STAMFORD, Conn., Feb. 4,
2016 /PRNewswire/ -- Charter Communications, Inc. (along with
its subsidiaries, the "Company" or "Charter") today reported
financial and operating results for the three and twelve months
ended December 31, 2015.
Key highlights:
- As of December 31, 2015, Charter served 6.7 million
residential and small and medium business ("SMB") customers. For
the full year 2015, total residential and SMB customers grew by
352,000, or 5.6%.
- 2015 marks the first full year in
over a decade in which Charter grew its total video customers,
including 33,000 video net additions in the fourth quarter, and
11,000 for the full year 2015.
- For the full year 2015, residential primary service units
("PSUs") increased by 5.2%, while SMB PSUs increased by 19.4%, with
fourth quarter 2015 residential and SMB PSU net additions growing
year-over-year by 26.5% and 47.4%, respectively.
- Fourth quarter revenues of $2.5
billion grew 6.4% as compared to the prior-year period,
driven by residential revenue growth of 7.2% and commercial revenue
growth of 12.3%.
- Fourth quarter Adjusted EBITDA1 grew by 7.5%
year-over-year. Excluding transition costs of $22 million for Charter's pending transactions,
fourth quarter Adjusted EBITDA grew by 8.4% year-over-year.
- Full year 2015 revenues increased 7.1% and Adjusted EBITDA rose
6.8%. Excluding transition costs for the pending transactions, 2015
Adjusted EBITDA increased 8.5%.
- Capital expenditures totaled $1.840
billion in 2015, down from $2.221
billion in 2014. Excluding transition capital expenditures
for the pending transactions, 2015 capital expenditures totaled
$1.725 billion.
- Full year 2015 free cash flow totaled $547 million, compared to $171 million during the prior-year, driven by
higher Adjusted EBITDA and lower capital expenditures, partially
offset by over $500 million of
transition-specific operating expenses, capital expenditures and
cash interest payments associated with transactions-related debt
held in escrow.
"Our consumer-focused product and service strategy continued to
drive Charter's accelerating customer growth in 2015, including
positive video net additions," said Tom
Rutledge, President and CEO of Charter Communications.
"Charter remains the fastest growing cable company in the United States because it provides
highly-competitive consumer-friendly products at attractive price
points, in simple packages, with quality customer service. We look
forward to bringing Charter Spectrum to the Time Warner Cable and
Bright House footprints following the close of our transactions,
offering consumers better products, prices and service, driving
greater growth for our new company and our business partners, and
creating value for shareholders."
1Adjusted 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
|
|
|
|
December 31, 2015
(a)
|
|
December 31, 2014
(a)
|
|
Y/Y
Change
|
Footprint
(b)
|
|
|
|
|
|
Estimated Video
Passings
|
12,783
|
|
|
12,740
|
|
|
—
|
%
|
Estimated Internet
Passings
|
12,515
|
|
|
12,465
|
|
|
—
|
%
|
Estimated Voice
Passings
|
12,062
|
|
|
12,005
|
|
|
—
|
%
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
34.7
|
%
|
|
34.7
|
%
|
|
—
|
ppts
|
Internet Penetration
of Estimated Internet Passings
|
44.5
|
%
|
|
40.7
|
%
|
|
3.8
|
ppts
|
Voice Penetration of
Estimated Voice Passings
|
23.3
|
%
|
|
21.8
|
%
|
|
1.5
|
ppts
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
(e)
|
6,284
|
|
|
5,990
|
|
|
5
|
%
|
Small and Medium
Business (i)
|
390
|
|
|
332
|
|
|
17
|
%
|
Total Customer
Relationships
|
6,674
|
|
|
6,322
|
|
|
6
|
%
|
|
|
|
|
|
|
Residential
(e)
|
|
|
|
|
|
Primary Service
Units ("PSU")
|
|
|
|
|
|
Video
|
4,322
|
|
|
4,324
|
|
|
—
|
%
|
Internet
|
5,227
|
|
|
4,785
|
|
|
9
|
%
|
Voice
|
2,598
|
|
|
2,439
|
|
|
7
|
%
|
|
12,147
|
|
|
11,548
|
|
|
5
|
%
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
Video
|
29
|
|
|
(3)
|
|
|
NM
|
|
Internet
|
115
|
|
|
104
|
|
|
11
|
%
|
Voice
|
47
|
|
|
50
|
|
|
(6)
|
%
|
|
191
|
|
|
151
|
|
|
26
|
%
|
|
|
|
|
|
|
Single Play
(f)
|
2,458
|
|
|
2,350
|
|
|
5
|
%
|
Double Play
(f)
|
1,790
|
|
|
1,722
|
|
|
4
|
%
|
Triple Play
(f)
|
2,036
|
|
|
1,918
|
|
|
6
|
%
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
39.1
|
%
|
|
39.2
|
%
|
|
-0.1
|
ppts
|
Double Play
Penetration (g)
|
28.5
|
%
|
|
28.8
|
%
|
|
-0.3
|
ppts
|
Triple Play
Penetration (g)
|
32.4
|
%
|
|
32.0
|
%
|
|
0.4
|
ppts
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
31.2
|
%
|
|
27.8
|
%
|
|
3
|
%
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (h)
|
$111.19
|
|
|
$108.67
|
|
|
2
|
%
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Video (i)
|
108
|
|
|
95
|
|
|
14
|
%
|
Internet
|
345
|
|
|
290
|
|
|
19
|
%
|
Voice
|
218
|
|
|
177
|
|
|
23
|
%
|
|
671
|
|
|
562
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
Video
|
4
|
|
|
—
|
|
|
NM
|
Internet
|
14
|
|
|
11
|
|
|
27
|
%
|
Voice
|
10
|
|
|
8
|
|
|
25
|
%
|
|
28
|
|
|
19
|
|
|
47
|
%
|
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (j)
|
$173.12
|
|
|
$181.83
|
|
|
(5)
|
%
|
|
|
|
|
|
|
|
|
Enterprise PSUs
(k)
|
|
|
|
|
|
|
|
Enterprise
PSUs
|
30
|
|
|
25
|
|
|
20
|
%
|
|
Footnotes
|
In thousands, except
per customer and penetration data. 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.
|
|
NM - Not
meaningful
|
|
All percentages are
calculated using whole numbers. Minor differences may exist due to
rounding.
|
During the fourth quarter of 2015, Charter's residential
customer relationships grew by 82,000, versus 67,000 in the
prior-year period. Residential PSUs increased by 191,000 versus a
gain of 151,000 in the prior-year period, driven by Charter
Spectrum, an industry-leading suite of video, Internet, and
voice services launched in 2014. Charter Spectrum includes
over 200 HD channels, in addition to minimum offered Internet
speeds of 60 Mbps, and a fully-featured voice service, delivered at
a highly competitive price. As of the end of the fourth quarter of
2015, 90% of Charter's residential customers received Charter
Spectrum products.
Residential video customers increased by 29,000 in the fourth
quarter of 2015, versus a loss of 3,000 in the year-ago period. For
the past four years, Charter has significantly increased the
competitiveness of its video product, by including more HD channels
and video on demand offerings, attractive packaging of advanced
services, improved selling methods, and enhanced service quality.
Today, virtually all of Charter's passings are fully digitized,
with access to more HD channels than satellite TV offers, and as of
December 31, 2015, over 96% of Charter's residential video
customers subscribed to the Company's expanded basic video
service.
Charter has introduced its new cloud-based user interface,
Spectrum Guide, to its video customers in certain markets,
including Fort Worth, Texas and
Reno, Nevada. Spectrum
Guide dramatically improves video content search and
discovery, and fully enables Charter's on-demand offering. In
addition, Spectrum Guide can function on nearly all of
Charter's deployed set-tops. Charter is also poised to launch its
new set-top box, World Box, which features downloadable
security along with other advanced functionality, driving an
enhanced customer experience and reducing incremental set-top box
costs.
Charter added 115,000 residential Internet customers in the
fourth quarter of 2015, compared to 104,000 a year ago. As of
December 31, 2015, 88% of Charter's residential Internet
customers subscribed to tiers that provided speeds of 60 Mbps or
more. The Company continues to see strong demand for its Internet
service as consumers value the speed and reliability of Charter's
Internet offering.
During the fourth quarter, the Company added 47,000 residential
voice customers, versus a gain of 50,000 during the fourth quarter
of 2014.
Fourth quarter residential revenue per customer relationship
totaled $111.19, and grew by 2.3% as
compared to the prior-year period, driven by higher product
sell-in, promotional rate step-ups and rate adjustments, partially
offset by continued single play Internet sell-in.
During the fourth quarter of 2015, small and medium business
(SMB) customer relationships grew by 15,000 versus 12,000 during
the fourth quarter of 2014. SMB PSUs increased 28,000, compared to
19,000 during the fourth quarter of 2014. Charter's accelerating
SMB customer and PSU growth is being driven by the launch of the
Spectrum Business product suite to the small and medium
business segments during the first quarter of 2015. This
competitive new offering is intended to provide better products and
greater value to SMB customers.
Fourth Quarter Financial Results
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
(dollars in
millions, except per share data)
|
|
|
Three Months Ended
December 31,
|
|
2015
|
|
2014
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
1,167
|
|
|
$
|
1,134
|
|
|
2.9
|
%
|
Internet
|
781
|
|
|
670
|
|
|
16.6
|
%
|
Voice
|
135
|
|
|
139
|
|
|
(2.7)
|
%
|
Residential
revenue
|
2,083
|
|
|
1,943
|
|
|
7.2
|
%
|
Small and medium
business
|
199
|
|
|
178
|
|
|
11.5
|
%
|
Enterprise
|
95
|
|
|
84
|
|
|
14.1
|
%
|
Commercial
revenue
|
294
|
|
|
262
|
|
|
12.3
|
%
|
Advertising
sales
|
87
|
|
|
107
|
|
|
(18.9)
|
%
|
Other
|
48
|
|
|
48
|
|
|
(1.2)
|
%
|
Total
Revenues
|
2,512
|
|
|
2,360
|
|
|
6.4
|
%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Total operating costs
and expenses
|
1,604
|
|
|
1,515
|
|
|
5.9
|
%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
908
|
|
|
$
|
845
|
|
|
7.5
|
%
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
36.2
|
%
|
|
35.8
|
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
548
|
|
|
$
|
543
|
|
|
|
% Total
Revenues
|
21.8
|
%
|
|
23.0
|
%
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(122)
|
|
|
$
|
(48)
|
|
|
|
Loss per common
share, basic and diluted
|
$
|
(1.09)
|
|
|
$
|
(0.44)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
611
|
|
|
$
|
630
|
|
|
|
Free cash
flow
|
$
|
80
|
|
|
$
|
89
|
|
|
|
Revenue
Fourth quarter 2015 revenues rose to $2.5
billion, 6.4% higher than the year-ago quarter, driven
primarily by growth in Internet, video and commercial revenues.
Video revenues totaled $1.2
billion in the fourth quarter, an increase of 2.9% compared
to the prior-year period. Video revenue growth was driven by higher
advanced services penetration, annual and promotional rate
adjustments and an increase in expanded basic and digital
customers, partially offset by a decrease in residential limited
basic video customers.
