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SEC Filings

10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 12/22/1999
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feasible, develop "clusters" in new geographic areas within existing regions.
Swapping of cable systems allows us to trade systems that do not coincide with
our operating strategy while gaining systems that meet our objectives. Several
significant swaps have been announced. These swaps have demonstrated the
industry's trend to cluster operations. To date, Charter Holdings has
participated in one swap in connection with the InterMedia transaction. In
addition, Charter entered into a letter of intent to exchange certain of its
cable systems for cable systems owned by AT&T.

LIQUIDITY AND CAPITAL RESOURCES

Our business requires significant cash to fund acquisitions, capital
expenditures, debt service costs and ongoing operations. We have historically
funded and expect to fund future liquidity and capital requirements through cash
flows from operations, equity contributions, and borrowings under our credit
facilities and debt and equity financings.

Our historical cash flows from operating activities for the three and nine
months ended September 30, 1999 were $120 and $266 million, respectively.

CAPITAL EXPENDITURES

We have substantial ongoing capital expenditure requirements. We make capital
expenditures primarily to upgrade, rebuild and expand our cable 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 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 1999, pro forma for recent acquisitions and the pending
Bresnan acquisition, are expected to be approximately $1.048 billion. For the
nine months ended September 30, 1999, we made capital expenditures, excluding
the acquisition of cable systems, of $385 million. The majority of the capital
expenditures related to rebuilding existing cable systems. Those expenditures
were funded from cash flows from operations and borrowings under our credit
facilities.

For the period from January 1, 2000 to December 31, 2002, we plan to spend
approximately $5.6 billion for capital expenditures, approximately $3.1 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 $2.5 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 $1.6 billion, $2.0 billion and $2.0 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 and Charter Capital
issued $3.6 billion principal amount of senior notes, consisting of $600 million
in aggregate principal amount of 8.250% Senior Notes due in 2007, $1.5 billion
in aggregate principal amount of 8.625% Senior Notes due in 2009 and $1.475
billion in aggregate principal amount at maturity of 9.920% Senior Discount
Notes due 2011. 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,



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