Charter Announces Fourth Quarter and Full Year 2012 Results

Charter Announces Fourth Quarter and Full Year 2012 Results

Progress on New Operating Strategies Delivers Results

STAMFORD, Conn., Feb. 22, 2013 /PRNewswire/ -- Charter Communications, Inc. (Nasdaq: CHTR) (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and twelve months ended December 31, 2012.

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

Key highlights:


-- Fourth quarter 2012 residential customer relationships increased by
20,000, a four-fold increase over the fourth quarter of 2011.
Residential customer relationships grew by 108,000 in 2012, compared to
a loss of 20,000 in 2011.
-- Revenues grew to $1.913 billion in the fourth quarter of 2012, up 4.3%
as compared to the prior-year period, driven by growth in Internet and
commercial customers, and higher sales of video and advertising. Total
revenues for the full year rose 3.9% on a pro forma(1) basis and 4.2% on
an actual basis.
-- Residential Internet revenues rose 9.0% in the fourth quarter, compared
to the year-ago quarter as Charter added 293,000 Internet customers over
the past twelve months, 28% more than in 2011.
-- Commercial revenues grew 20.4% in the fourth quarter, supported by
growth across all segments, marking the seventh consecutive quarter of
growth in excess of 20%. Full year commercial revenues increased 20.7%
on a pro forma basis and 21.0% on an actual basis.
-- Adjusted EBITDA(2) for the fourth quarter increased to $698 million, up
1.7% compared to prior year. Fourth quarter net loss totaled $40
million, compared to $67 million in the comparable prior-year period.
-- Free cash flow(2 )for the quarter was $33 million and net cash flows
from operating activities totaled $485 million. Free cash flow for the
year was $144 million and cash flows from operating activities were
$1.876 billion.
"Our fourth quarter results provide early evidence that our strategic changes are working as planned," said Tom Rutledge, Charter President and CEO. "We are providing a more competitive product and service, and as a result, customer relationships are growing and underlying subscription revenue is accelerating. Across both our residential and commercial businesses, our strategies are designed to drive higher market penetration and sustainable growth."


(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
-----------------
December 31, 2012 (a) December 31, 2011 (a) Y/Y Change
-------------------- -------------------- ----------
Footprint
---------
Estimated Video
Passings (b) 12,112 12,013 1%
Estimated Internet
Passings (b) 11,810 11,692 1%
Estimated Telephone
Passings (b) 11,139 10,891 2%

Penetration Statistics
----------------------
Video Penetration of
Estimated Video
Passings (c) 34.3% 35.9% -1.6 ppts
Internet Penetration of
Estimated Internet
Passings (c) 33.7% 31.3% 2.4 ppts
Telephone Penetration
of Estimated Telephone
Passings (c) 18.1% 17.2% 0.9 ppts

Residential
-----------
Residential Customer
Relationships (d) 5,035 4,927 2%
Residential Non-Video
Customers 1,046 783 34%
% Non-Video 20.8% 15.9% 4.9 ppts

Customers
---------
Video (e) 3,989 4,144 -4%
Internet (f) 3,785 3,492 8%
Telephone (g) 1,914 1,791 7%
Residential PSUs (h) 9,688 9,427 3%
Residential PSU /
Customer Relationships
(d)(h) 1.92 1.91

Quarterly Net
Additions/(Losses)
(i)
-------------------
Video (e) (36) (44) 18%
Internet (f) 54 68 -21%
Telephone (g) 34 27 26%
Residential PSUs (h) 52 51 2%

Single Play Penetration
(j) 37.6% 37.7% -0.1 ppts
Double Play Penetration
(k) 32.5% 33.2% -0.7 ppts
Triple Play Penetration
(l) 29.9% 29.1% 0.8 ppts
Digital Penetration (m) 86.9% 82.0% 4.9 ppts

Revenue per Customer
Relationship (n) $105.78 $105.73 -

Commercial
----------
Commercial Customer
Relationships (d)(o) 325 298 9%

Customers
---------
Video (o) 169 170 -1%
Internet (f) 193 163 18%
Telephone (g) 105 79 33%
Commercial PSUs (h) 467 412 13%

