Charter Reports 2Q Results

Charter Communications reported financial and operating results for the three and six months ended June 30.

In a release dated August 6, the company stated:

Second Quarter Results - Actual and Pro forma

- Second quarter revenues of $1.690 billion increased 4.4 percent compared to the year-ago quarter on a pro forma basis and 4.1 percent on an actual basis. The increase resulted primarily from telephone and HSI revenue growth.

- Telephone revenues for the 2009 second quarter were $177 million, a 32.1 percent increase over second quarter 2008, driven by a larger telephone customer base and an increase in telephone ARPU. HSI revenues were $367 million, up 8.3 percent year-over-year on an actual basis, due to an increased number of customers and ARPU growth. Video revenues were $873 million, essentially flat with the year-ago quarter, primarily as a result of digital and advanced services revenue growth, offset by a decline in basic video customers. Commercial revenues rose to $110 million, a 14.6 percent increase year-over-year on an actual basis, resulting from increased sales of the Charter Business Bundle primarily to small and medium-size businesses, growth in our fiber-based data services and the launch of PRI services. Advertising sales revenues declined 17.3 percent year-over-year to $62 million for the second quarter of 2009 primarily as a result of significant decreases in revenues from the political, automotive and retail sectors.

- Operating costs and expenses totaled $1.052 billion for the second quarter of 2009, a 1.9 percent increase on an actual basis compared to the year-ago period. Operating expenses for the 2009 second quarter, which include programming, service and advertising sales costs, were $715 million, a 2.4 percent increase year-over-year on an actual basis, primarily as a result of increased programming costs. Selling, general, and administrative expenses were $337 million, an increase of less than 1.0 percent on an actual basis compared to the year-ago quarter, reflecting efficiencies gained in our operations.

- Adjusted EBITDA for the second quarter of 2009 rose to $638 million, up 8.3 percent compared to the year-ago period on a pro forma basis and up 8.0 percent on an actual basis.

- Charter reported $301 million of income from operations in the second quarter of 2009, compared to $230 million in the second quarter of 2008 on an actual basis. Net loss for the second quarter of 2009 was $112 million, or 30 cents per common share. For the second quarter of 2008, Charter reported actual net loss of $274 million and a net loss per common share of 74 cents. The increase in income from operations resulted primarily from the increase in sales of our bundled services, improved cost efficiencies and a decrease in other operating expenses, net. The decrease in net loss resulted from the same factors along with a decrease in interest expense resulting from not recording contractual interest on debt subject to compromise and the allocation of losses of $47 million to noncontrolling interest beginning January 1, based on the adoption of Statement of Financial Accounting Standards No. 160, partially offset by expenses related to the financial restructuring underway at Charter. While operating during the Chapter 11 proceedings, the company ceased recording interest on its debt subject to compromise as of March 27, except on CCH II, LLC ("CCH II") debt. The company will continue to accrue interest on CCH II's debt as it intends to pay the interest under its Joint Plan of Reorganization. This amount is recorded as accrued interest in liabilities subject to compromise. The amount of contractual interest expense not recorded for the three and six months ended June 30, was approximately $206 million and $215 million, respectively.

- Expenditures for property, plant, and equipment for the second quarter of 2009 were $271 million, compared to second quarter 2008 expenditures of $316 million. The decrease in capital expenditures is primarily the result of declines in customer premise equipment and support capital expenditures.

- Net cash flows from operating activities for the second quarter of 2009 were $438 million, compared to actual net cash flows used in operating activities of $36 million in the second quarter of 2008. The change in net cash flows from operating activities is primarily due to a decrease in cash paid for interest, and an increase in adjusted EBITDA, partially offset by costs associated with the on-going restructuring.

- As of June 30, Charter had $21.610 billion in debt, $9.853 billion of which was classified as liabilities subject to compromise due to Charter's restructuring efforts. As previously announced, on March 27, Charter filed its pre-arranged Joint Plan of Reorganization (the "Pre-Arranged Plan") and Chapter 11 petitions in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") in order to implement a financial restructuring that, upon approval, would reduce the company's debt by approximately $8 billion.

- On July 20, Charter began the hearing for the Bankruptcy Court to consider confirmation of Charter's Pre-Arranged Plan, which hearing is ongoing. If confirmed by the Bankruptcy Court, the Pre-Arranged Plan will become effective once all its closing conditions have been met, at which point Charter will conclude the Chapter 11 process. As a debtor in possession, the company is authorized to transact business in the ordinary course of business and, as such, has been paying its trade creditors in full in the normal course. Charter expects that cash on hand and cash flows from operating activities will be adequate to fund its projected cash needs as it proceeds with its financial restructuring.

- The company's principal Chapter 11 petition has been assigned the lead case number 09-11435. Additional information about Charter's restructuring, including the disclosure statement describing the Pre-Arranged Plan and the terms of the committed and optional investments by members of the Bondholder Committee, is available at the company's website www.charter.com. You may also receive information from the company's restructuring information line, 800-419-3922. For access to Court documents and other general information about the Chapter 11 cases, visit: kccllc.net/charter.

Charter Communications is a 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 Digital Cable video entertainment programming, Charter High-Speed Internet access, and Charter Telephone.

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