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): September 30, 2009
Charter Communications,
Inc.
(Exact name of registrant as
specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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000-27927
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43-1857213
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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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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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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
2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 9, 2009, Charter Communications, Inc.
issued a press release announcing its results for the third quarter ended
September 30, 2009. The following information, including the entirety of
the press release appearing in Exhibit 99.1 hereto, is not filed but is
furnished pursuant to item 2.02, "Results of Operations and Financial
Condition."
ITEM 9.01. FINANCIAL STATEMENTS
AND EXHIBITS.
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Exhibit
Number
|
Description
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|
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99.1
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Press
Release dated November 9,
2009. *
|
*
furnished herewith
Cautionary
Statement Regarding Forward-Looking Statements:
This
current report includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, 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 current report 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 current report are set forth in other
reports or documents that we file from time to time with the SEC, including our
quarterly reports on Form 10-Q filed in 2009 and our most recent annual report
on Form 10-K and include, but are not limited to:
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•
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the
completion of the Company’s restructuring including the outcome and impact
on our business of the proceedings under Chapter 11 of the Bankruptcy
Code;
|
|
•
|
the
ability of the Company to satisfy closing conditions under the
agreements-in-principle with certain of our bondholders and pre-arranged
joint plan of reorganization (as amended, “the Plan”) and related
documents;
|
|
•
|
the
availability and access, in general, of funds to meet our debt obligations
and to fund our operations and necessary capital expenditures, either
through cash on hand, cash flows from operating activities, further
borrowings or other sources and, in particular, our ability to fund debt
obligations (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 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;
|
|
•
|
our
ability to repay debt prior to or when it becomes due and/or successfully
access the capital or credit markets to refinance that debt through new
issuances, exchange offers or otherwise, especially given recent
volatility and disruption in the capital and credit
markets;
|
|
•
|
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;
|
|
•
|
difficulties
in growing and operating our telephone services, while adequately meeting
customer expectations for the reliability of voice
services;
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•
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our
ability to adequately meet demand for installations and customer
service;
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•
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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 our customer base, particularly in the
face of increasingly aggressive competition and the weak economic
conditions in the United States;
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|
•
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our
ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming
costs;
|
|
•
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general
business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy;
and
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|
•
|
the
effects of governmental regulation on our
business.
|
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 current report.
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
November 9, 2009
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By: /s/ Kevin D.
Howard
Name: Kevin
D. Howard
Title: Vice President,
Controller and Chief Accounting
Officer
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EXHIBIT INDEX
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Exhibit
Number
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Description
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99.1
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Press
Release dated November 9,
2009. *
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*
furnished herewith
Exhibit
99.1
NEWS
Charter
Reports Third Quarter 2009
Financial
and Operating Results
Court
indicated confirmation of Company’s
pre-arranged
joint plan of reorganization is forthcoming
St. Louis, Missouri – November
9, 2009 – Charter Communications, Inc. (along with its subsidiaries, the
“Company” or “Charter”) today reported financial and operating results for the
three and nine months ended September 30, 2009.
Key
year-over-year highlights:
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·
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Third
quarter revenues of $1.693 billion grew 3.8% on a pro forma1 basis and 3.5% on an actual basis, driven by
increases in telephone, high-speed Internet (HSI) and commercial
revenues.
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·
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Third
quarter adjusted
EBITDA2 of $606 million grew 7.8% on a pro forma basis and
7.6% on an actual basis.
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·
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Third
quarter adjusted EBITDA margin of 35.8% increased 140 basis points on an
actual basis, driven by continued operational
efficiencies.
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·
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Total
average monthly revenue per basic video customer (ARPU) for the quarter
increased 8.2% year-over-year to $115.26, driven by increased sales of The
Charter BundleTM.
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·
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Revenues
for the nine months ended September 30, 2009 increased 4.9% on a pro forma basis and
4.6% on an actual basis compared to
2008.
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|
·
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Adjusted
EBITDA for the first nine months of 2009 increased 9.7% on a pro forma basis and
9.5% on an actual basis compared to
2008.
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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 net cash flows from operating activities in the addendum of
this news release.
1
“Third
quarter and year to date revenue and adjusted EBITDA increases reflect continued
growth of our high-speed Internet and telephone businesses, both residential and
commercial,” said Neil Smit, President and Chief Executive Officer. “We continue
to provide value to our customers by enhancing our products and service and by
leveraging our advanced technology. For example, we increased our upload and
download speeds, making Charter’s high-speed Internet service even more
attractive to our customers and further strengthening our advantage over DSL. In
what is proving to be a challenging environment, we continue to deliver solid
results, thanks to our continued focus on enhancing the customer experience,
promoting the value of the bundle and remaining disciplined in expense
management.”
Key
Operating Results
All of
the following customer and ARPU statistics are presented on a pro forma basis. Charter
served approximately 12.6 million revenue generating units (RGUs) as of
September 30, 2009. Approximately 56% of Charter’s customers subscribe to a
bundle, up from 52% in the third quarter of 2008. Charter’s pro forma ARPU for the third
quarter of 2009 was $115.26, an increase of 8.2% compared to third quarter 2008,
primarily as a result of higher bundled penetration.
Third
quarter 2009 customer changes (on a pro forma basis) included the
following:
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·
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Digital
video customers increased by approximately 22,800 and basic video
customers decreased by approximately 46,500 during the third quarter.
Video ARPU was $61.49 for the third quarter of 2009, up 4.1%
year-over-year.
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·
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HSI
customers grew by approximately 52,400 during the third quarter of 2009.
HSI ARPU of $41.59 increased approximately 2.6% compared to the year-ago
quarter, driven by customer upgrades to higher speeds of service and
increased penetration of home networking
service.
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·
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Third
quarter 2009 net gains of telephone customers were approximately 55,300.
