10-QPeriod: Q2 FY2010

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 4, 2010For Securities:CHTR

Summary

Charter Communications, Inc. reported its financial results for the quarter and six months ended June 30, 2010. The company is emerging from Chapter 11 bankruptcy proceedings, having adopted fresh start accounting as of December 1, 2009. This transition impacts comparability with prior periods. For the six months ended June 30, 2010, Charter reported a net loss of $57 million for Charter shareholders, a significant improvement from the $493 million net loss in the same period of the prior year. Revenue increased by 5% to $3.5 billion for the six-month period, driven by growth in high-speed internet, telephone, and commercial services, partially offset by a decline in video subscribers. Despite the improved net loss, the company's financial position remains heavily influenced by its substantial debt load, with long-term debt totaling $12.7 billion as of June 30, 2010. The company made progress in managing its debt, including refinancing efforts and note repurchases. However, significant interest expenses continue to weigh on profitability. Capital expenditures increased year-over-year, reflecting investments in network enhancements and service expansion. The company believes it has sufficient liquidity to meet its obligations, supported by operating cash flows and available credit facilities.

Financial Highlights

39 data points
Beta

Revenue

$1.77B

Net Income

-$81.00M

-4.6% Net Margin

EPS (Diluted)

$-0.72

Total Assets

$15.81B

Cash & Equivalents

$166.00M

Free Cash Flow

$112.00M

Financial Statements
Beta
Revenue$1.77B
SG&A Expenses$357.00M
Operating Expenses$1.52B
Operating Income$254.00M
Interest Expense$219.00M
Net Income-$81.00M
EPS (Basic)$-0.72

Key Highlights

  • 1Net loss attributable to Charter shareholders for the six months ended June 30, 2010, significantly improved to $57 million, compared to a $493 million loss in the prior year period.
  • 2Total revenues increased by 5% to $3.5 billion for the six months ended June 30, 2010, driven by growth in high-speed Internet, telephone, and commercial services.
  • 3The company exited Chapter 11 bankruptcy and adopted fresh start accounting on December 1, 2009, impacting the comparability of financial statements.
  • 4Long-term debt remained substantial at $12.7 billion as of June 30, 2010, although significant debt reduction occurred during the bankruptcy process.
  • 5Capital expenditures increased by $109 million to $649 million for the six months ended June 30, 2010, reflecting investments in network upgrades and service expansion.
  • 6Adjusted EBITDA remained relatively flat at $1.3 billion for the six months, indicating stability in operational performance despite increased amortization.
  • 7The company experienced a decline in basic video customers, offset by growth in digital video, high-speed internet, and telephone subscribers.

Frequently Asked Questions

The adoption of fresh start accounting on December 1, 2009, means that the financial statements for periods after this date are not directly comparable to periods prior to November 30, 2009. Assets and liabilities were revalued to fair value as of the emergence date, and the company began with no retained earnings or accumulated losses. This significantly altered the balance sheet and income statement presentation.

While the company significantly reduced its debt principal by approximately $8 billion through its Chapter 11 reorganization, it still carries a substantial long-term debt of $12.7 billion as of June 30, 2010. The company has been actively managing its debt through refinancing and repurchasing notes, but high interest expenses remain a significant factor in its financial results.

Revenue growth is primarily driven by increases in residential high-speed Internet and telephone customers, as well as expansion in commercial services and advertising sales. However, the company is experiencing a decline in basic video subscribers, which partially offsets the growth in other service areas.

Charter believes it has sufficient liquidity from cash on hand, operating cash flows, and its revolving credit facility to fund its projected operating needs. However, the company acknowledges that continued economic challenges and increasing competition could adversely affect future results and potentially lead to impairments of assets like franchises and goodwill. The company is investing in capital expenditures to enhance its services and maintain competitiveness.