News Release
Charter Reports Fourth Quarter and Annual 2009 Financial and Operating Results
Key year-over-year highlights:
- Revenues for the year ended December 31, 2009 increased 4.5% on a pro forma(1) basis and 4.3% on an actual basis compared to 2008.
- Adjusted EBITDA(2)for 2009 increased 7.8% on a pro forma basis and 7.5% on an actual basis compared to 2008.
- Fourth quarter revenues grew 3.5% on a pro forma basis and 3.3%on an actualbasis, driven by increases in telephone, high-speed Internet (HSI) and commercial revenues.
- Fourth quarteradjusted EBITDA grew 2.4% on a pro forma basis and 2.1% on an actual basis.
- Total average monthly revenue per basic video customer (ARPU) for the fourth quarter increased 8.1% year-over-year to $117.43, driven by increased sales of The Charter Bundle(TM).
- Charter completed its financial restructuring in November 2009, reducing debt by approximately $8 billion, or 40%.
"2009 was a successful year on many fronts. We enhanced our video, Internet and phone services while continuing to improve the customer experience. We also achieved strong operating results throughout the year and completed a financial restructuring that better positions us for the future," said Mike Lovett, Interim President and Chief Executive Officer.
Fresh Start Accounting and Combined Successor and Predecessor Results
As previously announced, Charter emerged from Chapter 11 on November 30, 2009 under our pre-arranged Joint Plan of Reorganization ("the Plan"), which was confirmed by the United States Bankruptcy Court for the Southern District of New York.
Upon emergence from bankruptcy, Charter adopted fresh start accounting. In addition to fresh start accounting, our consolidated financial statements reflect all effects of the transactions contemplated by the Plan. Thus, our financial statements are not comparable in many respects to our financial statements for periods prior to our adoption of fresh start accounting and prior to accounting for the effects of the reorganization.
The accompanying consolidated statements of operations and cash flows contained in the addendum to this release present the results of operations and the sources and uses of cash for (i) the eleven months ended November 30, 2009 of the Company (the "Predecessor") and (ii) the one month ended December 31, 2009 of the Company (the "Successor"). However, for purposes of this release, we have combined the current year results of operations for the Predecessor and the Successor. We believe the combined results of operations for the three and twelve months ended December 31, 2009 provide management and investors with a more meaningful perspective of our ongoing financial and operational performance and trends than if we did not combine the results of operations of the Predecessor and the Successor in this manner.
Net gains related to our emergence from Chapter 11 Bankruptcy and the related application of fresh start accounting had a significant impact on net income for the quarter and year ended December 31, 2009. Net income for the fourth quarter of 2009 was $12.718 billion compared to a net loss of $1.495 billion in the year ago quarter. Net income for 2009 was $11.366 billion compared to a net loss of $2.451 billion in 2008.
Key Operating Results
All of the following customer and ARPU statistics are presented on a pro forma basis. Charter served approximately 12.7 million revenue generating units (RGUs) as of December 31, 2009. Approximately 57% of Charter's customers subscribe to a bundle, up from 53% in the fourth quarter of 2008. Charter's pro forma ARPU for the fourth quarter of 2009 was $117.43, an increase of 8.1% compared to fourth quarter 2008, primarily as a result of higher bundled penetration.
Fourth quarter 2009 customer changes (on a pro forma basis) included the following:
- Digital video customers increased by approximately 43,300 and basic video customers decreased by approximately 56,900 during the fourth quarter. Video ARPU was $62.06 for the fourth quarter of 2009, up 4.7% year-over-year.
- HSI customers grew by approximately 51,800 during the fourth quarter of 2009. HSI ARPU of $41.48 increased approximately 3.0% compared to the year-ago quarter, driven by customer upgrades to higher speeds of service and increased penetration of home networking service.
- Fourth quarter 2009 net gains of telephone customers were approximately 60,600. Telephone penetration is now 14.9% of approximately 10.7 million telephone homes passed as of December 31, 2009. Telephone ARPU of $41.73 increased approximately 1.6% compared to the year-ago quarter.
As of December 31, 2009, Charter served approximately 5.3 million customers, and the Company's 12.7 million RGUs were comprised of 4.8 million basic video, 3.2 million digital video, 3.1 million HSI and 1.6 million telephone customers.
Fourth Quarter Results - Pro forma
Fourth quarter revenues of $1.710 billion increased 3.5% compared to the year-ago quarter on a pro forma basis. Adjusted EBITDA for the fourth quarter of 2009 totaled $633 million, an increase of 2.4% compared to the pro forma results for the year-ago period.
Fourth Quarter Results - Actual
Fourth quarter revenues of $1.710 billion increased 3.3% on an actual basis. The increase is the result of HSI, telephone and commercial revenue growth.
HSI revenues were $378 million, up 8.9% year-over-year due to an increased number of customers and ARPU growth. Telephone revenues for the 2009 fourth quarter were $184 million, a 17.9% increase over fourth quarter 2008, driven by a larger telephone customer base and an increase in telephone ARPU. Commercial revenues rose to $116 million, a 12.6% increase year-over-year, primarily resulting from increased sales of the Charter Business Bundle(R) and customer relationship growth. Video revenues were $862 million, essentially flat with the year-ago quarter, as digital and advanced services revenue growth were offset by a decline in basic video customers. Advertising sales revenues of $69 million for the fourth quarter of 2009, which showed a 7.8% improvement compared to the third quarter of 2009, declined 18.8% year-over-year, primarily as a result of significant decreases in revenues from the political, automotive and retail sectors.
Operating costs and expenses totaled $1.077 billion for the fourth quarter of 2009, a 4.0% increase compared to the year-ago period. Operating expenses for the 2009 fourth quarter, which include programming, service and advertising sales costs, were $731 million, a 4.0% increase year-over-year, primarily as a result of increased programming costs. Selling, general and administrative expenses were $346 million, an increase of 3.9% compared to the year-ago quarter.
Adjusted EBITDA for the fourth quarter of 2009 rose to $633 million, up 2.1% compared to the fourth quarter of 2008.
Charter reported $977 million of income from operations in the fourth quarter of 2009, compared to a net loss from operations of $1.257 billion in the fourth quarter of 2008. Driving the change are differences in non-cash franchise impairment charges. In the fourth quarter of 2008 Charter recorded a $1.521 billion non-cash franchise impairment charge. In the fourth quarter of 2009, we finalized the franchise impairment analysis initiated in the third quarter and recorded a $691 million reduction of the previously recorded non-cash franchise impairment charge.
Expenditures for property, plant and equipment for the fourth quarter of 2009 were $315 million, compared to fourth quarter 2008 expenditures of $264 million. The increase in capital expenditures was driven primarily by an increase in customer premise equipment related to higher customer demand for high definition and digital video recorder converters and an increase in support capital due to hardware, software and vehicle purchases.
