Charter Announces Fourth Quarter and Full Year 2014 Results

Charter Announces Fourth Quarter and Full Year 2014 Results

Spectrum Products Combined With Growing Service Capabilities Drive Market Share Growth

STAMFORD, Conn., Feb. 5, 2015 /PRNewswire/ -- Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and twelve months ended December 31, 2014.

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Key highlights:


-- During the fourth quarter, Charter completed its all-digital initiative
and the rollout of Charter Spectrum, the Company's new and more advanced
product suite.

-- Fourth quarter revenues of $2.4 billion grew 9.9%(1) as compared to the
prior-year period, driven by residential revenue growth of 8.3%,
commercial revenue growth of 16.1% and advertising revenue growth of
28.9%.

-- Fourth quarter Adjusted EBITDA(2) grew by 10.5% year-over-year.

-- Residential customer relationships increased by 73,000 during the fourth
quarter and have grown by 5.0%, or 280,000, since the end of 2013.

-- Residential primary service units ("PSUs") increased by 157,000 during
the fourth quarter. In 2014, Charter added 532,000 total residential
PSUs versus a pro forma(3) gain of 415,000 in 2013, with 2014
residential video customer losses declining to 17,000 from 109,000 in
2013.
-- Full year 2014 revenues and Adjusted EBITDA each rose 8.2% on a pro
forma basis, with capital expenditures totaling $2.2 billion.
"We recently completed our all-digital transition and the rollout of our more advanced product suite, Charter Spectrum, on plan. We have now unleashed the capabilities of our high capacity two-way interactive network, freeing network capacity we can utilize for years to come," said Tom Rutledge, President and CEO of Charter Communications. "Our fourth quarter and full year 2014 results demonstrate that our new products, combined with our improving service levels, are generating strong market share growth across all of our businesses. Customer growth continues to drive improving financial performance, with reduced capital intensity going forward."

(1)All percentages are calculated using actual amounts. Minor differences may exist due to rounding.

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

(3)All customer data and results, unless otherwise noted, are pro forma for the Bresnan transaction, as if it had occurred on January 1, 2012, and are provided in the addendum of this news release.










Key Operating Results

Approximate as of
-----------------

December 31, 2014 December 31, 2013 Y/Y
Change
(a) (a)
--- ---

Footprint
---------

Estimated Video Passings
(b) 12,871 12,838 -%

Estimated Internet
Passings (b) 12,570 12,505 1%

Estimated Voice Passings
(b) 12,079 11,934 1%


Penetration Statistics
----------------------

Video Penetration of
Estimated Video Passings
(c) 33.4% 33.8% -0.4ppts

Internet Penetration of
Estimated Internet
Passings (c) 40.4% 37.1% 3.3ppts

Voice Penetration of
Estimated Voice Passings
(c) 21.7% 20.3% 1.4ppts


Residential
-----------

Residential Customer
Relationships (d) 5,841 5,561 5%

Residential Non-Video
Customers 1,681 1,384 21%

% Non-Video 28.8% 24.9% 3.9ppts


Customers
---------

Video (e) 4,160 4,177 -%

Internet (f) 4,766 4,383 9%

Voice (g) 2,439 2,273 7%
----- -----

Residential PSUs (h) 11,365 10,833 5%

Residential PSU /Customer
Relationships (d)(h) 1.95 1.95


Quarterly Net Additions/
(Losses) (i)
------------------------

Video (e) 3 (2) NM

Internet (f) 104 93 11%

Voice (g) 50 56 (13)%
--- ---

Residential PSUs (h) 157 147 6%


Bulk Digital Upgrade Net
Additions (j) 5 4 NM


Single Play Penetration
(k) 38.0% 37.6% 0.4ppts

Double Play Penetration
(l) 29.1% 29.8% -0.7ppts

Triple Play Penetration
(m) 32.8% 32.6% 0.2ppts

Digital Penetration (n) 98.5% 91.8% 6.7ppts


Monthly Residential
Revenue per Residential
Customer (d)(o) $111.52 $108.12 3%


Commercial
----------

Commercial Customer
Relationships (d)(p) 386 375 3%


Customers
---------

Video (e)(p) 133 165 (19)%

Internet (f) 306 257 19%

Voice (g) 180 145 24%
--- ---

Commercial PSUs (h) 619 567 9%


Quarterly Net Additions/
(Losses) (i)
------------------------


Video (e)(p) (6) (1) NM

Internet (f) 12 12 -%

Voice (g) 8 7 14%
--- ---

Commercial PSUs (h) 14 18 (22)%


Footnotes

In thousands, except per
customer and penetration data.
See footnotes to unaudited
summary of operating
statistics on page 6 of the
addendum of this news release.
The footnotes contain
important disclosures
regarding the definitions used
for these operating
statistics.



NM - Not meaningful
-------------------


During the fourth quarter of 2014, Charter's residential customer relationships grew by 73,000, with triple play sell-in improving year-over-year, to 62% of total residential video sales. Commercial customer relationships grew by 6,000 in the fourth quarter of 2014. Residential PSUs increased by 157,000, while commercial PSUs increased 14,000 during the fourth quarter.

