Charter Third Quarter 2012 Results

Charter Third Quarter 2012 Results

Implementing Strategies to Drive Growth with Enhanced Product Offerings and Service

ST. LOUIS, Nov. 6, 2012 /PRNewswire/ -- Charter Communications, Inc. (NASDAQ: CHTR) (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and nine months ended September 30, 2012.

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

Third quarter highlights:


-- Customer relationship trends improved year over year with 119,000 more
residential and commercial relationships, and a significant increase in
triple play sell-in. Residential primary service units ("PSUs") grew by
48,000 compared to a gain of 1,000 a year ago.
-- Third quarter revenues of $1.880 billion grew 3.7% on a pro forma(1
)basis and 3.9% on an actual basis compared to the third quarter of
2011, due to growth in Internet, commercial and advertising sales.
-- Residential Internet revenues rose 7.6% on a pro forma basis and 7.9% on
an actual basis. Charter added more than 300,000 Internet customers over
the past twelve months.
-- Commercial revenues grew 20.9% on a pro forma and actual basis driven by
growth across all business groups, marking the sixth consecutive quarter
of over 20% growth.
-- Adjusted EBITDA(2) was $651 million, down 0.5% on a pro forma basis and
0.3% on an actual basis compared to prior year as revenue growth was
offset by an increase in operating expenses to support new operating
strategies. Net loss totaled $87 million in the quarter.
-- Net cash flows from operating activities totaled $468 million for the
quarter. Higher capital expenditures to support our growth and operating
strategies led to free cash flow(2) of negative $17 million.
"We entered the quarter in a stronger competitive position from a product, pricing and service standpoint, benefiting customer trends and triple play sales," said Tom Rutledge, Charter President and CEO. "We are enhancing the foundation of our operating structure, business practices and product offerings to support sustainable growth. The investments we make in the near term lay the groundwork for increased penetration across all of our products with a greater customer lifetime value. I am confident about our future and our ability to drive long-term growth and maximize return on investment."


(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
------
September 30, September 30, Y/Y Change
2012 (a) 2011 (a)
------- -------
Footprint
---------
Estimated Homes Passed Video
(b) 11,996 11,928 1%
Estimated Homes Passed
Internet (b) 11,665 11,602 1%
Estimated Homes Passed Phone
(b) 11,040 10,840 2%

Penetration Statistics
----------------------
Video Penetration of Homes
Passed Video (c) 33.6% 35.1% -1.5 ppts
Internet Penetration of Homes
Passed Internet (c) 32.0% 29.5% 2.5 ppts
Phone Penetration of Homes
Passed Phone (c) 17.0% 16.3% 0.7 ppts

Residential
-----------
Residential Customer
Relationships (d) 5,015 4,922 2%
Residential Non-Video
Customers 990 734 35%
% Non-Video 19.7% 14.9% 4.8 ppts

Customers
---------
Video (e) 4,025 4,188 -4%
Internet (f) 3,731 3,424 9%
Phone (g) 1,880 1,764 7%
Residential PSUs (h) 9,636 9,376 3%
Residential PSU /Customer
Relationships (d)(h) 1.92 1.90

Net Additions/(Losses) (i)
----------------------------
Video (e) (73) (63) -16%
Internet (f) 69 53 30%
Phone (g) 52 11 373%
Residential PSUs (h) 48 1 NM*

Single Play Penetration (j) 37.4% 38.2% -0.8 ppts
Double Play Penetration(k) 33.0% 33.0% -
Triple Play Penetration (l) 29.6% 28.8% 0.8 ppts
Digital Penetration (m) 86.2% 80.9% 5.3 ppts

Revenue per Customer
Relationship (n) $105.39 $105.83 -

Commercial
----------
Commercial Customer
Relationships (d)(o) 321 295 9%

Customers
---------
Video (e)(o) 172 173 -1%
Internet (f) 186 156 19%
Phone (g) 99 74 34%
Commercial PSUs (h) 457 403 13%

Net Additions/(Losses) (i)
----------------------------
Video (e)(o) 1 (4) 125%
Internet (f) 9 7 29%
Phone (g) 8 5 60%
Commercial PSUs (h) 18 8 125%

* 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.
As we entered the third quarter of 2012, we implemented new pricing and packaging of our residential offerings designed to increase penetration of all our products and gain a higher quality relationship with our customers. Our compelling Charter triple play offers a competitive video product with more than 100 HD channels, superior Internet, and fully-featured phone service, all packaged together in a straight-forward, reasonably priced offering designed to create value for our customers.

