St. Louis, MO - February 28, 2007 - Charter Communications, Inc. (Nasdaq: CHTR) (along with its subsidiaries, the “Company” or “Charter”) today reported its fourth-quarter and annual 2006 financial and operating results. These results are consistent with preliminary results reported on February 9, 2007.

 

“We increased momentum and generated consistent growth in revenues and adjusted EBITDA throughout 2006, which we believe positions us well for 2007 and beyond” said Neil Smit, President and Chief Executive Officer.

 

Paul G. Allen, Chairman of the Board and controlling shareholder of Charter said, "Under the leadership of Neil and our management team, I am pleased with Charter's significant progress in improving its operations, enhancing its financial flexibility and delivering strong performance. In a relatively short timeframe, Charter has rolled out telephone and triple play offerings, enhanced its customer service, disposed of $1 billion of non-strategic assets and significantly improved its debt maturity profile.  I continue to be bullish on the prospects of cable in general, and the strength of its platform in meeting the needs of consumers. I also believe 2007 will be a very exciting year for Charter, as we continue to implement our turnaround strategy and benefit from the fruits of all our recent efforts.”

 

Highlights:

 

 

 

·

Fourth-quarter adjusted EBITDA increased 10.3% and annual adjusted EBITDA increased 5.3% year over year on a pro forma basis. (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.)

·	On a pro forma basis, bundled customers increased 18% compared to fourth quarter 2005 and revenue generating units (RGUs) increased by 162,400 during the fourth quarter of 2006. Charter added a net 710,700 RGUs during the full year of 2006, a 64% increase compared to 2005 additions.

·	Telephone customers climbed to 445,800 as of December 31, 2006, up more than 30% from September 30, 2006. Telephone homes passed grew to approximately 6.8 million as of December 31, 2006.

·	Earlier this month, Charter initiated a refinancing and expansion of the existing $6.850 billion senior secured credit facilities.

 

Pro forma results in this release reflect (i) our 2006 asset sales, (ii) our acquisition in January 2006 and (iii) our asset sales in July 2005, as if they had occurred as of January 1, 2005 for the statement of operations data and other financial data, and as if such transactions had occurred as of the last day of the respective period for the operating data. Pro forma income statements for the three months and year ended December 31, 2005 and 2006 and pro forma customer statistics are provided in the addendum of this news release.

 

 

Charter added a net 162,400 RGUs during the fourth quarter.

 

During 2006, Charter added a net 710,700 RGUs on a pro forma basis, a 64% increase compared to 2005 pro forma net additions of 433,700. RGUs increased 6.8% during 2006.

 

 

 

As of December 31, 2006, Charter served approximately 11,089,700 RGUs, comprised of 5,433,300 analog video, 2,808,400 digital video, 2,402,200 HSI, and 445,800 telephone customers.

 

Total average monthly revenue per analog video customer (ARPU) increased 13.2%, with video ARPU increasing 5.6% and HSI ARPU increasing 6.8%, for the fourth quarter of 2006, as compared to the same period in 2005 on a pro forma basis.

 

Strong telephone customer growth continued in the fourth quarter, with total customers increasing over 30% since the third quarter of 2006. During the fourth quarter, Charter added more than 900,000 telephone homes passed, bringing total telephone homes passed to approximately 6.8 million as of December 31, 2006. During 2007, Charter will focus on driving deeper penetration of telephone service, as well as launching service in additional markets. “In markets where telephone penetration has already reached double digits, we’ve seen the benefits of customers who take advantage of our bundled offers. In these markets we have experienced improved customer retention and RGU growth, and higher revenue growth and margins than Company average,” said Mr. Smit.

 

 

Fourth quarter revenues were $1.413 billion, an increase of 11.7%, or $148 million, on a pro forma basis, resulting from both increases in digital, HSI and telephone customers versus the prior year, and increases in average revenue per customer. Revenues increased 9.8%, or $126 million on an actual basis. Pro forma HSI revenues increased 23.0%, up $52 million year over year, and telephone revenues more than tripled to $49 million from $14 million in the fourth quarter of 2005. Advertising sales revenues increased by $15 million year over year on a pro forma basis, or 19.7%, and commercial revenues increased $10 million, on a pro forma basis, or 14.7%. Video revenues increased 4.0%, up $32 million year over year on a pro forma basis.

