ST. LOUIS, Aug. 7, 2012 /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, 2012.
(Logo:
http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO)
Second quarter highlights:
- Second quarter revenues of $1.884
billion grew 4.7% on a pro forma1 basis
and 5.2% on an actual basis compared to the second quarter of 2011,
driven by year-over-year overall residential and commercial
customer growth.
- Customer trends improved compared to the prior year led by the
addition of 29,000 residential Internet customers, over 60% higher
than the growth in the year ago second quarter.
- Residential Internet revenues rose 10.2% on a pro forma
basis and 10.7% on an actual basis driven by continued increase in
demand for the speed and performance that Charter Internet
offers.
- Commercial revenues grew 21.2% on a pro forma basis and
22.1% on an actual basis supported by momentum across all the types
of businesses we serve, an expanded product set and sales
efforts.
- Adjusted EBITDA2 was $693
million, 2.7% higher on a pro forma basis and 3.0%
higher on an actual basis compared to prior year. Net loss totaled
$83 million in the quarter.
- Free cash flow2 for the quarter was $26 million and cash flows from operating
activities were $469 million.
"We delivered solid second quarter performance while
implementing key aspects of our growth strategy," said
Tom Rutledge, President and Chief
Executive Officer. "In addition to enhancing our product set and
launching new pricing and packaging, we're putting into action a
number of operational changes to best align the organization with
our growth objectives. These actions will make us more competitive,
deliver a powerful customer experience and increase our long-term
growth potential. We have compelling products and services, a
highly capable network and great people, and a strategy to create
value for our customers and shareholders."
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
|
|
|
|
|
June
30, 2012 (a)
|
|
June
30, 2011 (a)
|
|
Y/Y
Change
|
Footprint
|
|
|
|
|
|
|
Estimated
Homes Passed Video (b)
|
|
11,979
|
|
11,906
|
|
1%
|
% Switched
Digital Video
|
|
88%
|
|
68%
|
|
20
ppts
|
|
|
|
|
|
|
|
Estimated
Homes Passed Internet (b)
|
|
11,649
|
|
11,571
|
|
1%
|
% DOCSIS
3.0
|
|
95%
|
|
85%
|
|
10
ppts
|
|
|
|
|
|
|
|
Estimated
Homes Passed Phone (b)
|
|
10,966
|
|
10,791
|
|
2%
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Residential Customer Relationships (c)
|
|
4,996
|
|
4,932
|
|
1%
|
Commercial
Customer Relationships (c)(e)
|
|
312
|
|
292
|
|
7%
|
Total
Customer Relationships (c)(e)
|
|
5,308
|
|
5,224
|
|
2%
|
|
|
|
|
|
|
|
Residential Non-Video Customers
|
|
898
|
|
681
|
|
32%
|
%
Non-Video
|
|
18.0%
|
|
13.8%
|
|
4.2
ppts
|
|
|
|
|
|
|
|
Service
and Revenue Generating Units (f)
|
|
|
|
|
|
|
Video
(d)
|
|
4,098
|
|
4,251
|
|
-4%
|
Internet
(g)
|
|
3,662
|
|
3,371
|
|
9%
|
Phone
(h)
|
|
1,828
|
|
1,753
|
|
4%
|
Residential PSUs (i)
|
|
9,588
|
|
9,375
|
|
2%
|
Residential PSU / Customer Relationships
(c)(i)
|
|
1.92
|
|
1.90
|
|
|
|
|
|
|
|
|
|
Video
(d)(e)
|
|
171
|
|
177
|
|
-3%
|
Internet
(g)
|
|
177
|
|
149
|
|
19%
|
Phone
(h)
|
|
91
|
|
69
|
|
32%
|
Commercial PSUs (i)
|
|
439
|
|
395
|
|
11%
|
|
|
|
|
|
|
|
Digital
Video RGUs (j)
|
|
3,484
|
|
3,396
|
|
3%
|
|
|
|
|
|
|
|
Total
RGUs
|
|
13,511
|
|
13,166
|
|
3%
|
|
|
|
|
|
|
|
Net
Additions/(Losses) (k)
|
|
|
|
|
|
|
Video
(d)
|
|
(66)
|
|
(79)
|
|
16%
|
Internet
(g)
|
|
29
|
|
18
|
|
61%
|
Phone
(h)
|
|
6
|
|
7
|
|
-14%
|
Residential PSUs (i)
|
|
(31)
|
|
(54)
|
|
43%
|
|
|
|
|
|
|
|
Video
(d)(e)
|
|
(6)
|
|
(4)
|
|
-50%
|
Internet
(g)
|
|
8
|
|
7
|
|
14%
|
Phone
(h)
|
|
6
|
|
5
|
|
20%
|
Commercial PSUs (i)
|
|
8
|
|
8
|
|
-
|
|
|
|
|
|
|
|
Digital
Video RGUs (j)
|
|
11
|
|
(5)
|
|
NM*
|
|
|
|
|
|
|
|
Total
RGUs
|
|
