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): August
2, 2005
Charter
Communications, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or Other Jurisdiction of Incorporation or Organization)
|
000-27927
|
43-1857213
|
|
|
(Commission
File Number)
|
(I.R.S.
Employer Identification
Number)
|
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)
Item
2.02. Results
of Operations and Financial Condition.
On
August
2, 2005, Charter Communications, Inc. issued a press release announcing its
results for the second quarter ended June 30, 2005. 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
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated August 2, 2005. *
|
*
furnished herewith
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:
This
quarterly
report includes
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities
Act"),
and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange
Act"),
regarding, among other things, our plans, strategies and prospects, both
business and financial including, without limitation, the forward-looking
statements set forth in the "Results
of Operations"
and
"Liquidity
and Capital Resources"
sections
under Part I, Item 2. "Management’s
Discussion and Analysis of Financial Condition and Results of
Operations"
in this
quarterly
report.
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
"Certain
Trends and Uncertainties"
under
Part I, Item 2. "Management’s
Discussion and Analysis of Financial Condition and Results of
Operations"
in this
quarterly
report.
Many of
the forward-looking statements contained in this quarterly
report may
be
identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated"
and
"potential"
among
others. Important factors that could cause actual results to differ materially
from the forward-looking statements we make in this quarterly
report are
set
forth in this quarterly
report and
in
other reports or documents that we file from time to time with the SEC, and
include, but are not limited to:
|
·
|
the
availability 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;
|
|
·
|
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 a stable customer base, particularly in
the face
of increasingly aggressive competition from other service
providers;
|
|
·
|
our
ability to comply with all covenants in our indentures and credit
facilities, any violation of which would result in a violation
of the
applicable facility or indenture and could trigger a default of
other
obligations under cross-default
provisions;
|
|
·
|
our
ability to pay or refinance debt as it becomes
due;
|
|
·
|
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.
|
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 quarterly
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:
August 2, 2005
|
|
By:/s/
Paul E. Martin
Name:
Paul E. Martin
Title:
Senior Vice President, Interim Chief Financial Officer,
Principal
Accounting Officer and Corporate Controller
(Principal
Financial Officer and Principal Accounting
Officer)
|
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated August 2, 2005.
*
|
*
furnished herewith
Exhibit
99.1
NEWS
FOR
RELEASE: 8:00 AM CT, Tuesday, August 2, 2005
CHARTER
REPORTS SECOND QUARTER 2005
FINANCIAL
AND OPERATING RESULTS
St.
Louis, MO -
Charter
Communications, Inc. (Nasdaq: CHTR) (along with its subsidiaries, the "Company"
or "Charter") today reported financial and operating results for the three
and
six months ended June 30, 2005. The Company also provided its year to date
results compared to pro forma results for the same 2004 period reflecting
the
sales of certain cable systems in March and April 2004 as if these sales
occurred on January 1, 2004. (See the Addendum of this news release for
further
details on pro forma information.)
Overview
"Our
focus on disciplined operational improvement is gaining traction, and beginning
to show positive results," said Charter Interim President and CEO Robert
May.
"While customer additions were impacted by competition in certain markets
and
seasonality characteristic of the second quarter, we are gaining ground
in terms
of customer retention and additions, a result of our targeted approach
to
customer growth. We are encouraged by these mid-year results, but realize
there
is more to be done."
During
the second quarter of 2005 Charter:
| · |
Expanded
its segmented approach to selling its products, tailoring marketing
messages to various consumer
categories;
|
| · |
Increased
average monthly total revenue per analog video customer 10% and
increased
high-speed Internet (HSI) revenue per HSI customer 5% compared
to the
second quarter of 2004;
|
| · |
Added
a net 5,600 revenue generating units (RGUs), driven by the addition
of
43,800 HSI customers and 12,500 telephone customers, offset by
the loss of
9,000 digital video customers and 41,700 analog video customers;
|
| · |
Continued
to invest in new product opportunities including telephone and
advanced
set-top terminals; and
|
| · |
Grew
revenues 7% and adjusted EBITDA 4% compared to the second quarter
of 2004.
(Adjusted EBITDA is defined in the "Use of Non-GAAP Financial
Metrics"
section of this news release.)
|
"In
the
near term, we are focused on improving the value proposition for our customers;
developing more sophisticated customer care capabilities; executing growth
strategies for new services; managing our operating costs; and identifying
opportunities to continue to improve our balance sheet and liquidity,"
said Mr.
May. "And I’m confident we have the personnel, the infrastructure, the products
and the services necessary to achieve our goals and objectives."
Second
Quarter Results
Second
quarter 2005 revenues were $1.323 billion, an increase of $84 million,
or 7%,
over second quarter 2004 revenues of $1.239 billion. The increase in revenues
was primarily driven by growth in HSI revenues and average revenue per
customer.
For
the
three months ended June 30, 2005, HSI revenues increased $45 million, or
25%,
reflecting 310,800 net additional HSI customers since June 30, 2004, as
well as
a 5% increase in average revenue per HSI customer in the second quarter
of 2005
compared to the same 2004 period. Video revenues increased $15 million,
or 2%,
compared to the second quarter of 2004, primarily due to a 5% increase
in
average monthly video revenue per analog video customer and an increase
in
digital customers served, partially offset by the loss of analog video
customers
during the period. Commercial revenues increased $11 million, or 19%, and
advertising sales revenues increased $3 million, or 4%, compared to the
year ago
quarter. Other revenue increased $10 million, or 12%, for the second quarter
of
2005 compared to the second quarter of 2004, primarily due to increased
telephone and franchise fee revenue.
