Print Page  Close Window

Press Release

Charter Reports Second-Quarter 2006 Financial and Operating Results

Click here to view the Second Quarter Financial Addendum.

ST. LOUIS--(BUSINESS WIRE)--Aug. 8, 2006--Charter Communications, Inc. (NASDAQ: CHTR) (along with its subsidiaries, the "Company" or "Charter") today reported its second-quarter 2006 financial results.

"We are pleased with the results for the second quarter, which reflect continued momentum and visible improvements in the operating metrics that drive our business," said Neil Smit, president and chief executive officer. "We are keenly focused on disciplined, targeted marketing and operational execution aimed at delivering profitable revenue growth. While there is still a lot of work to be done, I believe that we're building a solid foundation for growth," Smit said.

    Highlights

    --  Second-quarter revenues from continuing and discontinued
        operations grew 8.7% year over year.

    --  Quarterly adjusted EBITDA from continuing and discontinued
        operations increased 4.2% compared to the second quarter of
        2005. (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.)

    --  Revenue generating units (RGUs) increased by 104,000, compared
        to the 5,600 RGUs added in the second quarter of 2005.

    --  Net gains improved on all product lines compared to the second
        quarter of 2005, and total average monthly revenue per analog
        video customer increased 10.0% year over year.

    --  Telephone customers climbed to 257,600 as of June 30, 2006, up
        35% from March 31, 2006. Phone service availability grew to
        approximately 4.7 million homes as of June 30, 2006.

    --  In July 2006, Charter completed the sale of certain
        geographically non-strategic systems for net proceeds of
        approximately $896 million.

The operating results of certain systems sold in July 2006 have been removed from continuing operations and placed in discontinued operations. All customer metrics in this release include all systems owned during the period, including those accounted for as discontinued operations, unless otherwise stated. (See "Discontinued Operations" section for further information.)

Operating Results

Charter's consistent focus on targeted marketing and improved service levels continued to drive RGU growth. Charter added a net 104,000 RGUs during the second quarter, a significant increase over second-quarter 2005 additions. Net gain improvements in every customer category contributed to overall RGU growth as compared to the year-ago quarter.

    --  Telephone customers increased by approximately 66,500,
        compared with a net gain of 12,500 customers in the year-ago
        quarter.

    --  High-speed Internet (HSI) customers increased by approximately
        52,700, compared with a net gain of 43,800 customers in the
        second quarter of 2005.

    --  Digital video customers increased by approximately 22,600,
        compared with a net loss of 9,000 customers a year ago.

    --  Analog video customers decreased by approximately 37,800,
        compared with a net loss of 41,700 customers in the second
        quarter of 2005.

As of June 30, 2006, Charter served approximately 11,397,800 RGUs, comprised of 5,876,100 analog video, 2,889,000 digital video, 2,375,100 HSI, and 257,600 telephone customers.

Total average monthly revenue per analog video customer increased 10.0% for the second quarter of 2006, compared to the same period in 2005, and churn declined compared to the year ago quarter. Continued improvements in average revenue and churn resulted from Charter's bundled offers and marketing efforts to add high-quality customers.

Strong telephone growth continued, with total customers increasing 35% since the first quarter of 2006. During the second quarter, Charter made telephone service available to nearly 750,000 additional homes, bringing total homes passed with telephone service to approximately 4.7 million as of June 30, 2006. The Company remains on track to make the service available to between 6 million and 8 million homes by year-end 2006. In markets where telephone service is available, Charter continues to experience lower customer churn, increased revenue per analog video customer, and improved customer satisfaction, as customers take advantage of Charter's bundled product offerings.

Second-Quarter Financial Results

Second-quarter 2006 revenues from continuing operations increased 9.2%, up $117 million year over year, to $1.383 billion, resulting from both a larger customer base versus prior year, and increases in average revenue per customer. High Speed Internet revenues increased 19.7%, up $43 million year over year, and telephone revenues more than tripled to $29 million from $8 million in the second quarter of 2005. Commercial revenues increased 15.2%, up $10 million year over year, and advertising sales revenues increased 8.2%, or $6 million, year over year. Video revenues increased 3.9%, up $32 million year over year.

Second-quarter 2006 operating costs and expenses from continuing operations increased $95 million, or 12.0%, to $887 million, reflecting Charter's expenditures to support higher rates of customer growth and retention, as well as added expenses arising from higher programming costs associated with annual rate increases and higher customer volumes.

Operating income from continuing operations increased by $46 million year over year, to $146 million for the second quarter of 2006. Revenue growth exceeded operating cost growth during the period by $22 million, and depreciation and amortization expenses declined by $24 million year over year.

Net loss applicable to common stock and loss per common share for the second quarter of 2006 were $382 million and $1.20, respectively. For the second quarter of 2005, Charter reported net loss applicable to common stock and loss per common share of $356 million and $1.17, respectively. The increase in net loss applicable to common stock was primarily due to a $27 million loss on extinguishment of debt related to the credit facility refinancing in April 2006, a $24 million increase in interest expense, and a $27 million increase in income tax expense. These expense increases were partially offset by the $46 million increase in operating income from continuing operations.

