ST. LOUIS, Nov. 1, 2011 /PRNewswire/ -- Charter
Communications, Inc. (along with its subsidiaries, the "Company" or
"Charter") today reported financial and operating results for the
three and nine months ended September 30,
2011.
(Logo:
http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO)
Third quarter highlights:
- Total revenues grew 3.0% on a pro forma(1) basis and
2.3% on an actual basis due to growth in commercial, Internet and
telephone sales.
- Adjusted EBITDA(2) grew 3.8% year-over-year on a pro
forma basis and 3.3% on an actual basis, driven by revenue
growth and a 30 basis point margin improvement, on a pro
forma basis, to 36.1%. Net loss declined to $85 million in the third quarter of 2011.
- Commercial revenues grew 19.4% on a pro forma basis, and
17.5% on an actual basis, fueled by new relationships with small
and medium businesses and carrier customers.
- Non-video residential customer relationships increased by
approximately 54,900 for the quarter, more than double prior-year
third quarter growth.
- Free cash flow(2) was $90 million
and cash flows from operating activities were $405 million.
- Continued execution of disciplined financial strategy with the
completion of several acquisitions and share and debt repurchases
within the quarter.
"Charter delivered solid results in the third quarter, and I
believe we have the right building blocks in place for long-term
success. We are seeing the early benefits of delivering on our
strategic priorities as evidenced by growth in Internet,
acceleration in our commercial business and an improved customer
relationship trend," said Mike
Lovett, President and Chief Executive Officer. "The
foundation of our strategy is to enhance the customer experience
and increase awareness of Charter as the leading Internet service
provider within our footprint. While we are making fundamental
improvements to our video offering, our leadership team is
confident that leveraging the strength of our Internet and
commercial businesses will benefit all product lines over time. I
am pleased with our near-term momentum in what remains a
challenging macro-economic environment, and continue to be
confident about our future."
During the third quarter, we continued to lay the foundation for
future growth by focusing on our strategic priorities which include
simplifying and enhancing the customer experience, leveraging our
Internet advantage, aggressively driving growth in our commercial
business, and changing the dynamic in video.
We are gaining traction in improving the ways in which customers
interact with and perceive Charter and in leveraging the strength
of our residential and commercial IP platforms which will
ultimately serve our video business well. We are continuing to
expand our commercial product offerings to our business and carrier
customers consistent with our plans to gain share and accelerate
growth in this area.
We recently added compelling new content and features for our
video customers, including NFL Network, NFL Red Zone, HBO GO®, MAX
GO® and BTN2Go, in addition to continued expansion of our HD
channel lineup. We also launched our TiVo pilot, a key component in
our next generation TV strategy, which we believe will meaningfully
improve our video experience. Today we announced an upcoming unique
enhancement to our online video capabilities that organizes video
content already available online through Charter.net with content
from sites such as Netflix, Amazon and Hulu into a single on-line
directory.
We continue to invest in our infrastructure to strengthen our
competitive position. Our key bandwidth initiatives, DOCSIS 3.0,
which allows Internet speeds of 100 Mbps or higher, and switched
digital video (SDV), which enables more HD channels, are nearing
completion. This will further enable us to deliver better products
and service to our residential and commercial customers.
(1)
Pro forma
results are described below in
the "Use of Non-GAAP Financial Metrics" section and are provided in
the addendum of this news release.
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(2) Adjusted
EBITDA and free cash flow are defined in the "Use of Non-GAAP
Financial Metrics" section and are reconciled to consolidated net
loss and net cash flows from operating activities, respectively, in
the addendum of this news release.
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Key Operating Results
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Approximate
as of
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Actual
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Pro
Forma
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September
30,
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September
30,
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2011
(a)
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2010
(a)
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Y/Y
Change
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Footprint
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Estimated Homes Passed Video
(b)
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11,927,600
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11,815,900
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1%
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% Switched Digital
Video
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80%
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44%
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36 ppts
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Estimated Homes Passed Internet
(b)
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11,601,900
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11,454,800
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1%
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% DOCSIS 3.0
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85%
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36%
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49 ppts
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Estimated Homes Passed Phone
(b)
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10,848,500
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10,587,800
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2%
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Customers
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Residential Customer
Relationships (c)
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4,866,200
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4,926,200
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-1%
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Commercial Customer
Relationships (c)
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356,500
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351,100
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2%
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Total Customer Relationships
(c)(e)
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5,222,700
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5,277,300
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-1%
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Residential Non-Video Customers
(d)
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730,400
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558,200
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31%
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% Non-Video (d)
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15.0%
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11.3%
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3.7 ppts
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Services and Revenue Generating
Units (f)
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Video (d)
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4,135,800
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4,368,000
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-5%
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Internet (g)
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3,424,100
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3,230,500
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6%
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Phone (h)
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1,763,800
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1,690,400
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4%
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Residential PSUs (i)
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9,323,700
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9,288,900
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0%
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Residential PSU / Customer
Relationships (c)(i)
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1.92
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1.89
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Video (d)(e)
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235,100
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246,700
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-5%
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Internet (g)(j)
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156,000
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133,200
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17%
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Phone (h)
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73,800
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54,800
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35%
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Commercial PSUs (i)
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464,900
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434,700
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7%
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Digital Video RGUs
(k)
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3,400,900
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3,351,300
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1%
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Total RGUs
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13,189,500
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13,074,900
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1%
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Quarterly Net Additions/(Losses)
(l)
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Video (d)
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(64,800)
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(66,100)
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2%
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Internet (g)
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53,200
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51,600
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3%
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Phone (h)
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10,900
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30,600
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-64%
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Residential PSUs (i)
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(700)
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16,100
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Video (d)(e)
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(4,300)
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3,000
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-243%
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Internet (g)
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6,900
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4,900
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41%
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Phone (h)
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5,300
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4,900
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8%
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Commercial PSUs (i)
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7,900
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12,800
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-38%
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Digital Video RGUs
(k)
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4,800
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42,500
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-89%
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Total RGUs
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12,000
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71,400
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-83%
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Quarterly Residential
ARPU
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Video (m)
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$
72.21
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$
69.21
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4%
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Internet (m)
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$
42.67
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$
41.93
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2%
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Phone (m)
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$
40.96
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$
41.43
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-1%
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ARPU per Customer Relationship
(n)
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$
106.38
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$
102.77
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4%
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Total ARPU per Video Customer
(o)
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$
137.41
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$
126.48
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9%
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Residential Penetration
Statistics
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Video Penetration of Homes
Passed Video (p)
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34.7%
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37.0%
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-2.3 ppts
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Internet Penetration of Homes
Passed Internet (p)
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29.5%
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28.2%
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1.3 ppts
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Phone Penetration of Homes
Passed Phone (p)
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16.3%
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16.0%
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0.3 ppts
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Bundled Penetration
(q)
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61.9%
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60.3%
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1.6 ppts
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Triple Play Penetration
(r)
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28.8%
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27.5%
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1.3 ppts
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Digital Penetration
(s)
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77.8%
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72.6%
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5.2 ppts
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Advanced Digital Penetration (of
Digital) (t)
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55.0%
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50.3%
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4.7 ppts
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Set-Top-Box per Digital
RGU(u)
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1.52
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1.49
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Footnotes
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See footnotes to unaudited
summary of operating statistics on page 6 of the addendum of this
release. The footnotes contain important disclosures regarding the
definitions used for these operating statistics.
