Charter 2010 Annual Report Download - page 60

Download and view the complete annual report

Please find page 60 of the 2010 Charter annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 143

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143

                                         

Interest expense, net. Net interest expense decreased by $211
million in 2010 from 2009 and $817 million in 2009 from 2008.
Net interest expense decreased in 2010 compared to 2009 primarily
as a result of a decrease in average debt outstanding as a result of
the completion of our reorganization under Chapter 11 of the
Bankruptcy Code and the related reduction of $8 billion principal
amount of debt. Because we filed for Chapter 11 bankruptcy on
March 27, 2009, we no longer accrued interest on debt subject to
compromise effective March 27, 2009, except on CCH II debt, as we
intended to pay the interest under the Plan. As such, interest expense
for 2009 decreased as compared to 2008. e amount of contractual
interest expense not recorded for the year ended December 31, 2009
was approximately $558 million.
Gain due to Plan effects. Gain due to Plan effects represents the
net gains recorded as a result of implementing the Plan including
the impact of eliminating $8 billion in debt. For more information,
see Note 23 to the accompanying condensed consolidated financial
statements contained in “Item 8. Financial Statements and
Supplementary Data.”
Gain due to fresh start accounting adjustments. Upon our
emergence from bankruptcy, the Company applied fresh start
accounting. Gain due to fresh start accounting adjustments
represents the net gains recognized as a result of adjusting all assets
and liabilities to fair value. For more information, see Note 23 to the
accompanying condensed consolidated financial statements contained
in “Item 8. Financial Statements and Supplementary Data.”
Reorganizations items, net. Reorganization items, net of $6
million and $647 million for the years ended December 31, 2010
and 2009, respectively, represent items of income, expense, gain or
loss that we realized or incurred related to our reorganization under
Chapter 11 of the Bankruptcy Code. For more information, see
Note 23 to the accompanying condensed consolidated financial
statements contained in “Item 8. Financial Statements and
Supplementary Data.”
Gain (loss) on extinguishment of debt. Gain (loss) on
extinguishment of debt consists of the following for the years ended
December 31, 2010, 2009 and 2008 (dollars in millions):
Successor Combined Predecessor
2010 2009 2008
Charter Holdings debt
notes repurchases /
exchanges $ -- $ -- $ 3
Charter convertible
note repurchases /
exchanges -- -- 5
CCH II tender offer -- -- (4)
CCO Holdings debt
notes repurchases /
exchanges (17) -- --
Charter Operating debt
notes repurchases (17) -- --
Charter Operating
credit amendment /
prepayments (51) -- --
$(85) $ -- $4
For more information, see Notes 7 and 15 to the accompanying
consolidated financial statements contained in “Item 8. Financial
Statements and Supplementary Data.”
Change in value of derivatives. Interest rate swaps are held to
manage our interest costs and reduce our exposure to increases
in floating interest rates. We expense the change in fair value of
derivatives that do not qualify for hedge accounting and cash flow
hedge ineffectiveness on interest rate swap agreements. Upon filing
for Chapter 11 bankruptcy, the counterparties to the interest rate
swap agreements terminated the underlying contracts and, upon
emergence from bankruptcy, received payment for the market
value of the interest rate swap agreement as measured on the date
the counterparties terminated. Additionally, certain provisions
of our 5.875% and 6.50% convertible senior notes issued in
November 2004 and October 2007, respectively, were considered
embedded derivatives for accounting purposes and were required to
be accounted for separately from the convertible senior notes and
marked to fair value at the end of each reporting period. On the
Effective Date, the convertible debt was cancelled. Change in value
of derivatives consists of the following for the years ended December
31, 2010, 2009 and 2008 (dollars in millions):
Successor Combined Predecessor
2010 2009 2008
Interest rate swaps $ -- $ (4) $ (62)
Embedded derivatives
from convertible senior
notes
-- -- 33
$ -- $(4) $(29)