Charter Second Quarter 2012 Results

Charter Second Quarter 2012 Results

Focus on Strategic Initiatives to Drive Growth

ST. LOUIS, Aug. 7, 2012 /PRNewswire/ -- Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and six months ended June 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO)

Second quarter highlights:


-- Second quarter revenues of $1.884 billion grew 4.7% on a pro forma(1
)basis and 5.2% on an actual basis compared to the second quarter of
2011, driven by year-over-year overall residential and commercial
customer growth.
-- Customer trends improved compared to the prior year led by the addition
of 29,000 residential Internet customers, over 60% higher than the
growth in the year ago second quarter.
-- Residential Internet revenues rose 10.2% on a pro forma basis and 10.7%
on an actual basis driven by continued increase in demand for the speed
and performance that Charter Internet offers.
-- Commercial revenues grew 21.2% on a pro forma basis and 22.1% on an
actual basis supported by momentum across all the types of businesses we
serve, an expanded product set and sales efforts.
-- Adjusted EBITDA(2) was $693 million, 2.7% higher on a pro forma basis
and 3.0% higher on an actual basis compared to prior year. Net loss
totaled $83 million in the quarter.
-- Free cash flow(2) for the quarter was $26 million and cash flows from
operating activities were $469 million.
"We delivered solid second quarter performance while implementing key aspects of our growth strategy," said Tom Rutledge, President and Chief Executive Officer. "In addition to enhancing our product set and launching new pricing and packaging, we're putting into action a number of operational changes to best align the organization with our growth objectives. These actions will make us more competitive, deliver a powerful customer experience and increase our long-term growth potential. We have compelling products and services, a highly capable network and great people, and a strategy to create value for our customers and shareholders."

(1) Pro forma results are described below in the "Use of Non-GAAP Financial Metrics" section and are provided in the addendum of this news release.

(2 )Adjusted EBITDA and free cash flow are defined in the "Use of Non-GAAP Financial Metrics" section and are reconciled to net loss and net cash flows from operating activities, respectively, in the addendum of this news release.


Key Operating Results

Approximate as of
-----------------
Actual Pro forma
------ ---------
June 30, 2012 (a) June 30, 2011 (a) Y/Y Change
---------------- ---------------- ----------
Footprint
---------
Estimated Homes Passed Video
(b) 11,979 11,906 1%
% Switched Digital Video 88% 68% 20 ppts

Estimated Homes Passed
Internet (b) 11,649 11,571 1%
% DOCSIS 3.0 95% 85% 10 ppts

Estimated Homes Passed Phone
(b) 10,966 10,791 2%

Customers
---------
Residential Customer
Relationships (c) 4,996 4,932 1%
Commercial Customer
Relationships (c)(e) 312 292 7%
--- ---
Total Customer Relationships
(c)(e) 5,308 5,224 2%

Residential Non-Video
Customers 898 681 32%
% Non-Video 18.0% 13.8% 4.2 ppts

Service and Revenue Generating
Units (f)
------------------------------
Video (d) 4,098 4,251 -4%
Internet (g) 3,662 3,371 9%
Phone (h) 1,828 1,753 4%
----- -----
Residential PSUs (i) 9,588 9,375 2%
Residential PSU /Customer
Relationships (c)(i) 1.92 1.90

Video (d)(e) 171 177 -3%
Internet (g) 177 149 19%
Phone (h) 91 69 32%
--- ---
Commercial PSUs (i) 439 395 11%

Digital Video RGUs (j) 3,484 3,396 3%
----- -----

Total RGUs 13,511 13,166 3%

Net Additions/(Losses) (k)
--------------------------
Video (d) (66) (79) 16%
Internet (g) 29 18 61%
Phone (h) 6 7 -14%
--- ---
Residential PSUs (i) (31) (54) 43%

Video (d)(e) (6) (4) -50%
Internet (g) 8 7 14%
Phone (h) 6 5 20%
--- ---
Commercial PSUs (i) 8 8 -

Digital Video RGUs (j) 11 (5) NM*
--- ---

Total RGUs (12) (51) 76%

Residential ARPU
----------------
Video (l) $73.41 $71.23 3%
Internet (l) $42.46 $41.77 2%
Phone (l) $39.69 $40.41 -2%
Revenue per Customer
Relationship (m) $106.00 $104.39 2%
Total Revenue per Video
Customer (n) $151.88 $139.61 9%