In the third quarter of 2012, we grew residential customer relationships 19,000 compared to a loss of 10,000 for the third quarter last year. Residential PSUs increased by 48,000 compared to a gain of 1,000 in the comparable year ago quarter. We added 9,000 commercial customer relationships in the third quarter of 2012 compared to 3,000 in the prior-year quarter.

Residential video customers decreased by 73,000 in the third quarter of 2012 compared to a decline of 63,000 last year. The year over year change was driven by our strategy to actively market only digital offerings, and the transition to new selling methods. The majority of the video loss stemmed from limited basic customers, and the loss of expanded basic customers declined by approximately 65% year over year.

We continued to drive success with our Internet product, adding 69,000 residential Internet customers in the third quarter of 2012 compared to 53,000 last year. Our new triple play offer drove an increase of 52,000 phone customers compared to a gain of 11,000 last year, reflecting the early success of our new pricing and packaging.

Third quarter residential revenue per customer relationship totaled $105.39, down slightly from $105.83 a year ago, reflecting entry-level pricing and continued single play Internet sell-in despite a higher rate of triple play sell-in.

We are focused on further improving the quality of our products and service. We are implementing a number of organizational, operational, and go-to-market changes that we believe will create a competitive advantage for Charter in the marketplace. While we anticipate short-term impacts on customer connects, revenue and operating expenses as we implement our new strategies, we expect these efforts to drive long-term growth in our business. We also plan for capital expenditures to remain elevated as we strive to increase penetration, place higher levels of customer premise equipment per transaction, and progressively move to an all-digital platform.

Third 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 September 30,
--------------------------------
2012 2011 2011
Actual Pro Forma (a) % Change Actual % Change
------ ------------ -------- ------ --------
REVENUES:
Video $906 $911 (0.5)% $908 (0.2)%
Internet 467 434 7.6 % 433 7.9 %
Telephone 208 216 (3.7)% 216 (3.7)%
Commercial 168 139 20.9% 139 20.9%
Advertising Sales 85 73 16.4% 73 16.4%
Other 46 40 15.0% 40 15.0%
---
Total Revenues 1,880 1,813 3.7% 1,809 3.9 %
----- ----- -----

COSTS AND EXPENSES:
Operating (excluding
depreciation and
amortization) (b)
858 795 7.9% 792 8.3%
Selling, general and
administrative (excluding
stock compensation
expense) (c)
371 364 1.9% 364 1.9%
Total operating costs and
expenses 1,229 1,159 6.0% 1,156 6.3%
----- ----- -----

Adjusted EBITDA $651 $654 (0.5)% $653 (0.3)%
==== ==== ====

Adjusted EBITDA margin 34.6% 36.1% 36.1%

Capital Expenditures $488 $304 $304
% Total Revenues 26.0% 16.8% 16.8%

Net loss $(87) $(85) $(85)
Loss per common share,
basic and diluted $(0.87) $(0.79) $(0.79)

Net cash flows from
operating activities $468 $406 $405
Free cash flow $(17) $91 $90

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

Third quarter 2012 revenues rose to $1.880 billion, up 3.7% on a pro forma basis and 3.9% 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 $906 million in the third quarter, a decrease of 0.5% on a pro forma basisand 0.2% on an actual basis compared to the prior-year period. Video revenues declined as a result of a decrease in residential basic video customers partially offset by price increases and incremental revenues from DVR and HD television services.

Third quarter 2012 Internet revenues were $467 million, growing 7.6% on a pro forma basisand 7.9% on an actual basis year over year, driven by the addition of 307,000 Internet customers. Telephone revenues totaled $208 million, down 3.7% on a pro forma basis and actual basis over third quarter 2011 due to value-based pricing and revenue allocation in multi-product packages. We added 116,000 phone customers in the last twelve months.

