Charter Communications 4 q13 earnings_presentation
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Charter Communications 4 q13 earnings_presentation Charter Communications 4 q13 earnings_presentation Presentation Transcript

  • Fourth Quarter 2013 Results February 21, 2014
  • Charter Communications | 1 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 "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), regarding, among other things, our plans, strategies and prospects, both business and financial. 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 including, without limitation, the factors described under "Risk Factors" under Part II, Item 1A of our most recent Form 10-K filed with the SEC and the factors described under “Risk Factors” under Part I, Item 1A of our most recent Form 10-K filed with the SEC. Many of the forward-looking statements contained herein 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" and "potential," 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 other reports or documents that we file from time to time with the SEC, and include, but are not limited to:  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 and the difficult economic conditions in the United States;  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, and video provided over the Internet;  general business conditions, economic uncertainty or downturn, high 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);  the development and deployment of new products and technologies, including in connection with our plan to make our systems all-digital in 2014;  the effects of governmental regulation on our business or potential business combination transaction;  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;  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; and  the ultimate outcome of any possible transaction between Charter and Comcast Corporation (“Comcast”) and/or Time Warner Cable Inc. ("TWC") including the possibility that Charter will not pursue any transaction; and if a transaction were to occur, the ultimate outcome and results of integrating the operations, the ultimate outcome of Charter’s pricing and packaging and operating strategy applied to the acquired systems and the ultimate ability to realize synergies. 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 hereof.
  • Charter Communications | 2 Fourth Quarter Overview  Revenue growth of 5.0% Y/Y; excluding advertising, revenue grew 6.2%  Residential and commercial customer and PSU trends improved Y/Y  63K increase in residential customer relationships vs. 24K last year  Residential PSUs increased by 147K vs. 57K last year  Stabilized video customer base; lost 2K video customers  Added 93K residential Internet customers vs. 59K last year; added 56K residential voice customers vs. 34k last year  Adjusted EBITDA1 grew by 2.6% Y/Y; ex-political advertising, Adjusted EBITDA1 grew 4.8%  Capital expenditures of $566M  Higher free cash flow1 of $84M, vs. $33M in the prior-year quarter, given higher operating cash flow, partially offset by higher capex Revenue (in Millions) Operating and Financial Overview Adjusted EBITDA1 (in Millions) 1 See notes on slide 16. Note: All results pro forma for certain acquisitions as if they occurred on January 1, 2011. $2,045 $2,048 $2,105 $2,118 $2,148 4Q12 1Q13 2Q13 3Q13 4Q13 $745 $715 $737 $732 $764 4Q12 1Q13 2Q13 3Q13 4Q13
  • Charter Communications | 3 Charter’s Customer Satisfaction On the Rise  Overall satisfaction reached 63% in 4Q13, up from 53% before change in operating strategy  Charter’s full year 2013 customer satisfaction of 59% is above the cable average of 56%  New pricing and packaging and triple play customers continue to have the highest level of satisfaction Quarterly Customer Satisfaction1 (1) Based on Leichtman Research Group, using a 1-10 scale with 10 being extremely satisfied and 1 being not at all satisfied 50% 51% 51% 53% 53% 54% 56% 56% 57% 58% 63% 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 Customer Satisfaction (10 point scale; score of 8-10 = very satisfied)
  • Charter Communications | 4 Charter’s Year-End 2014 Residential Triple Play Offering1 (1) For new offers and customers in Charter’s new pricing and packaging (approx. 68% of legacy residential customers as of Dec. 31, 2013) in all-digital markets.  Over 200 HD channels; “Charter TV is HD”  100% All digital  VOD on every outlet and every screen – inside and outside the home  Cloud-based interface on portable devices Video  Minimum 60Mbps service (with high quality Wi-Fi service)  Internet modem included Internet  Fully featured voice at $19.99 following promotional period, including all taxes and fees  Unlimited local and long distance calling in the U.S., Canada and Puerto Rico Voice  $90 Triple Play offer  No contract and 30 day money back guarantee Charter TV App (current) Cloud-Based UI (future) All copyrights and trademarks are the property of their respective owners.
