Charter Announces Second Quarter 2013 Results

Charter Announces Second Quarter 2013 Results

Strategic Initiatives Deliver Higher Customer and Revenue Growth

STAMFORD, Conn., Aug. 6, 2013 /PRNewswire/ -- Charter Communications, Inc. (along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and six months ended June 30, 2013.

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

Key highlights:


-- Customer trends improved across all residential and commercial PSU
categories during the second quarter of 2013 compared to the prior-year
period. Total residential customer relationships grew by 5,000 during
the quarter, versus a loss of 17,000 during the second quarter of 2012.
Residential PSUs increased by 38,000 during the period, versus a loss of
31,000 in the year-ago quarter.
-- Second quarter revenues of $1,972 million grew 4.7% as compared to the
prior-year period, led by growth in video services revenue and Internet
and commercial customers.
-- Second quarter residential revenues grew 4.3% compared to the second
quarter of 2012, when residential revenues grew by 2.6% on a pro forma
basis(1), and 3.1% on an actual basis.
-- Commercial revenues grew 20.6% in the second quarter versus the
prior-year period, primarily driven by continued growth in small and
medium businesses.
-- Second quarter Adjusted EBITDA(2) declined by 0.1% year-over-year to
$692 million, reflecting changes in operating practices to deliver
higher value products and improved service. Second quarter net loss
totaled $96 million compared to $83 million in the comparable prior-year
period, with the increase primarily driven by higher charges for
extinguishment of debt.
-- Free cash flow(2 )for the quarter was $75 million and net cash flows
from operating activities totaled $484 million.
"We continued to make progress in the second quarter, executing on our plan to grow market share by delivering better products, service and value to our customers," said Tom Rutledge, President and CEO of Charter Communications. "Two-thirds of our Internet customers receive speeds of at least 30 Mbps, and we offer over 100 HD channels in nearly all of our markets, with more to come as we go all-digital and introduce new products. Combined with improvements to our selling and customer service operations, we are driving deeper penetration of our services into the home, which we expect will lead to growth in market share, cash flow and return on investment."

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

(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
------------

June 30, 2013 June 30, 2012
(a) (a) Y/Y Change
-------------- -------------- ----------