As of the end of the fourth quarter of 2014, Charter had completed its all-digital initiative. All-digital allows Charter to offer more advanced products and services, and provides residential customers with two-way digital set-tops, which offer higher picture quality, an interactive programming guide and video on demand on all TV outlets in the home.

During the fourth quarter, Charter continued to introduce its new product suite, Charter Spectrum, in markets that were recently converted to all-digital. Charter customers in these markets now have access to an industry-leading suite of video, data, and voice services that includes over 200 HD channels, in addition to minimum offered Internet speeds of 60 Mbps, and a fully featured voice service, delivered at a highly competitive price. Charter Spectrum is available to new Charter customers, and to existing customers within the Company's new pricing and packaging structure launched in 2012. As of the end of the fourth quarter of 2014, 86% of residential customers were in Charter's new pricing and packaging, excluding customers in the former Bresnan properties.

Residential video customers increased by 3,000 in the fourth quarter of 2014, versus a loss of 2,000 in the year-ago period. For the past two years Charter has significantly increased the competitiveness of its video product, by including more HD channels and video on demand offerings, attractive packaging of advanced services, improved selling methods, and enhanced service quality.

Charter added 104,000 residential Internet customers in the fourth quarter of 2014, compared to 93,000 a year ago. As of December 31, 2014, 80% of Charter's residential Internet customers subscribed to tiers that provided speeds of 60 Mbps or more. The Company continues to see strong demand for its Internet service as consumers value the speed and reliability of Charter's Internet offering.

During the fourth quarter, the Company added 50,000 residential voice customers, versus a gain of 56,000 during the fourth quarter of 2013.

Fourth quarter residential revenue per customer relationship totaled $111.52, and grew by 3.1% as compared to the prior-year period, driven by rate adjustments, higher product sell-in and promotional rate step-ups, partially offset by continued single play Internet sell-in and bulk digital upgrades. In September 2014, Charter increased its broadcast TV surcharge. Excluding this rate adjustment, residential revenue per customer relationship grew by 2.2% year-over-year.





Fourth Quarter Financial Results


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share data)


Three Months Ended December 31,
-------------------------------

2014 2013 % Change
---- ---- --------

REVENUES:

Video $1,134 $1,049 8.1%

Internet 670 590 13.5%

Voice 139 154 (9.7)%

Commercial 262 225 16.1%

Advertising sales 107 83 28.9%

Other 48 47 6.2%


Total Revenues 2,360 2,148 9.9%
----- -----


COSTS AND EXPENSES:

Total operating costs and
expenses 1,515 1,384 9.6%
(excluding depreciation and
amortization)



Adjusted EBITDA $845 $764 10.5%
==== ====


Adjusted EBITDA margin 35.8% 35.6%


Capital Expenditures $543 $566

% Total Revenues 23.0% 26.3%


Net income (loss) $(48) $39

Earnings (loss) per common
share, basic $(0.44) $0.38

Earnings (loss) per common
share, diluted $(0.44) $0.35



Net cash flows from
operating activities $630 $595

Free cash flow $89 $84


Revenue

Fourth quarter 2014 revenues rose to $2.4 billion, 9.9% higher than the year-ago quarter, driven primarily by growth in Internet, video and commercial revenues.

Video revenues totaled $1.1 billion in the fourth quarter, an increase of 8.1% compared to the prior-year period. Video revenue growth was driven by higher expanded basic and digital penetration, annual and promotional rate adjustments, higher advanced services penetration, and revenue allocation from higher bundling, partially offset by a decrease in residential limited basic video customers.

Internet revenues grew 13.5% compared to the year-ago quarter to $670 million, driven by an increase of 383,000 Internet customers during the last year and by promotional rolloff, legacy price adjustments and revenue allocation from higher bundling.

Voice revenues totaled $139 million, a decline of 9.7% versus the fourth quarter of 2013, due to value-based pricing and revenue allocation from higher bundling, partially offset by the addition of 166,000 voice customers in the last twelve months.

Commercial revenues rose to $262 million, an increase of 16.1% over the prior-year period, and was driven by higher sales to small and medium business customers and to carrier customers.

Fourth quarter advertising sales revenues of $107 million increased 28.9% compared to the year-ago quarter, primarily driven by an increase in political advertising revenue. Excluding the benefit of political advertising revenue generated in the fourth quarter of 2014, and during the corresponding prior-year period, total fourth quarter advertising sales revenues grew by approximately 8.9% year-over-year.

Operating Costs and Expenses

Fourth quarter total operating costs and expenses increased by $131 million, or 9.6%, compared to the year-ago period, reflecting increases in programming costs, costs to service customers, and other expenses. Transition costs related to Charter's previously-announced transactions with Comcast accounted for $11 million of total fourth quarter operating costs.

Fourth quarter programming expense increased by $64 million, or 11.6%, as compared to the fourth quarter of 2013, reflecting contractual programming increases, a 1.9% increase in expanded basic package customers over the last twelve months, broader carriage of certain networks as a result of all-digital and the introduction of new networks to Charter's video offering. Costs to service customers grew by $28 million, or 6.6% as compared to the fourth quarter of last year, driven primarily by higher labor costs to deliver higher quality products and service levels, and transition expenses associated with the Comcast transactions. Other expenses grew by $37 million, or 20.4%, as compared to the fourth quarter of 2013, reflecting higher administrative labor and commercial costs, advertising sales expenses, and transition expenses associated with the Comcast transactions.

