Charter 2009 Annual Report Download - page 7

4
Item 1A. Risk Factors.
Risks Related to Our Emergence From Bankruptcy
Our actual financial results may vary significantly from the projections filed with the Bankruptcy Court.
In connection with the Plan, Charter was required to prepare projected financial information to demonstrate to the
Bankruptcy Court the feasibility of the Plan and our ability to continue operations upon emergence from
bankruptcy. Charter filed projected financial information with the Bankruptcy Court most recently on May 7, 2009
as part of the Disclosure Statement approved by the Bankruptcy Court. The projections reflect numerous
assumptions concerning anticipated future performance and prevailing and anticipated market and economic
conditions that were and continue to be beyond our control. Projections are inherently subject to uncertainties and to
a wide variety of significant business, economic and competitive risks. Neither the projections nor any version of
the Disclosure Statement should be considered or relied upon. After the date of the Disclosure Statement and during
2009, we recognized an impairment to our franchise values because of the lower than anticipated growth in revenues
experienced during the first three quarters of 2009 and an expected reduction of future cash flows as a result of the
economic and competitive environment.
Because our consolidated financial statements reflect fresh start accounting adjustments made upon emergence
from bankruptcy, and because of the effects of the transactions that became effective pursuant to the Plan,
financial information in the post-emergence financial statements is not comparable to our financial information
from prior periods.
Upon our emergence from bankruptcy, we adopted fresh start accounting pursuant to which our reorganization
value, which represents the fair value of the entity before considering liabilities and approximates the amount a
willing buyer would pay for the assets of the entity immediately after the reorganization, was allocated to the fair
value of assets. The amount remaining after allocation of the reorganization value to the fair value of identified
tangible and intangible assets is reflected as goodwill, which is subject to periodic evaluation for impairment.
Further, under fresh start accounting, the accumulated losses included in member’ s deficit were eliminated. In
addition to fresh start accounting, our consolidated financial statements reflect all effects of the transactions
contemplated by the Plan. Thus, our balance sheets and statements of operations data are not comparable in many
respects to our consolidated balance sheets and consolidated statements of operations data for periods prior to our
adoption of fresh start accounting and prior to accounting for the effects of the reorganization.
Risks Related to Our Significant Indebtedness
We have a significant amount of debt and may incur significant additional debt, including secured debt, in the
future, which could adversely affect our financial health and our ability to react to changes in our business.
As of September 30, 2009, our total principal amount of debt was approximately $14.2 billion. The consummation
of the Plan on November 30, 2009, resulted in a reduction of the principal amount of our debt of approximately
$708 million and reduction of our parent companies’ debt in the principal amount of approximately $7.5 billion.
However, we continue to have a significant amount of debt and may (subject to applicable restrictions in our debt
instruments) incur additional debt in the future. As of December 31, 2009, our total principal amount of debt was
approximately $13.5 billion.
Because of our significant indebtedness, our and our parent companies’ ability to raise additional capital at
reasonable rates, or at all, is uncertain, and our subsidiaries’ ability to make distributions or payments to their
respective parent companies is subject to availability of funds and restrictions under applicable debt instruments and
under applicable law.
Our significant amount of debt could have other important consequences. For example, the debt will or could:
• make us vulnerable to interest rate increases, because approximately 63% of our borrowings are, and may
continue to be, subject to variable rates of interest;
• expose us to increased interest expense to the extent we refinance existing debt with higher cost debt;
• require us to dedicate a significant portion of our cash flow from operating activities to make payments on
our debt, reducing our funds available for working capital, capital expenditures, and other general corporate
expenses;