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Charter Reports Second Quarter Financial and Operating Results

Click here to view the Second Quarter Financial Addendum.

Charter Drives Margin Expansion and Healthy ARPU Growth in the Second Quarter

ST. LOUIS--(BUSINESS WIRE)--Aug. 5, 2008--Charter Communications, Inc. (NASDAQ: CHTR) (along with its subsidiaries, the "Company" or "Charter") today reported its second quarter and six-month 2008 financial and operating results.

  • Second quarter revenues of $1.623 billion grew 8.9% year-over-year on a pro forma(1) basis and 8.3% on an actual basis primarily driven by increases in telephone and high-speed Internet (HSI) revenues.


  • Second quarter adjusted EBITDA(2) of $591 million increased 10.1% year-over-year on a pro forma basis and 9.4% on an actual basis.


  • Second quarter adjusted EBITDA margin of 36.4% increased 40 basis points year-over-year on a pro forma basis.


  • Total ARPU(3) for the quarter increased 12.2% year-over-year to $104.35, driven by increased sales of The Charter Bundle(TM), advanced services growth and upgrading customers to higher service tiers.


  • Revenue generating units (RGUs) increased 6.4% year-over-year, with 98,900 net additions during the second quarter of 2008.

"Our solid financial performance in the second quarter is a result of our consistent strategies to increase bundled penetration, enhance products and services, and improve the customer experience," said Neil Smit, President and Chief Executive Officer. "Our priorities are to deliver healthy financial growth, leverage infrastructure investments and capture new growth opportunities."

Key Operating Results

All of the following customer growth and ARPU statistics are presented on a pro forma basis. Charter added a net 98,900 RGUs during the second quarter of 2008. As of June 30, 2008, Charter served approximately 5,557,600 customers and the Company's 12,181,700 RGUs were comprised of 5,162,000 basic video, 3,056,900 digital video, 2,787,300 HSI, and 1,175,500 telephone customers.

  • Telephone customers increased by approximately 90,500 during the second quarter of 2008 and the number of telephone customers is up nearly 70% year-over-year. Telephone penetration is now 11.8% of telephone homes passed.


  • Digital video customers increased by approximately 33,900 and basic video customers decreased by 44,800 during the second quarter. Video ARPU was $58.73 for the second quarter of 2008, up 5.6% year-over-year.


  • HSI customers increased by approximately 19,300 in the second quarter of 2008. HSI ARPU increased year-over-year to $40.67.

Second quarter 2008 total ARPU increased 12.2% to $104.35 from the same period in 2007, driven primarily by an increase in bundled customers, advanced services growth, and upgrading customers to higher service tiers.

Second Quarter Results - Pro forma

Second quarter revenues were $1.623 billion, a pro forma increase of 8.9%, or $133 million. The increase resulted primarily from increases in telephone and HSI revenues.

Telephone revenues increased to $134 million from pro forma telephone revenues of $80 million a year ago, up 67.5% year-over-year on a pro forma basis as our telephone customer base continues to grow. HSI revenues were $339 million, up 10.4% year-over-year on a pro forma basis, due to increases in ARPU and the number of customers. Video revenues were $874 million, up 2.5% year-over-year on a pro forma basis, primarily as a result of advanced services revenue growth partially offset by a decline in basic video customers. Commercial revenues rose to $96 million, or 17.1% on a pro forma basis, resulting from increased sales of the Charter Business Bundle(R) to small and medium-size businesses.

Operating expenses, which include programming, service and advertising sales costs, were $698 million, an 8.7% increase year-over-year on a pro forma basis, reflecting annual programming rate increases, increased labor costs to support improved service levels, and growth of the Company's telephone business and other advanced services. Selling, general, and administrative expenses were $334 million, up 7.4% on a pro forma basis compared to the year-ago quarter, reflecting expenditures to further improve the customer experience and increased marketing expenditures targeted at revenue growth and retaining customers.

Adjusted EBITDA totaled $591 million for the second quarter of 2008, a pro forma increase of 10.1% compared to the year-ago quarter.

Net cash flows used in operating activities for the second quarter of 2008 were $36 million, compared to $151 million for the second quarter of 2007 on a pro forma basis. The decrease in cash flows used in operating activities is primarily the result of changes in operating assets and liabilities that used less cash in 2008 than the corresponding period in 2007, and the increase in adjusted EBITDA.

Six Months Results - Pro forma

For the six months ended June 30, 2008, revenues were $3.187 billion, a pro forma increase of $281 million, or 9.7%, primarily from telephone and HSI revenue growth.

Telephone revenues increased to $255 million from pro forma revenues of $143 million a year ago, up 78.3% year-over-year. HSI revenues increased to $667 million, up 11.2% year-over-year on a pro forma basis. Video revenues were $1.732 billion, an increase of 2.9% year-over-year on a pro forma basis. Commercial revenues increased to $189 million, up 16.0% on a pro forma basis.