Commercial revenues grew to $168 million, increasing 20.9% year over year on a pro forma and actual basis, reflecting higher sales to small and medium businesses and carrier customers.

Advertising sales revenues were $85 million for the third quarter of 2012, a 16.4% increase on a pro forma and actual basis compared to the third quarter of 2011 primarily driven by an increase in revenues from the political and automotive sectors.

Operating Costs and Expenses

Third quarter total operating costs and expenses increased 6.0% on a pro forma basis and 6.3% on an actual basis compared to the year-ago period, primarily related to increases in programming, labor and service expenses. Third quarter programming expenses increased $27 million on a pro forma basis and $29 million on an actual basis year over year reflecting contractual programming increases partially offset by customer losses. Labor and service expenses increased in the third quarter of 2012 primarily from increased preventive maintenance and growth in our commercial business.

Adjusted EBITDA

Third quarter adjusted EBITDA of $651 million decreased 0.5% on a pro forma basis and 0.3% on an actual basis compared to the year-ago quarter as higher revenues were offset by increased operating costs and expenses. Adjusted EBITDA margin declined to 34.6% for the third quarter of 2012 compared to 36.1% on a pro forma basis and an actual basis in the year-ago quarter.

Net Loss

Net loss was $87 million in the third quarter of 2012, compared to $85 million on a pro forma and actualbasis in the year-ago period. Net loss increased primarily due to higher depreciation and amortization partly offset by lower interest expense. Net loss per common share was $0.87 in the third quarter of 2012 compared to $0.79 on a pro forma and actual basis during the same period last year. The increase is a result of the factors described above and a decrease in our weighted average shares outstanding as a result of share repurchases in the last twelve months.

Capital Expenditures

Third quarter property, plant and equipment expenditures were $488 million compared to $304 million in 2011. The increase was driven primarily by investments in customer premise equipment ("CPE"), our commercial business, and support capital. The CPE expenditures included higher set-top box placement in new and existing customer homes and increases in inventory to support customer growth activity. Support capital expenditures increased due to fleet replacement, which was primarily timing related. During 2012, we currently expect capital expenditures to be between $1.6 billion and $1.7 billion.

Cash Flow

Net cash flows from operating activities totaled $468 million, compared to $406 million on a pro forma basis and $405 million on an actual basis in the third quarter of 2011. The increase in net cash flows from operating activities was primarily due to timing of trade working capital and lower cash interest.

Free cash flow for the third quarter of 2012 was negative $17 million, compared to free cash flow of $91 million on a pro forma basis and $90 million on an actual basis in the same period last year. The decrease was driven primarily by higher success-based capital expenditures offset by the increase in cash flows from operating activities.

Conference Call

Charter will host a conference call on Tuesday, November 6, 2012 at 10:00 a.m. Eastern Time (ET) related to the contents of this release.

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

Those participating via telephone should dial 866-919-0894 no later than 10 minutes prior to the call. International participants should dial 706-679-9379. The conference ID code for the call is 28432644.

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 December 6, 2012. The conference ID code for the replay is 28432644.

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 September 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 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) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses as well as other non-cash or special items, and is unaffected by the Company's capital structure or investment activities. Adjusted EBITDA is used by management and the Company's Board to evaluate the performance of the Company's business. However, these measures are limited in that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing. Management evaluates these costs through other financial measures.

Free cash flow is defined as net cash flows from operating activities, less purchases of property, plant and equipment and changes in accrued expenses related to capital expenditures.

The Company believes that adjusted EBITDA and free cash flow provide information useful to investors in assessing Charter's performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, adjusted EBITDA generally correlates to the leverage ratio calculation under the Company's credit facilities or outstanding notes to determine compliance with the covenants contained in the credit facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission). For the purpose of calculating compliance with leverage covenants, we use adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees which fees were in the amount of $44 million and $40 million for the three months ended September 30, 2012 and 2011, respectively, and $126 million and $110 million for the nine months ended September 30, 2012 and 2011, respectively.