Year to Date Financial Results

For the six months ended June 30, 2006, total revenues from continuing operations increased by 8.9%, up $222 million, to $2.703 billion, resulting from both a larger number of customers and higher average revenue per customer. HSI revenues increased 19.1%, up $81 million, and telephone revenues more than tripled to $49 million from $14 million in the year ago period. Commercial revenues increased 16.4%, up $21 million year over year, and advertising sales revenues increased 8.9%, up $12 million year over year. Video revenues increased 3.8%, up $61 million year over year.

Operating costs and expenses from continuing operations for the six months ended June 30, 2006 increased by 13.0%, or $203 million, to $1.759 billion, reflecting costs to serve a greater number of customers, expenditures on customer service enhancements, increased marketing spending, and annual programming rate increases.

Operating income from continuing operations decreased by 2.8%, or $4 million, to $138 million for the first six months of 2006. Revenue growth exceeded operating cost growth during the period by $19 million, and depreciation and amortization expenses declined by $40 million year over year. These benefits were offset by a $60 million increase in asset impairment charges related to Charter's asset sales to NewWave Communications and subsidiaries of Orange BroadBand Holding Company, LLC, and an $8 million increase in special charges primarily related to severance associated with closing call centers and divisional restructuring.

Net loss applicable to common stock and loss per common share for the six months ended June 30, 2006, were $841 million and $2.65, respectively. For the first six months of 2005, Charter reported net loss applicable to common stock and loss per common share of $709 million and $2.34, respectively. The increase in net loss applicable to common stock was primarily due to a $72 million increase in interest expense and a $35 million increase in loss on extinguishment of debt, primarily related to the credit facility refinancing in April 2006, along with the $4 million decrease in operating income from continuing operations.

Asset Sales

In 2006, the Company signed three separate definitive agreements to sell certain geographically non-strategic cable television systems serving approximately 356,000 analog video customers for a total of approximately $971 million. In July 2006, Charter completed the sales of systems in West Virginia and Virginia, serving approximately 239,700 analog video customers, to Cebridge Acquisition Co., LLC (the "Cebridge transaction") and systems in Illinois and Kentucky, serving approximately 73,300 analog video customers, to NewWave Communications (the "NewWave transaction"). The sale of systems in northern and southeastern Nevada, and in Colorado, New Mexico, and Utah, serving 43,000 analog video customers, to subsidiaries of Orange Broadband Holding Company, LLC (the "Orange transaction") is scheduled to close in the third quarter of 2006.

Charter expects to record a gain on the sale related to the Cebridge transaction of approximately $200 million in the third quarter of 2006.

Assuming the sales of systems in July 2005, the Cebridge transaction, the New Wave transaction, the pending Orange sale, and the acquisition in January 2006 had occurred as of January 1, 2005, pro forma revenue and adjusted EBITDA growth for the second quarter of 2006 over the pro forma second quarter of 2005 would have been 9.1% and 4.7%, respectively. Pro forma for the three sales of systems announced in 2006, Charter served approximately 5,520,100 analog video, 2,730,000 digital video, 2,264,200 HSI, and 257,600 telephone customers as of June 30, 2006.

Discontinued Operations

The results of operations for the West Virginia and Virginia cable systems, which were sold to Cebridge in July 2006, have been presented as discontinued operations, net of tax, for the three and six months ended June 30, 2006 and 2005. Charter has determined that these systems comprise operations and cash flows that, for financial reporting purposes, meet the criteria for discontinued operations in accordance with Generally Accepted Accounting Principles (GAAP). Income from discontinued operations, net of tax, for the second quarter of 2006 and 2005, were $20 million and $4 million, respectively. Income from discontinued operations for the six months ended June 30, 2006 and 2005 were $34 million and $29 million, respectively.

Results for second quarter of 2006 versus 2005

Total revenues, including revenues from discontinued operations, were $1.438 billion, an 8.7% increase over second-quarter 2005 revenues of $1.323 billion. Adjusted EBITDA, including adjusted EBITDA from discontinued operations, for the second quarter of 2006 was $519 million, a 4.2% increase over second-quarter 2005 adjusted EBITDA of $498 million.

Results for six months ended June 30, 2006 and 2005

Total revenues for the six months ended June 30, 2006, including revenues from discontinued operations, were $2.812 billion, an 8.4% increase over revenue of $2.594 billion for the same year-ago period. Adjusted EBITDA, including adjusted EBITDA from discontinued operations, for the six months ended June 30, 2006 was $990 million, a 1.7% increase over adjusted EBITDA of $973 million for the same year-ago period.

Liquidity

The results presented in this section reflect the operation of all assets owned during the first six months of 2006, including the operations of West Virginia and Virginia cable systems.

Net cash flows used in operating activities for the second quarter of 2006 were $4 million, compared to net cash flows provided by operating activities of $28 million for the year-ago quarter. The change in net cash provided by operating activities is primarily the result of an increase in cash interest expense of $54 million, partially offset by the $21 million higher increase in revenue compared to the rise in operating costs and expenses.

Net cash flows provided by operating activities for the six months ended June 30, 2006 were $205 million, compared to $181 million for the year-ago period. The increase in net cash provided by operating activities is primarily the result of changes in operating assets and liabilities, which provided $107 million more cash in 2006 than in 2005, while revenue growth outpaced operating cost growth by $17 million. These variances were partially offset by an increase in cash interest expense of $99 million.