Internet revenues grew 16.6% compared to the year-ago quarter to
$781 million, driven by an increase
of 442,000 Internet customers during the last year and by
promotional rolloff, price adjustments and revenue allocation from
higher bundling.
Voice revenues totaled $135
million, a decline of 2.7% versus the fourth quarter of
2014, due to value-based pricing and revenue allocation from higher
bundling, partially offset by the addition of 159,000 voice
customers in the last twelve months.
Commercial revenues rose to $294
million, an increase of 12.3% over the prior-year period,
and was driven by small and medium business revenue growth of 11.5%
and enterprise revenue growth of 14.1%. Following the launch of new
pricing and packaging for commercial customers, PSU growth has
accelerated albeit at lower promotional pricing.
Fourth quarter advertising sales revenues of $87 million decreased 18.9% compared to the
year-ago quarter primarily driven by a decrease in political
advertising revenue of $16
million.
Operating Costs and Expenses
Fourth quarter total operating costs and expenses increased by
$89 million, or 5.9%, compared to the
year-ago period, reflecting increases in programming costs, other
expenses and transition costs related to Charter's pending
transactions with Time Warner Cable Inc. ("Time Warner Cable") and
Bright House Networks, LLC ("Bright House"). Transition costs
accounted for $22 million of total
fourth quarter operating costs. Excluding transition costs, fourth
quarter total operating expenses increased by $78 million, or 5.3% year-over-year.
Fourth quarter programming expense increased by $49 million, or 7.9%, as compared to the fourth
quarter of 2014, reflecting contractual programming increases and a
higher number of expanded basic package customers and the
introduction of new networks to Charter's video offering.
Costs to service customers remained virtually unchanged
year-over-year despite year-over-year residential and SMB customer
relationship growth of 5.6%, given improved service metrics. Other
expenses grew by $28 million, or
14.8%, as compared to the fourth quarter of 2014, reflecting higher
corporate and administrative labor costs, including the insourcing
of IT and software development resources, property taxes and
insurance costs and enterprise sales and labor costs.
Adjusted EBITDA
Fourth quarter Adjusted EBITDA of $908
million grew by 7.5% year-over-year, reflecting revenue
growth and operating costs and expenses growth of 6.4% and 5.9%,
respectively. Excluding transition-related expenses, fourth quarter
Adjusted EBITDA grew by 8.4% year-over-year.
Net Loss
Net loss totaled $122 million in
the fourth quarter of 2015, compared to $48
million in the fourth quarter of 2014. The year-over-year
increase in net loss was driven by $231
million of interest expense related to the financing of
Charter's pending transactions with Time Warner Cable and Bright
House, offset by higher income from operations and lower income tax
expense. Basic and diluted loss per common share was $1.09 in the fourth quarter of 2015 compared to
$0.44 during the same period last
year. The increase in loss per common share was primarily the
result of the factors described above, partially offset by a 1.7%
increase in weighted average shares outstanding versus the
prior-year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $548 million in the fourth quarter of 2015,
compared to $543 million during the
fourth quarter of 2014. The year-over-year increase in capital
expenditures resulted from higher product development investments
and transition capital expenditures related to Charter's planned
and pending acquisitions, partially offset by a decline in customer
premise equipment ("CPE") spending. CPE spending declined versus
the prior-year period as Charter completed its all-digital
initiative in the fourth quarter of 2014. Transition-related
capital expenditures accounted for $49
million of capital expenditures in the fourth quarter of
2015. Excluding transition-related expenditures, fourth quarter
property, plant and equipment expenditures totaled $499 million.
Cash Flow
During the fourth quarter of 2015, net cash flows from operating
activities totaled $611 million,
compared to $630 million in the
fourth quarter of 2014. The year-over-year decline in net cash flow
from operating activities was primarily due to higher cash interest
paid in the fourth quarter of 2015 versus the fourth quarter of
2014, driven by the financing of Charter's pending transactions
with Time Warner Cable and Bright House, partly offset by an
increase in Adjusted EBITDA year-over-year, and a positive
contribution from working capital.
Free cash flow for the fourth quarter of 2015 was $80 million, compared to $89 million during the same period last year. The
decrease was primarily due to the factors described above.
Year to Date Financial Results
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
(dollars in
millions, except per share data)
|
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
Video
|
$
|
|
4,587
|
|
$
|
4,443
|
|
3.2
|
%
|
Internet
|
|
3,003
|
|
|
2,576
|
|
16.6
|
%
|
Voice
|
|
539
|
|
|
575
|
|
(6.4)
|
%
|
Residential
revenue
|
|
8,129
|
|
|
7,594
|
|
7.0
|
%
|
Small and medium business
|
|
764
|
|
|
676
|
|
13.0
|
%
|
Enterprise
|
|
363
|
|
|
317
|
|
14.8
|
%
|
Commercial
revenue
|
|
1,127
|
|
|
993
|
|
13.5
|
%
|
Advertising sales
|
|
309
|
|
|
341
|
|
(9.5)
|
%
|
Other
|
|
189
|
|
|
180
|
|
5.0
|
%
|
Total
Revenues
|
|
9,754
|
|
|
9,108
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
6,348
|
|
|
5,918
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
|
3,406
|
|
$
|
3,190
|
|
6.8
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
34.9
|
|
|
35.0
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
|
1,840
|
|
$
|
2,221
|
|
|
|
% Total
Revenues
|
|
18.9
|
|
|
24.4
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
|
(271)
|
|
$
|
(183)
|
|
|
|
Loss per common
share, basic and diluted
|
$
|
|
(2.43)
|
|
$
|
(1.70)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
|
2,359
|
|
$
|
2,359
|
|
|
|
Free cash
flow
|
$
|
|
547
|
|
$
|
171
|
|
|
|
Revenue
For the year ended December 31, 2015, revenues rose to
$9.8 billion, 7.1% higher than in
2014, driven by continued growth in Internet, video and commercial
revenues.
