ST. LOUIS, Aug. 2, 2011 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three and six months ended June 30,
2011.
(Logo:
http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO)
Second quarter highlights:
- We made significant progress on strategic initiatives including
customer experience, DOCSIS 3.0 and switched digital video
(SDV).
- Commercial revenues grew 17.5% on a pro forma(1) basis
and 16.5% on an actual basis supported by improved sales
productivity and investment.
- Non-video customer relationships increased by approximately
40,800 for the quarter, nearly double prior-year second quarter
growth.
- Revenues grew 2.2% on a pro forma basis and 1.1% on an
actual basis due to growth in commercial, Internet, telephone and
advertising sales.
- Adjusted EBITDA(2) grew 4.8% year-over-year on a pro
forma basis and 4.2% on an actual basis reflecting disciplined
revenue growth coupled with strong operational performance.
- Net loss totaled $107 million in
the second quarter of 2011. Free cash flow(2) increased to
$155 million and cash flows from
operating activities totaled $460
million.
"We delivered another solid quarter of adjusted EBITDA growth
and substantial free cash flow," said Mike
Lovett, President and Chief Executive Officer. "We made
significant progress on our longer-term strategic initiatives and
are just beginning to see the benefits of these investments. We
continued to drive accelerated growth in our commercial business
and higher penetration of our superior Internet product, and we are
confident that the investments we are making to enhance our
products and customer service are setting us up for long-term
success. For the remainder of 2011, we will continue to focus on
our key strategies of enhancing our customers' experience,
leveraging our Internet advantage while we develop next generation
video services, and aggressively pursuing growth in our commercial
business."
(1) Pro forma results are described below in the "Use of
Non-GAAP Financial Metrics" section and are provided in the
addendum of this news release.
(2) Adjusted EBITDA and free cash flow are defined in the "Use
of Non-GAAP Financial Metrics" section and are reconciled to
consolidated net loss and net cash flows from operating activities,
respectively, in the addendum of this news release.
Key Operating Results
|
|
Approximate
as of
|
|
|
|
|
Actual
|
|
Pro
Forma
|
|
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
|
|
2011 (a)
|
|
2010 (a)
|
|
Y/Y
Change
|
|
Footprint
|
|
|
|
|
|
|
|
Estimated Homes Passed Video
(b)
|
11,831,900
|
|
11,695,300
|
|
1%
|
|
|
% Switched Digital
Video
|
68%
|
|
24%
|
|
44 ppts
|
|
|
Estimated Homes Passed Internet
(b)
|
11,496,200
|
|
11,346,000
|
|
1%
|
|
|
% DOCSIS 3.0
|
85%
|
|
30%
|
|
55 ppts
|
|
|
Estimated Homes Passed Phone
(b)
|
10,719,100
|
|
10,420,400
|
|
3%
|
|
Customers
|
|
|
|
|
|
|
|
Residential Customer
Relationships (c)
|
4,846,900
|
|
4,940,000
|
|
-2%
|
|
|
Commercial Customer
Relationships (c)
|
355,200
|
|
344,300
|
|
3%
|
|
|
Total Customer Relationships
(c)(e)
|
5,202,100
|
|
5,284,300
|
|
-2%
|
|
|
Residential Non-Video Customers
(d)
|
673,500
|
|
533,000
|
|
26%
|
|
|
% Non-Video (d)
|
13.9%
|
|
10.8%
|
|
3.1 ppts
|
|
Services and Revenue Generating
Units (f)
|
|
|
|
|
|
|
|
Video (d)
|
4,173,400
|
|
4,407,000
|
|
-5%
|
|
|
Internet (g)
|
3,352,500
|
|
3,163,700
|
|
6%
|
|
|
Phone (h)
|
1,747,600
|
|
1,656,300
|
|
6%
|
|
|
Residential PSUs (i)
|
9,273,500
|
|
9,227,000
|
|
1%
|
|
|
Residential PSU / Customer
Relationships (c)(i)
|
1.91
|
|
1.87
|
|
|
|
|
Video (d)(e)
|
239,500
|
|
243,800
|
|
-2%
|
|
|
Internet (g)(i)
|
149,100
|
|
128,300
|
|
16%
|
|
|
Phone (h)
|
68,500
|
|
49,900
|
|
37%
|
|
|
Commercial PSUs (i)
|
457,100
|
|
422,000
|
|
8%
|
|
|
Digital Video RGUs
(k)
|
3,386,700
|
|
3,302,000
|
|
3%
|
|
|
Total RGUs
|
13,117,300
|
|
12,951,000
|
|
1%
|
|
Quarterly Net
Additions/(Losses) (l)
|
|
|
|
|
|
|
|
Video (d)
|
(79,900)
|
|
(71,700)
|
|
-11%
|
|
|
Internet (g)
|
18,500
|
|
22,000
|
|
-16%
|
|
|
Phone (h)
|
6,600
|
|
35,300
|
|
-81%
|
|
|
Residential PSUs (i)
|
(54,800)
|
|
(14,400)
|
|
|
|
|
Video (d)(e)
|
(3,800)
|
|
(2,500)
|
|
52%
|
|
|
Internet (g)
|
6,300
|
|
4,100
|
|
54%
|
|
|
Phone (h)
|
4,100
|
|
5,600
|
|
-27%
|
|
|
Commercial PSUs (i)
|
6,600
|
|
7,200
|
|
-8%
|
|
|
Digital Video RGUs
(k)
|
(4,900)
|
|
26,100
|
|
|
|
|
Total RGUs
|
(53,100)
|
|
18,900
|
|
|
|
Quarterly Residential
ARPU
|
|
|
|
|
|
|
|
Video (m)
|
$
71.40
|
|
$
69.05
|
|
3%
|
|
|
Internet (m)
|
$
41.76
|
|
$
42.18
|
|
-1%
|
|
|
Phone (m)
|
$
40.49
|
|
$
41.74
|
|
-3%
|
|
|
ARPU per Customer Relationship
(n)
|
$
105.02
|
|
$
102.34
|
|
3%
|
|
|
Total ARPU per Video Customer
(o)
|
$
133.84
|
|
$
124.64
|
|
7%
|
|
Residential Penetration
Statistics
|
|
|
|
|
|
|
|
Video Penetration of Homes
Passed Video (p)
|
35.3%
|
|
37.7%
|
|
-2.4 ppts
|
|
|
Internet Penetration of Homes
Passed Internet (p)
|
29.2%
|
|
27.9%
|
|
1.3 ppts
|
|
|
Phone Penetration of Homes
Passed Phone (p)
|
16.3%
|
|
15.9%
|
|
0.4 ppts
|
|
|
Bundled Penetration
(q)
|
61.6%
|
|
59.2%
|
|
2.4 ppts
|
|
|
Triple Play Penetration
(r)
|
28.8%
|
|
26.8%
|
|
2.0 ppts
|
|
|
Digital Penetration
(s)
|
76.7%
|
|
71.0%
|
|
5.7 ppts
|
|
|
Advanced Digital Penetration (of
Digital) (t)
|
55.7%
|
|
50.2%
|
|
5.5 ppts
|
|
|
Set-Top-Box per Digital
RGU
|
1.51
|
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
|
|
|
|
|
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|
|
See footnotes to unaudited
summary of operating statistics on page 6 of the addendum of this
release. The footnotes contain important disclosures regarding the
definitions used for these operating statistics.
|
|
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|
|
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|
|
During the second quarter, we continued to invest in bandwidth
efficiency and capacity initiatives including DOCSIS 3.0 and SDV
upgrades. These network improvements provide additional capacity
for more high definition channels and video on demand services,
expand commercial service offerings and increase Internet speeds.
