Charter 2006 Annual Report Download - page 96

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES 2006 FORM 10-K
Notes to Consolidated Financial Statements (continued)
in interim financial reports issued to shareholders. Operating West Virginia and Virginia cable systems comprise operations
segments are defined as components of an enterprise about and cash flows that for financial reporting purposes meet the
which separate financial information is available that is evaluated criteria for discontinued operations. Accordingly, the results of
on a regular basis by the chief operating decision maker, or operations for the West Virginia and Virginia cable systems
decision making group, in deciding how to allocate resources to (including a gain on sale of approximately $200 million recorded
an individual segment and in assessing performance of the in the third quarter of 2006) have been presented as discontin-
segment. ued operations, net of tax for the year ended December 31, 2006
The Company’s operations are managed on the basis of and all prior periods presented herein have been reclassified to
geographic divisional operating segments. The Company has conform to the current presentation. Tax expense of $18 million
evaluated the criteria for aggregation of the geographic operat- associated with this gain on sale was recorded in the fourth
ing segments under paragraph 17 of SFAS No. 131 and believes quarter of 2006.
it meets each of the respective criteria set forth. The Company Summarized consolidated financial information for the years
delivers similar products and services within each of its ended December 31, 2006, 2005 and 2004 for the West Virginia
geographic divisional operations. Each geographic and divisional and Virginia cable systems is as follows:
service area utilizes similar means for delivering the program-
Year Ended December 31,
ming of the Company’s services; have similarity in the type or
2006 2005 2004
class of customer receiving the products and services; distributes
the Company’s services over a unified network; and operates Revenues $ 109 $ 221 $ 217
within a consistent regulatory environment. In addition, each of Income (loss) before income taxes and
cumulative effect of accounting change $ 238 $ 39 $ (104)
the geographic divisional operating segments has similar eco- Income tax expense $ (22) $ (3) $ (31)
nomic characteristics. In light of the Company’s similar services, Net income (loss) $ 216 $ 36 $ (135)
means for delivery, similarity in type of customers, the use of a Earnings (loss) per common share, basic and
diluted $0.65 $0.12 $(0.45)
unified network and other considerations across its geographic
divisional operating structure, management has determined that In 2005, the Company closed the sale of certain cable
the Company has one reportable segment, broadband services. systems in Texas, West Virginia and Nebraska representing a
total of approximately 33,000 analog video customers. During
4. SALE OF ASSETS
the year ended December 31, 2005, certain of those cable
In 2006, the Company sold certain cable television systems systems met the criteria for assets held for sale. As such, the
serving a total of approximately 356,000 analog video customers assets were written down to fair value less estimated costs to sell
in 1) West Virginia and Virginia to Cebridge Connections, Inc. resulting in asset impairment charges during the year ended
(the ‘‘Cebridge Transaction’’); 2) Illinois and Kentucky to December 31, 2005 of approximately $39 million.
Telecommunications Management, LLC, doing business as New In 2004, the Company closed the sale of certain cable
Wave Communications (the ‘‘New Wave Transaction’’) and systems in Florida, Pennsylvania, Maryland, Delaware, New
3) Nevada, Colorado, New Mexico and Utah to Orange York and West Virginia to Atlantic Broadband Finance, LLC.
Broadband Holding Company, LLC (the ‘‘Orange Transaction’’) These transactions resulted in a $106 million gain recorded as
for a total sales price of approximately $971 million. The other income, net in the Company’s consolidated statements of
Company used the net proceeds from the asset sales to reduce operations. The total net proceeds from the sale of all of these
borrowings, but not commitments, under the revolving portion systems were approximately $735 million. The proceeds were
of the Company’s credit facilities. These cable systems met the used to repay a portion of amounts outstanding under the
criteria for assets held for sale. As such, the assets were written Company’s revolving credit facility.
down to fair value less estimated costs to sell, resulting in asset
impairment charges during the year ended December 31, 2006 5. ALLOWANCE FOR DOUBTFUL ACCOUNTS
of approximately $99 million related to the New Wave Activity in the allowance for doubtful accounts is summarized as
Transaction and the Orange Transaction. Also in 2006, the follows for the years presented:
Company recorded asset impairment charges of $60 million
related to other cable systems meeting the criteria of assets held Year Ended December 31,
for sale. 2006 2005 2004
During the second quarter of 2006, the Company deter-
Balance, beginning of year $17 $15 $17
mined, based on changes in the Company’s organizational and Charged to expense 89 76 92
cost structure, that its asset groupings for long lived asset Uncollected balances written off, net of recoveries (90) (74) (94)
accounting purposes are at the level of their individual market Balance, end of year $16 $17 $15
areas, which are at a level below the Company’s geographic
clustering. As a result, the Company has determined that the
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