STAMFORD, Conn., Oct. 26,
2017 /PRNewswire/ -- Charter Communications, Inc. (along with
its subsidiaries, the "Company" or "Charter") today reported
financial and operating results for the three and nine months ended
September 30, 2017. On May 18,
2016, Charter completed its transactions between the
Company, Time Warner Cable Inc. ("Legacy TWC") and Charter
Communications, Inc. ("Legacy Charter"), and Legacy Charter and
Bright House Networks, LLC ("Legacy Bright House") (collectively,
the "Transactions"). Pro forma1 results give
effect to the Transactions as if they had closed on January 1, 2015 and include the operations of
Legacy Charter, Legacy TWC and Legacy Bright House for the nine
months ended September 30, 2016.
Key highlights:
- Third quarter total customer relationships increased 212,000,
compared to 275,000 during the third quarter of 2016, when
excluding the impact of customer activity related to Legacy Bright
House's seasonal customer plan in 2016.2 Third quarter
total residential and SMB primary service units ("PSUs") increased
by 257,000, while third quarter 2016 PSUs grew by 395,000, when
adjusted for the seasonal customer program changes at Legacy Bright
House.
- Third quarter revenues of $10.5
billion grew 4.2%, as compared to the prior year period,
driven by residential revenue growth of 4.4% and commercial revenue
growth of 8.0%, partly offset by a decline in advertising revenue
of 11.1%, due to lower political revenue.
- Third quarter Adjusted EBITDA3 of $3.8 billion grew 5.0% year-over-year, and 4.7%
when excluding transition costs.
- Net income attributable to Charter shareholders in the third
quarter declined to $48 million from
$189 million during the same period
last year. The decline was driven by an increase in depreciation
and amortization in the third quarter of 2017, partly offset by a
year-over-year increase in Adjusted EBITDA.
- Third quarter capital expenditures totaled $2.4 billion, and $2.3
billion when excluding transition capital expenditures.
- During the third quarter, Charter purchased approximately 10.9
million shares of Charter Class A common stock and Charter Holdings
common units for approximately $4.0
billion.
"Our integration is going well and remains on schedule. And
despite the complexity that comes with changing the way we do
business in 75% of our footprint, we continue to generate solid
customer, revenue and EBITDA growth," said Tom Rutledge, Chairman and CEO of Charter
Communications, Inc. "Through our integration, we are creating one
company, with a unified and centralized operating strategy, which
will put Charter on a path to be able to grow quickly over a
multi-year period."
1
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See Exhibit 99.1 in
the Company's Quarterly Report on Form 10-Q for the three and nine
months ended September 30, 2016 filed with the Securities and
Exchange Commission on November 3, 2016, which includes
reconciliations of the pro forma information to actual
information for each quarter of 2015 and the first and second
quarters of 2016. See the "Use of Adjusted EBITDA, Free Cash Flow
and Pro Forma Information" section of this document for additional
information.
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2
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In the second quarter
of 2017, Charter conformed the seasonal customer program in the
Legacy Bright House footprint to Charter's program. For additional
information, see footnote j on page 6 of the addendum to this
release.
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3
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Adjusted EBITDA and
free cash flow are defined in the "Use of Adjusted EBITDA, Free
Cash Flow and Pro Forma Information" section and are reconciled to
consolidated net income and net cash flows from operating
activities, respectively, in the addendum of this news
release.
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Key Operating
Results
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Approximate as
of
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September 30,
2017 (a)
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September 30,
2016 (a)(j)
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Y/Y
Change
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Footprint
(b)
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Estimated Video
Passings
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49,854
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49,001
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1.7%
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Estimated Internet
Passings
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49,594
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48,689
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1.9%
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Estimated Voice
Passings
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48,832
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47,854
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2.0%
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Penetration
Statistics (c)
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Video Penetration of
Estimated Video Passings
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34.1%
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35.3%
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(1.2)
ppts
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Internet Penetration
of Estimated Internet Passings
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47.6%
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45.6%
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2.0ppts
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Voice Penetration of
Estimated Voice Passings
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23.1%
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23.1%
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—ppts
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Customer
Relationships (d)
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Residential
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25,470
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24,551
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3.7%
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Small and Medium
Business
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1,523
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1,367
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11.4%
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Total Customer
Relationships
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26,993
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25,918
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4.1%
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Residential
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Primary Service
Units ("PSUs")
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Video
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16,542
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16,887
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(2.0)%
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Internet
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22,282
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21,017
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6.0%
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Voice
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10,405
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10,288
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1.1%
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49,229
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48,192
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2.2%
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Quarterly Net
Additions/(Losses)
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Video
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(104)
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(47)
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(121.3)%
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Internet
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249
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350
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(28.9)%
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Voice
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27
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33
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(18.2)%
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172
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336
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(48.8)%
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Single Play
(e)
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10,373
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9,447
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9.8%
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Double Play
(e)
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6,436
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6,569
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(2.0)%
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Triple Play
(e)
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8,661
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8,535
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1.5%
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Single Play
Penetration (f)
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40.7%
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38.5%
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2.2ppts
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Double Play
Penetration (f)
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25.3%
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26.8%
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(1.5)
ppts
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Triple Play
Penetration (f)
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34.0%
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34.8%
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(0.8)
ppts
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% Residential
Non-Video Customer Relationships
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35.1%
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31.2%
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3.9ppts
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Monthly Residential
Revenue per Residential Customer (g)
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$110.12
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$109.70
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0.4%
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Small and Medium
Business
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PSUs
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Video
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440
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388
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13.4%
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Internet
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1,321
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1,185
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11.5%
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Voice
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881
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751
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17.3%
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2,642
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2,324
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13.7%
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Quarterly Net
Additions/(Losses)
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Video
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15
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10
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50.0%
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Internet
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36
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37
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(2.7)%
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Voice
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34
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26
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30.8%
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85
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73
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16.4%
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Monthly Small and
Medium Business Revenue per Customer (h)
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$206.64
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$214.53
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(3.7)%
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Enterprise PSUs
(i)
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Enterprise
PSUs
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108
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93
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16.1%
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Footnotes In thousands, except per customer
and penetration data. 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.
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All percentages are
calculated using whole numbers. Minor differences may exist due to
rounding.
