Charter Announces Second Quarter 2017 Results
STAMFORD, Conn., July 27, 2017 /PRNewswire/ -- Charter Communications, Inc. (formerly known as CCH I, LLC, along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and six months ended June 30, 2017. On May 18, 2016, Charter completed its transactions between the Company, Time Warner Cable Inc. ("Legacy TWC") and Charter Communications, Inc. ("Legacy Charter"), and Legacy Charter and Bright House Networks, LLC ("Legacy Bright House") (collectively, the "Transactions"). Pro forma(1) results give effect to the Transactions as if they had closed on January 1, 2015 and include the operations of Legacy Charter, Legacy TWC and Legacy Bright House for the three and six months ended June 30, 2016.
http://photos.prnewswire.com/prnvar/20110526/AQ10195LOGO
Key highlights:
-- During the second quarter of 2017, Charter completed the roll-out of its
high-value Spectrum pricing, packaging and brand across the Legacy TWC
and Legacy Bright House residential footprints, with the launch of
Spectrum in Hawaii, in June.
-- Second quarter total customer relationships increased 211,000, compared
to 231,000 on a pro forma basis during the second quarter of 2016, when
excluding the impact of customer disconnect activity related to Legacy
Bright House's seasonal customer plan in 2016.(2) Second quarter total
residential and SMB primary service units ("PSUs") increased by 243,000,
while pro forma second quarter 2016 PSUs grew by 422,000, when adjusted
for seasonal customer program changes at Legacy Bright House.
-- Second quarter revenues of $10.4 billion grew 3.9% on a pro forma basis,
as compared to the prior year period, driven by residential revenue
growth of 3.8% and commercial revenue growth of 9.5%. On an actual
basis, second quarter revenue grew 68.1% year-over-year, driven
primarily by the Transactions.
-- Second quarter Adjusted EBITDA(3) of $3.8 billion grew 8.6%
year-over-year on a pro forma basis, and 8.7% when excluding transition
costs. On an actual basis, second quarter Adjusted EBITDA grew by 73.3%,
driven primarily by the Transactions.
-- Net income attributable to Charter shareholders in the second quarter
declined to $139 million from $248 million on a pro forma basis during
the same period last year. The decline in year-over-year net income was
driven by a pension curtailment gain in the second quarter of 2016 and
an increase in depreciation and amortization in the second quarter of
2017, partly offset by a year-over-year increase in Adjusted EBITDA. On
an actual basis, net income declined to $139 million from $3.1 billion
during the second quarter of 2016, primarily driven by an income tax
benefit in the prior year quarter.
"With the rollout of our new pricing and packaging completed in June, we are now offering a simple, high value product across our 50 million passings, under one brand, Spectrum. That product is working in the marketplace, and we continue to see higher year-over-year customer connect volumes across our new footprint," said Tom Rutledge, Chairman and CEO of Charter Communications, Inc. "As we move forward with our integration, more of our customers are getting better products at better prices, which will drive higher customer satisfaction, lower churn and greater value into our business."
(1 )See Exhibit 99.1 in the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2016 filed with the Securities and Exchange Commission on November 3, 2016, which includes reconciliations of the pro forma information to actual information for each quarter of 2015 and the first and second quarters of 2016. See the "Use of Adjusted EBITDA, Free Cash Flow and Pro Forma Information" section of this document for additional information.
(2 )In the second quarter of 2017, Charter conformed the seasonal customer program in the Legacy Bright House footprint to Charter's program. For additional information, see footnote j on page 6 of the addendum to this release.
(3 )Adjusted EBITDA and free cash flow are defined in the "Use of Adjusted EBITDA, Free Cash Flow and Pro Forma Information" section and are reconciled to consolidated net income and net cash flows from operating activities, respectively, in the addendum of this news release.
Key Operating Results
Approximate as of
June 30, 2017 (a) June 30, 2016
(a)(j) Y/Y Change
----------------- -------------- ----------
Footprint (b)
------------
Estimated Video Passings 49,615 48,762 1.7%
Estimated Internet Passings 49,309 48,414 1.8%
Estimated Voice Passings 48,587 47,566 2.1%
Penetration Statistics (c)
-------------------------
Video Penetration of
Estimated Video Passings 34.4% 35.5% (1.1) ppts
Internet Penetration of
Estimated Internet
Passings 47.3% 45.1% 2.2 ppts
Voice Penetration of
Estimated Voice Passings 23.1% 23.1% - ppts
Customer Relationships (d)
-------------------------
Residential 25,298 24,306 4.1%
Small and Medium Business 1,483 1,333 11.3%
----- -----
Total Customer
Relationships 26,781 25,639 4.5%
Residential
-----------
Primary Service Units
("PSUs")
---------------------
Video 16,646 16,934 (1.7)%
Internet 22,033 20,667 6.6%
Voice 10,378 10,255 1.2%
------ ------
49,057 47,856 2.5%
Quarterly Net Additions/
(Losses)
------------------------
Video (90) (152) 40.8%
Internet 231 236 (2.1)%
Voice 14 83 (83.1)%
--- ---
155 167 (7.2)%
Single Play (e) 10,177 9,252 10.0%
Double Play (e) 6,484 6,559 (1.1)%
Triple Play (e) 8,637 8,495 1.7%
Single Play Penetration (f) 40.2% 38.1% 2.1 ppts
Double Play Penetration (f) 25.6% 27.0% (1.4) ppts
Triple Play Penetration (f) 34.1% 35.0% (0.9) ppts
% Residential Non-Video
Customer Relationships 34.2% 30.3% 3.9 ppts
Monthly Residential Revenue
per Residential Customer
(g) $109.46 $109.74 (0.3)%
Small and Medium Business
-------------------------
PSUs
----
Video 425 378 12.4%
Internet 1,285 1,148 11.9%
Voice 847 725 16.8%
--- ---
2,557 2,251 13.6%
Quarterly Net Additions/
(Losses)
------------------------
Video 14 9 55.6%
Internet 36 41 (12.2)%
Voice 38 32 18.8%
--- ---
88 82 7.3%
Monthly Small and Medium
Business Revenue per
Customer (h) $210.64 $214.52 (1.8)%
Enterprise PSUs (i)
------------------
Enterprise PSUs 103 90 14.4%
Footnotes
In thousands, except per customer 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.
