005 to 2019. In connection with the spin off, we have agreed to indemnify Liberty for any amounts Liberty is required to fund under these arrangements.

      In the ordinary course of business, we have provided indemnifications to (i) purchasers of certain of our assets, (ii) our lenders, (iii) our vendors and (iv) other parties. In addition, we have provided performance

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

and/or financial guarantees to local municipalities, our customers and vendors. Historically, these arrangements have not resulted in our company making any material payments and we do not believe that they will result in material payments in the future.

      Cignal — On April 26, 2002, UPC received a notice that certain former shareholders of Cignal Global Communications (Cignal) filed a lawsuit against UPC in the District Court of Amsterdam, The Netherlands, claiming $200,000,000 on the basis that UPC failed to honor certain option rights that were granted to those shareholders in connection with the acquisition of Cignal by Priority Telecom. UPC believes that it has complied in full with its obligations to these shareholders through the successful completion of the IPO of Priority Telecom on September 27, 2001. Accordingly, UPC believes that the Cignal shareholders’ claims are without merit and intends to defend this suit vigorously. In December 2003, certain members and former members of the Supervisory Board of Priority Telecom were put on notice that a tort claim may be filed against them for their cooperation in the IPO. On May 4, 2005, the court rendered its decision, dismissing all claims of the former Cignal shareholders.

      Class Action Lawsuits Relating to the Merger Transaction with UGC — Since January 18, 2005, twenty-one lawsuits have been filed in the Delaware Court of Chancery and one lawsuit in the Denver District Court, State of Colorado, all purportedly on behalf of UGC’s public stockholders, regarding the announcement on January 18, 2005 of the execution by UGC and us of the agreement and plan of merger for the combination of our companies under a new parent company. The defendants named in these actions include UGC, Gene W. Schneider, Michael T. Fries, David B. Koff, Robert R. Bennett, John C. Malone, John P. Cole, Bernard G. Dvorak, John W. Dick, Paul A. Gould and Gary S. Howard (directors of UGC) and our company. The allegations in each of the complaints, which are substantially similar, assert that the defendants have breached their fiduciary duties of loyalty, care, good faith and candor and that various defendants have engaged in self-dealing and unjust enrichment, affirmed an unfair price, and impeded or discouraged other offers for UGC or its assets in bad faith and for improper motives. In addition to seeking to enjoin the transaction, the complaints seek remedies, including damages for the public holders of UGC’s stock and an award of attorney’s fees to plaintiffs’ counsel. In connection with the Delaware lawsuits, defendants have been served with one request for production of documents. On February 11, 2005, the Delaware Court of Chancery consolidated all twenty-one Delaware lawsuits into a single action. On May 5, 2005, the plaintiffs filed a consolidated amended complaint containing allegations substantially similar to those found in and naming the same defendants named in the original complaints. The parties are negotiating a schedule for proceeding with the action, including a time for the defendants to respond to the consolidated amended complaint. The defendants believe the lawsuits are without merit.

      The Netherlands 2004 Rate Increases — The Dutch competition authority (NMA) is currently investigating the price increases that UGC made with respect to its video services in 2004 to determine whether it abused its dominant position. If the NMA were to find that the price increases amount to an abuse of a dominant position, the NMA could impose fines of up to 10% of UGC’s 2003 video revenue in The Netherlands and UGC would be obliged to reconsider the price increases. The timing of the NMA’s decision is not clear. Historically, in many parts of The Netherlands, UGC is a party to contracts with local municipalities that seek to control aspects of its Dutch business including, in some cases, pricing and package composition. Most of these contracts have been eliminated by agreement, although some contracts are still in force and under negotiation. In some cases there is litigation ongoing where some municipalities have resisted UGC’s attempts to move away from the contracts.

LIBERTY MEDIA INTERNATIONAL, INC.

(See note 1)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      Income Taxes — We operate in numerous countries around the world and accordingly we are subject to, and pay annual income taxes under, the various income tax regimes in the countries in which we operate. The tax rules and regulations in many countries are highly complex and subject to interpretation. From time to time, we may be subject to a review of our historic income tax filings. In connection with such reviews, disputes could arise with the taxing authorities over the interpretation or application of certain income tax rules related to our business in that tax jurisdiction. We have accrued income taxes (and related interest and penalties, if applicable) for amounts that represent income tax exposure items in tax years for which additional income taxes may be assessed.

      In addition to the foregoing items, we have contingent liabilities related to legal proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible we may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In our opinion, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements.

      A summary of UGC’s restructuring charge activity is set forth in the table below: