Charter 2002 Annual Report Download - page 4

2. Charter Communications
To Our Shareholders:
There has not been a more challenging period in our company’s
evolution than the past year. While our business continued to grow
revenues through the successful deployment of advanced broadband
services, our analog video customer count declined, and significant
organizational challenges arose.
A lengthy internal review together
with audits of the years 2001 and
2000 by our new accounting firm,
KPMG LLP, resulted in restatements
to our financial statements, which
reflect the results of our operations
for those periods and we believe
established financial and operational
baselines for an independent evalua-
tion of our business. We made difficult
but necessary personnel changes to
strengthen our management team,
adding individuals with proven track
records, whose talents are well-recog-
nized in our industry. We have
adopted new financial reporting
standards recommended by the
National Cable & Telecommunications
Association, and we have made an
effort to increase transparency in our
financial statement disclosure. Finally,
we have cooperated with outside
inquiries into our business practices
in an effort to bring such matters
to a conclusion.
The year 2003 will be a year of
transition. We are fully engaged in
advancing the opportunity that is at
the center of our company: harnessing
the tremendous possibility of our
broadband communications network.
Toward this end, we have excel-
lent news to share. Charter customers
continue to welcome advanced serv-
ices into their homes, and in each of
the key service areas that drive our
digital broadband business we are
delivering improvements in revenues
and cash flow. At the same time, we
continue to transition away from our
rebuild and upgrade cycle toward a
diminishing consumption of capital.
As our cash flow from operations
grows and our capital expenditures
decline, we approaching the genera-
tion of free cash flow — the point at
which cash generated from our busi-
ness exceeds interest expense and
capital expenditures. This powerful
combination of rising demand and
declining infrastructure costs presents
the fundamental economic value
proposition for Charter.
Charter is operationally more
efficient than ever before, with a
sharp focus on our customers. We
target marketing toward consumers
who are more likely to buy our top-
performing services with the goal of
lowering customer disconnect rates.
Exerting cost disciplines across our
entire organization, we have consoli-
dated our field operations into five
geographic divisions, and are imple-
menting intelligent systems that
allow us to deliver excellent service
to our customers and communities
in which we have the privilege to
be a broadband technology provider.
Against this more disciplined
backdrop, our business now encom-
passes a broad array of information,
entertainment and communications
services flowing from our single
broadband network. From extremely
rapid file downloads to the PC, to
the latest commercial-free Hollywood
hits over the television, we are par-
ticipating in meaningful ways in the
daily lives of millions of customers
nationwide. Our sources of revenues
increased from our expanding
product categories, including
high-speed Internet access, digital
video, analog video and telephony.
Within this growing complement
of broadband data products, our
high-speed data service stands out
not only as the fastest-growing com-
ponent, but also the most profitable,
producing excellent operating margins
and requiring comparatively little
deployment capital. Demand for our
high-speed data service continues
as America transforms from a nation
of dial-up Internet users to a society
equipped with a modern, always-on
broadband network. We remain con-
vinced that by providing customers
choice in their high-speed data access
speeds, and the prices associated
with them, we remain competitive
and often provide, quite simply, the
best deal in town.