Net cash flows used in operating activities for the fourth quarter of 2009 were $414 million, compared to $11 million in the fourth quarter of 2008. The increase in net cash flows used in operating activities was primarily due to cash paid associated with implementing the Plan.
Year to Date Results - Pro forma
Pro forma revenues for the year ended December 31, 2009 were $6.754 billion, an increase of 4.5%, or $293 million, over pro forma 2008 results.
Pro forma adjusted EBITDA for 2009 totaled $2.493 billion, an increase of 7.8% compared to the pro forma results for the year-ago period. The pro forma adjusted EBITDA margin increased 110 basis points for the year to 36.9%, up from 35.8% in the year-ago period on a pro forma basis.
Year to Date Results - Actual
Revenues of $6.755 billion for the year ended December 31, 2009 increased 4.3% compared to the year-ago period. The increase resulted from telephone, HSI and commercial revenue growth.
Telephone revenues for 2009 were $713 million, a 28.5% increase over 2008, driven by a larger telephone customer base and an increase in telephone ARPU. HSI revenues were $1.476 billion, up 8.8% year-over-year. Commercial revenues rose to $446 million, a 13.8% increase year-over-year. Video revenues were $3.468 billion, essentially flat with the same period in 2008. Advertising sales revenues declined 19.2% year-over-year to $249 million for 2009.
Operating costs and expenses totaled $4.262 billion for 2009, a 2.5% increase compared to the year-ago period. Operating expenses for the year, which include programming, service and advertising sales costs, were $2.895 billion, a 3.7% increase year-over-year. Selling, general and administrative expenses were $1.367 billion, essentially flat with the prior year.
Adjusted EBITDA for the year ended December 31, 2009 rose to $2.493 billion, up 7.5% compared to the prior year.
Charter reported a $979 million of loss from operations in 2009, compared to a $614 million loss in 2008. The increase in loss from operations is primarily due to the $2.163 billion non-cash franchise impairment charge recorded in 2009 compared to $1.521 billion in 2008, partially offset by the increase in adjusted EBITDA and change in other operating income.
Expenditures for property, plant and equipment for 2009 were $1.134 billion, compared to 2008 expenditures of $1.202 billion. The decrease in capital expenditures is primarily the result of lower spending on scalable infrastructure related to HSI and headend upgrades during 2009 compared to 2008. During 2010, we expect capital expenditures to be approximately $1.2 billion.
Net cash flows from operating activities for 2009 were $594 million, compared to $399 million in 2008. The increase in net cash flows from operating activities is primarily due to a decrease in cash paid for interest and increase in adjusted EBITDA, offset by reorganization items.
Debt and Equity Update
Upon completion of the Plan, Charter eliminated $8 billion of debt and reduced annual interest expense by more than $830 million. As of December 31, 2009, Charter had approximately $13.509 billion principal amount of debt and $754 million in cash and cash equivalents.
The Company has applied to NASDAQ to list its Class A common stock. The Company believes it will be in a position to complete the listing of its shares of Class A common stock on NASDAQ upon filling the vacancy on its board of directors and audit committee.
Conference Call
The Company will host a conference call on Tuesday, March 2, 2010 at 9:00 a.m. Eastern Time (ET) related to the contents of this release.
The conference call will be webcast live via the Company's website at http://www.charter.com/. The webcast can be accessed by selecting "Investor & News Center" from the lower menu on the home page. The call will be archived in the "Investor & News Center" in the "Financial Information" section on the left beginning two hours after completion of the call. Participants should go to the call link no later than 10 minutes prior to the start time to register.
Those participating via telephone should dial 866-726-7983 no later than 10 minutes prior to the call. International participants should dial 706-758-7055. The conference ID code for the call is 59952615.
A replay of the call will be available at 800-642-1687 or 706-645-9291 beginning two hours after the completion of the call through the end of business on March 16, 2010. The conference ID code for the replay is 59952615.
Additional Information Available on Website
A slide presentation to accompany the conference call will be available on the "Investor & News Center" of our website at http://www.charter.com/ in the "Financial Information" section. A trending schedule containing historical customer and financial data can also be found in the "Financial Information" section.
Use of Non-GAAP Financial Metrics
The Company uses certain measures that are not defined by Generally Accepted Accounting Principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA, pro forma adjusted EBITDA, adjusted EBITDA less capital expenditures and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income (loss) or cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is reconciled to consolidated net income (loss) and free cash flow is reconciled to cash flows from operating activities in the addendum of this new release.
Adjusted EBITDA is defined as consolidated net income (loss) plus interest expense, income taxes, depreciation and amortization, impairment of franchises, asset impairment charges, stock compensation expense and other operating expenses, such as special charges and loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses as well as other non-cash or non-recurring items, and is unaffected by the Company's capital structure or investment activities. Adjusted EBITDA less capital expenditures is defined as Adjusted EBITDA minus purchases of property, plant and equipment. Adjusted EBITDA, pro forma adjusted EBITDA and adjusted EBITDA less capital expenditures are used by management and the Company's board of directors to evaluate the performance of the Company's business. For this reason, they are significant components of Charter's annual incentive compensation program. However, these measures are limited in that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing. Management evaluates these costs through other financial measures.
Free cash flow is defined as net cash flows from operating activities, less purchases of property, plant and equipment and changes in accrued expenses related to capital expenditures.
The Company believes that adjusted EBITDA, pro forma adjusted EBITDA, adjusted EBITDA less capital expenditures and free cash flow provide information useful to investors in assessing Charter's performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, adjusted EBITDA generally correlates to the leverage ratio calculation under the Company's credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission). Adjusted EBITDA and pro forma adjusted EBITDA, as presented, include management fee expenses in the amount of $36 million and $32 million for the three months ended December 31, 2009 and 2008, respectively, which expense amounts are excluded for the purposes of calculating compliance with leverage covenants.
In addition to the actual results for the three and twelve months ended December 31, 2009 and 2008, we have provided pro forma results in this release for the three months ended December 31, 2008 and years ended December 31, 2009 and 2008. We believe these pro forma results facilitate meaningful analysis of the results of operations. Pro forma results in this release reflect certain sales and acquisitions of cable systems in 2008 and 2009 as if they occurred as of January 1, 2008. Pro forma statements of operations for the three months ended December 31, 2008 and years ended December 31, 2009 and 2008 and pro forma customer statistics as of September 30, 2009 and December 31, 2008 are provided in the addendum of this news release.
About Charter
Charter Communications, Inc. (CCMM - OTC Bulletin Board) is a leading broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter TV(TM) video entertainment programming, Charter Internet(TM) access, and Charter Phone(TM). Charter Business(R) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at http://www.charter.com/.
(1) Pro forma results are described below in the "Use of Non-GAAP Financial Metrics" section and are provided in the addendum of this news release.
