STAMFORD, Conn., Feb. 5, 2015 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three and twelve months ended December 31, 2014.
Key highlights:
- During the fourth quarter, Charter completed its all-digital
initiative and the rollout of Charter Spectrum, the
Company's new and more advanced product suite.
- Fourth quarter revenues of $2.4
billion grew 9.9%1 as compared to the prior-year
period, driven by residential revenue growth of 8.3%, commercial
revenue growth of 16.1% and advertising revenue growth of
28.9%.
- Fourth quarter Adjusted EBITDA2 grew by 10.5%
year-over-year.
- Residential customer relationships increased by 73,000 during
the fourth quarter and have grown by 5.0%, or 280,000, since the
end of 2013.
- Residential primary service units ("PSUs") increased by 157,000
during the fourth quarter. In 2014, Charter added 532,000 total
residential PSUs versus a pro forma3 gain of
415,000 in 2013, with 2014 residential video customer losses
declining to 17,000 from 109,000 in 2013.
- Full year 2014 revenues and Adjusted EBITDA each rose 8.2% on a
pro forma basis, with capital expenditures totaling
$2.2 billion.
"We recently completed our all-digital transition and the
rollout of our more advanced product suite, Charter
Spectrum, on plan. We have now unleashed the capabilities of
our high capacity two-way interactive network, freeing network
capacity we can utilize for years to come," said Tom Rutledge, President and CEO of Charter
Communications. "Our fourth quarter and full year 2014 results
demonstrate that our new products, combined with our improving
service levels, are generating strong market share growth across
all of our businesses. Customer growth continues to drive improving
financial performance, with reduced capital intensity going
forward."
1All percentages are calculated using actual amounts.
Minor differences may exist due to rounding.
2Adjusted EBITDA and free cash flow are defined in the
"Use of Non-GAAP Financial Metrics" section and are reconciled to
net income (loss) and net cash flows from operating activities,
respectively, in the addendum of this news release.
3All customer data and results, unless otherwise noted,
are pro forma for the Bresnan transaction, as if it had occurred on
January 1, 2012, and are provided in
the addendum of this news release.
Key Operating
Results
|
|
|
|
|
|
Approximate as
of
|
|
|
|
|
December 31,
2014
(a)
|
|
December 31,
2013
(a)
|
|
Y/Y
Change
|
Footprint
|
|
|
|
|
|
|
|
|
Estimated Video
Passings (b)
|
12,871
|
|
12,838
|
|
|
—%
|
Estimated Internet
Passings (b)
|
12,570
|
|
12,505
|
|
|
1%
|
Estimated Voice
Passings (b)
|
12,079
|
|
11,934
|
|
|
1%
|
|
|
|
|
|
|
|
Penetration
Statistics
|
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings (c)
|
33.4%
|
|
33.8%
|
|
|
-0.4ppts
|
Internet Penetration
of Estimated Internet Passings (c)
|
40.4%
|
|
37.1%
|
|
|
3.3ppts
|
Voice Penetration of
Estimated Voice Passings (c)
|
21.7%
|
|
20.3%
|
|
|
1.4ppts
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
Residential Customer
Relationships (d)
|
5,841
|
|
5,561
|
|
|
5%
|
Residential Non-Video
Customers
|
1,681
|
|
1,384
|
|
|
21%
|
% Non-Video
|
28.8%
|
|
24.9%
|
|
|
3.9ppts
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Video (e)
|
4,160
|
|
4,177
|
|
|
—%
|
Internet
(f)
|
4,766
|
|
4,383
|
|
|
9%
|
Voice (g)
|
2,439
|
|
2,273
|
|
|
7%
|
Residential PSUs
(h)
|
11,365
|
|
10,833
|
|
|
5%
|
Residential PSU /
Customer Relationships (d)(h)
|
1.95
|
|
1.95
|
|
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses) (i)
|
|
|
|
|
|
|
Video (e)
|
3
|
|
(2)
|
NM
|
|
|
Internet
(f)
|
104
|
|
93
|
|
|
11%
|
Voice (g)
|
50
|
|
56
|
|
|
(13)%
|
Residential PSUs
(h)
|
157
|
|
147
|
|
|
6%
|
|
|
|
|
|
|
|
Bulk Digital Upgrade
Net Additions (j)
|
5
|
|
4
|
NM
|
|
|
|
|
|
|
|
|
|
Single Play Penetration (k)
|
38.0%
|
|
37.6%
|
|
|
0.4ppts
|
Double Play
Penetration (l)
|
29.1%
|
|
29.8%
|
|
|
-0.7ppts
|
Triple Play
Penetration (m)
|
32.8%
|
|
32.6%
|
|
|
0.2ppts
|
Digital Penetration
(n)
|
98.5%
|
|
91.8%
|
|
|
6.7ppts
|
|
|
|
|
|
|
|
Monthly Residential Revenue per Residential Customer
(d)(o)
|
$111.52
|
|
$108.12
|
|
|
3%
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
Commercial Customer
Relationships (d)(p)
|
386
|
|
375
|
|
|
3%
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
Video
(e)(p)
|
133
|
|
165
|
|
|
(19)%
|
Internet
(f)
|
306
|
|
257
|
|
|
19%
|
Voice (g)
|
180
|
|
145
|
|
|
24%
|
Commercial PSUs
(h)
|
619
|
|
567
|
|
|
9%
|
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses) (i)
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (e)(p)
|
(6)
|
|
(1)
|
NM
|
|
|
Internet
(f)
|
12
|
|
12
|
|
|
—%
|
Voice (g)
|
8
|
|
7
|
|
|
14%
|
Commercial PSUs
(h)
|
14
|
|
18
|
|
|
(22)%
|
Footnotes
In thousands, except
per customer and penetration data. See footnotes to unaudited
summary of operating statistics on page 6 of the addendum of this
news release. The footnotes contain important disclosures regarding
the definitions used for these operating statistics.