Adjusted EBITDA

Fourth quarter Adjusted EBITDA of $845 million grew by 10.5% year-over-year, reflecting revenue growth and operating costs and expenses growth of 9.9% and 9.6%, respectively.

Net Loss

Net loss totaled $48 million in the fourth quarter of 2014, compared to net income of $39 million in the fourth quarter of 2013. Fourth quarter 2013 net income reflected a $36 million tax benefit related to a partnership restructuring. In addition, fourth quarter 2014 net income reflects $67 million of interest expense related to the Comcast transactions financing, $9 million of transactions costs related to the Comcast transactions in other operating expenses, and higher depreciation and amortization charges, partly offset by higher Adjusted EBITDA. Basic and diluted net loss per common share was $0.44 in the fourth quarter of 2014 compared to net income per basic and diluted share of $0.38 and $0.35, respectively, during the same period last year. The increase in net loss per common share was primarily the result of the factors described above.

Capital Expenditures

Property, plant and equipment expenditures were $543 million in the fourth quarter of 2014, compared to $566 million, during the fourth quarter of 2013. The decrease was the result of a decline in customer premise equipment ("CPE") spending, partly offset by higher support capital expenditures. CPE spending declined versus the prior-year period as Charter completed its all-digital initiative during the fourth quarter. The year-over-year increase in support capital expenditures was driven by Charter's ongoing insourcing initiatives. Transition capital expenditures related to Charter's previously-announced transactions with Comcast accounted for $26 million of capital expenditures in the fourth quarter.

Cash Flow

During the fourth quarter of 2014, net cash flows from operating activities totaled $630 million, compared to $595 million in the fourth quarter of 2013. The increase in net cash flows from operating activities was primarily related to higher Adjusted EBITDA partly offset by higher cash interest payments, including $52 million of cash payments associated with the $7 billion of debt, proceeds of which are currently in escrow, that will be used to finance the previously-announced transactions with Comcast.

Free cash flow for the fourth quarter of 2014 was $89 million, compared to $84 million during the same period last year. The increase was primarily due to higher net cash flow from operating activities and lower capital expenditures, partly offset by a smaller increase in accrued expenses related to capital expenditures versus the prior-year period.





Year to Date Financial Results


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share data)


Year Ended December 31,
-----------------------

2014 2013 2013

Actual Pro Forma % Change Actual % Change
------ --------- -------- ------ --------

REVENUES:

Video $4,443 $4,177 6.4% $4,040 10.0%

Internet 2,576 2,253 14.4% 2,186 17.8%

Voice 575 668 (14.2)% 644 (10.7)%

Commercial 993 840 18.2% 812 22.4%

Advertising sales 341 297 14.6% 291 17.0%

Other 180 184 (1.7)% 182 (0.8)%


Total Revenues 9,108 8,419 8.2% 8,155 11.7%
----- ----- -----


COSTS AND EXPENSES:

Total operating costs and
expenses (excluding
depreciation and
amortization) 5,918 5,471 8.2% 5,297 11.7%
----- ----- -----


Adjusted EBITDA $3,190 $2,948 8.2% $2,858 11.6%
====== ====== ======


Adjusted EBITDA margin 35.0% 35.0% 35.0%


Capital Expenditures $2,221 $1,854 $1,825

% Total Revenues 24.4% 22.0% 22.4%


Net loss $(183) $(194) $(169)

Loss per common share,
basic and diluted $(1.70) $(1.90) $(1.65)


Net cash flows from
operating activities $2,359 $2,158

Free cash flow $171 $409


Revenue

For the year ended December 31, 2014, revenues rose to $9.1 billion, 8.2% higher on a pro forma basis than in 2013, driven by continued growth in Internet, video and commercial revenues. On an actual basis, full year 2014 revenues rose 11.7% year-over-year.

Operating Costs and Expenses

Operating costs and expenses totaled $5.9 billion in 2014, an increase of $447 million, or 8.2%, on a pro forma basis compared to the year-ago period, reflecting increases in programming costs and other expenses. On an actual basis, total operating costs and expenses grew by 11.7% year-over-year. Transition costs related to the previously-announced transactions with Comcast accounted for $14 million of total 2014 operating costs.

Adjusted EBITDA

Adjusted EBITDA was $3.2 billion for the year ended December 31, 2014, an increase of 8.2% compared to 2013, on a pro forma basis. On an actual basis, Adjusted EBITDA grew by 11.6% compared to the year-ago period, driven by higher organic revenue growth and the acquisition of Bresnan. Charter's Adjusted EBITDA margin remained unchanged, on both a pro forma and actual basis, at 35.0%.

Net Loss

For the year ended December 31, 2014, net loss was $183 million, compared to $194 million on a pro forma basis, in 2013, driven by higher Adjusted EBITDA and a decline in loss on extinguishment of debt, partly offset by higher depreciation and amortization charges, higher interest expense related to the Comcast transactions financing and higher income tax expense. Net loss per common share was $1.70 for the year ended December 31, 2014, compared to $1.90 on a pro forma basis in 2013. The decrease was primarily the result of the factors described above.

