Charter 2002 Annual Report Download - page 110

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
(dollars in millions, except where indicated)
alternative minimum taxes paid by Charter, (iv) the apportionment of the allocated income or loss among the
states in which Charter Holdco does business, and (v) future federal and state tax laws. Further, in the event
of new capital contributions to Charter Holdco, it is possible that the tax eÅects of the Special ProÑt
Allocations and Special Loss Allocations will change signiÑcantly pursuant to the provisions of the income tax
regulations. Such change could defer the actual tax beneÑts to be derived by Charter with respect to the net
tax losses allocated to it or accelerate the actual taxable income to Charter with respect to the net tax proÑts
allocated to it. As a result, it is possible under certain circumstances, that Charter could receive future
allocations of taxable income in excess of its currently allocated tax deductions and available tax loss
carryforwards.
In addition to the aforementioned reasons, under their exchange agreement with Charter, Vulcan Cable
and Charter Investment may exchange some or all of their membership units in Charter Holdco for Charter's
Class B common stock, be merged with Charter, or be acquired by Charter in a non-taxable reorganization. If
such an exchange were to take place prior to the date that the Special ProÑt Allocation provisions had fully
oÅset the Special Loss Allocations, Vulcan Cable and Charter Investment could elect to cause Charter
Holdco to make the remaining Special ProÑt Allocations to Vulcan Cable and Charter Investment
immediately prior to the consummation of the exchange. In the event Vulcan Cable and Charter Investment
choose not to make such election or to the extent such allocations are not possible, Charter would then be
allocated tax proÑts attributable to the membership units received in such exchange pursuant to the Special
ProÑt Allocation provisions. The Company's principal shareholder has generally agreed to reimburse Charter
for any incremental income taxes that Charter would owe as a result of such an exchange and any resulting
future Special ProÑt Allocations to Charter.
For the years ended December 31, 2002, 2001 and 2000, the Company recorded deferred income tax
beneÑts as shown below. The income tax beneÑts are realized through reductions in the deferred tax liabilities
related to Charter's investment in Charter Holdco, as well as the deferred tax liabilities of certain of Charter's
indirect corporate subsidiaries.
Current and deferred income tax expense (beneÑt) is as follows (dollars in millions):
December 31,
2002 2001 2000
Current expense:
Federal income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ Ì $ Ì
State income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 Ì Ì
Current income tax expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 Ì Ì
Deferred beneÑt:
Federal income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (456) (11) (9)
State income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (66) (1) (1)
Deferred income tax beneÑt: ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (522) (12) (10)
Total income beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(520) $(12) $ (10)
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