1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): February 15, 2001 ----------------- CHARTER COMMUNICATIONS, INC. ----------------------------- (Exact name of registrant as specified in its charter) Delaware -------- (State or Other Jurisdiction of Incorporation or Organization) 000-27927 43-1857213 --------- ---------- Commission File Number (Federal Employer Identification Number) 12444 Powerscourt Drive - Suite 400 St. Louis, Missouri 63131 - -------------------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) (Registrant's telephone number, including area code) (314) 965-0555
2 ITEM 5. OTHER ITEMS. On February 15, 2001 Charter Communications, Inc. announced 2000 fourth quarter financial results. A copy of the press release is being filed as Exhibit 99.1 with this report.
3 ITEM 7. EXHIBITS. 99.1 Press release dated February 15, 2001.* - ---------------- *filed herewith
4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Charter Communications, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHARTER COMMUNICATIONS, INC., registrant Dated February 15, 2001 By: /s/ KENT D. KALKWARF ------------------------------------------------ Name: Kent D. Kalkwarf Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
5 EXHIBIT INDEX 99.1 Press release dated February 15, 2001.
1 EXHIBIT 99.1 [CHARTER COMMUNICATIONS(R) LOGO] NEWS FOR RELEASE: 7:00 AM CENTRAL TIME, THURSDAY, FEBRUARY 15, 2001 CHARTER COMMUNICATIONS REPORTS CONTINUED REVENUE, OCF, AND CUSTOMER GROWTH IN FOURTH QUARTER 2000 FINANCIAL RESULTS AGGRESSIVE DIGITAL AND HIGH-SPEED DATA DEPLOYMENT TO DRIVE 2001 GROWTH ST. LOUIS -- Charter Communications, Inc. (Nasdaq: CHTR) today reported continued acceleration in the growth of revenues, operating cash flow (OCF), and basic, digital and data customers for the three months ended December 31, 2000, compared to pro forma year-ago results and compared to all other quarters in 2000. 2000 FINANCIAL HIGHLIGHTS Jerry Kent, President and CEO, said "I'm pleased to report that we met, or in most cases significantly exceeded, all of the goals we set at the start of the year, as well as those expected by Wall Street analysts. In the fourth quarter, we capped the year with OCF growth that is almost twice that of any other major cable operator. We saw acceleration in core basic customer growth, which indicates the success of our digital strategy. And we ended the year with advanced service deployments that exceeded our original optimistic expectations. The fact that this was done in a year in which we integrated 13 major acquisitions is a tribute to the hard work and dedication of every employee at Charter, and the success of retaining our entrepreneurial culture." For the fourth quarter of 2000, revenues increased 15.8% to $893.9 million, and OCF increased 28.9% to $433.2 million compared to the pro forma results for the fourth quarter of 1999. Pro forma revenues and OCF for the year 2000 increased 11.9% to $3.30 billion and 19.0% to $1.56 billion, respectively, compared to pro forma 1999 annual results. Pro forma internal customer growth was 2.5% for the year 2000. "We apparently retained our industry leadership in generating internal customer growth," Mr. Kent said. "Our aggressive approach to competition has enabled us to accelerate our internal customer growth throughout the year," he -MORE-
2 CHARTER, PAGE 2 continued. At December 31, 2000, Charter served 6,350,900 basic cable customers, compared to 6,193,700 pro forma as of December 31, 1999, a pro forma net gain of 157,200 customers. For "same-store" cable systems owned by Charter during the fourth quarter of both the years 2000 and 1999, revenues and system operating cash flow grew 18.3% and 28.9%, respectively. These systems represented 3,783,600 customers at December 31, 2000, reflecting a 2.2% internal growth rate in basic customers compared to a year ago. "I'm very proud of the financial and operating success Charter achieved during 