Charter 2003 Annual Report Download - page 145

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003, 2002 and 2001
(dollars in millions, except where indicated)
rental attachments for the years ended December 31, 2003, 2002 and 2001, was $40 million,
$41 million and $33 million, respectively.
‚ The Company pays franchise fees under multi-year franchise agreements based on a percentage of
revenues earned from video service per year. The Company also pays other franchise related costs, such
as public education grants under multi-year agreements. Franchise fees and other franchise-related
costs included in the accompanying statement of operations were $162 million, $160 million and
$144 million for the years ended December 31, 2003, 2002 and 2001, respectively.
‚ The Company also has $153 million in letters of credit, primarily to its various worker's compensation,
property casualty and general liability carriers as collateral for reimbursement of claims. These letters
of credit reduce the amount the Company may borrow under its credit facilities.
Litigation
Fourteen putative federal class action lawsuits (the ""Federal Class Actions'') have been Ñled against
Charter and certain of its former and present oÇcers and directors in various jurisdictions allegedly on behalf
of all purchasers of Charter's securities during the period from either November 8 or November 9, 1999
through July 17 or July 18, 2002. UnspeciÑed damages are sought by the plaintiÅs. In general, the lawsuits
allege that Charter utilized misleading accounting practices and failed to disclose these accounting practices
and/or issued false and misleading Ñnancial statements and press releases concerning Charter's operations and
prospects. The Federal Class Actions were speciÑcally and individually identiÑed in public Ñlings made by
Charter prior to the date of this annual report.
In October 2002, Charter Ñled a motion with the Judicial Panel on Multidistrict Litigation (the ""Panel'')
to transfer the Federal Class Actions to the Eastern District of Missouri. On March 12, 2003, the Panel
transferred the six Federal Class Actions not Ñled in the Eastern District of Missouri to that district for
coordinated or consolidated pretrial proceedings with the eight Federal Class Actions already pending there.
The Panel's transfer order assigned the Federal Class Actions to Judge Charles A. Shaw. By virtue of a prior
court order, StoneRidge Investment Partners LLC became lead plaintiÅ upon entry of the Panel's transfer
order. StoneRidge subsequently Ñled a Consolidated Amended Complaint. The Court subsequently consoli-
dated the Federal Class Actions for pretrial purposes. On June 19, 2003, following a pretrial conference with
the parties, the Court issued a Case Management Order setting forth a schedule for the pretrial phase of the
consolidated class action. Motions to dismiss the Consolidated Amended Complaint have been Ñled. On
February 10, 2004, in response to a joint motion made by StoneRidge and defendants, Charter, Vogel and
Allen, the court entered an order providing, among other things, that: (1) the parties who Ñled such motion
engage in a mediation within ninety (90) days; and (2) all proceedings in the Consolidated Federal
Class Actions are stayed for ninety (90) days.
On September 12, 2002, a shareholders derivative suit (the ""State Derivative Action'') was Ñled in
Missouri state court against Charter and its then current directors, as well as its former auditors. A
substantively identical derivative action was later Ñled and consolidated into the State Derivative Action. The
plaintiÅs allege that the individual defendants breached their Ñduciary duties by failing to establish and
maintain adequate internal controls and procedures. UnspeciÑed damages, allegedly on Charter's behalf, are
sought by the plaintiÅs.
Separately, on February 12, 2003, a shareholders derivative suit (the ""Federal Derivative Action''), was
Ñled against Charter and its then current directors in the United States District Court for the Eastern District
of Missouri. The plaintiÅ alleges that the individual defendants breached their Ñduciary duties and grossly
F-47