STAMFORD, Conn., July 31,
2018 /PRNewswire/ -- Charter Communications, Inc. (along with
its subsidiaries, the "Company" or "Charter") today reported
financial and operating results for the three and six months ended
June 30, 2018.
Key highlights:
- As of June 30, 2018, Charter had
27.6 million total customer relationships and 52.9 million total
PSUs.
- Second quarter total residential and SMB customer relationships
increased 196,000, compared to 213,000 during the second quarter of
2017. Over the twelve months ended June 30,
2018, total residential and SMB customer relationships grew
by 3.3%.
- In the second quarter, total residential and SMB video,
Internet and voice customers increased by 202,000, as compared to
246,000 during the second quarter of 2017.
- Second quarter revenues of $10.9
billion grew 4.8%, as compared to the prior year period,
driven by residential revenue growth of 4.6%, commercial revenue
growth of 4.4%, and advertising revenue growth of 12.0%.
- Second quarter Adjusted EBITDA1 of $4.1 billion grew 5.3% year-over-year, and 6.2%
when excluding second quarter mobile costs.
- Net income attributable to Charter shareholders totaled
$273 million in the second quarter,
compared to $139 million during the
same period last year.
- Second quarter capital expenditures totaled $2.4 billion compared to $2.1 billion during the second quarter of 2017,
primarily driven by in-year timing differences and Charter's
all-digital and Internet speed increase initiatives. Second quarter
capital expenditures included $88
million of all-digital costs and $53
million of mobile launch costs.
- During the second quarter, Charter purchased approximately 6.4
million shares of Charter Class A common stock and Charter
Communications Holdings, LLC ("Charter Holdings") common units for
approximately $1.9 billion.
"Over the last two years, we have invested significantly to
quickly integrate and unify the operating strategies of three large
cable operators. While that process is disruptive, it has allowed
us to position our residential and commercial businesses for long
term growth and success, which is beginning to show in our
operating results," said Tom
Rutledge, Chairman and CEO of Charter Communications. "By
the end of this year our integration will be nearly complete, and
we will be operating as one company, with a unified product,
marketing, and service infrastructure, which will allow us to
accelerate growth and innovate faster."
1.
|
Adjusted EBITDA, free
cash flow and GAAP are defined in the "Use of Adjusted EBITDA and
Free Cash Flow Information" section and are reconciled to
consolidated net income and net cash flows from operating
activities, respectively, in the addendum of this news
release.
|
Key Operating Results
|
Approximate as
of
|
|
|
|
June 30, 2018
(b)
|
|
June 30, 2017
(a)(b)
|
|
Y/Y
Change
|
Footprint
(c)
|
|
|
|
|
|
Estimated Video
Passings
|
50,364
|
|
|
49,500
|
|
|
1.7
|
%
|
Estimated Internet
Passings
|
50,149
|
|
|
49,228
|
|
|
1.9
|
%
|
Estimated Voice
Passings
|
49,532
|
|
|
48,472
|
|
|
2.2
|
%
|
|
|
|
|
|
|
Penetration
Statistics (d)
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
33.1
|
%
|
|
34.2
|
%
|
|
(1.1)
|
ppts
|
Internet Penetration
of Estimated Internet Passings
|
49.1
|
%
|
|
47.5
|
%
|
|
1.6
|
ppts
|
Voice Penetration of
Estimated Voice Passings
|
22.9
|
%
|
|
23.2
|
%
|
|
(0.3)
|
ppts
|
|
|
|
|
|
|
Customer
Relationships (e)
|
|
|
|
|
|
Residential
|
25,871
|
|
|
25,157
|
|
|
2.8
|
%
|
Small and Medium
Business
|
1,750
|
|
|
1,580
|
|
|
10.8
|
%
|
Total Customer
Relationships
|
27,621
|
|
|
26,737
|
|
|
3.3
|
%
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
Video
|
16,206
|
|
|
16,502
|
|
|
(1.8)
|
%
|
Internet
|
23,070
|
|
|
22,005
|
|
|
4.8
|
%
|
Voice
|
10,325
|
|
|
10,375
|
|
|
(0.5)
|
%
|
|
49,601
|
|
|
48,882
|
|
|
1.5
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
(73)
|
|
|
(91)
|
|
|
19.8
|
%
|
Internet
|
218
|
|
|
230
|
|
|
(5.2)
|
%
|
Voice
|
(45)
|
|
|
14
|
|
|
(421.4)
|
%
|
|
100
|
|
|
153
|
|
|
(34.6)
|
%
|
|
|
|
|
|
|
Single Play
(f)
|
10,694
|
|
|
10,062
|
|
|
6.3
|
%
|
Double Play
(f)
|
6,633
|
|
|
6,467
|
|
|
2.6
|
%
|
Triple Play
(f)
|
8,544
|
|
|
8,628
|
|
|
(1.0)
|
%
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
41.3
|
%
|
|
40.0
|
%
|
|
1.3
|
ppts
|
Double Play
Penetration (g)
|
25.6
|
%
|
|
25.7
|
%
|
|
(0.1)
|
ppts
|
Triple Play
Penetration (g)
|
33.0
|
%
|
|
34.3
|
%
|
|
(1.3)
|
ppts
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
37.4
|
%
|
|
34.4
|
%
|
|
3.0
|
ppts
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (h)
|
$111.88
|
|
|
$109.99
|
|
|
1.7
|
%
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
|
Video
|
476
|
|
|
423
|
|
|
12.5
|
%
|
Internet
|
1,552
|
|
|
1,390
|
|
|
11.7
|
%
|
Voice
|
994
|
|
|
863
|
|
|
15.2
|
%
|
|
3,022
|
|
|
2,676
|
|
|
12.9
|
%
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
Video
|
16
|
|
|
15
|
|
|
6.7
|
%
|
Internet
|
49
|
|
|
39
|
|
|
25.6
|
%
|
Voice
|
37
|
|
|
39
|
|
|
(5.1)
|
%
|
|
102
|
|
|
93
|
|
|
9.7
|
%
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (i)
|
$176.96
|
|
|
$190.37
|
|
|
(7.0)
|
%
|
|
|
|
|
|
|
Enterprise PSUs
(j)
|
|
|
|
|
|
Enterprise
PSUs
|
235
|
|
|
202
|
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
All percentages are calculated using whole numbers. Minor
differences may exist due to rounding.