Quarterly Net
Additions/(Losses)
(i)
-------------------
Video (o) (3) (3) -
Internet (f) 7 7 -
Telephone (g) 6 5 20%
Commercial PSUs (h) 10 9 11%




Footnotes
---------

In thousands, except ARPU
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.
During 2012, we implemented several new operating strategies to further position Charter for growth. We made significant progress in enhancing our product set and changing the way we do business to better serve our customers. At mid-year 2012, we implemented new pricing and packaging of our residential offerings and revamped our go-to-market approach, both designed to increase the penetration of our products and to produce a higher quality, longer-term relationship with our customers. As a result of these new operating strategies, in the second half of 2012, we grew our triple play penetration by 110 basis points, from 28.8% to 29.9%. This compares to an increase of 40 basis points in the second half of 2011.

In the fourth quarter of 2012, we grew residential customer relationships 20,000, up from a gain of 5,000 in the fourth quarter last year. Residential PSUs increased by 52,000, in line with the gain in the year-ago quarter. We added 4,000 commercial customer relationships in the fourth quarter of 2012 compared to 3,000 in the prior-year quarter.

Residential video customers decreased by 36,000 in the fourth quarter of 2012, 18% better than the decline of 44,000 last year. In 2011, we lost 192,000 expanded basic video customers and in 2012, we reduced that loss to 12,000. The year-over-year improvement was driven by a combination of factors including our enhanced video product, which now includes over 100 HD channels, and the transition to new selling methods.

We added 54,000 residential Internet customers in the fourth quarter of 2012 compared to 68,000 a year ago. With our new pricing and packing, we no longer offered deeply discounted standalone offers as compared to the fourth quarter of 2011, when we actively marketed a $19.99 promotional offer for Internet service, as well as a low-priced double play Internet and phone offer.

Fourth quarter residential revenue per customer relationship totaled $105.78, up slightly from $105.73 in 2011, reflecting better product sell-in offset by entry-level pricing.



Fourth 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 December 31,
-------------------------------
2012 2011
Actual Actual % Change
------ ------ --------
REVENUES:
Video $927 $902 2.8%
Internet 482 442 9.0%
Telephone 186 217 (14.3)%
Commercial 177 147 20.4%
Advertising
sales 96 81 18.5%
Other 45 45 -%

Total
Revenues 1,913 1,834 4.3%
----- -----

COSTS AND EXPENSES:
Total
operating
costs and
expenses
(excluding
depreciation
and
amortization) 1,215 1,148 5.8%
----- -----

Adjusted
EBITDA $698 $686 1.7%
==== ====

Adjusted
EBITDA
margin 36.5% 37.4%

Capital
Expenditures $449 $327
% Total
Revenues 23.5% 17.8%

Net loss $(40) $(67)
Loss per
common
share,
basic and
diluted $(0.41) $(0.63)

Net cash
flows from
operating
activities $485 $425
Free cash
flow $33 $166


Revenue

Fourth quarter 2012 revenues were $1.913 billion, up 4.3% compared to the year-ago quarter, due to growth in video, Internet, commercial and advertising revenues.

Video revenues totaled $927 million in the fourth quarter, an increase of 2.8% compared to the prior-year period. Video revenue growth was driven by price increases and higher sales of DVR and HD services, partially offset by a decrease in residential video customers.

Internet revenues grew 9.0% compared to the year-ago quarter to $482 million, driven by an 8.4% increase in our Internet customer base. Telephone revenues totaled $186 million, down 14.3% over fourth quarter 2011 due to value-based pricing and revenue allocation in multi-product packages, partially offset by the addition of 123,000 phone customers in the last twelve months.

With 20.4% year-over-year growth, commercial revenues rose to $177 million, reflecting higher sales to small and medium businesses and carrier customers.

Fourth quarter advertising sales revenues of $96 million increased 18.5% compared to the year-ago quarter, and benefited from the November political election and from strength in the automotive sector.