  • Charter Communications | 5 Residential Customer Trends Primary Service Units (PSUs) (in ‘000s) Revenue per Customer Relationship Triple Play Penetration1 Net Video Additions/(Losses)2 (in ‘000s) 1 Represents the percentage of residential customers that subscribe to triple play service. Note: All results pro forma for certain acquisitions as if they occurred on January 1, 2011. 2 4th quarter video results typically reflect ~40K of seasonal customer downgrades from expanded basic service to limited basic service, with the opposite effect (upgrades) in the 2nd quarter. (12) (25) 10 18 (6) (59) (11) (35) (73) (21) 3Q12 4Q12 1Q13 2Q13 3Q13 Expanded Basic Limited Basic 105.76 $107.17 $108.55 $108.52 $107.97 4Q12 1Q13 2Q13 3Q13 4Q13 29.7% 30.4% 30.7% 31.2% 31.9% 32.2% 32.6% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 (25) 10 18 (6) (14) (11) (35) (73) (21) 12 4Q12 1Q13 2Q13 3Q13 4Q13 4,286 4,261 4,206 4,179 4,177 4,059 4,166 4,204 4,290 4,383 2,073 2,131 2,176 2,217 2,273 10,418 10,558 10,586 10,686 10,833 4Q12 1Q13 2Q13 3Q13 4Q13 4,286 4,261 4,206 4,179 4,1774,059 4,166 4,204 4,290 4,3832,073 2,131 2,176 2,217 2,273 4Q12 1Q13 2Q13 3Q13 4Q13 Video Internet Voice
  • Charter Communications | 6 Total Revenue  Revenue grew 5.0% Y/Y:  Video increased 5.2% Y/Y given better mix of expanded basic and digital, price adjustments, advanced services, and higher bundle revenue allocation  Internet increased 15.0% Y/Y driven by customer additions and price adjustments  Voice down 22.6% Y/Y from value pricing and lower bundle revenue allocation, partially offset by customer growth  Commercial grew 19.4% Y/Y; excluding video, revenue rose 23.3%  Advertising sales down 17.8% Y/Y primarily as a result of a decline in revenue from political advertising Quarterly Revenue (in Millions) Quarterly Highlights Commercial Revenue Y/Y Change Note: All results pro forma for certain acquisitions as if they occurred on January 1, 2011. 20.1% 19.9% 19.4% 18.7% 19.7% 20.4% 19.4% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 994 1,023 1,054 1,044 1,046148 110 121 120 130 4Q12 1Q13 2Q13 3Q13 4Q13 Video Internet Voice Commercial Advertising & Other 994 1,023 1,054 1,044 1,046 513 534 554 575 590 199 184 169 161 154 191 197 207 218 228148 110 121 120 130 $2,045 $2,048 $2,105 $2,118 $2,148 4Q12 1Q13 2Q13 3Q13 4Q13
  • Charter Communications | 7 Charter Growth and Metrics Excluding Bresnan Total Revenue Growth Revenue Growth excl. Advertising Residential Revenue Growth Net Video Additions/(Losses)1 (in ‘000s) 1 4th quarter video results typically reflect ~40K of seasonal customer downgrades, from expanded basic service to limited basic service, with the opposite effect (upgrades) in the 2nd quarter. Note: Growth rates are for Charter excluding the Bresnan properties and are pro forma for certain acquisitions completed in 2011. (12) (25) 10 18 (6) (59) (11) (35) (73) (21) 3Q12 4Q12 1Q13 2Q13 3Q13 Expanded Basic Limited Basic 4.7% 3.7% 4.3% 4.9% 4.7% 5.5% 5.2% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 4.3% 3.2% 3.7% 5.5% 5.7% 6.4% 6.4% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2.6% 1.3% 2.2% 4.1% 4.3% 5.3% 5.0% 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 (25) 9 23 (4) (12) 16 (11) (33) (71) (21) 11 (114) 4Q12 1Q13 2Q13 3Q13 4Q13 LTM
  • Charter Communications | 8 Adjusted EBITDA1 Quarterly Adjusted EBITDA1 (in Millions) Quarterly Highlights LTM Adjusted EBITDA1 (in Millions) 1 See notes on slide 16. Note: All results pro forma for certain acquisitions as if they occurred on January 1, 2011.  Adjusted EBITDA1 grew 2.6% Y/Y  Excluding political advertising sales, Adjusted EBITDA grew 4.8%  Total operating costs rose 6.5% Y/Y driven by:  Programming expense increase of 7.3% Y/Y reflecting contractual increases  Marketing expense increase of 19.8% reflecting higher sales activity and channel development  Other expenses increased 15.4% reflecting higher commercial labor costs and higher collections expense $745 $715 $737 $732 $764 4Q12 1Q13 2Q13 3Q13 4Q13 $2,864 $2,948 4Q12 4Q13
