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): March 31, 2009
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 May 7,
2009, Charter Communications, Inc. issued a press release announcing its results
for the first quarter ended March 31, 2009. The following information, including
the entirety of the press release appearing in Exhibit 99.1 hereto, is not filed
but is furnished pursuant to Item 2.02, "Results of Operations and Financial
Condition."
ITEM 9.01. FINANCIAL STATEMENTS
AND EXHIBITS.
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated May 7, 2009. *
|
*
furnished herewith
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:
This
current report includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding, among other things, our plans,
strategies and prospects, both business and financial. Although we believe that
our plans, intentions and expectations reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and assumptions,
including, without limitation, the factors described under "Risk Factors" from
time to time in our filings with the Securities and Exchange Commission ("SEC").
Many of the forward-looking statements contained in this current report may be
identified by the use of forward-looking words such as "believe," "expect,"
"anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim,"
"on track," "target," "opportunity" and "potential," among others. Important
factors that could cause actual results to differ materially from the
forward-looking statements we make in this current report are set forth in other
reports or documents that we file from time to time with the SEC, including our
quarterly reports on Form 10-Q filed in 2009 and our most recent annual report
on Form 10-K and include, but are not limited to:
|
|
·
|
the
completion of the Company’s restructuring including the outcome and impact
on our business of the proceedings under Chapter 11 of the Bankruptcy
Code;
|
|
·
|
the
ability of the Company to satisfy closing conditions under the
agreements-in-principle with certain of our bondholders and pre-arranged
Joint Plan of Reorganization (“the Plan”) and related documents and to
have the Plan confirmed by the bankruptcy
court;
|
|
|
·
|
the
availability and access, in general, of funds to meet interest payment
obligations under our debt and to fund our operations and necessary
capital expenditures, either through cash on hand, cash flows from
operating activities, further borrowings or other sources and, in
particular, our ability to fund debt obligations (by dividend, investment
or otherwise) to the applicable obligor of such
debt;
|
|
|
·
|
our
ability to comply with all covenants in our indentures and credit
facilities, any violation of which, if not cured in a timely manner, could
trigger a default of our other obligations under cross-default
provisions;
|
|
|
·
|
our
ability to repay debt prior to or when it becomes due and/or successfully
access the capital or credit markets to refinance that debt through new
issuances, exchange offers or otherwise, including restructuring our
balance sheet and leverage position, especially given recent volatility
and disruption in the capital and credit
markets;
|
|
·
|
the
impact of competition from other distributors, including but not limited
to incumbent telephone companies, direct broadcast satellite operators,
wireless broadband providers, and digital subscriber line (“DSL”)
providers;
|
|
|
·
|
difficulties
in growing and operating our telephone services, while adequately meeting
customer expectations for the reliability of voice
services;
|
|
|
·
|
our
ability to adequately meet demand for installations and customer
service;
|
|
|
·
|
our
ability to sustain and grow revenues and cash flows from operating
activities by offering video, high-speed Internet, telephone and other
services, and to maintain and grow our customer base, particularly in the
face of increasingly aggressive
competition;
|
|
|
·
|
our
ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming
costs;
|
|
|
·
|
general
business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy;
and
|
|
|
·
|
the
effects of governmental regulation on our
business.
|
All
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by this cautionary
statement. We are under no duty or obligation to update any of the
forward-looking statements after the date of this current report.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, Charter
Communications, Inc. has duly caused this Current Report to be signed on its
behalf by the undersigned hereunto duly authorized.
&
#160; CHARTER COMMUNICATIONS,
INC.
&
#160; Registrant
Dated May
7, 2009
|
By:/s/ Kevin D.
Howard
Name:
Kevin D. Howard
Title: Vice President,
Controller and Chief Accounting
Officer
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EXHIBIT INDEX
|
Exhibit
Number
|
Description
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|
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99.1
|
Press
Release dated May 7,
2009. *
|
*
furnished herewith
NEWS
Charter
Reports First Quarter 2009
Financial
and Operating Results
Charter
operations remain solid; financial restructuring underway to reduce
debt
St. Louis, Missouri – May 7,
2009 – Charter Communications, Inc. (Pink OTC: CHTRQ) (along with its
subsidiaries, the “Company” or “Charter”) today reported financial and operating
results for the three months ended March 31, 2009.
Key
year-over-year highlights:
|
·
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First
quarter pro
forma1revenues of $1.661 billion grew 6.5% on a
pro forma basis
and revenues grew 6.3% on an actual basis; primarily
driven by increases in telephone and high-speed Internet (HSI)
revenues.
|
|
·
|
First
quarter adjusted
EBITDA2 of $616 million grew 13.2% on a
pro forma basis
and 13.0% on an actual basis.
|
|
·
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First
quarter adjusted EBITDA margin of 37.1% increased more than 200 basis
points on a pro
forma and actual basis.
|
|
·
|
Total
average monthly revenue per basic video customer (ARPU) for the quarter
increased 9.9% year-over-year to $110.32, driven by increased sales of The
Charter BundleTM
and advanced services growth.
|
|
·
|
Revenue
generating units (RGUs) increased 149,600 during the first quarter, driven
by increased telephone and HSI customers. RGUs increased 4.1% compared to
March 31, 2008.
|
|
·
|
Commercial
revenues increased 16.3% year over year on a pro forma and actual
basis, accounting for approximately 15% of total first quarter revenue
growth, primarily driven by the Charter Business
Bundle.
|
1 Pro forma results are
described below in the “Use of Non-GAAP Financial Metrics” section and are
provided in the addendum of this news release.
2 Adjusted
EBITDA is defined in the “Use of Non-GAAP Financial Metrics” section and is
reconciled to net cash flows from operating activities in the addendum of this
news release.