Operating Costs and Expenses

Fourth quarter total operating costs and expenses increased 5.8% compared to the year-ago period, reflecting increases in programming expenses and costs to service customers. Fourth quarter programming expenses increased $26 million year-over-year, reflecting contractual programming increases, partially offset by customer losses. Costs to service our customers increased during the fourth quarter of 2012 primarily from greater spending on preventive maintenance.

Adjusted EBITDA

Fourth quarter adjusted EBITDA of $698 million increased 1.7% compared to the year-ago quarter. Adjusted EBITDA margin declined to 36.5% for the fourth quarter of 2012 compared to 37.4% in the year-ago quarter.

Net Loss

Net loss totaled $40 million in the fourth quarter of 2012, an improvement compared to $67 million in the year-ago period. Our net loss improvement reflects our lower interest expense and a gain realized on the extinguishment of debt in the fourth quarter of 2012, partly offset by higher depreciation and amortization. Net loss per common share was $0.41 in the fourth quarter of 2012 compared to $0.63 during the same period last year. The decrease is a result of our lower net loss in the fourth quarter of 2012, partially offset by a decrease in our weighted average shares outstanding as a result of share repurchases in 2011.

Capital Expenditures

Property, plant and equipment expenditures were $449 million in the fourth quarter of 2012, compared to $327 million in 2011. The increase was primarily driven by investments in customer premise equipment ("CPE"), upgrade and rebuild, commercial growth and support capital. The CPE expenditures included higher set-top box placement in new and existing customer homes. During the quarter we also completed higher levels of plant replacement in select regions of Charter's network that have historically performed below the rest of our systems. Support capital expenditures increased due to fleet replacement and real estate expenditures related to our organizational realignment.

Cash Flow

During the fourth quarter of 2012, net cash flows from operating activities totaled $485 million, compared to $425 million in the fourth quarter of 2011. The increase in net cash flows from operating activities was primarily driven by the timing of trade working capital and an increase in adjusted EBITDA.

Free cash flow for the fourth quarter of 2012 was $33 million, compared to $166 million during the same period last year. The decrease was primarily the result of higher capital expenditures.

In the fourth quarter of 2012, Charter redeemed the remaining $1.1 billion of 13.5% senior notes due 2016 and repaid $750 million of bank debt. Charter also issued $1.0 billion of 5.125% senior unsecured notes due 2023 in the fourth quarter of 2012.





Year to Date Financial Results

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

Year Ended December 31,
-----------------------
2012 2011 2011
Actual Pro forma % Change Actual % Change
------ --------- -------- ------ --------
REVENUES:
Video $3,639 $3,652 (0.4)% $3,639 -%
Internet 1,866 1,713 8.9% 1,708 9.3%
Telephone 828 859 (3.6)% 858 (3.5)%
Commercial 658 545 20.7% 544 21.0%
Advertising sales 334 292 14.4% 292 14.4%
Other 179 163 9.8% 163 9.8%

Total Revenues 7,504 7,224 3.9% 7,204 4.2%
----- ----- -----

COSTS AND EXPENSES:
Total operating costs
and expenses
(excluding
depreciation and
amortization) 4,810 4,544 5.9% 4,529 6.2%
----- ----- -----

Adjusted EBITDA $2,694 $2,680 0.5% $2,675 0.7%
====== ====== ======

Adjusted EBITDA margin 35.9% 37.1% 37.1%

Capital Expenditures $1,745 $1,311 $1,311
% Total Revenues 23.3% 18.1% 18.2%

Net loss $(304) $(370) $(369)
Loss per common share,
basic and diluted $(3.05) $(3.39) $(3.39)

Net cash flows from
operating activities $1,876 $1,742 $1,737
Free cash flow $144 $488 $483


Revenue

For the year ended December 31, 2012, revenues rose to $7.504 billion, up 3.9% on a pro forma basis, and 4.2% on an actual basis, compared to the prior year. We continued to grow our Internet and commercial businesses, and advertising was supported by a political election year and strength in the automotive segment.

Operating Costs and Expenses

Operating costs and expenses totaled $4.810 billion in 2012, an increase of 5.9% on a pro forma basis, and 6.2% on an actual basis compared to 2011, due to higher programming costs, increased maintenance and marketing expenses, increased service labor costs, and higher costs associated with growing our commercial business.