Operating expenses for the six months ended June 30, 2008 were $1.380 billion, an increase of 8.8% year-over-year on a pro forma basis; and selling, general, and administrative expenses were $671 million, up 10.4% on a pro forma basis.

Adjusted EBITDA totaled $1.136 billion for the first half of 2008, a pro forma increase of 10.3% compared to the first half of 2007.

Net cash flows provided by operating activities for the first six months of 2008 were $168 million, compared to $112 million for the first half of 2007 on a pro forma basis. The increase in cash flows provided by operating activities is primarily the result of adjusted EBITDA growth offset by changes in operating assets and liabilities that used more cash in 2008 than the corresponding period in 2007.

Second Quarter Results - Actual

Second quarter revenues increased 8.3% and operating costs and expenses increased 7.6% compared to year-ago results.

Adjusted EBITDA for the second quarter of 2008 rose 9.4% compared to the year-ago period.

Income from operations was $230 million in the second quarter of 2008, compared to $200 million in the second quarter of 2007. The increase was primarily related to adjusted EBITDA growth.

Net loss for the second quarter of 2008 was $276 million, or $0.74 per common share. For the second quarter of 2007, Charter reported a net loss of $360 million and net loss per common share of $0.98. Net loss decreased primarily as a result of an increase in adjusted EBITDA and decreases in non-operating expenses.

Expenditures for property, plant, and equipment for the second quarter of 2008 were $316 million, compared to second quarter 2007 expenditures of $281 million. The increase in capital expenditures primarily reflects year-over-year increases in customer premise equipment, specifically due to the purchase of advanced set top boxes.

Net cash flows used in operating activities during the second quarter of 2008 were $36 million, compared to $148 million of net cash flows used in operating activities for the second quarter of 2007. The decrease in cash flows used in operating activities is primarily the result of changes in operating assets and liabilities that used less cash in 2008 than the corresponding period in 2007 and the increase in adjusted EBITDA.

Six Months Results - Actual

Revenues for the six months ended June 30, 2008 increased 9.0% year-over-year. Operating costs and expenses rose 8.6% compared to year-ago actual results. Adjusted EBITDA for the first six months of 2008 grew 9.7% compared to the year-ago period.

Income from operations increased to $435 million for the first half of 2008, compared to $356 million in the first half of 2007 primarily due to adjusted EBITDA growth.

Net loss for the first six months of the year was $634 million, or $1.71 per common share. For the first six months of 2007, Charter reported a net loss of $741 million and net loss per common share of $2.02. The decrease in net loss is attributable to the increase in adjusted EBITDA.

Capital expenditures for property, plant, and equipment for the six months ended June 30, 2008 were $650 million, compared to $579 million in 2007. The increase in capital expenditures primarily reflects year-over-year increases in customer premise equipment, specifically an increase the purchase of advanced set top boxes. Charter expects that capital expenditures in the year 2008 will total approximately $1.2 billion and approximately 75% of that amount will be directed toward success-based activities.

Net cash flows from operating activities for the first six months of 2008 were $168 million, compared to $118 million for the first half of 2007. The increase in cash flows provided by operating activities is primarily the result of adjusted EBITDA growth offset by changes in operating assets and liabilities that used more cash in 2008 than the corresponding period in 2007.

As of June 30, 2008, Charter had $20.480 billion in long-term debt and $63 million of cash on hand. Availability under the Company's revolving credit facility totaled approximately $1.4 billion at June 30, 2008, none of which was limited by covenant restrictions. Charter expects that cash on hand, cash flows from operating activities, and the amounts available under its credit facilities will be adequate to fund its projected cash needs, including scheduled maturities, through 2009. Cash flows from operating activities, and the amounts available under Charter's credit facilities will not be sufficient to fund projected cash needs in 2010 (primarily as a result of the CCH II, LLC $1.9 billion of senior notes outstanding at July 2, 2008 that mature in September 2010) and thereafter.

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, and free cash flow 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 depreciation and amortization, impairment charges, stock compensation expense, and other operating (income) 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 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.

Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.

The Company believes that adjusted EBITDA, pro forma adjusted EBITDA, and free cash flow 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 United States Securities and Exchange Commission). Adjusted EBITDA and pro forma adjusted EBITDA, as presented, include management fee expenses in the amount of $32 million and $34 million for the three months ended June 30, 2008 and 2007, respectively, which expense amounts are excluded for the purposes of calculating compliance with leverage covenants.

In addition to the actual results for the three and six months ended June 30, 2008 and 2007, we have provided pro forma results in this release for the three and six months ended June 30, 2007. We believe these pro forma results facilitate meaningful analysis of the results of operations. Pro forma results in this release reflect certain sales and acquisitions of cable systems in 2007 as if they had occurred as of January 1, 2007. Pro forma income statements for the three and six months ended June 30, 2007 and pro forma customer statistics as of March 31, 2008, December 31, 2007 and June 30, 2007 are provided in the addendum of this news release.