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During the third quarter, Charter continued its all-digital
efforts in the approximately 35% of Legacy TWC's footprint and 60%
of Legacy Bright House's footprint that are not yet all-digital.
All-digital allows Charter to offer more advanced products and
services, and provides residential customers with two-way digital
set-top boxes, which offer better picture quality, an interactive
programming guide and video on demand on all TV outlets in the
home.
During the third quarter of 2017, Charter's residential customer
relationships grew by 172,000, while third quarter 2016 customer
relationships grew by 245,000, or 241,000 when adjusted for
seasonal program changes made at Legacy Bright House.1
Residential PSUs increased by 172,000 in the third quarter of 2017,
while third quarter 2016 PSUs increased by 336,000, or 322,000 when
adjusted for the seasonal program changes at Legacy Bright House.
As of September 30, 2017, Charter had 25.5 million residential
customer relationships and 49.2 million residential PSUs.
Residential video customers decreased by 104,000 in the third
quarter of 2017, while third quarter 2016 video customers decreased
by 47,000, or 51,000 when adjusted for seasonal program changes
made at Legacy Bright House. As of September 30, 2017, Charter
had 16.5 million residential video customers.
Charter added 249,000 residential Internet customers in the
third quarter of 2017, while third quarter 2016 Internet customers
grew by 350,000, or 344,000 when adjusted for seasonal program
changes made at Legacy Bright House. Charter now offers minimum
Internet speeds of at least 100 Mbps to over 75% of its total
footprint, with nearly all of Charter's remaining footprint
offering minimum Internet speeds of at least 60 Mbps. As of
September 30, 2017, 93% of Legacy Charter's residential
Internet customers subscribed to tiers that provided speeds of 60
Mbps or more compared to 73% at Legacy TWC and 80% at Legacy Bright
House. The Company continues to see strong demand for its Internet
service as consumers value the speed and reliability of Charter's
Internet offering. As of September 30, 2017, Charter had 22.3
million residential Internet customers.
During the third quarter of 2017, the Company added 27,000
residential voice customers, while third quarter 2016 voice
customers grew by 33,000, or 29,000 when adjusted for seasonal
program changes made at Legacy Bright House. As of
September 30, 2017, Charter had 10.4 million residential voice
customers.
Third quarter residential revenue per customer relationship
totaled $110.12, and grew by 0.4%
compared to the prior year period, as promotional rate step-ups,
modest rate adjustments, and pay-per-view event revenue were
partially offset by continued single play Internet sell-in and the
migration of Legacy TWC and Legacy Bright House customers to
higher-value Spectrum pricing and packaging.
During the third quarter of 2017, SMB customer relationships
grew by 40,000, versus customer growth of 34,000 during the third
quarter of 2016. SMB PSUs increased 85,000, compared to 73,000
during the third quarter of 2016. As of September 30, 2017,
Charter had 1.5 million SMB customer relationships and 2.6 million
SMB PSUs.
1
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See footnote j on
page 6 of the addendum to this release for additional information
regarding changes made to Legacy Bright House's seasonal customer
program in the second quarter of 2017.
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Third Quarter
Financial Results
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CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA
(dollars in millions, except per share data)
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Three Months Ended
September 30,
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2017
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2016
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%
Change
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REVENUES:
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Video
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$
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4,213
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$
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4,094
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2.9
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%
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Internet
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3,556
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3,206
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10.9
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%
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Voice
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611
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728
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(16.1)
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%
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Residential
revenue
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8,380
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8,028
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4.4
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%
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Small and medium
business
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931
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867
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7.4
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%
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Enterprise
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553
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508
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8.9
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%
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Commercial
revenue
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1,484
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1,375
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8.0
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%
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Advertising
sales
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373
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420
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(11.1)
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%
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Other
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221
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214
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3.0
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%
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Total
Revenue
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10,458
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10,037
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4.2
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%
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COSTS AND
EXPENSES:
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Total operating costs
and expenses
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6,639
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6,401
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3.7
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%
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Adjusted
EBITDA
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$
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3,819
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$
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3,636
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5.0
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%
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Adjusted EBITDA
margin
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36.5
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%
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36.2
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%
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Capital
Expenditures
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$
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2,393
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$
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1,748
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% Total
Revenues
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22.9
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%
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17.4
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%
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Net income
attributable to Charter shareholders
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$
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48
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$
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189
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Earnings per common
share attributable to Charter shareholders:
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Basic
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$
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0.19
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$
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0.70
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Diluted
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$
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0.19
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$
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0.69
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Net cash flows from
operating activities
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$
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2,908
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$
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2,801
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Free cash
flow
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$
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594
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$
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1,001
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Revenue
Third quarter revenues rose 4.2% year-over-year to $10.5 billion, driven by growth in Internet,
video and commercial revenues. Excluding advertising, third quarter
revenues increased 4.9% year-over-year.
Video revenues totaled $4.2
billion in the third quarter, an increase of 2.9% compared
to prior-year period. Video revenue growth was driven by annual and
promotional rate adjustments, pay-per-view events, and
revenue allocation relating to the launch of Spectrum
pricing and packaging in Legacy TWC and Legacy Bright House,
partially offset by a decrease in video customers over the last 12
months.
Internet revenues grew 10.9%, compared to the year-ago quarter,
to $3.6 billion, driven by growth in
Internet customers during the last year, promotional rolloff and
revenue allocation relating to the launch of Spectrum
pricing and packaging in Legacy TWC and Legacy Bright House.
Voice revenues totaled $611
million in the third quarter, a decrease of 16.1% compared
to the third quarter of 2016, as value-based pricing and revenue
allocation relating to the launch of Spectrum pricing and packaging
in Legacy TWC and Legacy Bright House, more than offset voice
customer growth over the last twelve months.
Commercial revenues rose to $1.5
billion, an increase of 8.0% over the prior year period,
driven by SMB revenue growth of 7.4% and enterprise revenue growth
of 8.9%.
Third quarter advertising sales revenues of $373 million decreased 11.1% compared to the
year-ago quarter, driven by a decrease in political, as well as
barter and local advertising revenue.
Operating Costs and Expenses
Third quarter total operating costs and expenses increased by
$238 million, or 3.7%, compared to
the year-ago period.
