EXHIBIT 99.1
(CHARTER COMMUNICATIONS LOGO)
NEWS
FOR RELEASE: JULY 31, 2003
CHARTER COMMUNICATIONS REPORTS
SECOND QUARTER 2003 FINANCIAL RESULTS
ST. LOUIS, MO - Charter Communications, Inc. (Nasdaq:CHTR) today
reported financial results for the three and six months ended June 30, 2003.
"Charter Communications is pleased with its quarterly financial results in this
year of transition, evidenced by growth in cash flows from operating
activities," said Carl Vogel, President and CEO. "This, together with a
significant reduction in capital expenditures in 2003, has allowed us to
generate free cash flow."
SECOND QUARTER RESULTS
For the second quarter of 2003, Charter generated revenues of $1.217
billion, an increase of 7.0% over last year's second quarter revenues of $1.137
billion. Income from operations totaled $112 million in the second quarter of
2003, an increase of 31.8% from the $85 million reported in the second quarter a
year ago. The current year's second quarter results includes a special charge of
$8 million primarily representing severance related costs incurred in connection
with the Company's reorganization plan commenced in December 2002.
This year's second quarter adjusted EBITDA, as defined below, was $497
million, up 11.2% over adjusted EBITDA of $447 million for the year ago quarter.
Net loss applicable to common stock and loss per common share for the
quarter ended June 30, 2003 declined to $38 million and 13 cents, respectively.
For the restated second quarter of 2002, Charter reported net loss applicable to
common stock and loss per common share of $161 million and 55 cents,
respectively.
1
YEAR TO DATE RESULTS
Revenues for the first six months of 2003 were $2.395 billion, an
increase of 8.3% over the comparable period a year ago of $2.211 billion. Income
from operations for the six months ended June 30, 2003 totaled $189 million, an
increase of 3.8% from $182 million reported a year ago. During the first six
months of 2003, the Company recorded $10 million of special charges consisting
primarily of severance related charges recorded in connection with its
reorganization plan commenced in December 2002.
Charter achieved adjusted EBITDA of $955 million on revenues of $2.395
billion for the six months ended June 30, 2003. Adjusted EBITDA was up 9.4% over
adjusted EBITDA of $873 million for the same year ago period.
Net loss applicable to common stock and loss per common share for the
six months ended June 30, 2003 declined to $220 million and 75 cents,
respectively. For the restated 2002 first six months, Charter reported net loss
applicable to common stock and loss per common share of $478 million and $1.62,
respectively.
CASH FLOWS FROM OPERATING ACTIVITIES AND FREE CASH FLOWS
Cash flows from operating activities for the six months ended June 30,
2003 were $285 million, an increase of 20.3% from $237 million reported a year
ago. Purchases of property, plant and equipment for the first six months of the
year totaled $264 million, declining to approximately 25.4% of amounts reported
for the comparable period in 2002 when capital expenditures totaled $1.038
billion. Free cash flows, as defined below, for the six months ended June 30,
2003, were $126 million, whereas, for the six months ended June 30, 2002, the
Company had negative cash flows of $709 million. Free cash flows for the three
months ended June 30, 2003 were $56 million, as compared to negative cash flows
of $432 million a year ago.
"Charter continues to make solid progress towards the goal of
consistently generating free cash flows," Mr. Vogel said. "We remain very
disciplined in managing our capital expenditures and expect to spend less than
the $1.1 billion previously planned." Based on our current spending and plans
for the remainder of the year, Mr. Vogel said the Company expects its fiscal
2003 capital expenditures to be in the $800 million to $925 million range.
2
At June 30, 2003, the Company had $212 million in cash on hand.
OPERATING STATISTICS
Revenue generating units (RGU) totaled approximately 10,463,500 at
June 30, 2003, an increase of approximately 495,100 units, or 5.0% for the
trailing twelve months. Total advanced service RGUs, defined as digital,
high-speed data and telephony units, increased by 748,300 units, or 23.2% for
the twelve months ending June 30, 2003. The increase in advanced service RGUs
was offset by a loss of 253,200 analog video customers, or 3.8% over the past
twelve months. Revenue generating units declined approximately 10,900 units, or
..1% in the second quarter as compared to the first quarter of 2003.