All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
During the second quarter, Charter completed the launch of its Spectrum brand, and residential pricing and packaging to residences in the Legacy TWC and Bright House footprints, with the roll-out of Spectrum in Hawaii. In July, Charter completed the launch of Spectrum pricing and packaging for small and medium businesses in Legacy TWC and Legacy Bright House markets.
In June, Charter restarted all-digital efforts for the approximately 40% of Legacy TWC's footprint and 60% of Legacy Bright House's footprint that are not yet all-digital. All-digital allows Charter to offer more advanced products and services, and provides residential customers with two-way digital set-tops, which offer better picture quality, an interactive programming guide and video on demand on all TV outlets in the home.
During the second quarter of 2017, Charter's residential customer relationships grew by 167,000, while pro forma second quarter 2016 customer relationships grew by 126,000, or 184,000 when adjusted for seasonal program changes made at Legacy Bright House.(1,2) Residential PSUs increased by 155,000 in the second quarter of 2017, while pro forma second quarter 2016 PSUs increased by 167,000, or 340,000 when adjusted for seasonal program changes at Legacy Bright House. As of June 30, 2017, Charter had 25.3 million residential customer relationships and 49.1 million residential PSUs.
Residential video customers decreased by 90,000 in the second quarter of 2017, while pro forma second quarter 2016 video customers decreased by 152,000, or 100,000 when adjusted for seasonal program changes at Legacy Bright House. Over the last twelve months, Legacy Charter grew residential video customers by 16,000 or 0.4%. As of June 30, 2017, Charter had 16.6 million residential video customers.
Charter added 231,000 residential Internet customers in the second quarter of 2017, while pro forma second quarter 2016 Internet customers grew by 236,000, or 308,000 when adjusted for seasonal program changes at Legacy Bright House. Charter now offers minimum Internet speeds of at least 100 Mbps to over 50% of its total footprint, with nearly all of Charter's remaining footprint offering minimum Internet speeds of at least 60 Mbps. As of June 30, 2017, 93% of Legacy Charter's residential Internet customers subscribed to tiers that provided speeds of 60 Mbps or more compared to 52% at Legacy TWC and 78% at Legacy Bright House. The Company continues to see strong demand for its Internet service as consumers value the speed and reliability of Charter's Internet offering. As of June 30, 2017, Charter had 22.0 million residential Internet customers.
During the second quarter of 2017, the Company added 14,000 residential voice customers, while pro forma second quarter 2016 voice customers grew by 83,000, or 132,000 when adjusted for seasonal program changes at Legacy Bright House. The year-over-year decline in voice net additions was primarily driven by higher churn at Legacy TWC resulting from promotions launched prior to the closing of the Transactions. As of June 30, 2017, Charter had 10.4 million residential voice customers.
Second quarter residential revenue per customer relationship totaled $109.46, a slight decrease as compared to the prior year period, as promotional rate step-ups and modest rate adjustments, were offset by continued single play Internet sell-in and the migration of Legacy TWC and Legacy Bright House customers to higher-value Spectrum pricing and packaging.
During the second quarter of 2017, SMB customer relationships grew by 44,000, versus customer growth of 47,000 during the second quarter of 2016. SMB PSUs increased 88,000, compared to 82,000 during the second quarter of 2016. As of June 30, 2017, Charter had 1.5 million SMB customer relationships and 2.6 million SMB PSUs.
(1 )All customer data referred to herein for periods prior to the third quarter of 2016, are pro forma for the Transactions as if they had closed on January 1, 2015.
(2 )See footnote j on page 6 of the addendum to this release for additional information regarding changes made to Legacy Bright House's seasonal customer program in the second quarter of 2017.
Second Quarter Financial Results
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share data)
Three Months Ended June 30,
2017 2016 % 2016 % Change
Change
Actual Pro Forma Actual
------ --------- ------
REVENUES:
Video $4,124 $4,125 - % $2,605 58.3%
Internet 3,513 3,133 12.1% 1,950 80.2%
Voice 650 729 (10.9)% 423 53.4%
--- --- ---
Residential revenue 8,287 7,987 3.8% 4,978 66.4%
Small and medium business 924 843 9.7% 520 77.7%
Enterprise 548 501 9.3% 296 85.1%
--- --- ---
Commercial revenue 1,472 1,344 9.5% 816 80.4%
Advertising sales 381 405 (5.8)% 237 61.3%
Other 217 233 (6.8)% 130 67.0%
Total Revenue 10,357 9,969 3.9% 6,161 68.1%
COSTS AND EXPENSES:
Total operating costs and
expenses 6,510 6,427 1.3% 3,941 65.2%
----- ----- -----
Adjusted EBITDA $3,847 $3,542 8.6% $2,220 73.3%
====== ====== ======
Adjusted EBITDA margin 37.1% 35.5% 36.0%
Capital Expenditures $2,148 $2,075 $1,260
% Total Revenues 20.7% 20.8% 20.4%
Net income attributable to
Charter shareholders $139 $248 $3,067
Earnings per common share attributable to
Charter shareholders:
Basic $0.53 $0.92 $16.73
Diluted $0.52 $0.91 $15.17
Net cash flows from
operating activities $2,945 $1,590
Free cash flow $1,144 $524
Revenue
On a pro forma basis, second quarter revenues rose 3.9% year-over-year to $10.4 billion, driven by growth in Internet and commercial revenues. On an actual basis, second quarter revenue increased 68.1% year-over-year, driven by the Transactions.
