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  • 1. Charter Communications Earnings Call Presentation May 3, 2007
  • 2. Cautionary Statement Regarding Forward Looking Statements This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the quot;Securities Actquot;) and Section 21E of the Securities Exchange Act of 1934, as amended (the quot;Exchange Actquot;), regarding, among other things, our plans, strategies and prospects, both business and financial. Charter will not undertake to revise forward-looking projections to reflect events after this date. Although we believe that our plans, intentions and expectations 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. Many of the forward-looking statements contained in this presentation may be identified by the use of forward-looking words such as quot;believe,quot; quot;expect,quot; quot;anticipate,quot; quot;should,quot; quot;planned,quot; quot;will,quot; quot;may,quot; quot;intend,quot; quot;estimated,quot; quot;aim,quot; quot;on track,quot; quot;target,quot; quot;opportunityquot; and quot;potential,quot; among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this presentation are set forth in reports or documents that we file from time to time with the SEC, and include, but are not limited to: –the availability, in general, of funds to meet interest payment obligations under our debt and to fund our operations and necessary capital expenditures, either through cash flows from operating activities, further borrowings or other sources and, in particular, our ability to be able to provide under the applicable debt instruments such funds (by dividend, investment or otherwise) to the applicable obligor of such debt; –our ability to comply with all covenants in our indentures and credit facilities, any violation of which could trigger a default of our other obligations under cross-default provisions; –our ability to pay or refinance debt prior to or when it becomes due and/or refinance that debt through new issuances, exchange offers or otherwise, including restructuring our balance sheet and leverage position; –competition from other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers and DSL providers; –difficulties in introducing and operating our telephone services, such as our ability to adequately meet customer expectations for the reliability of voice services, and our ability to adequately meet demand for installations and customer service; –our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition; –our ability to obtain programming at reasonable prices or to adequately raise prices to offset the effects of higher programming costs; –general business conditions, economic uncertainty or slowdown; and –the effects of governmental regulation, including but not limited to local franchise authorities, on our business. 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 presentation. Unless otherwise stated, all results are pro forma which reflect the acquisition of cable systems in January 2006 and the sales 2 of certain systems in 2006 and 2007 as if such transactions had occurred as of January 1, 2006.
  • 3. Executing on Key Metrics Highest RGU Growth in over Continuing Momentum 5 yrs Highest Adjusted EBITDA1 Consistent Strategies Growth in over 4 yrs Double Digit Growth: Leveraging Foundation (year over year) Revenue 10.7% ARPU 12.3% Adj EBITDA 13.2% 3 See notes on slide 10.
  • 4. Strong First Quarter Results Show Momentum 1Q07 Bundled customers increased to 41% in 1Q07 from 34% in 1Q06 Telephone homes passed increased to 7.3 million in 1Q07 from 3.9 million in 1Q06 Total RGUs of 11.4 million in 1Q07 up from 10.6 million in 1Q06 Y/Y RGU Net Adds Y/Y Revenue and Adj EBITDA Growth 1 332,000 16% 12% 227,000 8% 4% 0% 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 1Q06 Net Adds 1Q07 Net Adds -4% Rev Growth Adj EBITDA Growth Analog Digital HSD Telephone 4 See footnotes on slide 10.
  • 5. Bundling + Value-Added Services = RGU & ARPU Growth RGU Net Adds (000s) Bundled Customers (000s) Package ARPU 2,300 332 46% $125 - $130 1,800 227 $95 - $105 1,300 800 1Q 06 1Q 07 1Q 06 1Q 07 Double Play Triple Play Total ARPU Value-Added Services Increase ARPU 12% $88 ARPU Y/Y 1Q07 Increase $78 Total Video $54 5% HSI $40 7% 1Q 06 1Q 07 5 See footnotes on slide 10.
