8-KOther Events

CHARTER COMMUNICATIONS, INC. /MO/ 8-K Report (Jan 7, 2002)

Filed January 7, 2002For Securities:CHTR

Summary

This 8-K filing from Charter Communications, Inc., dated January 7, 2002, provides an update on the company's performance and strategic initiatives during 2001 and outlook for 2002. The company is aggressively expanding its digital cable and cable modem services, expecting significant customer growth in these advanced offerings. Revenue and operating cash flow are projected to grow in 2001, although operating expenses are also increasing due to investments in these new services, higher programming costs, and administrative expenses related to network upgrades and new customer contact centers. The report also addresses the impact of Excite@Home's bankruptcy, noting that Charter has successfully transitioned most affected customers to its own high-speed data service and expects to incur transitional operational expenses. The company is also investing heavily in system rebuilds and upgrades, with substantial capital expenditures planned for 2002. Furthermore, Charter has amended its credit facilities to defer principal repayments and delay certain reductions, in exchange for increased interest rates and consent fees, while also increasing borrowing availability. These developments highlight Charter's focus on technological advancement and service expansion amidst a complex financial and operational landscape.

Key Highlights

  • 1Projected 2001 revenue growth of 12.5% to 13.5% and operating cash flow growth of 10% to 11%.
  • 2Significant increase in digital customers, projected to reach approximately 2.15 million by end of 2001 from 1.07 million at end of 2000.
  • 3Substantial growth in data customers, projected to reach approximately 630,000 by end of 2001 from 252,400 at end of 2000.
  • 4Impact of Excite@Home bankruptcy: over 90% of affected customers transitioned to Charter's service, with expected transitional expenses of $15-20 million.
  • 5Amended credit facilities to defer principal repayments and delay reductions, increasing borrowing availability by $300 million ($200M Charter Operating, $100M CC VIII).
  • 6Significant long-term debt: approximately $16.4 billion as of December 31, 2001.
  • 7Planned capital expenditures of approximately $2.4 billion for 2002 for upgrades, rebuilds, and recurring capital expenditures.
  • 8Restructuring of operating divisions into three from two, effective January 4, 2002, with leadership changes.

Frequently Asked Questions

Charter Communications projected revenue growth of 12.5% to 13.5% and operating cash flow growth (after corporate overhead) of 10% to 11% for 2001 compared to 2000. However, operating expenses were also expected to increase by 18% to 19% due to investments in digital and data services, higher programming, and general administrative costs.

The company is aggressively rolling out digital cable and cable modem services. Digital customer numbers were expected to nearly double from 1.07 million at the end of 2000 to approximately 2.15 million by the end of 2001. Data customer growth was also strong, with projections to reach about 630,000 by the end of 2001, a significant increase from 252,400 at the end of 2000. The third quarter of 2001 saw the largest quarterly addition of data customers in the company's history.

The bankruptcy of Excite@Home, which provided high-speed internet to about 25% of Charter's data customers, required Charter to transition these customers to its own Charter Pipeline service. Over 90% had been transitioned by the filing date, with the remainder expected to be moved by February 2002. Charter anticipates incurring $15 to $20 million in non-recurring operational expenses related to this transition.

As of December 31, 2001, Charter Communications had approximately $16.4 billion in outstanding long-term debt. On January 3, 2002, subsidiaries Charter Communications Operating LLC and CC VIII Operating, LLC (Bresnan) amended their credit facilities. These amendments deferred principal repayments and delayed certain facility reductions, in exchange for increased interest rates and consent fees. The amendments also increased borrowing availability under these facilities by $200 million and $100 million, respectively. As of December 31, 2001, total unused availability under subsidiary credit facilities was $2.3 billion, which would have been $2.6 billion after giving effect to the January 3, 2002 amendments.