Charter 2011 Annual Report Download - page 123

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011, 2010 AND 2009
(dollars in millions, except share or per share data or where indicated)
F- 39
22. Employee Benefit Plan
The 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. The Company made contributions to the 401(k) plan totaling $1 million and $7 million for
the one month ended December 31, 2009 (Successor) and eleven months ended November 30, 2009 (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. The 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. The 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. The Company made contributions to the 401(k) plan totaling
$7 million for the year ended December 31, 2010 (Successor) and expects to make contributions to the 401(k) plan totaling $6
million for the year ended December 31, 2011 (Successor).
23. Emergence from Reorganization Proceedings
On March 27, 2009, the Company and certain affiliates filed voluntary petitions in the Bankruptcy Court to reorganize under 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 the Plan and a related disclosure statement ("Disclosure Statement")
with the Bankruptcy Court. The 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.
The 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 (Predecessor) include reorganization items of $644 million and a pre-
emergence gain of $6.8 billion primarily resulting from the discharge of long-term debt under the Plan and the related accrued
interest offset by the issuance of common stock, preferred stock, warrants and new notes to holders of such notes. The following
notes were eliminated on the Effective Date:
Charter Convertible Notes. On the Effective Date, $482 million of Charter convertible senior notes were canceled and holders of
the convertible senior notes received $25 million in cash and 5.5 million shares of preferred stock issued by Charter valued at
$145 million as of the Effective Date.
Charter Holdings Notes. On the Effective Date, $440 million of Charter Holdings senior and senior discount notes were canceled.
Holders of Charter Holdings notes received 1.3 million warrants to purchase shares of new Charter Class A common stock with
an exercise price of $51.28 per share that expire five years after the date of issuance. The warrants were valued at $6 million as
of the Effective Date.
CCH I Holdings, LLC Notes. On the Effective Date, $2.5 billion of CIH senior and senior discount notes were canceled. Holders
of CIH notes 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 after the date of issuance. The warrants were valued at $35 million as of the Effective Date.
CCH I, LLC Notes. On the Effective Date, $4.0 billion of CCH I senior and senior discount notes were canceled. Holders of CCH
I notes received 21.1 million shares of new Charter Class A common stock. In addition, as part of the Plan, the holders of CCH
I notes received and transferred to Mr. Allen $85 million principal amount of new CCH II notes valued at $101 million as of the
Effective Date.
CCH II, LLC Notes. On the Effective Date, $2.5 billion of CCH II senior notes were canceled through an exchange with holders
who received new 13.500% senior CCH II notes and cash paid for the remaining unexchanged amount.