Footprint
---------

Estimated
Video
Passings (b) 12,098 12,008 1 %

Estimated
Internet
Passings (b) 11,797 11,703 1 %

Estimated
Telephone
Passings (b) 11,132 10,925 2 %


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

Video
Penetration
of Estimated
Video
Passings (c) 33.7 % 35.6 % -1.9 ppts

Internet
Penetration
of Estimated
Internet
Passings (c) 35.1 % 32.8 % 2.3 ppts

Telephone
Penetration
of Estimated
Telephone
Passings (c) 19.2 % 17.6 % 1.6 ppts


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

Residential
Customer
Relationships
(d) 5,096 4,996 2 %

Residential
Non-Video
Customers 1,179 898 31 %

% Non-Video 23.1 % 18.0 % 5.1 ppts


Customers
---------

Video (e) 3,917 4,098 -4 %

Internet (f) 3,924 3,662 7 %

Telephone (g) 2,019 1,828 10 %
----- -----

Residential
PSUs (h) 9,860 9,588 3 %

Residential
PSU /
Customer
Relationships
(d)(h) 1.93 1.92


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

Video (e) (48) (66) 27 %

Internet (f) 40 29 38 %

Telephone (g) 46 6 667 %
--- ---

Residential
PSUs (h) 38 (31) 223 %


Single Play
Penetration
(j) 37.8 % 37.0 % 0.8 ppts

Double Play
Penetration
(k) 30.9 % 34.2 % -3.3 ppts

Triple Play
Penetration
(l) 31.3 % 28.8 % 2.5 ppts

Digital
Penetration
(m) 90.7 % 84.7 % 6.0 ppts


Revenue per
Customer
Relationship
(d)(n) $108.67 $106.00 3 %


Commercial
----------

Commercial
Customer
Relationships
(d)(o) 329 312 5 %


Customers
---------

Video (e)(o) 156 171 -9 %

Internet (f) 214 177 21 %

Telephone (g) 119 91 31 %
--- ---

Commercial
PSUs (h) 489 439 11 %


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

Video (e)(o) (3) (6) 50 %

Internet (f) 12 8 50 %

Telephone (g) 7 6 17 %
--- ---

Commercial
PSUs (h) 16 8 100 %





Footnotes
---------


In thousands, except
ARPU and penetration
data. See footnotes to
unaudited summary of
operating statistics
on page 5 of the
addendum of this news
release. The footnotes
contain important
disclosures regarding
the definitions used
for these operating
statistics.
Customer trends improved year-over-year across all PSU categories (video, Internet and phone) during the second quarter. Residential customer relationships grew by 5,000, up from a loss of 17,000 in the second quarter of 2012. Commercial customer relationships grew by 6,000 in the second quarter of 2013, compared to a gain of 1,000 in the prior-year period. Residential PSUs increased by 38,000 versus a loss of 31,000 in the year-ago quarter, while commercial PSUs increased 16,000 during the second quarter versus a gain of 8,000 in the year-ago quarter.

The year-over-year improvement in PSU and total customer growth reflects the Company's continued focus on enhancing the value of its core offerings, and improving service levels in order to increase the penetration of its products and to produce higher-quality, longer-term relationships with customers. Charter experienced higher demand for all of its products during the second quarter of 2013, including its triple play offering. Over the last twelve months, triple play penetration grew by 250 basis points, from 28.8% to 31.3%.

During the second quarter, Charter continued to pursue its all-digital initiative, and completed its all-digital network upgrade in Fort Worth, Texas. Charter customers in the Fort Worth region now have access to over 140 HD channels and residential customers have been provided with two-way digital set-tops, offering an interactive programming guide and video on demand. Charter expects to complete its all-digital roll out by year end 2014.

Residential video customers declined by 48,000 in the second quarter of 2013, versus a loss of 66,000 in the year-ago period. Excluding limited basic customer losses of 71,000, video customers grew by 23,000 during the second quarter. Expanded basic customer growth was driven by a more competitive video product, which now includes over 100 HD channels, packaging of advanced services, and the transition to new selling methods.

Charter added 40,000 residential Internet customers in the second quarter of 2013, compared to 29,000 a year ago. The Company continues to see strong demand for its Internet service as consumers value the speed and reliability of Charter's high speed offering.

During the second quarter, the Company added 46,000 residential telephone customers, versus a gain of 6,000 during the second quarter of 2012. The higher year-over-year telephone customer growth reflects the improved sell-in of triple play service resulting from simplified pricing and packaging.

Second quarter residential revenue per customer relationship totaled $108.67, and grew by 2.5% from $106.00 in the second quarter of 2012, driven by rate adjustments, higher product sell-in and promotional rate step-ups, partially offset by entry-level pricing.





Second Quarter Financial Results


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share and share data)


Three Months Ended June
30,
------------------------

2013 2012 % Change
---- ---- --------

REVENUES:

Video $984 $911 8.0 %

Internet 520 465 11.8 %

Telephone 158 217 (27.2)%

Commercial 193 160 20.6 %

Advertising
sales 73 87 (16.1)%

Other 44 44 -%


Total Revenues 1,972 1,884 4.7 %
----- -----


COSTS AND EXPENSES:

Total operating
costs and
expenses
(excluding
depreciation
and
amortization) 1,280 1,191 7.5 %
----- -----


Adjusted EBITDA $692 $693 (0.1)%
==== ====


Adjusted EBITDA
margin 35.1 % 36.8 %


Capital
Expenditures $422 $468

% Total Revenues 21.4 % 24.8 %


Net loss $(96) $(83)

Loss per common
share, basic
and diluted $(0.96) $(0.84)


Net cash flows
from operating
activities $484 $469

Free cash flow $75 $26
Revenue

Second quarter 2013 revenues rose to $1,972 million, 4.7% higher than the year-ago quarter, due to growth in video, Internet and commercial revenues.

Video revenues totaled $984 million in the second quarter, an increase of 8.0% 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 video customers.