At the end of June, 85% of the homes passed in our footprint had
been upgraded to DOCSIS 3.0 and 68% were SDV enabled. These
strategic initiatives are expected to be essentially complete by
the end of 2011 and contribute to the overall customer experience
and brand perception.
Residential primary service units (PSUs) decreased by 54,800 in
the second quarter of 2011 as increases in Internet and phone PSUs
were more than offset by a decline in video PSUs. Non-video PSUs
grew by 40,800, nearly double the growth during last year's second
quarter. Bundling over time to maximize retention and customer
profitability remains a key strategy, with 61.6% of our residential
customers in a bundle compared to 59.2% a year ago.
Residential video customers decreased by 79,900 in the quarter,
while digital video customers decreased by 4,900. Seasonality,
disciplined customer acquisition and price competition in the face
of generally weak economic conditions all contributed to a lower
rate of video acquisition which more than offset higher retention
levels compared to the prior-year second quarter. Net video losses
continued to be disproportionately driven by video-only analog
customers. At the end of June, 55.7% of our digital customers
enjoyed HD and/or DVR services. As a result, video ARPU was
$71.40 for the second quarter of
2011, up 3.4% year-over-year.
We added 18,500 residential Internet customers during the second
quarter of 2011, reflecting continued consumer demand for superior
speeds offered by Charter compared to DSL. Nearly 95% of our
customers have a broadband plan of 12Mbps or higher. Internet ARPU
of $41.76 decreased 1.0% compared to
the year-ago quarter primarily due to the mix of speed tiers. We
increased the speeds of our Internet tiers at no cost to our
customers twice in the past 18 months and are seeing the benefits
of higher customer satisfaction, brand awareness and higher
retention rates. However, we have less ARPU benefit from tier
upgrades. The tier mix impact was nearly offset by an increase in
home networking revenues with more than 20% of our Internet
customers relying on our home wireless service.
Second quarter 2011 net gains of phone customers were 6,600 with
phone penetration at 16.3% as of June 30,
2011. Given the clear retention benefit of bundling, we
recently launched an attractively priced triple play offer to our
video-only customers to further drive Internet and phone bundling,
and are promoting phone upsell to both video and non-video Internet
customers. Phone ARPU of $40.49
decreased approximately 3.0% year-over-year due to increased
bundling and value-based packages.
Commercial PSUs increased 6,600 in the second quarter to 457,100
and were up 8.3% over the second quarter of 2010. Commercial
Internet and phone PSUs increased year-over-year by more than 20%.
In addition, revenues from carrier customers, which aren't
reflected in PSUs, nearly doubled. In July, the number of cell
tower sites we served reached the 1,000 milestone, and we have a
robust pipeline. We continue to refine our commercial strategy to
further accelerate our growth and see a significant opportunity to
grow our commercial services.
Total ARPU for the second quarter of 2011 was $133.84; an increase of 7.4% compared to second
quarter 2010, primarily as a result of increased bundle and
advanced services penetration, along with growth in our commercial
business. For the first half of 2011, we lost 12,100 total customer
relationships as compared to 45,900 in 2010, reflecting the early
benefits of our strategic investments partially offset by
disciplined customer acquisition.
Second Quarter Financial Results
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
|
|
(DOLLARS IN
MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
Pro
Forma
|
|
|
2010
|
|
|
|
|
Actual
|
|
|
Pro
Forma
|
|
|
%
Change
|
|
|
Actual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
903
|
|
$
|
921
|
|
|
-2.0%
|
|
$
|
932
|
|
|
Internet
|
|
419
|
|
|
399
|
|
|
5.0%
|
|
|
402
|
|
|
Telephone
|
|
213
|
|
|
205
|
|
|
3.9%
|
|
|
206
|
|
|
Commercial
|
|
141
|
|
|
120
|
|
|
17.5%
|
|
|
121
|
|
|
Advertising
sales
|
|
76
|
|
|
71
|
|
|
7.0%
|
|
|
72
|
|
|
Other
|
|
39
|
|
|
37
|
|
|
5.4%
|
|
|
38
|
|
|
Total
revenues
|
|
1,791
|
|
|
1,753
|
|
|
2.2%
|
|
|
1,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (excluding
depreciation and amortization) (a)
|
|
784
|
|
|
764
|
|
|
2.6%
|
|
|
773
|
|
|
Selling, general and
administrative (excluding stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation expense)
(b)
|
|
334
|
|
|
347
|
|
|
-3.7%
|
|
|
352
|
|
|
Operating
costs and expenses
|
|
1,118
|
|
|
1,111
|
|
|
0.6%
|
|
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
673
|
|
|
642
|
|
|
4.8%
|
|
|
646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
|
37.6%
|
|
|
36.6%
|
|
|
|
|
|
36.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
324
|
|
$
|
337
|
|
|
|
$
|
|
339
|
|
|
% Total Revenues
|
|
18.1%
|
|
|
19.2%
|
|
|
|
|
|
19.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(107)
|
|
$
|
(82)
|
|
|
|
$
|
|
(81)
|
|
|
Loss per common share, basic and
diluted
|
$
|
(0.98)
|
|
$
|
(0.72)
|
|
|
|
$
|
|
(0.72)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating
activities
|
$
|
460
|
|
$
|
447
|
|
|
|
$
|
|
451
|
|
|
Free cash flow
|
$
|
155
|
|
$
|
125
|
|
|
|
$
|
|
127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Operating expenses
include programming, service, and advertising sales
expenses.
|
|
(b) Selling, general and
administrative expenses include general and administrative and
marketing expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA and free cash
flow are defined in the “Use of Non-GAAP Financial Metrics” section
and are reconciled to consolidated net loss and net cash flows from
operating activities, respectively, in the addendum of this
news release.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
Second quarter 2011 revenues totaled $1.791 billion, up 2.2% on a pro forma
basis and 1.1% on an actual basis compared to the year-ago quarter
as we continued to grow our commercial, Internet and phone
businesses and increase sales of bundled services.