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Residential primary service units (PSUs) decreased by 700 in the
third quarter of 2011 as gains in Internet and phone PSUs were more
than offset by video losses. Non-video customer relationships grew
by 54,900, more than double the growth during last year's third
quarter. Approximately 61.9% of our residential customers subscribe
to more than one product, as we up-sell single product customers to
higher-value bundles to maximize retention and penetration.
In the third quarter, residential video customers decreased by
64,800, a slight improvement compared to a decrease of 66,100 in
the third quarter of 2010. Basic analog customer relationships
decreased by approximately 63,000, nearly all of the video decline.
Our disciplined approach to customer acquisition resulted in higher
retention levels; however, we continued to be impacted by generally
weak economic conditions and competition. Digital video customers
increased by 4,800 in the quarter compared to a 42,500 increase in
the prior-year period. Digital growth slowed significantly compared
to last year's third quarter as Charter completed fewer analog
channel migrations in the 2011 third quarter, which traditionally
drive digital upgrades. While Internet and commercial services are
the primary growth engines and are becoming a larger part of our
revenues, video still represents approximately 50% of our total
revenue and remains an important part of the business. We're
focused on enhancing our video product offering, improving our
customer service and providing attractive offers targeted at
improving video customer trends. At the end of September, 55.0% of
our digital customers subscribed to HD and/or DVR services, up from
50.3% in the prior year quarter. Video ARPU was $72.21 for the third quarter of 2011, up 4.3%
year-over-year driven by recent targeted price adjustments and
higher advanced services penetration.
We delivered strong growth in high-speed Internet as we continue
to capture share with product superiority. We added 53,200
residential Internet customers in the third quarter compared to
51,600 last year. Nearly 95% of our Internet customers have a
broadband plan of 12Mbps or higher with approximately 23% of them
relying on our home networking service. Internet ARPU of
$42.67 increased 1.8% compared to the
year-ago quarter primarily due to the growth in home networking
revenues and recent price adjustments.
We continued to grow residential phone customers, although at a
slower pace than in 2010. We added 10,900 phone customers during
the 2011 third quarter compared to a gain of 30,600 a year ago due
primarily to fewer upgrades from our existing customer base driven
by a higher mix of brand as compared to direct response marketing
in the first part of 2011, weak economic conditions and the impact
of more customers replacing traditional phone service with wireless
service. Phone penetration was 16.3% as of September 30, 2011. Phone remains key to bundle
value in terms of retention and penetration, and we continue to
promote phone up-sell to both video and non-video Internet
customers. Phone ARPU of $40.96
decreased approximately 1.1% year-over-year due to increased
value-based packages and bundling.
Third-quarter commercial PSUs increased 7,900 to 464,900 and
were up 6.9% compared to the third quarter of 2010. Commercial
Internet and phone PSUs increased year-over-year by more than 20%.
We are well positioned to further leverage our network to provide
an expanding portfolio of products and services to our business
customers to accelerate our growth in our commercial footprint.
Total ARPU for the third quarter of 2011 was $137.41, an increase of 8.6% over the 2010 third
quarter, primarily as a result of continued growth in our
commercial business, the previously mentioned price adjustments and
higher bundle and advanced services penetration. For the nine
months ended September 30, 2011, we
lost 20,800 total customer relationships as compared to 80,800 in
2010, reflecting improvements in customer experience, enhanced
services and products, and benefits from our strategic investments,
partially offset by disciplined customer acquisition.
Third Quarter Financial Results
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
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UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
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(DOLLARS IN
MILLIONS, EXCEPT PER SHARE AND SHARE DATA)
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Three Months
Ended September 30,
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2011
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2010
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Pro
Forma
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2011
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2010
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Pro
Forma
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Pro
Forma
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%
Change
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Actual
|
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Actual
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%
Change
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REVENUES:
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Video
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$
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902
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$
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913
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-1.2%
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$
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899
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$
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918
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-2.1%
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Internet
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434
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402
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8.0%
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433
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404
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7.2%
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Telephone
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216
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208
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3.8%
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216
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208
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3.8%
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Commercial
|
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148
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124
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19.4%
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148
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126
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17.5%
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Advertising
sales
|
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73
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75
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-2.7%
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73
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75
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-2.7%
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Other
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40
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38
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5.3%
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40
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38
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5.3%
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Total
revenues
|
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1,813
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1,760
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3.0%
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1,809
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1,769
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2.3%
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COSTS AND
EXPENSES:
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Operating (excluding
depreciation and amortization) (a)
|
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795
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783
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1.5%
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792
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788
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0.5%
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Selling, general and
administrative (excluding stock
|
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compensation expense)
(b)
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364
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347
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4.9%
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364
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349
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4.3%
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Operating
costs and expenses
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1,159
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|
1,130
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2.6%
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1,156
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1,137
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1.7%
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Adjusted
EBITDA
|
|
654
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|
630
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3.8%
|
|
653
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|
632
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3.3%
|
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Adjusted
EBITDA margin
|
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36.1%
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35.8%
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36.1%
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35.7%
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Capital Expenditures
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$
|
304
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$
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297
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$
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304
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$
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299
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% Total Revenues
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16.8%
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16.9%
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16.8%
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16.9%
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Net loss
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$
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(85)
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$
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(99)
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$
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(85)
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$
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(95)
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Loss per common share, basic and
diluted
|
$
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(0.79)
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$
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(0.87)
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$
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(0.79)
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$
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(0.84)
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Net cash flows from operating
activities
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$
|
406
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$
|
439
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$
|
405
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$
|
441
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Free cash flow
|
$
|
91
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$
|
135
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$
|
90
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$
|
135
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Footnotes
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(a) Operating expenses
include programming, service, and advertising sales
expenses.