 

Fourth-quarter 2006 operating costs and expenses were $910 million, an increase of $101 million, or 12.5% on a pro forma basis. Operating costs and expenses increased 10.8% on an actual basis. The increases reflect continued emphasis on building and accelerating rollout of our telephone product and expenditures to support higher rates of

 

 

Operating income from continuing operations increased by $55 million year over year, to $163 million for the fourth quarter of 2006. Revenue growth exceeded operating costs and expense growth during the period by $37 million and depreciation and amortization expenses declined by $21 million year over year.

 

Net loss applicable to common stock and loss per common share for the fourth quarter of 2006 were $396 million and $1.08, respectively. For the fourth quarter of 2005, Charter reported net loss applicable to common stock of $336 million, and loss per common share was $1.06.

 

 

On a pro forma basis, revenues for 2006 increased 10.0%, or $495 million, to $5.437 billion, resulting from both increases in digital, HSI, and telephone customers versus the prior year, and increases in average revenue per customer. Pro forma HSI revenues increased 20.3%, up $176 million year over year, and telephone revenues more than tripled to $135 million in 2006 from $42 million in 2005. Commercial revenues increased by $40 million, or 15.5%, and advertising sales revenues increased by $36 million, or 12.9%, year over year on a pro forma basis. Video revenues increased 4.0%, up $127 million year over year on a pro forma basis.

 

On a pro forma basis, annual 2006 operating costs and expenses were $3.545 billion, an increase of $400 million, or 12.7%, compared to 2005. The increases reflect continued emphasis on building and accelerating rollout of our telephone service and expenditures to support higher rates of customer growth and retention, as well as higher programming costs associated with annual rate increases and more advanced services purchases.

 

 

These results include the operations of the assets sold during the third quarter of 2006 for the periods Charter owned and operated those systems. As discussed below, the operating results of the West Virginia and Virginia cable systems are reported as discontinued operations.

 

 

Annual 2006 revenues were $5.504 billion, an increase of 9.4%, or $471 million, over 2005 resulting from both increases in digital, HSI, and telephone customers versus the prior year, and increases in average revenue per customer. Annual 2006 operating costs and expenses were $3.590 billion, an increase of $389 million, or 12.2%, over 2005, reflecting continued emphasis on building and accelerating rollout of our telephone service and expenditures to support higher rates of customer growth and retention, as well as higher programming costs resulting from annual rate increases and more purchases of advanced services by our customers.

 

Operating income from continuing operations increased by $63 million year over year, to $367 million for the year ended December 31, 2006. Revenue growth exceeded operating costs and expense growth during the period by $82 million, and depreciation and amortization expenses declined by $89 million year over year, partially offset by a $120 million increase in asset impairment charges associated with certain assets sales described below.

 

Net loss applicable to common stock and loss per common share for the year ended December 31, 2006 were $1.370 billion and $4.13, respectively. For the year ended December 31, 2005, Charter reported net loss applicable to common stock of $970 million, and loss per common share was $3.13.

 

 

During 2006, the Company closed five separate sales of geographically non-strategic cable television systems, serving approximately 390,300 analog video customers, for a total of approximately $1 billion.

 

In the first quarter of 2007, Charter closed on two separate sales of geographically non-strategic cable television systems, serving approximately 34,400 analog video customers. These sales are not reflected in the pro forma results or statistics reported in this release or the addendum to this release. In order to allow comparisons of Charter’s performance over various time periods going forward, the Company has prepared and will post to its website immediately following this morning’s conference call, selected pro forma financial data of Charter after giving effect to these transactions for each quarter of 2006.

 

 

The West Virginia and Virginia cable systems, which were part of the 2006 system sales disclosed above, comprise operations and cash flows that for financial reporting purposes meet the criteria for discontinued operations. Accordingly, the results of operations for those systems have been presented as discontinued operations, net of tax, for the year ended December 31, 2006 and all prior periods presented herein have been reclassified to conform to the current presentation.

 

 

Net cash used in operating activities for the fourth quarter of 2006 was $25 million, compared to net cash flows provided by operating activities of $142 million for the year-ago quarter. The variance is primarily the result of the $128 million change in operating assets and liabilities and the increase in interest on cash pay obligations of $58 million.