Additional Information Available on Website

A slide presentation to accompany the second quarter conference call will be available on the Investor & News Center of our website at www.charter.com in the "Presentations/Webcasts" section. Pro forma data, including disclosure concerning the pro forma data and the basis upon which it was calculated, for each quarter of 2006 and 2007 can also be found on the Investor & News Center in the "Pro forma Information" section.

Conference Call

The Company will host a conference call on Tuesday, August 5, 2008, at 9:00 a.m. Eastern Time (ET) related to the contents of this release.

The conference call will be webcast live via the Company's website at www.charter.com. Access the webcast by clicking on "About Charter" at the top of the home page, then Investor and News Center. Participants should go to the call link at least 10 minutes prior to the start time to register. The call will be archived on the website beginning two hours after its completion. Accompanying slides will also be available on the site.

Those participating via telephone should dial 888/233-1576 no later than 10 minutes prior to the call. International participants should dial 706/643-3458. The passcode for the call is 52499711.

A replay of the call will be available at 800/642-1687 or 706/645-9291 beginning two hours after the completion of the call through the end of business on August 12, 2008. The passcode for the replay is 52499711.

About Charter Communications(R)

Charter Communications, Inc. is a leading broadband communications company and the third-largest publicly traded cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. More information about Charter can be found at www.charter.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS:

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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" from time to time in our filings with the Securities and Exchange Commission ("SEC"). Many of the forward-looking statements contained in this release 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" and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this release 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:

  • 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 fund debt obligations (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, if not cured in a timely manner, 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;


  • the impact of competition from other distributors, including incumbent telephone companies, direct broadcast satellite operators, wireless broadband providers, and digital subscriber line ("DSL") providers;


  • difficulties in growing, further introducing, and operating our telephone services, while adequately meeting customer expectations for the reliability of voice services;


  • 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, including the recent significant slowdown in the housing sector and overall economy; and


  • the effects of governmental regulation 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 release.

(1) Pro forma results are described in the "Use of Non-GAAP Financial Metrics" section and are provided in the addendum of this news release.

(2) Adjusted EBITDA is defined in the "Use of Non-GAAP Financial Metrics" section and is reconciled to net cash flows from operating activities in the addendum of this news release.

(3) Average revenue per basic customer.

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
  UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
        (DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)



                                      Three Months Ended June 30,
                                  -----------------------------------
                                      2008          2007
                                     Actual        Actual    % Change
                                  ------------  ------------ --------

REVENUES:
  Video                          $        874  $        859      1.7%
  High-speed Internet                     339           308     10.1%
  Telephone                               134            80     67.5%
  Commercial                               96            83     15.7%
  Advertising sales                        75            76     -1.3%
  Other                                   105            93     12.9%
                                  ------------  ------------
    Total revenues                      1,623         1,499      8.3%
                                  ------------  ------------

COSTS AND EXPENSES:
  Operating (excluding
   depreciation and
   amortization) (a)                      698           647      7.9%
  Selling, general and
   administrative (excluding
   stock compensation expense)
   (b)                                    334           312      7.1%
    Operating costs and expenses        1,032           959      7.6%
                                  ------------  ------------

    Adjusted EBITDA                       591           540      9.4%
                                  ------------  ------------

    Adjusted EBITDA margin               36.4%         36.0%
                                  ------------  ------------

  Depreciation and amortization           328           334
  Stock compensation expense                8             5
  Other operating expenses, net            25             1
                                  ------------  ------------

   Income from operations                 230           200
                                  ------------  ------------

OTHER INCOME (EXPENSES):
  Interest expense, net                  (474)         (462)
  Change in value of derivatives           26            (3)
  Other income (expense), net               1           (36)
                                  ------------  ------------
                                         (447)         (501)
                                  ------------  ------------

Loss before income taxes                 (217)         (301)

Income tax expense                        (59)          (59)
                                  ------------  ------------

Net loss                         $       (276) $       (360)
                                  ============  ============

Loss per common share, basic and
 diluted                         $      (0.74) $      (0.98)
                                  ============  ============

Weighted average common shares
 outstanding, basic and diluted   371,652,070   367,582,677
                                  ============  ============



                                       Six Months Ended June 30,
                                  ------------------------------------
                                      2008          2007
                                     Actual        Actual    % Change
                                  ------------  ------------ ---------

REVENUES:
  Video                          $      1,732  $      1,697       2.1%
  High-speed Internet                     667           602      10.8%
  Telephone                               255           143      78.3%
  Commercial                              189           164      15.2%
  Advertising sales                       143           139       2.9%
  Other                                   201           179      12.3%
                                  ------------  ------------
    Total revenues                      3,187         2,924       9.0%
                                  ------------  ------------

COSTS AND EXPENSES:
  Operating (excluding
   depreciation and
   amortization) (a)                    1,380         1,278       8.0%
  Selling, general and
   administrative (excluding
   stock compensation expense)
   (b)                                    671           610      10.0%
    Operating costs and expenses        2,051         1,888       8.6%
                                  ------------  ------------

