Charter 2006 Annual Report Download - page 59

CHARTER COMMUNICATIONS, INC. 2006 FORM 10-K
Recent Financing Transactions Historical Operating, Financing and Investing Activities
We have completed many capital transactions since the forma- Cash and Cash Equivalents. We held $60 million in cash and cash
tion of Charter. In 2006, we completed the following capital equivalents as of December 31, 2006 compared to $21 million as
transactions, all of which impacted our liquidity. of December 31, 2005.
In January 2006, CCH II and CCH II Capital Corp. issued
Operating Activities. Net cash provided by operating activities
$450 million in debt securities, the proceeds of which were
increased $63 million, or 24% from $260 million for the year
provided to Charter Operating, which used such funds to reduce
ended December 31, 2005 to $323 million for the year ended
borrowings, but not commitments, under the revolving portion
December 31, 2006. For the year ended December 31, 2006, net
of its credit facilities.
cash provided by operating activities increased primarily as a
In April 2006, Charter Operating completed a $6.85 billion
result of changes in operating assets and liabilities that provided
refinancing of its credit facilities including a new $350 million
$240 million more cash during the year ended December 31,
revolving/term facility (which converts to a term loan no later
2006 than the corresponding period in 2005, offset by an
than April 2007), a $5.0 billion term loan due in 2013, and
increase in cash interest expense of $214 million over the
certain amendments to the existing $1.5 billion revolving credit
corresponding prior period.
facility. In addition, the refinancing reduced margins on
Net cash provided by operating activities decreased
Eurodollar rate term loans to 2.625% from a weighted average
$212 million, or 45%, from $472 million for the year ended
of 3.15% previously, and margins on base rate term loans to
December 31, 2004 to $260 million for the year ended
1.625% from a weighted average of 2.15% previously. Concur-
December 31, 2005. For the year ended December 31, 2005, net
rent with this refinancing, the CCO Holdings bridge loan was
cash provided by operating activities decreased primarily as a
terminated.
result of an increase in cash interest expense of $189 million
In September 2006, Charter Holdings and its wholly owned
over the corresponding prior period, and changes in operating
subsidiaries, CCH I and CCH II, completed the exchange of
assets and liabilities that used $45 million more cash during the
approximately $797 million in total principal amount of out-
year ended December 31, 2005 than the corresponding period
standing debt securities of Charter Holdings. Holders of Charter
in 2004. The change in operating assets and liabilities is
Holdings notes due in 2009-2010 tendered $308 million princi-
primarily the result of the finalization of the class action
pal amount of notes for $250 million principal amount of new
settlement in the third quarter of 2005.
10.25% CCH II notes due 2013 and $37 million principal
amount of 11% CCH I notes due 2015. Holders of Charter Investing Activities. Net cash used in investing activities for the
Holdings notes due 2011-2012 tendered $490 million principal years ended December 31, 2006 and 2005 was $65 million and
amount of notes for $425 million principal amount of 11% CCH $1.0 billion, respectively. Investing activities used $960 million
I notes due 2015. The Charter Holdings notes received in the less cash during the year ended December 31, 2006 than the
exchanges were thereafter distributed to Charter Holdings and corresponding period in 2005 primarily due to $1.0 billion of
retired. Also in September 2006, CCHC and CCH II completed proceeds received in 2006 from the sale of assets, including
the exchange of $450 million principal amount of Charter’s cable systems.
outstanding 5.875% senior convertible notes due 2009 for Net cash used in investing activities for the years ended
$188 million in cash, 45 million shares of Charter’s Class A December 31, 2005 and 2004, was $1.0 billion and $243 million,
common stock and $146 million principal amount of 10.25% respectively. Investing activities used $782 million more cash
CCH II notes due 2010. The convertible notes received in the during the year ended December 31, 2005 than during the
exchange are held by CCHC. corresponding period in 2004, primarily as a result of cash
Sale of Assets provided by proceeds from the sale of certain cable systems to
In 2006, we closed asset sales for total net proceeds of Atlantic Broadband Finance, LLC in 2004, which did not recur
approximately $1.0 billion. We used the net proceeds from the in 2005, combined with increased cash used for capital
asset sales to reduce borrowings, but not commitments, under expenditures.
the revolving portion of our credit facilities. Also in 2006, we
recorded asset impairment charges of $159 million related to Financing Activities. Net cash used by financing activities was
cable systems meeting the criteria of assets held for sale. $219 million and net cash provided by financing activities was
$136 million for the years ended December 31, 2006 and 2005,
Acquisition respectively. The decrease in cash provided during the year
In January 2006, we closed the purchase of certain cable systems ended December 31, 2006 compared to the corresponding
in Minnesota from Seren Innovations, Inc. We acquired approxi- period in 2005, was primarily the result of an increase in
mately 17,500 analog video customers, 8,000 digital video repayments of long-term debt.
customers, 13,200 high-speed Internet customers, and 14,500 Net cash provided by financing activities was $136 million
telephone customers, for a total purchase price of approximately and $294 million for the years ended December 31, 2005 and
$42 million. 2004, respectively. The decrease in cash provided during the
year ended December 31, 2005, as compared to the correspond-
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