Print Page  Close Window

SEC Filings

10-Q
CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORP filed this Form 10-Q on 11/15/1999
Entire Document
 
<PAGE>   23


CAPITAL EXPENDITURES

         We have substantial ongoing capital expenditure requirements. We make
capital expenditures primarily to upgrade, rebuild and expand our cable
television systems, as well as for system maintenance, the development of new
products and services, and converters. Converters are set-top devices added in
front of a subscriber's television receiver to change the frequency of the cable
television signals to a suitable channel. The television receiver is then able
to tune and to allow access to premium service.

         Upgrading our cable television systems will enable us to offer new
products and services, including digital television, additional channels and
tiers, expanded pay-per-view options, high-speed Internet access and interactive
services.

         Capital expenditures for the fourth quarter of 1999 is expected to be
approximately $215 million and will be funded from cash flows from operations
and credit facilities borrowings. For the nine months ended September 30, 1999,
we made capital expenditures, excluding the acquisition of cable television
systems, of $385 million. The majority of the capital expenditures related to
rebuilding existing cable television systems.

         For the period from January 1, 2000 to December 31, 2002, we plan to
spend approximately $3.1 billion for capital expenditures, approximately $1.7
billion of which will be used to upgrade and rebuild our systems to bandwidth
capacity of 550 megahertz or greater and add two-way capability, so that we may
offer advanced services. The remaining $1.4 billion will be used for extensions
of systems, development of new products and services, converters and system
maintenance. Capital expenditures for 2000, 2001 and 2002 are expected to be
approximately $0.9 billion, $1.1 billion and $1.1 billion, respectively. We
currently expect to finance approximately 80% of the anticipated capital
expenditures with cash generated from operations and approximately 20% with
additional borrowings under credit facilities. We cannot assure you that these
amounts will be sufficient to accomplish our planned system upgrade, expansion
and maintenance. This could adversely affect our ability to offer new products
and services and compete effectively, and could adversely affect our growth,
financial condition and results of operations.

FINANCING ACTIVITIES

         CHARTER HOLDINGS NOTES. On March 17, 1999, Charter Holdings issued $3.6
billion principal amount of senior notes. The net proceeds of approximately
$2.99 billion, combined with the borrowings under Charter Operating's credit
facilities, were used to consummate tender offers for publicly held debt of
several of our subsidiaries, as described below, refinance borrowings under our
previous credit facilities and for working capital purposes and to finance a
number of recent acquisitions.

         Semi-annual interest payments with respect to the 8.250% notes and the
8.625% notes will be approximately $89.4 million, commencing with the first
payment on October 1, 1999. No interest on the 9.920% notes will be payable
prior to April 1, 2004. Thereafter, semi-annual interest payments on the three
series of senior notes will be approximately $162.6 million in the aggregate,
commencing on October 1, 2004. Charter Holdings and its wholly owned subsidiary,
Charter Communications Holdings Capital Corporation, in September 1999,
completed an offer to exchange the senior notes they issued in March 1999 for
senior notes with substantially similar terms, except that the new notes are
registered and are not subject to restrictions on transfer. With the exception
of $120,000 principal amount of the 8.625% notes, all of the Charter Holdings
notes were exchanged for new notes. As of September 30, 1999, $2.1 billion was
outstanding under the 8.250% and 8.625% notes, and the accreted value of the
9.920% notes was $954.1 million.

         Concurrently with the issuance of the Charter Holdings notes, we
refinanced substantially all of our previous credit facilities and Marcus Cable
Operating Company, L.L.C.'s credit facilities with new credit facilities entered
into by Charter Operating. In February and March 1999, we commenced cash tender
offers to purchase the 14% senior discount notes issued by Charter
Communications Southeast Holdings, LLC, the 11.25% senior notes issued by
Charter Communications Southeast, LLC, the 13.50% senior subordinated discount
notes issued by Marcus Cable Operating Company, L.L.C., and the 14.25% senior
discount notes issued by Marcus Cable. All notes, except for $1.1 million in
principal amount, were paid off for an aggregate amount of $1.0 billion. The
remaining notes ($1.1 million) were repaid in September 1999.

         CHARTER OPERATING CREDIT FACILITIES. Charter Operating's credit
facilities provide for two term facilities, one with a principal amount of $1.0
billion that matures in September 2008 (Term A), and the other with the
principal amount of $1.85 

                                       23