Second quarter 2011 video revenues were $903 million, a decrease of 2.0% on a pro
forma basis and 3.1% on an actual basis compared to the second
quarter of 2010 as a result of a decline in basic video customers,
partially offset by growth in advanced service revenues. Internet
revenues were $419 million, up 5.0%
on a pro forma basis and 4.2% on an actual basis
year-over-year due to the addition of 188,800 Internet customers.
Telephone revenues for the 2011 second quarter totaled $213 million, up 3.9% on a pro forma basis
and 3.4% on an actual basis over second quarter 2010 as growth in
the triple play bundle continued.
Commercial revenues rose to $141
million, a 17.5% year-over-year increase on a pro
forma basis and 16.5% on an actual basis, primarily reflecting
higher sales to small and medium business and carrier
customers.
Advertising sales revenues were $76
million for the second quarter of 2011, a 7.0% increase on a
pro forma basis and 5.6% on an actual basis compared to the
second quarter of 2010, primarily due to growth in revenue from the
automotive and retail sectors combined with a $3 million change to reflect certain revenues on
a gross basis, thus increasing both revenues and expenses by the
same amount.
Operating Costs and Expenses
Operating costs and expenses totaled $1.118 billion in the second quarter of 2011, an
increase of only 0.6% on a pro forma basis (0.6% actual
decrease) compared to the year-ago period, as increases in
programming costs were nearly offset by reduced other operating
costs. Programming expenses increased as a result of contractual
programming increases, offset by customer losses. Marketing
expenses decreased by $6 million in
the second quarter compared to the prior year reflecting a
favorable adjustment related to expenses associated with prior year
marketing campaigns, offset by increased spending on product and
brand-focused marketing. Bad debt expense was $6 million lower in the second quarter as we saw
benefits from our customer acquisition and retention strategies.
Total labor was essentially flat year-over-year as operating
efficiencies funded growth areas such as commercial.
Adjusted EBITDA
Adjusted EBITDA for the second quarter of 2011 was $673 million, an increase of 4.8% on a pro
forma basis and 4.2% on an actual basis compared to the
year-ago period. Adjusted EBITDA margin improved to 37.6% for the
second quarter of 2011 compared to adjusted EBITDA margin of 36.6%
on a pro forma basis and 36.5% on an actual basis in the
year-ago quarter. The margin improvement was driven by growth in
our higher margin Internet, phone and commercial products,
disciplined customer acquisition and improving customer service
levels.
Net Loss
Net loss was $107 million in the
second quarter of 2011, compared to $82
million on a pro forma basis and $81 million on an actual basis in the second
quarter of 2010. The change was primarily due to growth in
commercial, Internet, telephone and advertising sales offset by a
$19 million higher loss on
extinguishment of debt, higher interest expense as we continued to
refinance portions of our debt to extend maturities, and an
increase in depreciation and amortization in the quarter-to-quarter
comparison. Net loss per common share was $0.98 in the second quarter of 2011 compared to
$0.72 on a pro forma and
actual basis during the same period last quarter.
Capital Expenditures
Expenditures for property, plant and equipment for the second
quarter of 2011 decreased to $324
million compared to second quarter 2010 expenditures of
$337 million on a pro forma
basis and $339 million on an actual
basis. The decrease was primarily due to a decrease in scalable
infrastructure spend as a result of timing of strategic investments
in bandwidth initiatives partially offset by $9 million of incremental capital for
storm-related damage in 2011. Our estimate for capital expenditures
for 2011 remains approximately $1.3 billion
to $1.4 billion.
Cash Flow
Net cash flows from operating activities were $460 million, compared to $447 million on a pro forma basis and
$451 million on an actual basis in
the second quarter of 2010. The increase in net cash flows from
operating activities was primarily due to an increase in adjusted
EBITDA offset by higher cash interest payments.
Free cash flow for the second quarter of 2011 was $155 million, compared to $125 million on a pro forma basis and
$127 million on an actual basis in
the same period last year driven by the increase in net cash flows
from operating activities and lower capital expenditures.
Total principal amount of debt was approximately $12.5 billion as of June
30, 2011. At the end of the second quarter, we had
$194 million of cash and cash
equivalents (including restricted cash and cash equivalents of
$28 million) and availability under
our revolving credit facility of approximately $1.2 billion.
Conference Call
Charter will host a conference call on Tuesday, August 2, 2011 at 9:00 a.m. Eastern Time (ET) related to the
contents of this release.
The conference call will be webcast live via the Company's
website at charter.com. The webcast can be accessed by selecting
"Investor & News Center" from the lower menu on the home page.
The call will be archived in the "Investor & News Center" in
the "Financial Information" section on the left beginning two hours
after completion of the call. Participants should go to the webcast
link no later than 10 minutes prior to the start time to
register.
Those participating via telephone should dial 866-726-7983 no
later than 10 minutes prior to the call. International participants
should dial 706-758-7055. The conference ID code for the call is
82071314.
A replay of the call will be available at 800-642-1687 or
706-645-9291 beginning two hours after the completion of the call
through the end of business on August 16,
2011. The conference ID code for the replay is 82071314.
Additional Information Available on Website
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in the Company's quarterly report for the quarter ended
June 30, 2011 available on the
"Investor & News Center" of our website at charter.com in the
"Financial Information" section. A slide presentation to accompany
the conference call and a trending schedule containing historical
customer and financial data can also be found in the "Financial
Information" section.
Use of Non-GAAP Financial Metrics
The Company uses certain measures that are not defined by
Generally Accepted Accounting Principles ("GAAP") to evaluate
various aspects of its business. Adjusted EBITDA, adjusted EBITDA
less capital expenditures and free cash flow are non-GAAP financial
measures and should be considered in addition to, not as a
substitute for, net loss or cash flows from operating activities
reported in accordance with GAAP. These terms, as defined by
Charter, may not be comparable to similarly titled measures used by
other companies. Adjusted EBITDA is reconciled to net loss and free
cash flow is reconciled to net cash flows from operating activities
in the addendum of this news release.
Adjusted EBITDA is defined as net loss plus net interest
expense, income taxes, depreciation and amortization,
reorganization items, stock compensation expense, loss on
extinguishment of debt, and other expenses, such as special charges
and loss on sale or retirement of assets. As such, it eliminates
the significant non-cash depreciation and amortization expense that
results from the capital-intensive nature of the Company's
businesses as well as other non-cash or special items, and is
unaffected by the Company's capital structure or investment
activities. Adjusted EBITDA less capital expenditures is defined as
Adjusted EBITDA minus purchases of property, plant and equipment.