(2) Adjusted EBITDA is defined in the "Use of Non-GAAP Financial Metrics" section and is reconciled to consolidated net income (loss) in the addendum of this news release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions, including, without limitation, the factors described under "Risk Factors" from time to time in our filings with the Securities and Exchange Commission ("SEC"). Many of the forward-looking statements contained in this release may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim," "on track," "target," "opportunity" and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this release are set forth in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:
- our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services to residential and commercial customers, and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition and the difficult economic conditions in the United States;
- the impact of competition from other distributors, including but not limited to incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers, and digital subscriber line ("DSL") providers and competition from video provided over the Internet;
- general business conditions, economic uncertainty or downturn and the significant downturn in the housing sector and overall economy;
- 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 adequately deliver customer service;
- the effects of governmental regulation on our business;
- the availability and access, in general, of funds to meet our debt obligations, prior to or when they become due, and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) cash flows from operating activities, (iii) access to the capital or credit markets including through new issuances, exchange offers or otherwise, especially given recent volatility and disruption in the capital and credit markets, or (iv) other sources and our ability to fund debt obligations (by dividend, investment or otherwise) to the applicable obligor of such debt; and
- our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this release.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
Actual Three Months
Ended December 31, 2009
--------------------------------
Predecessor
Successor Predecessor Combined Actual Three
December 1 October 1 October 1 Months
through through through Ended %
December 31, November 30, December 31, December 31, Change
2009 2009 2009 2008
REVENUES:
Video $288 $574 $862 $864 -0.2%
High-speed
Internet 127 251 378 347 8.9%
Telephone 61 123 184 156 17.9%
Commercial 39 77 116 103 12.6%
Advertising
sales 22 47 69 85 -18.8%
Other 35 66 101 101 0.0%
--- --- --- ---
Total
revenues 572 1,138 1,710 1,656 3.3%
--- ----- ----- -----
COSTS AND EXPENSES:
Operating
(excluding
depreciation and
amortization) (a) 244 487 731 703 4.0%
Selling, general
and administrative
(excluding stock
compensation
expense) (b) 117 229 346 333 3.9%
--- --- --- ---
Operating costs
and expenses 361 716 1,077 1,036 4.0%
--- --- ----- -----
Adjusted
EBITDA 211 422 633 620 2.1%
--- --- --- ---
Adjusted EBITDA
margin 36.9% 37.1% 37.0% 37.4%
---- ---- ---- ----
Depreciation and
amortization 122 217 339 329
Impairment of
franchises - (691) (691) 1,521
Stock compensation
expense 1 3 4 9
Other operating
expenses, net 4 - 4 18
--- --- --- ---
Income (loss) from
operations 84 893 977 (1,257)
--- --- --- ------
OTHER INCOME (EXPENSES):
Interest expense,
net (excluding
unrecorded
contractual
interest expense
of $137 for the
two months ended
November 30, 2009) (68) (135) (203) (486)
Change in value of
derivatives - - - (28)
Gain due to
effects of Plan - 6,818 6,818 -
Gain due to fresh
start accounting
adjustments - 5,659 5,659 -
Reorganization
items, net (3) (121) (124) -
Other income
(expense), net (3) 1 (2) (2)
--- --- -- --
(74) 12,222 12,148 (516)
--- ------ ------ ----
Income (loss)
before income
taxes 10 13,115 13,125 (1,773)
Income tax benefit
(expense) (8) (93) (101) 277
--- --- ---- ---
Consolidated net
income (loss) 2 13,022 13,024 (1,496)
Less: Net
(income) loss -
noncontrolling
interest - (306) (306) 1
--- ---- ---- ---
Net income (loss) -
Charter
shareholders $ 2 $12,716 $12,718 $(1,495)
=== ======= ======= =======
Earnings (loss)
per
common share -
Charter
shareholders:
Basic $0.02 $33.55 $(3.96)
==== ====== ======
Diluted $0.02 $14.09 $(3.96)
==== ====== ======
Weighted average
common shares
outstanding,
basic 112,078,089 379,080,041 377,920,301
=========== =========== ===========
Weighted
average
common
shares
outstanding,
diluted 114,346,861 902,362,926 377,920,301
=========== =========== ===========
(a) Operating expenses include programming, service, and advertising
sales expenses.
(b) Selling, general and administrative expenses include general and
administrative and marketing expenses.
Adjusted EBITDA is a non-GAAP term. See page 10 of this addendum for
the reconciliation of adjusted EBITDA to consolidated net income (loss)
as defined by GAAP.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
Actual Year Ended December 31, 2009
-----------------------------------
Successor Predecessor Combined Predecessor
December 1 January 1 January 1 Actual
through through through Year Ended
December 31, November 30, December 31, December 31, %
2009 2009 2009 2008 Change
REVENUES:
Video $288 $3,180 $3,468 $3,463 0.1%
High-speed
Internet 127 1,349 1,476 1,356 8.8%
Telephone 61 652 713 555 28.5%
Commercial 39 407 446 392 13.8%
Advertising
sales 22 227 249 308 -19.2%
Other 35 368 403 405 -0.5%
--- --- --- ---
Total
revenues 572 6,183 6,755 6,479 4.3%
--- ----- ----- -----
COSTS AND EXPENSES:
Operating
(excluding
depreciation and
amortization) (a) 244 2,651 2,895 2,792 3.7%
Selling, general
and administrative
(excluding stock
compensation
expense) (b) 117 1,250 1,367 1,368 -0.1%
--- ----- ----- -----
Operating costs
and expenses 361 3,901 4,262 4,160 2.5%
--- ----- ----- -----
Adjusted
EBITDA 211 2,282 2,493 2,319 7.5%
--- ----- ----- -----
Adjusted
EBITDA
margin 36.9% 36.9% 36.9% 35.8%
---- ---- ---- ----
Depreciation and
amortization 122 1,194 1,316 1,310
Impairment of
franchises - 2,163 2,163 1,521
Stock compensation
expense 1 26 27 33
Other operating
(income) expenses,
net 4 (38) (34) 69
--- --- --- ---
Income (loss) from
operations 84 (1,063) (979) (614)
--- ------ ---- ----
OTHER INCOME (EXPENSES):
Interest expense,
net (excluding
unrecorded
contractual
interest expense
of $558 for the
eleven months
ended
November 30,
2009) (68) (1,020) (1,088) (1,905)
Change in value
of derivatives - (4) (4) (29)
Gain due to
effects of Plan - 6,818 6,818 -
Gain due to fresh
start accounting
adjustments - 5,659 5,659 -
Reorganization
items, net (3) (644) (647) -
Other income
(expense), net (3) 2 (1) (2)
--- --- --- ---
(74) 10,811 10,737 (1,936)
--- ------ ------ ------
Income (loss)
before income
taxes 10 9,748 9,758 (2,550)
Income tax benefit
(expense) (8) 351 343 103
--- --- --- ---
Consolidated net
income (loss) 2 10,099 10,101 (2,447)
Less: Net
(income) loss -
noncontrolling
interest - 1,265 1,265 (4)
--- ----- ----- ---
Net income (loss) -
Charter
shareholders $2 $11,364 $11,366 $(2,451)
=== ======= ======= =======
Earnings (loss)
per common share -
Charter shareholders:
Basic $0.02 $30.00 $(6.56)
===== ====== ======
Diluted $0.02 $12.61 $(6.56)
===== ====== ======
Weighted average
common shares
outstanding,
basic 112,078,089 378,784,231 373,464,920
=========== =========== ===========
Weighted average
common shares
outstanding,
diluted 114,346,861 902,067,116 373,464,920
=========== =========== ===========
(a) Operating expenses include programming, service, and advertising
sales expenses.
