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, 2006
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 OPERATONS AND FINANCIAL CONDITION.
On
October 31, 2006, Charter Communications, Inc.
issued a press release announcing its results for the third quarter September
30, 2006. 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 October 31, 2006. *
|
*
furnished herewith
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. The Company will not undertake to revise forward-looking projections
to reflect events after this date. 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,” “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 reports or documents that we file from time to time with the
SEC, and
include, but are not limited to:
| · |
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 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 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 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;
|
| · |
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.
|
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.
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:
October 31, 2006
|
|
By:/s/
Kevin D. Howard
Name:
Kevin D. Howard
Title:
Vice
President and Chief Accounting
Officer
|
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated October 31, 2006.
*
|
*
furnished herewith
Exhibit
99.1
NEWS
FOR
RELEASE: 7:00 a.m. CT, Tuesday, October 31, 2006
Charter
Reports Third-Quarter 2006
Financial
and Operating Results
Strong
high-speed Internet and phone growth through bundled offers drive increased
quarterly revenue and adjusted EBITDA growth
St.
Louis, MO -
October
31, 2006 - Charter Communications, Inc. (Nasdaq: CHTR) (along with its
subsidiaries, the “Company” or “Charter”) today reported its third-quarter 2006
financial results.
“During
the third quarter we increased marketing spend targeting high-value
relationships, and accelerated phone service launches to enable bundled service
offerings and to generate improved revenue growth,” said Neil Smit, president
and chief executive officer. “We’re building momentum, and I believe the
operating improvements we’ve implemented over the past year, along with ongoing
refinements to our geographic footprint, have positioned us for continued
growth,” said Mr. Smit.
| · |
Third-quarter
revenues grew 10.9% year over year on a pro
forma
basis, primarily driven by strong high-speed Internet (HSI) and phone
performance.
|
| · |
Quarterly
adjusted EBITDA increased 6.9% compared to the third quarter of 2005
on a
pro
forma
basis. (Pro
forma
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.)
|
| · |
During
the third quarter of 2006, Charter completed sales of geographically
non-strategic cable operating systems (the “Third Quarter 2006 Asset
Sales”), serving a total of 390,300 analog video customers, and signed
an
agreement to sell additional systems serving 33,000 analog video
customers. Upon closing of the asset sale signed in the third quarter
of
2006, Charter expects a 45% headend reduction and an increase in
customers
per headend of approximately 67% compared to year end
2005.
|
| · |
On
a pro
forma
basis, bundled customers increased 19% compared to third quarter
2005 and
revenue generating units (RGUs) increased 210,300 during the third
quarter
of 2006, a 20% increase compared to the 175,500 RGUs added in the
third
quarter of 2005.
|
1
| · |
Telephone
customers climbed to 339,600 as of September 30, 2006, up more than
30%
from June 30, 2006. Telephone homes passed grew to approximately
5.9
million as of September 30, 2006.
|
Pro
forma
results
in this release reflect the Third Quarter 2006 Asset Sales, the acquisition
in
January 2006 and the sale 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 and nine months
ended September 30, 2005 and 2006 and pro forma customer statistics are provided
in the addendum of this news release.
Pro
Forma Operating Results
Charter’s
consistent focus on targeted marketing, bundled service offerings, and continued
deployment of telephone service drove RGU growth. As of the end of the third
quarter 2006, 37% of Charter’s customers subscribed to a bundled package, up
from 31% a year ago. Charter added a net 210,300 RGUs during the third quarter
on a pro
forma
basis
including:
| § |
HSI
customers increased by approximately
88,100.
|
| § |
Telephone
customers increased by approximately 82,000.
|
| § |
Digital
video customers increased by approximately
49,400.
|
| § |
Analog
video customers decreased by approximately 9,200.
|
As
of
September
30, 2006, Charter served approximately 10,927,300 RGUs, comprised of 5,476,600
analog video, 2,767,900 digital video, 2,343,200 HSI, and 339,600 telephone
customers.
Total
average monthly revenue per video customer (ARPU) increased 11.9%, with video
ARPU increasing 5.6% and HSI ARPU increasing 4.3%, for the third quarter
of
2006, as compared to the same period in 2005.
Strong
telephone growth continued, with total customers increasing over 30% since
the
second quarter of 2006. During the third quarter, Charter added 1.2 million
telephone homes passed, bringing total phone homes passed to approximately
5.9 million as of September 30, 2006. The Company expects to pass between
6.5 million and 7 million homes with telephone service by year-end 2006.
In
markets where telephone
2
service
is available, customers take advantage of bundled offers, and Charter generally
experiences higher customer retention, increased video and HSI customer
growth
rates, higher revenue per video customer, and improved customer satisfaction,
as
customers take advantage of Charter’s bundled product offerings.
Third-Quarter
Pro Forma Results
On
a
pro
forma
basis,
third quarter revenues increased 10.9%, or $135 million, to $1.377 billion,
resulting from both a larger customer base versus the prior year and increases
in average revenue per customer. Pro
forma
HSI
revenues increased 21.0%, up $46 million year over year, and telephone revenues
more than tripled to $37 million from $11 million in the third quarter of
2005.
Commercial and advertising revenues each increased by $10 million year over
year
on a pro
forma
basis,
or 15.2% and 14.1%, respectively. Video revenues increased 4.5%, up
$36 million year over year on a pro
forma basis.
Third-quarter
2006 pro
forma
operating costs and expenses increased $105 million, or 13.0%, to
$914 million, reflecting continued emphasis on building and accelerating
rollout of our phone product and expenditures to support higher rates of
customer growth and retention, as well as higher programming costs associated
with annual rate increases and higher advanced services purchases.
