001-33664 | 43-1857213 | |
(Commission File Number) | (I.R.S. Employer Identification Number) |
Exhibit | Description | ||
99.1 | Press Release dated February 21, 2014 * |
• | 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 and the difficult economic conditions in the United States; |
• | the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite operators, wireless broadband and telephone providers, 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 development and deployment of new products and technologies including in connection with our plan to make our systems all-digital in 2014; |
• | the effects of governmental regulation on our business or potential business combination transaction; |
• | 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; and |
• | the ultimate outcome of any possible transaction between Charter and Comcast Corporation ("Comcast") and/or Time Warner Cable Inc. ("TWC") including the possibility that Charter will not pursue any transaction; and if a transaction were to occur, the ultimate outcome and results of integrating the operations, the ultimate outcome of Charter’s pricing and packaging and operating strategy applied to the acquired systems and the ultimate ability to realize synergies. |
CHARTER COMMUNICATIONS, INC., | ||||
Registrant | ||||
By: | /s/ Kevin D. Howard | |||
Kevin D. Howard | ||||
Senior Vice President - Finance, Controller and | ||||
Date: February 21, 2014 | Chief Accounting Officer |
Exhibit | Description | ||
99.1 | Press Release dated February 21, 2014 * |
NEWS |
• | Pro forma1 for the acquisition of Bresnan, total residential customer relationships grew by 63,000 during the quarter, versus 24,000 during the fourth quarter of 2012. Residential primary service units (PSUs) increased by 147,000 during the period, versus 57,000 in the year-ago quarter. |
• | For the full year 2013, Charter added 172,000 residential customers compared to growth of 120,000 residential customers in 2012. Charter saw improved growth across every residential PSU category in 2013, adding 415,000 residential PSUs, versus a gain of 296,000 in 2012, a year-over-year improvement of 40.2%. |
• | Fourth quarter revenues of $2.1 billion grew 5.0% on a pro forma1 basis as compared to the prior-year period, or 6.2% excluding advertising, led by growth in Internet, video, and commercial revenues. Total revenues for the full year rose 5.0% on a pro forma basis. |
• | Fourth quarter residential revenues grew 4.9% on a pro forma basis versus the fourth quarter of 2012, when residential revenues grew by 2.3% on a pro forma basis. For the full year 2013, residential revenues grew by 4.7% on a pro forma basis versus 2.1% in 2012. |
• | Pro forma for the acquisition of Bresnan, commercial customer relationships grew by 16,000 in the fourth quarter of 2013, compared to a gain of 4,000 during the fourth quarter of 2012. Fourth quarter commercial revenues grew 19.4% on a pro forma basis versus the prior-year period, primarily driven by higher sales to small and medium businesses and to carrier customers. |
• | Fourth quarter Adjusted EBITDA2 grew by 2.6% year-over-year on a pro forma basis. Excluding the impact of political advertising, fourth quarter Adjusted EBITDA grew by 4.8%. |
Approximate as of | ||||||||
Actual | Pro Forma | |||||||
December 31, 2013 (a) | December 31, 2012 (a) | Y/Y Change | ||||||
Footprint | ||||||||
Estimated Video Passings (b) | 12,799 | 12,741 | — | |||||
Estimated Internet Passings (b) | 12,467 | 12,427 | — | |||||
Estimated Voice Passings (b) | 11,898 | 11,752 | 1% | |||||
Penetration Statistics | ||||||||
Video Penetration of Estimated Video Passings (c) | 33.9 | % | 35.0 | % | -1.1 ppts | |||
Internet Penetration of Estimated Internet Passings (c) | 37.2 | % | 34.4 | % | 2.8 ppts | |||
Voice Penetration of Estimated Voice Passings (c) | 20.3 | % | 18.6 | % | 1.7 ppts | |||
Residential | ||||||||
Residential Customer Relationships (d) | 5,561 | 5,389 | 3% | |||||
Residential Non-Video Customers | 1,384 | 1,103 | 25% | |||||
% Non-Video | 24.9 | % | 20.5 | % | 4.4 ppts | |||
Customers | ||||||||
Video (e) | 4,177 | 4,286 | (3)% | |||||
Internet (f) | 4,383 | 4,059 | 8% | |||||
Voice (g) | 2,273 | 2,073 | 10% | |||||
Residential PSUs (h) | 10,833 | 10,418 | 4% | |||||
Residential PSU / Customer Relationships (d)(h) | 1.95 | 1.93 | ||||||
Quarterly Net Additions/(Losses) (i) | ||||||||
Video (e) | (2) | (36) | 94% | |||||
Internet (f) | 93 | 59 | 58% | |||||
Voice (g) | 56 | 34 | 65% | |||||
Residential PSUs (h) | 147 | 57 | 158% | |||||
Single Play Penetration (j) | 37.6 | % | 37.3 | % | 0.3 ppts | |||
Double Play Penetration (k) | 29.8 | % | 32.0 | % | -2.2 ppts | |||
Triple Play Penetration (l) | 32.6 | % | 30.7 | % | 1.9 ppts | |||
Digital Penetration (m) | 91.8 | % | 86.8 | % | 5.0 ppts | |||
Revenue per Customer Relationship (d)(n) | $107.97 | $105.76 | 2% | |||||
Commercial | ||||||||
Commercial Customer Relationships (d)(o) | 375 | 341 | 10% | |||||
Customers | ||||||||
Video (e)(o) | 165 | 177 | (7)% | |||||
Internet (f) | 257 | 210 | 22% | |||||
Voice (g) | 145 | 116 | 25% | |||||
Commercial PSUs (h) | 567 | 503 | 13% | |||||
Quarterly Net Additions/(Losses) (i) | ||||||||
Video (e)(o) | (1) | (3) | 67% | |||||
Internet (f) | 12 | 8 | 50% | |||||
Voice (g) | 7 | 7 | — | |||||
Commercial PSUs (h) | 18 | 12 | 50% |
Three Months Ended December 31, | |||||||||||||||||
2013 | 2012 | 2012 | |||||||||||||||
Actual | Pro Forma | % Change | Actual | % Change | |||||||||||||
REVENUES: | |||||||||||||||||
Video | $ | 1,046 | $ | 994 | 5.2 | % | $ | 927 | 12.8 | % | |||||||
Internet | 590 | 513 | 15.0 | % | 482 | 22.4 | % | ||||||||||
Voice | 154 | 199 | (22.6 | )% | 186 | (17.2 | )% | ||||||||||
Commercial | 228 | 191 | 19.4 | % | 177 | 28.8 | % | ||||||||||
Advertising sales | 83 | 101 | (17.8 | )% | 96 | (13.5 | )% | ||||||||||
Other | 47 | 47 | — | % | 45 | 4.4 | % | ||||||||||
Total Revenues | 2,148 | 2,045 | 5.0 | % | 1,913 | 12.3 | % | ||||||||||
COSTS AND EXPENSES: | |||||||||||||||||
Total operating costs and expenses (excluding depreciation and amortization) | 1,384 | 1,300 | 6.5 | % | 1,215 | 13.9 | % | ||||||||||
Adjusted EBITDA | $ | 764 | $ | 745 | 2.6 | % | $ | 698 | 9.5 | % | |||||||
Adjusted EBITDA margin | 35.6 | % | 36.4 | % | 36.5 | % | |||||||||||
Capital Expenditures | $ | 566 | $ | 469 | $ | 449 | |||||||||||
% Total Revenues | 26.4 | % | 22.9 | % | 23.5 | % | |||||||||||
Net income (loss) | $ | 39 | $ | (73 | ) | $ | (40 | ) | |||||||||
Income (loss) per common share, basic | $ | 0.38 | $ | (0.73 | ) | $ | (0.41 | ) | |||||||||
