Charter Announces Second Quarter 2016 Results

STAMFORD, Conn., Aug. 9, 2016 /PRNewswire/ -- Charter Communications, Inc. (formerly known as CCH I, LLC, along with its subsidiaries, the "Company" or "Charter") today reported financial and operating results for the three and six months ended June 30, 2016. On May 18, 2016, Charter completed its transactions between the Company, Time Warner Cable Inc. ("Legacy TWC"), Charter Communications, Inc. ("Legacy Charter") and Bright House Networks, LLC ("Legacy Bright House") (collectively, the "Transactions"). In this release, actual results reflect the operations of Legacy Charter for the three and six months ended June 30, 2016 and Legacy TWC and Legacy Bright House for the period from May 18, 2016 through June 30, 2016.  Pro forma¹ results give effect to the Transactions as if they had closed at the beginning of the earliest period presented and include the operations of Legacy Charter, Legacy TWC and Legacy Bright House for the full three and six months ended June 30, 2016.

Key highlights:

• Charter is now a company with greater scale, an enhanced footprint, and new revenue, product innovation and cost savings opportunities. Charter's network reaches 48.8 million homes and businesses, and serves 25.6 million residential and small and medium business ("SMB") customers.
• Pro forma¹ for the Transactions, second quarter revenues of $10.0 billion grew 6.6% as compared to the prior-year period, driven by residential revenue growth of 5.6% and commercial revenue growth of 13.4%. On an actual¹ basis, second quarter revenue of $6.2 billion grew 153.5% year-over-year, driven primarily by the Transactions.
• On a pro forma basis, total customer relationships increased 173,000 during the second quarter, compared to 54,000 during the second quarter of 2015, and for the twelve months ended June 30, 2016, grew by 1,251,000 or 5.1%. Pro forma residential and SMB primary service units ("PSUs") increased by 249,000 during the period, versus 270,000 in the year-ago quarter. The year-over-year decline in PSU net additions was driven by fewer voice net additions in the second quarter of 2016 versus the second quarter of 2015.
• On a pro forma basis, second quarter Adjusted EBITDA² of $3.5 billion grew 9.0% year-over-year. Excluding transition costs in the second quarters of 2016 and 2015, Adjusted EBITDA grew by 9.2% year-over-year. On an actual basis, second quarter Adjusted EBITDA grew by 161.6%, driven primarily by the Transactions.
• Pro forma net income totaled $280 million in the second quarter, compared to $107 million during the same period last year, driven by higher income from operations year-over-year. On an actual basis, net income totaled $3.1 billion, compared to a net loss of $122 million during the second quarter of 2015, driven by higher income from operations following the close of the Transactions and the reduction of substantially all of Charter's historical valuation allowance on its deferred tax assets.
• On a pro forma basis, second quarter capital expenditures totaled $2.1 billion, as compared to $1.9 billion in the year-ago period. Excluding transition capital, second quarter 2016 pro forma capital expenditures totaled $2.0 billion as compared to $1.8 billion during the second quarter of 2015. Second quarter actual capital expenditures totaled $1.3 billion.

"On May 18, we closed our transactions with Time Warner Cable and Bright House Networks, creating a new company with the ability to innovate and grow faster," said Tom Rutledge, CEO and Chairman of Charter Communications. "Our organization is in place, we are executing on our plans and our track record at Charter shows that our operating model, founded on providing high quality products and service at great prices, works. We will apply that model as quickly as possible to our new assets, putting our larger company on a long-term growth trajectory, and building greater value for our shareholders."

Key Operating Results

The combination of Legacy Charter, Legacy TWC and Legacy Bright House has created a leading broadband services and technology company that will drive investment into the combined entity's advanced broadband network, resulting in faster broadband speeds, better video products, and more affordable phone service for consumers. Starting in the fall of 2016, Charter will begin to introduce Charter Spectrum, in certain Legacy TWC and Legacy Bright House markets, with remaining markets to follow in 2017. Charter Spectrum is an industry-leading suite of video, Internet, and voice services that includes over 200 HD channels, minimum offered Internet speeds of 60 Mbps, and a fully featured voice service, delivered at a highly competitive price. As of the end of the second quarter of 2016, 92% of Legacy Charter's residential customers received Charter Spectrum products.

Beginning in early 2017, Charter will also restart all-digital efforts in those Legacy TWC and Legacy Bright House markets that continue to broadcast analog video signals. All-digital allows Charter to offer more advanced products and services, and will provide residential customers with two-way digital set-tops, which offer higher picture quality, an interactive programming guide and video on demand on all TV outlets in the home. Charter intends to complete the all-digital conversion in Legacy TWC and Legacy Bright House markets by the end of 2018.