Adjusted EBITDA totaled $519 million for the second quarter of 2006, an increase of $21 million, or 4.2%, compared with the year-ago quarter. Adjusted EBITDA totaled $990 million for the six months ended June 30, 2006, an increase of $17 million, or 1.7%, compared with the year-ago period.

Expenditures for property, plant, and equipment for the second quarter of 2006 were $298 million, compared to second-quarter 2005 expenditures of $331 million. The decrease in capital expenditures reflects decreases in spending on support capital, line extensions, and customer premise equipment, partially offset by a year over year increase in spending for scalable infrastructure. For the six months ended June 30, 2006, capital expenditures were $539 million, compared to $542 million for the same year-ago period. Increases in spending on customer premise equipment and scalable infrastructure were offset by decreases in support capital and line extensions. During 2006, Charter expects capital expenditures to be approximately $1.0 billion - $1.1 billion.

Charter reported negative free cash flow of $219 million for the second quarter of 2006, flat with the same year-ago quarter. Growth in revenues in excess of operating costs and expenses, and decreased capital expenditures, were offset by increased interest on cash-pay obligations. For the six months ended June 30, 2006, Charter reported negative free cash flow of $405 million, compared to $326 million for the year-ago period. The increase was primarily driven by higher interest on cash-pay obligations, partially offset by revenue growth that exceeded growth in operating costs and expenses.

As of June 30, 2006, Charter had $19.860 billion in long-term debt and $56 million of cash on hand. Charter's total potential availability under its credit facilities as of June 30, 2006 was approximately $900 million, none of which was limited by covenant restrictions. Pro forma for the asset sales that closed in July 2006, availability as of June 30, 2006 was approximately $1.7 billion, which was limited to $1.3 billion by covenant restrictions.

Use of Non-GAAP Financial Metrics

The Company uses certain measures that are not defined by GAAP to evaluate various aspects of its business. Adjusted EBITDA, un-levered free cash flow, 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 special charges, non-cash depreciation and amortization, loss on sale of assets, asset impairment charges, and option compensation expense. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses and intangible assets recognized in business combinations as well as other non-cash or non-recurring items, and is unaffected by the Company's capital structure or investment activities. Adjusted EBITDA is a liquidity measure used by the 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.

Un-levered free cash flow is defined as adjusted EBITDA less purchases of property, plant and equipment. The Company believes this is an important measure, as it takes into account the period costs associated with capital expenditures used to upgrade, extend and maintain Charter's plant, without regard to the Company's leverage structure.

Free cash flow is defined as un-levered free cash flow less interest on cash pay obligations. It can also be computed as net cash flows from operating activities, less capital expenditures and cash special charges, adjusted for the change in operating assets and liabilities, net of dispositions. As such, it is unaffected by fluctuations in working capital levels from period to period.

The Company believes that adjusted EBITDA, un-levered free cash flow 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, as presented, is reduced for management fees in the amounts of $30 million and $33 million for the three months ended June 30, 2006 and 2005, respectively, which amounts are added back for the purposes of calculating compliance with leverage covenants. As of June 30, 2006, Charter and its subsidiaries are in compliance with their debt covenants and expect to remain in compliance for the next 12 months.

Additional Information Available on Website

A reconciliation of results as reported to results including those reported as discontinued operations and to pro forma results can be found on the Investor Center of our website at www.charter.com in the "Other Financial Information" section. Pro forma income statements for the three and six months ended June 30, 2005 and 2006 and pro forma customer statistics are provided in the addendum of this news release.

Conference Call

The Company will host a conference call on Tuesday, August 8, 2006, 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 Us" at the top right of the page, then again on "Investor 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.

Those participating via telephone should dial 888-233-1576. International participants should dial 706-643-3458.

A replay will be available at (800) 642-1687 or (706) 645-9291 beginning two hours after completion of the call through midnight August 15, 2006. The passcode for the replay is 2366714.

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(R) video entertainment programming, Charter High-Speed(TM) Internet access service, and Charter Telephone(TM) services. 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 (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. The Company will not undertake to revise forward-looking projections to reflect events after this date. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Many of the forward-looking statements contained in this 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," 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 reports or documents that we file from time to time with the SEC, and include, but are not limited to:

    --  the availability, in general, of funds to meet interest
        payment obligations under our debt and to fund our operations
        and necessary capital expenditures, either through cash flows
        from operating activities, further borrowings or other sources
        and, in particular, our ability to be able to provide under
        applicable debt instruments such funds (by dividend,
        investment or otherwise) to the applicable obligor of such
        debt;

    --  our ability to comply with all covenants in our indentures and
        credit facilities, any violation of which would result in a
        violation of the applicable facility or indenture and could
        trigger a default of other obligations under cross-default
        provisions;

    --  our ability to pay or refinance debt prior to or when it
        becomes due and/or to take advantage of market opportunities
        and market windows to refinance that debt through new
        issuances, exchange offers or otherwise, including
        restructuring our balance sheet and leverage position;

    --  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 a stable
        customer base, particularly in the face of increasingly
        aggressive competition from other service providers;

    --  our ability to obtain programming at reasonable prices or to
        pass programming cost increases on to our customers;

    --  general business conditions, economic uncertainty or slowdown;
        and

    --  the effects of governmental regulation, including but not
        limited to local franchise authorities, on our business.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this release.