2000," Mr. Kent said. "Our rate of cash flow growth increased each quarter throughout the year as we integrated acquired systems, grew our basic and advanced service offerings significantly, and achieved operating efficiencies," he continued. Mr. Kent said strong "same store" operating results reinforce his confidence that Charter will continue to be a premier operator by generating superior operating results for the foreseeable future. BROADBAND PIPE DELIVERS ADVANCED SERVICES TO GROWING CUSTOMER BASE Charter ended the year with 1,069,500 digital cable customers, nearly seven times the number it had on December 31, 1999. "We began the year 2000 with some 155,000 Charter Digital CableTM customers, and a goal to increase that number by 10,000 new customers per week," Mr. Kent said. "Consumer excitement about digital was well beyond our initial expectations, driven by a very targeted marketing effort. As a result, we attained a weekly average of 17,500 new digital customers per week, with a weekly average of 40,000 installs throughout December," he continued. "We actually achieved the one million digital customer milestone before Christmas." Mr. Kent said close to 90% of Charter's customers now have access to digital video service, and the company plans to continue its aggressive marketing efforts throughout 2001. "I'm pleased to acknowledge the initiative each of our employees took in deploying our digital service. We wouldn't have achieved this growth without the devotion of each of them," he said. "We've achieved tremendous success in a competitive marketplace, including conversion of some 14,000 satellite customers to Charter Digital Cable service through our dish win-back program," he added. With the addition of 67,800 cable modem customers during the fourth quarter of 2000, Charter ended the year with 252,400 data customers. Mr. Kent said the weekly cable modem -MORE-
3 CHARTER, PAGE 3 installation rate increased to over 5,200 per week during the fourth quarter, compared to 2,700 per week during the third quarter. "Charter's cable modem install rate ramped up throughout the year and exceeded the expectations we set at the beginning of the year 2000," Mr. Kent said. "Now that Charter PipelineTM, our two-way high-speed data product, is available to more than 50% of our customers, we're ready to step-up our marketing efforts in 2001." Mr. Kent said Charter remains ahead of schedule in its $3.5 billion project to build what is recognized as one of the most robust broadband infrastructures in the industry. "Approximately 70% of our customers are served by plant upgraded to at least 550 megahertz, and more than 50% of our customers have access to two-way enacted plant. By the end of the year 2002, nearly 93% of our customers will be served by 550 megahertz plant or greater, providing full, two-way interactive capability," he added. RECENT DEVELOPMENTS Charter is now offering multiple interactive services to digital customers in its Los Angeles Region. The company was the first to integrate Wink's Enhanced Broadcasting product with DIVA's video-on-demand (VOD) technology, providing Charter Digital Cable customers with access to product information, news on-demand, coupons and shopping on more than 20 digital channels. VOD technology is available to Charter digital cable customers in Los Angeles and the suburbs of Atlanta, passing more than 250,000 homes. Charter announced a trial of IP telephony service in St. Louis, partnering with Nortel Networks and ANTEC. Slated to begin this Summer, the trial will involve up to 500 residents in the St. Louis area. Charter also has an IP telephony trial underway in Wisconsin using TelCordia, Cisco and Motorola equipment. LOOKING AHEAD In 2000, cable system pro forma revenue and operating cash flow, before corporate overhead, grew 11.9% and 12.4% respectively. In 2001, Charter expects an acceleration in revenue and operating cash flow, with revenue expected to grow between 14% and 16% compared to pro forma 2000 results. Operating cash flow growth is expected to range between 12% and 14%. In the year 2000, Charter began a three-year plan to build a state of the art customer care center in each region. One-time expenses associated with the launch of each center began to affect the Company in 2000. These expenses will approach $11 million in 2001. -MORE-
