STAMFORD, Conn., May 7, 2013 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three months ended March 31, 2013.
(Logo:
http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO)
Key highlights:
- Revenues grew to $1,917 million
in the first quarter of 2013, up 4.9% as compared to the prior-year
period, driven by growth in video services revenue and Internet and
commercial customers.
- Total residential customer relationships grew by 56,000 during
the first quarter. Expanded basic video customers grew by 4,000,
while limited basic customers declined by 28,000. Charter added
99,000 residential Internet customers and 59,000 residential
telephone customers during the first quarter.
- First quarter residential revenues grew 4.1% compared to the
prior-year period, a fourfold increase in growth as compared to the
first quarter of 2012. First quarter 2013 residential revenue
growth was led by video services, which grew by 6.8% compared to
the prior-year period.
- Commercial revenues grew 19.6% in the first quarter versus the
prior-year period, driven by continued growth in small and medium
businesses along with increased sales to carriers.
- First quarter Adjusted EBITDA1 grew 2.8%
year-over-year to $670 million. First
quarter net loss totaled $42 million,
compared to $94 million in the
comparable prior-year period.
- Free cash flow1 for the quarter was $118 million and net cash flows from operating
activities totaled $541 million.
"Less than a year ago, we implemented a new strategy that
substantially changed the way that Charter does business. While we
still have more work to do, significant progress is evident in our
first quarter results," said Tom
Rutledge, Charter President and CEO. "Our new operating
strategies are having a positive impact on our customers, employees
and the underlying fundamentals of our business. Our two-way,
interactive, high capacity network offers significant competitive
advantages, and our strategy is to fully leverage those benefits to
drive improved product and service delivery, operating performance,
and revenue and free cash flow growth."
1 Adjusted EBITDA and free cash flow are
defined in the "Use of Non-GAAP Financial Metrics" section and are
reconciled to net loss and net cash flows from operating
activities, respectively, in the addendum of this news release.
Key Operating Results
|
|
Approximate as of
|
|
|
|
|
March
31, 2013 (a)
|
|
March
31, 2012 (a)
|
|
Y/Y
Change
|
Footprint
|
|
|
|
|
|
|
Estimated Video Passings (b)
|
|
12,090
|
|
12,003
|
|
1
%
|
Estimated Internet Passings
(b)
|
|
11,789
|
|
11,691
|
|
1
%
|
Estimated Telephone Passings
(b)
|
|
11,124
|
|
10,886
|
|
2
%
|
|
|
|
|
|
|
|
Penetration Statistics
|
|
|
|
|
|
|
Video Penetration of Estimated Video
Passings (c)
|
|
34.1
%
|
|
36.2
%
|
|
-2.1
ppts
|
Internet Penetration of Estimated
Internet Passings (c)
|
|
34.7
%
|
|
32.5
%
|
|
2.2
ppts
|
Telephone Penetration of Estimated
Telephone Passings (c)
|
|
18.7
%
|
|
17.5
%
|
|
1.2
ppts
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
Residential Customer Relationships
(d)
|
|
5,091
|
|
5,013
|
|
2
%
|
Residential Non-Video
Customers
|
|
1,126
|
|
849
|
|
33
%
|
% Non-Video
|
|
22.1
%
|
|
16.9
%
|
|
5.2
ppts
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Video (e)
|
|
3,965
|
|
4,164
|
|
-5
%
|
Internet (f)
|
|
3,884
|
|
3,633
|
|
7
%
|
Telephone (g)
|
|
1,973
|
|
1,822
|
|
8
%
|
Residential PSUs (h)
|
|
9,822
|
|
9,619
|
|
2
%
|
Residential PSU / Customer Relationships
(d)(h)
|
|
1.93
|
|
1.92
|
|
|
|
|
|
|
|
|
|
Quarterly Net Additions/(Losses)
(i)
|
|
|
|
|
|
|
Video (e)
|
|
(24)
|
|
20
|
|
-220
%
|
Internet (f)
|
|
99
|
|
141
|
|
-30
%
|
Telephone (g)
|
|
59
|
|
31
|
|
90
%
|
Residential PSUs (h)
|
|
134
|
|
192
|
|
-30
%
|
|
|
|
|
|
|
|
Single Play Penetration (j)
|
|
37.7
%
|
|
37.1
%
|
|
0.6
ppts
|
Double Play Penetration (k)
|
|
31.7
%
|
|
34.0
%
|
|
-2.3
ppts
|
Triple Play Penetration (l)
|
|
30.5
%
|
|
28.9
%
|
|
1.6
ppts
|
Digital Penetration (m)
|
|
88.7
%
|
|
83.1
%
|
|
5.6
ppts
|
|
|
|
|
|
|
|
Revenue per Customer Relationship
(d)(n)
|
|
$107.25
|
|
$104.95
|
|
2
%