Operating Costs and Expenses
Operating costs and expenses totaled $6.3
billion in 2015, an increase of $430
million, or 7.3%, compared to the year-ago period,
reflecting increases in programming costs, other expenses and
transition costs. Transition costs accounted for $72 million of total 2015 operating costs.
Excluding transition costs, total operating expenses increased by
$372 million, or 6.3% year over
year.
Adjusted EBITDA
Adjusted EBITDA totaled $3.4
billion for the year ended December 31, 2015, an
increase of 6.8% compared to 2014, reflecting revenue growth and
operating costs and expenses growth of 7.1% and 7.3%,
respectively. Excluding transition-related expenses, Adjusted
EBITDA grew by 8.5% year-over-year.
Net Loss
For the year ended December 31, 2015, net loss was
$271 million, compared to
$183 million in 2014. The
increase was driven by $506 million
of interest expense related to the financing of Charter's pending
transactions with Time Warner Cable and Bright House and previous
transactions with Comcast Corporation ("Comcast"), and an increase
in loss on extinguishment of debt, offset by an income tax benefit
related to a partnership restructuring in the third quarter of 2015
and higher income from operations. Net loss per common share was
$2.43 for the year ended
December 31, 2015, compared to $1.70 in 2014. The increase was primarily the
result of the factors described above, offset by 3.2% increase in
weighted average shares outstanding.
Capital Expenditures
Capital expenditures for the year ended December 31, 2015,
totaled $1.840 billion compared to
$2.221 billion in 2014. The decrease
was the result of the completion of Charter's all-digital
initiative in 2014, partially offset by higher transition capital
expenditures and product development costs in 2015.
Transition-related capital expenditures accounted for $115 million and $27
million of capital expenditures in 2015 and 2014,
respectively. Excluding transition-related expenses, 2015 property,
plant and equipment expenditures totaled $1.725 billion, consistent with management
expectations.
Cash Flow
In 2015, net cash flows from operating activities totaled
$2.4 billion, and remained unchanged
year-over-year, with higher Adjusted EBITDA offset by higher cash
interest payments associated with debt issued to finance Charter's
pending transactions with Time Warner Cable and Bright House and
previous transactions with Comcast.
Free cash flow for the year ended December 31, 2015 was
$547 million, compared to
$171 million during the same period
last year. The increase was primarily due to lower capital
expenditures and higher Adjusted EBITDA, partially offset by higher
cash interest payments.
Liquidity & Financing
As of December 31, 2015, total principal amount of debt was
approximately $35.9 billion, and
Charter held $21.8 billion in
proceeds from debt in escrow for Charter's pending transactions
with Time Warner Cable and Bright House, described below. As of
December 31, 2015, Charter's credit facilities provided
approximately $961 million of
additional liquidity.
In May 2015, Charter entered into
a merger agreement with Time Warner Cable and CCH I, LLC ("New
Charter"), pursuant to which the parties to the agreement will
engage in a series of transactions that will result in Charter and
Time Warner Cable becoming wholly owned subsidiaries of New Charter
(the "TWC Transaction"). After giving effect to the TWC
Transaction, New Charter will be the new public company parent that
will hold the operations of the combined companies.
In May 2015, in connection with
the execution of the merger agreement with Time Warner Cable,
Charter's contribution agreement with Advance/Newhouse Partnership
was amended pursuant to which Charter would become the owner of the
membership interests in Bright House and any other assets primarily
related to Bright House.
In July 2015, Charter issued
$15.5 billion in aggregate principal
amount of senior secured notes comprised of $2.0 billion of 3.579% senior secured notes due
2020, $3.0 billion of 4.464% senior
secured notes due 2022, $4.5 billion
of 4.908% senior secured notes due 2025, $2.0 billion of 6.384% senior secured notes due
2035, $3.5 billion of 6.484% senior
secured notes due 2045 and $500
million of 6.834% senior notes due 2055. The net proceeds
were deposited into an escrow account and will be used to partially
finance the TWC Transaction as well as for general corporate
purposes.
In August 2015, Charter closed on
a new term loan H facility and a new term loan I facility totaling
an aggregate principal amount of $3.8
billion. The new term loan H facility was issued at a
principal amount of $1.0 billion and
matures in 2021. Pricing on the new term loan H facility was set at
LIBOR plus 2.50% with a LIBOR floor of 0.75% and issued at a price
of 99.75% of the aggregate principal amount. The new term loan I
facility was issued at a principal amount of $2.8 billion and matures in 2023. Pricing on the
new term loan I facility was set at LIBOR plus 2.75% with a LIBOR
floor of 0.75% and issued at a price of 99.75% of the aggregate
principal amount. The net proceeds were deposited into an escrow
account and will be used to partially finance the TWC Transaction
as well as for general corporate purposes.
In November 2015, Charter issued
$2.5 billion of 5.750% senior secured
notes due 2026. The net proceeds were deposited into an escrow
account and will be used to partially finance the TWC Transaction
as well as for general corporate purposes.
Conference Call
Charter will host a conference call on Thursday,
February 4, 2016 at 10:00 a.m. Eastern
Time (ET) related to the contents of this release.
The conference call will be webcast live via the Company's
investor relations website at ir.charter.com. The call will be
archived under the "Financial Information" section 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
18788504.