NM - Not
meaningful
|
During the fourth quarter of 2014, Charter's residential
customer relationships grew by 73,000, with triple play sell-in
improving year-over-year, to 62% of total residential video sales.
Commercial customer relationships grew by 6,000 in the fourth
quarter of 2014. Residential PSUs increased by 157,000, while
commercial PSUs increased 14,000 during the fourth quarter.
As of the end of the fourth quarter of 2014, Charter had
completed its all-digital initiative. All-digital allows Charter to
offer more advanced products and services, and provides residential
customers with two-way digital set-tops, which offer higher picture
quality, an interactive programming guide and video on demand on
all TV outlets in the home.
During the fourth quarter, Charter continued to introduce its
new product suite, Charter Spectrum, in markets that were
recently converted to all-digital. Charter customers in these
markets now have access to an industry-leading suite of video,
data, and voice services that includes over 200 HD channels, in
addition to minimum offered Internet speeds of 60 Mbps, and a fully
featured voice service, delivered at a highly competitive price.
Charter Spectrum is available to new Charter customers, and
to existing customers within the Company's new pricing and
packaging structure launched in 2012. As of the end of the fourth
quarter of 2014, 86% of residential customers were in Charter's new
pricing and packaging, excluding customers in the former Bresnan
properties.
Residential video customers increased by 3,000 in the fourth
quarter of 2014, versus a loss of 2,000 in the year-ago period. For
the past two years Charter has significantly increased the
competitiveness of its video product, by including more HD channels
and video on demand offerings, attractive packaging of advanced
services, improved selling methods, and enhanced service
quality.
Charter added 104,000 residential Internet customers in the
fourth quarter of 2014, compared to 93,000 a year ago. As of
December 31, 2014, 80% of Charter's residential Internet
customers subscribed to tiers that provided speeds of 60 Mbps or
more. The Company continues to see strong demand for its Internet
service as consumers value the speed and reliability of Charter's
Internet offering.
During the fourth quarter, the Company added 50,000 residential
voice customers, versus a gain of 56,000 during the fourth quarter
of 2013.
Fourth quarter residential revenue per customer relationship
totaled $111.52, and grew by 3.1% as
compared to the prior-year period, driven by rate adjustments,
higher product sell-in and promotional rate step-ups, partially
offset by continued single play Internet sell-in and bulk digital
upgrades. In September 2014, Charter
increased its broadcast TV surcharge. Excluding this rate
adjustment, residential revenue per customer relationship grew by
2.2% year-over-year.
Fourth Quarter
Financial Results
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
(dollars in
millions, except per share data)
|
|
|
Three Months Ended
December 31,
|
|
2014
|
|
2013
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
1,134
|
|
$
|
1,049
|
|
8.1%
|
Internet
|
670
|
|
590
|
|
13.5%
|
Voice
|
139
|
|
154
|
|
(9.7)%
|
Commercial
|
262
|
|
225
|
|
16.1%
|
Advertising
sales
|
107
|
|
83
|
|
28.9%
|
Other
|
48
|
|
47
|
|
6.2%
|
Total
Revenues
|
2,360
|
|
2,148
|
|
9.9%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Total operating costs
and expenses
(excluding depreciation and amortization)
|
1,515
|
|
1,384
|
|
9.6%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
845
|
|
$
|
764
|
|
10.5%
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
35.8%
|
|
35.6%
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
543
|
|
$
|
566
|
|
|
% Total
Revenues
|
23.0%
|
|
26.3%
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(48)
|
|
$
|
39
|
|
|
Earnings (loss) per
common share, basic
|
$
|
(0.44)
|
|
$
|
0.38
|
|
|
Earnings (loss) per
common share, diluted
|
$
|
(0.44)
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
630
|
|
$
|
595
|
|
|
Free cash
flow
|
$
|
89
|
|
$
|
84
|
|
|
Revenue
Fourth quarter 2014 revenues rose to $2.4
billion, 9.9% higher than the year-ago quarter, driven
primarily by growth in Internet, video and commercial revenues.
Video revenues totaled $1.1
billion in the fourth quarter, an increase of 8.1% compared
to the prior-year period. Video revenue growth was driven by higher
expanded basic and digital penetration, annual and promotional rate
adjustments, higher advanced services penetration, and revenue
allocation from higher bundling, partially offset by a decrease in
residential limited basic video customers.
Internet revenues grew 13.5% compared to the year-ago quarter to
$670 million, driven by an increase
of 383,000 Internet customers during the last year and by
promotional rolloff, legacy price adjustments and revenue
allocation from higher bundling.
Voice revenues totaled $139
million, a decline of 9.7% versus the fourth quarter of
2013, due to value-based pricing and revenue allocation from higher
bundling, partially offset by the addition of 166,000 voice
customers in the last twelve months.
Commercial revenues rose to $262
million, an increase of 16.1% over the prior-year period,
and was driven by higher sales to small and medium business
customers and to carrier customers.
Fourth quarter advertising sales revenues of $107 million increased 28.9% compared to the
year-ago quarter, primarily driven by an increase in political
advertising revenue. Excluding the benefit of political advertising
revenue generated in the fourth quarter of 2014, and during the
corresponding prior-year period, total fourth quarter advertising
sales revenues grew by approximately 8.9% year-over-year.
Operating Costs and Expenses
Fourth quarter total operating costs and expenses increased by
$131 million, or 9.6%, compared to
the year-ago period, reflecting increases in programming costs,
costs to service customers, and other expenses. Transition costs
related to Charter's previously-announced transactions with Comcast
accounted for $11 million of total
fourth quarter operating costs.
