FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 30, 2001
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CHARTER COMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation or Organization)
000-27927 43-1857213
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Commission File Number (Federal Employer
Identification Number)
12444 Powerscourt Drive - Suite 400
St. Louis, Missouri 63131
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's telephone number, including area code) (314) 965-0555
ITEM 5. OTHER ITEMS.
On July 30, 2001 Charter Communications, Inc. announced 2001 second
quarter financial results. A copy of the press release is being filed as Exhibit
99.1 with this report.
ITEM 7. EXHIBITS.
99.1 Press release dated July 30, 2001.*
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* filed herewith
SIGNATURES
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: August 1, 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)
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release dated July 30, 2001.
EX-99.1 OTHERDOC
PRESS RELEASE
EXHIBIT 99.1
[LOGO] Charter [LOGO] NEWS
Communications
A Wired World Company
FOR RELEASE: 7:00 AM CT Monday, July 30, 2001
Charter Communications Exceeds
Revenue, Operating Cash Flow Guidance
Strong Digital Video, High-Speed Data and Basic Customer Increases
Continued During Second Quarter
ST. LOUIS - Charter Communications, Inc. (Nasdaq: CHTR) today reported
second quarter 2001 revenue and operating cash flow growth exceeding Wall Street
estimates. Increases in digital video, high-speed data, and basic video
customers during the three-month period ended June 30, 2001 were in line with
the company's previously stated guidance, according to Jerry Kent, President and
CEO. "I'm proud once again to acknowledge this management team's demonstrated
ability to post outstanding quarterly results in today's highly competitive
marketplace. We're now in an excellent position to achieve all of our goals for
this fiscal year," Mr. Kent said.
Second Quarter Financial Highlights
For the second quarter of 2001, revenue increased 16.1% to $928.5
million, and operating cash flow increased 14.1% to $428.1 million compared to
pro forma results for the second quarter of 2000. This compares favorably to
previous guidance of 13%-15% revenue growth and 11.5%-13.5% operating cash flow
growth for the second quarter. Charter reported
internal customer growth of 2.1% compared to pro forma second quarter of 2000
for a total of 6,388,300 customers. "Our revenue and operating cash flow growth
accelerated in the second quarter. Outstanding customer service initiatives and
aggressive marketing efforts contributed greatly to our strong internal customer
growth," Mr. Kent said.
Demand for Advanced Services Remains Strong
As of June 30, 2001, Charter Digital CableTM customers totaled
1,585,000 with increases averaging more than 18,500 customers per week during
the second quarter. Mr. Kent said
-more-
Charter, page two...
Charter's goal is to end the year 2001 with over 2 million digital cable
customers. "We're exceeding our originally expected average weekly install rate
for the year, and we're on track to achieve over 30% digital penetration by the
end of 2001," Mr. Kent said. "Our customers continued to see that our digital
video product makes more sense in the price-value equation than satellite
service."
Mr. Kent said he expects Charter to maintain its industry leadership in
the deployment of video on demand (VOD) technology. "With VOD launches already
underway in the suburbs of Atlanta; the Pasadena and Long Beach areas of Los
Angeles; St. Louis; Fort Worth; the Greenville-Spartanburg, South Carolina area;
Hickory, North Carolina; and Slidell, Louisiana, Charter will pass some 2.2
million homes by the end of 2001," Mr. Kent said. "Early customer tracking in
digital households is showing that VOD increases Charter Digital Cable customer
retention."
Two-way high-speed data (HSD) service was available to 59% of Charter's
homes passed as of June 30, 2001. As of that date, Charter served 419,400 data
customers, having added 76,100 Charter PipelineTM customers during the second
quarter. "We're capitalizing on our increased two-way footprint resulting from
our $3.5 billion rebuild and upgrade of infrastructure by aggressively marketing
and deploying our high-speed data product everywhere that it's available," he
said. Charter increased its HSD customer guidance after the first quarter, and
is now confident of ending the year at the high end of their guidance of between
550,000 and 600,000 HSD customers, as Charter expects to accelerate its high
speed data growth rate for the balance of the year, Mr. Kent said
Recent Developments
On June 30, 2001, Charter and AT&T Broadband (AT&T) closed cable system
transactions announced in February. The transactions resulted in the net
addition of approximately 554,000 customers for Charter in exchange for $1.77
billion in cash and cable systems serving 9,000 customers for AT&T. Charter
acquired cable systems from AT&T serving approximately 563,000 customers in the
St. Louis area; areas of Auburn, Birmingham and Selma, Alabama; and the Reno
area of Nevada and California.
