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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 3, 2000
CHARTER COMMUNICATIONS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
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(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
000-27927 43-1857213
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(COMMISSION FILE NUMBER) (FEDERAL EMPLOYER)
IDENTIFICATION NUMBER)
12444 Powerscourt Drive - Suite 100
St. Louis, Missouri 63131
- ------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (314) 965-0555
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ITEM 5. OTHER ITEMS.
On May 3, 2000, Charter Communications, Inc. announced first quarter 2000
financial results. A copy of the press release is being filed as Exhibit 99.1
with this report.
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ITEM 7. EXHIBITS.
99.1 Press release dated May 3, 2000.*
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*filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Charter Communications, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CHARTER COMMUNICATIONS, INC.,
registrant
Dated May 3, 2000 By: /s/ KENT D. KALKWARF
----------------------------------------
Name: Kent D. Kalkwarf
Title: Senior Vice President and Chief
Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
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EXHIBIT INDEX
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99.1 Press release dated May 3, 2000.
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EXHIBIT 99.1
[CHARTER COMMUNICATIONS LOGO]
FOR IMMEDIATE RELEASE
CHARTER COMMUNICATIONS, INC. ANNOUNCES FIRST QUARTER 2000
FINANCIAL RESULTS
ST. LOUIS, MO - May 3, 2000 - Charter Communications, Inc. (Nasdaq: CHTR) today
announced financial results for the three months ended March 31, 2000. Pro forma
for the acquisition of Bresnan Communications in February 2000, revenues were
$759.3 million and operating cash flow after deducting corporate overhead was
$352.0 million for the first quarter of 2000. As of March 31, 2000, Charter
served 6,152,000 basic cable customers, an increase of 1.7% compared to the pro
forma customer level of 6,050,500 at March 31, 1999. In addition, for those
cable systems owned or managed by Charter during the first quarter of both 2000
and 1999, revenues and operating cash flow grew 10.2% and 13.7%, respectively,
and internal customer growth was 2.4% over the year-ago period.
"I am pleased to report that Charter Communications continued to successfully
integrate the cable systems we acquired last year, as evidenced by our 10.8%
growth in pro forma operating cash flow for the first quarter of 2000. As we
merge these properties into our regional operating structure, we are already
realizing the synergies that we had originally envisioned," said Jerald L. Kent,
President and CEO of Charter. "We have closed on all major acquisitions and are
very encouraged by our `Charterizing' of these properties. At this point, we are
extremely confident that there are no significant obstacles that stand in our
way of generating outstanding operating results for the year, and we expect an
acceleration in our rate of operating cash flow growth for the balance of the
year."
"We continued to aggressively roll out advanced services. As of March 31, 2000,
we had approximately 225,000 digital customers and approximately 123,000 data
customers. With an installed universe of 266,500 digital converters, we continue
to see digital revenue per household of approximately $20 per month. The demand
for our digital tier of service temporarily exceeded the ability of our vendors
to supply equipment, but we have been assured that we will receive adequate
supply in order to exceed our announced year 2000 goal of averaging 10,000 new
digital customers per week by at least 20%. Strong customer demand for these
services was a key factor in our decision to accelerate our previously announced
rebuild schedule. We expect to accelerate our rebuild program by almost a full
year. This will result in approximately 70% of our customers being served by
cable plant with bandwidth capacity of 550 MHz or greater, with 60% of our
customers at 750 MHz or greater, by the end of 2000. We believe this positions
Charter on a comparable level with other large cable operators," said Kent.
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Charter's architecture for its state-of-the-art broadband network incorporates a
maximum node size of 500 homes, which currently averages approximately 380 homes
per node. Charter is also installing six strands of fiber-optic cable to each
node, with two strands activated and four strands available for future use. This
enables the company to segment to 60 home nodes by utilizing dense wavelength
division multiplexing technology.
"Our three primary objectives for 2000 are integrating the acquired systems,
upgrading our cable systems, and rolling out advanced services to our customers.
Thus far, we are on track to achieve all three objectives," said Kent. "We
continue to be confident in our ability to meet or exceed the analysts' current
expectations for cash flow growth and customer growth for advanced services."
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OPERATING RESULTS FOR THE FIRST QUARTER
The following presents the actual results of Charter Communications, Inc. for
the three months ended March 31, 2000, reflecting the operating results of
Bresnan Communications subsequent to its acquisition on February 14, 2000.
Comparisons of current period operating results to the first quarter of 1999 are
not meaningful.
STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 2000 Actual
------
(Dollar amounts in thousands, except share data)
<S> <C>
Revenues:
Basic $ 524,547
Premium 55,773
Pay-per-view 7,231
Advertising sales 33,278
Digital 9,196
Data 9,712
Other 81,867
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Total revenues 721,604
Operating Expenses: =============
Programming 164,825
General and administrative 125,292
Service 47,091
Marketing 11,693
Other 22,868
Corporate expense charges 12,508
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Total operating expenses 384,277
=============
Operating cash flow 337,327
Depreciation (252,876)
Amortization (293,224)
Option compensation expense (15,500)
Interest, net (225,479)
Other, net 132
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Loss before minority interest (449,620)
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Minority Interest in Loss of Subsidiary 268,906
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Net loss $ (180,714)
=============
Basic and Diluted Loss per Common Share $ (0.81)
=============
Weighted average shares outstanding 221,917,083
=============
</TABLE>
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The following pro forma balance sheet and operating data as of December 31, 1999
reflect the Bresnan acquisition and the issuance of senior notes on January 12,
2000 as if these transactions had occurred as of December 31, 1999.
BALANCE SHEET DATA (Unaudited)
<TABLE>
<CAPTION>
Actual Pro Forma
March 31, 2000 December 31, 1999
-------------- -----------------
(Dollar amounts in thousands)
<S> <C> <C>
Total Assets $21,781,701 $22,045,909
Long-Term Debt 11,154,423 11,025,460
Minority Interest 4,920,136 5,242,533
Redeemable Securities 1,846,176 1,846,176
Shareholders' Equity 2,955,143 3,068,722
</TABLE>
OPERATING DATA (Unaudited)
<TABLE>
<CAPTION>
Actual Pro Forma
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
Homes Passed 9,895,400 9,852,800
Basic Customers 6,152,000 6,138,200
Basic Penetration 62.2% 62.3%
Premium Subscriptions 3,088,000 3,144,400
Digital Video Customers 224,700 155,400
Digital Converters Deployed 266,500 176,600
Data Customers 122,900 84,400
</TABLE>
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PRO FORMA OPERATING RESULTS FOR THE FIRST QUARTER
The following pro forma results for the three months ended March 31, 2000
reflect the acquisition of Bresnan Communications in February 2000. The pro
forma results for the three months ended March 31, 1999 reflect the merger of
Marcus Cable systems, the eleven acquisitions of cable systems completed during
1999, and the Bresnan acquisition in February 2000. The pro forma results assume
that all transactions had occurred on January 1, 1999.
STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Pro Forma Pro Forma Percent
For the Three Months Ended March 31, 2000 1999 Variance
----- ---- --------
<S> <C> <C> <C>
(Dollar amounts in thousands)
Revenues:
Basic $552,500 $528,355
Premium 58,737 58,112
Pay-per-view 7,600 13,014
Advertising sales 35,622 22,692
Digital 9,901 1,309
Data 11,352 4,984
Other 83,552 82,724
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Total revenues 759,264 711,190 6.8%
======== ========
Operating Expenses:
Programming 174,222 164,348
General and administrative 130,825 120,521
Service 51,763 43,826
Marketing 12,316 10,957
Other 24,095 25,565
Corporate expense charges 14,062 28,265
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Total operating expenses 407,283 393,482 3.5%
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Operating cash flow $351,981 $317,708 10.8%
======== ========
</TABLE>
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COMPARABLE OPERATING RESULTS FOR THE FIRST QUARTER
The following information presents operating results and data for the first
quarter of 2000 as compared to the first quarter of 1999 for the cable systems
owned or managed by Charter as of January 1, 1999.
STATEMENT OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
Percent
For the Three Months Ended March 31, 2000 1999 Variance
---- ---- --------
<S> <C> <C> <C>
(Dollar amounts in thousands)
Revenues:
Basic $ 205,895 $ 188,164
Premium 24,107 24,405
Pay-per-view 3,490 7,243
Advertising sales 15,510 9,993
Digital 4,276 261
Data 3,441 1,082
Other 38,688 37,015
Total revenues --------- ---------
295,407 268,163 10.2%
========= =========
Operating Expenses:
Programming 66,600 63,510
General and administrative 51,282 47,630
Service 18,425 18,589
Marketing 5,349 6,737
Other 9,748 5,084
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Total operating expenses 151,404 141,550 7.0%
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Operating cash flow $ 144,003 $ 126,613 13.7%
========= =========
</TABLE>
OPERATING DATA (Unaudited)
<TABLE>
<CAPTION>
Percent
March 31, 2000 March 31, 1999 Variance
-------------- -------------- --------
<S> <C> <C> <C>
Homes Passed 3,878,900 3,805,200
Basic Customers * 2,254,100 2,202,200 2.4%
Basic Penetration 58.1% 57.9%
Premium Subscriptions 1,365,600 1,280,200 6.7%
Digital Video Customers 117,300 2,800
Data Customers 38,700 6,900
Average Monthly Revenue
per Customer $43.68 $40.59 7.6%
</TABLE>
* December 31, 1999 pro forma customers were 2,244,000 after transfer of a
certain Indiana cable system to complete the InterMedia exchange in March 2000.