Second
quarter 2005 operating costs and expenses were $825 million, an increase
of $66
million, or 9%, compared to the year ago quarter. The rise in second quarter
2005 operating costs and expenses over 2004 primarily resulted from a $32
million, or 20%, increase in service costs, a $22 million, or 7%, increase
in
programming costs, and a $17 million, or 8%, increase in general and
administrative costs. Increased labor and maintenance costs to support
our
infrastructure, increased equipment maintenance, an increase in franchise
fees
as a result of increased revenues and higher fuel prices drove the rise
in
service costs. Programming costs grew as a result of price increases,
particularly in sports programming, partially offset by a decrease in analog
video customers and a reduction related to changes in estimates of programming
related liabilities resulting from the renewal of programming contracts
during
the quarter. General and administrative costs increased due to increases
in
salaries and benefits, property taxes and professional fees, partially
offset by
a decrease in bad debt expense. These increases were partially offset by
a $5
million, or 14%, decrease in marketing costs, as the Company exercised
discipline in spending while continuing to develop its segmented marketing
approach.
Charter
reported income from operations of $110 million for the second quarter
of 2005
compared to $15 million for the second quarter of 2004. The increase in
income
from operations was driven by variances discussed above, as well as a decrease
of $89 million in special charges due to litigation costs recorded in the
second
quarter of 2004 related to the settlement of the securities class action
lawsuits.
Net
loss
applicable to common stock and loss per common share for the second quarter
of
2005 were $356 million and $1.18, respectively. For the second quarter
of 2004,
Charter reported net loss applicable to common stock and loss per common
share
of $416 million and $1.39, respectively. The $60 million decrease in net
loss
applicable to common stock for the second quarter of 2005 compared to the
same
year ago period is primarily the result of changes in revenues and expenses
discussed above, as well as gains on equity investments and extinguishment
of
debt. These increases were partially offset by increased interest expense
and a
small net loss on derivative instruments and hedging activities, compared
to the
net gain recorded for the second quarter of 2004.
Year
to Date Results
Revenues
for the six months ended June 30, 2005 were $2.594 billion, an increase
of $170
million, or 7%, over pro forma revenues for the same 2004 period of $2.424
billion. For the six months ended June 30, 2005 operating costs and expenses
were $1.621 billion, an increase of $127 million, or 9%, compared to the
same
pro forma year ago period. Service costs increased $56 million, or 18%,
programming costs increased $55 million, or 8%, and general and administrative
costs increased $15 million, or 4%, compared to the pro forma year ago
period.
Charter
reported income from operations of $161 million for the six months ended
June
30, 2005 compared to $78 million for the same pro forma 2004 period. The
increase in income from operations was driven by variances discussed above,
as
well as a decrease of $95 million in special charges primarily due to litigation
costs recorded in the second quarter of 2004 related to the settlement
of the
securities class action lawsuits, partially offset by $39 million of impairment
charges recorded during the first six months of 2005 and the $104 million
gain
on sale of assets primarily related to assets sales occurring in March
and April
2004.
Net
loss
applicable to common stock and loss per common share for the six months
ended
June 30, 2005 were $709 million and $2.34, respectively. For the six months
ended June 30, 2004, Charter reported pro forma net loss applicable to
common
stock and loss per common share of $804 million and $2.71, respectively.
Liquidity
Adjusted
EBITDA totaled $498 million for the three months ended June 30, 2005, an
increase of $18 million, or 4%, compared to the year ago period. Adjusted
EBITDA
for the six months ended June 30, 2005 was $973 million, an increase of
5%
compared to pro forma adjusted EBITDA of $930 million for the six months
ended
June 30, 2004.
Net
cash
flows from operating activities for the six months ended June 30, 2005
were $181
million, compared to $168 million for the year ago period.
Expenditures
for property, plant and equipment for the second quarter of 2005 were $331
million, compared to second quarter 2004 expenditures of $200 million.
For the
six months ended June 30, 2005 expenditures for property, plant and equipment
were $542 million, while expenditures for the same 2004 period totaled
$390
million. The increases were primarily driven by spending on scalable
infrastructure related to telephone, video on demand and digital simulcast;
support capital related to our investment in infrastructure and service
improvements; and customer premise equipment primarily related to the continued
demand for advanced digital set-tops.
Un-levered
free cash flow for the second quarter of 2005 was $167 million compared
to
second quarter 2004 un-levered free cash flow of $280 million. For the
six
months ended June 30, 2005, un-levered free cash flow was $431 million,
compared
to $553 million for the year ago period. The increases in 2005 capital
expenditures more than offset adjusted EBITDA growth, resulting in lower
un-levered free cash flow during the 2005 periods.
Charter
reported negative free cash flow of $219 million for the second quarter
of 2005
compared to $60 million for the second quarter of 2004. Negative free cash
flow
for the six months ended June 30, 2005 was $326 million, compared to $87
million
for the same 2004 period. Higher capital expenditures and interest on cash-pay
obligations contributed to the increase in negative free cash flow.
As
of
June 30, 2005, Charter had $19.2 billion of outstanding indebtedness and
$40
million of cash on hand. Net availability of funds under the Charter
Communications Operating, LLC ("Charter Operating") credit facility was
approximately $870 million. The Company believes cash on hand at June 30,
2005,
cash flows from operating activities and the amounts available under its
credit
facilities will be sufficient to meet cash needs throughout 2005.