Residential Penetration
Statistics
-----------------------
Video Penetration of Homes
Passed Video (o) 34.2% 35.7% -1.5 ppts
Internet Penetration of Homes
Passed Internet (o) 31.4% 29.1% 2.3 ppts
Phone Penetration of Homes
Passed Phone (o) 16.7% 16.2% 0.5 ppts
Bundled Penetration (p) 63.0% 61.4% 1.6 ppts
Triple Play Penetration (q) 28.8% 28.7% 0.1 ppts
Digital Penetration (r) 84.7% 79.6% 5.1 ppts

* Not meaningful

Footnotes
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.
--------------------------------------------------------------------------------------------------------------------------------------------------------------------


During the seasonally weak second quarter, residential customer relationships decreased 17,000 compared to a loss of 38,000 for the second quarter last year, and for the first half of 2012, we gained 69,000 residential customer relationships compared to a loss of 15,000 in the comparable 2011 period. The year-over-year improvements reflect enhancements in our product offerings and service levels. Residential primary service units ("PSUs") decreased by 31,000 in the second quarter of 2012 driven by a decline in video customers offset by increases in Internet and phone customers.

Residential video customers decreased by 66,000 in the second quarter of 2012 compared to a decline of 79,000 last year. We added 29,000 residential Internet customers in the second quarter of 2012 compared to 18,000 last year reflecting continued consumer demand for the speed and performance advantages offered by Charter. During the second quarter of 2012, we added 6,000 phone customers compared to a gain of 7,000 last year, with phone penetration at 16.7% as of June 30, 2012. Commercial PSUs increased 8,000 in both the second quarter of 2012 and 2011, and we continue to see a significant opportunity to grow our commercial services business.

Second quarter revenue per residential customer relationship rose to $106.00 from $104.39 a year ago driven primarily by rate increases, and growth in multi-product subscriptions and advanced digital services.

We continue to see additional opportunities to drive higher market penetration and revenue per household by enhancing our product set, value proposition and customer service. We are focused on stabilizing our video customer base, upgrading existing customer relationships and gaining new customer relationships in the homes we pass that we currently do not serve today, as well as serving additional businesses in the significant commercial opportunity in our footprint. We have made significant strides in expanding our product offering, particularly video with the launch of additional HD channels this past quarter. Charter now offers more than 100 HD channels in substantially all of our markets. We also implemented new pricing and packaging at the end of June designed to provide a simple, value-based pricing structure and to increase triple play penetration. In addition, we are focused on improving our fundamental operating execution. We expect these efforts to drive long-term growth in our business, but in the short term, we expect that customer connects, revenue and operating expenses may be adversely impacted during this transition. We also expect our capital expenditures to increase as we drive further digital and HD-DVR penetration.


Second Quarter Financial Results

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITEDCONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share and share data)

Three Months Ended June 30,
---------------------------
2012 2011 2011
Actual Pro Forma (a) % Change Actual % Change
------ ------------ -------- ------ --------
REVENUES:
Video $911 $917 (0.7)% $912 (0.1)%
Internet 465 422 10.2% 420 10.7%
Telephone 217 213 1.9% 213 1.9%
Commercial 160 132 21.2% 131 22.1%
Advertising Sales 87 76 14.5% 76 14.5%
Other 44 39 12.8% 39 12.8%

Total Revenues 1,884 1,799 4.7% 1,791 5.2%
----- ----- -----

COSTS AND EXPENSES:
Operating (excluding
depreciation and
amortization) (b) 831 788 5.5% 784 6.0%
Selling, general and
administrative
(excluding stock
compensation expense)
(c) 360 336 7.1% 334 7.8%

1,191 1,124 6.0% 1,118 6.5%
----- ----- -----

Adjusted EBITDA $693 $675 2.7% $673 3.0%
==== ==== ====

Adjusted EBITDA margin 36.8% 37.5% 37.6%

Capital Expenditures $468 $324 $324
% Total Revenues 24.8% 18.0% 18.1%

Net loss $(83) $(107) $(107)
Loss per common share,
basic and diluted $(0.84) $(0.98) $(0.98)