Third quarter programming expense increased by $295 million, or 12.3% as compared to the third
quarter of 2016, reflecting contractual programming increases,
renewals, improving expanded basic video sell-in at Legacy TWC and
higher pay-per-view expenses.
Costs to service customers decreased by $73 million or 3.6% year-over-year, as a result
of benefits from the combination of the three companies and
improved productivity.
Marketing expenses increased by $33
million, or 5.6% year-over-year due to higher sales and the
implementation of Charter's selling tactics in the acquired
footprints. Other expenses decreased by $16
million, or 2.0% as compared to the third quarter of 2016,
driven primarily by Transactions synergies.
Adjusted EBITDA
Third quarter Adjusted EBITDA of $3.8
billion grew by 5.0% year-over-year reflecting revenue
growth and operating expense growth of 4.2% and 3.7%, respectively.
Excluding transition costs of $23
million in the third quarter of 2017 and $32 million in the prior year period, Adjusted
EBITDA grew by 4.7% year-over-year.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$48 million in the third quarter of
2017, compared to $189 million in the
third quarter of 2016. The year-over-year decrease in net income
was primarily driven by higher depreciation and amortization in the
third quarter of 2017, higher interest expense and a decrease in
gain on financial instruments, partly offset by higher Adjusted
EBITDA and lower severance-related and transactions expenses.
Net income per basic common share attributable to Charter
shareholders totaled $0.19 in the
third quarter of 2017 compared to $0.70 during the same period last year. The
decrease was primarily the result of the factors described above,
partially offset by a 6.4% decrease in weighted average shares
outstanding versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $2.4 billion in the third quarter of 2017,
compared to $1.7 billion during the
third quarter of September 30, 2016.
The year-over-year increase in capital expenditures was driven by
an increase in CPE spending related to higher customer connect
volumes driven by the launch of Spectrum pricing and
packaging in Legacy TWC and Legacy Bright House and the related
higher set-top box placement rate per Spectrum connect, and
CPE related to Charter's all-digital initiative. The increase in
scalable infrastructure was related to the timing of in-year spend
and planned product improvements for video and Internet. Support
capital increased due to the in-year timing of vehicle purchases
and capitalized labor associated with software development.
Transition capital expenditures accounted for $125 million of capital expenditures in the third
quarter of 2017, versus $109 million
in the third quarter of 2016. Excluding transition-related
expenditures, third quarter 2017 capital expenditures totaled
$2.3 billion, compared to
$1.6 billion during the same period
last year.
Cash Flow and Free Cash Flow
During the third quarter of 2017, net cash flows from operating
activities totaled $2.9 billion,
compared to $2.8 billion in the third
quarter of 2016. The year-over-year increase in net cash flows from
operating activities was primarily due to higher Adjusted EBITDA,
partly offset by a smaller working capital benefit in the third
quarter of 2017 versus the third quarter of 2016.
Free cash flow for the third quarter of 2017 totaled
$594 million, compared to
$1.0 billion during the same period
last year. The decrease was driven by higher capital expenditures
in the third quarter of 2017 versus the third quarter of 2016,
partly offset by higher net cash flows from operating
activities.
Liquidity & Financing
As of September 30, 2017, total principal amount of debt
was $66.8 billion and Charter's
credit facilities provided approximately $2.9 billion of additional liquidity in excess of
Charter's $2.2 billion cash
position.
In July, Charter Operating and Charter Communications Operating
Capital Corp. issued $1.0 billion of
3.750% senior secured notes due 2028 and an additional $500 million of 5.375% senior secured notes due
2047. The net proceeds were used to pay related fees and expenses
and for general corporate purposes, including buybacks of Charter
Class A common stock or common units of Charter Communications
Holdings, LLC.
In August, CCO Holdings, LLC and CCO Holdings Capital
Corp. issued $1.5 billion of 5.000%
senior unsecured notes due 2028. The net proceeds were used to pay
related fees and expenses and for general corporate purposes,
including buybacks of Charter Class A common stock or common units
of Charter Communications Holdings, LLC.
In September, Charter Communications Operating,
LLC and Charter Communications Operating Capital Corp.
issued $1.25 billion of 4.200% senior
secured notes due 2028, and an additional $750 million of 5.375% senior secured notes due
2047. The net proceeds were used to pay related fees and expenses
and for general corporate purposes, including buybacks of Charter
Class A common stock or common units of Charter Communications
Holdings, LLC.
In October, CCO Holdings, LLC and CCO Holdings Capital
Corp. issued $500 million of 4.000%
senior unsecured notes due 2023, and an additional $1.0 billion of 5.000% senior unsecured notes due
2028. The net proceeds will be used to pay related fees and
expenses and for general corporate purposes, including buybacks of
Charter Class A common stock or common units of Charter
Communications Holdings, LLC.
Share Repurchases
During the three months ended September 30, 2017, Charter
purchased approximately 10.9 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$4.0 billion.
Conference Call
Charter will host a conference call on Thursday,
October 26, 2017 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
79481864.
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 November 8,
2017. The conference ID code for the replay is 79481864.
Additional Information Available on Website
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in the Company's Quarterly Report on Form 10-Q for the three and
nine months ended September 30, 2017, which will be posted on
the "Financial Information" section of our investor relations
website at ir.charter.com, when it is filed with the Securities and
Exchange Commission (the "SEC"). 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 Adjusted EBITDA, Free Cash Flow and Pro Forma
Information
The company uses certain measures that are not defined by U.S.
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, consolidated net income and
net 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 and free cash flow are reconciled to consolidated
net income and net cash flows from operating activities,
respectively, in the Addendum to this release.
Adjusted EBITDA is defined as consolidated net income plus net
interest expense, income taxes, depreciation and amortization,
stock compensation expense, loss on extinguishment of debt, (gain)
loss on financial instruments, other pension (benefits) costs,
other (income) expense, net and other operating (income) expenses,
such as merger and restructuring 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 capital expenditures and changes in accrued
expenses related to capital expenditures.
Management and Charter'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 facilities and notes
(all such documents have been previously filed with the the SEC).
For the purpose of calculating compliance with leverage covenants,
the Company uses Adjusted EBITDA, as presented, excluding certain
expenses paid by its operating subsidiaries to other Charter
entities. The Company's debt covenants refer to these expenses as
management fees, which were $262
million and $231 million for
the three months ended September 30, 2017 and 2016,
respectively, and were $791 million
and $535 million for the nine months
ended September 30, 2017 and 2016, respectively.