4 CHARTER, PAGE 4 Basic internal customer growth is expected to again exceed 2.0% for 2001. Aggressive digital customer growth is expected to continue into 2001, and Mr. Kent said the company should end the year with approximately 2 million Charter Digital Cable customers, or a penetration rate in the excess of 30%. Marketing efforts for high-speed Internet access will increase in 2001 as more plant miles are upgraded to two-way interactivity. Charter expects to end 2001 with over 500,000 Charter Pipeline customers, nearly doubling that customer base. VOD launches are planned for ten additional markets in 2001. Mr. Kent said he expects approximately 2.2 million homes will have access to VOD technology by the end of 2001. "With continued solid underlying `same store' performance, the completed integration of 13 major acquisitions behind us, accelerated momentum in the deployment of our digital and high speed services, and the expected rollout of our TV portal, currently trialing in St. Louis, Charter enters 2001 hitting on all cylinders, and moving more quickly toward delivering our vision of a wired world," Mr. Kent concluded. With nearly 6.4 million customers, Charter Communications, a Wired World company(TM), is among the nation's largest broadband communications companies. Charter offers a full range of broadband services and products, including analog cable television under the Charter Cable brand; digital video programming services under the Charter Digital Cable(TM) brand; and high-speed Internet access via Charter Pipeline (TM). Charter's Class A common stock is traded on the Nasdaq National Market under the ticker symbol "CHTR." More information about Charter can be found on the Internet at www.chartercom.com. # # # Detailed financial information is included in the attached addendum. Charter will conduct a conference call to discuss their operating results on Thursday, February 15, 2001, at 11:00 AM Eastern Time. The call will be available live via webcast at www.chartercom.com. The call will be available on the "Investor" portion of the website, via "About Charter." 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. Statements in this press release regarding Charter Communications' business that are not historical facts may be "forward-looking statements." These forward-looking statements include specific projections regarding Charter's revenues and operating cash flow for the year 2001 as well as projections regarding growth in digital cable and high-speed Internet customers. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from any such forward-looking statements are identified in the reports and documents Charter files from time to time with the U.S. Securities and Exchange Commission. All forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. CONTACTS: MEDIA ANALYSTS Anita Lamont, 314-543-2215 Todd St. Onge, 314-543-2397 alamont@chartercom.com mmoehle@chartercom.com
5 CHARTER COMMUNICATIONS, INC. CONSOLIDATED OPERATING RESULTS (DOLLARS IN THOUSANDS) THREE MONTHS ENDED DECEMBER 31 ---------------------------------- PRO FORMA(a) PRO FORMA(a) 2000 1999 % CHANGE ----------------- ----------------- ------------- (UNAUDITED) REVENUES: Basic $ 581,247 $ 543,240 Premium 55,166 56,282 Pay-per-view 6,715 13,714 Digital 41,272 7,050 Data services 20,654 4,905 Advertising sales 92,073 59,747 Other 96,750 86,663 ---------- ---------- Total revenues 893,877 771,601 15.8% ---------- ---------- OPERATING EXPENSE: Programming 208,664 194,391 General and administrative 139,387 122,641 Service 49,018 42,488 Marketing 18,096 17,706 Advertising sales 15,905 14,512 Other 15,949 6,083 Corporate expense charge - related party 13,673 37,659 ---------- ---------- Total operating expenses 460,692 435,480 5.8% ---------- ---------- Operating cash flow $ 433,185 $ 336,121 28.9% ========== ========== (a) The pro forma results reflect all acquisitions and mergers of cable systems closed during 1999 and 2000. Addendum to Charter Communications Year-end 2000 Earnings Release Page 1 of 7