During the second quarter of 2018, Charter's residential
customer relationships grew by 141,000, while second quarter 2017
customer relationships grew by 166,000. Residential PSUs increased
by 100,000 in the second quarter of 2018, compared to second
quarter 2017 residential PSU additions of 153,000. The
year-over-year decrease in PSU additions was primarily driven by a
decline in voice net additions in the second quarter of 2018. As of
June 30, 2018, Charter had 25.9 million residential customer
relationships and 49.6 million residential PSUs.
Charter added 218,000 residential Internet customers in the
second quarter of 2018, versus second quarter 2017 Internet
customers additions of 230,000. As of June 30, 2018, Charter
had 23.1 million residential Internet customers, with over 80% of
those residential Internet customers subscribing to tiers that
provided 60 Mbps or more of speed, and over 60% subscribing to
Internet tiers that provided 100 Mbps or more of speed. Currently,
100 Mbps is the slowest speed offered to new Internet customers in
99% of Charter's footprint.
During the second quarter, Charter further expanded the
availability of its Spectrum Internet Gig service (940 Mbps)
to a number of new markets. The service, which uses DOCSIS
3.1 technology, is now available in approximately 60% of Charter's
footprint. Charter expects to offer its Spectrum Internet
Gig service to nearly all of its footprint by the end of 2018.
Additionally, Charter is doubling minimum Internet speeds to 200
Mbps in a number of markets at no additional cost to new and
existing Spectrum Internet customers.
Residential video customers decreased by 73,000 in the second
quarter of 2018, while second quarter 2017 video customers
decreased by 91,000. During the year ended June 30, 2018,
limited basic video subscriptions represented all of Charter's
residential video customer losses, while the combination of
traditional expanded basic video, and Charter's Stream and
Choice packages contributed to video customer growth. As of
June 30, 2018, Charter had 16.2 million residential video
customers.
As of the end of the second quarter, 91% of Charter's footprint
was all-digital. During the quarter, Charter continued its
all-digital efforts, and as of June 30, 2018 , approximately
6% of Legacy TWC's footprint and 50% of Legacy Bright House's
footprint were 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
video picture quality, an interactive programming guide and video
on demand on all TV outlets in the home.
During the second quarter of 2018, residential voice customers
declined by 45,000, while second quarter 2017 voice customers grew
by 14,000. As of June 30, 2018, Charter had 10.3 million
residential voice customers.
On June 30, Charter launched its
Spectrum MobileTM service. Spectrum
Mobile runs on America's largest, most reliable 4G-LTE network
and is combined with a nationwide network of Spectrum WiFi
hotspots. Spectrum Mobile customers can choose one of two
simple ways to pay for data, "Unlimited" for $45 a month (per line), or "By the Gig" at
$14/GB. Both plans include free
nationwide talk and text and customers can easily switch data plans
during the month. In the coming months, Spectrum Mobile will
broaden its array of device offerings, and will also allow
customers to transfer existing handsets to Spectrum
Mobile.
Second quarter residential revenue per customer relationship
totaled $111.88, and grew by 1.7%
compared to the prior year period, as promotional rate step-ups and
modest rate adjustments, were partly offset by continued single
play Internet sell-in.
SMB customer relationships grew by 55,000, during the second
quarter of 2018, compared to growth of 47,000 during the second
quarter of 2017. SMB PSUs increased 102,000, compared to 93,000
during the second quarter of 2017. As of June 30, 2018,
Charter had 1.8 million SMB customer relationships and 3.0 million
SMB PSUs. Enterprise PSUs grew by 7,000 during the second quarter
of 2018, compared to growth of 6,000 during the second quarter of
2017. As of June 30, 2018, Charter had 235,000 enterprise
PSUs.