Operating
Statistics
As
of
June 30, 2005, Charter served approximately 10,718,700 RGUs, a net increase
of
5,600 RGUs during the second quarter. Seasonality impacted customer growth
during the quarter resulting in a net gain of 43,800 residential HSI customers
during the quarter, and net losses of 41,700 and 9,000 analog video and
digital
video customers, respectively. Charter added a net 12,500 telephone customers
during the quarter.
As
of
June 30, 2005, Charter served approximately 5,943,100 analog video, 2,685,600
digital video, 2,022,200 residential high-speed Internet and 67,800 telephone
customers.
Financing
As
part
of the Company’s previously announced ongoing efforts to improve liquidity and
extend maturities, in June 2005, Charter Operating issued, in a private
placement, approximately $62 million principal amount of new notes with
terms
identical to Charter Operating’s 8.375% Senior Second Lien Notes due 2014, in
exchange for $62 million of Charter Communications Holdings, LLC 8.25%
Senior
Notes due 2007.
During
second quarter 2005, Charter also purchased, in private transactions, from
a
small number of institutional holders, a total of $97 million principal
amount
of the 4.75% convertible senior notes due 2006, leaving $25 million principal
amount outstanding.
In
July
2005, the Securities Exchange Commission declared effective the registration
on
Form S-1 covering both the convertible senior notes due 2009 and the related
share lending agreement. On July 29, 2005 Charter completed the first issuance
of Class A common stock under the share lending agreement. The Company
issued
27.2 million shares of stock at $1.25 per share. Charter may offer up to
an
additional 122.8 million more in future offerings. Charter will not receive
any
of the proceeds from the sale of Class A common stock under the share lending
agreement.
Use
of Non-GAAP Financial Metrics
The
Company uses certain measures that are not defined by GAAP (Generally Accepted
Accounting Principles) to evaluate various aspects of its business. 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, gain/loss on sale 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 our businesses and intangible assets recognized
in
business combinations as well as other non-cash or non-recurring items,
and is
unaffected by our capital structure or investment activities. Adjusted
EBITDA is
a liquidity measure used by Company management and the Board of Directors
to
measure our ability to fund operations and our 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 our 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, un-levered free cash flow and free
cash
flow provide information useful to investors in assessing our ability to
service
our 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, as presented, is
reduced
for management fees in the amounts of $33 million and $21 million for the
three
months ended June 30, 2005 and 2004, respectively, which amounts are added
back
for the purposes of calculating compliance with leverage covenants. As
of June
30, 2005, Charter and its subsidiaries were in compliance with their debt
covenants.
Conference
Call
The
Company will host a Conference Call on Tuesday, August 2, 2005 at 11:00
AM
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 Us" at the top right of the page, then
again
on "Investor Center." 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.
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 August 9, 2005. The passcode for
the
replay is 7161574.
About
Charter Communications
Charter
Communications, Inc., a broadband communications company, provides a full
range
of advanced broadband services to the home, including cable television
on an
advanced digital video programming platform via Charter Digital™, Charter
High-Speed™ Internet service and Charter Telephone™. Charter Business™ provides
scalable, tailored and cost-effective broadband communications solutions
to
organizations of all sizes through business-to-business Internet, data
networking, video and music services. Advertising sales and production
services
are sold under the Charter Media® brand. More information about Charter can be
found at www.charter.com
<<http://www.charter.com>>.
#
#
#
Contact:
Press: Analysts:
David
Andersen Mary
Jo
Moehle
314/543-2213 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 (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding,
among other things, our plans, strategies and prospects, both business
and
financial. Although we believe that our plans, intentions and expectations
reflected in or suggested by these forward-looking statements are reasonable,
we
cannot assure you that we will achieve or realize these plans, intentions
or
expectations. Forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Many of the forward-looking statements contained
in this
release may
be identified by the use of forward-looking words such as "believe," "expect,"
"anticipate," "should," "planned," "will," "may," "intend," "estimated"
and
"potential," among others. Important factors that could cause actual results
to
differ materially from the forward-looking statements we make in this
release are
set forth in reports or documents that we file from time to time with the
SEC,
and include, but are not limited to:
| · |
the
availability 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;
|
| · |
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 a stable customer base, particularly
in the face
of increasingly aggressive competition from other service
providers;
|
| · |
our
ability to comply with all covenants in our indentures and credit
facilities, any violation of which would result in a violation
of the
applicable facility or indenture and could trigger a default
of other
obligations under cross-default
provisions;
|
| · |
our
ability to repay or refinance debt as it becomes
due;
|
| · |
our
ability to obtain programming at reasonable prices or to pass
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 taxing authorities, 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.