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
Commercial Customer Relationships
(d)(o)
|
|
323
|
|
311
|
|
4
%
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Video (e)(o)
|
|
159
|
|
177
|
|
-10
%
|
Internet (f)
|
|
202
|
|
169
|
|
20
%
|
Telephone (g)
|
|
112
|
|
85
|
|
32
%
|
Commercial PSUs (h)
|
|
473
|
|
431
|
|
10
%
|
|
|
|
|
|
|
|
Quarterly Net Additions/(Losses)
(i)
|
|
|
|
|
|
|
Video (e)(o)
|
|
(10)
|
|
7
|
|
-243
%
|
Internet (f)
|
|
9
|
|
6
|
|
50
%
|
Telephone (g)
|
|
7
|
|
6
|
|
17
%
|
Commercial PSUs (h)
|
|
6
|
|
19
|
|
-68
%
|
Footnotes
In thousands, except ARPU and penetration
data. See footnotes to unaudited summary of operating statistics on
page 5 of the addendum of this news release. The footnotes contain
important disclosures regarding the definitions used for these
operating statistics.
During the first quarter of 2013, Charter continued to see
strong demand for its triple play offering. Triple play penetration
grew by 60 basis points during the quarter, from 29.9% to 30.5%.
The Company continues to focus on enhancing the value of its core
offerings and improving service levels in order to increase the
penetration of its products and to produce higher-quality,
longer-term relationships with customers.
Charter's all-digital initiative, which will allow the Company
to offer more content and faster Internet speeds, has already
started in some markets, including Texas. The Company expects its all-digital
roll out to be completed by year end 2014. Charter recently
received a waiver from the FCC CableCARD requirement, which will
allow the Company to deploy set-top boxes without CableCARDs,
improving the economics and speed of its all-digital initiative.
During the first quarter of 2013, residential customer
relationships grew by 56,000, down from a gain of 86,000 in the
first quarter of 2012, which benefited from the Company's more
aggressive promotional offers. Residential PSUs increased by
134,000, a decline from the gain of 192,000 in the year-ago
quarter. Commercial customer relationships declined by 2,000 in the
first quarter of 2013. Charter reported a loss of 10,000 commercial
video customers during the quarter, compared to a gain of 7,000 in
the prior-year quarter. The commercial video customer loss reported
in the first quarter of 2013 relates to the reporting of such
customers on an equivalent bulk unit ("EBU") basis, which reduces
total reported bulk customers, when a basic cable rate increase is
implemented. Commercial video billing relationships increased
during the quarter, commercial video revenue grew year over year,
and excluding the impact of the rate increases on EBU reporting,
total commercial relationships increased by 8,000.
Residential video customers declined by 24,000 in the first
quarter of 2013, versus a gain of 20,000 video customers in the
year-ago period. Excluding limited basic customer losses of 28,000,
video customers grew by 4,000 during the first quarter. Expanded
basic customer growth was driven by a more competitive video
product, which now includes over 100 HD channels, packaging of
advanced services, and the transition to new selling methods.
Charter added 99,000 residential Internet customers in the first
quarter of 2013, compared to 141,000 a year ago. With its new
pricing and packaging, Charter less actively markets standalone
Internet offers, as compared to the first quarter of 2012. The
Company continues to see strong demand for its Internet service as
consumers value the speed and reliability of Charter's high speed
offering.
During the first quarter, the Company added 59,000 residential
telephone customers versus a gain of 31,000 during the first
quarter of 2012. Strength in telephone customer growth reflects the
higher sell-in of triple play service resulting from simplified
pricing and packaging.
First quarter residential revenue per customer relationship
totaled $107.25, and grew by 2.2%
from $104.95 in the first quarter of
2012, driven by higher product sell-in, promotional rate step-ups
and late first quarter 2013 rate increases, partially offset by
entry-level pricing.
