Print Page  Close Window

SEC Filings

S-4
CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORP filed this Form S-4 on 04/30/1999
Entire Document
 
<PAGE>   51
 

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
INTRODUCTION
 
     Because of recently consummated and pending significant corporate events,
including the Charter Acquisition, the Marcus Combination, the Pending
Acquisitions and the Refinancing, we do not believe that our historical
financial condition and results of operations are accurate indicators of future
results. Provided below is a discussion of (i) the operation and development of
the Charter Companies prior to the Charter Acquisition, (ii) the Charter
Acquisition, (iii) the Marcus Combination and (iv) the Pending Acquisitions.
 
     Prior to the Charter Acquisition, CCI owned a minority interest in, and
managed, each of CCA Holdings, LLC, CCT Holdings, LLC, and Charter
Communications Long Beach, LLC (collectively, the "CCA Group") and CharterComm
Holdings, LLC ("CharterComm Holdings"). During that time, CCI was the parent of
Charter Communications Properties, LLC ("CCP"). Through CCP, CCI pursued and
executed a strategy of operating, developing, acquiring and consolidating cable
systems, including the Sonic Acquisition for approximately $228.4 million.
Because CCI was only a minority equity holder in the CCA Group and CharterComm
Holdings, the financial statements of these entities were not consolidated with
CCI prior to the Charter Acquisition.
 
     The Charter Acquisition became effective on December 23, 1998 through a
series of transactions in which Paul G. Allen acquired approximately 94% of CCI
for an aggregate purchase price, net of debt assumed, of $2.2 billion.
Subsequently, CCP was contributed to Charter Communications Operating, LLC
("Charter Operating"), a wholly owned subsidiary of Charter Holdings, and such
contribution was accounted for as a reorganization under common control.
Accordingly, the accompanying financial statements for periods prior to December
24, 1998 include the accounts of CCP. In conjunction with the Charter
Acquisition, CCI acquired the controlling interests of the CCA Group and
CharterComm Holdings and in February 1999 transferred these companies to Charter
Operating. Charter Holdings accounted for the acquisitions of the CCA Group and
the CharterComm Holdings in accordance with purchase accounting, and
accordingly, the financial statements for periods after December 23, 1998
include the accounts of CCP, the CCA Group and CharterComm Holdings.
 
     The Marcus Combination closed on April 7, 1999, at which time Marcus
Holdings merged with and into Charter Holdings. In April 1998, Paul G. Allen
purchased substantially all of the outstanding partnership interests in Marcus.
Beginning in October 1998, CCI began to manage the cable operations of Marcus.
In conjunction with the Marcus Combination, Paul G. Allen purchased the
remaining interests in Marcus. The Marcus Combination was accounted for as a
reorganization under common control similar to a pooling of interests because of
Paul G. Allen's controlling interests in Marcus and Charter. As such, the
accounts of Charter Holdings and Marcus have been consolidated since December
23, 1998.
 
     Since the beginning of 1999, CCI and/or subsidiaries of CCI have entered
into definitive agreements to purchase, the GMI Systems, Renaissance, Helicon,
the InterMedia Systems, Rifkin and the Other Acquisitions, which serve, in the
aggregate, approximately 1.3 million customers. All such definitive agreements
entered into by CCI have been assigned to us. In addition, CCI is also in active
negotiations with several other
 
                                       47