Charter 2002 Annual Report Download - page 87

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002, 2001 and 2000
(dollars in millions, except where indicated)
5. Acquisitions
On February 28, 2002, CC Systems, LLC, a subsidiary of the Company, and High Speed Access
Corp. (HSA) closed the Company's acquisition from HSA of the contracts and associated assets, and
assumed related liabilities, that served certain of the Company's high-speed data customers. At closing, the
Company paid $78 million in cash and delivered 37,000 shares of HSA's Series D convertible preferred stock
and all the warrants to buy HSA common stock owned by the Company. An additional $2 million of purchase
price was retained to secure indemnity claims. The purchase price has been allocated to assets acquired and
liabilities assumed based on fair values as determined in the fourth quarter of 2002 by a third-party valuation
expert, including $8 million assigned to intangible assets and amortized over an average useful life of three
years and $54 million assigned to goodwill. The Ñnalization of the purchase price did not have a material eÅect
on amortization expense previously reported. During the period from 1997 to 2000, certain subsidiaries of the
Company entered into Internet-access related service agreements with HSA, and both Vulcan Ventures and
certain of the Company's subsidiaries made equity investments in HSA. (See Note 23 for additional
information).
In April 2002, Interlink Communications Partners, LLC, Rifkin Acquisition Partners, LLC and Charter
Communications Entertainment I, LLC, each an indirect, wholly-owned subsidiary of Charter Holdings,
completed the purchase of certain assets of Enstar Income Program II-2, L.P., Enstar Income Program IV-3,
L.P., Enstar Income/Growth Program Six-A, L.P., Enstar Cable of Macoupin County and Enstar IV/PBD
Systems Venture, serving in the aggregate approximately 21,600 (unaudited) customers, for a total cash
purchase price of $48 million. In September 2002, Charter Communications Entertainment I, LLC purchased
all of Enstar Income Program II-1, L.P.'s Illinois cable television systems, serving approximately 6,400
(unaudited) customers, for a cash purchase price of $15 million. Enstar Communications Corporation, a
direct subsidiary of Charter Holdco, is a general partner of the Enstar limited partnerships but does not
exercise control over them. The purchase prices were allocated to assets acquired based on fair values,
including $41 million assigned to franchises and $4 million assigned to customer relationships amortized over
a useful life of three years.
During the second and third quarters in 2001, the Company acquired cable systems in two separate
transactions. In connection with the acquisitions, the Company paid aggregate cash consideration of
$1.8 billion, transferred a cable system valued at $25 million, issued 505,664 shares of Charter Series A
Convertible Redeemable Preferred Stock valued at $51 million, and in the Ñrst quarter of 2003 issued 39,595
additional shares of Series A Convertible Redeemable Preferred Stock to certain sellers subject to certain
holdback provisions of the acquisition agreement valued at $4 million. The purchase prices were allocated to
assets acquired and liabilities assumed based on fair values, including amounts assigned to franchises of
$1.5 billion.
During 2000, the Company acquired cable systems in Ñve separate transactions for an aggregate purchase
price of $1.2 billion, net of cash acquired, excluding debt assumed of $963 million. In connection with the
acquisitions, Charter issued shares of Class A common stock valued at approximately $178 million, and
Charter Holdco and an indirect subsidiary of Charter Holdco issued equity interests totaling $385 million and
$629 million, respectively. The purchase prices were allocated to assets and liabilities assumed based on
relative fair values, including amounts assigned to franchises of $3.3 billion.
The transactions described above were accounted for using the purchase method of accounting, and,
accordingly, the results of operations of the acquired assets and assumed liabilities have been included in the
consolidated Ñnancial statements from their respective dates of acquisition. The purchase prices were
allocated to assets acquired and liabilities assumed based on fair values.
F-19