Income (loss) per common share, diluted | $ | 0.35 | $ | (0.73 | ) | $ | (0.41 | ) | |||||||||
Net cash flows from operating activities | $ | 595 | $ | 485 | |||||||||||||
Free cash flow | $ | 84 | $ | 33 |
Year Ended December 31, 2013 | |||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Pro Forma | Pro Forma | % Change | Actual | Actual | % Change | ||||||||||||||||
REVENUES: | |||||||||||||||||||||
Video | $ | 4,167 | $ | 3,902 | 6.8 | % | $ | 4,030 | $ | 3,639 | 10.7 | % | |||||||||
Internet | 2,253 | 1,986 | 13.4 | % | 2,186 | 1,866 | 17.1 | % | |||||||||||||
Voice | 668 | 884 | (24.4 | )% | 644 | 828 | (22.2 | )% | |||||||||||||
Commercial | 850 | 711 | 19.5 | % | 822 | 658 | 24.9 | % | |||||||||||||
Advertising sales | 297 | 349 | (14.9 | )% | 291 | 334 | (12.9 | )% | |||||||||||||
Other | 184 | 185 | (0.5 | )% | 182 | 179 | 1.7 | % | |||||||||||||
Total Revenues | 8,419 | 8,017 | 5.0 | % | 8,155 | 7,504 | 8.7 | % | |||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||
Total operating costs and expenses (excluding depreciation and amortization) | 5,471 | 5,153 | 6.2 | % | 5,297 | 4,810 | 10.1 | % | |||||||||||||
Adjusted EBITDA | $ | 2,948 | $ | 2,864 | 2.9 | % | $ | 2,858 | $ | 2,694 | 6.1 | % | |||||||||
Adjusted EBITDA margin | 35.0 | % | 35.7 | % | 35.0 | % | 35.9 | % | |||||||||||||
Capital Expenditures | $ | 1,854 | $ | 1,816 | $ | 1,825 | $ | 1,745 | |||||||||||||
% Total Revenues | 22.0 | % | 22.7 | % | 22.4 | % | 23.3 | % | |||||||||||||
Net loss | $ | (194 | ) | $ | (392 | ) | $ | (169 | ) | $ | (304 | ) | |||||||||
Loss per common share, basic and diluted | $ | (1.90 | ) | $ | (3.93 | ) | $ | (1.65 | ) | $ | (3.05 | ) | |||||||||
Net cash flows from operating activities | $ | 2,158 | $ | 1,876 | |||||||||||||||||
Free cash flow | $ | 409 | $ | 144 |
Media: | Analysts: |
Justin Venech | Stefan Anninger |
203-905-7818 | 203-905-7955 |
• | 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 and the difficult economic conditions in the United States; |
• | the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite operators, wireless broadband and telephone providers, 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 development and deployment of new products and technologies, including in connection with our plan to make our systems all-digital in 2014; |
• | the effects of governmental regulation on our business or potential business combination transaction; |
• | 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; and |
• | the ultimate outcome of any possible transaction between Charter and Comcast Corporation ("Comcast") and/or Time Warner Cable Inc. ("TWC"), including the possibility that Charter will not pursue any transaction; and if a transaction were to occur, the ultimate outcome and results of integrating the operations, the ultimate outcome of Charter’s pricing and packaging and operating strategy applied to the acquired systems and the ultimate ability to realize synergies. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Actual | Actual | % Change | Actual | Actual | % Change | ||||||||||||||||
REVENUES: | |||||||||||||||||||||
Video | $ | 1,046 | $ | 927 | 12.8 | % | $ | 4,030 | $ | 3,639 | 10.7 | % | |||||||||
Internet | 590 | 482 | 22.4 | % | 2,186 | 1,866 | 17.1 | % | |||||||||||||
Voice | 154 | 186 | (17.2 | )% | 644 | 828 | (22.2 | )% | |||||||||||||