Telephone penetration is now 14.5% of approximately 10.6 million telephone
homes passed as of September 30, 2009. Telephone ARPU of $42.76 increased
approximately 5.1% compared to the year-ago
quarter.
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2
As of
September 30, 2009, Charter served approximately 5.3 million customers and the
Company’s 12.6 million RGUs were comprised of 4.9 million basic video, 3.2
million digital video, 3.0 million HSI and 1.5 million telephone
customers.
Third
Quarter Results – Actual and Pro forma
Third
quarter revenues of $1.693 billion increased 3.8% compared to the year-ago
quarter on a pro forma
basis and 3.5% on an actual basis. The increase is the result of telephone, HSI
and commercial revenue growth.
Telephone
revenues for the 2009 third quarter were $183 million, a 27.1% increase over
third quarter 2008, driven by a larger telephone customer base and an increase
in telephone ARPU. HSI revenues were $371 million, up 8.5% year-over-year due to
an increased number of customers and ARPU growth. Commercial revenues rose to
$113 million, a 13% increase year-over-year, primarily resulting from increased
sales of the Charter Business Bundle® to small and medium-size businesses,
growth in our fiber-based data services and the launch of primary rate interface
(PRI) services. Video revenues were $861 million, down slightly compared to
the year-ago quarter, as a decline in basic video customers was partially offset
by digital and advanced services revenue growth. Advertising sales revenues of
$64 million for the third quarter of 2009, which showed improvement compared to
the second quarter of 2009, declined 20.0% year-over-year on an actual basis,
primarily as a result of significant decreases in revenues from the political,
automotive and retail sectors.
Operating
costs and expenses totaled $1.087 billion for the third quarter of 2009, a 1.3%
increase on an actual basis compared to the year-ago period. Operating expenses
for the 2009 third quarter, which include programming, service and advertising
sales costs, were $736 million, a 3.7% increase year-over-year on an actual
basis, primarily as a result of increased programming costs. Selling, general
and administrative expenses were $351 million, a decrease of 3.3% on an actual
basis compared to the year-ago quarter, reflecting efficiencies gained in our
operations.
Adjusted
EBITDA for the third quarter of 2009 rose to $606 million, up 7.8% compared to
the year-ago period on a pro
forma basis and up 7.6% on an actual basis.
3
Charter
reported $2.591 billion of loss from operations in the third quarter of 2009,
compared to $208 million of income from operations in the third quarter of
2008.
As a
result of the continued economic pressure on the Company’s customers from the
recent economic downturn along with increased competition, the Company
determined that its projected future growth would be lower than previously
anticipated in its annual impairment testing in December 2008, which
determination resulted in a requirement that the Company perform an interim
franchise impairment analysis. In the third quarter, the Company recorded
approximately $2.854 billion of non-cash impairment of franchises as a result of
this impairment analysis, as required by Accounting Standards Codification
(“ASC”) 350, Intangibles –
Goodwill and Other.
Net loss
for the third quarter of 2009 was $1.035 billion, or $2.73 per common share. For
the third quarter of 2008, Charter reported an actual net loss of
$322 million and a net loss per common share of 86 cents. The decrease in
income from operations and the increase in net loss resulted primarily from the
impairment of franchises, offset by an increase in sales of our bundled services
and improved cost efficiencies. The impact of the impairment on net loss was
partially offset by $625 million of tax benefit associated with the impairment
and the allocation of losses of $1.395 billion to noncontrolling interest as a
result of the adoption of ASC 810-10, Consolidation – Overall on
January 1, 2009.
Expenditures
for property, plant and equipment for the third quarter of 2009 were $279
million, compared to third quarter 2008 expenditures of $288
million.
Free cash
flow3 for the third quarter of 2009 was $105 million
compared to negative cash flow of $46 million for the year-ago
quarter.
Net cash
flows from operating activities for the third quarter of 2009 were $383 million,
compared to $242 million in the third quarter of 2008. The increase in net cash
flows from operating activities was primarily due to a decrease in cash paid for
interest, and an increase in adjusted EBITDA, partially offset by costs
associated with the financial restructuring.
4
Year to Date Results – Pro
forma
Pro forma revenues for the
nine months ended September 30, 2009 were $5.044 billion, an increase of 4.9%,
or $235 million, over pro
forma 2008 results.
Pro forma adjusted EBITDA for
the first nine months of 2009 totaled $1.860 billion, an increase of 9.7%
compared to the pro
forma results for the year-ago period. The pro forma adjusted EBITDA
margin increased 170 basis points for the first three quarters of the year to
36.9%, up from 35.2% in the year-ago period on a pro forma basis.
Year
to Date Results – Actual
Revenues
of $5.045 billion for the nine months ended September 30, 2009 increased 4.6%
compared to the year-ago period. The increase resulted from telephone, HSI and
commercial revenue growth.
Telephone
revenues for the first nine months of 2009 were $529 million, a 32.6% increase
over the first nine months of 2008, driven by a larger telephone customer base
and an increase in telephone ARPU. HSI revenues were $1.098 billion, up 8.8%
year-over-year. Commercial revenues rose to $330 million, a 14.2% increase
year-over-year. Video revenues were $2.606 billion, essentially flat with the
same period in 2008. Advertising sales revenues declined 19.3% year-over-year to
$180 million for the first nine months of 2009.
Operating
costs and expenses totaled $3.185 billion for the first nine months of 2009, a
2.0% increase compared to the year-ago period. Operating expenses for the first
three quarters of 2009, which include programming, service and advertising sales
costs, were $2.164 billion, a 3.6% increase year-over-year. Selling, general and
administrative expenses were $1.021 billion, a 1.4% decrease compared to the
year-ago period, reflecting efficiencies gained in our operations.