1
“Our
results for the first quarter confirm that Charter’s operations remain strong,”
said Neil Smit, President and Chief Executive Officer. “We are
pleased to report solid growth in both revenue and adjusted
EBITDA. Our organization is nimble, and we’ve adjusted to market
conditions, achieving efficiencies while remaining committed to investing in new
products and improving service that deliver value to our
customers.”
Mr. Smit
continued, “I am also pleased with the progress we have made in our financial
restructuring and commend our employees for continuing to provide our customers
with superior service and value throughout this process. We have been
working diligently to complete our financial restructuring expeditiously, and
look forward to emerging as a stronger company.”
Key
Operating Results
All of
the following customer growth and ARPU statistics are presented on a pro forma basis. Charter
added 149,600 RGUs during the first quarter of 2009. Approximately 54% of
Charter’s customers subscribe to a bundle, up from 49% in the first quarter of
2008. Charter’s pro
forma ARPU for the first quarter of 2009 was $110.32, an increase of 9.9%
compared to first quarter 2008, primarily as a result of higher bundled
penetration and digital video recorder and high-definition customer growth, as
well as an increase in video on demand usage.
First
quarter 2009 RGU changes (on a pro forma basis) consisted of
the following:
|
·
|
Digital
video customers increased by approximately 25,600 and basic video
customers decreased by 22,200 during the first quarter. Video ARPU was
$60.61 for the first quarter of 2009, up 5.3% year-over-year. Customers
leasing high-definition or digital video recorder set tops has increased
more than 30% year over year, and on demand orders during the first
quarter of 2009 increased nearly 40% compared to the year ago quarter,
driving increased video ARPU and customer
satisfaction.
|
|
·
|
First
quarter 2009 net gains of HSI customers were approximately
71,900. HSI ARPU of $41.26 increased approximately 2.5%
compared to both the year ago and prior quarter, driven by customer
upgrades to higher levels of
service.
|
|
·
|
First
quarter 2009 net gains of telephone customers were approximately 74,300.
Telephone penetration is now 13.5% of approximately 10.6 million telephone
homes passed as of March 31, 2009.
|
2
As of
March 31, 2009, Charter served approximately 5,433,200 customers and the
Company’s 12,541,600 RGUs were comprised of 5,013,700 basic video; 3,157,700
digital video; 2,947,100 HSI, and 1,423,100 telephone customers.
First Quarter Results – Pro
forma
First
quarter pro forma
revenues were $1.661 billion, an increase of 6.5%, or $101 million, over pro forma 2008
results.
Pro forma adjusted EBITDA
totaled $616 million for the first quarter of 2009, an increase of 13.2%
compared to the pro
forma results for the year-ago quarter. The pro forma adjusted EBITDA
margin increased 220 basis points in the first quarter to 37.1%, up from 34.9%
in the year-ago quarter on a pro forma basis.
Pro
forma net cash flows from
operating activities for the first quarter of 2009 were $187 million, compared
to $203 million for the first quarter of 2008 on a pro
forma
basis.
First
Quarter Results – Actual
First
quarter revenues of $1.662 billion increased 6.3% compared to the year ago
quarter. The increase resulted primarily from telephone and HSI revenue
growth.
Telephone
revenues for the 2009 first quarter were $169 million, a 39.7% increase over
first quarter 2008, driven by a larger telephone customer base and an increase
in telephone ARPU. HSI revenues were $360 million, up 9.8% year-over-year, due
to an increased number of customers and ARPU growth. Video revenues were
$872 million, up 1.6% year-over-year, primarily as a result of digital and
advanced services revenue growth, partially offset by a decline in basic video
customers. Commercial revenues rose to $107 million, a 16.3% increase year over
year, resulting from increased sales of the Charter Business Bundle® primarily
to small and medium-size businesses, as well as growth in our fiber-based data
services. Advertising sales revenues declined 19.4% year over year to $54
million for the first quarter of 2009 primarily as a result of significant
decreases in revenues from the political and automotive sectors.
3
Operating
costs and expenses totaled $1.046 billion for the first quarter of 2009, a 2.6%
increase compared to the year-ago period. Operating expenses for the
2009 first quarter, which include programming, service and advertising sales
costs, were $713 million, a 4.7% increase year-over-year, reflecting annual
programming rate increases and increased costs to support improved service
levels and growth of the Company’s telephone business and advanced services.
Selling, general, and administrative expenses were $333 million, a decrease of
1.5% compared to the year-ago quarter, reflecting efficiencies gained in our
operations. Operating costs and expenses also reflect certain modified payment
terms made during the first quarter which reduced costs and expenses by
approximately $6 million.
Adjusted
EBITDA for the first quarter of 2009 rose to $616 million, up 13.0% compared to
the year-ago period.
Charter
reported $334 million income from operations in the first quarter of 2009,
compared to $205 million in the first quarter of 2008. Net loss for the
first quarter of 2009 was $205 million, or 54 cents per common share. For the
first quarter of 2008, Charter reported a net loss of $359 million and a
net loss per common share of 97 cents. The increase in income from operations
resulted primarily from the increase in sales of our bundled services, improved
cost efficiencies and favorable litigation settlements in 2009. The
decrease in net loss resulted from the same factors along with the allocation of
losses of $129 million to noncontrolling interest beginning January 1, 2009
based on the adoption of Statement of Financial Accounting Standards No. 160,
partially offset by expenses related to the financial restructuring underway at
Charter.
Expenditures for property, plant, and
equipment for the first quarter of 2009 were $269 million, compared to first
quarter 2008 expenditures of $334 million. The decrease in capital expenditures
is primarily the result of higher spending on scalable infrastructure during the
first quarter of 2008 related to HSI and headend upgrades.