    Adjusted EBITDA                     1,136         1,036       9.7%
                                  ------------  ------------

    Adjusted EBITDA margin               35.6%         35.4%
                                  ------------  ------------

  Depreciation and amortization           649           665
  Stock compensation expense               16            10
  Other operating expenses, net            36             5
                                  ------------  ------------

   Income from operations                 435           356
                                  ------------  ------------

OTHER INCOME (EXPENSES):
  Interest expense, net                  (939)         (926)
  Change in value of derivatives          (11)           (4)
  Other income (expense), net              (2)          (39)
                                  ------------  ------------
                                         (952)         (969)
                                  ------------  ------------

Loss before income taxes                 (517)         (613)

Income tax expense                       (117)         (128)
                                  ------------  ------------

Net loss                         $       (634) $       (741)
                                  ============  ============

Loss per common share, basic and
 diluted                         $      (1.71) $      (2.02)
                                  ============  ============

Weighted average common shares
 outstanding, basic and diluted   370,868,849   366,855,427
                                  ============  ============



(a) Operating expenses include programming, service, and advertising
 sales expenses.

(b) Selling, general and administrative expenses include general and
 administrative and marketing expenses.

Adjusted EBITDA is a non-GAAP term. See below for the reconciliation
 of adjusted EBITDA to net cash flows from operating activities as
 defined by GAAP.

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
  UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND OPERATING DATA
        (DOLLARS IN MILLIONS, EXCEPT PER SHARE AND SHARE DATA)



                                     Three Months Ended June 30,
                                 ------------------------------------
                                     2008          2007
                                    Actual     Pro Forma (a) % Change
                                 ------------  ------------- --------

REVENUES:
  Video                         $        874  $         853      2.5%
  High-speed Internet                    339            307     10.4%
  Telephone                              134             80     67.5%
  Commercial                              96             82     17.1%
  Advertising sales                       75             75      0.0%
  Other                                  105             93     12.9%
                                 ------------  -------------
    Total revenues                     1,623          1,490      8.9%
                                 ------------  -------------

COSTS AND EXPENSES:
  Operating (excluding
   depreciation and
   amortization) (b)                     698            642      8.7%
  Selling, general and
   administrative (excluding
   stock compensation expense)
   (c)                                   334            311      7.4%
    Operating costs and
     expenses                          1,032            953      8.3%
                                 ------------  -------------

    Adjusted EBITDA                      591            537     10.1%
                                 ------------  -------------

    Adjusted EBITDA margin              36.4%          36.0%
                                 ------------  -------------

  Depreciation and amortization          328            332
  Stock compensation expense               8              5
  Other operating expenses, net           25              1
                                 ------------  -------------

   Income from operations                230            199
                                 ------------  -------------

OTHER INCOME (EXPENSES):
  Interest expense, net                 (474)          (462)
  Change in value of
   derivatives                            26             (3)
  Other income (expense), net              1            (36)
                                 ------------  -------------
                                        (447)          (501)
                                 ------------  -------------

Loss before income taxes                (217)          (302)

Income tax expense                       (59)           (59)
                                 ------------  -------------

Net loss                        $       (276) $        (361)
                                 ============  =============

Loss per common share, basic
 and diluted                    $      (0.74) $       (0.98)
                                 ============  =============

Weighted average common shares
 outstanding, basic and diluted  371,652,070    367,582,677
                                 ============  =============



                                       Six Months Ended June 30,
                                 -------------------------------------
                                     2008          2007
                                    Actual     Pro Forma (a) % Change
                                 ------------  ------------- ---------

REVENUES:
  Video                         $      1,732  $       1,684       2.9%
  High-speed Internet                    667            600      11.2%
  Telephone                              255            143      78.3%
  Commercial                             189            163      16.0%
  Advertising sales                      143            137       4.4%
  Other                                  201            179      12.3%
                                 ------------  -------------
    Total revenues                     3,187          2,906       9.7%
                                 ------------  -------------

COSTS AND EXPENSES:
  Operating (excluding
   depreciation and
   amortization) (b)                   1,380          1,268       8.8%
  Selling, general and
   administrative (excluding
   stock compensation expense)
   (c)                                   671            608      10.4%
    Operating costs and
     expenses                          2,051          1,876       9.3%
                                 ------------  -------------

    Adjusted EBITDA                    1,136          1,030      10.3%
                                 ------------  -------------

    Adjusted EBITDA margin              35.6%          35.4%
                                 ------------  -------------

  Depreciation and amortization          649            662
  Stock compensation expense              16             10
  Other operating expenses, net           36              4
                                 ------------  -------------

   Income from operations                435            354
                                 ------------  -------------