Third-Quarter
GAAP Results
These
results include the operations of the assets sold in the third quarter of
2006.
As discussed below, the operating results of the West Virginia and Virginia
cable systems are included in discontinued operations.
Third-quarter
2006 revenues were $1.388 billion, a year over year increase of 9.7%, and
operating costs and expenses from continuing operations increased 11.8%,
to
$921 million.
Operating
income from continuing operations increased by $12 million year over year,
to
$66 million for the third quarter of 2006. Revenue growth exceeded operating
costs and expense growth during the period by $26 million; depreciation and
amortization expenses declined by $28 million year over year; and the year
over year comparison benefited from the $19 million hurricane asset retirement
loss in 2005. These
3
improvements
were partially offset by $60 million of asset impairment charges for systems
that met the criteria of assets held for sale in the third quarter of 2006.
Net
loss
applicable to common stock and loss per common share for the third quarter
of
2006 were $133 million and 41 cents, respectively. For the third quarter of
2005, Charter reported net income applicable to common stock of
$75 million, and earnings per common share were 24 cents and 9 cents on a
basic and fully diluted basis, respectively. The $208 million change to net
income (loss) applicable to common stock was primarily due to a $362 million
lower gain on extinguishment of debt related to the September 2006 debt exchange
compared to the gain related to the September 2005 debt exchanges and a $40
million increase in income tax expense, partially offset by a $196 million
increase in income from discontinued operations.
Asset
Sales
In
the
third quarter of 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 July 2006, Charter
completed the sales of systems in West Virginia and Virginia, serving
approximately 239,700 analog video customers, to Cebridge Acquisition Co.,
LLC
(the “Cebridge transaction”) and systems in Illinois and Kentucky, serving
approximately 73,300 analog video customers, to NewWave Communications (the
“NewWave transaction”). In September 2006, Charter completed
the
sale of
systems in northern and southeastern Nevada, and in Colorado, New Mexico,
and
Utah, serving 43,000 analog video customers, to subsidiaries of Orange Broadband
Holding Company, LLC (the “Orange transaction”). Additional sales were completed
during the third quarter serving a total of 34,300 analog video customers
in
South Carolina, Oklahoma, Kansas, Missouri and Texas.
Charter
recorded a gain on the sale related to the Cebridge transaction of approximately
$200 million in the third quarter of 2006. The assets sold in the New Wave
transaction and the Orange transaction were written down to fair value less
estimated costs to sell, resulting in asset impairment charges during the
first
quarter of 2006 of approximately $99 million. The Company also recorded $60
million of asset
4
impairment
charges related to systems that met the criteria of assets held for sale
during
the third quarter of 2006.
Discontinued
Operations
The
results of operations for the West Virginia and Virginia cable systems, which
were sold to Cebridge in July 2006, have been presented as discontinued
operations, net of tax, for the three months and nine months ended September
30,
2006 and 2005, respectively. Charter has determined that these systems comprise
operations and cash flows that, for financial reporting purposes, meet the
criteria for discontinued operations in accordance with Generally Accepted
Accounting Principles (GAAP). Income from discontinued operations, net of
tax,
for the third quarter of 2006 and 2005 was $200 million and $4 million,
respectively. Income from discontinued operations for the three months and
nine
months ended September 30, 2006 and 2005 was $234 million and $33 million,
respectively.
Liquidity
Net
cash
flows provided by operating activities for the third quarter of 2006 were
$143
million, compared to net cash used in operating activities of $63 million
for
the year-ago quarter. The increase is primarily the result of the $261 million
increase in cash provided by operating assets and liabilities, partially
offset
by an increase in interest on cash pay obligations of $57 million.
Net
cash
flows provided by operating activities for the nine months ended September
2006
were $348 million, compared to $118 million for the year-ago period. The
increase is primarily the result of the $368 million increase in cash provided
by operating assets and liabilities, partially offset by an increase in interest
on cash pay obligations of $156 million.
Adjusted
EBITDA totaled $467 million for the third quarter of 2006, an increase of
5.9%, compared with the year-ago quarter. Adjusted EBITDA totaled $1.411
billion
for the nine months ended September 30, 2006, a 3.3% increase compared with
the
year-ago period.
Pro
forma
adjusted
EBITDA totaled $463 million for the third quarter of 2006, an increase of
6.9%, compared with the year-ago quarter. Pro
forma
adjusted
EBITDA
5
totaled
$1.389 billion for the nine months ended September 30, 2006, a 3.6% increase
compared with the year-ago period.
Expenditures
for property, plant, and equipment for the third quarter of 2006 were $256
million, compared to third-quarter 2005 expenditures of $273 million. The
decrease in capital expenditures reflects decreases in spending on support
capital and line extensions, partially offset by a year over year increase
in
spending for customer premise equipment. For the nine months ended September
30,
2006, capital expenditures were $795 million, compared to $815 million for
the
same year-ago period. Increases in spending on customer premise equipment
and
scalable infrastructure were offset by decreases in support capital and line
extensions. During 2006, Charter expects capital expenditures to total
approximately $1.1 billion.
Charter
reported negative free cash flow of $234 million for the third quarter of
2006,
compared to negative free cash flow of $198 million for the same year-ago
quarter. Growth in revenues in excess of operating costs and expenses, and
decreased capital expenditures, were offset by increased interest on cash-pay
obligations. For the nine months ended September 30, 2006, Charter reported
negative free cash flow of $639 million, compared to negative free cash flow
of
$524 million for the year-ago period. 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 by $21 million and a $20
million
decrease in capital expenditures.