Adjusted
EBITDA for the nine months ended September 30, 2009 rose to $1.860 billion, up
9.5% compared to the year-ago period.
5
Charter
reported $1.956 billion of loss from operations in the first three quarters of
2009, compared to $643 million of income from operations in the same 2008
period. Net loss for the first nine months of 2009 was $1.352 billion, or
$3.57 per common share. For the first nine months of 2008, Charter reported a
net loss of $955 million and a net loss per common share of $2.57. The
decrease in income from operations and increase in net loss resulted primarily
from the impairment of franchises offset by an increase in sales of our bundled
services, improved cost efficiencies and favorable litigation settlements in
2009. The impact of the impairment on net loss was partially offset by $625
million of tax benefit associated with the impairment and the allocation of
losses of $1.571 billion to noncontrolling interest.
Expenditures
for property, plant and equipment for the first nine months of 2009 were $819
million, compared to first nine months of 2008 expenditures of $938 million. The
decrease in capital expenditures is primarily the result of higher spending on
scalable infrastructure during 2008 related to HSI and headend upgrades,
combined with lower expenditures on support capital in 2009.
Free cash
flow for the nine months ended September 30, 2009 was $171 million, compared to
negative cash flow of $569 million for the year-ago period.
Net cash
flows from operating activities for the first nine months of 2009 were $1.008
billion, compared to $410 million in the first three quarters of 2008. The
change in net cash flows from operating activities is primarily due to a
decrease in cash paid for interest and an increase in adjusted EBITDA, partially
offset by costs associated with the financial restructuring.
Restructuring
As of
September 30, 2009, Charter had $21.596 billion in debt, $9.856 billion of which
was classified as liabilities subject to compromise due to Charter’s
restructuring efforts. As previously announced, on March 27, 2009 Charter filed
its Plan and Chapter 11 petitions in the United States Bankruptcy Court for the
Southern District of New York (the “Court”) in order to implement a financial
restructuring that, upon approval, would reduce the Company’s debt by
approximately $8 billion. On October 15, 2009, the judge overseeing Charter’s
case indicated in open court that he will confirm Charter’s Plan
and
6
issue a
confirmation order within the next several weeks. The Company expects to emerge
from Chapter 11 shortly thereafter. As a debtor in possession, the Company is
authorized to transact business in the ordinary course of business and, as such,
has been paying its trade creditors in full in the normal course. Charter
expects that cash on hand and cash flows from operating activities will be
adequate to fund its projected cash needs as it proceeds with its financial
restructuring.
The
Company’s principal Chapter 11 petition has been assigned the lead case number
09-11435. Additional information about Charter’s restructuring, including the
disclosure statement describing the Plan and the terms of the committed and
optional investments by members of the Bondholder Committee, is available at the
Company’s website www.charter.com. You
may also receive information from the Company’s restructuring information line,
800-419-3922. For access to Court documents and other general information about
the Chapter 11 cases, please visit www.kccllc.net/charter.
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 and free cash flow are non-GAAP financial measures
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 and free cash flow are reconciled to net cash
flows from operating activities in the addendum of this new
release.
Adjusted
EBITDA is defined as income from operations before depreciation and
amortization, impairment of franchises, stock compensation expense and other
operating expenses, such as special charges and loss on sale or retirement of
assets. Additionally, Adjusted EBITDA does not include reorganization
items. 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 and pro forma
adjusted EBITDA are liquidity measures used by
7
Company
management and its board of directors to measure the Company’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 for the Company. Company management evaluates these costs
through other financial measures.
Free cash
flow is defined as net cash flows from operating activities, less capital
expenditures and changes in accrued expenses related to capital
expenditures.
The
Company believes that adjusted EBITDA, pro forma adjusted EBITDA and
free cash flow provide 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 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 $34 million and $33 million for the three months ended September 30,
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 nine months ended September 30,
2009 and 2008, we have provided pro forma results in this
release for the three months ended September 30, 2008 and the nine months ended
September 30, 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 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 September 30, 2008 and nine months ended
September 30, 2009 and 2008; and pro forma customer statistics
as of June 30, 2009, December 31, 2008 and September 30, 2008; are provided in
the addendum of this news release.
8
About
Charter Communications®
Charter
Communications, Inc. (Pink OTC:
CHTRQ) 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 Digital Cable®
video entertainment programming, Charter High-Speed® Internet access, and
Charter Telephone®. Charter Business™ 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® brand. On March 27, 2009,
Charter filed a pre-arranged plan and Chapter 11 petitions in the United States
Bankruptcy Court for the Southern District of New York. Charter believes
its operations are strong and expects to continue operating as usual during the
financial restructuring. More information about Charter can be found at www.charter.com.
# # #
Contact:
Media: Analysts:
Anita
Lamont Mary
Jo Moehle
314-543-2215 314-543-2397
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, and Section 21E of the Securities
Exchange Act of 1934, as amended, 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, including our
quarterly reports on Form 10-Q filed in 2009 and our most recent annual report
on Form 10-K and include, but are not limited to:
|
•
|
the
completion of the Company’s restructuring including the outcome and impact
on our business of the proceedings under Chapter 11 of the Bankruptcy
Code;
|
|
•
|
the
ability of the Company to satisfy closing conditions under the
agreements-in-principle with certain of our bondholders and pre-arranged
joint plan of reorganization (as amended, “the Plan”) and related
documents;
|
|
•
|
the
availability and access, in general, of funds to meet our debt obligations
and to fund our operations and necessary capital expenditures, either
through cash on hand, cash flows from operating activities, further
borrowings or other sources and, in particular, our ability to fund debt
obligations (by dividend, investment or otherwise) to the applicable
obligor of such debt;
|
|
•
|
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;
|
|
•
|
our
ability to repay debt prior to or when it becomes due and/or successfully
access the capital or credit markets to refinance that debt through new
issuances, exchange offers or otherwise, especially given recent
volatility and disruption in the capital and credit
markets;
|
9
|
•
|
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;
|
|
•
|
difficulties
in growing and operating our telephone services, while adequately meeting
customer expectations for the reliability of voice
services;
|
|
•
|
our
ability to adequately meet demand for installations and customer
service;
|
|
•
|
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 our customer base, particularly in the
face of increasingly aggressive competition and the weak
economic conditions in the United
States;
|
|
•
|
our
ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming
costs;
|
|
•
|
general
business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy;
and
|
|
•
|
the
effects of governmental regulation on our
business.
|
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.