|
CHARTER
COMMUNICATIONS, INC. AND
SUBSIDIARIES
|
|||||||||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
|||||||||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE
DATA)
|
|||||||||||||||||||
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||||||||
|
Actual
|
Actual
|
%
Change
|
Actual
|
Actual
|
%
Change
|
||||||||||||||
|
REVENUES:
|
|||||||||||||||||||
|
Video
|
$
|
861
|
$
|
846
|
2
|
%
|
$
|
1,703
|
$
|
1,695
|
-
|
||||||||
|
High-speed
Internet
|
226
|
181
|
25
|
%
|
441
|
349
|
26
|
%
|
|||||||||||
|
Advertising
sales
|
76
|
73
|
4
|
%
|
140
|
132
|
6
|
%
|
|||||||||||
|
Commercial
|
69
|
58
|
19
|
%
|
134
|
114
|
18
|
%
|
|||||||||||
|
Other
|
91
|
81
|
12
|
%
|
176
|
163
|
8
|
%
|
|||||||||||
|
Total
revenues
|
1,323
|
1,239
|
7
|
%
|
2,594
|
2,453
|
6
|
%
|
|||||||||||
|
COSTS
AND EXPENSES:
|
|||||||||||||||||||
|
Programming
|
351
|
329
|
7
|
%
|
709
|
663
|
7
|
%
|
|||||||||||
|
Advertising
sales
|
25
|
25
|
-
|
50
|
48
|
4
|
%
|
||||||||||||
|
Service
|
193
|
161
|
20
|
%
|
369
|
316
|
17
|
%
|
|||||||||||
|
General
and administrative
|
225
|
208
|
8
|
%
|
427
|
416
|
3
|
%
|
|||||||||||
|
Marketing
|
31
|
36
|
(14
|
)%
|
66
|
67
|
(1
|
)%
|
|||||||||||
|
Operating
costs and expenses
|
825
|
759
|
9
|
%
|
1,621
|
1,510
|
7
|
%
|
|||||||||||
|
Adjusted
EBITDA
|
498
|
480
|
4
|
%
|
973
|
943
|
3
|
%
|
|||||||||||
|
Adjusted
EBITDA margin
|
38
|
%
|
39
|
%
|
38
|
%
|
38
|
%
|
|||||||||||
|
Depreciation
and amortization
|
378
|
364
|
759
|
734
|
|||||||||||||||
|
Asset
impairment charges
|
8
|
-
|
39
|
-
|
|||||||||||||||
|
(Gain)
loss on sale of assets, net
|
-
|
2
|
4
|
(104
|
)
|
||||||||||||||
|
Option
compensation expense, net
|
4
|
12
|
8
|
26
|
|||||||||||||||
|
Special
charges, net
|
(2
|
)
|
87
|
2
|
97
|
||||||||||||||
|
Income
from operations
|
110
|
15
|
161
|
190
|
|||||||||||||||
|
OTHER
INCOME AND EXPENSES:
|
|||||||||||||||||||
|
Interest
expense, net
|
(451
|
)
|
(410
|
)
|
(871
|
)
|
(803
|
)
|
|||||||||||
|
Gain
(loss) on derivative instruments and hedging activities,
net
|
(1
|
)
|
63
|
26
|
56
|
||||||||||||||
|
Loss
on debt to equity conversions
|
-
|
(15
|
)
|
-
|
(23
|
)
|
|||||||||||||
|
Gain
(loss) on extinguishment of debt
|
1
|
(21
|
)
|
8
|
(21
|
)
|
|||||||||||||
|
Gain
on investments
|
20
|
2
|
21
|
-
|
|||||||||||||||
|
(431
|
)
|
(381
|
)
|
(816
|
)
|
(791
|
)
|
||||||||||||
|
Loss
before minority interest and income taxes
|
(321
|
)
|
(366
|
)
|
(655
|
)
|
(601
|
)
|
|||||||||||
|
|
|||||||||||||||||||
|
Minority
interest
|
(3
|
)
|
(6
|
)
|
(6
|
)
|
(10
|
)
|
|||||||||||
|
Loss
before income taxes
|
(324
|
)
|
(372
|
)
|
(661
|
)
|
(611
|
)
|
|||||||||||
|
Income
tax expense
|
(31
|
)
|
(43
|
)
|
(46
|
)
|
(97
|
)
|
|||||||||||
|
Net
loss
|
(355
|
)
|
(415
|
)
|
(707
|
)
|
(708
|
)
|
|||||||||||
|
Dividends
on preferred stock - redeemable
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
(2
|
)
|
|||||||||||
|
Net
loss applicable to common stock
|
$
|
(356
|
)
|
$
|
(416
|
)
|
$
|
(709
|
)
|
$
|
(710
|
)
|
|||||||
|
Loss
per common share, basic and diluted
|
$
|
(1.18
|
)
|
$
|
(1.39
|
)
|
$
|
(2.34
|
)
|
$
|
(2.39
|
)
|
|||||||
|
Weighted
average common shares outstanding, basic and diluted
|
303,620,347
|
300,522,815
|
303,465,474
|
297,814,091
|
|||||||||||||||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 1 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
||||||||||
|
Six
Months Ended June 30,
|
||||||||||
|
2005
|
2004
|
|||||||||
|
Actual
|
Pro
Forma (a)
|
%
Change
|
||||||||
|
REVENUES:
|
||||||||||
|
Video
|
$
|
1,703
|
$
|
1,674
|
2
|
%
|
||||
|
High-speed
Internet
|
441
|
346
|
27
|
%
|
||||||
|
Advertising
sales
|
140
|
131
|
7
|
%
|
||||||
|
Commercial
|
134
|
112
|
20
|
%
|
||||||
|
Other
|
176
|
161
|
9
|
%
|
||||||
|
Total
revenues
|
2,594
|
2,424
|
7
|
%
|
||||||
|
COSTS
AND EXPENSES:
|
||||||||||
|
Programming
|
709
|
654
|
8
|
%
|
||||||
|
Advertising
sales
|
50
|
48
|
4
|
%
|
||||||
|
Service
|
369
|
313
|
18
|
%
|
||||||
|
General
and administrative
|
427
|
412
|
4
|
%
|
||||||
|
Marketing
|
66
|
67
|
(1
|
)%
|
||||||
|
Operating
costs and expenses
|
1,621
|
1,494
|
9
|
%
|
||||||
|
Adjusted
EBITDA
|
973
|
930
|
5
|
%
|
||||||
|
Adjusted
EBITDA margin.