Net cash flows from
operating activities $469 $462 $460
Free cash flow $26 $157 $155

Footnotes
(a) Pro forma results reflect certain acquisitions of cable systems in 2011 as if they occurred as of January 1, 2011.
(b) Operating expenses include programming, service, and advertising sales expenses.
(c) Selling, general and administrative expenses include general and administrative and marketing expenses.
-----------------------------------------------------------------------------------------------------------

Adjusted EBITDA and free cash flow are defined in the "Use of Non-GAAP Financial Metrics" section and are reconciled to net loss and cash flows from operating activities, respectively, in the addendum of this news release.
Revenue

Second quarter 2012 revenues rose to $1.884 billion, up 4.7% on a pro forma basis and 5.2% on an actual basis compared to the year-ago quarter led by steady growth in Internet and commercial sales and also due to increased advertising revenue.

Video revenues totaled $911 million in the second quarter, a decrease of 0.7% on a pro forma basisand 0.1% on an actual basis compared to the prior-year period. Video revenues declined as a result of net video customer losses in the past twelve months and lower premium revenue partially offset by incremental DVR revenue, increases in digital customers, and price adjustments.

Second quarter 2012 Internet revenues were $465 million, growing 10.2% on a pro forma basisand 10.7% on an actual basis year over year, driven by the addition of 291,000 Internet customers and increased home networking revenue. Telephone revenues totaled $217 million, up 1.9% on a pro forma basis and actual basis over second quarter 2011 as we added 75,000 phone customers, partially offset by an increase in value based packages.

Commercial revenues grew to $160 million, increasing 21.2% year over year on a pro forma and 22.1% on an actual basis, reflecting higher sales to small and medium businesses and carrier customers.

Advertising sales revenues were $87 million for the second quarter of 2012, a 14.5% increase on a pro forma and actual basis compared to the second quarter of 2011 primarily driven by an increase in revenues from the political sector.

Operating Costs and Expenses

Second quarter operating costs and expenses increased 6.0% on a pro forma basis and 6.5% on an actual basis compared to the year-ago period, primarily related to increases in programming, marketing, and labor costs. Second quarter programming expenses increased $25 million on a pro forma basis and $27 million on an actual basis year over year reflecting contractual programming increases and new programming, partially offset by customer losses.

Marketing expenses increased by $20 million on a pro forma and actual basis in the second quarter compared to the prior year driven by increased media investment and commercial marketing as well as a favorable adjustment in the 2011 second quarter from expenses associated with prior-year marketing campaigns. Labor costs increased in the second quarter of 2012 primarily from sales force related expenses, increased preventive maintenance levels, and a higher number of reconnects.

Adjusted EBITDA

Second quarter adjusted EBITDA of $693 million increased 2.7% on a pro forma basis and 3.0% on an actual basis compared to the year-ago quarter. Adjusted EBITDA margin declined to 36.8% for the second quarter of 2012 compared to37.5% on a pro forma basis and 37.6% on an actual basis in the year-ago quarter.

Net Loss

Net loss was $83 million in the second quarter of 2012, compared to $107 million on a pro forma and actualbasis in the year-ago period. Net loss decreased primarily due to adjusted EBITDA growth and lower interest and income tax expense offset by higher depreciation and amortization. Net loss per common share was $0.84 in the second quarter of 2012 compared to $0.98 on a pro forma and actual basis during the same period last year. The decline is due to the decrease in net loss offset by a decrease in weighted average shares outstanding as a result of share repurchases in the last twelve months.

Capital Expenditures

Second quarter property, plant and equipment expenditures were $468 million compared to $324 million in 2011. The increase related to higher actual and anticipated residential and commercial customer growth, scalable Internet infrastructure to accommodate higher penetration and network throughput, and further investments in customer experience, both in systems and the network. During 2012, we currently expect capital expenditures to be between $1.5 billion and $1.7 billion. The actual amount of our capital expenditures depends on the level of success of our new operating strategies and residential product offerings, with the year-over-year increase reflecting higher expected levels of CPE placement for both new and existing customers, resulting from increased digitization and DVR penetration, and growth in our commercial business.