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(b) Selling, general and
administrative expenses include general and administrative and
marketing expenses.
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Adjusted EBITDA and free cash
flow are defined in the “Use of Non-GAAP Financial Metrics” section
and are reconciled to consolidated net loss and net cash flows from
operating activities, respectively, in the addendum of this
news release.
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Revenue
Third quarter 2011 pro forma revenues rose to
$1.813 billion, up 3.0% compared to
the year-ago quarter as we continued to grow our commercial,
Internet and phone businesses and increase sales of bundled
services. On an actual basis revenues grew 2.3% to $1.809 billion.
Third quarter 2011 pro forma video revenues totaled
$902 million, or $899 million on an actual basis, a decrease of
1.2% on a pro forma basis and 2.1% on an actual basis
compared to the prior-year period. Video revenues declined as a
result of our video customer losses, partially offset by price
adjustments and growth in revenues from DVR and high-definition
television services. Third quarter pro forma Internet
revenues were $434 million or
$433 million on an actual basis, up
8.0% on a pro forma basis and 7.2% on an actual basis
year-over-year driven by the addition of 193,600 Internet
customers. Telephone revenues totaled $216
million on a pro forma and actual basis, up 3.8% on a
pro forma and an actual basis over third quarter 2010 as we
added 73,400 phone customers.
Commercial revenues grew to $148
million, a 19.4% year-over-year increase on a pro
forma basis and 17.5% on an actual basis, supported by improved
sales productivity and line extensions for carrier and small and
medium business customers.
Advertising sales revenues were $73
million for the third quarter of 2011, a 2.7% decrease
compared to the third quarter of 2010, primarily due to higher
political spend in the year ago quarter offset by a $3 million change versus the prior year to
reflect certain revenues on a gross basis, thus increasing both
revenues and expenses by the same amount.
Operating Costs and Expenses
Pro forma operating costs and expenses totaled
$1.159 billion in the third quarter
of 2011, an increase of 2.6% compared to the year-ago period,
primarily related to increases in marketing and programming
expenses, partially offset by lower bad debt. On an actual basis,
operating costs and expenses totaled $1.156
billion, an increase of 1.7% compared to the year-ago
period. Marketing expenses increased by $15
million on a pro forma basis in the third quarter of
2011 compared to the year-ago quarter reflecting higher brand and
media investment, channel development and increased marketing
efforts for commercial. Programming expenses rose as a result of
contractual programming increases, partially offset by customer
losses. Bad debt expense was $5
million lower in the third quarter as we continue to derive
benefits from our customer acquisition and retention
strategies.
Adjusted EBITDA
Adjusted EBITDA on a pro forma basis was $654 million for the third quarter of 2011, an
increase of 3.8%. Adjusted EBITDA grew 3.3% on an actual basis to
$653 million. Adjusted EBITDA margin
improved to 36.1% on a pro forma and actual basis for the
third quarter of 2011 compared to adjusted EBITDA margin of 35.8%
on a pro forma basis and 35.7% on an actual basis in the
year-ago quarter. Sustained adjusted EBITDA growth was driven by
increases in our higher margin Internet, commercial and phone
products, continued disciplined customer acquisition, and improving
customer service levels.
Net Loss
Net loss on a pro forma and actual basis was $85 million in the third quarter of 2011,
compared to $99 million on a pro
forma basis and $95 million on an
actual basis in the prior-year third quarter. The improvement was
primarily due to adjusted EBITDA growth and lower income tax
expense partially offset by higher interest expense due to 2010 and
2011 refinancings, as well as an increase in depreciation and
amortization in the quarter-to-quarter comparison. Net loss per
common share was $0.79 in the third
quarter of 2011 compared to $0.87 on
a pro forma and $0.84 on an
actual basis during the same period last year.
Capital Expenditures
Property, plant and equipment expenditures for the third quarter
of 2011 were $304 million compared to
third quarter 2010 expenditures of $297
million on a pro forma basis and $299 million on an actual basis. The increase was
primarily due to a higher spending for line extensions driven by
commercial construction and for customer premise equipment,
partially offset by lower spending on scalable infrastructure due
to timing within the year. Our estimate for capital expenditures
for 2011 remains approximately $1.3 billion
to $1.4 billion.
Cash Flow
Net cash flows from operating activities were $406 million on a pro forma basis,
compared to $439 million on a pro
forma basis in the third quarter of 2010. Net cash flows from
operating activities were $405
million on an actual basis, compared to $441 million on an actual basis in the third
quarter of 2010. The decrease in net cash flows from operating
activities was primarily due to changes in working capital that
provided $36 million less cash in
quarter-to-quarter comparisons and an increase in cash interest
payments, offset by higher adjusted EBITDA.
Free cash flow for the third quarter of 2011 was $91 million on a pro forma basis and
$90 million on an actual basis,
compared to $135 million on a pro
forma basis and an actual basis in the same period last year.
The decrease was driven by lower net cash flows from operating
activities and higher capital expenditures.