Adjusted EBITDA and adjusted EBITDA less capital expenditures are
used by management and the Company's Board to evaluate the
performance of the Company's business. For this reason, they are
significant components of Charter's annual incentive compensation
program. However, these measures are limited in that they do not
reflect the periodic costs of certain capitalized tangible and
intangible assets used in generating revenues and the cash cost of
financing. Management evaluates these costs through other financial
measures.
Free cash flow is defined as net cash flows from operating
activities, less purchases of property, plant and equipment and
changes in accrued expenses related to capital expenditures.
The Company believes that adjusted EBITDA and free cash flow
provide information useful to investors in assessing Charter's
performance and its ability to service its debt, fund operations
and make additional investments with internally generated funds. In
addition, adjusted EBITDA generally correlates to the leverage
ratio calculation under the Company's credit facilities or
outstanding notes to determine compliance with the covenants
contained in the credit facilities and notes (all such documents
have been previously filed with the United States Securities and
Exchange Commission). Adjusted EBITDA, as presented, includes
management fee expenses in the amount of $35
million and $36 million for
the three months ended June 30, 2011
and 2010, respectively, and $70
million and $71 million for
the six months ended June 30, 2011
and 2010, respectively, which expense amounts are excluded for the
purposes of calculating compliance with leverage covenants.
In addition to the actual results for the three and six months
ended June 30, 2011 and 2010, we have
provided pro forma results in this release for the three and
six months ended June 30, 2010. We
believe these pro forma results facilitate meaningful
analysis of the results of operations. Pro forma results in
this release reflect certain sales of cable systems in 2010 as if
they occurred as of January 1, 2010.
Pro forma statements of operations for the three and six
months ended June 30, 2010; and
pro forma customer statistics as of June 30, 2010; are provided in the addendum of
this news release.
About Charter
Charter (NASDAQ: CHTR) is a leading broadband communications
company and the fourth-largest cable operator in the United States. Charter provides a full
range of advanced broadband services, including advanced Charter
TV® video entertainment programming, Charter Internet® access, and
Charter Phone®. Charter Business® similarly provides scalable,
tailored, and cost-effective broadband communications solutions to
business organizations, such as business-to-business Internet
access, data networking, business telephone, video and music
entertainment services, and wireless backhaul. Charter's
advertising sales and production services are sold under the
Charter Media® brand. More information about Charter can be found
at charter.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), regarding, among
other things, our plans, strategies and prospects, both business
and financial. Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking
statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations.
Forward-looking statements are inherently subject to risks,
uncertainties and assumptions including, without limitation, the
factors described under "Risk Factors" from time to time in our
filings with the Securities and Exchange Commission ("SEC"). Many
of the forward-looking statements contained in this release may be
identified by the use of forward-looking words such as "believe,"
"expect," "anticipate," "should," "planned," "will," "may,"
"intend," "estimated," "aim," "on track," "target," "opportunity,"
"tentative," "positioning" and "potential," among others. Important
factors that could cause actual results to differ materially from
the forward-looking statements we make in this release are set
forth in other reports or documents that we file from time to time
with the SEC, and include, but are not limited to:
- our ability to sustain and grow revenues and free cash flow by
offering video, Internet, telephone, advertising and other services
to residential and commercial customers, to adequately meet the
customer experience demands in our markets and to maintain and grow
our customer base, particularly in the face of increasingly
aggressive competition, the need for innovation and the related
capital expenditures and the difficult economic conditions in
the United States;
- the impact of competition from other market participants,
including but not limited to incumbent telephone companies, direct
broadcast satellite operators, wireless broadband and telephone
providers, and digital subscriber line ("DSL") providers and
competition from video provided over the Internet;
- general business conditions, economic uncertainty or downturn,
high unemployment levels and the level of activity in the housing
sector;
- our ability to obtain programming at reasonable prices or to
raise prices to offset, in whole or in part, the effects of higher
programming costs (including retransmission consents);
- the effects of governmental regulation on our business;
- the availability and access, in general, of funds to meet our
debt obligations, prior to or when they become due, and to fund our
operations and necessary capital expenditures, either through (i)
cash on hand, (ii) free cash flow, or (iii) access to the capital
or credit markets; and
- our ability to comply with all covenants in our indentures and
credit facilities, any violation of which, if not cured in a timely
manner, could trigger a default of our other obligations under
cross-default provisions.
All forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
this cautionary statement. We are under no duty or obligation to
update any of the forward-looking statements after the date of this
release.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
|
(DOLLARS IN
MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
Actual
|
|
|
Actual
|
|
%
Change
|
|
|
Actual
|
|
|
Actual
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
903
|
|
$
|
932
|
|
-3.1%
|
|
$
|
1,811
|
|
$
|
1,858
|
|
-2.5%
|
|
Internet
|
|
419
|
|
|
402
|
|
4.2%
|
|
|
831
|
|
|
797
|
|
4.3%
|
|
Telephone
|
|
213
|
|
|
206
|
|
3.4%
|
|
|
425
|
|
|
404
|
|
5.2%
|
|
Commercial
|
|
141
|
|
|
121
|
|
16.5%
|
|
|
278
|
|
|
239
|
|
16.3%
|
|
Advertising
sales
|
|
76
|
|
|
72
|
|
5.6%
|
|
|
138
|
|
|
131
|
|
5.3%
|
|
Other
|
|
39
|
|
|
38
|
|
2.6%
|
|
|
78
|
|
|
77
|
|
1.3%
|
|
Total
revenues
|
|
1,791
|
|
|
1,771
|
|
1.1%
|
|
|
3,561
|
|
|
3,506
|
|
1.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (excluding
depreciation and amortization) (a)
|
|
784
|
|
|
773
|
|
1.4%
|
|
|
1,552
|
|
|
1,529
|
|
1.5%
|
|
Selling, general and
administrative (excluding stock compensation expense)
(b)
|
|
334
|
|
|
352
|
|
-5.1%
|
|
|
673
|
|
|
694
|
|
-3.0%
|
|
Operating
costs and expenses
|
|
1,118
|
|
|
1,125
|
|
-0.6%
|
|
|
2,225
|
|
|
2,223
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
673
|
|
|
646
|
|
4.2%
|
|
|
1,336
|
|
|
1,283
|
|
4.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
|
37.6%
|
|
|
36.5%
|
|
|
|
|
37.5%
|
|
|
36.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
393
|
|
|
380
|
|
|
|
|
776
|
|
|
749
|
|
|
|
Stock compensation
expense
|
|
9
|
|
|
5
|
|
|
|
|
15
|
|
|
10
|
|
|
|
Other operating expenses,
net
|
|
1
|
|
|
7
|
|
|
|
|
6
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
270
|
|
|
254
|
|
|
|
|
539
|
|
|
505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(241)
|
|
|
(219)
|
|
|
|
|
(474)
|
|
|
(423)
|
|
|
|
Loss on extinguishment of
debt
|
|
(53)
|
|
|
(34)
|
|
|
|
|
(120)
|
|
|
(35)
|
|
|
|
Other income (expense),
net
|
|
(2)
|
|
|
1
|
|
|
|
|
(2)
|
|
|
(2)
|
|
|
|
|
|
(296)
|
|
|
(252)
|
|
|
|
|
(596)
|
|
|
(460)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
(26)
|
|
|
2
|
|
|
|
|
(57)
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
(81)
|
|
|
(83)
|
|
|
|
|
(160)
|
|
|
(102)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(107)
|
|
$
|
(81)
|
|
|
|
$
|
(217)
|
|
$
|
(57)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and
diluted
|
$
|
(0.98)
|
|
$
|
(0.72)
|
|
|
|
$
|
(1.95)
|
|
$
|
(0.51)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding, basic and diluted
|
|
109,265,876
|
|
|
113,110,882
|
|
|
|
|
111,234,155
|
|
|
113,066,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Operating expenses
include programming, service, and advertising sales
expenses.