(12)
|
|
(51)
|
|
76%
|
|
|
|
|
|
|
|
Residential ARPU
|
|
|
|
|
|
|
Video
(l)
|
|
$73.41
|
|
$71.23
|
|
3%
|
Internet
(l)
|
|
$42.46
|
|
$41.77
|
|
2%
|
Phone
(l)
|
|
$39.69
|
|
$40.41
|
|
-2%
|
Revenue
per Customer Relationship (m)
|
|
$106.00
|
|
$104.39
|
|
2%
|
Total
Revenue per Video Customer (n)
|
|
$151.88
|
|
$139.61
|
|
9%
|
|
|
|
|
|
|
|
Residential Penetration Statistics
|
|
|
|
|
|
|
Video
Penetration of Homes Passed Video (o)
|
|
34.2%
|
|
35.7%
|
|
-1.5
ppts
|
Internet
Penetration of Homes Passed Internet (o)
|
|
31.4%
|
|
29.1%
|
|
2.3
ppts
|
Phone
Penetration of Homes Passed Phone (o)
|
|
16.7%
|
|
16.2%
|
|
0.5
ppts
|
Bundled
Penetration (p)
|
|
63.0%
|
|
61.4%
|
|
1.6
ppts
|
Triple
Play Penetration (q)
|
|
28.8%
|
|
28.7%
|
|
0.1
ppts
|
Digital
Penetration (r)
|
|
84.7%
|
|
79.6%
|
|
5.1
ppts
|
|
|
|
|
|
|
|
* Not
meaningful
|
|
|
|
|
|
|
|
|
Footnotes
See footnotes to unaudited summary of operating statistics
on page 6 of the addendum of this news release. The footnotes
contain important disclosures regarding the definitions used for
these operating statistics.
|
During the seasonally weak second quarter, residential customer
relationships decreased 17,000 compared to a loss of 38,000 for the
second quarter last year, and for the first half of 2012, we gained
69,000 residential customer relationships compared to a loss of
15,000 in the comparable 2011 period. The year-over-year
improvements reflect enhancements in our product offerings and
service levels. Residential primary service units ("PSUs")
decreased by 31,000 in the second quarter of 2012 driven by a
decline in video customers offset by increases in Internet and
phone customers.
Residential video customers decreased by 66,000 in the second
quarter of 2012 compared to a decline of 79,000 last year. We added
29,000 residential Internet customers in the second quarter of 2012
compared to 18,000 last year reflecting continued consumer demand
for the speed and performance advantages offered by Charter. During
the second quarter of 2012, we added 6,000 phone customers compared
to a gain of 7,000 last year, with phone penetration at 16.7% as of
June 30, 2012. Commercial PSUs increased 8,000 in both the
second quarter of 2012 and 2011, and we continue to see a
significant opportunity to grow our commercial services
business.
Second quarter revenue per residential customer relationship
rose to $106.00 from $104.39 a year ago driven primarily by rate
increases, and growth in multi-product subscriptions and advanced
digital services.
We continue to see additional opportunities to drive higher
market penetration and revenue per household by enhancing our
product set, value proposition and customer service. We are focused
on stabilizing our video customer base, upgrading existing customer
relationships and gaining new customer relationships in the homes
we pass that we currently do not serve today, as well as serving
additional businesses in the significant commercial opportunity in
our footprint. We have made significant strides in expanding our
product offering, particularly video with the launch of additional
HD channels this past quarter. Charter now offers more than 100 HD
channels in substantially all of our markets. We also implemented
new pricing and packaging at the end of June designed to provide a
simple, value-based pricing structure and to increase triple play
penetration. In addition, we are focused on improving our
fundamental operating execution. We expect these efforts to drive
long-term growth in our business, but in the short term, we expect
that customer connects, revenue and operating expenses may be
adversely impacted during this transition. We also expect our
capital expenditures to increase as we drive further digital and
HD-DVR penetration.