In addition to the actual results for the three and nine months ended September 30, 2012 and 2011, we have provided pro forma results in this release for the three and nine months ended September 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 nine months ended September 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 September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2012 2011 2012 2011
Actual Actual % Change Actual Actual % Change
------ ------ -------- ------ ------ --------
REVENUES:
Video $906 $908 (0.2)% $2,712 $2,737 (0.9)%
Internet 467 433 7.9% 1,384 1,266 9.3%
Telephone 208 216 (3.7)% 642 641 0.2%
Commercial 168 139 20.9% 481 397 21.2%
Advertising Sales 85 73 16.4% 238 211 12.8%
Other 46 40 15.0% 134 118 13.6%
---
Total Revenues 1,880 1,809 3.9% 5,591 5,370 4.1%
----- ----- ----- -----

COSTS AND EXPENSES:
Operating (excluding depreciation and
amortization) (a)
858 792 8.3% 2,503 2,344 6.8%
Selling, general and administrative
(excluding stock compensation expense)
(b)
371 364 1.9% 1,092 1,037 5.3%
-----
Total operating costs and expenses 1,229 1,156 6.3% 3,595 3,381 6.3%
----- ----- ----- -----

Adjusted EBITDA 651 653 (0.3)% 1,996 1,989 0.4%
--- --- ----- -----

Adjusted EBITDA margin 34.6% 36.1% 35.7% 37.0%
---- ---- ---- ----

Depreciation and amortization 424 405 1,247 1,181
Stock compensation expense 13 10 37 25
Other operating expenses, net 3 1 2 7
--- --- --- ---

Income from operations 211 237 710 776
--- --- --- ---

OTHER EXPENSES:
Interest expense, net (229) (244) (691) (718)
Loss on extinguishment of debt - (4) (74) (124)
Other expense, net - (2) (1) (4)
--- --- ---
(229) (250) (766) (846)
---- ---- ---- ----

Loss before income taxes (18) (13) (56) (70)

Income tax expense (69) (72) (208) (232)
--- --- ---- ----

Net loss $(87) $(85) $(264) $(302)
==== ==== ===== =====

LOSS PER COMMON SHARE, BASIC AND DILUTED: $(0.87) $(0.79) $(2.65) $(2.74)
====== ====== ====== ======

Weighted average common shares
outstanding, basic and diluted 99,694,672 108,420,169 99,542,021 110,285,852
========== =========== ========== ===========


(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 September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2012 2011 2012 2011
Actual Pro Forma (a) % Change Actual Pro Forma (a) % Change
------ ------------ -------- ------ ------------ --------
REVENUES:
Video $906 $911 (0.5)% $2,712 $2,750 (1.4)%
Internet 467 434 7.6 % 1,384 1,271 8.9%
Telephone 208 216 (3.7)% 642 642 - %
Commercial 168 139 20.9% 481 398 20.9%
Advertising Sales 85 73 16.4% 238 211 12.8%
Other 46 40 15.0% 134 118 13.6%
--- --- --- ---
Total Revenues 1,880 1,813 3.7% 5,591 5,390 3.7%
----- ----- ----- -----

COSTS AND EXPENSES:
Operating (excluding
depreciation and
amortization) (b)
858 795 7.9% 2,503 2,355 6.3%
Selling, general and
administrative (excluding
stock compensation
expense) (c)
371 364 1.9% 1,092 1,041 4.9%
--- --- --- ----- -----
Total operating costs and
expenses 1,229 1,159 6.0% 3,595 3,396 5.9%
----- ----- ----- -----

Adjusted EBITDA 651 654 (0.5)% 1,996 1,994 0.1%
--- --- ----- -----

Adjusted EBITDA margin 34.6% 36.1% 35.7% 37.0%
---- ---- ---- ----

Depreciation and
amortization 424 406 1,247 1,187
Stock compensation expense 13 10 37 25
Other operating expenses,
net 3 1 2 7
--- --- --- ---

Income from operations 211 237 710 775
--- --- --- ---

OTHER EXPENSES:
Interest expense, net (229) (244) (691) (718)
Loss on extinguishment of
debt - (4) (74) (124)
Other expense, net - (2) (1) (4)
--- --- --- ---
(229) (250) (766) (846)
---- ---- ---- ----