|
38
|
%
|
38
|
%
|
||||||
|
Depreciation
and amortization
|
759
|
728
|
||||||||
|
Asset
impairment charges
|
39
|
-
|
||||||||
|
Loss
on sale of assets, net
|
4
|
1
|
||||||||
|
Option
compensation expense, net
|
8
|
26
|
||||||||
|
Special
charges, net
|
2
|
97
|
||||||||
|
Income
from operations
|
161
|
78
|
||||||||
|
OTHER
INCOME AND EXPENSES:
|
||||||||||
|
Interest
expense, net
|
(871
|
)
|
(799
|
)
|
||||||
|
Gain
on derivative instruments and hedging activities, net
|
26
|
56
|
||||||||
|
Loss
on debt to equity conversions
|
-
|
(23
|
)
|
|||||||
|
Gain
(loss) on extinguishment of debt
|
8
|
(21
|
)
|
|||||||
|
Gain
on investments
|
21
|
-
|
||||||||
|
(816
|
)
|
(787
|
)
|
|||||||
|
Loss
before minority interest and income taxes
|
(655
|
)
|
(709
|
)
|
||||||
|
|
||||||||||
|
Minority
interest
|
(6
|
)
|
(10
|
)
|
||||||
|
Loss
before income taxes
|
(661
|
)
|
(719
|
)
|
||||||
|
Income
tax expense
|
(46
|
)
|
(83
|
)
|
||||||
|
Net
loss
|
(707
|
)
|
(802
|
)
|
||||||
|
Dividends
on preferred stock - redeemable
|
(2
|
)
|
(2
|
)
|
||||||
|
Net
loss applicable to common stock
|
$
|
(709
|
)
|
$
|
(804
|
)
|
||||
|
Loss
per common share, basic and diluted
|
$
|
(2.34
|
)
|
$
|
(2.71
|
)
|
||||
|
Weighted
average common shares outstanding, basic and diluted
|
303,465,474
|
297,814,091
|
||||||||
|
(a)
Pro forma results reflect the sales of systems to Atlantic Broadband
Finance, LLC in March and April 2004 as if it occurred as of
January 1,
2004.
|
||||||||||
|
Actual
revenues exceeded pro forma revenues for the six months ended
June 30,
2004 by $29 million. Actual adjusted EBITDA exceeded pro forma
|
||||||||||
|
adjusted
EBITDA by $13 million for the six months ended June 30, 2004.
Pro forma
net loss exceeded actual net loss by $94 million for the six
months
|
||||||||||
|
ended
June 30, 2004. The unaudited pro forma financial information
has been
presented for comparative purposes and does not purport to be
indicative
|
||||||||||
|
of
the consolidated results of operations had these transactions
been
completed as of the assumed date or which may be obtained in
the future.
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. Second Quarter 2005 Earnings Release Page 2 of 8
|
CHARTER
COMMUNICATIONS, INC. AND
SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
|||||||
|
(DOLLARS
IN MILLIONS)
|
|||||||
|
June
30,
|
December
31,
|
||||||
|
2005
|
2004
|
||||||
|
ASSETS
|
|||||||
|
CURRENT
ASSETS:
|
|||||||
|
Cash
and cash equivalents
|
$
|
40
|
$
|
650
|
|||
|
Accounts
receivable, net of allowance for doubtful accounts
|
183
|
190
|
|||||
|
Prepaid
expenses and other current assets
|
82
|
82
|
|||||
|
Total
current assets
|
305
|
922
|
|||||
|
INVESTMENT
IN CABLE PROPERTIES:
|
|||||||
|
Property,
plant and equipment, net
|
6,075
|
6,289
|
|||||
|
Franchises,
net
|
9,839
|
9,878
|
|||||
|
Total
investment in cable properties, net
|
15,914
|
16,167
|
|||||
|
OTHER
NONCURRENT ASSETS
|
560
|
584
|
|||||
|
Total
assets
|
$
|
16,779
|
$
|
17,673
|
|||
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|||||||
|
CURRENT
LIABILITIES:
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
1,224
|
$
|
1,217
|
|||
|
Total
current liabilities
|
1,224
|
1,217
|
|||||
|
LONG-TERM
DEBT
|
19,247
|
19,464
|
|||||
|
DEFERRED
MANAGEMENT FEES - RELATED PARTY
|
14
|
14
|
|||||
|
OTHER
LONG-TERM LIABILITIES
|
682
|
681
|
|||||
|
MINORITY
INTEREST
|
659
|
648
|
|||||
|
PREFERRED
STOCK - REDEEMABLE
|
55
|
55
|
|||||
|
SHAREHOLDERS'
DEFICIT
|
(5,102
|
)
|
(4,406
|
)
|
|||
|
Total
liabilities and shareholders' deficit
|
$
|
16,779
|
$
|
17,673
|
|||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 3 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
|
(DOLLARS
IN MILLIONS)
|
|||||||
|
Six
Months Ended June 30,
|
|||||||
|
2005
|
2004
|
||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
|
Net
loss
|
$
|
(707
|
)
|
$
|
(708
|
)
|
|
|
Adjustments
to reconcile net loss to net cash flows from operating
activities:
|
|||||||
|
Minority
interest
|
6
|
10
|
|||||
|
Depreciation
and amortization
|
759
|
734
|
|||||
|
Asset
impairment charges
|
39
|
-
|
|||||
|
Option
compensation expense, net
|
8
|
22
|
|||||
|
Special
charges, net
|
(2
|
)
|
85
|
||||
|
Noncash
interest expense.