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,
|
|
2012
|
|
2011
|
|
|
|
2011
|
|
|
|
Actual
|
|
Pro
Forma (a)
|
|
%
Change
|
|
Actual
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
Video
|
$
911
|
|
$
917
|
|
(0.7)%
|
|
$
912
|
|
(0.1)%
|
Internet
|
465
|
|
422
|
|
10.2%
|
|
420
|
|
10.7%
|
Telephone
|
217
|
|
213
|
|
1.9%
|
|
213
|
|
1.9%
|
Commercial
|
160
|
|
132
|
|
21.2%
|
|
131
|
|
22.1%
|
Advertising Sales
|
87
|
|
76
|
|
14.5%
|
|
76
|
|
14.5%
|
Other
|
44
|
|
39
|
|
12.8%
|
|
39
|
|
12.8%
|
Total
Revenues
|
1,884
|
|
1,799
|
|
4.7%
|
|
1,791
|
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
Operating
(excluding depreciation and amortization) (b)
|
831
|
|
788
|
|
5.5%
|
|
784
|
|
6.0%
|
Selling,
general and administrative (excluding stock compensation expense)
(c)
|
360
|
|
336
|
|
7.1%
|
|
334
|
|
7.8%
|
|
1,191
|
|
1,124
|
|
6.0%
|
|
1,118
|
|
6.5%
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
693
|
|
$
675
|
|
2.7%
|
|
$
673
|
|
3.0%
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
36.8%
|
|
37.5%
|
|
|
|
37.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
468
|
|
$
324
|
|
|
|
$
324
|
|
|
% Total
Revenues
|
24.8%
|
|
18.0%
|
|
|
|
18.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(83)
|
|
$
(107)
|
|
|
|
$
(107)
|
|
|
Loss per
common share, basic and diluted
|
$
(0.84)
|
|
$
(0.98)
|
|
|
|
$
(0.98)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash
flows from operating activities
|
$
469
|
|
$
462
|
|
|
|
$
460
|
|
|
Free cash
flow
|
$
26
|
|
$
157
|
|
|
|
$
155
|
|
|
|
|
|
|
|
|
|
|
|
|
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
Second quarter 2012 revenues rose to $1.884 billion, up 4.7% on a pro forma
basis and 5.2% on an actual basis compared to the year-ago quarter
led by steady growth in Internet and commercial sales and also due
to increased advertising revenue.
Video revenues totaled $911
million in the second quarter, a decrease of 0.7% on a
pro forma basis and 0.1% 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 lower premium revenue
partially offset by incremental DVR revenue, increases in digital
customers, and price adjustments.
Second quarter 2012 Internet revenues were $465 million, growing 10.2% on a pro forma
basis and 10.7% on an actual basis year over year, driven by the
addition of 291,000 Internet customers and increased home
networking revenue. Telephone revenues totaled $217 million, up 1.9% on a pro forma basis
and actual basis over second quarter 2011 as we added 75,000 phone
customers, partially offset by an increase in value based
packages.
Commercial revenues grew to $160
million, increasing 21.2% year over year on a pro
forma and 22.1% on an actual basis, reflecting higher sales to
small and medium businesses and carrier customers.
Advertising sales revenues were $87
million for the second quarter of 2012, a 14.5% increase on
a pro forma and actual basis compared to the second quarter
of 2011 primarily driven by an increase in revenues from the
political sector.
Operating Costs and Expenses
Second quarter operating costs and expenses increased 6.0% on a
pro forma basis and 6.5% on an actual basis compared to the
year-ago period, primarily related to increases in programming,
marketing, and labor costs. Second quarter programming expenses
increased $25 million on a pro
forma basis and $27 million on an
actual basis year over year reflecting contractual programming
increases and new programming, partially offset by customer
losses.
Marketing expenses increased by $20
million on a pro forma and actual basis in the second
quarter compared to the prior year driven by increased media
investment and commercial marketing as well as a favorable
adjustment in the 2011 second quarter from expenses associated with
prior-year marketing campaigns. Labor costs increased in the second
quarter of 2012 primarily from sales force related expenses,
increased preventive maintenance levels, and a higher number of
reconnects.
Adjusted EBITDA
Second quarter adjusted EBITDA of $693
million increased 2.7% on a pro forma basis and 3.0%
on an actual basis compared to the year-ago quarter. Adjusted
EBITDA margin declined to 36.8% for the second quarter of 2012
compared to 37.5% on a pro forma basis and 37.6% on an
actual basis in the year-ago quarter.
Net Loss
Net loss was $83 million in the
second quarter of 2012, compared to $107
million on a pro forma and actual basis in the
year-ago period. Net loss decreased primarily due to adjusted
EBITDA growth and lower interest and income tax expense offset by
higher depreciation and amortization. Net loss per common share was
$0.84 in the second quarter of 2012
compared to $0.98 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 share
repurchases in the last twelve months.