During the second quarter of 2016, Charter's residential customer relationships grew by 126,000, versus 19,000 in the prior year period.¹ Residential PSUs increased by 167,000 versus a gain of 201,000 in the prior year period. The year-over-year decline in PSU net additions was primarily the result of fewer voice net additions, and both customer relationship and PSU net additions in the second quarter of 2016 and 2015 reflect the significant seasonality of Legacy Bright House Florida markets. As of June 30, 2016, Charter had 24.3 million residential customer relationships and 47.9 million residential PSUs.

Residential video customers decreased by 152,000 in the second quarter of 2016, versus a decrease of 170,000 in the year-ago period, driven by better year-over-year performance at Legacy Charter and Legacy Bright House, partially offset by higher video losses at Legacy TWC. As of the end of the second quarter of 2016, Legacy Charter's footprint was virtually 100% all-digital, compared to 60% at Legacy TWC and 40% at Legacy Bright House. As of June 30, 2016, Charter had 16.9 million residential video customers.

Charter added 236,000 residential Internet customers in the second quarter of 2016, compared to 157,000 a year ago. As of June 30, 2016, 90% of Legacy Charter's residential Internet customers subscribed to tiers that provided speeds of 60 Mbps or more compared to 28% at Legacy TWC and 32% at Legacy Bright House. The Company continues to see strong demand for its Internet service as consumers value the speed and reliability of Charter's Internet offering. As of June 30, 2016, Charter had 20.7 million residential Internet customers.

During the second quarter, the Company added 83,000 residential voice customers, versus 214,000 during the second quarter of 2015. The year-over-year decline in voice net additions was primarily driven by a Legacy TWC voice promotion that drove voice net additions in the second quarter of 2015. As of June 30, 2016, Charter had 10.3 million residential voice customers.

Second quarter residential revenue per customer relationship totaled $109.99, and grew by 1.0% as compared to the prior-year period, driven by higher product sell-in, promotional rate step-ups and rate adjustments, partially offset by continued single play Internet sell-in. Excluding pay-per-view revenue, which was impacted by the Mayweather-Pacquiao pay-per-view event in the second quarter of 2015, residential revenue per customer relationship grew by 1.7% as compared to the prior-year period.

During the second quarter of 2016, SMB customer relationships grew by 47,000 versus 35,000 during the second quarter of 2015. SMB PSUs increased 82,000, compared to 69,000 during the second quarter of 2015. As of June 30, 2016, Charter had 1.3 million SMB customer relationships and 2.3 million SMB PSUs.

Second Quarter Financial Results

Revenue

On a pro forma basis, second quarter revenues rose 6.6% year-over-year to $10.0 billion, driven primarily by growth in Internet, commercial and video revenues. On an actual basis, second quarter revenue rose to $6.2 billion, 153.5% higher year-over-year, driven by the Transactions.

Pro forma video revenues totaled $4.1 billion in the second quarter, an increase of 1.7% compared to the prior year period. Pro forma video revenue growth was driven by higher advanced services penetration and annual and promotional rate adjustments, partially offset by lower pay-per-view revenue, due to the Mayweather-Pacquiao event during the second quarter of 2015, and non-recurring customer credits at Legacy Charter. Second quarter video revenues totaled $2.6 billion on an actual basis, an increase of 126.9% compared to the prior-year period, driven by the Transactions.

On a pro forma basis, Internet revenues grew 12.0%, compared to the year-ago quarter, to $3.1 billion, driven by an increase of 1,620,000 Internet customers during the last year, promotional rolloff and price adjustments. On an actual basis, Internet revenues grew 162.5% year-over-year, as a result of the Transactions.

Voice revenues totaled $730 million on a pro forma basis, an increase of 3.3% compared to the second quarter of 2015, due to the addition of 856,000 voice customers in the last twelve months, partially offset by promotions and value-based pricing. Voice revenues increased 214.1% year-over-year, on an actual basis, driven by the Transactions.

Pro forma commercial revenues rose to $1.3 billion, an increase of 13.4% over the prior-year period, driven by SMB revenue growth of 13.2% and enterprise revenue growth of 13.7%. On an actual basis, commercial revenues grew 193.0% year-over-year, as a result of the Transactions.

Pro forma second quarter advertising sales revenues of $405 million increased 3.9% compared to the year-ago quarter, primarily driven by an increase in national and political advertising revenue. Advertising sales grew 200.1% year-over-year, on an actual basis, driven by the Transactions.

