Charter 2004 Annual Report Download - page 123

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2004 FORM 10-K
Notes to Consolidated Financial Statements (continued)
ended December 31, 2004. The remaining $2.4 billion of the ers led to the lower projected growth rates and the revised
total franchise impairment was attributable to the use of lower estimates of future cash flows from those used at October 1,
projected growth rates and the resulting revised estimates of 2003.
future cash flows in the Company’s valuation, and was recorded The valuation completed at October 1, 2003 showed
as impairment of franchises in the Company’s accompanying franchise values in excess of book value and thus resulted in no
consolidated statements of operations for the year ended impairment. The Company’s annual impairment assessment as
December 31, 2004. Sustained analog video customer losses by of October 1, 2002, based on revised estimates from January 1,
the Company in the third quarter of 2004 primarily as a result 2002 of future cash flows and projected long-term growth rates
of increased competition from direct broadcast satellite providers in the Company’s valuation, led to the recognition of a
and decreased growth rates in the Company’s high-speed data $4.6 billion impairment charge in the fourth quarter of 2002.
customers in the third quarter of 2004, in part, as a result of As of December 31, 2004 and 2003, indefinite-lived and
increased competition from digital subscriber line service provid- finite-lived intangible assets are presented in the following table:
December 31,
2004 2003
Gross Net Gross Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
Indefinite-lived intangible assets:
Franchises with indefinite lives $9,845 $ — $9,845 $13,606 $— $13,606
Goodwill 52 — 52 52 —52
$9,897 $ — $9,897 $13,658 $— $13,658
Finite-lived intangible assets:
Franchises with finite lives $37 $4 $33 $ 107 $33 $ 74
For the year ended December 31, 2004, the net carrying 8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
amount of indefinite-lived intangible assets was reduced by Accounts payable and accrued expenses consist of the following
$490 million as a result of the sale of cable systems, primarily as of December 31, 2004 and 2003:
the sale to Atlantic Broadband Finance, LLC, discussed in
Note 2. Additionally, in the first and fourth quarters of 2004, 2004 2003
approximately $29 million and $8 million, respectively, of Accounts payable — trade $ 148 $ 163
franchises that were previously classified as finite-lived were Accrued capital expenditures 65 108
reclassified to indefinite-lived, based on the Company’s renewal Accrued expenses:
Interest 324 277
of these franchise assets in 2003 and 2004. Franchise amortiza- Programming costs 278 319
tion expense for the years ended December 31, 2004, 2003 and Franchise related fees 67 70
2002 was $4 million, $9 million and $9 million, respectively, State sales tax 47 61
which represents the amortization relating to franchises that did Other 288 288
not qualify for indefinite-life treatment under SFAS No. 142, $ 1,217 $1,286
including costs associated with franchise renewals. The Com-
pany expects that amortization expense on franchise assets will
be approximately $3 million annually for each of the next five
years. Actual amortization expense in future periods could differ
from these estimates as a result of new intangible asset
acquisitions or divestitures, changes in useful lives and other
relevant factors.
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