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 February 18,
2016. The conference ID code for the replay is 18788504.
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-K for the year ended December 31,
2015 which will be posted on the "Financial Information" section of
our investor relations website at ir.charter.com, when it is filed
with the United States Securities and Exchange Commission. A slide
presentation to accompany the conference call and a trending
schedule containing historical customer and financial data will
also be available 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 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, (gain) loss
on derivative instruments, net, other expense, net and other
operating expenses, such as merger and acquisition costs, special
charges and (gain) 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. However, this measure is limited in that it
does not reflect the periodic costs of certain capitalized tangible
and intangible assets used in generating revenues and the cash cost
of financing. These costs are evaluated 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.
Management and the Company's board of directors use Adjusted
EBITDA and free cash flow to assess 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 $91 million and
$69 million for the three months
ended December 31, 2015 and 2014, respectively, and
$322 million and $253 million for the year ended December 31,
2015 and 2014, respectively.
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 Spectrum TV™ video
entertainment programming, Spectrum Internet™ access, and Spectrum
Voice™. Spectrum 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 Spectrum Reach™ brand. More
information about Charter can be found at charter.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This communication includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, 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 SEC. Many
of the forward-looking statements contained in this communication
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",
"predict", "project", "seek", "would", "could", "continue",
"ongoing", "upside", "increases" and "potential", among
others. Important factors that could cause actual results to
differ materially from the forward-looking statements we make in
this communication are set forth in our Annual Report on Form 10-K,
our definitive proxy statement filed with the SEC on August 20, 2015, and other reports or documents
that we file from time to time with the SEC, and include, but are
not limited to:
Risks Related to the TWC Transaction and Bright House
Transaction (collectively, the "Transactions")
- delays in the completion of the Transactions;
- the risk that a condition to completion of the Transactions may
not be satisfied;
- the risk that regulatory or other approvals that may be
required for the Transactions is delayed, is not obtained or is
obtained subject to material conditions that are not
anticipated;
- New Charter's ability to achieve the synergies and value
creation contemplated by the Transactions;
- New Charter's ability to promptly, efficiently and effectively
integrate acquired operations into its own operations;
- managing a significantly larger company than before the
completion of the Transactions;
- diversion of management time on issues related to the
Transactions;
- changes in Charter's, TWC's or Bright House's businesses,
future cash requirements, capital requirements, results of
operations, revenues, financial condition and/or cash flows;
- disruption in the existing business relationships of Charter,
TWC and Bright House as a result of the Transactions;
- the increase in indebtedness as a result of the Transactions,
which will increase interest expense and may decrease Charter's
operating flexibility;
- changes in transaction costs, the amount of fees paid to
financial advisors, potential termination fees and the potential
payments to TWC's and Bright House's executive officers in
connection with the Transactions;
- operating costs and business disruption that may be greater
than expected; and
- the ability to retain and hire key personnel and maintain
relationships with providers or other business partners pending
completion of the Transactions.
Risks Related to Our Business
- our ability to sustain and grow revenues and cash flow from
operations by offering video, Internet, voice, 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;
- 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, video
provided over the Internet and providers of advertising over the
Internet;
- general business conditions, economic uncertainty or downturn,
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 development and deployment of new products and technologies
including our cloud-based user interface, Spectrum Guide®, and
downloadable security for set-top boxes;
- the effects of governmental regulation on our business or
potential business combination transactions;
- any events that disrupt our networks, information systems or
properties and impair our operating activities and negatively