# # #
10
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
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(DEBTOR-IN-POSSESSION)
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UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
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||||||||||||||||||||||||
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(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
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||||||||||||||||||||||||
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Three
Months Ended September 30,
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Nine
Months Ended September 30,
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|||||||||||||||||||||||
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2009
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2008
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2009
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2008
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|||||||||||||||||||||
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Actual
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Actual
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%
Change
|
Actual
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Actual
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%
Change
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|||||||||||||||||||
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REVENUES:
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Video
|
$ | 861 | $ | 867 | -0.7 | % | $ | 2,606 | $ | 2,599 | 0.3 | % | ||||||||||||
|
High-speed
Internet
|
371 | 342 | 8.5 | % | 1,098 | 1,009 | 8.8 | % | ||||||||||||||||
|
Telephone
|
183 | 144 | 27.1 | % | 529 | 399 | 32.6 | % | ||||||||||||||||
|
Commercial
|
113 | 100 | 13.0 | % | 330 | 289 | 14.2 | % | ||||||||||||||||
|
Advertising
sales
|
64 | 80 | -20.0 | % | 180 | 223 | -19.3 | % | ||||||||||||||||
|
Other
|
101 | 103 | -1.9 | % | 302 | 304 | -0.7 | % | ||||||||||||||||
|
Total
revenues
|
1,693 | 1,636 | 3.5 | % | 5,045 | 4,823 | 4.6 | % | ||||||||||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||||||||||
|
Operating
(excluding depreciation and amortization) (a)
|
736 | 710 | 3.7 | % | 2,164 | 2,089 | 3.6 | % | ||||||||||||||||
|
Selling,
general and administrative (excluding stock
|
||||||||||||||||||||||||
|
compensation expense) (b)
|
351 | 363 | -3.3 | % | 1,021 | 1,035 | -1.4 | % | ||||||||||||||||
|
Operating
costs and expenses
|
1,087 | 1,073 | 1.3 | % | 3,185 | 3,124 | 2.0 | % | ||||||||||||||||
|
Adjusted
EBITDA
|
606 | 563 | 7.6 | % | 1,860 | 1,699 | 9.5 | % | ||||||||||||||||
|
Adjusted
EBITDA margin
|
35.8 | % | 34.4 | % | 36.9 | % | 35.2 | % | ||||||||||||||||
|
Depreciation
and amortization
|
327 | 332 | 977 | 981 | ||||||||||||||||||||
|
Impairment
of franchises
|
2,854 | - | 2,854 | - | ||||||||||||||||||||
|
Stock
compensation expense
|
6 | 8 | 23 | 24 | ||||||||||||||||||||
|
Other
operating (income) expenses, net
|
10 | 15 | (38 | ) | 51 | |||||||||||||||||||
|
Income
(loss) from operations
|
(2,591 | ) | 208 | (1,956 | ) | 643 | ||||||||||||||||||
|
OTHER
INCOME (EXPENSES):
|
||||||||||||||||||||||||
|
Interest expense, net (excluding unrecorded contractual
interest
|
||||||||||||||||||||||||
|
expense of $206 and $421 for the three and nine months
ended
|
||||||||||||||||||||||||
|
September
30, 2009, respectively)
|
(206 | ) | (478 | ) | (885 | ) | (1,419 | ) | ||||||||||||||||
|
Change
in value of derivatives
|
- | 10 | (4 | ) | (1 | ) | ||||||||||||||||||
|
Reorganization
items, net
|
(198 | ) | - | (523 | ) | - | ||||||||||||||||||
|
Other
income (expense), net
|
- | (4 | ) | 1 | 1 | |||||||||||||||||||
| (404 | ) | (472 | ) | (1,411 | ) | (1,419 | ) | |||||||||||||||||
|
Loss
before income taxes
|
(2,995 | ) | (264 | ) | (3,367 | ) | (776 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Income
tax benefit (expense)
|
565 | (57 | ) | 444 | (174 | ) | ||||||||||||||||||
|
Consolidated
net loss
|
(2,430 | ) | (321 | ) | (2,923 | ) | (950 | ) | ||||||||||||||||
|
Less: Net
(income) loss - noncontrolling interest
|
1,395 | (1 | ) | 1,571 | (5 | ) | ||||||||||||||||||
|
Net
loss - Charter shareholders
|
$ | (1,035 | ) | $ | (322 | ) | $ | (1,352 | ) | $ | (955 | ) | ||||||||||||
|
Loss
per common share, basic and diluted:
|
||||||||||||||||||||||||
|
Net
loss - Charter shareholders
|
$ | (2.73 | ) | $ | (0.86 | ) | $ | (3.57 | ) | $ | (2.57 | ) | ||||||||||||
|
Weighted
average common shares outstanding, basic and diluted
|
379,066,320 | 374,145,243 | 378,718,134 | 371,968,952 | ||||||||||||||||||||
|
(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 7 of this addendum for the
reconciliation of adjusted EBITDA to net cash flows from operating
activities as defined by GAAP.
