ST. LOUIS, March 1, 2011 /PRNewswire via COMTEX/ --

Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three months and year ended December 31, 2010.

Key highlights:

• Compared with the prior year, revenues for the quarter ended December 31, 2010 grew 5.2% on a pro forma(1) basis and 4.3%on an actualbasis. Revenues for the year ended December 31, 2010 increased 4.8% on a pro forma(1) basis and 4.5%on an actualbasis.
• Fourth quarter adjusted EBITDA(2) grew 8.6% year-over-year on a pro forma basis and 8.1% on an actual basis. Net income attributable to Charter shareholders declined to a loss of $70 million in the fourth quarter of 2010 on a pro forma basis and $85 million on an actual basis. Adjusted EBITDA for 2010 increased to 4.5% on a pro forma basis and 4.3% on an actual basis. Net income attributable to Charter shareholders declined to a loss of $230 million for 2010 on a pro forma basis and $237 million on an actual basis.
• Total average monthly revenue per basic video customer (ARPU) for the quarter increased 10.3% to $130.28 driven by an increase in bundle penetration, growth in our commercial and ad sales businesses and advanced services.
• Free cash flow(2) for the quarter ended December 31, 2010 was $243 million and cash flows from operating activities were $489 million. For the year ended December 31, 2010, free cash flow was $710 million and cash flows from operating activities were $1.911 billion.
• Charter continued to extend maturities and further balance its maturity profile in January with the issuance of $1.4 billion of 7.0% CCO Holdings, LLC Senior Notes due 2019 with proceeds used to repay borrowings under Charter Communications Operating, LLC's credit facilities.

(1) Pro forma results are described below in the "Use of Non-GAAP Financial Metrics" section and are provided in the addendum of this news release.

(2) Adjusted EBITDA and free cash flow are defined in the "Use of Non-GAAP Financial Metrics" section and are reconciled to consolidated net income (loss) and net cash flows from operating activities, respectively, in the addendum of this news release.

"Our improved financial position and generation of free cash flow in 2010 has allowed us to invest in our strategic priorities to improve the customer experience and grow the commercial business," said Mike Lovett, President and Chief Executive Officer. "We are pleased with the progress we made on those initiatives in 2010 and expect that by the end of 2011 our roll out of switched digital video and DOCSIS 3.0 will be substantially complete. Our commercial capabilities continue to grow and we are leveraging our network for the next generation of television along with the recent TiVo announcement as a first step to bring an enhanced entertainment experience to our customers."

Key Operating Results

All of the following customer and ARPU statistics are presented on a pro forma basis. Charter served approximately 12.8 million RGUs as of December 31, 2010, an increase of 325,000 RGUs, or about 2.6%, over the prior year. We added 14,400 RGUs in the fourth quarter of 2010, a reflection of our approach to customer acquisition focusing on the customer lifetime value, relying on the value of our bundled services rather than deep discounting. Approximately 61% of Charter's residential customers subscribe to a bundle, compared to 57% a year ago. Charter's ARPU for the fourth quarter of 2010 was $130.28; an increase of 10.3% compared to fourth quarter 2009, primarily as a result of increases in our bundle penetration along with growth in our commercial and ad sales businesses and advanced services.

Fourth quarter 2010 customer highlights included the following:

• Digital video customers increased by approximately 19,200 and basic video customers decreased by approximately 67,300 during the fourth quarter. Video ARPU was $70.39 for the fourth quarter of 2010, up 5.9% year-over-year as a result of increases in premium revenue and higher digital, high definition and digital video recorder (DVR) penetration.
• Internet customers grew by approximately 31,700 during the fourth quarter of 2010, reflecting continued consumer demand for superior speeds offered by Charter compared to DSL. Internet ARPU of $41.72 increased approximately 0.6% compared to the year-ago quarter, reflecting increased penetration of home networking.
• Fourth quarter 2010 net gains of phone customers were approximately 30,800. Phone penetration reached 16.3% as of December 31, 2010. Phone ARPU of $41.29 decreased approximately 2.9% year-over-year.

As of December 31, 2010, Charter served approximately 5.1 million customers, and the Company's 12.8 million RGUs were comprised of 4.5 million basic video, 3.4 million digital video, 3.2 million Internet and 1.7 million residential phone customers.

Fourth Quarter Results

Fourth quarter 2010 pro forma revenues were $1.780 billion, up 5.2% compared to the year-ago quarter, as the Company continued to grow its residential, commercial and ad sales businesses. On an actual basis revenues grew 4.3% to $1.784 billion.

