Charter 2003 Annual Report Download - page 118

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 and 2001
(dollars in millions, except where indicated)
2003 2002
Face Accreted Face Accreted
Value Value Value Value
Credit Facilities
Charter Operating ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,459 4,459 4,542 4,542
CC VI ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 868 868 926 926
Falcon Cable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 856 856 1,155 1,155
CC VIII Operating ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,044 1,044 1,166 1,166
$19,208 $18,647 $19,692 $18,671
The accreted values presented above represent the face value of the notes less the original issue discount
at the time of sale plus the accretion to the balance sheet date.
In September 2003, Charter, Charter Holdings and their indirect subsidiary, CCH II, LLC (""CCH II'')
purchased, in a non-monetary transaction, a total of approximately $609 million principal amount of Charter's
outstanding convertible senior notes and approximately $1.3 billion principal amount of the senior notes and
senior discount notes issued by Charter Holdings from institutional investors in a small number of privately
negotiated transactions. As consideration for these securities, CCH II issued approximately $1.6 billion
principal amount of 10.25% notes due 2010, achieving approximately $294 million of debt discount. CCH II
also issued an additional $30 million principal amount of 10.25% notes for an equivalent amount of cash and
used the proceeds for transaction costs and for general corporate purposes. See discussion of the CCH II notes
below for more details.
5.75% Charter Convertible Notes. In October and November 2000, Charter issued 5.75% convertible
senior notes with a total principal amount at maturity of $750 million. As of December 31, 2003, there was
$618 million in total principal amount of these notes outstanding. The 5.75% Charter convertible notes are
convertible at the option of the holder into shares of Class A common stock at a conversion rate of 46.3822
shares per $1,000 principal amount of notes, which is equivalent to a price of $21.56 per share, subject to
certain adjustments. SpeciÑcally, the adjustments include anti-dilutive provisions, which cause adjustments to
occur automatically based on the occurrence of speciÑed events to provide protection rights to holders of the
notes. Additionally, Charter may adjust the conversion ratio under certain circumstances when deemed
appropriate. These notes are redeemable at Charter's option at amounts decreasing from 102.3% to 100% of
the principal amount plus accrued and unpaid interest beginning on October 15, 2003, to the date of
redemption. Interest is payable semiannually on April 15 and October 15, beginning April 15, 2001, until
maturity on October 15, 2005.
The 5.75% Charter convertible notes rank equally with any of Charter's future unsubordinated and
unsecured indebtedness, but are structurally subordinated to all existing and future indebtedness and other
liabilities of Charter's subsidiaries. Upon a change of control, subject to certain conditions and restrictions,
Charter may be required to repurchase the notes, in whole or in part, at 100% of their principal amount plus
accrued interest at the repurchase date.
4.75% Charter Convertible Notes. In May 2001, Charter issued 4.75% convertible senior notes with a
total principal amount at maturity of $633 million. As of December 31, 2003, there was $156 million in total
principal amount of these notes outstanding. The 4.75% Charter convertible notes are convertible at the option
of the holder into shares of Class A common stock at a conversion rate of 38.0952 shares per $1,000 principal
amount of notes, which is equivalent to a price of $26.25 per share, subject to certain adjustments.
SpeciÑcally, the adjustments include anti-dilutive provisions, which automatically occur based on the
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