Charter 2011 Annual Report Download - page 61

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contractual obligations, including interest on our debt, totaling $6.2 billion. We also currently expect to incur capital expenditures
of approximately $1.4 billion to $1.5 billion in 2012.
Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing
and amount of our expenditures. Free cash flow was $483 million and $710 million for the years ended December 31, 2011 and
2010, respectively, and negative free cash flow was $550 million for the year ended December 31, 2009. We expect to continue
to generate free cash flow for 2012. As of December 31, 2011, the amount available under our credit facilities was approximately
$1.3 billion, including approximately $500 million of the unused portion of Term Loan A which was available in a single drawing
through March 15, 2012 and was subsequently drawn in February 2012. We expect to utilize free cash flow and availability under
our credit facilities as well as future refinancing transactions to further extend or reduce the maturities of our principal obligations.
The timing and terms of any refinancing transactions will be subject to market conditions. Additionally, we may, from time to
time, depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other
borrowings, to retire our debt through open market purchases, privately negotiated purchases, tender offers, or redemption
provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and Charter Operating’s revolving credit
facility as well as access to the capital markets to fund our projected operating cash needs.
We continue to evaluate the deployment of our anticipated future free cash flow including to reduce our leverage, to invest in our
business growth and other strategic opportunities, including mergers and acquisitions as well as stock repurchases and dividends.
On August 9, 2011, Charter’s board of directors authorized the repurchase of up to $200 million of Charter’s Class A common
stock and outstanding warrants. As of December 31, 2011, Charter had completed the share repurchase program by acquiring
approximately 4 million shares of Charter’s Class A common stock for a total of approximately $200 million. In addition, Charter
purchased an additional approximately 10 million shares of Charter’s Class A common stock for a total of approximately $525
million in privately negotiated transactions. As possible acquisitions, swaps or dispositions arise in our industry, we actively
review them against our objectives including, among other considerations, improving the operational efficiency and clustering of
our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present
attractive opportunities. However, there can be no assurance that we will actually complete any acquisition, disposition or system
swap or that any such transactions will be material to our operations or results. In 2011, we acquired cable systems for total
purchase prices of approximately $105 million, of which $89 million was paid for in cash and $16 million was a non-cash cable
system swap.
Free Cash Flow
Free cash flow was $483 million and $710 million for the years ended December 31, 2011 and 2010, respectively, compared to
negative free cash flow of $550 million for the year ended December, 31, 2009. The decrease in free cash flow in 2011 compared
to 2010 is primarily due to an increase of $164 million in cash paid for interest and $102 million of higher capital expenditures.
The increase in interest payments was primarily related to higher interest rates as part of refinancing, net of timing of interest
payments. Excluding the change in accrued interest, changes in operating assets and liabilities also provided $42 million less cash
during 2011 driven by one-time benefits in the first half of 2010 post emergence from bankruptcy along with timing of payments
in 2011. These decreases in free cash flow in 2011 were partially offset by revenues increasing at a faster rate than cash expenses.
The increase in free cash flow in 2010 compared to 2009 is primarily due to decreases in cash paid for interest and reorganization
items offset by increases in capital investments to enhance our residential and commercial products and service capabilities.
Recent Events
In January 2012, CCO Holdings and CCO Holdings Capital Corp. closed on transactions in which they issued $750 million
aggregate principal amount of 6.625% senior notes due 2022. In January and February 2012, the net proceeds of the notes were
used, along with a draw on the $500 million delayed draw portion of the Charter Operating Term Loan A facility, to repurchase
$300 million aggregate principal amount of Charter Operating's outstanding 8.00% senior second-lien notes due 2012, $294 million
aggregate principal amount of Charter Operating's 10.875% senior second-lien notes due 2014 and $334 million aggregate principal
amount of CCH II's 13.50% senior notes due 2016, as well as to repay amounts outstanding under our revolving credit facility.