 

Net cash flows provided by operating activities for the year ended December 31, 2006 were $323 million, compared to $260 million for the year-ago period. The increase is primarily the result of the $240 million increase in cash provided by operating assets and liabilities, and a $33 million increase in revenues over operating expenses, partially offset by an increase in interest on cash pay obligations of $214 million.

 

Adjusted EBITDA totaled $503 million for the fourth quarter of 2006, an increase of 10.3%, compared with the year-ago quarter on a pro forma basis and an increase of 7.9% on an actual basis.

 

Adjusted EBITDA totaled $1.914 billion for the year ended December 31, 2006, a 4.5% increase compared with the year-ago period. Pro forma adjusted EBITDA totaled $1.892 billion for the year ended December 31, 2006, a 5.3% increase compared with pro forma 2005 results.

 

Expenditures for property, plant, and equipment for the fourth quarter of 2006 were $308 million, compared to fourth-quarter 2005 expenditures of $273 million. The increase in capital expenditures reflects year over year increases in spending for scalable infrastructure and customer premise equipment. For the year ended December 31, 2006, capital expenditures were $1.103 billion, compared to $1.088 billion for 2005. Increases in spending on customer premise equipment and scalable infrastructure were offset by decreases in support capital and line extensions. Similar to 2006, we expect that

 

 

Charter reported negative free cash flow of $253 million for the fourth quarter of 2006, compared to negative free cash flow of $172 million for the same year-ago quarter. Growth in revenues in excess of operating costs and expenses was offset by increased interest on cash-pay obligations and increased capital expenditures. For the year ended December 31, 2006, Charter reported negative free cash flow of $892 million, compared to negative free cash flow of $696 million for 2005. The increase was primarily driven by higher interest on cash-pay obligations, partially offset by revenue growth that exceeded growth in operating costs and expenses.

 

As of December 31, 2006, Charter had $19.1 billion in long-term debt and $60 million of cash on hand.

 

 

In February 2007, the Company engaged J.P. Morgan Securities Inc., Banc of America Securities LLC, and Citigroup Global Markets Inc. to arrange and syndicate a refinancing and expansion of its existing $6.85 billion senior secured credit facilities. The proposed transaction includes $8.35 billion of senior secured credit facilities, consisting of a $1.5 billion revolving credit facility, a $1.5 billion new term facility, a $5.0 billion refinancing term loan facility at Charter Communications Operating, LLC and a $350 million third lien term loan at CCO Holdings, LLC (CCO Holdings), (collectively, the “Transaction”). 

 

Charter expects to use a portion of the additional proceeds from the Transaction to redeem up to $550 million of CCO Holdings’ outstanding floating rate notes due 2010 and up to $187 million of Charter Communications Holdings, LLC’s outstanding 8.625% senior notes due 2009 in addition to other general corporate purposes.  The Company expects to enter into the facilities in March 2007.  Upon completion of the Transaction, Charter expects to have adequate liquidity to fund its operations and service its debt through 2008. 

 

 

 

The Company uses certain measures that are not defined by GAAP to evaluate various aspects of its business. Adjusted EBITDA, pro forma adjusted EBITDA, un-levered free cash flow, 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 is defined as income from operations before special charges, non-cash depreciation and amortization, loss on sale or retirement of assets, asset impairment charges, and option compensation expense. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company’s businesses and intangible assets recognized in business combinations 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 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.

 

Un-levered free cash flow is defined as adjusted EBITDA less purchases of property, plant and equipment. The Company believes this is an important measure, as it takes into account the period costs associated with capital expenditures used to upgrade, extend and maintain Charter’s plant, without regard to the Company’s leverage structure.

 

Free cash flow is defined as un-levered free cash flow less interest on cash pay obligations. It can also be computed as net cash flows from operating activities, less capital expenditures and cash special charges, adjusted for the change in operating assets and liabilities, net of dispositions. As such, it is unaffected by fluctuations in working capital levels from period to period.

 

 

The Company believes that adjusted EBITDA, pro forma adjusted EBITDA, un-levered free cash flow 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, are reduced for management fees in the amounts of $33 million and $31 million for the three months ended December 31, 2006 and 2005, respectively, which amounts are added back for the purposes of calculating compliance with leverage covenants.