Fourth quarter 2010 pro forma video revenues were $910 million, or $913 million on an actual basis, essentially flat with the year-ago quarter, as we saw benefits from premium and advanced services revenue growth along with pricing and fee adjustments offset by a decline in basic video customers. Pro forma Internet revenues were $404 million, up 7.7% year-over-year on a pro forma basis and 7.1% on an actual basis primarily due to a larger customer base. Telephone revenues for the 2010 fourth quarter were $211 million, an 8.2% increase over fourth quarter 2009 on a pro forma and actual basis, as growth in the triple play bundle continues. Commercial service revenues rose to $129 million, a 12.2% pro forma increase year-over-year (11.2% actual increase), reflecting increases in small to medium business (SMB), mid-market and carrier customers. Advertising sales revenues were $85 million for the fourth quarter of 2010, a 25.0% pro forma increase (23.2% actual increase), compared to the fourth quarter of 2009, as we saw increases across all sectors in 2010, especially political and automotive.

Pro forma operating costs and expenses totaled $1.097 billion, an increase of 3.2% compared to the year-ago period (2.1% actual increase), primarily due to expenses related to our investment in the customer experience, scaling the commercial business, and increases in marketing and programming. Programming expenses increased as a result of annual rate increases and were offset by one-time impacts from favorable programming contract negotiations within the quarter.

Adjusted EBITDA on a pro forma basis for the fourth quarter of 2010 totaled $683 million, an increase of 8.6% compared to the year-ago period. Adjusted EBITDA grew 8.1% on an actual basis to $684 million. Pro Forma Adjusted EBITDA margin was 38.4% for the fourth quarter of 2010 compared to 37.2% pro forma adjusted EBITDA margin in the fourth quarter of 2009. Margin improved as a result of the growth in our higher margin Internet and phone businesses, combined with one-time programming benefits, offset by the investments to scale our commercial business for growth.

Charter reported $279 million of income from operations in the fourth quarter of 2010, compared to $977 million in the fourth quarter of 2009. The change in income from operations is primarily a result of the $691 million reduction of a previously recorded non-cash impairment charge in 2009 that did not recur in 2010.

Net loss attributable to Charter shareholders was $85 million in the fourth quarter of 2010, compared to income of $12.718 billion in the fourth quarter of 2009 which included approximately $12.5 billion of gains related to our emergence from bankruptcy and fresh start accounting adjustments. Charter reported net loss per common share of $0.75 in the fourth quarter of 2010.

Expenditures for property, plant and equipment for the fourth quarter of 2010 decreased to $261 million, compared to fourth quarter 2009 expenditures of $315 million, due to the timing of our strategic investments and lower customer connect volume.

Free cash flow for the fourth quarter of 2010 was $243 million, compared to negative free cash flow of $721 million in the same period last year, which included certain payments made upon emergence from bankruptcy. The improvement in free cash flow is primarily due to the elimination of these payments combined with adjusted EBITDA growth and lower interest costs.

Net cash flows from operating activities for the fourth quarter of 2010 were $489 million, compared to negative cash flows of $414 million in the fourth quarter of 2009.

Year to Date Results - Actual

Revenues for the year ended December 31, 2010 were $7.059 billion, up 4.5% year-over-year. Operating costs and expenses totaled $4.460 billion, an increase of 4.6% for the year ended December 31, 2010, compared to the year-ago period. Adjusted EBITDA for the year ended December 31, 2010 totaled $2.599 billion, an increase of 4.3% compared to the year-ago period.

Charter reported $1.024 billion of income from operations for the year ended December 31, 2010, compared to $979 million of loss from operations in 2009, which included $2.163 billion of non-cash franchise impairment charges.

Net loss attributable to Charter shareholders was $237 million for the year ended December 31, 2010, compared to net income of $11.366 billion for the year ended December 31, 2009, which included approximately $11.0 billion of gains related to our emergence from bankruptcy and application of fresh start accounting offset by reorganizational costs and losses from franchise impairment, all net of tax. Charter reported net loss per common share of $2.09 for the year ended December 31, 2010.

Expenditures for property, plant and equipment for the year ended December 31, 2010 were $1.209 billion, compared to $1.134 billion in the same period last year. Charter expects capital spending for 2011 to be between $1.3 billion and $1.4 billion, as we intend to invest in both our video and Internet platforms through deployment of switched digital video ("SDV") and DOCSIS 3.0 to most of our footprint by year end 2011 and as we continue to invest in growth of our commercial business.