The Company reported net losses of analog and digital video customers
of approximately 41,300 and 47,200, respectively, during the second quarter.
Second quarter analog video customer loss was .6%, and quarterly digital video
units declined 1.7%. Digital video customers increased by approximately 223,400
units, or 9.4% for the twelve months ending June 30, 2003.
Charter added approximately 76,700 high-speed data customers during the
quarter, bringing the total modem customers served to 1,349,000. Over the
trailing twelve months, modem customers have increased approximately 518,800
units, or 62.5%.
The Company has traditionally seen softness in its unit growth in the
second quarter, principally as a result of disconnects from annual price
adjustments and seasonality in many of its communities. More detailed
information on the method of calculating customer information is contained in
the Addendum and the footnotes thereto.
ORGANIZATIONAL UPDATE
"Our second quarter focus was to put organizational leadership in
place, restart our marketing efforts, and moderate customer losses," Mr. Vogel
said. "We reduced corporate and divisional staff as well, and replaced general
management in many of our key markets in the quarter, which we believe will
provide a strong foundation for the future."
Mr. Vogel said new pricing and packaging has recently been successfully
test marketed, and the Company expects to introduce these packages in many of
its top 25 markets during the second half of the year. "Our primary focus
remains on increasing revenues and adjusted EBITDA and being disciplined with
our capital expenditures. While we are generally pleased with our progress, we
need to remain focused on improving our
3
video business, and increasing the profitability of our high-speed data
business, while maintaining a customer first attitude."
USE OF NON-GAAP FINANCIAL METRICS
The Company believes that adjusted EBITDA and free cash flows
traditionally have provided additional information useful in analyzing the
underlying business results and allows a standardized peer company comparison,
while minimizing the differences from depreciation policies, financial leverage
and tax strategies. In addition, adjusted EBITDA generally correlates to the
amount utilized under the Company's various credit facilities, senior notes and
senior discount notes for its leverage ratio covenants. Adjusted EBITDA, as
presented, is reduced for management fees in the amounts of $19 million and $39
million for the three months and six months ended June 30, 2003 and $17 million
and $32 million for the three months and the six months ended June 30, 2002
which are added back for the purposes of the leverage covenants. Adjusted EBITDA
and free cash flows are non-GAAP (Generally Accepted Accounting Principles)
financial metrics and should be considered in addition to, and not as a
substitute for, income from operations, net loss, earnings per share or net cash
flows from operating activities. Adjusted EBITDA is defined as income from
operations before special charges, non-cash depreciation and amortization and
option compensation expense. A reconciliation of adjusted EBITDA to net cash
flows from operating activities and income from operations is included in the
following Addendum. Free cash flows is defined as adjusted EBITDA less purchases
of property, plant and equipment and interest on cash pay obligations. A
reconciliation of free cash flows to net cash flows from operating activities
and income from operations is included in the following Addendum.
CONFERENCE CALL
The Company will host a conference call Thursday, July 31,2003 at 3:00
PM 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. The call can be accessed through the "Investor Center" portion
of the website, via the "About Us" heading at the top of the page. 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
completion of the call.
4
Those participating via telephone should dial 888/233-1576.
International participants should dial 706/643-3458.
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 midnight August 6,
2003. The passcode for the replay is 2068343.
ABOUT CHARTER COMMUNICATIONS
Charter Communications(R), A Wired World Company(TM), is the nation's
third-largest broadband communications company. Charter provides a full range of
advanced broadband services to the home, including cable television on an
advanced digital video programming platform via Charter Digital Cable(R) brand
and high-speed Internet access marketed under the Charter Pipeline(R) brand.
Commercial high-speed data, video and Internet solutions are provided under the
Charter Business Networks(R) brand. Advertising sales and production services
are sold under the Charter Media(R) brand. More information about Charter can be
found at www.charter.com.