Net cash
flows from operating activities for the first quarter of 2009 were $187 million,
compared to $204 million in the first quarter of 2008.
4
Restructuring
As of
March 31, 2009, Charter had $21.623 billion in debt, $9.849 billion of which was
classified as liabilities subject to compromise due to Charter’s restructuring
efforts. As previously announced, on March 27, 2009, Charter filed
its pre-arranged Joint Plan of Reorganization (the “Pre-Arranged Plan”) and
Chapter 11 petitions in the United States Bankruptcy Court for the Southern
District of New York (the “Court”) in order to implement a financial
restructuring that, upon approval, would reduce the Company’s debt by
approximately $8 billion. The Pre-Arranged Plan also includes the investment by
certain of the Company’s debt holders of more than $3 billion, including up to
$2 billion in equity proceeds, $1.2 billion in roll-over debt and $267 million
in new debt to support the overall refinancing. Charter expects the proposed
restructuring to position the Company to generate positive free cash flow
through significant interest expense reductions.
As a
debtor in possession, the Company is authorized to transact business in the
ordinary course of business and, as such, has been paying its trade creditors in
full in the normal course. Charter expects that cash on hand and cash flows from
operating activities will be adequate to fund its projected cash needs as it
proceeds with its financial restructuring.
The
Company’s principal Chapter 11 petition has been assigned the lead case number
09-11435. Additional information about Charter’s restructuring,
including the disclosure statement describing the Pre-Arranged Plan and the
terms of the committed and optional investments by members of the Bondholder
Committee, is available at the Company’s website www.charter.com. You
may also receive information from the Company’s restructuring information line,
800-419-3922. For access to Court documents and other general
information about the Chapter 11 cases, please visit www.kccllc.net/charter.
Use
of Non-GAAP Financial Metrics
The
Company uses certain measures that are not defined by Generally Accepted
Accounting Principles (“GAAP”) to evaluate various aspects of its business.
Adjusted EBITDA, pro
forma adjusted EBITDA, and free cash flow are non-GAAP financial
5
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 depreciation and
amortization, stock compensation expense, and other operating expenses, such as
special charges and loss on sale or retirement of assets. As such, it eliminates
the significant non-cash depreciation and amortization expense that results from
the capital-intensive nature of the Company’s businesses as well as other
non-cash or non-recurring items, and is unaffected by the Company’s capital
structure or investment activities. Adjusted EBITDA and pro forma adjusted EBITDA are
liquidity measures used by Company management and its board of directors to
measure the Company’s ability to fund operations and its financing obligations.
For this reason, it is a significant component of Charter’s annual incentive
compensation program. However, this measure is limited in that it does not
reflect the periodic costs of certain capitalized tangible and intangible assets
used in generating revenues and the cash cost of financing for the Company.
Company management evaluates these costs through other financial
measures.
Free cash
flow is defined as net cash flows from operating activities, less capital
expenditures and changes in accrued expenses related to capital
expenditures.
The
Company believes that adjusted EBITDA, pro forma adjusted EBITDA,
and free cash flow provide information useful to investors in assessing
Charter’s ability to service its debt, fund operations, and make additional
investments with internally generated funds. In addition, adjusted EBITDA
generally correlates to the leverage ratio calculation under the Company’s
credit facilities or outstanding notes to determine compliance with the
covenants contained in the facilities and notes (all such documents have been
previously filed with the United States Securities and Exchange
Commission). Adjusted EBITDA and pro forma adjusted EBITDA, as
presented, include management fee expenses in the amount of $32 million and $34
million for the three months ended March 31, 2009 and 2008, respectively, which
expense amounts are excluded for the purposes of calculating compliance with
leverage covenants.
6
In
addition to the actual results for the three months ended March 31, 2009 and
2009, we have provided pro
forma results in this release for the three months ended March 31, 2009
and 2008. We believe these pro
forma results facilitate meaningful analysis of the results of
operations. Pro forma
results in this release reflect certain sales and acquisitions of cable systems
in 2008 and 2009 as if they had occurred as of January 1, 2008. Pro forma statements of
operations for the three months ended March 31, 2009 and 2008; and pro forma customer statistics
as of December 31, 2008 and March 31, 2008; are provided in the addendum of this
news release.
About
Charter Communications®
Charter
Communications, Inc. is a leading broadband communications company and the
fourth-largest cable operator in the United States. Charter provides a full
range of advanced broadband services, including advanced Charter Digital Cable®
video entertainment programming, Charter High-Speed® Internet access, and
Charter Telephone®. Charter Business™ similarly provides scalable, tailored, and
cost-effective broadband communications solutions to business organizations,
such as business-to-business Internet access, data networking, video and music
entertainment services, and business telephone. Charter's advertising sales and
production services are sold under the Charter Media® brand. On March 27, 2009,
Charter filed a pre-arranged plan and Chapter 11 petitions in the United States
Bankruptcy Court for the Southern District of New York. Charter believes
its operations are strong and expects to continue operating as usual during the
financial restructuring. More information about Charter can be found at www.charter.com.
# # #
Contact:
Media: Analysts:
Anita
Lamont Mary
Jo Moehle
314-543-2215 314-543-2397
Cautionary
Statement Regarding Forward-Looking Statements:
This
release includes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, regarding, among other things, our plans,
strategies and prospects, both business and financial. Although we believe that
our plans, intentions and expectations reflected in or suggested by these
forward-looking statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and assumptions,
including, without limitation, the factors described under "Risk Factors" from
time to time in our filings with the Securities and Exchange Commission ("SEC").