Fourth quarter programming expense increased by $64 million, or 11.6%, as compared to the fourth
quarter of 2013, reflecting contractual programming increases, a
1.9% increase in expanded basic package customers over the last
twelve months, broader carriage of certain networks as a result of
all-digital and the introduction of new networks to Charter's video
offering. Costs to service customers grew by $28 million, or 6.6% as compared to the fourth
quarter of last year, driven primarily by higher labor costs to
deliver higher quality products and service levels, and transition
expenses associated with the Comcast transactions. Other expenses
grew by $37 million, or 20.4%, as
compared to the fourth quarter of 2013, reflecting higher
administrative labor and commercial costs, advertising sales
expenses, and transition expenses associated with the Comcast
transactions.
Adjusted EBITDA
Fourth quarter Adjusted EBITDA of $845
million grew by 10.5% year-over-year, reflecting revenue
growth and operating costs and expenses growth of 9.9% and 9.6%,
respectively.
Net Loss
Net loss totaled $48 million in
the fourth quarter of 2014, compared to net income of $39 million in the fourth quarter of 2013. Fourth
quarter 2013 net income reflected a $36
million tax benefit related to a partnership restructuring.
In addition, fourth quarter 2014 net income reflects $67 million of interest expense related to the
Comcast transactions financing, $9
million of transactions costs related to the Comcast
transactions in other operating expenses, and higher depreciation
and amortization charges, partly offset by higher Adjusted EBITDA.
Basic and diluted net loss per common share was $0.44 in the fourth quarter of 2014 compared to
net income per basic and diluted share of $0.38 and $0.35,
respectively, during the same period last year. The increase in net
loss per common share was primarily the result of the factors
described above.
Capital Expenditures
Property, plant and equipment expenditures were $543 million in the fourth quarter of 2014,
compared to $566 million, during the
fourth quarter of 2013. The decrease was the result of a decline in
customer premise equipment ("CPE") spending, partly offset by
higher support capital expenditures. CPE spending declined versus
the prior-year period as Charter completed its all-digital
initiative during the fourth quarter. The year-over-year increase
in support capital expenditures was driven by Charter's ongoing
insourcing initiatives. Transition capital expenditures related to
Charter's previously-announced transactions with Comcast accounted
for $26 million of capital
expenditures in the fourth quarter.
Cash Flow
During the fourth quarter of 2014, net cash flows from operating
activities totaled $630 million,
compared to $595 million in the
fourth quarter of 2013. The increase in net cash flows from
operating activities was primarily related to higher Adjusted
EBITDA partly offset by higher cash interest payments, including
$52 million of cash payments
associated with the $7 billion of
debt, proceeds of which are currently in escrow, that will be used
to finance the previously-announced transactions with Comcast.
Free cash flow for the fourth quarter of 2014 was $89 million, compared to $84 million during the same period last year. The
increase was primarily due to higher net cash flow from operating
activities and lower capital expenditures, partly offset by a
smaller increase in accrued expenses related to capital
expenditures versus the prior-year period.
Year to Date
Financial Results
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
(dollars in
millions, except per share data)
|
|
|
Year Ended
December 31,
|
|
2014
|
|
2013
|
|
|
|
|
2013
|
|
|
|
|
Actual
|
|
Pro
Forma
|
|
%
Change
|
|
Actual
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
4,443
|
|
$
|
4,177
|
|
6.4%
|
|
$
|
4,040
|
|
10.0%
|
Internet
|
2,576
|
|
2,253
|
|
14.4%
|
|
2,186
|
|
17.8%
|
Voice
|
575
|
|
668
|
|
(14.2)%
|
|
644
|
|
(10.7)%
|
Commercial
|
993
|
|
840
|
|
18.2%
|
|
812
|
|
22.4%
|
Advertising
sales
|
341
|
|
297
|
|
14.6%
|
|
291
|
|
17.0%
|
Other
|
180
|
|
184
|
|
(1.7)%
|
|
182
|
|
(0.8)%
|
Total
Revenues
|
9,108
|
|
8,419
|
|
8.2%
|
|
8,155
|
|
11.7%
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses (excluding depreciation and amortization)
|
5,918
|
|
5,471
|
|
8.2%
|
|
5,297
|
|
11.7%
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
3,190
|
|
$
|
2,948
|
|
8.2%
|
|
$
|
2,858
|
|
11.6%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
35.0%
|
|
35.0%
|
|
|
|
35.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Expenditures
|
$
|
2,221
|
|
$
|
1,854
|
|
|
|
$
|
1,825
|
|
|
|
% Total
Revenues
|
24.4%
|
|
22.0%
|
|
|
|
22.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(183)
|
|
$
|
(194)
|
|
|
|
$
|
(169)
|
|
|
|
Loss per common
share, basic and diluted
|
$
|
(1.70)
|
|
$
|
(1.90)
|
|
|
|
$
|
(1.65)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
2,359
|
|
|
|
|
|
$
|
2,158
|
|
|
|
Free cash
flow
|
$
|
171
|
|
|
|
|
|
$
|
409
|
|
|
|
Revenue
For the year ended December 31, 2014, revenues rose to
$9.1 billion, 8.2% higher on a pro
forma basis than in 2013, driven by continued growth in
Internet, video and commercial revenues. On an actual basis, full
year 2014 revenues rose 11.7% year-over-year.
Operating Costs and Expenses
Operating costs and expenses totaled $5.9
billion in 2014, an increase of $447
million, or 8.2%, on a pro forma basis compared to
the year-ago period, reflecting increases in programming costs and
other expenses. On an actual basis, total operating costs and
expenses grew by 11.7% year-over-year. Transition costs related to
the previously-announced transactions with Comcast accounted for
$14 million of total 2014 operating
costs.
