Charter 2007 Annual Report Download - page 15

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(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, Charter’s 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 on a one-for-one basis.
(3)
The percentages shown in this table reflect the 24.8 million shares of Class A common stock outstanding as of December 31, 2007 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 24.8 million mirror membership units outstanding as of December 31, 2007 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. See
Notes 10 and 11 to the accompanying consolidated financial statements contained in “Item 8. Financial Statements and Supplementary Data.”
Charter Communications, Inc. Certain provisions of Charter’s certif-
icate of incorporation and Charter Holdco’s limited liability
company agreement effectively require that Charter’s investment
in Charter Holdco replicate, on a “mirror” basis, Charter’s
outstanding equity and debt structure. As a result of these
coordinating provisions, whenever Charter issues equity or debt,
Charter transfers the proceeds from such issuance to Charter
Holdco, and Charter Holdco issues a “mirror” security to Charter
that replicates the characteristics of the security issued by Char-
ter. Consequently, Charter’s principal assets are an approximate
54% common equity interest (52% for accounting purposes) and
a 100% voting interest in Charter Holdco, “mirror” notes that are
payable by Charter Holdco to Charter that have the same
principal amount and terms as Charter’s convertible senior notes
and preferred units in Charter Holdco that mirror the terms and
liquidation preferences of Charter’s outstanding preferred stock.
Charter Holdco, through its subsidiaries, owns cable systems and
certain strategic investments. As sole manager under applicable
operating agreements, Charter controls the affairs of Charter
Holdco and its limited liability company subsidiaries. In addition,
Charter provides management services to Charter Holdco and its
subsidiaries under a management services agreement.
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
4