Many of the forward-looking statements contained in this release may be
identified by the use of forward-looking words such as "believe," "expect,"
"anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim,"
"on track," "target," "opportunity" and "potential," among others. Important
factors that could cause actual results to differ materially from the
forward-looking statements we make in this release are set forth in other
reports or documents that we file from time to time with the SEC, including our
quarterly reports on Form 10-Q filed in 2009 and our most recent annual report
on Form 10-K and include, but are not limited to:
7
|
•
|
the
completion of the Company’s restructuring including the outcome and impact
on our business of the proceedings under Chapter 11 of the Bankruptcy
Code;
|
|
•
|
the
ability of the Company to satisfy closing conditions under the
agreements-in-principle with certain of our bondholders and pre-arranged
Joint Plan of Reorganization (“the Plan”) and related documents and to
have the Plan confirmed by the bankruptcy
court;
|
|
•
|
the
availability and access, in general, of funds to meet interest payment
obligations under our debt and to fund our operations and necessary
capital expenditures, either through cash on hand, cash flows from
operating activities, further borrowings or other sources and, in
particular, our ability to fund debt obligations (by dividend, investment
or otherwise) to the applicable obligor of such
debt;
|
|
•
|
our
ability to comply with all covenants in our indentures and credit
facilities, any violation of which, if not cured in a timely manner, could
trigger a default of our other obligations under cross-default
provisions;
|
|
•
|
our
ability to repay debt prior to or when it becomes due and/or successfully
access the capital or credit markets to refinance that debt through new
issuances, exchange offers or otherwise, including restructuring our
balance sheet and leverage position, especially given recent volatility
and disruption in the capital and credit
markets;
|
|
•
|
the
impact of competition from other distributors, including but not limited
to incumbent telephone companies, direct broadcast satellite operators,
wireless broadband providers, and digital subscriber line ("DSL")
providers;
|
|
•
|
difficulties
in growing and operating our telephone services, while adequately meeting
customer expectations for the reliability of voice
services;
|
|
•
|
our
ability to adequately meet demand for installations and customer
service;
|
|
•
|
our
ability to sustain and grow revenues and cash flows from operating
activities by offering video, high-speed Internet, telephone and other
services, and to maintain and grow our customer base, particularly in the
face of increasingly aggressive
competition;
|
|
•
|
our
ability to obtain programming at reasonable prices or to adequately raise
prices to offset the effects of higher programming
costs;
|
|
•
|
general
business conditions, economic uncertainty or downturn, including the
recent volatility and disruption in the capital and credit markets and the
significant downturn in the housing sector and overall economy;
and
|
|
•
|
the
effects of governmental regulation on our
business.
|
All
forward-looking statements attributable to us or any person acting on our behalf
are expressly qualified in their entirety by this cautionary statement. We are
under no duty or obligation to update any of the forward-looking statements
after the date of this release.
# # #
8
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CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
||||||||||||
|
Three
Months Ended March 31,
|
||||||||||||
|
2009
|
2008
|
|||||||||||
|
Actual
|
Actual
|
%
Change
|
||||||||||
|
REVENUES:
|
||||||||||||
|
Video
|
$ | 872 | $ | 858 | 1.6 | % | ||||||
|
High-speed
Internet
|
360 | 328 | 9.8 | % | ||||||||
|
Telephone
|
169 | 121 | 39.7 | % | ||||||||
|
Commercial
|
107 | 92 | 16.3 | % | ||||||||
|
Advertising
sales
|
54 | 67 | (19.4 | %) | ||||||||
|
Other
|
100 | 98 | 2.0 | % | ||||||||
|
Total
revenues
|
1,662 | 1,564 | 6.3 | % | ||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||
|
Operating
(excluding depreciation and amortization) (a)
|
713 | 681 | 4.7 | % | ||||||||
|
Selling,
general and administrative (excluding stock
|
||||||||||||
|
compensation
expense) (b)
|
333 | 338 | (1.5 | %) | ||||||||
|
Operating
costs and expenses
|
1,046 | 1,019 | 2.6 | % | ||||||||
|
Adjusted
EBITDA
|
616 | 545 | 13.0 | % | ||||||||
|
Adjusted
EBITDA margin
|
37.1 | % | 34.8 | % | ||||||||
|
Depreciation
and amortization
|
321 | 321 | ||||||||||
|
Stock
compensation expense
|
11 | 8 | ||||||||||
|
Other
operating (income) expenses, net
|
(50 | ) | 11 | |||||||||
|
Income
from operations
|
334 | 205 | ||||||||||
|
OTHER
INCOME (EXPENSES):
|
||||||||||||
|
Interest
expense, net (excluding unrecorded contractual interest
|
||||||||||||
|
expense
of $9 in 2009)
|
(463 | ) | (466 | ) | ||||||||
|
Change
in value of derivatives
|
(4 | ) | (37 | ) | ||||||||
|
Reorganization
items, net
|
(141 | ) | - | |||||||||
|
Other
income (expense), net
|
1 | (1 | ) | |||||||||
| (607 | ) | (504 | ) | |||||||||
|
Loss
before income taxes
|
(273 | ) | (299 | ) | ||||||||
|
Income
tax expense
|
(61 | ) | (58 | ) | ||||||||
|
Consolidated
net loss
|
(334 | ) | (357 | ) | ||||||||
|
Less: Net
(income) loss - noncontrolling interest
|
129 | (2 | ) | |||||||||
|
Net
loss - Charter shareholders
|
$ | (205 | ) | $ | (359 | ) | ||||||
|
Loss
per common share, basic and diluted:
|
||||||||||||
|
Net
loss - Charter shareholders
|
$ | (0.54 | ) | $ | (0.97 | ) | ||||||
|
Weighted
average common shares outstanding, basic and diluted
|
378,095,547 | 370,085,187 | ||||||||||
|
(a) Operating
expenses include programming, service, and advertising sales
expenses.
|
||||||||||||
|
(b) Selling,
general and administrative expenses include general and administrative and
marketing expenses.