First Quarter Financial Results
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 March 31,
|
|
2013
|
|
2012
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
956
|
|
$
895
|
|
6.8
%
|
Internet
|
501
|
|
452
|
|
10.8
%
|
Telephone
|
171
|
|
217
|
|
(21.2)%
|
Commercial
|
183
|
|
153
|
|
19.6
%
|
Advertising sales
|
60
|
|
66
|
|
(9.1)%
|
Other
|
46
|
|
44
|
|
4.5
%
|
Total Revenues
|
1,917
|
|
1,827
|
|
4.9
%
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
Total
operating costs and expenses (excluding depreciation and
amortization)
|
1,247
|
|
1,175
|
|
6.1
%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
670
|
|
$
652
|
|
2.8
%
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
35.0
%
|
|
35.7
%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
412
|
|
$
340
|
|
|
% Total
Revenues
|
21.5
%
|
|
18.6
%
|
|
|
|
|
|
|
|
|
Net
loss
|
$
(42)
|
|
$
(94)
|
|
|
Loss per
common share, basic and diluted
|
$
(0.42)
|
|
$
(0.95)
|
|
|
|
|
|
|
|
|
Net cash
flows from operating activities
|
$
541
|
|
$
454
|
|
|
Free cash
flow
|
$
118
|
|
$
102
|
|
|
Revenue
First quarter 2013 revenues rose to $1,917 million, up 4.9% compared to the year-ago
quarter, due to growth in video, Internet and commercial
revenues.
Video revenues totaled $956
million in the first quarter, an increase of 6.8% compared
to the prior-year period. Video revenue growth was driven by higher
expanded basic and digital penetration, promotional and annual rate
increases, higher advanced services penetration, and revenue
allocation from higher bundling, partially offset by a decrease in
residential video customers.
Internet revenues grew 10.8% compared to the year-ago quarter to
$501 million, driven by a 251,000
increase in Internet customers during the last year and by price
adjustments. Telephone revenues totaled $171
million, down 21.2% versus the first quarter of 2012, due to
value-based pricing and revenue allocation in multi-product
packages, partially offset by the addition of 151,000 telephone
customers in the last twelve months.
Commercial revenues rose to $183
million, an increase of 19.6% over the prior-year period and
driven by higher sales to small and medium businesses and carrier
customers.
First quarter advertising sales revenues of $60 million declined 9.1% compared to the
year-ago quarter, driven by the elimination of some barter contract
revenue and a decline in political advertising revenue, which saw
strength in the first quarter of 2012, given local and national
elections.
Operating Costs and Expenses
First quarter total operating costs and expenses increased 6.1%
compared to the year-ago period, primarily reflecting increases in
programming expense and costs to service customers. First quarter
programming expense increased $24
million, or 4.9% as compared to the prior-year period,
reflecting contractual programming increases, partially offset by
customer losses. Costs to service customers increased by
$36 million or 11.0% during the first
quarter of 2013, as compared to the first quarter of 2012,
reflecting higher spending on labor and preventive plant
maintenance.
Adjusted EBITDA
First quarter adjusted EBITDA of $670
million increased 2.8% compared to the year-ago quarter.
Adjusted EBITDA margin declined to 35.0% for the first quarter of
2013 compared to 35.7% in the year-ago quarter.
Net Loss
Net loss totaled $42 million in
the first quarter of 2013, an improvement compared to $94 million in the year-ago period. The net loss
improvement versus the prior year reflects adjusted EBITDA growth,
lower interest and income tax expense, partly offset by higher
depreciation and amortization, and a higher loss on extinguishment
of debt. Net loss per common share was $0.42 in the first quarter of 2013 compared to
$0.95 during the same period last
year. The decrease is a result of the 55.3% decline in net loss
compared to the prior-year period and a 0.9% increase in
weighted average shares outstanding in the last twelve months.
Capital Expenditures
Property, plant and equipment expenditures were $412 million in the first quarter of 2013,
compared to $340 million in 2012. The
increase was primarily driven by investments in customer premise
equipment ("CPE"), support capital and line extensions. The CPE
expenditures included higher set-top box placement in new and
existing customer homes and increases in inventory to support
customer growth activity. Support capital expenditures increased
primarily due to fleet replacement and real estate expenditures
related to our organizational realignment along with back office
system expenditures. The increase in line extension expenditures
was primarily driven by the higher number of cell towers that
Charter now serves.