6 CHARTER COMMUNICATIONS, INC. CONSOLIDATED OPERATING RESULTS (DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31 ---------------------------------- PRO FORMA(a) PRO FORMA(a) 2000 1999 % CHANGE ---------------- ---------------- ------------- (UNAUDITED) (UNAUDITED) (UNAUDITED) REVENUES: Basic $ 2,287,525 $ 2,131,197 Premium 231,800 264,975 Pay-per-view 29,070 52,450 Digital 91,869 18,761 Data services 64,973 20,476 Advertising sales 220,205 158,057 Other 375,420 305,119 ----------- ----------- Total revenues 3,300,862 2,951,035 11.9% ----------- ----------- OPERATING EXPENSES: Programming 749,810 693,760 General and administrative 546,752 458,785 Service 199,811 169,458 Marketing 64,361 54,838 Advertising sales 61,721 57,712 Other 58,964 76,100 Corporate expense charge - related party 55,960 126,854 ----------- ----------- Total operating expenses 1,737,379 1,637,507 6.1% ----------- ----------- Operating cash flow $ 1,563,483 $ 1,313,528 19.0% =========== =========== (a) The pro forma results reflect all acquisitions and mergers of cable systems closed during 1999 and 2000. Addendum to Charter Communications Year-end 2000 Earnings Release Page 2 of 7
7 CHARTER COMMUNICATIONS, INC. SUMMARY OF OPERATING STATISTICS - ----------------------------------------------------------------------------------------------------------------------------------- CABLE TELEVISION ACTUAL PRO FORMA(a) ACTUAL --------------------- ---------------------- --------------------- DECEMBER 31 DECEMBER 31, DECEMBER 31, 2000 1999 1999 --------------------- ---------------------- --------------------- Homes Passed 10,225,000 9,970,000 8,827,300 Basic Customers 6,350,900 6,193,700 5,452,600 Basic Penetration 62.1% 62.1% 61.8% Premium Units 4,939,100 3,144,500 2,844,400 Premium Penetration 77.8% 50.8% 52.2% Average Monthly Revenue per Basic Customer (quarter) $ 46.92 $ 41.53 $ 35.64 - ----------------------------------------------------------------------------------------------------------------------------------- DIGITAL VIDEO ACTUAL PRO FORMA(a) ACTUAL --------------------- ---------------------- ------------------- DECEMBER 31 DECEMBER 31, DECEMBER 31, 2000 1999 1999 --------------------- ---------------------- --------------------- Digital Homes Passed 8,793,000 4,675,000 4,085,700 Customers 1,069,500 155,400 126,200 Penetration 12.2% 3.3% 3.1% Digital Converters Deployed 1,336,900 176,600 144,300 - ----------------------------------------------------------------------------------------------------------------------------------- DATA SERVICES ACTUAL PRO FORMA(a) ACTUAL --------------------- ---------------------- --------------------- DECEMBER 31 DECEMBER 31, DECEMBER 31, 2000 1999 1999 --------------------- ---------------------- --------------------- Data Homes Passed 5,550,800 4,422,000 3,938,600 Customers 252,400 84,400 72,000 Penetration 4.5% 1.9% 1.8% - ----------------------------------------------------------------------------------------------------------------------------------- TELEVISION-BASED INTERNET ACCESS ACTUAL PRO FORMA(a) ACTUAL --------------------- ---------------------- --------------------- DECEMBER 31 DECEMBER 31, DECEMBER 31, 2000 1999 1999 --------------------- ---------------------- --------------------- Television-Based Internet Homes Passed 472,100 429,000 429,000 Customers 9,700 7,100 7,100 Penetration 2.1% 1.7% 1.7% - ----------------------------------------------------------------------------------------------------------------------------------- OTHER