Charter 2005 Annual Report Download - page 133

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2005 FORM 10-K
Notes to Consolidated Financial Statements (continued)
lent under the share lending agreement in the earnings per share 5. ALLOWANCE FOR DOUBTFUL ACCOUNTS
calculation. Activity in the allowance for doubtful accounts is summarized as
Segments follows for the years presented:
SFAS No. 131, Disclosure about Segments of an Enterprise and
Year Ended December 31,
Related Information, established standards for reporting informa-
2005 2004 2003
tion about operating segments in annual financial statements and
in interim financial reports issued to shareholders. Operating Balance, beginning of year $15 $17 $ 19
segments are defined as components of an enterprise about Charged to expense 76 92 79
Uncollected balances written off, net of
which separate financial information is available that is evaluated recoveries (74) (94) (81)
on a regular basis by the chief operating decision maker, or Balance, end of year $17 $15 $ 17
decision making group, in deciding how to allocate resources to
an individual segment and in assessing performance of the
segment. 6. PROPERTY, PLANT AND EQUIPMENT
The Company’s operations are managed on the basis of Property, plant and equipment consists of the following as of
geographic divisional operating segments. The Company has December 31, 2005 and 2004:
evaluated the criteria for aggregation of the geographic operat-
ing segments under paragraph 17 of SFAS No. 131 and believes 2005 2004
it meets each of the respective criteria set forth. The Company
Cable distribution systems $ 7,035 $ 6,596
delivers similar products and services within each of its
geographic divisional operations. Each geographic and divisional Customer equipment and installations 3,934 3,500
service area utilizes similar means for delivering the program- Vehicles and equipment 473 433
ming of the Company’s services; have similarity in the type or Buildings and leasehold improvements 584 578
class of customer receiving the products and services; distributes Furniture, fixtures and equipment 563 493
the Company’s services over a unified network; and operates
within a consistent regulatory environment. In addition, each of 12,589 11,600
the geographic divisional operating segments has similar eco- Less: accumulated depreciation (6,749) (5,311)
nomic characteristics. In light of the Company’s similar services,
$ 5,840 $ 6,289
means for delivery, similarity in type of customers, the use of a
unified network and other considerations across its geographic The Company periodically evaluates the estimated useful
divisional operating structure, management has determined that lives used to depreciate its assets and the estimated amount of
the Company has one reportable segment, broadband services. assets that will be abandoned or have minimal use in the future.
A significant change in assumptions about the extent or timing
4. SALE OF ASSETS of future asset retirements, or in the Company’s use of new
In 2005, the Company closed the sale of certain cable systems technology and upgrade programs, could materially affect future
in Texas, West Virginia and Nebraska, representing a total of depreciation expense.
approximately 33,000 analog video customers. During the year Depreciation expense for each of the years ended Decem-
ended December 31, 2005, those cable systems met the criteria ber 31, 2005, 2004 and 2003 was $1.5 billion.
for assets held for sale under Statement of Financial Accounting
7. FRANCHISES AND GOODWILL
Standards (‘‘SFAS’’) No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. As such, the assets were written Franchise rights represent the value attributed to agreements
down to fair value less estimated costs to sell resulting in asset with local authorities that allow access to homes in cable service
impairment charges during the year ended December 31, 2005 areas acquired through the purchase of cable systems. Manage-
of approximately $39 million. ment estimates the fair value of franchise rights at the date of
In 2004, the Company closed the sale of certain cable acquisition and determines if the franchise has a finite life or an
systems in Florida, Pennsylvania, Maryland, Delaware, New indefinite-life as defined by SFAS No. 142, Goodwill and Other
York and West Virginia to Atlantic Broadband Finance, LLC. Intangible Assets. Franchises that qualify for indefinite-life treat-
These transactions resulted in a $106 million gain recorded as a ment under SFAS No. 142 are tested for impairment annually
gain on sale of assets in the Company’s consolidated statements each October 1 based on valuations, or more frequently as
of operations. The total net proceeds from the sale of all of warranted by events or changes in circumstances. Such test
these systems were approximately $735 million. The proceeds resulted in a total franchise impairment of approximately
were used to repay a portion of amounts outstanding under the $3.3 billion during the third quarter of 2004. The 2003 and 2005
Company’s revolving credit facility. annual impairment tests resulted in no impairment. Franchises
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