Capital Expenditures

Capital expenditures for the year ended December 31, 2014, totaled $2.2 billion compared to pro forma capital expenditures of $1.9 billion in 2013. The year-over-year increase was primarily driven by Charter's all-digital initiative, investment in CPE to support customer growth, higher product development investment and the Company's ongoing insourcing initiative. Transition capital expenditures related to Charter's previously-announced transactions with Comcast accounted for $27 million of total 2014 capital expenditures.

Charter expects 2015 capital expenditures to be approximately $1.7 billion, excluding potential expenditures related to the previously-announced transactions with Comcast. Charter expects its 2015 capital expenditures to be driven by continued growth in residential and commercial customers along with further spend related to product development. The actual amount of capital expenditures in 2015 will depend on a number of factors including the pace of transition planning to service a larger customer base upon closing of the previously-announced transactions with Comcast.

Cash Flow

In 2014, net cash flows from operating activities totaled $2.4 billion compared to $2.2 billion in 2013. The increase in net cash flows from operating activities was primarily related to an increase in Adjusted EBITDA partly offset by an increase in cash interest payments.

Free cash flow for the year ended December 31, 2014 was $171 million, compared to $409 million during the same period last year. The decrease was primarily due to higher capital expenditures related to Charter's all-digital initiative, and expenditures related to the previously-announced Comcast transactions, including operating and other expenses, interest expense, and capital expenditures, partly offset by higher cash flow from operating activities.

Liquidity

Total principal amount of debt was approximately $21.1 billion as of December 31, 2014, including the $3.5 billion borrowed under CCO Safari Term Loan G issued in September 2014, and the $3.5 billion CCOH Safari notes issued in November 2014. Proceeds from the CCO Safari Term Loan G and CCOH Safari notes are being held in escrow and recorded as noncurrent restricted cash and cash equivalents. As of December 31, 2014, Charter held $3 million of unrestricted cash and cash equivalents, and its credit facilities provided approximately $817 million of additional liquidity. In addition, a $500 million revolver extension is currently committed and available to Charter. The availability of this revolver is not contingent or related to the closing of the previously-announced Comcast transactions.

Conference Call

Charter will host a conference call on Thursday, February 5, 2015 at 10:00 a.m. Eastern Time (ET) related to the contents of this release.

The conference call will be webcast live via the Company's investor relations website at ir.charter.com. The call will be archived under the "Financial Information" section two hours after completion of the call. Participants should go to the webcast link no later than 10 minutes prior to the start time to register.

Those participating via telephone should dial 866-919-0894 no later than 10 minutes prior to the call. International participants should dial 706-679-9379. The conference ID code for the call is 54499873.

A replay of the call will be available at 855-859-2056 or 404-537-3406 beginning two hours after the completion of the call through the end of business on March 5, 2015. The conference ID code for the replay is 54499873.

Additional Information Available on Website

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Form 10-K for the twelve months ended December 31, 2014 which will be posted on the "Financial Information" section of our investor relations website at ir.charter.com, when it is filed with the United States Securities and Exchange Commission. A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available in the "Financial Information" section.

Use of Non-GAAP Financial Metrics

The Company uses certain measures that are not defined by Generally Accepted Accounting Principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net loss or cash flows from operating activities reported in accordance with GAAP. These terms, as defined by Charter, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is reconciled to net income (loss) and free cash flow is reconciled to net cash flows from operating activities in the addendum of this news release.

Adjusted EBITDA is defined as net income (loss) plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, (gain) loss on derivative instruments, net and other operating expenses, such as merger and acquisition costs, special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses as well as other non-cash or special items, and is unaffected by the Company's capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing. These costs are evaluated through other financial measures.

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

Management and the Company's board of directors use Adjusted EBITDA and free cash flow to assess Charter's performance and its ability to service its debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under the Company's credit facilities or outstanding notes to determine compliance with the covenants contained in the credit facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission). For the purpose of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees which fees were in the amount of $69 million and $54 million for the three months ended December 31, 2014 and 2013, respectively and $253 million and $201 million for the twelve months ended December 31, 2014 and 2013, respectively.

In addition to the actual results for the three and twelve months ended December 31, 2014 and 2013, we have provided pro forma results in this release for the twelve months ended December 31, 2013. We believe these pro forma results facilitate meaningful analysis of the results of operations. Pro forma results in this release reflect certain acquisitions of cable systems in 2013 as if they occurred as of January 1, 2012. Pro forma statements of operations for the twelve months ended December 31, 2013 are provided in the addendum of this news release.