Loss before income taxes (18) (13) (56) (71)

Income tax expense (69) (72) (208) (232)
--- --- ---- ----

Net loss $(87) $(85) $(264) $(303)
==== ==== ===== =====

LOSS PER COMMON SHARE,
BASIC AND DILUTED: $(0.87) $(0.79) $(2.65) $(2.74)
====== ====== ====== ======

Weighted average common
shares outstanding, basic
and diluted 99,694,672 108,420,169 99,542,021 110,285,852
========== =========== ========== ===========


(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.

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 and net
loss remained unchanged. 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.

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)

September 30, December 31,
2012 2011
---- ----

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $868 $2
Restricted cash and cash
equivalents 27 27
Accounts receivable, net 254 272
Prepaid expenses and other
current assets 80 69
--- ---
Total current assets 1,229 370
----- ---

INVESTMENT IN CABLE
PROPERTIES:
Property, plant and equipment,
net 7,159 6,897
Franchises 5,287 5,288
Customer relationships, net 1,492 1,704
Goodwill 953 954
--- ---
Total investment in cable
properties, net 14,891 14,843
------ ------

OTHER NONCURRENT ASSETS 377 392
--- ---

Total assets $16,497 $15,605
======= =======

LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $1,246 $1,153
Current portion of long-term
debt 870 -
--- ---
Total current liabilities 2,116 1,153
----- -----

LONG-TERM DEBT 12,820 12,856
------ ------
DEFERRED INCOME TAXES 1,054 847
----- ---
OTHER LONG-TERM LIABILITIES 334 340
--- ---

SHAREHOLDERS' EQUITY 173 409
--- ---

Total liabilities and
shareholders' equity $16,497 $15,605
======= =======




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

Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2012 2011 2012 2011
---- ---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(87) $(85) $(264) $(302)
Adjustments to reconcile net loss
to net cash flows from operating
activities:
Depreciation and amortization 424 405 1,247 1,181
Noncash interest expense 9 7 33 27
Loss on extinguishment of debt - 4 74 124
Deferred income taxes 67 70 203 225
Other, net 14 10 25 26
Changes in operating assets and
liabilities, net of effects from
acquisitions and dispositions:
Accounts receivable 2 (10) 18 (5)
Prepaid expenses and other assets (1) 2 (12) (4)
Accounts payable, accrued
expenses and other 40 2 67 40
--- --- --- ---
Net cash flows from operating
activities 468 405 1,391 1,312
--- --- ----- -----

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant and
equipment (488) (304) (1,296) (984)
Change in accrued expenses
related to capital expenditures 3 (11) 16 (11)
Sales (purchases) of cable
systems, net (2) (89) 19 (89)
Other, net (7) (6) (18) (20)
--- --- --- ---
Net cash flows from investing
activities (494) (410) (1,279) (1,104)
---- ---- ------ ------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings of long-term debt 1,536 240 4,353 3,801
Repayments of long-term debt (635) (279) (3,554) (3,645)
Payments for debt issuance costs (17) - (41) (43)
Purchase of treasury stock - (116) (4) (323)
Other, net 5 (2) - 2
--- --- --- ---
Net cash flows from financing
activities 889 (157) 754 (208)
--- ---- --- ----

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 863 (162) 866 -
CASH AND CASH EQUIVALENTS,
beginning of period 32 194 29 32
--- --- --- ---
CASH AND CASH EQUIVALENTS, end of
period $895 $32 $895 $32
==== === ==== ===

CASH PAID FOR INTEREST $199 $247 $647 $649
==== ==== ==== ====




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

Approximate as of
-----------------
Actual
------
September 30, 2012 (a) June 30, 2012 (a) December 31, 2011 (a) September 30, 2011 (a)
--------------------- ---------------- -------------------- ---------------------
Footprint
---------
Estimated Homes
Passed Video (b) 11,996 11,979 11,960 11,928
Estimated Homes
Passed Internet (b) 11,665 11,649 11,634 11,602
Estimated Homes
Passed Phone (b) 11,040 10,966 10,871 10,840