STATISTICS ACTUAL PRO FORMA(a) ACTUAL --------------------- ---------------------- --------------------- DECEMBER 31 DECEMBER 31, DECEMBER 31, 2000 1999 1999 --------------------- ---------------------- --------------------- For the quarter ended Capital Expenditures (in 000's) $ 996,000(b) $ 429,500 $ 356,200 As of Book Value per Share $ 11.57 $ 13.93 $ 13.57 - ----------------------------------------------------------------------------------------------------------------------------------- (a) The pro forma statistics as of and for the quarter ended December 31, 1999 reflect all acquisitions closed since this date, including Bresnan Communications and Kalamazoo. (b) Capital expenditures for the year ended December 31, 2000 were $2.825 billion. Addendum to Charter Communications Year-end 2000 Earnings Release Page 3 of 7
8 CHARTER COMMUNICATIONS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) PERIOD ENDED DECEMBER 31, 2000 ------------------------------------------ THREE MONTHS TWELVE MONTHS ------------------- ------------------ (UNAUDITED) REVENUE: Basic $ 581,247 $ 2,249,339 Premium 55,166 226,598 Pay-per-view 6,715 28,590 Digital 41,272 91,115 Data services 20,654 63,330 Advertising sales 92,073 220,205 Other 96,750 370,045 ----------- ----------- Total revenues 893,877 3,249,222 ----------- ----------- OPERATING EXPENSES: Programming 208,664 736,043 General and administrative 139,387 543,865 Service 49,018 192,603 Marketing 18,096 63,789 Advertising sales 15,905 56,499 Other 15,949 58,554 Corporate expense charge - related party 13,673 55,243 ----------- ----------- Total operating expenses 460,692 1,706,596 ----------- ----------- Operating cash flow 433,185 1,542,626 Depreciation 347,026 1,209,698 Amortization 348,163 1,263,384 Option compensation expense 6,773 40,978 Interest, net 293,174 1,051,782 Other, net 25,774 31,729 ----------- ----------- (587,725) (2,054,945) Minority Interest in Loss of Subsidiary 346,628 1,226,295 ----------- ----------- Net Loss $ (241,097) $ (828,650) =========== =========== Basic and Diluted Loss per Share $ (1.03) $ (3.67) =========== =========== Weighted Average Common Shares Outstanding 233,738,668 225,697,775 =========== =========== Addendum to Charter Communications Year-end 2000 Earnings Release Page 4 of 7
9 CHARTER COMMUNICATIONS, INC. UNAUDITED CONSOLIDATED BALANCE SHEET DATA (DOLLARS IN THOUSANDS) ACTUAL ACTUAL PRO FORMA(a) DECEMBER 31, 2000 DECEMBER 31, 1999 DECEMBER 31, 1999 ------------------ ------------------ ------------------ ASSETS Current Assets: Cash and cash equivalents $ 130,702 $ 133,706 $ 149,656 Accounts receivable, net of allowance for doubtful accounts 217,667 93,743 103,541 Receivable from related party 6,480 -- -- Prepaid expenses and other 77,719 35,142 35,490 ------------ ------------ ------------ Total current assets 432,568 262,591 288,687 ------------ ------------ ------------ Investment in Cable Properties: Property, plant and equipment, net 5,267,519 3,490,573 3,875,036 Franchises, net 17,068,702 14,985,793 17,899,820 ------------ ------------ ------------ Total investment in cable properties 22,336,221 18,476,366 21,774,856 Other Assets 274,777 227,550 356,423 ------------ ------------ ------------ $ 23,043,566 18,966,507 $ 22,419,966 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 1,367,234 $ 706,775 $ 663,606 Payables to related party - 13,183 13,259 ------------ ------------ ------------ Total current liabilities 1,367,234 719,958 676,865 ------------ ------------ ------------ Long-Term Debt 13,060,455 8,936,455 11,241,727 ------------ ------------ ------------ Deferred Management Fees - Related Party 13,751 21,623 21,623 ------------ ------------ ------------ Other Long-Term Liabilities 285,266 145,124 155,144 ------------ ------------ ------------ Minority Interest 4,089,329 5,381,331 5,229,709 ------------ ------------ ------------ Redeemable