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): December 31, 2007
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 February
27, 2008, Charter Communications, Inc. issued a press release announcing
its results for the fourth quarter ended December 31, 2007. 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
8.01. OTHER
EVENTS.
On
February 27, 2008, Charter Communications, Inc. issued a press release
announcing that it had surpassed one million telephone customers. The press
release announcing the achievement is filed in Exhibit 99.2 hereto.
ITEM 9.01. FINANCIAL STATEMENTS
AND EXHIBITS.
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated February 27, 2008. *
|
|
|
99.2
|
Press Release dated February 27, 2008. ** |
*
furnished herewith
** filed
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 (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), regarding, among other things, our plans, strategies and
prospects, both business and financial. Although we believe that our plans,
intentions and expectations reflected in or suggested by these forward-looking
statements are reasonable, we cannot assure you that we will achieve or realize
these plans, intentions or expectations. Forward-looking statements
are inherently subject to risks, uncertainties and assumptions 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 this current report and in other reports or documents that we
file from time to time with the SEC, and include, but are not limited
to:
|
|
·
|
the
availability, 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 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 pay or refinance debt prior to or when it becomes due and/or
refinance that debt through new issuances, exchange offers or otherwise,
including restructuring our balance sheet and leverage
position;
|
|
·
|
the
impact of competition from other distributors, including incumbent
telephone companies, direct broadcast satellite operators, wireless
broadband providers, and digital subscriber line ("DSL")
providers;
|
|
·
|
difficulties
in growing, further introducing, 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 slowdown, including the
recent significant slowdown in the new 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
February 27, 2008
|
By:/s/ Kevin D.
Howard
Name:
Kevin D. Howard
Title: Vice President,
Controller and Chief Accounting
Officer
|
EXHIBIT INDEX
|
Exhibit
Number
|
Description
|
|
|
99.1
|
Press
Release dated February 27, 2008. *
|
|
|
99.2
|
Press Release dated February 27, 2008. ** |
*
furnished herewith
**
filed herewith
Exhibit
99.1
NEWS
FOR
RELEASE: 8:00 a.m. ET, Wednesday, February 27, 2008
Charter
Reports Fourth Quarter and Full Year
Financial
and Operating Results
Year-
over- year double-digit pro forma revenue and pro forma adjusted EBITDA growth
for the fifth consecutive quarter
St. Louis, MO – February 27,
2008 – Charter Communications, Inc. (NASDAQ: CHTR) (along with its subsidiaries,
the “Company” or “Charter”) today reported its fourth quarter and full year 2007
financial and operating results.
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·
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Fourth
quarter pro forma
revenue of $1.548 billion grew 10.6% year over year and actual revenue of
$1.553 billion grew 9.9%, primarily driven by increases in telephone and
high-speed Internet (HSI) revenues. (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.)
|
|
·
|
Fourth
quarter pro forma
adjusted EBITDA of $563 million increased 12.6% year over year and
actual adjusted EBITDA grew 12.3%. (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.)
|
|
·
|
Total
ARPU (average revenue per customer) for the quarter increased 12.9% year
over year, driven by increased sales of The Charter BundleTM
and advanced services growth.
|
|
·
|
Revenue
generating units (RGUs) increased by 199,100 on a pro forma basis during
the fourth quarter of 2007, a 19.9% increase in net adds over the prior
year fourth quarter.
|
Paul G.
Allen, Charter Chairman of the Board and controlling shareholder, said, “I am
pleased with the consistency of Charter’s performance and its continuing success
in building operational momentum. In 2007, Neil and our management team executed
our strategic plans and drove operational and financial improvement. All of
Charter’s employees deserve recognition for the Company’s performance, and I am
proud of their efforts. We expect the Charter Bundle and Charter Business Bundle
to continue to be the
1
primary
platform for success in 2008, and I am encouraged about the prospects for
Charter as we continue to improve the experience for our
customers.”
“I am
pleased to be announcing year-over-year double-digit pro forma revenue and
adjusted EBITDA growth for the fifth consecutive quarter,” said Neil Smit,
President and Chief Executive Officer. “We have momentum coming out of 2007 and
we remain disciplined in targeting our operating, marketing and capital
investments to grow the business.”
Key
Operating Results
All of
the following customer growth and ARPU statistics are presented on a pro forma basis. Charter
added a net 199,100 RGUs during the fourth quarter of 2007, and for the full
year added 835,900 RGUs, a 15.3% increase in RGU net adds over 2006. As of
December 31, 2007, Charter served approximately 5,596,300 customers and the
Company’s 11,782,100 RGUs were comprised of 5,219,900 analog video, 2,920,400
digital video, 2,682,500 HSI, and 959,300 telephone customers.
|
·
|
Telephone
customers increased by approximately 155,300 in the fourth quarter of
2007, the most quarterly phone net additions in Charter
history. The Company added 513,000 customers during the year
2007, ending the year at 10.6%
penetration.
|
|
·
|
HSI
customers increased by approximately 50,500 in the fourth quarter of 2007
and by 289,100 during the year 2007. HSI ARPU increased 4.8% compared to
the fourth quarter of 2006, primarily due to content improvements and
customers purchasing enhanced
speeds.
|
|
·
|
Digital
video customers increased by approximately 59,700 in the fourth quarter of
2007 and analog video customers decreased by 66,400. For the full year,
the company gained 150,100 digital video customers and lost 116,300 analog
video customers. Video ARPU increased 5.8% compared to the fourth quarter
of 2006 due to growth in revenue from advanced services and rate
adjustments.
|
2
|
·
|
Fourth
quarter 2007 total ARPU increased 12.9% to $97.99 from the same period in
2006, driven primarily by bundling, advanced services growth, and
upgrading customers to higher Internet speeds and programming
tiers.
|
Fourth Quarter Results – Pro
Forma
Fourth
quarter pro forma
revenues were $1.548 billion, an increase of $148 million, or 10.6% –
Charter’s sixth consecutive quarter of year-over-year double-digit pro forma revenue growth. The
increase resulted primarily from increases in telephone and HSI
revenues.