Total principal amount of debt was approximately $12.5 billion as of September 30, 2011. At the end of the third
quarter, we had $32 million of cash
and cash equivalents (including restricted cash and cash
equivalents of $27 million) and
availability under our revolving credit facility of approximately
$1.1 billion.
During the third quarter of 2011, we repurchased approximately
2.4 million shares of Class A common stock for approximately
$116 million in open market
transactions and purchased $193
million principal amount of 8% 2nd lien notes.
Conference Call
Charter will host a conference call on Tuesday, November 1, 2011 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 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 866-726-7983 no
later than 10 minutes prior to the call. International participants
should dial 706-758-7055. The conference ID code for the call is
16801546.
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 November 15,
2011. The conference ID code for the replay is 16801546.
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 quarterly report for the quarter ended
September 30, 2011 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, adjusted EBITDA
less capital expenditures 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, and other
expenses, such as special charges, reorganization items 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 special items, and is
unaffected by the Company's capital structure or investment
activities. Adjusted EBITDA less capital expenditures is defined as
Adjusted EBITDA minus purchases of property, plant and equipment.
Adjusted EBITDA and adjusted EBITDA less capital expenditures are
used by management and the Company's Board to evaluate the
performance of the Company's business. For this reason, they are
significant components of Charter's annual incentive compensation
program. 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 $40 million and $34
million for the three months ended September 30, 2011 and 2010, respectively, and
$110 million and $105 million for the nine months ended
September 30, 2011 and 2010,
respectively.
In addition to the actual results for the three and nine months
ended September 30, 2011 and 2010, we
have provided pro forma results in this release for the
three and nine months ended September 30,
2011 and 2010. We believe these pro forma results
facilitate meaningful analysis of the results of operations. Pro
forma results in this release reflect certain acquisitions and
sales of cable systems in 2010 and 2011 as if they occurred as of
January 1, 2010. Pro forma
statements of operations for the three and nine months ended
September 30, 2011 and 2010; and
pro forma customer statistics as of September 30, 2010; 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 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" 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 free cash flow 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, and digital subscriber line ("DSL") providers and
competition from 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 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
|
|
(IN
MILLIONS, EXCEPT SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30,
|
|
|
Nine Months
Ended September 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
Actual
|
|
|
Actual
|
|
% Change
|
|
|
Actual
|
|
|
Actual
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
899
|
|
$
|
918
|
|
-2.1%
|
|
$
|
2,710
|
|
$
|
2,776
|
|
-2.4%
|
|
Internet
|
|
433
|
|
|
404
|
|
7.2%
|
|
|
1,264
|
|
|
1,201
|
|
5.2%
|
|
Telephone
|
|
216
|
|
|
208
|
|
3.8%
|
|
|
641
|
|
|
612
|
|
4.7%
|
|
Commercial
|
|
148
|
|
|
126
|
|
17.5%
|
|
|
426
|
|
|
365
|
|
16.7%
|
|
Advertising
sales
|
|
73
|
|
|
75
|
|
-2.7%
|
|
|
211
|
|
|
206
|
|
2.4%
|
|
Other
|
|
40
|
|
|
38
|
|
5.3%
|
|
|
118
|
|
|
115
|
|
2.6%
|
|
Total
revenues
|
|
1,809
|
|
|
1,769
|
|
2.3%
|
|
|
5,370
|
|
|
5,275
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (excluding
depreciation and amortization) (a)
|
|
792
|
|
|
788
|
|
0.5%
|
|
|
2,344
|
|
|
2,317
|
|
1.2%
|
|
Selling, general and
administrative (excluding stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation expense)
(b)
|
|
364
|
|
|
349
|
|
4.3%
|
|
|
1,037
|
|
|
1,043
|
|
-0.6%
|
|
Operating
costs and expenses
|
|
1,156
|
|
|
1,137
|
|
1.7%
|
|
|
3,381
|
|
|
3,360
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
653
|
|
|
632
|
|
3.3%
|
|
|
1,989
|
|
|
1,915
|
|
3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
|
36.1%
|
|
|
35.7%
|
|
|
|
|
37.0%
|
|
|
36.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
405
|
|
|
385
|
|
|
|
|
1,181
|
|
|
1,134
|
|
|
|
Stock compensation
expense
|
|
10
|
|
|
7
|
|
|
|
|
25
|
|
|
17
|
|
|
|
Other operating expenses,
net
|
|
1
|
|
|
-
|
|
|
|
|
7
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