Second 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
June 30,
|
|
2018
|
|
2017
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
4,363
|
|
$
4,119
|
|
5.9 %
|
Internet
|
3,770
|
|
3,512
|
|
7.3 %
|
Voice
|
531
|
|
650
|
|
(18.3)%
|
Residential
revenue
|
8,664
|
|
8,281
|
|
4.6 %
|
Small and medium
business
|
915
|
|
890
|
|
2.9 %
|
Enterprise
|
627
|
|
588
|
|
6.7 %
|
Commercial
revenue
|
1,542
|
|
1,478
|
|
4.4 %
|
Advertising
sales
|
427
|
|
381
|
|
12.0 %
|
Other
|
221
|
|
217
|
|
1.5 %
|
Total
Revenue
|
10,854
|
|
10,357
|
|
4.8 %
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Total operating costs
and expenses
|
6,803
|
|
6,510
|
|
4.5 %
|
Adjusted
EBITDA
|
$
4,051
|
|
$
3,847
|
|
5.3 %
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
37.3
%
|
|
37.1
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
2,391
|
|
$
2,148
|
|
|
% Total
Revenues
|
22.0 %
|
|
20.7 %
|
|
|
|
|
|
|
|
|
Net income
attributable to Charter shareholders
|
$
273
|
|
$
139
|
|
|
Earnings per common
share attributable to Charter shareholders:
|
|
|
|
|
|
Basic
|
$
1.17
|
|
$
0.53
|
|
|
Diluted
|
$
1.15
|
|
$
0.52
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
3,096
|
|
$
2,945
|
|
|
Free cash
flow
|
$
804
|
|
$
1,144
|
|
|
Revenue
Second quarter revenues rose 4.8% year-over-year to $10.9 billion, driven by growth in Internet,
video, commercial and advertising revenues. Excluding advertising,
second quarter revenues increased 4.5% year-over-year.
Video revenues totaled $4.4
billion in the second quarter, an increase of 5.9% compared
to prior year period. Video revenue growth was driven by annual
rate adjustments, promotional rolloff, a higher number of expanded
basic video customers year-over-year and higher bundled revenue
allocation relating to the launch of Spectrum pricing and
packaging in Legacy TWC and Legacy Bright House, partly offset by a
decrease in limited basic video customers.
Internet revenues grew 7.3%, compared to the year-ago quarter,
to $3.8 billion, driven by growth in
Internet customers during the last year, promotional rolloff and
bundled revenue allocation relating to the launch of
Spectrum pricing and packaging in Legacy TWC and Legacy
Bright House.
Voice revenues totaled $531
million in the second quarter, a decrease of 18.3% compared
to the second quarter of 2017, driven by value-based pricing, lower
bundled revenue allocation relating to the launch of
Spectrum pricing and packaging in Legacy TWC and Legacy
Bright House, and a decline in voice customers over the last twelve
months.
Commercial revenues rose to $1.5
billion, an increase of 4.4% over the prior year period,
driven by enterprise revenue growth of 6.7% and SMB revenue growth
of 2.9%. Second quarter 2018 commercial revenue growth was lower
than second quarter 2018 commercial customer relationship growth,
given the migration of Legacy TWC and Legacy Bright House
commercial customers to more attractively priced Spectrum
pricing and packaging for both SMB and enterprise services.
Second quarter advertising sales revenues of $427 million increased 12.0% compared to the
year-ago quarter, driven by higher political revenue.
Operating Costs and Expenses
Second quarter total operating costs and expenses increased by
$293 million, or 4.5% year-over-year,
and 4.0% when excluding second quarter mobile launch costs.
Second quarter programming expense increased by $154 million, or 5.8% as compared to the second
quarter of 2017, reflecting contractual programming increases,
renewals and a higher number of expanded basic video customers
year-over-year.
Regulatory, connectivity and produced content expenses increased
by $28 million, or 5.1%
year-over-year, driven in part by the Company's adoption of FASB's
ASU 2014-09 as of January 1, 2018,
which results in the reclassification of expenses related to the
amortization of up-front fees paid to market and serve customers
who reside in multiple dwelling units, and which were recorded in
depreciation and amortization in the prior-year period, to
regulatory, connectivity and produced content expenses.
Costs to service customers increased by $22 million or 1.2% year-over-year compared to
year-over-year residential and SMB customer growth of 3.3%. The
year-over-year increase in costs to service customers was primarily
the result of an increase in bad debt expense on a larger customer
base.
Marketing expenses increased by $9
million, or 1.2% year-over-year due to higher sales and the
implementation of Charter's selling tactics in the acquired
footprints, partly offset by lower transition-related expenses.
Other expenses increased by $47
million, or 5.8% as compared to the second quarter of 2017
driven by higher information technology, advertising sales,
insurance and enterprise costs.
