1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): May 3, 2001 ----------- CHARTER COMMUNICATIONS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware -------------------------------------------------------------- (State or Other Jurisdiction of Incorporation or Organization) 000-27927 43-1857213 ---------------------- ---------------------- Commission File Number (Federal Employer Identification Number) 12444 Powerscourt Drive - Suite 400 St. Louis, Missouri 63131 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (Registrant's telephone number, including area code) (314) 965-0555
2 ITEM 5. OTHER ITEMS. On May 2, 2001 Charter Communications, Inc. announced 2001 first quarter financial results. A copy of the press release is being filed as Exhibit 99.1 with this report.
3 ITEM 7. EXHIBITS. 99.1 Press release dated May 2, 2001.* - ---------- * filed herewith
4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, Charter Communications, Inc. has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized. CHARTER COMMUNICATIONS, INC., Registrant Dated: May 3, 2001 By: /s/ KENT D. KALKWARF ------------------------------------- Name: Kent D. Kalkwarf Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
5 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ----------- 99.1 Press release dated May 2, 2001.
1 EXHIBIT 99.1 [CHARTER COMMUNICATIONS LOGO] NEWS FOR RELEASE: 7:00 AM CT WEDNESDAY, MAY 2, 2001 CHARTER COMMUNICATIONS ANNOUNCES SOLID FIRST QUARTER RESULTS DIGITAL VIDEO AND HIGH-SPEED DATA DEPLOYMENTS EXCEED EXPECTATIONS ST. LOUIS - Charter Communications, Inc. (Nasdaq: CHTR) today reported revenue and operating cash flow growth at the high end of previously stated guidance for the first quarter of 2001. Digital video and high-speed data service additions during the three-month period ended March 31, 2001 exceeded the company's expectations, according to Jerry Kent, President and CEO. FIRST QUARTER FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- For the first quarter of 2001 revenues increased 14.4% to $873.8 million, and operating cash flow (OCF) increased 9.7% to $387.9 million compared to the pro forma results for the first quarter of 2000. Charter increased its customer base by over 2.0% compared to pro forma first quarter of 2000 to 6,349,800 customers. "We continue to deliver by increasing revenue and OCF through internal and advanced broadband services customer growth made possible by our digital platform," Mr. Kent said. DEMAND FOR ADVANCED SERVICES CONTINUES - -------------------------------------------------------------------------------- As of March 31, 2001, Charter Digital Cable(TM) customers totaled 1,343,700, an increase of 274,800 customers over pro forma year-end 2000. Mr. Kent said Charter's goal is to add an average of 18,000 digital cable customers per week throughout the year. "During the first quarter we exceeded our year 2001 average weekly net digital add target by approximately 18%," Mr. Kent said. "The compelling price-value relationship of our digital video product in comparison to DBS contributes greatly to our success. Over 20,000 satellite dish owners have been converted to Charter Digital Cable over the past year," he said. -MORE-
2 CHARTER, PAGE 2 - -------------------------------------------------------------------------------- High-speed data service was available to 55% of Charter's homes passed as of March 31, 2001, according to Mr. Kent. "With an expanded footprint of two-way enacted broadband plant, the deployment of Charter Pipeline(TM), our high-speed data service, accelerated in the first quarter of 2001." As of March 31, 2001, Charter served 343,300 data customers, adding 90,900 Charter Pipeline customers during the first quarter, or 7,000 customers per week. "We capitalized on our larger two-way footprint by aggressively marketing and deploying our high-speed data product, exceeding our year 2001 average weekly goal by nearly 50% in the first quarter," Mr. Kent said. RECENT DEVELOPMENTS - -------------------------------------------------------------------------------- In February 2001, Charter entered into several agreements with AT&T Broadband, LLC involving several strategic cable system transactions that will result in a net addition of approximately 512,000 customers. When completed, Charter will acquire cable systems from AT&T Broadband serving approximately 574,000 customers in Missouri, Alabama, Nevada and California for a total of $1.79 billion. A portion of the purchase price will consist of Charter cable systems valued at $249.0 million serving approximately 62,000 customers in Florida, and up to $501.5 million will be paid in Class A common stock. The balance will be paid in