Capital Expenditures
Second quarter property, plant and equipment expenditures were
$468 million compared to $324 million in 2011. The increase related to
higher actual and anticipated residential and commercial customer
growth, scalable Internet infrastructure to accommodate higher
penetration and network throughput, and further investments in
customer experience, both in systems and the network. During 2012,
we currently expect capital expenditures to be between $1.5 billion and $1.7 billion. The actual
amount of our capital expenditures depends on the level of success
of our new operating strategies and residential product offerings,
with the year-over-year increase reflecting higher expected levels
of CPE placement for both new and existing customers, resulting
from increased digitization and DVR penetration, and growth in our
commercial business.
Cash Flow
Net cash flows from operating activities totaled $469 million, compared to $462 million on a pro forma basis and
$460 million on an actual basis in
the second quarter of 2011. The increase in net cash flows from
operating activities was driven by an increase in adjusted EBITDA
and a $26 million higher contribution
from working capital, excluding changes in accrued capital
expenditures and interest, partially offset by a $32 million increase in the timing of cash
payments for interest.
Free cash flow for the second quarter of 2012 was $26 million, compared to $157 million on a pro forma basis and
$155 million on an actual basis in
the same period last year. The decrease was driven primarily by
higher capital expenditures.
Conference Call
Charter will host a conference call on Tuesday, August 7, 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
87412789.
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 August 21,
2012. The conference ID code for the replay is 87412789.
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 quarter ended June 30, 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
operating (income) expenses, such as special charges and gain 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. 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 June 30, 2012 and
2011, respectively, and $82 million
and $70 million for the six months
ended June 30, 2012 and 2011, respectively.
In addition to the actual results for the three and six months
ended June 30, 2012 and 2011, we have provided pro
forma results in this release for the three and six months
ended June 30, 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 and six months ended June 30, 2011;
and pro forma customer statistics as of June 30, 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," "designed," "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, digital subscriber line ("DSL") providers, and 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,
|
|
2012
|
|
2011
|
|
|
|
2012
|
|
2011
|
|
|
|
Actual
|
|
Actual
|
|
%
Change
|
|
Actual
|
|
Actual
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
911
|
|
$
912
|
|
(0.1)%
|
|
$
1,806
|
|
$
1,829
|
|
(1.3)%
|
Internet
|
465
|
|
420
|
|
10.7%
|
|
917
|
|
833
|
|
10.1%
|
Telephone
|
217
|
|
213
|
|
1.9%
|
|
434
|
|
425
|
|
2.1%
|
Commercial
|
160
|
|
131
|
|
22.1%
|
|
313
|
|
258
|
|
21.3%
|
Advertising Sales
|
87
|
|
76
|
|
14.5%
|
|
153
|
|
138
|
|
10.9%
|
Other
|
44
|
|
39
|
|
12.8%
|
|
88
|
|
78
|
|
12.8%
|
Total
Revenues
|
1,884
|
|
1,791
|
|
5.2%
|
|
3,711
|
|
3,561
|
|
4.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(excluding depreciation and amortization) (a)
|
831
|
|
784
|
|
6.0%
|
|
1,645
|
|
1,552
|
|
6.0%
|
Selling,
general and administrative (excluding stock compensation expense)
(b)
|
360
|
|
334
|
|
7.8%
|
|
721
|
|
673
|
|
7.1%
|
Operating
costs and expenses
|
1,191
|
|
1,118
|
|
6.5%
|
|
2,366
|
|
2,225
|
|
6.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
693
|
|
673
|
|
3.0%
|
|
1,345
|
|
1,336
|
|
0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
36.8%
|
|
37.6%
|
|
|
|
36.2%
|
|
37.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
415
|
|
393
|
|
|
|
823
|
|
776
|
|
|
Stock
compensation expense
|
13
|
|
9
|
|
|
|
24
|
|
15
|
|
|
Other
operating (income) expenses, net
|
(4)
|
|
1
|
|
|
|
(1)
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
269
|
|
270
|
|
|
|
499
|
|
539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
(225)
|
|
(241)
|
|
|
|
(462)
|
|
(474)
|
|
|
Loss on
extinguishment of debt
|
(59)
|
|
(53)
|
|
|
|
(74)
|
|
(120)
|
|
|
Other
expense, net
|
-
|
|
(2)
|
|
|
|
(1)
|
|
(2)
|
|
|
|
(284)
|
|
(296)
|
|
|
|
(537)
|
|
(596)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
(15)
|
|
(26)
|
|
|
|
(38)
|
|
(57)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(68)
|
|
(81)
|
|
|
|
(139)
|
|
(160)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(83)
|
|
$
(107)
|
|
|
|
$
(177)
|
|
$
(217)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER
COMMON SHARE, BASIC AND DILUTED:
|
$
(0.84)
|
|
$
(0.98)
|
|
|
|
$
(1.78)
|
|
$
(1.95)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding, basic and diluted
|
99,496,755
|
|
109,265,876
|
|
|
|
99,464,858
|
|
111,234,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Operating expenses include programming, service, and advertising
sales expenses.
