Charter 2003 Annual Report Download - page 55

Minority interest. Minority interest increased by $1.7 billion, from $1.5 billion in 2001 to $3.2 billion in
2002. Minority interest represents the allocation of losses to the minority interest based on ownership of
Charter Holdco, the 10% dividend on preferred membership units in our indirect subsidiary, Charter Helicon,
LLC, and the 2% accretion of the preferred membership interests in our indirect subsidiary, CC VIII, LLC
issued to certain sellers of the Bresnan systems acquired by CC VIII systems in February 2000. The increase
is a result of an increase in loss before minority interest. See ""Certain Relationships and Related
Transactions Ì Transactions Arising Out of Our Organizational Structure and Mr. Allen's Investment in
Charter Communications, Inc. and Its Subsidiaries Ì Equity Put Rights Ì CC VIII'' in the Charter
Communications, Inc. 2004 Proxy Statement available at www.sec.gov.
Income tax beneÑt. Income tax beneÑt of $460 million and $12 million were recognized for the years
ended December 31, 2002 and 2001, respectively. The income tax beneÑts are realized through reductions in
deferred tax liabilities related to our investment in Charter Holdco, as well as the change in the deferred tax
liabilities of certain of our indirect corporate subsidiaries.
Cumulative eÅect of accounting change, net of tax. Cumulative eÅect of accounting change in 2002
represents the impairment charge recorded as a result of adopting SFAS No. 142. Cumulative eÅect of
accounting change in 2001 represents losses incurred upon adoption of SFAS No. 133.
Net loss. Net loss increased by $1.3 billion, or 115%, from $1.2 billion in 2001 to $2.5 billion in 2002 as
a result of the combination of factors described above. The impact of the impairment of franchises and the
cumulative eÅect of accounting change, net of minority interest and income tax impacts, was to increase net
loss by $1.6 billion in 2002. This was oÅset somewhat by the decrease in amortization expense, net of minority
interest and income tax impacts, in 2002 verses 2001 of $645 million as a result of the adoption of SFAS
No. 142 on January 1, 2002.
Preferred stock dividends. On August 31, 2001, Charter issued 505,664 shares (and on February 28,
2003 issued an additional 39,595 shares) of Series A Convertible Redeemable Preferred Stock in connection
with the Cable USA acquisition in August 2001, on which it pays a quarterly cumulative cash dividends at an
annual rate of 5.75% on a liquidation preference of $100 per share.
Loss per common share. The loss per common share increased by $4.22, from $4.33 per common share
for the year ended December 31, 2001 to $8.55 per common share for the year ended December 31, 2002 as a
result of the factors described above.
Liquidity and Capital Resources
Introduction
This section contains a discussion of our liquidity and capital resources, including a discussion of our cash
position, sources and uses of cash, access to debt facilities and other Ñnancing sources, historical Ñnancing
activities, cash needs, capital expenditures and outstanding debt.
Overview
Our business requires signiÑcant cash to fund capital expenditures, debt service costs and ongoing
operations. We have historically funded our operating activities and capital requirements through cash Öows
from operating activities, borrowings under the credit facilities of our subsidiaries, issuances of debt securities
by us and our subsidiaries and our issuances of equity securities. The mix of funding sources changes from
period to period, but for the year ended December 31, 2003, approximately 80% of our funding requirements
were from cash Öows from operating activities and 20% was from cash on hand. In 2003, net cash Öows used in
Ñnancing activities were $142 million, reÖecting a net repayment of debt. We expect that our mix of sources of
funds will continue to change in the future based on our overall needs relative to our cash Öow and on the
availability under the credit facilities of our subsidiaries, our access to the debt and equity markets and our
ability to generate cash Öows from operating activities.
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