ST. LOUIS, May 8, 2012 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three months ended March 31, 2012.
(Logo:
http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO)
First quarter highlights:
- Total customer relationships grew 99,000 in the first quarter,
more than triple the gain of 29,000 in the year-ago first quarter.
Charter added 141,000 residential Internet customers compared to a
gain of 90,000 in the prior year, and added 20,000 residential
video customers compared to a loss of 24,000 a year ago.
- First quarter revenues of $1.827
billion grew 2.8% on a pro forma(1) basis and 3.2% on
an actual basis compared to the first quarter of 2011, driven by
strong customer growth within the first quarter of 2012 offset by
net video customer losses in the trailing twelve month period.
- Commercial revenues continued to accelerate year-over-year,
growing 20.5% on both a pro formaand actual basis for the
quarter, driven by continued growth in small and medium businesses
along with increased sales to carrier customers.
- Adjusted EBITDA(2) was $652
million, 2.0% lower on a pro forma basis and 1.7%
lower on an actual basis compared to prior year reflecting
increased costs associated with higher customer growth and
programming. Net loss totaled $94
million in the first quarter 2012.
- Free cash flow(2) for the quarter was $102 million and cash flows from operating
activities were $454 million.
"Charter reported solid first quarter performance driven by
continued improvements in customer trends as we build on the
momentum gained in 2011," said Tom
Rutledge, President and Chief Executive Officer. "We are
effectively executing on our strategic priorities of delivering a
great customer experience, capitalizing on our market-leading
Internet product, improving our video and voice products, and
growing our commercial business. We are accelerating certain
initiatives, including driving digital penetration through
additional HD channel launches, a more simplified packaging and
pricing structure, and an enhanced product offering, all of which
provide more value to our customers. We will move quickly to
capitalize on these opportunities and leverage our powerful network
to grow our 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 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
|
|
|
|
|
March
31, 2012 (a)
|
|
March
31, 2011 (a)
|
|
Y/Y
Change
|
Footprint
|
|
|
|
|
|
|
Estimated Homes Passed Video (b)
|
|
11,988
|
|
|
11,892
|
|
|
1%
|
% Switched Digital Video
|
|
87%
|
|
|
64%
|
|
|
23
ppts
|
|
|
|
|
|
|
|
Estimated Homes Passed Internet (b)
|
|
11,650
|
|
|
11,541
|
|
|
1%
|
% DOCSIS 3.0
|
|
94%
|
|
|
70%
|
|
|
24
ppts
|
|
|
|
|
|
|
|
Estimated Homes Passed Phone (b)
|
|
10,899
|
|
|
10,728
|
|
|
2%
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Residential Customer Relationships (c)
|
|
5,013
|
|
|
4,970
|
|
|
1%
|
Commercial Customer Relationships (c)(e)
|
|
311
|
|
|
292
|
|
|
7%
|
Total Customer Relationships (c)(e)
|
|
5,324
|
|
|
5,262
|
|
|
1%
|
|
|
|
|
|
|
|
Residential Non-Video Customers
|
|
849
|
|
|
640
|
|
|
33%
|
% Non-Video
|
|
16.9%
|
|
|
12.9%
|
|
|
4.0
ppts
|
|
|
|
|
|
|
|
Service
and Revenue Generating Units (f)
|
|
|
|
|
|
|
Video (d)
|
|
4,164
|
|
|
4,330
|
|
|
-4%
|
Internet (g)
|
|
3,633
|
|
|
3,353
|
|
|
8%
|
Phone (h)
|
|
1,822
|
|
|
1,746
|
|
|
4%
|
Residential PSUs (i)
|
|
9,619
|
|
|
9,429
|
|
|
2%
|
Residential PSU / Customer Relationships
(c)(i)
|
|
1.92
|
|
|
1.90
|
|
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
|
177
|
|
|
181
|
|
|
-2%
|
Internet (g)
|
|
169
|
|
|
142
|
|
|
19%
|
Phone (h)
|
|
85
|
|
|
64
|
|
|
33%
|
Commercial PSUs (i)
|
|
431
|
|
|
387
|
|
|
11%
|
|
|
|
|
|
|
|
Digital Video RGUs (j)
|
|
3,473
|
|
|
3,401
|
|
|
2%
|
|
|
|
|
|
|
|
Total RGUs
|
|
13,523
|
|
|
13,217
|
|
|
2%
|
|
|
|
|
|
|
|
Net
Additions/(Losses) (k)
|
|
|
|
|
|
|
Video (d)