237
|
|
|
240
|
|
|
|
|
776
|
|
|
745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(244)
|
|
|
(222)
|
|
|
|
|
(718)
|
|
|
(645)
|
|
|
|
Loss on extinguishment of
debt
|
|
(4)
|
|
|
(3)
|
|
|
|
|
(124)
|
|
|
(38)
|
|
|
|
Other expense,
net
|
|
(2)
|
|
|
(1)
|
|
|
|
|
(4)
|
|
|
(3)
|
|
|
|
|
|
(250)
|
|
|
(226)
|
|
|
|
|
(846)
|
|
|
(686)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
(13)
|
|
|
14
|
|
|
|
|
(70)
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
(72)
|
|
|
(109)
|
|
|
|
|
(232)
|
|
|
(211)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(85)
|
|
$
|
(95)
|
|
|
|
$
|
(302)
|
|
$
|
(152)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and
diluted
|
$
|
(0.79)
|
|
$
|
(0.84)
|
|
|
|
$
|
(2.74)
|
|
$
|
(1.34)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
108,420,169
|
|
|
113,110,889
|
|
|
|
|
110,285,852
|
|
|
113,081,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 loss as defined by GAAP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING
DATA
|
|
(IN
MILLIONS, EXCEPT SHARE DATA)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30,
|
|
|
Nine Months
Ended September 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
Pro Forma
(a)
|
|
|
Pro Forma
(a)
|
|
% Change
|
|
|
Pro Forma
(a)
|
|
|
Pro Forma
(a)
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
$
|
902
|
|
$
|
913
|
|
-1.2%
|
|
$
|
2,723
|
|
$
|
2,757
|
|
-1.2%
|
|
Internet
|
|
434
|
|
|
402
|
|
8.0%
|
|
|
1,269
|
|
|
1,196
|
|
6.1%
|
|
Telephone
|
|
216
|
|
|
208
|
|
3.8%
|
|
|
642
|
|
|
613
|
|
4.7%
|
|
Commercial
|
|
148
|
|
|
124
|
|
19.4%
|
|
|
427
|
|
|
361
|
|
18.3%
|
|
Advertising
sales
|
|
73
|
|
|
75
|
|
-2.7%
|
|
|
211
|
|
|
205
|
|
2.9%
|
|
Other
|
|
40
|
|
|
38
|
|
5.3%
|
|
|
118
|
|
|
114
|
|
3.5%
|
|
Total
revenues
|
|
1,813
|
|
|
1,760
|
|
3.0%
|
|
|
5,390
|
|
|
5,246
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (excluding
depreciation and amortization) (b)
|
|
795
|
|
|
783
|
|
1.5%
|
|
|
2,355
|
|
|
2,301
|
|
2.3%
|
|
Selling, general and
administrative (excluding stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation expense)
(c)
|
|
364
|
|
|
347
|
|
4.9%
|
|
|
1,041
|
|
|
1,035
|
|
0.6%
|
|
Operating
costs and expenses
|
|
1,159
|
|
|
1,130
|
|
2.6%
|
|
|
3,396
|
|
|
3,336
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
654
|
|
|
630
|
|
3.8%
|
|
|
1,994
|
|
|
1,910
|
|
4.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA margin
|
|
36.1%
|
|
|
35.8%
|
|
|
|
|
37.0%
|
|
|
36.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
406
|
|
|
387
|
|
|
|
|
1,187
|
|
|
1,140
|
|
|
|
Stock compensation
expense
|
|
10
|
|
|
7
|
|
|
|
|
25
|
|
|
17
|
|
|
|
Other operating expenses,
net
|
|
1
|
|
|
-
|
|
|
|
|
7
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
|
237
|
|
|
236
|
|
|
|
|
775
|
|
|
734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
(244)
|
|
|
(222)
|
|
|
|
|
(718)
|
|
|
(645)
|
|
|
|
Loss on extinguishment of
debt
|
|
(4)
|
|
|
(3)
|
|
|
|
|
(124)
|
|
|
(38)
|
|
|
|
Other expense,
net
|
|
(2)
|
|
|
(1)
|
|
|
|
|
(4)
|
|
|
(3)
|
|
|
|
|
|
(250)
|
|
|
(226)
|
|
|
|
|
(846)
|
|
|
(686)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
|
(13)
|
|
|
10
|
|
|
|
|
(71)
|
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
(72)
|
|
|
(109)
|
|
|
|
|
(232)
|
|
|
(208)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(85)
|
|
$
|
(99)
|
|
|
|
$
|
(303)
|
|
$
|
(160)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share, basic and
diluted
|
$
|
(0.79)
|
|
$
|
(0.87)
|
|
|
|
$
|
(2.74)
|
|
$
|
(1.41)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
108,420,169
|
|
|
113,110,889
|
|
|
|
|
110,285,852
|
|
|
113,081,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Pro forma results
reflect certain sales and acquisitions of cable systems in 2010 and
2011 as if they occurred as of January 1, 2010.
|
|
|
|
(b) Operating expenses
include programming, service, and advertising sales
expenses.
|
|
|
|
(c) Selling, general and
administrative expenses include general and administrative and
marketing expenses.
|
|
|
|
September 30,
2011. Pro forma revenues and operating
costs and expenses increased by $4 million and $3 million,
respectively, for the three months ended September 30, 2011.
Pro forma revenues, operating costs and expenses and net loss
increased by $20 million, $15 million and $1 million, respectively,
for the nine months ended September 30, 2011.
|
|
|
|
September 30,
2010. Pro forma revenues and operating
costs and expenses were reduced by $9 million and $7 million,
respectively, and net loss increased by $4 million for the three
months ended September 30, 2010. Pro forma revenues and
operating costs and expenses were reduced by $29 million and $24
million, respectively, and net loss increased by $8 million for the
nine months ended September 30, 2010.