About Charter

Charter (NASDAQ: CHTR) is a leading broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter TV® video entertainment programming, Charter Internet® access, and Charter Phone®. Charter Business® similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, business telephone, video and music entertainment services, and wireless backhaul. Charter's advertising sales and production services are sold under the Charter Media® brand. More information about Charter can be found at charter.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under "Risk Factors" from time to time in our filings with the SEC. Many of the forward-looking statements contained in this presentation may be identified by the use of forward-looking words such as "believe", "expect", "anticipate", "should", "planned", "will", "may", "intend", "estimated", "aim", "on track", "target", "opportunity", "tentative", "positioning", "designed", "create", "predict", "project", "seek", "would", "could", "continue", "ongoing", "upside", "increases" and "potential", among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this presentation are set forth in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

Risks Related to Comcast Corporation ("Comcast") Transactions


-- the ultimate outcome of the proposed transactions between Charter and
Comcast including the possibility that such transactions may not occur
if closing conditions are not satisfied;
-- if any such transactions were to occur, the ultimate outcome and results
of integrating operations and application of our operating strategies to
the acquired assets and the ultimate ability to realize synergies at the
levels currently expected as well as potential programming
dis-synergies;
-- the impact of the proposed transactions on our stock price and future
operating results, including due to transaction and integration costs,
increased interest expense, business disruption, and diversion of
management time and attention;
-- the reduction in our current stockholders' percentage ownership and
voting interest as a result of the proposed transactions;
-- the increase in indebtedness as a result of the proposed transactions,
which will increase interest expense and may decrease our operating
flexibility;
Risks Related to Our Business


-- our ability to sustain and grow revenues and cash flow from operations
by offering video, Internet, voice, advertising and other services to
residential and commercial customers, to adequately meet the customer
experience demands in our markets and to maintain and grow our customer
base, particularly in the face of increasingly aggressive competition,
the need for innovation and the related capital expenditures;
-- the impact of competition from other market participants, including but
not limited to incumbent telephone companies, direct broadcast satellite
operators, wireless broadband and telephone providers, digital
subscriber line ("DSL") providers, video provided over the Internet and
providers of advertising over the Internet;
-- general business conditions, economic uncertainty or downturn, high
unemployment levels and the level of activity in the housing sector;
-- our ability to obtain programming at reasonable prices or to raise
prices to offset, in whole or in part, the effects of higher programming
costs (including retransmission consents);
-- the development and deployment of new products and technologies;
-- the effects of governmental regulation on our business or potential
business combination transactions;
-- the availability and access, in general, of funds to meet our debt
obligations prior to or when they become due and to fund our operations
and necessary capital expenditures, either through (i) cash on hand,
(ii) free cash flow, or (iii) access to the capital or credit markets;
-- our ability to comply with all covenants in our indentures and credit
facilities, any violation of which, if not cured in a timely manner,
could trigger a default of our other obligations under cross-default
provisions.
All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this release.








CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share data)


Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------

2014 2013 2014 2013

Actual Actual % Change Actual Actual % Change
------ ------ -------- ------ ------ --------

REVENUES:

Video $1,134 $1,049 8.1% $4,443 $4,040 10.0%

Internet 670 590 13.5% 2,576 2,186 17.8%

Voice 139 154 (9.7)% 575 644 (10.7)%

Commercial 262 225 16.1% 993 812 22.4%

Advertising sales 107 83 28.9% 341 291 17.0%

Other 48 47 6.2% 180 182 (0.8)%
--- --- --- ---

Total Revenues 2,360 2,148 9.9% 9,108 8,155 11.7%
----- ----- ----- -----


COSTS AND EXPENSES:

Programming 625 561 11.6% 2,459 2,146 14.6%

Franchises, regulatory and
connectivity 109 103 5.6% 428 399 7.2%

Costs to service customers 425 397 6.6% 1,675 1,561 7.0%

Marketing 125 129 (3.1)% 529 488 8.4%

Other 231 194 20.4% 827 703 18.3%
--- --- --- ---

Total operating costs and
expenses (excluding
depreciation and amortization) 1,515 1,384 9.6% 5,918 5,297 11.7%
----- ----- ----- -----


Adjusted EBITDA 845 764 10.5% 3,190 2,858 11.6%
--- --- ----- -----


Adjusted EBITDA margin 35.8% 35.6% 35.0% 35.0%
---- ---- ---- ----


Depreciation and amortization 534 500 2,102 1,854

Stock compensation expense 14 11 55 48

Other operating expenses, net 20 9 62 47
--- --- --- ---


Income from operations 277 244 971 909
--- --- --- ---


OTHER EXPENSES:

Interest expense, net (273) (211) (911) (846)

Loss on extinguishment of debt - - - (123)

Gain (loss) on derivative
instruments, net (4) 2 (7) 11
--- --- --- ---

(277) (209) (918) (958)
---- ---- ---- ----


Income (loss) before income
taxes - 35 53 (49)


Income tax benefit (expense) (48) 4 (236) (120)
--- --- ---- ----


Net income (loss) $(48) $39 $(183) $(169)
==== === ===== =====


EARNINGS (LOSS) PER COMMON SHARE:

Basic $(0.44) $0.38 $(1.70) $(1.65)
====== ===== ====== ======

Diluted $(0.44) $0.35 $(1.70) $(1.65)
====== ===== ====== ======


Weighted average common shares
outstanding, basic 110,242,507 103,836,535 108,374,160 101,934,630
=========== =========== =========== ===========

Weighted average common shares
outstanding, diluted 110,242,507 111,415,982 108,374,160 101,934,630
=========== =========== =========== ===========



Adjusted EBITDA is a non-GAAP
term. See page 7 of this
addendum for the reconciliation
of adjusted EBITDA to net loss
as defined by GAAP.