As
of
September 30, 2006, Charter had $18.8 billion in long-term debt and $85 million
of cash on hand. Charter’s total potential availability under its credit
facilities as of September 30, 2006 was approximately $1.6 billion, although
the
actual availability at that time was limited to $673 million due to covenant
restrictions.
Debt
and Convertible Note Exchanges
In
September 2006, Charter Communications Holdings, LLC (“Charter Holdings”) and
its wholly owned subsidiaries, CCH I, LLC (“CCH I”) and CCH II, LLC (“CCH II”),
completed the exchange of approximately $797 million in total principal amount
of outstanding debt securities of Charter Holdings. Holders of Charter Holdings
notes due in 2009-2010 tendered $308 million principal amount of notes for
$250
million principal amount of new 10.25% CCH II notes due 2013 and $37 million
principal
6
amount
of
11% CCH I notes due 2015. Holders of Charter Holdings notes due 2011-2012
tendered $490 million principal amount of notes for $425 million principal
amount of 11% CCH I notes due 2015. Also in September 2006, CCHC, LLC (“CCHC”)
and CCH II completed the exchange of $450 million principal amount of Charter’s
outstanding 5.875% senior convertible notes due 2009 for $188 million in
cash,
45 million shares of Charter’s Class A common stock, and $146 million principal
amount of 10.25% CCH II notes due 2010.
Use
of Non-GAAP Financial Metrics
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
7
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
$31 million and $33 million for the three months ended September 30, 2006
and 2005, respectively, which amounts are added back for the purposes of
calculating compliance with leverage covenants. As of September 30, 2006,
Charter and its subsidiaries are in compliance with their debt covenants
and
expect to remain in compliance for the next 12 months.
Additional
Information Available on Website
A
slide
presentation to accompany the third quarter 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 in 2005 and the first three quarters 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 nine months
ended
September 30, 2005 and 2006 and pro forma customer statistics are also provided
in the addendum of this news release.
8
Conference
Call
The
Company will host a conference call on Tuesday, October 31, 2006, 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 “Investor and News Center” at the bottom left 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 November 7, 2006. The passcode for
the
replay is 6981456.
About
Charter Communications®
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.
#
#
#
Contact:
Media: Analysts:
Anita
Lamont Mary
Jo
Moehle
314/543-2215 314/543-2397
9
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. The Company will not undertake to revise forward-looking projections
to reflect events after this date. 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,” “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 reports or documents that we file from time to time with the
SEC,
and include, but are not limited to:
| · |
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 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 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 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;
|
| · |
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.
|
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
|
|||||||||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
|||||||||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE
DATA)
|
|||||||||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||||||||
|
Actual
|
Actual
|
%
Change
|
Actual
|
Actual
|
%
Change
|
||||||||||||||
|
REVENUES:
|
|||||||||||||||||||
|
Video
|
$
|
836
|
$
|
811
|
3.1
|
%
|
$
|
2,520
|
$
|
2,434
|
3.5
|
%
|
|||||||
|
High-speed
Internet
|
267
|
222
|
20.3
|
%
|
773
|
647
|
19.5
|
%
|
|||||||||||
|
Telephone
|
37
|
9
|
311.1