In the second quarter of 2018, mobile launch costs totaled
$33 million.
Adjusted EBITDA
Second quarter Adjusted EBITDA of $4.1
billion grew by 5.3% year-over-year, reflecting revenue
growth and operating expense growth of 4.8% and 4.5%, respectively.
Excluding mobile costs of $33 million
in the second quarter of 2018, Adjusted EBITDA grew by 6.2%
year-over-year.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled
$273 million in the second quarter of
2018, compared to $139 million in the
second quarter of 2017. The year-over-year increase in net income
was primarily driven by higher Adjusted EBITDA and lower
severance-related and transactions expenses, partly offset by
higher year-over-year interest expense.
Net income per basic common share attributable to Charter
shareholders totaled $1.17 in the
second quarter of 2018 compared to $0.53 during the same period last year. The
increase was primarily the result of the factors described above
and a 11.1% decrease in weighted average common shares outstanding
versus the prior year period.
Capital Expenditures
Property, plant and equipment expenditures totaled $2.4 billion in the second quarter of 2018,
compared to $2.1 billion during the
second quarter of 2017, primarily driven by an increase in scalable
infrastructure, support capital spending, and line extensions,
partly offset by lower CPE spending. The increase in scalable
infrastructure was related to more consistent timing of in-year
spend, and planned product improvements for video and Internet,
including spending related to DOCSIS 3.1 launches. Support capital
increased due to higher vehicle purchases, software development and
facilities spending, and includes $46
million of capital spending related to the launch of
Spectrum Mobile. The decrease in CPE spending was related to
prior year timing of set-top box purchases related to the launch of
Spectrum pricing and packaging in Legacy TWC and Legacy
Bright House, partly offset by CPE related to Charter's all-digital
initiative in 2018. Second quarter capital expenditures included
$88 million of all-digital costs and
$53 million of mobile launch
costs.
Cash Flow and Free Cash Flow
During the second quarter of 2018, net cash flows from operating
activities totaled $3.1 billion,
compared to $2.9 billion in the
second quarter of 2017. The year-over-year increase in net cash
flows from operating activities was primarily due to higher
Adjusted EBITDA and lower severance-related expenses.
Free cash flow for the second quarter of 2018 totaled
$804 million, compared to
$1.1 billion during the same period
last year. The decrease was driven by higher capital expenditures
in the second quarter of 2018 versus the second quarter of 2017,
partly offset by higher net cash flows from operating activities.
During the second quarter, the reduction in free cash flow from
mobile totaled $116 million.
Liquidity & Financing
As of June 30, 2018, total principal amount of debt was
$71.1 billion and Charter's credit
facilities provided approximately $3.9
billion of additional liquidity in excess of Charter's
$773 million cash position.
In April, Charter Communications Operating, LLC and Charter
Communications Operating Capital Corp issued $800 million of 5.375% senior secured notes due
2038, and $1.7 billion of 5.750%
senior secured notes due 2048. The net proceeds were used to repay
existing indebtedness, including to fund the July redemption of all
of the outstanding $2.0 billion in
aggregate principal amount of TWC's 6.75% notes due July 2018, to pay related fees and expenses and
for general corporate purposes, including funding buybacks of
Charter Class A common stock and common units of Charter
Holdings.
In July, Charter Communications Operating, LLC and Charter
Communications Operating Capital Corp. issued $1.1 billion of 4.500% senior secured notes due
2024, and $400 million of senior
secured floating rate notes due 2024 at three-month LIBOR, reset
quarterly, plus 165 basis points. The net proceeds will be used for
general corporate purposes, including to fund potential buybacks of
Charter Class A common stock or common units of Charter
Holdings.
Share Repurchases
During the three months ended June 30, 2018, Charter
purchased approximately 6.4 million shares of Charter Class A
common stock and Charter Holdings common units for approximately
$1.9 billion.
Conference Call
Charter will host a conference call on Tuesday, July 31,
2018 at 8:30 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
6488496.
A replay of the call will be available at 855-859-2056 or
404-537-3406 beginning two hours after the completion of the call
through the end of business on May 11,
2018. The conference ID code for the replay is 6488496.
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
six months ended June 30, 2018, 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 and Free Cash Flow
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 (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 $265
million and $256 million for
the three months ended June 30, 2018 and 2017, respectively,
and were $538 million and
$529 million for the six months ended
June 30, 2018 and 2017, respectively.