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED BALANCE SHEETS
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
5
|
|
$
|
4
|
|
Restricted cash and cash
equivalents
|
|
27
|
|
|
28
|
|
Accounts receivable, net
of allowance for doubtful accounts
|
|
253
|
|
|
247
|
|
Prepaid expenses and
other current assets
|
|
50
|
|
|
47
|
|
Total current assets
|
|
335
|
|
|
326
|
|
|
|
|
|
|
|
|
INVESTMENT IN CABLE
PROPERTIES:
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
6,903
|
|
|
6,819
|
|
Franchises
|
|
5,287
|
|
|
5,257
|
|
Customer relationships,
net
|
|
1,779
|
|
|
2,000
|
|
Goodwill
|
|
954
|
|
|
951
|
|
Total investment in cable properties
|
|
14,923
|
|
|
15,027
|
|
|
|
|
|
|
|
|
OTHER NONCURRENT
ASSETS
|
|
380
|
|
|
354
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
15,638
|
|
$
|
15,707
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
1,081
|
|
$
|
1,049
|
|
Total current liabilities
|
|
1,081
|
|
|
1,049
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT
|
|
12,581
|
|
|
12,306
|
|
|
|
|
|
|
|
|
OTHER LONG-TERM
LIABILITIES
|
|
1,112
|
|
|
874
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
864
|
|
|
1,478
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
$
|
15,638
|
|
$
|
15,707
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(85)
|
|
$
|
(95)
|
|
$
|
(302)
|
|
$
|
(152)
|
|
Adjustments to reconcile
net loss to net cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
405
|
|
|
385
|
|
|
1,181
|
|
|
1,134
|
|
Noncash
interest expense
|
|
7
|
|
|
18
|
|
|
27
|
|
|
54
|
|
Loss on
extinguishment of debt
|
|
4
|
|
|
3
|
|
|
124
|
|
|
35
|
|
Deferred
income taxes
|
|
70
|
|
|
106
|
|
|
225
|
|
|
204
|
|
Other, net
|
|
10
|
|
|
9
|
|
|
26
|
|
|
20
|
|
Changes in operating
assets and liabilities, net of effects from
|
|
|
|
|
|
|
|
|
|
|
|
|
dispositions
and acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(10)
|
|
|
8
|
|
|
(5)
|
|
|
7
|
|
Prepaid
expenses and other assets
|
|
2
|
|
|
3
|
|
|
(4)
|
|
|
15
|
|
Accounts
payable, accrued expenses and other
|
|
2
|
|
|
4
|
|
|
40
|
|
|
105
|
|
Net cash flows from operating activities
|
|
405
|
|
|
441
|
|
|
1,312
|
|
|
1,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
(304)
|
|
|
(299)
|
|
|
(984)
|
|
|
(948)
|
|
Change in accrued
expenses related to capital expenditures
|
|
(11)
|
|
|
(7)
|
|
|
(11)
|
|
|
(7)
|
|
Purchase of cable
systems
|
|
(89)
|
|
|
-
|
|
|
(89)
|
|
|
-
|
|
Other, net
|
|
(6)
|
|
|
(3)
|
|
|
(20)
|
|
|
(7)
|
|
Net cash flows from investing activities
|
|
(410)
|
|
|
(309)
|
|
|
(1,104)
|
|
|
(962)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of long-term
debt
|
|
240
|
|
|
1,132
|
|
|
3,801
|
|
|
2,757
|
|
Repayments of long-term
debt
|
|
(279)
|
|
|
(630)
|
|
|
(3,645)
|
|
|
(3,070)
|
|
Repayment of preferred
stock
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(138)
|
|
Payments for debt
issuance costs
|
|
-
|
|
|
(17)
|
|
|
(43)
|
|
|
(76)
|
|
Purchase of treasury
stock
|
|
(116)
|
|
|
-
|
|
|
(323)
|
|
|
-
|
|
Other, net
|
|
(2)
|
|
|
(2)
|
|
|
2
|
|
|
(5)
|
|
Net cash flows from financing activities
|
|
(157)
|
|
|
483
|
|
|
(208)
|
|
|
(532)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
|
|
(162)
|
|
|
615
|
|
|
-
|
|
|
(72)
|
|
CASH AND CASH EQUIVALENTS,
beginning of period *
|
|
194
|
|
|
67
|
|
|
32
|
|
|
754
|
|
CASH AND CASH EQUIVALENTS, end
of period *
|
$
|
32
|
|
$
|
682
|
|
$
|
32
|
|
$
|
682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAID FOR
INTEREST
|
$
|
247
|
|
$
|
224
|
|
$
|
649
|
|
$
|
561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Cash and cash
equivalents includes restricted cash and cash
equivalents.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
SUMMARY OF OPERATING STATISTICS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximate
as of
|
|
|
|
Actual
|
|
Pro
Forma
|
|
|
|
September
30,
|
|
June
30,
|
|
December
31,
|
|
September
30,
|
|
|
|
2011
(a)
|
|
2011
(a)
|
|
2010
(a)
|
|
2010
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Footprint
|
|
|
Estimated Homes Passed Video
(b)
|
11,927,600
|
|
11,905,500
|
|
11,842,900
|
|
11,815,900
|
|
|
% Switched Digital
Video
|
80%
|
|
68%
|
|
63%
|
|
44%
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Homes Passed Internet
(b)
|
11,601,900
|
|
11,570,700
|
|
11,478,600
|
|
11,454,800
|
|
|
% DOCSIS 3.0
|
85%
|
|
85%
|
|
57%
|
|
36%
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Homes Passed Phone
(b)
|
10,848,500
|
|
10,800,000
|
|
10,646,700
|
|
10,587,800
|
|
|
|
|
|
|
|
|
|
|
|
Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Customer
Relationships (c)
|
4,866,200
|
|
4,876,100
|
|
4,893,400
|
|
4,926,200
|
|
|
Commercial Customer
Relationships (c)
|
356,500
|
|
355,200
|
|
350,100
|
|
351,100
|
|
|
Total Customer Relationships
(c)(e)
|
5,222,700
|
|
5,231,300
|
|
5,243,500
|
|
5,277,300
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Non-Video Customers
(d)
|
730,400
|
|
675,500
|
|
587,600
|
|
558,200
|
|
|
% Non-Video (d)
|
15.0%
|
|
13.9%
|
|
12.0%
|
|
11.3%
|
|
|
|
|
|
|
|
|
|
|
|
Services and Revenue Generating
Units (f)
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)
|
4,135,800
|
|
4,200,600
|
|
4,305,800
|
|
4,368,000
|
|
|
Internet (g)
|
3,424,100
|
|
3,370,900
|
|
3,263,200
|
|
3,230,500
|
|
|
Phone (h)
|
1,763,800
|
|
1,752,900
|
|
1,721,800
|
|
1,690,400
|
|
|
Residential PSUs
(i)
|
9,323,700
|
|
9,324,400
|
|
9,290,800
|
|
9,288,900
|
|
|
Residential PSU / Customer
Relationships (c)(i)
|
1.92
|
|
1.91
|
|
1.90