Adjusted EBITDA

Adjusted EBITDA was $2.694 billion for the year ended December 31, 2012, an increase of 0.5% compared to 2011 on a pro forma basis, and 0.7% on an actual basis. Charter's adjusted EBITDA margin declined to 35.9% in 2012 compared to anadjusted EBITDA margin of 37.1% on a pro forma and actual basis in 2011.

Net Loss

For the year ended December 31, 2012, net loss was $304 million, compared to $370 million on a pro forma basis, and $369 million on an actual basis for the same period last year. Net loss per common share was $3.05 for the year ended December 31, 2012, compared to $3.39 on a pro forma and actual basis during the same period last year.

Capital Expenditures

Property, plant and equipment expenditures for the year ended December 31, 2012, totaled $1.745 billion, compared to $1.311 billion in the same period last year. The increase related to higher residential and commercial customer growth as well as higher set-top box placement in existing homes, investments in plant to improve service reliability, and expenditures for fleet replacement and real estate related to our organizational realignment.

In 2013, we expect capital expenditures to be approximately $1.7 billion, excluding the impact of acquisitions. We anticipate 2013 capital expenditures to be driven by the deployment of additional set-top boxes in new and existing customer homes, growth in our commercial business, and further spend related to plant reliability, back-office support and our organizational realignment. The actual amount of our capital expenditures will depend on a number of factors including the growth rates of both our residential and commercial businesses, and the pace at which we progress to all-digital transmission.

Cash Flow

Net cash flows from operating activities were $1.876 billion, compared to $1.742 billion on a pro forma basis and $1.737 billion on an actual basis in 2011.

Free cash flow for the year ended December 31, 2012 was $144 million, compared to $488 million on a pro forma basis and $483 million on an actual basis in the same period last year. The decrease in free cash flow was primarily due to an increase in capital expenditures partially offset by higher cash flow from operating activities.

Liquidity

Total principal amount of debt was approximately $12.9 billion as of December 31, 2012. At the end of the year, we had $7 million of cash and cash equivalents, $27 million of restricted cash and cash equivalents, and our credit facilities provided us with approximately $960 million of available liquidity.

Conference Call

Charter will host a conference call on Friday, February 22, 2013 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 83494589.

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 21, 2013. The conference ID code for the replay is 83494589.

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 year ended December 31, 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, (gain) 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 $49 million and $41 million for the three months ended December 31, 2012 and 2011, respectively, and $191 million and $151 million for the year ended December 31, 2012 and 2011, respectively.

In addition to the actual results for the three and twelve months ended December 31, 2012 and 2011, we have provided pro forma results in this release for the twelve months ended December 31, 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 twelve months ended December 31, 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 cash flow from operations
by offering video, Internet, telephone, advertising and other services
to residential and commercial customers, to adequately meet the customer
experience demands in our markets and to maintain and grow our customer
base, particularly in the face of increasingly aggressive competition,
the need for innovation and the related capital expenditures and the
difficult economic conditions in the United States;
-- the impact of competition from other market participants, including but
not limited to incumbent telephone companies, direct broadcast satellite
operators, wireless broadband and telephone providers, 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;
-- 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 December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
Actual Actual % Change Actual Actual % Change
------ ------ -------- ------ ------ --------
REVENUES:
Video $927 $902 2.8 % $3,639 $3,639 -%
Internet 482 442 9.0 % 1,866 1,708 9.3 %
Telephone 186 217 (14.3)% 828 858 (3.5)%
Commercial 177 147 20.4 % 658 544 21.0 %
Advertising sales 96 81 18.5 % 334 292 14.4 %
Other 45 45 -% 179 163 9.8 %
--- --- --- ---
Total Revenues 1,913 1,834 4.3 % 7,504 7,204 4.2 %
----- ----- ----- -----