Adjusted EBITDA
Adjusted EBITDA was $3.2 billion
for the year ended December 31, 2014, an increase of 8.2%
compared to 2013, on a pro forma basis. On an actual basis,
Adjusted EBITDA grew by 11.6% compared to the year-ago period,
driven by higher organic revenue growth and the acquisition of
Bresnan. Charter's Adjusted EBITDA margin remained unchanged, on
both a pro forma and actual basis, at 35.0%.
Net Loss
For the year ended December 31, 2014, net loss was
$183 million, compared to
$194 million on a pro forma
basis, in 2013, driven by higher Adjusted EBITDA and a decline in
loss on extinguishment of debt, partly offset by higher
depreciation and amortization charges, higher interest expense
related to the Comcast transactions financing and higher income tax
expense. Net loss per common share was $1.70 for the year ended December 31, 2014,
compared to $1.90 on a pro
forma basis in 2013. The decrease was primarily the result of
the factors described above.
Capital Expenditures
Capital expenditures for the year ended December 31, 2014,
totaled $2.2 billion compared to
pro forma capital expenditures of $1.9 billion in 2013. The year-over-year increase
was primarily driven by Charter's all-digital initiative,
investment in CPE to support customer growth, higher product
development investment and the Company's ongoing insourcing
initiative. Transition capital expenditures related to Charter's
previously-announced transactions with Comcast accounted for
$27 million of total 2014 capital
expenditures.
Charter expects 2015 capital expenditures to be approximately
$1.7 billion, excluding potential
expenditures related to the previously-announced transactions with
Comcast. Charter expects its 2015 capital expenditures to be driven
by continued growth in residential and commercial customers along
with further spend related to product development. The actual
amount of capital expenditures in 2015 will depend on a number of
factors including the pace of transition planning to service a
larger customer base upon closing of the previously-announced
transactions with Comcast.
Cash Flow
In 2014, net cash flows from operating activities totaled
$2.4 billion compared to $2.2 billion in 2013. The increase in net cash
flows from operating activities was primarily related to an
increase in Adjusted EBITDA partly offset by an increase in cash
interest payments.
Free cash flow for the year ended December 31, 2014 was
$171 million, compared to
$409 million during the same period
last year. The decrease was primarily due to higher capital
expenditures related to Charter's all-digital initiative, and
expenditures related to the previously-announced Comcast
transactions, including operating and other expenses, interest
expense, and capital expenditures, partly offset by higher cash
flow from operating activities.
Liquidity
Total principal amount of debt was approximately $21.1 billion as of December 31, 2014,
including the $3.5 billion borrowed
under CCO Safari Term Loan G issued in September 2014, and the $3.5 billion CCOH Safari notes issued in
November 2014. Proceeds from the CCO
Safari Term Loan G and CCOH Safari notes are being held in escrow
and recorded as noncurrent restricted cash and cash equivalents. As
of December 31, 2014, Charter held $3
million of unrestricted cash and cash equivalents, and its
credit facilities provided approximately $817 million of additional liquidity. In
addition, a $500 million revolver
extension is currently committed and available to Charter. The
availability of this revolver is not contingent or related to the
closing of the previously-announced Comcast transactions.
Conference Call
Charter will host a conference call on Thursday,
February 5, 2015 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
investor relations website at ir.charter.com. The call will be
archived under the "Financial Information" section 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
54499873.
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 March 5,
2015. The conference ID code for the replay is 54499873.
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-K for the twelve months ended
December 31, 2014 which will be posted on the "Financial
Information" section of our investor relations website at
ir.charter.com, when it is filed with the United States Securities
and Exchange Commission. A slide presentation to accompany the
conference call and a trending schedule containing historical
customer and financial data will also be available 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 income (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 income (loss) plus net
interest expense, income taxes, depreciation and amortization,
stock compensation expense, loss on extinguishment of debt, (gain)
loss on derivative instruments, net and other operating expenses,
such as merger and acquisition costs, 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. 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. These costs are evaluated 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.
Management and the Company's board of directors use Adjusted
EBITDA and free cash flow to assess 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 $69 million and
$54 million for the three months
ended December 31, 2014 and 2013, respectively and
$253 million and $201 million for the twelve months ended
December 31, 2014 and 2013, respectively.
In addition to the actual results for the three and twelve
months ended December 31, 2014 and 2013, we have provided pro
forma results in this release for the twelve months ended
December 31, 2013. We believe these pro forma results
facilitate meaningful analysis of the results of operations. Pro
forma results in this release reflect certain acquisitions of cable
systems in 2013 as if they occurred as of January 1, 2012. Pro forma statements of
operations for the twelve months ended December 31, 2013 are
provided in the addendum of this news release.
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 communication 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 SEC. Many of the forward-looking
statements contained in this presentation 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", "predict",
"project", "seek", "would", "could", "continue", "ongoing",
"upside", "increases" and "potential", among others.