Commercial | 228 | 177 | 28.8 | % | 822 | 658 | 24.9 | % | |||||||||||||
Advertising sales | 83 | 96 | (13.5 | )% | 291 | 334 | (12.9 | )% | |||||||||||||
Other | 47 | 45 | 4.4 | % | 182 | 179 | 1.7 | % | |||||||||||||
Total Revenues | 2,148 | 1,913 | 12.3 | % | 8,155 | 7,504 | 8.7 | % | |||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||
Programming | 561 | 491 | 14.3 | % | 2,146 | 1,965 | 9.2 | % | |||||||||||||
Franchises, regulatory and connectivity | 103 | 96 | 7.3 | % | 399 | 383 | 4.2 | % | |||||||||||||
Costs to service customers | 383 | 357 | 7.3 | % | 1,514 | 1,363 | 11.1 | % | |||||||||||||
Marketing | 127 | 98 | 29.6 | % | 479 | 422 | 13.5 | % | |||||||||||||
Other | 210 | 173 | 21.4 | % | 759 | 677 | 12.1 | % | |||||||||||||
Total operating costs and expenses (excluding depreciation and amortization) | 1,384 | 1,215 | 13.9 | % | 5,297 | 4,810 | 10.1 | % | |||||||||||||
Adjusted EBITDA | 764 | 698 | 9.5 | % | 2,858 | 2,694 | 6.1 | % | |||||||||||||
Adjusted EBITDA margin | 35.6 | % | 36.5 | % | 35.0 | % | 35.9 | % | |||||||||||||
Depreciation and amortization | 500 | 466 | 1,854 | 1,713 | |||||||||||||||||
Stock compensation expense | 11 | 13 | 48 | 50 | |||||||||||||||||
Other operating expenses, net | 7 | 13 | 31 | 15 | |||||||||||||||||
Income from operations | 246 | 206 | 925 | 916 | |||||||||||||||||
OTHER INCOME (EXPENSES): | |||||||||||||||||||||
Interest expense, net | (211 | ) | (216 | ) | (846 | ) | (907 | ) | |||||||||||||
Gain (loss) on extinguishment of debt | — | 19 | (123 | ) | (55 | ) | |||||||||||||||
Gain on derivative instruments, net | 2 | — | 11 | — | |||||||||||||||||
Other expense, net | (2 | ) | — | (16 | ) | (1 | ) | ||||||||||||||
(211 | ) | (197 | ) | (974 | ) | (963 | ) | ||||||||||||||
Income (loss) before income taxes | 35 | 9 | (49 | ) | (47 | ) | |||||||||||||||
Income tax benefit (expense) | 4 | (49 | ) | (120 | ) | (257 | ) | ||||||||||||||
Net income (loss) | $ | 39 | $ | (40 | ) | $ | (169 | ) | $ | (304 | ) | ||||||||||
EARNINGS (LOSS) PER COMMON SHARE: | |||||||||||||||||||||
Basic | $ | 0.38 | $ | (0.41 | ) | $ | (1.65 | ) | $ | (3.05 | ) | ||||||||||
Diluted | $ | 0.35 | $ | (0.41 | ) | $ | (1.65 | ) | $ | (3.05 | ) | ||||||||||
Weighted average common shares outstanding, basic | 103,836,535 | 100,003,344 | 101,934,630 | 99,657,989 | |||||||||||||||||
Weighted average common shares outstanding, diluted | 111,415,982 | 100,003,344 | 101,934,630 | 99,657,989 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Actual | Pro Forma (a) | % Change | Pro Forma (a) | Pro Forma (a) | % Change | ||||||||||||||||
REVENUES: | |||||||||||||||||||||
Video | $ | 1,046 | $ | 994 | 5.2 | % | $ | 4,167 | $ | 3,902 | 6.8 | % | |||||||||
Internet | 590 | 513 | 15.0 | % | 2,253 | 1,986 | 13.4 | % | |||||||||||||
Voice | 154 | 199 | (22.6 | )% | 668 | 884 | (24.4 | )% | |||||||||||||
Commercial | 228 | 191 | 19.4 | % | 850 | 711 | 19.5 | % | |||||||||||||
Advertising sales | 83 | 101 | (17.8 | )% | 297 | 349 | (14.9 | )% | |||||||||||||
Other | 47 | 47 | — | % | 184 | 185 | (0.5 | )% | |||||||||||||
Total Revenues | 2,148 | 2,045 | 5.0 | % | 8,419 | 8,017 | 5.0 | % | |||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||
Programming | 561 | 523 | 7.3 | % | 2,214 | 2,091 | 5.9 | % | |||||||||||||