About Charter
Charter Communications, Inc. (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 residential broadband
services, including Spectrum TV® programming, Spectrum
Internet®, and Spectrum Voice®. Under the
Spectrum Business® brand, Charter provides scalable, and
cost-effective broadband communications solutions to small and
medium-sized business organizations, including Internet access,
business telephone, and TV services. Through the Spectrum
Enterprise brand, Charter is a national provider of scalable,
fiber-based technology solutions serving many of America's largest
businesses and communications service providers. Charter's
advertising sales and production services are sold under the
Spectrum Reach® brand. Charter's news and sports
networks are operated under the Spectrum Networks brand. More
information about Charter can be found at newsroom.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 efficiently and effectively integrate acquired
operations;
- our ability to sustain and grow revenues and cash flow from
operations by offering video, Internet, voice, mobile, 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 mobile 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
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
June 30,
|
|
Six Months Ended
June30,
|
|
2018
|
|
2017
|
|
%
Change
|
|
2018
|
|
2017
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
4,363
|
|
$
4,119
|
|
5.9 %
|
|
$
8,655
|
|
$
8,193
|
|
5.6 %
|
Internet
|
3,770
|
|
3,512
|
|
7.3 %
|
|
7,477
|
|
6,909
|
|
8.2 %
|
Voice
|
531
|
|
650
|
|
(18.3)%
|
|
1,087
|
|
1,344
|
|
(19.1)%
|
Residential revenue
|
8,664
|
|
8,281
|
|
4.6 %
|
|
17,219
|
|
16,446
|
|
4.7 %
|
Small and medium
business
|
915
|
|
890
|
|
2.9 %
|
|
1,815
|
|
1,756
|
|
3.4 %
|
Enterprise
|
627
|
|
588
|
|
6.7 %
|
|
1,249
|
|
1,167
|
|
7.0 %
|
Commercial revenue
|
1,542
|
|
1,478
|
|
4.4 %
|
|
3,064
|
|
2,923
|
|
4.9 %
|
Advertising
sales
|
427
|
|
381
|
|
12.0 %
|
|
783
|
|
718
|
|
9.0 %
|
Other
|
221
|
|
217
|
|
1.5 %
|
|
445
|
|
434
|
|
2.3 %
|
Total
Revenue
|
10,854
|
|
10,357
|
|
4.8 %
|
|
21,511
|
|
20,521
|
|
4.8 %
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
2,803
|
|
2,649
|
|
5.8 %
|
|
5,555
|
|
5,253
|
|
5.7 %
|
Regulatory,
connectivity and produced content
|
560
|
|
532
|
|
5.1 %
|
|
1,093
|
|
1,030
|
|
6.0 %
|
Costs to service
customers
|
1,784
|
|
1,762
|
|
1.2 %
|
|
3,638
|
|
3,562
|
|
2.1 %
|
Marketing
|
769
|
|
760
|
|
1.2 %
|
|
1,520
|
|
1,525
|
|
(0.3)%
|
Mobile
|
33
|
|
—
|
|
NM
|
|
41
|
|
—
|
|
NM
|
Other
expense
|
854
|
|
807
|
|
5.8 %
|
|
1,720
|
|
1,650
|
|
4.2 %
|
Total operating costs
and expenses (exclusive of items shown separately below)
|
6,803
|
|
6,510
|
|
4.5 %
|
|
13,567
|
|
13,020
|
|
4.2 %
|
Adjusted
EBITDA
|
4,051
|
|
3,847
|
|
5.3 %
|
|
7,944
|
|
7,501
|
|
5.9 %
|
Adjusted EBITDA
margin
|
37.3
%
|
|
37.1
%
|
|
|
|
36.9
%
|
|
36.5
%
|
|
|
Depreciation and
amortization
|
2,592
|
|
2,595
|
|
|
|
5,302
|
|
5,145
|
|
|
Stock compensation
expense
|
70
|
|
65
|
|
|
|
142
|
|
134
|
|
|
Other operating
expenses, net
|
29
|
|
135
|
|
|
|
98
|
|
229
|
|
|
Income from
operations
|
1,360
|
|
1,052
|
|
|
|
2,402
|
|
1,993
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(878)
|
|
(749)
|
|
|
|
(1,729)
|
|
(1,462)
|
|
|
Loss on
extinguishment of debt
|
—
|
|
(1)
|
|
|
|
—
|
|
(35)
|
|
|
Loss on financial
instruments, net
|
(75)
|
|
(70)
|
|
|
|
(12)
|
|
(32)
|
|
|
Other income
(expense), net
|
(27)
|
|
11
|
|
|
|
(30)
|
|
15
|
|
|
|
(980)
|
|
(809)
|
|
|
|
(1,771)
|
|
(1,514)
|
|
|
Income before income
taxes
|
380
|
|
243
|
|
|
|
631
|
|
479
|
|
|
Income tax
expense
|
(41)
|
|
(48)
|
|
|
|
(69)
|
|
(73)
|
|
|
Consolidated net
income
|
339
|
|
195
|
|
|
|
562
|
|
406
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(66)
|
|
(56)
|
|
|
|
(121)
|
|
(112)
|
|
|
Net income
attributable to Charter shareholders
|
$
273
|
|
$
139
|
|
|
|
$
441
|
|
$
294
|
|
|
EARNINGS PER COMMON
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
ATTRIBUTABLE TO
CHARTER SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
1.17
|
|
$
0.53
|
|
|
|
$
1.87
|
|
$
1.11
|
|
|
Diluted
|
$
1.15
|
|
$
0.52
|
|
|
|
$
1.84
|
|
$
1.09
|
|
|
Weighted average
common shares outstanding, basic
|
234,241,769
|
|
263,460,911
|
|
|
|
235,992,306
|
|
266,217,549
|
|
|
Weighted average
common shares outstanding, diluted
|
237,073,566
|
|
267,309,261
|
|
|
|
239,246,727
|
|
270,249,433
|
|
|
|
Adjusted EBITDA is a
non-GAAP term. See page 6 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.
