Charter 2002 Annual Report Download - page 82

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
(dollars in millions, except where indicated)
exercises voting control. Currently, Charter Holdco is the only subsidiary in which the Company consolidates
on the basis of voting control. All signiÑcant intercompany accounts and transactions among consolidated
entities have been eliminated. All amounts presented for 2000 and 2001 in the Ñnancial statements and
accompanying notes have been adjusted to reÖect the restated results in Note 3.
Use of Estimates
The preparation of Ñnancial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that aÅect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the Ñnancial statements
and the reported amounts of revenues and expenses during the reporting period. SigniÑcant judgments and
estimates include capitalization of labor and overhead costs, depreciation and amortization costs, impairments
of property, plant and equipment, franchises and goodwill, income taxes and other contingencies. Actual
results could diÅer from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to
be cash equivalents. These investments are carried at cost, which approximates market value.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, including all material labor and certain indirect costs
associated with the construction of cable transmission and distribution facilities. Costs associated with initial
customer installations and the additions of network equipment necessary to enable advanced services are
capitalized. Costs capitalized as part of initial customer installations include materials, labor, and certain
indirect costs. These indirect costs are associated with the activities of the Company's personnel who assist in
connecting and activating the new service and consist of compensation and overhead costs associated with
these support functions. Overhead costs primarily include employee beneÑts and payroll taxes, direct variable
costs associated with capitalizable activities, consisting primarily of installation and construction vehicle costs,
the cost of dispatch personnel and indirect costs directly attributable to capitalizable activities. The costs of
disconnecting service at a customer's dwelling or reconnecting service to a previously installed dwelling are
charged to operating expense in the period incurred. Costs for repairs and maintenance are charged to
operating expense as incurred, while equipment replacement and betterments, including replacement of cable
drops from the pole to the dwelling, are capitalized.
Depreciation is recorded using the straight-line method over management's estimate of the useful lives of
the related assets as follows:
Cable distribution systemsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7-15 years
Customer equipment and installations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3-5 years
Vehicles and equipmentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1-5 years
Buildings and leasehold improvementsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5-15 years
Furniture and ÑxturesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 years
Franchises
Franchise rights acquired through the purchase of cable systems represent management's estimate of fair
value at the date of acquisition and generally are reviewed to determine if the franchise has a Ñnite life or an
indeÑnite life as deÑned by Statement of Financial Accounting Standards (SFAS) No. 142. On January 1,
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