(b) Selling, general and administrative expenses include general and
administrative and marketing expenses.
Adjusted EBITDA is a non-GAAP term. See page 10 of this addendum for
the reconciliation of adjusted EBITDA to consolidated net income (loss)
as defined by GAAP.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
Actual Three Months Ended December 31, 2009
-------------------------------------------
Predecessor
Successor Predecessor Combined Pro Forma
December 1 October 1 October 1 Three Months
through through through Ended
December 31, November 30, December 31, December 31, %
2009 2009 2009 2008 Change
REVENUES:
Video $288 $574 $862 $861 0.1%
High-speed
Internet 127 251 378 346 9.2%
Telephone 61 123 184 156 17.9%
Commercial 39 77 116 103 12.6%
Advertising
sales 22 47 69 85 -18.8%
Other 35 66 101 101 0.0%
--- --- --- ---
Total
revenues 572 1,138 1,710 1,652 3.5%
--- ----- ----- -----
COSTS AND EXPENSES:
Operating
(excluding
depreciation and
amortization) (a) 244 487 731 701 4.3%
Selling, general
and administrative
(excluding
stock
compensation
expense) (b) 117 229 346 333 3.9%
--- --- --- ---
Operating costs
and expenses 361 716 1,077 1,034 4.2%
--- --- ----- -----
Adjusted
EBITDA 211 422 633 618 2.4%
--- --- --- ---
Adjusted
EBITDA
margin 36.9% 37.1% 37.0% 37.4%
---- ---- ---- ----
Depreciation and
amortization 122 217 339 328
Impairment of
franchises - (691) (691) 1,521
Stock compensation
expense 1 3 4 9
Other operating
expenses, net 4 - 4 15
--- --- --- ---
Income (loss)
from operations 84 893 977 (1,255)
--- --- --- ------
OTHER INCOME (EXPENSES):
Interest expense,
net (excluding
unrecorded
contractual
interest expense
of $137 for the
two months ended
November 30,
2009) (68) (135) (203) (486)
Change in value
of derivatives - - - (28)
Gain due to
effects of
Plan - 6,818 6,818 -
Gain due to fresh
start accounting
adjustments - 5,659 5,659 -
Reorganization
items, net (3) (121) (124) -
Other income
(expense), net (3) 1 (2) (2)
--- --- --- ---
(74) 12,222 12,148 (516)
--- ------ ------ ----
Income (loss)
before income
taxes 10 13,115 13,125 (1,771)
Income tax benefit
(expense) (8) (93) (101) 277
--- --- ---- ---
Consolidated net
income (loss) 2 13,022 13,024 (1,494)
Less: Net
(income) loss -
noncontrolling
interest - (306) (306) 1
--- ---- ---- ---
Net income (loss) -
Charter
shareholders $2 $12,716 $12,718 $(1,493)
=== ======= ======= =======
Earnings (loss)
per common
share - Charter
shareholders:
Basic $0.02 $33.55 $(3.95)
===== ====== ======
Diluted $0.02 $14.09 $(3.95)
===== ====== ======
Weighted average
common shares
outstanding,
basic 112,078,089 379,080,041 377,920,301
=========== =========== ===========
Weighted average
common shares
outstanding,
diluted 114,346,861 902,362,926 377,920,301
=========== =========== ===========
(a) Pro forma results reflect certain sales of cable systems in 2008 and
2009 as if they occurred as of January 1, 2008. The pro forma
statements of operations do not include adjustments for financing
transactions completed by Charter during the periods presented or
certain other dispositions or acquisitions of assets because those
transactions did not significantly impact Charter's adjusted EBITDA.
However, all transactions completed in 2008 and 2009 have been
reflected in the operating statistics. The pro forma data is based on
information available to Charter as of the date of this document and
certain assumptions that we believe are reasonable under the
circumstances. The financial data required allocation of certain
revenues and expenses and such information has been presented for
comparative purposes and is not intended to provide any indication of
what our actual financial position, or results of operations would
have been had the transactions described above been completed on the
dates indicated or
(b) Operating expenses include programming, service, and advertising
sales expenses.
(c) Selling, general and administrative expenses include general and
administrative and marketing expenses.
December 31, 2008. Pro forma revenues, operating costs and expenses and
net loss were reduced by $4 million, $2 million and $2 million,
respectively, for the three months ended December 31, 2008.