|
|
20
|
|
|
(24)
|
|
|
NM*
|
Internet (g)
|
|
141
|
|
|
90
|
|
|
57%
|
Phone (h)
|
|
31
|
|
|
24
|
|
|
29%
|
Residential PSUs (i)
|
|
192
|
|
|
90
|
|
|
113%
|
|
|
|
|
|
|
|
Video (d)(e)
|
|
7
|
|
|
4
|
|
|
75%
|
Internet (g)
|
|
6
|
|
|
3
|
|
|
100%
|
Phone (h)
|
|
6
|
|
|
4
|
|
|
50%
|
Commercial PSUs (i)
|
|
19
|
|
|
11
|
|
|
73%
|
|
|
|
|
|
|
|
Digital Video RGUs (j)
|
|
63
|
|
|
30
|
|
|
110%
|
|
|
|
|
|
|
|
Total RGUs
|
|
274
|
|
|
131
|
|
|
109%
|
|
|
|
|
|
|
|
Residential ARPU
|
|
|
|
|
|
|
Video (l)
|
|
$
|
71.89
|
|
|
$
|
70.86
|
|
|
1%
|
Internet (l)
|
|
$
|
42.26
|
|
|
$
|
41.80
|
|
|
1%
|
Phone (l)
|
|
$
|
40.10
|
|
|
$
|
40.93
|
|
|
-2%
|
Revenue per Customer Relationship (m)
|
|
$
|
104.95
|
|
|
$
|
104.26
|
|
|
1%
|
Total Revenue per Video Customer (n)
|
|
$
|
146.77
|
|
|
$
|
136.66
|
|
|
7%
|
|
|
|
|
|
|
|
Residential Penetration Statistics
|
|
|
|
|
|
|
Video Penetration of Homes Passed Video
(o)
|
|
34.7%
|
|
|
36.4%
|
|
|
-1.7
ppts
|
Internet Penetration of Homes Passed Internet
(o)
|
|
31.2%
|
|
|
29.1%
|
|
|
2.1
ppts
|
Phone Penetration of Homes Passed Phone
(o)
|
|
16.7%
|
|
|
16.3%
|
|
|
0.4
ppts
|
Bundled Penetration (p)
|
|
62.9%
|
|
|
61.2%
|
|
|
1.7
ppts
|
Triple Play Penetration (q)
|
|
28.9%
|
|
|
28.4%
|
|
|
0.5
ppts
|
Digital Penetration (r)
|
|
83.1%
|
|
|
78.3%
|
|
|
4.8
ppts
|
* Not
meaningful
|
Footnotes
|
See
footnotes to unaudited summary of operating statistics on page 5 of
the addendum of this news release. The footnotes contain
important disclosures regarding the definitions used for these
operating statistics.
|
We added 86,000 residential customer relationships in the
quarter. We continue to see additional opportunities to drive
higher customer penetration by stabilizing the video customer base
with product and customer experience enhancements, as well as
upgrading existing video and data customer relationships. The
percentage of our residential customers subscribing to more than
one product grew to 62.9% at March 31, 2012 as we continue to
emphasize our packaged services, which strengthen retention and
increase revenue per household. Residential primary service units
("PSUs") grew by 192,000 in the first quarter of 2012 driven by
increases in video, Internet and phone. Residential revenue per
customer relationship was $104.95 for
the quarter just ended compared to $104.26 a year ago.
In a seasonally strong first quarter, we grew residential video
customers by 20,000, the first quarterly gain in 5 years. We are
focused on increasing digital penetration and expanding our product
offerings, including accelerated roll-out of HD content, to further
improve our customer trends. At the end of March, 83.1% of our
video customers received digital service. Video average monthly
revenue per customer ("ARPU") was $71.89 for the first quarter of 2012, up 1.5%
year-over-year driven by higher advanced services penetration and
price adjustments.
We delivered strong growth in Internet as we continued to
improve our market share with our speed and performance advantages.
We added 141,000 residential Internet customers in the first
quarter of 2012 compared to 90,000 last year. Approximately 95% of
our Internet customers have a broadband plan of 15Mbps or higher
with approximately 28% relying on our home networking service.
Internet ARPU of $42.26 increased
1.1% compared to the year-ago quarter primarily due to growth in
home networking offset by promotional offers to drive customer
relationships.
During the first quarter of 2012, we added 31,000 phone
customers, up 29.2% from the first quarter of 2011, and up 14.8%
from the fourth quarter of 2011. We continue to aggressively market
and drive uptake of our phone product, particularly with existing
customers, which benefits retention. Phone ARPU of $40.10 decreased approximately 2.0%
year-over-year due to increased value-based packages.