 

 

A slide presentation to accompany the fourth-quarter and year-end conference call will be available on the Investor and News Center of our website at www.charter.com in the “Presentations/Webcasts” section. Pro forma data, including disclosure concerning the pro forma data and the basis upon which it was calculated, for each quarter of 2006 can also be found on the Investor and News Center in the “Pro Forma Information” section. Pro forma income statements for the three months and years ended December 31, 2005 and 2006 and pro forma historical customer statistics are also provided in the addendum of this news release.

 

 

The Company will host a conference call on Wednesday, February 28. 2007, at 9:00 a.m. Eastern Time (ET) related to the contents of this release.

 

The conference call will be webcast live via the Company’s website at www.charter.com. Access the webcast by clicking on “About Charter” at the top of the home page. 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 beginning two hours after its completion. Accompanying slides will also be available on the site.

 

Those participating via telephone should dial 888-233-1576. International participants should dial 706-643-3458.

 

 

A replay will be available at (800) 642-1687 or (706) 645-9291 beginning two hours after completion of the call through midnight March 8, 2007. The passcode for the replay is 6198768.

 

Charter Communications, Inc. is a leading broadband communications company and the third-largest publicly traded cable operator in the United States.  Charter provides a full range of advanced broadband services, including advanced Charter Digital® video entertainment programming, Charter High-Speed™ Internet access service, and Charter Telephone™ services. 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.  More information about Charter can be found at www.charter.com.

# # #

Media:              Analysts: 

Anita Lamont          Mary Jo Moehle

314/543-2215            314/543-2397    

 

 

 

 

·

the availability, in general, of funds to meet interest payment obligations under our debt and to fund our operations and necessary capital expenditures, either through cash flows from operating activities, further borrowings or other sources and, in particular, our ability to be able to provide under the applicable debt instruments such funds (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 could trigger a default of our other obligations under cross-default provisions;

 

 

 

·	our ability to pay or refinance debt prior to or when it becomes due and/or to take advantage of market opportunities and market windows to refinance that debt through new issuances, exchange offers or otherwise, including restructuring our balance sheet and leverage position;

·	competition from other video programming distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers and DSL providers;

·

unforeseen difficulties we may encounter in our continued introduction of our telephone services such as our ability to meet heightened customer expectations for the reliability of voice services compared to other services we provide and our ability to meet heightened 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 a stable customer base, particularly in the face of increasingly aggressive competition from other service providers;

·	our ability to obtain programming at reasonable prices or to pass programming cost increases on to our customers;

·	general business conditions, economic uncertainty or slowdown; and

·	the effects of governmental regulation, including but not limited to local franchise authorities, on our business.

 

 

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
		Three Months Ended December 31,									Year Ended December 31,
		2006			2005						2006			2005
		Actual			Actual			% Change			Actual			Actual			% Change
REVENUES:
Video		$	829		$	814			1.8	%	$	3,349		$	3,248			3.1	%
High-speed Internet			278			228			21.9	%		1,051			875			20.1	%
Telephone			49			13			276.9	%		135			36			275.0	%
Advertising sales			91			77			18.2	%		319			284			12.3	%
Commercial			78			70			11.4	%		305			266			14.7	%
Other			88			85			3.5	%		345			324			6.5	%
Total revenues			1,413			1,287			9.8	%		5,504			5,033			9.4	%
COSTS AND EXPENSES:
Programming			368			338			8.9	%		1,494			1,359			9.9	%
Service			211			196			7.7	%		835			748			11.6	%
Advertising sales			29			24			20.8	%		109			96			13.5	%
General and administrative			258			223			15.7	%		972			856			13.6	%
Marketing			44			40			10.0	%		180			142			26.8	%
Operating costs and expenses			910			821			10.8	%		3,590			3,201			12.2	%
Adjusted EBITDA			503			466			7.9	%		1,914			1,832			4.5	%
Adjusted EBITDA margin			35.6	%		36.2	%					34.8	%		36.4	%
Depreciation and amortization			330			351						1,354			1,443
Asset impairment charges			-			-						159			39
Loss on sale of assets, net			6			1						8			6
Option compensation expense, net			3			3						13			14
Hurricane asset retirement loss			-			-						-			19
Special charges, net			1			3						13			7
Operating income from continuing operations			163			108						367			304
OTHER INCOME AND (EXPENSES):
Interest expense, net			(478	)		(456	)					(1,887	)		(1,789	)
Gain (loss) on derivative instruments and hedging activities, net			(2	)		7						6			50
Gain on extinguishment of debt			-			23						101			521
Other, net			2			11						14			23
			(478	)		(415	)					(1,766	)		(1,195	)
Loss from continuing operations before income taxes			(315	)		(307	)					(1,399	)		(891	)
Income tax expense			(63	)		(32	)					(187	)		(112	)
Loss from continuing operations			(378	)		(339	)					(1,586	)		(1,003	)
Income (loss) from discontinued operations, net of tax			(18	)		3						216			36
Net loss			(396	)		(336	)					(1,370	)		(967	)
Dividends on preferred stock - redeemable			-			-						-			(3	)
Net loss applicable to common stock		$	(396	)	$	(336	)				$	(1,370	)	$	(970	)
LOSS PER COMMON SHARE, BASIC AND DILUTED:
Loss from continuing operations		$	(1.03	)	$	(1.07	)				$	(4.78	)	$	(3.24	)
Net loss		$	(1.08	)	$	(1.06	)				$	(4.13	)	$	(3.13	)
Weighted average common shares outstanding, basic and diluted			365,331,337			317,322,233						331,941,788			310,209,047