Important factors that could cause actual results to differ
materially from the forward-looking statements we make in this
presentation 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:
Risks Related to Comcast Corporation ("Comcast")
Transactions
- the ultimate outcome of the proposed transactions between
Charter and Comcast including the possibility that such
transactions may not occur if closing conditions are not
satisfied;
- if any such transactions were to occur, the ultimate outcome
and results of integrating operations and application of our
operating strategies to the acquired assets and the ultimate
ability to realize synergies at the levels currently expected as
well as potential programming dis-synergies;
- the impact of the proposed transactions on our stock price and
future operating results, including due to transaction and
integration costs, increased interest expense, business disruption,
and diversion of management time and attention;
- the reduction in our current stockholders' percentage ownership
and voting interest as a result of the proposed transactions;
- the increase in indebtedness as a result of the proposed
transactions, which will increase interest expense and may decrease
our operating flexibility;
Risks Related to Our Business
- our ability to sustain and grow revenues and cash flow from
operations by offering video, Internet, voice, 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;
- 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, video
provided over the Internet and providers of advertising 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 or
potential business combination transactions;
- 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;
- 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 data)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2014
|
|
2013
|
|
|
|
2014
|
|
2013
|
|
|
|
|
Actual
|
|
Actual
|
|
%
Change
|
|
Actual
|
|
Actual
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
1,134
|
|
$
|
1,049
|
|
8.1%
|
|
$
|
4,443
|
|
$
|
4,040
|
|
10.0%
|
Internet
|
670
|
|
590
|
|
13.5%
|
|
2,576
|
|
2,186
|
|
17.8%
|
Voice
|
139
|
|
154
|
|
(9.7)%
|
|
575
|
|
644
|
|
(10.7)%
|
Commercial
|
262
|
|
225
|
|
16.1%
|
|
993
|
|
812
|
|
22.4%
|
Advertising
sales
|
107
|
|
83
|
|
28.9%
|
|
341
|
|
291
|
|
17.0%
|
Other
|
48
|
|
47
|
|
6.2%
|
|
180
|
|
182
|
|
(0.8)%
|
Total
Revenues
|
2,360
|
|
2,148
|
|
9.9%
|
|
9,108
|
|
8,155
|
|
11.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
Programming
|
625
|
|
561
|
|
11.6%
|
|
2,459
|
|
2,146
|
|
14.6%
|
Franchises, regulatory
and connectivity
|
109
|
|
103
|
|
5.6%
|
|
428
|
|
399
|
|
7.2%
|
Costs to service
customers
|
425
|
|
397
|
|
6.6%
|
|
1,675
|
|
1,561
|
|
7.0%
|
Marketing
|
125
|
|
129
|
|
(3.1)%
|
|
529
|
|
488
|
|
8.4%
|
Other
|
231
|
|
194
|
|
20.4%
|
|
827
|
|
703
|
|
18.3%
|
Total operating costs
and expenses (excluding depreciation and amortization)
|
1,515
|
|
1,384
|
|
9.6%
|
|
5,918
|
|
5,297
|
|
11.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
845
|
|
764
|
|
10.5%
|
|
3,190
|
|
2,858
|
|
11.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
35.8%
|
|
35.6%
|
|
|
|
|
35.0%
|
|
35.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
534
|
|
500
|
|
|
|
|
2,102
|
|
1,854
|
|
|
|
Stock compensation
expense
|
14
|
|
11
|
|
|
|
|
55
|
|
48
|
|
|
|
Other operating
expenses, net
|
20
|
|
9
|
|
|
|
|
62
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
277
|
|
244
|
|
|
|
|
971
|
|
909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(273)
|
|
(211)
|
|
|
|
|
(911)
|
|
(846)
|
|
|
|
Loss on
extinguishment of debt
|
—
|
|
—
|
|
|
|
|
—
|
|
(123)
|
|
|
|
Gain (loss) on
derivative instruments, net
|
(4)
|
|
2
|
|
|
|
|
(7)
|
|
11
|
|
|
|
|
(277)
|
|
(209)
|
|
|
|
|
(918)
|
|
(958)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
—
|
|
35
|
|
|
|
|
53
|
|
(49)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
(expense)
|
(48)
|
|
4
|
|
|
|
|
(236)
|
|
(120)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(48)
|
|
$
|
39
|
|
|
|
|
$
|
(183)
|
|
$
|
(169)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS (LOSS) PER
COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.44)
|
|
$
|
0.38
|
|
|
|
|
$
|
(1.70)
|
|
$
|
(1.65)
|
|
|
|
Diluted
|
$
|
(0.44)
|
|
$
|
0.35
|
|
|
|
|
$
|
(1.70)
|
|
$
|
(1.65)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding, basic
|
110,242,507
|
|
103,836,535
|
|
|
|
|
108,374,160
|
|
101,934,630
|
|
|
|
Weighted average
common shares outstanding, diluted
|
110,242,507
|
|
111,415,982
|
|
|
|
|
108,374,160
|
|
101,934,630
|
|
|
|
|
Adjusted EBITDA is a
non-GAAP term. See page 7 of this addendum for the reconciliation
of adjusted EBITDA to net loss as defined by GAAP.
All percentages are
calculated using actual amounts. Minor differences may exist due to
rounding. Certain prior year amounts have been reclassified to
conform with the 2014 presentation.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
(dollars in
millions, except per share data)
|
|
|
Year Ended
December 31,
|
|
2014
|
|
2013
|
|
|
|
|
Actual
|
|
Pro Forma
(a)
|
|
%
Change
|
REVENUES:
|
|
|
|
|
|
Video
|
$
|
4,443
|
|
$
|
4,177
|
|
6.4%
|
Internet
|
2,576
|
|
2,253
|
|
14.4%
|
Voice
|
575
|
|
668
|
|
(14.2)%
|
Commercial
|
993
|
|
840
|
|
18.2%
|
Advertising
sales
|
341
|
|
297
|
|
14.6%
|
Other
|
180
|
|
184
|
|
(1.7)%
|
Total
Revenues
|
9,108
|
|
8,419
|
|
8.2%
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
Programming
|
2,459
|
|
2,214
|
|
11.2%
|
Franchises, regulatory
and connectivity
|
428
|
|
417
|
|
2.6%
|
Costs to service
customers
|
1,675
|
|
1,613
|
|
3.7%
|
Marketing
|
529
|
|
506
|
|
4.5%
|
Other
|
827
|
|
721
|
|
14.7%
|
Total operating costs
and expenses (excluding
depreciation and amortization)
|
5,918
|
|
5,471
|
|
8.2%
|
|
|
|
|
|
|
Adjusted
EBITDA
|
3,190
|
|
2,948
|
|
8.2%
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
35.0%
|
|
35.0%
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
2,102
|
|
1,908
|
|
|
|
Stock compensation
expense
|
55
|
|
48
|
|
|
|
Other operating
expenses, net
|
62
|
|
47
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
971
|
|
945
|
|
|
|
|
|
|
|
|
|
|
OTHER
EXPENSES:
|
|
|
|
|
|
|
Interest expense,
net
|
(911)
|
|
(873)
|
|
|
|
Loss on
extinguishment of debt
|
—
|
|
(123)
|
|
|
|
Gain (loss) on
derivative instruments, net
|
(7)
|
|
11
|
|
|
|
|
(918)
|
|
(985)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
53
|
|
(40)
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(236)
|
|
(154)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(183)
|
|
$
|
(194)
|
|
|
|
|
|
|
|
|
|
|
LOSS PER COMMON
SHARE, BASIC AND DILUTED:
|
$
|
(1.70)
|
|
$
|
(1.90)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding, basic and diluted
|
108,374,160
|
|
101,934,630
|
|
|
|
|
Adjusted EBITDA is a
non-GAAP term. See page 7 of this addendum for the reconciliation
of adjusted EBITDA to net loss as defined by GAAP.