First 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 March 31,
|
|
2012
|
|
2011
|
|
|
|
2011
|
|
|
|
Actual
|
|
Actual
|
|
%
Change
|
|
Pro
forma (a)
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
895
|
|
|
$
|
917
|
|
|
(2.4)%
|
|
$
|
922
|
|
|
(2.9)%
|
|
Internet
|
452
|
|
|
413
|
|
|
9.4%
|
|
415
|
|
|
8.9%
|
|
Telephone
|
217
|
|
|
212
|
|
|
2.4%
|
|
213
|
|
|
1.9%
|
|
Commercial
|
153
|
|
|
127
|
|
|
20.5%
|
|
127
|
|
|
20.5%
|
|
Advertising Sales
|
66
|
|
|
62
|
|
|
6.5%
|
|
62
|
|
|
6.5%
|
|
Other
|
44
|
|
|
39
|
|
|
12.8%
|
|
39
|
|
|
12.8%
|
|
Total Revenues
|
$
|
1,827
|
|
|
$
|
1,770
|
|
|
3.2%
|
|
$
|
1,778
|
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
Operating (excluding depreciation and amortization)
(b)
|
814
|
|
|
768
|
|
|
6.0%
|
|
772
|
|
|
5.4%
|
|
Selling, general and administrative (excluding stock
compensation expense) (c)
|
361
|
|
|
339
|
|
|
6.5%
|
|
341
|
|
|
5.9%
|
|
|
1,175
|
|
|
1,107
|
|
|
6.1%
|
|
1,113
|
|
|
5.6%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
652
|
|
|
$
|
663
|
|
|
(1.7)%
|
|
$
|
665
|
|
|
(2.0)%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
35.7%
|
|
|
37.5%
|
|
|
|
|
37.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
$
|
340
|
|
|
$
|
356
|
|
|
|
|
$
|
356
|
|
|
|
% Total Revenues
|
18.6%
|
|
|
20.1%
|
|
|
|
|
20.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(94)
|
|
|
$
|
(110)
|
|
|
|
|
$
|
(111)
|
|
|
|
Loss per
common share, basic and diluted
|
$
|
(0.95)
|
|
|
$
|
(0.97)
|
|
|
|
|
$
|
(0.97)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
flows from operating activities
|
$
|
454
|
|
|
$
|
447
|
|
|
|
|
$
|
449
|
|
|
|
Free cash
flow
|
$
|
102
|
|
|
$
|
72
|
|
|
|
|
$
|
74
|
|
|
|
Footnotes
|
(a)
Pro forma results reflect certain acquisitions of cable systems in
2011 as if they occurred as of January 1, 2011.
|
(b)
Operating expenses include programming, service, and advertising
sales expenses.
|
(c)
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 net loss and cash
flows from operating activities, respectively, in the addendum of
this news release.
|
Revenue
First quarter 2012 revenues rose to $1.827 billion, up 2.8% on a pro forma
basis and 3.2% on an actual basis compared to the year-ago quarter
as we continued to grow our Internet, commercial, and phone
businesses and increase sales of bundled services.
Video revenues totaled $895
million in the first quarter, a decrease of 2.9% on a pro
forma basis and 2.4% on an actual basis compared to the
prior-year period. Video revenues declined as a result of net video
customer losses in the past twelve months and declines in premium
and video on demand revenue. First quarter 2012 Internet revenues
were $452 million, up 8.9% on a
pro forma basis and 9.4% on an actual basis year-over-year,
due to the addition of 280,000 Internet customers and increased
home networking revenue. Telephone revenues totaled $217 million, up 1.9% on a pro forma basis
and 2.4% on an actual basis over first quarter 2011 as we added
76,000 phone customers.
Commercial revenues grew to $153
million, increasing 20.5% year-over-year on a pro
forma and actual basis, supported by improved sales
productivity, increased line extensions for carrier and small and
medium business customers, and deployment of DOCSIS 3.0, which
enables us to deliver higher speeds and improved reliability to our
non-fiber commercial customers.
Advertising sales revenues were $66
million for the first quarter of 2012, a 6.5% increase on a
pro forma and actual basis compared to the first quarter of
2011 primarily driven by a change to account for revenues received
from selling advertising for third parties on a gross basis rather
than a net basis.
Operating Costs and Expenses
First quarter operating costs and expenses increased 5.6% on a
pro forma basis and 6.1% on an actual basis compared to the
year-ago period, primarily related to increases in programming and
other operating expenses. First quarter programming expenses
increased $22 million on a pro
forma basis and $25 million on an
actual basis year over year reflecting contractual programming
increases, partially offset by customer losses in 2011. Other
operating expenses increased in the first quarter of 2012 primarily
related to increased costs associated with customer growth,
including marketing, sales and reconnect expenses, and higher labor
costs related to the upfront investments in our customer experience
transformation. We expect these investments to contribute to our
growth in the future.