Franchises, regulatory and connectivity | 103 | 105 | (1.9 | )% | 417 | 419 | (0.5 | )% | |||||||||||||
Costs to service customers | 383 | 384 | (0.3 | )% | 1,566 | 1,472 | 6.4 | % | |||||||||||||
Marketing | 127 | 106 | 19.8 | % | 497 | 457 | 8.8 | % | |||||||||||||
Other | 210 | 182 | 15.4 | % | 777 | 714 | 8.8 | % | |||||||||||||
Total operating costs and expenses (excluding depreciation and amortization) | 1,384 | 1,300 | 6.5 | % | 5,471 | 5,153 | 6.2 | % | |||||||||||||
Adjusted EBITDA | 764 | 745 | 2.6 | % | 2,948 | 2,864 | 2.9 | % | |||||||||||||
Adjusted EBITDA margin | 35.6 | % | 36.4 | % | 35.0 | % | 35.7 | % | |||||||||||||
Depreciation and amortization | 500 | 507 | 1,908 | 1,877 | |||||||||||||||||
Stock compensation expense | 11 | 13 | 48 | 50 | |||||||||||||||||
Other operating expenses, net | 7 | 13 | 31 | 15 | |||||||||||||||||
Income from operations | 246 | 212 | 961 | 922 | |||||||||||||||||
OTHER INCOME (EXPENSES): | |||||||||||||||||||||
Interest expense, net | (211 | ) | (229 | ) | (873 | ) | (960 | ) | |||||||||||||
Gain (loss) on extinguishment of debt | — | 19 | (123 | ) | (55 | ) | |||||||||||||||
Gain on derivative instruments, net | 2 | — | 11 | — | |||||||||||||||||
Other expense, net | (2 | ) | — | (16 | ) | (1 | ) | ||||||||||||||
(211 | ) | (210 | ) | (1,001 | ) | (1,016 | ) | ||||||||||||||
Income (loss) before income taxes | 35 | 2 | (40 | ) | (94 | ) | |||||||||||||||
Income tax benefit (expense) | 4 | (75 | ) | (154 | ) | (298 | ) | ||||||||||||||
Net income (loss) | $ | 39 | $ | (73 | ) | $ | (194 | ) | $ | (392 | ) | ||||||||||
EARNINGS (LOSS) PER COMMON SHARE: | |||||||||||||||||||||
Basic | $ | 0.38 | $ | (0.73 | ) | $ | (1.90 | ) | $ | (3.93 | ) | ||||||||||
Diluted | $ | 0.35 | $ | (0.73 | ) | $ | (1.90 | ) | $ | (3.93 | ) | ||||||||||
Weighted average common shares outstanding, basic | 103,836,535 | 100,003,344 | 101,934,630 | 99,657,989 | |||||||||||||||||
Weighted average common shares outstanding, diluted | 111,415,982 | 100,003,344 | 101,934,630 | 99,657,989 |
December 31, | |||||||
2013 | 2012 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 21 | $ | 7 | |||
Restricted cash and cash equivalents | — | 27 | |||||
Accounts receivable, net | 234 | 234 | |||||
Prepaid expenses and other current assets | 67 | 62 | |||||
Total current assets | 322 | 330 | |||||
INVESTMENT IN CABLE PROPERTIES: | |||||||
Property, plant and equipment, net | 7,981 | 7,206 | |||||
Franchises | 6,009 | 5,287 | |||||
Customer relationships, net | 1,389 | 1,424 | |||||
Goodwill | 1,177 | 953 | |||||
Total investment in cable properties, net | 16,556 | 14,870 | |||||
OTHER NONCURRENT ASSETS | 417 | 396 | |||||
Total assets | $ | 17,295 | $ | 15,596 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES: | |||||||
Accounts payable and accrued liabilities | $ | 1,467 | $ | 1,224 | |||
Total current liabilities | 1,467 | 1,224 | |||||
LONG-TERM DEBT | 14,181 | 12,808 | |||||
DEFERRED INCOME TAXES | 1,431 | 1,321 | |||||
OTHER LONG-TERM LIABILITIES | 65 | 94 | |||||
SHAREHOLDERS’ EQUITY | 151 | 149 | |||||
Total liabilities and shareholders’ equity | $ | 17,295 | $ | 15,596 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||
Net income (loss) | $ | 39 | $ | (40 | ) | $ | (169 | ) | $ | (304 | ) | ||||
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | |||||||||||||||
