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Registration No. 333-138319
Page | ||||
i | ||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii | |||
SUMMARY | 1 | |||
RISK FACTORS | 14 | |||
USE OF PROCEEDS | 28 | |||
CAPITALIZATION | 29 | |||
UNAUDITED PRO FORMA CONSOLIDATED FINANCIALS | 32 | |||
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA | 41 | |||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF CHARTER COMMUNICATIONS HOLDINGS, LLC | 43 | |||
BUSINESS | 72 | |||
REGULATION AND LEGISLATION | 87 | |||
MANAGEMENT | 92 | |||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 114 | |||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 118 | |||
DESCRIPTION OF OTHER INDEBTEDNESS | 132 | |||
DESCRIPTION OF THE CCH I NOTES | 154 | |||
DESCRIPTION OF THE CCH II NOTES | 192 | |||
THE EXCHANGE OFFER | 227 | |||
IMPORTANT UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS | 235 | |||
PLAN OF DISTRIBUTION | 239 | |||
LEGAL MATTERS | 240 | |||
EXPERTS | 240 | |||
WHERE YOU CAN FIND MORE INFORMATION | 240 | |||
INDEX TO FINANCIAL STATEMENTS | F-1 |
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• | the availability, in general, of funds to meet interest payment obligations under our debt and to fund our operations and necessary capital expenditures, either through cash flows from operating activities, further borrowings or other sources and, in particular, our ability to be able to provide under applicable debt instruments and applicable law such funds (by dividend, investment or otherwise) to the applicable obligor of such debt; | |
• | our ability to comply with all covenants in our indentures and credit facilities, any violation of which would result in a violation of the applicable facility or indenture and could trigger a default of other obligations under cross-default provisions; | |
• | our ability to pay or refinance debt prior to or when it becomes due and/or to take advantage of market opportunities and market windows to refinance that debt through new issuances, exchange offers or otherwise, including restructuring our balance sheet and leverage position; | |
• | our ability to sustain and grow revenues and cash flows from operating activities by offering video, high-speed Internet, telephone and other services and to maintain and grow a stable customer base, particularly in the face of increasingly aggressive competition from other service providers; | |
• | our ability to obtain programming at reasonable prices or to pass programming cost increases on to our customers; | |
• | general business conditions, economic uncertainty or slowdown; and | |
• | the effects of governmental regulation, including but not limited to local franchise authorities, on our business. |
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(1) | Charter acts as the sole manager of Charter Holdco and its direct and indirect limited liability company subsidiaries, including CCH I and CCH II. |
(2) | Without giving effect to the CCI Exchange. Concurrently with the CCI Exchange, CCH II and CCH I completed the Private Exchange. |
(3) | Held by Charter Investment, Inc. (“CII”) and Vulcan Cable III Inc., each of which is 100% owned by Paul G. Allen, Charter’s Chairman and controlling shareholder. They are exchangeable at any time on a one-for-one basis for shares of Class A common stock. |
(4) | The percentages reflect the issuance of the 116.9 million shares of Class A common stock issued in 2005 and February 2006 and the corresponding issuance of an equal number of mirror membership units by Charter Holdco to Charter. However, for accounting purposes, Charter’s common equity interest in Charter Holdco is 48%, and Paul G. Allen’s ownership of Charter Holdco is 52%. These percentages exclude the 116.9 million mirror membership units issued to Charter due to the required return of the issued mirror units upon return of the shares offered pursuant to the share lending agreement. |
(5) | Represents an exchangeable accreting note issued by CCHC related to the settlement of the CC VIII dispute. See “Certain Relationships and Related Party Transactions — Transactions Arising Out of Our Organizational Structure and Mr. Allen’s Investment in Charter and Its Subsidiaries — Equity Put Rights — CC VIII”. |
(6) | Without giving effect to the Private Exchange. In the Private Exchange, CCH I issued $462 million aggregate principal amount of Original CCH I Notes in addition to the $3.525 billion aggregate principal amount currently outstanding. |
(7) | Without giving effect to the Private Exchange and the CCI Exchange Offer. In the Private Exchange, CCH II issued $250 million aggregate principal amount of Original CCH II Notes. In the CCI Exchange Offer, CCH II issued $146.2 million aggregate principal amount of CCH II 2010 notes. |
(8) | Giving pro forma effect to the asset sales described under “— Recent Events — Asset Sales,” the aggregate principal amount of loans under Charter Operating’s senior credit facilities is $5.0 billion. |
(9) | This subsidiary guarantees the Charter Operating senior credit facilities and senior second lien notes, which guarantee is secured by substantially all assets of this subsidiary. |
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Original CCH I Notes | $462.0 million of 11.00% Senior Secured Notes due 2015, which CCH I issued on September 14, 2006. | |
New CCH I Notes | $462.0 million of CCH I’s 11.00% Senior Secured Notes due 2015, the offering and sale of which is registered under the Securities Act of 1933. | |
Original CCH II Notes | $250 million of 10.250% Senior Notes due 2013, which CCH II issued on September 14, 2006. | |
New CCH II Notes | $250 million of CCH II’s 10.250% Senior Notes due 2013, the offering and sale of which is registered under the Securities Act of 1933. | |
Exchange Offers | Charter Holdings, CCH I and CCH II (the “Offerors”) are offering to issue registered new notes in exchange for a like principal amount and like denomination of our original notes. The Offerors are offering to issue these registered new notes to satisfy our obligations under an exchange and registration rights agreement that the Offerors entered into with the initial purchasers of the original notes when the Offerors sold the original notes in a transaction that was exempt from the registration requirements of the Securities Act. You may tender your original notes for exchange by following the procedures described under the caption “The Exchange Offers.” | |
Tenders; Expiration date; Withdrawal | The exchange offers will expire at 5:00 p.m., New York City time, on December 18, 2006, which is within 60 business days after the exchange offers registration statement was declared effective, unless the Offerors extend it. If you decide to exchange your original notes for new notes, you must acknowledge that you are not engaging in, and do not intend to engage in, a distribution of the new notes. You may withdraw any original notes that you tender for exchange at any time prior to the expiration of the exchange offers. If the Offerors decide for any reason not to accept any original notes you have tendered for exchange, those original notes will be returned to you without cost promptly after the expiration or termination of the exchange offers. See “The Exchange Offers — Terms of the Exchange Offers” for a more complete description of the tender and withdrawal provisions. | |
Accrued Interest on the New Notes and Original Notes | The new notes will bear interest from October 1, 2006 (the date of the last interest payment in respect of the original notes). Holders of original notes that are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on such original notes accrued to the date of issuance of the new notes. | |
Conditions to the Exchange Offers | The exchange offers are subject to customary conditions, some of which the Offerors may waive. See “The Exchange Offers — Conditions to the Exchange Offers” for a description of the conditions. Other than the federal securities laws, we are not |
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subject to federal or state regulatory requirements in connection with the exchange offers. | ||
Certain Federal Income Tax Considerations | The exchange of original notes for new notes in the exchange offers will not be a taxable event for United States federal income tax purposes. See “Important United States Federal Income Tax Considerations.” | |
Exchange Agent Use of Proceeds | The Bank of New York Trust Company, NA is serving as exchange agent. We will not receive any proceeds from the exchange offers. | |
Consequences of failure to exchange your original notes | Original notes that are not tendered or that are tendered but not accepted will continue to be subject to the restrictions on transfer that are described in the legend on those notes. In general, you may offer or sell your original notes only if they are registered under, or offered or sold under an exemption from, the Securities Act and applicable state securities laws. Except in limited circumstances with respect to specific types of holders of original notes, neither CCH I nor CCH II, however, will have a further obligation to register the original notes. If you do not participate in the exchange offer, the liquidity of your original notes could be adversely affected. | |
Consequences of exchanging your original notes | Based on interpretations of the staff of the SEC, we believe that you may offer for resale, resell or otherwise transfer the new notes that CCH I or CCH II issues in the exchange offers without complying with the registration and prospectus delivery requirements of the Securities Act if you: | |
• acquire the new notes issued in the exchange offers in the ordinary course of your business; | ||
• are not participating, do not intend to participate, and have no arrangement or undertaking with anyone to participate, in the distribution of the new notes issued to you in the exchange offers, and | ||
• are not an “affiliate” of our company as defined in Rule 405 of the Securities Act. |
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• | will have been registered under the Securities Act; | |
• | will not contain transfer restrictions and registration rights that relate to the outstanding notes; and | |
• | will not contain provisions relating to the payment of additional interest to be made to the holders of the outstanding notes under circumstances related to the timing of the exchange offer. |
Issuers | CCH I, LLC and CCH I Capital Corp. | |
Maturity | October 1, 2005. | |
Interest | Interest will accrue from and including the settlement date and will be payable in cash semi-annually, in arrears, on April 1 and October 1 of each year, commencing on October 1, 2006. | |
Interest Rate | The per annum interest rate on the New CCH I Notes will be 11.00%. | |
Ranking | The New CCH I Notes will be pari passu with, of the same class as, and will vote on any matter submitted to bondholders with and otherwise be substantially identical in all respects to, the Original CCH I Notes, except that (i) the New CCH I Notes will have a separate CUSIP number from the Original CCH I Notes and thus will not be fungible with the Original CCH I Notes The New CCH I Notes will be the senior secured obligations of CCH I and will rank effectively senior to all of CCH I’s future unsecured senior indebtedness. In addition, the New CCH I Notes have been structured to be effectively senior to any indebtedness of any parent of CCH I. The New CCH I Notes will rank equally with all existing and future indebtedness of CCH I that may be secured equally and ratably by the collateral securing the New CCH I Notes, including $3,525 million aggregate principal amount of CCH I’s outstanding CCH I notes. The New CCH I Notes will be effectively subordinated to all existing and future obligations of CCH I’s subsidiaries. As of June 30, 2006, CCH I had stand-alone indebtedness and other liabilities of approximately $3.8 billion, and its consolidated subsidiaries had approximately $13.2 billion of indebtedness and other liabilities outstanding on their consolidated balance sheet. See “Capitalization”. | |
Guarantee | Charter Holdings will unconditionally guarantee the New CCH I Notes on a senior unsecured basis. If CCH I cannot make payments on the New CCH I Notes, Charter Holdings must make them. | |
Collateral | The New CCH I Notes will be secured by a pledge of 100% of the equity interests of CCH I’s wholly owned subsidiary, CCH II, LLC, and the proceeds thereof, and by a pledge of the CC VIII interests, and the proceeds thereof (collectively, the “collateral”). |
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The CC VIII interests are entitled to a 2% accreting priority return on the priority capital. The CC VIII interests represented approximately 13% of the total equity interests in CC VIII at June 30, 2006. CC VIII owned systems with approximately 934,000 analog video customers at June 30, 2006. CC VIII and certain other subsidiaries have guaranteed, on a secured basis, the credit facility and senior second lien notes of our subsidiary, Charter Operating. In addition, CC VIII may from time to time be obligated on other secured or unsecured indebtedness, including indebtedness to subsidiaries of CCH I. The New CCH I Notes and the outstanding CCH I notes will be, and all future indebtedness of CCH I that is permitted to be incurred by the CCH I indenture may be, secured equally and ratably by the collateral. The pledge agreement contains certain limitations on the rights of the trustee and the holders to exercise remedies with respect to the collateral. | ||
Optional Redemption | CCH I may redeem, at its option, the New CCH I Notes in whole or in part from time to time as described in the section “Description of the CCH I Notes — Optional Redemption”. | |
Change of Control | Upon the occurrence of a Change of Control (as defined herein), each holder of the New CCH I Notes will have the right to require CCH I to repurchase all or any part of that holder’s New CCH I Notes at a repurchase price equal to 101% of the aggregate principal amount of the New CCH I Notes repurchased plus accrued and unpaid interest thereon, if any, to the date of purchase. There can be no assurance that CCH I will have sufficient funds available at the time of any Change of Control to make any required debt repayment (including repurchases of the New CCH I Notes and outstanding CCH I notes). See “Description of the CCH I Notes — Repurchase at the Option of Holders — Change of Control”. | |
Restrictive Covenants | The indenture under which the New CCH I Notes will be issued, which we refer to as the “CCH I indenture”, restricts the ability of CCH I and CCH I’s restricted subsidiaries to: (1) incur indebtedness; (2) create liens; (3) pay dividends or make distributions in respect of capital stock and other restricted payments; (4) make investments; (5) sell assets; (6) create restrictions on the ability of restricted subsidiaries to make certain payments; (7) enter into transactions with affiliates; or (8) consolidate, merge or sell all or substantially all assets. However, such covenants are subject to a number of important qualifications and exceptions as described under “Description of the CCH I Notes — Certain Covenants”, including provisions allowing CCH I and its restricted subsidiaries, as long as CCH I’s leverage ratio is not greater than 7.5 to 1.0, to incur additional indebtedness and make investments. CCH I is also permitted under these covenants to provide funds to its parent companies to pay interest on and, subject to meeting its leverage ratio test, to retire or repurchase their debt obligations. | |
Events of Default | For a discussion of events that will permit acceleration of the payment of the principal of and accrued interest on the New |
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CCH I Notes, see “Description of the CCH I Notes — Events of Default and Remedies”. |
Issuers | CCH II, LLC and CCH II Capital Corp. | |
Maturity | October 1, 2013. | |
Interest | Interest will accrue from and including the settlement date and will be payable in cash semi-annually, in arrears, on April 1 and October 1 of each year, beginning on April 1, 2007. | |
Interest Rate | The per annum interest rate on the New CCH II Notes will be 10.25%. | |
Ranking | The New CCH II Notes will be the senior unsecured obligations of CCH II and will rank pari passu to all of CCH II’s existing and future unsecured senior indebtedness, including $2.1 billion aggregate principal amount of CCH II’s 10.25% Senior Notes due 2010 that are currently outstanding (the “outstanding CCH II 2010 notes”) and the $146 million aggregate principal amount of additional CCH II 2010 notes that were issued in the CCI Exchange Offer. In addition, the New CCH II Notes have been structured to be effectively senior to any indebtedness of any parent of CCH II, including the CCH I notes. However, because the CC VIII Interests is held by CCH I, holders of the New CCH II Notes will not have any direct or indirect claim against, or interest in, those preferred equity interests. Furthermore, the New CCH II Notes will be effectively subordinated to all existing and future obligations of CCH II’s subsidiaries. As of June 30, 2006, CCH II had stand-alone indebtedness and other liabilities outstanding of approximately $2.1 billion, and its consolidated subsidiaries had approximately $11.3 billion of indebtedness and other liabilities outstanding on their consolidated balance sheet. See “Capitalization”. | |
Guarantee | Charter Holdings will unconditionally guarantee the New CCH II Notes on a senior unsecured basis. If CCH II cannot make payments on the New CCH II Notes, Charter Holdings must make them. | |
Optional Redemption | CCH II may redeem, at its option, the New CCH II Notes in whole or in part from time to time as described in the section “Description of the CCH II Notes — Optional Redemption”. | |
Change of Control | Upon the occurrence of a Change of Control (as defined herein), each holder of the New CCH II Notes will have the right to require CCH II to repurchase all or any part of that holder’s New CCH II Notes at a repurchase price equal to 101% of the aggregate principal amount of the New CCH II Notes repurchased plus accrued and unpaid interest thereon, if any, to the date of purchase. There can be no assurance that CCH II will have sufficient funds available at the time of any Change of Control to make any required debt repayment (including repurchases of the |
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New CCH II Notes). See “Description of the CCH II Notes — Repurchase at the Option of Holders — Change of Control”. | ||
Restrictive Covenants | The indenture under which the New CCH II Notes will be issued, which we refer to as the “CCH II indenture”, restricts the ability of CCH II and CCH II’s restricted subsidiaries to: (1) incur indebtedness; (2) create liens; (3) pay dividends or make distributions in respect of capital stock and other restricted payments; (4) make investments; (5) sell assets; (6) create restrictions on the ability of restricted subsidiaries to make certain payments; (7) enter into transactions with affiliates; or (8) consolidate, merge or sell all or substantially all assets. However, such covenants are subject to a number of important qualifications and exceptions as described under “Description of the CCH II Notes — Certain Covenants”, including provisions allowing CCH II and its restricted subsidiaries, as long as CCH II’s leverage ratio is not greater than 5.5 to 1.0, to incur additional indebtedness and make investments. CCH II is also permitted under these covenants to provide funds to its parent companies to pay interest on and, subject to meeting its leverage ratio test, to retire or repurchase their debt obligations. | |
Events of Default | For a discussion of events that will permit acceleration of the payment of the principal of and accrued interest on the New CCH II Notes, see “Description of the CCH II Notes — Events of Default and Remedies”. |
(1) the redemption in March, 2005 of all (approximately $113 million principal amount) of CC V Holdings, LLC’s outstanding 11.875% senior discount notes due 2008 with cash on hand; | |
(2) the issuance and sale of $300 million of 83/4% CCO Holdings, LLC senior notes in August, 2005 and the use of a portion of such proceeds to pay financing costs and accrued interest in the September, 2005 exchange transaction referenced below; | |
(3) the exchange in September, 2005 of approximately $3.4 billion principal amount of Charter Holdings’ notes scheduled to mature in 2009 and 2010 for CCH I notes and the exchange of approximately $3.4 billion principal amount of Charter Holdings’ notes scheduled to mature in 2011 and 2012 for CCH I Holdings, LLC (“CIH”) notes and CCH I notes; | |
(4) the issuance and sale of $450 million principal amount of CCH II 2010 Notes in January, 2006 and the use of such proceeds to pay down credit facilities; |
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(5) the refinancing of the Charter Operating credit facilities in April, 2006 and the related reductions in interest rate margins on the term loan; | |
(6) the acquisition of certain assets in January, 2006 for approximately $42 million; | |
(7) the dispositions of certain assets for net proceeds of $948 million and the use of such proceeds to reduce amounts outstanding under our revolving credit facility to zero; | |
(8) the issuance of $146 million principal amount of additional CCH II 2010 Notes, 45 million shares of Charter’s Class A common stock and $188 million in cash in exchange for $450 million principal amount of outstanding Charter convertible notes pursuant to the CCI Exchange Offer; and | |
(9) the issuance of $250 million principal amount of Original CCH II Notes and $462 million principal amount of Original CCH I Notes in exchange for $797 million principal amount of Charter Holdings notes and the contribution of the CC VIII interests to CCH I pursuant to the Private Exchange. |
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Six Months Ended | |||||||||||||||||||||||||||
Year Ended December 31, | June 30, | ||||||||||||||||||||||||||
2005 | 2005 | 2006 | |||||||||||||||||||||||||
2003 Actual | 2004 Actual | 2005 Actual | Pro Forma(a) | Pro Forma(a) | Pro Forma(a) | ||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||
Video | $ | 3,306 | $ | 3,217 | $ | 3,248 | $ | 3,195 | $ | 1,596 | $ | 1,655 | |||||||||||||||
High-speed Internet | 535 | 712 | 875 | 868 | 422 | 499 | |||||||||||||||||||||
Telephone | 14 | 18 | 36 | 41 | 17 | 49 | |||||||||||||||||||||
Advertising sales | 254 | 279 | 284 | 280 | 133 | 145 | |||||||||||||||||||||
Commercial | 196 | 227 | 266 | 260 | 125 | 145 | |||||||||||||||||||||
Other | 311 | 307 | 324 | 319 | 153 | 165 | |||||||||||||||||||||
Total revenues | 4,616 | 4,760 | 5,033 | 4,963 | 2,446 | 2,658 | |||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | 1,873 | 1,994 | 2,203 | 2,172 | 1,066 | 1,191 | |||||||||||||||||||||
Selling, general and administrative | 909 | 965 | 1,012 | 1,003 | 476 | 544 | |||||||||||||||||||||
Depreciation and amortization | 1,396 | 1,433 | 1,443 | 1,432 | 730 | 685 | |||||||||||||||||||||
Impairment of franchises | — | 2,297 | — | — | — | — | |||||||||||||||||||||
Asset impairment charges | — | — | 39 | — | — | — | |||||||||||||||||||||
Other operating (income) expenses, net | (46 | ) | 13 | 32 | 32 | 6 | 10 | ||||||||||||||||||||
Total costs and expenses | 4,132 | 6,702 | 4,729 | 4,639 | 2,278 | 2,430 | |||||||||||||||||||||
Income (loss) from continuing operations | 484 | (1,942 | ) | 304 | 324 | 168 | 228 | ||||||||||||||||||||
Interest expense, net | (1,486 | ) | (1,618 | ) | (1,739 | ) | (1,676 | ) | (827 | ) | (880 | ) | |||||||||||||||
Gain (loss) on extinguishment of debt | 187 | (21 | ) | 494 | 9 | 9 | — | ||||||||||||||||||||
Other income, net | 26 | 91 | 105 | 73 | 41 | 17 | |||||||||||||||||||||
Loss from continuing operations before income taxes and cumulative effect of accounting change | (789 | ) | (3,490 | ) | (836 | ) | (1,270 | ) | (609 | ) | (635 | ) | |||||||||||||||
Income tax benefit (expense) | (13 | ) | 35 | (9 | ) | (9 | ) | (8 | ) | (4 | ) | ||||||||||||||||
Loss from continuing operations before cumulative effect of accounting change | $ | (802 | ) | $ | (3,455 | ) | $ | (845 | ) | $ | (1,279 | ) | $ | (617 | ) | $ | (639 | ) | |||||||||
Other Financial Data: | |||||||||||||||||||||||||||
Capital expenditures | 804 | 893 | 1,088 | 1,051 | 524 | 524 | |||||||||||||||||||||
Deficiency of earnings to cover fixed charges(b) | 728 | 3,614 | 830 | 1,271 | 603 | 634 | |||||||||||||||||||||
Operating Data: | |||||||||||||||||||||||||||
(end of period)(c): | |||||||||||||||||||||||||||
Analog video customers | 6,431,300 | 5,991,500 | 5,884,500 | 5,884,500 | 5,943,100 | 5,876,100 | |||||||||||||||||||||
Digital video customers | 2,671,900 | 2,674,700 | 2,796,600 | 2,796,600 | 2,685,600 | 2,889,000 | |||||||||||||||||||||
Residential high-speed Internet customers | 1,565,600 | 1,884,400 | 2,196,400 | 2,196,400 | 2,022,200 | 2,375,100 | |||||||||||||||||||||
Telephone customers | 24,900 | 45,400 | 121,500 | 121,500 | 67,800 | 257,600 |
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Pro Forma as of | ||||||
June 30, 2006 | ||||||
Balance Sheet Data: | ||||||
(end of period): | ||||||
Cash and cash equivalents | $ | — | ||||
Total assets | 15,133 | |||||
Long-term debt(d) | 18,274 | |||||
Loans payable-related party | 3 | |||||
Minority interest(e) | 189 | |||||
Member’s deficit | (4,902 | ) |
(a) | Pro forma loss from continuing operations before cumulative effect of accounting change exceeded actual loss from continuing operations before cumulative effect of accounting change by $434 million for the year ended December 31, 2005 and actual loss from continuing operations before cumulative effect of accounting change exceeded pro forma loss from continuing operations before cumulative effect of accounting change by $59 million and $154 million and six months ended June 30, 2005 and 2006, respectively. | |
(b) | Earnings include net loss plus fixed charges. Fixed charges consist of interest expense and an estimated interest component of rent expense. | |
(c) | See section entitled “Business — Products and Services” included elsewhere in this Prospectus for definitions of the terms contained in this section. | |
(d) | Certain of the CIH notes and CCH I notes issued in exchange for Charter Holdings’ notes in 2005 and certain of the Original CCH I Notes and Original CCH II Notes issued in the Private Exchange are recorded at the historical book values of the Charter Holdings’ notes for financial reporting proposes as opposed to the current accreted value for legal purposes and notes indenture purposes (which, for both purposes, is the amount that would become payable if the debt becomes immediately due). As of June 30, 2006, the accreted value of Charter Holdings’ debt for legal purposes and notes indenture purposes is approximately $18.6 billion. | |
(e) | Minority interest represents preferred membership interests in CC VIII. As part of the Private Exchange, CCHC contributed the CC VIII interest to CCH I. |
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• | our future operating performance; | |
• | the demand for our products and services; | |
• | general economic conditions and conditions affecting customer and advertiser spending; | |
• | competition and our ability to stabilize customer losses; and | |
• | legal and regulatory factors affecting our business. |
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• | the lenders under Charter Operating’s credit facilities and the holders of our subsidiaries’ other debt instruments will have the right to be paid in full before us from any of our subsidiaries’ assets; and | |
• | the other holders of preferred membership interests in CCH I’s subsidiary, CC VIII, would have a claim on a portion of its assets that may reduce the amounts available for repayment to holders of our outstanding notes. |
• | require us to dedicate a significant portion of our cash flow from operating activities to make payments on our debt, which will reduce our funds available for working capital, capital expenditures and other general corporate expenses; | |
• | limit our flexibility in planning for, or reacting to, changes in our business, the cable and telecommunications industries and the economy at large; | |
• | place us at a disadvantage as compared to our competitors that have proportionately less debt; | |
• | make us vulnerable to interest rate increases, because a significant portion of our borrowings are, and will continue to be, at variable rates of interest; | |
• | expose us to increased interest expense as we refinance all existing lower interest rate instruments; |
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• | adversely affect our relationship with customers and suppliers; | |
• | limit our ability to borrow additional funds in the future, if we need them, due to applicable financial and restrictive covenants in our debt; and | |
• | make it more difficult for us to satisfy our obligations to the holders of our notes and for our subsidiaries to satisfy their obligations to their lenders under their credit facilities and to their noteholders. |
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• | incur additional debt; | |
• | repurchase or redeem equity interests and debt; | |
• | issue equity; | |
• | make certain investments or acquisitions; | |
• | pay dividends or make other distributions; | |
• | dispose of assets or merge; | |
• | enter into related party transactions; and | |
• | grant liens and pledge assets. |
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• | rules governing the provision of cable equipment and compatibility with new digital technologies; | |
• | rules and regulations relating to subscriber privacy; | |
• | limited rate regulation; | |
• | requirements governing when a cable system must carry a particular broadcast station and when it must first obtain consent to carry a broadcast station; | |
• | rules and regulations relating to provision of voice communications; | |
• | rules for franchise renewals and transfers; and | |
• | other requirements covering a variety of operational areas such as equal employment opportunity, technical standards and customer service requirements. |
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• | cash and cash equivalents; | |
• | the actual as adjusted capitalization after giving effect to: (1) the disposition of certain assets to Cebridge, New Wave and Orange for total proceeds of $971 million and the use of such proceeds to reduce amounts outstanding under our revolving credit facility to zero; and (2) the CCI Exchange Offer; | |
• | the capitalization on a pro forma basis to reflect the transactions above and the consummation of the CCI Exchange Offer and the Private Exchange on the basis of the assumptions described in “Unaudited Pro Forma Consolidated Financial Statements”. |
As of June 30, 2006 | ||||||||||||||
As | ||||||||||||||
Actual | Adjusted | Pro Forma | ||||||||||||
(Dollars in millions, unaudited) | ||||||||||||||
Cash and cash equivalents | $ | 48 | $ | 1 | $ | — | ||||||||
Long-Term Debt: | ||||||||||||||
Charter Communications Holdings, LLC: | ||||||||||||||
Senior and senior discount notes(a) | 1,757 | 1,757 | 960 | |||||||||||
CCH I Holdings, LLC: | ||||||||||||||
Senior and senior discount notes(b)(c) | 2,520 | 2,520 | 2,520 | |||||||||||
CCH I, LLC: | ||||||||||||||
11.000% senior notes due 2015 | 3,678 | 3,678 | 4,097 | |||||||||||
CCH II, LLC: | ||||||||||||||
10.250% senior notes due 2010 | 2,042 | 2,190 | 2,452 | |||||||||||
CCO Holdings: | ||||||||||||||
83/4% senior notes due 2013 | 795 | 795 | 795 | |||||||||||
Senior floating rate notes due 2010 | 550 | 550 | 550 |
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As of June 30, 2006 | ||||||||||||||
As | ||||||||||||||
Actual | Adjusted | Pro Forma | ||||||||||||
(Dollars in millions, unaudited) | ||||||||||||||
Charter Operating: | ||||||||||||||
8.000% senior second lien notes due 2012 | 1,100 | 1,100 | 1,100 | |||||||||||
83/8% senior second lien notes due 2014 | 770 | 770 | 770 | |||||||||||
Credit Facilities: | ||||||||||||||
Charter Operating(d) | 5,800 | 5,000 | 5,030 | |||||||||||
Total long-term debt | 19,012 | 18,360 | 18,274 | |||||||||||
Loan Payable — Related Party | 3 | 3 | 3 | |||||||||||
Minority Interest(e) | 631 | 631 | 189 | |||||||||||
Member’s Deficit | (5,316 | ) | (5,452 | ) | (4,902 | ) | ||||||||
Total Capitalization | $ | 14,330 | $ | 13,542 | $ | 13,564 | ||||||||
(a) | Represents the following Charter Holdings notes: |
As of June 30, 2006 | |||||
(Dollars in millions) | |||||
8.250% senior notes due 2007 | $ | 105 | |||
8.625% senior notes due 2009 | 292 | ||||
9.920% senior discount notes due 2011 | 198 | ||||
10.000% senior notes due 2009 | 154 | ||||
10.250% senior notes due 2010 | 49 | ||||
11.750% senior discount notes due 2010 | 43 | ||||
10.750% senior notes due 2009 | 131 | ||||
11.125% senior notes due 2011 | 217 | ||||
13.500% senior discount notes due 2011 | 94 | ||||
9.625% senior notes due 2009 | 107 | ||||
10.000% senior notes due 2011 | 136 | ||||
11.750% senior discount notes due 2011 | 125 | ||||
12.125% senior discount notes due 2012 | 106 | ||||
Total | $ | 1,757 | |||
(b) | Represents the following CIH notes: |
As of June 30, 2006 | |||||
(Dollars in millions) | |||||
11.125% senior notes due 2014 | $ | 151 | |||
9.920% senior discount notes due 2014 | 471 | ||||
10.000% senior notes due 2014 | 299 | ||||
11.750% senior discount notes due 2014 | 815 | ||||
13.500% senior discount notes due 2014 | 581 | ||||
12.125% senior discount notes due 2015 | 203 | ||||
Total | $ | 2,520 | |||
(c) | Certain of the CIH notes and CCH I notes issued in exchange for Charter Holdings notes in 2005 and certain of the Original CCH I Notes and Original CCH II Notes issued in the Private Exchange are recorded at the historical book values of the Charter Holdings notes for financial reporting purposes as |
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opposed to the current accreted value for legal purposes and notes indenture purposes (which, for both purposes, is the amount that would become payable if the debt becomes immediately due). As of June 30, 2006, the accreted value of Charter Holdings’ debt for legal purposes and notes indenture purposes is approximately $18.6 billion. | ||
(d) | As of June 30, 2006, our potential availability under our credit facilities totaled approximately $900 million, none of which was limited by covenant restrictions. However, pro forma for the closing of the asset sales on July 1, 2006, and the related application of net proceeds to repay amounts outstanding under our revolving credit facility, potential availability under our credit facilities as of June 30, 2006 would have been approximately $1.7 billion, although actual availability would have been limited to $1.3 billion because of limits imposed by covenant restrictions. | |
(e) | Minority interest represents preferred membership interests in CC VIII. As part of the Private Exchange, CCHC contributed the CC VIII Interest to CCH I. |
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(1) the redemption in March, 2005 of all (approximately $113 million principal amount) of CC V Holdings, LLC’s outstanding 11.875% senior discount notes due 2008 with cash on hand; | |
(2) the issuance and sale of $300 million of 83/4% CCO Holdings senior notes in August, 2005 and the use of a portion of such proceeds to pay financing costs and accrued interest in the September, 2005 exchange transaction referenced below; | |
(3) the exchange in September, 2005 of approximately $3.4 billion principal amount of Charter Holdings’ notes scheduled to mature in 2009 and 2010 for outstanding CCH I notes and the exchange of approximately $3.4 billion principal amount of Charter Holdings’ notes scheduled to mature in 2011 and 2012 for CIH notes and outstanding CCH I notes; | |
(4) the issuance and sale of $450 million principal amount of outstanding CCH II 2010 notes in January, 2006 and the use of such proceeds to pay down credit facilities; | |
(5) the refinancing of the Charter Operating credit facilities in April, 2006 and the related reductions in interest rate margins on the term loan; | |
(6) the acquisition of certain assets in January, 2006 for approximately $42 million; | |
(7) the dispositions of certain assets to Cebridge, New Wave and Orange for net proceeds of $948 million and the use of such proceeds to reduce amounts outstanding under our revolving credit facility to zero; | |
(8) the issuance of $146 million principal amount of additional CCH II 2010 Notes, 45 million shares of Charter’s Class A common stock and $188 million in cash in exchange for $450 million principal amount of outstanding Charter convertible notes pursuant to the CCI Exchange Offer; and | |
(9) the issuance of $250 million principal amount of Original CCH II Notes and $462 million principal amount of Original CCH I Notes in exchange for $797 million principal amount of Charter Holdings notes and the contribution of the CC VIII interests to CCH I pursuant to the Private Exchange. |
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Acquisition/ | Prior Financing | Convert | CCH | ||||||||||||||||||||||||||||
Historical | Dispositions(a) | Transactions(b) | Transaction(c) | Sub Total | Exchange(d) | Pro Forma | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||||||||||
Video | $ | 1,684 | $ | (29 | ) | $ | — | $ | — | $ | 1,655 | $ | — | $ | 1,655 | ||||||||||||||||
High-speed Internet | 506 | (7 | ) | — | — | 499 | — | 499 | |||||||||||||||||||||||
Telephone | 49 | — | — | — | 49 | — | 49 | ||||||||||||||||||||||||
Advertising sales | 147 | (2 | ) | — | — | 145 | — | 145 | |||||||||||||||||||||||
Commercial | 149 | (4 | ) | — | — | 145 | — | 145 | |||||||||||||||||||||||
Other | 168 | (3 | ) | — | — | 165 | — | 165 | |||||||||||||||||||||||
2,703 | (45 | ) | — | — | 2,658 | — | 2,658 | ||||||||||||||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | 1,215 | (24 | ) | — | — | 1,191 | — | 1,191 | |||||||||||||||||||||||
Selling, general and administrative | 551 | (7 | ) | — | — | 544 | — | 544 | |||||||||||||||||||||||
Depreciation and amortization | 690 | (5 | ) | — | — | 685 | — | 685 | |||||||||||||||||||||||
Asset impairment charges | 99 | (99 | ) | — | — | — | — | — | |||||||||||||||||||||||
Other operating expenses, net | 10 | — | — | — | 10 | — | 10 | ||||||||||||||||||||||||
2,565 | (135 | ) | — | — | 2,430 | — | 2,430 | ||||||||||||||||||||||||
Operating income from continuing operations | 138 | 90 | — | — | 228 | — | 228 | ||||||||||||||||||||||||
Interest expense, net | (907 | ) | 26 | 7 | (8 | ) | (882 | ) | 2 | (880 | ) | ||||||||||||||||||||
Other income (expense), net | (19 | ) | — | 27 | — | 8 | 9 | 17 | |||||||||||||||||||||||
(926 | ) | 26 | 34 | (8 | ) | (874 | ) | 11 | (863 | ) | |||||||||||||||||||||
Loss from continuing operations before income taxes | (788 | ) | 116 | 34 | (8 | ) | (646 | ) | 11 | (635 | ) | ||||||||||||||||||||
Income tax expense | (4 | ) | — | — | — | (4 | ) | — | (4 | ) | |||||||||||||||||||||
Loss from continuing operations | $ | (792 | ) | $ | 116 | $ | 34 | $ | (8 | ) | $ | (650 | ) | $ | 11 | $ | (639 | ) | |||||||||||||
(a) | Represents the elimination of operating results related to the disposition of certain cable systems in July and September 2006 and the inclusion of operating results related to the acquisition of certain cable systems in January 2006. | |
(b) | Represents the adjustment to interest expense associated with the completion of the financing transactions discussed in pro forma assumptions four and five (in millions): |
Reduction in interest expense on the April 2006 refinancing of Charter Operating credit facilities | $ | (9 | ) | |
Interest on $450 million principal amount of CCH II 2010 notes issued in January 2006 | 2 | |||
Net decrease in interest expense | $ | (7 | ) | |
Adjustment to other income (expense), net represents the elimination of the write-off of deferred financing fees and third party costs related to the Charter Operating refinancing in April 2006. |
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(c) | Represents the adjustment to interest expense to reflect interest on the CCH II 2010 notes associated with the CCI Exchange Offer discussed in pro forma assumption eight. | |
(d) | Represents the adjustment to interest expense associated with the Private Exchange discussed in pro forma assumption nine (in millions): |
Interest on Original CCH I Notes and Original CCH II Notes issued in September 2006 | $ | 40 | ||||||
Historical interest expense on Charter Holdings notes exchanged for Original CCH I Notes and Original CCH II Notes | (42 | ) | ||||||
Net decrease in interest expense | $ | (2 | ) | |||||
Adjustment to other income (expense), net represents the elimination of minority interest as a result of transferring the CC VIII Interest to CCH I. |
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Acquisition/ | Prior Financing | Convert | CCH | Pro | ||||||||||||||||||||||||||
Historical | Dispositions(a) | Transactions(b) | Transaction(c) | Sub Total | Exchange(d) | Forma | ||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||
Video | $ | 3,248 | $ | (53 | ) | $ | — | $ | — | $ | 3,195 | $ | — | $ | 3,195 | |||||||||||||||
High-speed Internet | 875 | (7 | ) | — | — | 868 | — | 868 | ||||||||||||||||||||||
Telephone | 36 | 5 | — | — | 41 | — | 41 | |||||||||||||||||||||||
Advertising sales | 284 | (4 | ) | — | — | 280 | — | 280 | ||||||||||||||||||||||
Commercial | 266 | (6 | ) | — | — | 260 | — | 260 | ||||||||||||||||||||||
Other | 324 | (5 | ) | — | — | 319 | — | 319 | ||||||||||||||||||||||
5,033 | (70 | ) | — | — | 4,963 | — | 4,963 | |||||||||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | 2,203 | (31 | ) | — | — | 2,172 | — | 2,172 | ||||||||||||||||||||||
Selling, general and administrative | 1,012 | (9 | ) | — | — | 1,003 | — | 1,003 | ||||||||||||||||||||||
Depreciation and amortization | 1,443 | (11 | ) | — | — | 1,432 | — | 1,432 | ||||||||||||||||||||||
Asset impairment charges | 39 | (39 | ) | — | — | — | — | — | ||||||||||||||||||||||
Other operating expenses, net | 32 | — | — | — | 32 | — | 32 | |||||||||||||||||||||||
4,729 | (90 | ) | — | — | 4,639 | — | 4,639 | |||||||||||||||||||||||
Operating income from continuing operations | 304 | 20 | — | — | 324 | — | 324 | |||||||||||||||||||||||
Interest expense, net | (1,739 | ) | 34 | 40 | (16 | ) | (1,681 | ) | 5 | (1,676 | ) | |||||||||||||||||||
Other income (expense), net | 599 | — | (485 | ) | — | 114 | (32 | ) | 82 | |||||||||||||||||||||
(1,140 | ) | 34 | (445 | ) | (16 | ) | (1,567 | ) | (27 | ) | (1,594 | ) | ||||||||||||||||||
Loss from continuing operations before income taxes | (836 | ) | 54 | (445 | ) | (16 | ) | (1,243 | ) | (27 | ) | (1,270 | ) | |||||||||||||||||
Income tax expense | (9 | ) | — | — | — | (9 | ) | — | (9 | ) | ||||||||||||||||||||
Loss from continuing operations | $ | (845 | ) | $ | 54 | $ | (445 | ) | $ | (16 | ) | $ | (1,252 | ) | $ | (27 | ) | $ | (1,279 | ) | ||||||||||
(a) | Represents the elimination of operating results related to the disposition of certain cable systems in July 2005, July 2006 and September 2006 and the inclusion of operating results related to the acquisition of certain cable systems in January 2006. |
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(b) | Represents the adjustment to interest expense associated with the completion of the financing transactions discussed in pro forma assumptions (1) through (5) (in millions): |
Reduction in interest expense on the Charter Operating refinancing in April 2006 | $ | (26 | ) | |||||
Interest on $450 million principal amount of CCH II 2010 notes issued in January 2006 | 48 | |||||||
Amortization of deferred financing costs | 2 | |||||||
Historical interest expense for Charter Operating’s revolving credit facility | (32 | ) | ||||||
Interest on CCH I notes issued in September 2005 in exchange for Charter Holdings notes | 18 | |||||||
279 | ||||||||
Amortization of deferred financing costs | 5 | |||||||
Historical interest expense on Charter Holdings notes exchanged for CCH I notes | (327 | ) | ||||||
Interest on $300 million of CCO Holdings 83/4% senior notes issued in August 2005 | (43 | ) | ||||||
16 | ||||||||
Amortization of deferred financing costs | 1 | |||||||
17 | ||||||||
Historical interest expense on Charter Operating’s revolving credit facility repaid with cash on hand in February 2005 | (3 | ) | ||||||
Historical interest expense on CC V Holdings, LLC 8.75% senior discount notes repaid with cash on hand in March 2005 | (3 | ) | ||||||
Net decrease in interest expense | $ | (40 | ) | |||||
Adjustment to other income (expense), net represents the elimination of gains related to the exchange of Charter Holdings notes for CCH I and CIH notes issued in September 2005 and the elimination of losses related to the redemption of CC V Holdings, LLC 11.875% notes due 2008. | ||
(c) | Represents the adjustment to interest expense associated with the CCI Exchange Offer discussed in pro forma assumption eight (in millions): |
Interest on CCH II 2010 notes issued September 2006 | $ | 14 | ||||||
Amortization of deferred financing costs | 2 | |||||||
Net increase in interest expense | $ | 16 | ||||||
(d) | Represents the adjustment to interest expense associated with the Private Exchange discussed in pro forma assumption nine (in millions): |
Interest on Original CCH I Notes and Original CCH II Notes issued in September 2006 | $ | 79 | ||||||
Amortization of deferred financing costs | 1 | |||||||
Historical interest expense on Charter Holdings notes exchanged for Original CCH I Notes and Original CCH II Notes | (85 | ) | ||||||
Net decrease in interest expense | $ | (5 | ) | |||||
Adjustment to other income (expense), net represents the elimination of minority interest as a result of transferring the CC VIII Interest to CCH I. |
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Acquisition/ | Prior Financing | Convert | Sub | CCH | Pro | ||||||||||||||||||||||||||
Historical | Dispositions(a) | Transactions(b) | Transaction(c) | Total | Exchange(d) | Forma | |||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||
REVENUES | |||||||||||||||||||||||||||||||
Video | $ | 1,623 | $ | (27 | ) | $ | — | $ | — | $ | 1,596 | $ | — | $ | 1,596 | ||||||||||||||||
High-speed Internet | 425 | (3 | ) | — | — | 422 | — | 422 | |||||||||||||||||||||||
Telephone | 14 | 3 | — | — | 17 | — | 17 | ||||||||||||||||||||||||
Advertising sales | 135 | (2 | ) | — | — | 133 | — | 133 | |||||||||||||||||||||||
Commercial | 128 | (3 | ) | — | — | 125 | — | 125 | |||||||||||||||||||||||
Other | 156 | (3 | ) | — | — | 153 | — | 153 | |||||||||||||||||||||||
2,481 | (35 | ) | — | — | 2,446 | — | 2,446 | ||||||||||||||||||||||||
COSTS AND EXPENSES: | |||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | 1,081 | (15 | ) | — | — | 1,066 | — | 1,066 | |||||||||||||||||||||||