|
|
Revenue line items
and certain associated expenses have been recast to reflect the
customer changes described in note (a) on page 5 of this addendum
and to classify certain expenses more closely with organizational
responsibility. There were no changes to total revenue,
Adjusted EBITDA, capital expenditures, free cash flow or net
income.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (dollars
in millions)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2018
|
|
2017
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
773
|
|
$
621
|
Accounts receivable,
net
|
1,619
|
|
1,635
|
Prepaid expenses and
other current assets
|
358
|
|
299
|
Total current
assets
|
2,750
|
|
2,555
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
Property, plant and
equipment, net
|
34,411
|
|
33,888
|
Customer
relationships, net
|
10,710
|
|
11,951
|
Franchises
|
67,319
|
|
67,319
|
Goodwill
|
29,554
|
|
29,554
|
Total investment in
cable properties, net
|
141,994
|
|
142,712
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
1,507
|
|
1,356
|
|
|
|
|
Total
assets
|
$
146,251
|
|
$
146,623
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
8,637
|
|
$
9,045
|
Current portion of
long-term debt
|
5,387
|
|
2,045
|
Total current
liabilities
|
14,024
|
|
11,090
|
|
|
|
|
LONG-TERM
DEBT
|
66,730
|
|
68,186
|
DEFERRED INCOME
TAXES
|
17,376
|
|
17,314
|
OTHER LONG-TERM
LIABILITIES
|
2,479
|
|
2,502
|
|
|
|
|
SHAREHOLDERS'
EQUITY:
|
|
|
|
Controlling
interest
|
37,443
|
|
39,084
|
Noncontrolling
interests
|
8,199
|
|
8,447
|
Total shareholders'
equity
|
45,642
|
|
47,531
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
146,251
|
|
$
146,623
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH
FLOWS (dollars in millions)
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Consolidated net
income
|
$
339
|
|
$
195
|
|
$
562
|
|
$
406
|
Adjustments to
reconcile consolidated net income to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
2,592
|
|
2,595
|
|
5,302
|
|
5,145
|
Stock
compensation expense
|
70
|
|
65
|
|
142
|
|
134
|
Accelerated
vesting of equity awards
|
—
|
|
20
|
|
5
|
|
37
|
Noncash
interest income, net
|
(88)
|
|
(88)
|
|
(177)
|
|
(196)
|
Loss on
extinguishment of debt
|
—
|
|
1
|
|
—
|
|
35
|
Loss on
financial instruments, net
|
75
|
|
70
|
|
12
|
|
32
|
Deferred income
taxes
|
29
|
|
26
|
|
57
|
|
42
|
Other,
net
|
18
|
|
(11)
|
|
36
|
|
(18)
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(210)
|
|
(175)
|
|
16
|
|
61
|
Prepaid
expenses and other assets
|
40
|
|
60
|
|
(91)
|
|
(23)
|
Accounts
payable, accrued liabilities and other
|
231
|
|
187
|
|
(69)
|
|
133
|
Net cash flows from
operating activities
|
3,096
|
|
2,945
|
|
5,795
|
|
5,788
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(2,391)
|
|
(2,148)
|
|
(4,574)
|
|
(3,703)
|
Change in accrued
expenses related to capital expenditures
|
99
|
|
347
|
|
(466)
|
|
197
|
Other, net
|
(77)
|
|
(42)
|
|
(67)
|
|
(49)
|
Net cash flows from
investing activities
|
(2,369)
|
|
(1,843)
|
|
(5,107)
|
|
(3,555)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
2,699
|
|
2,506
|
|
5,628
|
|
7,146
|
Repayments of
long-term debt
|
(1,315)
|
|
(2,054)
|
|
(3,500)
|
|
(5,529)
|
Payments for debt
issuance costs
|
(17)
|
|
(21)
|
|
(17)
|
|
(42)
|
Purchase of treasury
stock
|
(1,664)
|
|
(3,328)
|
|
(2,281)
|
|
(4,223)
|
Proceeds from
exercise of stock options
|
7
|
|
14
|
|
43
|
|
86
|
Purchase of
noncontrolling interest
|
(201)
|
|
(402)
|
|
(328)
|
|
(429)
|
Distributions to
noncontrolling interest
|
(37)
|
|
(37)
|
|
(76)
|
|
(75)
|
Other, net
|
(2)
|
|
(6)
|
|
(5)
|
|
(8)
|
Net cash flows from
financing activities
|
(530)
|
|
(3,328)
|
|
(536)
|
|
(3,074)
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