Depreciation and amortization | 500 | 466 | 1,854 | 1,713 | |||||||||||
Stock compensation expense | 11 | 13 | 48 | 50 | |||||||||||
Noncash interest expense | 10 | 12 | 43 | 45 | |||||||||||
(Gain) loss on extinguishment of debt | — | (19 | ) | 123 | 55 | ||||||||||
Gain on derivative instruments, net | (2 | ) | — | (11 | ) | — | |||||||||
Deferred income taxes | — | 47 | 112 | 250 | |||||||||||
Other, net | 2 | 7 | 34 | (5 | ) | ||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||||||
Accounts receivable | — | 16 | 10 | 34 | |||||||||||
Prepaid expenses and other assets | 13 | 4 | — | (8 | ) | ||||||||||
Accounts payable, accrued liabilities and other | 22 | (21 | ) | 114 | 46 | ||||||||||
Net cash flows from operating activities | 595 | 485 | 2,158 | 1,876 | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||
Purchases of property, plant and equipment | (566 | ) | (449 | ) | (1,825 | ) | (1,745 | ) | |||||||
Change in accrued expenses related to capital expenditures | 55 | (3 | ) | 76 | 13 | ||||||||||
Sales (purchases) of cable systems, net | (3 | ) | — | (676 | ) | 19 | |||||||||
Other, net | (3 | ) | (6 | ) | (18 | ) | (24 | ) | |||||||
Net cash flows from investing activities | (517 | ) | (458 | ) | (2,443 | ) | (1,737 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||
Borrowings of long-term debt | 213 | 1,477 | 6,782 | 5,830 | |||||||||||
Repayments of long-term debt | (343 | ) | (2,347 | ) | (6,520 | ) | (5,901 | ) | |||||||
Payments for debt issuance costs | — | (12 | ) | (50 | ) | (53 | ) | ||||||||
Purchase of treasury stock | (4 | ) | (7 | ) | (15 | ) | (11 | ) | |||||||
Proceeds from exercise of options and warrants | 37 | 2 | 104 | 15 | |||||||||||
Other, net | (1 | ) | (1 | ) | (2 | ) | (14 | ) | |||||||
Net cash flows from financing activities | (98 | ) | (888 | ) | 299 | (134 | ) | ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (20 | ) | (861 | ) | 14 | 5 | |||||||||
CASH AND CASH EQUIVALENTS, beginning of period | 41 | 868 | 7 | 2 | |||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 21 | $ | 7 | $ | 21 | $ | 7 | |||||||
CASH PAID FOR INTEREST | $ | 179 | $ | 257 | $ | 763 | $ | 904 |
Approximate as of | |||||||||||
Actual | Pro Forma | ||||||||||
December 31, 2013 (a) | September 30, 2013 (a) | December 31, 2012 (a) | |||||||||
Footprint | |||||||||||
Estimated Video Passings (b) | 12,799 | 12,794 | 12,741 | ||||||||
Estimated Internet Passings (b) | 12,467 | 12,475 | 12,427 | ||||||||
Estimated Voice Passings (b) | 11,898 | 11,815 | 11,752 | ||||||||
Penetration Statistics | |||||||||||
Video Penetration of Estimated Video Passings (c) | 33.9 | % | 34.0 | % | 35.0 | % | |||||
Internet Penetration of Estimated Internet Passings (c) | 37.2 | % | 36.4 | % | 34.4 | % | |||||
Voice Penetration of Estimated Voice Passings (c) | 20.3 | % | 19.9 | % | 18.6 | % | |||||
Residential | |||||||||||
Residential Customer Relationships (d) | 5,561 | 5,498 | 5,389 | ||||||||
Residential Non-Video Customers | 1,384 | 1,319 | 1,103 | ||||||||
% Non-Video | 24.9 | % | 24.0 | % | 20.5 | % | |||||
Customers | |||||||||||
Video (e) | 4,177 | 4,179 | 4,286 | ||||||||
Internet (f) | 4,383 | 4,290 | 4,059 | ||||||||
Voice (g) | 2,273 | 2,217 | 2,073 | ||||||||
Residential PSUs (h) | 10,833 | 10,686 | 10,418 | ||||||||