|
%
|
86
|
23
|
273.9
|
%
|
|||||||||||
|
Advertising
sales
|
81
|
72
|
12.5
|
%
|
228
|
207
|
10.1
|
%
|
|||||||||||
|
Commercial
|
78
|
68
|
14.7
|
%
|
227
|
196
|
15.8
|
%
|
|||||||||||
|
Other
|
89
|
83
|
7.2
|
%
|
257
|
239
|
7.5
|
%
|
|||||||||||
|
Total
revenues
|
1,388
|
1,265
|
9.7
|
%
|
4,091
|
3,746
|
9.2
|
%
|
|||||||||||
|
COSTS
AND EXPENSES:
|
|||||||||||||||||||
|
Programming
|
371
|
343
|
8.2
|
%
|
1,126
|
1,021
|
10.3
|
%
|
|||||||||||
|
Service
|
216
|
196
|
10.2
|
%
|
624
|
552
|
13.0
|
%
|
|||||||||||
|
Advertising
sales
|
28
|
25
|
12.0
|
%
|
80
|
72
|
11.1
|
%
|
|||||||||||
|
General
and administrative
|
250
|
223
|
12.1
|
%
|
714
|
633
|
12.8
|
%
|
|||||||||||
|
Marketing
|
56
|
37
|
51.4
|
%
|
136
|
102
|
33.3
|
%
|
|||||||||||
|
Operating
costs and expenses
|
921
|
824
|
11.8
|
%
|
2,680
|
2,380
|
12.6
|
%
|
|||||||||||
|
Adjusted
EBITDA
|
467
|
441
|
5.9
|
%
|
1,411
|
1,366
|
3.3
|
%
|
|||||||||||
|
Adjusted
EBITDA margin
|
33.6
|
%
|
34.9
|
%
|
34.5
|
%
|
36.5
|
%
|
|||||||||||
|
Depreciation
and amortization
|
334
|
362
|
1,024
|
1,092
|
|||||||||||||||
|
Asset
impairment charges
|
60
|
-
|
159
|
39
|
|||||||||||||||
|
Loss
on sale of assets, net
|
2
|
1
|
2
|
5
|
|||||||||||||||
|
Option
compensation expense, net
|
3
|
3
|
10
|
11
|
|||||||||||||||
|
Hurricane
asset retirement loss
|
-
|
19
|
-
|
19
|
|||||||||||||||
|
Special
charges, net
|
2
|
2
|
12
|
4
|
|||||||||||||||
|
|
|||||||||||||||||||
|
Operating
income from continuing operations
|
66
|
54
|
204
|
196
|
|||||||||||||||
|
OTHER
INCOME AND (EXPENSES):
|
|||||||||||||||||||
|
Interest
expense, net
|
(466
|
)
|
(462
|
)
|
(1,409
|
)
|
(1,333
|
)
|
|||||||||||
|
Gain
(loss) on derivative instruments and hedging activities,
net
|
(3
|
)
|
17
|
8
|
43
|
||||||||||||||
|
Gain
on extinguishment of debt
|
128
|
490
|
101
|
498
|
|||||||||||||||
|
Other,
net
|
6
|
(3
|
)
|
12
|
12
|
||||||||||||||
|
(335
|
)
|
42
|
(1,288
|
)
|
(780
|
)
|
|||||||||||||
|
Income
(loss) from continuing operations before income taxes
|
(269
|
)
|
96
|
(1,084
|
)
|
(584
|
)
|
||||||||||||
|
|
|||||||||||||||||||
|
Income
tax expense
|
(64
|
)
|
(24
|
)
|
(124
|
)
|
(80
|
)
|
|||||||||||
|
Income
(loss) from continuing operations
|
(333
|
)
|
72
|
(1,208
|
)
|
(664
|
)
|
||||||||||||
|
Income
(loss) from discontinued operations, net of tax
|
200
|
4
|
234
|
33
|
|||||||||||||||
|
Net
income (loss)
|
(133
|
)
|
76
|
(974
|
)
|
(631
|
)
|
||||||||||||
|
Dividends
on preferred stock - redeemable
|
-
|
(1
|
)
|
-
|
(3
|
)
|
|||||||||||||
|
Net
income (loss) applicable to common stock
|
$
|
(133
|
)
|
$
|
75
|
$
|
(974
|
)
|
$
|
(634
|
)
|
||||||||
|
EARNINGS
(LOSS) PER SHARE:
|
|||||||||||||||||||
|
Income
(loss) from continuing operations, basic
|
$
|
(1.02
|
)
|
$
|
0.23
|
$
|
(3.77
|
)
|
$
|
(2.16
|
)
|
||||||||
|
Income
(loss) from continuing operations, diluted
|
$
|
(1.02
|
)
|
$
|
0.08
|
$
|
(3.77
|
)
|
$
|
(2.16
|
)
|
||||||||
|
Net
income (loss), basic
|
$
|
(0.41
|
)
|
$
|
0.24
|
$
|
(3.04
|
)
|
$
|
(2.06
|
)
|
||||||||
|
Net
income (loss), diluted
|
$
|
(0.41
|
)
|
$
|
0.09
|
$
|
(3.04
|
)
|
$
|
(2.06
|
)
|
||||||||
|
Weighted
average common shares outstanding, basic
|
326,910,632
|
316,214,740
|
320,680,698
|
307,761,930
|
|||||||||||||||
|
Weighted
average common shares outstanding, diluted
|
326,910,632
|
1,012,591,842
|
320,680,698
|
307,761,930
|
|||||||||||||||
Addendum
to Charter Communications, Inc. Third Quarter 2006 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 DATA)
|
|||||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
|
Pro
Forma (a)
|
Pro
Forma (a)
|
%
Change
|
Pro
Forma (a)
|
Pro
Forma (a)
|
%
Change
|
||||||||||
|
REVENUES:
|
|||||||||||||||
|
Video
|
$
|
830
|
$
|
794
|
4.5%
|
$
|
2,478
|
$
|
2,383
|
4.0%
|
|||||
|
High-speed
Internet
|
|
265
|
219
|
|
21.0%
|
|
763
|
639
|
19.4%
|
||||||
|
Telephone
|
37
|
11
|
236.4%
|
86
|
28
|
207.1%
|
|||||||||
|
Advertising
sales
|
