Charter Communications Announces Solid First Quarter Results; Digital Video and High-Speed Data Deployments Exceed Expectations.Business Editors ST. LOUIS--(BUSINESS WIRE)--May 2, 2001 Charter Communications Charter Communications NASDAQ: CHTR is an American company providing cable television, high-speed Internet, and telephone services to more than 5.7 million customers in 29 states. It is the third-largest publicly traded cable operator in the U.S. , Inc. (Nasdaq: CHTR CHTR Charter CHTR Canadian High Temperature Research ) today reported revenue and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. growth at the high end of previously stated guidance for the first quarter of 2001. Digital video and high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data service additions during the three-month period ended March 31, 2001 exceeded the company's expectations, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. Kent, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . First Quarter Financial Highlights For the first quarter of 2001 revenues increased 14.4% to $873.8 million, and operating cash flow (OCF (1) (Open Container Format) See OPS. (2) (OpenCard Framework) A smart card specification from the OpenCard Consortium. ) increased 9.7% to $387.9 million compared to the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma results for the first quarter of 2000. Charter increased its customer base by over 2.0% compared to pro forma first quarter of 2000 to 6,349,800 customers. "We continue to deliver by increasing revenue and OCF through internal and advanced broadband services See broadband and broadband service provider. customer growth made possible by our digital platform," Mr. Kent said. Demand for Advanced Services Continues As of March 31, 2001, Charter Digital Cable(TM) customers totaled 1,343,700, an increase of 274,800 customers over pro forma year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2000. Mr. Kent said Charter's goal is to add an average of 18,000 digital cable customers per week throughout the year. "During the first quarter we exceeded our year 2001 average weekly net digital add target by approximately 18%," Mr. Kent said. "The compelling price-value relationship of our digital video product in comparison to DBS (Direct Broadcast Satellite) A one-way TV broadcast service from a communications satellite to a small round or oval dish antenna no larger than 20" in diameter. contributes greatly to our success. Over 20,000 satellite dish satellite dish n. A dish antenna used to receive and transmit signals relayed by satellite. satellite dish A parabolic antenna used to receive signals relayed by satellite. owners have been converted to Charter Digital Cable over the past year," he said. High-speed data service was available to 55% of Charter's homes passed as of March 31, 2001, according to Mr. Kent. "With an expanded footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. of two-way enacted broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). plant, the deployment of Charter Pipeline(TM), our high-speed data service, accelerated in the first quarter of 2001." As of March 31, 2001, Charter served 343,300 data customers, adding 90,900 Charter Pipeline customers during the first quarter, or 7,000 customers per week. "We capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. on our larger two-way footprint by aggressively marketing and deploying our high-speed data product, exceeding our year 2001 average weekly goal by nearly 50% in the first quarter," Mr. Kent said. Recent Developments In February February: see month. 2001, Charter entered into several agreements with AT&T Broadband, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control involving several strategic cable system transactions that will result in a net addition of approximately 512,000 customers. When completed, Charter will acquire cable systems from AT&T Broadband serving approximately 574,000 customers in Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. ,
Alabama Alabama, indigenous people of North AmericaAlabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). and California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). for a total of $1.79 billion. A portion of the purchase price will consist of Charter cable systems valued at $249.0 million serving approximately 62,000 customers in Florida, and up to $501.5 million will be paid in Class A common stock. The balance will be paid in cash. When the transactions close in the late second or early third quarter, Charter will serve approximately 7 million customers in 40 states. In February 2001, Charter and Gemstar-TV Guide entered into a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Interactive Program Guide (IPG IPG Implantable pulse generator, see there ) agreement. Terms of the agreement provide for Charter to continue to use and further deploy TV Guide Interactive(SM) into additional markets, and across all digital platforms. TV Guide Interactive is the IPG currently used by Charter in 200 systems representing over 600,000 digital households. Charter's rollout of a TV Gateway IPG is also underway in thirteen markets, serving some 250,000 customers, with additional deployments planned. In March 2001, Charter announced the selection of Liberate (Liberate Technologies, San Mateo, CA) A software company that specialized in the information appliance field. Formerly Network Computer, Inc. (NCI), a spin-off from Oracle in 1996, it changed its name in 1999. Technologies open standards-based software in their rollout of interactive cable television services to advanced set-tops. Charter digital customers in St. Louis will be the first to experience Liberate-enabled Motorola DCT (Discrete Cosine Transform) An algorithm that is widely used for data compression. Similar to Fast Fourier Transform, DCT converts data (pixels, waveforms, etc.) into sets of frequencies. The first frequencies in the set are the most meaningful; the latter, the least. 