Cash Flow

Net cash flows from operating activities totaled $469 million, compared to $462 million on a pro forma basis and $460 million on an actual basis in the second quarter of 2011. The increase in net cash flows from operating activities was driven by an increase in adjusted EBITDA and a $26 million higher contribution from working capital, excluding changes in accrued capital expenditures and interest, partially offset by a $32 million increase in the timing of cash payments for interest.

Free cash flow for the second quarter of 2012 was $26 million, compared to $157 million on a pro forma basis and $155 million on an actual basis in the same period last year. The decrease was driven primarily by higher capital expenditures.

Conference Call

Charter will host a conference call on Tuesday, August 7, 2012 at 11:00 a.m. Eastern Time (ET) related to the contents of this release.

The conference call will be webcast live via the Company's website at charter.com. The webcast can be accessed by selecting "Investor & News Center" from the lower menu on the home page. The call will be archived in the "Investor & News Center" in the "Financial Information" section on the left beginning two hours after completion of the call. Participants should go to the webcast link no later than 10 minutes prior to the start time to register.

Those participating via telephone should dial 866-919-0894 no later than 10 minutes prior to the call. International participants should dial 706-679-9379. The conference ID code for the call is 87412789.

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 August 21, 2012. The conference ID code for the replay is 87412789.

Additional Information Available on Website

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Form 10-Q for quarter ended June 30, 2012 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 operating (income) expenses, such as special charges and gain 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. 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 $41 million and $35 million for the three months ended June 30, 2012 and 2011, respectively, and $82 million and $70 million for the six months ended June 30, 2012 and 2011, respectively.

In addition to the actual results for the three and six months ended June 30, 2012 and 2011, we have provided pro forma results in this release for the three and six months ended June 30, 2011. 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 2011 as if they occurred as of January 1, 2011. Pro forma statements of operations for the three and six months ended June 30, 2011; and pro forma customer statistics as of June 30, 2011; 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," "designed," "create" and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this release are set forth in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:


-- our ability to sustain and grow revenues and 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 development and deployment of new products and technologies;
-- the impact of competition from other market participants, including but
not limited to incumbent telephone companies, direct broadcast satellite
operators, wireless broadband and telephone providers, digital
subscriber line ("DSL") providers, and video provided over the Internet;
-- general business conditions, economic uncertainty or downturn, high
unemployment levels and the level of activity in the housing sector;
-- our ability to obtain programming at reasonable prices or to raise
prices to offset, in whole or in part, the effects of higher programming
costs (including retransmission consents);
-- the 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
UNAUDITEDCONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share and share data)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
Actual Actual % Change Actual Actual % Change
------ ------ -------- ------ ------ --------
REVENUES:
Video $911 $912 (0.1)% $1,806 $1,829 (1.3)%
Internet 465 420 10.7% 917 833 10.1%
Telephone 217 213 1.9% 434 425 2.1%
Commercial 160 131 22.1% 313 258 21.3%
Advertising Sales 87 76 14.5% 153 138 10.9%
Other 44 39 12.8% 88 78 12.8%

Total Revenues 1,884 1,791 5.2% 3,711 3,561 4.2%
----- ----- ----- -----

COSTS AND EXPENSES:
Operating (excluding
depreciation and
amortization) (a) 831 784 6.0% 1,645 1,552 6.0%
Selling, general and
administrative
(excluding stock
compensation expense)
(b) 360 334 7.8% 721 673 7.1%

Operating costs and
expenses 1,191 1,118 6.5% 2,366 2,225 6.3%
----- ----- ----- -----

Adjusted EBITDA 693 673 3.0% 1,345 1,336 0.7%
--- --- ----- -----

Adjusted EBITDA margin 36.8% 37.6% 36.2% 37.5%
---- ---- ---- ----

Depreciation and
amortization 415 393 823 776
Stock compensation
expense 13 9 24 15
Other operating (income)
expenses, net (4) 1 (1) 6
--- --- --- ---

Income from operations 269 270 499 539
--- --- --- ---

OTHER EXPENSES:
Interest expense, net (225) (241) (462) (474)
Loss on extinguishment of
debt (59) (53) (74) (120)
Other expense, net - (2) (1) (2)
--- --- ---
(284) (296) (537) (596)
---- ---- ---- ----