Adjusted EBITDA
First quarter adjusted EBITDA of $652
million decreased 2.0% on a pro forma basis and 1.7%
on an actual basis compared to the year-ago quarter. Adjusted
EBITDA margin declined to 35.7% for the first quarter of 2012
compared to 37.4% on a pro forma basis and 37.5% on an
actual basis in the year-ago quarter. Margin was impacted by
increased customer acquisition activity, as we incurred the upfront
costs associated with strong customer growth, as well as
investments in customer experience and the programming expense
drivers mentioned above.
Net Loss
Net loss was $94 million in the
first quarter of 2012, compared to $111
million on a pro forma basis and $110 million on an actual basis in the year-ago
period. Net loss decreased primarily due to a decrease in loss on
extinguishment of debt partially offset by higher depreciation and
amortization. Net loss per common share was $0.95 in the first quarter of 2012 compared to
$0.97 on a pro forma and
actual basis during the same period last year. The decline is due
to the decrease in net loss offset by a decrease in weighted
average shares outstanding as a result of the repurchase of 14.6
million Charter Class A shares.
Capital Expenditures
First quarter property, plant and equipment expenditures were
$340 million compared to $356 million in 2011. The decrease was primarily
due to timing of infrastructure spend offset by investments in
customer premise equipment and installations to support customer
growth. During 2012, we currently expect capital expenditures to be
between $1.4 billion and $1.5
billion.
Cash Flow
Net cash flows from operating activities totaled $454 million, compared to $449 million on a pro forma basis and
$447 million on an actual basis in
the first quarter of 2011. The increase in net cash flows from
operating activities was driven by a $31
million higher contribution from working capital, excluding
changes in accrued capital expenditures and interest, partially
offset by a $14 million increase in
cash paid for interest and lower adjusted EBITDA.
Free cash flow for the first quarter of 2012 was $102 million, compared to $74 million on a pro forma basis and
$72 million on an actual basis in the
same period last year. The increase was driven by higher net cash
flows from operating activities and lower capital expenditures.
In the first quarter of 2012, Charter issued $750 million of 6.625% senior unsecured notes due
2022. The net proceeds of the notes, along with a $500 million delayed draw on the senior secured
Term Loan A due 2017, were used to tender for $300 million of Charter Communications Operating,
LLC's ("Charter Operating") 8% senior second lien notes due 2012,
$294 million of Charter Operating's
10.875% senior second lien notes due 2014 ("2014 Notes") and
$334 million of CCH II, LLC's
13.5% senior notes due 2016, as well as to repay amounts
outstanding under our revolving credit facility. In
March 2012, Charter Operating
redeemed all of the remaining 2014 Notes.
In April 2012, Charter entered
into a $750 million Term Loan D due
2019 at an interest rate of LIBOR plus 300 basis points with a
LIBOR floor of 1%, and a price of 99.5. The proceeds were used to
refinance the Company's existing Term Loan B-1 and Term Loan B-2,
both due 2014, with the remaining amount used to pay down a portion
of our existing Term Loan C due 2016. We concurrently refinanced
our existing $1.3 billion revolving
credit facility due 2015, with a new $1.15
billion revolving credit facility due 2017, at an interest
rate of LIBOR plus 225 basis points. Additional amounts drawn under
the new facility were used to pay transaction related fees and
expenses. Charter also entered into an amendment and restatement of
Charter Operating's existing credit agreement to reflect the
foregoing transactions, as well as certain other amendments. In
April 2012, the Company entered into
$1.1 billion in notional amounts of
delayed start interest rate swap agreements, extending a portion of
the interest rate swap portfolio.
Conference Call
Charter will host a conference call on Tuesday, May 8, 2012 at 11:00 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 866-919-0894 no
later than 10 minutes prior to the call. International participants
should dial 706-679-9379. The conference ID code for the call is
66091673.
A replay of the call will be available at 855-859-2056 or
404-537-3406 beginning two hours after the completion of the call
through the end of business on May 22,
2012. The conference ID code for the replay is 66091673.
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 Form 10-Q for three months ended March 31,
2012 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, 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). For the purpose of calculating compliance
with leverage covenants, we use adjusted EBITDA, as presented,
excluding certain expenses paid by our operating subsidiaries to
other Charter entities. Our debt covenants refer to these expenses
as management fees which fees were in the amount of $41 million and $35
million for the three months ended March 31, 2012 and
2011, respectively.