Pro forma telephone revenues
increased to $107 million from $49 million a year ago, as our telephone customer
base has more than doubled since last year. Pro forma HSI revenues
increased $49 million, up 17.7% year over year, due to increases in ARPU and the
number of customers. Pro
forma video revenues increased $28 million, up 3.4% year over year,
primarily as a result of advanced services revenue growth. Pro forma commercial revenues
increased $12 million, or 15.4%, as Charter continues to market the Charter
Business Bundle® to small and medium-size businesses.
Pro forma operating expenses,
which include programming, service and advertising sales costs, increased 10.0%
year over year, reflecting annual programming rate increases, increased labor
costs to support improved service levels, and growth of the Company’s telephone
business and other advanced services. Selling, general, and administrative
expenses increased by 8.3% compared to the year-ago quarter, reflecting
expenditures to further improve the customer experience and increased marketing
expenditures targeted at revenue growth and retaining customers.
Pro forma adjusted EBITDA
totaled $563 million for the fourth quarter of 2007, an increase of 12.6%
compared to the year-ago quarter – Charter’s fifth consecutive quarter of
double-digit, year over year pro forma adjusted EBITDA
growth.
Pro forma net cash flows used
in operating activities for the fourth quarter of 2007 were $2 million, compared
to $28 million for the fourth quarter of 2006.
3
Annual
Results – Pro Forma
For the
year ended December 31, 2007, pro forma revenues were
$5.971 billion, an increase of $588 million, or 10.9%, primarily from telephone
and HSI revenue growth.
Pro forma telephone revenues
increased to $343 million from $135 million a year ago. Pro forma HSI revenues
increased $212 million, up 20.5% year over year. Pro forma video revenues
increased $106 million, up 3.2% year over year. Pro forma commercial revenues
increased $42 million, or 14.1%.
Pro forma operating expenses
for the full year ended December 31, 2007, which include programming, service,
and advertising sales costs, increased 9.7% year over year; and selling,
general, and administrative expenses increased by 11.8%.
Pro forma adjusted EBITDA
totaled $2.101 billion for the full year 2007, an increase of 11.9% compared to
the full year 2006.
Pro forma net cash flows from
operating activities for the full year 2007 were $317 million, compared to $267
million for the full year 2006.
Fourth
Quarter Results – Actual
Fourth
quarter revenues increased 9.9% and operating costs and expenses increased 8.6%
compared to year-ago results.
Adjusted
EBITDA for the fourth quarter of 2007 was $565 million, a 12.3% increase
compared to the year-ago period.
Operating
income from continuing operations was $85 million in the fourth quarter of 2007,
compared to $163 million in the fourth quarter of 2006. The decrease was
primarily related to a $178 million impairment of franchises in the fourth
quarter of 2007. No comparable charge occurred in the fourth quarter of
2006.
Net loss
for the fourth quarter of 2007 was $468 million, or $1.27 per common share. For
the fourth quarter of 2006, Charter reported a net loss of $396 million and
net loss per common share of $1.08. Despite adjusted EBITDA growth due to RGU
net additions and an increase in bundled customers, net loss increased primarily
due to the franchise impairment noted above.
Expenditures
for property, plant, and equipment for the fourth quarter of 2007 were $354
million, compared to fourth quarter 2006 expenditures of $308 million. The
4
increase
in capital expenditures primarily reflects year-over-year increases in customer
premise equipment and support capital.
There
were no net cash flows generated or used in operating activities during the
fourth quarter of 2007, compared to $25 million of net cash flows used in
operating activities for the fourth quarter of 2006.
Annual
Results – Actual
Revenues for the full year 2007 were
$6.002 billion, an increase of 9.0% year over year. Operating costs and expenses
were $3.891 billion, an increase of 8.4% compared to year-ago actual results.
Adjusted EBITDA for the full year 2007 was $2.111 billion, a 10.3% increase
compared to the year-ago period.
Operating
income from continuing operations increased to $548 million for the full year
2007, compared to $367 million in the full year 2006. The primary drivers of the
increase in operating income were increased revenues and higher margins year
over year.
Net loss
for the full year 2007 was $1.616 billion, or $4.39 per common
share. For the full year 2006, Charter reported a net loss of $1.370
billion and net loss per common share of $4.13. Despite the increase in
adjusted EBITDA due to RGU net additions and an increase in bundled customers,
net loss increased year over year. This is primarily due to a $148 million
charge related to the early retirement of debt in 2007, while a $101 million
gain related to the early retirement of debt was recorded in 2006. Additionally,
in 2006 a $200 million gain was recorded related to the sale of discontinued
operations.
Capital
expenditures for property, plant, and equipment for the full year 2007 were
$1.244 billion, compared to $1.103 billion in 2006. Charter expects
that capital expenditures in the year 2008 will total approximately $1.2 billion
and approximately 75% of that amount will be directed toward success-based
activities.
Net cash
flows from operating activities for the full year 2007 were $327 million,
compared to $323 million for the full year 2006.
As of
December 31, 2007, Charter had $19.908 billion in long-term debt and $75 million
of cash on hand. Availability under the Company’s revolving credit facility
totaled approximately $1.0 billion at year end, none of which was limited by
covenant restrictions. Charter
expects that cash on hand, cash flows from operating activities, and
5
amounts
available under its credit facilities will be adequate to meet its projected
cash needs through the second or third quarter of 2009 and thereafter will not
be sufficient to fund such needs. Charter will therefore need to obtain
additional sources of liquidity by early 2009.