Loss before income taxes (15) (26) (38) (57)

Income tax expense (68) (81) (139) (160)
--- --- ---- ----

Net loss $(83) $(107) $(177) $(217)
==== ===== ===== =====

LOSS PER COMMON SHARE,
BASIC AND DILUTED: $(0.84) $(0.98) $(1.78) $(1.95)
====== ====== ====== ======

Weighted average common
shares outstanding,
basic and diluted 99,496,755 109,265,876 99,464,858 111,234,155
========== =========== ========== ===========

(a) Operating expenses include programming, service, and advertising sales expenses.
(b) Selling, general and administrative expenses include general and administrative and marketing expenses.
Certain prior year amounts have been reclassified to conform with the 2012 presentation, including the reflection of revenues earned from customers residing in multi-dwelling residential structures from commercial revenues to video and Internet revenues.
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
UNAUDITEDCONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share and share data)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
Actual Pro Forma (a) % Change Actual Pro Forma (a) % Change
------ ------------ -------- ------ ------------ --------
REVENUES:
Video $911 $917 (0.7)% $1,806 $1,839 (1.8)%
Internet 465 422 10.2% 917 837 9.6%
Telephone 217 213 1.9% 434 426 1.9%
Commercial 160 132 21.2% 313 259 20.8%
Advertising Sales 87 76 14.5% 153 138 10.9%
Other 44 39 12.8% 88 78 12.8%

Total Revenues 1,884 1,799 4.7% 3,711 3,577 3.7%
----- ----- ----- -----

COSTS AND EXPENSES:
Operating (excluding
depreciation and
amortization) (b) 831 788 5.5% 1,645 1,560 5.4%
Selling, general and
administrative
(excluding stock
compensation expense)
(c) 360 336 7.1% 721 677 6.5%

Operating costs and
expenses 1,191 1,124 6.0% 2,366 2,237 5.8%
----- ----- ----- -----

Adjusted EBITDA 693 675 2.7% 1,345 1,340 0.4%
--- --- ----- -----

Adjusted EBITDA margin 36.8% 37.5% 36.2% 37.5%
---- ---- ---- ----

Depreciation and
amortization 415 395 823 781
Stock compensation
expense 13 9 24 15
Other operating (income)
expenses, net (4) 1 (1) 6
--- --- --- ---

Income from operations 269 270 499 538
--- --- --- ---

OTHER EXPENSES:
Interest expense, net (225) (241) (462) (474)
Loss on extinguishment of
debt (59) (53) (74) (120)
Other expense, net - (2) (1) (2)
--- --- ---
(284) (296) (537) (596)
---- ---- ---- ----

Loss before income taxes (15) (26) (38) (58)

Income tax expense (68) (81) (139) (160)
--- --- ---- ----

Net loss $(83) $(107) $(177) $(218)
==== ===== ===== =====

LOSS PER COMMON SHARE,
BASIC AND DILUTED: $(0.84) $(0.98) $(1.78) $(1.95)
====== ====== ====== ======

Weighted average common
shares outstanding,
basic and diluted 99,496,755 109,265,876 99,464,858 111,234,155
========== =========== ========== ===========

(a) Pro forma results reflect certain acquisitions of cable systems in 2011 as if they occurred as of January 1, 2011.

(b) Operating expenses include programming, service, and advertising sales expenses.

(c) Selling, general and administrative expenses include general and administrative and marketing expenses.

June 30, 2011.Pro forma revenues and operating costs and expenses increased by $8 million and $6 million, respectively, for the three months ended June 30, 2011 and net loss remained unchanged. Pro forma revenues, operating costs and expenses and net loss increased by $16 million, $12
million and $1 million, respectively, for the six months ended June 30, 2011.

Certain prior year amounts have been reclassified to conform with the 2012 presentation, including the reflection of revenues earned from customers residing in multi-dwelling residential structures from commercial revenues to video and Internet revenues.

