Charter 2007 Annual Report Download - page 12

PART I
ITEM 1. BUSINESS.
INTRODUCTION
Charter Communications, Inc. (“Charter”) operates broadband
communications businesses in the United States, with approxi-
mately 5.60 million customers at December 31, 2007. Through
our hybrid fiber and coaxial cable network, we offer traditional
cable video programming (analog and digital, which we refer to
as “video” service), high-speed Internet access, and telephone
service, as well as, advanced broadband services (such as Charter
OnDemand
TM
video service (“OnDemand”), high definition tele-
vision service, and digital video recorder (“DVR”) service). See
“Item 1. Business – Products and Services” for further description
of these terms, including “customers.”
At December 31, 2007, we served approximately 5.22 million
video customers, of which approximately 2.92 million were also
digital video customers. We also served approximately 2.68 mil-
lion high-speed Internet customers (including approximately
289,600 who received only high-speed Internet services). We also
provided telephone service to approximately 959,300 customers
(including approximately 38,700 who received only telephone
service).
At December 31, 2007, our investment in cable properties,
long-term debt, accumulated deficit, and total shareholders’ defi-
cit were $14.0 billion, $19.9 billion, $13.1 billion and $7.9 billion,
respectively. Our working capital deficit was $996 million as of
December 31, 2007. For the year ended December 31, 2007, our
revenues, net loss, and net loss per common share were approx-
imately $6.0 billion, $1.6 billion, and $4.39, respectively.
We have a history of net losses. Further, we expect to
continue to report net losses for the foreseeable future. Our net
losses are principally attributable to insufficient revenue to cover
the combination of operating expenses and interest expenses we
incur because of our high level of debt, and depreciation
expenses that we incur resulting from the capital investments we
have made and continue to make in our cable properties. We
expect that these expenses will remain significant.
Charter was organized as a Delaware corporation in 1999
and completed an initial public offering of its Class A common
stock in November 1999. Charter is a holding company whose
principal assets at December 31, 2007 are the 54% controlling
common equity interest (52% for accounting purposes) and a
100% voting interest in Charter Communications Holding Com-
pany, LLC (“Charter Holdco”), the direct parent of CCHC, LLC
(“CCHC”), which is the direct parent of Charter Communica-
tions Holdings, LLC (“Charter Holdings”). Charter also holds
certain preferred equity and indebtedness of Charter Holdco that
mirror the terms of securities issued by Charter. Charter’s only
business is to act as the sole manager of Charter Holdco and its
subsidiaries. As sole manager, Charter controls the affairs of
Charter Holdco and its limited liability company subsidiaries.
Paul G. Allen controls Charter through a voting control
interest of 91% as of December 31, 2007. He also owns 46% of
Charter Holdco and a note convertible into Charter Holdco
membership units through affiliated entities. His membership
units in Charter Holdco are convertible at any time for shares of
Charter’s Class B common stock on a one-for-one basis, which
shares are in turn convertible into Charter’s Class A common
stock on a one-for-one basis. Mr. Allen would hold a common
equity interest of approximately 50% on an as-converted basis as
of December 31, 2007. Each share of Class A common stock is
entitled to one vote. Mr. Allen is entitled to ten votes for each
share of Class B common stock and for each membership unit in
Charter Holdco held by him and his affiliates.
Our principal executive offices are located at Charter Plaza,
12405 Powerscourt Drive, St. Louis, Missouri 63131. Our tele-
phone number is [phone], and we have a website acces-
sible at www.charter.com. Since January 1, 2002, our annual
reports, quarterly reports and current reports on Form 8-K, and
all amendments thereto, have been made available on our
website free of charge as soon as reasonably practicable after
they have been filed. The information posted on our website is
not incorporated into this annual report.
Certain Significant Developments in 2007
We continue to pursue opportunities to improve our liquidity.
Our efforts in this regard resulted in the completion of a number
of financing transactions in 2007, as follows:
kthe March 2007 entry by our subsidiary, Charter Communi-
cations Operating, LLC (“Charter Operating”) into an
Amended and Restated Credit Agreement which provided a
$1.5 billion senior secured revolving line of credit, a contin-
uation of the existing $5.0 billion term loan facility, and a
$1.5 billion new term loan facility;
kthe March 2007 entry by our subsidiary, CCO Holdings,
LLC (“CCO Holdings”) into a credit agreement consisting
of a $350 million term loan facility maturing September
2014;
kthe April 2007 cash tender offer and purchase of $97 million
of outstanding notes of our subsidiary, Charter Holdings,
and subsequent redemption of $187 million of its
8.625% senior notes due April 1, 2009 and $550 million of
CCO Holdings senior floating rate notes due December 15,
2010; and
kthe October 2007 exchange offer, in which we issued
$479 million of our 6.50% convertible senior notes due 2027
in exchange for $364 million of our 5.875% convertible
senior notes due 2009.
Company Focus
We strive to provide value to our customers by offering a suite of
services which include video, high-speed Internet, and telephone
service as well as advanced broadband service offerings including
OnDemand, high-definition television service, and DVR service.
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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