|
||||||||||||
|
Adjusted
EBITDA is a non-GAAP term. See page 7 of this addendum for the
reconciliation of adjusted EBITDA to net cash flows from operating
activities as defined by GAAP.
|
||||||||||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 1 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
||||||||||||
|
Three
Months Ended March 31,
|
||||||||||||
|
2009
|
2008
|
|||||||||||
|
Pro
Forma (a)
|
Pro
Forma (a)
|
%
Change
|
||||||||||
|
REVENUES:
|
||||||||||||
|
Video
|
$ | 871 | $ | 855 | 1.9 | % | ||||||
|
High-speed
Internet
|
360 | 327 | 10.1 | % | ||||||||
|
Telephone
|
169 | 121 | 39.7 | % | ||||||||
|
Commercial
|
107 | 92 | 16.3 | % | ||||||||
|
Advertising
sales
|
54 | 67 | (19.4 | %) | ||||||||
|
Other
|
100 | 98 | 2.0 | % | ||||||||
|
Total
revenues
|
1,661 | 1,560 | 6.5 | % | ||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||
|
Operating
(excluding depreciation and amortization) (b)
|
712 | 679 | 4.9 | % | ||||||||
|
Selling,
general and administrative (excluding stock
|
||||||||||||
|
compensation
expense) (c)
|
333 | 337 | (1.2 | %) | ||||||||
|
Operating
costs and expenses
|
1,045 | 1,016 | 2.9 | % | ||||||||
|
Adjusted
EBITDA
|
616 | 544 | 13.2 | % | ||||||||
|
Adjusted
EBITDA margin
|
37.1 | % | 34.9 | % | ||||||||
|
Depreciation
and amortization
|
321 | 320 | ||||||||||
|
Stock
compensation expense
|
11 | 8 | ||||||||||
|
Other
operating (income) expenses, net
|
(52 | ) | 11 | |||||||||
|
Income
from operations
|
336 | 205 | ||||||||||
|
OTHER
INCOME (EXPENSES):
|
||||||||||||
|
Interest
expense, net (excluding unrecorded contractual interest
|
||||||||||||
|
expense
of $9 in 2009)
|
(463 | ) | (466 | ) | ||||||||
|
Change
in value of derivatives
|
(4 | ) | (37 | ) | ||||||||
|
Reorganization
items, net
|
(141 | ) | - | |||||||||
|
Other
income (expense), net
|
1 | (1 | ) | |||||||||
| (607 | ) | (504 | ) | |||||||||
|
Loss
before income taxes
|
(271 | ) | (299 | ) | ||||||||
|
Income
tax expense
|
(61 | ) | (58 | ) | ||||||||
|
Consolidated
net loss
|
(332 | ) | (357 | ) | ||||||||
|
Less: Net
(income) loss - noncontrolling interest
|
129 | (2 | ) | |||||||||
|
Net
loss - Charter shareholders
|
$ | (203 | ) | $ | (359 | ) | ||||||
|
Loss
per common share, basic and diluted:
|
||||||||||||
|
Net
loss - Charter shareholders
|
$ | (0.54 | ) | $ | (0.97 | ) | ||||||
|
Weighted
average common shares outstanding, basic and diluted
|
378,095,547 | 370,085,187 | ||||||||||
|
(a) Pro
forma results reflect certain sales of cable systems in 2008 and 2009 as
if they occurred as of January 1, 2008. The pro forma statements of
operations do not include adjustments for financing transactions completed
by Charter during the periods presented or certain other dispositions of
assets because those transactions did not significantly impact Charter's
adjusted EBITDA. However, all transactions completed in 2008 and 2009
have been reflected in the operating statistics. The pro forma data
is based on information available to Charter as of the date of this
document and certain assumptions that we believe are reasonable under the
circumstances. The financial data required allocation of certain revenues
and expenses and such information has been presented for comparative
purposes and is not intended to provide any indication of what our actual
financial position, or results of operations would have been had the
transactions described above been completed on the dates indicated or to
project our results of operations for any future date.
|
||||||||||||
|
(b) Operating
expenses include programming, service, and advertising sales
expenses.
|
||||||||||||
|
(c) Selling,
general and administrative expenses include general and administrative and
marketing expenses.
|
||||||||||||
|
March 31,
2009. Pro forma revenues, operating costs and expenses and net
loss were reduced by $1 million, $1 million and $2 million, respectively,
for the three months ended March 31, 2009.
|
||||||||||||
|
March 31,
2008. Pro forma revenues, operating costs and expenses and net loss
were reduced by $4 million, $3 million and $0, respectively, for the three
months ended March 31, 2008.
|
||||||||||||
|
Adjusted
EBITDA is a non-GAAP term. See page 7 of this addendum for the
reconciliation of adjusted EBITDA to net cash flows from operating
activities as defined by GAAP.