COSTS AND EXPENSES:
Programming 495 469 5.5 % 1,979 1,872 5.7 %
Franchises, regulatory
and connectivity 92 90 2.2 % 369 359 2.8 %
Costs to service
customers 357 325 9.8 % 1,363 1,268 7.5 %
Marketing 98 96 2.1 % 422 387 9.0 %
Other 173 168 3.0 % 677 643 5.3 %
--- --- --- ---
Total operating costs
and expenses (excluding
depreciation and
amortization) 1,215 1,148 5.8 % 4,810 4,529 6.2 %
----- ----- ----- -----

Adjusted EBITDA 698 686 1.7 % 2,694 2,675 0.7 %
--- --- ----- -----

Adjusted EBITDA margin 36.5 % 37.4 % 35.9 % 37.1 %
----- ----- ----- -----

Depreciation and
amortization 466 411 1,713 1,592
Stock compensation
expense 13 10 50 35
Other operating
expenses, net 13 - 15 7
--- --- --- ---

Income from operations 206 265 916 1,041
--- --- --- -----

OTHER EXPENSES:
Interest expense, net (216) (245) (907) (963)
Gain (loss) on
extinguishment of debt 19 (19) (55) (143)
Other expense, net - (1) (1) (5)
--- --- --- ---
(197) (265) (963) (1,111)
---- ---- ---- ------

Income (loss) before
income taxes 9 - (47) (70)

Income tax expense (49) (67) (257) (299)
--- --- ---- ----

Net loss $(40) $(67) $(304) $(369)
==== ==== ===== =====

LOSS PER COMMON SHARE,
BASIC AND DILUTED: $(0.41) $(0.63) $(3.05) $(3.39)
====== ====== ====== ======

Weighted average common
shares outstanding,
basic and diluted 100,003,344 105,503,936 99,657,989 108,948,554
=========== =========== ========== ===========




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 and
marketing expense to include
residential and commercial
labor.

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)

Year Ended December 31,
-----------------------
2012 2011
Actual Pro Forma (a) % Change
------ ------------ --------
REVENUES:
Video $3,639 $3,652 (0.4)%
Internet 1,866 1,713 8.9 %
Telephone 828 859 (3.6)%
Commercial 658 545 20.7 %
Advertising
sales 334 292 14.4 %
Other 179 163 9.8 %
--- ---
Total
Revenues 7,504 7,224 3.9 %
----- -----

COSTS
AND
EXPENSES:
Programming 1,979 1,879 5.3 %
Franchises,
regulatory
and
connectivity 369 361 2.2 %
Costs
to
service
customers 1,363 1,273 7.1 %
Marketing 422 388 8.8 %
Other 677 643 5.3 %
--- ---
Total
operating
costs
and
expenses
excluding
depreciation
and
amortization) 4,810 4,544 5.9 %
----- -----

Adjusted
EBITDA 2,694 2,680 0.5 %
----- -----

Adjusted
EBITDA
margin 35.9 % 37.1 %
----- -----

Depreciation
and
amortization 1,713 1,598
Stock
compensation
expense 50 35
Other
operating
expenses,
net 15 7
--- ---

Income
from
operations 916 1,040
--- -----

OTHER
EXPENSES:
Interest
expense,
net (907) (963)
Loss
on
extinguishment
of
debt (55) (143)
Other
expense,
net (1) (5)
--- ---
(963) (1,111)
---- ------

Loss
before
income
taxes (47) (71)

Income
tax
expense (257) (299)
---- ----

Net
loss $(304) $(370)
===== =====

LOSS
PER
COMMON
SHARE,
BASIC
AND
DILUTED: $(3.05) $(3.39)
====== ======

Weighted
average
common
shares
outstanding,
basic
and
diluted 99,657,989 108,948,554
========== ===========



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

Pro forma revenues, operating costs and
expenses and net loss increased by $20
million, $15 million and $1 million,
respectively, for the year ended
December 31, 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 and
marketing expense to include residential
and commercial labor.