In addition to the actual results for the three months ended
March 31, 2012 and 2011, we have provided pro forma
results in this release for the three months ended March 31,
2011. We believe these pro forma results facilitate
meaningful analysis of the results of operations. Pro forma
results in this release reflect certain acquisitions of cable
systems in 2011 as if they occurred as of January 1, 2011. Pro forma statements of
operations for the three months ended March 31, 2011; and
pro forma customer statistics as of March 31, 2011; 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," "create" 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 development and deployment of new products and
technologies;
- 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 March 31,
|
|
2012
|
|
2011
|
|
|
|
2011
|
|
|
|
Actual
|
|
Actual
|
|
%
Change
|
|
Pro
forma (a)
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
895
|
|
|
$
|
917
|
|
|
(2.4)%
|
|
|
$
|
922
|
|
|
(2.9)%
|
|
Internet
|
452
|
|
|
413
|
|
|
9.4%
|
|
|
415
|
|
|
8.9%
|
|
Telephone
|
217
|
|
|
212
|
|
|
2.4%
|
|
|
213
|
|
|
1.9%
|
|
Commercial
|
153
|
|
|
127
|
|
|
20.5%
|
|
|
127
|
|
|
20.5%
|
|
Advertising Sales
|
66
|
|
|
62
|
|
|
6.5%
|
|
|
62
|
|
|
6.5%
|
|
Other
|
44
|
|
|
39
|
|
|
12.8%
|
|
|
39
|
|
|
12.8%
|
|
Total Revenues
|
$
|
1,827
|
|
|
$
|
1,770
|
|
|
3.2%
|
|
|
$
|
1,778
|
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
Operating (excluding depreciation and amortization)
(b)
|
814
|
|
|
768
|
|
|
6.0%
|
|
|
772
|
|
|
5.4%
|
|
Selling, general and administrative (excluding stock
compensation expense) (c)
|
361
|
|
|
339
|
|
|
6.5%
|
|
|
341
|
|
|
5.9%
|
|
|
1,175
|
|
|
1,107
|
|
|
6.1%
|
|
|
1,113
|
|
|
5.6%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
652
|
|
|
663
|
|
|
(1.7)%
|
|
|
665
|
|
|
(2.0)%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
35.7%
|
|
|
37.5%
|
|
|
|
|
37.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
408
|
|
|
383
|
|
|
|
|
386
|
|
|
|
Stock compensation expense
|
11
|
|
|
6
|
|
|
|
|
6
|
|
|
|
Other operating expenses, net
|
3
|
|
|
5
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
230
|
|
|
269
|
|
|
|
|
268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
(237)
|
|
|
(233)
|
|
|
|
|
(233)
|
|
|
|
Loss on extinguishment of debt
|
(15)
|
|
|
(67)
|
|
|
|
|
(67)
|
|
|
|
Other expense, net
|
(1)
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(253)
|
|
|
(300)
|
|
|
|
|
(300)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
(23)
|
|
|
(31)
|
|
|
|
|
(32)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(71)
|
|
|
(79)
|
|
|
|
|
(79)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(94)
|
|
|
$
|
(110)
|
|
|
|
|
$
|
(111)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER
COMMON SHARE, BASIC AND DILUTED:
|
$
|
(0.95)
|
|
|
$
|
(0.97)
|
|
|
|
|
$
|
(0.97)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding, basic and diluted
|
99,432,960
|
|
|
113,224,303
|
|
|
|
|
113,224,303
|
|
|
|
(a)
Pro forma results reflect certain acquisitions of cable systems in
2011 as if they occurred as of January 1, 2011.
|
(b)
Operating expenses include programming, service, and advertising
sales expenses.
|
(c)
Selling, general and administrative expenses include general and
administrative and marketing expenses.
|
|
March 31, 2011. Pro forma
revenues, operating costs and expenses and net loss increased by $8
million, $6 million and $1 million, respectively, for the three
months ended March 31, 2011.
|
Certain
prior year amounts have been reclassified to conform with the 2012
presentation, including the reflection of revenues earned from
customers residing in multi-dwelling residential structures from
commercial revenues to video and Internet revenues.