Pro forma results give effect to the Transactions as if
they had closed on January 1, 2015
and include the operations of Legacy Charter, Legacy TWC and Legacy
Bright House for the nine months ended September 30, 2016. Due
to the transformative nature of the Transactions, the Company
believes that providing a discussion of its results of operations
on a pro forma basis provides management and investors a
more meaningful perspective on the Company's financial and
operational performance and trends. The results of operations
data on a pro forma basis are provided for illustrative
purposes only and are based on available information and
assumptions that Charter believes are reasonable and do not purport
to represent what the actual consolidated results of operations of
Charter would have been had the Transactions occurred on
January 1, 2015, nor are they
necessarily indicative of future consolidated results of operations
or consolidated financial position. Exhibit 99.1 in the Company's
Quarterly Report on Form 10-Q for the three and nine months ended
September 30, 2016 filed with the SEC
on November 3, 2016 provides pro
forma financial information for each quarter of 2015 and the
first and second quarters of 2016 and a reconciliation of the
pro forma financial information to the actual results of
operations of the Company.
About Charter
Charter (NASDAQ: CHTR) is a leading broadband
communications company and the second 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 as
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," "initiatives," "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,
and 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 promptly, efficiently and effectively integrate
acquired operations;
- 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, fiber to the
home providers, video provided over the Internet by (i) market
participants that have not historically competed in the
multichannel video business, (ii) traditional multichannel video
distributors, and (iii) content providers that have historically
licensed cable networks to multichannel video distributors, 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);
- our ability to develop and deploy new products and technologies
including wireless products, our cloud-based user interface,
Spectrum Guide®, and downloadable security for set-top
boxes, and any other cloud-based consumer services and service
platforms;
- the effects of governmental regulation on our business or
potential business combination transactions including costs,
disruptions and possible limitations on operating flexibility
related to, and our ability to comply with, regulatory conditions
applicable to us as a result of the Time Warner Inc. and Bright
House Networks, LLC Transactions;
- any events that disrupt our networks, information systems or
properties and impair our operating activities or our
reputation;
- the ability to retain and hire key personnel;
- 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 communication.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA
(dollars in millions, except per share
data)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
|
|
2017
|
|
2016
|
|
|
|
Actual
|
|
Actual
|
|
%
Change
|
|
Actual
|
|
Actual
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
4,213
|
|
|
$
|
4,094
|
|
|
2.9
|
%
|
|
$
|
12,416
|
|
|
$
|
7,869
|
|
|
57.8
|
%
|
Internet
|
3,556
|
|
|
3,206
|
|
|
10.9
|
%
|
|
10,467
|
|
|
5,960
|
|
|
75.6
|
%
|
Voice
|
611
|
|
|
728
|
|
|
(16.1)
|
%
|
|
1,955
|
|
|
1,286
|
|
|
51.9
|
%
|
Residential
revenue
|
8,380
|
|
|
8,028
|
|
|
4.4
|
%
|
|
24,838
|
|
|
15,115
|
|
|
64.3
|
%
|
Small and medium
business
|
931
|
|
|
867
|
|
|
7.4
|
%
|
|
2,755
|
|
|
1,589
|
|
|
73.3
|
%
|
Enterprise
|
553
|
|
|
508
|
|
|
8.9
|
%
|
|
1,640
|
|
|
903
|
|
|
81.6
|
%
|
Commercial
revenue
|
1,484
|
|
|
1,375
|
|
|
8.0
|
%
|
|
4,395
|
|
|
2,492
|
|
|
76.3
|
%
|
Advertising
sales
|
373
|
|
|
420
|
|
|
(11.1)
|
%
|
|
1,091
|
|
|
729
|
|
|
49.9
|
%
|
Other
|
221
|
|
|
214
|
|
|
3.0
|
%
|
|
655
|
|
|
392
|
|
|
66.9
|
%
|
Total
Revenue
|
10,458
|
|
|
10,037
|
|
|
4.2
|
%
|
|
30,979
|
|
|
18,728
|
|
|
65.4
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
2,699
|
|
|
2,404
|
|
|
12.3
|
%
|
|
7,952
|
|
|
4,648
|
|
|
71.1
|
%
|
Regulatory,
connectivity and produced content
|
523
|
|
|
515
|
|
|
1.6
|
%
|
|
1,553
|
|
|
944
|
|
|
64.5
|
%
|
Costs to service
customers
|
1,943
|
|
|
2,016
|
|
|
(3.6)
|
%
|
|
5,798
|
|
|
3,663
|
|
|
58.3
|
%
|
Marketing
|
629
|
|
|
596
|
|
|
5.6
|
%
|
|
1,812
|
|
|
1,143
|
|
|
58.6
|
%
|
Transition
costs
|
23
|
|
|
32
|
|
|
(28.6)
|
%
|
|
104
|
|
|
78
|
|
|
33.4
|
%
|
Other
expense
|
822
|
|
|
838
|
|
|
(2.0)
|
%
|
|
2,440
|
|
|
1,513
|
|
|
61.3