Video revenues totaled $4.1 billion in the second quarter, and remained virtually unchanged compared to the prior year period on a pro forma basis, as annual and promotional rate adjustments and revenue allocation relating to the launch of Spectrum pricing and packaging in Legacy TWC and Legacy Bright House, were offset by a decrease in video customers over the last 12 months. On an actual basis, second quarter video revenues increased by 58.3% compared to the prior year period, driven by the Transactions.
On a pro forma basis, Internet revenues grew 12.1%, compared to the year-ago quarter, to $3.5 billion, driven by growth in Internet customers during the last year, promotional rolloff and revenue allocation relating to the launch of Spectrum pricing and packaging in Legacy TWC and Legacy Bright House. On an actual basis, Internet revenues grew 80.2% year-over-year, as a result of the Transactions.
Voice revenues totaled $650 million in the second quarter, a decrease of 10.9% on a pro forma basis compared to the second quarter of 2016, as promotions and value-based pricing more than offset voice customer growth over the last twelve months. Voice revenues increased 53.4% year-over-year, on an actual basis, driven by the Transactions.
Commercial revenues rose to $1.5 billion, an increase of 9.5% on a pro forma basis over the prior year period, driven by SMB revenue growth of 9.7% and enterprise revenue growth of 9.3%. On an actual basis, commercial revenues grew 80.4% year-over-year, as a result of the Transactions.
Second quarter advertising sales revenues of $381 million decreased 5.8% on a pro forma basis compared to the year-ago quarter, driven by a decrease in political, local and barter advertising revenue. On an actual basis, advertising sales grew 61.3% year-over-year, driven by the Transactions. Other revenues fell to $217 million, a decrease of 6.8% on a pro forma basis compared to the year-ago quarter, due to a benefit in the second quarter of 2016 related to a contractual settlement at Legacy TWC and Legacy Bright House. On an actual basis, other revenues grew 67.0% year-over-year, as a result of the Transactions.
Operating Costs and Expenses
On a pro forma basis, second quarter total operating costs and expenses increased by $83 million, or 1.3%, compared to the year-ago period. On an actual basis, total operating costs and expenses grew by 65.2% year-over-year as a result of the Transactions.
Second quarter programming expense increased by $232 million, or 9.6% on a pro forma basis, as compared to the second quarter of 2016, reflecting contractual programming increases, renewals and improving expanded basic video sell-in at Legacy TWC, partly offset by Transactions synergies.
Costs to service customers decreased by $77 million or 3.9% on a pro forma basis year-over-year, as a result of benefits from the combination of the three companies and lower bad debt expense.
Marketing expenses decreased by $15 million, or 2.4% year-over-year, on a pro forma basis, due to efficiencies from the consolidation of marketing strategies following the Transactions. Other expenses decreased by $44 million, or 5.2% on a pro forma basis, as compared to the second quarter of 2016, driven primarily by Transactions synergies.
Adjusted EBITDA
Second quarter Adjusted EBITDA of $3.8 billion grew by 8.6% year-over-year on a pro forma basis, reflecting revenue growth and operating expense growth of 3.9% and 1.3%, respectively. Excluding transition costs of $30 million in the second quarter of 2017 and $25 million in the prior year period, pro forma Adjusted EBITDA grew by 8.7% year-over-year.
On an actual basis, Adjusted EBITDA grew by 73.3% year-over-year, due to the Transactions.
Net Income Attributable to Charter Shareholders
Net income attributable to Charter shareholders totaled $139 million in the second quarter of 2017, compared to pro forma net income of $248 million in the second quarter of 2016. The year-over-year decrease in pro forma net income was primarily driven by a pension curtailment gain related to Charter's announcement to freeze TWC's legacy defined benefit plans in the second quarter of 2016 and higher depreciation and amortization in the second quarter of 2017, partly offset by higher Adjusted EBITDA and lower severance-related and transactions expenses. Net income per basic common share attributable to Charter shareholders totaled $0.53 in the second quarter of 2017 compared to $0.92, on a pro forma basis, during the same period last year. The decrease was primarily the result of the factors described above, partially offset by a 2.6% decrease in pro forma weighted average shares outstanding versus the prior year period.
On an actual basis, net income attributable to Charter shareholders totaled $139 million during the second quarter of 2017, compared to $3.1 billion in the second quarter of 2016. The decrease in net income was primarily due to an income tax benefit in the second quarter of 2016 related to the reduction of substantially all of Charter's historical valuation allowance associated with its deferred tax assets, and higher interest expense, partly offset by higher income from operations as a result of the Transactions. Actual net income per basic common share attributable to Charter shareholders totaled $0.53 in the second quarter of 2017 compared to $16.73 during the same period last year. The decrease was primarily the result of the factors described above, and a 43.7% increase in weighted average shares outstanding versus the prior year period, also a result of the Transactions.
Capital Expenditures
Property, plant and equipment expenditures totaled $2.148 billion in the second quarter of 2017, compared to $2.075 billion, on a pro forma basis, during the second quarter of 2016. The pro forma year-over-year increase in capital expenditures was driven by an increase in CPE spending related to higher customer connect volumes driven by the launch of Spectrum pricing and packaging in Legacy TWC and Legacy Bright House and the related higher set-top box placement rate per Spectrum connect, and CPE inventory. The decrease in scalable infrastructure was related to the timing of spend. Transition capital expenditures accounted for $86 million of capital expenditures in the second quarter of 2017, versus $111 million in the second quarter of 2016. Excluding transition-related expenditures, second quarter 2017 capital expenditures totaled $2.062 billion, compared to $1.964 billion, on a pro forma basis, during the same period last year.