  • Charter Communications | 9 % of Total Capex Capital Investment Quarterly Capex (in Millions) Highlights Note: All results pro forma for certain acquisitions as if they occurred on January 1, 2011.  4Q13 capex increased $97M Y/Y:  CPE increased by $54M Y/Y to support customer growth and all-digital initiative  Scalable infrastructure increased by $50M Y/Y due to timing of spending in-year. In 2013, scalable infrastructure decreased to $362M, from $407M in 2012  Support capital increased $30M Y/Y due to back office systems, real estate and tools/test equipment related to insourcing  Commercial totaled $98M, up $10M Y/Y, to support customer growth  Full-year 2013 capital expenditures consistent with expectations  2014 estimate of approximately $2.2B, including labor, $400M for all-digital and $100M to support insourcing activities LTM 4Q13 4Q13 $505 $469 $423 $440 $425 3Q12 4Q12 1Q13 2Q13 3Q13 CPE/Install Scal Infra Line Ext Upgr/Rebuild Support 3Q12 4Q12 1Q13 2Q13 3Q13 CPE/Install Scal Infra Line Ext Upgr/Rebuild Support $469 $423 $440 $425 $566 4Q12 1Q13 2Q13 3Q13 4Q13 46% 20% 12% 10% 12% 40% 25% 10% 8% 17%
  • Charter Communications | 10 Free Cash Flow1 Free Cash Flow1 (in Millions) Quarterly Highlights Free Cash Flow1  4Q13 FCF1 increase driven by timing of cash interest, higher Adjusted EBITDA and better trade working capital, offset by higher capital expenditures  FY 2013 FCF increased to $409M from $109M in 2012, driven by higher Adjusted EBITDA, the timing of cash interest, better trade working capital, offset by higher capital expenditures Financing and Leverage  Target leverage 4-4.5 times, +/- half turn  Over 95% of debt now due after 2016 1 See notes on slide 16. 2 Includes payments on interest rate swaps. 3 Includes available cash and revolver availability. Excludes $27M in restricted cash as of December 31, 2012. 4 Leverage is net debt of $12,930M divided by LTM adjusted EBITDA1 of $2,694M as of 12/31/12 and net debt of $14,227M divided by LTM pro forma Adjusted EBITDA1 of $2,948M as of 12/31/13. 4Q13A 4Q12A Y/Y Var. Adjusted EBITDA1 764$ 698$ 66$ Capex (566) (449) (117) Adjusted EBITDA1 - Capex 198 249 (51) Cash Paid for Interest2 (179) (257) 78 Cash Taxes 4 (2) 6 Other Working Capital 67 50 17 Other (6) (7) (1) Free Cash Flow1 84 33 51 Financing Activities (98) (888) 790 M&A Activity (3) - (3) Other (3) (6) 3 Change in Cash (20)$ (861)$ 841$ Total Liquidity3 1,108$ 967$ 141$ Leverage (LTM Adj. EBITDA)1,4 4.8x 4.8x 0.0x
  • Charter Communications | 11 Debt Maturity Profile Debt Maturity Profile (in Millions) Weighted Average Cost of Debt = 5.6% Weighted Average Life of Debt = 7.4 Years Over 95% of debt matures beyond 2016 $414 $65 $93 $1,102 $673 $1,427 $2,864 $3,110 $2,000 $1,500 $1,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