In May 2001, Charter issued approximately 60.2 million shares of Class
A common stock and $632.5 million of Convertible Senior Notes due 2006, and its
subsidiary issued $1.5 billion
-more-
Charter, page three...
of Senior and Senior Discount Notes for total proceeds of $3.4 billion. Mr. Kent
said that with the completion of these offerings, Charter's business plan,
including the $3.5 billion rebuild program, is fully funded through 2003, at
which point the company expects to generate free cash flow.
Outlook
Mr. Kent reiterated Charter's previous 2001 annual guidance of 14% -
16% revenue growth and 12% - 14% operating cash flow growth, including the pro
forma impact of the acquired systems from AT&T. He also reiterated that Charter
expects to end the year with over 2 million digital cable customers, and
reaffirmed the company's previously upgraded data customer estimate of 550,000
to 600,000 by year-end. Mr. Kent now believes that the company will end the year
at the high end of this range. The systems acquired from AT&T are expected to
add approximately 150,000 digital customers and 30,000 data customers to these
estimates. Mr. Kent reaffirmed internal customer growth expectations of at least
2.0%. Charter has posted on its web site revised quarterly pro forma operating
results to include the recently acquired systems from AT&T for 2000 and the
first half of 2001. These results can be found in the "Financial Outlook"
section of the "Investor Center" via "About Us" at www.charter.com.
About Charter Communications
Charter Communications, a Wired World(TM) company, is among the
nation's largest broadband communications companies, currently serving some 7
million customers in 40 states. Charter provides a full range of advanced
broadband services to the home, including cable television on an advanced
digital video programming platform marketed 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 NetworksTM brand. Advertising sales and production services are sold
under the Charter MediaTM 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-
Charter, page 4...
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
Monday, July 30, 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
Center" portion of the website, via "About Us." 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.
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
amorgan@chartercom.com mmoehle@chartercom.com
Charter Communications, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except share data)
Three Months Ended June 30,
----------------------------------------------------
Actual Actual Pro Forma
2001 (a) 2000 2000 (b)
-------------- -------------- --------------
Revenues:
Analog video $ 666,725 $ 636,187 $ 640,615
Digital video 68,192 15,066 15,066
Cable modem 32,850 15,067 15,067
Advertising sales 64,514 41,794 41,794
Other 96,194 86,666 87,060
-------------- -------------- --------------
Total revenues 928,475 794,780 799,602
-------------- -------------- --------------
Operating Expenses:
General, administrative and service 197,786 173,956 174,031
Analog video programming 211,839 181,635 182,931
Digital video 24,081 5,820 5,820
Cable modem 20,440 13,218 13,218
Advertising sales 13,665 14,771 15,604
Marketing 18,617 17,144 17,604
Corporate expenses 13,993 15,007 15,103
-------------- -------------- --------------
Total operating expenses 500,421 421,551 424,311
-------------- -------------- --------------
Operating cash flow 428,054 373,229 375,291
Depreciation 395,097 296,912 305,844
Amortization 325,855 306,775 306,775
Option compensation expense 4,850 10,589 10,589
Interest, net 314,910 250,453 306,599
Other, net 23,991 2,636 2,677
-------------- -------------- --------------
(636,649) (494,136) (557,193)
Minority interest 362,784 297,315 296,970
-------------- -------------- --------------
Net loss $ (273,865) $ (196,821) $ (260,223)
============== ============== ==============
Basic and diluted loss per share $ (1.07) $ (0.89) $ (0.89)
============== ============== ==============
Weighted average common shares outstanding 255,027,543 222,089,746 293,510,455
============== ============== ==============
(a) The actual results exclude the operating results of the systems acquired in
the AT&T transactions which closed on June 30, 2001.
(b) 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 the October 2000 senior convertible notes,
issuance of the January 2001 Charter Holdings notes, issuance of the May 2001
Charter Holdings notes, issuance of 60,247,350 shares of common stock, issuance
of the May 2001 senior convertible notes and application of the proceeds from
all such borrowings to repay portions of other notes and credit facilities.
Addendum to Charter Communications Three Months Ended June 30, 2001
Earnings Release
Page 1 of 4
Charter Communications, Inc.