|
|
|
|
(b) Selling, general and
administrative expenses include general and administrative and
marketing expenses.
|
|
|
|
Adjusted EBITDA is a non-GAAP
term. See page 7 of this addendum for the reconciliation of
adjusted EBITDA to net loss as defined by GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
|
(DOLLARS IN
MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
Actual
|
|
|
Pro Forma
(a)
|
|
%
Change
|
|
|
Actual
|
|
|
Pro Forma
(a)
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
903
|
|
$
|
921
|
|
-2.0%
|
|
$
|
1,811
|
|
$
|
1,835
|
|
-1.3%
|
|
Internet
|
|
419
|
|
|
399
|
|
5.0%
|
|
|
831
|
|
|
791
|
|
5.1%
|
|
Telephone
|
|
213
|
|
|
205
|
|
3.9%
|
|
|
425
|
|
|
403
|
|
5.5%
|
|
Commercial
|
|
141
|
|
|
120
|
|
17.5%
|
|
|
278
|
|
|
237
|
|
17.3%
|
|
Advertising
sales
|
|
76
|
|
|
71
|
|
7.0%
|
|
|
138
|
|
|
129
|
|
7.0%
|
|
Other
|
|
39
|
|
|
37
|
|
5.4%
|
|
|
78
|
|
|
75
|
|
4.0%
|
|
Total
revenues
|
|
1,791
|
|
|
1,753
|
|
2.2%
|
|
|
3,561
|
|
|
3,470
|
|
2.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(excluding depreciation and amortization) (b)
|
|
784
|
|
|
764
|
|
2.6%
|
|
|
1,552
|
|
|
1,510
|
|
2.8%
|
|
Selling,
general and administrative (excluding stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation expense)
(c)
|
|
334
|
|
|
347
|
|
-3.7%
|
|
|
673
|
|
|
685
|
|
-1.8%
|
|
Operating costs and
expenses
|
|
1,118
|
|
|
1,111
|
|
0.6%
|
|
|
2,225
|
|
|
2,195
|
|
1.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
673
|
|
|
642
|
|
4.8%
|
|
|
1,336
|
|
|
1,275
|
|
4.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
37.6%
|
|
|
36.6%
|
|
|
|
|
37.5%
|
|
|
36.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
393
|
|
|
380
|
|
|
|
|
776
|
|
|
749
|
|
|
|
Stock compensation
expense
|
|
9
|
|
|
5
|
|
|
|
|
15
|
|
|
10
|
|
|
|
Other operating expenses,
net
|
|
1
|
|
|
7
|
|
|
|
|
6
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
270
|
|
|
250
|
|
|
|
|
539
|
|
|
497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(241)
|
|
|
(219)
|
|
|
|
|
(474)
|
|
|
(423)
|
|
|
|
Loss on extinguishment of
debt
|
|
(53)
|
|
|
(34)
|
|
|
|
|
(120)
|
|
|
(35)
|
|
|
|
Other income (expense),
net
|
|
(2)
|
|
|
1
|
|
|
|
|
(2)
|
|
|
(2)
|
|
|
|
|
|
(296)
|
|
|
(252)
|
|
|
|
|
(596)
|
|
|
(460)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
(26)
|
|
|
(2)
|
|
|
|
|
(57)
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
(81)
|
|
|
(80)
|
|
|
|
|
(160)
|
|
|
(99)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(107)
|
|
$
|
(82)
|
|
|
|
$
|
(217)
|
|
$
|
(62)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and
diluted
|
$
|
(0.98)
|
|
$
|
(0.72)
|
|
|
|
$
|
(1.95)
|
|
$
|
(0.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding, basic and diluted
|
|
109,265,876
|
|
|
113,110,882
|
|
|
|
|
111,234,155
|
|
|
113,066,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Pro forma results
reflect certain sales of cable systems in 2010 as if they occurred
as of January 1, 2010.
|
|
|
|
(b) Operating expenses
include programming, service, and advertising sales
expenses.
|
|
|
|
(c) Selling, general and
administrative expenses include general and administrative and
marketing expenses.
|
|
|
|
June 30, 2010.
Pro forma revenues and operating
costs and expenses were reduced by $18 million and $14 million,
respectively, and net loss increased by $1 million for the three
months ended June 30, 2010. Pro forma revenues and operating
costs and expenses were reduced by $36 million and $28 million,
respectively, and net loss increased by $5 million for the six
months ended June 30, 2010.