|
(b)
Selling, general and administrative expenses include general and
administrative and marketing expenses.
|
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 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,
|
|
2012
|
|
2011
|
|
|
|
2012
|
|
2011
|
|
|
|
Actual
|
|
Pro
Forma (a)
|
|
%
Change
|
|
Actual
|
|
Pro
Forma (a)
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
911
|
|
$
917
|
|
(0.7)%
|
|
$
1,806
|
|
$
1,839
|
|
(1.8)%
|
Internet
|
465
|
|
422
|
|
10.2%
|
|
917
|
|
837
|
|
9.6%
|
Telephone
|
217
|
|
213
|
|
1.9%
|
|
434
|
|
426
|
|
1.9%
|
Commercial
|
160
|
|
132
|
|
21.2%
|
|
313
|
|
259
|
|
20.8%
|
Advertising Sales
|
87
|
|
76
|
|
14.5%
|
|
153
|
|
138
|
|
10.9%
|
Other
|
44
|
|
39
|
|
12.8%
|
|
88
|
|
78
|
|
12.8%
|
Total
Revenues
|
1,884
|
|
1,799
|
|
4.7%
|
|
3,711
|
|
3,577
|
|
3.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Operating
(excluding depreciation and amortization) (b)
|
831
|
|
788
|
|
5.5%
|
|
1,645
|
|
1,560
|
|
5.4%
|
Selling,
general and administrative (excluding stock compensation expense)
(c)
|
360
|
|
336
|
|
7.1%
|
|
721
|
|
677
|
|
6.5%
|
Operating
costs and expenses
|
1,191
|
|
1,124
|
|
6.0%
|
|
2,366
|
|
2,237
|
|
5.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
693
|
|
675
|
|
2.7%
|
|
1,345
|
|
1,340
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
36.8%
|
|
37.5%
|
|
|
|
36.2%
|
|
37.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
415
|
|
395
|
|
|
|
823
|
|
781
|
|
|
Stock
compensation expense
|
13
|
|
9
|
|
|
|
24
|
|
15
|
|
|
Other
operating (income) expenses, net
|
(4)
|
|
1
|
|
|
|
(1)
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
269
|
|
270
|
|
|
|
499
|
|
538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
(225)
|
|
(241)
|
|
|
|
(462)
|
|
(474)
|
|
|
Loss on
extinguishment of debt
|
(59)
|
|
(53)
|
|
|
|
(74)
|
|
(120)
|
|
|
Other
expense, net
|
-
|
|
(2)
|
|
|
|
(1)
|
|
(2)
|
|
|
|
(284)
|
|
(296)
|
|
|
|
(537)
|
|
(596)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
(15)
|
|
(26)
|
|
|
|
(38)
|
|
(58)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(68)
|
|
(81)
|
|
|
|
(139)
|
|
(160)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(83)
|
|
$
(107)
|
|
|
|
$
(177)
|
|
$
(218)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER
COMMON SHARE, BASIC AND DILUTED:
|
$
(0.84)
|
|
$
(0.98)
|
|
|
|
$
(1.78)
|
|
$
(1.95)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding, basic and diluted
|
99,496,755
|
|
109,265,876
|
|
|
|
99,464,858
|
|
111,234,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
June
30, 2011. Pro forma revenues and operating costs and
expenses increased by $8 million and $6 million, respectively, for
the three months ended June 30, 2011 and net loss remained
unchanged. Pro forma revenues, operating costs and expenses and net
loss increased by $16 million, $12 million and $1 million,
respectively, for the six months ended June 30, 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 7 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)
|
|
|
|
|
|
June
30,
2012
|
|
December 31,
2011
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and
cash equivalents
|
$
5
|
|
$
2
|
Restricted
cash and cash equivalents
|
27
|
|
27
|
Accounts
receivable, net
|