  • 6. Telephone Net Gains and Annualized Penetration Rates 1Q07 Telephone Update 7.75% 125 7.3M Telephone Homes Passed 7.50% 573K Telephone Customers 105 Annualized Penetration Rates 7.25% 8% Telephone Penetration Net Gains in thousands (percent of telephone HP) 85 7.00% 76% Triple Play Take Rate (percent of telephone customers) 6.75% 65 6.50% 45 6.25% Annualized Penetration Rate Represents annualized quarterly net 25 6.00% telephone additions as a percentage 2Q 06 3Q 06 4Q 06 1Q 07 of homes passed at the beginning of Telephone Net Gain Annualized Penetration Rates that period Penetrating Telephone Markets at an Aggressive Rate 6
  • 7. Value-Added Services Support ARPU and RGU Growth HD/DVR customers up 20% from 4Q06 VOD revenue up 43% year over year Video ARPU up 5% year over year Video Video RGU net adds of 81,500 up 22% over 1Q06 Success in migrating customers to faster speeds 10 Meg service offered in all KMAs HSI HSI ARPU up 7% year over year HSI customer net gains of 18% year over year Available to 7.3 million homes, up 86% over 1Q06 8% triple play penetration of customer relationships Telephone Telephone net gains of 126,800 up 130% over 1Q06 7
  • 8. 1Q07 Financial Performance Revenue Summary Y/Y 1Q07 Financial Highlights ($ millions) 1Q07 Growth $838 3.6% Video Double-digit revenue growth 296 22.8% High-Speed Internet ARPU increased 12.3% 63 215.0% Telephone HSI revenue driven by unit growth and 7.4% ARPU growth 81 15.7% Commercial 147 0.0% Other Telephone revenue more than triple 1Q06 Commercial revenue continuing double $1,425 10.7% Total Revenues digit growth Operating Costs and $929 9.4% Adj EBITDA margin improved to 35% Expenses 1 Adj EBITDA $496 13.2% Building Momentum with Focused Operating Strategies 8 See footnotes on page 10.
  • 9. Adequate Liquidity Through 2008 Cumulative Maturity Profile2 ($ in millions) $7,022 $5,778 $5,421 $4,615 $3,375 $3,028 $1,067 $731 $185 $65 2008 2009 2010 2011 2012 As of 12/31/06 As of 3/31/07 Pro forma for recent transactions $2.4 Billion Maturities Extended Through 2012 9 See footnotes on page 10.
  • 10. Footnotes Unless otherwise stated, all results are pro forma which reflect the acquisition of cable systems in January 2006 and the sales of systems in 2006 and 2007 as if such transactions had occurred as of January 1, 2006. 1. Adjusted EBITDA and pro forma adjusted EBITDA are non-GAAP financial measures and should be considered in addition to, not as a substitute for, 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 is defined as income from operations before special charges, depreciation and amortization, loss on sale or retirement of assets, asset impairment charges, and stock compensation expense. 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 non-recurring items, and is unaffected by the Company’s capital structure or investment activities. Adjusted EBITDA and pro forma adjusted EBITDA are liquidity measures used by Company management and its Board of Directors to measure the Company’s ability to fund operations and its financing obligations. For this reason, it is a significant component of Charter’s annual incentive compensation program. 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 for the Company. Company management evaluates these costs through other financial measures. The Company believes that adjusted EBITDA and pro forma adjusted EBITDA provide information useful to investors in assessing Charter’s 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 SEC). For a reconciliation of pro forma adjusted EBITDA and adjusted EBITDA to the most directly comparable GAAP financial measure see the Appendix. 2. The maturity schedule reflects all maturities through 2012 and includes revolver maturity in 2012, term loan amortization, and bond and convertible note maturities. The remaining $16.4 billion face amount of debt matures in 2013 and beyond.
  • 11. Appendix
  • 12. CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES (DOLLARS IN MILLIONS) 2005 2006 2007 Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Actual 1st Quarter (a) 2nd Quarter (a) 3rd Quarter (a) 4th Quarter (a) 1st Quarter (a) 2nd Quarter (a) 3rd Quarter (a) 4th Quarter (a) 1st Quarter Net cash flows from operating activities $ 124 $ 1 $ (84) $ 120 $ 186 $ (20) $ 139 $ (25) $ 266 Less: Purchases of property, plant and equipment (205) (319) (264) (262) (233) (290) (254) (308) (298) Less: Change in accrued expenses related to capital expenditures 15 30 (9) (28) (7) (2) 13 20 (32) Free cash flow (66) (288) (357) (170) (54) (312) (102) (313) (64) Interest on cash pay obligations (b) 367 379 378 377 406 424 445 448 453 Purchases of property, plant and equipment 205 319 264 262 233 290 254 308 298 Change in accrued expenses related to capital expenditures (15) (30) 9 28 7 2 (13) (20) 32 Other, net 10 3 1 5 5 9 3 (2) 2 Change in operating assets and liabilities (59) 81 137 (46) (159) 74 (124) 82 (225) Adjusted EBITDA $ 442 $ 464 $ 432 $ 456 $ 438 $ 487 $ 463 $ 503 $ 496 (a) Pro forma results reflect the acquisition of cable systems in January 2006 and certain sales of cable systems in the third quarter of 2006 and January 2007 as if they occurred as of January 1, 2006 for all periods presented. (b) Interest on cash pay obligations excludes accretion of original issue discounts on certain debt securities and amortization of deferred financing costs that are reflected as interest expense in our consolidated statements of operations. The above schedules are presented in order to reconcile adjusted EBITDA and free cash flows, non-GAAP measures, to the most directly comparable GAAP measures in accordance with Section 401(b) of the Sarbanes-Oxley Act.