Charter 2002 Annual Report Download - page 106

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
(dollars in millions, except where indicated)
18. Operating Expenses
Operating expenses consist of the following for the years presented (in millions):
Year Ended December 31,
2002 2001 2000
Analog video programming ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,012 $ 874 $ 741
Digital video programmingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 159 103 34
High-speed data ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 112 65 25
Advertising sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 87 64 57
Service ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 434 374 328
$1,804 $1,480 $1,185
19. Selling, General and Administrative Expenses
Selling, general and administrative expenses consist of the following for the years presented (in millions):
Year Ended December 31,
2002 2001 2000
General and administrative ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $813 $696 $505
Marketing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 153 136 103
$966 $832 $608
20. Option Plans
The Company grants stock options, restricted stock and other incentive compensation pursuant to two
plans Ì the 1999 Option Plan of Charter Holdco (the ""1999 Plan'') and the 2001 Stock Incentive Plan of
Charter (the ""2001 Plan''). The 1999 Plan provided for the grant of options to purchase membership units in
Charter Holdco to current and prospective employees and consultants of Charter Holdco and its aÇliates and
current and prospective non-employee directors of Charter. Options granted generally vest over Ñve years from
the grant date, with 25% vesting 15 months after the anniversary of the grant date and ratably thereafter.
Options not exercised accumulate and are exercisable, in whole or in part, in any subsequent period, but not
later than ten years from the date of grant. Membership units received upon exercise of the options are
automatically exchanged into Class A common stock of Charter on a one-for-one basis.
The 2001 Plan provides for the grant of non-qualiÑed stock options, stock appreciation rights, dividend
equivalent rights, performance units and performance shares, share awards, phantom stock and/or shares of
restricted stock (not to exceed 3,000,000), as each term is deÑned in the 2001 Plan. Employees, oÇcers,
consultants and directors of the Company and its subsidiaries and aÇliates are eligible to receive grants under
the 2001 Plan. Options granted generally vest over four years from the grant date, with 25% vesting on the
anniversary of the grant date and ratably thereafter. Generally, options expire 10 years from the grant date.
Together, the plans allow for the issuance of up to an aggregate of 90,000,000 shares of Charter Class A
common stock (or units convertible into Charter Class A common stock). The aggregate shares available
reÖects an October 2002 amendment to the 2001 Plan approved by the board of directors of Charter to
increase available shares by 30,000,000 shares. However, the amendment is subject to shareholder approval
and any grants with respect to these additional shares will not be exercisable unless and until the Company's
shareholders approve the amendment. In 2001, any shares covered by options that terminated under the 1999
Plan were transferred to the 2001 Plan, and no new options were granted under the 1999 Plan. During
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