10-QPeriod: Q2 FY2011

CHARTER COMMUNICATIONS, INC. /MO/ Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 2, 2011For Securities:CHTR

Summary

Charter Communications, Inc. reported its financial results for the second quarter and first half of 2011. The company experienced revenue growth driven by its Internet, telephone, and commercial services, which helped offset a decline in video subscribers. Despite overall revenue increases, Charter reported a net loss for both the three and six-month periods ending June 30, 2011. This was largely due to increased interest expenses and significant losses on debt extinguishment from refinancing activities. Operationally, the company saw a decrease in total customers and video subscribers, attributing this to ongoing competition and challenging economic conditions. However, subscriber growth in Internet and telephone services, alongside expansion in its commercial segment, signals a strategic shift. The company also highlighted its focus on managing its substantial debt load through free cash flow generation and potential refinancing, while also considering investments in business growth.

Financial Highlights

43 data points
Beta

Revenue

$1.79B

Net Income

-$107.00M

-6.0% Net Margin

EPS (Diluted)

$-0.98

Total Assets

$15.81B

Cash & Equivalents

$166.00M

Free Cash Flow

$136.00M

Financial Statements
Beta
Revenue$1.79B
SG&A Expenses$343.00M
Operating Expenses$1.52B
Operating Income$270.00M
Interest Expense$241.00M
Net Income-$107.00M
EPS (Basic)$-0.98
Shares Outstanding (Basic)109.27M

Key Highlights

  • 1Total revenue increased by 1% for the three months ended June 30, 2011, and by 2% for the six months ended June 30, 2011, compared to the prior year periods, driven by growth in Internet, telephone, and commercial services.
  • 2Despite revenue growth, Charter reported a net loss of $107 million for the three months ended June 30, 2011, and $217 million for the six months ended June 30, 2011.
  • 3Video revenues declined by 3% in both the three and six-month periods, reflecting a decrease in basic video customers by 293,200 year-over-year.
  • 4Residential Internet customers grew by 164,600 and residential telephone customers increased by 89,500 year-over-year.
  • 5The company recorded significant losses on debt extinguishment, totaling $53 million for the three months and $120 million for the six months ended June 30, 2011, primarily related to refinancing activities.
  • 6Interest expense, net, increased by $22 million for the three months and $51 million for the six months ended June 30, 2011, due to a higher weighted average interest rate on its debt.
  • 7Free cash flow for the six months ended June 30, 2011, was $227 million, a decrease from $332 million in the prior year, largely due to changes in operating assets/liabilities and increased interest payments.

Frequently Asked Questions

Charter reported an increase in total revenues for both the three and six-month periods ended June 30, 2011, driven by growth in Internet, telephone, and commercial services. However, the company continued to experience net losses, with a loss of $107 million for the quarter and $217 million for the six months. This was significantly impacted by substantial losses from debt extinguishment and increased interest expenses.

Video revenues declined by 3% due to a significant drop in basic video subscribers. In contrast, Internet and telephone services showed subscriber growth, and commercial services revenue saw a notable increase of 17% for the quarter and 16% for the six months. Advertising sales also saw a modest increase.

Charter carries a substantial amount of long-term debt, with an accreted value of $12.6 billion as of June 30, 2011. The company incurred significant losses on debt extinguishment due to refinancing activities. Charter aims to manage its debt through free cash flow generation, availability under its revolving credit facility, and potential future refinancing transactions.

Key challenges include intense competition from other market participants (e.g., telephone companies, satellite operators, wireless providers), the need for continuous innovation and capital expenditures, challenging economic conditions impacting consumer demand, rising programming costs, and extensive governmental regulation across various aspects of its business, including franchise renewals and net neutrality.