Charter 2004 Annual Report Download - page 11

CHARTER COMMUNICATIONS, INC. 2004 FORM 10-K
PART I
ITEM 1. BUSINESS.
INTRODUCTION Charter Communications Holdings, LLC (‘‘Charter Holdings’’).
Charter also holds certain preferred equity and indebtedness of
Charter Communications, Inc. (‘‘Charter’’) is a broadband
Charter Holdco that mirror the terms of securities issued by
communications company operating in the United States, with
Charter. Charter’s only business is to act as the sole manager of
approximately 6.22 million customers at December 31, 2004.
Charter Holdco and its subsidiaries. As sole manager, Charter
Through our broadband network of coaxial and fiber optic
controls the affairs of Charter Holdco and its subsidiaries.
cable, we offer our customers traditional cable video program-
Certain of our subsidiaries commenced operations under the
ming (analog and digital, which we refer to as ‘‘video’’ service),
‘‘Charter Communications’’ name in 1994, and our growth to
high-speed cable Internet access (which we refer to as ‘‘high-
date has been primarily due to acquisitions and business
speed data service’’), advanced broadband cable services (such as
combinations, most notably acquisitions completed from 1999
video on demand (‘‘VOD’’), high definition television service and
through 2001, pursuant to which we acquired a total of
interactive television) and, in some of our markets, we offer
approximately 5.5 million customers. We do not expect to make
telephone service (which we refer to as ‘‘telephony’’). See
any significant acquisitions in the foreseeable future, but plan to
‘‘Business — Products and Services’’ for further description of
evaluate opportunities to consolidate our operations through
these terms, including ‘‘customers.’’
exchanges of cable systems with other cable operators, as they
At December 31, 2004, we served approximately 5.99 mil-
arise. We may also sell certain assets from time to time. Paul G.
lion analog video customers, of which approximately 2.67 mil-
Allen owns 53% of Charter Holdco through affiliated entities.
lion were also digital video customers. We also served
His membership units are convertible at any time for shares of
approximately 1.88 million high-speed data customers (including
our Class A common stock on a one-for-one basis. Paul G.
approximately 217,400 who received only high-speed data
Allen controls Charter with an as-converted common equity
services). We also provided telephony service to approximately
interest of approximately 57% and a voting control interest of
45,400 customers as of that date.
93% as of December 31, 2004.
At December 31, 2004, our investment in cable properties,
Our principal executive offices are located at Charter Plaza,
long-term debt, accumulated deficit and total shareholders’
12405 Powerscourt Drive, St. Louis, Missouri 63131. Our
deficit were $16.2 billion, $19.5 billion, $9.2 billion and $4.4 bil-
telephone number is [phone] and we have a website
lion, respectively. Our working capital deficit was $295 million
accessible at www.charter.com. Since January 1, 2002, our
at December 31, 2004. For the year ended December 31, 2004,
annual reports, quarterly reports and current reports on
our revenues, net loss applicable to common stock and loss per
Form 8-K, and all amendments thereto, have been made
common share were approximately $5.0 billion, $4.3 billion and
available on our website free of charge as soon as reasonably
$14.47, respectively.
practicable after they have been filed. The information posted
We have a history of net losses. Further, we expect to
on our website is not incorporated into this annual report.
continue to report net losses for the foreseeable future. Our net
losses are principally attributable to insufficient revenue to cover
CERTAIN SIGNIFICANT DEVELOPMENTS IN 2004
the interest costs we incur because of our high level of debt, the
depreciation expenses that we incur resulting from the capital In 2004, we completed several transactions that improved our
investments we have made in our cable properties, and the liquidity. Our efforts in this regard have resulted in the
amortization and impairment of our franchise intangibles. We completion of a number of transactions in 2004, as follows:
expect that these expenses (other than impairment of franchises)
(the December 2004 sale by our subsidiaries, CCO Holdings,
will remain significant, and we therefore expect to continue to
LLC and CCO Holdings Capital Corp., of $550 million of
report net losses for the foreseeable future. Additionally, because
senior floating rate notes due 2010;
minority interest in Charter Communications Holding Com-
pany, LLC (‘‘Charter Holdco’’) was substantially eliminated at
(the November 2004 sale by Charter of $862.5 million of
December 31, 2003, beginning in the first quarter of 2004, we 5.875% convertible senior notes due 2009;
absorb substantially all future losses before income taxes that
otherwise would have been allocated to minority interest. This
(the December 2004 redemption of all of our 5.75% convert-
resulted in an additional $2.4 billion of net loss for the year ible senior notes due 2005 ($588 million principal amount);
ended December 31, 2004. Under our existing capital structure,
future losses will continue to be absorbed by Charter. (the April 2004 sale of $1.5 billion of senior second-lien
Charter was organized as a Delaware corporation in 1999 notes by our subsidiary, Charter Communications Operat-
and completed an initial public offering of its Class A common ing, LLC (‘‘Charter Operating’’), together with the concur-
stock in November 1999. Charter is a holding company whose rent refinancing of its credit facilities; and
principal assets are an approximate 47% equity interest and a
100% voting interest in Charter Holdco, the direct parent of
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