Charter 2011 Annual Report Download - page 72

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The note issuers and their restricted subsidiaries may generally not otherwise sell assets or, in the case of restricted subsidiaries,
issue equity interests, in excess of $100 million unless they receive consideration at least equal to the fair market value of the
assets or equity interests, consisting of at least 75% in cash, assumption of liabilities, securities converted into cash within 60 days,
or productive assets. The note issuers and their restricted subsidiaries are then required within 365 days after any asset sale either
to use or commit to use the net cash proceeds over a specified threshold to acquire assets used or useful in their businesses or use
the net cash proceeds to repay specified debt, or to offer to repurchase the issuer’s notes with any remaining proceeds.
Restrictions on Sale and Leaseback Transactions
The note issuers and their restricted subsidiaries may generally not engage in sale and leaseback transactions unless, at the time
of the transaction, the applicable issuer could have incurred secured indebtedness under its leverage ratio test in an amount equal
to the present value of the net rental payments to be made under the lease, and the sale of the assets and application of proceeds
is permitted by the covenant restricting asset sales.
Prohibitions on Restricting Dividends
The note issuers’ restricted subsidiaries may generally not enter into arrangements involving restrictions on their ability to make
dividends or distributions or transfer assets to the applicable note issuer unless those restrictions with respect to financing
arrangements are on terms that are no more restrictive than those governing the credit facilities existing when they entered into
the applicable indentures or are not materially more restrictive than customary terms in comparable financings and will not materially
impair the applicable note issuers’ ability to make payments on the notes.
Affiliate Transactions
The indentures also restrict the ability of the note issuers and their restricted subsidiaries to enter into certain transactions with
affiliates involving consideration in excess of $15 million ($25 million in the case of CCO Holdings notes) without a determination
by the board of directors of the applicable note issuer that the transaction complies with this covenant, or transactions with affiliates
involving over $50 million ($100 million in the case of CCO Holdings notes) without receiving an opinion as to the fairness to
the holders of such transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of
national standing.
Cross Acceleration
The indentures of our subsidiaries include various events of default, including cross acceleration provisions. Under these provisions,
a failure by any of the issuers or any of their restricted subsidiaries to pay at the final maturity thereof the principal amount of
other indebtedness having a principal amount of $100 million or more (or any other default under any such indebtedness resulting
in its acceleration) would result in an event of default under the indenture governing the applicable notes. As a result, an event of
default related to the failure to repay principal at maturity or the acceleration of the indebtedness under the CCH II notes, CCO
Holdings notes, CCO Holdings credit facility, Charter Operating notes or the Charter Operating credit facilities could cause cross-
defaults under our subsidiaries’ indentures.
Recently Issued Accounting Standards
In May 2011, the FASB issued Accounting Standards Update ("ASU") 2011-04, Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRSs) ("ASU
2011-04"). ASU 2011-04 provides guidance about how fair value should be determined when it is already required or permitted.
Most of the changes clarify existing guidance or change words to align U.S. GAAP with IFRS. This standard is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2011. We do not expect the adoption of ASU 2011-04
to have a material impact on our consolidated financial statements.
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income ("ASU 2011-05"). ASU 2011-05 provides
guidance on presenting comprehensive income with the intention of increasing its prominence in financial statements by eliminating
the option to report other comprehensive income and its components in the statement of changes in stockholder's equity. This
standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We do not expect
the adoption of ASU 2011-05 to have a material impact on our consolidated financial statements.