Charter 2011 Annual Report Download - page 46

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(c) Noncontrolling interest, as of December 31, 2009, represents the fair value of Mr. Allen’s previous 0.19% interest of Charter
Holdco on the Effective Date plus the allocation of income for the month ended December 31, 2009. On February 8, 2010,
Mr. Allen exercised his remaining right to exchange Charter Holdco units for shares of Charter Class A common stock after
which Charter Holdco became 100% owned by Charter.
(d) Earnings include income (loss) before noncontrolling interest and income taxes plus fixed charges. Fixed charges consist
of interest expense and an estimated interest component of rent expense.
Comparability of the above information from year to year is affected by acquisitions and dispositions completed by us. In addition,
upon our emergence from bankruptcy, we adopted fresh start accounting. This resulted in us becoming a new entity on December 1,
2009, with a new capital structure, a new accounting basis in the identifiable assets and liabilities assumed and no retained earnings
or accumulated losses. Accordingly, the consolidated financial statements on or after December 1, 2009 are not comparable to the
consolidated financial statements prior to that date. The financial statements for the periods ended prior to November 30, 2009 do
not include the effect of any changes in our capital structure or changes in the fair value of assets and liabilities as a result of fresh
start accounting.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Reference is made to “Part I. Item 1A. Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” which
describe important factors that could cause actual results to differ from expectations and non-historical information contained
herein. In addition, the following discussion should be read in conjunction with the audited consolidated financial statements and
accompanying notes thereto of Charter Communications, Inc. and subsidiaries included in “Item 8. Financial Statements and
Supplementary Data.”
Upon our emergence from bankruptcy on November 30, 2009, we adopted fresh start accounting. In accordance with accounting
principles generally accepted in the United States (“GAAP”), the accompanying consolidated statements of operations and cash
flows contained in “Item 8. Financial Statements and Supplementary Data” present the results of operations and the sources and
uses of cash for (i) the eleven months ended November 30, 2009 of the Predecessor and (ii) the one month ended December 31,
2009 of the Successor. However, for purposes of management’s discussion and analysis of the results of operations and the sources
and uses of cash in this Form 10-K, we have combined the results of operations for the Predecessor and the Successor for 2009.
The results of operations of the Predecessor and Successor are not comparable due to the change in basis resulting from the
emergence from bankruptcy. This combined presentation is being made solely to explain the changes in results of operations for
the periods presented in the financial statements. We also compare the combined results of operations and the sources and uses of
cash for the twelve months ended December 31, 2009 with the corresponding periods in 2011 and 2010.
We believe the combined results of operations for the twelve months ended December 31, 2009 provide management and investors
with a more meaningful perspective on our ongoing financial and operational performance and trends than if we did not combine
the results of operations of the Predecessor and the Successor in this manner.
Overview
We are a cable operator providing services in the United States with approximately 5.2 million residential and commercial customers
at December 31, 2011. We offer our customers traditional cable video programming (basic and digital video), Internet services,
and telephone services, as well as advanced video services such as OnDemandTM (“OnDemand”), HD television and digital video
recorder (“DVR”) service. We also sell local advertising on cable networks and provide fiber connectivity to cellular towers. See
“Part I. Item 1. Business — Products and Services” for further description of these services, including “customers.”
Our most significant competitors are DBS providers and certain telephone companies that offer services that provide features and
functions similar to our video, high-speed Internet, and telephone services, including in some cases wireless services, and they
also offer these services in bundles similar to ours. See “Business — Competition.” In the recent past, we have grown revenues
by offsetting basic video customer losses with price increases and sales of incremental services such as high-speed Internet,
OnDemand, DVR, HD television, and telephone. We expect to continue to grow revenues in this manner and in addition, we
expect to increase revenues by expanding the sales of services to our commercial customers and non-video customers. However,
we cannot assure you that we will be able to grow revenues or maintain our margins at recent historical rates.
After giving effect to divestitures and acquisitions of cable systems in 2010 and 2011, during the years ended December 31, 2011
and 2010, we had a decrease in total customers of approximately 12,400 and 116,500, respectively, and lost approximately 215,500
and 214,800 residential basic video customers, respectively. We believe that continued competition and the weakened economic