Charter 2005 Annual Report Download - page 59

CHARTER COMMUNICATIONS, INC. 2005 FORM 10-K
related to network launches, while accounts receivable remained $1.0 billion to $1.1 billion. We expect that the nature of these
essentially flat in the year ended December 31, 2004. expenditures will continue to be composed primarily of purchases
of customer premise equipment related to telephone and other
Investing activities. Net cash used in investing activities for the advanced services, support capital and for scalable infrastructure
years ended December 31, 2005 and 2004 was $1.0 billion and costs. We expect to fund capital expenditures for 2006 primarily
$243 million, respectively. Investing activities used $782 million from cash flows from operating activities and borrowings under
more cash during the year ended December 31, 2005 than the our credit facilities.
corresponding period in 2004 primarily as a result of cash We have adopted capital expenditure disclosure guidance,
provided by proceeds from the sale of certain cable systems to which was developed by eleven publicly traded cable system
Atlantic Broadband Finance, LLC in 2004 which did not recur operators, including Charter, with the support of the National
in 2005 combined with increased cash used for capital Cable & Telecommunications Association (‘‘NCTA’’). The dis-
expenditures. closure is intended to provide more consistency in the reporting
Net cash used in investing activities for the years ended of operating statistics in capital expenditures and customers
December 31, 2004 and 2003 was $243 million and $817 mil- among peer companies in the cable industry. These disclosure
lion, respectively. Investing activities used $574 million less cash guidelines are not required disclosure under GAAP, nor do they
during the year ended December 31, 2004 than the correspond- impact our accounting for capital expenditures under GAAP.
ing period in 2003 primarily as a result of cash provided by The following table presents our major capital expenditures
proceeds from the sale of certain cable systems to Atlantic categories in accordance with NCTA disclosure guidelines for
Broadband Finance, LLC offset by increased cash used for the years ended December 31, 2005, 2004 and 2003 (dollars in
capital expenditures. millions):
For the Years Ended
Financing activities. Net cash provided by financing activities was
December 31,
$136 million and $294 million for the years ended December 31, 2005 2004 2003
2005 and 2004, respectively. The decrease in cash provided Customer premise equipment(a) $ 434 $451 $380
during the year ended December 31, 2005, as compared to the Scalable infrastructure(b) 174 108 67
corresponding period in 2004, was primarily the result of an Line extensions(c) 134 131 131
decrease in borrowings of long-term debt and proceeds from Upgrade/Rebuild(d) 49 49 132
Support capital(e) 297 185 144
issuance of debt offset by a decrease in repayments of long-term
Total capital expenditures $1,088 $924 $854
debt.
Net cash provided by financing activities for the year ended (a) Customer premise equipment includes costs incurred at the customer residence
to secure new customers, revenue units and additional bandwidth revenues. It
December 31, 2004 was $294 million and the net cash used in also includes customer installation costs in accordance with SFAS 51 and
financing activities for the year ended December 31, 2003 was customer premise equipment (e.g., set-top terminals and cable modems, etc.).
$142 million. The increase in cash provided during the year (b) Scalable infrastructure includes costs, not related to customer premise equipment
or our network, to secure growth of new customers, revenue units and
ended December 31, 2004, as compared to the corresponding additional bandwidth revenues or provide service enhancements (e.g., headend
period in 2003, was primarily the result of an increase in equipment).
borrowings of long-term debt and proceeds from issuance of (c) Line extensions include network costs associated with entering new service areas
(e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design
debt reduced by repayments of long-term debt. engineering).
(d) Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable
Capital Expenditures networks, including betterments.
We have significant ongoing capital expenditure requirements. (e) Support capital includes costs associated with the replacement or enhancement
Capital expenditures were $1.1 billion, $924 million and of non-network assets due to technological and physical obsolescence (e.g., non-
network equipment, land, buildings and vehicles).
$854 million for the years ended December 31, 2005, 2004 and
2003, respectively. The majority of the capital expenditures in
2005, 2004 and 2003 related to our customer premise equipment
costs. See the table below for more details.
Our capital expenditures are funded primarily from cash
flows from operating activities, the issuance of debt and
borrowings under credit facilities. In addition, during the years
ended December 31, 2005, 2004 and 2003, our liabilities related
to capital expenditures increased $8 million and decreased
$43 million and $33 million, respectively.
The increase in capital expenditures for 2005 compared to
2004 is the result of expected increases in scalable infrastructure
costs related to telephone services, deployment of advanced
digital set-top terminals and capital expenditures to replace plant
and equipment destroyed by hurricanes Katrina and Rita. During
2006, we expect capital expenditures to be approximately
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