5000 set-tops, initially equipped with Internet access See how to access the Internet. , the TV Guide Interactive programming guide, and television-based e-mail and interactive television portal services developed and supported by digeo, inc. Outlook Mr. Kent reiterated Charter's previous 2001 annual guidance of 14% - 16% revenue growth and 12% - 14% operating cash flow growth, and second quarter 2001 revenue growth of 13% - 15% and OCF growth of 11.5% - 13.5%. Mr. Kent said Charter anticipates ending the year 2001 with approximately 2 million digital cable customers. "We expect to significantly exceed our original guidance of 500,000 data customers, and are now comfortable we'll end the year within a range of 550,000 - 600,000 data customers." Mr. Kent said Charter has plans for additional video on demand launches and expects approximately 2.2 million homes will have access to VOD See video-on-demand. VoD - video on demand technology by the end of 2001. About Charter Communications Charter Communications, a Wired World(TM) company, is among the nation's largest broadband communications companies Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. , currently serving some 6.4 million customers in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television under the Charter Cable TV brand; advanced digital video programming services under the Charter Digital Cable(TM) brand; and high-speed Internet See broadband. access via Charter Pipeline(TM). Commercial high-speed data, video and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the solutions are provided under the Charter Business Networks(TM) brand. Advertising sales and production services are sold under the Charter Media(TM) brand. A Fortune 500 company, Charter is the 2001 recipient of the Outstanding Corporate Growth Award from the Association for Corporate Growth, the 2001 R.E. "Ted" Turner Innovator of the Year Award from the Southern Cable Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Association, and the 2000 Innovator Award for Technology from Cablevision Magazine. More information about Charter can be found at www.charter.com. Detailed financial information is included in the attached addendum addendum n. an addition to a completed written document. Most commonly this is a proposed change or explanation (such as a list of goods to be included) in a contract, or some point that has been subject of negotiation after the contract was originally proposed by . Charter will conduct a conference call to discuss their operating results on Wednesday, May 2, 2001, at 11:00 AM Eastern Time. The call will be available live via webcast at www.charter.com. The call will be available on the "Investor" portion of the website, via "About Charter." Participants should go to the call link at least 10 minutes prior to the start time to register. The call will be archived on the website. Statements in this press release regarding Charter Communications' business that are not historical facts may be "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ." Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from any such forward-looking statements are identified in the reports and documents Charter files from time to time with the U.S. Securities and Exchange Commission.
Charter Communications, Inc.
Unaudited Consolidated Statement of Operations
(Dollars in thousands, except per share data)
Three Months Ended March 31,
-----------------------------------
Actual Actual Pro Forma
2001 2000 2000(a)
------ ------ ---------
Revenues:
Analog video $649,355 $587,551 $622,501
Digital video 55,047 9,196 9,950
Cable modem 25,166 9,712 13,797
Advertising sales 55,641 33,278 35,622
Other 88,588 81,867 81,719
-------- -------- --------
Total revenues 873,797 721,604 763,589
-------- -------- --------
Operating Expenses:
General, administrative and
service 189,503 168,074 175,282
Analog video programming 210,374 164,825 175,748
Digital video 20,609 4,189 4,311
Cable modem 17,646 8,760 12,464
Advertising sales 15,265 12,277 14,834
Marketing 16,623 11,693 12,297
Other 2,127 1,951 1,951
Corporate expenses 13,721 12,508 13,028
------------ ------------ ------------
Total operating expenses 485,868 384,277 409,915
------------ ------------ ------------
Operating cash flow 387,929 337,327 353,674
Depreciation 366,941 252,876 275,616
Amortization 328,954 293,224 302,716
Option compensation expense 6,038 15,500 15,500
Interest, net 310,740 225,479 261,786
Other, net 59,917(b) (132) (81)
------------ ------------ ------------
(684,661) (449,620) (501,863)
Minority interest 403,962 268,906 289,979
------------ ------------ ------------
Net loss $ (280,699) $ (180,714) $ (211,884)
============ ============ ============
Basic and diluted loss per
share $ (1.20) $ (0.81) $ (0.91)
============ ============ ============
Weighted average common shares
outstanding 233,777,675 221,917,083 232,584,043
============ ============ ============
(a) The pro forma results reflect all acquisitions and
dispositions of cable systems closed during 2000 and
borrowings under the Charter Holdings senior bridge loan
facility, issuance of senior convertible notes, issuance of
the January 2001 Charter Holdings notes and application of the
proceeds from all such borrowings to repay portions of other
notes and credit facilities.