# # #
Contacts:
Analysts Media
Mary Jo Moehle Deb Seidel
314-543-2397 314-543-5703
mmoehle@chartercom.com dseidel@chartercom.com
Cautionary Statement Regarding Forward-Looking Statements:
This news release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 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. Many
of the forward-looking statements contained in this news release may be
identified by the use of forward-looking words such as "believe," "expect,"
"anticipate," "should," "planned," "will," "may," "intend," "estimated," and
"potential," among others. Important factors that could cause actual results to
differ materially from the forward-looking statements we make in this news
release are set forth in reports or documents that we file from time to time
with the United States Securities and Exchange Commission, or the SEC, and
include, but are not limited to:
o our ability to sustain and grow revenues and cash flows from operating
activities by offering video and data services and to maintain a stable
customer base, particularly in the face of increasingly aggressive
competition from other service providers;
o our and our subsidiaries' ability to comply with all covenants in our
indentures and their credit
5
facilities and indentures, 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;
o our and our subsidiary's ability to refinance the debt as it becomes
due, commencing in 2005;
o availability 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;
o any adverse consequences arising out of our and our subsidiaries' prior
restatement of the financial statements;
o the results of the pending grand jury investigation by the United
States Attorney's Office for the Eastern District of Missouri, the
pending SEC Division of Enforcement investigation and the putative
class action and derivative shareholders litigation against us;
o our ability to achieve free cash flow;
o our ability to obtain programming at reasonable prices or pass cost
increases on to our customers;
o general business conditions, economic uncertainty or slowdown; and
o the effects of governmental regulation, including but not limited to
local franchise taxing authorities, on our business.
All forward-looking statements attributable to us or a person acting on our
behalf are expressly qualified in their entirety by this cautionary statement.
We are under no obligation to update any of the forward looking statements after
the date of this news release to conform these statements to actual results or
to changes in our expectations.
6
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------------- ---------------------------------
2003 2002 2003 2002
-------------- -------------- -------------- --------------
(RESTATED) (RESTATED)
REVENUES:
Analog video ....................................... $ 722 $ 716 $ 1,441 $ 1,407
Digital video ...................................... 185 176 364 341
High-speed data .................................... 136 79 258 143
Advertising sales .................................. 67 72 124 130
Other .............................................. 107 94 208 190
-------------- -------------- -------------- --------------
Total revenues .................................. 1,217 1,137 2,395 2,211
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Programming costs .................................. 313 294 627 577
Advertising sales .................................. 23 21 44 40
Service ............................................ 152 132 302 256
General and administrative ......................... 203 200 418 394
Marketing .......................................... 29 43 49 71
Depreciation and amortization ...................... 377 361 756 687
Option compensation expense, net ................... -- 1 -- 3
Special charges, net ............................... 8 -- 10 1
-------------- -------------- -------------- --------------
Total costs and expenses ........................ 1,105 1,052 2,206 2,029
-------------- -------------- -------------- --------------
Income from operations .......................... 112 85 189 182
OTHER EXPENSES:
Interest, net ...................................... (386) (373) (776) (735)
Other, net ......................................... (12) (66) -- (35)
-------------- -------------- -------------- --------------
(398) (439) (776) (770)
-------------- -------------- -------------- --------------
Loss before minority interest, income taxes and
cumulative effect of accounting change .............. (286) (354) (587) (588)
Minority interest ..................................... 151 188 311 312
-------------- -------------- -------------- --------------
Loss before income taxes and cumulative effect
of accounting change ................................ (135) (166) (276) (276)
Income tax benefit .................................... 98 6 58 6
-------------- -------------- -------------- --------------
Loss before cumulative effect of accounting change .... (37) (160) (218) (270)
Cumulative effect of accounting change, net of tax .... -- -- -- (206)
-------------- -------------- -------------- --------------
Net loss .............................................. (37) (160) (218) (476)
Dividends on preferred stock - redeemable ............. (1) (1) (2) (2)
-------------- -------------- -------------- --------------
Net loss applicable to common stock ................... $ (38) $ (161) $ (220) $ (478)
============== ============== ============== ==============
Basic and diluted loss per share ...................... $ (0.13) $ (0.55) $ (0.75) $ (1.62)
============== ============== ============== ==============
Weighted average common shares outstanding ............ 294,474,596 294,453,454 294,471,798 294,424,366
============== ============== ============== ==============
</Table>
NOTE: Certain 2002 amounts have been reclassified to conform with the 2003
presentation.