|
|
|
|
Adjusted EBITDA is a non-GAAP
term. See page 7 of this addendum for the reconciliation of
adjusted EBITDA to net income (loss) as defined by GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
166
|
|
$
|
4
|
|
Restricted cash and cash
equivalents
|
|
28
|
|
|
28
|
|
Accounts receivable, net
of allowance for doubtful accounts
|
|
243
|
|
|
247
|
|
Prepaid expenses and
other current assets
|
|
53
|
|
|
47
|
|
Total current assets
|
|
490
|
|
|
326
|
|
|
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
6,879
|
|
|
6,819
|
|
Franchises
|
|
5,257
|
|
|
5,257
|
|
Customer relationships,
net
|
|
1,846
|
|
|
2,000
|
|
Goodwill
|
|
951
|
|
|
951
|
|
Total investment in cable properties
|
|
14,933
|
|
|
15,027
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
|
386
|
|
|
354
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
15,809
|
|
$
|
15,707
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
1,087
|
|
$
|
1,049
|
|
Total current liabilities
|
|
1,087
|
|
|
1,049
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT
|
|
12,620
|
|
|
12,306
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM
LIABILITIES
|
|
1,038
|
|
|
874
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
1,064
|
|
|
1,478
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
$
|
15,809
|
|
$
|
15,707
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(107)
|
|
$
|
(81)
|
|
$
|
(217)
|
|
$
|
(57)
|
|
Adjustments to reconcile
net loss to net cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
393
|
|
|
380
|
|
|
776
|
|
|
749
|
|
Noncash
interest expense
|
|
8
|
|
|
18
|
|
|
20
|
|
|
36
|
|
Loss on
extinguishment of debt
|
|
53
|
|
|
31
|
|
|
120
|
|
|
32
|
|
Deferred
income taxes
|
|
78
|
|
|
82
|
|
|
155
|
|
|
98
|
|
Other, net
|
|
9
|
|
|
5
|
|
|
16
|
|
|
11
|
|
Changes in operating
assets and liabilities, net of effects from
dispositions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(19)
|
|
|
(26)
|
|
|
5
|
|
|
(1)
|
|
Prepaid
expenses and other assets
|
|
3
|
|
|
12
|
|
|
(6)
|
|
|
12
|
|
Accounts
payable, accrued expenses and other
|
|
42
|
|
|
30
|
|
|
38
|
|
|
101
|
|
Net cash flows from operating activities
|
|
460
|
|
|
451
|
|
|
907
|
|
|
981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
(324)
|
|
|
(339)
|
|
|
(680)
|
|
|
(649)
|
|
Change in accrued
expenses related to capital expenditures
|
|
19
|
|
|
15
|
|
|
-
|
|
|
-
|
|
Other, net
|
|
(8)
|
|
|
1
|
|
|
(14)
|
|
|
(4)
|
|
Net cash flows from investing activities
|
|
(313)
|
|
|
(323)
|
|
|
(694)
|
|
|
(653)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of long-term
debt
|
|
1,715
|
|
|
1,625
|
|
|
3,561
|
|
|
1,625
|
|
Repayments of long-term
debt
|
|
(1,700)
|
|
|
(1,773)
|
|
|
(3,366)
|
|
|
(2,440)
|
|
Repayment of preferred
stock
|
|
-
|
|
|
(138)
|
|
|
-
|
|
|
(138)
|
|
Payments for debt
issuance costs
|
|
(21)
|
|
|
(28)
|
|
|
(43)
|
|
|
(59)
|
|
Purchase of treasury
stock
|
|
-
|
|
|
-
|
|
|
(207)
|
|
|
-
|
|
Other, net
|
|
(1)
|
|
|
(1)
|
|
|
4
|
|
|
(3)
|
|
Net cash flows from financing activities
|
|
(7)
|
|
|
(315)
|
|
|
(51)
|
|
|
(1,015)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
|
|
140
|
|
|
(187)
|
|
|
162
|
|
|
(687)
|
|
CASH AND CASH EQUIVALENTS,
beginning of period *
|
|
54
|
|
|
254
|
|
|
32
|
|
|
754
|
|
CASH AND CASH EQUIVALENTS, end
of period *
|
$
|
194
|
|
$
|
67
|
|
$
|
194
|
|
$
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
200
|
|
$
|
185
|
|
$
|
402
|
|
$
|
337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Cash and cash
equivalents includes restricted cash and cash
equivalents.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate
as of
|
|
|
|
Actual
|
|
Pro
Forma
|
|
|
|
June
30,
|
|
March
31,
|
|
December
31,
|
|
June
30,
|
|
|
|
2011 (a)
|
|
2011 (a)
|
|
2010 (a)
|
|
2010 (a)
|
|
|
|
|
|
|
|
|
|
|
|
Footprint
|
|
|
|
|
|
|
|
|
|
Estimated Homes Passed Video
(b)
|
11,831,900
|
|
11,818,400
|
|
11,768,800
|
|
11,695,300
|
|
|
% Switched Digital
Video
|
68%
|
|
64%
|
|
63%
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Homes Passed Internet
(b)
|
11,496,200
|
|
11,466,200
|
|
11,404,000
|
|
11,346,000
|
|
|
% DOCSIS 3.0
|
85%
|
|
70%
|
|
57%
|
|
30%
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Homes Passed Phone
(b)
|
10,719,100
|
|
10,655,900
|
|
10,565,800
|
|
10,420,400
|
|
|
|
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Customer
Relationships (c)
|
4,846,900
|
|
4,886,000
|
|
4,864,100
|
|
4,940,000
|
|
|
Commercial Customer
Relationships (c)
|
355,200
|
|
354,400
|
|
350,100
|
|
344,300
|
|
|
Total Customer Relationships
(c)(e)
|
5,202,100
|
|
5,240,400
|
|
5,214,200
|
|
5,284,300
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Non-Video Customers
(d)
|
673,500
|
|
632,700
|
|
585,700
|
|
533,000
|
|
|
% Non-Video (d)
|
13.9%
|
|
12.9%
|
|
12.0%
|
|
10.8%
|
|
|
|
|
|
|
|
|
|
|
|
Services and Revenue Generating
Units (f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)
|
4,173,400
|
|
4,253,300
|
|
4,278,400
|
|
4,407,000
|
|
|
Internet (g)
|
3,352,500
|
|
3,334,000
|
|
3,246,100
|
|
3,163,700
|
|
|
Phone (h)
|
1,747,600
|
|
1,741,000
|
|
1,717,000
|
|
1,656,300
|
|
|
Residential PSUs
(i)
|
9,273,500
|
|
9,328,300
|
|
9,241,500
|
|
9,227,000
|
|
|
Residential PSU / Customer
Relationships (c)(i)
|
1.91
|
|
1.91
|
|
1.90
|
|
1.87
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
239,500
|
|
243,300
|
|
242,000
|
|
243,800
|
|
|
Internet (g)(i)
|
149,100
|
|
142,800
|
|
138,500
|
|
128,300
|
|
|
Phone (h)
|
68,500
|
|
64,400
|
|
59,900
|
|
49,900
|
|
|
Commercial PSUs
(i)
|
457,100
|
|
450,500
|
|
440,400
|
|
422,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Video RGUs
(k)
|
3,386,700
|
|
3,391,600
|
|
3,363,200
|
|
3,302,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RGUs
|
13,117,300
|
|
13,170,400
|
|
13,045,100
|
|
12,951,000
|
|
|
|
|
|
|
|
|
|
|
|
Net
Additions/(Losses) (l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)
|
(79,900)
|
|
(25,100)
|
|
(62,500)
|
|
(71,700)
|
|
|
Internet (g)
|
18,500
|
|
87,900
|
|
31,700
|
|
22,000
|
|
|
Phone (h)
|
6,600
|
|
24,000
|
|
30,800
|
|
35,300
|
|
|
Residential PSUs
(i)
|
(54,800)
|
|
86,800
|
|
-
|
|
(14,400)
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
(3,800)
|
|
1,300
|
|
(4,800)
|
|
(2,500)
|
|
|
Internet (g)
|
6,300
|
|
4,300
|
|
5,300
|
|
4,100
