SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): April
6, 2006
CCH
II, LLC
CCH
II Capital Corp.
(Exact
name of registrants as specified in their charter) Delaware
Delaware
(State
or Other Jurisdiction of Incorporation or Organization)
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333-111423
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03-0511293
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333-111423-01
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13-4257703
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(Commission
File Number)
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(I.R.S.
Employer Identification
Number)
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12405
Powerscourt Drive
St.
Louis, Missouri 63131
(Address
of principal executive offices including zip code)
(314)
965-0555
(Registrant's
telephone number, including area code)
Not
Applicable
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17
CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR
240.13e-4(c))
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ITEM
7.01 REGULATION FD DISCLOSURE.
The
following information is being provided solely to comply with
Regulation FD
because Charter Communications, Inc. (“Charter”), the
indirect parent company and manager of CCH II, LLC and CCH II
Capital Corp.,
through its subsidiary Charter Communications Operating,
LLC, expects to
be providing this information to certain potential investors
as part of a
refinancing of its credit facility in the near future.
Because
the first quarter has only recently ended, the information that
follows is, by
necessity, preliminary in nature and based only upon preliminary
information
available to Charter as of the date of this report. Investors
should exercise
caution in relying on the information contained herein and should
not draw any
inferences from this information regarding financial or operating
data that is
not discussed herein.
In
the
first quarter of 2006, Charter continued its targeted marketing
efforts and
related expenditures that began in the third quarter of 2005.
The long-term
objective of these efforts is to increase its revenues through
deeper market
penetration of all of its services. We believe these efforts
have been effective
as reflected in the following customer results. In addition,
in January 2006, we
completed the acquisition of certain cable systems in Minnesota
from Seren
Innovations, Inc. (“Seren”).
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first
quarter 2006 net gains of analog video customers are
approximately 29,400
(including approximately 17,500 customers acquired
in the Seren
acquisition) compared to a net loss of approximately
6,700 in the first
quarter of 2005;
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first
quarter 2006 net gains of digital video customers are
approximately 70,100
(including approximately 8,000 customers acquired in
the Seren
acquisition) compared to a net gain of approximately
19,900 in the first
quarter of 2005;
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first
quarter 2006 net gains of high-speed Internet customers
are approximately
126,000 (including approximately 13,200 customers acquired
in the Seren
acquisition) compared to a net gain of approximately
94,000 in the first
quarter of 2005; and
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first
quarter 2006 net gains of telephone customers are approximately
69,600
(including approximately 14,500 customers acquired
in the Seren
acquisition) compared to a net gain of approximately
9,900 in the first
quarter of 2005.
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Charter
currently expects actual revenue for the first quarter 2006 of
between $1.365
billion and $1.380 billion, which would represent an increase
of approximately
7.5% to 8.5% compared to the same period in 2005. Charter currently
expects actual adjusted EBITDA for the first quarter 2006 to
be essentially flat
versus the same period in the prior year. The Company expects
that operating
expenses increased in the first quarter of 2006 over the first
quarter of 2005,
due in large part to increased programming expense as a result
of annual rate
increases, as well as higher costs associated with improved customer
service
levels and the increases in customers noted above. Adjusted EBITDA
is a non-GAAP
term; see the "Use of Non-GAAP Financial Metrics" section below
for a definition
of this term and additional information.
Capital
expenditures for the first quarter of 2006 are currently expected
to be between
$235 million and $260 million, which would be higher than capital
expenditures
of $211 million during the same quarter in the prior year, but
less than fourth
quarter 2005 capital expenditures of $273 million. Capital expenditures
for the
full year 2006 are expected to be approximately $1.0 billion
to $1.1
billion.
Information
regarding certain financial performance measures not discussed
herein, including
net cash flows from operating activities and EBITDA, is not
provided on the date
hereof because the first quarter has only recently ended and
reliable estimates
of certain items used in the calculations of such measures
are not yet
available.
Use
of Non-GAAP Financial Metrics
Charter
uses certain measures that are not defined by GAAP (Generally
Accepted
Accounting Principles) to evaluate various aspects of its business.