             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,
                                    ----------------------------------
                                           2006         2005
                                         Actual       Actual  % Change
                                    ------------ ------------ --------
REVENUES:
  Video                              $      853   $      821      3.9%
  High-speed Internet                       261          218     19.7%
  Telephone                                  29            8    262.5%
  Advertising sales                          79           73      8.2%
  Commercial                                 76           66     15.2%
  Other                                      85           80      6.3%
                                    ------------ ------------
    Total revenues                        1,383        1,266      9.2%
                                    ------------ ------------

COSTS AND EXPENSES:
  Programming                               379          336     12.8%
  Service                                   205          186     10.2%
  Advertising sales                          27           24     12.5%
  General and administrative                233          216      7.9%
  Marketing                                  43           30     43.3%
                                    ------------ ------------
    Operating costs and expenses            887          792     12.0%
                                    ------------ ------------

  Depreciation and amortization             340          364
  Asset impairment charges                    -            8
  Loss on sale of assets, net                 -            -
  Option compensation expense, net            3            4
  Special charges, net                        7           (2)
                                    ------------ ------------

    Operating income from
     continuing operations                  146          100
                                    ------------ ------------

OTHER INCOME AND (EXPENSES):
  Interest expense, net                    (475)        (451)
  Gain (loss) on derivative
   instruments and hedging
   activities, net                            3           (1)
  Gain (loss) on extinguishment of
   debt                                     (27)           1
  Other, net                                  3           17
                                    ------------ ------------
                                           (496)        (434)
                                    ------------ ------------

Loss from continuing operations
 before income taxes                       (350)        (334)

Income tax expense                          (52)         (25)
                                    ------------ ------------

Loss from continuing operations            (402)        (359)

Income from discontinued
 operations, net of tax (a)                  20            4
                                    ------------ ------------

Net loss                                   (382)        (355)

Dividends on preferred stock -
 redeemable                                   -           (1)
                                    ------------ ------------

Net loss applicable to common
 stock                               $     (382)  $     (356)
                                    ============ ============

LOSS PER COMMON SHARE, BASIC AND
 DILUTED:
  Loss from continuing operations    $    (1.27)  $    (1.18)
                                    ============ ============
  Net loss                           $    (1.20)  $    (1.17)
                                    ============ ============

Weighted average common shares
 outstanding, basic and diluted     317,646,946  303,620,347
                                    ============ ============



                                         Six Months Ended June 30,
                                    ----------------------------------
                                           2006         2005
                                         Actual       Actual  % Change
                                    ------------ ------------ --------
REVENUES:
  Video                              $    1,684   $    1,623      3.8%
  High-speed Internet                       506          425     19.1%
  Telephone                                  49           14    250.0%
  Advertising sales                         147          135      8.9%
  Commercial                                149          128     16.4%
  Other                                     168          156      7.7%
                                    ------------ ------------
    Total revenues                        2,703        2,481      8.9%
                                    ------------ ------------

COSTS AND EXPENSES:
  Programming                               755          678     11.4%
  Service                                   408          356     14.6%
  Advertising sales                          52           47     10.6%
  General and administrative                464          410     13.2%
  Marketing                                  80           65     23.1%
                                    ------------ ------------
    Operating costs and expenses          1,759        1,556     13.0%
                                    ------------ ------------

  Depreciation and amortization             690          730
  Asset impairment charges                   99           39
  Loss on sale of assets, net                 -            4
  Option compensation expense, net            7            8
  Special charges, net                       10            2
                                    ------------ ------------

    Operating income from
     continuing operations                  138          142
                                    ------------ ------------

OTHER INCOME AND (EXPENSES):
  Interest expense, net                    (943)        (871)
  Gain (loss) on derivative
   instruments and hedging
   activities, net                           11           26
  Gain (loss) on extinguishment of
   debt                                     (27)           8
  Other, net                                  6           15
                                    ------------ ------------
                                           (953)        (822)
                                    ------------ ------------

Loss from continuing operations
 before income taxes                       (815)        (680)

Income tax expense                          (60)         (56)
                                    ------------ ------------

Loss from continuing operations            (875)        (736)

Income from discontinued
 operations, net of tax (a)                  34           29
                                    ------------ ------------

Net loss                                   (841)        (707)

Dividends on preferred stock -
 redeemable                                   -           (2)
                                    ------------ ------------

Net loss applicable to common
 stock                               $     (841)  $     (709)
                                    ============ ============

LOSS PER COMMON SHARE, BASIC AND
 DILUTED:
  Loss from continuing operations    $    (2.76)  $    (2.43)
                                    ============ ============
  Net loss                           $    (2.65)  $    (2.34)
                                    ============ ============

Weighted average common shares
 outstanding, basic and diluted     317,531,492  303,465,474
                                    ============ ============



             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,
                                    ----------------------------------
                                           2006         2005
                                      Pro Forma    Pro Forma
                                             (a)          (a) % Change
                                    ------------ ------------ --------
REVENUES:
  Video                             $       838  $       807      3.8%
  High-speed Internet                       257          216     19.0%
  Telephone                                  29            9    222.2%
  Advertising sales                          78           72      8.3%
  Commercial                                 74           64     15.6%
  Other                                      84           79      6.3%
                                    ------------ ------------
    Total revenues                        1,360        1,247      9.1%
                                    ------------ ------------