Selling, general and administrative | 483 | (7 | ) | — | — | 476 | — | 476 | |||||||||||||||||||||||
Depreciation and amortization | 730 | — | — | — | 730 | — | 730 | ||||||||||||||||||||||||
Asset impairment charges | 39 | (39 | ) | — | — | — | — | — | |||||||||||||||||||||||
Other operating expenses, net | 6 | — | — | — | 6 | — | 6 | ||||||||||||||||||||||||
2,339 | (61 | ) | — | — | 2,278 | — | 2,278 | ||||||||||||||||||||||||
Operating income from continuing operations | 142 | 26 | — | — | 168 | — | 168 | ||||||||||||||||||||||||
Interest expense, net | (855 | ) | 11 | 23 | (8 | ) | (829 | ) | 2 | (827 | ) | ||||||||||||||||||||
Other income (expense), net | 45 | — | 5 | — | 50 | — | 50 | ||||||||||||||||||||||||
(810 | ) | 11 | 28 | (8 | ) | (779 | ) | 2 | (777 | ) | |||||||||||||||||||||
Loss from continuing operations before income taxes | (668 | ) | 37 | 28 | (8 | ) | (611 | ) | 2 | (609 | ) | ||||||||||||||||||||
Income tax expense | (8 | ) | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||||||||
Loss from continuing operations | $ | (676 | ) | $ | 37 | $ | 28 | $ | (8 | ) | $ | (619 | ) | $ | 2 | $ | (617 | ) | |||||||||||||
(a) | Represents the elimination of operating results related to the disposition of certain cable systems in July 2005, July 2006 and September 2006 and the inclusion of operating results related to the acquisition of certain cable systems in January 2006. |
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(b) | Represents the adjustment to interest expense associated with the completion of the financing transactions discussed in pro forma assumptions (1) through (5) (in millions): |
Reduction in interest expense on the Charter Operating refinancing in April 2006 | $ | (13 | ) | |||||
Interest on $450 million principal amount of CCH II 2010 notes issued in January 2006 | 24 | |||||||
Amortization of deferred financing costs | 1 | |||||||
Historical interest expense for Charter Operating’s revolving credit facility | (14 | ) | ||||||
11 | ||||||||
Interest on CCH I notes issued in September 2005 in exchange for Charter Holdings notes | 186 | |||||||
Amortization of deferred financing costs | 3 | |||||||
Historical interest expense on Charter Holdings notes exchanged for CCH I notes | (217 | ) | ||||||
(28 | ) | |||||||
Interest on $300 million of CCO Holdings 83/4% senior notes issued in August 2005 | 13 | |||||||
Historical interest expense on Charter Operating’s revolving credit facility repaid with cash on hand in February 2005 | (3 | ) | ||||||
Historical interest expense on CC V Holdings, LLC 8.75% senior discount notes repaid with cash on hand in March 2005 | (3 | ) | ||||||
Net decrease in interest expense | $ | (23 | ) | |||||
Adjustment to other income (expense), net represents the elimination of losses related to the redemption of CC V Holdings, LLC 11.875% notes due 2008. | ||
(c) | Represents the adjustment to interest expense to reflect interest on the CCH II 2010 notes associated with the financing transaction discussed in pro forma assumption eight. | |
(d) | Represents the adjustment to interest expense associated with the financing transaction discussed in pro forma assumption nine (in millions): |
Interest on Original CCH I Notes and Original CCH II Notes issued in September 2006 | $ | 40 | ||||||
Historical interest expense on Charter Holdings notes exchanged for Original CCH I Notes and Original CCH II Notes | (42 | ) | ||||||
Net decrease in interest expense | $ | (2 | ) | |||||
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Convert | CCH | Pro | ||||||||||||||||||||||||
Historical | Dispositions(a) | Transaction(b) | Sub Total | Exchange(c) | Forma | |||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||
Cash and cash equivalents | $ | 48 | $ | 148 | $ | (195 | ) | $ | 1 | $ | (1 | ) | $ | — | ||||||||||||
Accounts receivable, net | 178 | — | — | 178 | — | 178 | ||||||||||||||||||||
Prepaid expenses and other current assets | 20 | — | — | 20 | — | 20 | ||||||||||||||||||||
Assets held for sale | 768 | (768 | ) | — | — | — | — | |||||||||||||||||||
Total current assets | 1,014 | (620 | ) | (195 | ) | 199 | (1 | ) | 198 | |||||||||||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||||||||||||||||||
Property, plant and equipment, net | 5,354 | — | — | 5,354 | — | 5,354 | ||||||||||||||||||||
Franchises, net | 9,280 | — | — | 9,280 | — | 9,280 | ||||||||||||||||||||
Total investment in cable properties, net | 14,634 | — | — | 14,634 | — | 14,634 | ||||||||||||||||||||
OTHER NONCURRENT ASSETS | 294 | — | 7 | 301 | — | 301 | ||||||||||||||||||||
Total assets | $ | 15,942 | $ | (620 | ) | $ | (188 | ) | $ | 15,134 | $ | (1 | ) | $ | 15,133 | |||||||||||
LIABILITIES AND MEMBER’S DEFICIT | ||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 1,129 | $ | — | $ | — | $ | 1,129 | $ | (23 | ) | $ | 1,106 | |||||||||||||
Payables to related parties | 90 | — | — | 90 | — | 90 | ||||||||||||||||||||
Liabilities held for sale | 20 | (20 | ) | — | — | — | — | |||||||||||||||||||
Total current liabilities | 1,239 | (20 | ) | — | 1,219 | (23 | ) | 1,196 | ||||||||||||||||||
LONG-TERM DEBT | 19,012 | (800 | ) | 148 | 18,360 | (86 | ) | 18,274 | ||||||||||||||||||
NOTE PAYABLE — RELATED PARTY | 3 | — | — | 3 | — | 3 | ||||||||||||||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | 14 | — | — | 14 | — | 14 | ||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | 359 | — | — | 359 | — | 359 | ||||||||||||||||||||
MINORITY INTEREST | 631 | — | — | 631 | (442 | ) | 189 | |||||||||||||||||||
MEMBER’S DEFICIT: | ||||||||||||||||||||||||||
Member’s deficit | (5,318 | ) | 200 | (336 | ) | (5,454 | ) | 550 | (4,904 | ) | ||||||||||||||||
Accumulated other comprehensive income | 2 | — | — | 2 | — | 2 | ||||||||||||||||||||
Total member’s deficit | (5,316 | ) | 200 | (336 | ) | (5,452 | ) | 550 | (4,902 | ) | ||||||||||||||||
Total liabilities and member’s deficit | $ | 15,942 | $ | (620 | ) | $ | (188 | ) | $ | 15,134 | $ | (1 | ) | $ | 15,133 | |||||||||||
(a) | Represents the elimination of assets and liabilities related to the disposition of certain cable systems in July and September 2006 and the related use of the proceeds to repay amounts outstanding under our revolving credit facility and for general corporate purposes. Adjustment to equity represents the expected gain on the sale of the assets. | |
(b) | Adjustment to cash represents use of cash to pay the cash portion of the consideration paid to repurchase the Charter convertible notes in the CCI Exchange Offer. Adjustment to other assets represents the payment of approximately $7 million of fees. Adjustment to long-term debt represents the fair value of CCH II 2010 notes issued in the CCI Exchange Offer. Adjustments to member’s equity are detailed below. |
Fair value of CCH II 2010 notes issued | $ | 148 | |||
Cash consideration distributed | 188 | ||||
Net increase in deficit | $ | 336 | |||
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(c) | Adjustment to accounts payable and accrued expenses represents payment of accrued interest related to the Charter Holdings notes. Adjustment to minority interest represents the contribution of the CC VIII Interest to CCH I. Adjustment to long-term debt and member’s deficit are detailed below. |
Accreted value of Charter Holdings notes exchanged | $ | (797 | ) | ||
Fair value of CCH II notes issued | 262 | ||||
Fair value of CCH I notes issued | 419 | ||||
Drawdown on credit facility for payment of transaction fees and accrued interest on notes exchanged | 30 | ||||
Net decrease in long-term debt | $ | (86 | ) | ||
Net gain on exchange | $ | 108 | |||
Contribution of CC VIII Interest to CCH I | 442 | ||||
Net decrease in member’s deficit | $ | 550 | |||
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Six Months Ended | |||||||||||||||||||||||||||||
Year Ended December 31, | June 30, | ||||||||||||||||||||||||||||
2001(a) | 2002(a) | 2003(a) | 2004(a) | 2005(a) | 2005(a) | 2006(a) | |||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||
Revenues | $ | 3,648 | $ | 4,377 | $ | 4,616 | $ | 4,760 | $ | 5,033 | $ | 2,481 | $ | 2,703 | |||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | 1,430 | 1,736 | 1,873 | 1,994 | 2,203 | 1,081 | 1,215 | ||||||||||||||||||||||
Selling, general and administrative | 789 | 932 | 909 | 965 | 1,012 | 483 | 551 | ||||||||||||||||||||||
Depreciation and amortization | 2,638 | 1,364 | 1,396 | 1,433 | 1,443 | 730 | 690 | ||||||||||||||||||||||
Impairment of franchises | — | 4,220 | — | 2,297 | — | — | — | ||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 39 | 39 | 99 | ||||||||||||||||||||||
Other operating (income) expenses, net | 28 | 39 | (46 | ) | 13 | 32 | 6 | 10 | |||||||||||||||||||||
4,885 | 8,291 | 4,132 | 6,702 | 4,729 | 2,339 | 2,565 | |||||||||||||||||||||||
Operating income (loss) from continuing operations | (1,237 | ) | (3,914 | ) | 484 | (1,942 | ) | 304 | 142 | 138 | |||||||||||||||||||
Interest expense, net | (1,247 | ) | (1,425 | ) | (1,486 | ) | (1,618 | ) | (1,739 | ) | (855 | ) | (907 | ) | |||||||||||||||
Gain (loss) on extinguishment of debt | — | — | 187 | (21 | ) | 494 | 4 | (27 | ) | ||||||||||||||||||||
Other income (expense), net | (118 | ) | (128 | ) | 26 | 91 | 105 | 41 | 8 | ||||||||||||||||||||
Loss from continuing operations before income taxes and cumulative effect of accounting change | (2,602 | ) | (5,467 | ) | (789 | ) | (3,490 | ) | (836 | ) | (668 | ) | (788 | ) | |||||||||||||||
Income tax benefit (expense) | 27 | 216 | (13 | ) | 35 | (9 | ) | (8 | ) | (4 | ) | ||||||||||||||||||
Loss from continuing operations before cumulative effect of accounting change | (2,575 | ) | (5,251 | ) | (802 | ) | (3,455 | ) | (845 | ) | (676 | ) | (792 | ) | |||||||||||||||
Income (loss) from discontinued operations, net of tax | 26 | (408 | ) | 32 | (104 | ) | 39 | 19 | 38 | ||||||||||||||||||||
Loss before cumulative effect of accounting change | (2,549 | ) | (5,659 | ) | (770 | ) | (3,559 | ) | (806 | ) | (657 | ) | (754 | ) | |||||||||||||||
Cumulative effect of accounting change, net of tax | (24 | ) | (540 | ) | — | (840 | ) | — | — | — | |||||||||||||||||||
Net loss | $ | (2,573 | ) | $ | (6,199 | ) | $ | (770 | ) | $ | (4,399 | ) | $ | (806 | ) | $ | (657 | ) | $ | (754 | ) | ||||||||
Other Data: | |||||||||||||||||||||||||||||
Deficiencies of earnings to cover fixed charges(b) | $ | 2,560 | $ | 5,859 | $ | 728 | $ | 3,614 | $ | 830 | $ | 643 | $ | 740 | |||||||||||||||
Balance Sheet Data (end of period): | |||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 2 | $ | 310 | $ | 85 | $ | 546 | $ | 14 | $ | 24 | $ | 48 | |||||||||||||||
Total assets | 26,220 | 22,156 | 21,148 | 17,084 | 16,192 | 16,442 | 15,942 | ||||||||||||||||||||||
Long-term debt | 14,960 | 17,288 | 17,873 | 18,474 | 18,525 | 18,384 | 19,012 | ||||||||||||||||||||||
Laon payable — related party | 189 | 73 | 37 | 29 | 25 | 62 | 3 | ||||||||||||||||||||||
Minority interest(c) | 655 | 693 | 719 | 656 | 622 | 662 | 631 | ||||||||||||||||||||||
Member’s equity (deficit) | 8,122 | 1,906 | 639 | (3,713 | ) | (4,562 | ) | (4,420 | ) | (5,316 | ) |
(a) | In 2006, we signed three separate definitive agreements to sell certain cable television systems serving a total of approximately 356,000 analog video customers in 1) West Virginia and Virginia to Cebridge Connections, Inc. (the “Cebridge Transaction”); 2) Illinois and Kentucky to Telecommunications Management, LLC, doing business as New Wave Communications (the “New Wave Transaction”) and 3) Nevada, Colorado, New Mexico and Utah to Orange Broadband Holding Company, LLC (the “Orange |
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Transaction”) for a total of approximately $971 million. These cable systems met the criteria for assets held for sale. As such, the assets were written down to fair value less estimated costs to sell resulting in asset impairment charges during the six months ended June 30, 2006 of approximately $99 million related to the New Wave Transaction and the Orange Transaction. In the third quarter of 2006, we expect to record a gain of approximately $200 million on the Cebridge Transaction. In addition, assets and liabilities to be sold have been presented as held for sale. We have also determined that the West Virginia and Virginia cable systems comprise operations and cash flows that for financial reporting purposes meet the criteria for discontinued operations. Accordingly, the results of operations for the West Virginia and Virginia cable systems have been presented as discontinued operations, net of tax for the six months ended June 30, 2006 and all prior periods presented herein have been reclassified to conform to the current presentation. | |
(b) | Earnings include net loss plus fixed charges. Fixed charges consist of interest expense and an estimated interest component of rent expense. |
(c) | Minority interest represents preferred membership interests in our indirect subsidiary, CC VIII, and since June 6, 2003, the pro rata share of the profits and losses of CC VIII. This preferred membership interest arises from approximately $630 million of preferred membership units issued by CC VIII in connection with an acquisition in February 2000 and was the subject of a dispute between Charter and Mr. Allen, Charter’s Chairman and controlling shareholder that was settled October 31, 2005. As part of the Private Exchange, CCHC contributed the CC VIII Interest to CCH I. See “Certain Relationships and Related Party Transactions — Transactions Arising Out of Our Organizational Structure and Mr. Allen’s Investment in Charter and Its Subsidiaries — Equity Put Rights — CC VIII.” |
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• | the July and September 2006 sale of cable systems to Cebridge, New Wave and Orange for a total sales price of approximately $971 million; | |
• | the April 2006 refinancing of our existing credit facilities (See “— Liquidity and Capital Resources — Recent Financing Transactions”); | |
• | the January 2006 sale by our subsidiaries, CCH II and CCH II Capital Corp., of an additional $450 million principal amount of their 10.250% senior notes due 2010; | |
• | the October 2005 entry by our subsidiaries, CCO Holdings and CCO Holdings Capital Corp., as guarantor thereunder, into a $600 million senior bridge loan agreement with various lenders (which was reduced to $435 million as a result of the issuance of CCH II notes); | |
• | the September 2005 exchange by Charter Holdings, CCH I and CIH of approximately $6.8 billion in total principal amount of outstanding debt securities of Charter Holdings in a private placement for new debt securities; | |
• | the August 2005 sale by our subsidiaries, CCO Holdings and CCO Holdings Capital Corp., of $300 million of 83/4% senior notes due 2013; | |
• | the March and June 2005 issuance of $333 million of Charter Operating notes in exchange for $346 million of Charter Holdings notes; | |
• | the repurchase during 2005 of $136 million of Charter’s 4.75% convertible senior notes due 2006 leaving $20 million in principal amount outstanding; and | |
• | the March 2005 redemption of all of CC V Holdings, LLC’s outstanding 11.875% senior discount notes due 2008 at a total cost of $122 million. |
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• | Capitalization of labor and overhead costs; | |
• | Useful lives of property, plant and equipment; | |
• | Impairment of property, plant, and equipment, franchises, and goodwill; |
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• | Income taxes; and | |
• | Litigation. |
• | Dispatching a “truck roll” to the customer’s dwelling for service connection; | |
• | Verification of serviceability to the customer’s dwelling (i.e., determining whether the customer’s dwelling is capable of receiving service by our cable network and/or receiving advanced or Internet services); | |
• | Customer premise activities performed by in-house field technicians and third-party contractors in connection with customer installations, installation of network equipment in connection with the installation of expanded services and equipment replacement and betterment; and | |
• | Verifying the integrity of the customer’s network connection by initiating test signals downstream from the headend to the customer’s digital set-top box. |
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Cable distribution systems | 7-20 years | |||
Customer equipment and installations | 3-5 years | |||
Vehicles and equipment | 1-5 years | |||
Buildings and leasehold improvements | 5-15 years | |||
Furniture, fixtures and equipment | 5 years |
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Percentage/ | Franchise Value | |||||||
Percentage Point | Increase/(Decrease) | |||||||
Assumption | Change | (Dollars in millions) | ||||||
Annual Operating Cash Flow(1) | +/-5% | $ | 1,200/$(1,200) | |||||
Long-Term Growth Rate(2) | +/-1pts(3) | 1,700/(1,300) | ||||||
Discount Rate | +/-0.5pts(3) | (1,300)/1,500 |
(1) | Operating Cash Flow is defined as revenues less operating expenses and selling general and administrative expenses. |
(2) | Long-Term Growth Rate is the rate of cash flow growth beyond year ten. |
(3) | A percentage point change of one point equates to 100 basis points. |
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Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005 |
Six Months Ended June 30, | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Revenues | $ | 2,703 | 100% | $ | 2,481 | 100% | ||||||||||||
Costs and expenses: | ||||||||||||||||||
Operating (excluding depreciation and amortization) | 1,215 | 45% | 1,081 | 44% | ||||||||||||||
Selling, general and administrative | 551 | 20% | 483 | 19% | ||||||||||||||
Depreciation and amortization | 690 | 26% | 730 | 29% | ||||||||||||||
Asset impairment charges | 99 | 4% | 39 | 2% | ||||||||||||||
Other operating expenses, net | 10 | — | 6 | — | ||||||||||||||
2,565 | 95% | 2,339 | 94% | |||||||||||||||
Operating income from continuing operations | 138 | 5% | 142 | 6% | ||||||||||||||
Interest expense, net | (907 | ) | (855 | ) | ||||||||||||||
Other income (expenses), net | (19 | ) | 45 | |||||||||||||||
(926 | ) | (810 | ) | |||||||||||||||
Loss before income taxes | (788 | ) | (668 | ) | ||||||||||||||
Income tax expense | (4 | ) | (8 | ) | ||||||||||||||
Loss from continuing operations | (792 | ) | (676 | ) | ||||||||||||||
Income from discontinued operations, net of tax | 38 | 19 | ||||||||||||||||
Net loss | $ | (754 | ) | $ | (657 | ) | ||||||||||||
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Six Months Ended June 30, | ||||||||||||||||||||||||
2006 | 2005 | 2006 over 2005 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Revenues | Revenues | Revenues | Revenues | Change | Change | |||||||||||||||||||
Video | $ | 1,684 | 62% | $ | 1,623 | 66% | $ | 61 | 4% | |||||||||||||||
High-speed Internet | 506 | 19% | 425 | 17% | 81 | 19% | ||||||||||||||||||
Telephone | 49 | 2% | 14 | 1% | 35 | 250% | ||||||||||||||||||
Advertising sales | 147 | 5% | 135 | 5% | 12 | 9% | ||||||||||||||||||
Commercial | 149 | 6% | 128 | 5% | 21 | 16% | ||||||||||||||||||
Other | 168 | 6% | 156 | 6% | 12 | 8% | ||||||||||||||||||
$ | 2,703 | 100% | $ | 2,481 | 100% | $ | 222 | 9% | ||||||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||||
2006 | 2005 | 2006 over 2005 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Expenses | Revenues | Expenses | Revenues | Change | Change | |||||||||||||||||||
Programming | $ | 755 | 28% | $ | 678 | 27% | $ | 77 | 11% | |||||||||||||||
Service | 408 | 15% | 356 | 15% | 52 | 15% | ||||||||||||||||||
Advertising sales | 52 | 2% | 47 | 2% | 5 | 11% | ||||||||||||||||||
$ | 1,215 | 45% | $ | 1,081 | 44% | $ | 134 | 12% | ||||||||||||||||
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Six Months Ended June 30, | ||||||||||||||||||||||||
2006 | 2005 | 2006 over 2005 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Expenses | Revenues | Expenses | Revenues | Change | Change | |||||||||||||||||||
General and administrative | $ | 471 | 17% | $ | 418 | 17% | $ | 53 | 13% | |||||||||||||||
Marketing | 80 | 3% | 65 | 2% | 15 | 23% | ||||||||||||||||||
$ | 551 | 20% | $ | 483 | 19% | $ | 68 | 14% | ||||||||||||||||
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Year Ended December 31, 2005, December 31, 2004 and December 31, 2003 |
Year Ended December 31, | |||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||
Revenues | $ | 5,033 | 100 | % | $ | 4,760 | 100 | % | $ | 4,616 | 100 | % | |||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | 2,203 | 44 | % | 1,994 | 42 | % | 1,873 | 41 | % | ||||||||||||||||
Selling, general and administrative | 1,012 | 20 | % | 965 | 20 | % | 909 | 20 | % | ||||||||||||||||
Depreciation and amortization | 1,443 | 29 | % | 1,433 | 30 | % | 1,396 | 30 | % | ||||||||||||||||
Impairment of franchises | — | — | 2,297 | 48 | % | — | — | ||||||||||||||||||
Asset impairment charges | 39 | 1 | % | — | — | — | — | ||||||||||||||||||
Other operating (income) expenses, net | 32 | — | 13 | — | (46 | ) | (1 | )% | |||||||||||||||||
4,729 | 94 | % | 6,702 | 140 | % | 4,132 | 90 | % | |||||||||||||||||
Operating income (loss) from continuing operations | 304 | 6 | % | (1,942 | ) | (40 | )% | 484 | 10 | % | |||||||||||||||
Interest expense, net | (1,739 | ) | (1,618 | ) | (1,486 | ) | |||||||||||||||||||
Gain (loss) on extinguishment of debt | 494 | (21 | ) | 187 | |||||||||||||||||||||
Other income, net | 105 | 91 | 26 | ||||||||||||||||||||||
Loss from continuing operations before income taxes and cumulative effect of accounting change | (836 | ) | (3,490 | ) | (789 | ) | |||||||||||||||||||
Income tax benefit (expense) | (9 | ) | 35 | (13 | ) | ||||||||||||||||||||
Loss from continuing operations before cumulative effect of accounting change | (845 | ) | (3,455 | ) | (802 | ) | |||||||||||||||||||
Income (loss) from discontinued operations, net of tax | 39 | (104 | ) | 32 | |||||||||||||||||||||
Loss before cumulative effect of accounting change | (806 | ) | (3,559 | ) | (770 | ) | |||||||||||||||||||
Cumulative effect of accounting change, net of tax | — | (840 | ) | — | |||||||||||||||||||||
Net loss | $ | (806 | ) | $ | (4,399 | ) | $ | (770 | ) | ||||||||||||||||
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Year Ended December 31, | ||||||||||||||||||||||||
2005 | 2004 | 2005 over 2004 | ||||||||||||||||||||||
Revenues | % of Revenues | Revenues | % of Revenues | Change | % Change | |||||||||||||||||||
Video | $ | 3,248 | 65 | % | $ | 3,217 | 68 | % | $ | 31 | 1 | % | ||||||||||||
High-speed Internet | 875 | 17 | % | 712 | 15 | % | 163 | 23 | % | |||||||||||||||
Telephone | 36 | 1 | % | 18 | — | 18 | 100 | % | ||||||||||||||||
Advertising sales | 284 | 6 | % | 279 | 6 | % | 5 | 2 | % | |||||||||||||||
Commercial | 266 | 5 | % | 227 | 5 | % | 39 | 17 | % | |||||||||||||||
Other | 324 | 6 | % | 307 | 6 | % | 17 | 6 | % | |||||||||||||||
$ | 5,033 | 100 | % | $ | 4,760 | 100 | % | $ | 273 | 6 | % | |||||||||||||
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Year Ended December 31, | ||||||||||||||||||||||||
2005 | 2004 | 2005 over 2004 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Expenses | Revenues | Expenses | Revenues | Change | Change | |||||||||||||||||||
Programming | $ | 1,359 | 27 | % | $ | 1,264 | 27 | % | $ | 95 | 8 | % | ||||||||||||
Service | 748 | 15 | % | 638 | 13 | % | 110 | 17 | % | |||||||||||||||
Advertising sales | 96 | 2 | % | 92 | 2 | % | 4 | 4 | % | |||||||||||||||
$ | 2,203 | 44 | % | $ | 1,994 | 42 | % | $ | 209 | 10 | % | |||||||||||||
Year Ended December 31, | ||||||||||||||||||||||||
2005 | 2004 | 2005 over 2004 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Expenses | Revenues | Expenses | Revenues | Change | Change | |||||||||||||||||||
General and administrative | $ | 870 | 17 | % | $ | 846 | 18 | % | $ | 24 | 3 | % | ||||||||||||
Marketing | 142 | 3 | % | 119 | 2 | % | 23 | 19 | % | |||||||||||||||
$ | 1,012 | 20 | % | $ | 965 | 20 | % | $ | 47 | 5 | % | |||||||||||||
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2004 over 2003 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Revenues | Revenues | Revenues | Revenues | Change | Change | |||||||||||||||||||
Video | $ | 3,217 | 68 | % | $ | 3,306 | 72 | % | $ | (89 | ) | (3 | )% | |||||||||||
High-speed Internet | 712 | 15 | % | 535 | 12 | % | 177 | 33 | % | |||||||||||||||
Telephone | 18 | — | 14 | — | 4 | 29 | % | |||||||||||||||||
Advertising sales | 279 | 6 | % | 254 | 5 | % | 25 | 10 | % | |||||||||||||||
Commercial | 227 | 5 | % | 196 | 4 | % | 31 | 16 | % | |||||||||||||||
Other | 307 | 6 | % | 311 | 7 | % | (4 | ) | (1 | )% | ||||||||||||||
$ | 4,760 | 100 | % | $ | 4,616 | 100 | % | $ | 144 | 3 | % | |||||||||||||
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2004 over 2003 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Expenses | Revenues | Expenses | Revenues | Change | Change | |||||||||||||||||||
Programming | $ | 1,264 | 27 | % | $ | 1,195 | 26 | % | $ | 69 | 6 | % | ||||||||||||
Service | 638 | 13 | % | 595 | 13 | % | 43 | 7 | % | |||||||||||||||
Advertising sales | 92 | 2 | % | 83 | 2 | % | 9 | 11 | % | |||||||||||||||
$ | 1,994 | 42 | % | $ | 1,873 | 41 | % | $ | 121 | 6 | % | |||||||||||||
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Year Ended December 31, 2003 | ||||||||||||||||||||||||
2004 | 2003 | 2004 over 2003 | ||||||||||||||||||||||
% of | % of | % | ||||||||||||||||||||||
Expenses | Revenues | Expenses | Revenues | Change | Change | |||||||||||||||||||
General and administrative | $ | 846 | 17 | % | $ | 806 | 18 | % | $ | 40 | 5 | % | ||||||||||||
Marketing | 119 | 3 | % | 103 | 2 | % | 16 | 16 | % | |||||||||||||||
$ | 965 | 20 | % | $ | 909 | 20 | % | $ | 56 | 6 | % | |||||||||||||
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Introduction |
Recent Financing Transactions |
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Debt Covenants |
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Parent Company Debt Obligations |
Specific Limitations |
• | issuing equity at the Charter or Charter Holdco level, the proceeds of which could be loaned or contributed to us; |
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• | issuing debt securities that may have structural or other priority over our existing notes; | |
• | further reducing our expenses and capital expenditures, which may impair our ability to increase revenue; | |
• | selling assets; or | |
• | requesting waivers or amendments with respect to our credit facilities, the availability and terms of which would be subject to market conditions. |
Sale of Assets |
Acquisition |
Summary of Outstanding Contractual Obligations |
Payments by Period | |||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | ||||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | |||||||||||||||||
Contractual Obligations | |||||||||||||||||||||
Long-Term Debt Principal Payments(1) | $ | 18,453 | $ | 30 | $ | 1,129 | $ | 4,918 | $ | 12,376 | |||||||||||
Long-Term Debt Interest Payments(2) | 11,325 | 1,469 | 3,173 | 3,016 | 3,667 | ||||||||||||||||
Payments on Interest Rate Instruments(3) | 18 | 8 | 10 | — | — | ||||||||||||||||
Capital and Operating Lease Obligations(1) | 94 | 20 | 27 | 23 | 24 | ||||||||||||||||
Programming Minimum Commitments(4) | 1,253 | 342 | 678 | 233 | — | ||||||||||||||||
Other(5) | 301 | 146 | 70 | 42 | 43 | ||||||||||||||||
Total | $ | 31,444 | $ | 2,015 | $ | 5,087 | $ | 8,232 | $ | 16,110 | |||||||||||
(1) | The table presents maturities of long-term debt outstanding as of December 31, 2005. Refer to Notes 9 and 26 to our accompanying consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data” in our 2005 Annual Report on Form 10-K for a description of our long-term debt and other contractual obligations and commitments. |
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(2) | Interest payments on variable debt are estimated using amounts outstanding at December 31, 2005 and the average implied forward London Interbank Offering Rate (LIBOR) rates applicable for the quarter during the interest rate reset based on the yield curve in effect at December 31, 2005. Actual interest payments will differ based on actual LIBOR rates and actual amounts outstanding for applicable periods. |
(3) | Represents amounts we will be required to pay under our interest rate hedge agreements estimated using the average implied forward LIBOR applicable rates for the quarter during the interest rate reset based on the yield curve in effect at December 31, 2005. |
(4) | We pay programming fees under multi-year contracts ranging from three to ten years typically based on a flat fee per customer, which may be fixed for the term or may in some cases, escalate over the term. Programming costs included in the accompanying statement of operations were $1.4 billion, $1.3 billion and $1.2 billion for the years ended December 31, 2005, 2004 and 2003, respectively. Certain of our programming agreements are based on a flat fee per month or have guaranteed minimum payments. The table sets forth the aggregate guaranteed minimum commitments under our programming contracts. |
(5) | “Other” represents other guaranteed minimum commitments, which consist primarily of commitments to our billing services vendors. |
• | We also rent utility poles used in our operations. Generally, pole rentals are cancelable on short notice, but we anticipate that such rentals will recur. Rent expense incurred for pole rental attachments related to continuing operations for the years ended December 31, 2005, 2004 and 2003, was $44 million, $42 million and $38 million, respectively. | |
• | We pay franchise fees under multi-year franchise agreements based on a percentage of revenues earned from video service per year. We also pay other franchise related costs, such as public education grants under multi-year agreements. Franchise fees and other franchise-related costs related to continuing operations included in the accompanying statement of operations were $165 million, $159 million and $157 million for the years ended December 31, 2005, 2004 and 2003, respectively. | |
• | We also have $165 million in letters of credit, primarily to our various worker’s compensation, property casualty and general liability carriers as collateral for reimbursement of claims. These letters of credit reduce the amount we may borrow under our credit facilities. |
Historical Operating, Financing and Investing Activities |
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Capital Expenditures |
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Six Months | |||||||||||||||||||||
Ended June 30, | Year Ended December 31, | ||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | |||||||||||||||||
Customer premise equipment(a) | $ | 258 | $ | 228 | $ | 434 | $ | 451 | $ | 380 | |||||||||||
Scalable infrastructure(b) | 97 | 89 | 174 | 108 | 66 | ||||||||||||||||
Line extensions(c) | 59 | 77 | 134 | 131 | 130 | ||||||||||||||||
Upgrade/ Rebuild(d) | 23 | 22 | 49 | 49 | 132 | ||||||||||||||||
Support capital(e) | 102 | 126 | 297 | 154 | 96 | ||||||||||||||||
Total capital expenditures | $ | 539 | $ | 542 | $ | 1,088 | $ | 893 | $ | 804 | |||||||||||
(a) | Customer premise equipment includes costs incurred at the customer residence to secure new customers, revenue units and additional bandwidth revenues. It also includes customer installation costs in accordance with SFAS No. 51,Financial Reporting by Cable Television Companies, and customer premise equipment (e.g., set-top boxes 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). |
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Fair Value at | ||||||||||||||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | June 30, 2006 | ||||||||||||||||||||||||||||||
Debt: | ||||||||||||||||||||||||||||||||||||||
Fixed Rate | $ | — | $ | 105 | $ | — | $ | 684 | $ | 2,143 | $ | 771 | $ | 8,842 | $ | 12,545 | $ | 10,430 | ||||||||||||||||||||
Average Interest Rate | — | 8.25 | % | — | 9.50 | % | 10.28 | % | 11.01 | % | 10.38 | % | 10.34 | % | ||||||||||||||||||||||||
Variable Rate | $ | — | $ | 25 | $ | 50 | $ | 50 | $ | 600 | $ | 850 | $ | 4,775 | $ | 6,350 | $ | 6,359 | ||||||||||||||||||||
Average Interest Rate | — | 8.21 | % | 8.14 | % | 8.22 | % | 9.64 | % | 8.66 | % | 8.39 | % | 8.75 | % | |||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||||||||||||||||||
Variable to Fixed Swaps | $ | 898 | $ | 875 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,773 | $ | 6 | ||||||||||||||||||||
Average Pay Rate | 7.70 | % | 7.58 | % | — | — | — | — | — | 7.64 | % | |||||||||||||||||||||||||||
Average Receive Rate | 8.33 | % | 8.31 | % | — | — | — | — | — | 8.32 | % |
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• | improving theend-to-end customer experience and increasing customer loyalty; | |
• | growing sales and retention for all our products and services; and | |
• | driving operating and capital effectiveness. |
The Customer Experience |
Sales and Retention |
Operating and Capital Effectiveness |
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• | the July and September 2006 sale of cable systems to Cebridge, New Wave and Orange for a total sales price of approximately $971 million; | |
• | the April 2006 refinancing of our existing credit facilities (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Charter Communications Holdings, LLC — Liquidity and Capital Resources — Recent Financing Transactions” included elsewhere in this Prospectus; | |
• | the January 2006 sale by CCH II of an additional $450 million principal amount of CCH II 2010 notes; | |
• | the September 2005 exchange by Charter Holdings, CCH I and CCH I Holdings, LLC (“CIH”), of approximately $6.8 billion in total principal amount of outstanding debt securities of Charter Holdings in a private placement for new debt securities; | |
• | the August 2005 sale by our subsidiaries, CCO Holdings, LLC (“CCO Holdings”) and CCO Holdings Capital Corp., of $300 million of 83/4% senior notes due 2013; | |
• | the March and June 2005 issuance of $333 million of Charter Operating notes in exchange for $346 million of Charter Holdings notes; | |
• | the repurchase during 2005 of $136 million of Charter’s 4.75% convertible senior notes due 2006 leaving $20 million in principal amount outstanding; and | |
• | the March 2005 redemption of all of CC V Holdings, LLC’s outstanding 11.875% senior discount notes due 2008 at a total cost of $122 million. |
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Approximate as of | ||||||||||
June 30, | June 30, | |||||||||
2006(a) | 2005(a) | |||||||||
Cable Video Services: | ||||||||||
Analog Video: | ||||||||||
Residential (non-bulk) analog video customers(b) | 5,600,300 | 5,683,400 | ||||||||
Multi-dwelling (bulk) and commercial unit customers(c) | 275,800 | 259,700 | ||||||||
Total analog video customers(b)(c) | 5,876,100 | 5,943,100 | ||||||||
Digital Video: | ||||||||||
Digital video customers(d) | 2,889,000 | 2,685,600 | ||||||||
Non-Video Cable Services: | ||||||||||
Residential high-speed Internet customers(e) | 2,375,100 | 2,022,200 | ||||||||
Residential telephone customers(f) | 257,600 | 67,800 |
(a) | “Customers” include all persons our corporate billing records show as receiving service (regardless of their payment status), except for complimentary accounts (such as our employees). At June 30, 2006 and 2005, “customers” include approximately 55,900 and 45,100 persons whose accounts were over 60 days past due in payment, approximately 14,300 and 8,200 persons whose accounts were over 90 days past due in payment and approximately 8,900 and 4,500 of which were over 120 days past due in payment, respectively. | |
(b) | “Analog video customers” include all customers who receive video services (including those who also purchase high-speed Internet and telephone services) but excludes approximately 296,500 and 248,400 customers at June 30, 2006 and 2005, respectively, who receive high-speed Internet service only or telephone service only and who are only counted as high-speed Internet customers or telephone customers. | |
(c) | Included within “video customers” are those in commercial and multi-dwelling structures, which are calculated on an equivalent bulk unit (“EBU”) basis. EBU is calculated for a system by dividing the bulk price charged to accounts in an area by the most prevalent price charged to non-bulk residential |
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customers in that market for the comparable tier of service. The EBU method of estimating analog video customers is consistent with the methodology used in determining costs paid to programmers and has been used consistently. As we increase our effective analog prices to residential customers without a corresponding increase in the prices charged to commercial service or multi-dwelling customers, our EBU count will decline even if there is no real loss in commercial service or multi-dwelling customers. | ||
(d) | “Digital video customers” include all households that have one or more digital set-top boxes. Included in “digital video customers” on June 30, 2006 and 2005 are approximately 8,400 and 9,700 customers, respectively, that receive digital video service directly through satellite transmission. | |
(e) | “Residential high-speed Internet customers” represent those customers who subscribe to our high-speed Internet service. | |
(f) | “Residential telephone customers” include all households receiving telephone service. |
Video Services |
• | Basic Analog Video. All of our video customers receive a package of basic programming which generally consists of local broadcast television, local community programming, including governmental and public access, and limited satellite-delivered or non-broadcast channels, such as weather, shopping and religious services. Our basic channelline-up generally has between 15 and 30 channels. | |
• | Expanded Basic Video. This expanded programming level includes a package of satellite-delivered or non-broadcast channels and generally has between 30 and 50 channels in addition to the basic channel line-up. | |
• | Premium Channels. These channels provide commercial-free movies, sports and other special event entertainment programming. Although we offer subscriptions to premium channels on an individual basis, we offer an increasing number of premium channel packages and we offer premium channels with our advanced services. | |
• | Pay-Per-View. These channels allow customers to pay on a per event basis to view a single showing of a recently released movie, a one-time special sporting event, music concert or similar event on a commercial-free basis. | |
• | Digital Video. We offer digital video service to our customers in several different service combination packages. All of our digital packages include a digital set-top box, an interactive electronic programming guide, an expanded menu of pay-per-view channels and the option to also receive digital packages which range from 8 to 30 additional video channels. We also offer our customers certain digital packages with one or more premium channels that give customers access to several different versions of the same premium channel. Some digital tier packages focus on the interests of a particular customer demographic and emphasize, for example, sports, movies, family or ethnic programming. In addition to video programming, digital video service enables customers to receive our advanced services such as VOD and high definition television. Other digital packages bundle digital television with our advanced services, such as high-speed Internet services. | |
• | Video on Demand and Subscription Video on Demand. We offer VOD service, which allows customers to access hundreds of movies and other programming at any time with digital picture quality. In some systems we also offer subscription VOD (“SVOD”) for a monthly fee or included in a digital tier premium channel subscription. | |
• | High Definition Television. High definition television offers our digital customers video programming at a higher resolution than the standard analog or digital video image. | |
• | Digital Video Recorder. DVR service enables customers to digitally record programming and to pause and rewind live programming. |
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High-Speed Internet Services |
Telephone Services |
Commercial Services |
Sale of Advertising |
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Price Range as of | ||||
Service | June 30, 2006 | |||
Analog video packages | $ | 6.38-$ 58.00 | ||
Premium channels | $ | 10.00-$ 15.00 | ||
Pay-per-view events | $ | 2.99-$179.00 | ||
Digital video packages (including high-speed Internet service for higher tiers) | $ | 34.00-$172.99 | ||
High-speed Internet service | $ | 21.95-$ 59.99 | ||
Video on demand (per selection) | $ | 0.99-$ 29.99 | ||
High definition television | $ | 3.00-$ 10.99 | ||
Digital video recorder (DVR) | $ | 9.99-$ 14.99 |
Less than | ||||||||||||||||||
550 megahertz | 550 megahertz | 750 megahertz | 860/870 megahertz | Two-way Enabled | ||||||||||||||
8 | % | 5 | % | 40 | % | 47 | % | 87 | % |
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• | increased bandwidth capacity, for more channels and other services; | |
• | dedicated bandwidth for two-way services, which avoids reverse signal interference problems that can occur with two-way communication capability; and | |
• | improved picture quality and service reliability. |
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General |
Costs |
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DBS |
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DSL and Other Broadband Services |
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Telephone Companies and Utilities |
Broadcast Television |
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Traditional Overbuilds |
Private Cable |
Wireless Distribution |
Properties |
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Other Litigation |
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Directors | Position(s) | |
Paul G. Allen | Chairman of the board of directors | |
W. Lance Conn | Director of Charter | |
Nathaniel A. Davis | Director of Charter | |
Jonathan L. Dolgen | Director of Charter | |
Rajive Johri | Director of Charter | |
Robert P. May | Director of Charter | |
David C. Merritt | Director of Charter | |
Marc B. Nathanson | Director of Charter | |
Jo Allen Patton | Director of Charter | |
Neil Smit | Director of Charter, CCH I Capital Corp., CCH II Capital Corp., President and Chief Executive Officer of Charter and Charter Holdco | |
John H. Tory | Director of Charter | |
Larry W. Wangberg | Director of Charter |
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Executive Officers | Position | |
Paul G. Allen | Chairman of the Board of Directors | |
Neil Smit | President and Chief Executive Officer | |
Michael J. Lovett | Executive Vice President and Chief Operating Officer | |
Jeffrey T. Fisher | Executive Vice President and Chief Financial Officer | |
Grier C. Raclin | Executive Vice President, General Counsel and Corporate Secretary | |
Marwan Fawaz | Executive Vice President and Chief Technical Officer | |
Robert A. Quigley | Executive Vice President and Chief Marketing Officer | |
Sue Ann R. Hamilton | Executive Vice President, Programming | |
Lynne F. Ramsey | Senior Vice President, Human Resources | |
Kevin D. Howard | Vice President and Chief Accounting Officer |
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Long-Term | ||||||||||||||||||||||||||||
Compensation Award | ||||||||||||||||||||||||||||
Annual Compensation | ||||||||||||||||||||||||||||
Restricted | Securities | |||||||||||||||||||||||||||
Year | Other Annual | Stock | Underlying | All Other | ||||||||||||||||||||||||
Ended | Salary | Bonus | Compensation | Awards | Options | Compensation | ||||||||||||||||||||||
Name and Principal Position | Dec. 31 | ($) | ($) | ($) | ($) | (#) | ($)(1) | |||||||||||||||||||||
Neil Smit(2) | 2005 | 415,385 | 1,200,000 | (9) | — | 3,278,500 | (21) | 3,333,333 | 23,236 | (28) | ||||||||||||||||||
President and Chief | 2004 | — | — | — | — | — | — | |||||||||||||||||||||
Executive Officer | 2003 | — | — | — | — | — | — | |||||||||||||||||||||
Robert P. May(3) | 2005 | — | 839,000 | (10) | 1,360,239 | (16) | 180,000 | (22) | — | — | ||||||||||||||||||
Former Interim President | 2004 | — | — | 10,000 | (16) | 50,000 | (22) | — | — | |||||||||||||||||||
and Chief Executive Officer | 2003 | — | — | — | — | — | — | |||||||||||||||||||||
Carl E. Vogel(4) | 2005 | 115,385 | — | 1,428 | (17) | — | — | 1,697,451 | (29) | |||||||||||||||||||
Former President and Chief | 2004 | 1,038,462 | 500,000 | (11) | 38,977 | (17) | 4,729,400 | (23) | 580,000 | 3,239 | ||||||||||||||||||
Executive Officer | 2003 | 1,000,000 | 150,000 | (12) | 40,345 | (17) | — | 750,000 | 3,239 | |||||||||||||||||||
Michael J. Lovett(5) | 2005 | 516,153 | 377,200 | 14,898 | (18) | 265,980 | (24) | 216,000 | 59,013 | (30) | ||||||||||||||||||
Executive Vice President | 2004 | 291,346 | 241,888 | 7,797 | (18) | 355,710 | (24) | 172,000 | 6,994 | |||||||||||||||||||
and Chief Operating Officer | 2003 | 81,731 | 60,000 | 2,400 | (18) | — | 100,000 | 1,592 | ||||||||||||||||||||
Paul E. Martin(6) | 2005 | 350,950 | 299,017 | (13) | — | 52,650 | (25) | 83,700 | 7,047 | |||||||||||||||||||
Senior Vice President, | 2004 | 193,173 | 25,000 | (13) | — | 269,100 | (25) | 77,500 | 6,530 | |||||||||||||||||||
Interim Chief Financial | 2003 | 167,308 | 14,000 | — | — | — | 4,048 | |||||||||||||||||||||
Officer, Principal | ||||||||||||||||||||||||||||
Accounting Officer and | ||||||||||||||||||||||||||||
Corporate Controller | ||||||||||||||||||||||||||||
Wayne H. Davis(7) | 2005 | 409,615 | 184,500 | — | 108,810 | (26) | 145,800 | 3,527 | ||||||||||||||||||||
Executive Vice President | 2004 | 269,231 | 61,370 | (14) | — | 435,635 | (26) | 135,000 | 2,278 | |||||||||||||||||||
and Chief Technical Officer | 2003 | 212,885 | 47,500 | 581 | (19) | — | 225,000 | 436 | ||||||||||||||||||||
Sue Ann R. Hamilton(8) | 2005 | 362,700 | 152,438 | — | 107,838 | (27) | 145,000 | 6,351 | ||||||||||||||||||||
Executive Vice President | 2004 | 346,000 | 13,045 | — | 245,575 | (27) | 90,000 | 3,996 | ||||||||||||||||||||
Programming | 2003 | 225,000 | 231,250 | (15) | 4,444 | (20) | — | 200,000 | 1,710 |
(1) | Except as noted in notes 28 through 30 below respectively, these amounts consist of matching contributions under our 401(k) plan, premiums for supplemental life insurance available to executives, and long-term disability available to executives. |
(2) | Mr. Smit joined Charter on August 22, 2005 in his current position. | |
(3) | Mr. May served as Interim President and Chief Executive Officer from January 2005 through August 2005. | |
(4) | Mr. Vogel resigned from all of his positions with Charter and its subsidiaries on January 17, 2005. | |
(5) | Mr. Lovett joined Charter in August 2003 and was promoted to his current position in April 2005. | |
(6) | Mr. Martin resigned from all of his positions with Charter and its subsidiaries on April 3, 2006. | |