Adjusted EBITDA is a non-GAAP term. See page 10 of this addendum for
the reconciliation of adjusted EBITDA to consolidated net income (loss)
as defined by GAAP.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
Pro Forma Year Ended December 31, 2009
--------------------------------------
Successor Predecessor Combined Predecessor
December 1 January 1 January 1 Pro Forma
through through through Year Ended
December 31, November 30, December 31, December 31, %
2009 2009 2009 2008 Change
REVENUES:
Video $288 $3,179 $3,467 $3,451 0.5%
High-speed
Internet 127 1,349 1,476 1,354 9.0%
Telephone 61 652 713 555 28.5%
Commercial 39 407 446 391 14.1%
Advertising
sales 22 227 249 306 -18.6%
Other 35 368 403 404 -0.2%
--- --- --- ---
Total
revenues 572 6,182 6,754 6,461 4.5%
--- ----- ----- -----
COSTS AND EXPENSES:
Operating
(excluding
depreciation and
amortization) (a) 244 2,650 2,894 2,784 4.0%
Selling, general
and administrative
(excluding
stock
compensation
expense) (b) 117 1,250 1,367 1,364 0.2%
--- ----- ----- -----
Operating costs
and expenses 361 3,900 4,261 4,148 2.7%
--- ----- ----- -----
Adjusted
EBITDA 211 2,282 2,493 2,313 7.8%
--- ----- ----- -----
Adjusted EBITDA
margin 36.9% 36.9% 36.9% 35.8%
---- ---- ---- ----
Depreciation and
amortization 122 1,194 1,316 1,306
Impairment of
franchises - 2,163 2,163 1,521
Stock compensation
expense 1 26 27 33
Other operating
(income) expenses,
net 4 (40) (36) 65
--- --- --- --
Income (loss) from
operations 84 (1,061) (977) (612)
--- ------ ---- ----
OTHER INCOME (EXPENSES):
Interest expense,
net (excluding
unrecorded
contractual interest
expense of $558
for the eleven
months ended
November 30,
2009) (68) (1,020) (1,088) (1,905)
Change in value of
derivatives - (4) (4) (29)
Gain due to
effects of Plan - 6,818 6,818 -
Gain due to fresh
start accounting
adjustments - 5,659 5,659 -
Reorganization
items, net (3) (644) (647) -
Other income
(expense), net (3) 2 (1) (2)
--- --- --- ---
(74) 10,811 10,737 (1,936)
--- ------ ------ ------
Income (loss)
before income
taxes 10 9,750 9,760 (2,548)
Income tax benefit
(expense) (8) 351 343 103
--- --- --- ---
Consolidated net
income (loss) 2 10,101 10,103 (2,445)
Less: Net
(income) loss -
noncontrolling
interest - 1,265 1,265 (4)
--- ----- ----- ---
Net income (loss) -
Charter
shareholders $2 $11,366 $11,368 $(2,449)
=== ======= ======= =======
Earnings (loss) per
common share -
Charter
shareholders:
Basic $0.02 $30.00 $(6.55)
===== ====== ======
Diluted $0.02 $12.61 $(6.55)
===== ====== ======
Weighted average
common shares
outstanding,
basic 112,078,089 378,784,231 373,464,920
=========== =========== ===========
Weighted average
common shares
outstanding,
diluted 114,346,861 902,067,116 373,464,920
=========== =========== ===========
(a) Pro forma results reflect certain sales of cable systems in 2008 and
2009 as if they occurred as of January 1, 2008. The pro forma
statements of operations do not include adjustments for financing
transactions completed by Charter during the periods presented or
certain other dispositions or acquisitions of assets because those
transactions did not significantly impact Charter's adjusted EBITDA.
However, all transactions completed in 2008 and 2009 have been
reflected in the operating statistics. The pro forma data is based on
information available to Charter as of the date of this document and
certain assumptions that we believe are reasonable under the
circumstances. The financial data required allocation of certain
revenues and expenses and such information has been presented for
comparative purposes and is not intended to provide any indication of
what our actual financial position, or results of operations would
have been had the transactions described above been completed on the
dates indicated or
(b) Operating expenses include programming, service, and advertising
sales expenses.
(c) Selling, general and administrative expenses include general and
administrative and marketing expenses.
December 31, 2009. Pro forma revenues and operating costs and expenses
were reduced by $1 million and $1 million, respectively, for the year
ended December 31, 2009. Pro forma net income increased by $2 million
for the year ended December 31, 2009.
December 31, 2008. Pro forma revenues, operating costs and expenses and
net loss were reduced by $18 million, $12 million and $2 million,
respectively, for the year ended December 31, 2008.
Adjusted EBITDA is a non-GAAP term. See page 10 of this addendum for
the reconciliation of adjusted EBITDA to consolidated net income (loss)
as defined by GAAP.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
Successor Predecessor
December 31, December 31,
2009 2008
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $709 $960
Restricted cash and cash equivalents 45 -
Accounts receivable, net of allowance for
doubtful accounts 248 222
Prepaid expenses and other current
assets 69 36
-- --
Total current assets 1,071 1,218
----- -----
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net 6,833 4,987
Franchises, net 5,272 7,384
Customer relationships, net 2,335 9
Goodwill 951 68
--- --
Total investment in cable properties,
net 15,391 12,448
------ ------
OTHER NONCURRENT ASSETS 196 216
--- ---
Total assets $16,658 $13,882
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $898 $1,310
Current portion of long-term debt 70 155
-- ---
Total current liabilities 968 1,465
--- -----
LONG-TERM DEBT 13,252 21,511
NOTE PAYABLE - RELATED PARTY - 75
DEFERRED MANAGEMENT FEES - RELATED PARTY - 14
OTHER LONG-TERM LIABILITIES 520 1,082
TEMPORARY EQUITY 1 241
SHAREHOLDERS' EQUITY (DEFICIT):
Charter shareholders' equity (deficit) 1,915 (10,506)
Noncontrolling interest 2 -
--- ---
Total shareholders' equity (deficit) 1,917 (10,506)
----- -------
Total liabilities and shareholders'
equity (deficit) $16,658 $13,882
======= =======
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
Three Months Ended December 31, 2009
--------------------------------------
Successor Predecessor Combined Predecessor
December 1 October 1 October 1 Three Months
through through through Ended
December 31, November 30, December 31, December 31,
2009 2009 2009 2008
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) -
Charter
shareholders $2 $12,716 $12,718 $(1,495)
Adjustments to
reconcile net
income (loss) to
net cash flows
from operating
activities: -
Depreciation and
amortization 122 217 339 329
Impairment of
franchises - (691) (691) 1,521
Noncash interest
expense 5 7 12 16
Change in value of
derivatives - - - 28
Gain due to effects
of Plan - (6,818) (6,818) -
Gain due to fresh
start accounting
adjustments - (5,659) (5,659) -
Noncash
reorganization
items, net - 15 15 -
Deferred income
taxes 7 93 100 (276)
Noncontrolling
interest - 306 306 (1)
Other, net 3 3 6 11
Changes in operating
assets and liabilities,
net of effects from
dispositions -
Accounts
receivable 26 (63) (37) 24
Prepaid expenses and
other assets 2 1 3 8
Accounts payable,
accrued expenses and
other 16 (699) (683) (176)
Payment of deferred
management fees -
related party - (25) (25) -
--- --- --- ---
Net cash flows from
operating
activities 183 (597) (414) (11)