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
6,639
|
|
|
6,401
|
|
|
3.7
|
%
|
|
19,659
|
|
|
11,989
|
|
|
64.0
|
%
|
Adjusted
EBITDA
|
3,819
|
|
|
3,636
|
|
|
5.0
|
%
|
|
11,320
|
|
|
6,739
|
|
|
68.0
|
%
|
Adjusted EBITDA
margin
|
36.5
|
%
|
|
36.2
|
%
|
|
|
|
36.5
|
%
|
|
36.0
|
%
|
|
|
Depreciation and
amortization
|
2,701
|
|
|
2,437
|
|
|
|
|
7,846
|
|
|
4,412
|
|
|
|
Stock compensation
expense
|
64
|
|
|
81
|
|
|
|
|
198
|
|
|
168
|
|
|
|
Other operating
expenses, net
|
145
|
|
|
207
|
|
|
|
|
374
|
|
|
776
|
|
|
|
Income from
operations
|
909
|
|
|
911
|
|
|
|
|
2,902
|
|
|
1,383
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(788)
|
|
|
(724)
|
|
|
|
|
(2,250)
|
|
|
(1,771)
|
|
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
|
|
(35)
|
|
|
(110)
|
|
|
|
Gain (loss) on
financial instruments, net
|
17
|
|
|
71
|
|
|
|
|
(15)
|
|
|
16
|
|
|
|
Other pension
benefits (costs)
|
(17)
|
|
|
13
|
|
|
|
|
9
|
|
|
533
|
|
|
|
Other expense,
net
|
(3)
|
|
|
(5)
|
|
|
|
|
(14)
|
|
|
(10)
|
|
|
|
|
(791)
|
|
|
(645)
|
|
|
|
|
(2,305)
|
|
|
(1,342)
|
|
|
|
Income before income
taxes
|
118
|
|
|
266
|
|
|
|
|
597
|
|
|
41
|
|
|
|
Income tax benefit
(expense)
|
(26)
|
|
|
(16)
|
|
|
|
|
(99)
|
|
|
3,135
|
|
|
|
Consolidated net
income
|
92
|
|
|
250
|
|
|
|
|
498
|
|
|
3,176
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(44)
|
|
|
(61)
|
|
|
|
|
(156)
|
|
|
(108)
|
|
|
|
Net income attributable
to Charter shareholders
|
$
|
48
|
|
|
$
|
189
|
|
|
|
|
$
|
342
|
|
|
$
|
3,068
|
|
|
|
EARNINGS PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
ATTRIBUTABLE TO
CHARTER SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.19
|
|
|
$
|
0.70
|
|
|
|
|
$
|
1.31
|
|
|
$
|
16.52
|
|
|
|
Diluted
|
$
|
0.19
|
|
|
$
|
0.69
|
|
|
|
|
$
|
1.29
|
|
|
$
|
15.23
|
|
|
|
Weighted average
common shares outstanding, basic
|
253,923,805
|
|
|
271,263,259
|
|
|
|
|
262,074,603
|
|
|
185,706,106
|
|
|
|
Weighted average
common shares outstanding, diluted
|
258,341,851
|
|
|
275,373,202
|
|
|
|
|
266,363,602
|
|
|
208,460,148
|
|
|
|
Adjusted EBITDA is a non-GAAP term. See page 7 of this
addendum for the reconciliation of Adjusted EBITDA to consolidated
net income as defined by GAAP. All percentages are calculated
using whole numbers. Minor differences may exist due to
rounding.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA
(dollars in millions, except per share
data)
|
|
|
|
Nine Months Ended
September 30,
|
|
2017
Actual
|
|
2016
Pro
Forma
|
|
%
Change
|
|
|
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
12,416
|
|
|
$
|
12,292
|
|
|
1.0
|
%
|
Internet
|
10,467
|
|
|
9,376
|
|
|
11.6
|
%
|
Voice
|
1,955
|
|
|
2,186
|
|
|
(10.6)
|
%
|
Residential
revenue
|
24,838
|
|
|
23,854
|
|
|
4.1
|
%
|
Small and medium
business
|
2,755
|
|
|
2,518
|
|
|
9.4
|
%
|
Enterprise
|
1,640
|
|
|
1,499
|
|
|
9.4
|
%
|
Commercial
revenue
|
4,395
|
|
|
4,017
|
|
|
9.4
|
%
|
Advertising
sales
|
1,091
|
|
|
1,190
|
|
|
(8.2)
|
%
|
Other
|
655
|
|
|
687
|
|
|
(4.8)
|
%
|
Total
Revenue
|
30,979
|
|
|
29,748
|
|
|
4.1
|
%
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Programming
|
7,952
|
|
|
7,228
|
|
|
10.0
|
%
|
Regulatory,
connectivity and produced content
|
1,553
|
|
|
1,570
|
|
|
(1.1)
|
%
|
Costs to service
customers
|
5,798
|
|
|
5,933
|
|
|
(2.3)
|
%
|
Marketing
|
1,812
|
|
|
1,804
|
|
|
0.5
|
%
|
Transition
costs
|
104
|
|
|
78
|
|
|
33.4
|
%
|
Other
expense
|
2,440
|
|
|
2,524
|
|
|
(3.3)
|
%
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
19,659
|
|
|
19,137
|
|
|
2.7
|
%
|
Adjusted
EBITDA
|
11,320
|
|
|
10,611
|
|
|
6.7
|
%
|
Adjusted EBITDA
margin
|
36.5
|
%
|
|
35.7
|
%
|
|
|
Depreciation and
amortization
|
7,846
|
|
|
7,060
|
|
|
|
Stock compensation
expense
|
198
|
|
|
219
|
|
|
|
Other operating
expenses, net
|
374
|
|
|
519
|
|
|
|
Income from
operations
|
2,902
|
|
|
2,813
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
Interest expense,
net
|
(2,250)
|
|
|
(2,155)
|
|
|
|
Loss on
extinguishment of debt
|
(35)
|
|
|
(110)
|
|
|
|
Gain (loss) on
financial instruments, net
|
(15)
|
|
|
16
|
|
|
|
Other pension
benefits
|
9
|
|
|
549
|
|
|
|
Other income
(expense), net
|
(14)
|
|
|
5
|
|
|
|
|
(2,305)
|
|
|
(1,695)
|
|
|
|
Income before income
taxes
|
597
|
|
|
1,118
|
|
|
|
Income tax
expense
|
(99)
|
|
|
(288)
|
|
|
|
Consolidated net
income
|
498
|
|
|
830
|
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(156)
|
|
|
(214)
|
|
|
|
Net income attributable
to Charter shareholders
|
$
|
342
|
|
|
$
|
616
|
|
|
|
EARNINGS PER COMMON
SHARE
|
|
|
|
|
|
ATTRIBUTABLE TO
CHARTER SHAREHOLDERS:
|
|
|
|
|
|
Basic
|
$
|
1.31
|
|
|
$
|
2.28
|
|
|
|
Diluted
|
$
|
1.29
|
|
|
$
|
2.25
|
|
|
|
Weighted average
common shares outstanding, basic
|
262,074,603
|
|
|
270,028,132