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
		Three Months Ended December 31,									Year Ended December 31,
		2006			2005						2006			2005
		Pro Forma (a)			Pro Forma (a)			% Change			Pro Forma (a)			Pro Forma (a)			% Change
REVENUES:
Video		$	829		$	797			4.0	%	$	3,307		$	3,180			4.0	%
High-speed Internet			278			226			23.0	%		1,041			865			20.3	%
Telephone			49			14			250.0	%		135			42			221.4	%
Advertising sales			91			76			19.7	%		316			280			12.9	%
Commercial			78			68			14.7	%		298			258			15.5	%
Other			88			84			4.8	%		340			317			7.3	%
Total revenues			1,413			1,265			11.7	%		5,437			4,942			10.0	%
COSTS AND EXPENSES:
Programming			368			331			11.2	%		1,473			1,331			10.7	%
Service			211			193			9.3	%		823			737			11.7	%
Advertising sales			29			23			26.1	%		107			93			15.1	%
General and administrative			258			223			15.7	%		963			844			14.1	%
Marketing			44			39			12.8	%		179			140			27.9	%
Operating costs and expenses			910			809			12.5	%		3,545			3,145			12.7	%
Adjusted EBITDA			503			456			10.3	%		1,892			1,797			5.3	%
Adjusted EBITDA margin			35.6	%		36.0	%					34.8	%		36.4	%
Depreciation and amortization			330			344						1,343			1,424
Asset impairment charges			-			-						20			-
Loss on sale of assets, net			6			1						6			6
Option compensation expense, net			3			3						13			13
Hurricane asset retirement loss			-			-						-			19
Special charges, net			1			3						13			7
Operating income from operations			163			105						497			328
OTHER INCOME AND (EXPENSES):
Interest expense, net			(478	)		(443	)					(1,861	)		(1,755	)
Gain (loss) on derivative instruments and hedging activities, net			(2	)		7						6			50
Gain on extinguishment of debt			-			23						101			521
Other, net			2			11						14			23
			(478	)		(402	)					(1,740	)		(1,161	)
Loss before income taxes			(315	)		(297	)					(1,243	)		(833	)
Income tax expense			(48	)		(32	)					(180	)		(110	)
Net loss			(363	)		(329	)					(1,423	)		(943	)
Dividends on preferred stock - redeemable			-			-						-			(3	)
Net loss applicable to common stock		$	(363	)	$	(329	)				$	(1,423	)	$	(946	)
Loss per common share, basic and diluted		$	(0.99	)	$	(1.04	)				$	(4.28	)	$	(3.05	)
Weighted average common shares outstanding, basic and diluted			365,331,337			317,322,233						331,941,788			310,209,047
(a) Pro forma results reflect the acquisition of cable systems in January 2006 and the sales of cable systems in July 2005 and certain sales of cable systems in the third quarter of 2006 as if they occurred as of January 1, 2005 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 dispositions of assets because those transactions did not materially impact Charter's adjusted EBITDA. However, all transactions completed in January 2006 and the third quarter of 2006 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 results of operations for any future date.
December 31, 2006. Pro forma revenues were reduced by $0 and $67 million for the three months and year ended December 31, 2006, respectively. Pro forma operating costs and expenses were reduced by $0 and $45 million for the three months and year ended December 31, 2006, respectively. Pro forma net loss was decreased by $33 million and increased by $53 million for the three months and year ended December 31, 2006, respectively.
December 31, 2005. Pro forma revenues were reduced by $22 million and $91 million for the three months and year ended December 31, 2005, respectively. Pro forma operating costs and expenses were reduced by $12 million and $56 million for the three months and year ended December 31, 2005, respectively. Pro forma net loss was reduced by $7 million and $24 million for the three months and year ended December 31, 2005.
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.

