Charter 2002 Annual Report Download - page 32

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Net Interest Expense. Net interest expense increased by $193 million, or 15%, from $1.3 billion in 2001
to $1.5 billion in 2002. The increase in net interest expense was a result of increased average debt outstanding
in 2002 of $17.8 billion compared to $15.7 billion in 2001, partially oÅset by a decrease in our average
borrowing rate from 8.40% in 2001 to 8.02% in 2002. The increased debt was used for capital expenditures.
Loss on Equity Investments. Loss on equity investments decreased by $51 million, from $54 million in
2001 to $3 million in 2002. In 2002, the loss on equity investments was primarily due to losses of $5 million on
investments carried under the equity method of accounting oÅset by realized gains of $2 million on marketable
securities. The loss on equity investments in 2001 included a loss of $38 million related to our investment in
High Speed Access, a related party, which is described more fully in Note 23 to our consolidated Ñnancial
statements.
Other Expense. Other expense increased by $52 million from $66 million in 2001 to $118 million in
2002. This increase is primarily due to an increase in losses on interest rate agreements which do not qualify
for hedge accounting under SFAS No. 133, which increased from $48 million in 2001 to $101 million in 2002.
Income Tax BeneÑt. Income tax beneÑt of $520 million and $12 million were recognized for the years
ended December 31, 2002 and 2001, respectively. The income tax beneÑts are realized through reductions in
deferred tax liabilities related to our investment in Charter Communications Holding Company, as well as the
change in the deferred tax liabilities of certain of our indirect corporate subsidiaries.
Minority Interest. Minority interest increased by $1.7 billion, from $1.5 billion in 2001 to $3.2 billion in
2002. Minority interest represents the allocation of losses to the minority interest based on ownership of
Charter Communications Holding Company and the 2% accretion of the preferred membership interests in
CC VIII issued to certain former owners of the Bresnan systems acquired by CC VIII in February 2000. Such
preferred membership interests were subsequently sold to Paul G. Allen in June 2003. The increase is a result
of an increase in loss before minority interest. See Note 23 to our consolidated Ñnancial statements.
Cumulative EÅect of Accounting Change. Cumulative eÅect of accounting change in 2002 represents
the impairment charge recorded as a result of adopting SFAS No. 142. Cumulative eÅect of accounting
change in 2001 represents losses incurred upon adoption of SFAS No. 133.
Net Loss. Net loss increased by $1.3 billion, from $1.2 billion in 2001 to $2.5 billion in 2002 as a result
of the combination of factors described above, including the impact of the impairment of franchises oÅset
somewhat by the decrease in amortization expense as a result of the adoption of SFAS No. 142.
Preferred Stock Dividends. On August 31, 2001, Charter Communications, Inc. issued 505,664 shares
(and on February 28, 2003 issued an additional 39,595 shares) of Series A Convertible Redeemable Preferred
Stock in connection with the Cable USA acquisition in August 2001, on which it pays a quarterly cumulative
cash dividends at an annual rate of 5.75% on a liquidation preference of $100 per share.
Loss Per Common Share. The loss per common share increased by $4.22, from $4.33 per common
share for the year ended December 31, 2001 to $8.55 per common share for the year ended December 31,
2002 as a result of the factors described above.
Year Ended December 31, 2001 Compared to Year Ended December 31, 2000
Revenues. Revenues increased by $666 million, or 21%, from $3.1 billion in 2000 to $3.8 billion in 2001.
This increase is principally the result of increases in digital video and high-speed data customers.
Average monthly revenue per customer increased from $42 in 2000 to $47 in 2001. Average monthly
revenue per customer represents total annual revenue, divided by twelve, divided by the average number of
customer relationships.
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