Charter 2009 Annual Report Download - page 38

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(3) We lease certain facilities and equipment under noncancelable operating leases. Leases and rental costs
charged to expense for the years ended December 31, 2009, 2008, and 2007, were $25 million, $24 million,
and $23 million, respectively.
(4) We pay programming fees under multi-year contracts ranging from three to ten years, typically based on a flat
fee per customer, which may be fixed for the term, or may in some cases escalate over the term.
Programming costs included in the accompanying statement of operations were approximately $1.7 billion,
$1.6 billion, and $1.6 billion, for the years ended December 31, 2009, 2008, and 2007, respectively. Certain
of our programming agreements are based on a flat fee per month or have guaranteed minimum payments.
The table sets forth the aggregate guaranteed minimum commitments under our programming contracts.
(5) “Other” represents other guaranteed minimum commitments, which consist primarily of commitments to our
billing services vendors.
The following items are not included in the contractual obligations table because the obligations are not fixed and/or
determinable due to various factors discussed below. However, we incur these costs as part of our operations:
• We rent utility poles used in our operations. Generally, pole rentals are cancelable on short notice, but we
anticipate that such rentals will recur. Rent expense incurred for pole rental attachments for each of the
years ended December 31, 2009, 2008, and 2007, was $47 million.
• We pay franchise fees under multi-year franchise agreements based on a percentage of revenues generated
from video service per year. We also pay other franchise related costs, such as public education grants,
under multi-year agreements. Franchise fees and other franchise-related costs included in the
accompanying statement of operations were $176 million, $179 million, and $172 million for the years
ended December 31, 2009, 2008, and 2007, respectively.
• We also have $124 million in letters of credit, primarily to our various worker’ s compensation, property
and casualty, and general liability carriers, as collateral for reimbursement of claims.
Limitations on Distributions
Distributions by Charter’ s subsidiaries to a parent company for payment of principal on parent company notes are
restricted under indentures and credit facilities governing our indebtedness, unless there is no default under the
applicable indenture and credit facilities, and unless each applicable subsidiary’ s leverage ratio test is met at the time
of such distribution. As of December 31, 2009, there was no default under any of these indentures or credit
facilities. However, certain of our subsidiaries did not meet their applicable leverage ratio tests based on December
31, 2009 financial results. As a result, distributions from certain of Charter’ s subsidiaries to their parent companies
would have been restricted at such time and will continue to be restricted unless those tests are met. Distributions by
Charter Operating for payment of principal on parent company notes are further restricted by the covenants in its
credit facilities.
Distributions by CCO Holdings and Charter Operating to a parent company for payment of parent company interest
are permitted if there is no default under the aforementioned indentures and CCO Holdings and Charter Operating
credit facilities.
In addition to the limitation on distributions under the various indentures discussed above, distributions by our
subsidiaries may be limited by applicable law, including the Delaware Limited Liability Company Act, under which
our subsidiaries may only make distributions if they have “surplus” as defined in the act. See “Part I. Item 1A. Risk
Factors —Restrictions in our and our subsidiaries’ debt instruments and under applicable law limit our and their
ability to provide funds to the various debt issuers.”
Historical Operating, Investing, and Financing Activities
Cash and Cash Equivalents. We held $539 million in cash and cash equivalents, including restricted cash, as of
December 31, 2009 compared to $953 million as of December 31, 2008.
Operating Activities. Net cash provided by operating activities decreased $461 million from $1.2 billion for the
year ended December 31, 2008 to $757 million for the year ended December 31, 2009, primarily as a result of cash
reorganization items of $477 million and changes in operating assets and liabilities that used $444 million more cash