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)

December 31,
------------
2012 2011
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $7 $2
Restricted cash and cash equivalents 27 27
Accounts receivable, net 234 268
Prepaid expenses and other current assets 65 60
--- ---
Total current assets 333 357
--- ---

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net 7,206 6,897
Franchises 5,287 5,288
Customer relationships, net 1,424 1,704
Goodwill 953 954
--- ---
Total investment in cable properties, net 14,870 14,843
------ ------

OTHER NONCURRENT ASSETS 396 401
--- ---

Total assets $15,599 $15,601
======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $1,224 $1,157
------
Total current liabilities 1,224 1,157
----- -----

LONG-TERM DEBT 12,808 12,856
------ ------
DEFERRED INCOME TAXES 1,122 847
----- ---
OTHER LONG-TERM LIABILITIES 296 332
--- ---

SHAREHOLDERS' EQUITY 149 409
--- ---

Total liabilities and shareholders' equity $15,599 $15,601
======= =======






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

Three Months Ended
December 31, Year Ended December 31,
------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(40) $(67) $(304) $(369)
Adjustments to reconcile net
loss to net cash flows from
operating activities:
Depreciation and amortization 466 411 1,713 1,592
Noncash interest expense 12 7 45 34
(Gain) loss on extinguishment
of debt (19) 19 55 143
Deferred income taxes 47 65 250 290
Other, net 20 7 45 33
Changes in operating assets and
liabilities, net of effects
from acquisitions and
dispositions:
Accounts receivable 16 (19) 34 (24)
Prepaid expenses and other
assets 4 5 (8) 1
Accounts payable, accrued
liabilities and other (21) (3) 46 37
--- --- --- ---
Net cash flows from operating
activities 485 425 1,876 1,737
--- --- ----- -----

CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant
and equipment (449) (327) (1,745) (1,311)
Change in accrued expenses
related to capital
expenditures (3) 68 13 57
Sales (purchases) of cable
systems, net - - 19 (88)
Other, net (6) (4) (24) (24)
--- --- --- ---
Net cash flows from investing
activities (458) (263) (1,737) (1,366)
---- ---- ------ ------

CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings of long-term debt 1,477 1,688 5,830 5,489
Repayments of long-term debt (2,347) (1,427) (5,901) (5,072)
Payments for debt issuance
costs (12) (19) (53) (62)
Purchase of treasury stock (7) (410) (11) (733)
Other, net 1 3 1 5
--- --- --- ---
Net cash flows from financing
activities (888) (165) (134) (373)
---- ---- ---- ----

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (861) (3) 5 (2)
CASH AND CASH EQUIVALENTS,
beginning of period 868 5 2 4
--- --- --- ---
CASH AND CASH EQUIVALENTS, end
of period $7 $2 $7 $2
=== === === ===

CASH PAID FOR INTEREST $257 $250 $904 $899
==== ==== ==== ====








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

Approximate as of
-----------------
December 31, 2012 (a) September 30, 2012 (a) December 31, 2011 (a)
-------------------- --------------------- --------------------
Footprint
---------
Estimated Video Passings
(b) 12,112 12,072 12,013
Estimated Internet
Passings (b) 11,810 11,759 11,692
Estimated Telephone
Passings (b) 11,139 11,018 10,891

Penetration Statistics
----------------------
Video Penetration of
Estimated Video Passings
(c) 34.3 % 34.8 % 35.9 %
Internet Penetration of
Estimated Internet
Passings (c) 33.7 % 33.3 % 31.3 %
Telephone Penetration of
Estimated Telephone
Passings (c) 18.1 % 18.0 % 17.2 %

Residential
-----------
Residential Customer
Relationships (d) 5,035 5,015 4,927
Residential Non-Video
Customers 1,046 990 783
% Non-Video 20.8 % 19.7 % 15.9 %

Customers
---------
Video (e) 3,989 4,025 4,144
Internet (f) 3,785 3,731 3,492
Telephone (g) 1,914 1,880 1,791
Residential PSUs (h) 9,688 9,636 9,427
===== ===== =====
Residential PSU /Customer
Relationships (d)(h) 1.92 1.92 1.91
Quarterly Net Additions/
(Losses) (i)
------------------------
Video (e) (36) (73) (44)
Internet (f) 54 69 68
Telephone (g) 34 52 27
Residential PSUs (h) 52 48 51
=== === ===