|
81
|
71
|
|
14.1%
|
|
225
|
204
|
10.3%
|
||||||
|
Commercial
|
|
76
|
|
66
|
15.2%
|
|
220
|
190
|
15.8%
|
||||||
|
Other
|
|
88
|
81
|
8.6%
|
|
252
|
233
|
8.2%
|
|||||||
|
Total
revenues
|
|
1,377
|
1,242
|
10.9%
|
|
4,024
|
3,677
|
9.4%
|
|||||||
|
|
|
||||||||||||||
|
COSTS
AND EXPENSES:
|
|||||||||||||||
|
Programming
|
|
368
|
336
|
9.5%
|
|
1,105
|
1,000
|
10.5%
|
|||||||
|
Service
|
|
214
|
193
|
10.9%
|
|
612
|
544
|
12.5%
|
|||||||
|
Advertising
sales
|
|
28
|
24
|
16.7%
|
|
78
|
70
|
11.4%
|
|||||||
|
General
and administrative
|
|
248
|
219
|
13.2%
|
|
705
|
621
|
13.5%
|
|||||||
|
Marketing
|
|
56
|
37
|
51.4%
|
|
135
|
101
|
33.7%
|
|||||||
|
Operating
costs and expenses
|
|
914
|
809
|
13.0%
|
|
2,635
|
2,336
|
12.8%
|
|||||||
|
|
|||||||||||||||
|
Adjusted
EBITDA
|
|
463
|
433
|
6.9%
|
|
1,389
|
1,341
|
3.6%
|
|||||||
|
Adjusted
EBITDA margin
|
|
33.6%
|
34.9%
|
|
34.5%
|
36.5%
|
|||||||||
|
Depreciation
and amortization
|
|
332
|
354
|
|
1,013
|
1,080
|
|||||||||
|
Asset
impairment charges
|
20
|
-
|
20
|
-
|
|||||||||||
|
Loss
on sale of assets, net
|
-
|
1
|
-
|
5
|
|||||||||||
|
Option
compensation expense, net
|
3
|
3
|
10
|
10
|
|||||||||||
|
Hurricane
asset retirement loss
|
-
|
19
|
-
|
19
|
|||||||||||
|
Special
charges, net
|
|
2
|
2
|
|
12
|
4
|
|||||||||
|
Operating
income from operations
|
|
106
|
54
|
|
334
|
223
|
|||||||||
|
OTHER
INCOME AND (EXPENSES):
|
|||||||||||||||
|
Interest
expense, net
|
(466)
|
(452)
|
(1,383)
|
(1,312)
|
|||||||||||
|
Gain
(loss) on derivative instruments and hedging activities,
net
|
|
(3)
|
17
|
|
8
|
43
|
|||||||||
|
Gain
on extinguishment of debt
|
|
128
|
490
|
|
101
|
498
|
|||||||||
|
Other,
net
|
|
6
|
(3)
|
|
12
|
12
|
|||||||||
|
(335)
|
52
|
(1,262)
|
(759)
|
||||||||||||
|
Income
(loss) before income taxes
|
(229)
|
106
|
(928)
|
(536)
|
|||||||||||
|
|
|||||||||||||||
|
Income
tax expense
|
(53)
|
(23)
|
(132)
|
(78)
|
|||||||||||
|
Net
income (loss)
|
(282)
|
83
|
(1,060)
|
(614)
|
|||||||||||
|
Dividends
on preferred stock - redeemable
|
|
-
|
(1)
|
|
-
|
(3)
|
|||||||||
|
Net
income (loss) applicable to common stock
|
$
|
(282)
|
$
|
82
|
$
|
(1,060)
|
$
|
(617)
|
|||||||
|
EARNINGS
(LOSS) PER SHARE:
|
|||||||||||||||
|
Basic
|
$
|
(0.86)
|
$
|
0.26
|
$
|
(3.31)
|
$
|
(2.00)
|
|||||||
|
Diluted
|
$
|
(0.86)
|
$
|
0.09
|
$
|
(3.31)
|
$
|
(2.00)
|
|||||||
|
|
|||||||||||||||
|
Weighted
average common shares outstanding, basic
|
|
326,272,226
|
316,214,740
|
320,466,343
|
307,761,930
|
||||||||||
|
Weighted
average common shares outstanding, diluted
|
326,272,226
|
1,012,591,842
|
320,466,343
|
307,761,930
|
|||||||||||
|
|
|||||||||||||||
|
(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 July 2005, January 2006 and the third
quarter of 2006 have been reflected in the operating statistics.
The pro
forma data are 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.
|
|||||||||||||||
|
|
|||||||||||||||
|
September
30, 2006. Pro forma revenues were reduced by $11 million
and
$67 million for the three and nine months ended September 30,
2006,
respectively. Pro forma operating costs and expenses were reduced
by $7
million and $45 million for the three and nine months ended September
30,
2006, respectively. Pro forma net loss was increased by $149
million and
$86 million for the three and nine months ended September 30,
2006,
respectively.
|
|||||||||||||||
|
September
30, 2005. Pro forma revenues were reduced by $23 million
and
$69 million for the three and nine months ended September 30,
2005,
respectively. Pro forma operating costs and expenses were reduced
by $15
million and $44 million for the three and nine months ended September
30,
2005, respectively. Pro forma net income was increased by $7
million for
the three months ended September 30, 2005. Pro forma net loss
was reduced
by $17 million for the nine months ended September 30,
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.