Operating Costs and Expenses

On a pro forma basis, second quarter total operating costs and expenses increased by $326 million, or 5.3%, compared to the year-ago period, primarily driven by increases in programming and other expenses. On an actual basis, total operating costs and expenses grew by 149.2% year-over-year as a result of the Transactions.

Second quarter programming expense increased by $167 million, or 7.5% on a pro forma basis, as compared to the second quarter of 2015, reflecting contractual programming increases and non-recurring items, partly offset by lower pay-per-view programming expenses and partial period transactions synergies.

Costs to service customers grew by $37 million, or 2.1% on a pro forma basis year-over-year, despite year-over-year residential and SMB customer relationship growth of 5.1%, given improved service metrics. Other expenses grew by $81 million, or 8.5% on a pro forma basis, as compared to the second quarter of 2015, reflecting higher corporate and administrative labor costs, including pre-closing bonus accrual true ups, higher IT resources at Legacy TWC, advertising sales costs, and enterprise sales and labor costs.      

Adjusted EBITDA

Second quarter pro forma Adjusted EBITDA of $3.5 billion grew by 9.0% year-over-year, reflecting revenue growth and operating costs and expenses growth of 6.6% and 5.3%, respectively. Excluding transition costs of $25 million in the second quarter of 2016 and $17 million in the prior-year period, pro forma Adjusted EBITDA grew by 9.2% year-over-year. On an actual basis, Adjusted EBITDA of $2.2 billion grew by 161.6% year-over-year, due to the Transactions.

Net Income Attributable to Charter Shareholders

Pro forma net income attributable to Charter shareholders totaled $280 million in the second quarter of 2016, compared to $107 million in the second quarter of 2015. The year-over-year increase in pro forma net income was primarily related to higher Adjusted EBITDA and a pension curtailment gain related to Charter's announcement to freeze TWC's legacy defined benefit plans in the second quarter of 2016 totaling approximately $518 million, offset by $299 million of post-closing restructuring charges, higher income tax expense and approximately $50 million in expenses related to the net valuation of hedged foreign currency debt and the elimination of TWC's interest rate swaps. Pro forma net income per basic common share attributable to Charter shareholders totaled $1.04 in the second quarter of 2016 compared to $0.40 during the same period last year. The increase was primarily the result of the factors described above, partly offset by a 0.3% increase in pro forma weighted average shares outstanding versus the prior-year period.

On an actual basis, net income attributable to Charter shareholders totaled $3.1 billion during the second quarter of 2016, compared to a net loss of $122 million in the second quarter of 2015. The increase in net income was primarily related to higher income from operations following the close of the Transactions and the reduction of substantially all of Charter's historical valuation allowance associated with its deferred tax assets of approximately $3.3 billion. Actual net income per basic common share attributable to Charter shareholders totaled $16.73 in the second quarter of 2016 compared to a loss of $1.21 during the same period last year. The increase was primarily the result of the factors described above, partly offset by an 81.4% increase in weighted average shares outstanding versus the prior-year period, as a result of the Transactions.

Capital Expenditures

Pro forma property, plant and equipment expenditures totaled $2.1 billion in the second quarter of 2016, compared to $1.9 billion during the second quarter of 2015. The year-over-year increase in capital expenditures was driven by higher product development investments, transition capital expenditures incurred in connection with the Transactions, and support capital investments. Transition capital expenditures accounted for $111 million of capital expenditures in the second quarter of 2016 versus $28 million in the second quarter of 2015. Excluding transition-related expenditures, second quarter 2016 pro forma property, plant and equipment expenditures totaled $2.0 billion compared to $1.8 billion during the same period last year.

On an actual basis, second quarter 2016 property, plant and equipment expenditures totaled $1.3 billion, an increase of $828 million as compared to the prior-year, as a result of the Transactions.

The actual amount of capital expenditures in 2016 will depend on a number of factors including the pace of transition planning to service a larger customer base as a result of the Transactions and growth rates of both residential and commercial business customers.

Cash Flow

During the second quarter of 2016, net cash flows from operating activities totaled $1.6 billion, compared to $531 million in the second quarter of 2015. The year-over-year increase in net cash flows from operating activities was primarily due to higher Adjusted EBITDA in the second quarter of 2016 versus the second quarter of 2015, following the close of the Transactions.

Free cash flow for the second quarter of 2016 totaled $524 million, compared to $158 million during the same period last year. The increase was related to higher net cash flows from operating activities in the second quarter of 2016 versus the second quarter of 2015, driven by the close of the Transactions, partly offset by Transactions closing costs and higher capital expenditures.

Liquidity & Financing

As of June 30, 2016, total principal amount of debt was approximately $60.3 billion and Charter's credit facilities provided approximately $2.8 billion of additional liquidity.