|
|
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
235,100
|
|
239,400
|
|
241,900
|
|
246,700
|
|
|
Internet (g)(j)
|
156,000
|
|
149,100
|
|
138,500
|
|
133,200
|
|
|
Phone (h)
|
73,800
|
|
68,500
|
|
59,900
|
|
54,800
|
|
|
Commercial PSUs
(i)
|
464,900
|
|
457,000
|
|
440,300
|
|
434,700
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Video RGUs
(k)
|
3,400,900
|
|
3,396,100
|
|
3,371,300
|
|
3,351,300
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RGUs
|
13,189,500
|
|
13,177,500
|
|
13,102,400
|
|
13,074,900
|
|
|
|
|
|
|
|
|
|
|
|
Net Additions/(Losses)
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)
|
(64,800)
|
|
(80,400)
|
|
(62,200)
|
|
(66,100)
|
|
|
Internet (g)
|
53,200
|
|
18,500
|
|
32,700
|
|
51,600
|
|
|
Phone (h)
|
10,900
|
|
6,500
|
|
31,400
|
|
30,600
|
|
|
Residential PSUs
(i)
|
(700)
|
|
(55,400)
|
|
1,900
|
|
16,100
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (d)(e)
|
(4,300)
|
|
(3,800)
|
|
(4,800)
|
|
3,000
|
|
|
Internet (g)
|
6,900
|
|
6,300
|
|
5,300
|
|
4,900
|
|
|
Phone (h)
|
5,300
|
|
4,100
|
|
5,100
|
|
4,900
|
|
|
Commercial PSUs
(i)
|
7,900
|
|
6,600
|
|
5,600
|
|
12,800
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Video RGUs
(k)
|
4,800
|
|
(4,600)
|
|
20,000
|
|
42,500
|
|
|
|
|
|
|
|
|
|
|
|
|
Total RGUs
|
12,000
|
|
(53,400)
|
|
27,500
|
|
71,400
|
|
|
|
|
|
|
|
|
|
|
|
Residential ARPU
|
|
|
|
|
|
|
|
|
|
|
|
|
Video (m)
|
$
72.21
|
|
$
71.33
|
|
$
70.34
|
|
$
69.21
|
|
|
Internet (m)
|
$
42.67
|
|
$
41.73
|
|
$
41.70
|
|
$
41.93
|
|
|
Phone (m)
|
$
40.96
|
|
$
40.45
|
|
$
41.26
|
|
$
41.43
|
|
|
ARPU per Customer Relationship
(n)
|
$
106.38
|
|
$
104.94
|
|
$
104.09
|
|
$
102.77
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ARPU per Video Customer
(o)
|
$
137.41
|
|
$
133.63
|
|
$
130.08
|
|
$
126.48
|
|
|
|
|
|
|
|
|
|
|
|
Residential Penetration
Statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
Video Penetration of Homes
Passed Video (p)
|
34.7%
|
|
35.3%
|
|
36.4%
|
|
37.0%
|
|
|
Internet Penetration of Homes Passed Internet (p)
|
29.5%
|
|
29.1%
|
|
28.4%
|
|
28.2%
|
|
|
Phone Penetration of Homes
Passed Phone (p)
|
16.3%
|
|
16.2%
|
|
16.2%
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Bundled Penetration
(q)
|
61.9%
|
|
61.6%
|
|
60.9%
|
|
60.3%
|
|
|
Triple Play Penetration
(r)
|
28.8%
|
|
28.8%
|
|
28.2%
|
|
27.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital Penetration
(s)
|
77.8%
|
|
76.5%
|
|
74.1%
|
|
72.6%
|
|
|
Advanced Digital Penetration (of
Digital) (t)
|
55.0%
|
|
54.4%
|
|
52.2%
|
|
50.3%
|
|
|
Set-Top-Box per Digital RGU
(u)
|
1.52
|
|
1.51
|
|
1.50
|
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma operating
statistics reflect the sales and acquisitions of cable systems in
2010 and 2011 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 or acquisitions of assets
because those transactions did not significantly impact Charter's
revenue and operating costs and expenses.
|
|
|
|
At June 30, 2011, actual
residential video customers, Internet customers, and phone
customers were 4,173,400, 3,352,500, and 1,747,600, respectively;
actual commercial video customers, Internet customers, and phone
customers were 239,500, 149,100, and 68,500, respectively; and
actual digital RGUs were 3,386,700.
|
|
|
|
At December 31, 2010,
actual residential video customers, Internet customers, and phone
customers were 4,278,400, 3,246,100, and 1,717,000, respectively;
actual commercial video customers, Internet customers, and phone
customers were 242,000, 138,500, and 59,900, respectively; and
actual digital RGUs were 3,363,200.
|
|
|
|
At September 30, 2010,
actual residential video customers, Internet customers, and phone
customers were 4,399,900, 3,238,700, and 1,688,000, respectively;
actual commercial video customers, Internet customers, and phone
customers were 252,800, 134,300, and 54,900, respectively; and
actual digital RGUs were 3,379,300.
|
|
|
|
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 September 30, 2011, June 30, 2011,
December 31, 2010, and September 30, 2010, customers include
approximately 15,500, 16,100, 15,700, and 14,400 customers,
respectively, whose accounts were over 60 days past due in payment,
approximately 1,900, 2,200, 1,800, and 1,900 customers,
respectively, whose accounts were over 90 days past due in payment
and approximately 1,000, 1,000, 1,000, and 1,100 customers,
respectively, whose accounts were over 120 days past due in
payment.
|
|
|
|
(b) “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.
|
|
|
|
(c) "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 and multi-dwelling
structures, which are calculated on an EBU basis (see footnote (e))
and non-video commercial customer relationships.
|
|
|
|
(d) "Video Customers”
represent those customers who subscribe to our video services.
|
|
|
|
(e) Included within
commercial video customers are those in commercial and
multi-dwelling 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 (MSOs).
As we increase our published video rates 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.
|
|
|
|
(f) "Revenue Generating
Units" or "RGUs" represent the total of all basic video, digital
video, Internet and phone customers, not counting additional
outlets within one household. For example, a customer who
receives two types of service (such as basic video and digital
video) would be treated as two RGUs, and if that customer added
Internet service, the customer would be treated as three RGUs.