Internet revenues grew 11.8% compared to the year-ago quarter to $520 million, driven by an increase of 262,000 Internet customers during the last year and by price adjustments. Telephone revenues totaled $158 million, down 27.2% versus the second quarter of 2012, due to value-based pricing and revenue allocation from higher bundling, partially offset by the addition of 191,000 telephone customers in the last twelve months.

Commercial revenues rose to $193 million, an increase of 20.6% over the prior-year period, and was driven by higher sales to small and medium businesses and carrier customers.

Second quarter advertising sales revenues of $73 million declined 16.1% compared to the year-ago quarter, driven by a decline in political advertising revenue, which saw strength in the second quarter of 2012, given local and national elections, and from a decline in barter and contractual revenue.

Operating Costs and Expenses

Second quarter total operating costs and expenses increased 7.5% compared to the year-ago period, primarily reflecting increases in costs to service customers and programming expense. Costs to service customers increased by $46 million or 14.2% during the second quarter of 2013, as compared to the prior-year period, reflecting higher spending on labor and preventive plant maintenance in order to deliver higher quality products and service levels. Second quarter programming expense increased $27 million, or 5.4% as compared to the second quarter of 2012, reflecting contractual programming increases, partially offset by customer losses.

Adjusted EBITDA

Second quarter adjusted EBITDA of $692 million declined 0.1% compared to the year-ago quarter. Adjusted EBITDA margin declined to 35.1% for the second quarter of 2013 compared to 36.8% in the year-ago quarter.

Net Loss

Net loss totaled $96 million in the second quarter of 2013, compared to $83 million in the year-ago period. Net loss increased primarily due to a greater loss on extinguishment of debt and higher depreciation and amortization, partly offset by a net gain on derivative instruments, lower interest expense, and lower income tax expense. Net loss per common share was $0.96 in the second quarter of 2013 compared to $0.84 during the same period last year. The increase is a result of the 15.7% increase in net loss compared to the prior-year period, offset by a 1.1% increase in weighted average shares outstanding in the last twelve months.

Capital Expenditures

Property, plant and equipment expenditures were $422 million in the second quarter of 2013, compared to $468 million in 2012. The decrease was primarily driven by lower scalable infrastructure spending, given the timing of expenditures in 2013 versus the prior year.

In 2013, capital expenditures are expected to be approximately $1.8 billion, including the impact of the Bresnan acquisition, which closed on July 1, 2013. Charter expects 2013 capital expenditures to be driven by the deployment of additional set-top boxes in new and existing customer homes, growth in Charter's commercial business, and further spend related to plant reliability, back-office support and our organizational realignment. The actual amount of capital expenditures will depend on a number of factors including the growth rates of both residential and commercial businesses, and the pace at which Charter progresses to all-digital transmission.

Cash Flow

During the second quarter of 2013, net cash flows from operating activities totaled $484 million, compared to $469 million in the second quarter of 2012. The increase in net cash flows from operating activities was related to the reclassification of restricted cash into operating cash.

Free cash flow for the second quarter of 2013 was $75 million, compared to $26 million during the same period last year. The increase was primarily due to a decrease in capital expenditures versus the prior-year period.

During the second quarter of 2013, Charter issued $1.0 billion of 5.75% senior unsecured notes due 2024. The proceeds from the issuance of these notes were used to tender or repurchase all of Charter's 7.875% senior notes due 2018. In the second quarter of 2013, Charter also entered into a $1.2 billion term loan F maturing in 2021. The proceeds were used to to repay Charter's existing term loan C due 2016 and term loan D due 2019.

In conjunction with the closing of the Bresnan transaction on July 1, Charter activated the previously committed term loan E facility providing for a $1.5 billion term loan maturing in seven years. Additionally, and as part of a previously announced tender offer, Charter purchased $250 million aggregate principal amount of 8.00% senior notes due 2018 that were originally issued by Bresnan.

Liquidity

Total principal amount of debt was approximately $12.9 billion as of June 30, 2013. At the end of the quarter, Charter held $44 million of cash and cash equivalents, and its credit facilities provided approximately $986 million of additional liquidity.

Conference Call

Charter will host a conference call on Tuesday, August 6, 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 10631562.