COSTS AND EXPENSES:
  Programming                               372          330     12.7%
  Service                                   201          184      9.2%
  Advertising sales                          27           24     12.5%
  General and administrative                230          213      8.0%
  Marketing                                  42           30     40.0%
                                    ------------ ------------
    Operating costs and expenses            872          781     11.7%
                                    ------------ ------------

    Adjusted EBITDA                         488          466      4.7%
                                    ------------ ------------

    Adjusted EBITDA margin                   36%          37%
                                    ------------ ------------

  Depreciation and amortization             340          367
  Loss on sale of assets, net                 -            -
  Option compensation expense, net            3            4
  Special charges, net                        7           (2)
                                    ------------ ------------

    Income from operations                  138           97
                                    ------------ ------------

OTHER INCOME AND (EXPENSES):
  Interest expense, net                    (459)        (444)
  Gain on derivative instruments
   and hedging activities, net                3           (1)
  Gain (loss) on extinguishment of
   debt                                     (27)           1
  Other, net                                  3           17
                                    ------------ ------------
                                           (480)        (427)
                                    ------------ ------------

Loss before income taxes                   (342)        (330)

Income tax expense                          (51)         (25)
                                    ------------ ------------

Net loss                                   (393)        (355)

Dividends on preferred stock -
 redeemable                                   -           (1)
                                    ------------ ------------

Net loss applicable to common stock $      (393) $      (356)
                                    ============ ============

Loss per common share, basic and
 diluted                            $     (1.24) $     (1.17)
                                    ============ ============

Weighted average common shares
 outstanding, basic and diluted     317,646,946  303,620,347
                                    ============ ============


                                         Six Months Ended June 30,
                                    ----------------------------------
                                           2006         2005
                                      Pro Forma    Pro Forma
                                             (a)          (a) % Change
                                    ------------ ------------ --------
REVENUES:
  Video                             $     1,655  $     1,596      3.7%
  High-speed Internet                       499          422     18.2%
  Telephone                                  49           17    188.2%
  Advertising sales                         145          133      9.0%
  Commercial                                145          125     16.0%
  Other                                     165          153      7.8%
                                    ------------ ------------
    Total revenues                        2,658        2,446      8.7%
                                    ------------ ------------

COSTS AND EXPENSES:
  Programming                               740          668     10.8%
  Service                                   400          352     13.6%
  Advertising sales                          51           46     10.9%
  General and administrative                458          404     13.4%
  Marketing                                  79           64     23.4%
                                    ------------ ------------
    Operating costs and
     expenses                             1,728        1,534     12.6%
                                    ------------ ------------

    Adjusted EBITDA                         930          912      2.0%
                                    ------------ ------------

    Adjusted EBITDA margin                   35%          37%
                                    ------------ ------------

  Depreciation and amortization             685          730
  Loss on sale of assets, net                 -            4
  Option compensation expense,
   net                                        7            8
  Special charges, net                       10            2
                                    ------------ ------------

    Income from operations                  228          168
                                    ------------ ------------

OTHER INCOME AND (EXPENSES):
  Interest expense, net                    (917)        (860)
  Gain on derivative
   instruments and hedging
   activities, net                           11           26
  Gain (loss) on extinguishment
   of debt                                  (27)           8
  Other, net                                  6           15
                                    ------------ ------------
                                           (927)        (811)
                                    ------------ ------------

Loss before income taxes                   (699)        (643)

Income tax expense                          (79)         (55)
                                    ------------ ------------

Net loss                                   (778)        (698)

Dividends on preferred stock -
 redeemable                                   -           (2)
                                    ------------ ------------

Net loss applicable to common
 stock                              $      (778) $      (700)
                                    ============ ============

Loss per common share, basic
 and diluted                        $     (2.45) $     (2.31)
                                    ============ ============

Weighted average common shares
 outstanding, basic and diluted     317,531,492  303,465,474
                                    ============ ============


(a) Pro forma results reflect the acquisition of cable systems in
    January 2006 and the sales of systems in July 2005, July 2006
    and the announced sale of systems scheduled to close in the third
    quarter of 2006  as if they occurred as of January 1, 2005 for
    all periods presented.

June 30, 2006. Pro forma revenues were reduced by $23 million and
$45 million for the three and six months ended June 30, 2006,
respectively. Pro forma net loss was increased by $11 million for the
three months ended June 30, 2006 and reduced by $63 million for the
six months ended June 30, 2006.

June 30, 2005. Pro forma revenues were reduced by $19 million and
$35 million for the three and six months ended June 30, 2005,
respectively. Pro forma net loss was reduced by $0 and $9 million for
the three and six months ended June 30, 2005, respectively.