(7) | Mr. Davis resigned from all of his positions with Charter and its subsidiaries on March 23, 2006. | |
(8) | Ms. Hamilton joined Charter in March 2003 and was promoted to her current position in April 2005. | |
(9) | Pursuant to his employment agreement, Mr. Smit received a $1,200,000 bonus for 2005. |
(10) | This bonus was paid pursuant to Mr. May’s Executive Services Agreement. See “Employment Arrangements and Related Agreements.” |
(11) | Mr. Vogel’s 2004 bonus was a mid-year discretionary bonus. |
(12) | Mr. Vogel’s 2003 bonus was determined in accordance with the terms of his employment agreement. |
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(13) | Includes (i) for 2005, Mr. Martin’s bonus included a guarantee bonus of $50,000 for Mr. Martin’s services as Interim Co-Chief Financial Officer and a discretionary bonus of $50,000 and (ii) for 2004, a SOX implementation bonus of $25,000. |
(14) | Mr. Davis’ 2004 bonus included a $50,000 discretionary bonus. |
(15) | Ms. Hamilton’s 2003 bonus included a $150,000 signing bonus. |
(16) | Includes (i) for 2005, $1,177,885 as compensation for services of Mr. May as Interim President and Chief Executive Officer pursuant to his Executive Services Agreement (see “Employment Arrangements and Related Agreements”), $67,000 as compensation for services as a director on Charter’s board of directors, $15,717 attributed to personal use of the corporate airplane and $99,637 for reimbursement for transportation and living expenses pursuant to Mr. May’s Executive Services Agreement, and (ii) for 2004, compensation for services as a director on Charter’s board of directors. |
(17) | Includes (i) for 2005, $1,428 attributed to personal use of the corporate airplane, (ii) for 2004, $28,977 attributed to personal use of the corporate airplane and $10,000 for tax advisory services, and (iii) for 2003, $30,345 attributed to personal use of the corporate airplane and $10,000 for tax advisory services. |
(18) | Includes (i) for 2005, $7,698 attributed to personal use of the corporate airplane and $7,200 for automobile allowance, (ii) for 2004, $597 attributed to personal use of the corporate airplane and $7,200 for automobile allowance and (iii) for 2003, $2,400 for automobile allowance. |
(19) | Amount attributed to personal use of the corporate airplane. |
(20) | Amount attributed to personal use of the corporate airplane. |
(21) | Pursuant to his employment agreement, Mr. Smit received 1,250,000 restricted shares in August 2005, which will vest on the first anniversary of the grant date and 1,562,500 restricted shares in August 2005, which will vest over three years in equal one-third installments. See “Employment Arrangements and Related Agreements.” At December 31, 2005, the value of all of Mr. Smit’s unvested restricted stock holdings was $3,431,250, based on a per share market value (closing sale price) of $1.22 for the Class A common stock on December 31, 2005. |
(22) | Includes (i) for 2005, 100,000 restricted shares granted in April 2005 under our 2001 Stock Incentive Program for Mr. May’s services as Interim President and Chief Executive Officer that vested upon his termination in that position in August 2005 and 40,650 restricted shares granted in October 2005 under our 2001 Stock Incentive Program for Mr. May’s annual director grant which vest on the first anniversary of the grant date, and (ii) for 2004, 19,685 restricted shares granted in October 2004 under our 2001 Stock Incentive Program for Mr. May’s annual director grant, which vested on the first anniversary of the grant date in October 2005. At December 31, 2005, the value of all of Mr. May’s unvested restricted stock holdings was $49,593, based on a per share market value (closing sale price) of $1.22 for the Class A common stock on December 31, 2005. |
(23) | Includes 340,000 performance shares granted in January 2004 under our Long-Term Incentive Program that were to vest on the third anniversary of the grant date only if Charter meets certain performance criteria. Also includes 680,000 restricted shares issued in exchange for stock options held by Mr. Vogel pursuant to the February 2004 option exchange program described below, one half of which constituted performance shares which were to vest on the third anniversary of the grant date only if Charter met certain performance criteria, and the other half of which were to vest over three years in equal one-third installments. Under the terms of the separation agreement described below in “Employment Arrangements and Related Agreements,” Mr. Vogel’s options and remaining restricted stock vested until December 31, 2005, and all vested options were exercisable until sixty (60) days thereafter. All performance shares were forfeited upon termination of employment. All remaining unvested restricted stock and stock options were cancelled on December 31, 2005. Therefore, at December 31, 2005, the value of all of Mr. Vogel’s unvested restricted stock holdings was $0. |
(24) | Includes (i) for 2005, 129,600 performance shares granted in April 2005 under our Long-Term Incentive Program which will vest on the third anniversary of the grant date only if Charter meets certain performance criteria and 75,000 restricted shares granted in April 2005 under our 2001 Stock Incentive Plan that will vest on the third anniversary of the grant date, and (ii) for 2004, 88,000 |
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performance shares granted under our Long-Term Incentive Program that will vest on the third anniversary of the grant date only if Charter meets certain performance criteria. At December 31, 2005, the value of all of Mr. Lovett’s unvested restricted stock holdings (including performance shares) was $356,972, based on a per share market value (closing sale price) of $1.22 for the Class A common stock on December 31, 2005. | |
(25) | Includes (i) for 2005, $40,500 performance shares granted under our Long-Term Incentive Program that will vest on the third anniversary of the grant date only if Charter meets certain performance criteria, and (ii) for 2004, 37,500 performance shares granted in January 2004 under our Long-Term Incentive Program which were to vest on the third anniversary of the grant date only if Charter meets certain performance criteria and 17,214 restricted shares issued in exchange for stock options held by Mr. Martin pursuant to the February 2004 option exchange program described below, one half of which constituted performance shares which were to vest on the third anniversary of the grant date only if Charter meets certain performance criteria, and the other half of which were to vest over three years in equal one-third installments. At December 31, 2005, the value of all of Mr. Martin’s unvested restricted stock holdings (including performance shares) was $112,661, based on a per share market value (closing sale price) of $1.22 for the Class A common stock on December 31, 2005. |
(26) | Includes (i) for 2005, 83,700 performance shares granted under our Long-Term Incentive Program that will vest on the third anniversary of the grant date only if Charter meets certain performance criteria, and (ii) for 2004, 77,500 performance shares granted in January 2004 under our Long-Term Incentive Program which will vest on the third anniversary of the grant date only if Charter meets certain performance criteria and 8,000 restricted shares issued in exchange for stock options held by Mr. Davis pursuant to the February 2004 option exchange program described below, one half of which constituted performance shares which will vest on the third anniversary of the grant date only if Charter meets certain performance criteria, and the other half of which will vest over three years in equal one-third installments. At December 31, 2005, the value of all of Mr. Davis’s unvested restricted stock holdings (including performance shares) was $204,797, based on a per share market value (closing sale price) of $1.22 for the Class A common stock on December 31, 2005. |
(27) | These restricted shares consist of 83,700 and 47,500 performance shares granted in 2005 and 2004 under our Long-Term Incentive Program that will vest on the third anniversary of the grant date only if Charter meets certain performance criteria. At December 31, 2005, the value of all of Ms. Hamilton’s unvested restricted stock holdings (including performance shares) was $160,064 based on a per share market value (closing sale price) of $1.22 for the Class A common stock on December 31, 2005. |
(28) | In addition to items in Note 1 above, includes $19,697 attributed to reimbursement for taxes (on a “grossed up” basis) paid in respect of prior reimbursements for relocation expenses. |
(29) | In addition to items in Note 1 above, includes accrued vacation at time of termination and severance payments pursuant to Mr. Vogel’s separation agreement (See “— Employment Arrangements and Related Agreements”). |
(30) | In addition to items in Note 1 above, includes $51,223 attributed to reimbursement for taxes (on a “grossed up” basis) paid in respect of prior reimbursements for relocation expenses. |
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Potential Realizable Value at | ||||||||||||||||||||||||
Number of | % of Total | Assumed Annual Rate of | ||||||||||||||||||||||
Securities | Options | Stock Price Appreciation for | ||||||||||||||||||||||
Underlying | Granted to | Exercise | Option Term(2) | |||||||||||||||||||||
Options | Employees in | Price | Expiration | |||||||||||||||||||||
Name | Granted (#)(1) | 2005 | ($/Sh) | Date | 5%($) | 10%($) | ||||||||||||||||||
Neil Smit | 3,333,333 | 30.83 | % | $ | 1.18 | 8/22/2015 | $ | 2,465,267 | $ | 6,247,470 | ||||||||||||||
Robert P. May | — | — | — | — | — | — | ||||||||||||||||||
Carl E. Vogel | — | — | — | — | — | — | ||||||||||||||||||
Michael J. Lovett | 216,000 | 2.00 | % | 1.30 | 4/26/2015 | 175,914 | 445,802 | |||||||||||||||||
Paul E. Martin | 83,700 | 0.77 | % | 1.30 | 4/26/2015 | 68,430 | 173,415 | |||||||||||||||||
Wayne H. Davis | 145,800 | 1.35 | % | 1.30 | 4/26/2015 | 118,742 | 300,916 | |||||||||||||||||
Sue Ann R. Hamilton | 97,200 | 0.90 | % | 1.53 | 3/25/2015 | 93,221 | 236,240 | |||||||||||||||||
47,800 | 0.44 | % | 1.27 | 10/18/2015 | 38,208 | 96,826 |
(1) | Options are transferable under limited conditions, primarily to accommodate estate planning purposes. These options generally vest in four equal installments commencing on the first anniversary following the grant date. |
(2) | This column shows the hypothetical gains on the options granted based on assumed annual compound price appreciation of 5% and 10% over the full ten-year term of the options. The assumed rates of 5% and 10% appreciation are mandated by the SEC and do not represent our estimate or projection of future prices. |
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Options at December 31, | In-the-Money Options at | |||||||||||||||||||||||
Shares | 2005 (#)(1) | December 31, 2005 ($)(2) | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise (#) | Realized($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Neil Smit | — | — | — | 3,333,333 | — | $ | 133,333 | |||||||||||||||||
Robert P. May | — | — | — | — | — | — | ||||||||||||||||||
Carl E. Vogel(3) | — | — | 1,120,000 | — | — | — | ||||||||||||||||||
Michael J. Lovett | — | — | 93,000 | 395,000 | — | — | ||||||||||||||||||
Paul E. Martin(4) | — | — | 143,125 | 193,075 | — | — | ||||||||||||||||||
Wayne H. Davis(5) | — | — | 176,250 | 379,550 | — | — | ||||||||||||||||||
Sue Ann R. Hamilton | — | — | 122,500 | 312,500 | — | — |
(1) | Options granted prior to 2001 and under the 1999 Charter Communications Option Plan, when vested, are exercisable for membership units of Charter Holdco which are immediately exchanged on a one-for-one basis for shares of the Class A common stock upon exercise of the option. Options granted under the 2001 Stock Incentive Plan and after 2000 are exercisable for shares of the Class A common stock. |
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(2) | Based on a per share market value (closing price) of $1.22 as of December 31, 2005 for the Class A common stock. |
(3) | Mr. Vogel’s employment terminated on January 17, 2005. Under the terms of the separation agreement, his options continued to vest until December 31, 2005, and all vested options were exercisable for sixty (60) days thereafter. |
(4) | Mr. Martin’s employment terminated on April 3, 2006. Under the terms of his January 9, 2006 retention agreement, his options continue to vest until September 2, 2007, and all vested options are exercisable until sixty (60) days thereafter. |
(5) | Mr. Davis’ employment terminated on March 23, 2006. Under the terms of his separation agreement, his options continue to vest until September 30, 2007, and all vested options are exercisable until sixty (60) days thereafter. |
Estimated Future Payouts of Shares | ||||||||||||||||||||
Number of | Under Non-Stock Price-Based Plans | |||||||||||||||||||
Shares, Units or | Performance or Other Period | |||||||||||||||||||
Name | Other Rights | Until Maturation or Payout | Threshold | Target | Maximum | |||||||||||||||
Neil Smit | — | — | — | |||||||||||||||||
Robert P. May | — | — | — | |||||||||||||||||
Carl E. Vogel | — | — | — | |||||||||||||||||
Michael J. Lovett | 1 year performance cycle | |||||||||||||||||||
129,600 | 3 year vesting | 90,720 | 129,600 | 259,200 | ||||||||||||||||
Paul E. Martin | 1 year performance cycle | |||||||||||||||||||
40,500 | 3 year vesting | 28,350 | 40,500 | 81,000 | ||||||||||||||||
Wayne H. Davis | 83,700 | 1 year performance cycle | ||||||||||||||||||
3 year vesting | 58,590 | 83,700 | 167,400 | |||||||||||||||||
Sue Ann R. Hamilton | 83,700 | 1 year performance cycle | ||||||||||||||||||
3 year vesting | 58,590 | 83,700 | 167,400 |
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Market | |||||||||||||||||||||||||
Number of | Price of | Exercise | |||||||||||||||||||||||
Securities | Stock at | Price at | New | Length of Original | |||||||||||||||||||||
Underlying | Time of | Time of | Exercise | Option Term | |||||||||||||||||||||
Options | Exchange | Exchange | Price | Remaining at Date | |||||||||||||||||||||
Name | Date | Exchanged | ($) | ($) | ($) | of Exchange | |||||||||||||||||||
Carl E. Vogel | 2/25/04 | 3,400,000 | 4.37 | 13.68 | (1 | ) | 7 years 7 months | ||||||||||||||||||
Former President and Chief | |||||||||||||||||||||||||
Executive Officer | |||||||||||||||||||||||||
Paul E. Martin | 2/25/04 | 15,000 | 4.37 | 23.09 | (2 | ) | 7 years 0 months | ||||||||||||||||||
Former Senior Vice President, | 50,000 | 4.37 | 11.99 | 7 years 7 months | |||||||||||||||||||||
Interim Chief Financial Officer, | 40,000 | 4.37 | 15.03 | 6 years 3 months | |||||||||||||||||||||
Principal Accounting Officer and Corporate Controller | |||||||||||||||||||||||||
Wayne H. Davis | 2/25/04 | 40,000 | 4.37 | 23.09 | (3 | ) | 7 years 0 months | ||||||||||||||||||
Former Executive Vice President | 40,000 | 4.37 | 12.27 | 7 years 11 months | |||||||||||||||||||||
and Chief Technical Officer |
(1) | On February 25, 2004, in exchange for 3,400,000 options tendered, 340,000 performance shares were granted with a three year performance cycle and three year vesting along with 340,000 restricted stock units with one-third of the shares vesting on each of the first three anniversaries of the date of grant. On the grant date, the price of our common stock was $4.37. |
(2) | On February 25, 2004, in exchange for 105,000 options tendered, 8,607 performance shares were granted with a three year performance cycle and three year vesting along with 8,607 restricted stock units with one-third of the shares vesting on each of the first three anniversaries of the grant date. On the grant date, the price of Charter’s common stock was $4.37. |
(3) | On February 25, 2004, in exchange for 80,000 options tendered, 4,000 performance shares were granted with a three year performance cycle and three year vesting along with 4,000 restricted stock units with one-third of the shares vesting on each of the first three anniversaries of the grant date. On the grant date, the price of Charter’s common stock was $4.37. |
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(1) any breach of the director’s duty of loyalty to the corporation and its shareholders; | |
(2) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; | |
(3) unlawful payments of dividends or unlawful stock purchases or redemptions; or | |
(4) any transaction from which the director derived an improper personal benefit. |
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• | each current director of Charter; | |
• | the current chief executive officer and individuals named in the Summary Compensation Table; | |
• | all persons currently serving as directors and officers of Charter, as a group; and | |
• | each person known by us to own beneficially 5% or more of Charter’s outstanding Class A common stock as of September 30, 2006. |
• | each holder of Class A common stock is entitled to one vote per share; and | |
• | each holder of Charter Class B common stock (“Class B common stock”) is entitled to (i) ten votes per share of Class B common stock held by such holder and its affiliates and (ii) ten votes per share of Class B common stock for which membership units in Charter Holdco held by such holder and its affiliates are exchangeable. |
Unvested | Class A Shares | |||||||||||||||||||||||||||
Number of | Restricted | Receivable on | Class B | |||||||||||||||||||||||||
Class A | Class A | Exercise of | Shares | |||||||||||||||||||||||||
Shares | Shares | Vested Options | Number of | Issuable upon | % of Class A | % of | ||||||||||||||||||||||
(Voting and | (Voting | or Other | Class B | Exchange or | Shares (Voting | Voting | ||||||||||||||||||||||
Name and Address of | Investment | Power | Convertible | Shares | Conversion of | and Investment | Power | |||||||||||||||||||||
Beneficial Owner | Power)(1) | Only)(2) | Securities(3) | Owned | Units(4) | Power) (4)(5) | (5)(6) | |||||||||||||||||||||
Paul G. Allen(7) | 29,165,526 | 49,242 | 10,000 | 50,000 | 366,475,601 | 49.88 | % | 90.29 | % | |||||||||||||||||||
Charter Investment, Inc.(8) | 250,162,428 | 36.96 | % | * | ||||||||||||||||||||||||
Vulcan Cable III Inc.(9) | 116,313,173 | 21.42 | % | * | ||||||||||||||||||||||||
Neil Smit | 970,834 | 1,041,666 | 1,111,111 | * | * | |||||||||||||||||||||||
Robert P. May | 160,335 | 49,242 | * | * | ||||||||||||||||||||||||
W. Lance Conn | 51,303 | 49,242 | * | * | ||||||||||||||||||||||||
Nathaniel A. Davis | 49,242 | * | * | |||||||||||||||||||||||||
Jonathan L. Dolgen | 60,335 | 49,242 | * | * | ||||||||||||||||||||||||
Rajive Johri | 67,379 | * | * | |||||||||||||||||||||||||
David C. Merritt | 64,768 | 49,242 | * | * | ||||||||||||||||||||||||
Marc B. Nathanson | 464,768 | 49,242 | 50,000 | * | * | |||||||||||||||||||||||
Jo Allen Patton | 51,300 | 63,986 | * | * | ||||||||||||||||||||||||
John H. Tory | 69,068 | 49,242 | 40,000 | * | * | |||||||||||||||||||||||
Larry W. Wangberg | 67,768 | 49,242 | 40,000 | * | * | |||||||||||||||||||||||
Michael J. Lovett | 24,387 | 200,000 | 215,000 | * | * | |||||||||||||||||||||||
Sue Ann Hamilton | 231,250 | * | * | |||||||||||||||||||||||||
All current directors and executive officers as a group (20 persons) | 31,168,250 | 1,950,525 | 1,867,236 | 50,000 | 366,475,601 | 50.49 | % | 90.39 | % | |||||||||||||||||||
Carl E. Vogel(10) | 158,126 | * | * | |||||||||||||||||||||||||
Wayne Davis(11) | 1,642 | 1,333 | 312,700 | * | * | |||||||||||||||||||||||
Paul Martin(12) | 9,659 | 2,869 | 224,675 | * | * | |||||||||||||||||||||||
Steelhead Partners(13) | 37,621,030 | 8.82 | % | * | ||||||||||||||||||||||||
J-K Navigator Fund, L.P.(13) | 22,067,209 | 5.17 | % | * |
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Unvested | Class A Shares | |||||||||||||||||||||||||||
Number of | Restricted | Receivable on | Class B | |||||||||||||||||||||||||
Class A | Class A | Exercise of | Shares | |||||||||||||||||||||||||
Shares | Shares | Vested Options | Number of | Issuable upon | % of Class A | % of | ||||||||||||||||||||||
(Voting and | (Voting | or Other | Class B | Exchange or | Shares (Voting | Voting | ||||||||||||||||||||||
Name and Address of | Investment | Power | Convertible | Shares | Conversion of | and Investment | Power | |||||||||||||||||||||
Beneficial Owner | Power)(1) | Only)(2) | Securities(3) | Owned | Units(4) | Power) (4)(5) | (5)(6) | |||||||||||||||||||||
James Michael Johnston(13) | 30,284,630 | 7.10 | % | * | ||||||||||||||||||||||||
Brian Katz Klein(13) | 30,284,630 | 7.10 | % | * | ||||||||||||||||||||||||
FMR Corp.(14) | 52,487,788 | 12.30 | % | 1.37 | % | |||||||||||||||||||||||
Fidelity Management & Research Company(14) | 14,961,471 | 31,231,402 | 10.09 | % | 1.20 | % | ||||||||||||||||||||||
Edward C. Johnson 3d(14) | 52,487,788 | 12.30 | % | 1.37 | % | |||||||||||||||||||||||
Standard Pacific Capital LLC(15) | 30,876,404 | 7.24 | % | * | ||||||||||||||||||||||||
Kingdon Capital Management, LLC(16) | 27,636,237 | 6.48 | % | * |
* | Less than 1%. |
(1) | Includes shares for which the named person has sole voting and investment power; or shared voting and investment power with a spouse. Does not include shares that may be acquired through exercise of options. | |
(2) | Includes unvested shares of restricted stock issued under the Charter Communications, Inc. 2001 Stock Incentive Plan (including those issued in the February 2004 option exchange for those eligible employees who elected to participate), as to which the applicable director or employee has sole voting power but not investment power. Excludes certain performance units granted under the Charter 2001 Stock Incentive Plan with respect to which shares will not be issued until the third anniversary of the grant date and then only if Charter meets certain performance criteria (and which consequently do not provide the holder with any voting rights). | |
(3) | Includes shares of Class A common stock issuable (a) upon exercise of options that have vested or will vest on or before November 29, 2006 under the 1999 Charter Communications Option Plan and the 2001 Stock Incentive Plan or (b) upon conversion of other convertible securities. | |
(4) | Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. The beneficial owners at September 30, 2006 of Class B common stock, Charter Holdco membership units and convertible senior notes of Charter are deemed to be beneficial owners of an equal number of shares of Class A common stock because such holdings are either convertible into Class A shares (in the case of Class B shares and convertible senior notes) or exchangeable (directly or indirectly) for Class A shares (in the case of the membership units) on a one-for-one basis. Unless otherwise noted, the named holders have sole investment and voting power with respect to the shares listed as beneficially owned. As a result of the settlement of the CC VIII dispute, Mr. Allen received an accreting note exchangeable as of September 30, 2006 for 27,343,570 Charter Holdco units. See “Certain Relationships and Related Transactions — Transactions Arising Out of Our Organizational Structure and Mr. Allen’s Investment in Charter Communications, Inc. and Its Subsidiaries — Equity Put Rights — CC VIII.” | |
(5) | The calculation of this percentage assumes for each person that: |
• | 426,699,355 shares of Class A common stock are issued and outstanding as of September 30, 2006; | |
• | 50,000 shares of Class B common stock held by Mr. Allen have been converted into shares of Class A common stock; | |
• | the acquisition by such person of all shares of Class A common stock that such person or affiliates of such person has the right to acquire upon exchange of membership units in subsidiaries or conversion of Series A Convertible Redeemable Preferred Stock or 5.875% or 4.75% convertible senior notes; |
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• | the acquisition by such person of all shares that may be acquired upon exercise of options to purchase shares or exchangeable membership units that have vested or will vest by November 29, 2006; and | |
• | that none of the other listed persons or entities has received any shares of Class A common stock that are issuable to any of such persons pursuant to the exercise of options or otherwise. |
A person is deemed to have the right to acquire shares of Class A common stock with respect to options vested under the 1999 Charter Communications Option Plan. When vested, these options are exercisable for membership units of Charter Holdco, which are immediately exchanged on a one-for-one basis for shares of Class A common stock. A person is also deemed to have the right to acquire shares of Class A common stock issuable upon the exercise of vested options under the 2001 Stock Incentive Plan. |
(6) | The calculation of this percentage assumes that Mr. Allen’s equity interests are retained in the form that maximizes voting power (i.e., the 50,000 shares of Class B common stock held by Mr. Allen have not been converted into shares of Class A common stock; that the membership units of Charter Holdco owned by each of Vulcan Cable III Inc. and Charter Investment, Inc. have not been exchanged for shares of Class A common stock). | |
(7) | The total listed includes: |
• | 250,162,428 membership units in Charter Holdco held by Charter Investment, Inc.; and | |
• | 116,313,173 membership units in Charter Holdco held by Vulcan Cable III Inc. |
The listed total includes 27,343,570 shares of Class A common stock issuable as of September 30, 2006 upon exchange of units of Charter Holdco, which are issuable to Charter Investment, Inc. (which is owned by Mr. Allen) as a consequence of the settlement of the CC VIII dispute. See “Certain Relationships and Related Transactions — Transactions Arising Out of Our Organizational Structure and Mr. Allen’s Investment in Charter Communications, Inc. and Its Subsidiaries — Equity Put Rights — CC VIII.” The address of this person is: 505 Fifth Avenue South, Suite 900, Seattle, WA 98104. |
(8) | Includes 250,162,428 membership units in Charter Holdco, which are exchangeable for shares of Class B common stock on a one-for-one basis, which are convertible to shares of Class A common stock on a one-for-one basis. The address of this person is: Charter Plaza, 12405 Powerscourt Drive, St. Louis, MO 63131. | |
(9) | Includes 116,313,173 membership units in Charter Holdco, which are exchangeable for shares of Class B common stock on a one-for-one basis, which are convertible to shares of Class A common stock on a one-for-one basis. The address of this person is: 505 Fifth Avenue South, Suite 900, Seattle, WA 98104. |
(10) | Mr. Vogel terminated his employment effective on January 17, 2005. His stock options and restricted stock shown in this table continued to vest until December 31, 2005, and his options were exercisable for another 60 days thereafter. |
(11) | Mr. Davis terminated his employment effective March 23, 2006. His stock options and restricted stock shown in this table continue to vest until September 30, 2007, and his options will be exercisable for another 60 days thereafter. |
(12) | Mr. Martin terminated his employment effective April 3, 2006. His stock options and restricted stock shown in this table continue to vest until September 2, 2007, and his options will be exercisable for another 60 days thereafter. |
(13) | The equity ownership reported in this table is based upon the holder’s Form 13F filed with the SEC April 28, 2006. The business address of the reporting person is: 1301 First Avenue, Suite 201, Seattle, WA 98101. Steelhead Partners, LLC acts as general partner of J-K Navigator Fund, L.P., and J. Michael Johnston and Brian K. Klein act as the member-managers of Steelhead Partners, LLC. Accordingly, shares shown as beneficially held by Steelhead Partners, LLC, Mr. Johnston and Mr. Klein include shares beneficially held by J-K Navigator Fund, L.P. |
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(14) | The equity ownership reported in this table is based on the holder’s Schedule 13G/ A filed with the SEC on February 14, 2006. The address of the person is: 82 Devonshire Street, Boston, Massachusetts 02109. Fidelity Management & Research Company is a wholly-owned subsidiary of FMR Corp. and is the beneficial owner of 46,192,873 shares as a result of acting as investment adviser to various investment companies and includes: 31,231,402 shares resulting from the assumed conversion of 5.875% senior notes. Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp. and is a beneficial owner of 3,066,115 shares as a result of acting as investment adviser to various investment companies and includes: 3,066,115 shares resulting from the assumed conversion of 5.875% senior notes. Fidelity International Limited (“FIL”) provides investment advisory and management services tonon-U.S. investment companies and certain institutional investors and is a beneficial owner of 3,228,800 shares. FIL is a separate and independent corporate entity from FMR Corp. Edward C. Johnson 3d, Chairman of FMR Corp. and FIL own shares of FIL voting stock with the right to cast approximately 38% of the total votes of FIL voting stock. Edward C. Johnson 3d, chairman of FMR Corp., and FMR Corp. each has sole power to dispose of 52,487,788 shares. |
(15) | The equity ownership reported in this table is based upon holder’s Schedule 13F filed with the SEC August 16, 2006. The address of the reporting person is: 101 California Street, 36th Floor, San Francisco, CA 94111. |
(16) | The equity ownership reported in this table is based upon holder’s Schedule 13F filed with the SEC August 14, 2006. The address of the reporting person is: 152 West 57th Street, 50th Floor, New York, NY 10019. |
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• | Transactions in which Mr. Allen has an interest that arise directly out of Mr. Allen’s investment in Charter and Charter Holdco. A large number of the transactions described below arise out of Mr. Allen’s direct and indirect (through Charter Investment, Inc. (“CII”), or the Vulcan entities, each of which Mr. Allen controls) investment in Charter and its subsidiaries, as well as commitments made as consideration for the investments themselves. | |
• | Transactions with third party providers of products, services and content in which Mr. Allen has or had a material interest. Mr. Allen has had numerous investments in the areas of technology and media. We have a number of commercial relationships with third parties in which Mr. Allen has or had an interest. | |
• | Other Miscellaneous Transactions. We have a limited number of transactions in which certain of the officers, directors and principal stockholders of Charter and its subsidiaries, other than Mr. Allen, have an interest. |
Transaction | Interested Related Party | Description of Transaction | ||
Private Exchange | Paul G. Allen | Affiliates of Mr. Allen hold approximately $56 million of Charter Holdings’ that were the subject of the Private Exchange. Mr. Allen’s affiliates tendered these notes in the Private Exchange and will likely participate in the exchange offer. | ||
Intercompany Management Arrangements | Paul G. Allen | Subsidiaries of Charter Communications Holdings, LLC (“Charter Holdings”) paid Charter approximately $84 million, $90 million, $128 million and $67 million for management services rendered in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively. |
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Transaction | Interested Related Party | Description of Transaction | ||
Mutual Services Agreement | Paul G. Allen | Charter paid Charter Holdco approximately $73 million, $74 million, $89 million and $52 million for services rendered in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively. | ||
Previous Management Agreement | Paul G. Allen | No fees were paid in 2003, 2004, 2005 or 2006, although total management fees accrued and payable to CII, exclusive of interest, were approximately $14 million at December 31, 2003, 2004 and 2005 and June 30, 2006. | ||
Channel Access Agreement | Paul G. Allen W. Lance Conn Jo Allen Patton | At Vulcan Ventures’ request, we will provide Vulcan Ventures with exclusive rights for carriage on eight of our digital cable channels as partial consideration for a 1999 capital contribution of approximately $1.3 billion. | ||
Equity Put Rights | Paul G. Allen | Certain sellers of cable systems that we acquired were granted, or previously had the right, as described below, to put to Paul Allen equity in Charter and CC VIII, LLC issued to such sellers in connection with such acquisitions. | ||
Previous Funding Commitment of Vulcan Inc. | Paul G. Allen W. Lance Conn Jo Allen Patton | Pursuant to a commitment letter dated April 14, 2003, Vulcan Inc., which is an affiliate of Paul Allen, agreed to lend, under certain circumstances, or cause an affiliate to lend to Charter Holdings or any of its subsidiaries a total amount of up to $300 million, which amount included a subfacility of up to $100 million for the issuance of letters of credit. In November 2003, the commitment was terminated. We incurred expenses to Vulcan Inc. totaling $5 million in connection with the commitment prior to termination. |
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Transaction | Interested Related Party | Description of Transaction | ||
TechTV Carriage Agreement | Paul G. Allen W. Lance Conn Jo Allen Patton Larry W. Wangberg | We recorded approximately $1 million, $5 million, $1 million and $0.6 million from TechTV under the affiliation agreement in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively, related to launch incentives as a reduction of programming expense. | ||
Oxygen Media Corporation Carriage Agreement | Paul G. Allen W. Lance Conn Jo Allen Patton | We paid Oxygen Media approximately $9 million, $13 million, $9 million and $4 million under a carriage agreement in exchange for programming in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively. We recorded approximately $1 million, $1 million, $0.1 million and $0 in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively, from Oxygen Media related to launch incentives as a reduction of programming expense. We received 1 million shares of Oxygen Preferred Stock with a liquidation preference of $33.10 per share in March 2005. We recognized approximately $9 million, $13 million, $2 million and $0 as a reduction of programming expense in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively, in recognition of the guaranteed value of the investment. | ||
Portland Trail Blazers Carriage Agreement | Paul G. Allen | We paid approximately $135,200, $96,100, $116,500 and $115,600 for rights to carry the cable broadcast of certain Trail Blazers basketball games in 2003, 2004 and 2005 and the six months ended June 30, 2006, respectively. |
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Transaction | Interested Related Party | Description of Transaction | ||
Digeo, Inc. Broadband Carriage Agreement | Paul G. Allen Carl E. Vogel Jo Allen Patton W. Lance Conn Michael J. Lovett | We paid Digeo approximately $4 million, $3 million, $3 million and $1 million for customized development of the i-channels and the local content tool kit in 2003, 2004 and 2005 and for the six months ended June 30, 2006, respectively. We entered into a license agreement in 2004 for the Digeo software that runs DVR units purchased from a third party. We paid approximately $0.5 million, $1 million and $3 million in license and maintenance fees in 2004, 2005 and for the six months ended June 30, 2006, respectively. In 2004 we executed a purchase agreement for the purchase of up to 70,000 DVR units and a related software license agreement, both subject to satisfaction of certain conditions. We paid approximately $1 million, $10 million and $8 million in capital purchases in 2004, 2005 and for the six months ended June 30, 2006, respectively. | ||
Viacom Networks | Jonathan L. Dolgen | We are party to certain affiliation agreements with networks of New Viacom and CBS Corporation, pursuant to which they provide Charter with programming for distribution via our cable systems. For the years ended December 31, 2003, 2004 and 2005, Charter paid Old Viacom approximately $188 million, $194 million, $201 million, respectively, and for the six months ended June 30, 2006, Charter paid New Viacom $62 million and CBS Corporation $46 million for programming, and Charter recorded as receivables approximately $5 million, $8 million and $15 million for launch incentives and marketing support for the years ended December 31, 2003, 2004 and 2005, respectively. |
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Transaction | Interested Related Party | Description of Transaction | ||
Payment for relative’s services | Carl E. Vogel | Since June 2003, Mr. Vogel’s brother-in-law has been an employee of Charter Holdco and has received a salary commensurate with his position in the engineering department | ||
Radio advertising | Marc B. Nathanson | We believe that, through a third party advertising agency, we have paid approximately $67,300, $49,300, $67,600 and $56,500 in 2003, 2004 and 2005 and for the six months ended June 30, 2006, respectively, to Mapleton Communications, an affiliate of Mapleton Investments, LLC. | ||
Enstar Limited Partnership Systems Purchase and Management Services | Charter officers who were appointed by a Charter subsidiary (as general partner) to serve as officers of Enstar limited partnerships | Certain of our subsidiaries purchased certain assets of the Enstar Limited Partnerships for approximately $63 million in 2002. We also earned approximately $469,300, $0, $0 and $0 in 2003, 2004 and 2005 and for the six months ended June 30, 2006, respectively, by providing management services to the Enstar Limited Partnerships. | ||
Indemnification Advances | Directors and current and former officers named in certain legal proceedings | Charter reimbursed certain of its current and former directors and executive officers a total of approximately $8 million, $3 million, $16,200 and $400 for costs incurred in connection with litigation matters in 2003, 2004 and 2005 and for the six months ended June 30, 2006, respectively. |
Private Exchange |
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Intercompany Management Arrangements |
Mutual Services Agreement |
Previous Management Agreement with Charter Investment, Inc. |
Vulcan Ventures Channel Access Agreement |
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Equity Put Rights |
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Previous Funding Commitment of Vulcan Inc. |
Allocation of Business Opportunities with Mr. Allen |
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TechTV, Inc. |
Oxygen Media Corporation |
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Portland Trail Blazers |
Digeo, Inc. |
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Viacom Networks |
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Payments for Relative’s Services |
Radio Advertising |
Enstar Management Fees |
Indemnification Advances |
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Start Date | ||||||||||||||||||||||||||||||
June 30, 2006 | December 31, 2005 | for Interest | ||||||||||||||||||||||||||||
Semi-Annual | Payment on | |||||||||||||||||||||||||||||
Principal | Accreted | Principal | Accreted | Interest | Discount | Maturity | ||||||||||||||||||||||||
Amount | Value(a) | Amount | Value(a) | Payment Dates | Notes | Date(b) | ||||||||||||||||||||||||
Credit Facilities | ||||||||||||||||||||||||||||||
Charter Operating | $ | 5,800 | $ | 5,800 | $ | 5,731 | $ | 5,731 | ||||||||||||||||||||||
Renaissance Media Group LLC: | ||||||||||||||||||||||||||||||
10.000% senior discount notes due 2008 | — | — | 114 | 115 | 4/15 & 10/15 | 10/15/03 | 4/15/08 | |||||||||||||||||||||||
Charter Operating: | ||||||||||||||||||||||||||||||
8% senior second-lien notes due 2012 | 1,100 | 1,100 | 1,100 | 1,100 | 4/30 & 10/30 | 4/30/12 | ||||||||||||||||||||||||
83/8% senior second-lien notes due 2014 | 770 | 770 | 733 | 733 | 4/30 & 10/30 | 4/30/14 | ||||||||||||||||||||||||
CCO Holdings, LLC: | ||||||||||||||||||||||||||||||
83/4% senior notes due 2013 | 800 | 795 | 800 | 794 | 5/15 & 11/15 | 11/15/13 | ||||||||||||||||||||||||
Senior floating notes due 2010 | 550 | 550 | 550 | 550 | 3/15, 6/15, | 12/15/10 | ||||||||||||||||||||||||
9/15 & 12/15 | ||||||||||||||||||||||||||||||
CCH II, LLC: | ||||||||||||||||||||||||||||||
10.250% senior notes due 2010 | 2,051 | 2,042 | 1,601 | 1,601 | 3/15 & 9/15 | 9/15/10 | ||||||||||||||||||||||||
Total CCH II, LLC | 11,071 | 11,057 | 10,629 | 10,624 | ||||||||||||||||||||||||||
CCH I(a): | ||||||||||||||||||||||||||||||
11.00% senior notes due 2015 | 3,525 | 3,678 | 3,525 | 3,683 | 4/1 & 10/1 | 10/1/15 | ||||||||||||||||||||||||
Total CCH I, LLC | 14,596 | 14,735 | 14,154 | 14,307 | ||||||||||||||||||||||||||
CIH(a): | ||||||||||||||||||||||||||||||
11.125% senior notes due 2014 | 151 | 151 | 151 | 151 | 1/15 & 7/15 | 1/15/14 | ||||||||||||||||||||||||
9.920% senior discount notes due 2014 | 471 | 471 | 471 | 471 | 4/1 & 10/1 | 4/1/14 | ||||||||||||||||||||||||
10.000% senior notes due 2014 | 299 | 299 | 299 | 299 | 5/15 & 11/15 | 5/15/14 | ||||||||||||||||||||||||
11.750% senior discount notes due 2014 | 815 | 815 | 815 | 781 | 5/15 & 11/15 | 11/15/06 | 5/15/14 | |||||||||||||||||||||||
13.500% senior discount notes due 2014 | 581 | 581 | 581 | 578 | 1/15 & 7/15 | 7/15/06 | 1/15/14 | |||||||||||||||||||||||
12.125% senior discount notes due 2015 | 217 | 203 | 217 | 192 | 1/15 & 7/15 | 7/15/07 | 1/15/15 | |||||||||||||||||||||||
Charter Holdings: | ||||||||||||||||||||||||||||||
8.250% senior notes due 2007 | 105 | 105 | 105 | 105 | 4/1 & 10/1 | 4/1/07 | ||||||||||||||||||||||||
8.625% senior notes due 2009 | 292 | 292 | 292 | 292 | 4/1 & 10/1 | 4/1/09 | ||||||||||||||||||||||||
9.920% senior discount notes due 2011 | 198 | 198 | 198 | 198 | 4/1 & 10/1 | 10/1/04 | 4/1/11 | |||||||||||||||||||||||
10.000% senior notes due 2009 | 154 | 154 | 154 | 154 | 4/1 & 10/1 | 4/1/09 | ||||||||||||||||||||||||
10.250% senior notes due 2010 | 49 | 49 | 49 | 49 | 1/15 & 7/15 | 1/15/10 |
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Start Date | |||||||||||||||||||||||||||||
June 30, 2006 | December 31, 2005 | for Interest | |||||||||||||||||||||||||||
Semi-Annual | Payment on | ||||||||||||||||||||||||||||
Principal | Accreted | Principal | Accreted | Interest | Discount | Maturity | |||||||||||||||||||||||
Amount | Value(a) | Amount | Value(a) | Payment Dates | Notes | Date(b) | |||||||||||||||||||||||
11.750% senior discount notes due 2010 | 43 | 43 | 43 | 43 | 1/15 & 7/15 | 7/15/05 | 1/15/10 | ||||||||||||||||||||||
10.750% senior notes due 2009 | 131 | 131 | 131 | 131 | 4/1 & 10/1 | 10/1/09 | |||||||||||||||||||||||
11.125% senior notes due 2011 | 217 | 217 | 217 | 217 | 1/15 & 7/15 | 1/15/11 | |||||||||||||||||||||||
13.500% senior discount notes due 2011 | 94 | 94 | 94 | 94 | 1/15 & 7/15 | 7/15/06 | 1/15/11 | ||||||||||||||||||||||
9.625% senior notes due 2009 | 107 | 107 | 107 | 107 | 5/15 & 11/15 | 11/15/09 | |||||||||||||||||||||||
10.000% senior notes due 2011 | 137 | 136 | 137 | 136 | 5/15 & 11/15 | 5/15/11 | |||||||||||||||||||||||
11.750% senior discount notes due 2011 | 125 | 125 | 125 | 120 | 5/15 & 11/15 | 11/15/06 | 5/15/11 | ||||||||||||||||||||||
12.125% senior discount notes due 2012 | 113 | 106 | 113 | 100 | 1/15 & 7/15 | 7/15/07 | 1/15/12 | ||||||||||||||||||||||
Total Charter Holdings | $ | 18,895 | $ | 19,012 | $ | 18,453 | $ | 18,525 | |||||||||||||||||||||
(a) | The accreted value presented above generally represents the principal amount of the notes less the original issue discount at the time of sale plus the accretion to the balance sheet date except as follows. The accreted value of the CIH notes issued in exchange for Charter Holdings notes and the CCH I notes issued in exchange for the 8.625% Charter Holdings notes due 2009 are recorded at the historical book values of the Charter Holdings notes for financial reporting purposes as opposed to the current accreted value for legal purposes and notes indenture purposes (which, for both purposes, is the amount that would become payable if the debt becomes immediately due). As of June 30, 2006 and December 31, 2005, the accreted value of Charter Holdings’ debt for legal purposes and notes and indentures purposes is approximately $18.6 billion and $18.0 billion, respectively. |
(b) | In general, the obligors have the right to redeem all of the notes set forth in the above table (except with respect to the 8.25% Charter Holdings notes due 2007, the 10.000% Charter Holdings notes due 2009, the 10.75% Charter Holdings notes due 2009 and the 9.625% Charter Holdings notes due 2009) in whole or part at their option, beginning at various times prior to their stated maturity dates, subject to certain conditions, upon the payment of the outstanding principal amount (plus a specified redemption premium) and all accrued and unpaid interest. For additional information, see Note 9 to the accompanying consolidated financial statements included elsewhere in this Prospectus. |
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• | a term facility with a total principal amount of $5.0 billion, which shall be repayable in 23 equal quarterly installments, commencing September 30, 2007, aggregating in each loan year to 1% of the original amount of the term facility, with the remaining balance due at final maturity in 2013; | |
• | a revolving credit facility, in a total amount of $1.5 billion, with a maturity date in 2010; and | |
• | a revolving credit facility (the “R/ T Facility”), in a total amount of $350.0 million, that converts to term loans in April 2007, repayable on the same terms as the term facility described above. |
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(i) the failure to make payments when due or within the applicable grace period, | |
(ii) the failure to comply with specified covenants, including but not limited to a covenant to deliver audited financial statements with an unqualified opinion from our independent auditors, | |
(iii) the failure to pay or the occurrence of events that cause or permit the acceleration of other indebtedness owing by CCO Holdings, Charter Operating or Charter Operating’s subsidiaries in amounts in excess of $50 million in aggregate principal amount, | |
(iv) the failure to pay or the occurrence of events that result in the acceleration of other indebtedness owing by certain of CCO Holdings’ direct and indirect parent companies in amounts in excess of $200 million in aggregate principal amount, | |
(v) Paul Allen and/or certain of his family members and/or their exclusively owned entities (collectively, the “Paul Allen Group”) ceasing to have the power, directly or indirectly, to vote at least 35% of the ordinary voting power of Charter Operating, | |