In 2013, capital expenditures are expected to be approximately
$1.7 billion, excluding the impact of
acquisitions. Charter expects 2013 capital expenditures to be
driven by the deployment of additional set-top boxes in new and
existing customer homes, growth in Charter's commercial business,
and further spend related to plant reliability, back-office support
and our organizational realignment. The actual amount of capital
expenditures will depend on a number of factors including the
growth rates of both residential and commercial businesses, and the
pace at which Charter progresses to all-digital transmission.
Cash Flow
During the first quarter of 2013, net cash flows from operating
activities totaled $541 million,
compared to $454 million in the first
quarter of 2012. The increase in net cash flows from operating
activities was primarily driven by a decline in cash paid for
interest due to a change in the timing of payments with the
completion of refinancings, and an increase in adjusted EBITDA.
Free cash flow for the first quarter of 2013 was $118 million, compared to $102 million during the same period last year.
The increase was primarily the result of higher cash flow from
operating activities partly offset by higher capital
expenditures.
In the first quarter of 2013, Charter issued $500 million of 5.250% senior unsecured notes due
2021 and $500 million of 5.750%
senior unsecured notes due 2023. The proceeds from the issuance of
these notes were used to pay down $987
million of Term Loan C.
Liquidity
Total principal amount of debt was approximately $12.9 billion as of March 31, 2013. At the
end of the quarter, Charter held $65
million of cash and cash equivalents, $27 million of restricted cash and cash
equivalents, and its credit facilities provided approximately
$800 million of available
liquidity.
Conference Call
Charter will host a conference call on Tuesday, May 7, 2013 at 10:00 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 charter.com. The webcast can be accessed by selecting
"Investor & News Center" from the lower menu on the home page.
The call will be archived in the "Investor & News Center" in
the "Financial Information" section on the left beginning two hours
after completion of the call. Participants should go to the webcast
link no later than 10 minutes prior to the start time to
register.
Those participating via telephone should dial 866-919-0894 no
later than 10 minutes prior to the call. International participants
should dial 706-679-9379. The conference ID code for the call is
33265994.
A replay of the call will be available at 855-859-2056 or
404-537-3406 beginning two hours after the completion of the call
through the end of business on June 7,
2013. The conference ID code for the replay is 33265994.
Additional Information Available on Website
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in the Company's Form 10-Q for three months ended March 31,
2013 available on the "Investor & News Center" of our website
at charter.com in the "Financial Information" section. A slide
presentation to accompany the conference call and a trending
schedule containing historical customer and financial data can also
be found in the "Financial Information" section.
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 and free cash flow
are non-GAAP financial measures and should be considered in
addition to, not as a substitute for, net loss or 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 reconciled to
net loss and free cash flow is reconciled to net cash flows from
operating activities in the addendum of this news
release.
Adjusted EBITDA is defined as net loss plus net interest
expense, income taxes, depreciation and amortization, stock
compensation expense, loss on extinguishment of debt, loss on
derivative instruments, net and other operating expenses, such as
special charges and (gain) 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 special
items, and is unaffected by the Company's capital structure or
investment activities. Adjusted EBITDA is used by management and
the Company's Board to evaluate the performance of the Company's
business. However, these measures are limited in that they do not
reflect the periodic costs of certain capitalized tangible and
intangible assets used in generating revenues and the cash cost of
financing. Management evaluates these costs through other financial
measures.
Free cash flow is defined as net cash flows from operating
activities, less purchases of property, plant and equipment and
changes in accrued expenses related to capital expenditures.
The Company believes that adjusted EBITDA and free cash flow
provide information useful to investors in assessing Charter's
performance and its 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 credit facilities and notes (all such documents
have been previously filed with the United States Securities and
Exchange Commission). For the purpose of calculating compliance
with leverage covenants, we use adjusted EBITDA, as presented,
excluding certain expenses paid by our operating subsidiaries to
other Charter entities. Our debt covenants refer to these expenses
as management fees which fees were in the amount of $51 million and $41
million for the three months ended March 31, 2013 and
2012, respectively.
About Charter
Charter (NASDAQ: CHTR) 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
TV® video entertainment programming, Charter Internet® access, and
Charter Phone®. Charter Business® similarly provides scalable,
tailored, and cost-effective broadband communications solutions to
business organizations, such as business-to-business Internet
access, data networking, business telephone, video and music
entertainment services, and wireless backhaul. Charter's
advertising sales and production services are sold under the
Charter Media® brand. More information about Charter can be found
at charter.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), and Section 21E of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), regarding, among
other things, our plans, strategies and prospects, both business
and financial. Although we believe that our plans, intentions and
expectations reflected in or suggested by these forward-looking
statements are reasonable, we cannot assure you that we will
achieve or realize these plans, intentions or expectations.