All percentages are
calculated using actual amounts. Minor differences may exist due to
rounding. Certain prior year amounts have been reclassified to
conform with the 2014 presentation.
(a) Pro forma results
reflect certain acquisitions of cable systems in 2013 as if they
occurred as of January 1, 2012.
December 31,
2013. Pro forma revenues, operating expenses and net loss
increased by $264 million, $174 million and $25 million,
respectively, for the year ended December 31, 2013.
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(dollars in
millions)
|
|
|
December
31,
|
|
December
31,
|
|
2014
|
|
|
2013
|
|
|
|
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
3
|
|
|
$
|
21
|
Accounts receivable,
net
|
285
|
|
|
234
|
Prepaid expenses and
other current assets
|
83
|
|
|
67
|
Total current
assets
|
371
|
|
|
322
|
|
|
|
|
|
RESTRICTED CASH AND
CASH EQUIVALENTS
|
7,111
|
|
|
—
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
|
Property, plant and
equipment, net
|
8,373
|
|
|
7,981
|
Franchises
|
6,006
|
|
|
6,009
|
Customer
relationships, net
|
1,105
|
|
|
1,389
|
Goodwill
|
1,168
|
|
|
1,177
|
Total investment in
cable properties, net
|
16,652
|
|
|
16,556
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
416
|
|
|
417
|
|
|
|
|
|
Total
assets
|
$
|
24,550
|
|
|
$
|
17,295
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
1,635
|
|
|
$
|
1,467
|
Total current
liabilities
|
1,635
|
|
|
1,467
|
|
|
|
|
|
LONG-TERM
DEBT
|
21,023
|
|
|
14,181
|
DEFERRED INCOME
TAXES
|
1,674
|
|
|
1,431
|
OTHER LONG-TERM
LIABILITIES
|
72
|
|
|
65
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
146
|
|
|
151
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
$
|
24,550
|
|
|
$
|
17,295
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(dollars in
millions)
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(48)
|
|
$
|
|
39
|
|
|
$
|
(183)
|
|
$
|
(169)
|
Adjustments to
reconcile net income (loss) to net cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
534
|
|
|
500
|
|
|
2,102
|
|
1,854
|
Stock compensation
expense
|
14
|
|
|
11
|
|
|
55
|
|
48
|
Noncash interest
expense
|
8
|
|
|
10
|
|
|
37
|
|
43
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
123
|
(Gain) loss on
derivative instruments, net
|
4
|
|
|
(2)
|
|
|
7
|
|
(11)
|
Deferred income
taxes
|
56
|
|
|
—
|
|
|
233
|
|
112
|
Other, net
|
8
|
|
|
2
|
|
|
10
|
|
34
|
Changes in operating
assets and liabilities, net of effects from acquisitions and
dispositions:
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(15)
|
|
|
—
|
|
|
(51)
|
|
10
|
Prepaid expenses and
other assets
|
12
|
|
|
13
|
|
|
(9)
|
|
—
|
Accounts payable,
accrued liabilities and other
|
57
|
|
|
22
|
|
|
158
|
|
114
|
Net cash flows from
operating activities
|
630
|
|
|
595
|
|
|
2,359
|
|
2,158
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Purchases of
property, plant and equipment
|
(543)
|
|
|
(566)
|
|
|
(2,221)
|
|
(1,825)
|
Change in accrued
expenses related to capital expenditures
|
2
|
|
|
55
|
|
|
33
|
|
76
|
Sales (purchases) of
cable systems, net
|
11
|
|
|
(3)
|
|
|
11
|
|
(676)
|
Restricted cash in
escrow
|
(3,598)
|
|
|
—
|
|
|
(7,111)
|
|
—
|
Other, net
|
(11)
|
|
|
(3)
|
|
|
(16)
|
|
(18)
|
Net cash flows from
investing activities
|
(4,139)
|
|
|
(517)
|
|
|
(9,304)
|
|
(2,443)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Borrowings of
long-term debt
|
3,892
|
|
|
213
|
|
|
8,806
|
|
6,782
|
Repayments of
long-term debt
|
(466)
|
|
|
(343)
|
|
|
(1,980)
|
|
(6,520)
|
Payments for debt
issuance costs
|
(2)
|
|
|
—
|
|
|
(6)
|
|
(50)
|
Purchase of treasury
stock
|
(1)
|
|
|
(4)
|
|
|
(19)
|
|
(15)
|
Proceeds from
exercise of options and warrants
|
80
|
|
|
37
|
|
|
123
|
|
104
|
Other, net
|
(1)
|
|
|
(1)
|
|
|
3
|
|
(2)
|
Net cash flows from
financing activities
|
3,502
|
|
|
(98)
|
|
|
6,927
|
|
299
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(7)
|
|
|
(20)
|
|
|
(18)
|
|
14
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
10
|
|
|
41
|
|
|
21
|
|
7
|
CASH AND CASH
EQUIVALENTS, end of period
|
$
|
3
|
|
$
|
|
21
|
|
|
$
|
3
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
226
|
|
$
|
|
179
|
|
|
$
|
850
|
|
$
|
763
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
UNAUDITED SUMMARY
OF OPERATING STATISTICS
|
(in thousands,
except per customer and penetration data)
|
|
|
Approximate as
of
|
|
December 31,
2014 (a)
|
|
September 30,
2014 (a)
