Charter 2009 Annual Report Download - page 55

CCH II, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009, 2008 AND 2007
(dollars in millions, except where indicated)
F-7
1. Organization and Basis of Presentation
Organization
CCH II, LLC (“CCH II”) is a holding company whose principal assets at December 31, 2009 are the equity interests
in its operating subsidiaries. CCH II is a direct subsidiary of CCH I, LLC (“CCH I”), which is an indirect subsidiary
of Charter Communications, Inc. (“Charter”). The consolidated financial statements include the accounts of CCH II
and all of its subsidiaries where the underlying operations reside, which are collectively referred to herein as the
“Company.” All significant intercompany accounts and transactions among consolidated entities have been
eliminated.
The Company is a broadband communications company operating in the United States. The Company offers to
residential and commercial customers traditional cable video programming (basic and digital video), high-speed
Internet services, and telephone services, as well as advanced broadband services such as high definition television,
Charter OnDemand™, and digital video recorder (“DVR”) service. The Company sells its cable video
programming, high-speed Internet, telephone, and advanced broadband services primarily on a subscription basis.
The Company also sells local advertising on cable networks.
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”). Effective December 1, 2009, the Company applied fresh start accounting which
requires assets and liabilities to be reflected at fair value. The financial information set forth in this report, unless
otherwise expressly set forth or as the context otherwise indicates, reflects the consolidated results of operations and
financial condition of CCH II and its subsidiaries for the period following November 30, 2009 (“Successor”), and of
CCH II and its subsidiaries for the periods through November 30, 2009 (“Predecessor”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Areas involving significant judgments and estimates include capitalization of labor and overhead costs; depreciation
and amortization costs; impairments of property, plant and equipment, intangibles and goodwill; income taxes;
contingencies; and fresh start accounting. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform with the 2009 presentation.
2. Emergence from Reorganization Proceedings and Related Events
On March 27, 2009, the Company, its parent companies, and certain affiliates (collectively, the “Debtors”) filed
voluntary petitions in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy
Court”) to reorganize under Chapter 11 of the United States Code (the “Bankruptcy Code”). The Chapter 11 cases
were jointly administered under the caption In re Charter Communications, Inc., et al., Case No. 09-11435. On May
7, 2009, the Company filed a Joint Plan of Reorganization (the "Plan") and a related disclosure statement (the
“Disclosure Statement”) with the Bankruptcy Court. The Plan was confirmed by order of the Bankruptcy Court on
November 17, 2009 (“Confirmation Order”), and became effective on November 30, 2009 (the “Effective Date”),
the date on which the Company and its parent companies emerged from protection under Chapter 11 of the
Bankruptcy Code.
As provided in the Plan and the Confirmation Order, (i) the notes and bank debt of Charter Communications
Operating, LLC (“Charter Operating”) and CCO Holdings, LLC (“CCO Holdings”) remained outstanding; (ii)
holders of approximately $1.5 billion of notes issued by CCH II received new CCH II notes (the “Notes Exchange”);
(iii) holders of notes issued by CCH I received 21.1 million shares of new Charter Class A common stock; (iv)
holders of notes issued by CCH I Holdings, LLC (“CIH”) received 6.4 million warrants to purchase shares of new
Charter Class A common stock with an exercise price of $46.86 per share that expire five years from the date of