All percentages are calculated
using actual amounts. Minor
differences may exist due to
rounding. Certain prior year
amounts have been reclassified
to conform with the 2014
presentation.







CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share data)


Year Ended December 31,
-----------------------

2014 2013

Actual Pro Forma (a) % Change
------ ------------ --------

REVENUES:

Video $4,443 $4,177 6.4%

Internet 2,576 2,253 14.4%

Voice 575 668 (14.2)%

Commercial 993 840 18.2%

Advertising sales 341 297 14.6%

Other 180 184 (1.7)%
--- ---

Total Revenues 9,108 8,419 8.2%
----- -----


COSTS AND EXPENSES:

Programming 2,459 2,214 11.2%

Franchises, regulatory and
connectivity 428 417 2.6%

Costs to service customers 1,675 1,613 3.7%

Marketing 529 506 4.5%

Other 827 721 14.7%
--- ---

Total operating costs and
expenses (excluding 5,918 5,471 8.2%
depreciation and amortization)



Adjusted EBITDA 3,190 2,948 8.2%
----- -----


Adjusted EBITDA margin 35.0% 35.0%
---- ----


Depreciation and amortization 2,102 1,908

Stock compensation expense 55 48

Other operating expenses, net 62 47
--- ---


Income from operations 971 945
--- ---


OTHER EXPENSES:

Interest expense, net (911) (873)

Loss on extinguishment of debt - (123)

Gain (loss) on derivative
instruments, net (7) 11
--- ---

(918) (985)
---- ----


Income (loss) before income
taxes 53 (40)


Income tax expense (236) (154)
---- ----


Net loss $(183) $(194)
===== =====


LOSS PER COMMON SHARE, BASIC AND
DILUTED: $(1.70) $(1.90)
====== ======


Weighted average common shares
outstanding, basic and diluted 108,374,160 101,934,630
=========== ===========



Adjusted EBITDA is a non-GAAP
term. See page 7 of this
addendum for the reconciliation
of adjusted EBITDA to net loss
as defined by GAAP.



All percentages are calculated
using actual amounts. Minor
differences may exist due to
rounding. Certain prior year
amounts have been reclassified
to conform with the 2014
presentation.



(a) Pro forma results reflect
certain acquisitions of cable
systems in 2013 as if they
occurred as of January 1, 2012.



December 31, 2013. Pro forma
revenues, operating expenses
and net loss increased by $264
million, $174 million and $25
million, respectively, for the
year ended December 31, 2013.




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions)


December 31, December 31,

2014 2013
---- ----


ASSETS

CURRENT ASSETS:

Cash and cash
equivalents $3 $21

Accounts
receivable,
net 285 234

Prepaid
expenses and
other current
assets 83 67
--- ---

Total current
assets 371 322
--- ---


RESTRICTED
CASH AND CASH
EQUIVALENTS 7,111 -
----- ---


INVESTMENT IN CABLE
PROPERTIES:

Property,
plant and
equipment,
net 8,373 7,981

Franchises 6,006 6,009

Customer
relationships,
net 1,105 1,389

Goodwill 1,168 1,177
----- -----

Total
investment in
cable
properties,
net 16,652 16,556
------ ------


OTHER
NONCURRENT
ASSETS 416 417
--- ---


Total assets $24,550 $17,295
======= =======


LIABILITIES AND
SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts
payable and
accrued
liabilities $1,635 $1,467


Total current
liabilities 1,635 1,467
----- -----


LONG-TERM DEBT 21,023 14,181
------ ------

DEFERRED
INCOME TAXES 1,674 1,431
----- -----

OTHER LONG-
TERM
LIABILITIES 72 65
--- ---


SHAREHOLDERS'
EQUITY 146 151
--- ---


Total
liabilities
and
shareholders'
equity $24,550 $17,295
======= =======




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)




Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------

2014 2013 2014 2013
---- ---- ---- ----

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $(48) $ 39 $(183) $(169)

Adjustments to reconcile net income (loss)
to net cash flows from operating
activities:

Depreciation and amortization 534 500 2,102 1,854

Stock compensation expense 14 11 55 48

Noncash interest expense 8 10 37 43

Loss on extinguishment of debt - - - 123

(Gain) loss on derivative
instruments, net 4 (2) 7 (11)

Deferred income taxes 56 - 233 112

Other, net 8 2 10 34

Changes in operating assets and
liabilities, net of effects from
acquisitions and dispositions:

Accounts receivable (15) - (51) 10

Prepaid expenses and other assets 12 13 (9) -

Accounts payable, accrued
liabilities and other 57 22 158 114
--- --- --- ---

Net cash flows from operating
activities 630 595 2,359 2,158
--- --- ----- -----


CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and
equipment (543) (566) (2,221) (1,825)

Change in accrued expenses
related to capital expenditures 2 55 33 76

Sales (purchases) of cable
systems, net 11 (3) 11 (676)