(vi) the consummation of any transaction resulting in any person or group (other than the Paul Allen Group) having power, directly or indirectly, to vote more than 35% of the ordinary voting power of Charter Operating, unless the Paul Allen Group holds a greater share of ordinary voting power of Charter Operating, | |
(vii) certain of Charter Operating’s indirect or direct parent companies, Charter Operating or Charter Operating’s subsidiaries having indebtedness in excess of $500 million aggregate principal amount (other than under the Charter Operating credit facilities) which remains undefeased three months prior to the final maturity of such indebtedness, and | |
(viii) Charter Operating ceasing to be a wholly-owned direct subsidiary of CCO Holdings, except in certain very limited circumstances. |
83/4% Senior Notes due 2013 |
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Senior Floating Rate Notes Due 2010 |
Additional Terms of the CCO Holdings Senior Notes and Senior Floating Rate Notes |
• | up to $9.75 billion of debt under credit facilities, including debt under credit facilities outstanding on the issue date of the CCO Holdings senior notes; | |
• | up to $75 million of debt incurred to finance the purchase or capital lease of new assets; | |
• | up to $300 million of additional debt for any purpose; and |
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• | other items of indebtedness for specific purposes such as intercompany debt, refinancing of existing debt, and interest rate swaps to provide protection against fluctuation in interest rates. |
• | to repurchase management equity interests in amounts not to exceed $10 million per fiscal year; | |
• | to pay, regardless of the existence of any default, pass-through tax liabilities in respect of ownership of equity interests in Charter Holdings or its restricted subsidiaries; | |
• | to pay, regardless of the existence of any default, interest when due on the Convertible Notes, Charter Holdings notes, CIH notes, CCH I notes and the CCH II Notes; | |
• | to purchase, redeem or refinance Charter Holdings notes, CIH notes, CCH I notes, CCH II Notes, Charter notes, and other direct or indirect parent company notes, so long as CCO Holdings could incur $1.00 of indebtedness under the 4.5 to 1.0 leverage ratio test referred to above and there is no default; or | |
• | to make other specified restricted payments including merger fees up to 1.25% of the transaction value, repurchases using concurrent new issuances, and certain dividends on existing subsidiary preferred equity interests. |
• | investments by CCO Holdings and its restricted subsidiaries in CCO Holdings and in other restricted subsidiaries, or entities that become restricted subsidiaries as a result of the investment, | |
• | investments aggregating up to 100% of new cash equity proceeds received by CCO Holdings since November 10, 2003 to the extent the proceeds have not been allocated to the restricted payments covenant described above, | |
• | other investments up to $750 million outstanding at any time, and |
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• | certain specified additional investments, such as investments in customers and suppliers in the ordinary course of business and investments received in connection with permitted asset sales. |
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• | a senior obligation of such guarantor; | |
• | structurally senior to the outstanding senior notes of CCO Holdings (except in the case of CCO Holdings’ note guarantee, which is structurallypari passuwith such senior notes), the outstanding CCH II Notes, the outstanding CCH I notes, the outstanding CIH notes, the outstanding Charter Holdings notes and the outstanding Convertible Notes (but subject to provisions in the Charter Operating indenture that permit interest and, subject to meeting the 4.25 to 1.0 leverage ratio test, principal payments to be made thereon); and | |
• | senior in right of payment to any future subordinated indebtedness of such guarantor. |
• | up to $6.8 billion of debt under credit facilities (but such incurrence is permitted only by Charter Operating and its restricted subsidiaries that are guarantors of the Charter Operating notes, so long as there are such guarantors), including debt under credit facilities outstanding on the issue date of the Charter Operating notes; | |
• | up to $75 million of debt incurred to finance the purchase or capital lease of assets; | |
• | up to $300 million of additional debt for any purpose, and | |
• | other items of indebtedness for specific purposes such as refinancing of existing debt and interest rate swaps to provide protection against fluctuation in interest rates and, subject to meeting the leverage ratio test, debt existing at the time of acquisition of a restricted subsidiary. |
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• | to repurchase management equity interests in amounts not to exceed $10 million per fiscal year; | |
• | regardless of the existence of any default, to pay pass-through tax liabilities in respect of ownership of equity interests in Charter Operating or its restricted subsidiaries; | |
• | to pay, regardless of the existence of any default, interest when due on the Convertible Notes, the Charter Holdings notes, the CIH notes, the CCH I notes, the CCH II Notes and the CCO Holdings notes; | |
• | to purchase, redeem or refinance the Charter Holdings notes, the CIH notes, the CCH I notes, the CCH II Notes, the CCO Holdings notes, the Convertible Notes, and other direct or indirect parent company notes, so long as Charter Operating could incur $1.00 of indebtedness under the 4.25 to 1.0 leverage ratio test referred to above and there is no default, or | |
• | to make other specified restricted payments including merger fees up to 1.25% of the transaction value, repurchases using concurrent new issuances, and certain dividends on existing subsidiary preferred equity interests. |
• | investments by Charter Operating and its restricted subsidiaries in Charter Operating and in other restricted subsidiaries, or entities that become restricted subsidiaries as a result of the investment, | |
• | investments aggregating up to 100% of new cash equity proceeds received by Charter Operating since April 27, 2004 to the extent the proceeds have not been allocated to the restricted payments covenant described above, | |
• | other investments up to $750 million outstanding at any time, and | |
• | certain specified additional investments, such as investments in customers and suppliers in the ordinary course of business and investments received in connection with permitted asset sales. |
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• | Until the guarantee and pledge date, the Charter Operating notes are secured by a second-priority lien on all of Charter Operating’s assets that secure the obligations of Charter Operating under the Charter Operating credit facility and specified related obligations. The collateral secures the obligations of Charter Operating with respect to the 8% senior second-lien notes due 2012 and the 83/8% senior second-lien notes due 2014 on a ratable basis. The collateral consists of substantially all of Charter Operating’s assets in which security interests may be perfected under the Uniform Commercial Code |
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by filing a financing statement (including capital stock and intercompany obligations), including, but not limited to: | ||
• | all of the capital stock of all of Charter Operating’s direct subsidiaries, including, but not limited to, CCO NR Holdings, LLC; and | |
• | all intercompany obligations owing to Charter Operating including, but not limited to, intercompany notes from CC VI Operating, CC VIII Operating and Falcon, which notes are supported by the same guarantees and collateral that supported these subsidiaries’ credit facilities prior to the amendment and restatement of the Charter Operating credit facilities. |
• | with certain exceptions, all capital stock (limited in the case of capital stock of foreign subsidiaries, if any, to 66% of the capital stock of first tier foreign Subsidiaries) held by Charter Operating or any guarantor; and | |
• | with certain exceptions, all intercompany obligations owing to Charter Operating or any guarantor. |
March 1999 Charter Holdings Notes |
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January 2000 Charter Holdings Notes |
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January 2001 Charter Holdings Notes |
May 2001 Charter Holdings Notes |
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January 2002 Charter Holdings Notes |
Summary of Restrictive Covenants Under the Charter Holdings High-Yield Notes |
• | up to $3.5 billion of debt under credit facilities, | |
• | up to $75 million of debt incurred to finance the purchase or capital lease of new assets, | |
• | up to $300 million of additional debt for any purpose, |
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• | additional debt in an amount equal to 200% of new cash equity proceeds received by Charter Holdings and its restricted subsidiaries since March 1999, the date of its first indenture, and not allocated for restricted payments or permitted investments, and | |
• | other items of indebtedness for specific purposes such as intercompany debt, refinancing of existing debt, and interest rate swaps to provide protection against fluctuation in interest rates. |
• | to repurchase management equity interests in amounts not to exceed $10 million per fiscal year, | |
• | regardless of the existence of any default, to pay pass-through tax liabilities in respect of ownership of equity interests in Charter Holdings or its restricted subsidiaries, or | |
• | to make other specified restricted payments including merger fees up to 1.25% of the transaction value, repurchases using concurrent new issuances, and certain dividends on existing subsidiary preferred equity interests. |
• | investments by Charter Holdings in restricted subsidiaries or by restricted subsidiaries in Charter Holdings, | |
• | investments in productive assets (including through equity investments) aggregating up to $150 million since March 1999, | |
• | investments aggregating up to 100% of new cash equity proceeds received by Charter Holdings since March 1999 and not allocated to the debt incurrence or restricted payments covenant, and | |
• | other investments aggregating up to $50 million since March 1999. |
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Percentage of | ||||||
Note Series | Redemption Dates | Principal | ||||
11.125% | September 30, 2007 - January 14, 2008 | 103.708% | ||||
January 15, 2008 - January 14, 2009 | 101.854% | |||||
Thereafter | 100.0% | |||||
9.92% | September 30, 2007 - Thereafter | 100.0% | ||||
10.0% | September 30, 2007 - May 14, 2008 | 103.333% | ||||
May 15, 2008 - May 14, 2009 | 101.667% | |||||
Thereafter | 100.0% | |||||
11.75% | September 30, 2007 - May 14, 2008 | 103.917% | ||||
May 15, 2008 - May 14, 2009 | 101.958% | |||||
Thereafter | 100.0% | |||||
13.5% | September 30, 2007 - January 14, 2008 | 104.5% | ||||
January 15, 2008 - January 14, 2009 | 102.25% | |||||
Thereafter | 100.0% | |||||
12.125% | September 30, 2007 - January 14, 2008 | 106.063% | ||||
January 15, 2008 - January 14, 2009 | 104.042% | |||||
January 15, 2009 - January 14, 2010 | 102.021% | |||||
Thereafter | 100.0% |
• | The debt incurrence covenant permits up to $9.75 billion (rather than $3.5 billion) of debt under credit facilities (less the amount of net proceeds of asset sales applied to repay such debt as required by the asset sale covenant). | |
• | CIH and its restricted subsidiaries are generally permitted to pay dividends on equity interests, repurchase interests, or make other specified restricted payments only if, after giving pro forma effect to the transaction, the CIH leverage ratio would be below 8.75 to 1.0 and if no default exists or would exist as a consequence of such transaction. If those conditions are met, restricted payments are permitted in a total amount of up to the sum of (1) the greater of (a) $500 million or (b) 100% of CIH’s consolidated EBITDA, as defined, minus 1.2 times its consolidated interest expense each for the period from September 28, 2005 to the end of CIH’s most recently ended full fiscal quarter for which internal financial statements are available, plus (2) 100% of new cash and non-cash equity proceeds received by CIH and not allocated to the debt incurrence covenant or to permitted investments, all cumulatively from September 28, 2005. | |
• | Instead of the $150 million and $50 million permitted investment baskets described above, there is a $750 million permitted investment basket. |
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Year | Percentage | |||
2010 | 105.5 | % | ||
2011 | 102.75 | % | ||
2012 | 101.375 | % | ||
2013 and thereafter | 100.0 | % |
• | up to $9.75 billion of debt under credit facilities (less the amount of net proceeds of asset sales applied to repay such debt as required by the asset sale covenant); | |
• | up to $75 million of debt incurred to finance the purchase or capital lease of new assets; | |
• | up to $300 million of additional debt for any purpose; and | |
• | other items of indebtedness for specific purposes such as intercompany debt, refinancing of existing debt, and interest rate swaps to provide protection against fluctuation in interest rates. |
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• | to repurchase management equity interests in amounts not to exceed $10 million per fiscal year; | |
• | to pay, regardless of the existence of any default, pass-through tax liabilities in respect of ownership of equity interests in CCH I or its restricted subsidiaries; | |
• | to enable certain of its parents to pay interest on certain of their indebtedness; | |
• | to enable certain of its parents to purchase, redeem or refinance certain indebtedness, so long as CCH I could incur $1.00 of indebtedness under the 7.5 to 1.0 leverage ratio test referred to above; or | |
• | to make other specified restricted payments including merger fees up to 1.25% of the transaction value, repurchases using concurrent new issuances, and certain dividends on existing subsidiary preferred equity interests. |
• | investments by CCH I and its restricted subsidiaries in CCH I and in other restricted subsidiaries, or entities that become restricted subsidiaries as a result of the investment, | |
• | investments aggregating up to 100% of new cash equity proceeds received by CCH I since September 28, 2005 to the extent the proceeds have not been allocated to the restricted payments covenant described above, | |
• | other investments up to $750 million outstanding at any time, and | |
• | certain specified additional investments, such as investments in customers and suppliers in the ordinary course of business and investments received in connection with permitted asset sales. |
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Start Date | ||||||||||||||||||||||||||||||
June 30, 2006 | December 31, 2005 | for Interest | ||||||||||||||||||||||||||||
Semi-Annual | Payment on | |||||||||||||||||||||||||||||
Principal | Accreted | Principal | Accreted | Interest Payment | Discount | Maturity | ||||||||||||||||||||||||
Amount | Value(a) | Amount | Value(a) | Dates | Notes | Date(b) | ||||||||||||||||||||||||
Charter Communications, Inc.: | ||||||||||||||||||||||||||||||
4.750% convertible senior notes due 2006 | $ | — | $ | — | $ | 20 | $ | 20 | 12/1 & 6/1 | 6/1/06 | ||||||||||||||||||||
5.875% convertible senior notes due 2009(c) | 863 | 848 | 863 | 843 | 5/16 & 11/16 | 11/16/09 | ||||||||||||||||||||||||
Charter Communications, Inc. | $ | 863 | $ | 848 | $ | 883 | $ | 863 | ||||||||||||||||||||||
(a) | The accreted value presented above represents the principal amount of the notes less the original issue discount at the time of sale plus the accretion to the balance sheet date. |
(b) | The 5.875% convertible senior notes are redeemable if the closing price of Charter’s Class A common stock exceeds the conversion price by certain percentages as directed below. | |
(c) | The 5.875% convertible senior notes are convertible at the option of the holder into shares of Charter Class A common stock at an initial conversion rate of 413.2231 shares per $1,000 principal amount of notes, which is equivalent to a price of $2.42 per share. Certain anti-dilutive provisions cause adjustments to occur automatically upon the occurrence of specified events. Additionally, the conversion ratio may be adjusted by Charter under certain circumstances. |
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Charter 5.875% Convertible Senior Notes due 2009 |
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• | senior secured obligations of the CCH I Issuers, secured by the Collateral equally and ratably with all future indebtedness of CCH I that may be secured by the Collateral as permitted by the CCH I Indenture, including all Additional CCH I Notes; | |
• | effectively senior in right of payment to any future unsecured Indebtedness of the CCH I Issuers, to the extent of the value of the Collateral; | |
• | structured to be effectively senior to the notes of CIH and Charter Holdings and the outstanding convertible senior notes of Charter Communications, Inc.; | |
• | senior in right of payment to any future subordinated Indebtedness of the CCH I Issuers; | |
• | structurally subordinated to all indebtedness and other liabilities (including trade payables) of the CCH I Issuers’ subsidiaries, including indebtedness under our subsidiaries’ credit facilities, the original CCH II notes and the additional CCH II notes being offered in the CCI exchange offer, and the senior notes of CCO Holdings and CCO; and | |
• | unconditionally guaranteed on a senior basis by the Parent Guarantor. |
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• | is a general unsecured obligation of the Parent Guarantor; | |
• | ispari passuin right of payment with all existing and future unsubordinated indebtedness of the Parent Guarantor, including the old CCH notes that remain outstanding following consummation of the Exchange Offers; and | |
• | is senior in right of payment to any existing and future subordinated indebtedness of the Parent Guarantor. |
Assets Pledged as Collateral |
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Certain Limitations on Remedies, Etc. |
(i) have no authority to exercise any voting rights with respect to the Collateral or receive any dividends or other distributions with respect thereto, except for distributions in any bankruptcy or insolvency case or proceeding (an “insolvency proceeding”); | |
(ii) be prohibited from commencing judicial or non-judicial foreclosure or collection proceedings with respect to, seeking to have a trustee, receiver, liquidator or similar official appointed for or over, attempting any action to take possession of any Collateral, exercising any right, remedy or power with respect to, or otherwise taking any action to realize upon the Collateral, including without limitation (a) any right to dispose of the Collateral after default under Article 9 of the Uniform Commercial Code or (b) any other default remedy under applicable law; and | |
(iii) be prohibited from seeking relief from the automatic stay or from any other stay in any insolvency proceeding, in each case, with respect to any Collateral. |
Pari Passu Secured Indebtedness |
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Certain Bankruptcy Limitations |
Sufficiency of Collateral |
Release |
(1) in whole, upon payment in full of the principal of, and accrued and unpaid interest and premium, if any, on the CCH I Notes; | |
(2) in whole, upon satisfaction and discharge of the CCH I Indenture; | |
(3) in whole, upon a legal or covenant defeasance as set forth under “— Legal Defeasance and Covenant Defeasance,” below; | |
(4) upon the sale or other disposition of the Collateral in accordance with, and as expressly provided for under, the CCH I Indenture (subject to any continuing Lien on the proceeds of such sale or disposition); and | |
(5) with the consent of the holders of a majority in aggregate principal amount of the then outstanding CCH I Notes, including, without limitation, consents obtained in connection with a tender offer or exchange offer for, or purchase of, CCH I Notes. |
(a) an officers’ certificate and such other documentation as required under the CCH I Indenture and the Pledge Agreement; and | |
(b) an opinion of counsel to the effect that such accompanying documents constitute all documents required by the CCH I Indenture and the Pledge Agreement. |
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(1) at least 65% of the aggregate principal amount of the CCH I Notes must remain outstanding immediately after the occurrence of such redemption (excluding CCH I Notes held by the CCH I Issuers and their Subsidiaries), and | |
(2) the redemption must occur within 60 days of the date of the closing of such Equity Offering. |
Year | Percentage | |||
2010 | 105.500 | % | ||
2011 | 102.750 | % | ||
2012 | 101.375 | % | ||
2013 and thereafter | 100.000 | % |
Change of Control |
(1) accept for payment all CCH I Notes or portions thereof properly tendered pursuant to the Change of Control Offer; |
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(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all CCH I Notes or portions thereof so tendered; and | |
(3) deliver or cause to be delivered to the trustee the CCH I Notes so accepted together with an officers’ certificate stating the aggregate principal amount of CCH I Notes or portions thereof being purchased by the CCH I Issuers. |
Asset Sales |
(1) CCH I or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of; | |
(2) such fair market value is determined by the Board of Directors of CCH I and evidenced by a resolution of such Board of Directors set forth in an officers’ certificate delivered to the trustee; and | |
(3) at least 75% of the consideration therefor received by CCH I or such Restricted Subsidiary is in the form of cash, Cash Equivalents or readily marketable securities. |
(a) any liabilities (as shown on CCH I’s or such Restricted Subsidiary’s most recent balance sheet) of CCH I or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the CCH I Notes) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases CCH I or such Restricted Subsidiary from further liability; |
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(b) any securities, notes or other obligations received by CCH I or any such Restricted Subsidiary from such transferee that are converted by the recipient thereof into cash, Cash Equivalents or readily marketable securities within 60 days after receipt thereof (to the extent of the cash, Cash Equivalents or readily marketable securities received in that conversion); and | |
(c) Productive Assets. |
(1) to repay debt under the Credit Facilities or any other Indebtedness of the Restricted Subsidiaries of CCH I (other than Indebtedness represented by a guarantee of a Restricted Subsidiary of CCH I); or | |
(2) to invest in Productive Assets; provided that any such amount of Net Proceeds which CCH I or a Restricted Subsidiary has committed to invest in Productive Assets within 365 days of the applicable Asset Sale may be invested in Productive Assets within two years of such Asset Sale. |
(1) if any CCH I Notes are listed, in compliance with the requirements of the principal national securities exchange on which the CCH I Notes are listed; or | |
(2) if the CCH I Notes are not so listed, on a pro rata basis, by lot or by such method as the trustee shall deem fair and appropriate. |
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• | “— Repurchase at the Option of Holders — Asset Sales,” | |
• | “— Restricted Payments,” | |
• | “— Investments,” | |
• | “— Incurrence of Indebtedness and Issuance of Preferred Stock,” | |
• | “— Dividend and Other Payment Restrictions Affecting Subsidiaries,” | |
• | clause (D) of the first paragraph of “— Merger, Consolidation or Sale of Assets,” | |
• | “— Transactions with Affiliates” and | |
• | “— Sale and Leaseback Transactions.” |
Restricted Payments |
(1) declare or pay any dividend or make any other payment or distribution on account of its or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving CCH I or any of its Restricted Subsidiaries) or to the direct or indirect holders of CCH I’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable (x) solely in Equity Interests (other than Disqualified Stock) of CCH I or (y) in the case of CCH I and its Restricted Subsidiaries, to CCH I or a Restricted Subsidiary thereof); | |
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving CCH I or any of its Restricted Subsidiaries) any Equity Interests of CCH I or any direct or indirect Parent of CCH I or any Restricted Subsidiary of CCH I (other than, in the case of CCH I and its Restricted Subsidiaries, any such Equity Interests owned by CCH I or any of its Restricted Subsidiaries); or | |
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of CCH I that is subordinated to the CCH I Notes, except a payment of interest or principal at the Stated Maturity thereof, |
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(1) no Default or Event of Default under the CCH I Indenture shall have occurred and be continuing or would occur as a consequence thereof; and | |
(2) CCH I would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; and | |
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by CCH I and its Restricted Subsidiaries from and after the Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9) and (10) of the next succeeding paragraph), shall not exceed, at the date of determination, the sum of the following: |
(a) an amount equal to 100% of the Consolidated EBITDA of CCH I for the period beginning on the Issue Date to the end of CCH I’s most recently ended full fiscal quarter for which internal financial statements are available, taken as a single accounting period, less the product of 1.3 times the Consolidated Interest Expense of CCH I for such period, plus | |
(b) an amount equal to 100% of Capital Stock Sale Proceeds less any amount of such Capital Stock Sale Proceeds used in connection with an Investment made on or after the Issue Date pursuant to clause (5) of the definition of “Permitted Investments,” plus | |
(c) $100 million. |
(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the CCH I Indenture; | |
(2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of CCH I in exchange for, or out of the net proceeds of, the substantially concurrent sale (other than to a Subsidiary of CCH I) of Equity Interests of CCH I (other than Disqualified Stock);providedthat the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph; | |
(3) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of CCH I or any of its Restricted Subsidiaries with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; | |
(4) regardless of whether a Default then exists, the payment of any dividend or distribution made in respect of any calendar year or portion thereof during which CCH I or any of its Subsidiaries is a Person that is not treated as a separate tax paying entity for United States federal income tax purposes by CCH I and its Subsidiaries (directly or indirectly) to the direct or indirect holders of the Equity Interests of CCH I or its Subsidiaries that are Persons that are treated as a separate tax paying entity for United States federal income tax purposes, in an amount sufficient to permit each such holder to pay the actual income taxes (including required estimated tax installments) that are required to be paid by it with respect to the taxable income of any Parent (through its direct or indirect ownership of CCH I and/or its Subsidiaries), CCH I, its Subsidiaries or any Unrestricted Subsidiary, as applicable, in any calendar year, as estimated in good faith by CCH I or its Subsidiaries, as the case may be; | |
(5) regardless of whether a Default then exists, the payment of any dividend by a Restricted Subsidiary of CCH I to the holders of its common Equity Interests on a pro rata basis; |
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(6) the payment of any dividend on the Helicon Preferred Stock or the redemption, repurchase, retirement or other acquisition of the Helicon Preferred Stock in an amount not in excess of its aggregate liquidation value; | |
(7) the repurchase, redemption or other acquisition or retirement for value, or the payment of any dividend or distribution to the extent necessary to permit the repurchase, redemption or other acquisition or retirement for value, of any Equity Interests of CCH I or a Parent of CCH I held by any member of CCH I’s, such Parent’s or any Restricted Subsidiary’s management pursuant to any management equity subscription agreement or stock option agreement entered into in accordance with the policies of CCH I, any Parent or any Restricted Subsidiary; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $10 million in any fiscal year of the Issuers; | |
(8) payment of fees in connection with any acquisition, merger or similar transaction in an amount that does not exceed an amount equal to 1.25% of the transaction value of such acquisition, merger or similar transaction; | |
(9) additional Restricted Payments directly or indirectly to CIH or any other Parent (i) regardless of whether a Default exists (other than a Default described in paragraphs (1), (2), (7) or (8) under the caption “Events of Default and Remedies”), for the purpose of enabling Charter Holdings, CIH or any Charter Refinancing Subsidiary to pay interest when due on Indebtedness under the Charter Holdings Indentures, the CIH Indenture, and/or any Charter Refinancing Indebtedness, (ii) for the purpose of enabling CCI and/or any Charter Refinancing Subsidiary to pay interest when due on Indebtedness under the CCI Indentures and/or any Charter Refinancing Indebtedness and (iii) so long as CCH I would have been permitted, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable quarter period, to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock,” (A) to the extent required to enable Charter Holdings, CIH, CCI or any Charter Refinancing Subsidiary to defease, redeem, repurchase, prepay, repay, discharge or otherwise acquire or retire Indebtedness under the Charter Holdings Indentures, the CIH Indenture, the CCI Indentures or any Charter Refinancing Indebtedness (including any expenses incurred by any Parent in connection therewith) or (B) consisting of purchases, redemptions or other acquisitions by CCH I or its Restricted Subsidiaries of Indebtedness under the Charter Holdings Indentures, the CIH Indenture, the CCI Indentures, or any Charter Refinancing Indebtedness (including any expenses incurred by CCH I and its Restricted Subsidiaries in connection therewith) and the distribution, loan to or investment in any Parent of Indebtedness so purchased, redeemed or acquired; and | |
(10) Restricted Payments that are part of the Exchange Offers. |
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Investments |
(1) make any Restricted Investment; or | |
(2) allow any of its Restricted Subsidiaries to become an Unrestricted Subsidiary, unless, in each case: |
(a) no Default or Event of Default under the CCH I Indenture shall have occurred and be continuing or would occur as a consequence thereof; and | |
(b) CCH I would, at the time of, and after giving effect to, such Restricted Investment or such designation of a Restricted Subsidiary as an Unrestricted Subsidiary, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the applicable Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock.” |
Incurrence of Indebtedness and Issuance of Preferred Stock |
(1) the incurrence by CCH I and its Restricted Subsidiaries of Indebtedness under the Credit Facilities;providedthat the aggregate principal amount of all Indebtedness of CCH I and its Restricted Subsidiaries outstanding under this clause (1) for all Credit Facilities of CCH I and its Restricted Subsidiaries after giving effect to such incurrence does not exceed an amount equal to $9.75 billion less the aggregate amount of all Net Proceeds from Asset Sales applied by CCH I or any of its Restricted Subsidiaries to repay any such Indebtedness under a Credit Facility pursuant to the covenant described under “— Repurchase at the Option of Holders — Asset Sales;” | |
(2) the incurrence by CCH I and its Restricted Subsidiaries of Existing Indebtedness (other than under Credit Facilities); | |
(3) the incurrence on the Issue Date by CCH I of Indebtedness represented by the CCH I Notes (but not including any Additional CCH I Notes); | |
(4) the incurrence by CCH I or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement (including, without limitation, the cost of design, development, construction, acquisition, transportation, installation, improvement, and migration) of Productive Assets of CCH I or any of its Restricted |
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Subsidiaries in an aggregate principal amount not to exceed, together with any related Permitted Refinancing Indebtedness permitted by clause (5) below, $75 million at any time outstanding; | |
(5) the incurrence by CCH I or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, in whole or in part, Indebtedness (other than intercompany Indebtedness) that was permitted by the CCH I Indenture to be incurred under this clause (5), the first paragraph of this covenant or clauses (2), (3) or (4) of this paragraph; | |
(6) the incurrence by CCH I or any of its Restricted Subsidiaries of intercompany Indebtedness between or among CCH I and any of its Restricted Subsidiaries;providedthat: |
(a) if CCH I is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all obligations with respect to the CCH I Notes; and | |
(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than CCH I or a Restricted Subsidiary of CCH I and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either CCH I or a Restricted Subsidiary of CCH I, shall be deemed, in each case, to constitute an incurrence of such Indebtedness that was not permitted by this clause (6); |
(7) the incurrence by CCH I or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the CCH I Indenture to be outstanding; | |
(8) the guarantee by CCH I or any of its Restricted Subsidiaries of Indebtedness of a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; | |
(9) the incurrence by CCH I or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount at any time outstanding under this clause (9), not to exceed $300 million; and | |
(10) the accretion or amortization of original issue discount and the write up of Indebtedness in accordance with purchase accounting. |
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(a) any Indebtedness or Preferred Stock of any Person existing at the time such Person is merged with or into or becomes a Subsidiary of CCH I;providedthat such Indebtedness or Preferred Stock was not incurred or issued in connection with, or in contemplation of, such Person merging with or into, or becoming a Subsidiary of, CCH I, and | |
(b) any Indebtedness or Preferred Stock of a Restricted Subsidiary issued in connection with, and as part of the consideration for, an acquisition, whether by stock purchase, asset sale, merger or otherwise, in each case involving such Restricted Subsidiary, which Indebtedness or Preferred Stock is issued to the seller or sellers of such stock or assets;providedthat such Restricted Subsidiary is not obligated to register such Indebtedness or Preferred Stock under the Securities Act or obligated to provide information pursuant to Rule 144A under the Securities Act. |
Liens |
Dividend and Other Payment Restrictions Affecting Subsidiaries |
(1) pay dividends or make any other distributions on its Capital Stock to CCH I or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to CCH I or any of its Restricted Subsidiaries; | |
(2) make loans or advances to CCH I or any of its Restricted Subsidiaries; or | |
(3) transfer any of its properties or assets to CCH I or any of its Restricted Subsidiaries. |
(1) Existing Indebtedness, contracts and other instruments as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof;providedthat such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the most restrictive Existing Indebtedness, contracts or other instruments, as in effect on the Issue Date; | |
(2) applicable law; | |
(3) any instrument governing Indebtedness or Capital Stock of a Person acquired by CCH I or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the CCH I Indenture to be incurred; | |
(4) customary non-assignment provisions in leases, franchise agreements and other commercial agreements entered into in the ordinary course of business; | |
(5) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the preceding paragraph; |
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(6) any agreement for the sale or other disposition of Capital Stock or assets of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending such sale or other disposition; | |
(7) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive at the time such restrictions become effective, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; | |
(8) Liens securing Indebtedness or other obligations otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption “— Liens” that limit the right of CCH I or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien; | |
(9) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; | |
(10) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(11) restrictions contained in the terms of Indebtedness or Preferred Stock permitted to be incurred under the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”;providedthat such restrictions are not materially more restrictive, taken as a whole, than the terms contained in the most restrictive, together or individually, of the Credit Facilities and other Existing Indebtedness as in effect on the Issue Date; and | |
(12) restrictions that are not materially more restrictive, taken as a whole, than customary provisions in comparable financings and that the management of CCH I determines, at the time of such financing, will not materially impair the CCH I Issuers’ ability to make payments as required under the CCH I Notes. |
Merger, Consolidation or Sale of Assets |
(A) either: |
(i) such CCH I Issuer is the surviving Person; or | |
(ii) the Person formed by or surviving any such consolidation or merger (if other than such CCH I Issuer) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia,providedthat if the Person formed by or surviving any such consolidation or merger with such CCH I Issuer is a Person other than a corporation, a corporate co-issuer shall also be an obligor with respect to the CCH I Notes; |
(B) the Person formed by or surviving any such consolidation or merger (if other than such CCH I Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of such CCH I Issuer under the CCH I Notes and the CCH I Indenture pursuant to agreements reasonably satisfactory to the trustee; | |
(C) immediately after such transaction no Default or Event of Default exists; and | |
(D) such CCH I Issuer or the Person formed by or surviving any such consolidation or merger (if other than such CCH I Issuer) will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, |
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(x) be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock;” or | |
(y) have a Leverage Ratio immediately after giving effect to such consolidation or merger no greater than the Leverage Ratio immediately prior to such consolidation or merger. |
Transactions with Affiliates |
(1) such Affiliate Transaction is on terms that are not less favorable to CCH I or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by CCH I or such Restricted Subsidiary with an unrelated Person; and | |
(2) CCH I delivers to the trustee: |
(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration given or received by CCH I or any such Restricted Subsidiary in excess of $15 million, a resolution of the Board of Directors of CCH I or CCI set forth in an officers’ certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the members of such Board of Directors; and | |
(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration given or received by CCH I or any such Restricted Subsidiary in excess of $50 million, an opinion as to the fairness to the holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. |
(1) any existing employment agreement and employee benefit arrangement (including stock purchase or option agreements, deferred compensation plans, and retirement, savings or similar plans) entered into by CCH I or any of its Subsidiaries and any employment agreement and employee benefit arrangements entered into by CCH I or any of its Restricted Subsidiaries in the ordinary course of business; | |
(2) transactions between or among CCH I and/or its Restricted Subsidiaries; | |
(3) payment of reasonable directors fees to Persons who are not otherwise Affiliates of CCH I, and customary indemnification and insurance arrangements in favor of directors, regardless of affiliation with CCH I or any of its Restricted Subsidiaries; | |
(4) payment of Management Fees; | |
(5) Restricted Payments that are permitted by the provisions of the covenant described above under the caption “— Restricted Payments” and Restricted Investments that are permitted by the provisions of the covenant described above under the caption “— Investments”; |
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(6) Permitted Investments; | |
(7) transactions pursuant to agreements existing on the Issue Date, as in effect on the Issue Date, or as subsequently modified, supplemented, or amended, to the extent that any such modifications, supplements, or amendments comply with the applicable provisions of paragraph (1) of this covenant; and | |
(8) contributions to the common equity capital of CCH I or the issue or sale of Equity Interests of CCH I. |
Sale and Leaseback Transactions |
(1) CCH I or such Restricted Subsidiary could have |
(a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Leverage Ratio test in the first paragraph of the covenant described above under the caption “— Incurrence of Additional Indebtedness and Issuance of Preferred Stock”; and | |
(b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “— Liens” or the definition of “Permitted Liens”; and |
(2) the transfer of assets in that sale and leaseback transaction is permitted by, and CCH I or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales.” |
Limitations on Issuances of Guarantees of Indebtedness |
(1) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture providing for the Guarantee (a “Subsidiary Guarantee”) of the payment of the CCH I Notes by such Restricted Subsidiary, and | |
(2) until one year after all the CCH I Notes have been paid in full in cash, such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against CCH I or any other Restricted Subsidiary of CCH I as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee;providedthat this paragraph shall not be applicable to any Guarantee or any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary. |
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Payments for Consent |
Reports |
(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the CCH I Issuers were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and, with respect to the annual information only, a report on the annual consolidated financial statements of CCH I of its independent public accountants; and | |
(2) all current reports that would be required to be filed with the SEC on Form 8-K if the CCH I Issuers were required to file such reports. |
(1) default for 30 consecutive days in the payment when due of interest on the CCH I Notes; | |
(2) default in payment when due of the principal of or premium, if any, on the CCH I Notes; | |
(3) failure by CCH I or any of its Restricted Subsidiaries to comply with the provisions of the CCH I Indenture described under the captions “— Repurchase at the Option of Holders — Change of Control” or “— Certain Covenants — Merger, Consolidation or Sale of Assets”; |
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(4) failure by CCH I or any of its Restricted Subsidiaries for 30 consecutive days after written notice thereof has been given to the Issuers by the trustee or to the Issuers and the trustee by holders of at least 25% of the aggregate principal amount of the CCH I Notes outstanding to comply with any of their other covenants or agreements in the CCH I Indenture; | |
(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by CCH I or any of its Restricted Subsidiaries (or the payment of which is guaranteed by CCH I or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default: |
(a) is caused by a failure to pay at final stated maturity the principal amount on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or | |
(b) results in the acceleration of such Indebtedness prior to its express maturity, |
(6) failure by CCH I or any of its Restricted Subsidiaries to pay final judgments which are nonappealable aggregating in excess of $100 million, net of applicable insurance which has not been denied in writing by the insurer, which judgments are not paid, discharged or stayed for a period of 60 days; | |
(7) CCH I or any of its Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: |
(a) commences a voluntary case, | |
(b) consents to the entry of an order for relief against it in an involuntary case, | |
(c) consents to the appointment of a custodian of it or for all or substantially all of its property, or | |
(d) makes a general assignment for the benefit of its creditors; |
(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: |
(a) is for relief against CCH I or any of its Significant Subsidiaries in an involuntary case; | |
(b) appoints a custodian of CCH I or any of its Significant Subsidiaries or for all or substantially all of the property of CCH I or any of its Significant Subsidiaries; or | |
(c) orders the liquidation of CCH I or any of its Significant Subsidiaries; |
(9) so long as the Pledge Agreement has not otherwise been terminated in accordance with its terms, (a) failure by CCH I for 30 consecutive days after written notice thereof has been given to CCH I by the trustee or to CCH I and the trustee by holders of at least 25% of the aggregate principal amount of the CCH I Notes outstanding to comply with any of CCH I’s covenants or agreements in the Pledge Agreement which failure adversely affects the enforceability, validity, perfection or priority of the trustee’s Lien on the Collateral or (b) repudiation or disaffirmation by CCH I of the Pledge Agreement. |
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(1) the rights of holders of outstanding CCH I Notes to receive payments in respect of the principal of, premium, if any, and interest on the CCH I Notes when such payments are due from the trust referred to below; | |