Unaudited Summary of Operating Statistics
=================================================================================================================
Cable Television Actual Pro Forma Pro Forma
- ---------------- ------------------ ------------------ ------------------
June 30, December 31, June 30,
2001 (a) 2000 (b) 2000 (b)
------------------ ------------------ ------------------
Homes Passed 10,311,500 10,219,300 10,062,000
Basic Customers 6,388,300 6,346,200 6,258,500
Basic Penetration 62.0% 62.1% 62.2%
Premium Units 5,234,600 4,936,800 3,326,500
Premium Penetration 81.9% 77.8% 53.2%
Average Monthly Revenue per Basic Customer (quarter) $ 48.45 $ 46.95 $ 42.59
==================================================================================================================
Digital Video Actual Pro Forma Pro Forma
- ------------- ------------------ ------------------ ------------------
June 30, December 31, June 30,
2001 (a) 2000 (b) 2000 (b)
------------------ ------------------ ------------------
Digital Homes Passed 9,060,700 8,787,500 6,528,100
Customers 1,585,000 1,068,900 375,000
Penetration of Digital Homes Passed 17.5% 12.2% 5.7%
Penetration of Basic Customers 24.8% 16.8% 6.0%
Digital Converters Deployed 2,100,400 1,336,600 456,100
=================================================================================================================
Data Services Actual Pro Forma Pro Forma
- ------------- ------------------ ------------------ ------------------
June 30, December 31, June 30,
2001 (a) 2000 (b) 2000 (b)
------------------ ------------------ ------------------
Data Homes Passed 6,110,179 5,550,800 5,201,700
Customers 419,400 252,400 149,300
Penetration 6.9% 4.5% 2.9%
=================================================================================================================
Other Statistics Actual
- ---------------- ------------------
June 30,
2001 (a)
------------------
For the quarter ended
Capital Expenditures (in 000's) $ 837,737
As of
Book Value per Share $ 11.97
========================================================================
(a) The actual statistics exclude the systems acquired in the AT&T transactions
which closed on June 30, 2001.
(b) The pro forma statistics reflect all acquisitions and dispositions of cable
systems closed during 2000 as of the periods indicated. The pro forma statistics
exclude the systems acquired in the AT&T transactions which closed on June 30,
2001.
Addendum to Charter Communications Three Months Ended June 30, 2001
Earnings Release
Page 2 of 4
Charter Communications, Inc.
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except share data)
Periods Ended June 30, 2001
----------------------------------------------
Three Months (a) Six Months (a)
--------------------- ------------------
Revenues:
Analog video $ 666,725 $ 1,316,080
Digital video 68,192 123,239
Cable modem 32,850 58,016
Advertising sales 64,514 120,155
Other 96,194 184,783
--------------------- ------------------
Total revenues 928,475 1,802,273
--------------------- ------------------
Operating Expenses:
General, administrative and service 197,786 389,416
Analog video programming 211,839 422,213
Digital video 24,081 44,690
Cable modem 20,440 38,086
Advertising sales 13,665 28,930
Marketing 18,617 35,241
Corporate expenses 13,993 27,715
--------------------- ------------------
Total operating expenses 500,421 986,291
--------------------- ------------------
Operating cash flow 428,054 815,982
Depreciation 395,097 762,038
Amortization 325,855 654,809
Option compensation expense 4,850 10,888
Interest, net 314,910 625,650
Other, net 23,991 83,908 (b)
--------------------- ------------------
(636,649) (1,321,311)
Minority interest 362,784 766,746
--------------------- ------------------
Net loss $ (273,865) $ (554,565)
===================== ==================
Basic and diluted loss per share $ (1.07) $ (2.27)
===================== ==================
Weighted average common shares outstanding 255,027,543 244,461,311
===================== ==================
(a) Operating results exclude the operating results of the systems acquired in
the AT&T transactions which closed on June 30, 2001.
(b) Includes a $23.9 million cumulative effect of a change in accounting
principle and current period expense of $14.7 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 June 30, 2001
Earnings Release
Page 3 of 4
Charter Communications, Inc.
Unaudited Consolidated Balance Sheet Data
(Dollars in thousands)
Actual Actual
June 30, 2001 (a) December 31, 2000
-------------------- ------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 572,733 $ 130,702
Accounts receivable, net of allowance for doubtful accounts 214,334 217,667
Receivable from related party 1,129 6,480
Prepaid expenses and other 84,201 77,719
-------------------- ------------------------
Total current assets 872,397 432,568
-------------------- ------------------------
Investment in Cable Properties:
Property, plant and equipment, net 6,339,551 5,267,519
Franchises, net 17,794,981 17,068,702
-------------------- ------------------------
Total investment in cable properties 24,134,532 22,336,221
Other assets 323,265 274,777
-------------------- ------------------------
$ 25,330,194 $ 23,043,566
==================== ========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,188,505 $ 1,367,234
-------------------- ------------------------
Total current liabilities 1,188,505 1,367,234
Long-term debt 15,570,699 13,060,455
Deferred management fees - related party 13,751 13,751
Other long-term liabilities 325,285 285,266
Minority interest 4,710,817 4,089,329
Redeemable securities - 1,104,327
Shareholders' equity 3,521,137 3,123,204
-------------------- ------------------------
$ 25,330,194 $ 23,043,566
==================== ========================
(a) The balance sheet at June 30, 2001 includes the systems acquired in the AT&T
transactions which closed on June 30, 2001.
Addendum to Charter Communications Three Months Ended June 30, 2001
Earnings Release
Page 4 of 4