The unaudited pro forma financial information has been presented
for comparative purposes and does not purport to be indicative of the
consolidated results of operations had these transactions been
completed as of the assumed date or which may be obtained in the
future. Adjusted EBITDA is a non-GAAP term. See page 7 of this
addendum 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,
                                                  2006           2005
                                          -------------  -------------
    ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                $        56    $        21
  Accounts receivable, net of allowance
   for doubtful accounts                           180            214
  Prepaid expenses and other current
   assets                                           84             92
  Assets held for sale                             768              -
                                          -------------  -------------
    Total current assets                         1,088            327
                                          -------------  -------------

INVESTMENT IN CABLE PROPERTIES:
  Property, plant and equipment, net             5,392          5,840
  Franchises, net                                9,280          9,826
                                          -------------  -------------
    Total investment in cable properties,
     net                                        14,672         15,666
                                          -------------  -------------

OTHER NONCURRENT ASSETS:                           385            438
                                          -------------  -------------
    Total assets                           $    16,145    $    16,431
                                          =============  =============

    LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable and accrued expenses    $     1,220    $     1,191
  Liabilities held for sale                         20              -
                                          -------------  -------------
    Total current liabilities                    1,240          1,191
                                          -------------  -------------

LONG-TERM DEBT                                  19,860         19,388

NOTE PAYABLE - RELATED PARTY                        53             49

DEFERRED MANAGEMENT FEES - RELATED PARTY            14             14

OTHER LONG-TERM LIABILITIES                        547            517

MINORITY INTEREST                                  189            188

PREFERRED STOCK - REDEEMABLE                         4              4

SHAREHOLDERS' DEFICIT                           (5,762)        (4,920)
                                          -------------  -------------
    Total liabilities and shareholders'
     deficit                               $    16,145    $    16,431
                                          =============  =============



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


                                                   Six Months Ended
                                                       June 30,
                                              ------------------------
                                                     2006        2005
                                              ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                     $     (841) $     (707)
  Adjustments to reconcile net loss to net
   cash flows from operating activities:
    Depreciation and amortization                     698         759
    Asset impairment charges                           99          39
    Noncash interest expense                           87         114
    Deferred income taxes                              60          43
    Loss on sale of assets, net                         -           4
    Option compensation expense, net                    7           8
    Gain on derivative instruments and hedging
     activities, net                                  (11)        (26)
    Gain on extinguishment of debt                     27         (14)
    Other, net                                         (6)        (17)
  Changes in operating assets and liabilities,
   net of effects from acquisitions and
   dispositions:
    Accounts receivable                                30           1
    Prepaid expenses and other assets                  29           -
    Accounts payable, accrued expenses and
     other                                             26         (23)
                                               ----------- -----------
      Net cash flows from operating activities        205         181
                                               ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment         (539)       (542)
  Change in accrued expenses related to
   capital expenditures                                (9)         45
  Proceeds from sale of assets                          9           8
  Purchase of cable system                            (42)          -
  Proceeds from investments                            28          17
  Other, net                                            -          (5)
                                               ----------- -----------
      Net cash flows from investing activities       (553)       (477)
                                               ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings of long-term debt                      5,830         635
  Repayments of long-term debt                     (5,858)       (946)
  Proceeds from issuance of debt                      440           -
  Payments for debt issuance costs                    (29)         (3)
                                               ----------- -----------
      Net cash flows from financing activities        383        (314)
                                               ----------- -----------

NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                           35        (610)
CASH AND CASH EQUIVALENTS, beginning of period         21         650
                                               ----------- -----------
CASH AND CASH EQUIVALENTS, end of period       $       56  $       40
                                               =========== ===========
CASH PAID FOR INTEREST                         $      791  $      744
                                               =========== ===========

NONCASH TRANSACTIONS:
  Issuance of debt by Charter Communications
   Operating, LLC                              $       37  $      333
                                               =========== ===========
  Retirement of Renaissance Media Group LLC
   debt                                        $      (37) $        -
                                               =========== ===========
  Retirement of Charter Communications
   Holdings, LLC debt                          $        -  $     (346)
                                               =========== ===========



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


                                      Approximate as of
                       -----------------------------------------------
                          June 30,   March 31,    Dec. 31,    June 30,
                          2006 (a)    2006 (a)    2005 (a)    2005 (a)
                       ----------- ----------- ----------- -----------
Customer Summary:
Customer Relationships:
  Residential (non-
   bulk) analog video
   customers (b)        5,600,300   5,640,200   5,616,300   5,683,400
  Multi-dwelling
   (bulk) and
   commercial unit
   customers (c)          275,800     273,700     268,200     259,700
                       ----------- ----------- ----------- -----------
    Total analog
     video customers
     (b) (c)            5,876,100   5,913,900   5,884,500   5,943,100

  Non-video customers
   (b)                    296,500     287,700     272,700     248,400
                       ----------- ----------- ----------- -----------
      Total customer
       relationships
       (d)              6,172,600   6,201,600   6,157,200   6,191,500
                       =========== =========== =========== ===========

  Average monthly
   revenue per analog
   video customer (e)  $    81.31  $    77.64  $    75.88  $    73.94

  Bundled customers (f) 2,136,900   2,064,400   1,958,200   1,795,200

Revenue Generating
 Units:
  Analog video
   customers (b) (c)    5,876,100   5,913,900   5,884,500   5,943,100
  Digital video
   customers (g)        2,889,000   2,866,400   2,796,600   2,685,600
  Residential high-
   speed Internet
   customers (h)        2,375,100   2,322,400   2,196,400   2,022,200
  Residential
   telephone customers
   (i)                    257,600     191,100     121,500      67,800
                       ----------- ----------- ----------- -----------
      Total revenue
       generating
       units (j)       11,397,800  11,293,800  10,999,000  10,718,700
                       =========== =========== =========== ===========