|
|||||||||||||||
|
|
|||||||||||||||
Addendum
to Charter Communications, Inc. Third Quarter 2006 Earnings Release
Page 2
of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|||||
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
|||||
|
(DOLLARS
IN MILLIONS)
|
|||||
|
September
30,
|
December
31,
|
||||
|
2006
|
2005
|
||||
|
ASSETS
|
|||||
|
CURRENT
ASSETS:
|
|||||
|
Cash
and cash equivalents
|
$
|
85
|
$
|
21
|
|
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
186
|
214
|
||
|
Prepaid
expenses and other current assets
|
|
90
|
92
|
||
|
Total
current assets
|
|
361
|
327
|
||
|
|
|||||
|
INVESTMENT
IN CABLE PROPERTIES:
|
|
||||
|
Property,
plant and equipment, net
|
|
5,263
|
5,840
|
||
|
Franchises,
net
|
|
9,221
|
9,826
|
||
|
Total
investment in cable properties, net
|
|
14,484
|
15,666
|
||
|
|
|||||
|
OTHER
NONCURRENT ASSETS:
|
|
353
|
438
|
||
|
Total
assets
|
$
|
15,198
|
$
|
16,431
|
|
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|||||
|
CURRENT
LIABILITIES:
|
|||||
|
Accounts
payable and accrued expenses
|
$
|
1,360
|
$
|
1,191
|
|
|
Total
current liabilities
|
|
1,360
|
1,191
|
||
|
|
|||||
|
LONG-TERM
DEBT
|
|
18,799
|
19,388
|
||
|
|
|||||
|
NOTE
PAYABLE - RELATED PARTY
|
55
|
|
49
|
||
|
|
|||||
|
DEFERRED
MANAGEMENT FEES - RELATED PARTY
|
|
14
|
14
|
||
|
|
|||||
|
OTHER
LONG-TERM LIABILITIES
|
|
602
|
517
|
||
|
|
|||||
|
MINORITY
INTEREST
|
|
191
|
188
|
||
|
|
|||||
|
PREFERRED
STOCK - REDEEMABLE
|
|
4
|
4
|
||
|
|
|||||
|
SHAREHOLDERS'
DEFICIT
|
|
(5,827)
|
(4,920)
|
||
|
Total
liabilities and shareholders' deficit
|
$
|
15,198
|
$
|
16,431
|
|
Addendum
to Charter Communications, Inc. Third Quarter 2006 Earnings Release
Page 3
of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||
|
(DOLLARS
IN MILLIONS)
|
||||||
|
Nine
Months Ended September 30,
|
||||||
|
2006
|
2005
|
|||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||
|
Net
loss
|
|
$
|
(974)
|
$
|
(631)
|
|
|
Adjustments
to reconcile net loss to net cash flows from operating
activities:
|
|
|||||
|
Depreciation
and amortization
|
|
1,032
|
1,134
|
|||
|
Asset
impairment charges
|
|
159
|
39
|
|||
|
Noncash
interest expense
|
|
108
|
188
|
|||
|
Deferred
income taxes
|
|
123
|
71
|
|||
|
(Gain)
loss on sale of assets, net
|
|
(198)
|
5
|
|||
|
Option
compensation expense, net
|
|
10
|
11
|
|||
|
Gain
on derivative instruments and hedging activities, net
|
|
(8)
|
(43)
|
|||
|
Gain
on extinguishment of debt
|
|
(101)
|
(504)
|
|||
|
Other,
net
|
|
(12)
|
7
|
|||
|
Changes
in operating assets and liabilities, net of effects from acquisitions
|
|
|||||
|
and
dispositions:
|
||||||
|
Accounts
receivable
|
|
46
|
(3)
|
|||
|
Prepaid
expenses and other assets
|
|
23
|
85
|
|||
|
Accounts
payable, accrued expenses and other
|
|
140
|
(241)
|
|||
|
Net
cash flows from operating activities
|
|
348
|
118
|
|||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|||||
|
Purchases
of property, plant and equipment
|
|
(795)
|
(815)
|
|||
|
Change
in accrued expenses related to capital expenditures
|
|
4
|
36
|
|||
|
Proceeds
from sale of assets, including cable systems
|
988
|
38
|
||||
|
Purchase
of cable system
|
(42)
|
-
|
||||
|
Purchase
of investments
|
|
-
|
(3)
|
|||
|
Proceeds
from investments
|
|
42
|
17
|
|||
|
Other,
net
|
|
(1)
|
(2)
|
|||
|
Net
cash flows from investing activities
|
|
196
|
(729)
|
|||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|||||
|
Borrowings
of long-term debt
|
|
5,970
|
897
|
|||
|
Repayments
of long-term debt
|
|
(6,846)
|
(1,141)
|
|||
|
Proceeds
from issuance of debt
|
440
|
294
|
||||
|
Payments
for debt and equity issuance costs
|
|
(44)
|
(67)
|
|||
|
Net
cash flows from financing activities
|
|
(480)
|
(17)
|
|||
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
64
|
(628)
|
|||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
|
21
|
650
|
|||
|
CASH
AND CASH EQUIVALENTS, end of period
|
|
$
|
85
|
$
|
22
|
|
|
|
|
|
||||
|
CASH
PAID FOR INTEREST
|
|
$
|
1,121
|
$
|
1,170
|
|
|
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
|
$
|
-
|
||
|
Retirement
of convertible notes
|
$
|
(255)
|
$
|
-
|
||
Addendum
to Charter Communications, Inc. Third Quarter 2006 Earnings Release
Page 4
of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|||||||
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
|||||||
|
Actual
|
Approximate
Pro forma as of
|
||||||
|
September
30,
|
June
30,
|
December
31,
|
September
30,
|
||||
|
2006
(a)
|
2006
(a)
|
2005
(a)
|
2005
(a)
|
||||
|
Customer
Summary:
|
|||||||
|
Customer
Relationships:
|
|||||||
|
Residential
(non-bulk) analog video customers (b)
|
5,216,900
|
5,234,700
|
5,262,900
|
5,277,400
|
|||
|
Multi-dwelling
(bulk) and commercial unit customers (c)
|
259,700
|
251,100
|
243,900
|
246,100
|
|||
|
Total
analog video customers (b) (c)
|
5,476,600
|
5,485,800
|
5,506,800
|
5,523,500
|
|||
|
|
|||||||
|
Non-video
customers (b)
|
289,700
|
284,600
|
|
258,700
|
245,000
|