impact our reputation;
- 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 data)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
%
Change
|
|
2015
|
|
2014
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
1,167
|
|
|
$
|
1,134
|
|
|
2.9
|
%
|
|
$
|
4,587
|
|
|
$
|
4,443
|
|
|
3.2
|
%
|
Internet
|
781
|
|
|
670
|
|
|
16.6
|
%
|
|
3,003
|
|
|
2,576
|
|
|
16.6
|
%
|
Voice
|
135
|
|
|
139
|
|
|
(2.7)
|
%
|
|
539
|
|
|
575
|
|
|
(6.4)
|
%
|
Residential
revenue
|
2,083
|
|
|
1,943
|
|
|
7.2
|
%
|
|
8,129
|
|
|
7,594
|
|
|
7.0
|
%
|
Small and
medium business
|
199
|
|
|
178
|
|
|
11.5
|
%
|
|
764
|
|
|
676
|
|
|
13.0
|
%
|
Enterprise
|
95
|
|
|
84
|
|
|
14.1
|
%
|
|
363
|
|
|
317
|
|
|
14.8
|
%
|
Commercial
revenue
|
294
|
|
|
262
|
|
|
12.3
|
%
|
|
1,127
|
|
|
993
|
|
|
13.5
|
%
|
Advertising
sales
|
87
|
|
|
107
|
|
|
(18.9)
|
%
|
|
309
|
|
|
341
|
|
|
(9.5)
|
%
|
Other
|
48
|
|
|
48
|
|
|
(1.2)
|
%
|
|
189
|
|
|
180
|
|
|
5.0
|
%
|
Total
Revenues
|
2,512
|
|
|
2,360
|
|
|
6.4
|
%
|
|
9,754
|
|
|
9,108
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
674
|
|
|
625
|
|
|
7.9
|
%
|
|
2,678
|
|
|
2,459
|
|
|
8.9
|
%
|
Franchises, regulatory
and connectivity
|
111
|
|
|
109
|
|
|
1.7
|
%
|
|
435
|
|
|
428
|
|
|
1.6
|
%
|
Costs to service
customers
|
420
|
|
|
421
|
|
|
(0.1)
|
%
|
|
1,705
|
|
|
1,679
|
|
|
1.5
|
%
|
Marketing
|
152
|
|
|
152
|
|
|
—
|
%
|
|
619
|
|
|
610
|
|
|
1.4
|
%
|
Transition
costs
|
22
|
|
|
11
|
|
|
NM
|
|
|
72
|
|
|
14
|
|
|
NM
|
|
Other
|
225
|
|
|
197
|
|
|
14.8
|
%
|
|
839
|
|
|
728
|
|
|
15.5
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
1,604
|
|
|
1,515
|
|
|
5.9
|
%
|
|
6,348
|
|
|
5,918
|
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
908
|
|
|
845
|
|
|
7.5
|
%
|
|
3,406
|
|
|
3,190
|
|
|
6.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
36.2
|
%
|
|
35.8
|
%
|
|
|
|
34.9
|
%
|
|
35.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
545
|
|
|
534
|
|
|
|
|
2,125
|
|
|
2,102
|
|
|
|
Stock compensation
expense
|
20
|
|
|
14
|
|
|
|
|
78
|
|
|
55
|
|
|
|
Other operating
expenses, net
|
20
|
|
|
20
|
|
|
|
|
89
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
323
|
|
|
277
|
|
|
|
|
1,114
|
|
|
971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(435)
|
|
|
(273)
|
|
|
|
|
(1,306)
|
|
|
(911)
|
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
|
|
(128)
|
|
|
—
|
|
|
|
Gain (loss) on
derivative instruments, net
|
6
|
|
|
(4)
|
|
|
|
|
(4)
|
|
|
(7)
|
|
|
|
Other expense,
net
|
(4)
|
|
|
—
|
|
|
|
|
(7)
|
|
|
—
|
|
|
|
|
(433)
|
|
|
(277)
|
|
|
|
|
(1,445)
|
|
|
(918)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(110)
|
|
|
—
|
|
|
|
|
(331)
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
(12)
|
|
|
(48)
|
|
|
|
|
60
|
|
|
(236)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(122)
|
|
|
$
|
(48)
|
|
|
|
|
$
|
(271)
|
|
|
$
|
(183)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS PER COMMON
SHARE, BASIC AND DILUTED
|
$
|
(1.09)
|
|
|
$
|
(0.44)
|
|
|
|
|
$
|
(2.43)
|
|
|
$
|
(1.70)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding, basic and diluted
|
112,106,255
|
|
|
110,242,507
|
|
|
|
|
111,869,771
|
|
|
108,374,160
|
|
|
|
|
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.
|
|
All percentages are
calculated using whole numbers. Minor differences may exist due to
rounding. Certain prior year amounts have been reclassified
to conform with the 2015 presentation.
|
|
NM - Not
meaningful
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(dollars in
millions)
|
|
|
December
31,
|
|
December
31,
|
|
2015
|
|
2014
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
5
|
|
|
$
|
3
|
|
Accounts receivable,
net
|
279
|
|
|
285
|
|
Prepaid expenses and
other current assets
|
61
|
|
|
57
|
|
Total current
assets
|
345
|
|
|
345
|
|
|
|
|
|
RESTRICTED CASH AND
CASH EQUIVALENTS
|
22,264
|
|
|
7,111
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
8,345
|
|
|
8,373
|
|
Franchises
|
6,006
|
|
|
6,006
|
|
Customer
relationships, net
|
856
|
|
|
1,105
|
|
Goodwill
|
1,168
|
|
|
1,168
|
|
Total investment in
cable properties, net
|
16,375
|
|
|
16,652
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
332
|
|
|
280
|
|
|
|
|
|
Total
assets
|
$
|
39,316
|
|
|
$
|
24,388
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY (DEFICIT)
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
1,972
|
|
|
$
|
1,635
|
|
Total current
liabilities
|
1,972
|
|
|
1,635
|
|
|
|
|
|
LONG-TERM
DEBT
|
35,723
|
|
|
20,887
|
|
DEFERRED INCOME
TAXES
|
1,590
|
|
|
1,648
|
|
OTHER LONG-TERM
LIABILITIES
|
77
|
|
|
72
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
(DEFICIT)
|
(46)
|
|
|
146
|
|
|
|
|
|
Total liabilities and
shareholders' equity (deficit)
|
$
|
39,316
|
|
|
$
|
24,388
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(dollars in
millions)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net loss
|
$
|
(122)
|
|
|
$
|
(48)
|
|
|
$
|
(271)
|
|
|
$
|
(183)
|
|
Adjustments to
reconcile net loss to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
545
|
|
|
534
|
|
|
2,125
|
|
|
2,102
|
|
Stock compensation
expense
|
20
|
|
|