  • Charter Communications | 12 Significant Tax Assets  Tax basis increase includes $1.7 billion full step-up of Bresnan acquisition  For tax purposes, expect depreciation and amortization of approximately $2.2 billion in 2014, and $4.4 billion between 2015-2018, decelerating annually1  Charter is not expected to be a significant income tax payer until after 2018, with remaining NOL carryforward benefits becoming available through 2024 $2.1B of unrestricted tax loss carryforward available for Charter’s immediate use at 12/31/2013 $4.4B of loss carryforward becomes unrestricted in varying amounts from 2014 through 2016 $1.7B of loss carryforward becomes unrestricted at $226M annually, between 2017- 2024 $0.1B subject to §382 and other limitations Loss Carryforwards: ~$8.3B 1 Excludes depreciation and amortization on future capital expenditures and acquisitions. 2 Tax basis includes Bresnan assets. Tax Basis: ~$10.3B2 2013 2014 2015 2016 2017+ Tax Assets as of December 31, 2013 Tax Asset Basis Loss Carryforward Availability Tangible Assets: $5.1 Intangible Assets: $5.2 $0.1 $1.7 $0.4 $2.0 $2.0 $2.1
  • Charter Communications | 13 Charter is Well Positioned  Highly capable network covering ~12.8M passings; $9.5B1 commercial market  Offering superior Internet and competitive video and voice products in residential and commercial markets  Change in national go-to-market approach and operating strategies designed to create competitive advantage  Significant opportunity to increase residential and commercial penetration  Compelling products, pricing and packaging encourage adoption of fully- featured services throughout the home  Enhancing products and service to expand relationships, increase revenue per customer, and lower transaction costs  Market share growth strategy designed to generate attractive returns on invested capital and increase cash flow per home passed  Moderate leverage target and return-oriented use of cash  Opportunistically improving maturity profile, and lowering interest cost  Expect no significant cash income taxes until after 2018 due to ~$10.3B tax basis in assets as of 12/31/13 and ~$8.3B tax loss carryforwards Strong Platform and Scale Significant Penetration and Operating Growth Upside Unique and Attractive Financial Profile 1 Represents commercial telecommunications services marketplace, excluding commercial video, within Charter’s footprint.
  • Charter Communications | 14 Contact Information Investor Inquiries: Stefan Anninger | 203.905.7955 stefan.anninger@charter.com
  • Appendix
  • Charter Communications | 16 Use of Non-GAAP Financial Metrics The Company uses certain measures that are not defined by Generally Accepted Accounting Principles (“GAAP”) to evaluate various aspects of its business. Adjusted EBITDA, pro forma adjusted EBITDA, adjusted EBITDA less capital expenditures, and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net income (loss) or 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 reconciled to net income (loss) and free cash flow is reconciled to net cash flows from operating activities in the appendix of this presentation. Adjusted EBITDA is defined as net income (loss) plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, (gain) loss on extinguishment of debt, (gain) loss on derivative instruments, net and other operating expenses, such as 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 purchases of property, plant and equipment and changes in accrued expenses related to capital expenditures. Management and the Company’s Board 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 credit facilities and notes (all such documents have been previously filed with the United States Securities and Exchange Commission). For the purpose of calculating compliance with leverage covenants, we use adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees which fees were in the amount of $54 million and $49 million for the three months ended December 31, 2013 and 2012, respectively, and $201 million and $191 million for the year ended December 31, 2013 and 2012, respectively. For a reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measure, see slides 17, 18 and 19 in the appendix.
