Charter 2009 Annual Report Download - page 40

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(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 and customer
premise equipment (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, 2009 and 2008, the blended weighted average interest rate on our debt was 5.5% and 7.0%,
respectively. The interest rate on approximately 37% and 70% of the total principal amount of our debt was
effectively fixed, including the effects of our interest rate hedge agreements, if any, as of December 31, 2009 and
2008, respectively. The fair value of our high-yield notes was $5.4 billion and $3.5 billion at December 31, 2009
and 2008, respectively. The fair value of our credit facilities was $8.0 billion and $6.2 billion at December 31, 2009
and 2008, respectively. The fair value of our high-yield notes and credit facilities were based on quoted market
prices.
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
On the Effective Date, the Charter Operating credit facilities remain outstanding although the revolving line of credit
is no longer available for new borrowings and remains substantially drawn with the same maturity and interest
terms. The Charter Operating credit facilities have outstanding principal amount of $8.2 billion at December 31,
2009 as follows:
• a term loan with a remaining principal amount of $6.4 billion, which is repayable in equal quarterly installments
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;
• an incremental term loan with a remaining principal amount of $491 million which is payable on of March 6, 2014
and prior to that date will amortize in quarterly principal installments totaling 1% annually; and
• a revolving credit facility of $1.3 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 an additional $500 million, 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. Although
the Charter Operating credit facilities allow for the incurrence of up to an additional $500 million in incremental
term loans, no assurance can be given that we could obtain additional incremental term loans in the future 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 LIBOR, as defined, plus a margin for LIBOR loans of 2.00% for the revolving credit facility and for the
term loan. The current incremental term loan bears interest at LIBOR plus 5.0%, with a LIBOR floor of 3.5% or at
Charter Operating’ s election, a base rate plus a margin of 4.00%. Charter Operating has currently elected the base
rate for the incremental term loan.