Securities 1,104,327 750,937 1,846,176 ------------ ------------ ------------ Shareholders' Equity 3,123,204 3,011,079 3,248,722 ------------ ------------ ------------ $ 23,043,566 $ 18,966,507 $ 22,419,966 ============ ============ ============ (a) The pro forma balance sheet reflects all acquisitions and mergers of cable systems closed during 1999 and 2000, the issuance and sale of senior and senior discount notes by Charter Communications Holdings, LLC in March 1999, January 2000 and January 2001, and the issuance and sale of convertible senior notes by Charter Communications, Inc. in October 2000 and November 2000. Addendum to Charter Communications Year-end 2000 Earnings Release Page 5 of 7
10 CHARTER COMMUNICATIONS, INC. "SAME STORE RESULTS" (DOLLARS IN THOUSANDS, EXCEPT PER BASIC CUSTOMER DATA) OPERATING RESULTS Three Months Ended December 31 ------------------------------- 2000 1999 % CHANGES ---------- ------------ --------- (UNAUDITED) REVENUES: Basic $ 354,046 $ 332,970 Premium 36,130 41,081 Pay-per-view 4,548 7,803 Digital 29,393 4,383 Data services 14,115 5,567 Advertising sales 46,273 28,802 Other 78,045 55,122 --------- --------- Total revenues 562,550 475,728 18.3% --------- --------- OPERATING EXPENSES: Programming 116,841 109,463 General and administrative 95,435 85,991 Service 27,344 26,650 Marketing 7,586 7,167 Advertising sales 7,866 7,195 Other 21,885 17,763 --------- --------- Total operating expenses 276,957 254,229 8.9% --------- --------- System operating cash flow $ 285,593 $ 221,499 28.9% ========= ========= OPERATING DATA DECEMBER 31, 2000 DECEMBER 31, 1999 ----------------- ----------------- (UNAUDITED) Homes Passed 6,017,700 5,887,900 Basic Customers 3,783,600 3,703,500 2.2% Basic Penetration 62.9% 62.9% Premium Units 3,232,500 2,205,800 Digital Video Customers 690,600 79,900 Data Customers 186,900 59,100 Average Monthly Revenue per Basic Customer $ 49.56 $ 42.82 15.7% Note: The above "same store" information presents operating results and data for the fourth quarter of 2000 as compared to the fourth quarter of 1999 for the cable systems owned by Charter Communications as of October 1, 1999. Addendum to Charter Communications Year-end 2000 Earnings Release Page 6 of 7
11 CHARTER COMMUNICATIONS, INC. 2000 HIGHLIGHTS Q1 2000 Q2 2000 Q3 2000 Q4 2000 FULL YEAR 2000 ---------------- --------------- --------------- --------------- ---------------- PRO FORMA(a), DOLLARS IN THOUSANDS, EXCEPT EPS Revenues $763,589 $799,602 $842,405 $893,378 $3,298,974 Operating Cash Flow $353,674 $375,291 $400,319 $433,075 $1,562,359 2001 Projections Q1 2001 Q2 2001 Q3 2001 Q4 2001 FULL YEAR 2001 ---------------- --------------- --------------- --------------- ---------------- GROWTH RATES OVER PRO FORMA(a) YEAR-AGO PERIOD Revenues 12.5-14.5% 13.0-15.0% 13.5-15.5% 15.0-17.0% 14.0-16.0% Operating Cash Flow 8.0-10.0% 11.5-13.5% 12.0-14.0% 15.5-17.5% 12.0-14.0% EPS ($1.24) - (1.29) ($1.21) - (1.26) ($1.24) - (1.27) ($1.25) - (1.28) ($4.94) - (5.10) (a) Pro forma for all acquisitions completed in 2000 and for the sale of 4,715 customers in Dickinson, North Dakota, completed on December 31, 2000. Statements in this press release regarding Charter Communications' business that are not historical facts may be "forward-looking statements." These forward-looking statements include specific projections regarding Charter's revenues EPS and operating cash flow for the year 2001 as well as projections regarding growth in basic, digital cable and high-speed Internet customers. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Important factors that could cause actual results to differ materially from any such forward-looking statements are identified in the reports and documents Charter files from time to time with the U.S. Securities and Exchange Commission. All forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. Addendum to Charter Communications Year-end 2000 Earnings Release Page 7 of 7