256
|
|
272
|
Prepaid
expenses and other current assets
|
79
|
|
69
|
Total
current assets
|
367
|
|
370
|
|
|
|
|
INVESTMENT
IN CABLE PROPERTIES:
|
|
|
|
Property,
plant and equipment, net
|
7,024
|
|
6,897
|
Franchises
|
5,287
|
|
5,288
|
Customer
relationships, net
|
1,562
|
|
1,704
|
Goodwill
|
953
|
|
954
|
Total
investment in cable properties, net
|
14,826
|
|
14,843
|
|
|
|
|
OTHER
NONCURRENT ASSETS
|
360
|
|
392
|
|
|
|
|
Total
assets
|
$
15,553
|
|
$
15,605
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
payable and accrued expenses
|
$
1,194
|
|
$
1,153
|
Total
current liabilities
|
1,194
|
|
1,153
|
|
|
|
|
LONG-TERM
DEBT
|
12,786
|
|
12,856
|
DEFERRED
INCOME TAXES
|
987
|
|
847
|
OTHER
LONG-TERM LIABILITIES
|
342
|
|
340
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
244
|
|
409
|
|
|
|
|
Total
liabilities and shareholders' equity
|
$
15,553
|
|
$
15,605
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
|
|
|
|
|
|
|
|
Three
Months Ended June 30,
|
|
Six
Months Ended June 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
CASH FLOWS
FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(83)
|
|
$
(107)
|
|
$
(177)
|
|
$
(217)
|
Adjustments to reconcile net loss to net cash flows
from operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
415
|
|
393
|
|
823
|
|
776
|
Noncash
interest expense
|
|
10
|
|
8
|
|
24
|
|
20
|
Loss on
extinguishment of debt
|
|
59
|
|
53
|
|
74
|
|
120
|
Deferred
income taxes
|
|
66
|
|
78
|
|
136
|
|
155
|
Other,
net
|
|
-
|
|
9
|
|
11
|
|
16
|
Changes in
operating assets and liabilities, net of effects from acquisitions
and dispositions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(24)
|
|
(19)
|
|
16
|
|
5
|
Prepaid
expenses and other assets
|
|
(3)
|
|
3
|
|
(11)
|
|
(6)
|
Accounts
payable, accrued expenses and other
|
|
29
|
|
42
|
|
27
|
|
38
|
Net cash
flows from operating activities
|
|
469
|
|
460
|
|
923
|
|
907
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment
|
|
(468)
|
|
(324)
|
|
(808)
|
|
(680)
|
Change in
accrued expenses related to capital expenditures
|
|
25
|
|
19
|
|
13
|
|
-
|
Other,
net
|
|
23
|
|
(8)
|
|
10
|
|
(14)
|
Net cash
flows from investing activities
|
|
(420)
|
|
(313)
|
|
(785)
|
|
(694)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Borrowings
of long-term debt
|
|
1,348
|
|
1,715
|
|
2,817
|
|
3,561
|
Repayments
of long-term debt
|
|
(1,380)
|
|
(1,700)
|
|
(2,919)
|
|
(3,366)
|
Payments
for debt issuance costs
|
|
(14)
|
|
(21)
|
|
(24)
|
|
(43)
|
Purchase
of treasury stock
|
|
(1)
|
|
-
|
|
(4)
|
|
(207)
|
Other,
net
|
|
(1)
|
|
(1)
|
|
(5)
|
|
4
|
Net cash
flows from financing activities
|
|
(48)
|
|
(7)
|
|
(135)
|
|
(51)
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
1
|
|
140
|
|
3
|
|
162
|
CASH AND
CASH EQUIVALENTS, beginning of period
|
|
31
|
|
54
|
|
29
|
|
32
|
CASH AND
CASH EQUIVALENTS, end of period
|
|
$
32
|
|
$
194
|
|
$
32
|
|
$
194
|
|
|
|
|
|
|
|
|
|
CASH PAID
FOR INTEREST
|
|
$
232
|
|
$
200
|
|
$
448
|
|
$
402
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
(in thousands, except ARPU and penetration
data)
|
|
|
|
Approximate as of
|
|
Actual
|
|
Pro
forma
|
|
June
30, 2012 (a)
|
|
March
31, 2012 (a)
|
|
December 31, 2011 (a)
|
|
June
30, 2011 (a)
|