On an actual basis, second quarter 2017 capital expenditures increased by $888 million as compared to the prior year, due to the Transactions.
Cash Flow and Free Cash Flow
During the second quarter of 2017, net cash flows from operating activities totaled $2.9 billion, compared to $1.6 billion in the second quarter of 2016. The year-over-year increase in net cash flows from operating activities was primarily due to higher Adjusted EBITDA, partly offset by higher cash paid for interest in the second quarter of 2017 versus the second quarter of 2016, following the close of the Transactions.
Free cash flow for the second quarter of 2017 totaled $1.1 billion, compared to $524 million during the same period last year. The increase was related to higher net cash flows from operating activities in the second quarter of 2017 versus the second quarter of 2016, given the close of the Transactions, partly offset by higher actual capital expenditures.
Liquidity & Financing
As of June 30, 2017, total principal amount of debt was $61.8 billion and Charter's credit facilities provided approximately $2.8 billion of additional liquidity in excess of Charter's $694 million cash position.
In April, Charter redeemed Time Warner Cable, LLC's 5.850% senior secured notes due 2017.
Also in April, CCO Holdings, LLC and CCO Holdings Capital Corp. issued $1.25 billion of 5.125% senior unsecured notes due 2027, which form part of the same series of senior unsecured notes that were originally issued on February 6, 2017, and Charter Communications Operating, LLC ("Charter Operating") and Charter Communications Operating Capital Corp. issued $1.25 billion of 5.375% senior secured notes due 2047. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including buybacks of Charter Class A common stock or common units of Charter Communications Holdings, LLC.
In July, Charter Operating and Charter Communications Operating Capital Corp. issued $1.0 billion of 3.75% senior secured notes due 2028, and an additional $500 million of 5.375% senior secured notes due 2047. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including potential buybacks of Charter Class A common stock or common units of Charter Communications Holdings, LLC.
Share Repurchases
During the three months ended June 30, 2017, Charter purchased approximately 11.2 million shares of Charter Class A common stock and Charter Holdings common units for approximately $3.7 billion.
Conference Call
Charter will host a conference call on Thursday, July 27, 2017 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 investor relations website at ir.charter.com. The call will be archived under the "Financial Information" section 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 32866159.
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 August 9, 2017. The conference ID code for the replay is 32866159.
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 Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017, which will be posted on the "Financial Information" section of our investor relations website at ir.charter.com, when it is filed with the Securities and Exchange Commission (the "SEC"). A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available in the "Financial Information" section.
Use of Adjusted EBITDA, Free Cash Flow and Pro Forma Information
The company uses certain measures that are not defined by U.S. 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, consolidated net income and net 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 and free cash flow are reconciled to consolidated net income and net cash flows from operating activities, respectively, in the Addendum to this release.
Adjusted EBITDA is defined as consolidated net income plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, (gain) loss on financial instruments, other pension benefits, other (income) expense, net and other operating (income) expenses, such as merger and restructuring costs, 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, this measure is limited in that it does 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 capital expenditures and changes in accrued expenses related to capital expenditures.
Management and Charter'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 facilities and notes (all such documents have been previously filed with the the SEC). For the purpose of calculating compliance with leverage covenants, the Company uses Adjusted EBITDA, as presented, excluding certain expenses paid by its operating subsidiaries to other Charter entities. The Company's debt covenants refer to these expenses as management fees, which were $256 million and $202 million for the three months ended June 30, 2017 and 2016, respectively, and were $529 million and $304 million for the six months ended June 30, 2017 and 2016, respectively.
Pro forma results give effect to the Transactions as if they had closed on January 1, 2015 and include the operations of Legacy Charter, Legacy TWC and Legacy Bright House for the three and six months ended June 30, 2016. Due to the transformative nature of the Transactions, the Company believes that providing a discussion of its results of operations on a pro forma basis provides management and investors a more meaningful perspective on the Company's financial and operational performance and trends. The results of operations data on a pro forma basis are provided for illustrative purposes only and are based on available information and assumptions that Charter believes are reasonable and do not purport to represent what the actual consolidated results of operations of Charter would have been had the Transactions occurred on January 1, 2015, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. Exhibit 99.1 in the Company's Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2016 filed with the SEC on November 3, 2016 provides pro forma financial information for each quarter of 2015 and the first and second quarters of 2016 and a reconciliation of the pro forma financial information to the actual results of operations of the Company.