|
||||||||||||||||||||||||
Addendum to Charter Communications, Inc. Third Quarter
2009 Earnings Release
Page 1 of 8
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
||||||||||||||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
||||||||||||||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||||||||||
|
Actual
|
Pro
Forma (a)
|
%
Change
|
Pro
Forma (a)
|
Pro
Forma (a)
|
%
Change
|
|||||||||||||||||||
|
REVENUES:
|
||||||||||||||||||||||||
|
Video
|
$ | 861 | $ | 864 | -0.3 | % | $ | 2,605 | $ | 2,590 | 0.6 | % | ||||||||||||
|
High-speed
Internet
|
371 | 342 | 8.5 | % | 1,098 | 1,008 | 8.9 | % | ||||||||||||||||
|
Telephone
|
183 | 144 | 27.1 | % | 529 | 399 | 32.6 | % | ||||||||||||||||
|
Commercial
|
113 | 100 | 13.0 | % | 330 | 288 | 14.6 | % | ||||||||||||||||
|
Advertising
sales
|
64 | 79 | -19.0 | % | 180 | 221 | -18.6 | % | ||||||||||||||||
|
Other
|
101 | 102 | -1.0 | % | 302 | 303 | -0.3 | % | ||||||||||||||||
|
Total
revenues
|
1,693 | 1,631 | 3.8 | % | 5,044 | 4,809 | 4.9 | % | ||||||||||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||||||||||
|
Operating
(excluding depreciation and amortization) (b)
|
736 | 707 | 4.1 | % | 2,163 | 2,083 | 3.8 | % | ||||||||||||||||
|
Selling,
general and administrative (excluding stock
|
||||||||||||||||||||||||
|
compensation expense) (c)
|
351 | 362 | -3.0 | % | 1,021 | 1,031 | -1.0 | % | ||||||||||||||||
|
Operating
costs and expenses
|
1,087 | 1,069 | 1.7 | % | 3,184 | 3,114 | 2.2 | % | ||||||||||||||||
|
Adjusted
EBITDA
|
606 | 562 | 7.8 | % | 1,860 | 1,695 | 9.7 | % | ||||||||||||||||
|
Adjusted
EBITDA margin
|
35.8 | % | 34.5 | % | 36.9 | % | 35.2 | % | ||||||||||||||||
|
Depreciation
and amortization
|
327 | 331 | 977 | 978 | ||||||||||||||||||||
|
Impairment
of franchises
|
2,854 | - | 2,854 | - | ||||||||||||||||||||
|
Stock
compensation expense
|
6 | 8 | 23 | 24 | ||||||||||||||||||||
|
Other
operating (income) expenses, net
|
10 | 15 | (40 | ) | 51 | |||||||||||||||||||
|
Income
(loss) from operations
|
(2,591 | ) | 208 | (1,954 | ) | 642 | ||||||||||||||||||
|
OTHER
INCOME (EXPENSES):
|
||||||||||||||||||||||||
|
Interest expense, net (excluding unrecorded contractual
interest
|
||||||||||||||||||||||||
|
expense
of $206 and $421 for the three and nine months ended
|
||||||||||||||||||||||||
|
September
30, 2009, respectively)
|
(206 | ) | (478 | ) | (885 | ) | (1,419 | ) | ||||||||||||||||
|
Change
in value of derivatives
|
- | 10 | (4 | ) | (1 | ) | ||||||||||||||||||
|
Reorganization
items, net
|
(198 | ) | - | (523 | ) | - | ||||||||||||||||||
|
Other
income (expense), net
|
- | (4 | ) | 1 | 1 | |||||||||||||||||||
| (404 | ) | (472 | ) | (1,411 | ) | (1,419 | ) | |||||||||||||||||
|
Loss
before income taxes
|
(2,995 | ) | (264 | ) | (3,365 | ) | (777 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Income
tax benefit (expense)
|
565 | (57 | ) | 444 | (174 | ) | ||||||||||||||||||
|
Consolidated
net loss
|
(2,430 | ) | (321 | ) | (2,921 | ) | (951 | ) | ||||||||||||||||
|
Less: Net
(income) loss - noncontrolling interest
|
1,395 | (1 | ) | 1,571 | (5 | ) | ||||||||||||||||||
|
Net
loss - Charter shareholders
|
$ | (1,035 | ) | $ | (322 | ) | $ | (1,350 | ) | $ | (956 | ) | ||||||||||||
|
Loss
per common share, basic and diluted:
|
||||||||||||||||||||||||
|
Net
loss - Charter shareholders
|
$ | (2.73 | ) | $ | (0.86 | ) | $ | (3.57 | ) | $ | (2.57 | ) | ||||||||||||
|
Weighted
average common shares outstanding, basic and diluted
|
379,066,320 | 374,145,243 | 378,718,134 | 371,968,952 | ||||||||||||||||||||
|
(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 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 to
project our
|
||||||||||||||||||||||||
|
(b) Operating
expenses include programming, service, and advertising sales
expenses.
|
||||||||||||||||||||||||
|
(c) Selling,
general and administrative expenses include general and administrative and
marketing expenses.
|
||||||||||||||||||||||||
|
September
30, 2009. Pro forma revenues, operating costs and expenses and
net loss were reduced by $1 million, $1 million and $2 million,
respectively, for the nine months ended September 30,
2009.
|
||||||||||||||||||||||||
|
September
30, 2008. Pro forma revenues and operating costs and expenses were
reduced by $5 million and $4 million, respectively, and pro forma net loss
remained unchanged, for the three months ended September 30,
2008. Pro forma revenues and operating costs and expenses were
reduced by $14 million and $10 million, respectively, and pro forma net
loss increased by $1 million, for the nine months ended September 30,
2008.