197
|
|
(2,226)
|
|
152
|
|
(841)
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
576
|
|
2,920
|
|
621
|
|
1,535
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
773
|
|
$
694
|
|
$
773
|
|
$
694
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
882
|
|
$
761
|
|
$
1,889
|
|
$
1,653
|
CASH PAID FOR
TAXES
|
$
21
|
|
$
32
|
|
$
22
|
|
$
33
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED SUMMARY
OF OPERATING STATISTICS (in thousands, except per
customer and penetration data)
|
|
|
|
Approximate as
of
|
|
June 30,
2018 (b)
|
|
March 31,
2018 (a)(b)
|
|
December 31,
2017 (a)(b)
|
|
June 30,
2017 (a)(b)
|
Footprint
(c)
|
|
|
|
|
|
|
|
Estimated Video
Passings
|
50,364
|
|
50,165
|
|
49,973
|
|
49,500
|
Estimated Internet
Passings
|
50,149
|
|
49,947
|
|
49,727
|
|
49,228
|
Estimated Voice
Passings
|
49,532
|
|
49,265
|
|
48,995
|
|
48,472
|
|
|
|
|
|
|
|
|
Penetration
Statistics (d)
|
|
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings
|
33.1 %
|
|
33.4 %
|
|
33.7 %
|
|
34.2 %
|
Internet Penetration
of Estimated Internet Passings
|
49.1 %
|
|
48.8 %
|
|
48.2 %
|
|
47.5 %
|
Voice Penetration of
Estimated Voice Passings
|
22.9 %
|
|
23.0 %
|
|
23.2 %
|
|
23.2 %
|
|
|
|
|
|
|
|
|
Customer
Relationships (e)
|
|
|
|
|
|
|
|
Residential
|
25,871
|
|
25,730
|
|
25,499
|
|
25,157
|
Small and Medium
Business
|
1,750
|
|
1,695
|
|
1,662
|
|
1,580
|
Total Customer
Relationships
|
27,621
|
|
27,425
|
|
27,161
|
|
26,737
|
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
|
Primary Service
Units ("PSUs")
|
|
|
|
|
|
|
|
Video
|
16,206
|
|
16,279
|
|
16,400
|
|
16,502
|
Internet
|
23,070
|
|
22,852
|
|
22,518
|
|
22,005
|
Voice
|
10,325
|
|
10,370
|
|
10,424
|
|
10,375
|
|
49,601
|
|
49,501
|
|
49,342
|
|
48,882
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Video
|
(73)
|
|
(121)
|
|
2
|
|
(91)
|
Internet
|
218
|
|
334
|
|
263
|
|
230
|
Voice
|
(45)
|
|
(54)
|
|
23
|
|
14
|
|
100
|
|
159
|
|
288
|
|
153
|
|
|
|
|
|
|
|
|
Single Play
(f)
|
10,694
|
|
10,577
|
|
10,341
|
|
10,062
|
Double Play
(f)
|
6,633
|
|
6,537
|
|
6,473
|
|
6,467
|
Triple Play
(f)
|
8,544
|
|
8,616
|
|
8,685
|
|
8,628
|
|
|
|
|
|
|
|
|
Single Play
Penetration (g)
|
41.3 %
|
|
41.1 %
|
|
40.6 %
|
|
40.0 %
|
Double Play
Penetration (g)
|
25.6 %
|
|
25.4 %
|
|
25.4 %
|
|
25.7 %
|
Triple Play
Penetration (g)
|
33.0 %
|
|
33.5 %
|
|
34.1 %
|
|
34.3 %
|
|
|
|
|
|
|
|
|
% Residential
Non-Video Customer Relationships
|
37.4 %
|
|
36.7 %
|
|
35.7 %
|
|
34.4 %
|
|
|
|
|
|
|
|
|
Monthly Residential
Revenue per Residential Customer (h)
|
$
111.88
|
|
$
111.41
|
|
$
110.74
|
|
$
109.99
|
|
|
|
|
|
|
|
|
Small and Medium
Business
|
|
|
|
|
|
|
|
PSUs
|
|
|
|
|
|
|
|
Video
|
476
|
|
460
|
|
450
|
|
423
|
Internet
|
1,552
|
|
1,503
|
|
1,470
|
|
1,390
|
Voice
|
994
|
|
957
|
|
930
|
|
863
|
|
3,022
|
|
2,920
|
|
2,850
|
|
2,676
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses)
|
|
|
|
|
|
|
|
Video
|
16
|
|
10
|
|
12
|
|
15
|
Internet
|
49
|
|
33
|
|
41
|
|
39
|
Voice
|
37
|
|
27
|
|
32
|
|
39
|
|
102
|
|
70
|
|
85
|
|
93
|
|
|
|
|
|
|
|
|
Monthly Small and
Medium Business Revenue per Customer (i)
|
$
176.96
|
|
$
178.84
|
|
$
181.57
|
|
$
190.37
|
|
|
|
|
|
|
|
|
Enterprise PSUs
(j)
|
|
|
|
|
|
|
|
Enterprise
PSUs
|
235
|
|
228
|
|
220
|
|
202
|
(a)
|
Since the closing of
the TWC and Bright House transactions in May 2016, Charter has
reported its customer data and results using legacy company
reporting methodologies. During the second quarter of 2018, Charter
implemented certain reporting changes on a retrospective basis
which allowed for the recasting of historical customer data and
results using consistent definitions and reporting methodologies
across all three legacy companies.