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
Page 1 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<Table>
<Caption>
JUNE 30, DECEMBER 31,
2003 2002
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................................... $ 212 $ 321
Accounts receivable, net of allowance for doubtful accounts ....... 228 259
Receivables from related party .................................... -- 8
Prepaid expenses and other current assets ......................... 33 45
------------ ------------
Total current assets ........................................ 473 633
------------ ------------
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net ................................ 7,194 7,679
Franchises, net ................................................... 13,723 13,727
------------ ------------
Total investment in cable properties, net ................... 20,917 21,406
------------ ------------
OTHER ASSETS ......................................................... 340 345
------------ ------------
Total assets ................................................. $ 21,730 $ 22,384
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable and accrued expenses ............................. $ 1,180 $ 1,405
------------ ------------
Total current liabilities ................................... 1,180 1,405
------------ ------------
LONG-TERM DEBT ....................................................... 18,867 18,671
DEFERRED MANAGEMENT FEES - RELATED PARTY ............................. 14 14
OTHER LONG-TERM LIABILITIES .......................................... 1,074 1,177
MINORITY INTEREST .................................................... 714 1,025
PREFERRED STOCK - REDEEMABLE ......................................... 55 51
SHAREHOLDERS' EQUITY (DEFICIT) ....................................... (174) 41
------------ ------------
Total liabilities and shareholders' equity ................. $ 21,730 $ 22,384
============ ============
</Table>
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
Page 2 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<Table>
<Caption>
SIX MONTH ENDED JUNE 30,
-----------------------------
2003 2002
------------ ------------
(RESTATED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ............................................................................ $ (218) $ (476)
Adjustments to reconcile net loss to net cash flows from operating activities:
Minority interest ................................................................ (311) (312)
Depreciation and amortization .................................................... 756 687
Noncash interest expense ......................................................... 211 191
Loss (gain) on derivative instruments and hedging activities ..................... (4) 30
Deferred income taxes ............................................................ (58) (6)
Change in accounting principle ................................................... -- 206
Other, net ....................................................................... 2 6
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable .............................................................. 32 58
Prepaid expenses and other assets ................................................ 7 (3)
Accounts payable, accrued expenses and other ..................................... (140) (142)
Receivables from and payables to related party,
including deferred management fees .............................................. 8 (2)
------------ ------------
Net cash flows from operating activities ..................................... 285 237
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment .......................................... (264) (1,038)
Change in accounts payable and accrued expenses related to capital expenditures ..... (113) (84)
Payments for acquisitions, net of cash acquired ..................................... -- (125)
Purchases of investments ............................................................ (4) (8)
Other, net .......................................................................... (5) 1
------------ ------------
Net cash flows from investing activities ..................................... (386) (1,254)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt ........................................................ 346 2,453
Repayments of long-term debt ........................................................ (340) (1,393)
Payments for debt issuance costs .................................................... (14) (39)
Capital contributions ............................................................... -- 1
------------ ------------
Net cash flows from financing activities ..................................... (8) 1,022
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ................................... (109) 5
CASH AND CASH EQUIVALENTS, beginning of period ......................................... 321 2
------------ ------------
CASH AND CASH EQUIVALENTS, end of period ............................................... $ 212 $ 7
============ ============
CASH PAID FOR INTEREST ................................................................. $ 562 $ 534
============ ============