Use
of Non-GAAP Financial Metrics
The
Company uses certain measures that are not defined by Generally Accepted
Accounting Principles (“GAAP”) to evaluate various aspects of its business.
Adjusted EBITDA, pro
forma adjusted EBITDA, and free cash flow are non-GAAP financial measures
and should be considered in addition to, not as a substitute for, net cash flows
from operating activities reported in accordance with GAAP. These terms, as
defined by Charter, may not be comparable to similarly titled measures used by
other companies.
Adjusted
EBITDA is defined as income from operations before depreciation and
amortization, impairment charges, stock compensation expense, and other
operating (income) 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
6
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 $31 million and $32
million for each of the three months ended December 31, 2007 and 2006,
respectively, which expense amounts are excluded for the purposes of calculating
compliance with leverage covenants.
In
addition to the actual results for the three and twelve months ended December
31, 2006 and 2007, we have provided in this release pro forma results for the
three and twelve months ended December 31, 2006 and 2007. We believe these pro forma results facilitate
meaningful analysis of the results of operations. Pro forma results in this
release reflect certain of our sales and acquisition of certain assets in 2006
and 2007 as if they had occurred as of January 1, 2006. Pro forma income statements
for the three and twelve months ended December 31, 2006 and December 31, 2007
and pro forma customer
statistics as of December 31, 2007, September 30, 2007 and December 31, 2006 are
provided in the addendum of this news release.
Additional
Information Available on Website
A slide
presentation to accompany the fourth quarter conference call will be available
on the Investor & News Center of our website at www.charter.com in
the “Presentations/Webcasts” section. Pro forma data, including
disclosure concerning the pro
forma data and the basis upon which it was calculated, for each quarter
of 2006 and 2007 can also be found on the Investor & News Center in the
“Pro Forma Information”
section. The pro forma
income statement for the three months and twelve months ended December 31, 2006
and 2007 and pro forma
historical customer statistics are also provided in the addendum of this news
release.
7
Conference
Call
The
Company will host a conference call on Wednesday, February 27, 2008, at 9:00
a.m. Eastern Time (ET) related to the contents of this release.
The
conference call will be webcast live via the Company’s website at www.charter.com.
Access the webcast by clicking on “About Charter” at the top of the home page.
Participants should go to the call link at least 10 minutes prior to the start
time to register. The call will be archived on the website beginning two hours
after its completion. Accompanying slides will also be available on the
site.
Those
participating via telephone should dial 888/233-1576 no later than 10 minutes
prior to the call. International participants should dial 706/643-3458. The
passcode for the call is 32009033.
A replay
of the call will be available at 800/642-1687 or 706/645-9291 beginning two
hours after the completion of the call through the end of business on March 5,
2008. The passcode for the replay is 32009033.
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 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. 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
8
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, 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 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 pay or refinance debt prior to or when it becomes due and/or
refinance that debt through new issuances, exchange offers or otherwise,
including restructuring our balance sheet and leverage
position;
|
| · | the impact of competition from other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers, and digital subscriber line (“DSL”) providers; | |
| · |
difficulties
in growing, further introducing, 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 slowdown, including the
recent significant slowdown in the new 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.
# # #
9
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
||||||||||||||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
||||||||||||||||||||||||
|
Three
Months Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||
|
Actual
|
Actual
|
%
Change
|
Actual
|
Actual
|
%
Change
|
|||||||||||||||||||
|
REVENUES:
|
||||||||||||||||||||||||
|
Video
|
$ | 850 | $ | 829 | 2.5 | % | $ | 3,392 | $ | 3,349 | 1.3 | % | ||||||||||||
|
High-speed
Internet
|
326 | 278 | 17.3 | % | 1,252 | 1,051 | 19.1 | % | ||||||||||||||||
|
Telephone
|
107 | 49 | 118.4 | % | 343 | 135 | 154.1 | % | ||||||||||||||||
|
Advertising
sales
|
82 | 91 | (9.9 | %) | 298 | 319 | (6.6 | %) | ||||||||||||||||
|
Commercial
|
90 | 78 | 15.4 | % | 341 | 305 | 11.8 | % | ||||||||||||||||
|
Other
|
98 | 88 | 11.4 | % | 376 | 345 | 9.0 | % | ||||||||||||||||
|
Total
revenues
|
1,553 | 1,413 | 9.9 | % | 6,002 | 5,504 | 9.0 | % | ||||||||||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||||||||||
|
Operating (excluding depreciation and
amortization)
(a)
|
663 | 608 | 9.0 | % | 2,620 | 2,438 | 7.5 | % | ||||||||||||||||
|
Selling,
general and administrative (excluding
stock compensation expense) (b)