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 September 6, 2013. The conference ID code for the replay is 10631562.

Additional Information Available on Website

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Form 10-Q for three and six months ended June 30, 2013 available on the "Investor & News Center" of our website at charter.com in the "Financial Information" section. A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data can also be found in the "Financial Information" section.

Use of Non-GAAP Financial Metrics

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

Adjusted EBITDA is defined as net loss plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, gain on derivative instruments, net and other operating 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. 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. 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 $47 million and $41 million for the three months ended June 30, 2013 and 2012, respectively, and $98 million and $82 million for the six months ended June 30, 2013 and 2012, respectively.

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

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA

(dollars in millions, except per share and share data)


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

2013 2012 % Change 2013 2012 % Change
---- ---- -------- ---- ---- --------

REVENUES:

Video $984 $911 8.0 % $1,940 $1,806 7.4 %

Internet 520 465 11.8 % 1,021 917 11.3 %

Telephone 158 217 (27.2)% 329 434 (24.2)%

Commercial 193 160 20.6 % 376 313 20.1 %

Advertising
sales 73 87 (16.1)% 133 153 (13.1)%

Other 44 44 -% 90 88 2.3 %
--- --- --- ---

Total Revenues 1,972 1,884 4.7 % 3,889 3,711 4.8 %
----- ----- ----- -----


COSTS AND EXPENSES:

Programming 523 496 5.4 % 1,038 987 5.2 %

Franchises,
regulatory and
connectivity 93 93 -% 185 185 -%

Costs to
service
customers 369 323 14.2 % 732 650 12.6 %

Marketing 116 107 8.4 % 224 219 2.3 %

Other 179 172 4.1 % 348 325 7.1 %
--- --- --- ---

Total operating
costs and
expenses
(excluding
depreciation
and
amortization) 1,280 1,191 7.5 % 2,527 2,366 6.8 %
----- ----- ----- -----


Adjusted EBITDA 692 693 (0.1)% 1,362 1,345 1.3 %
--- --- ----- -----


Adjusted EBITDA
margin 35.1 % 36.8 % 35.0 % 36.2 %
----- ----- ----- -----


Depreciation
and
amortization 436 415 861 823

Stock
compensation
expense 15 13 26 24

Other operating
(income)
expenses, net 5 (4) 16 (1)
--- --- --- ---


Income from
operations 236 269 459 499
--- --- --- ---


OTHER INCOME (EXPENSES):

Interest
expense, net (211) (225) (421) (462)

Loss on
extinguishment
of debt (81) (59) (123) (74)

Gain on
derivative
instruments,
net 20 - 17 -

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

(274) (284) (530) (537)
---- ---- ---- ----


Loss before
income taxes (38) (15) (71) (38)


Income tax
expense (58) (68) (67) (139)
--- --- --- ----


Net loss $(96) $(83) $(138) $(177)
==== ==== ===== =====


LOSS PER COMMON
SHARE, BASIC
AND DILUTED: $(0.96) $(0.84) $(1.37) $(1.78)
====== ====== ====== ======


Weighted
average common
shares
outstanding,
basic and
diluted 100,600,678 99,496,755 100,464,808 99,464,858
=========== ========== =========== ==========


Adjusted EBITDA is a non-GAAP term. See page 6 of this addendum for the reconciliation of adjusted EBITDA to net loss as defined by GAAP.




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions)


June 30, 2013 December 31, 2012
------------- -----------------

(unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash
equivalents $44 $7

Restricted cash
and cash
equivalents - 27

Accounts
receivable, net 223 234

Prepaid expenses
and other
current assets 66 62
--- ---

Total current
assets 333 330
--- ---


INVESTMENT IN CABLE PROPERTIES:

Property, plant
and equipment,
net 7,313 7,206

Franchises 5,287 5,287

Customer
relationships,
net 1,294 1,424

Goodwill 953 953
--- ---

Total investment
in cable
properties, net 14,847 14,870
------ ------


OTHER NONCURRENT
ASSETS 409 396
--- ---


Total assets $15,589 $15,596
======= =======


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable
and accrued
liabilities $1,280 $1,224