Video Cable Services:
Analog Video:
  Estimated homes
   passed (k)          12,640,200  12,582,100  12,519,300  12,287,500
  Analog video
   customers  (b) (c)   5,876,100   5,913,900   5,884,500   5,943,100
  Estimated
   penetration of
   analog video homes
   passed (b) (c) (k)
   (l)                         46%         47%         47%         48%
  Average monthly
   analog revenue per
   analog video
   customer (m)        $    38.45  $    37.97  $    37.66  $    38.51
  Analog video
   customers quarterly
   net gain (loss) (b)
   (c) (n)                (37,800)     29,400     (21,800)    (41,700)

Digital Video:
  Estimated digital
   video homes passed
   (k)                 12,557,200  12,493,100  12,427,800  12,156,300
  Digital video
   customers (g)        2,889,000   2,866,400   2,796,600   2,685,600
  Estimated
   penetration of
   digital homes
   passed (g) (k) (l)          23%         23%         23%         22%
  Digital penetration
   of analog video
   customers (b) (c)
   (g) (o)                     49%         48%         48%         45%
  Digital set-top
   terminals deployed   4,130,500   4,086,900   3,981,100   3,836,600
  Average incremental
   monthly digital
   revenue per digital
   video customer (m)  $    28.96  $    27.66  $    26.45  $    25.64
  Digital video
   customers quarterly
   net gain (loss) (g)
   (n)                     22,600      69,800      47,200      (9,000)

Non-Video Cable
 Services:
High-Speed Internet
 Services:
  Estimated high-speed
   Internet homes
   passed (k)          11,376,800  11,338,200  11,260,300  10,984,100
  Residential high-
   speed Internet
   customers (h)        2,375,100   2,322,400   2,196,400   2,022,200
  Estimated
   penetration of
   high-speed Internet
   homes passed (h)
   (k) (l)                     21%         20%         20%         18%
  Average monthly
   high-speed Internet
   revenue per high-
   speed Internet
   customer (m)        $    38.32  $    37.33  $    36.60  $    37.67
  Residential high-
   speed Internet
   customers quarterly
   net gain (h) (n)        52,700     126,000      76,400      43,800

Telephone Services:
 Estimated telephone
  homes passed (k)      4,658,500   3,911,600   2,918,000   1,619,900
 Residential telephone
  customers (i)           257,600     191,100     121,500      67,800
 Average monthly
  telephone revenue
  per telephone
  customer (m)         $    42.67  $    43.00  $    39.57  $    41.26
 Residential telephone
  customers quarterly
  net gain (i) (n)         66,500      69,600      31,600      12,500


After giving effect to the sale of certain non-strategic cable
systems in July and the announced sale of systems scheduled to close
in the third quarter of 2006, June 30, 2006 analog video customers,
digital video customers, high-speed Internet customers and telephone
customers would have been 5,520,100, 2,730,000, 2,264,200, 257,600,
respectively.

After giving effect to the sale of certain non-strategic cable
systems in July and the announced sale of systems scheduled to close
in the third quarter of 2006, March 31, 2006 analog video customers,
digital video customers, high-speed Internet customers and telephone
customers would have been 5,552,200, 2,707,200, 2,212,400, 191,100,
respectively.

After giving effect to the acquisition of cable systems in January
2006 and the sale of certain non-strategic cable systems in July and
the announced sale of systems scheduled to close in the third quarter
of 2006, December 31, 2005 analog video customers, digital video
customers, high-speed Internet customers and telephone customers would
have been 5,542,100, 2,650,500, 2,106,000 and 136,000, respectively.

After giving effect to the acquisition of cable systems in January
2006 and the sale of certain non-strategic cable systems in July 2005,
July 2006 and the announced sale of systems scheduled to close in the
third quarter of 2006, June 30, 2005 analog video customers, digital
video customers, high-speed Internet customers and telephone customers
would have been 5,570,000, 2,532,300, 1,937,000, 82,600, respectively.

See footnotes to unaudited summary of operating statistics on page
7 of this Addendum.


(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, 2006, March 31, 2006, December 31, 2005 and June 30,
    2005, "customers" include approximately 55,900, 48,500, 50,500 and
    45,100 persons whose accounts were over 60 days past due in
    payment, approximately 14,300, 11,900, 14,300 and 8,200 persons
    whose accounts were over 90 days past due in payment and
    approximately 8,900, 7,800, 7,400 and 4,500 of which were over 120
    days past due in payment, respectively.

(b) "Analog video customers" include all customers who receive video
    services (including those who also purchase high-speed Internet
    and telephone services) but excludes approximately 296,500,
    287,700, 272,700 and 248,400 customer relationships at June 30,
    2006, March 31, 2006, December 31, 2005 and June 30, 2005,
    respectively, who receive high-speed Internet service only or
    telephone service only and who are only counted as high-speed
    Internet customers or telephone customers.

(c) Included within "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 analog video customers is consistent with the
    methodology used in determining costs paid to programmers and has
    been used consistently. As we increase our effective analog 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) "Average monthly revenue per analog video customer" is calculated
    as total quarterly revenue divided by three divided by average
    analog video customers during the respective quarter.