As a result of the Transactions, Charter paid $27.8 billion in cash to Legacy TWC stockholders and $2.0 billion in cash to Advance/Newhouse, the former parent of Legacy Bright House.

In connection with the TWC transaction, Legacy Charter and Liberty Broadband Corporation  ("Liberty Broadband") completed their previously announced transactions pursuant to their investment agreement, in which Liberty Broadband purchased for cash approximately 22.0 million shares of Charter Class A common stock valued at $4.3 billion at the signing of the TWC transaction to partially finance the cash portion of the TWC transaction consideration. In connection with the Bright House transaction, Liberty Broadband purchased approximately 3.7 million shares of Charter Class A common stock valued at $700 million at the signing of the Bright House transaction (the "Liberty Transaction").

Charter also partially financed the cash portion of the purchase price of the Transactions with additional indebtedness and cash on hand. In 2015, Legacy Charter issued $15.5 billion aggregate principal amount of CCO Safari II, LLC ("CCO Safari II") senior secured notes, $3.8 billion aggregate principal amount of CCO Safari III, LLC ("CCO Safari III") senior secured bank loans and $2.5 billion aggregate principal amount of CCOH Safari, LLC ("CCOH Safari") senior unsecured notes. The net proceeds were initially deposited into escrow accounts. Upon closing of the TWC transaction, the proceeds were released from escrow and the CCOH Safari notes became obligations of CCO Holdings, LLC ("CCO Holdings") and CCO Holdings Capital Corp. ("CCO Holdings Capital"), and the CCO Safari II notes and CCO Safari III credit facilities became obligations of Charter Communications Operating, LLC ("Charter Operating") and  Charter Communications Operating Capital Corp. CCOH Safari merged into CCO Holdings and CCO Safari II and CCO Safari III merged into Charter Operating.

In connection with the closing of the TWC transaction, Charter Operating replaced its existing revolving credit facility with a new $3.0 billion senior secured revolving credit facility under Charter Operating's Amended and Restated Credit Agreement dated May 18, 2016 (the "Credit Agreement"). In connection with the closing of the Bright House transaction, Charter Operating closed on a $2.6 billion aggregate principal amount Term Loan A pursuant to the terms of the Credit Agreement of which $2.0 billion was used to fund the cash portion of the Bright House transaction and of which $638 million was used to  prepay and terminate Charter Operating's existing Term A-1 Loans. Interest on Term Loan A was set at LIBOR plus 2%. In connection with the closing of the TWC transaction, Charter assumed approximately $22.5 billion in aggregate principal amount of Time Warner Cable, LLC and Time Warner Cable Enterprises, LLC senior notes and debentures with varying maturities.

In February 2016, CCO Holdings and CCO Holdings Capital jointly issued $1.7 billion aggregate principal amount of 5.875% senior notes due 2024 (the "2024 Notes") and, in April 2016, they issued $1.5 billion aggregate principal amount of 5.500% senior notes due 2026 (the "2026 Notes") at a price of 100.075% of the aggregate principal amount. The net proceeds from both issuances were used to repurchase all of CCO Holdings' 7.000% senior notes due 2019, 7.375% senior notes due 2020 and 6.500% senior notes due 2021 and to pay related fees and expenses and for general corporate purposes. These debt repurchases resulted in a loss on extinguishment of debt of $110 million for the three and six months ended June 30, 2016.

Conference Call

Charter will host a conference call on Tuesday, August 9, 2016 at 10:00 a.m. Eastern Time (ET) related to the contents of this release.

The conference call will be webcast live via the Company's investor relations website at ir.charter.com. The call will be archived under the "Financial Information" section two hours after completion of the call. Participants should go to the webcast link no later than 10 minutes prior to the start time to register.

Those participating via telephone should dial 866-919-0894 no later than 10 minutes prior to the call. International participants should dial 706-679-9379. The conference ID code for the call is 31046169.

A replay of the call will be available at 855-859-2056 or 404-537-3406 beginning two hours after the completion of the call through the end of business on August 23, 2016. The conference ID code for the replay is 31046169.

Additional Information Available on Website

The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Form 10-Q for the quarter ended June 30, 2016, which will be posted on the "Financial Information" section of our investor relations website at ir.charter.com, when it is filed with the United States Securities and Exchange Commission. A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available in the "Financial Information" section.

Use of Adjusted EBITDA, Free Cash Flow and Pro Forma Information

The company uses certain measures that are not defined by U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of its business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, consolidated net income (loss) and 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 and free cash flow are reconciled to consolidated net income (loss) and net cash flows from operating activities, respectively, in the Addendum to this release.