|
325 | 302 | 7.6 | % | 1,271 | 1,152 | 10.3 | % | ||||||||||||||||
|
Operating
costs and expenses
|
988 | 910 | 8.6 | % | 3,891 | 3,590 | 8.4 | % | ||||||||||||||||
|
Adjusted
EBITDA
|
565 | 503 | 12.3 | % | 2,111 | 1,914 | 10.3 | % | ||||||||||||||||
|
Adjusted
EBITDA margin
|
36.4 | % | 35.6 | % | 35.2 | % | 34.8 | % | ||||||||||||||||
|
Depreciation
and amortization
|
329 | 330 | 1,328 | 1,354 | ||||||||||||||||||||
|
Impairment
charges
|
178 | - | 234 | 159 | ||||||||||||||||||||
|
Stock
compensation expense
|
3 | 3 | 18 | 13 | ||||||||||||||||||||
|
Other
operating (income) expenses, net
|
(30 | ) | 7 | (17 | ) | 21 | ||||||||||||||||||
|
Operating
income from continuing operations
|
85 | 163 | 548 | 367 | ||||||||||||||||||||
|
OTHER
INCOME AND (EXPENSES):
|
||||||||||||||||||||||||
|
Interest
expense, net
|
(466 | ) | (466 | ) | (1,851 | ) | (1,877 | ) | ||||||||||||||||
|
Change
in value of derivatives
|
70 | (14 | ) | 52 | (4 | ) | ||||||||||||||||||
|
Gain
(loss) on extinguishment of debt
|
(113 | ) | - | (148 | ) | 101 | ||||||||||||||||||
|
Other
income (expense), net
|
(4 | ) | 2 | (8 | ) | 14 | ||||||||||||||||||
| (513 | ) | (478 | ) | (1,955 | ) | (1,766 | ) | |||||||||||||||||
|
Loss
from continuing operations before income taxes
|
(428 | ) | (315 | ) | (1,407 | ) | (1,399 | ) | ||||||||||||||||
|
Income
tax expense
|
(40 | ) | (63 | ) | (209 | ) | (187 | ) | ||||||||||||||||
|
Loss
from continuing operations
|
(468 | ) | (378 | ) | (1,616 | ) | (1,586 | ) | ||||||||||||||||
|
Income
(loss) from discontinued operations, net of tax
|
- | (18 | ) | - | 216 | |||||||||||||||||||
|
Net
loss
|
$ | (468 | ) | $ | (396 | ) | $ | (1,616 | ) | $ | (1,370 | ) | ||||||||||||
|
LOSS
PER COMMON SHARE, BASIC AND DILUTED:
|
||||||||||||||||||||||||
|
Loss
from continuing operations
|
$ | (1.27 | ) | $ | (1.03 | ) | $ | (4.39 | ) | $ | (4.78 | ) | ||||||||||||
|
Net
loss
|
$ | (1.27 | ) | $ | (1.08 | ) | $ | (4.39 | ) | $ | (4.13 | ) | ||||||||||||
|
Weighted
average common shares outstanding, basic and diluted
|
369,916,556 | 365,331,337 | 368,240,608 | 331,941,788 | ||||||||||||||||||||
|
(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. Fourth Quarter 2007 Earnings
Release
Page
1 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
|
||||||||||||||||||||||||
|
(DOLLARS
IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
|
||||||||||||||||||||||||
|
Three
Months Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||||||||||
|
Pro
Forma (a)
|
Pro
Forma (a)
|
%
Change
|
Pro
Forma (a)
|
Pro
Forma (a)
|
%
Change
|
|||||||||||||||||||
|
REVENUES:
|
||||||||||||||||||||||||
|
Video
|
$ | 846 | $ | 818 | 3.4 | % | $ | 3,370 | $ | 3,264 | 3.2 | % | ||||||||||||
|
High-speed
Internet
|
326 | 277 | 17.7 | % | 1,248 | 1,036 | 20.5 | % | ||||||||||||||||
|
Telephone
|
107 | 49 | 118.4 | % | 343 | 135 | 154.1 | % | ||||||||||||||||
|
Advertising
sales
|
82 | 91 | (9.9 | %) | 297 | 315 | (5.7 | %) | ||||||||||||||||
|
Commercial
|
90 | 78 | 15.4 | % | 339 | 297 | 14.1 | % | ||||||||||||||||
|
Other
|
97 | 87 | 11.5 | % | 374 | 336 | 11.3 | % | ||||||||||||||||
|
Total
revenues
|
1,548 | 1,400 | 10.6 | % | 5,971 | 5,383 | 10.9 | % | ||||||||||||||||
|
COSTS
AND EXPENSES:
|
||||||||||||||||||||||||
|
Operating
(excluding depreciation and
amortization)
(b)
|
660 | 600 | 10.0 | % | 2,602 | 2,371 | 9.7 | % | ||||||||||||||||
|
Selling,
general and administrative (excluding stock
|
||||||||||||||||||||||||
|
compensation
expense) (c)
|
325 | 300 | 8.3 | % | 1,268 | 1,134 | 11.8 | % | ||||||||||||||||
|
Operating
costs and expenses
|
985 | 900 | 9.4 | % | 3,870 | 3,505 | 10.4 | % | ||||||||||||||||
|
Adjusted
EBITDA
|
563 | 500 | 12.6 | % | 2,101 | 1,878 | 11.9 | % | ||||||||||||||||
|
Adjusted
EBITDA margin
|
36.4 | % | 35.7 | % | 35.2 | % | 34.9 | % | ||||||||||||||||
|
Depreciation
and amortization
|
327 | 328 | 1,323 | 1,334 | ||||||||||||||||||||
|
Impairment
charges
|
178 | - | 178 | - | ||||||||||||||||||||
|
Stock
compensation expense
|
3 | 3 | 18 | 13 | ||||||||||||||||||||
|
Other
operating (income) expenses, net
|
(33 | ) | 7 | (20 | ) | 19 | ||||||||||||||||||
|
Operating
income from operations
|
88 | 162 | 602 | 512 | ||||||||||||||||||||
|
OTHER
INCOME AND (EXPENSES):
|
||||||||||||||||||||||||
|
Interest
expense, net
|
(466 | ) | (466 | ) | (1,851 | ) | (1,851 | ) | ||||||||||||||||
|
Change
in value of derivatives
|
70 | (14 | ) | 52 | (4 | ) | ||||||||||||||||||
|
Gain
(loss) on extinguishment of debt
|
(113 | ) | - | (148 | ) | 101 | ||||||||||||||||||
|
Other
expense, net
|
(4 | ) | 2 | (8 | ) | 14 | ||||||||||||||||||
| (513 | ) | (478 | ) | (1,955 | ) | (1,740 | ) | |||||||||||||||||
|
Loss
before income taxes
|
(425 | ) | (316 | ) | (1,353 | ) | (1,228 | ) | ||||||||||||||||
|
Income
tax expense
|
(42 | ) | (47 | ) | (192 | ) | (179 | ) | ||||||||||||||||
|
Net
loss
|
$ | (467 | ) | $ | (363 | ) | $ | (1,545 | ) | $ | (1,407 | ) | ||||||||||||
|
LOSS
PER COMMON SHARE, BASIC AND DILUTED:
|
$ | (1.26 | ) | $ | (0.99 | ) | $ | (4.20 | ) | $ | (4.24 | ) | ||||||||||||
|
Weighted
average common shares outstanding, basic and diluted
|
369,916,556 | 365,331,337 | 368,240,608 | 331,941,788 | ||||||||||||||||||||
|
(a) Pro forma results reflect certain sales
and acquisitions of cable systems in 2006 and 2007 as if they occurred as
of January 1, 2006. 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 2006 and 2007 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.