|
114
|
163
|
|||||
|
(Gain)
loss on derivative instruments and hedging activities, net
|
(26
|
)
|
(56
|
)
|
|||
|
(Gain)
loss on sale of assets, net
|
4
|
(104
|
)
|
||||
|
Loss
on debt to equity conversions
|
-
|
23
|
|||||
|
(Gain)
loss on extinguishment of debt
|
(14
|
)
|
18
|
||||
|
Gain
on investments
|
(21
|
)
|
-
|
||||
|
Deferred
income taxes
|
43
|
95
|
|||||
|
Changes
in operating assets and liabilities, net of effects from
dispositions:
|
|||||||
|
Accounts
receivable
|
1
|
1
|
|||||
|
Prepaid
expenses and other assets
|
-
|
3
|
|||||
|
Accounts
payable, accrued expenses and other
|
(23
|
)
|
(118
|
)
|
|||
|
Net
cash flows from operating activities
|
181
|
168
|
|||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
|
Purchases
of property, plant and equipment
|
(542
|
)
|
(390
|
)
|
|||
|
Change
in accrued expenses related to capital expenditures
|
45
|
(52
|
)
|
||||
|
Proceeds
from sale of assets
|
8
|
729
|
|||||
|
Purchases
of investments
|
(3
|
)
|
(12
|
)
|
|||
|
Proceeds
from investments
|
17
|
-
|
|||||
|
Other,
net
|
(2
|
)
|
(2
|
)
|
|||
|
Net
cash flows from investing activities
|
(477
|
)
|
273
|
||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
|
Borrowings
of long-term debt
|
635
|
2,813
|
|||||
|
Repayments
of long-term debt
|
(946
|
)
|
(3,160
|
)
|
|||
|
Payments
for debt issuance costs
|
(3
|
)
|
(97
|
)
|
|||
|
Net
cash flows from financing activities
|
(314
|
)
|
(444
|
)
|
|||
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(610
|
)
|
(3
|
)
|
|||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
650
|
127
|
|||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
40
|
$
|
124
|
|||
|
CASH
PAID FOR INTEREST
|
$
|
744
|
$
|
609
|
|||
|
NONCASH
TRANSACTIONS:
|
|||||||
|
Issuance
of debt by Charter Communications Operating, LLC
|
$
|
333
|
$
|
-
|
|||
|
Retirement
of Charter Communications Holdings, LLC debt
|
$
|
(346
|
)
|
$
|
-
|
||
|
Debt
exchanged for Charter Class A common stock
|
$
|
-
|
$
|
30
|
|||
|
NOTE:
Certain 2004 amounts have been reclassified to conform with
the 2005
presentation.
|
|||||||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 4 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|||||||||||||
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
|||||||||||||
|
Approximate
as of
|
|||||||||||||
|
June
30,
|
March
31,
|
December
31,
|
June
30,
|
|
|||||||||
|
|
|
2005
(a)
|
|
2005
(a)
|
|
2004
(a)
|
|
2004
(a)
|
|||||
|
Customer
Summary:
|
|||||||||||||
|
Customer
Relationships:
|
|||||||||||||
|
Residential
(non-bulk) analog video customers (b)
|
5,683,400
|
5,732,600
|
5,739,900
|
5,892,600
|
|||||||||
|
Multi-dwelling
(bulk) and commercial unit customers (c)
|
259,700
|
252,200
|
251,600
|
240,600
|
|||||||||
|
Total
analog video customers (b) (c)
|
5,943,100
|
5,984,800
|
5,991,500
|
6,133,200
|
|||||||||
|
Non-video
customers (b)
|
248,400
|
241,700
|
228,700
|
176,900
|
|||||||||
|
Total
customer relationships (d)
|
6,191,500
|
6,226,500
|
6,220,200
|
6,310,100
|
|||||||||
|
Average
monthly revenue per analog video customer (e)
|
$
|
73.94
|
$
|
70.75
|
$
|
70.50
|
$
|
67.02
|
|||||
|
Bundled
customers (f)
|
1,783,400
|
1,743,800
|
1,659,700
|
1,544,600
|
|||||||||
|
Revenue
Generating Units:
|
|||||||||||||
|
Analog
video customers (b) (c)
|
5,943,100
|
5,984,800
|
5,991,500
|
6,133,200
|
|||||||||
|
Digital
video customers (g)
|
2,685,600
|
2,694,600
|
2,674,700
|
2,650,200
|
|||||||||
|
Residential
high-speed Internet customers (h)
|
2,022,200
|
1,978,400
|
1,884,400
|
1,711,400
|
|||||||||
|
Telephone
customers (i)
|
67,800
|
55,300
|
45,400
|
31,200
|
|||||||||
|
Total
revenue generating units (j)
|
10,718,700
|
10,713,100
|
10,596,000
|
10,526,000
|
|||||||||
|
Video
Cable Services:
|
|||||||||||||
|
Analog
Video:
|
|||||||||||||
|
Estimated
homes passed (k)
|
12,287,500
|
12,214,900
|
12,085,900
|
11,979,300
|
|||||||||
|
Analog
video customers (b)(c)
|
5,943,100
|
5,984,800
|
5,991,500
|
6,133,200
|
|||||||||
|
Estimated
penetration of analog video homes passed (b) (c) (k) (l)
|
48
|
%
|
49
|
%
|
50
|
%
|
51
|
%
|
|||||
|
Average
monthly analog revenue per analog video customer (m)
|
$
|
38.51
|
$
|
37.80
|
$
|
37.52
|
$
|
37.27
|
|||||
|
Analog
video customers quarterly net loss (b) (c) (n)
|
(41,700
|
)
|
(6,700
|
)
|
(83,100
|
)
|
(58,800
|
)
|
|||||
|
Digital
Video:
|
|||||||||||||
|
Estimated
digital video homes passed (k)
|
12,156,300
|
12,104,600
|
12,000,500
|
11,851,600
|
|||||||||
|
Digital
video customers (g)
|
2,685,600
|
2,694,600
|
2,674,700
|
2,650,200
|
|||||||||
|
Estimated
penetration of digital homes passed (g) (k) (l)
|
22
|
%
|
22
|
%
|
22
|
%
|
22
|
%
|
|||||
|
Digital
penetration of analog video customers (b) (c) (g) (o)
|
45
|
%
|
45
|
%
|
45
|
%
|
43
|
%
|
|||||
|
Digital
set-top terminals deployed
|
3,836,600
|
3,829,200
|
3,791,600
|
3,751,900
|
|||||||||
|
