Charter 2005 Annual Report Download - page 12

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
approximately $6.8 billion in total principal amount of the full 150 million shares covered by the share lending
outstanding debt securities of Charter Holdings in a private agreement were sold in the prior share borrow transactions, we
placement for new debt securities; remain obligated to issue, at CGML’s request, up to an additional
33.1 million loaned shares in up to two additional subsequent
(the August 2005 sale by our subsidiaries, CCO Holdings registered public offerings pursuant to the share lending
and CCO Holdings Capital Corp., of $300 million of agreement.
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/4% senior notes due 2013; These transactions were conducted to facilitate transactions
(the March and June 2005 issuance of $333 million of by which investors in Charter’s 5.875% convertible senior notes
Charter Communications Operating, LLC (‘‘Charter Oper- due 2009 issued on November 22, 2004, hedged their invest-
ating’’) notes in exchange for $346 million of Charter ments in those convertible senior notes. Charter did not receive
Holdings notes; any of the proceeds from the sale of shares in the share borrow
transactions. However, under the share lending agreement,
(the repurchase during 2005 of $136 million of Charter’s Charter received a loan fee of $.001 for each share that it lent to
4.75% convertible senior notes due 2006 leaving $20 million CGML.
in principal amount outstanding; and
(the March 2005 redemption of all of CC V Holdings, FOCUS FOR 2006
LLC’s outstanding 11.875% senior discount notes due 2008 Our strategy is to leverage the capacity and the capabilities of
at a total cost of $122 million. our broadband network to become the premier provider of in-
home entertainment and communications services in the com-
RECENT EVENTS
munities we serve. By offering excellent value and variety to our
Asset Sales customers through creative product bundles, strategic pricing
On February 28, 2006, Charter announced the signing of two and packaging of all our products and services, our goal is to
separate definitive agreements to sell certain cable television increase profitable revenues that will enable us to maximize
systems serving a total of approximately 316,000 analog video return on our invested capital.
customers, including 142,000 digital video customers and 91,000 Building on the foundation established throughout 2005, in
high-speed Internet customers in West Virginia, Virginia, Illinois 2006, we will strive toward:
and Kentucky for a total of approximately $896 million. The
(improving the end-to-end customer experience and increas-
closings of these transactions are expected to occur in the third ing customer loyalty;
quarter of 2006. Under the terms of the bridge loan, bridge
availability will be reduced by the proceeds of asset sales. (growing sales and retention for all our products and
services; and
Appointment of New Executive Vice President and Chief Financial Officer
Jeffrey T. Fisher, 43, has been appointed to the position of (driving operating and capital effectiveness.
Executive Vice President and Chief Financial Officer, effective The Customer Experience
February 6, 2006. Mr. Fisher succeeds the Interim Chief Providing superior customer service is an essential element of
Financial Officer, Paul E. Martin, who has indicated his our fundamental business strategy. We strive to continually
intention to continue as Charter’s Senior Vice President, improve the end-to-end customer experience and increase
Principal Accounting Officer and Corporate Controller until at customer loyalty by effectively managing our customer care
least March 31, 2006. contact centers in alignment with technical operations. We are
CCH II, LLC Note Offering seeking to instill a customer-service-oriented culture throughout
On January 30, 2006, CCH II and CCH II Capital Corp. issued the organization and will continue to focus on excellence by
an additional $450 million principal amount of their pursuing further improvements in customer service, technical
10.250% senior notes due 2010, the proceeds of which will be operations, sales and marketing.
provided, directly or indirectly, to Charter Operating, which will We are dedicated to fostering strong relationships and
use such funds to reduce borrowings, but not commitments, making not only financial investments, but the investment of
under the revolving portion of its credit facilities. As a result of time and effort to strengthen the communities we serve. We
the offering of these notes, availability under the bridge loan has have developed programs and initiatives that provide valuable
been reduced to $435 million. television time to groups and organizations over our cable
networks.
Consummation of Share Borrow Transaction
On February 9, 2006, we issued 22.0 million shares of Class A Sales and Retention
common stock in a public offering. The shares were issued Providing desirable products and services and investing in
pursuant to a share lending agreement pursuant to which we had profitable marketing programs are major components of our
previously agreed to loan up to 150 million shares to Citigroup sales strategy. Bundling services, combining two or more
Global Markets Limited (‘‘CGML’’). To date, 116.9 million shares Charter services for one discounted price, is fundamental to our
have been sold in share borrow transactions. Because less than marketing strategy. We believe that combining our products into
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