About Charter
Charter (NASDAQ: CHTR) is a leading broadband communications company and the second largest cable operator in the United States. Charter provides a full range of advanced broadband services, including Spectrum TV(TM) video entertainment programming, Spectrum Internet(TM) access, and Spectrum Voice(TM). Spectrum Business(TM) 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 Spectrum Reach(TM) brand. More information about Charter can be found at charter.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations as 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 SEC. Many of the forward-looking statements contained in this communication 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," "predict," "project," "initiatives," "seek," "would," "could," "continue," "ongoing," "upside," "increases" and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in our annual report on Form 10-K, and 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 promptly, efficiently and effectively integrate acquired
operations;
-- our ability to sustain and grow revenues and cash flow from operations
by offering video, Internet, voice, advertising and other services to
residential and commercial customers, to adequately meet the customer
experience demands in our markets and to maintain and grow our customer
base, particularly in the face of increasingly aggressive competition,
the need for innovation and the related capital expenditures;
-- 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, fiber to the home providers, video
provided over the Internet by (i) market participants that have not
historically competed in the multichannel video business, (ii)
traditional multichannel video distributors, and (iii) content providers
that have historically licensed cable networks to multichannel video
distributors, and providers of advertising over the Internet;
-- general business conditions, economic uncertainty or downturn,
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);
-- our ability to develop and deploy new products and technologies
including wireless products, our cloud-based user interface, Spectrum
Guide(®), and downloadable security for set-top boxes, and any other
cloud-based consumer services and service platforms;
-- the effects of governmental regulation on our business or potential
business combination transactions including costs, disruptions and
possible limitations on operating flexibility related to, and our
ability to comply with, regulatory conditions applicable to us as a
result of the Time Warner Inc. and Bright House Networks, LLC
Transactions;
-- any events that disrupt our networks, information systems or properties
and impair our operating activities or our reputation;
-- the ability to retain and hire key personnel;
-- 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 communication.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Actual Actual % Change Actual Actual % Change
------ ------ -------- ------ ------ --------
REVENUES:
Video $4,124 $2,605 58.3% $8,203 $3,775 117.3%
Internet 3,513 1,950 80.2% 6,911 2,754 151.0%
Voice 650 423 53.4% 1,344 558 140.6%
--- --- ----- ---
Residential revenue 8,287 4,978 66.4% 16,458 7,087 132.2%
Small and medium business 924 520 77.7% 1,824 722 152.5%
Enterprise 548 296 85.1% 1,087 395 175.1%
--- --- ----- ---
Commercial revenue 1,472 816 80.4% 2,911 1,117 160.5%
Advertising sales 381 237 61.3% 718 309 132.9%
Other 217 130 67.0% 434 178 143.8%
--- --- --- ---
Total Revenue 10,357 6,161 68.1% 20,521 8,691 136.1%
------ ----- ------ -----
COSTS AND EXPENSES:
Programming 2,649 1,541 71.9% 5,253 2,244 134.1%
Regulatory, connectivity and
produced content 532 317 67.2% 1,030 429 139.7%
Costs to service customers 1,907 1,189 60.4% 3,855 1,647 134.0%
Marketing 601 382 57.6% 1,183 547 116.3%
Transition costs 30 25 21.9% 81 46 77.3%
Other expense 791 487 62.3% 1,618 675 139.8%
--- --- ----- ---
Total operating costs and
expenses (exclusive of items
shown separately below) 6,510 3,941 65.2% 13,020 5,588 133.0%
----- ----- ------ -----
Adjusted EBITDA 3,847 2,220 73.3% 7,501 3,103 141.7%
----- ----- ----- -----
Adjusted EBITDA margin 37.1% 36.0% 36.5% 35.7%
---- ---- ---- ----
Depreciation and amortization 2,595 1,436 5,145 1,975
Stock compensation expense 65 63 134 87
Other operating expenses, net 135 551 229 569
--- --- --- ---
Income from operations 1,052 170 1,993 472
----- --- ----- ---
OTHER EXPENSES:
Interest expense, net (749) (593) (1,462) (1,047)
Loss on extinguishment of
debt (1) (110) (35) (110)
Loss on financial
instruments, net (70) (50) (32) (55)
Other pension benefits 13 520 26 520
Other expense, net (2) (2) (11) (5)
--- --- --- ---
(809) (235) (1,514) (697)
---- ---- ------ ----
Income (loss) before income
taxes 243 (65) 479 (225)
Income tax benefit (expense) (48) 3,179 (73) 3,151
--- ----- --- -----
Consolidated net income 195 3,114 406 2,926
Less: Net income attributable
to noncontrolling interests (56) (47) (112) (47)
--- --- ---- ---
Net income attributable to
Charter shareholders $139 $3,067 $294 $2,879
==== ====== ==== ======
EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic $0.53 $16.73 $1.11 $20.21
===== ====== ===== ======
Diluted $0.52 $15.17 $1.09 $19.00
===== ====== ===== ======
Weighted average common
shares outstanding, basic 263,460,911 183,362,776 266,217,549 142,457,435
=========== =========== =========== ===========
Weighted average common
shares outstanding, diluted 267,309,261 205,214,266 270,249,433 153,959,234
=========== =========== =========== ===========
Adjusted EBITDA is a non-GAAP term. See page 7 of this addendum for the reconciliation of Adjusted EBITDA to consolidated net income as defined by GAAP. All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
(dollars in millions, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Actual Pro Forma % Change Actual Pro Forma % Change
------ --------- -------- ------ --------- --------
REVENUES:
Video $4,124 $4,125 - % $8,203 $8,198 0.1%
Internet 3,513 3,133 12.1% 6,911 6,170 12.0%