|
||||||||||||||||||||||||
|
December
31, 2007. Pro forma revenues were reduced by $5 million and $31
million for the three months and year ended December 31, 2007,
respectively. Pro forma operating costs and expenses were reduced by $3
million and $21 million for the three months and year ended December 31,
2007, respectively. Pro forma net loss was reduced by $1 million and
$71 million for the three months and year ended December 31, 2007,
respectively.
|
||||||||||||||||||||||||
|
December
31, 2006. Pro forma revenues were reduced by $13 million and $121
million for the three months and year ended December 31, 2006,
respectively. Pro forma operating costs and expenses were reduced by
$10 million and $85 million for the three months and year ended December
31, 2006, respectively. Pro forma net loss was reduced by $33 million
and increased by $37 million for the three months and year ended December
31, 2006, respectively.
|
||||||||||||||||||||||||
|
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. Fourth Quarter 2007 Earnings
Release
Page
2 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
December
31,
|
December
31,
|
|||||||
|
2007
|
2006
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS:
|
||||||||
|
Cash
and cash equivalents
|
$ | 75 | $ | 60 | ||||
|
Accounts
receivable, net of allowance for doubtful accounts
|
225 | 195 | ||||||
|
Prepaid
expenses and other current assets
|
36 | 84 | ||||||
|
Total
current assets
|
336 | 339 | ||||||
|
INVESTMENT
IN CABLE PROPERTIES:
|
||||||||
|
Property,
plant and equipment, net
|
5,103 | 5,217 | ||||||
|
Franchises,
net
|
8,942 | 9,223 | ||||||
|
Total
investment in cable properties, net
|
14,045 | 14,440 | ||||||
|
OTHER
NONCURRENT ASSETS
|
285 | 321 | ||||||
|
Total
assets
|
$ | 14,666 | $ | 15,100 | ||||
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
||||||||
|
CURRENT
LIABILITIES:
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 1,332 | $ | 1,298 | ||||
|
Total
current liabilities
|
1,332 | 1,298 | ||||||
|
LONG-TERM
DEBT
|
19,908 | 19,062 | ||||||
|
NOTE
PAYABLE - RELATED PARTY
|
65 | 57 | ||||||
|
DEFERRED
MANAGEMENT FEES - RELATED PARTY
|
14 | 14 | ||||||
|
OTHER
LONG-TERM LIABILITIES
|
1,035 | 692 | ||||||
|
MINORITY
INTEREST
|
199 | 192 | ||||||
|
PREFERRED
STOCK - REDEEMABLE
|
5 | 4 | ||||||
|
SHAREHOLDERS'
DEFICIT
|
(7,892 | ) | (6,219 | ) | ||||
|
Total
liabilities and shareholders' deficit
|
$ | 14,666 | $ | 15,100 | ||||
Addendum
to Charter Communications, Inc. Fourth Quarter 2007 Earnings
Release
Page
3 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||
|
Year
Ended December 31,
|
||||||||
|
2007
|
2006
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
loss
|
$ | (1,616 | ) | $ | (1,370 | ) | ||
|
Adjustments
to reconcile net loss to net cash flows from operating
activities:
|
||||||||
|
Depreciation
and amortization
|
1,328 | 1,362 | ||||||
|
Impairment
charges
|
234 | 159 | ||||||
|
Noncash
interest expense
|
40 | 128 | ||||||
|
Change
in value of derivatives
|
(52 | ) | 4 | |||||
|
Deferred
income taxes
|
198 | 202 | ||||||
|
Gain
on sale of assets, net
|
(3 | ) | (192 | ) | ||||
|
(Gain)
loss on extinguishment of debt
|
136 | (101 | ) | |||||
|
Other,
net
|
2 | 4 | ||||||
|
Changes
in operating assets and liabilities, net of effects from acquisitions and
dispositions:
|
||||||||
|
Accounts
receivable
|
(36 | ) | 24 | |||||
|
Prepaid
expenses and other assets
|
45 | 55 | ||||||
|
Accounts
payable, accrued expenses and other
|
51 | 48 | ||||||
|
Net
cash flows from operating activities
|
327 | 323 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchases
of property, plant and equipment
|
(1,244 | ) | (1,103 | ) | ||||
|
Change
in accrued expenses related to capital expenditures
|
(2 | ) | 24 | |||||
|
Proceeds
from sale of assets, including cable systems
|
104 | 1,020 | ||||||
|
Other,
net
|
4 | (6 | ) | |||||
|
Net
cash flows from investing activities
|
(1,138 | ) | (65 | ) | ||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Borrowings
of long-term debt
|
7,877 | 6,322 | ||||||
|
Repayments
of long-term debt
|
(7,017 | ) | (6,938 | ) | ||||
|
Proceeds
from issuance of debt
|
- | 440 | ||||||
|
Payments
for debt issuance costs
|
(42 | ) | (44 | ) | ||||
|
Other,
net
|
8 | 1 | ||||||
|
Net
cash flows from financing activities
|
826 | (219 | ) | |||||
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
15 | 39 | ||||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
60 | 21 | ||||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 75 | $ | 60 | ||||
|
CASH
PAID FOR INTEREST
|
$ | 1,792 | $ | 1,671 | ||||
|
NONCASH
TRANSACTIONS:
|
||||||||