(2) the CCH I Issuers’ obligations with respect to the CCH I Notes concerning issuing temporary CCH I Notes, registration of CCH I Notes, mutilated, destroyed, lost or stolen CCH I Notes and the maintenance of an office or agency for payment and money for security payments held in trust; | |
(3) the rights, powers, trusts, duties and immunities of the trustee, and the CCH I Issuers’ obligations in connection therewith; and | |
(4) the Legal Defeasance provisions of the CCH I Indenture. |
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(1) the CCH I Issuers or the Parent Guarantor must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the CCH I Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding CCH I Notes on the stated maturity or on the applicable redemption date, as the case may be, and the CCH I Issuers and the Parent Guarantor must specify whether the CCH I Notes will be defeased to maturity or to a particular redemption date; | |
(2) in the case of Legal Defeasance, the CCH I Issuers shall have delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that |
(a) the CCH I Issuers and the Parent Guarantor have received from, or there has been published by, the Internal Revenue Service a ruling or | |
(b) since the Issue Date, there has been a change in the applicable federal income tax law, |
(3) in the case of Covenant Defeasance, the CCH I Issuers or the Parent Guarantor shall have delivered to the trustee an opinion of counsel confirming that the holders of the outstanding CCH I Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; | |
(4) no Default or Event of Default under the CCH I Indenture shall have occurred and be continuing either (a) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing); or (b) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; | |
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the CCH I Indenture) to which the CCH I Issuers or any of their Restricted Subsidiaries is a party or by which the CCH I Issuers or any of their Restricted Subsidiaries is bound; | |
(6) the CCH I Issuers must have delivered to the trustee an opinion of counsel to the effect that after the 91st day, assuming no intervening bankruptcy, that no holder is an insider of either of the CCH I Issuers following the deposit and that such deposit would not be deemed by a court of competent jurisdiction a transfer for the benefit of the CCH I Issuers in their capacities as such, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; | |
(7) the CCH I Issuers or the Parent Guarantor must deliver to the trustee an officers’ certificate stating that the deposit was not made by the CCH I Issuers with the intent of preferring the holders of the CCH I Notes over the other creditors of the CCH I Issuers or the Parent Guarantor with the intent of defeating, hindering, delaying or defrauding creditors of the CCH I Issuers, the Parent Guarantor or others; and | |
(8) the CCH I Issuers or the Parent Guarantor must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
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(a) have become due and payable or | |
(b) will become due and payable on the maturity date or a redemption date within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of the CCH I Issuers. |
(1) reduce the principal amount of such CCH I Notes; | |
(2) change the fixed maturity of such CCH I Notes or reduce the premium payable upon redemption of such CCH I Notes; | |
(3) reduce the rate of or extend the time for payment of interest on such CCH I Notes; | |
(4) waive a Default or an Event of Default in the payment of principal of or premium, if any, or interest on the CCH I Notes (except a rescission of acceleration of the CCH I Notes by the holders of at least a majority in aggregate principal amount of the CCH I Notes and a waiver of the payment default that resulted from such acceleration); | |
(5) make such CCH I Notes payable in money other than that stated in such CCH I Notes; | |
(6) make any change in the provisions of the CCH I Indenture relating to waivers of past Defaults applicable to any CCH I Notes or the rights of holders thereof to receive payments of principal of, or premium, if any, or interest on such CCH I Notes; | |
(7) waive a redemption payment with respect to such CCH I Notes (other than a payment required by one of the covenants described above under the caption “— Repurchase at the Option of Holders”); or | |
(8) make any change in the preceding amendment and waiver provisions. |
(1) to cure any ambiguity, defect or inconsistency; | |
(2) to provide for uncertificated CCH I Notes in addition to or in place of certificated CCH I Notes; | |
(3) to provide for or confirm the issuance of Additional CCH I Notes; |
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(4) to provide for the assumption of the CCH I Issuers’ or the Parent Guarantor’s obligations to holders of CCH I Notes in the case of a merger or consolidation or sale of all or substantially all of the CCH I Issuers’ assets; | |
(5) to release any Subsidiary Guarantee in accordance with the provisions of the CCH I Indenture; | |
(6) to make any change that would provide any additional rights or benefits to the holders of CCH I Notes or that does not adversely affect the legal rights under the CCH I Indenture of any such holder; | |
(7) to comply with requirements of the SEC in order to effect or maintain the qualification of the CCH I Indenture under the Trust Indenture Act or otherwise as necessary to comply with applicable law; or | |
(8) to provide for the issuance or incurrence of Pari Passu Secured Indebtedness in compliance with the provisions set forth in the CCH I Indenture and the Pledge Agreement as in effect on the Issue Date. |
(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and | |
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. |
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(1) an Investment by CCH I or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary of CCH I or any of its Restricted Subsidiaries or shall be merged with or into CCH I or any of its Restricted Subsidiaries, or | |
(2) the acquisition by CCH I or any of its Restricted Subsidiaries of the assets of any Person which constitute all or substantially all of the assets of such Person, any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. |
(1) the sale, lease, conveyance or other disposition of any assets or rights, other than sales of inventory in the ordinary course of the Cable Related Business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of CCH I and its Subsidiaries, taken as a whole, will be governed by the provisions of the CCH I Indenture described above under the caption “— Repurchase at the Option of Holders — Change of Control” and/or the provisions described above under the caption “— Certain Covenants — Merger, Consolidation, or Sale of Assets” and not by the provisions of the covenant described above under the caption “Repurchase at the Option of Holders — Asset Sales”; and | |
(2) the issuance of Equity Interests by any Restricted Subsidiary of CCH I or the sale by CCH I or any Restricted Subsidiary of CCH I of Equity Interests of any Restricted Subsidiary of CCH I. | |
Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales: | |
(1) any single transaction or series of related transactions that: |
(a) involves assets having a fair market value of less than $100 million; or | |
(b) results in net proceeds to CCH I and its Restricted Subsidiaries of less than $100 million; |
(2) a transfer of assets between or among CCH I and/or its Restricted Subsidiaries; | |
(3) an issuance of Equity Interests by a Restricted Subsidiary of CCH I to CCH I or to another Wholly Owned Restricted Subsidiary of CCH I; | |
(4) a Restricted Payment that is permitted by the covenant described above under the caption “— Certain Covenants — Restricted Payments,” a Restricted Investment that is permitted by the covenant described above under the caption “— Certain Covenants — Investments” or a Permitted Investment; | |
(5) the incurrence of Liens not prohibited by the CCH I Indenture and the disposition of assets related to such Liens by the secured party pursuant to a foreclosure; and | |
(6) any disposition of cash or Cash Equivalents. |
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(1) in the case of a corporation, corporate stock; | |
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; | |
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and | |
(4) any other interest (other than any debt obligation) or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. |
(x) as a contribution to the common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock and other than issuances or sales to a Subsidiary of CCH I) of CCH I after the Issue Date, or | |
(y) from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of CCH I that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of CCH I). |
(1) United States dollars; | |
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition; | |
(3) certificates of deposit and eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight |
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bank deposits, in each case, with any domestic commercial bank having combined capital and surplus in excess of $500 million and a Thompson Bank Watch Rating at the time of acquisition of “B” or better; | |
(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; | |
(5) commercial paper having a rating at the time of acquisition of at least “P-1” from Moody’s or at least “A-1” from S&P and in each case maturing within twelve months after the date of acquisition; | |
(6) corporate debt obligations maturing within twelve months after the date of acquisition thereof, rated at the time of acquisition at least “Aaa” or “P-1” by Moody’s or “AAA” or “A-1” by S&P; | |
(7) auction-rate Preferred Stocks of any corporation maturing not later than 45 days after the date of acquisition thereof, rated at the time of acquisition at least “Aaa” by Moody’s or “AAA” by S&P; | |
(8) securities issued by any state, commonwealth or territory of the United States, or by any political subdivision or taxing authority thereof, maturing not later than six months after the date of acquisition thereof, rated at the time of acquisition at least “A” by Moody’s or S&P; and | |
(9) money market or mutual funds at least 90% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (8) of this definition. |
(1) the sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of CCH I and its Subsidiaries, taken as a whole, or of a Parent and its Subsidiaries, taken as a whole, to any “person” (as such term is used in Section 13(d)(3) of the Exchange Act) other than Paul G. Allen and the Related Parties; | |
(2) the adoption of a plan relating to the liquidation or dissolution of CCH I or a Parent (except the liquidation of any Parent into any other Parent); | |
(3) the consummation of any transaction, including, without limitation, any merger or consolidation, the result of which is that any “person” (as defined above) other than Paul G. Allen and Related Parties becomes the Beneficial Owner, directly or indirectly, of more than 35% of the Voting Stock of CCH I or a Parent, measured by voting power rather than the number of shares, unless Paul G. Allen or a Related Party Beneficially Owns, directly or indirectly, a greater percentage of Voting Stock of CCH I or such Parent, as the case may be, measured by voting power rather than the number of shares, than such person; |
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(4) after the Issue Date, the first day on which a majority of the members of the Board of Directors of CCI are not Continuing Directors; | |
(5) CCH I or a Parent consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, CCH I or a Parent, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of CCH I or such Parent is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of CCH I or such Parent outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person immediately after giving effect to such issuance; or | |
(6) (i) Charter Communications Holdings Company, LLC shall cease to own beneficially, directly or indirectly, 100% of the Capital Stock of Charter Holdings or (ii) Charter Holdings shall cease to own beneficially, directly or indirectly, 100% of the Capital Stock of CCH I. |
(1) the principal amount (or accreted value, if applicable) of such Charter Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of, plus accrued interest and premium, if any, on the Indebtedness so extended, refinanced, renewed, replaced, defeased, purchased, acquired or refunded (plus the amount of reasonable fees, commissions and expenses incurred in connection therewith); and | |
(2) such Charter Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased, purchased, acquired or refunded. |
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(1) Consolidated Interest Expense; | |
(2) income taxes; | |
(3) depreciation expense; | |
(4) amortization expense; | |
(5) all other non-cash items, extraordinary items and nonrecurring and unusual items (including without limitation any restructuring charges and charges related to litigation settlements or judgments) and the cumulative effects of changes in accounting principles reducing such net income, less all noncash items, extraordinary items, nonrecurring and unusual items and cumulative effects of changes in accounting principles increasing such net income; | |
(6) amounts actually paid during such period pursuant to a deferred compensation plan; and | |
(7) for purposes of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock,” Management Fees; |
(x) the net income (or net loss) of any Person that is not a Restricted Subsidiary (“Other Person”), except |
(i) with respect to net income, to the extent of the amount of dividends or other distributions actually paid to such Person or any of its Restricted Subsidiaries by such Other Person during such period; and | |
(ii) with respect to net losses, to the extent of the amount of investments made by such Person or any Restricted Subsidiary of such Person in such Other Person during such period; |
(y) solely for the purposes of calculating the amount of Restricted Payments that may be made pursuant to the second clause (3) in the first paragraph of the covenant described under the caption “ — Certain Covenants — Restricted Payments” (and in such case, except to the extent includable pursuant to clause (x) above), the net income (or net loss) of any Other Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with such Person or any Restricted |
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Subsidiaries or all or substantially all of the property and assets of such Other Person are acquired by such Person or any of its Restricted Subsidiaries; and | |
(z) the net income of any Restricted Subsidiary of CCH I to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the time of determination of such Consolidated EBITDA permitted by the operation of the terms of such Restricted Subsidiary’s charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary (other than any agreement or instrument evidencing Indebtedness or Preferred Stock (i) outstanding on the Issue Date or (ii) incurred or issued thereafter in compliance with the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”;providedthat (a) the terms of any such agreement or instrument (other than Existing Indebtedness and any modifications, increases or refinancings that are not materially more restrictive taken as a whole) restricting the declaration and payment of dividends or similar distributions apply only in the event of a default with respect to a financial covenant or a covenant relating to payment, beyond any applicable period of grace, contained in such agreement or instrument; (b) such terms are determined by such Person to be customary in comparable financings; and (c) such restrictions are determined by CCH I not to materially affect the CCH I Issuers’ ability to make principal or interest payments on the applicable CCH I Notes when due). |
(1) the total amount of outstanding Indebtedness of such Person and its Restricted Subsidiaries, plus | |
(2) the total amount of Indebtedness of any other Person that has been Guaranteed by the referent Person or one or more of its Restricted Subsidiaries, plus | |
(3) the aggregate liquidation value of all Disqualified Stock of such Person and all Preferred Stock of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP. |
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization or original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments (if any) pursuant to Hedging Obligations); and | |
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; and | |
(3) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon); |
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(1) was a member of the Board of Directors of CCI on the Issue Date; or | |
(2) was nominated for election or elected to the Board of Directors of CCI with the approval of a majority of the Continuing Directors who were members of such Board of Directors of CCI at the time of such nomination or election or whose election or appointment was previously so approved. |
(1) the acquisition by CIH and CCH I of Indebtedness outstanding under the Charter Holdings Indentures, in exchange for CIH Notes and CCH I Notes, pursuant to the Offering Memorandum dated August 23, 2005 and related documents, as such documents may be supplemented, modified, extended or amended from time to time; and | |
(2) the distribution, loan or investment of (a) Indebtedness accepted in exchange for CIH Notes or CCH I Notes as contemplated by clause (1) of this definition, and (b) amounts sufficient to satisfy the expenses incurred by any Parent in connection therewith (including any required payment of accrued interest thereon), in each case, directly or indirectly to or in any Parent; |
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(1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; | |
(2) interest rate option agreements, foreign currency exchange agreements, foreign currency swap agreements; and | |
(3) other agreements or arrangements designed to protect such Person against fluctuations in interest and currency exchange rates. |
(1) in respect of borrowed money; | |
(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); | |
(3) in respect of banker’s acceptances; | |
(4) representing Capital Lease Obligations; | |
(5) in respect of the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or | |
(6) representing the notional amount of any Hedging Obligations, |
The amount of any Indebtedness outstanding as of any date shall be: | |
(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and | |
(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. |
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(1) the Consolidated Indebtedness of CCH I on such date to | |
(2) the aggregate amount of Consolidated EBITDA for CCH I for the most recently ended fiscal quarter for which internal financial statements are available (the “Reference Period”), multiplied by four. |
(1) the issuance of the CCH I Notes; | |
(2) the incurrence of the Indebtedness or the issuance of the Disqualified Stock by CCH I or a Restricted Subsidiary or Preferred Stock of a Restricted Subsidiary (and the application of the proceeds therefrom) giving rise to the need to make such calculation and any incurrence or issuance (and the application of the proceeds therefrom) or repayment of other Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary, other than the incurrence or repayment of Indebtedness for ordinary working capital purposes, at any time subsequent to the beginning of the Reference Period and on or prior to the date of determination, as if such incurrence (and the application of the proceeds thereof), or the repayment, as the case may be, occurred on the first day of the Reference Period; and | |
(3) any Dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any person that becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring, assuming or otherwise becoming liable for or issuing Indebtedness, Disqualified Stock or Preferred Stock) made on or subsequent to the first day of the Reference Period and on or prior to the date of determination, as if such Disposition or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness, Disqualified Stock or Preferred Stock and also including any Consolidated EBITDA associated with such Asset Acquisition, including any cost savings adjustments in compliance with Regulation S-X promulgated by the SEC) had occurred on the first day of the Reference Period. |
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(1) as to which neither CCH I nor any of its Restricted Subsidiaries |
(a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness); | |
(b) is directly or indirectly liable as a guarantor or otherwise; or | |
(c) constitutes the lender; |
(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the CCH I Notes) of CCH I or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and | |
(3) as to which the lenders have been notified in writing that they will not have any recourse to the Capital Stock or assets of CCH I or any of its Restricted Subsidiaries. |
(1) any Investment by CCH I in a Restricted Subsidiary thereof, or any Investment by a Restricted Subsidiary of CCH I in CCH I or in another Restricted Subsidiary of CCH I; | |
(2) any Investment in Cash Equivalents; |
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(3) any Investment by CCH I or any of its Restricted Subsidiaries in a Person, if as a result of such Investment: |
(a) such Person becomes a Restricted Subsidiary of CCH I; or | |
(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, CCH I or a Restricted Subsidiary of CCH I; |
(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; | |
(5) any Investment made out of the net cash proceeds of the issue and sale (other than to a Subsidiary of CCH I) of Equity Interests (other than Disqualified Stock) or cash contributions to the common equity of CCH I, in each case after the Issue Date, to the extent that such net cash proceeds have not been applied to make a Restricted Payment or to effect other transactions pursuant to the covenant described under “Certain Covenants — Restricted Payments” (with the amount of usage of the basket in this clause (5) being determined net of the aggregate amount of principal, interest, dividends, distributions, repayments, proceeds or other value otherwise returned or recovered in respect of any such Investment, but not to exceed the initial amount of such Investment); | |
(6) other Investments in any Person (other than any Parent) having an aggregate fair market value when taken together with all other Investments in any Person made by CCH I and its Restricted Subsidiaries (without duplication) pursuant to this clause (6) from and after the Issue Date, not to exceed $750 million (initially measured on the date each such Investment was made and without giving effect to subsequent changes in value, but reducing the amount outstanding by the aggregate amount of principal, interest, dividends, distributions, repayments, proceeds or other value otherwise returned or recovered in respect of any such Investment, but not to exceed the initial amount of such Investment) at any one time outstanding; | |
(7) Investments in customers and suppliers in the ordinary course of business which either |
(A) generate accounts receivable, or | |
(B) are accepted in settlement of bona fide disputes; |
(8) Investments consisting of payments by CCH I or any of its subsidiaries of amounts that are neither dividends nor distributions but are payments of the kind described in clause (4) of the second paragraph of the covenant described above under the caption “— Certain Covenants — Restricted Payments” to the extent such payments constitute Investments; | |
(9) regardless of whether a Default then exists, Investments in any Unrestricted Subsidiary made by CCH I and/or any of its Restricted Subsidiaries with the proceeds of distributions from any Unrestricted Subsidiary; and | |
(10 Investments that are part of the Exchange Offers. |
(1) Liens on the assets of CCH I securing Pari Passu Secured Indebtedness,providedany such Liens rank equally and ratably with the Lien securing the Obligations under the CCH I Notes; | |
(2) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with CCH I;providedthat such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with CCH I and related assets, such as the proceeds thereof; | |
(3) Liens on property existing at the time of acquisition thereof by CCH I;providedthat such Liens were in existence prior to the contemplation of such acquisition; |
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(4) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; | |
(5) purchase money mortgages or other purchase money Liens (including, without limitation, any Capitalized Lease Obligations) incurred by CCH I upon any fixed or capital assets acquired after the Issue Date or purchase money mortgages (including, without limitation, Capital Lease Obligations) on any such assets, whether or not assumed, existing at the time of acquisition of such assets, whether or not assumed, so long as |
(a) such mortgage or lien does not extend to or cover any of the assets of CCH I, except the asset so developed, constructed, or acquired, and directly related assets such as enhancements and modifications thereto, substitutions, replacements, proceeds (including insurance proceeds), products, rents and profits thereof, and | |
(b) such mortgage or lien secures the obligation to pay all or a portion of the purchase price of such asset, interest thereon and other charges, costs and expenses (including, without limitation, the cost of design, development, construction, acquisition, transportation, installation, improvement, and migration) and is incurred in connection therewith (or the obligation under such Capitalized Lease Obligation) only; |
(6) Liens existing on the Issue Date (other than on the Collateral) and replacement Liens therefore that do not encumber additional property; | |
(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded;providedthat any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefore; | |
(8) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; | |
(9) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security; | |
(10) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligation, bankers’ acceptance, surety and appeal bonds, government contracts, performance andreturn-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); | |
(11) easements,rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of CCH I or any of its Restricted Subsidiaries; | |
(12) Liens of franchisors or other regulatory bodies arising in the ordinary course of business; | |
(13) Liens arising from filing Uniform Commercial Code financing statements regarding leases or other Uniform Commercial Code financing statements for precautionary purposes relating to arrangements not constituting Indebtedness; | |
(14) Liens arising from the rendering of a final judgment or order against CCH I or any of its Restricted Subsidiaries that does not give rise to an Event of Default; | |
(15) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof; | |
(16) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, |
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in each case, securing Indebtedness under Hedging Obligations and forward contracts, options, future contracts, future options or similar agreements or arrangements designed solely to protect CCH I or any of its Restricted Subsidiaries from fluctuations in interest rates, currencies or the price of commodities; | |
(17) Liens consisting of any interest or title of licensor in the property subject to a license; | |
(18) Liens on the Capital Stock of Unrestricted Subsidiaries; | |
(19) Liens arising from sales or other transfers of accounts receivable which are past due or otherwise doubtful of collection in the ordinary course of business; | |
(20) Liens incurred in the ordinary course of business of CCH I and its Restricted Subsidiaries with respect to obligations which in the aggregate do not exceed $50 million at any one time outstanding; | |
(21) Liens in favor of the trustee arising under the CCH I Indenture and similar provisions in favor of trustees or other agents or representatives under indentures or other agreements governing debt instruments entered into after the date hereof; | |
(22) Liens in favor of the trustee for its benefit and the benefit of holders of the CCH I Notes, as their respective interests appear; and | |
(23) Liens securing Permitted Refinancing Indebtedness, to the extent that the Indebtedness being refinanced was secured or was permitted to be secured by such Liens. |
(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable) plus accrued interest and premium, if any, on the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith), except to the extent that any such excess principal amount (or accreted value, as applicable) would be then permitted to be incurred by other provisions of the covenant described above under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”; | |
(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and | |
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the CCH I Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the CCH I Notes on terms at least as favorable to the holders of CCH I Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. |
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(1) any corporation, association or other business entity of which at least 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and, in the case of any such entity of which 50% of the total voting power of shares of Capital Stock is so owned or controlled by such Person or one or more of the other Subsidiaries of such Person, such Person and its Subsidiaries also have the right to control the management of such entity pursuant to contract or otherwise; and | |
(2) any partnership |
(a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person, or | |
(b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). |
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(1) has no Indebtedness other than Non-Recourse Debt; | |
(2) is not party to any agreement, contract, arrangement or understanding with CCH I or any Restricted Subsidiary of CCH I unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to CCH I or such Restricted Subsidiary of CCH I than those that might be obtained at the time from Persons who are not Affiliates of CCH I unless such terms constitute Investments permitted by the covenant described above under the caption “— Certain Covenants — Investments,” Permitted Investments, Asset Sales permitted under the covenant described above under the caption “— Repurchase at the Option of the Holders — Asset Sales” or sale-leaseback transactions permitted by the covenant described above under the caption “— Certain Covenants — Sale and Leaseback Transactions”; | |
(3) is a Person with respect to which neither CCH I nor any of its Restricted Subsidiaries has any direct or indirect obligation |
(a) to subscribe for additional Equity Interests or | |
(b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; |
(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of CCH I or any of its Restricted Subsidiaries; and | |
(5) does not own any Capital Stock of any Restricted Subsidiary of CCH I. |
Any designation of a Subsidiary of CCH I as an Unrestricted Subsidiary shall be evidenced to the trustee by filing with the trustee a certified copy of the board resolution giving effect to such designation and an officers’ certificate certifying that such designation complied with the preceding conditions and was permitted by the covenant described above under the caption “— Certain Covenants — Investments.” If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the CCH I Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of CCH I as of such date and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” CCH I shall be in default of such covenant. The Board of Directors of CCH I may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;providedthat such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if: |
(1) such Indebtedness is permitted under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and | |
(2) no Default or Event of Default would be in existence immediately following such designation. |
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(1) the sum of the products obtained by multiplying |
(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by | |
(b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by |
(2) the then outstanding principal amount of such Indebtedness. |
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• | senior unsecured obligations of the CCH II Issuers; | |
• | effectively subordinated in right of payment to any future secured Indebtedness of the CCH II Issuers, to the extent of the value of the assets securing such Indebtedness; | |
• | equal in right of payment to the CCH II Issuers’ 10.25% Senior Notes due 2010 and any other future unsubordinated, unsecured Indebtedness of the CCH II Issuers; | |
• | structured to be effectively senior to the outstanding senior notes and senior discount notes of CCH I, CIH and Charter Holdings and the outstanding convertible senior notes of Charter Communications, Inc.; | |
• | senior in right of payment to any future subordinated Indebtedness of the CCH II Issuers; | |
• | structurally subordinated to all indebtedness and other liabilities (including trade payables) of the CCH II Issuers’ subsidiaries, including indebtedness under our subsidiaries’ credit facilities and the senior notes of CCO Holdings and CCO; and | |
• | unconditionally guaranteed on a senior basis by the Parent Guarantor. |
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• | is a general unsecured obligation of the Parent Guarantor; | |
• | ispari passuin right of payment with all existing and future unsubordinated indebtedness of the Parent Guarantor, including the Charter Holdings notes that remained outstanding following consummation of the Exchange Offers; and | |
• | is senior in right of payment to any existing and future subordinated indebtedness of the Parent Guarantor. |
(1) at least 65% of the aggregate principal amount of the CCH II Notes remain outstanding immediately after the occurrence of such redemption (excluding CCH II Notes held by the CCH II Issuers and their Subsidiaries), and | |
(2) the redemption must occur within 60 days of the date of the closing of such Equity Offering. |
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Year | Percentage | |||
2010 | 105.125 | % | ||
2011 | 102.563 | % | ||
2012 and thereafter | 100.000 | % |
(1) accept for payment all CCH II Notes or portions thereof properly tendered pursuant to the Change of Control Offer; | |
(2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all CCH II Notes or portions thereof so tendered; and | |
(3) deliver or cause to be delivered to the trustee the CCH II Notes so accepted together with an officers’ certificate stating the aggregate principal amount of CCH II Notes or portions thereof being purchased by the CCH II Issuers. |
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Asset Sales |
(1) CCH II or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of; | |
(2) such fair market value is determined by the Board of Directors of CCH II and evidenced by a resolution of such Board of Directors set forth in an officers’ certificate delivered to the trustee; and | |
(3) at least 75% of the consideration therefor received by CCH II or such Restricted Subsidiary is in the form of cash, Cash Equivalents or readily marketable securities. |
(a) any liabilities (as shown on CCH II’s or such Restricted Subsidiary’s most recent balance sheet) of CCH II or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the CCH II Notes) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases CCH II or such Restricted Subsidiary from further liability; | |
(b) any securities, notes or other obligations received by CCH II or any such Restricted Subsidiary from such transferee that are converted by the recipient thereof into cash, Cash Equivalents or readily marketable securities within 60 days after receipt thereof (to the extent of the cash, Cash Equivalents or readily marketable securities received in that conversion); and | |
(c) Productive Assets. |
(1) to repay debt under the Credit Facilities or any other Indebtedness of the Restricted Subsidiaries of CCH II (other than Indebtedness represented by a guarantee of a Restricted Subsidiary of CCH II); or | |
(2) to invest in Productive Assets; provided that any such amount of Net Proceeds which CCH II or a Restricted Subsidiary has committed to invest in Productive Assets within 365 days of the applicable Asset Sale may be invested in Productive Assets within two years of such Asset Sale. |
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(1) if any CCH II Notes are listed, in compliance with the requirements of the principal national securities exchange on which the CCH II Notes are listed; or | |
(2) if the CCH II Notes are not so listed, on a pro rata basis, by lot or by such method as the trustee shall deem fair and appropriate. |
• | “— Repurchase at the Option of Holders — Asset Sales,” | |
• | “— Restricted Payments,” | |
• | “— Investments,” | |
• | “— Incurrence of Indebtedness and Issuance of Preferred Stock,” | |
• | “— Dividend and Other Payment Restrictions Affecting Subsidiaries,” | |
• | clause (D) of the first paragraph of “— Merger, Consolidation, or Sale of Assets,” |
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• | “— Transactions with Affiliates” and | |
• | “— Sale and Leaseback Transactions.” |
Restricted Payments |
(1) declare or pay any dividend or make any other payment or distribution on account of its or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving CCH II or any of its Restricted Subsidiaries) or to the direct or indirect holders of CCH II’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable (x) solely in Equity Interests (other than Disqualified Stock) of CCH II or (y) in the case of CCH II and its Restricted Subsidiaries, to CCH II or a Restricted Subsidiary thereof); | |
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving CCH II or any of its Restricted Subsidiaries) any Equity Interests of CCH II or any direct or indirect Parent of CCH II or any Restricted Subsidiary of CCH II (other than, in the case of CCH II and its Restricted Subsidiaries, any such Equity Interests owned by CCH II or any of its Restricted Subsidiaries); or | |
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Indebtedness of CCH II that is subordinated to the CCH II Notes, except a payment of interest or principal at the Stated Maturity thereof (all such payments and other actions set forth in clauses (1) through (3) above are collectively referred to as “Restricted Payments”), unless, at the time of and after giving effect to such Restricted Payment: |
(a) no Default or Event of Default under the CCH II Indenture shall have occurred and be continuing or would occur as a consequence thereof; and | |
(b) CCH II would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; and | |
(c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by CCH II and its Restricted Subsidiaries from and after the Existing Notes Issue Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8) and (9) of the next succeeding paragraph), shall not exceed, at the date of determination, the sum of: |
(1) an amount equal to 100% of the Consolidated EBITDA of CCH II for the period beginning on the first day of the fiscal quarter immediately preceding the Existing Notes Issue Date to the end of CCH II’s most recently ended full fiscal quarter for which internal financial statements are available, taken as a single accounting period, less the product of 1.3 times the Consolidated Interest Expense of CCH II for such period, plus |
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(2) an amount equal to 100% of Capital Stock Sale Proceeds less any amount of such Capital Stock Sale Proceeds used in connection with an Investment made on or after the Existing Notes Issue Date pursuant to clause (5) of the definition of “Permitted Investments,” plus | |
(3) $100 million. |
(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the CCH II Indenture; | |
(2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of CCH II in exchange for, or out of the net proceeds of, the substantially concurrent sale (other than to a Subsidiary of CCH II) of Equity Interests of CCH II (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3)(b) of the preceding paragraph; | |
(3) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of CCH II or any of its Restricted Subsidiaries with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; | |
(4) regardless of whether a Default then exists, the payment of any dividend or distribution made in respect of any calendar year or portion thereof during which CCH II or any of its Subsidiaries is a Person that is not treated as a separate tax paying entity for United States federal income tax purposes by CCH II and its Subsidiaries (directly or indirectly) to the direct or indirect holders of the Equity Interests of CCH II or its Subsidiaries that are Persons that are treated as a separate tax paying entity for United States federal income tax purposes, in an amount sufficient to permit each such holder to pay the actual income taxes (including required estimated tax installments) that are required to be paid by it with respect to the taxable income of any Parent (through its direct or indirect ownership of CCH II and/or its Subsidiaries), CCH II, its Subsidiaries or any Unrestricted Subsidiary, as applicable, in any calendar year, as estimated in good faith by CCH II or its Subsidiaries, as the case may be; | |
(5) regardless of whether a Default then exists, the payment of any dividend by a Restricted Subsidiary of CCH II to the holders of its common Equity Interests on a pro rata basis; | |
(6) the repurchase, redemption or other acquisition or retirement for value, or the payment of any dividend or distribution to the extent necessary to permit the repurchase, redemption or other acquisition or retirement for value, of any Equity Interests of CCH II or a Parent of CCH II held by any member of CCH II’s, such Parent’s or any Restricted Subsidiary’s management pursuant to any management equity subscription agreement or stock option agreement entered into in accordance with the policies of CCH II, any Parent or any Restricted Subsidiary; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $10 million in any fiscal year of the Issuers; | |
(7) payment of fees in connection with any acquisition, merger or similar transaction in an amount that does not exceed an amount equal to 1.25% of the transaction value of such acquisition, merger or similar transaction; | |
(8) additional Restricted Payments directly or indirectly to CCH I or any other Parent (i) regardless of whether a Default exists (other than a Default described in paragraphs (1), (2), (7) or (8) under the caption “— Events of Default and Remedies”), for the purpose of enabling Charter Holdings, CIH, CCH I or any Charter Refinancing Subsidiary to pay interest when due on Indebtedness under the Charter Holdings Indentures, the CIH Indenture, the CCH I Indenture and/or any Charter Refinancing Indebtedness, (ii) for the purpose of enabling CCI and/or any Charter Refinancing Subsidiary to pay interest when due on Indebtedness under the CCI Indentures and/or any Charter |
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Refinancing Indebtedness and (iii) so long as CCH II would have been permitted, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable quarter period, to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock,” (A) to the extent required to enable Charter Holdings, CIH, CCH I, CCI or any Charter Refinancing Subsidiary to defease, redeem, repurchase, prepay, repay, discharge or otherwise acquire or retire Indebtedness under the Charter Holdings Indentures, the CIH Indenture, the CCH I Indenture, the CCI Indentures or any Charter Refinancing Indebtedness (including any expenses incurred by any Parent in connection therewith) or (B) consisting of purchases, redemptions or other acquisitions by CCH II or its Restricted Subsidiaries of Indebtedness under the Charter Holdings Indentures, the CIH Indenture, the CCH I Indenture, the CCI Indentures, or any Charter Refinancing Indebtedness (including any expenses incurred by CCH II and its Restricted Subsidiaries in connection therewith) and the distribution, loan to or investment in any Parent of Indebtedness so purchased, redeemed or acquired; and | |
(9) Restricted Payments that are part of the Exchange Offers. |
Investments |
(1) make any Restricted Investment; or | |
(2) allow any of its Restricted Subsidiaries to become an Unrestricted Subsidiary, unless, in each case: |
(a) no Default or Event of Default under the CCH II Indenture shall have occurred and be continuing or would occur as a consequence thereof; and | |
(b) CCH II would, at the time of, and after giving effect to, such Restricted Investment or such designation of a Restricted Subsidiary as an Unrestricted Subsidiary, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the applicable Leverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock.” |
Incurrence of Indebtedness and Issuance of Preferred Stock |
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(1) the incurrence by CCH II and its Restricted Subsidiaries of Indebtedness under the Credit Facilities; provided that the aggregate principal amount of all Indebtedness of CCH II and its Restricted Subsidiaries outstanding under this clause (1) for all Credit Facilities of CCH II and its Restricted Subsidiaries after giving effect to such incurrence does not exceed an amount equal to $9.75 billion less the aggregate amount of all Net Proceeds from Asset Sales applied by CCH II or any of its Restricted Subsidiaries to repay any such Indebtedness under a Credit Facility pursuant to the covenant described under “— Repurchase at the Option of Holders — Asset Sales;” | |
(2) the incurrence by CCH II and its Restricted Subsidiaries of Existing Indebtedness (other than under the Credit Facilities); | |
(3) the incurrence on the Issue Date by CCH II of Indebtedness represented by the CCH II Notes (but not including any Additional CCH II Notes); | |
(4) the incurrence by CCH II or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement (including, without limitation, the cost of design, development, construction, acquisition, transportation, installation, improvement, and migration) of Productive Assets of CCH II or any of its Restricted Subsidiaries in an aggregate principal amount not to exceed, together with any related Permitted Refinancing Indebtedness permitted by clause (5) below, $75 million at any time outstanding; | |