</Table>
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
Page 3 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED SUMMARY OF OPERATING STATISTICS
<Table>
<Caption>
APPROXIMATE AS OF
----------------------------------------------
JUNE 30, DECEMBER 31, JUNE 30,
2003 (a) 2002 (a) 2002 (a)
------------ ------------ ------------
VIDEO SERVICES:
ANALOG VIDEO:
Estimated homes passed (b) ............................................... 12,189,400 11,925,000 11,800,700
Residential (non-bulk) analog video customers (c) ........................ 6,234,500 6,328,900 6,496,500
Multi-dwelling (bulk) and commercial unit customers (d) .................. 252,400 249,900 243,600
------------ ------------ ------------
Total analog video customers (c) (d) ................................. 6,486,900 6,578,800 6,740,100
------------ ------------ ------------
Estimated penetration of analog video homes passed (b) (c) (d) (e) ....... 53% 55% 57%
DIGITAL VIDEO:
Estimated digital homes passed (b) ....................................... 11,958,200 11,547,000 11,222,500
Digital customers (f) .................................................... 2,603,900 2,682,800 2,380,500
Estimated penetration of digital homes passed (b) (e) (f) ................ 22% 23% 21%
Digital percentage of analog video customers (c) (d) (f) (g) ............. 40% 41% 35%
Digital set-top terminals deployed ....................................... 3,680,000 3,772,600 3,305,300
Estimated video-on-demand homes passed (b) .............................. 3,371,900 3,195,000 1,994,700
HIGH-SPEED DATA SERVICES:
Estimated high-speed data homes passed (b) ............................... 10,013,100 9,826,000 8,795,200
Residential high-speed data customers (h) (i) ............................ 1,349,000 1,138,100 830,200
Estimated penetration of high-speed data homes passed (b) (e) (h) (i) ..... 13% 12% 9%
Dial-up customers ......................................................... 11,700 14,200 18,600
REVENUE GENERATING UNITS (j):
Analog video customers (c) (d) .............................................. 6,486,900 6,578,800 6,740,100
Digital customers (f) ....................................................... 2,603,900 2,682,800 2,380,500
High-speed data customers (h) (i) ........................................... 1,349,000 1,138,100 830,200
Telephony customers (k) ..................................................... 23,700 22,800 17,600
------------ ------------ ------------
Total revenue generating units (j) ...................................... 10,463,500 10,422,500 9,968,400
============ ============ ============
Customer relationships (l) ................................................... 6,538,900 6,634,700 6,783,900
</Table>
See footnotes to unaudited summary of operating statistics on page 5 of this
Addendum.
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
Page 4 of 7
(a) "Customers" include all persons corporate billing records show as receiving
service, regardless of their payment status, except for complimentary accounts
(such as our employees).
(b) Homes passed represents our estimate of the number of living units, such as
single family homes, apartment units and condominium units passed by the cable
distribution network in the areas in which we offer the service indicated. Homes
passed excludes commercial units passed by the cable distribution network. The
figures in this table reflect an increase at June 30, 2003 from our estimated
homes passed from that previously reported for March 31, 2003. This increase is
in part due to a refinement of methods used to estimate homes passed and in part
due to increased line mileage within our network that was not previously
reflected.
(c) Analog video customers include all customers who receive video services
(including those who also purchase high-speed data and telephony services), but
excludes approximately 52,000, 55,900 and 43,800 customer relationships,
respectively, who pay for high-speed data service only and who are only counted
as high-speed data customers. This represents a change in our methodology from
prior reports through September 30, 2002, in which high-speed data service only
customers were included within our analog video customers. We made this change
because we determined that most of these customers were unable to receive our
most basic level of analog video service because this service was physically
secured or blocked, was unavailable in certain areas or the customers were
unaware that this service was available to them. However, this year we initiated
a detailed study and determined that 11,100 high-speed data customers have been
receiving, or were otherwise upgraded to receive, analog video service. These
11,100 customers have been added to the June 30, 2003 analog video customers
since our last quarterly filing.
(d) Commercial and multi-dwelling structures 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
consistently applied year over year. As we increase our effective analog 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.
Our policy is not to count complimentary accounts (such as our employees) as
customers.
(e) Penetration represents customers as a percentage of homes passed.