Residential PSU / Customer Relationships (d)(h) | 1.95 | 1.94 | 1.93 | ||||||||
Quarterly Net Additions/(Losses) (i) | |||||||||||
Video (e) | (2 | ) | (27 | ) | (36 | ) | |||||
Internet (f) | 93 | 86 | 59 | ||||||||
Voice (g) | 56 | 41 | 34 | ||||||||
Residential PSUs (h) | 147 | 100 | 57 | ||||||||
Single Play Penetration (j) | 37.6 | % | 37.7 | % | 37.3 | % | |||||
Double Play Penetration (k) | 29.8 | % | 30.2 | % | 32.0 | % | |||||
Triple Play Penetration (l) | 32.6 | % | 32.2 | % | 30.7 | % | |||||
Digital Penetration (m) | 91.8 | % | 91.2 | % | 86.8 | % | |||||
Revenue per Customer Relationship (d)(n) | $ | 107.97 | $ | 108.52 | $ | 105.76 | |||||
Commercial | |||||||||||
Commercial Customer Relationships (d)(o) | 375 | 359 | 341 | ||||||||
Customers | |||||||||||
Video (e)(o) | 165 | 166 | 177 | ||||||||
Internet (f) | 257 | 245 | 210 | ||||||||
Voice (g) | 145 | 138 | 116 | ||||||||
Commercial PSUs (h) | 567 | 549 | 503 | ||||||||
Quarterly Net Additions/(Losses) (i) | |||||||||||
Video (e)(o) | (1 | ) | 2 | (3 | ) | ||||||
Internet (f) | 12 | 12 | 8 | ||||||||
Voice (g) | 7 | 7 | 7 | ||||||||
Commercial PSUs (h) | 18 | 21 | 12 |
(a) | We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, at December 31, 2013, September 30, 2013 and December 31, 2012, customers include approximately 11,300, 9,700 and 18,400 customers, respectively, whose accounts were over 60 days past due in payment, approximately 800, 1,000 and 2,600 customers, respectively, whose accounts were over 90 days past due in payment and approximately 900, 900 and 1,700 customers, respectively, whose accounts were over 120 days past due in payment. |
(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 (o)) and non-video commercial customer relationships. |
(e) | "Video Customers” represent those customers who subscribe to our video services. |
(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) | "Single Play Penetration" represents residential customers receiving only one Charter service offering, including video, Internet or voice, as a % of residential customer relationships. |
(k) | "Double Play Penetration" represents residential customers receiving only two Charter service offering, including video, Internet and/or voice, as a % of residential customer relationships. |
(l) | "Triple Play Penetration" represents residential customers receiving all three Charter service offerings, including video, Internet and voice, as a % of residential customer relationships. |
(m) | "Digital Penetration" represents the number of residential digital video customers as a percentage of residential video customers. |
(n) | "Revenue per Customer Relationship" is calculated as total residential video, Internet and voice quarterly revenue divided by three divided by average 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 basic 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 10,000 during the year ended December 31, 2013 due to published video rate increases. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Actual | Actual | Actual | Actual | ||||||||||||
Net income (loss) | $ | 39 | $ | (40 | ) | $ | (169 | ) | $ | (304 | ) | ||||
Plus: Interest expense, net | 211 | 216 | 846 | 907 | |||||||||||
Income tax (benefit) expense | (4 | ) | 49 | 120 | 257 | ||||||||||