Average
incremental monthly digital revenue per digital video customer
(m)
|
$
|
25.65
|
$
|
24.58
|
$
|
23.99
|
$
|
23.87
|
|||||
|
Digital
video customers quarterly net gain (loss) (g) (n)
|
(9,000
|
)
|
19,900
|
(14,200
|
)
|
(7,200
|
)
|
||||||
|
Non-Video
Cable Services:
|
|||||||||||||
|
High-Speed
Internet Services:
|
|||||||||||||
|
Estimated
high-speed Internet homes passed (k)
|
10,984,100
|
10,944,700
|
10,682,800
|
10,475,100
|
|||||||||
|
Residential
high-speed Internet customers (h)
|
2,022,200
|
1,978,400
|
1,884,400
|
1,711,400
|
|||||||||
|
Estimated
penetration of high-speed Internet homes passed (h) (k)
(l)
|
18
|
%
|
18
|
%
|
18
|
%
|
16
|
%
|
|||||
|
Average
monthly high-speed Internet revenue per high-speed Internet customer
(m)
|
$
|
37.66
|
$
|
37.11
|
$
|
36.53
|
$
|
35.87
|
|||||
|
Residential
high-speed Internet customers quarterly net gain (h) (n)
|
43,800
|
94,000
|
64,500
|
58,400
|
|||||||||
|
Telephone
Services:
|
|||||||||||||
|
Telephone
customers (i)
|
67,800
|
55,300
|
45,400
|
31,200
|
|||||||||
|
Average
monthly telephone revenue per telephone customer (m)
|
$
|
41.26
|
$
|
41.34
|
$
|
41.95
|
$
|
44.85
|
|||||
|
Telephone
customers quarterly net gain (i) (n)
|
12,500
|
9,900
|
5,200
|
4,900
|
|||||||||
|
See
footnotes to unaudited summary of operating statistics on page
6 of this
Addendum.
|
|||||||||||||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 5 of 8
|
(a)
“Customers” include all persons our corporate billing records show as
receiving service (regardless of their payment status), except
for
complimentary accounts (such as our employees). At June 30, 2005,
March
31, 2005, December 31, 2004 and June 30, 2004, “customers” include
approximately 45,100, 43,100, 44,700 and 58,700 persons whose
accounts
were over 60 days past due in payment, approximately 8,200, 7,000,
5,200
and 6,300 persons whose accounts were over 90 days past due in
payment and
approximately 4,500, 3,600, 2,300 and 2,000 of which were over
120 days
past due in payment, respectively.
|
|||||||||||||
|
(b)
“Analog video customers” include all customers who receive video services
(including those who also purchase high-speed Internet and telephone
services) but excludes approximately 248,400, 241,700, 228,700
and 176,900
customer relationships at June 30, 2005, March 31, 2005, December
31, 2004
and June 30, 2004, respectively, who receive high-speed Internet
service
only or telephone service only and who are only counted as high-speed
Internet customers or telephone customers, and therefore are
shown as
"non-video" customers.
|
|||||||||||||
|
(c)
Included within "video customers" are those in commercial and
multi-dwelling structures, which are calculated on an equivalent
bulk unit
(“EBU”) basis. EBU is calculated for a system by dividing the bulk
price
charged to accounts in an area by the most prevalent price charged
to
non-bulk residential customers in that market for the comparable
tier of
service. The EBU method of estimating analog video customers
is consistent
with the methodology used in determining costs paid to programmers
and has
been consistently applied year over year. As we increase our
effective
analog video prices to residential customers without a corresponding
increase in the prices charged to commercial service or multi-dwelling
customers, our EBU count will decline even if there is no real
loss in
commercial service or multi-dwelling customers.
|
|||||||||||||
|
(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 publicly traded cable operators, including
Charter.
|
|||||||||||||
|
(e)
"Average monthly revenue per analog video customer" is calculated
as total
quarterly revenue divided by three divided by average analog
video
customers during the respective quarter.
|
|||||||||||||
|
(f)
"Bundled customers" include customers receiving a combination
of at least
two different types of service, including Charter's video service,
high-speed Internet service or telephone. "Bundled customers"
do not
include customers who only subscribe to video service.
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(g)
“Digital video customers” include all households that have one or more
digital set-top terminals. Included in "digital video customers"
on June
30, 2005, March 31, 2005, December 31, 2004 and June 30, 2004
are
approximately 9,700, 10,000, 10,100 and 11,400 customers, respectively,
that receive digital video service directly through satellite
transmission.
|
|||||||||||||
|
(h)
"High-speed Internet customers” represent those customers who subscribe to
our high-speed Internet service. At June 30, 2005, March 31,
2005,
December 31, 2004 and June 30, 2004, approximately 1,787,600,
1,749,000,
1,667,000 and 1,543,000 of these high-speed Internet customers,
respectively, receive video services from us and are included
within our
video statistics above.