|
Cumulative
adjustment to Accumulated Deficit for the adoption of FIN
48
|
$ | 56 | $ | - | ||||
|
Issuance
of 6.50% convertible notes
|
$ | 479 | $ | - | ||||
|
Issuance
of debt by CCH I, LLC
|
$ | - | $ | 419 | ||||
|
Issuance
of debt by CCH II, LLC
|
$ | - | $ | 410 | ||||
|
Issuance
of debt by Charter Communications Operating, LLC
|
$ | - | $ | 37 | ||||
|
Retirement
of Charter Communications Holdings, LLC debt
|
$ | - | $ | (796 | ) | |||
|
Retirement
of Renaissance Media Group LLC debt
|
$ | - | $ | (37 | ) | |||
|
Issuance
of Class A common stock
|
$ | - | $ | 68 | ||||
|
Retirement
of 5.875% convertible notes
|
$ | (364 | ) | $ | (255 | ) | ||
Addendum
to Charter Communications, Inc. Fourth Quarter 2007 Earnings
Release
Page
4 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
||||||||||||
|
Approximate
|
||||||||||||
|
Actual
|
Pro
Forma as of
|
|||||||||||
|
December
31,
|
September
30,
|
December
31,
|
||||||||||
|
2007
(a)
|
2007
(a)
|
2006
(a)
|
||||||||||
|
Customer
Summary:
|
||||||||||||
|
Customer
Relationships:
|
||||||||||||
|
Residential
(non-bulk) video customers (b)
|
4,959,800 | 5,012,400 | 5,077,200 | |||||||||
|
Multi-dwelling
(bulk) and commercial unit customers (c)
|
260,100 | 273,900 | 259,000 | |||||||||
|
Total
video customers
|
5,219,900 | 5,286,300 | 5,336,200 | |||||||||
|
Non-video
customers (b)
|
376,400 | 362,000 | 331,400 | |||||||||
|
Total
customer relationships (d)
|
5,596,300 | 5,648,300 | 5,667,600 | |||||||||
|
Pro
forma average monthly revenue per video customer (e)
|
$ | 97.99 | $ | 95.24 | $ | 86.81 | ||||||
|
Pro
forma average monthly video revenue per video customer (m)
|
$ | 56.05 | $ | 55.13 | $ | 52.99 | ||||||
|
Residential
bundled customers (f)
|
2,506,700 | 2,440,200 | 2,180,700 | |||||||||
|
Revenue
Generating Units:
|
||||||||||||
|
Video
customers (b) (c)
|
5,219,900 | 5,286,300 | 5,336,200 | |||||||||
|
Digital
video customers (g)
|
2,920,400 | 2,860,700 | 2,770,300 | |||||||||
|
Residential
high-speed Internet customers (h)
|
2,682,500 | 2,632,000 | 2,393,400 | |||||||||
|
Telephone
customers (i)
|
959,300 | 804,000 | 446,300 | |||||||||
|
Total
revenue generating units (j)
|
11,782,100 | 11,583,000 | 10,946,200 | |||||||||
|
Video
Cable Services:
|
||||||||||||
|
Video:
|
||||||||||||
|
Estimated
homes passed (k)
|
11,847,600 | 11,641,300 | 11,519,000 | |||||||||
|
Video
customers (b)(c)
|
5,219,900 | 5,286,300 | 5,336,200 | |||||||||
|
Estimated
penetration of video homes passed (b) (c) (k) (l)
|
44.1 | % | 45.4 | % | 46.3 | % | ||||||
|
Pro
forma video customers quarterly net gain (loss) (b) (c)
(n)
|
(66,400 | ) | (38,700 | ) | (40,700 | ) | ||||||
|
Digital
Video:
|
||||||||||||
|
Estimated
digital video homes passed (k)
|
11,753,300 | 11,546,400 | 11,385,000 | |||||||||
|
Digital
video customers (g)
|
2,920,400 | 2,860,700 | 2,770,300 | |||||||||
|
Estimated
penetration of digital homes passed (g) (k) (l)
|
24.8 | % | 24.8 | % | 24.3 | % | ||||||
|
Digital
penetration of video customers (b) (c) (g) (o)
|
55.9 | % | 54.1 | % | 51.9 | % | ||||||
|
Digital
set-top terminals deployed
|
4,192,700 | 4,125,400 | 3,985,600 | |||||||||
|
Pro
forma digital video customers quarterly net gain (g) (n)
|
59,700 | 16,700 | 41,100 | |||||||||
|
Non-Video
Cable Services:
|
||||||||||||
|
High-Speed
Internet Services:
|
||||||||||||
|
Estimated
high-speed Internet homes passed (k)
|
11,023,700 | 10,907,400 | 10,761,000 | |||||||||
|
Residential
high-speed Internet customers (h)
|
2,682,500 | 2,632,000 | 2,393,400 | |||||||||
|
Estimated
penetration of high-speed Internet homes passed (h) (k)
(l)
|
24.3 | % | 24.1 | % | 22.2 | % | ||||||
|
Pro
forma average monthly high-speed Internet revenue per high-speed Internet
customer (m)
|
$ | 40.86 | $ | 40.87 | $ | 38.98 | ||||||
|
Pro
forma high-speed Internet customers quarterly net gain (h)
(n)
|
50,500 | 53,900 | 59,200 | |||||||||
|
Telephone
Services:
|
||||||||||||
|
Estimated
telephone homes passed (k)
|
9,013,900 | 8,289,200 | 6,799,300 | |||||||||
|
Telephone
customers (i)
|
959,300 | 804,000 | 446,300 | |||||||||
|
Estimated
penetration of telephone homes passed (h) (k) (l)
|
10.6 | % | 9.7 | % | 6.6 | % | ||||||
|
Pro
forma average monthly telephone revenue per telephone customer
(m)
|
$ | 41.77 | $ | 42.48 | $ | 42.26 | ||||||
|
Pro
forma telephone customers quarterly net gain (i) (n)
|
155,300 | 102,700 | 106,500 | |||||||||
|
Pro
forma operating statistics reflect the sales and acquisitions of cable
systems in 2006 and 2007 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 2006 and 2007 have been reflected in the
operating statistics.