|
|
|
|
The changes to
previously reported customer data and results occurred primarily
within legacy TWC and legacy Bright House and include:
|
|
|
|
(i) the
reclassification of certain customer types, particularly
universities, from residential where they were previously reported
based on the number of billed units in a bulk contract to small and
medium business accounts where they are reported based on the
number of physical sites;
|
|
|
|
(ii) the recasting of
small and medium business and enterprise PSUs which were previously
reported based on billing relationships to now being reported based
on the number of physical sites; and
|
|
|
|
(iii) the
reclassification of fiber video service from small and medium
business to enterprise.
|
|
|
|
TWC Hawaii customer
statistics are expected to move to Charter's standard methodology
in early 2019 and variances, if any, will be disclosed at that
time.
|
|
|
(b)
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at June 30, 2018, March 31,
2018, December 31, 2017 and June 30, 2017, actual customers include
approximately 227,500, 190,700, 248,900 and 214,100 customers,
respectively, whose accounts were over 60 days past due,
approximately 19,300, 17,200, 20,600 and 15,800 customers,
respectively, whose accounts were over 90 days past due and
approximately 13,200, 13,400, 13,200 and 9,000 customers,
respectively, whose accounts were over 120 days past
due.
|
|
|
(c)
|
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.
|
|
|
(d)
|
Penetration
represents residential and small and medium business customers as a
percentage of estimated passings for the service
indicated.
|
|
|
(e)
|
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.
|
|
|
(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)
|
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.
|
|
|
(j)
|
Enterprise PSUs
represents the aggregate number of 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
June 30,
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Consolidated net
income
|
$
339
|
|
$
195
|
|
$
562
|
|
$
406
|
Plus: Interest
expense, net
|
878
|
|
749
|
|
1,729
|
|
1,462
|
Income tax
expense
|
41
|
|
48
|
|
69
|
|
73
|
Depreciation and
amortization
|
2,592
|
|
2,595
|
|
5,302
|
|
5,145
|
Stock compensation
expense
|
70
|
|
65
|
|
142
|
|
134
|
Loss on
extinguishment of debt
|
—
|
|
1
|
|
—
|
|
35
|
Loss on financial
instruments, net
|
75
|
|
70
|
|
12
|
|
32
|
Other, net
|
56
|
|
124
|
|
128
|
|
214
|
Adjusted EBITDA
(a)
|
$
4,051
|
|
$
3,847
|
|
$
7,944
|
|
$
7,501
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
3,096
|
|
$
2,945
|
|
$
5,795
|
|
$
5,788
|
Less: Purchases
of property, plant and equipment
|
(2,391)
|
|
(2,148)
|
|
(4,574)
|
|
(3,703)
|
Change in accrued
expenses related to capital expenditures
|
99
|
|
347
|
|
(466)
|
|
197
|
Free cash
flow
|
$
804
|
|
$
1,144
|
|
$
755
|
|
$
2,282
|
(a)
|
See page 1 of
this addendum for detail of the components included within Adjusted
EBITDA.
|
|
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
June 30,
|
|
Six Months Ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Customer premise
equipment (a)
|
$
828
|
|
$
1,017
|
|
$
1,762
|
|
$
1,724
|
Scalable
infrastructure (b)
|
587
|
|
382
|
|
1,073
|
|
650
|
Line extensions
(c)
|
353
|
|
297
|
|
644
|
|
545
|
Upgrade/rebuild
(d)
|
190
|
|
145
|
|
332
|
|
252
|
Support capital
(e)
|
433
|
|
307
|
|
763
|
|
532
|
Total
capital expenditures
|
$
2,391
|
|
$
2,148
|
|
$
4,574
|
|
$
3,703
|
|
|
|
|
|
|
|
|
Capital expenditures
included in total related to:
|
|
|
|
|
|
|
|
Commercial
services
|
$
309
|
|
$
335
|
|
$
592
|
|
$
603
|
All-digital
transition
|
$
88
|
|
$
5
|
|
$
274
|
|
$
6
|
Mobile
|
$
53
|
|
$
—
|
|
$
70
|
|
$
—
|
|
|
(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).
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/charter-announces-second-quarter-2018-results-300689131.html
SOURCE Charter Communications, Inc.