cash. When the transactions close in the late second or early third quarter, Charter will serve approximately 7 million customers in 40 states. In February 2001, Charter and Gemstar-TV Guide entered into a long-term Interactive Program Guide (IPG) agreement. Terms of the agreement provide for Charter to continue to use and further deploy TV Guide Interactive(SM) into additional markets, and across all digital platforms. TV Guide Interactive is the IPG currently used by Charter in 200 systems representing over 600,000 digital households. Charter's rollout of a TV Gateway IPG is also underway in thirteen markets, serving some 250,000 customers, with additional deployments planned. In March 2001, Charter announced the selection of Liberate Technologies open standards-based software in their rollout of interactive cable television services to advanced set-tops. Charter digital customers in St. Louis will be the first to experience Liberate-enabled Motorola DCT 5000 set-tops, initially equipped with Internet access, the TV Guide Interactive programming guide, and television-based e-mail and interactive television portal services developed and supported by digeo, inc. -MORE-
3 CHARTER, PAGE 3 OUTLOOK - -------------------------------------------------------------------------------- Mr. Kent reiterated Charter's previous 2001 annual guidance of 14% - 16% revenue growth and 12% - 14% operating cash flow growth, and second quarter 2001 revenue growth of 13% - 15% and OCF growth of 11.5% - 13.5%. Mr. Kent said Charter anticipates ending the year 2001 with approximately 2 million digital cable customers. "We expect to significantly exceed our original guidance of 500,000 data customers, and are now comfortable we'll end the year within a range of 550,000 - 600,000 data customers." Mr. Kent said Charter has plans for additional video on demand launches and expects approximately 2.2 million homes will have access to VOD technology by the end of 2001. ABOUT CHARTER COMMUNICATIONS - -------------------------------------------------------------------------------- Charter Communications, a Wired World(TM) company, is among the nation's largest broadband communications companies, currently serving some 6.4 million customers in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television under the Charter Cable TV brand; advanced digital video programming services under the Charter Digital Cable(TM) brand; and high-speed Internet access via Charter Pipeline(TM). Commercial high-speed data, video and Internet solutions are provided under the Charter Business Networks(TM) brand. Advertising sales and production services are sold under the Charter Media(TM) brand. A Fortune 500 company, Charter is the 2001 recipient of the Outstanding Corporate Growth Award from the Association for Corporate Growth, the 2001 R.E. "Ted" Turner Innovator of the Year Award from the Southern Cable Telecommunications Association, and the 2000 Innovator Award for Technology from Cablevision Magazine. More information about Charter can be found at www.charter.com. # # # Detailed financial information is included in the attached addendum. Charter will conduct a conference call to discuss their operating results on Wednesday, May 2, 2001, at 11:00 AM Eastern Time. The call will be available live via webcast at www.charter.com. The call will be available on the "Investor" portion of the website, via "About Charter." Participants should go to the call link at least 10 minutes prior to the start time to register. The call will be archived on the website. -MORE-
4 CHARTER, PAGE 4 - -------------------------------------------------------------------------------- Statements in this press release regarding Charter Communications' business that are not historical facts may be "forward-looking statements." Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from any such forward-looking statements are identified in the reports and documents Charter files from time to time with the U.S. Securities and Exchange Commission. CONTACTS: Media: Andy Morgan Analysts: Mary Jo Moehle 314.543.2217 314.543.2397