||
|
Total
customer relationships (d)
|
5,766,300
|
5,770,400
|
5,765,500
|
5,768,500
|
|||
|
Pro
forma average monthly revenue per analog video customer
(e)
|
$
83.76
|
$
81.92
|
$
76.27
|
$
74.86
|
|||
|
|
|||||||
|
Bundled
customers (f)
|
2,124,600
|
2,028,700
|
1,856,100
|
1,785,600
|
|||
|
Revenue
Generating Units:
|
|||||||
|
Analog
video customers (b) (c)
|
5,476,600
|
5,485,800
|
5,506,800
|
5,523,500
|
|||
|
Digital
video customers (g)
|
2,767,900
|
2,718,500
|
2,638,500
|
2,588,700
|
|||
|
Residential
high-speed Internet customers (h)
|
2,343,200
|
2,255,100
|
2,097,700
|
2,023,900
|
|||
|
Residential
telephone customers (i)
|
339,600
|
257,600
|
136,000
|
104,700
|
|||
|
Total
revenue generating units (j)
|
10,927,300
|
10,717,000
|
10,379,000
|
10,240,800
|
|||
|
Video
Cable Services:
|
|||||||
|
Analog
Video:
|
|||||||
|
Estimated
homes passed (k)
|
11,811,400
|
11,770,600
|
11,643,900
|
11,450,000
|
|||
|
Analog
video customers (b)(c)
|
5,476,600
|
5,485,800
|
5,506,800
|
5,523,500
|
|||
|
Estimated
penetration of analog video homes passed (b) (c) (k) (l)
|
46%
|
47%
|
47%
|
48%
|
|||
|
Pro
forma average monthly analog revenue per analog video customer
(m)
|
$
38.22
|
$
38.29
|
$
37.45
|
$
37.84
|
|||
|
Analog
video customers quarterly net gain (loss) (b) (c) (n)
|
(9,200)
|
(30,700)
|
(16,700)
|
(10,100)
|
|||
|
|
|
||||||
|
Digital
Video:
|
|||||||
|
Estimated
digital video homes passed (k)
|
11,774,800
|
11,723,500
|
11,588,300
|
11,391,100
|
|||
|
Digital
video customers (g)
|
2,767,900
|
2,718,500
|
2,638,500
|
2,588,700
|
|||
|
Estimated
penetration of digital homes passed (g) (k) (l)
|
24%
|
23%
|
23%
|
23%
|
|||
|
Digital
penetration of analog video customers (b) (c) (g) (o)
|
51%
|
50%
|
48%
|
47%
|
|||
|
Digital
set-top terminals deployed
|
3,946,000
|
3,874,800
|
3,740,700
|
3,668,000
|
|||
|
Pro
forma average incremental monthly digital revenue per digital video
customer (m)
|
$
28.96
|
$
29.09
|
$
26.60
|
$
26.12
|
|||
|
Digital
video customers quarterly net gain (loss) (g) (n)
|
49,400
|
23,500
|
49,800
|
68,900
|
|||
|
Non-Video
Cable Services:
|
|||||||
|
High-Speed
Internet Services:
|
|||||||
|
Estimated
high-speed Internet homes passed (k)
|
10,763,300
|
10,665,700
|
10,543,500
|
10,268,600
|
|||
|
Residential
high-speed Internet customers (h)
|
2,343,200
|
2,255,100
|
2,097,700
|
2,023,900
|
|||
|
Estimated
penetration of high-speed Internet homes passed (h) (k)
(l)
|
22%
|
21%
|
20%
|
20%
|
|||
|
Pro
forma average monthly high-speed Internet revenue per high-speed
Internet
customer (m)
|
$
38.60
|
$
38.30
|
$
36.55
|
$
37.01
|
|||
|
Residential
high-speed Internet customers quarterly net gain (loss) (h)
(n)
|
88,100
|
52,000
|
73,800
|
94,600
|
|||
|
|
|
|
|||||
|
Telephone
Services:
|
|||||||
|
Estimated
telephone homes passed (k)
|
5,892,000
|
4,658,500
|
2,918,000
|
2,365,400
|
|||
|
Residential
telephone customers (i)
|
339,600
|
257,600
|
136,000
|
104,700
|
|||
|
Pro
foma average monthly telephone revenue per telephone customer
(m)
|
$
42.40
|
$
43.19
|
$
39.38
|
$
39.27
|
|||
|
Residential
telephone customers quarterly net gain (i) (n)
|
82,000
|
66,500
|
31,300
|
22,100
|
|||
|
|
|||||||
|
|
|||||||
|
Pro
forma results reflect the acquisition of cable systems in January
2006 and
the sales of cable systems in July 2005 and 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 July 2005, January 2006
and the
third quarter of 2006 have been reflected in the operating
statistics.
|
|||||||
|
At
June 30, 2006, actual analog video customers, digital video customers,
high-speed Internet customers and telephone customers were 5,876,100,
2,889,000, 2,375,100 and 257,600, respectively.
|
|||||||
|
At
December 31, 2005, actual analog video customers, digital video
customers,
high-speed Internet customers and telephone customers were 5,884,500,
2,796,600, 2,196,400 and 121,500, respectively.
|
|||||||
|
At
September 30, 2005, actual analog video customers, digital video
customers, high-speed Internet customers and telephone customers
were
5,906,300, 2,749,400, 2,120,000 and 89,900,
respectively.
|
|||||||
|
See
footnotes to unaudited summary of operating statistics on page
6 of this
addendum.
|
|||||||
Addendum
to Charter Communications, Inc. Third Quarter 2006 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). In addition, at
September
30, 2006, June 30, 2006, December 31, 2005 and September 30, 2005,
“customers” include approximately 51,200, 55,900, 50,500 and 49,300
persons whose accounts were over 60 days past due in payment,
approximately 11,300, 14,300, 14,300 and 9,900 persons whose accounts
were
over 90 days past due in payment and approximately 6,200, 8,900,
7,400 and
6,000 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 289,700, 284,600, 258,700
and 245,000
customer relationships at September 30, 2006, June 30, 2006, December
31,
2005 and September 30, 2005, 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.