--- ---- ---- ---
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of
property, plant and
equipment (108) (207) (315) (264)
Change in accrued
expenses related to
capital
expenditures - 8 8 2
Purchase of CC VIII,
LLC interest - (150) (150) -
Other, net (3) (3) (6) 32
--- --- --- ---
Net cash flows
from
investing
activities (111) (352) (463) (230)
---- ---- ---- ----
CASH FLOWS FROM
FINANCING ACTIVITIES:
Borrowings of long-
term debt - 1,614 1,614 750
Repayments of long-
term debt (17) (1,002) (1,019) (116)
Payments for debt
issuance costs - (39) (39) -
Other, net - - - (2)
--- --- --- ---
Net cash flows
from
financing
activities (17) 573 556 632
--- --- --- ---
NET INCREASE
(DECREASE) IN CASH
AND CASH EQUIVALENTS 55 (376) (321) 391
CASH AND CASH
EQUIVALENTS,
beginning of period 699 1,075 1,075 569
--- ----- ----- -----
CASH AND CASH
EQUIVALENTS, end of
period $754 $699 $754 $960
==== ==== ==== ====
CASH PAID FOR
INTEREST $4 $411 $415 $606
=== ==== ==== ====
NONCASH TRANSACTIONS:
Liabilities subject
to compromise
discharged at
emergence $- $7,829 $7,829 $-
=== ====== ====== ===
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
Year Ended December 31, 2009
----------------------------
Successor Predecessor Combined Predecessor
December 1 January 1 January 1 Actual Year
through through through Ended
December 31, November 30, December 31, December 31,
2009 2009 2009 2008
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) -
Charter
shareholders $2 $11,364 $11,366 $(2,451)
Adjustments to
reconcile net income
(loss) to net cash
flows from operating
activities:
Depreciation and
amortization 122 1,194 1,316 1,310
Impairment of
franchises - 2,163 2,163 1,521
Noncash interest
expense 5 42 47 61
Change in value of
derivatives - 4 4 29
Gain due to effects
of Plan - (6,818) (6,818) -
Gain due to fresh
start accounting
adjustments - (5,659) (5,659) -
Noncash
reorganization
items, net - 170 170 -
Deferred income
taxes 7 (358) (351) (107)
Noncontrolling
interest - (1,265) (1,265) 4
Other, net 3 31 34 43
Changes in operating
assets and liabilities,
net of effects
from dispositions
Accounts
receivable 26 (52) (26) 3
Prepaid expenses
and other assets 2 (36) (34) (1)
Accounts payable,
accrued expenses
and other 16 (344) (328) (13)
Payment of deferred
management fees -
related party - (25) (25) -
--- --- --- ---
Net cash flows
from operating
activities 183 411 594 399
--- --- --- ---
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchases of
property, plant and
equipment (108) (1,026) (1,134) (1,202)
Change in accrued
expenses related to
capital
expenditures - (10) (10) (39)
Purchase of CC VIII,
LLC interest - (150) (150) -
Other, net (3) (7) (10) 31
--- --- --- ---
Net cash flows from
investing
activities (111) (1,193) (1,304) (1,210)
---- ------ ------ ------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Proceeds from Rights
Offering - 1,614 1,614 -
Borrowings of long-
term debt - - - 3,105
Repayments of long-
term debt (17) (1,054) (1,071) (1,354)
Payments for debt
issuance costs - (39) (39) (42)
Other, net - - - (13)
--- --- --- ---
Net cash flows
from financing
activities (17) 521 504 1,696
--- --- --- -----
NET INCREASE
(DECREASE) IN CASH
AND CASH EQUIVALENTS 55 (261) (206) 885
CASH AND CASH
EQUIVALENTS,
beginning of period 699 960 960 75
--- --- --- --
CASH AND CASH
EQUIVALENTS, end of
period $754 $699 $754 $960
==== ==== ==== ====
CASH PAID FOR
INTEREST $4 $1,096 $1,100 $1,847
=== ====== ====== ======
NONCASH TRANSACTIONS:
Liabilities subject
to compromise
discharged at
emergence $- $7,829 $7,829 $-
=== ====== ====== ===
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
Approximate as of
------------------
Actual Pro Forma
------ ----------
December 31, September 30, December 31,
2009 (a) 2009 (a) 2008 (a)
-------- -------- --------
Customer Summary:
Customer Relationships:
Residential (non-
bulk) basic video
customers (b) 4,562,900 4,617,900 4,767,600
Multi-dwelling
(bulk) and
commercial unit
customers (c) 261,100 263,000 256,400
------- ------- -------
Total basic video
customers 4,824,000 4,880,900 5,024,000
Non-video customers
(b) 493,100 462,800 408,700
------- ------- -------
Total customer
relationships
(d) 5,317,100 5,343,700 5,432,700
========= ========= =========
Pro forma average
monthly revenue per
basic video
customer (e) $117.43 $115.21 $108.64
Pro forma average
monthly video
revenue per basic
video customer
(f) $62.06 $61.47 $59.28
Residential bundled
customers (g) 2,889,700 2,858,300 2,748,000
Revenue Generating Units:
Basic video
customers (b) (c) 4,824,000 4,880,900 5,024,000
Digital video
customers (h) 3,218,100 3,174,800 3,132,200
Residential high-
speed Internet
customers (i) 3,062,300 3,010,500 2,875,600
Telephone customers
(j) 1,595,900 1,535,300 1,348,800
--------- --------- ---------
Total revenue
generating units
(k) 12,700,300 12,601,500 12,380,600
========== ========== ==========
Total Video Services:
Estimated homes
passed (l) 11,902,200 11,861,600 11,773,300
Basic video
customers (b)(c) 4,824,000 4,880,900 5,024,000
Estimated
penetration of
basic homes passed
(b) (c) (l) (m) 40.5% 41.1% 42.7%
Pro forma basic
video customers
quarterly net loss
(b) (c) (n) (56,900) (46,500) (71,800)
Digital video
customers (h) 3,218,100 3,174,800 3,132,200
Digital penetration
of basic video
customers (b) (c)
(h) (o) 66.7% 65.0% 62.3%
Digital set-top
terminals
deployed 4,794,500 4,713,500 4,548,200
Pro forma digital
video customers
quarterly net gain
(h) (n) 43,300 22,700 22,400
High-Speed Internet Services:
Estimated high-
speed Internet
homes passed (l) 11,360,200 11,308,600 11,174,600
Residential high-
speed Internet
customers (i) 3,062,300 3,010,500 2,875,600
Estimated
penetration of high-
speed Internet
homes passed (i)
(l) (m) 27.0% 26.6% 25.7%
Pro forma average
monthly high-speed
Internet revenue
per high-speed
Internet customer
(f) $41.48 $41.58 $40.26
Pro forma high-
speed Internet
customers quarterly
net gain (i) (n) 51,800 52,400 22,900
Telephone Services:
Estimated telephone
homes passed (l) 10,723,400 10,619,100 10,434,400
Telephone customers
(j) 1,595,900 1,535,300 1,348,800
Estimated
penetration of
telephone homes
passed (i) (l)
(m) 14.9% 14.5% 12.9%
Pro forma average
monthly telephone
revenue per
telephone customer
(f) $41.73 $42.76 $41.06
Pro forma telephone
customers quarterly
net gain (j) (n) 60,600 55,300 75,200
Pro forma operating statistics reflect the sales and acquisitions
of cable systems in 2008 and 2009 as if such transactions had
occurred as of the last day of the respective period for all periods
presented. The pro forma statements of operations do not include
adjustments for financing transactions completed by Charter during the
periods presented or certain other dispositions or acquisitions of assets
because those transactions did not significantly impact Charter's
adjusted EBITDA. However, all transactions completed in 2008 and 2009
have been reflected in the operating statistics.
At September 30, 2009 actual basic video customers, digital video
customers, high-speed Internet customers and telephone customers were
4,879,100, 3,174,800, 3,010,100, and 1,535,300, respectively.
