Charter 2006 Annual Report Download - page 18

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CHARTER COMMUNICATIONS, INC. 2006 FORM 10-K
(1) Charter acts as the sole manager of Charter Holdco and its direct and indirect limited liability company subsidiaries. Charter’s certificate of incorporation requires that its
principal assets be securities of Charter Holdco, the terms of which mirror the terms of securities issued by Charter. See ‘‘Item 1. Business — Corporate Organizational
Structure — Charter Communications, Inc.’’ below.
(2) These membership units are held by Charter Investment, Inc. (‘‘CII’’) and Vulcan Cable III Inc., each of which is 100% owned by Paul G. Allen, our chairman and
controlling shareholder. They are exchangeable at any time on a one-for-one basis for shares of Charter Class B common stock, which in turn are exchangeable into
Charter Class A common stock.
(3) The percentages shown in this table reflect the 39.8 million shares of Class A common stock outstanding as of December 31, 2006 issued pursuant to the share lending
agreement. However, for accounting purposes, Charter’s common equity interest in Charter Holdco is 52%, and Paul G. Allen’s ownership of Charter Holdco through CII
and Vulcan Cable III Inc. is 48%. These percentages exclude the 39.8 million mirror membership units outstanding as of December 31, 2006 issued pursuant to the share
lending agreement. See Note 13 to the accompanying consolidated financial statements contained in ‘‘Item 8. Financial Statements and Supplementary Data.’’
(4) Represents preferred membership interests in CC VIII, LLC (‘‘CC VIII’’), a subsidiary of CC V Holdings, LLC, and an exchangeable accreting note issued by CCHC
related to the settlement of the CC VIII dispute. See Note 10 to the accompanying consolidated financial statements contained in ‘‘Item 8. Financial Statements and
Supplementary Data.’’
Charter Communications, Inc. Certain provisions of Charter’s purposes) and a 100% voting interest in Charter Holdco, ‘‘mirror’’
certificate of incorporation and Charter Holdco’s limited liability notes that are payable by Charter Holdco to Charter that have the
company agreement effectively require that Charter’s investment same principal amount and terms as Charter’s convertible senior
in Charter Holdco replicate, on a ‘‘mirror’’ basis, Charter’s notes and preferred units in Charter Holdco that mirror the terms
outstanding equity and debt structure. As a result of these and liquidation preferences of Charter’s outstanding preferred stock.
coordinating provisions, whenever Charter issues equity or debt, Charter Holdco, through its subsidiaries, owns cable systems and
Charter transfers the proceeds from such issuance to Charter certain strategic investments. As sole manager under applicable
Holdco, and Charter Holdco issues a ‘‘mirror’’ security to operating agreements, Charter controls the affairs of Charter
Charter that replicates the characteristics of the security issued Holdco and its limited liability company subsidiaries. In addition,
by Charter. Consequently, Charter’s principal assets are an Charter also provides management services to Charter Holdco and
approximate 55% common equity interest (52% for accounting its subsidiaries under a management services agreement.
4