|
|
|
Phone (h)
|
4,100
|
|
4,500
|
|
5,100
|
|
5,600
|
|
|
Commercial PSUs
(i)
|
6,600
|
|
10,100
|
|
5,600
|
|
7,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Video RGUs
(k)
|
(4,900)
|
|
28,400
|
|
19,200
|
|
26,100
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RGUs
|
(53,100)
|
|
125,300
|
|
24,800
|
|
18,900
|
|
|
|
|
|
|
|
|
|
|
|
Residential ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (m)
|
$
71.40
|
|
$
71.01
|
|
$
70.39
|
|
$
69.05
|
|
|
Internet (m)
|
$
41.76
|
|
$
41.77
|
|
$
41.72
|
|
$
42.18
|
|
|
Phone (m)
|
$
40.49
|
|
$
40.97
|
|
$
41.29
|
|
$
41.74
|
|
|
ARPU per Customer Relationship
(n)
|
$
105.02
|
|
$
104.87
|
|
$
104.17
|
|
$
102.34
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ARPU per Video Customer
(o)
|
$
133.84
|
|
$
131.01
|
|
$
130.28
|
|
$
124.64
|
|
|
|
|
|
|
|
|
|
|
|
Residential Penetration
Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video Penetration of Homes
Passed Video (p)
|
35.3%
|
|
36.0%
|
|
36.4%
|
|
37.7%
|
|
|
Internet Penetration of Homes
Passed Internet (p)
|
29.2%
|
|
29.1%
|
|
28.5%
|
|
27.9%
|
|
|
Phone Penetration of Homes
Passed Phone (p)
|
16.3%
|
|
16.3%
|
|
16.3%
|
|
15.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
Bundled Penetration
(q)
|
61.6%
|
|
61.4%
|
|
60.9%
|
|
59.2%
|
|
|
Triple Play Penetration
(r)
|
28.8%
|
|
28.5%
|
|
28.2%
|
|
26.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Penetration
(s)
|
76.7%
|
|
75.4%
|
|
74.4%
|
|
71.0%
|
|
|
Advanced Digital Penetration (of
Digital) (t)
|
55.7%
|
|
55.2%
|
|
53.4%
|
|
50.2%
|
|
|
Set-Top-Box per Digital
RGU
|
1.51
|
|
1.51
|
|
1.50
|
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma operating statistics
reflect the sales of cable systems in 2010 as if such transactions
had occurred as of the last day of the respective period for all
periods presented. The pro forma statements of operations do
not include adjustments for financing transactions completed by
Charter during the periods presented or certain other dispositions
or acquisitions of assets because those transactions did not
significantly impact Charter's revenue and operating costs and
expenses. However, all transactions completed in 2010 have
been reflected in the operating statistics.
|
|
|
|
|
|
At June 30, 2010, actual
residential video customers, Internet customers, and phone
customers were 4,466,600, 3,187,900, and 1,658,100, respectively;
actual commercial video customers, Internet customers, and phone
customers were 249,900, 129,400, and 50,000, respectively; and
actual digital RGUs were 3,337,500.
|
|
|
|
|
|
See footnotes to unaudited
summary of operating statistics on page 6 of this
addendum.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
We calculate the aging of
customer accounts based on the monthly billing cycle for each
account. On that basis, at June 30, 2011, March 31, 2011,
December 31, 2010, and June 30, 2010, customers include
approximately 16,100, 12,500, 15,700, and 20,800 persons,
respectively, whose accounts were over 60 days past due in payment,
approximately 2,200, 1,700, 1,800, and 2,500 persons, respectively,
whose accounts were over 90 days past due in payment and
approximately 1,000, 1,100, 1,000, and 1,300 persons, respectively,
whose accounts were over 120 days past due in payment.
|
|
|
|
(b)
|
"Homes Passed" represent our
estimate of the number of living units, such as single family
homes, apartment units and condominium units passed by our cable
distribution network in the areas where we offer the service
indicated. "Homes passed" exclude commercial units passed by
our cable distribution network. These estimates are updated
for all periods presented when estimates change.
|
|
|
|
(c)
|
"Customer Relationships" include
the number of customers that receive one or more levels of service,
encompassing video, Internet and phone services, without regard to
which service(s) such customers receive. This statistic is
computed in accordance with the guidelines of the National Cable
& Telecommunications Association (NCTA). Commercial
customer relationships includes video customers in commercial and
multi-dwelling structures, which are calculated on an EBU basis
(see footnote (e)) and non-video commercial customer
relationships.
|
|
|
|
|
(d)
|
"Video Customers” represent
those customers who subscribe to our video services.
|
|
|
|
|
(e)
|
Included within commercial video
customers are those in commercial and multi-dwelling structures,
which are calculated on an equivalent bulk unit (“EBU”) basis.
We calculate EBUs by dividing the bulk price charged to
accounts in an area by the published rate charged to non-bulk
residential customers in that market for the comparable tier of
service rather than the most prevalent price charged as was used
previously. This EBU method of estimating video customers is
consistent with the methodology used in determining costs paid to
programmers and is consistent with the methodology used by other
multiple system operators (MSOs). As we increase our
published video rates to residential customers without a
corresponding increase in the prices charged to commercial service
or multi-dwelling customers, our EBU count will decline even if
there is no real loss in commercial service or multi-dwelling
customers.
|
|
|
|
|
(f)
|
"Revenue Generating Units" or
"RGUs" represent the total of all basic video, digital video,
Internet and phone customers, not counting additional outlets
within one household. For example, a customer who receives
two types of service (such as basic video and digital video) would
be treated as two RGUs, and if that customer added Internet
service, the customer would be treated as three RGUs. This
statistic is computed in accordance with the guidelines of the
NCTA.
|
|
|
|
|
(g)
|
"Internet Customers" represent
those customers who subscribe to our Internet service.
|
|
|
|
|
(h)
|
"Phone Customers" represent
those customers who subscribe to our phone service.
|
|
|
|
|
(i)
|
"Primary Service Units" or
"PSUs" represent the total of video, Internet and phone
customers.
|
|
|
|
|
(j)
|
Prior year commercial Internet
customers were adjusted to reflect current year
presentation.
|
|
|
|
|
(k)
|
"Digital Video RGUs" include all
video customers that rent one or more digital set-top boxes or
cable cards.