At December 31, 2008 actual basic video customers, digital video
customers, high-speed Internet customers and telephone customers were
5,036,400, 3,133,400, 2,875,200, and 1,348,800, respectively.
See footnotes to unaudited summary of operating statistics on page 9 of
this addendum.
(a) Our billing systems calculate the aging of customer accounts based
on the monthly billing cycle for each account. On that basis, at
December 31, 2009, September 30, 2009, and December 31, 2008,
customers include approximately 25,900, 33,300, and 36,000 persons,
respectively, whose accounts were over 60 days past due in payment,
approximately 3,500, 5,700, and 5,300 persons, respectively, whose
accounts were over 90 days past due in payment and approximately
2,200, 2,500, and 2,700 persons, respectively, whose accounts were
over 120 days past due in payment.
(b) "Basic video customers" include all residential customers who receive
video services (including those who also purchase high-speed Internet
and telephone services) but excludes approximately 493,100, 462,800,
and 408,700 customer relationships at December 31, 2009,
September 30, 2009, and December 31, 2008, respectively, who receive
high-speed Internet service only, telephone service only, or both
high-speed Internet service and telephone service and who are only
counted as high-speed Internet customers or telephone customers.
(c) Included within "basic video customers" are those in commercial and
multi-dwelling structures, which are calculated on an equivalent bulk
unit ("EBU") basis. In the second quarter of 2009, we began
calculating EBUs by dividing the bulk price charged to accounts in an
area by the published rate charged to non-bulk residential customers
in that market for the comparable tier of service rather than the
most prevalent price charged as was used previously. This EBU method
of estimating basic video customers is consistent with the
methodology used in determining costs paid to programmers and is
consistent with the methodology used by other multiple system
operators (MSOs). EBUs presented as of December 31, 2008 decreased
by 9,300 as a result of the change in methodology. As we increase
our published video rates to residential customers without a
corresponding increase in the prices charged to commercial service or
multi-dwelling customers, our EBU count will decline even if there is
no real loss in commercial service or multi-dwelling customers.
(d) "Customer relationships" include the number of customers that receive
one or more levels of service, encompassing video, Internet and
telephone services, without regard to which service(s) such customers
receive. This statistic is computed in accordance with the
guidelines of the National Cable & Telecommunications Association
(NCTA) that have been adopted by eleven then publicly traded cable
operators, including Charter.
(e) "Pro forma average monthly revenue per basic video customer" is
calculated as total quarterly pro forma revenue divided by three
divided by average pro forma basic video customers during the
respective quarter.
(f) "Pro forma average monthly revenue per customer" represents quarterly
pro forma revenue for the service indicated divided by three divided
by the number of pro forma customers for the service indicated during
the respective quarter.
(g) "Residential bundled customers" include residential customers
receiving a combination of at least two different types of service,
including Charter's video service, high-speed Internet service or
telephone. "Residential bundled customers" do not include
residential customers who only subscribe to video service.
(h) "Digital video customers" include all basic video customers that have
one or more digital set-top boxes or cable cards deployed.
(i) "Residential high-speed Internet customers" represent those
residential customers who subscribe to our high-speed Internet
service. At December 31, 2009, September 30, 2009, and December 31,
2008, approximately 2,705,300, 2,673,400, and 2,577,200 of these high-
speed Internet customers, respectively, receive video and/ or
telephone services from us and are included within the respective
statistics above.
(j) "Telephone customers" include all customers receiving telephone
service. As of December 31, 2009, September 30, 2009, and December
31, 2008 approximately 1,548,100, 1,493,300, and 1,311,200 of these
telephone customers, respectively, receive video and/or high-speed
Internet services from us and are included within the respective
statistics above.
(k) "Revenue generating units" represent the sum total of all basic
video, digital video, high-speed Internet and telephone customers,
not counting additional outlets within one household. For example,
a customer who receives two types of service (such as basic video and
digital video) would be treated as two revenue generating units, and
if that customer added on high-speed Internet service, the customer
would be treated as three revenue generating units. This statistic is
computed in accordance with the guidelines of the NCTA.
(l) "Homes passed" represent our estimate of the number of living units,
such as single family homes, apartment units and condominium units
passed by our cable distribution network in the areas where we offer
the service indicated. "Homes passed" exclude commercial units passed
by our cable distribution network. These estimates are updated for
all periods presented when estimates change.
(m) "Penetration" represents customers as a percentage of homes passed
for the service indicated.
(n) "Pro forma quarterly net gain (loss)" represents the pro forma net
gain or loss in the respective quarter for the service indicated.
(o) "Digital penetration of basic video customers" represents the number
of digital video customers as a percentage of basic video customers.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(DOLLARS IN MILLIONS)
Actual Three Months Ended December 31, 2009
-------------------------------------------
Successor Predecessor Combined Predecessor
December 1 October 1 October 1 Actual Three
through through through Months Ended
December 31, November 30, December 31, December 31,
2009 2009 2009 2008
Consolidated net
income (loss) $2 $13,022 $13,024 $(1,496)
Plus: Interest expense,
net 68 135 203 486
Income tax
(benefit)
expense 8 93 101 (277)
Depreciation and
amortization 122 217 339 329
Impairment of
franchises - (691) (691) 1,521
Stock
compensation
expense 1 3 4 9
(Gain) loss due
to bankruptcy
related items
(b) 3 (12,356) (12,353) -
Other, net 7 (1) 6 48
--- --- --- ---
Adjusted EBITDA (c) 211 422 633 620
Less: Purchases of
property,
plant and
equipment (108) (207) (315) (264)
---- ---- ---- ----
Adjusted EBITDA
less capital
expenditures $103 $215 $318 $356
==== ==== ==== ====
Net cash flows from
operating
activities $183 $(597) $(414) $(11)
Less: Purchases of
property,
plant and
equipment (108) (207) (315) (264)
Change in
accrued
expenses
related
to capital
expenditures - 8 8 2
--- --- --- ---
Free cash flow $75 $(796) $(721) $(273)
=== ===== ===== =====
Actual Three Months Ended December 31, 2009
-------------------------------------------
Successor Predecessor Combined Predecessor
December 1 October 1 October 1 Pro Forma Three
through through through Months Ended
December 31, November 30, December 31, December 31,
2009 2009 2009 2008 (a)
Consolidated net
income (loss) $2 $13,022 $13,024 $(1,494)
Plus: Interest
expense, net 68 135 203 486
Income tax
(benefit)
expense 8 93 101 (277)
Depreciation and
amortization 122 217 339 328
Impairment of
franchises - (691) (691) 1,521
Stock
compensation
expense 1 3 4 9
(Gain) loss due
to bankruptcy
related items
(b) 3 (12,356) (12,353) -
Other, net 7 (1) 6 45
--- --- --- ---
Adjusted EBITDA (c) 211 422 633 618
Less: Purchases of
property,
plant and
equipment (108) (207) (315) (264)
---- ---- ---- ----
Adjusted EBITDA
less capital
expenditures $103 $215 $318 $354
==== ==== ==== ====
Net cash flows
from operating
activities $183 $(597) $(414) $(13)
Less: Purchases of
property,
plant and
equipment (108) (207) (315) (264)
Change in
accrued
expenses
related
to capital
expenditures - 8 8 2
--- --- --- ---
Free cash flow $75 $(796) $(721) $(275)
=== ===== ===== =====
(a) Pro forma results reflect certain sales and acquisitions of cable
systems in 2008 and 2009 as if they occurred as of January 1, 2008.