 

 

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
		December 31,			December 31,
		2006			2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	60		$	21
Accounts receivable, net of allowance for doubtful accounts			195			214
Prepaid expenses and other current assets			84			92
Total current assets			339			327
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net			5,217			5,840
Franchises, net			9,223			9,826
Total investment in cable properties, net			14,440			15,666
OTHER NONCURRENT ASSETS:			321			438
Total assets		$	15,100		$	16,431
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	1,298		$	1,191
Total current liabilities			1,298			1,191
LONG-TERM DEBT			19,062			19,388
NOTE PAYABLE - RELATED PARTY			57			49
DEFERRED MANAGEMENT FEES - RELATED PARTY			14			14
OTHER LONG-TERM LIABILITIES			692			517
MINORITY INTEREST			192			188
PREFERRED STOCK - REDEEMABLE			4			4
SHAREHOLDERS' DEFICIT			(6,219	)		(4,920	)
Total liabilities and shareholders' deficit		$	15,100		$	16,431

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
		Year Ended December 31,
		2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,370	)	$	(967	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation and amortization			1,362			1,499
Asset impairment charges			159			39
Noncash interest expense			138			254
Deferred income taxes			202			109
(Gain) loss on sale of assets, net			(192	)		6
Option compensation expense, net			13			14
Gain on derivative instruments and hedging activities, net			(6	)		(50	)
Gain on extinguishment of debt			(101	)		(527	)
Other, net			(9	)		(4	)
Changes in operating assets and liabilities, net of effects from acquisitions
and dispositions:
Accounts receivable			24			(29	)
Prepaid expenses and other assets			55			97
Accounts payable, accrued expenses and other			48			(181	)
Net cash flows from operating activities			323			260
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(1,103	)		(1,088	)
Change in accrued expenses related to capital expenditures			24			8
Proceeds from sale of assets, including cable systems			1,020			44
Purchase of cable system			(42	)		-
Purchase of investments			-			(3	)
Proceeds from investments			37			17
Other, net			(1	)		(3	)
Net cash flows from investing activities			(65	)		(1,025	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt			6,322			1,207
Repayments of long-term debt			(6,938	)		(1,239	)
Proceeds from issuance of debt			440			294
Payments for debt and equity issuance costs			(44	)		(70	)
Redemption of preferred stock			-			(56	)
Other, net			1			-
Net cash flows from financing activities			(219	)		136
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			39			(629	)
CASH AND CASH EQUIVALENTS, beginning of period			21			650
CASH AND CASH EQUIVALENTS, end of period		$	60		$	21
CASH PAID FOR INTEREST		$	1,671		$	1,526
NONCASH TRANSACTIONS:
Issuance of debt by CCH I Holdings, LLC		$	-		$	2,423
Issuance of debt by CCH I, LLC		$	419		$	3,686
Issuance of debt by CCH II, LLC		$	410		$	-
Issuance of debt by Charter Communications Operating, LLC		$	37		$	333
Retirement of Charter Communications Holdings, LLC debt		$	(796	)	$	(7,000	)
Retirement of Renaissance Media Group LLC debt		$	(37	)	$	-
Issuance of Class A common stock		$	68		$	-
Issuance of shares in Securities Class Action Settlement		$	-		$	15
Retirement of convertible notes		$	(255	)	$	-
CC VIII Settlement - exchange of interests		$	-		$	418