Voice 650 729 (10.9)% 1,344 1,458 (7.9)%
--- --- ----- -----
Residential revenue 8,287 7,987 3.8% 16,458 15,826 4.0%
Small and medium business 924 843 9.7% 1,824 1,651 10.5%
Enterprise 548 501 9.3% 1,087 991 9.7%
--- --- ----- ---
Commercial revenue 1,472 1,344 9.5% 2,911 2,642 10.2%
Advertising sales 381 405 (5.8)% 718 770 (6.7)%
Other 217 233 (6.8)% 434 473 (8.3)%
--- --- --- ---
Total Revenue 10,357 9,969 3.9% 20,521 19,711 4.1%
------ ----- ------ ------
COSTS AND EXPENSES:
Programming 2,649 2,417 9.6% 5,253 4,824 8.9%
Regulatory, connectivity and
produced content 532 550 (3.3)% 1,030 1,055 (2.4)%
Costs to service customers 1,907 1,984 (3.9)% 3,855 3,917 (1.6)%
Marketing 601 616 (2.4)% 1,183 1,208 (2.1)%
Transition costs 30 25 21.9% 81 46 77.3%
Other expense 791 835 (5.2)% 1,618 1,686 (4.0)%
--- --- ----- -----
Total operating costs and
expenses (exclusive of items
shown separately below) 6,510 6,427 1.3% 13,020 12,736 2.2%
----- ----- ------ ------
Adjusted EBITDA 3,847 3,542 8.6% 7,501 6,975 7.5%
----- ----- ----- -----
Adjusted EBITDA margin 37.1% 35.5% 36.5% 35.4%
---- ---- ---- ----
Depreciation and amortization 2,595 2,338 5,145 4,623
Stock compensation expense 65 72 134 138
Other operating expenses, net 135 289 229 312
--- --- --- ---
Income from operations 1,052 843 1,993 1,902
----- --- ----- -----
OTHER EXPENSES:
Interest expense, net (749) (723) (1,462) (1,431)
Loss on extinguishment of
debt (1) (110) (35) (110)
Loss on financial
instruments, net (70) (50) (32) (55)
Other pension benefits 13 526 26 536
Other income (expense), net (2) 2 (11) 10
--- --- --- ---
(809) (355) (1,514) (1,050)
---- ---- ------ ------
Income before income taxes 243 488 479 852
Income tax expense (48) (157) (73) (272)
--- ---- --- ----
Consolidated net income 195 331 406 580
Less: Net income attributable
to noncontrolling interests (56) (83) (112) (153)
--- --- ---- ----
Net income attributable to
Charter shareholders $139 $248 $294 $427
==== ==== ==== ====
EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic $0.53 $0.92 $1.11 $1.58
===== ===== ===== =====
Diluted $0.52 $0.91 $1.09 $1.56
===== ===== ===== =====
Weighted average common
shares outstanding, basic 263,460,911 270,464,654 266,217,549 270,105,143
=========== =========== =========== ===========
Weighted average common
shares outstanding, diluted 267,309,261 273,802,246 270,249,433 273,469,536
=========== =========== =========== ===========
Pro forma results reflect certain acquisitions of cable systems in 2016 as if they occurred as of January 1, 2015. Adjusted EBITDA is a non-GAAP term. See page 7 of this addendum for the reconciliation of Adjusted EBITDA to consolidated net income as defined by GAAP. All percentages are calculated using whole numbers. Minor differences may exist due to rounding.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in millions)
June 30, December 31,
2017 2016
---- ----
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $694 $1,535
Accounts
receivable,
net 1,489 1,432
Prepaid
expenses and
other
current
assets 381 333
--- ---
Total current
assets 2,564 3,300
----- -----
INVESTMENT IN CABLE
PROPERTIES:
Property,
plant and
equipment,
net 32,948 32,963
Customer
relationships,
net 13,231 14,608
Franchises 67,316 67,316
Goodwill 29,554 29,509
------ ------
Total
investment
in cable
properties,
net 143,049 144,396
------- -------
OTHER
NONCURRENT
ASSETS 1,347 1,371
----- -----
Total assets $146,960 $149,067
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts
payable and
accrued
liabilities $8,123 $7,544
Current
portion of
long-term
debt - 2,028
--- -----
Total current
liabilities 8,123 9,572
----- -----
LONG-TERM
DEBT 63,248 59,719
------ ------
DEFERRED
INCOME TAXES 26,574 26,665
------ ------
OTHER LONG-
TERM
LIABILITIES 2,582 2,745
----- -----
SHAREHOLDERS' EQUITY:
Controlling
interest 36,628 40,139
Noncontrolling
interests 9,805 10,227
----- ------
Total
shareholders'
equity 46,433 50,366
------ ------
Total
liabilities
and
shareholders'
equity $146,960 $149,067
======== ========
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
---- ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $195 $3,114 $406 $2,926
Adjustments to reconcile consolidated net income
to net cash flows from operating activities:
Depreciation and amortization 2,595 1,436 5,145 1,975
Stock compensation expense 65 63 134 87
Accelerated vesting of equity
awards 20 145 37 145
Noncash interest income, net (88) (48) (196) (41)
Other pension benefits (13) (520) (26) (520)
Loss on extinguishment of debt 1 110 35 110
Loss on financial instruments, net 70 50 32 55
Deferred income taxes 26 (3,192) 42 (3,164)
Other, net 2 (3) 8 -
Changes in operating assets and liabilities, net
of effects from acquisitions:
Accounts receivable (175) (124) 61 (100)
Prepaid expenses and other assets 60 32 (23) 11
Accounts payable, accrued
liabilities and other 187 527 133 530
--- --- --- ---
Net cash flows from operating
activities 2,945 1,590 5,788 2,014
----- ----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and
equipment (2,148) (1,260) (3,703) (1,689)
Change in accrued expenses related
to capital expenditures 347 194 197 138
Purchases of cable systems, net of
cash acquired - (28,810) - (28,810)
Change in restricted cash and cash
equivalents - 22,313 - 22,264
Other, net (42) (4) (49) (6)
--- --- --- ---
Net cash flows from investing
activities (1,843) (7,567) (3,555) (8,103)
------ ------ ------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 2,506 3,858 7,146 5,997
Repayments of long-term debt (2,054) (3,343) (5,529) (4,070)
Payments for debt issuance costs (21) (266) (42) (283)
Issuance of equity - 5,000 - 5,000
Purchase of treasury stock (3,328) (84) (4,223) (99)
Proceeds from exercise of stock
options 14 19 86 24
Purchase of noncontrolling interest (402) - (429) -
Distributions to noncontrolling
interest (37) (18) (75) (18)
Proceeds from termination of
interest rate derivatives - 88 - 88
Other, net (6) - (8) -
--- --- --- ---
Net cash flows from financing
activities (3,328) 5,254 (3,074) 6,639