|
||||||||||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 2 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
March
31,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash
and cash equivalents
|
$ | 836 | $ | 960 | ||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
188 | 222 | ||||||
|
Prepaid
expenses and other current assets
|
114 | 36 | ||||||
|
Total
current assets
|
1,138 | 1,218 | ||||||
|
INVESTMENT
IN CABLE PROPERTIES:
|
||||||||
|
Property,
plant and equipment, net
|
4,927 | 4,987 | ||||||
|
Franchises,
net
|
7,377 | 7,384 | ||||||
|
Total
investment in cable properties, net
|
12,304 | 12,371 | ||||||
|
OTHER
NONCURRENT ASSETS
|
208 | 293 | ||||||
|
Total
assets
|
$ | 13,650 | $ | 13,882 | ||||
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||||||
|
LIABILITIES
NOT SUBJECT TO COMPROMISE
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 1,322 | $ | 1,310 | ||||
|
Current
portion of long-term debt
|
11,774 | 155 | ||||||
|
Total
current liabilities
|
13,096 | 1,465 | ||||||
|
LONG-TERM
DEBT
|
- | 21,511 | ||||||
|
NOTE
PAYABLE - RELATED PARTY
|
- | 75 | ||||||
|
DEFERRED
MANAGEMENT FEES - RELATED PARTY
|
- | 14 | ||||||
|
OTHER
LONG-TERM LIABILITIES
|
683 | 1,082 | ||||||
|
LIABILITIES
SUBJECT TO COMPROMISE (INCLUDING AMOUNTS
|
||||||||
|
DUE
TO RELATED PARTY OF $102 AND $0, RESPECTIVELY)
|
10,470 | - | ||||||
|
TEMPORARY
EQUITY
|
252 | 241 | ||||||
|
SHAREHOLDERS'
DEFICIT
|
||||||||
|
Charter
shareholders' deficit
|
(10,714 | ) | (10,506 | ) | ||||
|
Noncontrolling
interest
|
(137 | ) | - | |||||
|
Total
shareholders' deficit
|
(10,851 | ) | (10,506 | ) | ||||
|
Total
liabilities and shareholders' deficit
|
$ | 13,650 | $ | 13,882 | ||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 3 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
Three
Months Ended March 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
loss - Charter shareholders
|
$ | (205 | ) | $ | (359 | ) | ||
|
Adjustments
to reconcile net loss to net cash flows from operating
activities:
|
||||||||
|
Depreciation
and amortization
|
321 | 321 | ||||||
|
Noncash
interest expense
|
15 | 14 | ||||||
|
Change
in value of derivatives
|
4 | 37 | ||||||
|
Reorganization
items, net
|
108 | - | ||||||
|
Deferred
income taxes
|
59 | 57 | ||||||
|
Noncontrolling
interest
|
(129 | ) | 2 | |||||
|
Other,
net
|
12 | 11 | ||||||
|
Changes
in operating assets and liabilities, net of effects from
dispositions
|
||||||||
|
Accounts
receivable
|
34 | 18 | ||||||
|
Prepaid
expenses and other assets
|
(78 | ) | (2 | ) | ||||
|
Accounts
payable, accrued expenses and other
|
46 | 105 | ||||||
|
Net
cash flows from operating activities
|
187 | 204 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchases
of property, plant and equipment
|
(269 | ) | (334 | ) | ||||
|
Change
in accrued expenses related to capital expenditures
|
(27 | ) | (31 | ) | ||||
|
Purchases
of short-term investments
|
- | (74 | ) | |||||
|
Other,
net
|
4 | 3 | ||||||
|
Net
cash flows from investing activities
|
(292 | ) | (436 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Borrowings
of long-term debt
|
- | 1,765 | ||||||
|
Repayments
of long-term debt
|
(17 | ) | (1,102 | ) | ||||
|
Payments
for debt issuance costs
|
- | (39 | ) | |||||
|
Other,
net
|
(2 | ) | - | |||||
|
Net
cash flows from financing activities
|
(19 | ) | 624 | |||||
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(124 | ) | 392 | |||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
960 | 75 | ||||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 836 | $ | 467 | ||||
|
CASH
PAID FOR INTEREST
|
$ | 221 | 323 | |||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 4 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||||||
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
||||||||||||
|
Approximate
as of
|
||||||||||||
|
Actual
|
Pro
Forma
|
|||||||||||
|
March
31,
|
December
31,
|
March
31,
|
||||||||||
|
2009
(a)
|
2008
(a)
|
2008
(a)
|
||||||||||
|
Customer
Summary:
|
||||||||||||
|
Customer
Relationships:
|
||||||||||||
|
Residential
(non-bulk) basic video customers (b)
|
4,746,000 | 4,769,900 | 4,924,400 | |||||||||
|
Multi-dwelling
(bulk) and commercial unit customers (c)
|
267,700 | 266,000 | 257,000 | |||||||||
|
Total
basic video customers
|
5,013,700 | 5,035,900 | 5,181,400 | |||||||||
|
Non-video
customers (b)
|
419,500 | 408,900 | 390,100 | |||||||||
|
Total
customer relationships (d)
|
5,433,200 | 5,444,800 | 5,571,500 | |||||||||
|
Pro
forma average monthly revenue per basic video customer (e)
|
$ | 110.32 | $ | 108.47 | $ | 100.37 | ||||||
|
Pro
forma average monthly video revenue per basic video customer
(f)
|
$ | 60.61 | $ | 59.19 | $ | 57.55 | ||||||
|
Residential
bundled customers (g)
|
2,814,700 | 2,749,000 | 2,597,300 | |||||||||
|
Revenue
Generating Units:
|
||||||||||||
|
Basic
video customers (b) (c)
|
5,013,700 | 5,035,900 | 5,181,400 | |||||||||
|
Digital
video customers (h)
|
3,157,700 | 3,132,100 | 3,014,200 | |||||||||
|
Residential
high-speed Internet customers (i)
|
2,947,100 | 2,875,200 | 2,762,400 | |||||||||
|
Telephone
customers (j)
|
1,423,100 | 1,348,800 | 1,085,000 | |||||||||
|
Total
revenue generating units (k)
|
12,541,600 | 12,392,000 | 12,043,000 | |||||||||
|
Video
Cable Services:
|
||||||||||||
|
Basic
Video:
|
||||||||||||
|
Estimated
homes passed (l)
|
11,896,600 | 11,852,000 | 11,723,000 | |||||||||
|
Basic
video customers (b)(c)
|
5,013,700 | 5,035,900 | 5,181,400 | |||||||||
|
Estimated
penetration of basic homes passed (b) (c) (l) (m)
|
42.1 | % | 42.5 | % | 44.2 | % | ||||||
|
Pro
forma basic video customers quarterly net loss (b) (c) (n)
|
(22,200 | ) | (74,900 | ) | (11,800 | ) | ||||||