(5) the incurrence by CCH II or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace, in whole or in part, Indebtedness (other than intercompany Indebtedness) that was permitted by the CCH II Indenture to be incurred under this clause (5), the first paragraph of this covenant or clauses (2), (3) or (4) of this paragraph; | |
(6) the incurrence by CCH II or any of its Restricted Subsidiaries of intercompany Indebtedness between or among CCH II and any of its Restricted Subsidiaries; provided that: |
(a) if CCH II is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all obligations with respect to the CCH II Notes; and | |
(b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than CCH II or a Restricted Subsidiary of CCH II and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either CCH II or a Restricted Subsidiary of CCH II, shall be deemed, in each case, to constitute an incurrence of such Indebtedness that was not permitted by this clause (6); |
(7) the incurrence by CCH II or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the CCH II Indenture to be outstanding; |
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(8) the guarantee by CCH II or any of its Restricted Subsidiaries of Indebtedness of a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; | |
(9) the incurrence by CCH II or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount at any time outstanding under this clause (9), not to exceed $300 million; and | |
(10) the accretion or amortization of original issue discount and the write up of Indebtedness in accordance with purchase accounting. |
(a) any Indebtedness or Preferred Stock of any Person existing at the time such Person is merged with or into or becomes a Subsidiary of CCH II; provided that such Indebtedness or Preferred Stock was not incurred or issued in connection with, or in contemplation of, such Person merging with or into, or becoming a Subsidiary of, CCH II, and | |
(b) any Indebtedness or Preferred Stock of a Restricted Subsidiary issued in connection with, and as part of the consideration for, an acquisition, whether by stock purchase, asset sale, merger or otherwise, in each case involving such Restricted Subsidiary, which Indebtedness or Preferred Stock is issued to the seller or sellers of such stock or assets; provided that such Restricted Subsidiary is not obligated to register such Indebtedness or Preferred Stock under the Securities Act or obligated to provide information pursuant to Rule 144A under the Securities Act. |
Liens |
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Dividend and Other Payment Restrictions Affecting Subsidiaries |
(1) pay dividends or make any other distributions on its Capital Stock to CCH II or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to CCH II or any of its Restricted Subsidiaries; | |
(2) make loans or advances to CCH II or any of its Restricted Subsidiaries; or | |
(3) transfer any of its properties or assets to CCH II or any of its Restricted Subsidiaries. |
(1) Existing Indebtedness, contracts and other instruments as in effect on the Issue Date and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings thereof; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the most restrictive Existing Indebtedness, contracts or other instruments, as in effect on the Issue Date; | |
(2) applicable law; | |
(3) any instrument governing Indebtedness or Capital Stock of a Person acquired by CCH II or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the CCH II Indenture to be incurred; | |
(4) customary non-assignment provisions in leases, franchise agreements and other commercial agreements entered into in the ordinary course of business; | |
(5) purchase money obligations for property acquired in the ordinary course of business that impose restrictions on the property so acquired of the nature described in clause (3) of the preceding paragraph; | |
(6) any agreement for the sale or other disposition of Capital Stock or assets of a Restricted Subsidiary that restricts distributions by such Restricted Subsidiary pending such sale or other disposition; | |
(7) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not materially more restrictive at the time such restrictions become effective, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; | |
(8) Liens securing Indebtedness or other obligations otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption “— Liens” that limit the right of CCH II or any of its Restricted Subsidiaries to dispose of the assets subject to such Lien; | |
(9) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; | |
(10) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(11) restrictions contained in the terms of Indebtedness or Preferred Stock permitted to be incurred under the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; provided that such restrictions are not materially more restrictive, taken as a whole, |
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than the terms contained in the most restrictive, together or individually, of the Credit Facilities and other Existing Indebtedness as in effect on the Issue Date; and | |
(12) restrictions that are not materially more restrictive, taken as a whole, than customary provisions in comparable financings and that the management of CCH II determines, at the time of such financing, will not materially impair the Issuers’ ability to make payments as required under the CCH II Notes. |
Merger, Consolidation or Sale of Assets |
(A) either: |
(i) such CCH II Issuer is the surviving Person; or | |
(ii) the Person formed by or surviving any such consolidation or merger (if other than such CCH II Issuer) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia, provided that if the Person formed by or surviving any such consolidation or merger with such CCH II Issuer is a Person other than a corporation, a corporate co-issuer shall also be an obligor with respect to the CCH II Notes; |
(B) the Person formed by or surviving any such consolidation or merger (if other than such CCH II Issuer) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of such CCH II Issuer under the CCH II Notes and the CCH II Indenture pursuant to agreements reasonably satisfactory to the trustee; | |
(C) immediately after such transaction no Default or Event of Default exists; and | |
(D) such CCH II Issuer or the Person formed by or surviving any such consolidation or merger (if other than such CCH II Issuer) will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, | |
(x) be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock;” or | |
(y) have a Leverage Ratio immediately after giving effect to such consolidation or merger no greater than the Leverage Ratio immediately prior to such consolidation or merger. |
Transactions with Affiliates |
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(1) such Affiliate Transaction is on terms that are not less favorable to CCH II or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by CCH II or such Restricted Subsidiary with an unrelated Person; and | |
(2) CCH II delivers to the trustee: |
(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration given or received by CCH II or any such Restricted Subsidiary in excess of $15 million, a resolution of the Board of Directors of CCH II or CCI set forth in an officers’ certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the members of such Board of Directors; and | |
(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration given or received by CCH II or any such Restricted Subsidiary in excess of $50 million, an opinion as to the fairness to the holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. |
(1) any existing employment agreement and employee benefit arrangement (including stock purchase or option agreements, deferred compensation plans, and retirement, savings or similar plans) entered into by CCH II or any of its Subsidiaries and any employment agreement and employee benefit arrangements entered into by CCH II or any of its Restricted Subsidiaries in the ordinary course of business; | |
(2) transactions between or among CCH II and/or its Restricted Subsidiaries; | |
(3) payment of reasonable directors fees to Persons who are not otherwise Affiliates of CCH II, and customary indemnification and insurance arrangements in favor of directors, regardless of affiliation with CCH II or any of its Restricted Subsidiaries; | |
(4) payment of Management Fees; | |
(5) Restricted Payments that are permitted by the provisions of the covenant described above under the caption “— Restricted Payments” and Restricted Investments that are permitted by the provisions of the covenant described above under the caption “— Investments”; | |
(6) Permitted Investments; | |
(7) transactions pursuant to agreements existing on the Issue Date, as in effect on the Issue Date, or as subsequently modified, supplemented, or amended, to the extent that any such modifications, supplements, or amendments comply with the applicable provisions of paragraph (1) of this covenant; and | |
(8) contributions to the common equity capital of CCH II or the issue or sale of Equity Interests of CCH II. |
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Sale and Leaseback Transactions |
(1) CCH II or such Restricted Subsidiary could have |
(a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Leverage Ratio test in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock”; and | |
(b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption “— Liens” or the definition of “Permitted Liens”; and |
(2) the transfer of assets in that sale and leaseback transaction is permitted by, and CCH II or such Restricted Subsidiary applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales.” |
Limitations on Issuances of Guarantees of Indebtedness |
(1) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture providing for the Guarantee (a “Subsidiary Guarantee”) of the payment of the CCH II Notes by such Restricted Subsidiary, and | |
(2) until one year after all the CCH II Notes have been paid in full in cash, such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against CCH II or any other Restricted Subsidiary of CCH II as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee; provided that this paragraph shall not be applicable to any Guarantee or any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary. |
Payments for Consent |
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Reports |
(1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the CCH II Issuers were required to file such forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and, with respect to the annual information only, a report on the annual consolidated financial statements of CCH II of its independent public accountants; and | |
(2) all current reports that would be required to be filed with the SEC on Form 8-K if the CCH II Issuers were required to file such reports. |
(1) default for 30 consecutive days in the payment when due of interest on the CCH II Notes; | |
(2) default in payment when due of the principal of or premium, if any, on the CCH II Notes; | |
(3) failure by CCH II or any of its Restricted Subsidiaries to comply with the provisions of the CCH II Indenture described under the captions “— Repurchase at the Option of Holders — Change of Control” or “— Certain Covenants — Merger, Consolidation, or Sale of Assets”; | |
(4) failure by CCH II or any of its Restricted Subsidiaries for 30 consecutive days after written notice thereof has been given to the Issuers by the trustee or to the CCH II Issuers and the trustee by holders of at least 25% of the aggregate principal amount of the CCH II Notes outstanding to comply with any of their other covenants or agreements in the CCH II Indenture; | |
(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by CCH II or any of its Restricted Subsidiaries (or the payment of which is guaranteed by CCH II or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the Issue Date, if that default: |
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(a) is caused by a failure to pay at final stated maturity the principal amount on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or | |
(b) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $100 million or more; |
(6) failure by CCH II or any of its Restricted Subsidiaries to pay final judgments which are nonappealable aggregating in excess of $100 million, net of applicable insurance which has not been denied in writing by the insurer, which judgments are not paid, discharged or stayed for a period of 60 days; | |
(7) CCH II or any of its Significant Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: |
(a) commences a voluntary case, | |
(b) consents to the entry of an order for relief against it in an involuntary case, | |
(c) consents to the appointment of a custodian of it or for all or substantially all of its property, or | |
(d) makes a general assignment for the benefit of its creditors; or |
(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: |
(a) is for relief against CCH II or any of its Significant Subsidiaries in an involuntary case; | |
(b) appoints a custodian of CCH II or any of its Significant Subsidiaries or for all or substantially all of the property of CCH II or any of its Significant Subsidiaries; or | |
(c) orders the liquidation of CCH II or any of its Significant Subsidiaries; |
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(1) the rights of holders of outstanding CCH II Notes to receive payments in respect of the principal of, premium, if any, and interest on the CCH II Notes when such payments are due from the trust referred to below; | |
(2) the CCH II Issuers’ obligations with respect to the CCH II Notes concerning issuing temporary CCH II Notes, registration of CCH II Notes, mutilated, destroyed, lost or stolen CCH II Notes and the maintenance of an office or agency for payment and money for security payments held in trust; | |
(3) the rights, powers, trusts, duties and immunities of the trustee, and the CCH II Issuers’ obligations in connection therewith; and | |
(4) the Legal Defeasance provisions of the CCH II Indenture. |
(1) the CCH II Issuers or the Parent Guarantor must irrevocably deposit with the trustee, in trust, for the benefit of the holders of the CCH II Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding CCH II Notes on the stated maturity or on the applicable redemption date, as the case may be, and the CCH II Issuers and the Parent Guarantor must specify whether the CCH II Notes will be defeased to maturity or to a particular redemption date; | |
(2) in the case of Legal Defeasance, the CCH II Issuers shall have delivered to the trustee an opinion of counsel reasonably acceptable to the trustee confirming that |
(a) the CCH II Issuers and the Parent Guarantor have received from, or there has been published by, the Internal Revenue Service a ruling or | |
(b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the holders of the outstanding CCH II Notes will not recognize income, gain or loss for federal income |
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tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; |
(3) in the case of Covenant Defeasance, the CCH II Issuers or the Parent Guarantor shall have delivered to the trustee an opinion of counsel confirming that the holders of the outstanding CCH II Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; | |
(4) no Default or Event of Default under the CCH II Indenture shall have occurred and be continuing either: |
(a) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing); or | |
(b) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; |
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the CCH II Indenture) to which the CCH II Issuers or any of their Restricted Subsidiaries is a party or by which the CCH II Issuers or any of their Restricted Subsidiaries is bound; | |
(6) the CCH II Issuers must have delivered to the trustee an opinion of counsel to the effect that after the 91st day, assuming no intervening bankruptcy, that no holder is an insider of either of the CCH II Issuers following the deposit and that such deposit would not be deemed by a court of competent jurisdiction a transfer for the benefit of the CCH II Issuers in their capacities as such, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally; | |
(7) the CCH II Issuers or the Parent Guarantor must deliver to the trustee an officers’ certificate stating that the deposit was not made by the CCH II Issuers with the intent of preferring the holders of the CCH II Notes over the other creditors of the CCH II Issuers or the Parent Guarantor or with the intent of defeating, hindering, delaying or defrauding creditors of the CCH II Issuers, the Parent Guarantor or others; and | |
(8) the CCH II Issuers or the Parent Guarantor must deliver to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
(a) have become due and payable or | |
(b) will become due and payable on the maturity date or a redemption date within one year under arrangements satisfactory to the trustee for the giving of notice of redemption by the trustee in the name, and at the expense, of the CCH II Issuers. |
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(1) reduce the principal amount of such CCH II Notes; | |
(2) change the fixed maturity of such CCH II Notes or reduce the premium payable upon redemption of such CCH II Notes; | |
(3) reduce the rate of or extend the time for payment of interest on such CCH II Notes; | |
(4) waive a Default or an Event of Default in the payment of principal of or premium, if any, or interest on the CCH II Notes (except a rescission of acceleration of the CCH II Notes by the holders of at least a majority in aggregate principal amount of the CCH II Notes and a waiver of the payment default that resulted from such acceleration); | |
(5) make such CCH II Notes payable in money other than that stated in such CCH II Notes; | |
(6) make any change in the provisions of the CCH II Indenture relating to waivers of past Defaults applicable to any CCH II Notes or the rights of holders thereof to receive payments of principal of, or premium, if any, or interest on such CCH II Notes; | |
(7) waive a redemption payment with respect to such CCH II Notes (other than a payment required by one of the covenants described above under the caption “— Repurchase at the Option of Holders”); or | |
(8) make any change in the preceding amendment and waiver provisions. |
(1) to cure any ambiguity, defect or inconsistency; | |
(2) to provide for uncertificated CCH II Notes in addition to or in place of certificated CCH II Notes; | |
(3) to provide for or confirm the issuance of Additional CCH II Notes; | |
(4) to provide for the assumption of the CCH II Issuers’ or the Parent Guarantor’s obligations to holders of CCH II Notes in the case of a merger or consolidation or sale of all or substantially all of the CCH II Issuers’ assets; | |
(5) to release any Subsidiary Guarantee in accordance with the provisions of the CCH II Indenture; | |
(6) to make any change that would provide any additional rights or benefits to the holders of CCH II Notes or that does not adversely affect the legal rights under the CCH II Indenture of any such holder; or | |
(7) to comply with requirements of the SEC in order to effect or maintain the qualification of the CCH II Indenture under the Trust Indenture Act or otherwise as necessary to comply with applicable law. |
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(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and | |
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. |
(a) an Investment by CCH II or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary of CCH II or any of its Restricted Subsidiaries or shall be merged with or into CCH II or any of its Restricted Subsidiaries, or |
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(b) the acquisition by CCH II or any of its Restricted Subsidiaries of the assets of any Person which constitute all or substantially all of the assets of such Person, any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. |
(1) the sale, lease, conveyance or other disposition of any assets or rights, other than sales of inventory in the ordinary course of the Cable Related Business; provided that the sale, conveyance or other disposition of all or substantially all of the assets of CCH II and its Subsidiaries, taken as a whole, will be governed by the provisions of the CCH II Indenture described above under the caption “— Repurchase at the Option of Holders — Change of Control” and/or the provisions described above under the caption “— Certain Covenants — Merger, Consolidation, or Sale of Assets” and not by the provisions of the Asset Sale covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; and | |
(2) the issuance of Equity Interests by any Restricted Subsidiary of CCH II or the sale by CCH II or any Restricted Subsidiary of CCH II of Equity Interests of any Restricted Subsidiary of CCH II. |
(1) any single transaction or series of related transactions that: |
(a) involves assets having a fair market value of less than $100 million; or | |
(b) results in net proceeds to CCH II and its Restricted Subsidiaries of less than $100 million; |
(2) a transfer of assets between or among CCH II and/or its Restricted Subsidiaries; | |
(3) an issuance of Equity Interests by a Restricted Subsidiary of CCH II to CCH II or to another Wholly Owned Restricted Subsidiary of CCH II; | |
(4) a Restricted Payment that is permitted by the covenant described above under the caption “— Certain Covenants — Restricted Payments,” a Restricted Investment that is permitted by the covenant described above under the caption “— Certain Covenants — Investments” or a Permitted Investment; | |
(5) the incurrence of Liens not prohibited by the CCH II Indenture and the disposition of assets related to such Liens by the secured party pursuant to a foreclosure; and | |
(6) any disposition of cash or Cash Equivalents. |
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(1) in the case of a corporation, corporate stock; | |
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; | |
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and | |
(4) any other interest (other than any debt obligation) or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. |
(x) as a contribution to the common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock and other than issuances or sales to a Subsidiary of CCH II) of CCH II after the Issue Date, or | |
(y) from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of CCH II that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of CCH II). |
(1) United States dollars; | |
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve months from the date of acquisition; | |
(3) certificates of deposit and eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any domestic commercial bank having combined capital and surplus in excess of $500 million and a Thompson Bank Watch Rating at the time of acquisition of “B” or better; | |
(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; | |
(5) commercial paper having a rating at the time of acquisition of at least “P-1” from Moody’s or at least “A-1” from S&P and in each case maturing within twelve months after the date of acquisition; | |
(6) corporate debt obligations maturing within twelve months after the date of acquisition thereof, rated at the time of acquisition at least ”Aaa” or “P-1” by Moody’s or “AAA” or “A-1” by S&P; | |
(7) auction-rate Preferred Stocks of any corporation maturing not later than 45 days after the date of acquisition thereof, rated at the time of acquisition at least “Aaa” by Moody’s or “AAA” by S&P; | |
(8) securities issued by any state, commonwealth or territory of the United States, or by any political subdivision or taxing authority thereof, maturing not later than six months after the date of acquisition thereof, rated at the time of acquisition at least “A” by Moody’s or S&P; and |
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(9) money market or mutual funds at least 90% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (8) of this definition. |
(1) the sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of CCH II and its Subsidiaries, taken as a whole, or of a Parent and its Subsidiaries, taken as a whole, to any “person” (as such term is used in Section 13(d)(3) of the Exchange Act) other than Paul G. Allen and the Related Parties; | |
(2) the adoption of a plan relating to the liquidation or dissolution of CCH II or a Parent (except the liquidation of any Parent into any other Parent); | |
(3) the consummation of any transaction, including, without limitation, any merger or consolidation, the result of which is that any “person” (as defined above) other than Paul G. Allen and Related Parties becomes the Beneficial Owner, directly or indirectly, of more than 35% of the Voting Stock of CCH II or a Parent, measured by voting power rather than the number of shares, unless Paul G. Allen or a Related Party Beneficially owns, directly or indirectly, a greater percentage of Voting Stock of CCH II or such Parent, as the case may be, measured by voting power rather than the number of shares, than such person; | |
(4) after the Issue Date, the first day on which a majority of the members of the Board of Directors of CCI are not Continuing Directors; | |
(5) CCH II or a Parent consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, CCH II or a Parent, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of CCH II or such Parent is converted into or exchanged |
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for cash, securities or other property, other than any such transaction where the Voting Stock of CCH II or such Parent outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person immediately after giving effect to such issuance; or | |
(6) (i) Charter Communications Holding Company, LLC shall cease to own beneficially, directly or indirectly, 100% of the Capital Stock of Charter Holdings or (ii) Charter Holdings shall cease to own beneficially, directly or indirectly, 100% of the Capital Stock of CCH II. |
(1) the principal amount (or accreted value, if applicable) of such Charter Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) plus accrued interest and premium, if any, on the Indebtedness so extended, refinanced, renewed, replaced, defeased, purchased, acquired or refunded (plus the amount of reasonable fees, commissions and expenses incurred in connection therewith); and | |
(2) such Charter Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased, purchased, acquired or refunded. |
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(1) Consolidated Interest Expense; | |
(2) income taxes; | |
(3) depreciation expense; | |
(4) amortization expense; | |
(5) all other non-cash items, extraordinary items and nonrecurring and unusual items (including without limitation any restructuring charges and charges related to litigation settlements or judgments) and the cumulative effects of changes in accounting principles reducing such net income, less all non-cash items, extraordinary items, nonrecurring and unusual items and cumulative effects of changes in accounting principles increasing such net income; | |
(6) amounts actually paid during such period pursuant to a deferred compensation plan; and | |
(7) for purposes of the covenant described above under the caption “— Incurrence of Indebtedness and Issuance of Preferred Stock,” Management Fees; |
(x) the net income (or net loss) of any Person that is not a Restricted Subsidiary (“Other Person”), except |
(i) with respect to net income, to the extent of the amount of dividends or other distributions actually paid to such Person or any of its Restricted Subsidiaries by such Other Person during such period; and | |
(ii) with respect to net losses, to the extent of the amount of investments made by such Person or any Restricted Subsidiary of such Person in such Other Person during such period; |
(y) solely for the purposes of calculating the amount of Restricted Payments that may be made pursuant to the second clause (3) in the first paragraph of the covenant described under the caption “— Certain Covenants — Restricted Payments” (and in such case, except to the extent includable pursuant to clause (x) above), the net income (or net loss) of any Other Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with such Person or any Restricted Subsidiaries or all or substantially all of the property and assets of such Other Person are acquired by such Person or any of its Restricted Subsidiaries; and | |
(z) the net income of any Restricted Subsidiary of CCH II to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the time of determination of such Consolidated EBITDA permitted by the operation of the terms of |
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such Restricted Subsidiary’s charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary (other than any agreement or instrument evidencing Indebtedness or Preferred Stock (i) outstanding on the Issue Date or (ii) incurred or issued thereafter in compliance with the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock”; provided that (a) the terms of any such agreement or instrument (other than Existing Indebtedness and any modifications, increases or refinancings that are not materially more restrictive taken as a whole) restricting the declaration and payment of dividends or similar distributions apply only in the event of a default with respect to a financial covenant or a covenant relating to payment, beyond any applicable period of grace, contained in such agreement or instrument, (b) such terms are determined by such Person to be customary in comparable financings and (c) such restrictions are determined by CCH II not to materially affect the CCH II Issuers’ ability to make principal or interest payments on the applicable CCH II Notes when due). |
(1) the total amount of outstanding Indebtedness of such Person and its Restricted Subsidiaries, plus | |
(2) the total amount of Indebtedness of any other Person that has been Guaranteed by the referent Person or one or more of its Restricted Subsidiaries, plus | |
(3) the aggregate liquidation value of all Disqualified Stock of such Person and all Preferred Stock of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP. |
(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization or original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net payments (if any) pursuant to Hedging Obligations); and | |
(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; and | |
(3) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon); in each case, on a consolidated basis and in accordance with GAAP, excluding, however, any amount of such interest of any Restricted Subsidiary of the referent Person if the net income of such Restricted Subsidiary is excluded in the calculation of Consolidated EBITDA pursuant to clause (z) of the definition thereof (but only in the same proportion as the net income of such Restricted Subsidiary is excluded from the calculation of Consolidated EBITDA pursuant to clause (z) of the definition thereof). |
(1) was a member of the Board of Directors of CCI on the Issue Date; or | |
(2) was nominated for election or elected to the Board of Directors of CCI with the approval of a majority of the Continuing Directors who were members of such Board of Directors of CCI at the time of such nomination or election or whose election or appointment was previously so approved. |
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(1) the acquisition by CCHC and/or CCH II of Indebtedness outstanding under the CCI Indentures, in exchange for the Issuers’ 10.25% Senior Notes due 2010, Class A common stock of CCI and cash, pursuant to the Prospectus dated August 11, 2006 and related documents, as such documents may be supplemented, modified or extended from time to time; and | |
(2) the acquisition by CCH I and/or CCH II of Indebtedness outstanding under the Charter Holdings Indentures, in exchange for CCH I Notes and CCH II Notes, pursuant to the Offering Memorandum dated August 11, 2006 and related documents, as such documents may be supplemented, modified or extended from time to time; and | |
(3) the distribution, loan or investment of (a) Indebtedness accepted in the exchanges contemplated by clauses (1) and (2) of this definition and (b) amounts sufficient to satisfy the expenses incurred by any Parent in connection therewith (including any required payment of accrued interest thereon), in each case, directly or indirectly to or in any Parent; |
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(1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; | |
(2) interest rate option agreements, foreign currency exchange agreements, foreign currency swap agreements; and | |
(3) other agreements or arrangements designed to protect such Person against fluctuations in interest and currency exchange rates. |
(1) in respect of borrowed money; | |
(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); | |
(3) in respect of banker’s acceptances; | |
(4) representing Capital Lease Obligations; | |
(5) in respect of the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or | |
(6) representing the notional amount of any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by such Person of any indebtedness of any other Person. |
(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and | |
(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. |
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(1) the Consolidated Indebtedness of CCH II on such date to | |
(2) the aggregate amount of Consolidated EBITDA for CCH II for the most recently ended fiscal quarter for which internal financial statements are available (the “Reference Period”), multiplied by four. |
(1) the issuance of the CCH II Notes; | |
(2) the incurrence of the Indebtedness or the issuance of the Disqualified Stock by CCH II or a Restricted Subsidiary or Preferred Stock of a Restricted Subsidiary (and the application of the proceeds therefrom) giving rise to the need to make such calculation and any incurrence or issuance (and the application of the proceeds therefrom) or repayment of other Indebtedness, Disqualified Stock or Preferred Stock of a Restricted Subsidiary, other than the incurrence or repayment of Indebtedness for ordinary working capital purposes, at any time subsequent to the beginning of the Reference Period and on or prior to the date of determination, as if such incurrence (and the application of the proceeds thereof), or the repayment, as the case may be, occurred on the first day of the Reference Period; and | |
(3) any Dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any person that becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring, assuming or otherwise becoming liable for or issuing Indebtedness, Disqualified Stock or Preferred Stock) made on or subsequent to the first day of the Reference Period and on or prior to the date of determination, as if such Disposition or Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness, Disqualified Stock or Preferred Stock and also including any Consolidated EBITDA associated with such Asset Acquisition, including any cost savings adjustments in compliance with Regulation S-X promulgated by the SEC) had occurred on the first day of the Reference Period. |
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(1) as to which neither CCH II nor any of its Restricted Subsidiaries |
(a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness); | |
(b) is directly or indirectly liable as a guarantor or otherwise; or | |
(c) constitutes the lender; |
(2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the CCH II Notes) of CCH II or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and | |
(3) as to which the lenders have been notified in writing that they will not have any recourse to the Capital Stock or assets of CCH II or any of its Restricted Subsidiaries. |
(1) any Investment by CCH II in a Restricted Subsidiary thereof, or any Investment byaRestricted Subsidiary of CCH II in CCH II or in another Restricted Subsidiary of CCH II; | |
(2) any Investment in Cash Equivalents; |
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(3) any Investment by CCH II or any of its Restricted Subsidiaries in a Person, if as a result of such Investment: |
(a) such Person becomes a Restricted Subsidiary of CCH II; or | |
(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, CCH II or a Restricted Subsidiary of CCH II; |
(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; | |
(5) any Investment made out of the net cash proceeds of the issue and sale (other than to a Subsidiary of CCH II) of Equity Interests (other than Disqualified Stock) or cash contributions to the common equity of CCH II, in each case after the Issue Date, to the extent that such net cash proceeds have not been applied to make a Restricted Payment or to effect other transactions pursuant to the covenant described under “— Certain Covenants — Restricted Payments” (with the amount of usage of the basket in this clause (5) being determined net of the aggregate amount of principal, interest, dividends, distributions, repayments, proceeds or other value otherwise returned or recovered in respect of any such Investment, but not to exceed the initial amount of such Investment); | |
(6) other Investments in any Person (other than any Parent) having an aggregate fair market value when taken together with all other Investments in any Person made by CCH II and its Restricted Subsidiaries (without duplication) pursuant to this clause (6) from and after the Issue Date, not to exceed $750 million (initially measured on the date each such Investment was made and without giving effect to subsequent changes in value, but reducing the amount outstanding by the aggregate amount of principal, interest, dividends, distributions, repayments, proceeds or other value otherwise returned or recovered in respect of any such Investment, but not to exceed the initial amount of such Investment) at any one time outstanding; | |
(7) Investments in customers and suppliers in the ordinary course of business which either |
(A) generate accounts receivable, or | |
(B) are accepted in settlement of bona fide disputes; |
(8) Investments consisting of payments by CCH II or any of its subsidiaries of amounts that are neither dividends nor distributions but are payments of the kind described in clause (4) of the second paragraph of the covenant described above under the caption “— Certain Covenants — Restricted Payments” to the extent such payments constitute Investments; | |
(9) regardless of whether a Default then exists, Investments in any Unrestricted Subsidiary made by CCH II and/or any of its Restricted Subsidiaries with the proceeds of distributions from any Unrestricted Subsidiary; and | |
(10) Investments that are part of the Exchange Offers. |
(1) Liens on the assets of the Company and its Restricted Subsidiaries securing Indebtedness and other Obligations under any Credit Facilities; | |
(2) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with CCH II; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with CCH II and related assets, such as the proceeds thereof; | |
(3) Liens on property existing at the time of acquisition thereof by CCH II; provided that such Liens were in existence prior to the contemplation of such acquisition; |
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(4) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; | |
(5) purchase money mortgages or other purchase money Liens (including, without limitation, any Capitalized Lease Obligations) incurred by CCH II upon any fixed or capital assets acquired after the Issue Date or purchase money mortgages (including, without limitation, Capital Lease Obligations) on any such assets, whether or not assumed, existing at the time of acquisition of such assets, whether or not assumed, so long as |
(a) such mortgage or lien does not extend to or cover any of the assets of CCH II, except the asset so developed, constructed, or acquired, and directly related assets such as enhancements and modifications thereto, substitutions, replacements, proceeds (including insurance proceeds), products, rents and profits thereof, and | |
(b) such mortgage or lien secures the obligation to pay all or a portion of the purchase price of such asset, interest thereon and other charges, costs and expenses (including, without limitation, the cost of design, development, construction, acquisition, transportation, installation, improvement, and migration) and is incurred in connection therewith (or the obligation under such Capitalized Lease Obligation) only; |
(6) Liens existing on the Issue Date and replacement Liens therefore that do not encumber additional property; | |
(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefore; | |
(8) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; | |
(9) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security; | |
(10) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligation, bankers’ acceptance, surety and appeal bonds, government contracts, performance andreturn-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money); | |
(11) easements,rights-of-way, municipal and zoning ordinances and similar charges, encumbrances, title defects or other irregularities that do not materially interfere with the ordinary course of business of CCH II or any of its Restricted Subsidiaries; | |
(12) Liens of franchisors or other regulatory bodies arising in the ordinary course of business; | |
(13) Liens arising from filing Uniform Commercial Code financing statements regarding leases or other Uniform Commercial Code financing statements for precautionary purposes relating to arrangements not constituting Indebtedness; | |
(14) Liens arising from the rendering of a final judgment or order against CCH II or any of its Restricted Subsidiaries that does not give rise to an Event of Default; | |
(15) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof; | |
(16) Liens encumbering customary initial deposits and margin deposits, and other Liens that are within the general parameters customary in the industry and incurred in the ordinary course of business, |
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in each case, securing Indebtedness under Hedging Obligations and forward contracts, options, future contracts, future options or similar agreements or arrangements designed solely to protect CCH II or any of its Restricted Subsidiaries from fluctuations in interest rates, currencies or the price of commodities; | |
(17) Liens consisting of any interest or title of licensor in the property subject to a license; | |
(18) Liens on the Capital Stock of Unrestricted Subsidiaries; | |
(19) Liens arising from sales or other transfers of accounts receivable which are past due or otherwise doubtful of collection in the ordinary course of business; | |
(20) Liens incurred in the ordinary course of business of CCH II and its Restricted Subsidiaries with respect to obligations which in the aggregate do not exceed $50 million at any one time outstanding; | |
(21) Liens in favor of the trustee arising under the CCH II Indenture and similar provisions in favor of trustees or other agents or representatives under indentures or other agreements governing debt instruments entered into after the date hereof; | |
(22) Liens in favor of the trustee for its benefit and the benefit of holders of the CCH II Notes, as their respective interests appear; and | |
(23) Liens securing Permitted Refinancing Indebtedness, to the extent that the Indebtedness being refinanced was secured or was permitted to be secured by such Liens. |
(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount of (or accreted value, if applicable) plus accrued interest and premium, if any, on the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of reasonable expenses incurred in connection therewith), except to the extent that any such excess principal amount (or accreted value, as applicable) would be then permitted to be incurred by other provisions of the covenant described above under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock.” | |
(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and | |
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the CCH II Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the CCH II Notes on terms at least as favorable to the holders of CCH II Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. |
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(1) any corporation, association or other business entity of which at least 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and, in the case of any such entity of which 50% of the total voting power of shares of Capital Stock is so owned or controlled by such Person or one or more of the other Subsidiaries of such Person, such Person and its Subsidiaries also have the right to control the management of such entity pursuant to contract or otherwise; and | |
(2) any partnership |
(a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person, or | |
(b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). |
(1) has no Indebtedness other than Non-Recourse Debt; | |
(2) is not party to any agreement, contract, arrangement or understanding with CCH II or any Restricted Subsidiary of CCH II unless the terms of any such agreement, contract, arrangement or |
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understanding are no less favorable to CCH II or such Restricted Subsidiary of CCH II than those that might be obtained at the time from Persons who are not Affiliates of CCH II unless such terms constitute Investments permitted by the covenant described above under the caption “— Certain Covenants — Investments,” Permitted Investments, Asset Sales permitted under the covenant described above under the caption “— Repurchase at the Option of the Holders — Asset Sales” or sale-leaseback transactions permitted by the covenant described above under the caption “Certain Covenants — Sale and Leaseback Transactions”; | |
(3) is a Person with respect to which neither CCH II nor any of its Restricted Subsidiaries has any direct or indirect obligation |
(a) to subscribe for additional Equity Interests or | |
(b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; |
(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of CCH II or any of its Restricted Subsidiaries; and | |
(5) does not own any Capital Stock of any Restricted Subsidiary of CCH II. |
(1) such Indebtedness is permitted under the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; and | |
(2) no Default or Event of Default would be in existence immediately following such designation. |
(1) the sum of the products obtained by multiplying |
(a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by | |
(b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by |
(2) the then outstanding principal amount of such Indebtedness. |
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(a) existing law or applicable policy or interpretations of the staff of the Securities and Exchange Commission do not permit us to effect the exchange offers, | |