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED SUMMARY OF OPERATING STATISTICS

								Approximate
		Actual						Pro Forma as of
		December 31,			September 30,			December 31,
		2006 (a)			2006 (a)			2005 (a)
Customer Summary:
Customer Relationships:
Residential (non-bulk) analog video customers (b)			5,172,300			5,216,900			5,262,900
Multi-dwelling (bulk) and commercial unit customers (c)			261,000			259,700			243,900
Total analog video customers (b) (c)			5,433,300			5,476,600			5,506,800
Non-video customers (b)			296,100			289,700			258,700
Total customer relationships (d)			5,729,400			5,766,300			5,765,500
Average monthly revenue per analog video customer (e)		$	86.32		$	83.76		$	76.27
Average monthly video revenue per analog video customer (m)		$	52.84		$	52.70		$	50.06
Bundled customers (f)			2,190,000			2,124,600			1,856,100
Revenue Generating Units:
Analog video customers (b) (c)			5,433,300			5,476,600			5,506,800
Digital video customers (g)			2,808,400			2,767,900			2,638,500
Residential high-speed Internet customers (h)			2,402,200			2,343,200			2,097,700
Residential telephone customers (i)			445,800			339,600			136,000
Total revenue generating units (j)			11,089,700			10,927,300			10,379,000
Video Cable Services:
Analog Video:
Estimated homes passed (k)			11,848,800			11,811,400			11,643,900
Analog video customers (b)(c)			5,433,300			5,476,600			5,506,800
Estimated penetration of analog video homes passed (b) (c) (k) (l)			46	%		46	%		47	%
Pro forma analog video customers quarterly net loss (b) (c) (n)			(43,300	)		(9,200	)		(16,700	)
Digital Video:
Estimated digital video homes passed (k)			11,683,100			11,616,100			11,429,700
Digital video customers (g)			2,808,400			2,767,900			2,638,500
Estimated penetration of digital homes passed (g) (k) (l)			24	%		24	%		23	%
Digital penetration of analog video customers (b) (c) (g) (o)			52	%		51	%		48	%
Digital set-top terminals deployed			4,030,300			3,946,000			3,740,700
Pro forma digital video customers quarterly net gain (g) (n)			40,500			49,400			49,800
Non-Video Cable Services:
High-Speed Internet Services:
Estimated high-speed Internet homes passed (k)			10,835,900			10,763,300			10,543,500
Residential high-speed Internet customers (h)			2,402,200			2,343,200			2,097,700
Estimated penetration of high-speed Internet homes passed (h) (k) (l)			22	%		22	%		20	%
Average monthly high-speed Internet revenue per high-speed Internet customer (m)		$	39.02		$	38.60		$	36.55
Pro forma residential high-speed Internet customers quarterly net gain (h) (n)			59,000			88,100			73,800
Telephone Services:
Estimated telephone homes passed (k)			6,799,300			5,892,000			2,918,000
Residential telephone customers (i)			445,800			339,600			136,000
Pro forma average monthly telephone revenue per telephone customer (m)		$	42.25		$	42.40		$	39.38
Pro forma residential telephone customers quarterly net gain (i) (n)			106,200			82,000			31,300
Pro forma results reflect the acquisition of cable systems in January 2006 and the sales of cable systems in the third quarter of 2006 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 dispositions of assets because those transactions did not materially impact Charter's adjusted EBITDA. However, all transactions completed in January 2006 and the third quarter of 2006 have been reflected in the operating statistics.
After giving effect to the sales of cable systems in January 2007, December 31, 2006 analog video customers, digital video customers, high-speed Internet customers and telephone customers would have been 5,398,900, 2,797,900, 2,402,000 and 445,800, respectively.
After giving effect to the sales of cable systems in January 2007, September 30, 2006 analog video customers, digital video customers, high-speed Internet customers and telephone customers would have been 5,440,900, 2,757,100, 2,343,100 and 339,600, respectively.
After giving effect to the sales of cable systems in January 2007, December 31, 2005 analog video customers, digital video customers, high-speed Internet customers and telephone customers would have been 5,468,300, 2,627,000, 2,097,600 and 136,000, respectively.
See footnotes to unaudited summary of operating statistics on page 6 of this addendum.