Total current
liabilities 1,280 1,224
----- -----


LONG-TERM DEBT 12,812 12,808
------ ------

DEFERRED INCOME
TAXES 1,374 1,321
----- -----

OTHER LONG-TERM
LIABILITIES 62 94
--- ---


SHAREHOLDERS'
EQUITY 61 149
--- ---


Total
liabilities and
shareholders'
equity $15,589 $15,596
======= =======




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)


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

2013 2012 2013 2012
---- ---- ---- ----

CASH FLOWS FROM OPERATING
ACTIVITIES:

Net loss $(96) $(83) $(138) $(177)

Adjustments to reconcile net
loss to net cash flows from
operating activities:

Depreciation
and
amortization 436 415 861 823

Stock
compensation
expense 15 13 26 24

Noncash
interest
expense 10 10 23 24

Loss on
extinguishment
of debt 81 59 123 74

Gain on
derivative
instruments,
net (20) - (17) -

Deferred
income
taxes 54 66 56 136

Other, net 26 (13) 27 (13)

Changes in operating assets and
liabilities:

Accounts
receivable (15) (24) 11 16

Prepaid
expenses
and other
assets 10 (3) (6) (11)

Accounts
payable,
accrued
liabilities
and other (17) 29 59 27
--- --- --- ---

Net cash
flows from
operating
activities 484 469 1,025 923
--- --- ----- ---


CASH FLOWS FROM INVESTING
ACTIVITIES:

Purchases
of
property,
plant and
equipment (422) (468) (834) (808)

Change in
accrued
expenses
related to
capital
expenditures 13 25 2 13

Other, net (5) 23 (14) 10
--- --- --- ---

Net cash
flows from
investing
activities (414) (420) (846) (785)
---- ---- ---- ----


CASH FLOWS FROM FINANCING
ACTIVITIES:

Borrowings
of long-
term debt 3,395 1,348 4,710 2,817

Repayments
of long-
term debt (3,470) (1,380) (4,825) (2,919)

Payments
for debt
issuance
costs (20) (14) (32) (24)

Purchase of
treasury
stock (5) (1) (10) (4)

Other, net 9 (1) 15 (5)
--- --- --- ---

Net cash
flows from
financing
activities (91) (48) (142) (135)
--- --- ---- ----


NET
INCREASE
(DECREASE)
IN CASH
AND CASH
EQUIVALENTS (21) 1 37 3

CASH AND
CASH
EQUIVALENTS,
beginning
of period 65 4 7 2
--- --- --- ---

CASH AND
CASH
EQUIVALENTS,
end of
period $44 $5 $44 $5
=== === === ===


CASH PAID
FOR
INTEREST $250 $232 $370 $448
==== ==== ==== ====




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED SUMMARY OF OPERATING STATISTICS

(in thousands, except ARPU and penetration data)


Approximate as of

June 30, 2013 (a) March 31, 2013 (a) December 31, 2012 (a) June 30, 2012 (a)
---------------- ----------------- -------------------- ----------------

Footprint
---------

Estimated
Video
Passings
(b) 12,098 12,090 12,074 12,008

Estimated
Internet
Passings
(b) 11,797 11,789 11,772 11,703

Estimated
Telephone
Passings
(b) 11,132 11,124 11,103 10,925


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

Video
Penetration
of
Estimated
Video
Passings
(c) 33.7 % 34.1 % 34.4 % 35.6 %

Internet
Penetration
of
Estimated
Internet
Passings
(c) 35.1 % 34.7 % 33.8 % 32.8 %

Telephone
Penetration
of
Estimated
Telephone
Passings
(c) 19.2 % 18.7 % 18.2 % 17.6 %


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

Residential
Customer
Relationships
(d) 5,096 5,091 5,035 4,996

Residential
Non-Video
Customers 1,179 1,126 1,046 898

% Non-Video 23.1 % 22.1 % 20.8 % 18.0 %


Customers
---------

Video (e) 3,917 3,965 3,989 4,098

Internet (f) 3,924 3,884 3,785 3,662

Telephone
(g) 2,019 1,973 1,914 1,828

Residential
PSUs (h) 9,860 9,822 9,688 9,588
===== ===== ===== =====

Residential
PSU /
Customer
Relationships
(d)(h) 1.93 1.93 1.92 1.92


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

Video (e) (48) (24) (36) (66)