OTHER INCOME (EXPENSES):
  Interest expense, net                 (939)          (926)
  Change in value of
   derivatives                           (11)            (4)
  Other income (expense), net             (2)           (39)
                                 ------------  -------------
                                        (952)          (969)
                                 ------------  -------------

Loss before income taxes                (517)          (615)

Income tax expense                      (117)          (109)
                                 ------------  -------------

Net loss                        $       (634) $        (724)
                                 ============  =============

Loss per common share, basic
 and diluted                    $      (1.71) $       (1.97)
                                 ============  =============

Weighted average common shares
 outstanding, basic and diluted  370,868,849    366,855,427
                                 ============  =============



(a) Pro forma results reflect certain sales and acquisitions of cable
 systems in 2007 as if they occurred as of January 1, 2007. The pro
 forma statements of operations do not include adjustments for
 financing transactions completed by Charter during the periods
 presented or certain other dispositions of assets because those
 transactions did not significantly impact Charter's adjusted EBITDA.
 However, all transactions completed in 2007 and 2008 have been
 reflected in the operating statistics. The pro forma data is based on
 information available to Charter as of the date of this document and
 certain assumptions that we believe are reasonable under the
 circumstances. The financial data required allocation of certain
 revenues and expenses and such information has been presented for
 comparative purposes and is not intended to provide any indication of
 what our actual financial position, or results of operations would
 have been had the transactions described above been completed on the
 dates indicated or to project our results of operations for any
 future date.

(b) Operating expenses include programming, service, and advertising
 sales expenses.

(c) Selling, general and administrative expenses include general and
 administrative and marketing expenses.

June 30, 2007. Pro forma revenues and operating costs and expenses
 were reduced by $9 million and $6 million, respectively, for the
 three months ended June 30, 2007. Pro forma net loss increased by $1
 million for the three months ended June 30, 2007. Pro forma revenues,
 operating costs and expenses and net loss were reduced by $18
 million, $12 million and $17 million, respectively, for the six
 months ended June 30, 2007.

Adjusted EBITDA is a non-GAAP term. See below for the reconciliation
 of adjusted EBITDA to net cash flows from operating activities as
 defined by GAAP.

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                UNAUDITED CONSOLIDATED BALANCE SHEETS
                        (DOLLARS IN MILLIONS)


                                                June 30,  December 31,
                                                  2008        2007
                                                --------  ------------

                    ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                    $     63  $         75
  Short-term investments                             13             -
  Accounts receivable, net of allowance for
   doubtful accounts                                250           225
  Prepaid expenses and other current assets          35            36
                                                --------  ------------
    Total current assets                            361           336
                                                --------  ------------

INVESTMENT IN CABLE PROPERTIES:
  Property, plant and equipment, net              5,106         5,103
  Franchises, net                                 8,935         8,942
                                                --------  ------------
    Total investment in cable properties, net    14,041        14,045
                                                --------  ------------

OTHER NONCURRENT ASSETS                             308           285
                                                --------  ------------
   Total assets                                $ 14,710  $     14,666
                                                ========  ============

    LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable and accrued expenses        $  1,293  $      1,332
                                                --------  ------------
    Total current liabilities                     1,293         1,332
                                                --------  ------------

LONG-TERM DEBT                                   20,480        19,908

NOTE PAYABLE - RELATED PARTY                         69            65

DEFERRED MANAGEMENT FEES - RELATED PARTY             14            14

OTHER LONG-TERM LIABILITIES                       1,150         1,035

MINORITY INTEREST                                   203           199

PREFERRED STOCK - REDEEMABLE                          5             5

SHAREHOLDERS' DEFICIT                            (8,504)       (7,892)
                                                --------  ------------
     Total liabilities and shareholders'
      deficit                                  $ 14,710  $     14,666
                                                ========  ============

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
           UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (DOLLARS IN MILLIONS)


                                            Six Months Ended June 30,
                                            --------------------------
                                                2008          2007
                                            ------------  ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                 $       (634) $       (741)
  Adjustments to reconcile net loss to net
   cash flows from operating activities:
    Depreciation and amortization                   649           665
    Noncash interest expense                         27            21
    Change in value of derivatives                   11             4
    Deferred income taxes                           114           123
    Other, net                                       22            39
  Changes in operating assets and
   liabilities, net of effects from
   dispositions
    Accounts receivable                             (24)          (29)
    Prepaid expenses and other assets                 -            26
    Accounts payable, accrued expenses and
     other                                            3            10
                                            ------------  ------------
      Net cash flows from operating
       activities                                   168           118
                                            ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and
   equipment                                       (650)         (579)
  Change in accrued expenses related to
   capital expenditures                             (41)          (39)
  Other, net                                        (11)           31
                                            ------------  ------------
      Net cash flows from investing
       activities                                  (702)         (587)
                                            ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt                    1,765         7,247
  Repayments of long-term debt                   (1,195)       (6,727)
  Payments for debt issuance costs                  (39)          (33)
  Other, net                                         (9)            3
                                            ------------  ------------
      Net cash flows from financing
       activities                                   522           490
                                            ------------  ------------

NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                        (12)           21
CASH AND CASH EQUIVALENTS, beginning of
 period                                              75            60
                                            ------------  ------------
CASH AND CASH EQUIVALENTS, end of period   $         63  $         81
                                            ============  ============

CASH PAID FOR INTEREST                     $        912  $        918
                                            ============  ============

NONCASH TRANSACTIONS:
  Cumulative adjustment to Accumulated
   Deficit for the adoption of FIN 48      $          -  $         56
                                            ============  ============

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
              UNAUDITED SUMMARY OF OPERATING STATISTICS


                                    Approximate as of
                   ---------------------------------------------------
                      Actual                  Pro Forma
                   ------------ --------------------------------------
                     June 30,    March 31,   December 31,   June 30,
                     2008 (a)     2008 (a)     2007 (a)     2007 (a)
                   ------------ ------------ ------------ ------------

Customer Summary:
Customer
 Relationships:
  Residential
   (non-bulk)
   basic video
   customers (b)     4,897,100    4,947,900    4,958,600    5,054,800
  Multi-dwelling
   (bulk) and
   commercial unit
   customers (c)       264,900      258,900      260,100      269,000
                   ------------ ------------ ------------ ------------
    Total basic
     video
     customers       5,162,000    5,206,800    5,218,700    5,323,800

  Non-video
   customers (b)       395,600      390,800      376,400      348,400
                   ------------ ------------ ------------ ------------
    Total customer
     relationships
     (d)             5,557,600    5,597,600    5,595,100    5,672,200
                   ============ ============ ============ ============

  Pro forma
   average monthly
   revenue per
   basic video
   customer (e)    $    104.35  $    100.16  $     98.13  $     93.01
  Pro forma
   average monthly
   video revenue
   per basic video
   customer (f)    $     58.73  $     57.48  $     56.13  $     55.59

  Residential
   bundled
   customers (g)     2,639,000    2,602,800    2,506,700    2,370,900

Revenue Generating
 Units:
  Basic video
   customers (b)
   (c)               5,162,000    5,206,800    5,218,700    5,323,800
  Digital video
   customers (h)     3,056,900    3,023,000    2,920,100    2,843,800
  Residential
   high-speed
   Internet
   customers (i)     2,787,300    2,768,000    2,682,300    2,577,900
  Telephone
   customers (j)     1,175,500    1,085,000      959,300      701,300
                   ------------ ------------ ------------ ------------
    Total revenue
     generating
     units (k)      12,181,700   12,082,800   11,780,400   11,446,800
                   ============ ============ ============ ============

Video Cable
 Services:
Basic Video:
  Estimated homes
   passed (l)       11,890,800   11,792,800   11,741,500   11,591,700
  Basic video
   customers
   (b)(c)            5,162,000    5,206,800    5,218,700    5,323,800
  Estimated
   penetration of
   basic homes
   passed (b) (c)
   (l) (m)                43.4%        44.2%        44.4%        45.9%
  Pro forma basic
   video customers
   quarterly net
   loss (b) (c)
   (n)                 (44,800)     (11,900)     (66,400)     (28,300)

Digital Video:
  Digital video
   customers (h)     3,056,900    3,023,000    2,920,100    2,843,800
  Digital
   penetration of
   basic video
   customers (b)
   (c) (h) (o)            59.2%        58.1%        56.0%        53.4%
  Digital set-top
   terminals
   deployed          4,409,300    4,340,300    4,192,700    4,102,400
  Pro forma
   digital video
   customers
   quarterly net
   gain (h) (n)         33,900      102,900       59,600        8,700

Non-Video Cable
 Services:
High-Speed
 Internet
 Services:
  Estimated high-
   speed Internet
   homes passed
   (l)              11,203,400   11,105,800   11,051,400   10,877,000
  Residential
   high-speed
   Internet
   customers (i)     2,787,300    2,768,000    2,682,300    2,577,900
  Estimated
   penetration of
   high-speed
   Internet homes
   passed (i) (l)
   (m)                    24.9%        24.9%        24.3%        23.7%
  Pro forma
   average monthly
   high-speed
   Internet
   revenue per
   high-speed
   Internet
   customer (f)    $     40.67  $     40.08  $     40.21  $     40.14
  Pro forma high-
   speed Internet
   customers
   quarterly net
   gain (i) (n)         19,300       85,700       50,500       60,800

Telephone
 Services:
  Estimated
   telephone homes
   passed (l)        9,990,500    9,525,200    9,013,900    7,649,100
  Telephone
   customers (j)     1,175,500    1,085,000      959,300      701,300
  Estimated
   penetration of
   telephone homes
   passed (i) (l)
   (m)                    11.8%        11.4%        10.6%         9.2%
  Pro forma
   average monthly
   telephone
   revenue per
   telephone
   customer (f)    $     40.62  $     40.42  $     41.74  $     42.01
  Pro forma
   telephone
   customers
   quarterly net
   gain (j) (n)         90,500      125,700      155,300      128,000


Pro forma operating statistics reflect the sales and acquisitions of
 cable systems in 2007 and 2008 as if such transactions had occurred
 as of the last day of the respective period for all periods
 presented. The pro forma statements of operations do not include
 adjustments for financing transactions completed by Charter during
 the periods presented or certain other dispositions of assets because
 those transactions did not significantly impact Charter's adjusted
 EBITDA. However, all transactions completed in 2007 and 2008 have
 been reflected in the operating statistics.