|
|
December 31,
2013 (a)
|
Footprint
|
|
|
|
|
|
Estimated Video
Passings (b)
|
12,871
|
|
12,858
|
|
12,838
|
Estimated Internet
Passings (b)
|
12,570
|
|
12,522
|
|
12,505
|
Estimated Voice
Passings (b)
|
12,079
|
|
12,014
|
|
11,934
|
|
|
|
|
|
|
Penetration
Statistics
|
|
|
|
|
|
Video Penetration of
Estimated Video Passings (c)
|
33.4%
|
|
33.4%
|
|
33.8%
|
Internet Penetration
of Estimated Internet Passings (c)
|
40.4%
|
|
39.6%
|
|
37.1%
|
Voice Penetration of
Estimated Voice Passings (c)
|
21.7%
|
|
21.3%
|
|
20.3%
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
Residential Customer
Relationships (d)
|
5,841
|
|
5,768
|
|
5,561
|
Residential Non-Video
Customers
|
1,681
|
|
1,611
|
|
1,384
|
% Non-Video
|
28.8%
|
|
27.9%
|
|
24.9%
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
Video (e)
|
4,160
|
|
4,157
|
|
4,177
|
Internet
(f)
|
4,766
|
|
4,662
|
|
4,383
|
Voice (g)
|
2,439
|
|
2,389
|
|
2,273
|
Residential PSUs
(h)
|
11,365
|
|
11,208
|
|
10,833
|
Residential PSU /
Customer Relationships (d)(h)
|
1.95
|
|
1.94
|
|
1.95
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses) (i)
|
|
|
|
|
|
Video (e)
|
3
|
|
(9)
|
|
(2)
|
Internet
(f)
|
104
|
|
94
|
|
93
|
Voice (g)
|
50
|
|
29
|
|
56
|
Residential PSUs
(h)
|
157
|
|
114
|
|
147
|
|
|
|
|
|
|
Bulk Digital Upgrade
Net Additions (j)
|
5
|
|
20
|
|
4
|
|
|
|
|
|
|
Single Play
Penetration (k)
|
38.0%
|
|
38.1%
|
|
37.6%
|
Double Play
Penetration (l)
|
29.1%
|
|
29.3%
|
|
29.8%
|
Triple Play
Penetration (m)
|
32.8%
|
|
32.6%
|
|
32.6%
|
Digital Penetration
(n)
|
98.5%
|
|
97.7%
|
|
91.8%
|
Monthly Residential
Revenue per Residential Customer (d)(o)
|
$
|
111.52
|
|
$
|
110.81
|
|
$
|
108.12
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
Commercial Customer
Relationships (d)(p)
|
386
|
|
380
|
|
375
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
Video
(e)(p)
|
133
|
|
139
|
|
165
|
Internet
(f)
|
306
|
|
294
|
|
257
|
Voice (g)
|
180
|
|
172
|
|
145
|
Commercial PSUs
(h)
|
619
|
|
605
|
|
567
|
|
|
|
|
|
|
Quarterly Net
Additions/(Losses) (i)
|
|
|
|
|
|
Video
(e)(p)
|
(6)
|
|
(15)
|
|
(1)
|
Internet
(f)
|
12
|
|
12
|
|
12
|
Voice (g)
|
8
|
|
8
|
|
7
|
Commercial PSUs
(h)
|
14
|
|
5
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
All percentages are
calculated using actual amounts. Minor differences may exist due to
rounding.
See footnotes to
unaudited summary of operating statistics on page 6 of this
addendum.
|
|
|
(a)
|
We calculate the
aging of customer accounts based on the monthly billing cycle for
each account. On that basis, at December 31, 2014, September
30, 2014 and December 31, 2013, customers include approximately
35,100, 13,500 and 11,300 customers, respectively, whose accounts
were over 60 days, approximately 1,500, 1,200 and 800 customers,
respectively, whose accounts were over 90 days and approximately
900, 800 and 900 customers, respectively, whose accounts were over
120 days. The increase in aging of customer accounts over 60
days is primarily related to a third quarter change in our
collections policy consistent with broader cable industry
practices.
|
|
|
(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 voice
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
include video customers in commercial structures, which are
calculated on an EBU basis (see footnote (p)) and non-video
commercial customer relationships.
|
|
|
(e)
|
"Video Customers"
represent those customers who subscribe to our video
services. Our methodology for reporting residential video
customers generally excludes units under bulk arrangements, unless
those units have a digital set-top box, thus a direct billing
relationship. As we complete our all-digital transition, bulk
units are supplied with digital set-top boxes adding to our bulk
digital upgrade customers.
|
|
|
(f)
|
"Internet Customers"
represent those customers who subscribe to our Internet
services.
|
|
|
(g)
|
"Voice Customers"
represent those customers who subscribe to our voice
services.
|
|
|
(h)
|
"Primary Service
Units" or "PSUs" represent the total of video, Internet and voice
customers.
|
|
|
(i)
|
"Quarterly Net
Additions/(Losses)" represent the net gain or loss in the
respective quarter for the service indicated.
|
|
|
(j)
|
"Bulk Digital Upgrade
Net Additions" represents the portion of residential video net
additions that result from the addition of a digital set-top box to
a bulk unit.