Footprint
|
|
|
|
|
|
|
|
Estimated
Homes Passed Video (b)
|
11,979
|
|
11,988
|
|
11,960
|
|
11,906
|
% Switched
Digital Video
|
88%
|
|
87%
|
|
86%
|
|
68%
|
Estimated
Homes Passed Internet (b)
|
11,649
|
|
11,650
|
|
11,634
|
|
11,571
|
% DOCSIS
3.0
|
95%
|
|
94%
|
|
93%
|
|
85%
|
Estimated
Homes Passed Phone (b)
|
10,966
|
|
10,899
|
|
10,871
|
|
10,791
|
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
|
Residential Customer Relationships (c)
|
4,996
|
|
5,013
|
|
4,927
|
|
4,932
|
Commercial
Customer Relationships (c)(e)
|
312
|
|
311
|
|
298
|
|
292
|
Total
Customer Relationships (c)(e)
|
5,308
|
|
5,324
|
|
5,225
|
|
5,224
|
Residential Non-Video Customers
|
898
|
|
849
|
|
783
|
|
681
|
%
Non-Video
|
18.0%
|
|
16.9%
|
|
15.9%
|
|
13.8%
|
|
|
|
|
|
|
|
|
Service
and Revenue Generating Units (f)
|
|
|
|
|
|
|
|
Video
(d)
|
4,098
|
|
4,164
|
|
4,144
|
|
4,251
|
Internet
(g)
|
3,662
|
|
3,633
|
|
3,492
|
|
3,371
|
Phone
(h)
|
1,828
|
|
1,822
|
|
1,791
|
|
1,753
|
Residential PSUs (i)
|
9,588
|
|
9,619
|
|
9,427
|
|
9,375
|
Residential PSU / Customer Relationships
(c)(i)
|
1.92
|
|
1.92
|
|
1.91
|
|
1.90
|
|
|
|
|
|
|
|
|
Video
(d)(e)
|
171
|
|
177
|
|
170
|
|
177
|
Internet
(g)
|
177
|
|
169
|
|
163
|
|
149
|
Phone
(h)
|
91
|
|
85
|
|
79
|
|
69
|
Commercial PSUs (i)
|
439
|
|
431
|
|
412
|
|
395
|
Digital
Video RGUs (j)
|
3,484
|
|
3,473
|
|
3,410
|
|
3,396
|
Total
RGUs
|
13,511
|
|
13,523
|
|
13,249
|
|
13,166
|
|
|
|
|
|
|
|
|
Net
Additions/(Losses) (k)
|
|
|
|
|
|
|
|
Video
(d)
|
(66)
|
|
20
|
|
(44)
|
|
(79)
|
Internet
(g)
|
29
|
|
141
|
|
68
|
|
18
|
Phone
(h)
|
6
|
|
31
|
|
27
|
|
7
|
Residential PSUs (i)
|
(31)
|
|
192
|
|
51
|
|
(54)
|
|
|
|
|
|
|
|
|
Video
(d)(e)
|
(6)
|
|
7
|
|
(3)
|
|
(4)
|
Internet
(g)
|
8
|
|
6
|
|
7
|
|
7
|
Phone
(h)
|
6
|
|
6
|
|
5
|
|
5
|
Commercial PSUs (i)
|
8
|
|
19
|
|
9
|
|
8
|
Digital
Video RGUs (j)
|
11
|
|
63
|
|
9
|
|
(5)
|
Total
RGUs
|
(12)
|
|
274
|
|
69
|
|
(51)
|
|
|
|
|
|
|
|
|
Residential ARPU
|
|
|
|
|
|
|
|
Video
(l)
|
$
73.41
|
|
$
71.89
|
|
$
72.21
|
|
$
71.23
|
Internet
(l)
|
$
42.46
|
|
$
42.26
|
|
$
42.65
|
|
$
41.77
|
Phone
(l)
|
$
39.69
|
|
$
40.10
|
|
$
40.72
|
|
$
40.41
|
Revenue
per Customer Relationship (m)
|
$
106.00
|
|
$
104.95
|
|
$
105.73
|
|
$
104.39
|
Total
Revenue per Video Customer (n)
|
$
151.88
|
|
$
146.77
|
|
$
146.84
|
|
$
139.61
|
|
|
|
|
|
|
|
|
Residential Penetration Statistics
|
|
|
|
|
|
|
|
Video
Penetration of Homes Passed Video (o)
|
34.2%
|
|
34.7%
|
|
34.6%
|
|
35.7%
|
Internet
Penetration of Homes Passed Internet (o)
|
31.4%
|
|
31.2%
|
|
30.0%
|
|
29.1%
|
Phone
Penetration of Homes Passed Phone (o)
|
16.7%
|
|
16.7%
|
|
16.5%
|
|
16.2%
|
Bundled
Penetration (p)
|
63.0%
|
|
62.9%
|
|
62.3%
|
|
61.4%
|
Triple
Play Penetration (q)
|
28.8%
|
|
28.9%
|
|
29.1%
|
|
28.7%
|
Digital
Penetration (r)
|
84.7%
|
|
83.1%
|
|
82.0%
|
|
79.6%
|
|
|
|
|
|
|
|
|
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 June
30, 2011, actual residential video customers, Internet customers,
and phone customers were 4,224,000, 3,352,000, and 1,748,000,
respectively; actual commercial video customers, Internet
customers, and phone customers were 177,000, 149,000, and 69,000,
respectively; and actual digital RGUs were 3,387,000.