  • Charter Communications | 17 GAAP Reconciliations December 31, December 31, 2013 2012 Actual Actual Net income (loss) 39$ (40)$ Plus: Interest expense, net 211 216 Income tax expense / (benefit) (4) 49 Depreciation and amortization 500 466 Stock compensation expense 11 13 Gain on extinguishment of debt - (19) Gain on derviative instruments, net (2) - Other, net 9 13 Adjusted EBITDA1 764 698 Less: Purchases of property, plant and equipment (566) (449) Adjusted EBITDA less capital expenditures 198$ 249$ Net cash flows from operating activities 595$ 485$ Less: Purchases of property, plant and equipment (566) (449) Change in accrued expenses related to capital expenditures 55 (3) Free cash flow 84$ 33$ 1 Adjusted EBITDA is defined as net income (loss) plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, gain on extinguishment of debt, gain on derivative instruments, net, and other operating expenses, such as 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 our businesses as well as other non-cash or non-recurring items, and is unaffected by our capital structure or investment activities. The above schedules are presented in order to reconcile adjusted EBITDA and free cash flows, both non-GAAP measures, to the most directly comparable GAAP measure in accordance with Section 401(b) of the Sarbanes- Oxley Act. CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED ACTUAL RECONCILIATION OFNON-GAAP MEASURES TO GAAP MEASURES (DOLLARS IN MILLIONS) Three Months Ended
  • Charter Communications | 18 GAAP Reconciliations December 31, September 30, June 30, March 31, December 31, 2013 2013 2013 2013 2012 Actual Actual Pro Forma Pro Forma Pro Forma Net income (loss) 39$ (70)$ (95)$ (68)$ (73)$ Plus: Interest expense, net 211 214 224 224 229 Income tax expense / (benefit) (4) 57 62 39 75 Depreciation and amortization 500 493 463 452 507 Stock compensation expense 11 11 15 11 13 (Gain) loss on extinguishment of debt - - 81 42 (19) (Gain) loss on derviative instruments, net (2) 8 (20) 3 - Other, net 9 19 7 12 13 Adjusted EBITDA 2 764 732 737 715 745 Less: Purchases of property, plant and equipment (566) (425) (440) (423) (469) Adjusted EBITDA less capital expenditures 198$ 307$ 297$ 292$ 276$ The above schedules are presented in order to reconcile adjusted EBITDA, a non-GAAP measure, to the most directly comparable GAAP measure in accordance with Section 401(b) of the Sarbanes-Oxley Act. CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED PRO FORMA 1 RECONCILIATION OFNON-GAAP MEASURES TO GAAP MEASURES (DOLLARS IN MILLIONS) Three Months Ended 1 Pro forma results reflect certain acquisitions of cable systems as if they occurred as of January 1, 2011. 2 Adjusted EBITDA is defined as net income (loss) plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, (gain) loss on extinguishment of debt, (gain) loss on derivative instruments, net, and other operating expenses, such as 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 our businesses as well as other non-cash or non-recurring items, and is unaffected by our capital structure or investment activities. Political advertising contributed to Adjusted EBITDA $1 million and $17 million for the three months ended December 31, 2013 and 2012, respectively.
  • Charter Communications | 19 GAAP Reconciliations 2013 2012 2012 Pro Forma 1 Pro Forma 1 Actual Net loss (194)$ (392)$ (304)$ Plus: Interest expense, net 873 960 907 Income tax expense 154 298 257 Depreciation and amortization 1,908 1,877 1,713 Stock compensation expense 48 50 50 Loss on extinguishment of debt 123 55 55 Gain on derviative instruments, net (11) - - Other, net 47 16 16 Adjusted EBITDA2 2,948 2,864 2,694 Less: Purchases of property, plant and equipment (1,854) (1,816) (1,745) Adjusted EBITDA less capital expenditures 1,094$ 1,048$ 949$ 2 Adjusted EBITDA is defined as net loss plus net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, gain on derivative instruments, net, and other operating expenses, such as 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 our businesses as well as other non-cash or non-recurring items, and is unaffected by our capital structure or investment activities. The above schedules are presented in order to reconcile adjusted EBITDA, a non-GAAP measure, to the most directly comparable GAAP measure in accordance with Section 401(b) of the Sarbanes-Oxley Act. CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES UNAUDITED RECONCILIATION OFNON-GAAP MEASURES TO GAAP MEASURES (DOLLARS IN MILLIONS) 1 Pro forma results reflect certain acquisitions of cable systems as if they occurred as of January 1, 2011. Last Twelve Months Ended December 31,