Free cash flow for the year ended December 31, 2010 was $710 million, compared to negative free cash flow of $550 million in the same period last year.

Net cash flows from operating activities for 2010 were $1.911 billion, compared to $594 million in 2009. The increase in cash flows from operating activities is primarily due to reduced cash paid for interest and reorganization costs combined with growth in adjusted EBITDA.

Total principal amount of debt was approximately $12.3 billion as of December 31, 2010.At the end of the fourth quarter, the Company had availability under its revolving credit facility of approximately $1.1 billion.

In January 2011, CCO Holdings and CCO Holdings Capital Corp. issued $1.4 billion in aggregate principal amount of 7.00% senior unsecured notes due 2019. The Company used the net proceeds from the sale of the notes to repay outstanding term loan borrowings under its subsidiary's credit facilities.

Conference Call

The Company will host a conference call on Tuesday, March 1, 2011 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 charter.com. The webcast can be accessed by selecting "Investor & News Center" from the lower menu on the home page. The call will be archived in the "Investor & News Center" in the "Financial Information" section on the left beginning two hours after completion of the call. Participants should go to the webcast link no later than 10 minutes prior to the start time to register.

Those participating via telephone should dial 866-726-7983 no later than 10 minutes prior to the call. International participants should dial 706-758-7055. The conference ID code for the call is 37074256.

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 15, 2011. The conference ID code for the replay is 37074256.

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 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.

Fresh Start Accounting and Combined Successor and Predecessor Results

For the three months ended December 31, 2009, 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 two months ended November 30, 2009 of the Company (the "Predecessor") and (ii) the one month ended December 31, 2009 of the Company (the "Successor"). For the twelve months ended December 31, 2010, 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 2009 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.

Use of Non-GAAP Financial Metrics

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA, adjusted EBITDA less capital expenditures and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net 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 net cash flows from operating activities in the addendum of this news release.

Adjusted EBITDA is defined as consolidated net loss plus net interest expense, income taxes, depreciation and amortization, reorganization items, impairment charges, gains related to our emergence from bankruptcy and fresh start accounting adjustments, stock compensation expense, loss on extinguishment of debt, and other 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 special items, and is unaffected by the Company's capital structure or investment activities. Adjusted EBITDA less capital expenditures is defined as Adjusted EBITDA minus purchases of property, plant and equipment. Adjusted EBITDA and adjusted EBITDA less capital expenditures are used by management and the Company's Board to evaluate the performance of the Company's business. 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 and free cash flow provide information useful to investors in assessing Charter's performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, adjusted EBITDA generally correlates to the leverage ratio calculation under the Company's credit facilities or outstanding notes to determine compliance with the covenants contained in the credit facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission). Adjusted EBITDA, as presented, includes management fee expenses in the amount of $39 million and $36 million for the three months ended December 31, 2010 and 2009, respectively, and $144 million and $136 million for the years ended December 31, 2010 and 2009, 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, 2010 and 2009, we have provided pro forma results in this release for the three and twelve months ended December 31, 2010 and 2009. We believe these pro forma results facilitate meaningful analysis of the results of operations. Pro forma results in this release reflect certain sales of cable systems in 2009 and 2010 as if they occurred as of January 1, 2009. Pro forma statements of operations for the three and twelve months ended December 31, 2010 and 2009; and pro forma customer statistics as of September 30, 2010 and December 31, 2009; are provided in the addendum of this news release.

About Charter

Charter (NASDAQ: CHTR) is a leading broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter TV(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, business telephone, video and music entertainment services, and wireless backhaul. Charter's advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at charter.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under "Risk Factors" from time to time in our filings with the Securities and Exchange Commission ("SEC"). Many of the forward-looking statements contained in this release may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim," "on track," "target," "opportunity," "tentative," "positioning" and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this release are set forth in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

• our ability to sustain and grow revenues and free cash flow by offering video, high-speed Internet, telephone and other services to residential and commercial customers, to adequately meet the customer experience demands in our markets and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures and the difficult economic conditions in the United States;
• the impact of competition from other market participants, 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, high unemployment levels and the level of activity in the housing sector;
• our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents);
• the effects of governmental regulation on our business;
• the availability and access, in general, of funds to meet our debt obligations, prior to or when they become due, and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
• our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this release.