|
Adjusted
EBITDA is a non-GAAP term. See page 6 of this addendum for
the reconciliation of adjusted EBITDA to net loss as defined by
GAAP.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
|
|
March 31,
2012
|
|
December 31,
2011
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
|
4
|
|
|
$
|
2
|
|
Restricted cash and cash equivalents
|
27
|
|
|
27
|
|
Accounts receivable, net
|
231
|
|
|
272
|
|
Prepaid expenses and other current assets
|
76
|
|
|
69
|
|
Total current assets
|
338
|
|
|
370
|
|
|
|
|
|
INVESTMENT
IN CABLE PROPERTIES:
|
|
|
|
Property, plant and equipment, net
|
6,906
|
|
|
6,897
|
|
Franchises
|
5,291
|
|
|
5,288
|
|
Customer relationships, net
|
1,634
|
|
|
1,704
|
|
Goodwill
|
954
|
|
|
954
|
|
Total investment in cable properties, net
|
14,785
|
|
|
14,843
|
|
|
|
|
|
OTHER
NONCURRENT ASSETS
|
396
|
|
|
392
|
|
|
|
|
|
Total assets
|
$
|
15,519
|
|
|
$
|
15,605
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and accrued expenses
|
$
1,140
|
|
|
$
1,153
|
|
Total current liabilities
|
1,140
|
|
|
1,153
|
|
|
|
|
|
LONG-TERM
DEBT
|
12,802
|
|
|
12,856
|
|
DEFERRED
INCOME TAXES
|
917
|
|
|
847
|
|
OTHER
LONG-TERM LIABILITIES
|
334
|
|
|
340
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
326
|
|
|
409
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
$
|
15,519
|
|
|
$
|
15,605
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
|
|
|
Three
Months Ended March 31,
|
|
|
2012
|
|
2011
|
CASH FLOWS
FROM OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
|
$
|
(94)
|
|
|
$
|
(110)
|
|
Adjustments to reconcile net loss to net cash flows
from operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
408
|
|
|
383
|
|
Noncash interest expense
|
|
14
|
|
|
12
|
|
Loss on extinguishment of debt
|
|
15
|
|
|
67
|
|
Deferred income taxes
|
|
70
|
|
|
77
|
|
Other, net
|
|
11
|
|
|
7
|
|
Changes in operating assets and liabilities, net of
effects from acquisitions:
|
|
|
|
|
Accounts receivable
|
|
40
|
|
|
24
|
|
Prepaid expenses and other assets
|
|
(8)
|
|
|
(9)
|
|
Accounts payable, accrued expenses and
other
|
|
(2)
|
|
|
(4)
|
|
Net cash flows from operating activities
|
|
454
|
|
|
447
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES:
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(340)
|
|
|
(356)
|
|
Change in accrued expenses related to capital
expenditures
|
|
(12)
|
|
|
(19)
|
|
Other, net
|
|
(13)
|
|
|
(6)
|
|
Net cash flows from investing activities
|
|
(365)
|
|
|
(381)
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES:
|
|
|
|
|
Borrowings of long-term debt
|
|
1,469
|
|
|
1,846
|
|
Repayments of long-term debt
|
|
(1,539)
|
|
|
(1,666)
|
|
Payments for debt issuance costs
|
|
(10)
|
|
|
(22)
|
|
Purchase of treasury stock
|
|
(3)
|
|
|
(207)
|
|
Other, net
|
|
(4)
|
|
|
5
|
|
Net cash flows from financing activities
|
|
(87)
|
|
|
(44)
|
|
|
|
|
|
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
2
|
|
|
22
|
|
CASH AND
CASH EQUIVALENTS, beginning of period
|
|
29
|
|
|
32
|
|
CASH AND
CASH EQUIVALENTS, end of period
|
|
$
|
31
|
|
|
$
|
54
|
|
|
|
|
|
|
CASH PAID
FOR INTEREST
|
|
$
|
216
|
|
|
$
|
202
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
(in thousands, except ARPU and penetration
data)
|
|
|
Approximate as of
|
|
|
Actual
|
|
Pro
forma
|
|
|
March
31, 2012 (a)
|
|
December 31, 2011 (a)
|
|
March
31, 2011 (a)
|
Footprint
|
|
|
|
|
|
|