|
|||||||||||||
|
(c)
Included within "analog 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 used consistently. 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)
"Pro forma average monthly revenue per analog video customer" is
calculated as total quarterly pro forma revenue divided by three
divided
by average pro forma 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
September 30, 2006, June 30, 2006, December 31, 2005 and September
30,
2005 are approximately 6,700, 8,400, 8,600 and 8,900 customers,
respectively, that receive digital video service directly through
satellite transmission.
|
|||||||||||||
|
(h)
"Residential high-speed Internet customers” represent those customers who
subscribe to our high-speed Internet service. At September 30,
2006, June
30, 2006, December 31, 2005 and September 30, 2005, approximately
2,079,000, 1,996,400,
1,860,000 and 1,798,800 of these high-speed Internet customers,
respectively, receive video and/or telephone services from us and
are
included within the respective statistics above.
|
|||||||||||||
|
(i)
“Residential telephone customers” include all households receiving
telephone service. As of September 30, 2006, June 30, 2006, December
31,
2005 and September 30, 2005, approximately 314,000, 233,500, 116,600
and
86,900 of these telephone customers, respectively, receive video
and/or
high-speed Internet services from us and are included within the
respective statistics above.
|
|||||||||||||
|
|
|||||||||||||
|
(j)
"Revenue generating units" represent the sum total of all 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)
"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.
|
|||||||||||||
|
(n)
"Quarterly net gain (loss)" represents the net gain or loss in
the
respective quarter for the service indicated.
|
|||||||||||||
|
(o)
"Digital penetration of analog video customers" represents the
number of
digital video customers as a percentage of analog video
customers.
|
|||||||||||||
Addendum
to Charter Communications, Inc. Third Quarter 2006 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 September 30,
|
Nine
Months Ended September 30,
|
||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||
|
Actual
|
Actual
|
Actual
|
Actual
|
||||||
|
Adjusted
EBITDA from continuing and discontinued operations (a)
|
$
467
|
$
463
|
$
1,457
|
$
1,436
|
|||||
|
Less:
Purchases of property, plant and equipment
|
(256)
|
(273)
|
(795)
|
(815)
|
|||||
|
Un-levered
free cash flow
|
211
|
190
|
662
|
621
|
|||||
|
Less:
Interest on cash pay obligations (b)
|
(445)
|
(388)
|
(1,301)
|
(1,145)
|
|||||
|
Free
cash flow
|
(234)
|
(198)
|
(639)
|
(524)
|
|||||
|
Purchases
of property, plant and equipment
|
256
|
273
|
795
|
815
|
|||||
|
Special
charges, net
|
(2)
|
-
|
(12)
|
(4)
|
|||||
|
Other,
net
|
(1)
|
(1)
|
(5)
|
(10)
|
|||||
|
Change
in operating assets and liabilities
|
124
|
(137)
|
209
|
(159)
|
|||||
|
Net
cash flows from operating activities
|
$
143
|
$
(63)
|
$
348
|
$
118
|
|||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||
|
2006
|
2005
|
2006
|
2005
|
||||||
|
Pro
forma (c)
|
Pro
forma (c)
|
Pro
forma (c)
|
Pro
forma (c)
|
||||||
|
Adjusted
EBITDA (a)
|
$
463
|
$
433
|
$
1,389
|
$
1,341
|
|||||
|
Less:
Purchases of property, plant and equipment
|
(254)
|
(264)
|
(777)
|
(788)
|
|||||
|
Un-levered
free cash flow
|
209
|
169
|
612
|
553
|
|||||
|
Less:
Interest on cash pay obligations (b)
|
(445)
|
(378)
|
(1,275)
|
(1,124)
|
|||||
|
Free
cash flow
|
(236)
|
(209)
|
(663)
|
(571)
|
|||||
|
Purchases
of property, plant and equipment
|
254
|
264
|
777
|
788
|
|||||
|
Special
charges, net
|
(2)
|
-
|
(12)
|
(4)
|
|||||
|
Other,
net
|
(1)
|
(1)
|
(5)
|
(10)
|
|||||
|
Change
in operating assets and liabilities
|
124
|
(137)
|
209
|
(159)
|
|||||
|
Net
cash flows from operating activities
|
$
139
|
$
(83)
|
$
306
|
$
44
|
|||||
|
(a)
Adjusted EBITDA is calculated from page 1 of the addendum by
taking
revenue from continuing operations less operating costs and expenses
from
continuing operations plus adjusted EBITDA from discontinued
operations.
|
|||||||||
|
(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)
Pro forma results reflect the acquisition of cable systems in
January 2006
and the sales of 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
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.
|
|||||||||
Addendum
to Charter Communications, Inc. Third Quarter 2006 Earnings Release
Page
7 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||
|
UNAUDITED
CAPITAL EXPENDITURES
|
||||||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||||||
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||
|
2006
|
2005
|
2006
|
2005
|
|||||||||
|
|
||||||||||||
|
Customer
premise equipment (a)
|
$
|
120
|
$
|
94
|
$
|
378
|
$
|
322
|
||||
|
Scalable
infrastructure (b)
|
49
|
49
|
146
|
138
|
||||||||
|
Line
extensions (c)
|
23
|
37
|
82
|
114
|
||||||||
|
Upgrade/Rebuild
(d)
|
13
|
13
|
36
|
35
|
||||||||
|
Support
capital (e)
|
51
|
80
|
153
|
206
|
||||||||
|
Total
capital expenditures
|
$
|
256
|
$
|
273
|
$
|
795
|
$
|
815
|
||||
|
(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 No. 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).
|
||||||||||||
Addendum
to Charter Communications, Inc. Third Quarter 2006 Earnings Release
Page 8
of 8