Charter 2003 Annual Report Download - page 33

begin marketing of our high-speed data services as a separate product, we believed that separate disclosure of
this information would assist investors in understanding our current business and in monitoring what we
expected to be an increasing number of data only customers.
Disclosure Committee. We established a Disclosure Committee, consisting of senior personnel from the
business units, our internal audit group, and the Ñnance and legal groups, and we now follow an extensive
review and certiÑcation process in connection with our Ñlings with the SEC and other disclosure documents.
Audit Committee. We modiÑed our Audit Committee's charter to expand the role of the committee and
to comply with the Sarbanes-Oxley Act of 2002 and the rules issued thereunder (including Nasdaq rules).
Accounting Policy Changes. Consistent with the description of the restatement, we have revised a
number of our accounting policies, including treatment of launch incentives received from programmers. For a
complete discussion of accounting changes and adjustments brought about as a result of the re-audit or
restatement, see ""Restatement of Prior Results'' below.
Restatement of Prior Results
There were no restatements in 2003 of prior results. However, certain reclassiÑcations have been made to
2002 and 2001 amounts to conform to 2003 presentation. Also, as discussed in our annual report on
Form 10-K available at www.sec.gov, for the year ended December 31, 2002, on November 19, 2002, we
announced that we had determined that additional franchise costs and deferred income tax liability should
have been recorded for the diÅerences between the Ñnancial statement and tax basis of assets we acquired in
connection with certain cable businesses acquired throughout 1999 and 2000. As a result of this restatement,
we engaged KPMG LLP to perform audits as of and for the years ended December 31, 2001 and 2000 because
our former accountants, Arthur Andersen LLP, were no longer available to provide an opinion as to restated
Ñnancial statements. In connection with these audits, we concluded that it was appropriate to make certain
additional adjustments to previously reported results. Among other things, adjustments were made to previous
interpretations and applications of generally accepted accounting principles (""GAAP'') that had been
consistently followed by us since 2000 and throughout the restatement period.
These adjustments reduced revenues reported in our 2002 quarterly reports on Form 10-Q for the Ñrst
three quarters of 2002 by a total of $38 million, and in our 2001 annual report on Form 10-K available at
www.sec.gov, for the year ended December 31, 2001 and 2000 by $146 million and $108 million, respectively.
Such adjustments represent approximately 1%, 4% and 3% of previously reported revenues for the respective
periods in 2002, 2001 and 2000. Our previously reported consolidated net loss increased by a total of
$26 million for the Ñrst three quarters of 2002 and decreased by $11 million for the year ended December 31,
2001. Our previously reported net loss increased by $29 million for the year ended December 31, 2000,
primarily due to adjustments related to the original accounting for acquisitions and elements of our rebuild and
upgrade activities. Net cash Öows from operating activities for the years ended December 31, 2001 and 2000
were reduced by $30 million and $303 million, respectively. The most signiÑcant categories of adjustments
related to the following items outlined below.
Launch Incentives from Programmers. Amounts previously recognized as advertising revenue in
connection with the launch of new programming channels have been deferred and recorded in other long-term
liabilities in the year such launch support was provided, and amortized as a reduction of programming costs
based upon the relevant contract term. These adjustments decreased revenue $30 million for the Ñrst three
quarters of 2002, and $118 million and $76 million for the years ended December 31, 2001 and 2000,
respectively. Additionally, for the year ended December 31, 2000, we increased marketing expense by
$24 million for other promotional activities associated with launching new programming services previously
deferred and subsequently amortized. The corresponding amortization of such deferred amounts reduced
programming expenses by $36 million for the Ñrst three quarters of 2002, and $27 million and $5 million for
the years ended December 31, 2001 and 2000, respectively.
Customer Incentives and Inducements. Marketing inducements paid to encourage potential customers
to switch from satellite providers to Charter-branded services and enter into multi-period service agreements
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