Charter 2007 Annual Report Download - page 57

disclosures under GAAP, nor do they impact our accounting for
capital expenditures under GAAP.
The following table presents our major capital expenditures
categories in accordance with NCTA disclosure guidelines for
the years ended December 31, 2007, 2006, and 2005 (dollars in
millions):
2007 2006 2005
For the Years Ended December 31,
Customer premise equipment
(a)
$ 578 $ 507 $ 434
Scalable infrastructure
(b)
232 214 174
Line extensions
(c)
105 107 134
Upgrade/Rebuild
(d)
52 45 49
Support capital
(e)
277 230 297
Total capital expenditures $1,244 $1,103 $1,088
(a)
Customer premise equipment includes costs incurred at the customer residence
to secure new customers, revenue units and additional bandwidth revenues. It
also includes customer installation costs in accordance with SFAS No. 51,
Financial Reporting by Cable Television Companies, and customer premise equip-
ment (e.g., set-top boxes and cable modems, etc.).
(b)
Scalable infrastructure includes costs not related to customer premise equipment
or our network, to secure growth of new customers, revenue units, and additional
bandwidth revenues, or provide service enhancements (e.g., headend equipment).
(c)
Line extensions include network costs associated with entering new service areas
(e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design
engineering).
(d)
Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable
networks, including betterments.
(e)
Support capital includes costs associated with the replacement or enhancement
of non-network assets due to technological and physical obsolescence (e.g.,
non-network equipment, land, buildings and vehicles).
DESCRIPTION OF OUR OUTSTANDING DEBT
Overview
As of December 31, 2007 and 2006, our long-term debt totaled
approximately $19.9 billion and $19.1 billion, respectively. This
debt was comprised of approximately $7.2 billion and $5.4 billion
of credit facility debt, $12.3 billion and $13.3 billion accreted
amount of high-yield notes and $402 million and $408 million
accreted amount of convertible senior notes at December 31,
2007 and 2006, respectively. See the organizational chart on
page 4 and the first table under “– Liquidity and Capital
Resources – Overview of Our Debt and Liquidity” for debt
outstanding by issuer.
As of December 31, 2007 and 2006, the blended weighted
average interest rate on our debt was 9.0% and 9.5%, respectively.
The interest rate on approximately 85% and 78% of the total
principal amount of our debt was effectively fixed, including the
effects of our interest rate hedge agreements, as of December 31,
2007 and 2006, respectively. The fair value of our high-yield
notes was $10.3 billion and $13.3 billion at December 31, 2007
and 2006, respectively. The fair value of our convertible senior
notes was $332 million and $576 million at December 31, 2007
and 2006, respectively. The fair value of our credit facilities was
$6.7 billion and $5.4 billion at December 31, 2007 and 2006,
respectively. The fair value of high-yield and convertible notes
was based on quoted market prices, and the fair value of the
credit facilities was based on dealer quotations.
The following description is a summary of certain provisions
of our credit facilities and our notes (the “Debt Agreements”).
The summary does not restate the terms of the Debt Agreements
in their entirety, nor does it describe all terms of the Debt
Agreements. The agreements and instruments governing each of
the Debt Agreements are complicated and you should consult
such agreements and instruments for more detailed information
regarding the Debt Agreements.
Credit Facilities – General
Charter Operating Credit Facilities
The Charter Operating credit facilities were amended and
restated in March 2007, among other things, to defer maturities
and to increase availability. The Charter Operating credit facili-
ties provide borrowing availability of up to $8.0 billion as follows:
ka term loan with a total principal amount of $6.5 billion,
which is repayable in equal quarterly installments, com-
mencing March 31, 2008, and aggregating in each loan year
to 1% of the original amount of the term loan, with the
remaining balance due at final maturity on March 6, 2014;
and
ka revolving line of credit of $1.5 billion, with a maturity date
on March 6, 2013.
The Charter Operating credit facilities also allow us to enter
into incremental term loans in the future with an aggregate
amount of up to $1.0 billion, with amortization as set forth in the
notices establishing such term loans, but with no amortization
greater than 1% prior to the final maturity of the existing term
loan. However, no assurance can be given that we could obtain
such incremental term loans if Charter Operating sought to do
so.
Amounts outstanding under the Charter Operating credit
facilities bear interest, at Charter Operating’s election, at a base
rate or the Eurodollar rate, as defined, plus a margin for
Eurodollar loans of up to 2.00% for the revolving credit facility
and 2.00% for the term loan, and quarterly commitment fees of
0.5% per annum is payable on the average daily unborrowed
balance of the revolving credit facility.
The obligations of Charter Operating under the Charter
Operating credit facilities (the “Obligations”) are guaranteed by
Charter Operating’s immediate parent company, CCO Holdings,
and subsidiaries of Charter Operating, except for certain subsid-
iaries, including immaterial subsidiaries and subsidiaries precluded
from guaranteeing by reason of the provisions of other indebted-
ness to which they are subject (the “non-guarantor subsidiaries”).
The Obligations are also secured by (i) a lien on substantially all
of the assets of Charter Operating and its subsidiaries (other than
assets of the non-guarantor subsidiaries), to the extent such lien
can be perfected under the Uniform Commercial Code by the
filing of a financing statement, and (ii) a pledge by CCO
Holdings of the equity interests owned by it in Charter Operat-
ing or any of Charter Operating’s subsidiaries, as well as
intercompany obligations owing to it by any of such entities.
CHARTER COMMUNICATIONS, INC. 2007 FORM 10-K
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