|
||||||||||||
|
At
September 30, 2007 actual video customers, digital video customers,
high-speed Internet customers and telephone customers were 5,347,800,
2,882,900, 2,639,200, and 802,600, respectively.
|
||||||||||||
|
At
December 31, 2006 actual video customers, digital video customers,
high-speed Internet customers and telephone customers were 5,433,300,
2,808,400, 2,402,200, and 445,800, respectively.
|
||||||||||||
|
See
footnotes to unaudited summary of operating statistics on page 6 of this
addendum.
|
||||||||||||
Addendum
to Charter Communications, Inc. Fourth Quarter 2007 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 December 31,
2007, September 30, 2007, and December 31, 2006, “customers” include
approximately 48,200, 33,800, and 32,700 persons whose accounts were over
60 days past due in payment, approximately 10,700, 5,700, and 5,400
persons whose accounts were over 90 days past due in payment and
approximately 2,900, 2,100, and 2,700 of which were over 120 days past due
in payment, respectively.
|
|||||||||||||
|
(b) "Video
customers" include all residential customers who receive video services
(including those who also purchase high-speed Internet and telephone
services) but excludes approximately 376,400, 362,000, and 331,400
customer relationships at December 31, 2007, September 30, 2007, and
December 31, 2006, 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 "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 video customers is
consistent with the methodology used in determining costs paid to
programmers and has been used consistently. 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 publicly traded cable operators, including
Charter.
|
|||||||||||||
|
(e)
"Pro forma average monthly revenue per video customer" is calculated as
total quarterly pro forma revenue divided by three divided by average pro
forma video customers during the respective quarter.
|
|||||||||||||
|
(f)
"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.
|
|||||||||||||
|
(g) "Digital
video customers" include all video customers that have one or more digital
set-top boxes or cable cards deployed. Included in "digital video
customers" on December 31, 2007, September 30, 2007, and December 31, 2006
are approximately 2,000, 3,100, and 4,700 customers, respectively, that
receive digital video service directly through satellite
transmission.
|
|||||||||||||
|
(h) "Residential
high-speed Internet customers" represent those residential customers who
subscribe to our high-speed Internet service. At December 31,
2007, September 30, 2007, and December 31, 2006, approximately 2,392,900,
2,343,300, and 2,114,200 of these high-speed Internet customers,
respectively, receive video and/or telephone services from us and are
included within the respective statistics above.
|
|||||||||||||
|
(i) "Telephone
customers" include all customers receiving telephone
service. As of December 31, 2007, September 30, 2007, and
December 31, 2006, approximately 920,600, 770,600, and 418,600 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 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) "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 video customers" represents the number of digital video
customers as a percentage of video
customers.
|
|||||||||||||
Addendum
to Charter Communications, Inc. Fourth Quarter 2007 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 December 31,
|
Year
Ended December 31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Actual
|
Actual
|
Actual
|
Actual
|
|||||||||||||
|
Net
cash flows from operating activities
|
$ | - | $ | (25 | ) | $ | 327 | $ | 323 | |||||||
|
Less: Purchases
of property, plant and equipment
|
(354 | ) | (308 | ) | (1,244 | ) | (1,103 | ) | ||||||||
|
Less: Change
in accrued expenses related to capital expenditures
|
49 | 20 | (2 | ) | 24 | |||||||||||
|
Free
cash flow
|
(305 | ) | (313 | ) | (919 | ) | (756 | ) | ||||||||
|
Interest
on cash pay obligations (a)
|
457 | 448 | 1,811 | 1,749 | ||||||||||||
|
Purchases
of property, plant and equipment
|
354 | 308 | 1,244 | 1,103 | ||||||||||||
|
Change
in accrued expenses related to capital expenditures
|
(49 | ) | (20 | ) | 2 | (24 | ) | |||||||||
|
Other,
net
|
7 | (2 | ) | 33 | 15 | |||||||||||
|
Change
in operating assets and liabilities
|
101 | 82 | (60 | ) | (127 | ) | ||||||||||
|
Adjusted
EBITDA from continuing and discontinued
operations (b)
|
$ | 565 | $ | 503 | $ | 2,111 | $ | 1,960 | ||||||||
|
Three
Months Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Pro
Forma (c)
|
Pro
Forma (c)
|
Pro
Forma (c)
|
Pro
Forma (c)
|
|||||||||||||
|
Net
cash flows from operating activities
|
$ | (2 | ) | $ | (28 | ) | $ | 317 | $ | 267 | ||||||
|
Less: Purchases
of property, plant and equipment
|
(354 | ) | (308 | ) | (1,244 | ) | (1,085 | ) | ||||||||
|
Less: Change
in accrued expenses related to capital expenditures
|
49 | 20 | (2 | ) | 24 | |||||||||||
|
Free
cash flow
|
(307 | ) | (316 | ) | (929 | ) | (794 | ) | ||||||||
|
Interest
on cash pay obligations (a)
|
457 | 448 | 1,811 | 1,723 | ||||||||||||
|
Purchases
of property, plant and equipment
|
354 | 308 | 1,244 | 1,085 | ||||||||||||
|
Change
in accrued expenses related to capital expenditures
|
(49 | ) | (20 | ) | 2 | (24 | ) | |||||||||
|
Other,
net
|
7 | (2 | ) | 33 | 15 | |||||||||||
|
Change
in operating assets and liabilities
|
101 | 82 | (60 | ) | (127 | ) | ||||||||||
|
Adjusted
EBITDA (b)
|
$ | 563 | $ | 500 | $ | 2,101 | $ | 1,878 | ||||||||
|
(a) 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.