This statistic is computed in accordance with the guidelines
of the NCTA.
|
|
|
|
(g) "Internet Customers"
represent those customers who subscribe to our Internet service.
|
|
|
|
(h) "Phone Customers"
represent those customers who subscribe to our phone service.
|
|
|
|
(i) "Primary Service
Units" or "PSUs" represent the total of video, Internet and phone
customers.
|
|
|
|
(j) Prior year commercial
Internet customers were adjusted to reflect current year
presentation.
|
|
|
|
(k) "Digital Video RGUs"
include all video customers that rent one or more digital set-top
boxes or cable cards.
|
|
|
|
(l) "Net
Additions/(Losses)" represent the pro forma net gain or loss in the
respective quarter for the service indicated.
|
|
|
|
(m) "Average Monthly
Revenue per Customer" or "ARPU" 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) "ARPU per Customer
Relationship" is calculated as total video, Internet and phone
quarterly pro forma revenue divided by three divided by average
residential customer relationships during the respective quarter.
|
|
|
|
(o) "Total ARPU 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.
|
|
|
|
(p) "Penetration"
represents residential customers as a percentage of homes passed
for the service indicated.
|
|
|
|
(q) "Bundled Penetration"
represents the percentage of residential customers receiving a
combination of at least two different types of service, including
Charter's video service, Internet service or phone. "Bundled
Penetration" does not include residential customers who only
subscribe to video service.
|
|
|
|
(r) "Triple Play
Penetration" represents residential customers receiving all three
Charter service offerings, including video, Internet and phone, as
a % of residential customer relationships.
|
|
|
|
(s) "Digital Penetration"
represents the number of digital RGUs as a percentage of video
customers, including EBUs.
|
|
|
|
(t) "Advanced Digital
Penetration" represents customers who subscribe to our
high-definition and/or digital video recorder services as a % of
digital RGUs.
|
|
|
|
(u) "Set-Top-Box per
Digital RGU" is calculated as the number of set-top boxes deployed
divided by digital RGUs at the end of the respective period.
|
|
|
CHARTER
COMMUNICATIONS, INC. AND SUBSIDIARIES
|
|
UNAUDITED
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
|
|
(DOLLARS IN
MILLIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
Actual
|
|
Actual
|
|
Actual
|
|
Actual
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(85)
|
|
$
(95)
|
|
$
(302)
|
|
$
(152)
|
|
Plus:
|
Interest expense, net
|
244
|
|
222
|
|
718
|
|
645
|
|
|
Income tax expense
|
72
|
|
109
|
|
232
|
|
211
|
|
|
Depreciation and
amortization
|
405
|
|
385
|
|
1,181
|
|
1,134
|
|
|
Stock compensation
expense
|
10
|
|
7
|
|
25
|
|
17
|
|
|
Loss on extinguishment of
debt
|
4
|
|
3
|
|
124
|
|
38
|
|
|
Other, net
|
3
|
|
1
|
|
11
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (b)
|
653
|
|
632
|
|
1,989
|
|
1,915
|
|
Less:
|
Purchases of property, plant and
equipment
|
(304)
|
|
(299)
|
|
(984)
|
|
(948)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less capital
expenditures
|
$
349
|
|
$
333
|
|
$
1,005
|
|
$
967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating
activities
|
$
405
|
|
$
441
|
|
$
1,312
|
|
$
1,422
|
|
Less:
|
Purchases of property, plant and
equipment
|
(304)
|
|
(299)
|
|
(984)
|
|
(948)
|
|
|
Change in accrued expenses
related to capital expenditures
|
(11)
|
|
(7)
|
|
(11)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
$
90
|
|
$
135
|
|
$
317
|
|
$
467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
Pro Forma
(a)
|
|
Pro Forma
(a)
|
|
Pro Forma
(a)
|
|
Pro Forma
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
(85)
|
|
$
(99)
|
|
$
(303)
|
|
$
(160)
|
|
Plus:
|
Interest expense, net
|
244
|
|
222
|
|
718
|
|
645
|
|
|
Income tax expense
|
72
|
|
109
|
|
232
|
|
208
|
|
|
Depreciation and
amortization
|
406
|
|
387
|
|
1,187
|
|
1,140
|
|
|
Stock compensation
expense
|
10
|
|
7
|
|
25
|
|
17
|
|
|
Loss on extinguishment of
debt
|
4
|
|
3
|
|
124
|
|
38
|
|
|
Other, net
|
3
|
|
1
|
|
11
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (b)
|
654
|
|
630
|
|
1,994
|
|
1,910
|
|
Less:
|
Purchases of property, plant and
equipment
|
(304)
|
|
(297)
|
|
(984)
|
|
(942)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA less capital
expenditures
|
$
350
|
|
$
333
|
|
$
1,010
|
|
$
968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from operating
activities
|
$
406
|
|
$
439
|
|
$
1,317
|
|
$
1,417
|
|
Less:
|
Purchases of property, plant and
equipment
|
(304)
|
|
(297)
|
|
(984)
|
|
(942)
|
|
|
Change in accrued expenses
related to capital expenditures
|
(11)
|
|
(7)
|
|
(11)
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
$
91
|
|
$
135
|
|
$
322
|
|
$
468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Pro forma results
reflect certain sales and acquisitions of cable systems in 2010 and
2011 as if they occurred as of January 1, 2010.
|
|
|
|
(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 September 30,
|
|
|
Nine Months
Ended September 30,
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer premise equipment
(a)
|
$
|
146
|
|
$
|
141
|
|
$
|
433
|
|
$
|
437
|
|
Scalable infrastructure
(b)
|
|
58
|
|
|
64
|
|
|
265
|
|
|
259
|
|
Line extensions (c)
|
|
29
|
|
|
23
|
|
|
78
|
|
|
61
|
|
Upgrade/Rebuild (d)
|
|
7
|
|
|
4
|
|
|
19
|
|
|
20
|
|
Support capital (e)
|
|
64
|
|
|
67
|
|
|
189
|
|
|
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital
expenditures (f)
|
$
|
304
|
|
$
|
299
|
|
$
|
984
|
|
$
|
948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 and
customer premise equipment (e.g., set-top boxes and cable
modems).
|
|
|
|
(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).
|
|
|
|
(f) Total capital expenditures
includes $48 million and $34 million of capital expenditures
related to commercial services for the three months ended September
30, 2011 and 2010, respectively, and $120 million and $86 million
for the nine months ended September 30, 2011 and 2010,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Charter Communications, Inc.