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
UNAUDITEDCONSOLIDATED BALANCE SHEETS
(dollars in millions)

June 30, December 31,
2012 2011
---- ----

ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $5 $2
Restricted cash
and cash
equivalents 27 27
Accounts
receivable,
net 256 272
Prepaid
expenses and
other current
assets 79 69
--- ---
Total current
assets 367 370
--- ---

INVESTMENT IN
CABLE
PROPERTIES:
Property, plant
and equipment,
net 7,024 6,897
Franchises 5,287 5,288
Customer
relationships,
net 1,562 1,704
Goodwill 953 954
--- ---
Total
investment in
cable
properties,
net 14,826 14,843
------ ------

OTHER
NONCURRENT
ASSETS 360 392
--- ---

Total assets $15,553 $15,605
======= =======

LIABILITIES AND
SHAREHOLDERS'
EQUITY
CURRENT
LIABILITIES:
Accounts
payable and
accrued
expenses $1,194 $1,153
------ ------
Total current
liabilities 1,194 1,153
----- -----

LONG-TERM DEBT 12,786 12,856
------ ------
DEFERRED INCOME
TAXES 987 847
--- ---
OTHER LONG-
TERM
LIABILITIES 342 340
--- ---

SHAREHOLDERS'
EQUITY 244 409
--- ---

Total
liabilities
and
shareholders'
equity $15,553 $15,605
======= =======



CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITEDCONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
---- ---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(83) $(107) $(177) $(217)
Adjustments to reconcile net loss
to net cash flows from operating
activities:
Depreciation and amortization 415 393 823 776
Noncash interest expense 10 8 24 20
Loss on extinguishment of debt 59 53 74 120
Deferred income taxes 66 78 136 155
Other, net - 9 11 16
Changes in operating assets and
liabilities, net of effects from
acquisitions and dispositions:
Accounts receivable (24) (19) 16 5
Prepaid expenses and other assets (3) 3 (11) (6)
Accounts payable, accrued
expenses and other 29 42 27 38
--- --- --- ---
Net cash flows from operating
activities 469 460 923 907
--- --- --- ---

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant and
equipment (468) (324) (808) (680)
Change in accrued expenses
related to capital expenditures 25 19 13 -
Other, net 23 (8) 10 (14)
--- --- --- ---
Net cash flows from investing
activities (420) (313) (785) (694)
---- ---- ---- ----

CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings of long-term debt 1,348 1,715 2,817 3,561
Repayments of long-term debt (1,380) (1,700) (2,919) (3,366)
Payments for debt issuance costs (14) (21) (24) (43)
Purchase of treasury stock (1) - (4) (207)
Other, net (1) (1) (5) 4
--- --- --- ---
Net cash flows from financing
activities (48) (7) (135) (51)
--- --- ---- ---

NET INCREASE IN CASH AND CASH
EQUIVALENTS 1 140 3 162
CASH AND CASH EQUIVALENTS,
beginning of period 31 54 29 32
--- --- --- ---
CASH AND CASH EQUIVALENTS, end of
period $32 $194 $32 $194
=== ==== === ====

CASH PAID FOR INTEREST $232 $200 $448 $402
==== ==== ==== ====




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
(in thousands, except ARPU and penetration data)

Approximate as of
-----------------
Actual Pro forma
------ ---------
June 30, 2012 (a) March 31, 2012 (a) December 31, 2011 (a) June 30, 2011 (a)
---------------- ----------------- -------------------- ----------------
Footprint
---------
Estimated Homes
Passed Video (b) 11,979 11,988 11,960 11,906
% Switched Digital
Video 88% 87% 86% 68%
Estimated Homes
Passed Internet (b) 11,649 11,650 11,634 11,571
% DOCSIS 3.0 95% 94% 93% 85%
Estimated Homes
Passed Phone (b) 10,966 10,899 10,871 10,791

Customers
---------
Residential Customer
Relationships (c) 4,996 5,013 4,927 4,932
Commercial Customer
Relationships
(c)(e) 312 311 298 292
--- --- --- ---
Total Customer
Relationships
(c)(e) 5,308 5,324 5,225 5,224
Residential Non-
Video Customers 898 849 783 681
% Non-Video 18.0% 16.9% 15.9% 13.8%

Service and Revenue Generating Units (f)
-----------------------------------
Video (d) 4,098 4,164 4,144 4,251
Internet (g) 3,662 3,633 3,492 3,371
Phone (h) 1,828 1,822 1,791 1,753
----- ----- ----- -----
Residential PSUs (i) 9,588 9,619 9,427 9,375
Residential PSU /
Customer
Relationships
(c)(i) 1.92 1.92 1.91 1.90