Single Play Penetration
(j) 37.6 % 37.4 % 37.7 %
Double Play Penetration
(k) 32.5 % 33.0 % 33.2 %
Triple Play Penetration
(l) 29.9 % 29.6 % 29.1 %
Digital Penetration (m) 86.9 % 86.2 % 82.0 %

Revenue per Customer
Relationship (n) $105.78 $105.39 $105.73

Commercial
----------
Commercial Customer
Relationships (d)(o) 325 321 298

Customers
---------
Video (o) 169 172 170
Internet (f) 193 186 163
Telephone (g) 105 99 79
Commercial PSUs (h) 467 457 412
=== === ===
Quarterly Net Additions/
(Losses) (i)
------------------------
Video (o) (3) 1 (3)
Internet (f) 7 9 7
Telephone (g) 6 8 5
Commercial PSUs (h) 10 18 9
=== === ===



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,
2012, September 30, 2012 and December 31,
2011, customers include approximately
18,400, 16,900 and 18,600 customers,
respectively, whose accounts were over 60
days past due in payment, approximately
2,600, 3,400 and 2,500 customers,
respectively, whose accounts were over 90
days past due in payment and approximately
1,700, 1,600 and 1,400 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
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
video customers rather than commercial video
customers. Further, residential video
customers 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 video
customers and reduced commercial video
customers, with an overall net decrease to
total video customers. Prior periods were
reclassified to conform to the 2012
presentation.

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

(g) "Telephone Customers" represent those
customers who subscribe to our telephone
service.

(h) "Primary Service Units" or "PSUs" represent
the total of video, Internet and phone
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 of
Charter service offerings, including video,
Internet or phone, as a % of residential
customer relationships.

(k) "Double Play Penetration" represents
residential customers receiving only 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 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 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.




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

Net loss $(40) $(67) $(304) $(369)
Plus: Interest expense, net 216 245 907 963
Income tax expense 49 67 257 299
Depreciation and amortization 466 411 1,713 1,592
Stock compensation expense 13 10 50 35
(Gain) loss on extinguishment
of debt (19) 19 55 143
Other, net 13 1 16 12
--- --- --- ---

Adjusted EBITDA (b) 698 686 2,694 2,675
Less: Purchases of property,
plant and equipment (449) (327) (1,745) (1,311)
---- ---- ------ ------

Adjusted EBITDA less capital
expenditures $249 $359 $949 $1,364
==== ==== ==== ======

Net cash flows from operating
activities $485 $425 $1,876 $1,737
Less: Purchases of property,
plant and equipment (449) (327) (1,745) (1,311)
Change in accrued expenses
related to capital
expenditures
(3) 68 13 57

Free cash flow $33 $166 $144 $483
=== ==== ==== ====

Year Ended December 31,
-----------------------
2012 2011
Actual Pro forma (a)
------ ------------

Net loss $(304) $(370)
Plus: Interest expense, net 907 963
Income tax expense 257 299
Depreciation and amortization 1,713 1,598
Stock compensation expense 50 35
Loss on extinguishment of debt 55 143
Other, net 16 12
--- ---

Adjusted EBITDA (b) 2,694 2,680
Less: Purchases of property,
plant and equipment (1,745) (1,311)
------ ------

Adjusted EBITDA less capital
expenditures $949 $1,369
==== ======

Net cash flows from operating
activities $1,876 $1,742
Less: Purchases of property,
plant and equipment (1,745) (1,311)
Change in accrued expenses
related to capital
expenditures
13 57

Free cash flow $144 $488
==== ====



(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 Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----

Customer
premise
equipment
(a) $162 $115 $803 $585
Scalable
infrastructure
(b) 92 82 412 347
Line
extensions
(c) 56 39 167 117
Upgrade/
Rebuild
(d) 69 34 197 130
Support
capital
(e) 70 57 166 132
--- --- --- ---

Total
capital
expenditures
(f) $449 $327 $1,745 $1,311
==== ==== ====== ======



(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
$88 million and $75 million of
capital expenditures related to
commercial services for the three
months ended December 31, 2012 and
2011, respectively, and $269 million
and $195 million for the year ended
December 31, 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, or Stefan Anninger, +1-203-905-7955

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


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