|
|
|
(k)
|
"Single Play
Penetration" represents residential customers receiving only one
Charter service offering, including video, Internet or voice, as a
% of residential customer relationships.
|
|
|
(l)
|
"Double Play
Penetration" represents residential customers receiving only two
Charter service offering, including video, Internet and/or voice,
as a % of residential customer relationships.
|
|
|
(m)
|
"Triple Play
Penetration" represents residential customers receiving all three
Charter service offerings, including video, Internet and voice, as
a % of residential customer relationships.
|
|
|
(n)
|
"Digital Penetration"
represents the number of residential digital video customers as a
percentage of residential video customers.
|
|
|
(o)
|
"Monthly Residential
Revenue per Residential Customer" is calculated as total
residential video, Internet and voice quarterly revenue divided by
three divided by average residential customer relationships during
the respective quarter.
|
|
|
(p)
|
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 18,000 during the year ended December 31, 2014 due to a higher
applicable video rate applied and other revisions to customer
reporting methodology.
|
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,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(48)
|
|
$
|
39
|
|
$
|
(183)
|
|
$
|
(169)
|
Plus: Interest
expense, net
|
273
|
|
211
|
|
911
|
|
846
|
Income tax (benefit)
expense
|
48
|
|
(4)
|
|
236
|
|
120
|
Depreciation and
amortization
|
534
|
|
500
|
|
2,102
|
|
1,854
|
Stock compensation
expense
|
14
|
|
11
|
|
55
|
|
48
|
Loss on extinguishment
of debt
|
—
|
|
—
|
|
—
|
|
123
|
(Gain) loss on
derivative instruments, net
|
4
|
|
(2)
|
|
7
|
|
(11)
|
Other, net
|
20
|
|
9
|
|
62
|
|
47
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(b)
|
845
|
|
764
|
|
3,190
|
|
2,858
|
Less: Purchases
of property, plant and equipment
|
(543)
|
|
(566)
|
|
(2,221)
|
|
(1,825)
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less
capital expenditures
|
$
|
302
|
|
$
|
198
|
|
$
|
969
|
|
$
|
1,033
|
|
|
|
|
|
|
|
|
Net cash flows from
operating activities
|
$
|
630
|
|
$
|
595
|
|
$
|
2,359
|
|
$
|
2,158
|
Less: Purchases
of property, plant and equipment
|
(543)
|
|
(566)
|
|
(2,221)
|
|
(1,825)
|
Change in accrued
expenses related to capital expenditures
|
2
|
|
55
|
|
33
|
|
76
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
|
89
|
|
$
|
84
|
|
$
|
171
|
|
$
|
409
|
|
Year Ended
December 31,
|
|
2014
|
|
2013
|
|
Actual
|
|
Pro Forma
(a)
|
|
|
|
|
Net loss
|
$
|
(183)
|
|
$
|
(194)
|
Plus: Interest
expense, net
|
911
|
|
873
|
Income tax
expense
|
236
|
|
154
|
Depreciation and
amortization
|
2,102
|
|
1,908
|
Stock compensation
expense
|
55
|
|
48
|
Loss on extinguishment
of debt
|
—
|
|
123
|
(Gain) loss on
derivative instruments, net
|
7
|
|
(11)
|
Other, net
|
62
|
|
47
|
|
|
|
|
Adjusted EBITDA
(b)
|
3,190
|
|
2,948
|
Less: Purchases
of property, plant and equipment
|
(2,221)
|
|
(1,854)
|
|
|
|
|
Adjusted EBITDA less
capital expenditures
|
$
|
969
|
|
$
|
1,094
|
|
(a) Pro forma results
reflect certain acquisitions of cable systems in 2013 as if they
occurred as of January 1, 2012.
(b) See page 1 and 2
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
December 31,
|
|
Year Ended
December 31,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer premise
equipment (a)
|
$
|
174
|
|
|
$
|
223
|
|
|
$
|
1,082
|
|
|
$
|
841
|
|
Scalable
infrastructure (b)
|
148
|
|
|
142
|
|
|
455
|
|
|
352
|
|
Line extensions
(c)
|
45
|
|
|
57
|
|
|
176
|
|
|
219
|
|
Upgrade/Rebuild
(d)
|
36
|
|
|
46
|
|
|
167
|
|
|
183
|
|
Support capital
(e)
|
140
|
|
|
98
|
|
|
341
|
|
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
capital expenditures (f)
|
$
|
543
|
|
|
$
|
566
|
|
|
$
|
2,221
|
|
|
$
|
1,825
|
|
|
Year Ended
December 31,
|
|
2014
|
|
2013
|
|
Actual
|
|
Pro Forma
(g)
|
|
|
|
|
Customer premise
equipment (a)
|
$
|
1,082
|
|
$
|
854
|
Scalable
infrastructure (b)
|
455
|
|
362
|
Line extensions
(c)
|
176
|
|
221
|
Upgrade/Rebuild
(d)
|
167
|
|
185
|
Support capital
(e)
|
341
|
|
232
|
|
|
|
|
Total
capital expenditures (f)
|
$
|
2,221
|
|
$
|
1,854
|
|
(a) Customer premise
equipment includes costs incurred at the customer residence to
secure new customers and revenue generating units, including
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 include $42 million and $59 million for the three
months ended December 31, 2014 and 2013, respectively, and $410
million and $88 million for the year ended December 31, 2014 and
2013, respectively, related to our all-digital transition; and $58
million and $84 million for the three months ended December 31,
2014 and 2013, respectively, and $242 million and $300 million for
the year ended December 31, 2014 and 2013, respectively, related to
commercial services.
(g) Pro forma results
reflect certain acquisitions of cable systems in 2013 as if they
occurred as of January 1, 2012.
|
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SOURCE Charter Communications, Inc.