Forward-looking statements are inherently subject to risks,
uncertainties and assumptions 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,"
"tentative," "positioning," "designed," "create" 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:
- our ability to sustain and grow revenues and cash flow from
operations by offering video, Internet, telephone, advertising and
other services to residential and commercial customers, to
adequately meet the customer experience demands in our markets and
to maintain and grow our customer base, particularly in the face of
increasingly aggressive competition, the need for innovation and
the related capital expenditures and the difficult economic
conditions in the United
States;
- the impact of competition from other market participants,
including but not limited to incumbent telephone companies, direct
broadcast satellite operators, wireless broadband and telephone
providers, digital subscriber line ("DSL") providers, and video
provided over the Internet;
- general business conditions, economic uncertainty or downturn,
high unemployment levels and the level of activity in the housing
sector;
- our ability to obtain programming at reasonable prices or to
raise prices to offset, in whole or in part, the effects of higher
programming costs (including retransmission consents);
- the development and deployment of new products and
technologies;
- the effects of governmental regulation on our business;
- the availability and access, in general, of funds to meet our
debt obligations prior to or when they become due and to fund our
operations and necessary capital expenditures, either through (i)
cash on hand, (ii) free cash flow, or (iii) access to the capital
or credit markets; and
- 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.
All forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by
this cautionary statement. We are under no duty or obligation to
update any of the forward-looking statements after the date of this
release.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
OPERATING DATA
(dollars in millions, except per share and share
data)
|
|
|
Three
Months Ended March 31,
|
|
|
2013
|
|
2012
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
Video
|
|
$
956
|
|
$
895
|
|
6.8
%
|
Internet
|
|
501
|
|
452
|
|
10.8
%
|
Telephone
|
|
171
|
|
217
|
|
(21.2)%
|
Commercial
|
|
183
|
|
153
|
|
19.6
%
|
Advertising sales
|
|
60
|
|
66
|
|
(9.1)%
|
Other
|
|
46
|
|
44
|
|
4.5
%
|
Total
Revenues
|
|
1,917
|
|
1,827
|
|
4.9
%
|
|
|
|
|
|
|
|
COSTS
AND EXPENSES:
|
|
|
|
|
|
|
Programming
|
|
515
|
|
491
|
|
4.9
%
|
Franchises, regulatory and connectivity
|
|
92
|
|
92
|
|
—%
|
Costs to
service customers
|
|
363
|
|
327
|
|
11.0
%
|
Marketing
|
|
108
|
|
112
|
|
(3.6)%
|
Other
|
|
169
|
|
153
|
|
10.5
%
|
Total
operating costs and expenses (excluding depreciation and
amortization)
|
|
1,247
|
|
1,175
|
|
6.1
%
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
670
|
|
652
|
|
2.8
%
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
|
35.0
%
|
|
35.7
%
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
425
|
|
408
|
|
|
Stock
compensation expense
|
|
11
|
|
11
|
|
|
Other
operating expenses, net
|
|
11
|
|
3
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
|
223
|
|
230
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
Interest
expense, net
|
|
(210)
|
|
(237)
|
|
|
Loss on
extinguishment of debt
|
|
(42)
|
|
(15)
|
|
|
Loss on
derivative instruments, net
|
|
(3)
|
|
—
|
|
|
Other
expense, net
|
|
(1)
|
|
(1)
|
|
|
|
|
(256)
|
|
(253)
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
(33)
|
|
(23)
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(9)
|
|
(71)
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
(42)
|
|
$
(94)
|
|
|
|
|
|
|
|
|
|