|
|
|
|
Weighted average
common shares outstanding, diluted
|
266,363,602
|
|
|
273,824,029
|
|
|
|
Pro forma results reflect certain acquisitions of cable systems
in 2016 as if they occurred as of January
1, 2015. Adjusted EBITDA is a non-GAAP term. See
page 7 of this addendum for the reconciliation of Adjusted EBITDA
to consolidated net income as defined by GAAP. All
percentages are calculated using whole numbers. Minor differences
may exist due to rounding.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
|
2,164
|
|
|
$
|
1,535
|
|
Accounts receivable,
net
|
1,652
|
|
|
1,432
|
|
Prepaid expenses and
other current assets
|
316
|
|
|
333
|
|
Total current
assets
|
4,132
|
|
|
3,300
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
33,300
|
|
|
32,963
|
|
Customer
relationships, net
|
12,589
|
|
|
14,608
|
|
Franchises
|
67,316
|
|
|
67,316
|
|
Goodwill
|
29,554
|
|
|
29,509
|
|
Total investment in
cable properties, net
|
142,759
|
|
|
144,396
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
1,337
|
|
|
1,371
|
|
|
|
|
|
Total
assets
|
$
|
148,228
|
|
|
$
|
149,067
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
8,351
|
|
|
$
|
7,544
|
|
Current portion of
long-term debt
|
2,068
|
|
|
2,028
|
|
Total current
liabilities
|
10,419
|
|
|
9,572
|
|
|
|
|
|
LONG-TERM
DEBT
|
66,064
|
|
|
59,719
|
|
DEFERRED INCOME
TAXES
|
26,576
|
|
|
26,665
|
|
OTHER LONG-TERM
LIABILITIES
|
2,591
|
|
|
2,745
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
33,229
|
|
|
40,139
|
|
Noncontrolling
interests
|
9,349
|
|
|
10,227
|
|
Total shareholders'
equity
|
42,578
|
|
|
50,366
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
148,228
|
|
|
$
|
149,067
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
92
|
|
|
$
|
250
|
|
|
$
|
498
|
|
|
$
|
3,176
|
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,701
|
|
|
2,437
|
|
|
7,846
|
|
|
4,412
|
|
Stock compensation
expense
|
64
|
|
|
81
|
|
|
198
|
|
|
168
|
|
Accelerated vesting
of equity awards
|
6
|
|
|
57
|
|
|
43
|
|
|
202
|
|
Noncash interest
income, net
|
(87)
|
|
|
(107)
|
|
|
(283)
|
|
|
(148)
|
|
Other pension
(benefits) costs
|
17
|
|
|
(13)
|
|
|
(9)
|
|
|
(533)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
35
|
|
|
110
|
|
(Gain) loss on
financial instruments, net
|
(17)
|
|
|
(71)
|
|
|
15
|
|
|
(16)
|
|
Deferred income
taxes
|
11
|
|
|
(6)
|
|
|
53
|
|
|
(3,170)
|
|
Other, net
|
85
|
|
|
—
|
|
|
93
|
|
|
—
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(162)
|
|
|
98
|
|
|
(101)
|
|
|
(2)
|
|
Prepaid expenses and
other assets
|
60
|
|
|
74
|
|
|
37
|
|
|
85
|
|
Accounts payable,
accrued liabilities and other
|
138
|
|
|
1
|
|
|
271
|
|
|
531
|
|
Net cash flows from
operating activities
|
2,908
|
|
|
2,801
|
|
|
8,696
|
|
|
4,815
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(2,393)
|
|
|
(1,748)
|
|
|
(6,096)
|
|
|
(3,437)
|
|
Change in accrued
expenses related to capital expenditures
|
79
|
|
|
(52)
|
|
|
276
|
|
|
86
|
|
Purchases of cable
systems, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,810)
|
|
Change in restricted
cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
22,264
|
|
Other, net
|
(14)
|
|
|
(2)
|
|
|
(63)
|
|
|
(8)
|
|
Net cash flows from
investing activities
|
(2,328)
|
|
|
(1,802)
|
|
|
(5,883)
|
|
|
(9,905)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
5,014
|
|
|
—
|
|
|
12,115
|
|
|
5,997
|
|
Repayments of
long-term debt
|
(50)
|
|
|
(50)
|
|
|
(5,534)
|
|
|
(4,120)
|
|
Payments for debt
issuance costs
|
(41)
|
|
|
—
|
|
|
(83)
|
|
|
(283)
|
|
Issuance of
equity
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
Purchase of treasury
stock
|
(3,525)
|
|
|
(349)
|
|
|
(7,748)
|
|
|
(448)
|
|
Proceeds from
exercise of stock options
|
25
|
|
|
47
|
|
|
111
|
|
|
71
|
|
Purchase of
noncontrolling interest
|
(493)
|
|
|
—
|
|
|
(922)
|
|
|
—
|
|
Distributions to
noncontrolling interest
|
(38)
|
|
|
(37)
|
|
|
(115)
|
|
|
(55)
|
|
Proceeds from
termination of interest rate derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
Other, net
|
(2)
|
|
|
—
|
|
|
(8)
|
|
|
—
|
|
Net cash flows from
financing activities
|
890
|
|
|
(389)
|
|
|
(2,184)
|
|
|
6,250
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
1,470
|
|
|
610
|
|
|
629
|
|
|
1,160
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
694
|
|
|
555
|
|
|
1,535
|
|
|
5
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
|
2,164
|
|
|
$
|
1,165
|
|
|
$
|
2,164
|
|
|
$
|
1,165
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
891
|
|
|
$
|
950
|
|
|
$
|
2,544
|
|
|
$
|
1,964
|
|
CASH PAID FOR
TAXES
|
$
|
5
|
|
|
$
|
44
|
|
|
$
|
38
|
|
|
$
|
48
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED SUMMARY
OF OPERATING STATISTICS (in thousands, except per
customer and penetration data)