------ ----- ------ -----
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,226) (723) (841) 550
CASH AND CASH EQUIVALENTS,
beginning of period 2,920 1,278 1,535 5
----- ----- ----- ---
CASH AND CASH EQUIVALENTS, end of
period $694 $555 $694 $555
==== ==== ==== ====
CASH PAID FOR INTEREST $761 $544 $1,653 $1,014
==== ==== ====== ======
CASH PAID FOR TAXES $32 $4 $33 $4
=== === === ===
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
(in thousands, except per customer and penetration data)
Approximate as of
June 30, March 31, December 31, June 30,
2017 (a) 2017 (a) 2016 (a) 2016 (a)(j)
------- ------- ------- ----------
Footprint (b)
------------
Estimated Video Passings 49,615 49,401 49,229 48,762
Estimated Internet
Passings 49,309 49,123 48,955 48,414
Estimated Voice Passings 48,587 48,331 48,142 47,566
Penetration Statistics (c)
-------------------------
Video Penetration of
Estimated Video Passings 34.4% 34.7% 35.0% 35.5%
Internet Penetration of
Estimated Internet
Passings 47.3% 46.9% 46.2% 45.1%
Voice Penetration of
Estimated Voice Passings 23.1% 23.1% 23.1% 23.1%
Customer Relationships (d)
-------------------------
Residential 25,298 25,131 24,801 24,306
Small and Medium Business 1,483 1,439 1,404 1,333
Total Customer
Relationships 26,781 26,570 26,205 25,639
====== ====== ====== ======
Residential
-----------
Primary Service Units ("PSUs")
-----------------------------
Video 16,646 16,736 16,836 16,934
Internet 22,033 21,802 21,374 20,667
Voice 10,378 10,364 10,327 10,255
49,057 48,902 48,537 47,856
====== ====== ====== ======
Pro Forma Quarterly Net Additions/(Losses)
----------------------------------------
Video (90) (100) (51) (152)
Internet 231 428 357 236
Voice 14 37 39 83
155 365 345 167
=== === === ===
Single Play (e) 10,177 9,980 9,640 9,252
Double Play (e) 6,484 6,540 6,586 6,559
Triple Play (e) 8,637 8,611 8,575 8,495
Single Play Penetration
(f) 40.2% 39.7% 38.9% 38.1%
Double Play Penetration
(f) 25.6% 26.0% 26.6% 27.0%
Triple Play Penetration
(f) 34.1% 34.3% 34.6% 35.0%
% Residential Non-Video
Customer Relationships 34.2% 33.4% 32.1% 30.3%
Pro Forma Monthly
Residential Revenue per
Residential Customer (g) $109.46 $109.11 $109.77 $109.74
Small and Medium Business
-------------------------
PSUs
----
Video 425 411 400 378
Internet 1,285 1,249 1,219 1,148
Voice 847 809 778 725
2,557 2,469 2,397 2,251
===== ===== ===== =====
Pro Forma Quarterly Net Additions/(Losses)
----------------------------------------
Video 14 11 12 9
Internet 36 30 34 41
Voice 38 31 27 32
88 72 73 82
=== === === ===
Pro Forma Monthly Small
and Medium Business
Revenue per Customer (h) $210.64 $211.21 $214.25 $214.52
Enterprise PSUs (i)
------------------
Enterprise PSUs 103 99 97 90
Pro forma results reflect certain acquisitions of cable systems in 2016 as if they occurred as of January 1, 2015. All percentages are calculated using whole numbers. Minor differences may exist due to rounding. See footnotes to unaudited summary of operating statistics on page 6 of this addendum.
(a) All customer statistics include the operations of
Legacy TWC, Legacy Bright House and Legacy Charter
each of which is based on individual legacy
company reporting methodology. These
methodologies differ and their differences may be
material. Statistical reporting will be conformed
over time to a single Charter reporting
methodology.
We calculate the aging of customer accounts based
on the monthly billing cycle for each account. On
that basis, at June 30, 2017, March 31, 2017,
December 31, 2016 and June 30, 2016, actual
customers include approximately 209,500, 168,400,
208,400 and 208,600 customers, respectively, whose
accounts were over 60 days past due, approximately
14,800, 13,300, 15,500 and 14,000 customers,
respectively, whose accounts were over 90 days
past due and approximately 8,700, 7,900, 8,000 and
8,000 customers, respectively, whose accounts were
over 120 days past due.
(b) Passings represent our estimate of the number of
units, such as single family homes, apartment and
condominium units and small and medium business
and enterprise sites passed by our cable
distribution network in the areas where we offer
the service indicated. These estimates are based
upon the information available at this time and
are updated for all periods presented when new
information becomes available.
(c) Penetration represents residential, small and
medium business and enterprise customers as a
percentage of estimated passings for the service
indicated.
(d) Customer relationships include the number of
customers that receive one or more levels of
service, encompassing video, Internet and voice
services, without regard to which service(s) such
customers receive. Customers who reside in
residential multiple dwelling units ("MDUs") and
that are billed under bulk contracts are counted
based on the number of billed units within each
bulk MDU. Total customer relationships excludes
enterprise customer relationships.
(e) Single play, double play and triple play customers
represent customers that subscribe to one, two or
three of Charter service offerings, respectively.
(f) Single play, double play and triple play
penetration represents the number of residential
single play, double play and triple play
customers, respectively, as a percentage of
residential customer relationships.
(g) Pro forma monthly residential revenue per
residential customer is calculated as total pro
forma residential video, Internet and voice
quarterly revenue divided by three divided by
average pro forma residential customer
relationships during the respective quarter.
(h) Pro forma monthly small and medium business revenue
per customer is calculated as total pro forma
small and medium business quarterly revenue
divided by three divided by average pro forma
small and medium business customer relationships
during the respective quarter.
(i) Enterprise PSUs represents the aggregate number of
fiber service offerings counting each separate
service offering at each customer location as an
individual PSU.
