Charter 2003 Annual Report Download - page 108

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 and 2001
(dollars in millions, except where indicated)
of 15 years. The period of 15 years was management's best estimate of the useful lives of the franchises and
assumed that substantially all of those franchises that expired during the period would be renewed but not
indeÑnitely. The Company evaluated the recoverability of franchises for impairment when events or changes
in circumstances indicated that the carrying amount of an asset may not be recoverable.
Other Noncurrent Assets
Other noncurrent assets primarily include goodwill, deferred Ñnancing costs and investments in equity
securities. Costs related to borrowings are deferred and amortized to interest expense using the eÅective
interest method over the terms of the related borrowings. As of December 31, 2003 and 2002, other
noncurrent assets include $203 million and $231 million of deferred Ñnancing costs, net of accumulated
amortization of $128 million and $106 million, respectively.
Investments in equity securities are accounted for at cost, under the equity method of accounting or in
accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. Charter
recognizes losses for any decline in value considered to be other than temporary. Certain marketable equity
securities are classiÑed as available-for-sale and reported at market value with unrealized gains and losses
recorded as accumulated other comprehensive income or loss.
The following summarizes investment information as of and for the years ended December 31, 2003 and
2002:
Gain (loss)
Carrying for the
Value at Years Ended
December 31, December 31,
2003 2002 2003 2002
Equity investments, under the cost methodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $30 $17 $(2) $Ì
Equity investments, under the equity methodÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11 16 (1) (5)
Marketable securities, at market value ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 2
$41 $33 $(3) $(3)
Valuation of Property, Plant and Equipment
The Company evaluates the recoverability of property, plant and equipment for impairment when events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events
or changes in circumstances could include such factors as changes in technological advances, Öuctuations in
the fair value of such assets, adverse changes in relationships with local franchise authorities, adverse changes
in market conditions or poor operating results. If a review indicates that the carrying value of such asset is not
recoverable from estimated undiscounted cash Öows, the carrying value of such asset is reduced to its
estimated fair value. While the Company believes that its estimates of future cash Öows are reasonable,
diÅerent assumptions regarding such cash Öows could materially aÅect its evaluations of asset recoverability.
No impairment of property, plant and equipment occurred in 2003, 2002 and 2001.
Derivative Financial Instruments
The Company accounts for derivative Ñnancial instruments in accordance with SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended, which became eÅective for the
Company on January 1, 2001. The Company uses interest rate risk management derivative instruments, such
as interest rate swap agreements, interest rate cap agreements and interest rate collar agreements (collectively
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