|
|
|
|
Approximate as
of
|
|
September 30,
2017 (a)
|
|
June 30,
2017 (a)
|
|
December 31,
2016 (a)
|
|
September 30,
2016 (a)(j)
|
Footprint
(b)
|
|
|
|
|
|
|
|
Estimated Video
Passings
|
49,854
|
|
|
49,615
|
|
|
49,229
|
|
|
49,001
|
|
Estimated Internet
Passings
|
49,594
|
|
|
49,309
|
|
|
48,955
|
|
|
48,689
|
|
Estimated Voice
Passings
|
48,832
|
|
|
48,587
|
|
|
48,142
|
|
|
47,854
|
|
|
|
|
|
|
|
|
|
Penetration
Statistics (c)
|
|
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
34.1
|
%
|
|
34.4
|
%
|
|
35.0
|
%
|
|
35.3
|
%
|
Internet Penetration
of Estimated Internet Passings
|
47.6
|
%
|
|
47.3
|
%
|
|
46.2
|
%
|
|
45.6
|
%
|
Voice Penetration of
Estimated Voice Passings
|
23.1
|
%
|
|
23.1
|
%
|
|
23.1
|
%
|
|
23.1
|
%
|
|
|
|
|
|
|
|
|
Customer
Relationships (d)
|
|
|
|
|
|
|
|
Residential
|
25,470
|
|
|
25,298
|
|
|
24,801
|
|
|
24,551
|
|
Small and Medium
Business
|
1,523
|
|
|
1,483
|
|
|
1,404
|
|
|
1,367
|
|
Total Customer
Relationships
|
26,993
|
|
|
26,781
|
|
|
26,205
|
|
|
25,918
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
|
|
Video
|
16,542
|
|
|
16,646
|
|
|
16,836
|
|
|
16,887
|
|
Internet
|
22,282
|
|
|
22,033
|
|
|
21,374
|
|
|
21,017
|
|
Voice
|
10,405
|
|
|
10,378
|
|
|
10,327
|
|
|
10,288
|
|
|
49,229
|
|
|
49,057
|
|
|
48,537
|
|
|
48,192
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Video
|
(104)
|
|
|
(90)
|
|
|
(51)
|
|
|
(47)
|
|
Internet
|
249
|
|
|
231
|
|
|
357
|
|
|
350
|
|
Voice
|
27
|
|
|
14
|
|
|
39
|
|
|
33
|
|
|
172
|
|
|
155
|
|
|
345
|
|
|
336
|
|
|
|
|
|
|
|
|
|
Single Play
(e)
|
10,373
|
|
|
10,177
|
|
|
9,640
|
|
|
9,447
|
|
Double Play
(e)
|
6,436
|
|
|
6,484
|
|
|
6,586
|
|
|
6,569
|
|
Triple Play
(e)
|
8,661
|
|
|
8,637
|
|
|
8,575
|
|
|
8,535
|
|
|
|
|
|
|
|
|
|
Single Play
Penetration (f)
|
40.7
|
%
|
|
40.2
|
%
|
|
38.9
|
%
|
|
38.5
|
%
|
Double Play
Penetration (f)
|
25.3
|
%
|
|
25.6
|
%
|
|
26.6
|
%
|
|
26.8
|
%
|
Triple Play
Penetration (f)
|
34.0
|
%
|
|
34.1
|
%
|
|
34.6
|
%
|
|
34.8
|
%
|
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
35.1
|
%
|
|
34.2
|
%
|
|
32.1
|
%
|
|
31.2
|
%
|
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (g)
|
$
|
110.12
|
|
|
$
|
109.46
|
|
|
$
|
109.77
|
|
|
$
|
109.70
|
|
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
|
|
Video
|
440
|
|
|
425
|
|
|
400
|
|
|
388
|
|
Internet
|
1,321
|
|
|
1,285
|
|
|
1,219
|
|
|
1,185
|
|
Voice
|
881
|
|
|
847
|
|
|
778
|
|
|
751
|
|
|
2,642
|
|
|
2,557
|
|
|
2,397
|
|
|
2,324
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Video
|
15
|
|
|
14
|
|
|
12
|
|
|
10
|
|
Internet
|
36
|
|
|
36
|
|
|
34
|
|
|
37
|
|
Voice
|
34
|
|
|
38
|
|
|
27
|
|
|
26
|
|
|
85
|
|
|
88
|
|
|
73
|
|
|
73
|
|
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (h)
|
$
|
206.64
|
|
|
$
|
210.64
|
|
|
$
|
214.25
|
|
|
$
|
214.53
|
|
|
|
|
|
|
|
|
|
Enterprise PSUs
(i)
|
|
|
|
|
|
|
|
Enterprise
PSUs
|
108
|
|
|
103
|
|
|
97
|
|
|
93
|
|
|
|
(a)
|
All customer
statistics include the operations of Legacy TWC, Legacy Bright
House and Legacy Charter each of which is based on individual
legacy company reporting methodology. These methodologies
differ and their differences may be material. Statistical
reporting will be conformed over time to a single Charter reporting
methodology.
|
|
|
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at September 30, 2017, June 30,
2017, December 31, 2016 and September 30, 2016, actual customers
include approximately 218,300, 209,500, 208,400 and 200,900
customers, respectively, whose accounts were over 60 days past due,
approximately 20,300, 14,800, 15,500 and 15,200 customers,
respectively, whose accounts were over 90 days past due and
approximately 12,000, 8,700, 8,000 and 8,900 customers,
respectively, whose accounts were over 120 days past
due.
|
|
|
(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, small and medium business and enterprise
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. Customers who reside in residential multiple
dwelling units ("MDUs") and that are billed under bulk contracts
are counted based on the number of billed units within each bulk
MDU. Total customer relationships excludes enterprise
customer relationships.
|
|
|
(e)
|
Single play, double
play and triple play customers represent customers that subscribe
to one, two or three of Charter service offerings,
respectively.
|
|
|
(f)
|
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.
|
|
|
(g)
|
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.
|
|
|
(h)
|
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.
|
|
|
(i)
|
Enterprise PSUs
represents the aggregate number of fiber service offerings counting
each separate service offering at each customer location as an
individual PSU.