Penetration
Statistics
-----------
Video Penetration of
Homes Passed Video
(c) 33.6% 34.2% 34.6% 35.1%
Internet Penetration
of Homes Passed
Internet (c) 32.0% 31.4% 30.0% 29.5%
Phone Penetration of
Homes Passed Phone
(c) 17.0% 16.7% 16.5% 16.3%

Residential
-----------
Residential Customer
Relationships (d) 5,015 4,996 4,927 4,922
Residential Non-
Video Customers 990 898 783 734
% Non-Video 19.7% 18.0% 15.9% 14.9%

Customers
---------
Video (e) 4,025 4,098 4,144 4,188
Internet (f) 3,731 3,662 3,492 3,424
Phone (g) 1,880 1,828 1,791 1,764
Residential PSUs (h) 9,636 9,588 9,427 9,376
===== ===== ===== =====
Residential PSU /
Customer
Relationships
(d)(h) 1.92 1.92 1.91 1.90

Net Additions/
(Losses) (i)
--------------
Video (e) (73) (66) (44) (63)
Internet (f) 69 29 68 53
Phone (g) 52 6 27 11
Residential PSUs (h) 48 (31) 51 1
=== === === ===

Single Play
Penetration (j) 37.4% 37.0% 37.7% 38.2%
Double Play
Penetration(k) 33.0% 34.2% 33.2% 33.0%
Triple Play
Penetration (l) 29.6% 28.8% 29.1% 28.8%
Digital Penetration
(m) 86.2% 84.7% 82.0% 80.9%

Revenue per Customer
Relationship (n) $105.39 $106.00 $105.73 $105.83

Commercial
----------
Commercial Customer
Relationships
(d)(o) 321 312 298 295

Customers
---------
Video (e)(o) 172 171 170 173
Internet (f) 186 177 163 156
Phone (g) 99 91 79 74
Commercial PSUs (h) 457 439 412 403
=== === === ===

Net Additions/
(Losses) (i)
--------------
Video (e)(o) 1 (6) (3) (4)
Internet (f) 9 8 7 7
Phone (g) 8 6 5 5
Commercial PSUs (h) 18 8 9 8
=== === === ===

Digital Video RGUs
(p) 3,484 3,484 3,410 3,401
------------------

Residential Product
ARPU
-------------------
Video (q) $74.42 $73.41 $72.21 $72.08
Internet (q) $42.15 $42.46 $42.65 $42.71
Phone (q) $37.44 $39.69 $40.72 $40.93

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,
2012, June 30, 2012, December 31, 2011 and
September 30, 2011, customers include
approximately 16,900, 17,000, 18,600 and
15,500 customers, respectively, whose accounts
were over 60 days past due in payment,
approximately 3,400, 2,900, 2,500 and 1,900
customers, respectively, whose accounts were
over 90 days past due in payment and
approximately 1,600, 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) "Penetration" represents residential customers
as a percentage of homes passed for the
service indicated.

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

(e) "Video Customers" represent those customers who
subscribe to our video services. 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 (h)) rather than
commercial. Further, residential PSUs and
customer relationships are no longer
calculated on an EBU (see footnote (o)) 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.

(f) "Internet Customers" represent those customers
who subscribe to our Internet service.

(g) "Phone Customers" represent those customers who
subscribe to our phone service.

(h) "Primary Service Units" or "PSUs" represent the
total of video, Internet and phone customers.

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

(j) "Single Play Penetration" represents
residential customers receiving one of Charter
service offerings, including video, Internet
or phone, as a % of residential customer
relationships.

(k) "Double Play Penetration" represents
residential customers receiving two of Charter
service offerings, including video, Internet
and/or phone, as a % of residential customer
relationships.

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

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

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

(o) Included within commercial video customers are
those in commercial structures, which are
calculated on an equivalent bulk unit ("EBU")
basis. We calculate EBUs by dividing the bulk
price charged to accounts in an area by the
published rate charged to non-bulk
residential customers in that market for the
comparable tier of service. This EBU method
of estimating video customers is consistent
with the methodology used in determining costs
paid to programmers and is consistent with the
methodology used by other multiple system
operators (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.