(b) Represents the aggregate of gain due to effects of Plan, gain due to
fresh start accounting adjustments and reorganizations items, net as
presented on the statements of operations.
(c) See page 1 of this addendum for detail of the components included
within adjusted EBITDA.
The above schedules are presented in order to reconcile adjusted EBITDA
and free cash flows, both non-GAAP measures, to the most directly
comparable GAAP measures in accordance with Section 401(b) of the
Sarbanes-Oxley Act.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(DOLLARS IN MILLIONS)
Actual Year Ended December 31, 2009
-----------------------------------
Successor Predecessor Combined Predecessor
December 1 January 1 January 1 Actual Year
through through through Ended
December 31, November 30, December 31, December 31,
2009 2009 2009 2008
Consolidated net
income (loss) $2 $10,099 $10,101 $(2,447)
Plus: Interest
expense, net 68 1,020 1,088 1,905
Income tax
(benefit)
expense 8 (351) (343) (103)
Depreciation
and
amortization 122 1,194 1,316 1,310
Impairment of
franchises - 2,163 2,163 1,521
Stock compensation
expense 1 26 27 33
(Gain) loss
due to bankruptcy
related items (b) 3 (11,833) (11,830) -
Other, net 7 (36) (29) 100
--- --- --- ---
Adjusted EBITDA (c) 211 2,282 2,493 2,319
Less: Purchases of
property,
plant and
equipment (108) (1,026) (1,134) (1,202)
---- ------ ------ ------
Adjusted EBITDA less
capital expenditures $103 $1,256 $1,359 $1,117
==== ====== ====== ======
Net cash flows from
operating
activities $183 $411 $594 $399
Less: Purchases of
property,
plant and
equipment (108) (1,026) (1,134) (1,202)
Change in
accrued
expenses
related to
capital
expenditures - (10) (10) (39)
--- --- --- ---
Free cash flow $75 $(625) $(550) $(842)
=== ===== ===== =====
Pro Forma Year Ended December 31, 2009 (a)
------------------------------------------
Successor Predecessor Combined Predecessor
December 1 January 1 January 1 Pro Forma
through through through Year Ended
December 31, November 30, December 31, December 31,
2009 2009 2009 2008 (a)
Consolidated
net income (loss) $2 $10,101 $10,103 $(2,445)
Plus: Interest
expense, net 68 1,020 1,088 1,905
Income tax
(benefit)
expense 8 (351) (343) (103)
Depreciation and
amortization 122 1,194 1,316 1,306
Impairment of
franchises - 2,163 2,163 1,521
Stock compensation
expense 1 26 27 33
(Gain) loss due
to bankruptcy
related
items (b) 3 (11,833) (11,830) -
Other, net 7 (38) (31) 96
--- --- --- ---
Adjusted EBITDA (c) 211 2,282 2,493 2,313
Less: Purchases of
property,
plant and
equipment (108) (1,026) (1,134) (1,202)
---- ------ ------ ------
Adjusted EBITDA less
capital
expenditures $103 $1,256 $1,359 $1,111
==== ====== ====== ======
Net cash flows from
operating
activities $183 $411 $594 $393
Less: Purchases of
property,
plant and
equipment (108) (1,026) (1,134) (1,202)
Change in
accrued
expenses
related to
capital
expenditures - (10) (10) (39)
--- --- --- ---
Free cash flow $75 $(625) $(550) $(848)
=== ===== ===== =====
(a) Pro forma results reflect certain sales and acquisitions of cable
systems in 2008 and 2009 as if they occurred as of January 1, 2008.
(b) Represents the aggregate of gain due to effects of Plan, gain due to
fresh start accounting adjustments and reorganizations items, net as
presented on the statements of operations.
(c) See page 1 of this addendum for detail of the components included
within adjusted EBITDA.
The above schedules are presented in order to reconcile adjusted EBITDA
and free cash flows, both non-GAAP measures, to the most directly
comparable GAAP measures in accordance with Section 401(b) of the
Sarbanes-Oxley Act.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CAPITAL EXPENDITURES
(DOLLARS IN MILLIONS)
Three Months Ended December 31, 2009
------------------------------------
Successor Predecessor Combined Predecessor
December 1 October 1 October 1 Three Months
through through through Ended
December November December December
31, 30, 31, 31,
2009 2009 2009 2008
-------- -------- -------- --------
Customer premise
equipment (a) $38 $95 $133 $115
Scalable
infrastructure (b) 30 45 75 66
Line extensions (c) 7 14 21 17
Upgrade/Rebuild (d) 1 7 8 3
Support capital (e) 32 46 78 63
--- --- --- ---
Total capital
expenditures $108 $207 $315 $264
==== ==== ==== ====
Year Ended December 31, 2009
----------------------------
Successor Predecessor Combined
December 1 January 1 January 1 Predecessor
through through through Year Ended
December November December December
31, 30, 31, 31,
2009 2009 2009 2008
-------- -------- -------- --------
Customer premise
equipment (a) $38 $555 $593 $595
Scalable
infrastructure (b) 30 186 216 251
Line extensions (c) 7 63 70 80
Upgrade/Rebuild (d) 1 27 28 40
Support capital (e) 32 195 227 236
--- --- --- ---
Total capital
expenditures $108 $1,026 $1,134 $1,202
==== ====== ====== ======
(a) Customer premise equipment includes costs incurred at the customer
residence to secure new customers, revenue units and additional
bandwidth revenues. It also includes customer installation costs and
customer premise equipment (e.g., set-top boxes and cable modems,
etc.).
(b) Scalable infrastructure includes costs, not related to customer
premise equipment or our network, to secure growth of new customers,
revenue units and additional bandwidth revenues or provide service
enhancements (e.g., headend equipment).
(c) Line extensions include network costs associated with entering new
service areas (e.g., fiber/coaxial cable, amplifiers, electronic
equipment, make-ready and design engineering).
(d) Upgrade/rebuild includes costs to modify or replace existing
fiber/coaxial cable networks, including betterments.
(e) Support capital includes costs associated with the replacement or
enhancement of non-network assets due to technological and physical
obsolescence (e.g., non-network equipment, land, buildings and
vehicles).
SOURCE Charter Communications, Inc.