LOSS PER
COMMON SHARE, BASIC AND DILUTED:
|
|
$
(0.42)
|
|
$
(0.95)
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding, basic and diluted
|
|
100,327,418
|
|
99,432,960
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA is a non-GAAP term. See page 6 of this
addendum for the reconciliation of adjusted EBITDA to net loss as
defined by GAAP.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
|
|
March
31, 2013
|
|
December 31, 2012
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and
cash equivalents
|
$
65
|
|
$
7
|
Restricted
cash and cash equivalents
|
27
|
|
27
|
Accounts
receivable, net
|
208
|
|
234
|
Prepaid
expenses and other current assets
|
74
|
|
65
|
Total
current assets
|
374
|
|
333
|
|
|
|
|
INVESTMENT
IN CABLE PROPERTIES:
|
|
|
|
Property,
plant and equipment, net
|
7,259
|
|
7,206
|
Franchises
|
5,287
|
|
5,287
|
Customer
relationships, net
|
1,359
|
|
1,424
|
Goodwill
|
953
|
|
953
|
Total
investment in cable properties, net
|
14,858
|
|
14,870
|
|
|
|
|
OTHER
NONCURRENT ASSETS
|
407
|
|
396
|
|
|
|
|
Total
assets
|
$
15,639
|
|
$
15,599
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts
payable and accrued liabilities
|
$
1,290
|
|
$
1,224
|
Total
current liabilities
|
1,290
|
|
1,224
|
|
|
|
|
LONG-TERM
DEBT
|
12,816
|
|
12,808
|
DEFERRED
INCOME TAXES
|
1,279
|
|
1,122
|
OTHER
LONG-TERM LIABILITIES
|
125
|
|
296
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
129
|
|
149
|
|
|
|
|
Total
liabilities and shareholders' equity
|
$
15,639
|
|
$
15,599
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
|
|
Three
Months Ended March 31,
|
|
2013
|
|
2012
|
CASH FLOWS
FROM OPERATING ACTIVITIES:
|
|
|
|
Net
loss
|
$
(42)
|
|
$
(94)
|
Adjustments to reconcile net loss to net cash flows
from operating activities:
|
|
|
|
Depreciation and amortization
|
425
|
|
408
|
Stock
compensation expense
|
11
|
|
11
|
Noncash
interest expense
|
13
|
|
14
|
Loss on
extinguishment of debt
|
42
|
|
15
|
Loss on
derivative instruments, net
|
3
|
|
—
|
Deferred
income taxes
|
2
|
|
70
|
Other,
net
|
1
|
|
—
|
Changes in
operating assets and liabilities:
|
|
|
|
Accounts
receivable
|
26
|
|
40
|
Prepaid
expenses and other assets
|
(16)
|
|
(8)
|
Accounts
payable, accrued liabilities and other
|
76
|
|
(2)
|
Net cash
flows from operating activities
|
541
|
|
454
|
|
|
|
|
CASH FLOWS
FROM INVESTING ACTIVITIES:
|
|
|
|
Purchases
of property, plant and equipment
|
(412)
|
|
(340)
|
Change in
accrued expenses related to capital expenditures
|
(11)
|
|
(12)
|
Other,
net
|
(9)
|
|
(13)
|
Net cash
flows from investing activities
|
(432)
|
|
(365)
|
|
|
|
|
CASH FLOWS
FROM FINANCING ACTIVITIES:
|
|
|
|
Borrowings
of long-term debt
|
1,315
|
|
1,469
|
Repayments
of long-term debt
|
(1,355)
|
|
(1,539)
|
Payments
for debt issuance costs
|
(12)
|
|
(10)
|
Purchase
of treasury stock
|
(5)
|
|
(3)
|
Other,
net
|
6
|
|
(4)
|
Net cash
flows from financing activities
|
(51)
|
|
(87)
|
|
|
|
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
58
|
|
2
|
CASH AND
CASH EQUIVALENTS, beginning of period
|
7
|
|
2
|
CASH AND
CASH EQUIVALENTS, end of period
|
$
65
|
|
$
4
|
|
|
|
|
CASH PAID
FOR INTEREST
|
$
120
|
|
$
216
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING
STATISTICS
(in
thousands, except ARPU and penetration data)
|
|
Approximate as of
|
|
March
31, 2013 (a)
|
|
December 31, 2012 (a)
|
|
March
31, 2012 (a)
|
Footprint
|
|
|
|
|
|
Estimated
Video Passings (b)
|
12,090
|
|
12,074
|
|
12,003
|
Estimated
Internet Passings (b)
|
11,789
|
|
11,772
|
|
11,691
|
Estimated
Telephone Passings (b)
|
11,124
|
|
11,103
|
|
10,886
|
|
|
|
|
|
|
Penetration Statistics
|
|
|
|
|
|
Video
Penetration of Estimated Video Passings (c)
|
34.1
%
|
|
34.4
%
|
|
36.2
%
|
Internet
Penetration of Estimated Internet Passings (c)
|