|
|
|
|
|
|
|
|
|
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,
2012, March 31, 2011, December 31, 2011 and June 30, 2011,
customers include approximately 17,000, 11,500, 18,600 and 16,100
customers, respectively, whose accounts were over 60 days past due
in payment, approximately 2,900, 1,500, 2,500 and 2,200 customers,
respectively, whose accounts were over 90 days past due in payment
and approximately 1,300, 1,300, 1,400 and 1,000 customers,
respectively, whose accounts were over 120 days past due in
payment.
|
|
|
(b)
|
"Homes
Passed" represent our estimate of the number of units, such as
single family homes, apartment and condominium units and commercial
establishments passed by our cable distribution network in the
areas where we offer the service indicated. These estimates
are updated for all periods presented based upon the information
available at that time.
|
|
|
(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 who subscribe to our
digital video service.
|
|
|
(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 June 30,
|
|
Six
Months Ended June 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(83)
|
|
$
(107)
|
|
$
(177)
|
|
$
(217)
|
Plus: Interest expense, net
|
225
|
|
241
|
|
462
|
|
474
|
Income tax
expense
|
68
|
|
81
|
|
139
|
|
160
|
Depreciation and amortization
|
415
|
|
393
|
|
823
|
|
776
|
Stock
compensation expense
|
13
|
|
9
|
|
24
|
|
15
|
Loss on
extinguishment of debt
|
59
|
|
53
|
|
74
|
|
120
|
Other,
net
|
(4)
|
|
3
|
|
-
|
|
8
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (b)
|
693
|
|
673
|
|
1,345
|
|
1,336
|
Less: Purchases of property, plant and
equipment
|
(468)
|
|
(324)
|
|
(808)
|
|
(680)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA less capital expenditures
|
$
225
|
|
$
349
|
|
$
537
|
|
$
656
|
|
|
|
|
|
|
|
|
Net cash
flows from operating activities
|
$
469
|
|
$
460
|
|
$
923
|
|
$
907
|
Less: Purchases of property, plant and
equipment
|
(468)
|
|
(324)
|
|
(808)
|
|
(680)
|
Change in
accrued expenses related to capital expenditures
|
25
|
|
19
|
|
13
|
|
-
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
26
|
|
$
155
|
|
$
128
|
|
$
227
|
|
|
|
|
|
|
|
|
|
Three
Months Ended June 30,
|
|
Six
Months Ended June 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
Actual
|
|
Pro
forma (a)
|
|
Actual
|
|
Pro
forma (a)
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(83)
|
|
$
(107)
|
|
$
(177)
|
|
$
(218)
|
Plus: Interest expense, net
|
225
|
|
241
|
|
462
|
|
474
|
Income tax
expense
|
68
|
|
81
|
|
139
|
|
160
|
Depreciation and amortization
|
415
|
|
395
|
|
823
|
|
781
|
Stock
compensation expense
|
13
|
|
9
|
|
24
|
|
15
|
Loss on
extinguishment of debt
|
59
|
|
53
|
|
74
|
|
120
|
Other,
net
|
(4)
|
|
3
|
|
-
|
|
8
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA (b)
|
693
|
|
675
|
|
1,345
|
|
1,340
|
Less: Purchases of property, plant and
equipment
|
(468)
|
|
(324)
|
|
(808)
|
|
(680)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA less capital expenditures
|
$
225
|
|
$
351
|
|
$
537
|
|
$
660
|
|
|
|
|
|
|
|
|
Net cash
flows from operating activities
|
$
469
|
|
$
462
|
|
$
923
|
|
$
911
|
Less: Purchases of property, plant and
equipment
|
(468)
|
|
(324)
|
|
(808)
|
|
(680)
|
Change in
accrued expenses related to capital expenditures
|
25
|
|
19
|
|
13
|
|
-
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
26
|
|
$
157
|
|
$
128
|
|
$
231
|
|
(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 June 30,
|
|
Six
Months Ended June 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
Customer
premise equipment (a)
|
|
$
193
|
|
$
130
|
|
$
366
|
|
$
287
|
Scalable
infrastructure (b)
|
|
167
|
|
85
|
|
246
|
|
207
|
Line
extensions (c)
|
|
33
|
|
29
|
|
59
|
|
49
|
Upgrade/Rebuild (d)
|
|
7
|
|
7
|
|
14
|
|
12
|
Support
capital (e)
|
|
68
|
|
73
|
|
123
|
|
125
|
|
|
|
|
|
|
|
|
|
Total
capital expenditures (f)
|
|
$
468
|
|
$
324
|
|
$
808
|
|
$
680
|
|
(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, 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 $61 million and $45 million of
capital expenditures related to commercial services for the three
months ended June 30, 2012 and 2011, respectively, and $99 million
and $72 million for the six months ended June 30, 2012 and
2011.
|
|
|
SOURCE Charter Communications, Inc.