Adjusted EBITDA is defined as consolidated net income (loss) plus net interest expense, income tax (benefit) expense, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, (gain) loss on financial instruments, other expense, net and other operating expenses, such as merger and restructuring costs, other pension benefits, special charges and (gain) loss on sale or retirement of assets. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of the Company's businesses as well as other non-cash or special items, and is unaffected by the Company's capital structure or investment activities. 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. These costs are evaluated through other financial measures.

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

Management and Charter's board of directors use Adjusted EBITDA and free cash flow to assess Charter's performance and its 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 Securities and Exchange Commission (the "SEC")). For the purpose of calculating compliance with leverage  covenants, the Company uses Adjusted EBITDA, as presented, excluding certain expenses paid by its operating subsidiaries to other Charter entities. The Company's debt covenants refer to these expenses as management fees, which were $202 million and $76 million for the three months ended June 30, 2016 and 2015, respectively, and $304 million and $152 million for the six months ended June 30, 2016 and 2015, respectively.

Pro forma results give effect to the Transactions as if they had closed at the beginning of the earliest period presented and include the operations of Legacy Charter, Legacy TWC and Legacy Bright House for the full three and six months ended June 30, 2016 and 2015. Due to the transformative nature of the Transactions, the Company believes that providing a discussion of its results of operations on a pro forma basis provides management and investors a more meaningful perspective on the Company's financial and operational performance and trends. The results of operations data on a pro forma basis are provided for illustrative purposes only and are based on available information and assumptions that Charter believes are reasonable and do not purport to represent what the actual consolidated results of operations of Charter would have been had the Transactions occurred as of the beginning of the earliest period presented, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position. Exhibit 99.1 in the Company's second quarter 2016 Quarterly Report on Form 10-Q provides pro forma financial information for each quarter of 2015 and the first and second quarters of 2016 and a reconciliation of the pro forma financial information to the actual results of operations of the Company.

About Charter

Charter (NASDAQ: CHTR) is a leading broadband communications company and the second largest cable operator in the United States. Charter provides a full range of advanced broadband services, including Spectrum TV™ video entertainment programming, Spectrum Internet™ access, and Spectrum Voice™. Spectrum Business™ similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, business telephone, video and music entertainment services, and wireless backhaul. Charter's advertising sales and production services are sold under the Spectrum Reach™ brand. More information about Charter can be found at charter.com.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial.  Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations.  Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under "Risk Factors" from time to time in our filings with the SEC.  Many of the forward-looking statements contained in this communication may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated," "aim," "on track," "target," "opportunity," "tentative," "positioning," "designed," "create," "predict," "project," "seek," "would," "could," "continue," "ongoing," "upside," "increases" and "potential," among others.  Important factors that could cause actual results to differ materially from the forward-looking statements we make in this communication are set forth in our quarterly report on Form 10-Q for the quarter ended June 30, 2016, in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

Risks Related to the recently completed Transactions:

• our ability to achieve the synergies and value creation contemplated by the Transactions;
• our ability to promptly, efficiently and effectively integrate acquired operations;
• managing a significantly larger company than before the completion of the Transactions;
• diversion of management time on issues related to the integration of the Transactions;
• changes in Legacy Charter, Legacy TWC or Legacy Bright House operations' businesses, future cash requirements, capital requirements, results of operations, revenues, financial condition and/or cash flows;
• disruption in our business relationships as a result of the Transactions;
• the increase in indebtedness as a result of the Transactions, which will increase interest expense and may decrease our operating flexibility;
• operating costs and business disruption that may be greater than expected;
• the ability to retain and hire key personnel and maintain relationships with providers or other business partners; and
• costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us as a result of the Transactions.

Risks Related to Our Business

• our ability to sustain and grow revenues and cash flow from operations by offering video, Internet, voice, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our markets and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
• the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite operators, wireless broadband and telephone providers, digital subscriber line ("DSL") providers, fiber to the home providers, video provided over the Internet by (i) market participants that have not historically competed in the multichannel video business, (ii) traditional multichannel video distributors, and (iii) content providers that have historically licensed cable networks to multichannel video distributors, and providers of advertising over the Internet;
• general business conditions, economic uncertainty or downturn, unemployment levels and the level of activity in the housing sector;
• our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents);
• our ability to develop and deploy new products and technologies including our cloud-based user interface, Spectrum Guide^®, and downloadable security for set-top boxes, and any other cloud-based consumer services and service platforms;
• the effects of governmental regulation on our business or potential business combination transactions;
• any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
• the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
• our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

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 communication.