|
||||||||||||||||||||||||
|
Adjusted
EBITDA is a non-GAAP term. See page 7 of this addendum for the
reconciliation of adjusted EBITDA to net cash flows from operating
activities as defined by GAAP.
|
||||||||||||||||||||||||
Addendum to Charter Communications, Inc. Third Quarter 2009
Earnings Release
Page 2 of 8
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
September
30,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash
and cash equivalents
|
$ | 1,075 | $ | 960 | ||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
211 | 222 | ||||||
|
Prepaid
expenses and other current assets
|
73 | 36 | ||||||
|
Total
current assets
|
1,359 | 1,218 | ||||||
|
INVESTMENT
IN CABLE PROPERTIES:
|
||||||||
|
Property,
plant and equipment, net
|
4,822 | 4,987 | ||||||
|
Franchises,
net
|
4,520 | 7,384 | ||||||
|
Total
investment in cable properties, net
|
9,342 | 12,371 | ||||||
|
OTHER
NONCURRENT ASSETS
|
204 | 293 | ||||||
|
Total
assets
|
$ | 10,905 | $ | 13,882 | ||||
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||||||
|
LIABILITIES
NOT SUBJECT TO COMPROMISE
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 1,458 | $ | 1,310 | ||||
|
Current
portion of long-term debt
|
11,740 | 155 | ||||||
|
Total
current liabilities
|
13,198 | 1,465 | ||||||
|
LONG-TERM
DEBT
|
- | 21,511 | ||||||
|
NOTE
PAYABLE - RELATED PARTY
|
- | 75 | ||||||
|
DEFERRED
MANAGEMENT FEES - RELATED PARTY
|
- | 14 | ||||||
|
OTHER
LONG-TERM LIABILITIES
|
162 | 1,082 | ||||||
|
LIABILITIES
SUBJECT TO COMPROMISE (INCLUDING AMOUNTS
|
||||||||
|
DUE
TO RELATED PARTY OF $102 AND $0, RESPECTIVELY)
|
10,675 | - | ||||||
|
TEMPORARY
EQUITY
|
234 | 241 | ||||||
|
SHAREHOLDERS'
DEFICIT:
|
||||||||
|
Charter
shareholders' deficit
|
(11,834 | ) | (10,506 | ) | ||||
|
Noncontrolling
interest
|
(1,530 | ) | - | |||||
|
Total
shareholders' deficit
|
(13,364 | ) | (10,506 | ) | ||||
|
Total
liabilities and shareholders' deficit
|
$ | 10,905 | $ | 13,882 | ||||
Addendum to Charter Communications, Inc. Third Quarter 2009
Earnings Release
Page 3 of 8
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||||||
|
Net loss - Charter shareholders
|
$ | (1,035 | ) | $ | (322 | ) | $ | (1,352 | ) | $ | (955 | ) | ||||
|
Adjustments to reconcile net loss to net cash flows from operating
activities:
|
||||||||||||||||
|
Depreciation
and amortization
|
327 | 332 | 977 | 981 | ||||||||||||
|
Impairment
of franchises
|
2,854 | - | 2,854 | - | ||||||||||||
|
Noncash
interest expense
|
9 | 16 | 35 | 45 | ||||||||||||
|
Change
in value of derivatives
|
- | (10 | ) | 4 | 1 | |||||||||||
|
Noncash
reorganization items, net
|
24 | - | 155 | - | ||||||||||||
|
Deferred
income taxes
|
(567 | ) | 55 | (451 | ) | 169 | ||||||||||
|
Noncontrolling
interest
|
(1,395 | ) | 1 | (1,571 | ) | 5 | ||||||||||
|
Other, net
|
9 | 16 | 28 | 31 | ||||||||||||
|
Changes
in operating assets and liabilities, net of effects from
dispositions
|
||||||||||||||||
|
Accounts
receivable
|
4 | 3 | 11 | (21 | ) | |||||||||||
|
Prepaid
expenses and other assets
|
7 | (9 | ) | (37 | ) | (9 | ) | |||||||||
|
Accounts
payable, accrued expenses and other
|
146 | 160 | 355 | 163 | ||||||||||||
|
Net
cash flows from operating activities
|
383 | 242 | 1,008 | 410 | ||||||||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||||||
|
Purchases
of property, plant and equipment
|
(279 | ) | (288 | ) | (819 | ) | (938 | ) | ||||||||
|
Change
in accrued expenses related to capital expenditures
|
1 | - | (18 | ) | (41 | ) | ||||||||||
|
Other,
net
|
(4 | ) | 10 | (4 | ) | (1 | ) | |||||||||
|
Net
cash flows from investing activities
|
(282 | ) | (278 | ) | (841 | ) | (980 | ) | ||||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||||||
|
Borrowings
of long-term debt
|
- | 590 | - | 2,355 | ||||||||||||
|
Repayments
of long-term debt
|
(18 | ) | (43 | ) | (52 | ) | (1,238 | ) | ||||||||
|
Payments
for debt issuance costs
|
- | (3 | ) | - | (42 | ) | ||||||||||
|
Other,
net
|
- | (2 | ) | - | (11 | ) | ||||||||||
|
Net
cash flows from financing activities
|
(18 | ) | 542 | (52 | ) | 1,064 | ||||||||||
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
83 | 506 | 115 | 494 | ||||||||||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
992 | 63 | 960 | 75 | ||||||||||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 1,075 | $ | 569 | $ | 1,075 | $ | 569 | ||||||||
|
CASH
PAID FOR INTEREST
|
$ | 154 | $ | 329 | $ | 685 | $ | 1,241 | ||||||||
Addendum to Charter Communications, Inc. Third Quarter 2009
Earnings Release
Page 4 of 8
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||||||