14
|
|
|
78
|
|
|
55
|
|
Noncash interest
expense
|
7
|
|
|
8
|
|
|
28
|
|
|
37
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
128
|
|
|
—
|
|
(Gain) loss on
derivative instruments, net
|
(6)
|
|
|
4
|
|
|
4
|
|
|
7
|
|
Deferred income
taxes
|
11
|
|
|
56
|
|
|
(65)
|
|
|
233
|
|
Other, net
|
3
|
|
|
8
|
|
|
11
|
|
|
10
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
|
|
Accounts
receivable
|
12
|
|
|
(15)
|
|
|
5
|
|
|
(51)
|
|
Prepaid expenses and
other assets
|
16
|
|
|
12
|
|
|
(3)
|
|
|
(9)
|
|
Accounts payable,
accrued liabilities and other
|
125
|
|
|
57
|
|
|
319
|
|
|
158
|
|
Net cash flows from
operating activities
|
611
|
|
|
630
|
|
|
2,359
|
|
|
2,359
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(548)
|
|
|
(543)
|
|
|
(1,840)
|
|
|
(2,221)
|
|
Change in accrued
expenses related to capital expenditures
|
17
|
|
|
2
|
|
|
28
|
|
|
33
|
|
Sales of cable
systems, net
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Change in restricted
cash and cash equivalents
|
(2,638)
|
|
|
(3,598)
|
|
|
(15,153)
|
|
|
(7,111)
|
|
Other, net
|
2
|
|
|
(11)
|
|
|
(67)
|
|
|
(16)
|
|
Net cash flows from
investing activities
|
(3,167)
|
|
|
(4,139)
|
|
|
(17,032)
|
|
|
(9,304)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
2,983
|
|
|
3,892
|
|
|
26,045
|
|
|
8,806
|
|
Repayments of
long-term debt
|
(415)
|
|
|
(466)
|
|
|
(11,326)
|
|
|
(1,980)
|
|
Payments for debt
issuance costs
|
(1)
|
|
|
(2)
|
|
|
(36)
|
|
|
(6)
|
|
Purchase of treasury
stock
|
(14)
|
|
|
(1)
|
|
|
(38)
|
|
|
(19)
|
|
Proceeds from
exercise of options and warrants
|
8
|
|
|
80
|
|
|
30
|
|
|
123
|
|
Other, net
|
—
|
|
|
(1)
|
|
|
—
|
|
|
3
|
|
Net cash flows from
financing activities
|
2,561
|
|
|
3,502
|
|
|
14,675
|
|
|
6,927
|
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
5
|
|
|
(7)
|
|
|
2
|
|
|
(18)
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
—
|
|
|
10
|
|
|
3
|
|
|
21
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
|
5
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
304
|
|
|
$
|
226
|
|
|
$
|
1,046
|
|
|
$
|
850
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED SUMMARY
OF OPERATING STATISTICS
|
(in thousands,
except per customer and penetration data)
|
|
|
Approximate as
of
|
|
December 31, 2015
(a)
|
|
September 30, 2015
(a)
|
|
December 31, 2014
(a)
|
Footprint
(b)
|
|
|
|
|
|
Estimated Video
Passings
|
12,783
|
|
|
12,770
|
|
|
12,740
|
|
Estimated Internet
Passings
|
12,515
|
|
|
12,502
|
|
|
12,465
|
|
Estimated Voice
Passings
|
12,062
|
|
|
12,050
|
|
|
12,005
|
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
34.7
|
%
|
|
34.4
|
%
|
|
34.7
|
%
|
Internet Penetration
of Estimated Internet Passings
|
44.5
|
%
|
|
43.5
|
%
|
|
40.7
|
%
|
Voice Penetration of
Estimated Voice Passings
|
23.3
|
%
|
|
22.9
|
%
|
|
21.8
|
%
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
Residential
(e)
|
6,284
|
|
|
6,202
|
|
|
5,990
|
|
Small and Medium
Business (i)
|
390
|
|
|
375
|
|
|
332
|
|
Total Customer
Relationships
|
6,674
|
|
|
6,577
|
|
|
6,322
|
|
|
|
|
|
|
|
Residential
(e)
|
|
|
|
|
|
Primary Service
Units ("PSU")
|
|
|
|
|
|
Video
|
4,322
|
|
|
4,293
|
|
|
4,324
|
|
Internet
|
5,227
|
|
|
5,112
|
|
|
4,785
|
|
Voice
|
2,598
|
|
|
2,551
|
|
|
2,439
|
|
|
12,147
|
|
|
11,956
|
|
|
11,548
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
29
|
|
|
11
|
|
|
(3)
|
|
Internet
|
115
|
|
|
130
|
|
|
104
|
|
Voice
|
47
|
|
|
37
|
|
|
50
|
|
|
191
|
|
|
178
|
|
|
151
|
|
|
|
|
|
|
|
Single Play
(f)
|
2,458
|
|
|
2,445
|
|
|
2,350
|
|
Double Play
(f)
|
1,790
|
|
|
1,760
|
|
|
1,722
|
|
Triple Play
(f)
|
2,036
|
|
|
1,997
|
|
|
1,918
|
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
39.1
|
%
|
|
39.4
|
%
|
|
39.2
|
%
|
Double Play
Penetration (g)
|
28.5
|
%
|
|
28.4
|
%
|
|
28.8
|
%
|
Triple Play
Penetration (g)
|
32.4
|
%
|
|
32.2
|
%
|
|
32.0
|
%
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
31.2
|
%
|
|
30.8
|
%
|
|
27.8
|
%
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (h)
|
$
|
111.19
|
|
|
$
|
110.69
|
|
|
$
|
108.67
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
Video (i)
|
108
|
|
|
104
|
|
|
95
|
|
Internet
|
345
|
|
|
331
|
|
|
290
|
|
Voice
|
218
|
|
|
208
|
|
|
177
|
|
|
671
|
|
|
643
|
|
|
562
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
4
|
|
|
4
|
|
|
—
|
|
Internet
|
14
|
|
|
15
|
|
|
11
|
|
Voice
|
10
|
|
|
11
|
|
|
8
|
|
|
28
|
|
|
30
|
|
|
19
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (j)
|
$
|
173.12
|
|
|
$
|
176.33
|
|
|
$
|
181.83
|
|
|
|
|
|
|
|
Enterprise PSUs
(k)
|
|
|
|
|
|
Enterprise
PSUs
|
30
|
|
|
28
|
|
|
25
|
|
All percentages are
calculated using whole numbers. Minor differences may exist due to
rounding.
|
|
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 December 31, 2015, September
30, 2015 and December 31, 2014, customers include approximately
38,100, 36,800 and 35,100 customers, respectively, whose accounts
were over 60 days, approximately 1,700, 1,200 and 1,500 customers,
respectively, whose accounts were over 90 days and approximately
900, 800 and 900 customers, respectively, whose accounts were over
120 days.