Video (d)(e) 171 177 170 177
Internet (g) 177 169 163 149
Phone (h) 91 85 79 69
--- --- --- ---
Commercial PSUs (i) 439 431 412 395
Digital Video RGUs
(j) 3,484 3,473 3,410 3,396
----- ----- ----- -----
Total RGUs 13,511 13,523 13,249 13,166

Net Additions/(Losses) (k)
--------------------------
Video (d) (66) 20 (44) (79)
Internet (g) 29 141 68 18
Phone (h) 6 31 27 7
--- --- --- ---
Residential PSUs (i) (31) 192 51 (54)

Video (d)(e) (6) 7 (3) (4)
Internet (g) 8 6 7 7
Phone (h) 6 6 5 5
--- --- --- ---
Commercial PSUs (i) 8 19 9 8
Digital Video RGUs
(j) 11 63 9 (5)
--- --- --- ---
Total RGUs (12) 274 69 (51)

Residential ARPU
----------------
Video (l) $73.41 $71.89 $72.21 $71.23
Internet (l) $42.46 $42.26 $42.65 $41.77
Phone (l) $39.69 $40.10 $40.72 $40.41
Revenue per Customer
Relationship (m) $106.00 $104.95 $105.73 $104.39
Total Revenue per
Video Customer (n) $151.88 $146.77 $146.84 $139.61

Residential Penetration Statistics
----------------------------------
Video Penetration of
Homes Passed Video
(o) 34.2% 34.7% 34.6% 35.7%
Internet Penetration
of Homes Passed
Internet (o) 31.4% 31.2% 30.0% 29.1%
Phone Penetration of
Homes Passed Phone
(o) 16.7% 16.7% 16.5% 16.2%
Bundled Penetration
(p) 63.0% 62.9% 62.3% 61.4%
Triple Play
Penetration (q) 28.8% 28.9% 29.1% 28.7%
Digital Penetration
(r) 84.7% 83.1% 82.0% 79.6%

Pro forma operating statistics reflect certain acquisitions of cable systems in 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 4,224,000, 3,352,000, and 1,748,000, respectively;
actual commercial video customers, Internet customers, and phone customers were 177,000, 149,000, and 69,000, respectively; and actual digital RGUs
were 3,387,000.

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 June 30, 2012,
March 31, 2011, December 31, 2011 and June 30,
2011, customers include approximately 17,000,
11,500, 18,600 and 16,100 customers,
respectively, whose accounts were over 60 days
past due in payment, approximately 2,900,
1,500, 2,500 and 2,200 customers,
respectively, whose accounts were over 90 days
past due in payment and approximately 1,300,
1,300, 1,400 and 1,000 customers,
respectively, whose accounts were over 120
days past due in payment.

(b) "Homes Passed" 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) "Customer Relationships" include the number of
customers that receive one or more levels of
service, encompassing video, Internet and
phone services, without regard to which
service(s) such customers receive. This
statistic is computed in accordance with the
guidelines of the National Cable &
Telecommunications Association (NCTA).
Commercial customer relationships includes
video customers in commercial structures,
which are calculated on an EBU basis (see
footnote (e)) and non-video commercial
customer relationships.

(d) "Video Customers" represent those customers who
subscribe to our video services. Effective
January 1, 2012, Charter revised its reporting
of customers whereby customers residing in
multi-dwelling residential structures are now
included in residential customer relationships
and PSUs (see footnote (i)) rather than
commercial. Further, residential PSUs and
customer relationships are no longer
calculated on an EBU (see footnote (e)) basis
but are based on separate billing
relationships. The impact of these changes
increased residential customer relationships
and PSUs and reduced commercial customer
relationships and PSUs, with an overall net
decrease to total customer relationships and
PSUs. Prior periods were reclassified to
conform to the 2012 presentation.

(e) 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 (MSOs). 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.

(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) "Digital Video RGUs" include all video
customers who subscribe to our digital video
service.

(k) "Net Additions/(Losses)" represent the pro
forma net gain or loss in the respective
quarter for the service indicated.