Depreciation and amortization | 500 | 466 | 1,854 | 1,713 | |||||||||||
Stock compensation expense | 11 | 13 | 48 | 50 | |||||||||||
(Gain) loss on extinguishment of debt | — | (19 | ) | 123 | 55 | ||||||||||
Gain on derivative instruments, net | (2 | ) | — | (11 | ) | — | |||||||||
Other, net | 9 | 13 | 47 | 16 | |||||||||||
Adjusted EBITDA (b) | 764 | 698 | 2,858 | 2,694 | |||||||||||
Less: Purchases of property, plant and equipment | (566 | ) | (449 | ) | (1,825 | ) | (1,745 | ) | |||||||
Adjusted EBITDA less capital expenditures | $ | 198 | $ | 249 | $ | 1,033 | $ | 949 | |||||||
Net cash flows from operating activities | $ | 595 | $ | 485 | $ | 2,158 | $ | 1,876 | |||||||
Less: Purchases of property, plant and equipment | (566 | ) | (449 | ) | (1,825 | ) | (1,745 | ) | |||||||
Change in accrued expenses related to capital expenditures | 55 | (3 | ) | 76 | 13 | ||||||||||
Free cash flow | $ | 84 | $ | 33 | $ | 409 | $ | 144 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Actual | Pro Forma (a) | Pro Forma (a) | Pro Forma (a) | ||||||||||||
Net income (loss) | $ | 39 | $ | (73 | ) | $ | (194 | ) | $ | (392 | ) | ||||
Plus: Interest expense, net | 211 | 229 | 873 | 960 | |||||||||||
Income tax (benefit) expense | (4 | ) | 75 | 154 | 298 | ||||||||||
Depreciation and amortization | 500 | 507 | 1,908 | 1,877 | |||||||||||
Stock compensation expense | 11 | 13 | 48 | 50 | |||||||||||
(Gain) loss on extinguishment of debt | — | (19 | ) | 123 | 55 | ||||||||||
Gain on derivative instruments, net | (2 | ) | — | (11 | ) | — | |||||||||
Other, net | 9 | 13 | 47 | 16 | |||||||||||
Adjusted EBITDA (b) | 764 | 745 | 2,948 | 2,864 | |||||||||||
Less: Purchases of property, plant and equipment | (566 | ) | (469 | ) | (1,854 | ) | (1,816 | ) | |||||||
Adjusted EBITDA less capital expenditures | $ | 198 | $ | 276 | $ | 1,094 | $ | 1,048 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Actual | Actual | Actual | Actual | ||||||||||||
Customer premise equipment (a) | $ | 223 | $ | 164 | $ | 841 | $ | 795 | |||||||
Scalable infrastructure (b) | 142 | 86 | 352 | 387 | |||||||||||
Line extensions (c) | 57 | 61 | 219 | 192 | |||||||||||
Upgrade/Rebuild (d) | 46 | 74 | 183 | 212 | |||||||||||
Support capital (e) | 98 | 64 | 230 | 159 | |||||||||||
Total capital expenditures (f) | $ | 566 | $ | 449 | $ | 1,825 | $ | 1,745 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Actual | Pro Forma (g) | Pro Forma (g) | Pro Forma (g) | ||||||||||||
Customer premise equipment (a) | $ | 223 | $ | 169 | $ | 854 | $ | 826 | |||||||
Scalable infrastructure (b) | 142 | 92 | 362 | 407 | |||||||||||
Line extensions (c) | 57 | 62 | 221 | 196 | |||||||||||
Upgrade/Rebuild (d) | 46 | 78 | 185 | 220 | |||||||||||
Support capital (e) | 98 | 68 | 232 | 167 | |||||||||||
Total capital expenditures | $ | 566 | $ | 469 | $ | 1,854 | $ | 1,816 |
(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 $98 million and $88 million for the three months ended December 31, 2013 and 2012, respectively, and $319 million and $269 million for the year months ended December 31, 2013 and 2012, respectively, of capital expenditures related to commercial services. |
(g) | Pro forma results reflect certain acquisitions of cable systems in 2013 as if they occurred as of January 1, 2012. |
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