Estimated Homes Passed Video (b)
|
|
11,988
|
|
|
11,960
|
|
|
11,892
|
|
% Switched Digital Video
|
|
87%
|
|
|
86%
|
|
|
64%
|
|
Estimated Homes Passed Internet (b)
|
|
11,650
|
|
|
11,634
|
|
|
11,541
|
|
% DOCSIS 3.0
|
|
94%
|
|
|
93%
|
|
|
70%
|
|
Estimated Homes Passed Phone (b)
|
|
10,899
|
|
|
10,871
|
|
|
10,728
|
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Residential Customer Relationships (c)
|
|
5,013
|
|
|
4,927
|
|
|
4,970
|
|
Commercial Customer Relationships (c)(e)
|
|
311
|
|
|
298
|
|
|
292
|
|
Total Customer Relationships (c)(e)
|
|
5,324
|
|
|
5,225
|
|
|
5,262
|
|
Residential Non-Video Customers
|
|
849
|
|
|
783
|
|
|
640
|
|
% Non-Video
|
|
16.9%
|
|
|
15.9%
|
|
|
12.9%
|
|
|
|
|
|
|
|
|
Service
and Revenue Generating Units (f)
|
|
|
|
|
|
|
Video (d)
|
|
4,164
|
|
|
4,144
|
|
|
4,330
|
|
Internet (g)
|
|
3,633
|
|
|
3,492
|
|
|
3,353
|
|
Phone (h)
|
|
1,822
|
|
|
1,791
|
|
|
1,746
|
|
Residential PSUs (i)
|
|
9,619
|
|
|
9,427
|
|
|
9,429
|
|
Residential PSU / Customer Relationships
(c)(i)
|
|
1.92
|
|
|
1.91
|
|
|
1.90
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
|
177
|
|
|
170
|
|
|
181
|
|
Internet (g)
|
|
169
|
|
|
163
|
|
|
142
|
|
Phone (h)
|
|
85
|
|
|
79
|
|
|
64
|
|
Commercial PSUs (i)
|
|
431
|
|
|
412
|
|
|
387
|
|
Digital Video RGUs (j)
|
|
3,473
|
|
|
3,410
|
|
|
3,401
|
|
Total RGUs
|
|
13,523
|
|
|
13,249
|
|
|
13,217
|
|
|
|
|
|
|
|
|
Net
Additions/(Losses) (k)
|
|
|
|
|
|
|
Video (d)
|
|
20
|
|
|
(44)
|
|
|
(24)
|
|
Internet (g)
|
|
141
|
|
|
68
|
|
|
90
|
|
Phone (h)
|
|
31
|
|
|
27
|
|
|
24
|
|
Residential PSUs (i)
|
|
192
|
|
|
51
|
|
|
90
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
|
7
|
|
|
(3)
|
|
|
4
|
|
Internet (g)
|
|
6
|
|
|
7
|
|
|
3
|
|
Phone (h)
|
|
6
|
|
|
5
|
|
|
4
|
|
Commercial PSUs (i)
|
|
19
|
|
|
9
|
|
|
11
|
|
Digital Video RGUs (j)
|
|
63
|
|
|
9
|
|
|
30
|
|
Total RGUs
|
|
274
|
|
|
69
|
|
|
131
|
|
|
|
|
|
|
|
|
Residential ARPU
|
|
|
|
|
|
|
Video (l)
|
|
$
|
71.89
|
|
|
$
|
72.21
|
|
|
$
|
70.86
|
|
Internet (l)
|
|
$
|
42.26
|
|
|
$
|
42.65
|
|
|
$
|
41.80
|
|
Phone (l)
|
|
$
|
40.10
|
|
|
$
|
40.72
|
|
|
$
|
40.93
|
|
Revenue per Customer Relationship (m)
|
|
$
|
104.95
|
|
|
$
|
105.73
|
|
|
$
|
104.26
|
|
Total Revenue per Video Customer (n)
|
|
$
|
146.77
|
|
|
$
|
146.84
|
|
|
$
|
136.66
|
|
|
|
|
|
|
|
|
Residential Penetration Statistics
|
|
|
|
|
|
|
Video Penetration of Homes Passed Video
(o)
|
|
34.7%
|
|
|
34.6%
|
|
|
36.4%
|
|
Internet Penetration of Homes Passed Internet
(o)
|
|
31.2%
|
|
|
30.0%
|
|
|
29.1%
|
|
Phone Penetration of Homes Passed Phone
(o)
|
|
16.7%
|
|
|
16.5%
|
|
|
16.3%
|
|
Bundled Penetration (p)
|
|
62.9%
|
|
|
62.3%
|
|
|
61.2%
|
|
Triple Play Penetration (q)
|
|
28.9%
|
|
|
29.1%
|
|
|
28.4%
|
|
Digital Penetration (r)
|
|
83.1%
|
|
|
82.0%
|
|
|
78.3%
|
|
|
Pro forma
operating statistics reflect certain acquisitions of cable systems
in 2011 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.
|
At March
31, 2011, actual residential video customers, Internet customers,
and phone customers were 4,302,000, 3,334,000, and 1,741,000,
respectively; actual commercial video customers, Internet
customers, and phone customers were 181,000, 133,000, and 64,000,
respectively; and actual digital RGUs were 3,392,000.
|
See
footnotes to unaudited summary of operating statistics on page 5 of
this addendum.