(b) any holder of notes notifies us that either: |
(1) such holder is not eligible to participate in the exchange offers, or | |
(2) such holder participates in the exchange offers and does not receive freely transferable new notes in exchange for tendered original notes, or |
(c) the exchange offers are not completed within 240 days after September 14, 2006, we will, at our cost: |
• | file a shelf registration statement covering resales of the original notes, | |
• | use our reasonable best efforts to cause the shelf registration statement to be declared effective under the Securities Act of 1933 at the earliest possible time, but no later than 90 days after the time such obligation to file arises, and | |
• | use our reasonable best efforts to keep effective the shelf registration statement until the earlier of two years after the date as of which the Securities and Exchange Commission declares such shelf registration statement effective or the shelf registration otherwise becomes effective, or the time when all of the applicable original notes are no longer outstanding. |
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Procedures for Tendering |
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(a) by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the Letter of Transmittal or | |
(b) for the account of an eligible institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, are required to be guaranteed, such guarantee must be by an eligible institution. |
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(1) The tender is made through an eligible institution; | |
(2) prior to the expiration date, the exchange agent receives from such eligible institution a properly completed and duly executed Notice of Guaranteed Delivery, by facsimile transmission, mail or hand delivery, setting forth the name and address of the holder of the original notes, the certificate number or numbers of such original notes and the principal amount of original notes tendered, stating that the tender is being made thereby, and guaranteeing that, within three business days after the expiration date, the letter of transmittal, or facsimile thereof or agent’s message in lieu of the Letter of Transmittal, together with the certificate(s) representing the original notes to be tendered in proper form for transfer and any other documents required by the Letter of Transmittal will be deposited by the eligible institution with the exchange agent; and | |
(3) such properly completed and executed Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing all tendered original notes in proper form for transfer and all other documents required by the Letter of Transmittal are received by the exchange agent within three business days after the expiration date. |
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(a) specify the name of the depositor, who is the person having deposited the original notes to be withdrawn, | |
(b) identify the original notes to be withdrawn, including the certificate number or numbers and principal amount of such original notes or, in the case of original notes transferred by book-entry transfer, the name and number of the account at The Depository Trust Company to be credited, | |
(c) be signed by the depositor in the same manner as the original signature on the letter of transmittal by which such original notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee with respect to the original notes register the transfer of such original notes into the name of the depositor withdrawing the tender, and | |
(d) Specify the name in which any such original notes are to be registered, if different from that of the depositor. All questions as to the validity, form and eligibility, including time of receipt, of such withdrawal notices will be determined by us, and our determination shall be final and binding on all parties. Any original notes so withdrawn will be deemed not to have been validly tendered for purposes of the exchange offers and no new notes will be issued with respect to the original notes withdrawn unless the original notes so withdrawn are validly retendered. Any original notes which have been tendered but which are not accepted for exchange will be returned to its holder without cost to such holder as soon as practicable after withdrawal, rejection of tender or termination of the exchange offers. Properly withdrawn original notes may be retendered by following one of the procedures described above under “— Procedures for Tendering” at any time prior to the expiration date. |
(1) refuse to accept any original notes and return all tendered original notes to the tendering holders, | |
(2) extend the exchange offers and retain all original notes tendered prior to the expiration of the exchange offers, subject, however, to the rights of holders who tendered such original notes to withdraw their tendered original notes, or | |
(3) waive such condition, if permissible, with respect to the exchange offers and accept all properly tendered original notes which have not been withdrawn. If such waiver constitutes a material change to the exchange offers, the Offerors will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the holders, and the Offerors will extend the exchange offers as required by applicable law. |
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By Regular Mail or Overnight Courier: The Bank of New York Trust Company, NA. Attn: Mrs. Evangeline R. Gonzales 101 Barclay Street — 7 East New York, NY 10286 | By Hand: The Bank of New York Trust Company, NA. Attn: Mrs. Evangeline R. Gonzales 101 Barclay Street — 7 East New York, NY 10286 |
• | to us, upon redemption of these notes or otherwise, | |
• | so long as the original notes are eligible for resale pursuant to Rule 144A under the Securities Act of 1933, to a person inside the United States whom the seller reasonably believes is a qualified |
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institutional buyer within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, | ||
• | in accordance with Rule 144 under the Securities Act of 1933, or under another exemption from the registration requirements of the Securities Act of 1933, and based upon an opinion of counsel reasonably acceptable to us, | |
• | outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act of 1933, or | |
• | under an effective registration statement under the Securities Act of 1933, in each case in accordance with any applicable securities laws of any state of the United States. |
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Exchange Offers |
(1) no gain or loss will be realized by a U.S. Holder upon receipt of a new note, | |
(2) the holding period of the new note will include the holding period of the outstanding note exchanged therefor, | |
(3) the adjusted tax basis of the new notes will be the same as the adjusted tax basis of the original notes exchanged at the time of the exchange, and | |
(4) the U.S. Holder will continue to take into account income in respect of the new note in the same manner as before the exchange. |
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Payments of Interest on the New Notes |
Sale, Redemption, Retirement or Other Taxable Disposition of the New Notes |
Market Discount |
Amortizable Bond Premium |
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Information Reporting and Backup Withholding |
Exchange Offers |
Payments of Interest |
(1) the interest is not effectively connected with the conduct of a trade or business in the United States; | |
(2) theNon-U.S. Holder (A) does not actually or constructively own 10 percent or more of the combined voting power of all classes of stock of CCO Holdings Capital entitled to vote nor 10 percent or more of the capital or profits interests of Charter Communications Holding Company, LLC and (B) is neither a controlled foreign corporation that is related to us through stock ownership within the meaning of the Code, nor a bank that received the new notes on an extension of credit in the ordinary course of its trade or business; and | |
(3) either (A) the beneficial owner of the new notes certifies to us or our paying agent, under penalties of perjury, that it is not a U.S. Holder and provides its name and address on Internal Revenue Service Form W-8BEN (or a suitable substitute form) or (B) a securities clearing organization, bank or other financial institution that holds the new notes on behalf of suchNon-U.S. Holder in the ordinary course of its trade or business (a “financial institution”) certifies under penalties of perjury that such an Internal Revenue Service Form W-8BEN or W-8IMY (or suitable substitute form) has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and, in case of a non-qualified intermediary, furnishes the payor with a copy thereof. |
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Sale, Redemption, Retirement or Other Taxable Disposition of New Notes |
(1) such gain is effectively connected with the conduct by such holder of a trade or business in the United States, and, where an income tax treaty applies, the gain is attributable to a permanent establishment maintained in the United States or, in the case of an individual, a fixed base in the United States, or | |
(2) in the case of gains derived by an individual, such individual is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met. |
Information Reporting and Backup Withholding |
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Page | ||||
Audited Financial Statements | ||||
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December 31, | ||||||||||
2005 | 2004 | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 14 | $ | 546 | ||||||
Accounts receivable, less allowance for doubtful accounts of $17 and $15, respectively | 212 | 186 | ||||||||
Prepaid expenses and other current assets | 22 | 20 | ||||||||
Total current assets | 248 | 752 | ||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||
Property, plant and equipment, net of accumulated depreciation of $6,712 and $5,142, respectively | 5,800 | 6,110 | ||||||||
Franchises, net | 9,826 | 9,878 | ||||||||
Total investment in cable properties, net | 15,626 | 15,988 | ||||||||
OTHER NONCURRENT ASSETS | 318 | 344 | ||||||||
Total assets | $ | 16,192 | $ | 17,084 | ||||||
LIABILITIES AND MEMBER’S DEFICIT | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable and accrued expenses | $ | 1,096 | $ | 1,112 | ||||||
Payables to related party | 83 | 19 | ||||||||
Total current liabilities | 1,179 | 1,131 | ||||||||
LONG-TERM DEBT | 18,525 | 18,474 | ||||||||
LOANS PAYABLE — RELATED PARTY | 22 | 29 | ||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | 14 | 14 | ||||||||
OTHER LONG-TERM LIABILITIES | 392 | 493 | ||||||||
MINORITY INTEREST | 622 | 656 | ||||||||
MEMBER’S DEFICIT: | ||||||||||
Member’s deficit | (4,564 | ) | (3,698 | ) | ||||||
Accumulated other comprehensive income (loss) | 2 | (15 | ) | |||||||
Total member’s deficit | (4,562 | ) | (3,713 | ) | ||||||
Total liabilities and member’s deficit | $ | 16,192 | $ | 17,084 | ||||||
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Year Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
REVENUES | $ | 5,033 | $ | 4,760 | $ | 4,616 | ||||||||
COSTS AND EXPENSES: | ||||||||||||||
Operating (excluding depreciation and amortization) | 2,203 | 1,994 | 1,873 | |||||||||||
Selling, general and administrative | 998 | 934 | 905 | |||||||||||
Depreciation and amortization | 1,443 | 1,433 | 1,396 | |||||||||||
Impairment of franchises | — | 2,297 | — | |||||||||||
Asset impairment charges | 39 | — | — | |||||||||||
(Gain) loss on sale of assets, net | 6 | (86 | ) | 5 | ||||||||||
Option compensation expense, net | 14 | 31 | 4 | |||||||||||
Hurricane asset retirement loss | 19 | — | — | |||||||||||
Special charges, net | 7 | 104 | 21 | |||||||||||
Unfavorable contracts and other settlements | — | (5 | ) | (72 | ) | |||||||||
4,729 | 6,702 | 4,132 | ||||||||||||
Operating income (loss) from continuing operations | 304 | (1,942 | ) | 484 | ||||||||||
OTHER INCOME AND EXPENSES: | ||||||||||||||
Interest expense, net | (1,739 | ) | (1,618 | ) | (1,486 | ) | ||||||||
Gain on derivative instruments and hedging activities, net | 50 | 69 | 65 | |||||||||||
Gain (loss) on extinguishment of debt | 494 | (21 | ) | 187 | ||||||||||
Other, net | 22 | 2 | (10 | ) | ||||||||||
(1,173 | ) | (1,568 | ) | (1,244 | ) | |||||||||
Loss from continuing operations before minority interest, income taxes and cumulative effect of accounting change | (869 | ) | (3,510 | ) | (760 | ) | ||||||||
MINORITY INTEREST | 33 | 20 | (29 | ) | ||||||||||
Loss from continuing operations before income taxes and cumulative effect of accounting change | (836 | ) | (3,490 | ) | (789 | ) | ||||||||
INCOME TAX BENEFIT (EXPENSE) | (9 | ) | 35 | (13 | ) | |||||||||
Loss from continuing operations before cumulative effect of accounting change | (845 | ) | (3,455 | ) | (802 | ) | ||||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX | 39 | (104 | ) | 32 | ||||||||||
Loss before cumulative effect of accounting change | (806 | ) | (3,559 | ) | (770 | ) | ||||||||
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX | — | (840 | ) | — | ||||||||||
Net loss | $ | (806 | ) | $ | (4,399 | ) | $ | (770 | ) | |||||
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Accumulated | |||||||||||||
Other | Total | ||||||||||||
Member’s | Comprehensive | Member’s | |||||||||||
Equity | Income | Equity | |||||||||||
(Deficit) | (Loss) | (Deficit) | |||||||||||
BALANCE, December 31, 2002 | $ | 2,011 | $ | (105 | ) | $ | 1,906 | ||||||
Distributions to parent company | (548 | ) | — | (548 | ) | ||||||||
Changes in fair value of interest rate agreements | — | 48 | 48 | ||||||||||
Other, net | 3 | — | 3 | ||||||||||
Net loss | (770 | ) | — | (770 | ) | ||||||||
BALANCE, December 31, 2003 | 696 | (57 | ) | 639 | |||||||||
Changes in fair value of interest rate agreements | — | 42 | 42 | ||||||||||
Other, net | 5 | — | 5 | ||||||||||
Net loss | (4,399 | ) | — | (4,399 | ) | ||||||||
BALANCE, December 31, 2004 | (3,698 | ) | (15 | ) | (3,713 | ) | |||||||
Distributions to parent company | (60 | ) | — | (60 | ) | ||||||||
Changes in fair value of interest rate agreements and other | — | 17 | 17 | ||||||||||
Net loss | (806 | ) | — | (806 | ) | ||||||||
BALANCE, December 31, 2005 | $ | (4,564 | ) | $ | 2 | $ | (4,562 | ) | |||||
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Year Ended December 31, | |||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||
Net loss | $ | (806 | ) | $ | (4,399 | ) | $ | (770 | ) | ||||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||||||
Minority interest | (33 | ) | (20 | ) | 29 | ||||||||||
Depreciation and amortization | 1,499 | 1,495 | 1,453 | ||||||||||||
Impairment of franchises | — | 2,433 | — | ||||||||||||
Asset impairment charges | 39 | — | — | ||||||||||||
(Gain) loss on sale of assets, net | 6 | (86 | ) | 5 | |||||||||||
Option compensation expense, net | 14 | 27 | 4 | ||||||||||||
Hurricane asset retirement loss | 19 | — | — | ||||||||||||
Special charges, net | — | 85 | — | ||||||||||||
Unfavorable contracts and other settlements | — | (5 | ) | (72 | ) | ||||||||||
Noncash interest expense | 257 | 315 | 410 | ||||||||||||
Gain on derivative instruments and hedging activities, net | (50 | ) | (69 | ) | (65 | ) | |||||||||
(Gain) loss on extinguishment of debt | (501 | ) | 18 | (187 | ) | ||||||||||
Deferred income taxes | 3 | (42 | ) | 13 | |||||||||||
Cumulative effect of accounting change, net of tax | — | 840 | — | ||||||||||||
Other, net | (22 | ) | (3 | ) | — | ||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||||||
Accounts receivable | (31 | ) | (3 | ) | 62 | ||||||||||
Prepaid expenses and other assets | (6 | ) | (4 | ) | 13 | ||||||||||
Accounts payable, accrued expenses and other | (44 | ) | (83 | ) | (109 | ) | |||||||||
Receivables from and payables to related party, including deferred management fees | (90 | ) | (68 | ) | (40 | ) | |||||||||
Net cash flows from operating activities | 254 | 431 | 746 | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||
Purchases of property, plant and equipment | (1,088 | ) | (893 | ) | (804 | ) | |||||||||
Change in accrued expenses related to capital expenditures | 13 | (33 | ) | (41 | ) | ||||||||||
Proceeds from sale of assets | 44 | 744 | 91 | ||||||||||||
Purchases of investments | (1 | ) | (6 | ) | (8 | ) | |||||||||
Proceeds from investments | 16 | — | — | ||||||||||||
Other, net | (2 | ) | (3 | ) | (3 | ) | |||||||||
Net cash flows from investing activities | (1,018 | ) | (191 | ) | (765 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||
Borrowings of long-term debt | 1,207 | 3,147 | 739 | ||||||||||||
Borrowings from related parties | 140 | — | — | ||||||||||||
Repayments of long-term debt | (1,107 | ) | (4,860 | ) | (1,369 | ) | |||||||||
Repayments to related parties | (147 | ) | (8 | ) | (36 | ) | |||||||||
Proceeds from issuance of debt | 294 | 2,050 | 529 | ||||||||||||
Payments for debt issuance costs | (70 | ) | (108 | ) | (42 | ) | |||||||||
Redemption of preferred interest | (25 | ) | — | — | |||||||||||
Distributions | (60 | ) | — | (27 | ) | ||||||||||
Net cash flows from financing activities | 232 | 221 | (206 | ) | |||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (532 | ) | 461 | (225 | ) | ||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | 546 | 85 | 310 | ||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 14 | $ | 546 | $ | 85 | |||||||||
CASH PAID FOR INTEREST | $ | 1,467 | $ | 1,264 | $ | 1,069 | |||||||||
NONCASH TRANSACTIONS: | |||||||||||||||
Issuance of debt by CCH I Holdings, LLC | $ | 2,423 | $ | — | $ | — | |||||||||
Issuance of debt by CCH I, LLC | $ | 3,686 | $ | — | $ | — | |||||||||
Issuance of debt by Charter Communications Operating, LLC | $ | 333 | $ | — | $ | — | |||||||||
Retirement of Charter Communications Holdings, LLC debt | $ | (7,000 | ) | $ | — | $ | 1,257 | ||||||||
Transfer of property, plant and equipment from parent company | $ | 139 | $ | — | $ | — | |||||||||
Issuance of debt by CCH II, LLC | $ | — | $ | — | $ | 1,572 | |||||||||
CCH II, LLC notes distributed to retire parent company debt | $ | — | $ | — | $ | 521 | |||||||||
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1. | Organization and Basis of Presentation |
2. | Liquidity and Capital Resources |
Recent Financing Transactions |
F-7
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Debt Covenants |
F-8
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Parent Company Debt Obligations |
Specific Limitations |
F-9
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3. | Summary of Significant Accounting Policies |
Cash Equivalents |
Property, Plant and Equipment |
Cable distribution systems | 7-20 years | |||
Customer equipment and installations | 3-5 years | |||
Vehicles and equipment | 1-5 years | |||
Buildings and leasehold improvements | 5-15 years | |||
Furniture, fixtures and equipment | 5 years |
Asset Retirement Obligations |
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Franchises |
Other Noncurrent Assets |
Carrying | Gain (loss) For the | |||||||||||||||||||
Value at | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2003 | ||||||||||||||||
Equity investments, under the cost method | $ | 27 | $ | 8 | $ | — | $ | (3 | ) | $ | (2 | ) | ||||||||
Equity investments, under the equity method | 13 | 24 | 22 | 6 | 2 | |||||||||||||||
$ | 40 | $ | 32 | $ | 22 | $ | 3 | $ | — | |||||||||||
Valuation of Property, Plant and Equipment |
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Derivative Financial Instruments |
Revenue Recognition |
Programming Costs |
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Advertising Costs |
Stock-Based Compensation |
Year Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Net loss | $ | (806 | ) | $ | (4,399 | ) | $ | (770 | ) | ||||
Add back stock-based compensation expense related to stock options included in reported net loss | 14 | 31 | 4 | ||||||||||
Less employee stock-based compensation expense determined under fair value based method for all employee stock option awards | (14 | ) | (33 | ) | (30 | ) | |||||||
Effects of unvested options in stock option exchange (see Note 17) | — | 48 | — | ||||||||||
Pro forma | $ | (806 | ) | $ | (4,353 | ) | $ | (796 | ) | ||||
Unfavorable Contracts and Other Settlements |
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Income Taxes |
Segments |
4. | Sale of Assets |
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Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Revenues | $ | 221 | $ | 217 | $ | 203 | ||||||
Income (loss) before minority interest, income taxes and cumulative effect of accounting change | $ | 39 | $ | (104 | ) | $ | 32 |
5. | Allowance for Doubtful Accounts |
Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Balance, beginning of year | $ | 15 | $ | 17 | $ | 19 | ||||||
Charged to expense | 76 | 92 | 79 | |||||||||
Uncollected balances written off, net of recoveries | (74 | ) | (94 | ) | (81 | ) | ||||||
Balance, end of year | $ | 17 | $ | 15 | $ | 17 | ||||||
6. | Property, Plant and Equipment |
2005 | 2004 | |||||||
Cable distribution systems | $ | 7,035 | $ | 6,555 | ||||
Customer equipment and installations | 3,934 | 3,497 | ||||||
Vehicles and equipment | 462 | 419 | ||||||
Buildings and leasehold improvements | 525 | 518 | ||||||
Furniture, fixtures and equipment | 556 | 263 | ||||||
12,512 | 11,252 | |||||||
Less: accumulated depreciation | (6,712 | ) | (5,142 | ) | ||||
$ | 5,800 | $ | 6,110 | |||||
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7. | Franchises and Goodwill |
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December 31, | |||||||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||||||||
Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Franchises with indefinite lives | $ | 9,806 | $ | — | $ | 9,806 | $ | 9,845 | $ | — | $ | 9,845 | |||||||||||||
Goodwill | 52 | — | 52 | 52 | — | 52 | |||||||||||||||||||
$ | 9,858 | $ | — | $ | 9,858 | $ | 9,897 | $ | — | $ | 9,897 | ||||||||||||||
Finite-lived intangible assets: | |||||||||||||||||||||||||
Franchises with finite lives | $ | 27 | $ | 7 | $ | 20 | $ | 37 | $ | 4 | $ | 33 | |||||||||||||
8. | Accounts Payable and Accrued Expenses |
2005 | 2004 | ||||||||
Accounts payable — trade | $ | 102 | $ | 140 | |||||
Accrued capital expenditures | 73 | 60 | |||||||
Accrued expenses: | |||||||||
Interest | 329 | 310 | |||||||
Programming costs | 272 | 278 | |||||||
Franchise related fees | 67 | 67 | |||||||
Compensation | 60 | 47 | |||||||
Other | 193 | 210 | |||||||
$ | 1,096 | $ | 1,112 | ||||||
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9. | Long-Term Debt |
2005 | 2004 | ||||||||||||||||
Principal | Accreted | Principal | Accreted | ||||||||||||||
Amount | Value | Amount | Value | ||||||||||||||
Long-Term Debt | |||||||||||||||||
Charter Holdings: | |||||||||||||||||
8.250% senior notes due 2007 | $ | 105 | $ | 105 | $ | 451 | $ | 451 | |||||||||
8.625% senior notes due 2009 | 292 | 292 | 1,244 | 1,243 | |||||||||||||
9.920% senior discount notes due 2011 | 198 | 198 | 1,108 | 1,108 | |||||||||||||
10.000% senior notes due 2009 | 154 | 154 | 640 | 640 | |||||||||||||
10.250% senior notes due 2010 | 49 | 49 | 318 | 318 | |||||||||||||
11.750% senior discount notes due 2010 | 43 | 43 | 450 | 448 | |||||||||||||
10.750% senior notes due 2009 | 131 | 131 | 874 | 874 | |||||||||||||
11.125% senior notes due 2011 | 217 | 217 | 500 | 500 | |||||||||||||
13.500% senior discount notes due 2011 | 94 | 94 | 675 | 589 | |||||||||||||
9.625% senior notes due 2009 | 107 | 107 | 640 | 638 | |||||||||||||
10.000% senior notes due 2011 | 137 | 136 | 710 | 708 | |||||||||||||
11.750% senior discount notes due 2011 | 125 | 120 | 939 | 803 | |||||||||||||
12.125% senior discount notes due 2012 | 113 | 100 | 330 | 259 | |||||||||||||
CIH: | |||||||||||||||||
11.125% senior notes due 2014 | 151 | 151 | — | — | |||||||||||||
9.920% senior discount notes due 2014 | 471 | 471 | — | — | |||||||||||||
10.000% senior notes due 2014 | 299 | 299 | — | — | |||||||||||||
11.750% senior discount notes due 2014 | 815 | 781 | — | — | |||||||||||||
13.500% senior discount notes due 2014 | 581 | 578 | — | — | |||||||||||||
12.125% senior discount notes due 2015 | 217 | 192 | — | — | |||||||||||||
CCH I: | |||||||||||||||||
11.000% senior notes due 2015 | 3,525 | 3,683 | — | — | |||||||||||||
CCH II: | |||||||||||||||||
10.250% senior notes due 2010 | 1,601 | 1,601 | 1,601 | 1,601 | |||||||||||||
CCO Holdings: | |||||||||||||||||
83/4% senior notes due 2013 | 800 | 794 | 500 | 500 | |||||||||||||
Senior floating notes due 2010 | 550 | 550 | 550 | 550 | |||||||||||||
Charter Operating: | |||||||||||||||||
8% senior second-lien notes due 2012 | 1,100 | 1,100 | 1,100 | 1,100 | |||||||||||||
83/8% senior second-lien notes due 2014 | 733 | 733 | 400 | 400 | |||||||||||||
Renaissance Media Group LLC: | |||||||||||||||||
10.000% senior discount notes due 2008 | 114 | 115 | 114 | 116 | |||||||||||||
CC V Holdings, LLC: | |||||||||||||||||
11.875% senior discount notes due 2008 | — | — | 113 | 113 |
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2005 | 2004 | |||||||||||||||
Principal | Accreted | Principal | Accreted | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Credit Facilities | ||||||||||||||||
Charter Operating | 5,731 | 5,731 | 5,515 | 5,515 | ||||||||||||
$ | 18,453 | $ | 18,525 | $ | 18,772 | $ | 18,474 | |||||||||
Gain on Extinguishment of Debt |
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Start Date | ||||||||||||
Semi-Annual | for Interest | |||||||||||
Interest Payment | Payment on | Maturity | ||||||||||
Dates | Discount Notes | Date | ||||||||||
11.125% senior notes due 2014 | 1/15 & 7/15 | 1/15/14 | ||||||||||
9.920% senior discount notes due 2014 | 4/1 & 10/1 | 4/1/14 | ||||||||||
10.000% senior notes due 2014 | 5/15 & 11/15 | 5/15/14 | ||||||||||
11.750% senior discount notes due 2014 | 5/15 & 11/15 | 11/15/06 | 5/15/14 | |||||||||
13.500% senior discount notes due 2014 | 1/15 & 7/15 | 7/15/06 | 1/15/14 | |||||||||
12.125% senior discount notes due 2015 | 1/15 & 7/15 | 7/15/07 | 1/15/15 |
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CCO Holdings Notes. |
83/4% Senior Notes due 2013 |
Senior Floating Rate Notes Due 2010 |
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• | a senior obligation of such guarantor; | |
• | structurally senior to the outstanding CCO Holdings notes (except in the case of CCO Holdings’ note guarantee, which is structurallypari passuwith such senior notes), the outstanding CCH II notes, the outstanding CCH I notes, the outstanding CIH notes, the outstanding Charter Holdings notes and the outstanding Charter convertible senior notes (but subject to provisions in the Charter Operating |
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indenture that permit interest and, subject to meeting the 4.25 to 1.0 leverage ratio test, principal payments to be made thereon); and | ||
• | senior in right of payment to any future subordinated indebtedness of such guarantor. |
• | incur additional debt; | |
• | pay dividends on equity or repurchase equity; | |
• | make investments; | |
• | sell all or substantially all of their assets or merge with or into other companies; | |
• | sell assets; | |
• | enter into sale-leasebacks; | |
• | in the case of restricted subsidiaries, create or permit to exist dividend or payment restrictions with respect to the bond issuers, guarantee their parent companies debt, or issue specified equity interests; | |
• | engage in certain transactions with affiliates; and | |
• | grant liens. |
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Charter Operating Credit Facilities |
• | two term facilities: |
(i) a Term A facility with a total principal amount of $2.0 billion, of which 12.5% matures in 2007, 30% matures in 2008, 37.5% matures in 2009 and 20% matures in 2010; and | |
(ii) a Term B facility with a total principal amount of $3.0 billion, which shall be repayable in 27 equal quarterly installments aggregating in each loan year to 1% of the original amount of the Term B facility, with the remaining balance due at final maturity in 2011; and |
• | a revolving credit facility, in a total amount of $1.5 billion, with a maturity date in 2010. |
Charter Operating Credit Facilities — Restrictive Covenants |
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• | the failure to make payments when due or within the applicable grace period, | |
• | the failure to comply with specified covenants, including but not limited to a covenant to deliver audited financial statements with an unqualified opinion from our independent auditors, | |
• | the failure to pay or the occurrence of events that cause or permit the acceleration of other indebtedness owing by CCO Holdings, Charter Operating or Charter Operating’s subsidiaries in amounts in excess of $50 million in aggregate principal amount, | |
• | the failure to pay or the occurrence of events that result in the acceleration of other indebtedness owing by certain of CCO Holdings’ direct and indirect parent companies in amounts in excess of $200 million in aggregate principal amount, | |
• | Paul Allen and/or certain of his family members and/or their exclusively owned entities (collectively, the “Paul Allen Group”) ceasing to have the power, directly or indirectly, to vote at least 35% of the ordinary voting power of Charter Operating, | |
• | the consummation of any transaction resulting in any person or group (other than the Paul Allen Group) having power, directly or indirectly, to vote more than 35% of the ordinary voting power of Charter Operating, unless the Paul Allen Group holds a greater share of ordinary voting power of Charter Operating, | |
• | certain of Charter Operating’s indirect or direct parent companies having indebtedness in excess of $500 million aggregate principal amount which remains undefeased three months prior to the final maturity of such indebtedness, and | |
• | Charter Operating ceasing to be a wholly-owned direct subsidiary of CCO Holdings, except in certain very limited circumstances. |
CCO Holdings Bridge Loan |
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Year | Amount | |||
2006 | $ | 30 | ||
2007 | 385 | |||
2008 | 744 | |||
2009 | 1,463 | |||
2010 | 3,455 | |||
Thereafter | 12,376 | |||
$ | 18,453 | |||
10. | Minority Interest |
11. | Comprehensive Loss |
12. | Accounting for Derivative Instruments and Hedging Activities |
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13. | Fair Value of Financial Instruments |
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2005 | 2004 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Value | Value | Value | Value | ||||||||||||||
Debt | |||||||||||||||||
Charter Holdings debt | $ | 1,746 | $ | 1,145 | $ | 8,579 | $ | 7,669 | |||||||||
CIH debt | 2,472 | 1,469 | — | — | |||||||||||||
CCH I debt | 3,683 | 2,959 | — | — | |||||||||||||
CCH II debt | 1,601 | 1,592 | 1,601 | 1,698 | |||||||||||||
CCO Holdings debt | 1,344 | 1,299 | 1,050 | 1,064 | |||||||||||||
Charter Operating debt | 1,833 | 1,821 | 1,500 | 1,563 | |||||||||||||
Credit facilities | 5,731 | 5,719 | 5,515 | 5,502 | |||||||||||||
Other | 115 | 114 | 229 | 236 | |||||||||||||
Interest Rate Agreements | |||||||||||||||||
Assets (Liabilities) | |||||||||||||||||
Swaps | (4 | ) | (4 | ) | (69 | ) | (69 | ) | |||||||||
Collars | — | — | (1 | ) | (1 | ) |
14. | Revenues |
Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Video | $ | 3,248 | $ | 3,217 | $ | 3,306 | ||||||
High-speed Internet | 875 | 712 | 535 | |||||||||
Telephone | 36 | 18 | 14 | |||||||||
Advertising sales | 284 | 279 | 254 | |||||||||
Commercial | 266 | 227 | 196 | |||||||||
Other | 324 | 307 | 311 | |||||||||
$ | 5,033 | $ | 4,760 | $ | 4,616 | |||||||
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15. | Operating Expenses |
Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Programming | $ | 1,359 | $ | 1,264 | $ | 1,195 | ||||||
Service | 748 | 638 | 595 | |||||||||
Advertising sales | 96 | 92 | 83 | |||||||||
$ | 2,203 | $ | 1,994 | $ | 1,873 | |||||||
16. | Selling, General and Administrative Expenses |
Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
General and administrative | $ | 856 | $ | 815 | $ | 802 | ||||||
Marketing | 142 | 119 | 103 | |||||||||
$ | 998 | $ | 934 | $ | 905 | |||||||
17. | Stock Compensation Plans |
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2005 | 2004 | 2003 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Options outstanding, beginning of period | 24,835 | $ | 6.57 | 47,882 | $ | 12.48 | 53,632 | $ | 14.22 | |||||||||||||||
Granted | 10,810 | 1.36 | 9,405 | 4.88 | 7,983 | 3.53 | ||||||||||||||||||
Exercised | (17 | ) | 1.11 | (839 | ) | 2.02 | (165 | ) | 3.96 | |||||||||||||||
Cancelled | (6,501 | ) | 7.40 | (31,613 | ) | 15.16 | (13,568 | ) | 14.10 | |||||||||||||||
Options outstanding, end of period | 29,127 | $ | 4.47 | 24,835 | $ | 6.57 | 47,882 | $ | 12.48 | |||||||||||||||
Weighted average remaining contractual life | 8 years | 8 years | 8 years | |||||||||||||||||||||
Options exercisable, end of period | 9,999 | $ | 7.80 | 7,731 | $ | 10.77 | 22,861 | $ | 16.36 | |||||||||||||||
Weighted average fair value of options granted | $ | 0.65 | $ | 3.71 | $ | 2.71 | ||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Weighted- | Weighted- | |||||||||||||||||||||||||
Average | Weighted- | Average | Weighted- | |||||||||||||||||||||||
Remaining | Average | Remaining | Average | |||||||||||||||||||||||
Range of | Number | Contractual | Exercise | Number | Contractual | Exercise | ||||||||||||||||||||
Exercise Prices | Outstanding | Life | Price | Exercisable | Life | Price | ||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||
$ 1.11 - $ 1.60 | 12,565 | 9 years | $ | 1.39 | 1,297 | 9 years | $ | 1.49 | ||||||||||||||||||
$ 2.85 - $ 4.56 | 5,906 | 7 years | 3.40 | 3,028 | 7 years | 3.33 | ||||||||||||||||||||
$ 5.06 - $ 5.17 | 6,970 | 8 years | 5.15 | 2,187 | 8 years | 5.13 | ||||||||||||||||||||
$ 9.13 - $13.68 | 1,712 | 6 years | 10.96 | 1,513 | 6 years | 11.10 | ||||||||||||||||||||
$13.96 - $23.09 | 1,974 | 4 years | 19.24 | 1,974 | 4 years | 19.24 |
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18. | Hurricane Asset Retirement Loss |
19. | Special Charges |
Total | |||||||||||||||||
Severance/ | Special | ||||||||||||||||
Leases | Litigation | Other | Charge | ||||||||||||||
Balance at December 31, 2002 | $ | 31 | |||||||||||||||
Special Charges | 26 | $ | — | $ | (5 | ) | $ | 21 | |||||||||
Payments | (43 | ) | |||||||||||||||
Balance at December 31, 2003 | 14 | ||||||||||||||||
Special Charges | 12 | $ | 92 | $ | — | $ | 104 | ||||||||||
Payments | (20 | ) | |||||||||||||||
Balance at December 31, 2004 | 6 | ||||||||||||||||
Special Charges | 6 | $ | 1 | $ | — | $ | 7 | ||||||||||
Payments | (8 | ) | |||||||||||||||
Balance at December 31, 2005 | $ | 4 | |||||||||||||||
20. | Income Taxes |
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December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Current expense: | |||||||||||||
Federal income taxes | $ | (2 | ) | $ | (2 | ) | $ | (1 | ) | ||||
State income taxes | (4 | ) | (4 | ) | (1 | ) | |||||||
Current income tax expense | (6 | ) | (6 | ) | (2 | ) | |||||||
Deferred benefit (expense): | |||||||||||||
Federal income taxes | (3 | ) | 50 | (10 | ) | ||||||||
State income taxes | — | 7 | (1 | ) | |||||||||
Deferred income tax benefit (expense) | (3 | ) | 57 | (11 | ) | ||||||||
Total income benefit (expense) | $ | (9 | ) | $ | 51 | $ | (13 | ) | |||||
December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Statutory federal income taxes | $ | 279 | $ | 1,258 | $ | 265 | ||||||
State income taxes, net of federal benefit | 40 | 180 | 38 | |||||||||
Losses allocated to limited liability companies not subject to income taxes | (348 | ) | (1,367 | ) | (290 | ) | ||||||
Valuation allowance used (provided) | 20 | (20 | ) | (26 | ) | |||||||
Income tax benefit (expense) | (9 | ) | 51 | (13 | ) | |||||||
Less: cumulative effect of accounting change | — | (16 | ) | — | ||||||||
Income tax benefit (expense) | $ | (9 | ) | $ | 35 | $ | (13 | ) | ||||
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December 31, | |||||||||
2005 | 2004 | ||||||||
Deferred tax assets: | |||||||||
Net operating loss carryforward | $ | 80 | $ | 95 | |||||
Other | 6 | 8 | |||||||
Total gross deferred tax assets | 86 | 103 | |||||||
Less: valuation allowance | (51 | ) | (71 | ) | |||||
Net deferred tax assets | $ | 35 | $ | 32 | |||||
Deferred tax liabilities: | |||||||||
Property, plant & equipment | $ | (41 | ) | $ | (39 | ) | |||
Franchises | (207 | ) | (201 | ) | |||||
Gross deferred tax liabilities | (248 | ) | (240 | ) | |||||
Net deferred tax liabilities | $ | (213 | ) | $ | (208 | ) | |||
21. | Related Party Transactions |
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22. | Commitments and Contingencies |
Commitments |
Total | 2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | |||||||||||||||||||||||
Contractual Obligations | |||||||||||||||||||||||||||||
Operating and Capital Lease Obligations(1) | $ | 94 | $ | 20 | $ | 15 | $ | 12 | $ | 10 | $ | 13 | $ | 24 | |||||||||||||||
Programming Minimum Commitments(2) | 1,253 | 342 | 372 | 306 | 233 | — | — | ||||||||||||||||||||||
Other(3) | 301 | 146 | 49 | 21 | 21 | 21 | 43 | ||||||||||||||||||||||
Total | $ | 1,648 | $ | 508 | $ | 436 | $ | 339 | $ | 264 | $ | 34 | $ | 67 | |||||||||||||||
(1) | The Company leases certain facilities and equipment under noncancelable operating leases. Leases and rental costs charged to expense for the years ended December 31, 2005, 2004 and 2003, were $22 million, $22 million and $29 million, respectively. |
(2) | The Company pays programming fees under multi-year contracts ranging from three to ten years typically based on a flat fee per customer, which may be fixed for the term or may in some cases, escalate over the term. Programming costs included in the accompanying statement of operations were $1.4 billion, $1.3 billion and $1.2 billion for the years ended December 31, 2005, 2004 and 2003, respectively. Certain of the Company’s programming agreements are based on a flat fee per month or have guaranteed minimum payments. The table sets forth the aggregate guaranteed minimum commitments under the Company’s programming contracts. |
(3) | “Other” represents other guaranteed minimum commitments, which consist primarily of commitments to the Company’s billing services vendors. |
• | The Company also rents utility poles used in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments from continuing operations for the years ended December 31, 2005, 2004 and 2003, was $44 million, $42 million and $38 million, respectively. | |
• | The Company pays franchise fees under multi-year franchise agreements based on a percentage of revenues earned from video service per year. The Company also pays other franchise related costs, such as public education grants under multi-year agreements. Franchise fees and other franchise-related costs from continuing operations included in the accompanying statement of operations were $165 million, $159 million and $157 million for the years ended December 31, 2005, 2004 and 2003, respectively. |
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• | The Company also has $165 million in letters of credit, primarily to its various worker’s compensation, property casualty and general liability carriers as collateral for reimbursement of claims. These letters of credit reduce the amount the Company may borrow under its credit facilities. |
Litigation |
Securities Class Actions and Derivative Suits |
F-46
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Regulation in the Cable Industry |
23. | Employee Benefit Plan |
24. | Recently Issued Accounting Standards |
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25. | Parent Company Only Financial Statements |
December 31, | ||||||||
2005 | 2004 | |||||||
ASSETS | ||||||||
Accounts receivable | $ | — | $ | 11 | ||||
Receivables from related party | 24 | 11 | ||||||
Investment in subsidiaries | — | 4,913 | ||||||
Other assets | 14 | 94 | ||||||
Total assets | $ | 38 | $ | 5,029 | ||||
LIABILITIES AND MEMBER’S DEFICIT | ||||||||
Current liabilities | $ | 42 | $ | 163 | ||||
Long-term debt | 1,746 | 8,579 | ||||||
Losses in excess of investment | 2,812 | — | ||||||
Member’s deficit | (4,562 | ) | (3,713 | ) | ||||
Total liabilities and member’s deficit | $ | 38 | $ | 5,029 | ||||
Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Interest expense | $ | (711 | ) | $ | (892 | ) | $ | (941 | ) | |||
Gain on extinguishment of debt | 520 | — | 187 | |||||||||
Equity in losses of subsidiaries | (615 | ) | (3,506 | ) | (15 | ) | ||||||
Other, net | — | (1 | ) | (1 | ) | |||||||
Net loss | $ | (806 | ) | $ | (4,399 | ) | $ | (770 | ) | |||
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Year Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
Net loss | $ | (806 | ) | $ | (4,399 | ) | $ | (770 | ) | |||||
Noncash interest expense | 179 | 288 | 372 | |||||||||||
Equity in losses of subsidiaries | 615 | 3,506 | 15 | |||||||||||
Gain on extinguishment of debt | (521 | ) | — | (187 | ) | |||||||||
Other, net | — | 2 | — | |||||||||||
Changes in operating assets and liabilities | (111 | ) | 25 | (5 | ) | |||||||||
Net cash flows from operating activities | (644 | ) | (578 | ) | (575 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
Purchases of investments | — | — | (8 | ) | ||||||||||
Investment in subsidiaries | — | — | (10 | ) | ||||||||||
Repayment on loans to subsidiaries | — | — | 59 | |||||||||||
Net cash flows from investing activities | — | — | 41 | |||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
Distributions from subsidiaries | 644 | 578 | 561 | |||||||||||
Distributions to parent companies | — | — | (27 | ) | ||||||||||
Net cash flows from financing activities | 644 | 578 | 534 | |||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | — | — | — | |||||||||||
CASH AND CASH EQUIVALENTS, beginning of year | — | — | — | |||||||||||
CASH AND CASH EQUIVALENTS, end of year | $ | — | $ | — | $ | — | ||||||||
26. | Consolidating Schedules |
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Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 3 | $ | 8 | $ | — | $ | 3 | $ | — | $ | 14 | ||||||||||||||||
Accounts receivable, net | — | — | — | — | 212 | — | 212 | |||||||||||||||||||||||
Receivables from related party | 24 | — | — | — | — | (24 | ) | — | ||||||||||||||||||||||
Prepaid expenses and other current assets | — | — | — | — | 22 | — | 22 | |||||||||||||||||||||||
Total current assets | 24 | 3 | 8 | — | 237 | (24 | ) | 248 | ||||||||||||||||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | — | — | — | — | 5,800 | — | 5,800 | |||||||||||||||||||||||
Franchises, net | — | — | — | — | 9,826 | — | 9,826 | |||||||||||||||||||||||
Total investment in cable properties, net | — | — | — | — | 15,626 | — | 15,626 | |||||||||||||||||||||||
INVESTMENT IN SUBSIDIARIES | — | — | 3,402 | 5,044 | — | (8,446 | ) | — | ||||||||||||||||||||||
OTHER NONCURRENT ASSETS | 14 | 21 | 45 | 14 | 224 | — | 318 | |||||||||||||||||||||||
Total assets | $ | 38 | $ | 24 | $ | 3,455 | $ | 5,058 | $ | 16,087 | $ | (8,470 | ) | $ | 16,192 | |||||||||||||||
LIABILITIES AND MEMBER’S EQUITY (DEFICIT) | ||||||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 42 | $ | 24 | $ | 107 | $ | 48 | $ | 875 | $ | — | $ | 1,096 | ||||||||||||||||
Payables to related party | — | 2 | 3 | 7 | 95 | (24 | ) | 83 | ||||||||||||||||||||||
Total current liabilities | 42 | 26 | 110 | 55 | 970 | (24 | ) | 1,179 | ||||||||||||||||||||||
LONG-TERM DEBT | 1,746 | 2,472 | 3,683 | 1,601 | 9,023 | — | 18,525 | |||||||||||||||||||||||
LOANS PAYABLE — RELATED PARTY | — | — | — | — | 22 | �� | — | 22 | ||||||||||||||||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | — | — | — | — | 14 | — | 14 | |||||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | — | — | — | — | 392 | — | 392 | |||||||||||||||||||||||
LOSSES IN EXCESS OF INVESTMENT | 2,812 | 338 | — | — | — | (3,150 | ) | — | ||||||||||||||||||||||
MINORITY INTEREST | — | — | — | — | 622 | — | 622 | |||||||||||||||||||||||
MEMBER’S EQUITY (DEFICIT): | ||||||||||||||||||||||||||||||
Member’s equity (deficit) | (4,562 | ) | (2,812 | ) | (338 | ) | 3,402 | 5,042 | (5,296 | ) | (4,564 | ) | ||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||
Total member’s equity (deficit) | (4,562 | ) | (2,812 | ) | (338 | ) | 3,402 | 5,044 | (5,296 | ) | (4,562 | ) | ||||||||||||||||||
Total liabilities and member’s equity (deficit) | $ | 38 | $ | 24 | $ | 3,455 | $ | 5,058 | $ | 16,087 | $ | (8,470 | ) | $ | 16,192 | |||||||||||||||
F-51
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | — | $ | 546 | $ | — | $ | 546 | ||||||||||||||||
Accounts receivable, net | 11 | — | — | — | 175 | — | 186 | |||||||||||||||||||||||
Receivables from related party | 11 | — | — | — | — | (11 | ) | — | ||||||||||||||||||||||
Prepaid expenses and other current assets | — | — | — | — | 20 | — | 20 | |||||||||||||||||||||||
Total current assets | 22 | — | — | — | 741 | (11 | ) | 752 | ||||||||||||||||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | — | — | — | — | 6,110 | — | 6,110 | |||||||||||||||||||||||
Franchises, net | — | — | — | — | 9,878 | — | 9,878 | |||||||||||||||||||||||
Total investment in cable properties, net | — | — | — | — | 15,988 | — | 15,988 | |||||||||||||||||||||||
INVESTMENT IN SUBSIDIARIES | 4,913 | 4,913 | 4,913 | 6,553 | — | (21,292 | ) | — | ||||||||||||||||||||||
OTHER NONCURRENT ASSETS | 94 | — | — | 15 | 235 | — | 344 | |||||||||||||||||||||||
Total assets | $ | 5,029 | $ | 4,913 | $ | 4,913 | $ | 6,568 | $ | 16,964 | $ | (21,303 | ) | $ | 17,084 | |||||||||||||||
LIABILITIES AND MEMBER’S EQUITY (DEFICIT) | ||||||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 163 | $ | — | $ | — | $ | 48 | $ | 901 | $ | — | $ | 1,112 | ||||||||||||||||
Payables to related party | — | — | — | 6 | 24 | (11 | ) | 19 | ||||||||||||||||||||||
Total current liabilities | 163 | — | — | 54 | 925 | (11 | ) | 1,131 | ||||||||||||||||||||||
LONG-TERM DEBT | 8,579 | — | — | 1,601 | 8,294 | — | 18,474 | |||||||||||||||||||||||
LOANS PAYABLE — RELATED PARTY | — | — | — | — | 29 | — | 29 | |||||||||||||||||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | — | — | — | 14 | 14 | |||||||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | — | — | — | — | 493 | — | 493 | |||||||||||||||||||||||
MINORITY INTEREST | — | — | — | — | 656 | — | 656 | |||||||||||||||||||||||
MEMBER’S EQUITY (DEFICIT): | ||||||||||||||||||||||||||||||
Member’s equity (deficit) | (3,713 | ) | 4,913 | 4,913 | 4,913 | 6,568 | (21,292 | ) | (3,698 | ) | ||||||||||||||||||||
Accumulated other comprehensive loss | — | — | — | — | (15 | ) | — | (15 | ) | |||||||||||||||||||||
Total member’s equity (deficit) | (3,713 | ) | 4,913 | 4,913 | 4,913 | 6,553 | (21,292 | ) | (3,713 | ) | ||||||||||||||||||||
Total liabilities and member’s equity (deficit) | $ | 5,029 | $ | 4,913 | $ | 4,913 | $ | 6,568 | $ | 16,964 | $ | (21,303 | ) | $ | 17,084 | |||||||||||||||