|
|
|
(b)
|
Passings represent
our estimate of the number of units, such as single family homes,
apartment and condominium units and small and medium business and
enterprise sites passed by our cable distribution network in the
areas where we offer the service indicated. These estimates
are based upon the information available at this time and are
updated for all periods presented when new information becomes
available.
|
|
|
(c)
|
Penetration
represents residential and small and medium business customers as a
percentage of estimated passings for the service
indicated.
|
|
|
(d)
|
Customer
relationships include the number of customers that receive one or
more levels of service, encompassing video, Internet and voice
services, without regard to which service(s) such customers
receive. Total customer relationships excludes enterprise
customer relationships.
|
|
|
(e)
|
Charter revised its
methodology for counting customers who reside in residential
multiple dwelling units ("MDUs") that are billed under bulk
contracts. Beginning in the fourth quarter of 2015, we count
and report customers based on the number of billed units within
each bulk MDU, similar to recent reporting changes at our peers and
reflecting the completion of all-digital which requires a direct
billing relationship for all units which receive a set-top
box. Previously, our methodology for reporting residential
customers generally excluded units under bulk arrangements, unless
those units had a direct billing relationship. Prior year
information has been revised to reflect our revised
methodology.
|
|
|
(f)
|
Single play, double
play and triple play customers represent customers that subscribe
to one, two or three of Charter service offerings,
respectively.
|
|
|
(g)
|
Single play, double
play and triple play penetration represents the number of
residential single play, double play and triple play customers,
respectively, as a percentage of residential customer
relationships.
|
|
|
(h)
|
Monthly residential
revenue per residential customer is calculated as total residential
video, Internet and voice quarterly revenue divided by three
divided by average residential customer relationships during the
respective quarter.
|
|
|
(i)
|
Charter revised its
methodology for counting small and medium business video
customers. Beginning in the fourth quarter of 2015, small and
medium business customers are counted based on the number of
customer locations. Previously, we had counted and reported
video customers on an equivalent bulk unit ("EBU") basis.
EBUs were calculated 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.
Prior year information has been revised to reflect our revised
methodology.
|
|
|
(j)
|
Monthly small and
medium business revenue per customer is calculated as total small
and medium business quarterly revenue divided by three divided by
average small and medium business customer relationships during the
respective quarter.
|
|
|
(k)
|
Enterprise PSUs
represents the aggregate number of Charter's fiber service
offerings counting each separate service offering at each customer
location as an individual PSU.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
MEASURES
|
(dollars in
millions)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(122)
|
|
|
$
|
(48)
|
|
|
$
|
(271)
|
|
|
$
|
(183)
|
|
Plus: Interest
expense, net
|
435
|
|
|
273
|
|
|
1,306
|
|
|
911
|
|
Income tax (benefit)
expense
|
12
|
|
|
48
|
|
|
(60)
|
|
|
236
|
|
Depreciation and
amortization
|
545
|
|
|
534
|
|
|
2,125
|
|
|
2,102
|
|
Stock compensation
expense
|
20
|
|
|
14
|
|
|
78
|
|
|
55
|
|
Loss on extinguishment
of debt
|
—
|
|
|
—
|
|
|
128
|
|
|
—
|
|
(Gain) loss on
derivative instruments, net
|
(6)
|
|
|
4
|
|
|
4
|
|
|
7
|
|
Other, net
|
24
|
|
|
20
|
|
|
96
|
|
|
62
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(a)
|
908
|
|
|
845
|
|
|
3,406
|
|
|
3,190
|
|
Less: Purchases
of property, plant and equipment
|
(548)
|
|
|
(543)
|
|
|
(1,840)
|
|
|
(2,221)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less
capital expenditures
|
$
|
360
|
|
|
$
|
302
|
|
|
$
|
1,566
|
|
|
$
|
969
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
611
|
|
|
$
|
630
|
|
|
$
|
2,359
|
|
|
$
|
2,359
|
|
Less: Purchases
of property, plant and equipment
|
(548)
|
|
|
(543)
|
|
|
(1,840)
|
|
|
(2,221)
|
|
Change in accrued
expenses related to capital expenditures
|
17
|
|
|
2
|
|
|
28
|
|
|
33
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
|
80
|
|
|
$
|
89
|
|
|
$
|
547
|
|
|
$
|
171
|
|
|
(a) 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
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Customer premise
equipment (a)
|
$
|
134
|
|
|
$
|
174
|
|
|
$
|
582
|
|
|
$
|
1,082
|
|
Scalable
infrastructure (b)
|
188
|
|
|
148
|
|
|
523
|
|
|
455
|
|
Line extensions
(c)
|
50
|
|
|
45
|
|
|
194
|
|
|
176
|
|
Upgrade/Rebuild
(d)
|
34
|
|
|
36
|
|
|
128
|
|
|
167
|
|
Support capital
(e)
|
142
|
|
|
140
|
|
|
413
|
|
|
341
|
|
|
|
|
|
|
|
|
|
Total
capital expenditures (f)
|
$
|
548
|
|
|
$
|
543
|
|
|
$
|
1,840
|
|
|
$
|
2,221
|
|
(a)
|
Customer premise
equipment includes costs incurred at the customer residence to
secure new customers and revenue generating units, including
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 and revenue generating
units, 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 for the years ended December 31, 2015 and 2014
include the following (dollars in millions):
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Capital expenditures
related to commercial services
|
$
|
74
|
|
|
$
|
58
|
|
|
$
|
260
|
|
|
$
|
242
|
|
Capital expenditures
related to transition
|
$
|
49
|
|
|
$
|
26
|
|
|
$
|
115
|
|
|
$
|
27
|
|
Capital expenditures
related to all-digital transition
|
$
|
—
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
410
|
|
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SOURCE Charter Communications, Inc.