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
||||||||||||||||
|
Approximate
as of
|
||||||||||||||||
|
Actual
|
Pro
Forma
|
|||||||||||||||
|
September
30,
|
June
30,
|
December
31,
|
September
30,
|
|||||||||||||
|
2009
(a)
|
2009
(a)
|
2008
(a)
|
2008
(a)
|
|||||||||||||
|
Customer
Summary:
|
||||||||||||||||
|
Customer
Relationships:
|
||||||||||||||||
|
Residential
(non-bulk) basic video customers (b)
|
4,616,100 | 4,668,000 | 4,765,800 | 4,832,800 | ||||||||||||
|
Multi-dwelling
(bulk) and commercial unit customers (c)
|
263,000 | 257,600 | 256,400 | 261,200 | ||||||||||||
|
Total
basic video customers
|
4,879,100 | 4,925,600 | 5,022,200 | 5,094,000 | ||||||||||||
|
Non-video
customers (b)
|
462,800 | 431,500 | 408,700 | 407,500 | ||||||||||||
|
Total
customer relationships (d)
|
5,341,900 | 5,357,100 | 5,430,900 | 5,501,500 | ||||||||||||
|
Pro
forma average monthly revenue per basic video customer (e)
|
$ | 115.26 | $ | 113.39 | $ | 108.68 | $ | 106.50 | ||||||||
|
Pro
forma average monthly video revenue per basic video customer
(f)
|
$ | 61.49 | $ | 61.40 | $ | 59.30 | $ | 59.06 | ||||||||
|
Residential
bundled customers (g)
|
2,858,300 | 2,822,300 | 2,748,000 | 2,711,800 | ||||||||||||
|
Revenue
Generating Units:
|
||||||||||||||||
|
Basic
video customers (b) (c)
|
4,879,100 | 4,925,600 | 5,022,200 | 5,094,000 | ||||||||||||
|
Digital
video customers (h)
|
3,174,800 | 3,152,000 | 3,132,100 | 3,109,700 | ||||||||||||
|
Residential
high-speed Internet customers (i)
|
3,010,100 | 2,957,700 | 2,875,200 | 2,852,300 | ||||||||||||
|
Telephone
customers (j)
|
1,535,300 | 1,480,000 | 1,348,800 | 1,273,600 | ||||||||||||
|
Total
revenue generating units (k)
|
12,599,300 | 12,515,300 | 12,378,300 | 12,329,600 | ||||||||||||
|
Total
Video Services:
|
||||||||||||||||
|
Estimated
homes passed (l)
|
11,926,900 | 11,896,900 | 11,838,600 | 11,801,500 | ||||||||||||
|
Basic
video customers (b)(c)
|
4,879,100 | 4,925,600 | 5,022,200 | 5,094,000 | ||||||||||||
|
Estimated
penetration of basic homes passed (b) (c) (l) (m)
|
40.9 | % | 41.4 | % | 42.4 | % | 43.2 | % | ||||||||
|
Pro
forma basic video customers quarterly net loss (b) (c) (n)
|
(46,500 | ) | (73,100 | ) | (71,800 | ) | (29,800 | ) | ||||||||
|
Digital
video customers (h)
|
3,174,800 | 3,152,000 | 3,132,100 | 3,109,700 | ||||||||||||
|
Digital
penetration of basic video customers (b) (c) (h) (o)
|
65.1 | % | 64.0 | % | 62.4 | % | 61.0 | % | ||||||||
|
Digital
set-top terminals deployed
|
4,713,400 | 4,601,400 | 4,548,100 | 4,491,700 | ||||||||||||
|
Pro
forma digital video customers quarterly net gain (h) (n)
|
22,800 | (5,700 | ) | 22,400 | 61,400 | |||||||||||
|
High-Speed
Internet Services:
|
||||||||||||||||
|
Estimated
high-speed Internet homes passed (l)
|
11,363,400 | 11,292,800 | 11,229,400 | 11,214,400 | ||||||||||||
|
Residential
high-speed Internet customers (i)
|
3,010,100 | 2,957,700 | 2,875,200 | 2,852,300 | ||||||||||||
|
Estimated
penetration of high-speed Internet homes passed (i) (l)
(m)
|
26.5 | % | 26.2 | % | 25.6 | % | 25.4 | % | ||||||||
|
Pro
forma average monthly high-speed Internet revenue per high-speed Internet
customer (f)
|
$ | 41.59 | $ | 41.41 | $ | 40.26 | $ | 40.53 | ||||||||
|
Pro
forma high-speed Internet customers quarterly net gain (i)
(n)
|
52,400 | 10,600 | 22,900 | 70,500 | ||||||||||||
|
Telephone
Services:
|
||||||||||||||||
|
Estimated
telephone homes passed (l)
|
10,619,100 | 10,587,700 | 10,434,400 | 10,214,600 | ||||||||||||
|
Telephone
customers (j)
|
1,535,300 | 1,480,000 | 1,348,800 | 1,273,600 | ||||||||||||
|
Estimated
penetration of telephone homes passed (i) (l) (m)
|
14.5 | % | 14.0 | % | 12.9 | % | 12.5 | % | ||||||||
|
Pro
forma average monthly telephone revenue per telephone customer
(f)
|
$ | 42.76 | $ | 42.67 | $ | 41.06 | $ | 40.67 | ||||||||
|
Pro
forma telephone customers quarterly net gain (j) (n)
|
55,300 | 56,900 | 75,200 | 98,400 | ||||||||||||
|
Pro
forma operating statistics reflect the sales 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 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
June 30, 2009 actual basic video customers, digital video customers,
high-speed Internet customers and telephone customers were 4,929,900,
3,152,000, 2,957,700, and 1,480,000, 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.
|
||||||||||||||||
|
At
September 30, 2008 actual basic video customers, digital video customers,
high-speed Internet customers and telephone customers were 5,123,700,
3,118,500, 2,858,200, and 1,274,300, respectively.