At March 31, 2008 actual basic video customers, digital video
 customers, high-speed Internet customers and telephone customers were
 5,208,000, 3,023,200, 2,768,200, and 1,085,000, respectively.

At December 31, 2007 actual basic video customers, digital video
 customers, high-speed Internet customers and telephone customers were
 5,219,900, 2,920,400, 2,682,500, and 959,300, respectively.

At June 30, 2007 actual basic video customers, digital video
 customers, high-speed Internet customers and telephone customers were
 5,376,800, 2,866,000, 2,583,200, and 700,300, respectively.

See footnotes to unaudited summary of operating statistics below.

(a) "Customers" include all persons our corporate billing records show
 as receiving service (regardless of their payment status), except for
 complimentary accounts (such as our employees). In addition, at June
 30, 2008, March 31, 2008, December 31, 2007, and June 30, 2007,
 "customers" include approximately 34,200, 30,600, 48,200, and 31,300
 persons whose accounts were over 60 days past due in payment,
 approximately 5,300, 4,700, 10,700, and 3,800 persons whose accounts
 were over 90 days past due in payment and approximately 2,600, 3,200,
 2,900, and 1,500 of which were over 120 days past due in payment,
 respectively.

(b) "Basic video customers" include all residential customers who
 receive video services (including those who also purchase high-speed
 Internet and telephone services) but excludes approximately 395,600,
 390,800, 376,400, and 348,400 customer relationships at June 30,
 2008, March 31, 2008, December 31, 2007, and June 30, 2007,
 respectively, who receive high-speed Internet service only, telephone
 service only, or both high-speed Internet service and telephone
 service and who are only counted as high-speed Internet customers or
 telephone customers.

(c) Included within "basic video customers" are those in commercial
 and multi-dwelling structures, which are calculated on an equivalent
 bulk unit ("EBU") basis. EBU is calculated for a system by dividing
 the bulk price charged to accounts in an area by the most prevalent
 price charged to non-bulk residential customers in that market for
 the comparable tier of service. The EBU method of estimating basic
 video customers is consistent with the methodology used in
 determining costs paid to programmers and has been used consistently.
 As we increase our effective video prices to residential customers
 without a corresponding increase in the prices charged to commercial
 service or multi-dwelling customers, our EBU count will decline even
 if there is no real loss in commercial service or multi-dwelling
 customers.

(d) "Customer relationships" include the number of customers that
 receive one or more levels of service, encompassing video, Internet
 and telephone services, without regard to which service(s) such
 customers receive. This statistic is computed in accordance with the
 guidelines of the National Cable & Telecommunications Association
 (NCTA) that have been adopted by eleven publicly traded cable
 operators, including Charter.

(e) "Pro forma average monthly revenue per basic video customer" is
 calculated as total quarterly pro forma revenue divided by three
 divided by average pro forma basic video customers during the
 respective quarter.

(f) "Pro forma average monthly revenue per customer" represents
 quarterly pro forma revenue for the service indicated divided by
 three divided by the number of pro forma customers for the service
 indicated during the respective quarter.

(g) "Residential bundled customers" include residential customers
 receiving a combination of at least two different types of service,
 including Charter's video service, high-speed Internet service or
 telephone. "Residential bundled customers" do not include residential
 customers who only subscribe to video service.

(h) "Digital video customers" include all basic video customers that
 have one or more digital set-top boxes or cable cards deployed.

(i) "Residential high-speed Internet customers" represent those
 residential customers who subscribe to our high-speed Internet
 service. At June 30, 2008, March 31, 2008, December 31, 2007, and
 June 30, 2007, approximately 2,494,600, 2,470,300, 2,392,700, and
 2,294,900 of these high-speed Internet customers, respectively,
 receive video and/or telephone services from us and are included
 within the respective statistics above.

(j) "Telephone customers" include all customers receiving telephone
 service. As of June 30, 2008, March 31, 2008, December 31, 2007, and
 June 30, 2007, approximately 1,133,800, 1,048,800, 920,600, and
 669,500 of these telephone customers, respectively, receive video
 and/or high-speed Internet services from us and are included within
 the respective statistics above.

