Charter 2010 Annual Report Download - page 123

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F- F-PB
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010, 2009, AND 2008
(dollars in millions, except share or per share data or where indicated)
the CCO Holdings credit facility. is Stipulation was signed by the
judge on April 19, 2010 and the case dismissed. e remaining
appeals by Law Debenture Trust, R2 Investments and the securities
plaintiffs have been briefed but have not been argued to, or ruled
upon by the District Court for the Southern District of New York.
e Company cannot predict the ultimate outcome of the appeals.
e Company is party to lawsuits and claims that arise in the
ordinary course of conducting its business. e ultimate outcome
of these other legal matters pending against the Company cannot be
predicted, and although such lawsuits and claims are not expected
individually to have a material adverse effect on the Company’s
consolidated financial condition, results of operations or liquidity,
such lawsuits could have, in the aggregate, a material adverse effect
on the Company’s consolidated financial condition, results of
operations or liquidity.
Regulation in the Cable Industry
e operation of a cable system is extensively regulated by the Federal
Communications Commission (“FCC”), some state governments
and most local governments. e FCC has the authority to enforce
its regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of other
administrative sanctions, such as the revocation of FCC licenses
needed to operate certain transmission facilities used in connection
with cable operations. e Telecommunications Act of 1996 altered
the regulatory structure governing the nation’s communications
providers. It removed barriers to competition in both the cable
television market and the telephone market. Among other things, it
reduced the scope of cable rate regulation and encouraged additional
competition in the video programming industry by allowing
telephone companies to provide video programming in their own
telephone service areas.
Future legislative and regulatory changes could adversely affect the
Company’s operations, including, without limitation, additional
regulatory requirements the Company may be required to comply
with as it offers services such as telephone.
 
e Company’s employees may participate in the Charter
Communications, Inc. 401(k) Plan. Employees that qualify for
participation can contribute up to 50% of their salary, on a pre-tax
basis, subject to a maximum contribution limit as determined by the
Internal Revenue Service. For each payroll period, the Company
contributed to the 401(k) Plan (a) the total amount of the salary
reduction the employee elects to defer between 1% and 50% and (b)
prior to January 1, 2010, a matching contribution equal to 50% of
the amount of the salary reduction the participant elected to defer
(up to 5% of the participant’s payroll compensation), excluding
any catch-up contributions. e Company made contributions
to the 401(k) plan totaling $1 million, $7 million and $8 million
for the one month ended December 31, 2009 (Successor), eleven
months ended November 30, 2009 (Predecessor) and year ended
December 31, 2008 (Predecessor), respectively.
Effective January 1, 2010, the Company’s matching contribution
is discretionary with the intent that any contribution be based on
performance metrics used in its other bonus and incentive plans.
e discretionary performance contribution is made on an annual
basis (instead of on a per pay period basis). Each participant who
makes before-tax contributions and is employed on the last day of
the fiscal year received a portion of the discretionary performance
contribution, if any, on a pro rata basis. e Company divided
each participant’s before-tax contributions for the year (up to 5%
of eligible earnings, excluding catch-up contributions) by the total
employee contributions (up to 5% of eligible earnings, excluding
catch-up contributions) for the year to determine each participant’s
share of any discretionary performance contribution. e Company
intends to make contributions to the 401(k) plan totaling $6 million
for the year ended December 31, 2010 (Successor).
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On March 27, 2009, the Company and certain affiliates filed voluntary
petitions in the Bankruptcy Court to reorganize under the Bankruptcy
Code. e 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 the Plan and Disclosure
Statement with the Bankruptcy Court. e Plan was confirmed by
order of the Bankruptcy Court on November 17, 2009, and became
effective on the Effective Date, the date on which the Company
emerged from protection under Chapter 11 of the Bankruptcy Code.
e Company selected December 1, 2009 for application of fresh
start accounting. Accordingly, the results of operations of the
Company for the eleven months ended November 30, 2009 include
reorganization items of $644 million and a pre-emergence gain of