|
(a)
|
We
calculate the aging of customer accounts based on the monthly
billing cycle for each account. On that basis, at March 31,
2012, December 31, 2011 and March 31, 2011, customers include
approximately 11,500, 18,600 and 12,500 customers, respectively,
whose accounts were over 60 days past due in payment, approximately
1,500, 2,500 and 1,700 customers, respectively, whose accounts were
over 90 days past due in payment and approximately 1,300, 1,400 and
1,100 customers, 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 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. Effective January 1, 2012, Charter revised its reporting
of customers whereby customers residing in multi-dwelling
residential structures are now included in residential customer
relationships and PSUs (see footnote (i)) rather than
commercial. Further, residential PSUs and customer
relationships are no longer calculated on an EBU (see footnote (e))
basis but are based on separate billing relationships. The
impact of these changes increased residential customer
relationships and PSUs and reduced commercial customer
relationships and PSUs, with an overall net decrease to total
customer relationships and PSUs. Prior periods were
reclassified to conform to the 2012 presentation.
|
|
|
(e)
|
Included
within commercial video customers are those in commercial
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. 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
customers, our EBU count will decline even if there is no real loss
in commercial service 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)
|
"Digital
Video RGUs" include all video customers that rent one or more
digital set-top boxes or cable cards.
|
|
|
(k)
|
"Net
Additions/(Losses)" represent the pro forma net gain or loss in the
respective quarter for the service indicated.
|
|
|
(l)
|
"Average
Monthly Revenue per Customer" or "ARPU" represents quarterly pro
forma revenue for the service indicated divided by three divided by
the average number of pro forma customers for the service indicated
during the respective quarter.
|
|
|
(m)
|
"Revenue
per Customer Relationship" is calculated as total residential
video, Internet and phone quarterly pro forma revenue divided by
three divided by average residential customer relationships during
the respective quarter.
|
|
|
(n)
|
"Total
Revenue per Video Customer" is calculated as total quarterly pro
forma revenue divided by three divided by average pro forma
residential video customers during the respective
quarter.
|
|
|
(o)
|
"Penetration" represents residential customers as a
percentage of homes passed for the service indicated.
|
|
|
(p)
|
"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.
"Bundled Penetration" does not include residential customers who
only subscribe to video service.
|
|
|
(q)
|
"Triple
Play Penetration" represents residential customers receiving all
three Charter service offerings, including video, Internet and
phone, as a % of residential customer relationships.
|
|
|
(r)
|
"Digital
Penetration" represents the number of residential digital video
RGUs as a percentage of residential video customers.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)
|
|
|
Three
Months Ended March 31,
|
|
|
2012
|
|
2011
|
|
2011
|
|
|
Actual
|
|
Actual
|
|
Pro
Forma (a)
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(94)
|
|
|
$
|
(110)
|
|
|
$
|
(111)
|
|
Plus: Interest expense, net
|
|
237
|
|
|
233
|
|
|
233
|
|
Income tax expense
|
|
71
|
|
|
79
|
|
|
79
|
|
Depreciation and amortization
|
|
408
|
|
|
383
|
|
|
386
|
|
Stock compensation expense
|
|
11
|
|
|
6
|
|
|
6
|
|
Loss on extinguishment of debt
|
|
15
|
|
|
67
|
|
|
67
|
|
Other, net
|
|
4
|
|
|
5
|
|
|
5
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (b)
|
|
652
|
|
|
663
|
|
|
665
|
|
Less: Purchases of property, plant and
equipment
|
|
(340)
|
|
|
(356)
|
|
|
(356)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA less capital expenditures
|
|
$
|
312
|
|
|
$
|
307
|
|
|
$
|
309
|
|
|
|
|
|
|
|
|
Net cash
flows from operating activities
|
|
$
|
454
|
|
|
$
|
447
|
|
|
$
|
449
|
|
Less: Purchases of property, plant and
equipment
|
|
(340)
|
|
|
(356)
|
|
|
(356)
|
|
Change in accrued expenses related to capital
expenditures
|
|
(12)
|
|
|
(19)
|
|
|
(19)
|
|
|
|
|
|
|
|
|
Free cash
flow
|
|
$
|
102
|
|
|
$
|
72
|
|
|
$
|
74
|
|
(a)
Pro forma results reflect certain acquisitions of cable systems in
2011 as if they occurred as of January 1, 2011.
|
(b) See
page 1 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 March 31,
|
|
|
2012
|
|
2011
|
|
|
|
|
|
Customer
premise equipment (a)
|
|
$
|
173
|
|
|
$
|
157
|
|
Scalable
infrastructure (b)
|
|
79
|
|
|
122
|
|
Line
extensions (c)
|
|
26
|
|
|
20
|
|
Upgrade/Rebuild (d)
|
|
7
|
|
|
5
|
|
Support
capital (e)
|
|
55
|
|
|
52
|
|
|
|
|
|
|
Total
capital expenditures (f)
|
|
$
|
340
|
|
|
$
|
356
|
|
(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 $38 million and $27 million of
capital expenditures related to commercial services for the three
months ended March 31, 2012 and 2011, respectively.
|
SOURCE Charter Communications, Inc.