Charter 2003 Annual Report Download - page 111

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 and 2001
(dollars in millions, except where indicated)
Unfavorable Contracts and Other Settlements
The Company recognized $72 million of beneÑt for the year ended December 31, 2003 as a result of the
settlement of estimated liabilities recorded in connection with prior business combinations. The majority of
this beneÑt (approximately $52 million) is due to the renegotiation of a major programming contract, for
which a liability had been recorded for the above market portion of the agreement in conjunction with the
Falcon acquisition in 1999 and the Bresnan acquisition in 2000. The remaining beneÑt relates to the reversal of
previously recorded liabilities, which, based on an evaluation of current facts and circumstances, are no longer
required.
Income Taxes
The Company recognizes deferred tax assets and liabilities for temporary diÅerences between the
Ñnancial reporting basis and the tax basis of the Company's assets and liabilities and expected beneÑts of
utilizing net operating loss carryforwards. The impact on deferred taxes of changes in tax rates and tax law, if
any, applied to the years during which temporary diÅerences are expected to be settled, are reÖected in the
consolidated Ñnancial statements in the period of enactment (see Note 21).
Minority Interest
Minority interest on the consolidated balance sheets represents the portion of members' equity of Charter
Holdco not owned by Charter, plus preferred membership interests in two indirect subsidiaries of Charter held
by Mr. Paul G. Allen and certain sellers of the Helicon systems. Minority interest totaled $689 million and
$1.0 billion as of December 31, 2003 and 2002, respectively, on the accompanying consolidated balance
sheets. Gains or losses arising from issuances by Charter Holdco of its membership units are recorded as
capital transactions thereby increasing or decreasing shareholders' equity and decreasing or increasing
minority interest on the consolidated balance sheets. These losses totaled $1 million, $1 million and
$253 million for the years ended December 31, 2003, 2002 and 2001, respectively, on the accompanying
consolidated statements of changes in shareholders' equity. Operating losses are allocated to the minority
owners based on their ownership percentage, thereby reducing the Company's net loss.
Loss per Common Share
Basic loss per common share is computed by dividing the net loss applicable to common stock by
294,597,519 shares, 294,440,261 shares and 269,594,386 shares for the years ended December 31, 2003, 2002
and 2001, representing the weighted-average common shares outstanding during the respective periods.
Diluted loss per common share equals basic loss per common share for the periods presented, as the eÅect of
stock options is antidilutive because the Company incurred net losses. All membership units of Charter
Holdco are exchangeable on a one-for-one basis into common stock of Charter at the option of the holders.
Should the holders exchange units for shares, the eÅect would not be dilutive.
Segments
SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, established
standards for reporting information about operating segments in annual Ñnancial statements and in interim
Ñnancial reports issued to shareholders. Operating segments are deÑned as components of an enterprise about
which separate Ñnancial information is available that is evaluated on a regular basis by the chief operating
decisionmaker, or decision making group, in deciding how to allocate resources to an individual segment and
in assessing performance of the segment.
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