(k) "Revenue generating units" represent the sum total of all basic
 video, digital video, high-speed Internet and telephone customers,
 not counting additional outlets within one household. For example, a
 customer who receives two types of service (such as basic video and
 digital video) would be treated as two revenue generating units, and
 if that customer added on high-speed Internet service, the customer
 would be treated as three revenue generating units. This statistic is
 computed in accordance with the guidelines of the NCTA that have been
 adopted by eleven publicly traded cable operators, including Charter.

(l) "Homes passed" represent our estimate of the number of living
 units, such as single family homes, apartment units and condominium
 units passed by our cable distribution network in the areas where we
 offer the service indicated. "Homes passed" exclude commercial units
 passed by our cable distribution network. These estimates are updated
 for all periods presented when estimates change.

(m) "Penetration" represents customers as a percentage of homes passed
 for the service indicated.

(n) "Pro forma quarterly net gain (loss)" represents the pro forma net
 gain or loss in the respective quarter for the service indicated.

(o) "Digital penetration of basic video customers" represents the
 number of digital video customers as a percentage of basic video
 customers.

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
    UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
                        (DOLLARS IN MILLIONS)


                                          Three Months Ended June 30,
                                         -----------------------------
                                          2008    2007       2007
                                         Actual  Actual  Pro Forma (a)
                                         ------- ------- -------------

Net cash flows from operating activities $  (36) $ (148) $       (151)
Less: Purchases of property, plant and
 equipment                                 (316)   (281)         (281)
Less: Change in accrued expenses related
 to capital expenditures                    (10)     (7)           (7)
                                         ------- ------- -------------

Free cash flow                             (362)   (436)         (439)

Interest on cash pay obligations (b)        460     452           452
Purchases of property, plant and
 equipment                                  316     281           281
Change in accrued expenses related to
 capital expenditures                        10       7             7
Other, net                                   25      18            18
Change in operating assets and
 liabilities                                142     218           218
                                         ------- ------- -------------

Adjusted EBITDA (c)                      $  591  $  540  $        537
                                         ======= ======= =============


                                           Six Months Ended June 30,
                                         -----------------------------
                                          2008    2007       2007
                                         Actual  Actual  Pro Forma (a)
                                         ------- ------- -------------

Net cash flows from operating activities $  168  $  118  $        112
Less: Purchases of property, plant and
 equipment                                 (650)   (579)         (579)
Less: Change in accrued expenses related
 to capital expenditures                    (41)    (39)          (39)
                                         ------- ------- -------------

Free cash flow                             (523)   (500)         (506)

Interest on cash pay obligations (b)        912     905           905
Purchases of property, plant and
 equipment                                  650     579           579
Change in accrued expenses related to
 capital expenditures                        41      39            39
Other, net                                   35      20            20
Change in operating assets and
 liabilities                                 21      (7)           (7)
                                         ------- ------- -------------

Adjusted EBITDA (c)                      $1,136  $1,036  $      1,030
                                         ======= ======= =============


(a) Pro forma results reflect certain sales and acquisitions of cable
 systems in 2007 as if they occurred as of January 1, 2007.

(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.

(c) See above for detail of the components included within adjusted
 EBITDA.

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 measures in accordance with Section 401(b)
 of the Sarbanes-Oxley Act.

            CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
                         CAPITAL EXPENDITURES
                        (DOLLARS IN MILLIONS)


                                Three Months Ended  Six Months Ended
                                     June 30,            June 30,
                                ------------------  ------------------
                                  2008      2007      2008      2007
                                --------  --------  --------  --------

Customer premise equipment (a) $     158 $     128 $     323 $     289
Scalable infrastructure (b)           52        51       133       100
Line extensions (c)                   23        25        44        49
Upgrade/Rebuild (d)                   12        12        29        24
Support capital (e)                   71        65       121       117
                                --------  --------  --------  --------

  Total capital expenditures   $     316 $     281 $     650 $     579
                                ========  ========  ========  ========


(a) Customer premise equipment includes costs incurred at the customer
 residence to secure new customers, revenue units and additional
 bandwidth revenues. It also includes customer installation costs in
 accordance with SFAS No. 51 and customer premise equipment (e.g.,
 set-top boxes and cable modems, etc.).

(b) Scalable infrastructure includes costs, not related to customer
 premise equipment or our network, to secure growth of new customers,
 revenue units and additional bandwidth revenues or provide service
 enhancements (e.g., headend equipment).

(c) Line extensions include network costs associated with entering new
 service areas (e.g., fiber/coaxial cable, amplifiers, electronic
 equipment, make-ready and design engineering).

(d) Upgrade/rebuild includes costs to modify or replace existing
 fiber/coaxial cable networks, including betterments.

(e) Support capital includes costs associated with the replacement or
 enhancement of non-network assets due to technological and physical
 obsolescence (e.g., non-network equipment, land, buildings and
 vehicles).

CONTACT: Charter Communications, Inc.
Media:
Anita Lamont, 314-543-2215
or
Analysts:
Mary Jo Moehle, 314-543-2397

SOURCE: Charter Communications, Inc.