Restricted cash in escrow (3,598) - (7,111) -

Other, net (11) (3) (16) (18)
--- --- --- ---

Net cash flows from investing
activities (4,139) (517) (9,304) (2,443)
------ ---- ------ ------


CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings of long-term debt 3,892 213 8,806 6,782

Repayments of long-term debt (466) (343) (1,980) (6,520)

Payments for debt issuance costs (2) - (6) (50)

Purchase of treasury stock (1) (4) (19) (15)

Proceeds from exercise of options
and warrants 80 37 123 104

Other, net (1) (1) 3 (2)
--- --- --- ---

Net cash flows from financing
activities 3,502 (98) 6,927 299
----- --- ----- ---


NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (7) (20) (18) 14

CASH AND CASH EQUIVALENTS,
beginning of period 10 41 21 7
--- --- --- ---

CASH AND CASH EQUIVALENTS, end of
period $3 $ 21 $3 $21
=== === === === ===


CASH PAID FOR INTEREST $226 $ 179 $850 $763
==== === === ==== ====







CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED SUMMARY OF OPERATING STATISTICS

(in thousands, except per customer and penetration data)


Approximate as of
-----------------

December 31, September 30,
2014 (a) 2014 (a)
December 31,
2013 (a)
--------

Footprint
---------

Estimated Video Passings
(b) 12,871 12,858 12,838

Estimated Internet
Passings (b) 12,570 12,522 12,505

Estimated Voice Passings
(b) 12,079 12,014 11,934


Penetration Statistics
----------------------

Video Penetration of
Estimated Video Passings
(c) 33.4% 33.4% 33.8%

Internet Penetration of
Estimated Internet
Passings (c) 40.4% 39.6% 37.1%

Voice Penetration of
Estimated Voice Passings
(c) 21.7% 21.3% 20.3%


Residential
-----------

Residential Customer
Relationships (d) 5,841 5,768 5,561

Residential Non-Video
Customers 1,681 1,611 1,384

% Non-Video 28.8% 27.9% 24.9%


Customers
---------

Video (e) 4,160 4,157 4,177

Internet (f) 4,766 4,662 4,383

Voice (g) 2,439 2,389 2,273

Residential PSUs (h) 11,365 11,208 10,833
====== ====== ======

Residential PSU /Customer
Relationships (d)(h) 1.95 1.94 1.95


Quarterly Net Additions/(Losses) (i)
------------------------------------

Video (e) 3 (9) (2)

Internet (f) 104 94 93

Voice (g) 50 29 56

Residential PSUs (h) 157 114 147
=== === ===


Bulk Digital Upgrade Net
Additions (j) 5 20 4


Single Play Penetration
(k) 38.0% 38.1% 37.6%

Double Play Penetration
(l) 29.1% 29.3% 29.8%

Triple Play Penetration
(m) 32.8% 32.6% 32.6%

Digital Penetration (n) 98.5% 97.7% 91.8%

Monthly Residential
Revenue per Residential
Customer (d)(o) $111.52 $110.81 $108.12


Commercial
----------

Commercial Customer
Relationships (d)(p) 386 380 375


Customers
---------

Video (e)(p) 133 139 165

Internet (f) 306 294 257

Voice (g) 180 172 145

Commercial PSUs (h) 619 605 567
=== === ===


Quarterly Net Additions/(Losses) (i)
------------------------------------

Video (e)(p) (6) (15) (1)

Internet (f) 12 12 12

Voice (g) 8 8 7

Commercial PSUs (h) 14 5 18
=== === ===



All percentages are calculated
using actual amounts. Minor
differences may exist due to
rounding.



See footnotes to unaudited
summary of operating statistics
on page 6 of this addendum.



(a) We calculate the aging of customer accounts
based on the monthly billing cycle for each
account. On that basis, at December 31, 2014,
September 30, 2014 and December 31, 2013,
customers include approximately 35,100, 13,500
and 11,300 customers, respectively, whose
accounts were over 60 days, approximately
1,500, 1,200 and 800 customers, respectively,
whose accounts were over 90 days and
approximately 900, 800 and 900 customers,
respectively, whose accounts were over 120
days. The increase in aging of customer
accounts over 60 days is primarily related to
a third quarter change in our collections
policy consistent with broader cable industry
practices.


(b) "Passings" represent our estimate of the number
of units, such as single family homes,
apartment and condominium units and commercial
establishments passed by our cable
distribution network in the areas where we
offer the service indicated. These estimates
are updated for all periods presented based
upon the information available at that time.


(c) "Penetration" represents residential and
commercial customers as a percentage of
estimated passings for the service indicated.


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


(e) "Video Customers" represent those customers who
subscribe to our video services. Our
methodology for reporting residential video
customers generally excludes units under bulk
arrangements, unless those units have a
digital set-top box, thus a direct billing
relationship. As we complete our all-digital
transition, bulk units are supplied with
digital set-top boxes adding to our bulk
digital upgrade customers.


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


(g) "Voice Customers" represent those customers who
subscribe to our voice services.


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


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


(j) "Bulk Digital Upgrade Net Additions" represents
the portion of residential video net additions
that result from the addition of a digital
set-top box to a bulk unit.