(b) Includes a $23.9 million cumulative effect of a change in
accounting principle and current period expense of $21.8
million, both as a result of the implementation of SFAS 133
"Accounting for Derivative Instruments and Hedging
Activities".
Charter Communications, Inc.
Unaudited Summary of Operating Statistics
Cable Television Actual Pro Forma Pro Forma
---------------- ------ --------- ---------
March 31, December 31, March 31,
2001 2000(a) 2000(a)
-------- ----------- ---------
Homes Passed 10,258,300 10,219,300 10,007,100
Basic Customers 6,349,800 6,346,200 6,224,700
Basic Penetration 61.9% 62.1% 62.2%
Premium Units 5,199,700 4,936,800 3,118,000
Premium Penetration 81.9% 77.8% 50.1%
Average Monthly Revenue
per Basic Customer (quarter) $ 45.87 $ 46.95 $ 40.89
Digital Video Actual Pro Forma Pro Forma
------------- ------ --------- ---------
March 31, December 31, March 31,
2001 2000(a) 2000(a)
-------- ----------- --------
Digital Homes Passed 8,811,900 8,787,500 4,808,300
Customers 1,343,700 1,068,900 224,700
Penetration 15.2% 12.2% 4.7%
Digital Converters Deployed 1,697,000 1,336,600 266,500
Data Services Actual Pro Forma Pro Forma
------------- ------ --------- ---------
March 31, December 31, March 31,
2001 2000(a) 2000(a)
-------- ----------- --------
Data Homes Passed 5,688,800 5,550,800 5,081,300
Customers 343,300 252,400 122,900
Penetration 6.0% 4.5% 2.4%
Other Statistics Actual
---------------- ------
March 31,
2001
--------
For the quarter ended
Capital Expenditures
(in 000's) $ 524,500
As of
Book Value per Share $ 12.20
(a) The pro forma statistics reflect all acquisitions and
dispositions of cable systems closed during 2000 as of the
periods indicated.
Charter Communications, Inc.
Unaudited Consolidated Balance Sheet Data
(Dollars in thousands)
Actual Actual
March 31, 2001 December 31, 2000
-------------- -----------------
ASSETS
Current Assets:
Cash and cash equivalent $ 19,421 $ 130,702
Accounts receivable,
net of allowance for
doubtful accounts 193,811 217,667
Receivable from related party 4,592 6,480
Prepaid expenses and other 92,656 77,719
----------- -----------
Total current assets 310,480 432,568
----------- -----------
Investment in Cable Properties:
Property, plant and
equipment, net 5,500,886 5,267,519
Franchises, net 16,753,694 17,068,702
----------- -----------
Total investment in
cable properties 22,254,580 22,336,221
Other assets 293,664 274,777
----------- -----------
$22,858,724 $23,043,566
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and
accrued expenses $ 1,169,766 $ 1,367,234
----------- -----------
Total current liabilities 1,169,766 1,367,234
Long-term debt 13,707,347 13,060,455
Deferred management
fees - related party 13,751 13,751
Other long-term liabilities 331,857 285,266
Minority interest 4,783,692 4,089,329
Redeemable securities -- 1,104,327
Shareholders' equity 2,852,311 3,123,204
----------- -----------
$22,858,724 $23,043,566
=========== ===========
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