(f) Digital video customers include all households that have one or more digital
set-top terminals. Included in digital video customers at June 30, 2003,
December 31, 2002 and June 30, 2002 are 13,300, 27,500 and 11,900 customers,
respectively, that receive digital video service directly through satellite
transmission.
(g) Represents the number of digital video customers as a percentage of analog
video customers.
(h) As noted above, all of these customers also receive video service and are
included in the video statistics above, except that the video statistics do not
include approximately 52,000, 55,900 and 43,800 customers at June 30, 2003,
December 31, 2002 and June 30, 2002, respectively, who were high-speed data only
customers.
(i) During the first three quarters of 2002, commercial high-speed data
customers were calculated on an Equivalent Modem Unit or EMU basis, which
involves converting commercial revenues to residential customer counts. Given
the growth plans for our commercial data business, we do not believe that
converting commercial revenues to residential customer counts is the most
meaningful way to disclose or describe this growing business. We, therefore,
excluded 75,300 EMUs that were previously reported in our June 30, 2002 customer
totals for comparative purposes.
(j) Revenue generating units represent the sum total of all primary analog
video, digital video, high-speed data and telephony customers, not counting
additional outlets within one household. For example, a customer who receives
two types of services (such as analog video and digital video) would be treated
as two revenue generating units, and if that customer added on high-speed data
service, the customer would be treated as three revenue generating units. 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 Communications, Inc.) as an industry
standard.
(k) Telephony customers include all households purchasing telephone service.
(l) Customer relationships include the number of customers that receive at least
one level of service encompassing video, data and telephony services, without
regard to which service(s) such customers purchase. This statistic is computed
in accordance with the guidelines of the NCTA that have been adopted by eleven
publicly traded cable operators (including Charter Communications, Inc.) as an
industry standard.
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
Page 5 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(DOLLARS IN MILLIONS)
<Table>
<Caption>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- --------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Income from operations $ 112 $ 85 $ 189 $ 182
Depreciation and amortization 377 361 756 687
Option compensation expense, net -- 1 -- 3
Special charge, net 8 -- 10 1
---------- ---------- ---------- ----------
Adjusted EBITDA 497 447 955 873
Interest on cash pay obligations (a) (281) (276) (565) (544)
Special charges, net (8) -- (10) (1)
Other, net (2) (2) (2) (2)
Change in operating assets and liabilities (83) (34) (93) (89)
---------- ---------- ---------- ----------
Net cash flows from operating activities $ 123 $ 135 $ 285 $ 237
========== ========== ========== ==========
Income from operations $ 112 $ 85 $ 189 $ 182
Depreciation and amortization 377 361 756 687
Option compensation expense, net -- 1 -- 3
Special charge, net 8 -- 10 1
Less: Interest on cash pay obligations (a) (281) (276) (565) (544)
Less: Purchases of property, plant and equipment (160) (603) (264) (1,038)
---------- ---------- ---------- ----------
Free cash flows 56 (432) 126 (709)
Purchase of property, plant and equipment 160 603 264 1,038
Special charges, net (8) -- (10) (1)
Other, net (2) (2) (2) (2)
Change in operating assets and liabilities (83) (34) (93) (89)
---------- ---------- ---------- ----------
Net cash flows from operating activities $ 123 $ 135 $ 285 $ 237
========== ========== ========== ==========
</Table>
(a) 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 statement of operations.
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.
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
Page 6 of 7
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CAPITAL EXPENDITURES
(DOLLARS IN MILLIONS)
<Table>
<Caption>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Customer premise equipment (a) $ 68 $ 205 $ 132 $ 411
Scalable infrastructure (b) 12 75 20 119
Line extensions (c) 17 26 25 43
Upgrade/Rebuild (d) 37 218 52 344
Support capital (e) 26 79 35 121
---------- ---------- ---------- ----------
Total capital expenditures (f) $ 160 $ 603 $ 264 $ 1,038
========== ========== ========== ==========
</Table>
(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 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).
(f) Represents all capital purchases made during the three and six months ended
June 30, 2003 and 2002, respectively.
Addendum to Charter Communications, Inc. Earnings Release
Three and Six Months Ended June 30, 2003
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