Charter 2006 Annual Report Download - page 116

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2006 FORM 10-K
Notes to Consolidated Financial Statements (continued)
such lawsuits and claims are not expected individually to have a December 31, 2006. The adoption of SAB 108 did not have a
material adverse effect on the Company’s consolidated financial material impact on the Company’s financial statements.
condition, results of operations or liquidity, such lawsuits could In June 2006, the FASB issued FIN 48, Accounting for
have, in the aggregate, a material adverse effect on the Uncertainty in Income Taxes — an Interpretation of FASB Statement
Company’s consolidated financial condition, results of operations No. 109, which provides criteria for the recognition, measure-
or liquidity. ment, presentation and disclosure of uncertain tax positions. A
tax benefit from an uncertain position may be recognized only if
Regulation in the Cable Industry it is ‘‘more likely than not’’ that the position is sustainable based
The operation of a cable system is extensively regulated by the on its technical merits. FIN 48 is effective for fiscal years
Federal Communications Commission (‘‘FCC’’), some state beginning after December 15, 2006 and the Company will adopt
governments and most local governments. The FCC has the FIN 48 effective January 1, 2007. The Company is currently
authority to enforce its regulations through the imposition of assessing the impact of FIN 48 on its financial statements.
substantial fines, the issuance of cease and desist orders and/or In September 2006, the FASB issued SFAS 157, Fair Value
the imposition of other administrative sanctions, such as the Measurements, which establishes a framework for measuring fair
revocation of FCC licenses needed to operate certain transmis- value and expands disclosures about fair value measurements.
sion facilities used in connection with cable operations. The SFAS 157 is effective for fiscal years beginning after Novem-
1996 Telecom Act altered the regulatory structure governing the ber 15, 2007 and interim periods within those fiscal years. The
nation’s communications providers. It removed barriers to Company will adopt SFAS 157 effective January 1, 2008. The
competition in both the cable television market and the local Company does not expect that the adoption of SFAS 157 will
telephone market. Among other things, it reduced the scope of have a material impact on its financial statements.
cable rate regulation and encouraged additional competition in In February 2007, the FASB issued SFAS 159, The Fair
the video programming industry by allowing local telephone Value Option for Financial Assets and Financial Liabilities —
companies to provide video programming in their own tele- Including an amendment of FASB Statement No. 115, which allows
phone service areas. measurement at fair value of eligible financial assets and
Future legislative and regulatory changes could adversely liabilities that are not otherwise measured at fair value. If the fair
affect the Company’s operations, including, without limitation, value option for an eligible item is elected, unrealized gains and
additional regulatory requirements the Company may be losses for that item shall be reported in current earnings at each
required to comply with as it offers new services such as subsequent reporting date. SFAS 159 also establishes presenta-
telephone. tion and disclosure requirements designed to draw comparison
between the different measurement attributes the company
24. EMPLOYEE BENEFIT PLAN elects for similar types of assets and liabilities. SFAS 159 is
The Company’s employees may participate in the Charter effective for fiscal years beginning after November 15, 2007.
Communications, Inc. 401(k) Plan. Employees that qualify for Early adoption is permitted. The Company is currently assessing
participation can contribute up to 50% of their salary, on a pre- the impact of SFAS 159 on its financial statements.
tax basis, subject to a maximum contribution limit as determined Charter does not believe that any other recently issued, but
by the Internal Revenue Service. The Company matches 50% of not yet effective accounting pronouncements, if adopted, would
the first 5% of participant contributions. The Company made have a material effect on the Company’s accompanying financial
contributions to the 401(k) plan totaling $8 million, $6 million, statements.
and $7 million for the years ended December 31, 2006, 2005,
and 2004, respectively. 26. PARENT COMPANY ONLY FINANCIAL STATEMENTS
As the result of limitations on, and prohibitions of, distributions,
25. RECENTLY ISSUED ACCOUNTING STANDARDS substantially all of the net assets of the consolidated subsidiaries
In September 2006, the SEC issued SAB 108, Considering the are restricted from distribution to Charter, the parent company.
Effects of Prior Year Misstatements when Quantifying Misstatements The following condensed parent-only financial statements of
in Current Year Financial Statements, which addresses the effects Charter account for the investment in Charter Holdco under the
of prior year uncorrected misstatements in quantifying misstate- equity method of accounting. The financial statements should be
ments in current year financial statements. Misstatements are read in conjunction with the consolidated financial statements of
required to be quantified using both the balance-sheet (‘‘iron- the Company and notes thereto.
curtain’’) and income-statement approach (‘‘rollover’’) and evalu-
ated as to whether either approach results in a material error in
light of quantitative and qualitative factors. SAB 108 is effective
for fiscal years ending after November 15, 2006 and the
Company adopted SAB 108 effective for the fiscal year ended
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