F-52
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
REVENUES | $ | — | $ | — | $ | — | $ | — | $ | 5,033 | $ | — | $ | 5,033 | ||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | — | — | — | — | 2,203 | — | 2,203 | |||||||||||||||||||||||
Selling, general and administrative | — | — | — | — | 998 | — | 998 | |||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 1,443 | — | 1,443 | |||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 39 | — | 39 | |||||||||||||||||||||||
Loss on sale of assets | — | — | — | — | 6 | — | 6 | |||||||||||||||||||||||
Option compensation expense, net | — | — | — | — | 14 | — | 14 | |||||||||||||||||||||||
Hurricane asset retirement loss | — | — | — | — | 19 | — | 19 | |||||||||||||||||||||||
Special charges, net | — | — | — | — | 7 | — | 7 | |||||||||||||||||||||||
— | — | — | — | 4,729 | — | 4,729 | ||||||||||||||||||||||||
Operating income from continuing operations | — | — | — | — | 304 | — | 304 | |||||||||||||||||||||||
OTHER INCOME AND EXPENSES: | ||||||||||||||||||||||||||||||
Interest expense, net | (711 | ) | (72 | ) | (98 | ) | (167 | ) | (691 | ) | — | (1,739 | ) | |||||||||||||||||
Gain on derivative instruments and hedging activities, net | — | — | — | — | 50 | — | 50 | |||||||||||||||||||||||
Gain (loss) on extinguishment of debt | 520 | (8 | ) | (12 | ) | — | (6 | ) | — | 494 | ||||||||||||||||||||
Other, net | — | — | — | — | 22 | — | 22 | |||||||||||||||||||||||
Equity in income (losses) of subsidiaries | (615 | ) | (535 | ) | (425 | ) | (258 | ) | — | 1,833 | — | |||||||||||||||||||
(806 | ) | (615 | ) | (535 | ) | (425 | ) | (625 | ) | 1,833 | (1,173 | ) | ||||||||||||||||||
Loss from continuing operations before minority interest and income taxes | (806 | ) | (615 | ) | (535 | ) | (425 | ) | (321 | ) | 1,833 | (869 | ) | |||||||||||||||||
MINORITY INTEREST | — | — | — | — | 33 | — | 33 | |||||||||||||||||||||||
Loss from continuing operations before income taxes | (806 | ) | (615 | ) | (535 | ) | (425 | ) | (288 | ) | 1,833 | (836 | ) | |||||||||||||||||
INCOME TAX EXPENSE | — | — | — | — | (9 | ) | — | (9 | ) | |||||||||||||||||||||
Loss from continuing operations | (806 | ) | (615 | ) | (535 | ) | (425 | ) | (297 | ) | 1,833 | (845 | ) | |||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | — | — | — | — | 39 | — | 39 | |||||||||||||||||||||||
Net loss | $ | (806 | ) | $ | (615 | ) | $ | (535 | ) | $ | (425 | ) | $ | (258 | ) | $ | 1,833 | $ | (806 | ) | ||||||||||
F-53
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
REVENUES | $ | — | $ | — | $ | — | $ | — | $ | 4,760 | $ | — | $ | 4,760 | ||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | — | — | — | — | 1,994 | — | 1,994 | |||||||||||||||||||||||
Selling, general and administrative | — | — | — | — | 934 | — | 934 | |||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 1,433 | — | 1,433 | |||||||||||||||||||||||
Impairment of franchises | — | — | — | — | 2,297 | — | 2,297 | |||||||||||||||||||||||
Gain on sale of assets | — | — | — | — | (86 | ) | — | (86 | ) | |||||||||||||||||||||
Option compensation expense, net | — | — | — | — | 31 | — | 31 | |||||||||||||||||||||||
Special charges, net | — | — | — | — | 104 | — | 104 | |||||||||||||||||||||||
Unfavorable contracts and other settlements | — | — | — | — | (5 | ) | — | (5 | ) | |||||||||||||||||||||
— | — | — | — | 6,702 | — | 6,702 | ||||||||||||||||||||||||
Operating loss from continuing operations | — | — | — | — | (1,942 | ) | — | (1,942 | ) | |||||||||||||||||||||
OTHER INCOME AND EXPENSES: | ||||||||||||||||||||||||||||||
Interest expense, net | (892 | ) | — | — | (166 | ) | (560 | ) | — | (1,618 | ) | |||||||||||||||||||
Gain on derivative instruments and hedging activities, net | — | — | — | — | 69 | — | 69 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | (21 | ) | — | (21 | ) | |||||||||||||||||||||
Other, net | (1 | ) | — | — | — | 3 | — | 2 | ||||||||||||||||||||||
Equity in income (losses) of subsidiaries | (3,506 | ) | (3,506 | ) | (3,506 | ) | (3,340 | ) | — | 13,858 | — | |||||||||||||||||||
(4,399 | ) | (3,506 | ) | (3,506 | ) | (3,506 | ) | (509 | ) | 13,858 | (1,568 | ) | ||||||||||||||||||
Loss before minority interest, income taxes and cumulative effect of accounting change | (4,399 | ) | (3,506 | ) | (3,506 | ) | (3,506 | ) | (2,451 | ) | 13,858 | (3,510 | ) | |||||||||||||||||
MINORITY INTEREST | — | — | — | — | 20 | — | 20 | |||||||||||||||||||||||
Loss from continuing operations before income taxes and cumulative effect of accounting change | (4,399 | ) | (3,506 | ) | (3,506 | ) | (3,506 | ) | (2,431 | ) | 13,858 | (3,490 | ) | |||||||||||||||||
INCOME TAX BENEFIT | — | — | — | — | 35 | — | 35 | |||||||||||||||||||||||
Loss from continuing operations before cumulative effect of accounting change | (4,399 | ) | (3,506 | ) | (3,506 | ) | (3,506 | ) | (2,396 | ) | 13,858 | (3,455 | ) | |||||||||||||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | — | — | — | — | (104 | ) | — | (104 | ) | |||||||||||||||||||||
Loss before cumulative effect of accounting change | (4,399 | ) | (3,506 | ) | (3,506 | ) | (3,506 | ) | (2,500 | ) | 13,858 | (3,559 | ) | |||||||||||||||||
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX | — | — | — | — | (840 | ) | — | (840 | ) | |||||||||||||||||||||
Net loss | $ | (4,399 | ) | $ | (3,506 | ) | $ | (3,506 | ) | $ | (3,506 | ) | $ | (3,340 | ) | $ | 13,858 | $ | (4,399 | ) | ||||||||||
F-54
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
REVENUES | $ | — | $ | — | $ | — | $ | — | $ | 4,616 | $ | — | $ | 4,616 | ||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | — | — | — | — | 1,873 | — | 1,873 | |||||||||||||||||||||||
Selling, general and administrative | — | — | — | — | 905 | — | 905 | |||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 1,396 | — | 1,396 | |||||||||||||||||||||||
Loss on sale of assets | — | — | — | — | 5 | — | 5 | |||||||||||||||||||||||
Option compensation expense, net | — | — | — | — | 4 | — | 4 | |||||||||||||||||||||||
Special charges, net | — | — | — | — | 21 | — | 21 | |||||||||||||||||||||||
Unfavorable contracts and other settlements | — | — | — | — | (72 | ) | — | (72 | ) | |||||||||||||||||||||
— | — | — | — | 4,132 | — | 4,132 | ||||||||||||||||||||||||
Operating income from continuing operations | — | — | — | — | 484 | — | 484 | |||||||||||||||||||||||
OTHER INCOME AND EXPENSES: | ||||||||||||||||||||||||||||||
Interest expense, net | (941 | ) | — | — | (45 | ) | (500 | ) | — | (1,486 | ) | |||||||||||||||||||
Gain on derivative instruments and hedging activities, net | — | — | — | — | 65 | — | 65 | |||||||||||||||||||||||
Gain on extinguishment of debt | 187 | — | — | — | — | — | 187 | |||||||||||||||||||||||
Other, net | (1 | ) | — | — | — | (9 | ) | — | (10 | ) | ||||||||||||||||||||
Equity in income (losses) of subsidiaries | (15 | ) | (15 | ) | (15 | ) | 30 | — | 15 | — | ||||||||||||||||||||
(770 | ) | (15 | ) | (15 | ) | (15 | ) | (444 | ) | 15 | (1,244 | ) | ||||||||||||||||||
Loss from continuing operations before minority interest and income taxes | (770 | ) | (15 | ) | (15 | ) | (15 | ) | 40 | 15 | (760 | ) | ||||||||||||||||||
MINORITY INTEREST | — | — | — | — | (29 | ) | — | (29 | ) | |||||||||||||||||||||
Loss from continuing operations before income taxes | (770 | ) | (15 | ) | (15 | ) | (15 | ) | 11 | 15 | (789 | ) | ||||||||||||||||||
INCOME TAX EXPENSE | — | — | — | — | (13 | ) | — | (13 | ) | |||||||||||||||||||||
Loss from continuing operations | (770 | ) | (15 | ) | (15 | ) | (15 | ) | (2 | ) | 15 | (802 | ) | |||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | — | — | — | — | 32 | — | 32 | |||||||||||||||||||||||
Net loss | $ | (770 | ) | $ | (15 | ) | $ | (15 | ) | $ | (15 | ) | $ | 30 | $ | 15 | $ | (770 | ) | |||||||||||
F-55
Table of Contents
Charter | |||||||||||||||||||||||||||||||
Charter | All Other | Holdings | |||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||||||||||
Net loss | $ | (806 | ) | $ | (615 | ) | $ | (535 | ) | $ | (425 | ) | $ | (258 | ) | $ | 1,833 | $ | (806 | ) | |||||||||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||||||||||||||||||||||
Minority interest | — | — | — | — | (33 | ) | — | (33 | ) | ||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 1,499 | — | 1,499 | ||||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 39 | — | 39 | ||||||||||||||||||||||||
Loss on sale of assets, net | — | — | — | — | 6 | — | 6 | ||||||||||||||||||||||||
Option compensation expense, net | — | — | — | — | 14 | — | 14 | ||||||||||||||||||||||||
Hurricane asset retirement loss | — | — | — | — | 19 | — | 19 | ||||||||||||||||||||||||
Noncash interest expense | 179 | 49 | (2 | ) | 2 | 29 | — | 257 | |||||||||||||||||||||||
Gain on derivative instruments and hedging activities, net | — | — | — | — | (50 | ) | — | (50 | ) | ||||||||||||||||||||||
(Gain) loss on extinguishment of debt | (521 | ) | 8 | 12 | — | — | — | (501 | ) | ||||||||||||||||||||||
Equity in losses of subsidiaries | 615 | 535 | 425 | 258 | — | (1,833 | ) | — | |||||||||||||||||||||||
Deferred income taxes | — | — | — | — | 3 | — | 3 | ||||||||||||||||||||||||
Other, net | — | — | — | — | (22 | ) | — | (22 | ) | ||||||||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||||||||||||||||||||||
Accounts receivable | 10 | — | — | — | (41 | ) | — | (31 | ) | ||||||||||||||||||||||
Prepaid expenses and other assets | 1 | — | — | — | (7 | ) | — | (6 | ) | ||||||||||||||||||||||
Accounts payable, accrued expenses and other | (110 | ) | 25 | 107 | — | (66 | ) | — | (44 | ) | |||||||||||||||||||||
Receivables from and payables to related party, including deferred management fees | (12 | ) | 2 | 3 | — | (83 | ) | — | (90 | ) | |||||||||||||||||||||
Net cash flows from operating activities | (644 | ) | 4 | 10 | (165 | ) | 1,049 | — | 254 | ||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||||||||||
Purchases of property, plant and equipment | — | — | — | — | (1,088 | ) | — | (1,088 | ) | ||||||||||||||||||||||
Change in accrued expenses related to capital expenditures | — | — | — | — | 13 | — | 13 | ||||||||||||||||||||||||
Proceeds from sale of assets | — | — | — | — | 44 | — | 44 | ||||||||||||||||||||||||
Purchases of investments | — | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||||
Investment in subsidiaries | — | — | — | — | 16 | 16 | |||||||||||||||||||||||||
Other, net | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||||||||||||||
Net cash flows from investing activities | — | — | — | — | (1,018 | ) | — | (1,018 | ) | ||||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Borrowings of long-term debt | — | — | — | — | 1,207 | — | 1,207 | ||||||||||||||||||||||||
Borrowings from related parties | — | — | — | — | 140 | — | 140 | ||||||||||||||||||||||||
Repayments of long-term debt | — | — | — | — | (1,107 | ) | — | (1,107 | ) | ||||||||||||||||||||||
Repayments to parent companies | — | — | — | — | (147 | ) | — | (147 | ) | ||||||||||||||||||||||
Proceeds from issuance of debt | — | — | — | — | 294 | — | 294 | ||||||||||||||||||||||||
Payments for debt issuance costs | — | (8 | ) | (51 | ) | — | (11 | ) | — | (70 | ) | ||||||||||||||||||||
Redemption of preferred interest | — | — | — | — | (25 | ) | — | (25 | ) | ||||||||||||||||||||||
Distributions | 644 | 7 | 49 | 165 | (925 | ) | — | (60 | ) | ||||||||||||||||||||||
Net cash flows from financing activities | 644 | (1 | ) | (2 | ) | 165 | (574 | ) | — | 232 | |||||||||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | 3 | 8 | — | (543 | ) | — | (532 | ) | ||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | — | — | — | — | 546 | — | 546 | ||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | — | $ | 3 | $ | 8 | $ | — | $ | 3 | $ | — | $ | 14 | |||||||||||||||||
F-56
Table of Contents
Charter | |||||||||||||||||||||||||||||||
Charter | All Other | Holdings | |||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||||||||||
Net loss | $ | (4,399 | ) | $ | (3,506 | ) | $ | (3,506 | ) | $ | (3,506 | ) | $ | (3,340 | ) | $ | 13,858 | $ | (4,399 | ) | |||||||||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||||||||||||||||||||||
Minority interest | — | — | — | — | (20 | ) | — | (20 | ) | ||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 1,495 | — | 1,495 | ||||||||||||||||||||||||
Impairment of franchises | — | — | — | — | 2,433 | — | 2,433 | ||||||||||||||||||||||||
Gain on sale of assets | — | — | — | — | (86 | ) | — | (86 | ) | ||||||||||||||||||||||
Option compensation expense, net | — | — | — | — | 27 | — | 27 | ||||||||||||||||||||||||
Special charges, net | — | — | — | — | 85 | — | 85 | ||||||||||||||||||||||||
Unfavorable contracts and other settlements | — | — | — | — | (5 | ) | — | (5 | ) | ||||||||||||||||||||||
Noncash interest expense | 288 | — | — | 2 | 25 | — | 315 | ||||||||||||||||||||||||
Gain on derivative instruments and hedging activities, net | — | — | — | — | (69 | ) | — | (69 | ) | ||||||||||||||||||||||
Equity in losses of subsidiaries | 3,506 | 3,506 | 3,506 | 3,340 | — | (13,858 | ) | — | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | 18 | — | 18 | ||||||||||||||||||||||||
Deferred income taxes | — | — | — | — | (42 | ) | — | (42 | ) | ||||||||||||||||||||||
Cumulative effect of accounting change, net | — | — | — | — | 840 | — | 840 | ||||||||||||||||||||||||
Other, net | 2 | — | — | — | (5 | ) | — | (3 | ) | ||||||||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||||||||||||||||||||||
Accounts receivable | 1 | — | — | — | (4 | ) | — | (3 | ) | ||||||||||||||||||||||
Prepaid expenses and other assets | — | — | — | — | (4 | ) | — | (4 | ) | ||||||||||||||||||||||
Accounts payable, accrued expenses and other | 20 | — | — | 3 | (106 | ) | — | (83 | ) | ||||||||||||||||||||||
Receivables from and payables to related party, including deferred management fees | 4 | — | — | 3 | (75 | ) | — | (68 | ) | ||||||||||||||||||||||
Net cash flows from operating activities | (578 | ) | — | — | (158 | ) | 1,167 | — | 431 | ||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||||||||||
Purchases of property, plant and equipment | — | — | — | — | (893 | ) | — | (893 | ) | ||||||||||||||||||||||
Change in accrued expenses related to capital expenditures | — | — | — | — | (33 | ) | — | (33 | ) | ||||||||||||||||||||||
Proceeds from sale of systems | — | — | — | — | 744 | — | 744 | ||||||||||||||||||||||||
Purchases of investments | — | — | — | — | (6 | ) | — | (6 | ) | ||||||||||||||||||||||
Other, net | — | — | — | — | (3 | ) | — | (3 | ) | ||||||||||||||||||||||
Net cash flows from investing activities | — | — | — | — | (191 | ) | — | (191 | ) | ||||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Borrowings of long-term debt | — | — | — | — | 3,147 | — | 3,147 | ||||||||||||||||||||||||
Repayments of long-term debt | — | — | — | 1 | (4,861 | ) | — | (4,860 | ) | ||||||||||||||||||||||
Repayments to parent companies | — | — | — | — | (8 | ) | — | (8 | ) | ||||||||||||||||||||||
Proceeds from issuance of long-term debt | — | — | — | — | 2,050 | — | 2,050 | ||||||||||||||||||||||||
Payments for debt issuance costs | — | — | — | (3 | ) | (105 | ) | — | (108 | ) | |||||||||||||||||||||
Distributions | 578 | — | — | 160 | (738 | ) | — | — | |||||||||||||||||||||||
Net cash flows from financing activities | 578 | — | — | 158 | (515 | ) | — | 221 | |||||||||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | — | — | — | — | 461 | — | 461 | ||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | — | — | — | — | 85 | — | 85 | ||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | — | $ | — | $ | — | $ | — | $ | 546 | $ | — | $ | 546 | |||||||||||||||||
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Charter | |||||||||||||||||||||||||||||||
Charter | All Other | Holdings | |||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||||||||||
Net loss | $ | (770 | ) | $ | (15 | ) | $ | (15 | ) | $ | (15 | ) | $ | 30 | $ | 15 | $ | (770 | ) | ||||||||||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||||||||||||||||||||||
Minority interest | — | — | — | — | 29 | — | 29 | ||||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 1,453 | — | 1,453 | ||||||||||||||||||||||||
Loss on sale of assets | — | — | — | — | 5 | — | 5 | ||||||||||||||||||||||||
Option compensation expense, net | — | — | — | — | 4 | — | 4 | ||||||||||||||||||||||||
Unfavorable contracts and other settlements | — | — | — | — | (72 | ) | — | (72 | ) | ||||||||||||||||||||||
Noncash interest expense | 372 | — | — | — | 38 | — | 410 | ||||||||||||||||||||||||
Gain on derivative instruments and hedging activities, net | — | — | — | — | (65 | ) | — | (65 | ) | ||||||||||||||||||||||
Equity in losses of subsidiaries | 15 | 15 | 15 | (30 | ) | — | (15 | ) | — | ||||||||||||||||||||||
Gain on extinguishment of debt | (187 | ) | — | — | — | — | — | (187 | ) | ||||||||||||||||||||||
Deferred income taxes | — | — | — | — | 13 | — | 13 | ||||||||||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||||||||||||||||||||||
Accounts receivable | (7 | ) | — | — | — | 69 | — | 62 | |||||||||||||||||||||||
Prepaid expenses and other assets | 1 | — | — | 2 | 10 | — | 13 | ||||||||||||||||||||||||
Accounts payable, accrued expenses and other | (6 | ) | — | — | 45 | (148 | ) | — | (109 | ) | |||||||||||||||||||||
Receivables from and payables to related party, including deferred management fees | 7 | — | — | 3 | (50 | ) | — | (40 | ) | ||||||||||||||||||||||
Net cash flows from operating activities | (575 | ) | — | — | 5 | 1,316 | — | 746 | |||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||||||||||
Purchases of property, plant and equipment | — | — | — | — | (804 | ) | — | (804 | ) | ||||||||||||||||||||||
Change in accrued expenses related to capital expenditures | — | — | — | — | (41 | ) | — | (41 | ) | ||||||||||||||||||||||
Proceeds from sale of systems | — | — | — | — | 91 | — | 91 | ||||||||||||||||||||||||
Purchases of investments | (8 | ) | — | — | — | — | — | (8 | ) | ||||||||||||||||||||||
Investment in subsidiaries | (10 | ) | — | — | — | — | 10 | — | |||||||||||||||||||||||
Repayment on loans to subsidiaries | 59 | — | — | — | — | (59 | ) | — | |||||||||||||||||||||||
Other, net | — | — | — | — | (3 | ) | — | (3 | ) | ||||||||||||||||||||||
Net cash flows from investing activities | 41 | — | — | — | (757 | ) | (49 | ) | (765 | ) | |||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Borrowings of long-term debt | — | — | — | — | 739 | — | 739 | ||||||||||||||||||||||||
Repayments of long-term debt | — | — | — | — | (1,368 | ) | (1 | ) | (1,369 | ) | |||||||||||||||||||||
Repayments to parent companies | — | — | — | — | (96 | ) | 60 | (36 | ) | ||||||||||||||||||||||
Proceeds from issuance of long-term debt | — | — | — | 29 | 500 | — | 529 | ||||||||||||||||||||||||
Payments for debt issuance costs | — | — | — | (18 | ) | (24 | ) | — | (42 | ) | |||||||||||||||||||||
Distributions | 534 | — | — | (16 | ) | (535 | ) | (10 | ) | (27 | ) | ||||||||||||||||||||
Net cash flows from financing activities | 534 | — | — | (5 | ) | (784 | ) | 49 | (206 | ) | |||||||||||||||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | — | — | — | — | (225 | ) | — | (225 | ) | ||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | — | — | — | — | 310 | — | 310 | ||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | — | $ | — | $ | — | $ | — | $ | 85 | $ | — | $ | 85 | |||||||||||||||||
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27. | Subsequent Events |
F-59
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June 30, | December 31, | |||||||||
2006 | 2005 | |||||||||
(Unaudited) | ||||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 48 | $ | 14 | ||||||
Accounts receivable, less allowance for doubtful accounts of $19 and $17, respectively | 178 | 212 | ||||||||
Prepaid expenses and other current assets | 20 | 22 | ||||||||
Assets held for sale | 768 | — | ||||||||
Total current assets | 1,014 | 248 | ||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||
Property, plant and equipment, net of accumulated depreciation of $7,014 and $6,712, respectively | 5,354 | 5,800 | ||||||||
Franchises, net | 9,280 | 9,826 | ||||||||
Total investment in cable properties, net | 14,634 | 15,626 | ||||||||
OTHER NONCURRENT ASSETS | 294 | 318 | ||||||||
Total assets | $ | 15,942 | $ | 16,192 | ||||||
3 LIABILITIES AND MEMBER’S DEFICIT | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable and accrued expenses | $ | 1,129 | $ | 1,096 | ||||||
Payables to related party | 90 | 83 | ||||||||
Liabilities held for sale | 20 | — | ||||||||
Total current liabilities | 1,239 | 1,179 | ||||||||
LONG-TERM DEBT | 19,012 | 18,525 | ||||||||
LOANS PAYABLE — RELATED PARTY | 3 | 22 | ||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | 14 | 14 | ||||||||
OTHER LONG-TERM LIABILITIES | 359 | 392 | ||||||||
MINORITY INTEREST | 631 | 622 | ||||||||
MEMBER’S DEFICIT: | ||||||||||
Member’s deficit | (5,318 | ) | (4,564 | ) | ||||||
Accumulated other comprehensive income | 2 | 2 | ||||||||
Total member’s deficit | (5,316 | ) | (4,562 | ) | ||||||
Total liabilities and member’s deficit | $ | 15,942 | $ | 16,192 | ||||||
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Three Months | Six Months | |||||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||||
REVENUES | $ | 1,383 | $ | 1,266 | $ | 2,703 | $ | 2,481 | ||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||
Operating (excluding depreciation and amortization) | 611 | 546 | 1,215 | 1,081 | ||||||||||||||
Selling, general and administrative | 279 | 250 | 551 | 483 | ||||||||||||||
Depreciation and amortization | 340 | 364 | 690 | 730 | ||||||||||||||
Asset impairment charges | — | 8 | 99 | 39 | ||||||||||||||
Other operating (income) expenses, net | 7 | (2 | ) | 10 | 6 | |||||||||||||
1,237 | 1,166 | 2,565 | 2,339 | |||||||||||||||
Operating income from continuing operations | 146 | 100 | 138 | 142 | ||||||||||||||
OTHER INCOME AND (EXPENSES): | ||||||||||||||||||
Interest expense, net | (456 | ) | (431 | ) | (907 | ) | (855 | ) | ||||||||||
Other income (expenses), net | (26 | ) | 14 | (19 | ) | 45 | ||||||||||||
(482 | ) | (417 | ) | (926 | ) | (810 | ) | |||||||||||
Loss from continuing operations before income taxes | (336 | ) | (317 | ) | (788 | ) | (668 | ) | ||||||||||
INCOME TAX EXPENSE | (2 | ) | (2 | ) | (4 | ) | (8 | ) | ||||||||||
Loss from continuing operations | (338 | ) | (319 | ) | (792 | ) | (676 | ) | ||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | 23 | 10 | 38 | 19 | ||||||||||||||
Net loss | $ | (315 | ) | $ | (309 | ) | $ | (754 | ) | $ | (657 | ) | ||||||
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Six Months Ended | |||||||||||
June 30, | |||||||||||
2006 | 2005 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | (754 | ) | $ | (657 | ) | |||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||
Depreciation and amortization | 698 | 759 | |||||||||
Asset impairment charges | 99 | 39 | |||||||||
Noncash interest expense | 74 | 128 | |||||||||
Deferred income taxes | — | 5 | |||||||||
Other, net | 27 | (42 | ) | ||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||
Accounts receivable | 29 | — | |||||||||
Prepaid expenses and other assets | — | (21 | ) | ||||||||
Accounts payable, accrued expenses and other | 28 | (19 | ) | ||||||||
Receivables from and payables to related party, including management fees | 3 | (28 | ) | ||||||||
Net cash flows from operating activities | 204 | 164 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchases of property, plant and equipment | (539 | ) | (542 | ) | |||||||
Change in accrued expenses related to capital expenditures | (9 | ) | 48 | ||||||||
Proceeds from sale of assets | 9 | 8 | |||||||||
Purchase of cable system | (42 | ) | — | ||||||||
Proceeds from investments | 28 | 16 | |||||||||
Other, net | — | (2 | ) | ||||||||
Net cash flows from investing activities | (553 | ) | (472 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings of long-term debt | 5,830 | 635 | |||||||||
Borrowings from related parties | — | 140 | |||||||||
Repayments of long-term debt | (5,838 | ) | (819 | ) | |||||||
Repayments to related parties | (20 | ) | (107 | ) | |||||||
Proceeds from issuance of debt | 440 | — | |||||||||
Payments for debt issuance costs | (29 | ) | (3 | ) | |||||||
Distributions | — | (60 | ) | ||||||||
Net cash flows from financing activities | 383 | (214 | ) | ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 34 | (522 | ) | ||||||||
CASH AND CASH EQUIVALENTS, beginning of period | 14 | 546 | |||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 48 | $ | 24 | |||||||
CASH PAID FOR INTEREST | $ | 765 | $ | 707 | |||||||
NONCASH TRANSACTIONS: | |||||||||||
Issuance of debt by Charter Communications Operating, LLC | $ | 37 | $ | 333 | |||||||
Retirement of Renaissance Media Group LLC debt | $ | (37 | ) | $ | — | ||||||
Retirement of Charter Communications Holdings, LLC debt | $ | — | $ | (346 | ) | ||||||
Transfer of property, plant and equipment from parent company | $ | — | $ | 139 | |||||||
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1. | Organization and Basis of Presentation |
Reclassifications |
2. | Liquidity and Capital Resources |
Recent Financing Transactions |
F-63
Table of Contents
Debt Covenants |
F-64
Table of Contents
Parent Company Debt Obligations |
Specific Limitations |
F-65
Table of Contents
3. | Sale of Assets |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues | $ | 55 | $ | 57 | $ | 109 | $ | 113 | ||||||||
Income (loss) before income taxes | $ | 23 | $ | 10 | $ | 38 | $ | 19 |
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4. | Franchises and Goodwill |
June 30, 2006 | December 31, 2005 | ||||||||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||||||||
Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | ||||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||||
Franchises with indefinite lives | $ | 9,263 | $ | — | $ | 9,263 | $ | 9,806 | $ | — | $ | 9,806 | |||||||||||||
Goodwill | 61 | — | 61 | 52 | — | 52 | |||||||||||||||||||
$ | 9,324 | $ | — | $ | 9,324 | $ | 9,858 | $ | — | $ | 9,858 | ||||||||||||||
Finite-lived intangible assets: | |||||||||||||||||||||||||
Franchises with finite lives | $ | 23 | $ | 6 | $ | 17 | $ | 27 | $ | 7 | $ | 20 | |||||||||||||
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5. | Accounts Payable and Accrued Expenses |
June 30, | December 31, | ||||||||
2006 | 2005 | ||||||||
Accounts payable — trade | $ | 74 | $ | 102 | |||||
Accrued capital expenditures | 64 | 73 | |||||||
Accrued expenses: | |||||||||
Interest | 394 | 329 | |||||||
Programming costs | 297 | 272 | |||||||
Franchise-related fees | 55 | 67 | |||||||
Compensation | 64 | 60 | |||||||
Other | 181 | 193 | |||||||
$ | 1,129 | $ | 1,096 | ||||||
6. | Long-Term Debt |
June 30, 2006 | December 31, 2005 | ||||||||||||||||
Principal | Accreted | Principal | Accreted | ||||||||||||||
Amount | Value | Amount | Value | ||||||||||||||
Long-Term Debt | |||||||||||||||||
Charter Communications Holdings, LLC: | |||||||||||||||||
8.250% senior notes due 2007 | $ | 105 | $ | 105 | $ | 105 | $ | 105 | |||||||||
8.625% senior notes due 2009 | 292 | 292 | 292 | 292 | |||||||||||||
9.920% senior discount notes due 2011 | 198 | 198 | 198 | 198 | |||||||||||||
10.000% senior notes due 2009 | 154 | 154 | 154 | 154 | |||||||||||||
10.250% senior notes due 2010 | 49 | 49 | 49 | 49 | |||||||||||||
11.750% senior discount notes due 2010 | 43 | 43 | 43 | 43 | |||||||||||||
10.750% senior notes due 2009 | 131 | 131 | 131 | 131 | |||||||||||||
11.125% senior notes due 2011 | 217 | 217 | 217 | 217 | |||||||||||||
13.500% senior discount notes due 2011 | 94 | 94 | 94 | 94 | |||||||||||||
9.625% senior notes due 2009 | 107 | 107 | 107 | 107 | |||||||||||||
10.000% senior notes due 2011 | 137 | 136 | 137 | 136 | |||||||||||||
11.750% senior discount notes due 2011 | 125 | 125 | 125 | 120 | |||||||||||||
12.125% senior discount notes due 2012 | 113 | 106 | 113 | 100 |
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June 30, 2006 | December 31, 2005 | |||||||||||||||||
Principal | Accreted | Principal | Accreted | |||||||||||||||
Amount | Value | Amount | Value | |||||||||||||||
CCH I Holdings, LLC: | ||||||||||||||||||
11.125% senior notes due 2014 | 151 | 151 | 151 | 151 | ||||||||||||||
9.920% senior discount notes due 2014 | 471 | 471 | 471 | 471 | ||||||||||||||
10.000% senior notes due 2014 | 299 | 299 | 299 | 299 | ||||||||||||||
11.750% senior discount notes due 2014 | 815 | 815 | 815 | 781 | ||||||||||||||
13.500% senior discount notes due 2014 | 581 | 581 | 581 | 578 | ||||||||||||||
12.125% senior discount notes due 2015 | 217 | 203 | 217 | 192 | ||||||||||||||
CCH I, LLC: | ||||||||||||||||||
11.000% senior notes due 2015 | 3,525 | 3,678 | 3,525 | 3,683 | ||||||||||||||
CCH II, LLC: | ||||||||||||||||||
10.250% senior notes due 2010 | 2,051 | 2,042 | 1,601 | 1,601 | ||||||||||||||
CCO Holdings, LLC: | ||||||||||||||||||
83/4% senior notes due 2013 | 800 | 795 | 800 | 794 | ||||||||||||||
Senior floating notes due 2010 | 550 | 550 | 550 | 550 | ||||||||||||||
Charter Communications Operating, LLC: | ||||||||||||||||||
8% senior second lien notes due 2012 | 1,100 | 1,100 | 1,100 | 1,100 | ||||||||||||||
83/8% senior second lien notes due 2014 | 770 | 770 | 733 | 733 | ||||||||||||||
Renaissance Media Group LLC: | ||||||||||||||||||
10.000% senior discount notes due 2008 | — | — | 114 | 115 | ||||||||||||||
Credit Facilities | ||||||||||||||||||
Charter Operating | 5,800 | 5,800 | 5,731 | 5,731 | ||||||||||||||
$ | 18,895 | $ | 19,012 | $ | 18,453 | $ | 18,525 | |||||||||||
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Table of Contents
Gain (loss) on extinguishment of debt |
7. | Minority Interest |
8. | Comprehensive Loss |
F-70
Table of Contents
9. | Accounting for Derivative Instruments and Hedging Activities |
F-71
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10. | Revenues |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Video | $ | 853 | $ | 821 | $ | 1,684 | $ | 1,623 | ||||||||
High-speed Internet | 261 | 218 | 506 | 425 | ||||||||||||
Telephone | 29 | 8 | 49 | 14 | ||||||||||||
Advertising sales | 79 | 73 | 147 | 135 | ||||||||||||
Commercial | 76 | 66 | 149 | 128 | ||||||||||||
Other | 85 | 80 | 168 | 156 | ||||||||||||
$ | 1,383 | $ | 1,266 | $ | 2,703 | $ | 2,481 | |||||||||
11. | Operating Expenses |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Programming | $ | 379 | $ | 336 | $ | 755 | $ | 678 | ||||||||
Service | 205 | 186 | 408 | 356 | ||||||||||||
Advertising sales | 27 | 24 | 52 | 47 | ||||||||||||
$ | 611 | $ | 546 | $ | 1,215 | $ | 1,081 | |||||||||
12. | Selling, General and Administrative Expenses |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
General and administrative | $ | 236 | $ | 220 | $ | 471 | $ | 418 | ||||||||
Marketing | 43 | 30 | 80 | 65 | ||||||||||||
$ | 279 | $ | 250 | $ | 551 | $ | 483 | |||||||||
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13. | Other Operating (Income) Expenses, Net |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Loss on sale of assets, net | $ | — | $ | — | $ | — | $ | 4 | ||||||||
Special charges, net | 7 | (2 | ) | 10 | 2 | |||||||||||
$ | 7 | $ | (2 | ) | $ | 10 | $ | 6 | ||||||||
14. | Other Income (Expenses), Net |
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Gain (loss) on derivative instruments and hedging activities, net | $ | 3 | $ | (1 | ) | $ | 11 | $ | 26 | |||||||
Gain (loss) on extinguishment of debt | (27 | ) | (2 | ) | (27 | ) | 4 | |||||||||
Minority interest | (6 | ) | (3 | ) | (10 | ) | (6 | ) | ||||||||
Gain on investments | 5 | 20 | 4 | 21 | ||||||||||||
Other, net | (1 | ) | — | 3 | — | |||||||||||
$ | (26 | ) | $ | 14 | $ | (19 | ) | $ | 45 | |||||||
15. | Income Taxes |
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Table of Contents
16. | Contingencies |
17. | Stock Compensation Plans |
F-74
Table of Contents
18. | Related Party Transactions |
CC VIII, LLC |
F-75
Table of Contents
19. | Recently Issued Accounting Standards |
20. | Consolidating Schedules |
F-76
Table of Contents
F-77
Table of Contents
�� | ||||||||||||||||||||||||||||||
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 2 | $ | 2 | $ | 1 | $ | 43 | $ | — | $ | 48 | ||||||||||||||||
Accounts receivable, net | — | — | — | — | 178 | — | 178 | |||||||||||||||||||||||
Receivables from related party | 128 | — | — | — | — | (128 | ) | — | ||||||||||||||||||||||
Prepaid expenses and other current assets | — | — | — | — | 20 | — | 20 | |||||||||||||||||||||||
Assets held for sale | — | — | — | — | 768 | — | 768 | |||||||||||||||||||||||
Total current assets | 128 | 2 | 2 | 1 | 1,009 | (128 | ) | 1,014 | ||||||||||||||||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | — | — | — | — | 5,354 | — | 5,354 | |||||||||||||||||||||||
Franchises, net | — | — | — | — | 9,280 | — | 9,280 | |||||||||||||||||||||||
Total investment in cable properties, net | — | — | — | — | 14,634 | — | 14,634 | |||||||||||||||||||||||
INVESTMENT IN SUBSIDIARIES | — | — | 2,648 | 4,535 | — | (7,183 | ) | — | ||||||||||||||||||||||
OTHER NONCURRENT ASSETS | 13 | 21 | 43 | 21 | 196 | — | 294 | |||||||||||||||||||||||
Total assets | $ | 141 | $ | 23 | $ | 2,693 | $ | 4,557 | $ | 15,839 | $ | (7,311 | ) | $ | 15,942 | |||||||||||||||
LIABILITIES AND MEMBER’S EQUITY (DEFICIT) | ||||||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 46 | $ | 69 | $ | 97 | $ | 55 | $ | 862 | $ | — | $ | 1,129 | ||||||||||||||||
Payables to related party | — | 2 | 4 | 8 | 99 | (23 | ) | 90 | ||||||||||||||||||||||
Liabilities held for sale | — | — | — | — | 20 | — | 20 | |||||||||||||||||||||||
Total current liabilities | 46 | 71 | 101 | 63 | 981 | (23 | ) | 1,239 | ||||||||||||||||||||||
LONG-TERM DEBT | 1,757 | 2,520 | 3,678 | 2,042 | 9,015 | — | 19,012 | |||||||||||||||||||||||
LOANS PAYABLE — RELATED PARTY | — | — | — | (196 | ) | 304 | (105 | ) | 3 | |||||||||||||||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | — | — | — | — | 14 | — | 14 | |||||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | — | — | — | — | 359 | — | 359 | |||||||||||||||||||||||
LOSSES IN EXCESS OF INVESTMENT | 3,654 | 1,086 | — | — | — | (4,740 | ) | — | ||||||||||||||||||||||
MINORITY INTEREST | — | — | — | — | 631 | — | 631 | |||||||||||||||||||||||
MEMBER’S EQUITY (DEFICIT): | ||||||||||||||||||||||||||||||
Member’s equity (deficit) | (5,316 | ) | (3,654 | ) | (1,086 | ) | 2,648 | 4,533 | (2,443 | ) | (5,318 | ) | ||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||
Total member’s equity (deficit) | (5,316 | ) | (3,654 | ) | (1,086 | ) | 2,648 | 4,535 | (2,443 | ) | (5,316 | ) | ||||||||||||||||||
Total liabilities and member’s equity (deficit) | $ | 141 | $ | 23 | $ | 2,693 | $ | 4,557 | $ | 15,839 | $ | (7,311 | ) | $ | 15,942 | |||||||||||||||
F-78
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 3 | $ | 8 | $ | — | $ | 3 | $ | — | $ | 14 | ||||||||||||||||
Accounts receivable, net | — | — | — | — | 212 | — | 212 | |||||||||||||||||||||||
Receivables from related party | 24 | — | — | — | — | (24 | ) | — | ||||||||||||||||||||||
Prepaid expenses and other current assets | — | — | — | — | 22 | — | 22 | |||||||||||||||||||||||
Total current assets | 24 | 3 | 8 | 237 | (24 | ) | 248 | |||||||||||||||||||||||
INVESTMENT IN CABLE PROPERTIES: | ||||||||||||||||||||||||||||||
Property, plant and equipment, net | — | — | — | — | 5,800 | — | 5,800 | |||||||||||||||||||||||
Franchises, net | — | — | — | — | 9,826 | — | 9,826 | |||||||||||||||||||||||
Total investment in cable properties, net | — | — | — | — | 15,626 | — | 15,626 | |||||||||||||||||||||||
INVESTMENT IN SUBSIDIARIES | — | — | 3,402 | 5,044 | — | (8,446 | ) | — | ||||||||||||||||||||||
OTHER NONCURRENT ASSETS | 14 | 21 | 45 | 14 | 224 | — | 318 | |||||||||||||||||||||||
Total assets | $ | 38 | $ | 24 | $ | 3,455 | $ | 5,058 | $ | 16,087 | $ | (8,470 | ) | $ | 16,192 | |||||||||||||||
LIABILITIES AND MEMBER’S EQUITY (DEFICIT) | ||||||||||||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||||||||||||
Accounts payable and accrued expenses | $ | 42 | $ | 24 | $ | 107 | $ | 48 | $ | 875 | $ | — | $ | 1,096 | ||||||||||||||||
Payables to related party | — | 2 | 3 | 7 | 95 | (24 | ) | 83 | ||||||||||||||||||||||
Total current liabilities | 42 | 26 | 110 | 55 | 970 | (24 | ) | 1,179 | ||||||||||||||||||||||
LONG-TERM DEBT | 1,746 | 2,472 | 3,683 | 1,601 | 9,023 | — | 18,525 | |||||||||||||||||||||||
LOANS PAYABLE — RELATED PARTY | — | — | — | — | 22 | — | 22 | |||||||||||||||||||||||
DEFERRED MANAGEMENT FEES — RELATED PARTY | — | — | — | — | 14 | — | 14 | |||||||||||||||||||||||
OTHER LONG-TERM LIABILITIES | — | — | — | — | 392 | — | 392 | |||||||||||||||||||||||
LOSSES IN EXCESS OF INVESTMENT | 2,812 | 338 | — | — | — | (3,150 | ) | — | ||||||||||||||||||||||
MINORITY INTEREST | — | — | — | — | 622 | — | 622 | |||||||||||||||||||||||
MEMBER’S EQUITY (DEFICIT): | ||||||||||||||||||||||||||||||
Member’s equity (deficit) | (4,562 | ) | (2,812 | ) | (338 | ) | 3,402 | 5,042 | (5,296 | ) | (4,564 | ) | ||||||||||||||||||
Accumulated other comprehensive income | — | — | — | — | 2 | — | 2 | |||||||||||||||||||||||
Total member’s equity (deficit) | (4,562 | ) | (2,812 | ) | (338 | ) | 3,402 | 5,044 | (5,296 | ) | (4,562 | ) | ||||||||||||||||||
Total liabilities and member’s equity (deficit) | $ | 38 | $ | 24 | $ | 3,455 | $ | 5,058 | $ | 16,087 | $ | (8,470 | ) | $ | 16,192 | |||||||||||||||
F-79
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
REVENUES | $ | — | $ | — | $ | — | $ | — | $ | 2,703 | $ | — | $ | 2,703 | ||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | — | — | — | — | 1,215 | — | 1,215 | |||||||||||||||||||||||
Selling, general and administrative | — | — | — | — | 551 | — | 551 | |||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 690 | — | 690 | |||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 99 | — | 99 | |||||||||||||||||||||||
Other operating expenses, net | — | — | — | — | 10 | — | 10 | |||||||||||||||||||||||
— | — | — | — | 2,565 | — | 2,565 | ||||||||||||||||||||||||
Operating income from continuing operations | — | — | — | — | 138 | — | 138 | |||||||||||||||||||||||
OTHER INCOME AND (EXPENSES): | ||||||||||||||||||||||||||||||
Interest expense, net | (88 | ) | (141 | ) | (190 | ) | (98 | ) | (390 | ) | — | (907 | ) | |||||||||||||||||
Other expense, net | — | — | — | — | (19 | ) | — | (19 | ) | |||||||||||||||||||||
Equity in losses of subsidiaries | (666 | ) | (525 | ) | (335 | ) | (237 | ) | — | 1,763 | — | |||||||||||||||||||
(754 | ) | (666 | ) | (525 | ) | (335 | ) | (409 | ) | 1,763 | (926 | ) | ||||||||||||||||||
Loss from continuing operations before income taxes | (754 | ) | (666 | ) | (525 | ) | (335 | ) | (271 | ) | 1,763 | (788 | ) | |||||||||||||||||
INCOME TAX EXPENSE | — | — | — | — | (4 | ) | — | (4 | ) | |||||||||||||||||||||
Loss from continuing operations | (754 | ) | (666 | ) | (525 | ) | (335 | ) | (275 | ) | 1,763 | (792 | ) | |||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | — | — | — | — | 38 | — | 38 | |||||||||||||||||||||||
Net loss | $ | (754 | ) | $ | (666 | ) | $ | (525 | ) | $ | (335 | ) | $ | (237 | ) | $ | 1,763 | $ | (754 | ) | ||||||||||
F-80
Table of Contents
Charter | ||||||||||||||||||||||||||||||
Charter | All Other | Holdings | ||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||
REVENUES | $ | — | $ | — | $ | — | $ | — | $ | 2,481 | $ | — | $ | 2,481 | ||||||||||||||||
COSTS AND EXPENSES: | ||||||||||||||||||||||||||||||
Operating (excluding depreciation and amortization) | — | — | — | — | 1,081 | — | 1,081 | |||||||||||||||||||||||
Selling, general and administrative | — | — | — | — | 483 | — | 483 | |||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 730 | — | 730 | |||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 39 | — | 39 | |||||||||||||||||||||||
Other operating expenses, net | — | — | — | — | 6 | — | 6 | |||||||||||||||||||||||
— | — | — | — | 2,339 | — | 2,339 | ||||||||||||||||||||||||
Operating income from continuing operations | — | — | — | — | 142 | — | 142 | |||||||||||||||||||||||
OTHER INCOME AND (EXPENSES): | ||||||||||||||||||||||||||||||
Interest expense, net | (447 | ) | — | — | (84 | ) | (324 | ) | — | (855 | ) | |||||||||||||||||||
Other income, net | 10 | — | — | — | 35 | — | 45 | |||||||||||||||||||||||
Equity in losses of subsidiaries | (220 | ) | (220 | ) | (220 | ) | (136 | ) | — | 796 | — | |||||||||||||||||||
(657 | ) | (220 | ) | (220 | ) | (220 | ) | (289 | ) | 796 | (810 | ) | ||||||||||||||||||
Loss from continuing operations before income taxes | (657 | ) | (220 | ) | (220 | ) | (220 | ) | (147 | ) | 796 | (668 | ) | |||||||||||||||||
INCOME TAX EXPENSE | — | — | — | — | (8 | ) | — | (8 | ) | |||||||||||||||||||||
Loss from continuing operations | (657 | ) | (220 | ) | (220 | ) | (220 | ) | (155 | ) | 796 | (676 | ) | |||||||||||||||||
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX | — | — | — | — | 19 | — | 19 | |||||||||||||||||||||||
Net loss | $ | (657 | ) | $ | (220 | ) | $ | (220 | ) | $ | (220 | ) | $ | (136 | ) | $ | 796 | $ | (657 | ) | ||||||||||
F-81
Table of Contents
Charter | |||||||||||||||||||||||||||||||
Charter | All Other | Holdings | |||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||||||||||
Net loss | $ | (754 | ) | $ | (666 | ) | $ | (525 | ) | $ | (335 | ) | $ | (237 | ) | $ | 1,763 | $ | (754 | ) | |||||||||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 698 | — | 698 | ||||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 99 | — | 99 | ||||||||||||||||||||||||
Noncash interest expense | 12 | 49 | (3 | ) | 2 | 14 | — | 74 | |||||||||||||||||||||||
Equity in losses of subsidiaries | 666 | 525 | 335 | 237 | — | (1,763 | ) | — | |||||||||||||||||||||||
Other, net | — | — | — | — | 27 | — | 27 | ||||||||||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||||||||||||||||||||||
Accounts receivable | — | — | — | — | 29 | — | 29 | ||||||||||||||||||||||||
Accounts payable, accrued expenses and other | 4 | 44 | (10 | ) | 7 | (17 | ) | — | 28 | ||||||||||||||||||||||
Receivables from and payables to related party, including deferred management fees | 2 | — | — | 2 | (1 | ) | — | 3 | |||||||||||||||||||||||
Net cash flows from operating activities | (70 | ) | (48 | ) | (203 | ) | (87 | ) | 612 | — | 204 | ||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||||||||||
Purchases of property, plant and equipment | — | — | — | — | (539 | ) | — | (539 | ) | ||||||||||||||||||||||
Change in accrued expenses related to capital expenditures | — | — | — | — | (9 | ) | — | (9 | ) | ||||||||||||||||||||||
Proceeds from sale of assets | — | — | — | — | 9 | — | 9 | ||||||||||||||||||||||||
Purchase of cable system | — | — | — | — | (42 | ) | — | (42 | ) | ||||||||||||||||||||||
Proceeds from investments | — | — | — | — | 28 | — | 28 | ||||||||||||||||||||||||
Net cash flows from investing activities | — | — | — | — | (553 | ) | — | (553 | ) | ||||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Borrowings of long-term debt | — | — | — | — | 5,830 | — | 5,830 | ||||||||||||||||||||||||
Borrowings from related party | — | — | — | (194 | ) | 300 | (106 | ) | — | ||||||||||||||||||||||
Repayments of long-term debt | — | — | — | — | (5,838 | ) | — | (5,838 | ) | ||||||||||||||||||||||
Repayments to related parties | — | — | — | — | (20 | ) | — | (20 | ) | ||||||||||||||||||||||
Proceeds from issuance of debt | — | — | — | 440 | — | — | 440 | ||||||||||||||||||||||||
Payments for debt issuance costs | — | — | — | (10 | ) | (19 | ) | — | (29 | ) | |||||||||||||||||||||
Distributions | 70 | 47 | 197 | (148 | ) | (272 | ) | 106 | — | ||||||||||||||||||||||
Net cash flows from financing activities | 70 | 47 | 197 | 88 | (19 | ) | — | 383 | |||||||||||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | (1 | ) | (6 | ) | 1 | 40 | ��� | 34 | ||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | — | 3 | 8 | — | 3 | — | 14 | ||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | — | $ | 2 | $ | 2 | $ | 1 | $ | 43 | $ | — | $ | 48 | |||||||||||||||||
F-82
Table of Contents
Charter | |||||||||||||||||||||||||||||||
Charter | All Other | Holdings | |||||||||||||||||||||||||||||
Holdings | CIH | CCH I | CCH II | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||||||||||
Net loss | $ | (657 | ) | $ | (220 | ) | $ | (220 | ) | $ | (220 | ) | $ | (136 | ) | $ | 796 | $ | (657 | ) | |||||||||||
Adjustments to reconcile net loss to net cash flows from operating activities: | |||||||||||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | 759 | — | 759 | ||||||||||||||||||||||||
Asset impairment charges | — | — | — | — | 39 | — | 39 | ||||||||||||||||||||||||
Noncash interest expense | 114 | — | — | 1 | 13 | — | 128 | ||||||||||||||||||||||||
Deferred income taxes | — | — | — | — | 5 | — | 5 | ||||||||||||||||||||||||
Equity in losses of subsidiaries | 220 | 220 | 220 | 136 | — | (796 | ) | — | |||||||||||||||||||||||
Other, net | (11 | ) | — | — | — | (31 | ) | — | (42 | ) | |||||||||||||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||||||||||||||||||||||||||
Accounts receivable | 10 | — | — | — | (10 | ) | — | — | |||||||||||||||||||||||
Prepaid expenses and other assets | — | — | — | — | (21 | ) | — | (21 | ) | ||||||||||||||||||||||
Accounts payable, accrued expenses and other | 27 | — | — | — | (46 | ) | — | (19 | ) | ||||||||||||||||||||||
Receivables from and payables to related party, including deferred management fees | (8 | ) | — | — | — | (20 | ) | — | (28 | ) | |||||||||||||||||||||
Net cash flows from operating activities | (305 | ) | — | — | (83 | ) | 552 | — | 164 | ||||||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||||||||||
Purchases of property, plant and equipment | — | — | — | — | (542 | ) | — | (542 | ) | ||||||||||||||||||||||
Change in accrued expenses related to capital expenditures | — | — | — | — | 48 | — | 48 | ||||||||||||||||||||||||
Proceeds from sale of assets | — | — | — | — | 8 | — | 8 | ||||||||||||||||||||||||
Proceeds from investments | — | — | — | — | 16 | — | 16 | ||||||||||||||||||||||||
Other, net | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||||||||||||||
Net cash flows from investing activities | — | — | — | — | (472 | ) | — | (472 | ) | ||||||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Borrowings of long-term debt | — | — | — | — | 635 | — | 635 | ||||||||||||||||||||||||
Borrowings from related parties | — | — | — | — | 140 | — | 140 | ||||||||||||||||||||||||
Repayments of long-term debt | — | — | — | — | (819 | ) | — | (819 | ) | ||||||||||||||||||||||
Repayments to parent companies | — | — | — | — | (107 | ) | — | (107 | ) | ||||||||||||||||||||||
Payments for debt issuance costs | — | — | — | — | (3 | ) | — | (3 | ) | ||||||||||||||||||||||
Distributions | 307 | — | — | 83 | (450 | ) | — | (60 | ) | ||||||||||||||||||||||
Net cash flows from financing activities | 307 | — | — | 83 | (604 | ) | — | (214 | ) | ||||||||||||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 2 | — | — | — | (524 | ) | — | (522 | ) | ||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, beginning of period | — | — | — | — | 546 | 546 | |||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 2 | $ | — | $ | — | $ | — | $ | 22 | $ | — | $ | 24 | |||||||||||||||||
F-83