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Revenues increased by $27.2 million or 10.2% when comparing the revenues for the
three months ended March 31, 2000 to the results for the comparable systems for
the three months ended March 31, 1999. This increase is due to a net gain of
approximately 51,900 or 2.4% basic customers between quarters and retail rate
increases implemented in certain of the Company's systems. Pay-per-view revenues
decreased as a result of fewer special events in the first quarter of 2000.
Advertising revenues increased 55.2% as a result of launching advertising in new
markets and increasing the number of cable channels on which advertising is
sold.
Total operating expenses increased approximately $9.9 million or 7.0% when
comparing the operating expenses for the quarter ended March 31, 2000 to the
results for the same systems for the quarter ended March 31, 1999. This increase
is primarily due to increases in license fees paid for programming as a result
of additional subscribers, new channels launched and increases in the rates paid
for programming services. The Company believes that the increases in programming
expense are consistent with industry-wide increases.
The Company experienced growth in operating cash flow of approximately $17.4
million or 13.7% when comparing operating cash flow for the quarter ended March
31, 2000 to the results for the same systems for the quarter ended March 31,
1999. Operating cash flow margin increased from 47.2% to 48.7% when comparing
the similar periods.
NEW PRODUCTS AND SERVICES
Charter currently offers its customers a full array of traditional cable
television services and we have begun to offer advanced high bandwidth services
such as digital video and high-speed Internet access. We plan to continually
enhance and upgrade these services, including adding new programming and other
telecommunications services.
Charter is in the process of introducing a variety of new or expanded products
and services beyond the traditional offerings of analog television programming
for the benefit of both our residential and commercial customers. These new
products and services are as follows:
- Digital television and its related enhancements;
- High-speed Internet access via cable modems;
- Internet access through dial-up telephone modems;
- Internet access through television-based service; and
- Interactive programming.
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The following statistics for December 31, 1999 are pro forma for the Bresnan
acquisition completed in February 2000.
<TABLE>
<CAPTION>
Actual Pro Forma
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
DIGITAL VIDEO
- -------------
Homes Passed 4,808,300 4,675,000
Digital Customers 224,700 155,400
Digital Penetration 4.7% 3.3%
DATA
- ----
Homes Passed 5,081,300 4,422,000
Data Customers 122,900 84,400
Penetration 2.4% 1.9%
TELEVISION-BASED INTERNET ACCESS
- --------------------------------
Homes Passed 429,000 429,000
Customers 7,300 7,100
Penetration 1.7% 1.7%
</TABLE>
"Safe Harbor" Statements under the Private Securities Litigation Reform Act of
1995: Statements in this press release regarding Charter Communications'
business which are not historical facts are "forward-looking statements" that
involve risks and uncertainties. These forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially
from historical results or those anticipated. For a discussion of such risks and
uncertainties, which could cause actual results to differ from those contained
in the forward-looking statements, see "Risk Factors" in the reports and
documents the company files from time to time with the U.S.
Securities and Exchange Commission.
Charter Communications (Nasdaq: CHTR) is a Wired World(TM) company offering a
full range of traditional cable television services. The Company has also begun
to offer services including digital cable television, high-speed Internet access
and television-based Internet access and is introducing interactive video
programming. All of these services are important steps toward the realization of
the Wired World vision where cable's ability to transmit voice, video and data
at high speeds will enable it to serve as the primary platform for the delivery
of new services to the home and workplace. Charter is the fourth largest
operator of cable television systems in the United States.
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For more information about Charter Communications, Inc., visit the Company's web
site at http://www.chartercom.com.
# # #
For further information, please contact:
Analysts and Investors: Media:
Ralph G. Kelly Anita Lamont
Senior Vice President - Treasurer Director of Communications
314-543-2388 314-543-2215
[email protected] [email protected]