Internet (f) 40 99 54 29

Telephone
(g) 46 59 34 6

Residential
PSUs (h) 38 134 52 (31)
=== === === ===


Single Play
Penetration
(j) 37.8 % 37.7 % 37.6 % 37.0 %

Double Play
Penetration
(k) 30.9 % 31.7 % 32.5 % 34.2 %

Triple Play
Penetration
(l) 31.3 % 30.5 % 29.9 % 28.8 %

Digital
Penetration
(m) 90.7 % 88.7 % 86.9 % 84.7 %


Revenue per
Customer
Relationship
(d)(n) $108.67 $107.25 $105.78 $106.00


Commercial
----------

Commercial
Customer
Relationships
(d)(o) 329 323 325 312


Customers
---------

Video (e)(o) 156 159 169 171

Internet (f) 214 202 193 177

Telephone
(g) 119 112 105 91

Commercial
PSUs (h) 489 473 467 439
=== === === ===


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

Video (e)(o) (3) (10) (3) (6)

Internet (f) 12 9 7 8

Telephone
(g) 7 7 6 6

Commercial
PSUs (h) 16 6 10 8
=== === === ===


See footnotes to unaudited summary of operating statistics on page 5 of this addendum.


(a) We calculate the aging of customer
accounts based on the monthly billing
cycle for each account. On that
basis, at June 30, 2013, March 31,
2013, December 31, 2012, and June 30,
2012, customers include approximately
9,600, 12,000, 18,400, and 17,000
customers, respectively, whose
accounts were over 60 days past due in
payment, approximately 900, 2,400,
2,600, and 2,900 customers,
respectively, whose accounts were over
90 days past due in payment and
approximately 700, 1,300, 1,700, and
1,300 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.


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


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


(h) "Primary Service Units" or "PSUs"
represent the total of video, Internet
and telephone 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
customers 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. 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 six months ended June 30,
2013 due to published video rate
increases.




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES

(dollars in millions)


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

2013 2012 2013 2012
---- ---- ---- ----


Net loss $(96) $(83) $(138) $(177)

Plus: Interest
expense, net 211 225 421 462

Income tax expense 58 68 67 139

Depreciation and
amortization 436 415 861 823

Stock compensation
expense 15 13 26 24

Loss on extinguishment
of debt 81 59 123 74

Gain on derivative
instruments, net (20) - (17) -

Other, net 7 (4) 19 -
--- --- --- ---


Adjusted EBITDA (a) 692 693 1,362 1,345

Less: Purchases of
property, plant and
equipment (422) (468) (834) (808)
---- ---- ---- ----


Adjusted EBITDA less
capital expenditures $270 $225 $528 $537
==== ==== ==== ====


Net cash flows from
operating activities $484 $469 $1,025 $923

Less: Purchases of
property, plant and
equipment (422) (468) (834) (808)

Change in accrued
expenses related to
capital expenditures 13 25 2 13
--- --- --- ---


Free cash flow $75 $26 $193 $128
=== === ==== ====


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


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




CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

CAPITAL EXPENDITURES

(dollars in millions)


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

2013 2012 2013 2012
---- ---- ---- ----


Customer premise equipment (a) $192 $201 $425 $373

Scalable infrastructure (b) 78 146 132 234

Line extensions (c) 62 44 108 74

Upgrade/Rebuild (d) 48 50 87 84

Support capital (e) 42 27 82 43
--- --- --- ---


Total capital expenditures (f) $422 $468 $834 $808
==== ==== ==== ====


(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 $85 million and $61
million for the three months
ended June 30, 2013 and 2012,
respectively, and $147 million
and $99 million for the six
months ended June 30, 2013 and
2012, respectively, of capital
expenditures related to
commercial services.
SOURCE Charter Communications, Inc.

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

CONTACT: Media, Anita Lamont, 314-543-2215, or Analysts, Stefan Anninger, 203-905-7955

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


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