Adjusted
EBITDA is a non-GAAP financial measure and should be considered
in addition to,
not as a substitute for, 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 is defined as income from operations before special
charges, non-cash
depreciation and amortization, gain/loss on sale or retirement
of assets, asset
impairment charges and option compensation expense. As such,
it eliminates the
significant non-cash depreciation and amortization expense
that results from the
capital-intensive nature of Charter’s businesses and intangible assets
recognized in business combinations as well as other non-cash
or non-recurring
items, and is unaffected by Charter’s capital structure or investment
activities. Adjusted EBITDA is a liquidity measure used by
Charter’s management
and the Board of Directors to measure Charter’s ability to fund operations and
its financing obligations. For this reason, it is a significant
component of
Charter’s annual incentive compensation program. 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. Charter’s management evaluates these costs through other financial
measures.
Charter
believes that adjusted EBITDA provides information useful to
investors in
assessing Charter’s 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 its 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).
Certain
Definitions Relating to Customer Statistics
Terms
used in this Item 7.01 shall have the following meanings:
“Customers”
include all persons our corporate billing records show as receiving
service
(regardless of their payment status), except for complimentary
accounts (such as
our employees). In addition, ''customers'' include persons
whose accounts were
over 60, 90 and 120 days past due in payment. We currently
believe that the
number of customers whose accounts were over 60 and 90 days
past due in payment
have decreased approximately 4% and 17%, respectively, from
the fourth quarter
of 2005, and that the number of customers whose accounts were
over 120 days past
due in payment have increased approximately 5% from the fourth
quarter of
2005.
"Analog
video customers'' include all customers who receive video services
(including
those who also purchase high-speed Internet and telephone services)
but exclude
customers who receive high-speed Internet service only or telephone
service only
and who are only counted as high-speed Internet customers or
telephone
customers.
Included
within video customers are those in commercial and multi-dwelling
structures,
which are calculated on an equivalent bulk unit ("EBU'') basis.
EBU is
calculated for a system by dividing the bulk price charged
to accounts in an
area by the most prevalent price charged to non-bulk residential
customers in
that market for the comparable tier of service. The EBU method
of estimating
analog video customers is consistent with the methodology used
in determining
costs paid to programmers and has been consistently applied
year over year. As
we increase our effective analog prices 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.
"Digital
video customers'' include all households that have one or more
digital set-top
terminals.
Cautionary
Statement Regarding Forward-Looking Statements:
This
report 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. Charter will not undertake to revise forward-looking
projections
to reflect events after this date. 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.
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" and
"potential," among
others. Important factors that could cause actual results to
differ materially
from the forward-looking statements we make in this report
are set forth in
reports or documents that we file from time to time with the
SEC, and include,
but are not limited to:
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the
availability, in general, of funds to meet interest
payment obligations
under our debt and to fund our operations and necessary
capital
expenditures, either through cash flows from operating
activities, further
borrowings or other sources and, in particular, our
ability to be able to
provide under applicable debt instruments such funds
(by dividend,
investment or otherwise) to the applicable obligor
of such
debt;
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our
ability to comply with all covenants in our indentures,
bridge loan and
credit facilities, any violation of which would result
in a violation of
the applicable facility or indenture and could trigger
a default of other
obligations under cross-default
provisions;
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our
ability to pay or refinance debt prior to or when
it becomes due and/or to
take advantage of market opportunities and market
windows to refinance
that debt through new issuances, exchange offers
or otherwise, including
restructuring our balance sheet and leverage
position;
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our
ability to sustain and grow revenues and cash flows
from operating
activities by offering video, high-speed Internet,
telephone and other
services and to maintain and grow a stable customer
base, particularly in
the face of increasingly aggressive competition from
other service
providers;
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our
ability to obtain programming at reasonable prices
or to pass programming
cost increases on to our customers;
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general
business conditions, economic uncertainty or slowdown;
and
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the
effects of governmental regulation, including but
not limited to local
franchise authorities, on our business.
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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 report.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934,
CCH
II,
LLC and CCH II Capital Corp. have duly caused this Current Report
to be signed on their behalf by the undersigned hereunto duly authorized.
CCH
II, LLC
Registrant
By:
CHARTER COMMUNICATIONS, INC., Sole Manager
Dated:
April 6, 2006
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By:/s/
Grier C. Raclin
Name:
Grier C. Raclin
Title:
Executive
Vice President and General Counsel
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CCH
II
CAPITAL CORP.
Registrant
Dated:
April 6, 2006
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By:/s/
Grier C. Raclin
Name:
Grier C. Raclin
Title:
Executive
Vice President and General Counsel
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