34.7
%
|
|
33.8
%
|
|
32.5
%
|
Telephone
Penetration of Estimated Telephone Passings (c)
|
18.7
%
|
|
18.2
%
|
|
17.5
%
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Residential Customer Relationships (d)
|
5,091
|
|
5,035
|
|
5,013
|
Residential Non-Video Customers
|
1,126
|
|
1,046
|
|
849
|
%
Non-Video
|
22.1
%
|
|
20.8
%
|
|
16.9
%
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
Video
(e)
|
3,965
|
|
3,989
|
|
4,164
|
Internet
(f)
|
3,884
|
|
3,785
|
|
3,633
|
Telephone
(g)
|
1,973
|
|
1,914
|
|
1,822
|
Residential PSUs (h)
|
9,822
|
|
9,688
|
|
9,619
|
Residential PSU / Customer Relationships
(d)(h)
|
1.93
|
|
1.92
|
|
1.92
|
|
|
|
|
|
|
Quarterly Net Additions/(Losses)
(i)
|
|
|
|
|
|
Video
(e)
|
(24)
|
|
(36)
|
|
20
|
Internet
(f)
|
99
|
|
54
|
|
141
|
Telephone
(g)
|
59
|
|
34
|
|
31
|
Residential PSUs (h)
|
134
|
|
52
|
|
192
|
|
|
|
|
|
|
Single
Play Penetration (j)
|
37.7
%
|
|
37.6
%
|
|
37.1
%
|
Double
Play Penetration (k)
|
31.7
%
|
|
32.5
%
|
|
34.0
%
|
Triple
Play Penetration (l)
|
30.5
%
|
|
29.9
%
|
|
28.9
%
|
Digital
Penetration (m)
|
88.7
%
|
|
86.9
%
|
|
83.1
%
|
|
|
|
|
|
|
Revenue
per Customer Relationship (d)(n)
|
$
107.25
|
|
$
105.78
|
|
$
104.95
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
Commercial
Customer Relationships (d)(o)
|
323
|
|
325
|
|
311
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
Video
(e)(o)
|
159
|
|
169
|
|
177
|
Internet
(f)
|
202
|
|
193
|
|
169
|
Telephone
(g)
|
112
|
|
105
|
|
85
|
Commercial PSUs (h)
|
473
|
|
467
|
|
431
|
|
|
|
|
|
|
Quarterly Net Additions/(Losses)
(i)
|
|
|
|
|
|
Video
(e)(o)
|
(10)
|
|
(3)
|
|
7
|
Internet
(f)
|
9
|
|
7
|
|
6
|
Telephone
(g)
|
7
|
|
6
|
|
6
|
Commercial PSUs (h)
|
6
|
|
10
|
|
19
|
See footnotes to unaudited summary of operating statistics on
page 5 of this addendum.
(a)
|
We
calculate the aging of customer accounts based on the monthly
billing cycle for each account. On that basis, at March 31,
2013, December 31, 2012, and March 31, 2012, customers include
approximately 12,000, 18,400, and 11,500 customers, respectively,
whose accounts were over 60 days past due in payment, approximately
2,400, 2,600, and 1,500 customers, respectively, whose accounts
were over 90 days past due in payment and approximately 1,300,
1,700, and 1,300 customers, respectively, whose accounts were over
120 days past due in payment.
|
|
|
(b)
|
"Passings"
represent our estimate of the number of units, such as single
family homes, apartment and condominium units and commercial
establishments passed by our cable distribution network in the
areas where we offer the service indicated. These estimates
are updated for all periods presented based upon the information
available at that time.
|
|
|
(c)
|
"Penetration" represents residential and commercial
customers as a percentage of estimated passings for the service
indicated.
|
|
|
(d)
|
"Customer
Relationships" include the number of customers that receive one or
more levels of service, encompassing video, Internet and phone
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). Commercial customer relationships
includes video customers in commercial structures, which are
calculated on an EBU basis (see footnote (o)) and non-video
commercial customer relationships.
|
|
|
(e)
|
"Video
Customers" represent those customers who subscribe to our video
services.
|
|
|
(f)
|
"Internet
Customers" represent those customers who subscribe to our Internet
service.
|
|
|
(g)
|
"Telephone
Customers" represent those customers who subscribe to our telephone
service.
|
|
|
(h)
|
"Primary
Service Units" or "PSUs" represent the total of video, Internet and
phone customers.
|
|
|
(i)
|
"Quarterly
Net Additions/(Losses)" represent the net gain or loss in the
respective quarter for the service indicated.