  • Charter Communications | 20 Charter Shares Outstanding Charter Shares Outstanding as of December 31, 2013 1 Unvested restricted stock has voting rights and is therefore included in issued and outstanding total. 2 All warrants are currently exercisable, 840K warrants with an exercise price of $19.80 per share, 5.1M warrants with an exercise price $46.86 per share and 755K warrants with an exercise price of $51.28 per share. 3 The weighted average exercise price of outstanding options is $59.86 per share with various time and performance vesting requirements. 4 Restricted stock and restricted stock units vest over various periods of time depending upon the terms of each award agreement. Outstanding Shares Class A Common Shares 105,491,087 Restricted Stock1,4 652,988 Total Class A Common Shares 106,144,075 Warrants Outstanding2 6,732,199 Options3 3,141,955 Restricted Stock Units4 287,636
  • Charter Communications | 21 Charter Capital Structure Summary Issue Charter Communications, Inc. (CCI ) Rate / Shares1 As of December 31, 2013 (in millions) Aggregate Debt3 Leverage Ratio4 Issuer Amount2 CCO Holdings, LLC (CCOH) Operating Subsidiaries Charter Communications Operating, LLC (CCO) 1 Rate is stated bank interest or bond coupon. 2 Issuer amount includes stated bank, bond, and current equity market capitalization of shares outstanding based on a closing share price of $136.76 as of 12/31/13. 3 Aggregate debt is total principal amount of debt, excluding intercompany loans and $76M of letters of credit and capital leases. 4 Leverage is aggregate debt divided by LTM pro forma Adjusted EBITDA6 of $2,948M. The leverage calculation does not reflect the leverage calculations pursuant to our indentures and credit agreements. 6 See notes on slide 16. Common Shares 106M Equity Market Cap: ~$14.5B 3rd Lien Bank due 2014 L+2.5% 350 $14,248 4.8x Senior Notes due 2017-24 5.125 - 8.125% 10,350 Total CCOH 10,700 1st Lien Bank due 2018-21 L+2-2.25% 3,548 $3,548 Total CCO $3,548
  • Charter Communications | 22 Charter Capital Structure – Covenant Calculations 1 Calculated using aggregate principal amount of debt at 12/31/13 divided by LQA 4Q13 Adjusted EBITDA5 of $764M plus management fee expenses of $54M, or $818M. 2 Includes $779M of intercompany notes and $76M in letters of credit and capital leases. Intercompany loan balances consolidate out at the applicable entities as follows: $46M owed by CCO to Charter Communications Holding Company, LLC, $272M owed by CCO to CCH II and $461M owed by CCO to CCOH. 3 For CCOH, consists of $175M of minority interest of CC VIII (the “Liquidation Preference”), an indirect subsidiary of CCO, held by CCH I, LLC and Charter, less $461M owed by CCO to CCOH. The Liquidation Preference is included in the leverage calculation shown for CCOH. The CCO leverage calculation shown is consistent with the CCO Credit Facility and excludes the Liquidation Preference. 4 Includes $272M of intercompany notes from CCO to CCH II, $46M of intercompany notes from CCO to Charter Communications Holding Company, LLC and elimination of the Liquidation Preference. 5 See notes on slide 16. (in millions) As of December 31, 2013 Leverage ratio1 1st Lien bank debt due 2018-2021 $3,548 Other CCO debt2 855 Total CCO Debt 4,403 1.3x 3rd Lien Facility due 2014 350 7.25% Senior Notes due 2017 1,000 7.00% Senior Notes due 2019 1,400 8.125% Senior Notes due 2020 700 7.375% Senior Notes due 2020 750 5.25% Senior Notes due 2021 500 6.50% Senior Notes due 2021 1,500 6.625% Senior Notes due 2022 750 5.250% Senior Notes due 2022 1,250 5.125% Senior Notes due 2023 1,000 5.75% Senior Notes due 2023 500 5.75% Senior Notes due 2024 1,000 Minority Interest, net of intercompany note from CCO3 (286) Total CCOH Debt 10,413 Total Debt through CCOH 14,816 4.5x Intercompany eliminations4 (493) Total Charter Communications, Inc. debt $14,324 4.4x