Charter 2003 Annual Report Download - page 139

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 and 2001
(dollars in millions, except where indicated)
The tax eÅects of these temporary diÅerences that give rise to signiÑcant portions of the deferred tax
assets and deferred tax liabilities at December 31, 2003 and 2002 which are included in long-term liabilities
are presented below.
December 31,
2003 2002
Deferred tax assets:
Net operating loss carryforward ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,723 $ 1,489
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6 9
Total gross deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,729 1,498
Less: valuation allowance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,291) (1,444)
Net deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 438 $ 54
Deferred tax liabilities:
Investment in Charter Holdco.ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (553) $ (266)
Property, plant & equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (42) (67)
Franchises ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (260) (240)
Gross deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (855) (573)
Net deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (417) $ (519)
As of December 31, 2003, the Company has deferred tax assets of $1.7 billion, which primarily relate to
Ñnancial and tax losses allocated to Charter from Charter Holdco. The deferred tax assets also include
$912 million of tax net operating loss carryforwards (generally expiring in years 2004 through 2023) of
Charter and its indirect corporate subsidiaries, which are subject to certain limitations. Valuation allowances
of $480 million exist with respect to these carryforwards.
The total valuation allowance for deferred tax assets as of December 31, 2003 and 2002 was $1.3 billion
and $1.4 billion, respectively. In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax assets will be realized. Because of
the uncertainties in projecting future taxable income of Charter Holdco, valuation allowances have been
established except for deferred beneÑts available to oÅset certain deferred tax liabilities.
The Company is currently under examination by the Internal Revenue Service for the tax years ending
December 31, 1999 and 2000. Management does not expect the results of this examination to have a material
adverse eÅect on the Company's consolidated Ñnancial condition or results of operation.
22. Related Party Transactions
The following sets forth certain transactions in which the Company and the directors, executive oÇcers
and aÇliates of the Company are involved. Unless otherwise disclosed, management believes that each of the
transactions described below was on terms no less favorable to the Company than could have been obtained
from independent third parties.
Charter has entered into management arrangements with Charter Holdco and certain of its subsidiaries.
Under these agreements, Charter provides management services for the cable systems owned or operated by
its subsidiaries. The management services include such services as centralized customer billing services, data
processing and related support, beneÑts administration and coordination of insurance coverage and self-
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