|
|
|
(j)
|
"Single
Play Penetration" represents residential customers receiving only
one of Charter service offerings, including video, Internet or
phone, as a % of residential customer relationships.
|
|
|
(k)
|
"Double
Play Penetration" represents residential customers receiving only
two of Charter service offerings, including video, Internet and/or
phone, as a % of residential customer relationships.
|
|
|
(l)
|
"Triple
Play Penetration" represents residential customers receiving all
three Charter service offerings, including video, Internet and
phone, as a % of residential customer relationships.
|
|
|
(m)
|
"Digital
Penetration" represents the number of residential digital video
customers as a percentage of residential video
customers.
|
|
|
(n)
|
"Revenue
per Customer Relationship" is calculated as total residential
video, Internet and phone quarterly revenue divided by three
divided by average residential customer relationships during the
respective quarter.
|
|
|
(o)
|
Included
within commercial video customers are those in commercial
structures, which are calculated on an equivalent bulk unit ("EBU")
basis. We calculate EBUs by dividing the bulk price charged
to accounts in an area by the published rate charged to non-bulk
residential customers in that market for the comparable tier of
service. This EBU method of estimating video customers is
consistent with the methodology used in determining costs paid to
programmers and is consistent with the methodology used by other
multiple system operators. As we increase our published video
rates to residential customers without a corresponding increase in
the prices charged to commercial service customers, our EBU count
will decline even if there is no real loss in commercial service
customers. For example, commercial video customers decreased
by 10,000 during the three months ended March 31, 2013 due to
published video rate increases.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)
|
|
Three
Months Ended March 31,
|
|
2013
|
|
2012
|
|
|
|
|
Net
loss
|
$
(42)
|
|
$
(94)
|
Plus: Interest expense, net
|
210
|
|
237
|
Income tax
expense
|
9
|
|
71
|
Depreciation and amortization
|
425
|
|
408
|
Stock
compensation expense
|
11
|
|
11
|
Loss on
extinguishment of debt
|
42
|
|
15
|
Loss on
derivative instruments, net
|
3
|
|
—
|
Other,
net
|
12
|
|
4
|
|
|
|
|
Adjusted
EBITDA (a)
|
670
|
|
652
|
Less: Purchases of property, plant and
equipment
|
(412)
|
|
(340)
|
|
|
|
|
Adjusted
EBITDA less capital expenditures
|
$
258
|
|
$
312
|
|
|
|
|
Net cash
flows from operating activities
|
$
541
|
|
$
454
|
Less: Purchases of property, plant and
equipment
|
(412)
|
|
(340)
|
Change in
accrued expenses related to capital expenditures
|
(11)
|
|
(12)
|
|
|
|
|
Free cash
flow
|
$
118
|
|
$
102
|
|
|
|
|
(a) 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.
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
CAPITAL EXPENDITURES
(dollars in millions)
|
|
Three
Months Ended March 31,
|
|
2013
|
|
2012
|
|
|
|
|
Customer
premise equipment (a)
|
$
233
|
|
$
172
|
Scalable
infrastructure (b)
|
54
|
|
88
|
Line
extensions (c)
|
46
|
|
30
|
Upgrade/Rebuild (d)
|
39
|
|
34
|
Support
capital (e)
|
40
|
|
16
|
|
|
|
|
Total
capital expenditures (f)
|
$
412
|
|
$
340
|
|
|
|
|
(a)
|
Customer
premise equipment includes costs incurred at the customer residence
to secure new customers and revenue generating units. It also
includes customer installation costs and customer premise equipment
(e.g., set-top boxes and cable modems).
|
(b)
|
Scalable
infrastructure includes costs, not related to customer premise
equipment, to secure growth of new customers and revenue generating
units, or provide service enhancements (e.g., headend
equipment).
|
(c)
|
Line
extensions include network costs associated with entering new
service areas (e.g., fiber/coaxial cable, amplifiers, electronic
equipment, make-ready and design engineering).
|
(d)
|
Upgrade/rebuild includes costs to modify or replace
existing fiber/coaxial cable networks, including
betterments.
|
(e)
|
Support
capital includes costs associated with the replacement or
enhancement of non-network assets due to technological and physical
obsolescence (e.g., non-network equipment, land, buildings and
vehicles).
|
(f)
|
Total
capital expenditures includes $62 million and $38 million of
capital expenditures related to commercial services for the three
months ended March 31, 2013 and 2012,
respectively.
|
SOURCE Charter Communications, Inc.