(l) "Average Monthly Revenue per Customer" or
"ARPU" represents quarterly pro forma revenue
for the service indicated divided by three
divided by the average number of pro forma
customers for the service indicated during the
respective quarter.

(m) "Revenue per Customer Relationship" is
calculated as total residential video,
Internet and phone quarterly pro forma revenue
divided by three divided by average
residential customer relationships during the
respective quarter.

(n) "Total Revenue per Video Customer" is
calculated as total quarterly pro forma
revenue divided by three divided by average
pro forma residential video customers during
the respective quarter.

(o) "Penetration" represents residential customers
as a percentage of homes passed for the
service indicated.

(p) "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.

(q) "Triple Play Penetration" represents
residential customers receiving all three
Charter service offerings, including video,
Internet and phone, as a % of residential
customer relationships.

(r) "Digital Penetration" represents the number of
residential digital video RGUs as a percentage
of residential video customers.



CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
Actual Actual Actual Actual
------ ------ ------ ------

Net loss $(83) $(107) $(177) $(217)
Plus: Interest expense, net 225 241 462 474
Income tax expense 68 81 139 160
Depreciation and amortization 415 393 823 776
Stock compensation expense 13 9 24 15
Loss on extinguishment of
debt 59 53 74 120
Other, net (4) 3 - 8
--- --- --- ---

Adjusted EBITDA (b) 693 673 1,345 1,336
Less: Purchases of property,
plant and equipment (468) (324) (808) (680)
---- ---- ---- ----

Adjusted EBITDA less capital
expenditures $225 $349 $537 $656
==== ==== ==== ====

Net cash flows from operating
activities $469 $460 $923 $907
Less: Purchases of property,
plant and equipment (468) (324) (808) (680)
Change in accrued expenses
related to capital
expenditures 25 19 13 -
--- --- --- ---

Free cash flow $26 $155 $128 $227
=== ==== ==== ====

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
Actual Pro forma (a) Actual Pro forma (a)
------ ------------ ------ ------------

Net loss $(83) $(107) $(177) $(218)
Plus: Interest expense, net 225 241 462 474
Income tax expense 68 81 139 160
Depreciation and amortization 415 395 823 781
Stock compensation expense 13 9 24 15
Loss on extinguishment of
debt 59 53 74 120
Other, net (4) 3 - 8
--- --- --- ---

Adjusted EBITDA (b) 693 675 1,345 1,340
Less: Purchases of property,
plant and equipment (468) (324) (808) (680)
---- ---- ---- ----

Adjusted EBITDA less capital
expenditures $225 $351 $537 $660
==== ==== ==== ====

Net cash flows from operating
activities $469 $462 $923 $911
Less: Purchases of property,
plant and equipment (468) (324) (808) (680)
Change in accrued expenses
related to capital
expenditures 25 19 13 -
--- --- --- ---

Free cash flow $26 $157 $128 $231
=== ==== ==== ====

(a) Pro forma results reflect certain acquisitions of cable systems in 2011 as if they occurred as of January 1, 2011.

(b) See page 1 of this addendum for detail of the components included within adjusted EBITDA.

The above schedules are presented in order to reconcile adjusted EBITDA and free cash flows, both non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.



CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CAPITAL EXPENDITURES
(dollars in millions)

Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2012 2011 2012 2011
---- ---- ---- ----

Customer premise equipment (a) $193 $130 $366 $287
Scalable infrastructure (b) 167 85 246 207
Line extensions (c) 33 29 59 49
Upgrade/Rebuild (d) 7 7 14 12
Support capital (e) 68 73 123 125
--- --- --- ---

Total capital expenditures (f) $468 $324 $808 $680
==== ==== ==== ====

(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, 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 $61 million and $45 million of capital expenditures related to commercial services for the three months ended June 30, 2012 and 2011, respectively, and $99 million and
$72 million for the six months ended June 30, 2012 and 2011.








SOURCE Charter Communications, Inc.

Photo:http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO
http://photoarchive.ap.org/
Charter Communications, Inc.

CONTACT: Media, Anita Lamont, +1-314-543-2215, or Analysts, Robin Gutzler, +1-314-543-2389

Web Site: http://www.charter.com


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