Charter 2006 Annual Report Download - page 104

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2006 FORM 10-K
Notes to Consolidated Financial Statements (continued)
ings under all debt agreements as of December 31, 2006, are as the CCHC Note as of December 31, 2006 and 2005 is
follows: $57 million and $49 million, respectively. If not redeemed prior
to maturity in 2020, $380 million would be due under this note.
Year Amount
11. MINORITY INTEREST AND EQUITY INTEREST OF CHARTER HOLDCO
2007 $ 130
2008 50 Charter is a holding company whose primary assets are a
2009 878 controlling equity interest in Charter Holdco, the indirect owner
2010 3,246 of the Company’s cable systems, and $413 million and $863 mil-
2011 353
Thereafter 14,307 lion at December 31, 2006 and 2005, respectively, of mirror
$18,964 notes that are payable by Charter Holdco to Charter and have
the same principal amount and terms as those of Charter’s
For the amounts of debt scheduled to mature during 2007, convertible senior notes. Minority interest on the Company’s
it is management’s intent to fund the repayments from consolidated balance sheets as of December 31, 2006 and 2005
borrowings on the Company’s revolving credit facility. The primarily represents preferred membership interests in CC VIII,
accompanying consolidated balance sheets reflect this intent by an indirect subsidiary of Charter Holdco, of $192 million and
presenting all debt balances as long-term while the table above $188 million, respectively. As more fully described in Note 22,
reflects actual debt maturities as of the stated date. this preferred interest is held by Mr. Allen, Charter’s Chairman
and controlling shareholder, and CCH I. Approximately 5.6% of
10. NOTE PAYABLE — RELATED PARTY CC VIII’s income is allocated to minority interest.
Minority interest historically included the portion of Char-
CCHC, LLC Note ter Holdco’s member’s equity not owned by Charter. However,
In October 2005, Charter, acting through a Special Committee members’ deficit of Charter Holdco was $5.9 billion, $4.8 billion,
of Charter’s Board of Directors, and Mr. Allen, settled a dispute and $4.4 billion as of December 31, 2006, 2005, and 2004,
that had arisen between the parties with regard to the respectively, thus minority interest in Charter Holdco has been
ownership of CC VIII. As part of that settlement, CCHC issued eliminated. Minority ownership, for accounting purposes, was
a subordinated exchangeable note (the ‘‘CCHC Note’’) to 48%, 52%, and 53% as of December 31, 2006, 2005, and 2004,
Charter Investment, Inc. (‘‘CII’’). The CCHC Note has a 15-year respectively. Because minority interest in Charter Holdco is
maturity. The CCHC Note has an initial accreted value of substantially eliminated, Charter absorbs all losses of Charter
$48 million accreting at 14% compounded quarterly, except that Holdco. Subject to any changes in Charter Holdco’s capital
from and after February 28, 2009, CCHC may pay any increase structure, future losses will continue to be absorbed by Charter
in the accreted value of the CCHC Note in cash and the for GAAP purposes. Changes to minority interest consist of the
accreted value of the CCHC Note will not increase to the following for the periods presented:
extent such amount is paid in cash. The CCHC Note is
exchangeable at CII’s option, at any time, for Charter Holdco Minority
Class A Common units at a rate equal to the then accreted Interest
value, divided by $2.00 (the ‘‘Exchange Rate’’). Customary anti- Balance, December 31, 2003 $ 689
dilution protections have been provided that could cause future Minority interest in loss of a subsidiary (19)
changes to the Exchange Rate. Additionally, the Charter Holdco Minority interest in cumulative effect of accounting change (19)
Reclass of Helicon, LLC interest (25)
Class A Common units received will be exchangeable by the Changes in fair value of interest rate agreements 22
holder into Charter Class B common stock in accordance with Balance, December 31, 2004 648
existing agreements between CII, Charter and certain other Minority interest in loss of subsidiary (1)
parties signatory thereto. Beginning February 28, 2009, if the CC VIII settlement — exchange of interests (467)
closing price of Charter common stock is at or above the Changes in fair value of interest rate agreements and other 8
Exchange Rate for a certain period of time as specified in the Balance, December 31, 2005 188
Minority interest in income of subsidiary 4
Exchange Agreement, Charter Holdco may require the
Balance, December 31, 2006 $ 192
exchange of the CCHC Note for Charter Holdco Class A
Common units at the Exchange Rate. Additionally, CCHC has
the right to redeem the CCHC Note under certain circum- 12. PREFERRED STOCK — REDEEMABLE
stances for cash in an amount equal to the then accreted value,
In November 2005, Charter repurchased 508,546 shares of its
such amount, if redeemed prior to February 28, 2009, would
Series A Convertible Redeemable Preferred Stock (the ‘‘Preferred
also include a make whole up to the accreted value through
Stock’’) for an aggregate purchase price of approximately
February 28, 2009. CCHC must redeem the CCHC Note at its
$31 million (or $60 per share). The shares had liquidation
maturity for cash in an amount equal to the initial stated value
preference of approximately $51 million and had accrued but
plus the accreted return through maturity. The accreted value of
F-23