5 CHARTER COMMUNICATIONS, INC. UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED MARCH 31, ------------------------------------------------------ ACTUAL ACTUAL PRO FORMA 2001 2000 2000(a) ------------- ------------- ------------- REVENUES: Analog video $ 649,355 $ 587,551 $ 622,501 Digital video 55,047 9,196 9,950 Cable modem 25,166 9,712 13,797 Advertising sales 55,641 33,278 35,622 Other 88,588 81,867 81,719 ------------- ------------- ------------- Total revenues 873,797 721,604 763,589 ------------- ------------- ------------- OPERATING EXPENSES: General, administrative and service 189,503 168,074 175,282 Analog video programming 210,374 164,825 175,748 Digital video 20,609 4,189 4,311 Cable modem 17,646 8,760 12,464 Advertising sales 15,265 12,277 14,834 Marketing 16,623 11,693 12,297 Other 2,127 1,951 1,951 Corporate expenses 13,721 12,508 13,028 ------------- ------------- ------------- Total operating expenses 485,868 384,277 409,915 ------------- ------------- ------------- Operating cash flow 387,929 337,327 353,674 Depreciation 366,941 252,876 275,616 Amortization 328,954 293,224 302,716 Option compensation expense 6,038 15,500 15,500 Interest, net 310,740 225,479 261,786 Other, net 59,917(b) (132) (81) ------------- ------------- ------------- (684,661) (449,620) (501,863) Minority interest 403,962 268,906 289,979 ------------- ------------- ------------- Net loss $ (280,699) $ (180,714) $ (211,884) ============= ============= ============= Basic and diluted loss per share $ (1.20) $ (0.81) $ (0.91) ============= ============= ============= Weighted average common shares outstanding 233,777,675 221,917,083 232,584,043 ============= ============= ============= (a) The pro forma results reflect all acquisitions and dispositions of cable systems closed during 2000 and borrowings under the Charter Holdings senior bridge loan facility, issuance of senior convertible notes, issuance of the January 2001 Charter Holdings notes and application of the proceeds from all such borrowings to repay portions of other notes and credit facilities. (b) Includes a $23.9 million cumulative effect of a change in accounting principle and current period expense of $21.8 million, both as a result of the implementation of SFAS 133 "Accounting for Derivative Instruments and Hedging Activities". Addendum to Charter Communications Three Months Ended March 31, 2001 Earnings Release Page 1 of 3
6 CHARTER COMMUNICATIONS, INC. UNAUDITED SUMMARY OF OPERATING STATISTICS CABLE TELEVISION ACTUAL PRO FORMA PRO FORMA -------------- -------------- -------------- MARCH 31, DECEMBER 31, MARCH 31, 2001 2000(a) 2000(a) -------------- -------------- -------------- Homes Passed 10,258,300 10,219,300 10,007,100 Basic Customers 6,349,800 6,346,200 6,224,700 Basic Penetration 61.9% 62.1% 62.2% Premium Units 5,199,700 4,936,800 3,118,000 Premium Penetration 81.9% 77.8% 50.1% Average Monthly Revenue per Basic Customer (quarter) $ 45.87 $ 46.95 $ 40.89 DIGITAL VIDEO ACTUAL PRO FORMA PRO FORMA -------------- -------------- -------------- MARCH 31, DECEMBER 31, MARCH 31, 2001 2000(a) 2000(a) -------------- -------------- -------------- Digital Homes Passed 8,811,900 8,787,500 4,808,300 Customers 1,343,700 1,068,900 224,700 Penetration 15.2% 12.2% 4.7% Digital Converters Deployed 1,697,000 1,336,600 266,500 DATA SERVICES ACTUAL PRO FORMA PRO FORMA -------------- -------------- -------------- MARCH 31, DECEMBER 31, MARCH 31, 2001 2000(a) 2000(a) -------------- -------------- -------------- Data Homes Passed 5,688,800 5,550,800 5,081,300 Customers 343,300 252,400 122,900 Penetration 6.0% 4.5% 2.4% OTHER STATISTICS ACTUAL ----------- MARCH 31, 2001 ----------- For the quarter ended Capital Expenditures (in 000's) $ 524,500 As of Book Value per Share $ 12.20 (a) The pro forma statistics reflect all acquisitions and dispositions of cable systems closed during 2000 as of the periods indicated. Addendum to Charter Communications Three Months Ended March 31, 2001 Earnings Release Page 2 of 3
7 CHARTER COMMUNICATIONS, INC. UNAUDITED CONSOLIDATED BALANCE SHEET DATA (DOLLARS IN THOUSANDS) ACTUAL ACTUAL MARCH 31, 2001 DECEMBER 31, 2000 -------------- ----------------- ASSETS Current Assets: Cash and cash equivalents $ 19,421 $ 130,702 Accounts receivable, net of allowance for doubtful accounts 193,811 217,667 Receivable from related party 4,592 6,480 Prepaid expenses and other 92,656 77,719 ----------- ----------- Total current assets 310,480 432,568 ----------- ----------- Investment in Cable Properties: Property, plant and equipment, net 5,500,886 5,267,519 Franchises, net 16,753,694 17,068,702 ----------- ----------- Total investment in cable properties 22,254,580 22,336,221 Other assets 293,664 274,777 ----------- ----------- $22,858,724 $23,043,566 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 1,169,766 $ 1,367,234 ----------- ----------- Total current liabilities 1,169,766 1,367,234 Long-term debt 13,707,347 13,060,455 Deferred management fees - related party 13,751 13,751 Other long-term liabilities 331,857 285,266 Minority interest 4,783,692 4,089,329 Redeemable securities -- 1,104,327 Shareholders' equity 2,852,311 3,123,204 ----------- ----------- $22,858,724 $23,043,566 =========== =========== Addendum to Charter Communications Three Months Ended March 31, 2001 Earnings Release Page 3 of 3