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

(g) "Digital video customers" include all households that have one or
    more digital set-top terminals. Included in "digital video
    customers" on June 30, 2006, March 31, 2006, December 31, 2005 and
    June 30, 2005 are approximately 8,400, 8,500, 8,600 and 9,700
    customers, respectively, that receive digital video service
    directly through satellite transmission.

(h) "Residential high-speed Internet customers" represent those
    customers who subscribe to our high-speed Internet service. At
    June 30, 2006, March 31, 2006, December 31, 2005 and June 30,
    2005, approximately 2,102,700, 2,055,500, 1,943,000 and 1,787,600
    of these high-speed Internet customers, respectively, receive
    video and/or telephone services from us and are included within
    the respective statistics above.

(i) "Residential telephone customers" include all households receiving
    telephone service. As of June 30, 2006, March 31, 2006, December
    31, 2005 and June 30, 2005, approximately 233,500, 170,300,
    102,200 and 54,000 of these telephone customers, respectively,
    receive video and/or high-speed Internet services from us and are
    included within the respective statistics above.

(j) "Revenue generating units" represent the sum total of all analog
    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 analog 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.

(k) "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.

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

(m) "Average monthly revenue per customer" represents quarterly
    revenue for the service indicated divided by three divided by the
    number of customers for the service indicated during the
    respective quarter.

(n) "Quarterly net gain (loss)" represents the net gain or loss in the
    respective quarter for the service indicated.

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



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


                                       Three Months      Six Months
                                      Ended June 30,  Ended June 30,
                                    ---------------- ---------------
                                       2006    2005    2006    2005
                                     Actual  Actual  Actual  Actual
                                    -------- ------- ------- -------
Adjusted EBITDA from continuing and
 discontinued operations (a)         $  519  $  498  $  990  $  973
Less:  Purchases of property, plant
 and equipment                         (298)   (331)   (539)   (542)
                                    -------- ------- ------- -------

Un-levered free cash flow               221     167     451     431

Less:  Interest on cash pay
 obligations (b)                       (440)   (386)   (856)   (757)
                                    -------- ------- ------- -------

Free cash flow                         (219)   (219)   (405)   (326)

Purchases of property, plant and
 equipment                              298     331     539     542
Special charges, net                     (7)      -     (10)     (4)
Other, net                               (2)     (3)     (4)     (9)
Change in operating assets and
 liabilities                            (74)    (81)     85     (22)
                                    -------- ------- ------- -------

Net cash flows from operating
 activities                          $   (4) $   28  $  205  $  181
                                    ======== ======= ======= =======


                                       Three Months      Six Months
                                      Ended June 30,  Ended June 30,
                                    ---------------- ---------------
                                       2006    2005    2006    2005
                                        Pro     Pro     Pro     Pro
                                      forma   forma   forma   forma
                                         (c)     (c)     (c)     (c)
                                    -------- ------- ------- -------
Adjusted EBITDA (a)                  $  488  $  466  $  930  $  912
Less:  Purchases of property, plant
 and equipment                         (290)   (324)   (524)   (524)
                                    -------- ------- ------- -------

Un-levered free cash flow               198     142     406     388

Less:  Interest on cash pay
 obligations (b)                       (424)   (379)   (830)   (746)
                                    -------- ------- ------- -------

Free cash flow                         (226)   (237)   (424)   (358)

Purchases of property, plant and
 equipment                              290     324     524     524
Special charges, net                     (7)      -     (10)     (4)
Other, net                               (2)     (3)     (4)     (9)
Change in operating assets and
 liabilities                            (74)    (81)     85     (22)
                                    -------- ------- ------- -------

Net cash flows from operating
 activities                          $  (19) $    3  $  171  $  131
                                    ======== ======= ======= =======


(a) Adjusted EBITDA is calculated from page 1 of the addendum by
    taking revenue from continuing operations less operating costs and
    expenses from continuing operations plus adjusted EBITDA from
    discontinued operations. For details of the components of pro
    forma adjusted EBITDA, see page 2 of the addendum.

(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) Pro forma results reflect the acquisition of cable systems in
    January 2006 and sales of systems in July 2005, July 2006 and the
    announced sale of systems scheduled to close in the third quarter
    of 2006, June 30, as if they occurred as of January 1, 2005 for
    all periods presented.

The above schedules are presented in order to reconcile adjusted
EBITDA, un-levered free cash flows and free cash flows, all 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
                    UNAUDITED CAPITAL EXPENDITURES
                         (DOLLARS IN MILLIONS)


                                     Three Months      Six Months
                                    Ended June 30,  Ended June 30,
                                   --------------- ---------------
                                     2006    2005    2006    2005
                                   ------- ------- ------- -------

Customer premise equipment (a)     $  128  $  142  $  258  $  228
Scalable infrastructure (b)            63      47      97      89
Line extensions (c)                    33      48      59      77
Upgrade/Rebuild (d)                    14      12      23      22
Support capital (e)                    60      82     102     126
                                   ------- ------- ------- -------

  Total capital expenditures       $  298  $  331  $  539  $  542
                                   ======= ======= ======= =======


(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 terminals 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