|
Digital
Video:
|
||||||||||||
|
Digital
video customers (h)
|
3,157,700 | 3,132,100 | 3,014,200 | |||||||||
|
Digital
penetration of basic video customers (b) (c) (h) (o)
|
63.0 | % | 62.2 | % | 58.2 | % | ||||||
|
Digital
set-top terminals deployed
|
4,604,000 | 4,548,100 | 4,328,600 | |||||||||
|
Pro
forma digital video customers quarterly net gain (h) (n)
|
25,600 | 22,400 | 102,600 | |||||||||
|
Non-Video
Cable Services:
|
||||||||||||
|
High-Speed
Internet Services:
|
||||||||||||
|
Estimated
high-speed Internet homes passed (l)
|
11,287,800 | 11,229,400 | 11,044,600 | |||||||||
|
Residential
high-speed Internet customers (i)
|
2,947,100 | 2,875,200 | 2,762,400 | |||||||||
|
Estimated
penetration of high-speed Internet homes passed (i) (l)
(m)
|
26.1 | % | 25.6 | % | 25.0 | % | ||||||
|
Pro
forma average monthly high-speed Internet revenue per high-speed Internet
customer (f)
|
$ | 41.26 | $ | 40.26 | $ | 40.09 | ||||||
|
Pro
forma high-speed Internet customers quarterly net gain (i)
(n)
|
71,900 | 22,900 | 85,500 | |||||||||
|
Telephone
Services:
|
||||||||||||
|
Estimated
telephone homes passed (l)
|
10,577,400 | 10,434,400 | 9,520,400 | |||||||||
|
Telephone
customers (j)
|
1,423,100 | 1,348,800 | 1,085,000 | |||||||||
|
Estimated
penetration of telephone homes passed (i) (l) (m)
|
13.5 | % | 12.9 | % | 11.4 | % | ||||||
|
Pro
forma average monthly telephone revenue per telephone customer
(f)
|
$ | 42.56 | $ | 41.06 | $ | 40.42 | ||||||
|
Pro
forma telephone customers quarterly net gain (j) (n)
|
74,300 | 75,200 | 125,700 | |||||||||
|
Pro
forma operating statistics reflect the sales of cable systems in 2008 and
2009 as if such transactions had occurred as of the last day of the
respective period for all periods presented. The pro forma statements
of operations do not include adjustments for financing transactions
completed by Charter during the periods presented or certain other
dispositions of assets because those transactions did not significantly
impact Charter's adjusted EBITDA. However, all transactions completed
in 2008 and 2009 have been reflected in the operating
statistics.
|
||||||||||||
|
At
December 31, 2008 actual basic video customers, digital video customers,
high-speed Internet customers and telephone customers were 5,045,700,
3,133,400, 2,875,200, and 1,348,800, respectively.
|
||||||||||||
|
At
March 31, 2008 actual basic video customers, digital video customers,
high-speed Internet customers and telephone customers were 5,208,000,
3,023,200, 2,768,200, and 1,085,000, respectively.
|
||||||||||||
|
See
footnotes to unaudited summary of operating statistics on page 6 of this
addendum.
|
||||||||||||
Addendum
to Charter Communications, Inc. First Quarter 2009 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. In addition, at March 31, 2009, December 31, 2008,
and March 31, 2008, “customers” include approximately 30,600, 36,000, and
30,600 persons, respectively, whose accounts were over 60 days past due in
payment, approximately 4,400, 5,300, and 4,700 persons, respectively,
whose accounts were over 90 days past due in payment and approximately
2,700, 2,700, and 3,200 persons, respectively, whose accounts were over
120 days past due in payment.
|
|||||||||||||
|
(b) "Basic
video customers" include all residential customers who receive video
services (including those who also purchase high-speed Internet and
telephone services) but excludes approximately 419,500, 408,900, and
390,100 customer relationships at March 31, 2009, December 31, 2008, and
March 31, 2008, respectively, who receive high-speed Internet service
only, telephone service only, or both high-speed Internet service and
telephone service and who are only counted as high-speed Internet
customers or telephone customers.
|
|||||||||||||
|
(c) Included
within "basic video customers" are those in commercial and multi-dwelling
structures, which are calculated on an equivalent bulk unit (“EBU”)
basis. 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 basic video customers
is consistent with the methodology used in determining costs paid to
programmers and has been used consistently each reporting
year. As we increase our effective 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 then publicly traded cable operators, including
Charter.
|
|||||||||||||
|
(e)
"Pro forma average monthly revenue per basic video customer" is calculated
as total quarterly pro forma revenue divided by three divided by average
pro forma basic video customers during the respective
quarter.
|
|||||||||||||
|
(f)
"Pro forma average monthly revenue per customer" represents quarterly pro
forma revenue for the service indicated divided by three divided by the
number of pro forma customers for the service indicated during the
respective quarter.
|
|||||||||||||
|
(g)
"Residential bundled customers" include residential customers receiving a
combination of at least two different types of service, including
Charter's video service, high-speed Internet service or
telephone. "Residential bundled customers" do not include
residential customers who only subscribe to video
service.
|
|||||||||||||
|
(h) "Digital
video customers" include all basic video customers that have one or more
digital set-top boxes or cable cards deployed.
|
|||||||||||||
|
(i) "Residential
high-speed Internet customers" represent those residential customers who
subscribe to our high-speed Internet service. At March 31,
2009, December 31, 2008, and March 31, 2008, approximately 2,639,400,
2,576,600, and 2,465,400 of these high-speed Internet customers,
respectively, receive video and/or telephone services from us and are
included within the respective statistics above.