|
|
|
(j)
|
In the second quarter
of 2017, Charter conformed the seasonal customer program in the
Legacy Bright House footprint to Charter's program. Prior to the
plan change, Legacy Bright House customers enrolling in the
seasonal plan were charged a one-time fee and counted as customer
disconnects, and as new connects, when moving off the seasonal
plan. Under Charter's seasonal plan, residential customers pay a
reduced monthly fee while the seasonal plan is active and remain
reported as customers. Excluding the impact of customer
connect activity related to Legacy Bright House residential
customers moving off the seasonal plan, net additions for video,
Internet and voice PSUs for the third quarter of 2016 would have
been lower by 4,000, 6,000 and 4,000, respectively. Excluding
the net disconnect activity in the second and third quarters of
2016, residential customer relationships, video, Internet and voice
PSUs at September 30, 2016 would have been higher by approximately
54,000, 48,000, 66,000 and 45,000, respectively.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP
MEASURES
(dollars in millions)
|
|
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
|
92
|
|
|
$
|
250
|
|
|
$
|
498
|
|
|
$
|
3,176
|
|
Plus: Interest
expense, net
|
788
|
|
|
724
|
|
|
2,250
|
|
|
1,771
|
|
Income tax (benefit)
expense
|
26
|
|
|
16
|
|
|
99
|
|
|
(3,135)
|
|
Depreciation and
amortization
|
2,701
|
|
|
2,437
|
|
|
7,846
|
|
|
4,412
|
|
Stock compensation
expense
|
64
|
|
|
81
|
|
|
198
|
|
|
168
|
|
Loss on extinguishment
of debt
|
—
|
|
|
—
|
|
|
35
|
|
|
110
|
|
(Gain) loss on
financial instruments, net
|
(17)
|
|
|
(71)
|
|
|
15
|
|
|
(16)
|
|
Other pension
(benefits) costs
|
17
|
|
|
(13)
|
|
|
(9)
|
|
|
(533)
|
|
Other, net
|
148
|
|
|
212
|
|
|
388
|
|
|
786
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(a)
|
3,819
|
|
|
3,636
|
|
|
11,320
|
|
|
6,739
|
|
Less: Purchases
of property, plant and equipment
|
(2,393)
|
|
|
(1,748)
|
|
|
(6,096)
|
|
|
(3,437)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less
capital expenditures
|
$
|
1,426
|
|
|
$
|
1,888
|
|
|
$
|
5,224
|
|
|
$
|
3,302
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
2,908
|
|
|
$
|
2,801
|
|
|
$
|
8,696
|
|
|
$
|
4,815
|
|
Less: Purchases
of property, plant and equipment
|
(2,393)
|
|
|
(1,748)
|
|
|
(6,096)
|
|
|
(3,437)
|
|
Change in accrued
expenses related to capital expenditures
|
79
|
|
|
(52)
|
|
|
276
|
|
|
86
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
|
594
|
|
|
$
|
1,001
|
|
|
$
|
2,876
|
|
|
$
|
1,464
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Actual
|
|
Pro Forma
(b)
|
|
|
|
|
|
|
|
|
Consolidated net
income
|
|
|
|
|
$
|
498
|
|
|
$
|
830
|
|
Plus: Interest
expense, net
|
|
|
|
|
2,250
|
|
|
2,155
|
|
Income tax
expense
|
|
|
|
|
99
|
|
|
288
|
|
Depreciation and
amortization
|
|
|
|
|
7,846
|
|
|
7,060
|
|
Stock compensation
expense
|
|
|
|
|
198
|
|
|
219
|
|
Loss on extinguishment
of debt
|
|
|
|
|
35
|
|
|
110
|
|
(Gain) loss on
financial instruments, net
|
|
|
|
|
15
|
|
|
(16)
|
|
Other pension
benefits
|
|
|
|
|
(9)
|
|
|
(549)
|
|
Other, net
|
|
|
|
|
388
|
|
|
514
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(a)
|
|
|
|
|
11,320
|
|
|
10,611
|
|
Less: Purchases
of property, plant and equipment
|
|
|
|
|
(6,096)
|
|
|
(5,657)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less
capital expenditures
|
|
|
|
|
$
|
5,224
|
|
|
$
|
4,954
|
|
|
|
(a)
|
See pages 1 and 2 of
this addendum for detail of the components included within Adjusted
EBITDA.
|
(b)
|
Pro forma results
reflect certain acquisitions of cable systems in 2016 as if they
occurred as of January 1, 2015.
|
The above schedule is 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
UNAUDITED CAPITAL EXPENDITURES (dollars in
millions)
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
Customer premise
equipment (a)
|
$
|
855
|
|
|
$
|
662
|
|
|
$
|
2,579
|
|
|
$
|
1,177
|
|
Scalable
infrastructure (b)
|
632
|
|
|
441
|
|
|
1,282
|
|
|
937
|
|
Line extensions
(c)
|
319
|
|
|
249
|
|
|
864
|
|
|
467
|
|
Upgrade/rebuild
(d)
|
163
|
|
|
156
|
|
|
415
|
|
|
307
|
|
Support capital
(e)
|
424
|
|
|
240
|
|
|
956
|
|
|
549
|
|
|
|
|
|
|
|
|
|
Total
capital expenditures
|
$
|
2,393
|
|
|
$
|
1,748
|
|
|
$
|
6,096
|
|
|
$
|
3,437
|
|
|
|
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
|
|
|
|
Commercial
services
|
$
|
339
|
|
|
$
|
306
|
|
|
$
|
941
|
|
|
$
|
566
|
|
Transition
(f)
|
$
|
125
|
|
|
$
|
109
|
|
|
$
|
287
|
|
|
$
|
273
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
Actual
|
|
Pro Forma
(g)
|
|
|
|
|
|
|
|
|
Customer premise
equipment (a)
|
|
|
|
|
$
|
2,579
|
|
|
$
|
2,074
|
|
Scalable
infrastructure (b)
|
|
|
|
|
1,282
|
|
|
1,556
|
|
Line extensions
(c)
|
|
|
|
|
864
|
|
|
751
|
|
Upgrade/rebuild
(d)
|
|
|
|
|
415
|
|
|
461
|
|
Support capital
(e)
|
|
|
|
|
956
|
|
|
815
|
|
|
|
|
|
|
|
|
|
Total
capital expenditures
|
|
|
|
|
$
|
6,096
|
|
|
$
|
5,657
|
|
|
|
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
|
|
|
|
Commercial
services
|
|
|
|
|
$
|
941
|
|
|
$
|
931
|
|
Transition
(f)
|
|
|
|
|
$
|
287
|
|
|
$
|
273
|
|
|
|
(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)
|
Transition represents
incremental costs incurred to integrate the Legacy TWC and Legacy
Bright House operations and to bring the three companies' systems
and processes into a uniform operating structure.
|
(g)
|
Pro forma results
reflect certain acquisitions of cable systems in 2016 as if they
occurred as of January 1, 2015.
|
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SOURCE Charter Communications, Inc.