(k) "Single Play Penetration" represents
residential customers receiving only one
Charter service offering, including video,
Internet or voice, as a % of residential
customer relationships.


(l) "Double Play Penetration" represents
residential customers receiving only two
Charter service offering, including video,
Internet and/or voice, as a % of residential
customer relationships.


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


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


(o) "Monthly Residential Revenue per Residential
Customer" is calculated as total residential
video, Internet and voice quarterly revenue
divided by three divided by average
residential customer relationships during the
respective quarter.


(p) Included within commercial video customers are
those in commercial structures, which are
calculated on an equivalent bulk unit ("EBU")
basis. We calculate EBUs by dividing the bulk
price charged to accounts in an area by the
published rate charged to non-bulk
residential customers in that market for the
comparable tier of service. This EBU method of
estimating video customers is consistent with
the methodology used in determining costs paid
to programmers and is consistent with the
methodology used by other multiple system
operators. As we increase our published video
rates to residential customers without a
corresponding increase in the prices charged
to commercial service customers, our EBU count
will decline even if there is no real loss in
commercial service customers. For example,
commercial video customers decreased by 18,000
during the year ended December 31, 2014 due to
a higher applicable video rate applied and
other revisions to customer reporting
methodology.




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES

(dollars in millions)


Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------

2014 2013 2014 2013

Actual Actual Actual Actual
------ ------ ------ ------


Net income (loss) $(48) $39 $(183) $(169)

Plus: Interest expense, net 273 211 911 846

Income tax (benefit) expense 48 (4) 236 120

Depreciation and amortization 534 500 2,102 1,854

Stock compensation expense 14 11 55 48

Loss on extinguishment of debt - - - 123

(Gain) loss on derivative
instruments, net 4 (2) 7 (11)

Other, net 20 9 62 47
--- --- --- ---


Adjusted EBITDA (b) 845 764 3,190 2,858

Less: Purchases of property, plant
and equipment (543) (566) (2,221) (1,825)
---- ---- ------ ------


Adjusted EBITDA less capital
expenditures $302 $198 $969 $1,033
==== ==== ==== ======


Net cash flows from operating
activities $630 $595 $2,359 $2,158

Less: Purchases of property, plant
and equipment (543) (566) (2,221) (1,825)

Change in accrued expenses related
to capital expenditures 2 55 33 76
--- --- --- ---


Free cash flow $89 $84 $171 $409
=== === ==== ====







Year Ended December 31,
-----------------------

2014 2013

Actual Pro Forma
(a)
------ ----------


Net loss $(183) $(194)

Plus: Interest expense,
net 911 873

Income tax expense 236 154

Depreciation and
amortization 2,102 1,908

Stock compensation
expense 55 48

Loss on extinguishment of
debt - 123

(Gain) loss on derivative
instruments, net 7 (11)

Other, net 62 47
--- ---


Adjusted EBITDA (b) 3,190 2,948

Less: Purchases of
property, plant and
equipment (2,221) (1,854)
------ ------


Adjusted EBITDA less
capital expenditures $969 $1,094
==== ======



(a) Pro forma results reflect
certain acquisitions of cable
systems in 2013 as if they
occurred as of January 1,
2012.



(b) See page 1 and 2 of this
addendum for detail of the
components included within
adjusted EBITDA.



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




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

CAPITAL EXPENDITURES

(dollars in millions)


Three Months Ended December
31, Year Ended December 31,
---------------------------- -----------------------

2014 2013 2014 2013

Actual Actual Actual Actual
------ ------ ------ ------


Customer premise
equipment (a) $174 $223 $1,082 $841

Scalable infrastructure
(b) 148 142 455 352

Line extensions (c) 45 57 176 219

Upgrade/Rebuild (d) 36 46 167 183

Support capital (e) 140 98 341 230
--- --- --- ---


Total capital
expenditures (f) $543 $566 $2,221 $1,825
---- ---- ------ ------









Year Ended December 31,
-----------------------

2014 2013

Actual Pro Forma
(g)
------ ----------


Customer premise equipment (a) $1,082 $854

Scalable infrastructure (b) 455 362

Line extensions (c) 176 221

Upgrade/Rebuild (d) 167 185

Support capital (e) 341 232
--- ---


Total capital expenditures (f) $2,221 $1,854
====== ======



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



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



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



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



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



(f) Total capital expenditures include
$42 million and $59 million for the
three months ended December 31, 2014
and 2013, respectively, and $410
million and $88 million for the year
ended December 31, 2014 and 2013,
respectively, related to our all-
digital transition; and $58 million
and $84 million for the three months
ended December 31, 2014 and 2013,
respectively, and $242 million and
$300 million for the year ended
December 31, 2014 and 2013,
respectively, related to commercial
services.



(g) Pro forma results reflect certain
acquisitions of cable systems in 2013
as if they occurred as of January 1,
2012.


Logo - http://photos.prnewswire.com/prnh/20110526/AQ10195LOGO





SOURCE Charter Communications, Inc.

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

CONTACT: Media: Justin Venech, 203-905-7818; Analysts: Stefan Anninger, 203-905-7955

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


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