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
“Telephone customers” include all households who subscribe to our
telephone service.
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(j)
"Revenue generating units" represent the sum total of all primary
analog
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 analog 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 that have been adopted by eleven
publicly
traded cable operators, including Charter.
|
|||||||||||||
|
(k)
“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.
|
|||||||||||||
|
(l)
Penetration represents customers as a percentage of homes passed
for the
service indicated.
|
|||||||||||||
|
(m)
"Average monthly revenue" represents quarterly revenue for the
service
indicated divided by three divided by the average number of customers
for
the service indicated during the respective quarter.
|
|||||||||||||
|
(n)
"Quarterly net gain (loss)" represents the net gain or loss in
the
respective quarter for the service indicated.
|
|||||||||||||
|
(o)
Represents the number of digital video customers as a percentage
of analog
video customers.
|
|||||||||||||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 6 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|||||||||||||
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP
MEASURES
|
|||||||||||||
|
(DOLLARS
IN MILLIONS)
|
|||||||||||||
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Actual
|
Actual
|
Actual
|
Actual
|
||||||||||
|
Adjusted
EBITDA (a)
|
$
|
498
|
$
|
480
|
$
|
973
|
$
|
943
|
|||||
|
Less:
Purchases of property, plant and equipment
|
(331
|
)
|
(200
|
)
|
(542
|
)
|
(390
|
)
|
|||||
|
Un-levered
free cash flow
|
167
|
280
|
431
|
553
|
|||||||||
|
Less:
Interest on cash pay obligations (b)
|
(386
|
)
|
(340
|
)
|
(757
|
)
|
(640
|
)
|
|||||
|
Free
cash flow
|
(219
|
)
|
(60
|
)
|
(326
|
)
|
(87
|
)
|
|||||
|
Purchases
of property, plant and equipment
|
331
|
200
|
542
|
390
|
|||||||||
|
Special
charges, net
|
-
|
(2
|
)
|
(4
|
)
|
(12
|
)
|
||||||
|
Other,
net
|
(3
|
) |
(5
|
)
|
(9
|
)
|
(9
|
)
|
|||||
|
Change
in operating assets and liabilities
|
(81
|
)
|
(80
|
)
|
(22
|
)
|
(114
|
)
|
|||||
|
Net
cash flows from operating activities
|
$
|
28
|
$
|
53
|
$
|
181
|
$
|
168
|
|||||
|
Six
Months Ended June 30,
|
|||||||
|
2005
|
2004
|
||||||
|
Actual
|
Pro
Forma
|
||||||
|
Adjusted
EBITDA (a)
|
$
|
973
|
$
|
930
|
|||
|
Less:
Purchases of property, plant and equipment
|
(542
|
)
|
(388
|
)
|
|||
|
Un-levered
free cash flow
|
431
|
542
|
|||||
|
Less:
Interest on cash pay obligations (b)
|
(757
|
)
|
(636
|
)
|
|||
|
Free
cash flow
|
(326
|
)
|
(94
|
)
|
|||
|
Purchases
of property, plant and equipment
|
542
|
388
|
|||||
|
Special
charges, net
|
(4
|
)
|
(12
|
)
|
|||
|
Other,
net
|
(9
|
)
|
(14
|
)
|
|||
|
Change
in operating assets and liabilities
|
(22
|
)
|
(103
|
)
|
|||
|
Net
cash flows from operating activities
|
$
|
181
|
$
|
165
|
|||
|
(a)
See page 1 of this addendum for detail of the components
included within
adjusted EBITDA.
|
|||||||||||||
|
(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.
|
|||||||||||||
|
The
above schedules are presented in order to reconcile adjusted
EBITDA,
un-levered free cash flows and free cash flows, all non-GAAP
|
|||||||||||||
|
measures,
to the most directly comparable GAAP measures in accordance
with Section
401(b) of the Sarbanes-Oxley Act.
|
|||||||||||||
|
Pro
forma results reflect the sales of systems to Atlantic Broadband
Finance,
LLC in March and April 2004, as if it occurred as of January
1, 2004.
|
|||||||||||||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 7 of 8
|
CHARTER
COMMUNICATIONS, INC. AND
SUBSIDIARIES
|
|||||||||||||
|
CAPITAL
EXPENDITURES
|
|||||||||||||
|
(DOLLARS
IN
MILLIONS)
|
|||||||||||||
|
Three
Months Ended June 30,
|
Six
Months Ended June 30,
|
||||||||||||
|
2005
|
2004
|
2005
|
2004
|
||||||||||
|
Customer
premise equipment (a)
|
$
|
142
|
$
|
112
|
$ |
228
|
$
|
226
|
|||||
|
Scalable
infrastructure (b)
|
47
|
14
|
89
|
33
|
|||||||||
|
Line
extensions (c)
|
48
|
30
|
77
|
53
|
|||||||||
|
Upgrade/Rebuild
(d)
|
12
|
5
|
22
|
16
|
|||||||||
|
Support
capital (e)
|
82
|
39
|
126
|
62
|
|||||||||
|
Total
capital expenditures (f)
|
$
|
331
|
$
|
200
|
$ |
542
|
$
|
390
|
|||||
|
(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 in accordance
with
SFAS 51 and customer premise equipment (e.g., set-top terminals
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).
|
|||||||||||||
|
(f)
Represents all capital expenditures made during the three and
six months
ended June 30, 2005 and 2004,
respectively.
|
|||||||||||||
Addendum to Charter Communications, Inc. Second Quarter 2005 Earnings Release Page 8 of 8