|
||||||||||||||||
|
See
footnotes to unaudited summary of operating statistics on page 6 of this
addendum.
|
||||||||||||||||
Addendum to Charter Communications, Inc. Third Quarter
2009 Earnings Release
Page 5 of 8
|
(a)
Our billing systems calculate the aging of customer accounts based on the
monthly billing cycle for each account. On that basis, at
September 30, 2009, June 30, 2009, December 31, 2008, and September 30,
2008, customers include approximately 33,300, 37,200, 36,000, and 42,100
persons, respectively, whose accounts were over 60 days past due in
payment, approximately 5,700, 6,200, 5,300, and 7,700 persons,
respectively, whose accounts were over 90 days past due in payment and
approximately 2,500, 2,900, 2,700, and 3,800 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 462,800, 431,500, 408,700,
and 407,500 customer relationships at September 30, 2009, June 30, 2009,
December 31, 2008, and September 30, 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). As of December 31, 2008 and
September 30, 2008, EBUs decreased by 9,300, and 12,400, respectively, 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 September 30,
2009, June 30, 2009, December 31, 2008, and September 30, 2008,
approximately 2,673,000, 2,644,600, 2,576,800, and 2,554,600 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 September 30, 2009, June 30, 2009, December 31,
2008, and September 30, 2008, approximately 1,493,300, 1,443,700,
1,311,200, and 1,232,400 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.
|
|||||||||||||
Addendum to Charter Communications, Inc. Third Quarter 2009
Earnings Release
Page 6 of 8
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||||||
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
|
||||||||||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Actual
|
Actual
|
Actual
|
Actual
|
|||||||||||||
|
Net
cash flows from operating activities
|
$ | 383 | $ | 242 | $ | 1,008 | $ | 410 | ||||||||
|
Less: Purchases
of property, plant and equipment
|
(279 | ) | (288 | ) | (819 | ) | (938 | ) | ||||||||
|
Less: Change
in accrued expenses related to capital expenditures
|
1 | - | (18 | ) | (41 | ) | ||||||||||
|
Free
cash flow
|
105 | (46 | ) | 171 | (569 | ) | ||||||||||
|
Interest
on cash pay obligations (b)
|
197 | 462 | 850 | 1,374 | ||||||||||||
|
Purchases
of property, plant and equipment
|
279 | 288 | 819 | 938 | ||||||||||||
|
Change
in accrued expenses related to capital expenditures
|
(1 | ) | - | 18 | 41 | |||||||||||
|
Reorganization
items, net
|
174 | - | 368 | - | ||||||||||||
|
Other,
net
|
9 | 13 | (37 | ) | 48 | |||||||||||
|
Change
in operating assets and liabilities
|
(157 | ) | (154 | ) | (329 | ) | (133 | ) | ||||||||
|
Adjusted
EBITDA (c)
|
$ | 606 | $ | 563 | $ | 1,860 | $ | 1,699 | ||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
|
Actual
|
Pro
Forma (a)
|
Pro
Forma (a)
|
Pro
Forma (a)
|
|||||||||||||
|
Net
cash flows from operating activities
|
$ | 383 | $ | 241 | $ | 1,008 | $ | 406 | ||||||||
|
Less: Purchases
of property, plant and equipment
|
(279 | ) | (288 | ) | (819 | ) | (938 | ) | ||||||||
|
Less: Change
in accrued expenses related to capital expenditures
|
1 | - | (18 | ) | (41 | ) | ||||||||||
|
Free
cash flow
|
105 | (47 | ) | 171 | (573 | ) | ||||||||||
|
Interest
on cash pay obligations (b)
|
197 | 462 | 850 | 1,374 | ||||||||||||
|
Purchases
of property, plant and equipment
|
279 | 288 | 819 | 938 | ||||||||||||
|
Change
in accrued expenses related to capital expenditures
|
(1 | ) | - | 18 | 41 | |||||||||||
|
Reorganization
items, net
|
174 | - | 368 | - | ||||||||||||
|
Other,
net
|
9 | 13 | (37 | ) | 48 | |||||||||||
|
Change
in operating assets and liabilities
|
(157 | ) | (154 | ) | (329 | ) | (133 | ) | ||||||||
|
Adjusted
EBITDA (c)
|
$ | 606 | $ | 562 | $ | 1,860 | $ | 1,695 | ||||||||
|
(a) Pro
forma results reflect certain sales of cable systems in 2008 and 2009 as
if they occurred as of January 1, 2008.
|
||||||||||||||||
|
(b)
Interest on cash pay obligations excludes accretion of original issue
discounts on certain debt securities and amortization of deferred
financing costs that are reflected as interest expense in our consolidated
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.
|
||||||||||||||||
Addendum to Charter Communications, Inc. Third Quarter 2009
Earnings Release
Page 7 of 8
| CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES | ||||||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||||||
|
CAPITAL
EXPENDITURES
|
||||||||||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
|
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
Customer
premise equipment (a)
|
$ | 152 | $ | 157 | $ | 460 | $ | 480 | ||||||||
|
Scalable
infrastructure (b)
|
46 | 52 | 141 | 185 | ||||||||||||
|
Line
extensions (c)
|
18 | 19 | 49 | 63 | ||||||||||||
|
Upgrade/Rebuild
(d)
|
6 | 8 | 20 | 37 | ||||||||||||
|
Support
capital (e)
|
57 | 52 | 149 | 173 | ||||||||||||
|
Total
capital expenditures
|
$ | 279 | $ | 288 | $ | 819 | $ | 938 | ||||||||
|
(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).
|
||||||||||||||||
Addendum to Charter Communications, Inc. Third Quarter 2009
Earnings Release
Page 8 of 8