|
|
|
|
|
(l)
|
"Net Additions/(Losses)"
represent the pro forma net gain or loss in the respective quarter
for the service indicated.
|
|
|
|
|
(m)
|
"Average Monthly Revenue per
Customer" or "ARPU" represents quarterly pro forma revenue for the
service indicated divided by three divided by the number of pro
forma customers for the service indicated during the respective
quarter.
|
|
|
|
|
(n)
|
"ARPU per Customer Relationship"
is calculated as total video, Internet and phone quarterly pro
forma revenue divided by three divided by average residential
customer relationships during the respective quarter.
|
|
|
|
|
(o)
|
"Total ARPU per Video Customer"
is calculated as total quarterly pro forma revenue divided by three
divided by average pro forma video customers during the respective
quarter.
|
|
|
|
|
(p)
|
"Penetration" represents
residential customers as a percentage of homes passed for the
service indicated.
|
|
|
|
|
(q)
|
"Bundled Penetration" represents
the percentage of residential customers receiving a combination of
at least two different types of service, including Charter's video
service, Internet service or phone. "Residential % Bundled"
does not include residential customers who only subscribe to video
service.
|
|
|
|
|
(r)
|
"Triple Play Penetration"
represents residential customers receiving all three Charter
service offerings, including video, Internet and phone, as a % of
residential customer relationships.
|
|
|
|
|
(s)
|
"Digital Penetration" represents
the number of digital RGUs as a percentage of video customers,
including EBUs.
|
|
|
|
|
(t)
|
"Advanced Digital Penetration"
represents customers who subscribe to our high-definition and/or
digital video recorder services as a % of digital RGUs.
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(107)
|
|
$
(81)
|
|
$
(217)
|
|
$
(57)
|
|
Plus:
|
Interest expense, net
|
241
|
|
219
|
|
474
|
|
423
|
|
|
Income tax expense
|
81
|
|
83
|
|
160
|
|
102
|
|
|
Depreciation and
amortization
|
393
|
|
380
|
|
776
|
|
749
|
|
|
Stock compensation
expense
|
9
|
|
5
|
|
15
|
|
10
|
|
|
Loss on extinguishment of
debt
|
53
|
|
34
|
|
120
|
|
35
|
|
|
Other, net
|
3
|
|
6
|
|
8
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (b)
|
673
|
|
646
|
|
1,336
|
|
1,283
|
|
Less:
|
Purchases of property, plant and
equipment
|
(324)
|
|
(339)
|
|
(680)
|
|
(649)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less capital
expenditures
|
$
349
|
|
$
307
|
|
$
656
|
|
$
634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating
activities
|
$
460
|
|
$
451
|
|
$
907
|
|
$
981
|
|
Less:
|
Purchases of property, plant and
equipment
|
(324)
|
|
(339)
|
|
(680)
|
|
(649)
|
|
|
Change in accrued expenses
related to capital expenditures
|
19
|
|
15
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
$
155
|
|
$
127
|
|
$
227
|
|
$
332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
Actual
|
|
Pro Forma
(a)
|
|
Actual
|
|
Pro Forma
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(107)
|
|
$
(82)
|
|
$
(217)
|
|
$
(62)
|
|
Plus:
|
Interest expense, net
|
241
|
|
219
|
|
474
|
|
423
|
|
|
Income tax expense
|
81
|
|
80
|
|
160
|
|
99
|
|
|
Depreciation and
amortization
|
393
|
|
380
|
|
776
|
|
749
|
|
|
Stock compensation
expense
|
9
|
|
5
|
|
15
|
|
10
|
|
|
Loss on extinguishment of
debt
|
53
|
|
34
|
|
120
|
|
35
|
|
|
Other, net
|
3
|
|
6
|
|
8
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (b)
|
673
|
|
642
|
|
1,336
|
|
1,275
|
|
Less:
|
Purchases of property, plant and
equipment
|
(324)
|
|
(337)
|
|
(680)
|
|
(645)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less capital
expenditures
|
$
349
|
|
$
305
|
|
$
656
|
|
$
630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating
activities
|
$
460
|
|
$
447
|
|
$
907
|
|
$
973
|
|
Less:
|
Purchases of property, plant and
equipment
|
(324)
|
|
(337)
|
|
(680)
|
|
(645)
|
|
|
Change in accrued expenses
related to capital expenditures
|
19
|
|
15
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
$
155
|
|
$
125
|
|
$
227
|
|
$
328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Pro forma results
reflect certain sales of cable systems in 2010 as if they occurred
as of January 1, 2010.
|
|
|
|
|
|
(b) See page 1 and 2 of this
addendum for detail of the components included within adjusted
EBITDA.
|
|
|
|
|
|
The above schedules are
presented in order to reconcile adjusted EBITDA and free cash
flows, both non-GAAP measures, to the most directly comparable GAAP
measures in accordance with Section 401(b) of the Sarbanes-Oxley
Act.
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
CAPITAL
EXPENDITURES
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended June 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer premise equipment
(a)
|
$
|
130
|
|
$
|
140
|
|
$
|
287
|
|
$
|
296
|
|
Scalable infrastructure
(b)
|
|
85
|
|
|
108
|
|
|
207
|
|
|
195
|
|
Line extensions (c)
|
|
29
|
|
|
22
|
|
|
49
|
|
|
38
|
|
Upgrade/Rebuild (d)
|
|
7
|
|
|
7
|
|
|
12
|
|
|
16
|
|
Support capital (e)
|
|
73
|
|
|
62
|
|
|
125
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital
expenditures (f)
|
$
|
324
|
|
$
|
339
|
|
$
|
680
|
|
$
|
649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Customer premise
equipment includes costs incurred at the customer residence to
secure new customers, revenue units and additional bandwidth
revenues. It also includes customer installation costs and
customer premise equipment (e.g., set-top boxes and cable
modems).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Scalable infrastructure
includes costs, not related to customer premise equipment or our
network, to secure growth of new customers, revenue units and
additional bandwidth revenues or provide service enhancements
(e.g., headend equipment).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Line extensions include
network costs associated with entering new service areas (e.g.,
fiber/coaxial cable, amplifiers, electronic equipment, make-ready
and design engineering).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) Upgrade/rebuild
includes costs to modify or replace existing fiber/coaxial cable
networks, including betterments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Support capital
includes costs associated with the replacement or enhancement of
non-network assets due to technological and physical obsolescence
(e.g., non-network equipment, land, buildings and
vehicles).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f) Total capital expenditures
includes $45 million and $34 million of capital expenditures
related to commercial services for the three months ended June 30,
2011 and 2010, respectively, and $72 million and $52 million for
the six months ended June 30, 2011 and 2010,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Charter Communications, Inc.