(j) In the second quarter of 2017, Charter conformed
the seasonal customer program in the Legacy Bright
House footprint to Charter's program. Prior to the
plan change, Legacy Bright House customers
enrolling in the seasonal plan were charged a one-
time fee and counted as customer disconnects, and
as new connects, when moving off the seasonal
plan. Under Charter's seasonal plan, residential
customers pay a reduced monthly fee while the
seasonal plan is active and remain reported as
customers. Excluding the impact of customer
disconnect activity related to the previous
seasonal plan, Legacy Bright House residential
customer relationships at June 30, 2016, would
have been higher by approximately 58,000, and
video, Internet and voice PSUs and net additions
for the second quarter of 2016, would have been
higher by 52,000, 72,000 and 49,000 respectively.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(dollars in millions)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Actual Actual Actual Actual
------ ------ ------ ------
Consolidated net income $195 $3,114 $406 $2,926
Plus: Interest expense, net 749 593 1,462 1,047
Income tax (benefit) expense 48 (3,179) 73 (3,151)
Depreciation and amortization 2,595 1,436 5,145 1,975
Stock compensation expense 65 63 134 87
Loss on extinguishment of debt 1 110 35 110
Loss on financial instruments, net 70 50 32 55
Other pension benefits (13) (520) (26) (520)
Other, net 137 553 240 574
--- --- --- ---
Adjusted EBITDA (a) 3,847 2,220 7,501 3,103
Less: Purchases of property, plant
and equipment (2,148) (1,260) (3,703) (1,689)
------ ------ ------ ------
Adjusted EBITDA less capital
expenditures $1,699 $960 $3,798 $1,414
====== ==== ====== ======
Net cash flows from operating
activities $2,945 $1,590 $5,788 $2,014
Less: Purchases of property, plant
and equipment (2,148) (1,260) (3,703) (1,689)
Change in accrued expenses related to
capital expenditures 347 194 197 138
--- --- --- ---
Free cash flow $1,144 $524 $2,282 $463
====== ==== ====== ====
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Actual Pro Forma (b) Actual Pro Forma (b)
------ ------------ ------ ------------
Consolidated net income $195 $331 $406 $580
Plus: Interest expense, net 749 723 1,462 1,431
Income tax expense 48 157 73 272
Depreciation and amortization 2,595 2,338 5,145 4,623
Stock compensation expense 65 72 134 138
Loss on extinguishment of debt 1 110 35 110
Loss on financial instruments, net 70 50 32 55
Other pension benefits (13) (526) (26) (536)
Other, net 137 287 240 302
--- --- --- ---
Adjusted EBITDA (a) 3,847 3,542 7,501 6,975
Less: Purchases of property, plant
and equipment (2,148) (2,075) (3,703) (3,909)
------ ------ ------ ------
Adjusted EBITDA less capital
expenditures $1,699 $1,467 $3,798 $3,066
====== ====== ====== ======
(a) See pages 1 and 2 of this
addendum for detail of the
components included within
Adjusted EBITDA.
(b) Pro forma results reflect
certain acquisitions of cable
systems in 2016 as if they
occurred as of January 1, 2015.
The above schedule is 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
UNAUDITED CAPITAL EXPENDITURES
(dollars in millions)
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Actual Actual Actual Actual
------ ------ ------ ------
Customer premise
equipment (a) $1,017 $378 $1,724 $515
Scalable infrastructure
(b) 382 386 650 496
Line extensions (c) 297 171 545 218
Upgrade/rebuild (d) 145 110 252 151
Support capital (e) 307 215 532 309
--- --- --- ---
Total capital
expenditures $2,148 $1,260 $3,703 $1,689
====== ====== ====== ======
Capital expenditures included in total
related to:
Commercial services $334 $196 $602 $260
Transition (f) $86 $111 $162 $164
Three Months Ended June 30, Six Months Ended June 30,
2017 2016 2017 2016
Actual Pro Forma (g) Actual Pro Forma (g)
------ ------------ ------ ------------
Customer premise
equipment (a) $1,017 $651 $1,724 $1,412
Scalable infrastructure
(b) 382 640 650 1,115
Line extensions (c) 297 277 545 502
Upgrade/rebuild (d) 145 171 252 305
Support capital (e) 307 336 532 575
--- --- --- ---
Total capital
expenditures $2,148 $2,075 $3,703 $3,909
====== ====== ====== ======
Capital expenditures included in total
related to:
Commercial services $334 $338 $602 $625
Transition (f) $86 $111 $162 $164
(a) Customer premise equipment includes
costs incurred at the customer
residence to secure new customers and
revenue generating units, including
customer installation costs and
customer premise equipment (e.g., set-
top boxes and cable modems).
(b) Scalable infrastructure includes costs,
not related to customer premise
equipment, to secure growth of new
customers and revenue generating units,
or provide service enhancements (e.g.,
headend equipment).
(c) Line extensions include network costs
associated with entering new service
areas (e.g., fiber/coaxial cable,
amplifiers, electronic equipment, make-
ready and design engineering).
(d) Upgrade/rebuild includes costs to
modify or replace existing fiber/
coaxial cable networks, including
betterments.
(e) Support capital includes costs
associated with the replacement or
enhancement of non-network assets due
to technological and physical
obsolescence (e.g., non-network
equipment, land, buildings and
vehicles).
(f) Transition represents incremental costs
incurred to integrate the Legacy TWC
and Legacy Bright House operations and
to bring the three companies' systems
and processes into a uniform operating
structure.
(g) Pro forma results reflect certain
acquisitions of cable systems in 2016
as if they occurred as of January 1,
2015.
View original content:http://www.prnewswire.com/news-releases/charter-announces-second-quarter-2017-results-300495247.html
SOURCE Charter Communications, Inc.