(p) "Digital video RGUs" include all video
customers who have one or more digital set-
top boxes or cable cards in their home or
business.

(q) "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.




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,
-------------
2012 2011 2012 2011
Actual Actual Actual Actual
------ ------ ------ ------

Net loss $(87) $(85) $(264) $(302)
Plus: Interest expense, net 229 244 691 718
Income tax expense 69 72 208 232
Depreciation and amortization 424 405 1,247 1,181
Stock compensation expense 13 10 37 25
Loss on extinguishment of debt - 4 74 124
Other, net 3 3 3 11
--- --- --- ---

Adjusted EBITDA (b) 651 653 1,996 1,989
Less: Purchases of property,
plant and equipment (488) (304) (1,296) (984)
---- ---- ------ ----

Adjusted EBITDA less capital
expenditures $163 $349 $700 $1,005
==== ==== ==== ======

Net cash flows from operating
activities $468 $405 $1,391 $1,312
Less: Purchases of property,
plant and equipment (488) (304) (1,296) (984)
Change in accrued expenses
related to capital expenditures
3 (11) 16 (11)
--- --- --- ---

Free cash flow $(17) $90 $111 $317
==== === ==== ====

Three Months Ended
September 30, Nine Months Ended
September 30,
-------------
2012 2011 2012 2011
Actual Pro forma (a) Actual Pro forma (a)
------ ------------ ------ ------------

Net loss $(87) $(85) $(264) $(303)
Plus: Interest expense, net 229 244 691 718
Income tax expense 69 72 208 232
Depreciation and amortization 424 406 1,247 1,187
Stock compensation expense 13 10 37 25
Loss on extinguishment of debt - 4 74 124
Other, net 3 3 3 11
--- --- --- ---

Adjusted EBITDA (b) 651 654 1,996 1,994
Less: Purchases of property,
plant and equipment (488) (304) (1,296) (984)
---- ---- ------ ----

Adjusted EBITDA less capital
expenditures $163 $350 $700 $1,010
==== ==== ==== ======

Net cash flows from operating
activities $468 $406 $1,391 $1,317
Less: Purchases of property,
plant and equipment (488) (304) (1,296) (984)
Change in accrued expenses
related to capital expenditures
3 (11) 16 (11)
--- --- --- ---

Free cash flow $(17) $91 $111 $322
==== === ==== ====

(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 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 Nine Months Ended
September 30, September 30,
------------- -------------
2012 2011 2012 2011
---- ---- ---- ----

Customer
premise
equipment
(a) $255 $156 $641 $470
Scalable
infrastructure
(b) 74 58 320 265
Line
extensions
(c) 52 29 111 78
Upgrade/
Rebuild
(d) 43 30 104 86
Support
capital
(e) 64 31 120 85
--- --- --- ---

Total
capital
expenditures
(f) $488 $304 $1,296 $984
==== ==== ====== ====

(a) Customer premise equipment includes
costs incurred at the customer
residence to secure new customers and
revenue generating units. It also
includes customer installation costs
and customer premise equipment (e.g.,
set-top boxes and cable modems).

(b) Scalable infrastructure includes
costs, not related to customer
premise equipment, to secure growth
of new customers and revenue
generating units, or provide service
enhancements (e.g., headend
equipment).

(c) Line extensions include network costs
associated with entering new service
areas (e.g., fiber/coaxial cable,
amplifiers, electronic equipment,
make-ready and design engineering).

(d) Upgrade/rebuild includes costs to
modify or replace existing fiber/
coaxial cable networks, including
betterments.

(e) Support capital includes costs
associated with the replacement or
enhancement of non-network assets
due to technological and physical
obsolescence (e.g., non-network
equipment, land, buildings and
vehicles).

(f) Total capital expenditures includes
$82 million and $48 million of
capital expenditures related to
commercial services for the three
months ended September 30, 2012 and
2011, respectively, and $181 million
and $120 million for the nine months
ended September 30, 2012 and 2011.

Certain prior period amounts have been reclassified to
conform with the 2012 presentation.


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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