|
||||||||||||||||
|
(b)
See page 1 of this addendum for detail of the components included within
adjusted EBITDA. Adjusted EBITDA from continuing and discontinued
operations of $503 million
|
||||||||||||||||
|
and
$2.0 billion for the three months and year ended December 31, 2006,
respectively, includes $0 and $46 million of adjusted EBITDA recorded in
discontinued operations
|
||||||||||||||||
|
in
our consolidated statements of operations.
|
||||||||||||||||
|
(c) Pro
forma results reflect certain sales and acquisitions of cable systems in
2006 and 2007 as if they occurred as of January 1, 2006.
|
||||||||||||||||
|
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. Fourth Quarter 2007 Earnings
Release
Page
7 of 8
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
||||||||||||||||
|
CAPITAL
EXPENDITURES
|
||||||||||||||||
|
(DOLLARS
IN MILLIONS)
|
||||||||||||||||
|
Three
Months Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Customer
premise equipment (a)
|
$ | 150 | $ | 129 | $ | 578 | $ | 507 | ||||||||
|
Scalable
infrastructure (b)
|
68 | 68 | 232 | 214 | ||||||||||||
|
Line
extensions (c)
|
29 | 25 | 105 | 107 | ||||||||||||
|
Upgrade/Rebuild
(d)
|
17 | 9 | 52 | 45 | ||||||||||||
|
Support
capital (e)
|
90 | 77 | 277 | 230 | ||||||||||||
|
Total
capital expenditures
|
$ | 354 | $ | 308 | $ | 1,244 | $ | 1,103 | ||||||||
|
(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. Fourth Quarter 2007 Earnings
Release
Page
8 of 8
Exhibit
99.2
NEWS
Charter
Communications Surpasses One Million
Telephone
Customers
Charter
Telephone customers save an estimated $150 million a year versus services
provided by traditional phone companies
St. Louis, Missouri, February
27, 2008 – Charter Communications, Inc. (NASDAQ: CHTR) announced today it has
surpassed one million Charter Telephone® customers. Charter offers customers a
choice for residential telephone service and the opportunity for significant
savings. The company estimates its one million Charter Telephone customers save
approximately $150 million a year versus the service provided by traditional
phone companies.
Charter
is a reliable and cost-effective provider of residential and business telephone
service. “More than a million customers rely on Charter phone, and the vast
majority of them bundle it with Charter Digital Cable® and Charter High-Speed®
Internet because it’s simple, convenient, and it’s a great value,” said Mike
Lovett, Executive Vice President and Chief Operating Officer for
Charter.
A cable customer for more than 20
years, Charter’s one-millionth telephone customer lives in Worcester, MA, and
recently upgraded to Charter’s triple-play bundle of services. Upon hearing the
news, the customer said of Charter, “Our family has had a great experience with
Charter Cable over the years, so it was an easy decision to add Charter phone
and high-speed Internet. It’s also really convenient to have only one bill for
all three services, and we save a lot of money with the bundle.”
Charter
Telephone is now available to over nine million homes, with additional launches
of the service planned in 2008. Charter’s commercial telephone service is
available in all of its telephone markets, which provides business customers the
opportunity for significant savings through the Charter Business
Bundle®.
About
Charter Telephone
Charter
provides high-quality, reliable residential and business voice services to over
one million customers through Charter’s private, managed digital fiber-optic
network. Charter Telephone service includes unlimited nationwide
calling and 10 popular calling features, such as Call Waiting, Caller ID, and
Call Forwarding as well as Voicemail and enhanced 911 emergency service, all at
no additional charge. Directory assistance (411) and listings in the local
telephone directory are also available. New customers can keep their current
phone numbers when they switch to Charter service, and calls can be made
directly through any working in-home jack using the customers’ existing
telephones.
Charter
Telephone’s Unlimited Plan can be added to a Charter Digital Cable® and Charter
High-Speed® Internet bundle for only $24.99 more per month. Charter also offers
customers the Worldwide 250 Calling Plan, which can be added to their Charter
Telephone service. The Plan offers 250 international minutes to more than 200
countries around the world from any landline phone for an additional $20 per
month. Professional installation for Charter Telephone is included at no extra
charge. For more details or to place an order, call 1-888-438-2427 (1-888-GET
CHARTER).
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 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.
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