|
|||||||||||||
|
(j) "Telephone
customers" include all customers receiving telephone
service. As of March 31, 2009, December 31, 2008, and March 31,
2008, approximately 1,390,100, 1,311,200, and 1,048,800 of these telephone
customers, respectively, receive video and/or high-speed Internet services
from us and are included within the respective statistics
above.
|
|||||||||||||
|
(k) "Revenue
generating units" represent the sum total of all basic video, digital
video, high-speed Internet and telephone customers, not counting
additional outlets within one household. For example, a
customer who receives two types of service (such as basic video and
digital video) would be treated as two revenue generating units, and if
that customer added on high-speed Internet service, the customer would be
treated as three revenue generating units. This
statistic is computed in accordance with the guidelines of the
NCTA.
|
|||||||||||||
|
(l) "Homes
passed" represent our estimate of the number of living units, such as
single family homes, apartment units and condominium units passed by our
cable distribution network in the areas where we offer the service
indicated. "Homes passed" exclude commercial units passed by
our cable distribution network. These estimates are updated for
all periods presented when estimates change.
|
|||||||||||||
|
(m) "Penetration"
represents customers as a percentage of homes passed for the service
indicated.
|
|||||||||||||
|
(n) "Pro
forma quarterly net gain (loss)" represents the pro forma net gain or loss
in the respective quarter for the service indicated.
|
|||||||||||||
|
(o) "Digital
penetration of basic video customers" represents the number of digital
video customers as a percentage of basic video
customers.
|
|||||||||||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 6 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
Three
Months Ended March 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Actual
|
Actual
|
|||||||
|
Net
cash flows from operating activities
|
$ | 187 | $ | 204 | ||||
|
Less: Purchases
of property, plant and equipment
|
(269 | ) | (334 | ) | ||||
|
Less: Change
in accrued expenses related to capital expenditures
|
(27 | ) | (31 | ) | ||||
|
Free
cash flow
|
(109 | ) | (161 | ) | ||||
|
Interest
on cash pay obligations (b)
|
448 | 452 | ||||||
|
Purchases
of property, plant and equipment
|
269 | 334 | ||||||
|
Change
in accrued expenses related to capital expenditures
|
27 | 31 | ||||||
|
Reorganization
items, net
|
33 | - | ||||||
|
Other,
net
|
(50 | ) | 10 | |||||
|
Change
in operating assets and liabilities
|
(2 | ) | (121 | ) | ||||
|
Adjusted
EBITDA (c)
|
$ | 616 | $ | 545 | ||||
|
Three
Months Ended March 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Pro
Forma (a)
|
Pro
Forma (a)
|
|||||||
|
Net
cash flows from operating activities
|
$ | 187 | $ | 203 | ||||
|
Less: Purchases
of property, plant and equipment
|
(269 | ) | (334 | ) | ||||
|
Less: Change
in accrued expenses related to capital expenditures
|
(27 | ) | (31 | ) | ||||
|
Free
cash flow
|
(109 | ) | (162 | ) | ||||
|
Interest
on cash pay obligations (b)
|
448 | 452 | ||||||
|
Purchases
of property, plant and equipment
|
269 | 334 | ||||||
|
Change
in accrued expenses related to capital expenditures
|
27 | 31 | ||||||
|
Reorganization
items, net
|
33 | - | ||||||
|
Other,
net
|
(50 | ) | 10 | |||||
|
Change
in operating assets and liabilities
|
(2 | ) | (121 | ) | ||||
|
Adjusted
EBITDA (c)
|
$ | 616 | $ | 544 | ||||
|
(a) Pro
forma results reflect certain sales of cable systems in 2008 and 2009 as
if they occurred as of January 1, 2008.
|
||||||||
|
(b)
Interest on cash pay obligations excludes accretion of original issue
discounts on certain debt securities and amortization of deferred
financing costs that are reflected as interest expense in our consolidated
statements of operations.
|
||||||||
|
(c)
See page 1 of this addendum for detail of the components included within
adjusted EBITDA.
|
||||||||
|
The
above schedules are presented in order to reconcile adjusted EBITDA and
free cash flows, both non-GAAP measures, to the most directly comparable
GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley
Act.
|
||||||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 7 of
8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
|
(DEBTOR-IN-POSSESSION)
|
||||||||
|
CAPITAL
EXPENDITURES
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
Three
Months Ended March 31,
|
||||||||
|
2009
|
2008
|
|||||||
|
Customer
premise equipment (a)
|
$ | 167 | $ | 165 | ||||
|
Scalable
infrastructure (b)
|
45 | 81 | ||||||
|
Line
extensions (c)
|
14 | 21 | ||||||
|
Upgrade/Rebuild
(d)
|
5 | 17 | ||||||
|
Support
capital (e)
|
38 | 50 | ||||||
|
Total
capital expenditures
|
$ | 269 | $ | 334 | ||||
|
(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 boxes and
cable modems, etc.).
|
||||||||
|
(b)
Scalable infrastructure includes costs, not related to customer premise
equipment or our network, to secure growth of new customers, revenue units
and additional bandwidth revenues or provide service enhancements (e.g.,
headend equipment).
|
||||||||
|
(c)
Line extensions include network costs associated with entering new service
areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment,
make-ready and design engineering).
|
||||||||
|
(d) Upgrade/rebuild
includes costs to modify or replace existing fiber/coaxial cable networks,
including betterments.
|
||||||||
|
(e) Support
capital includes costs associated with the replacement or enhancement of
non-network assets due to technological and physical obsolescence (e.g.,
non-network equipment, land, buildings and vehicles).
|
||||||||
Addendum
to Charter Communications, Inc. First Quarter 2009 Earnings
Release
Page 8 of
8