Charter 2010 Annual Report Download - page 92

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F- F-PB
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010, 2009, AND 2008
(dollars in millions, except share or per share data or where indicated)
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Organization
Charter Communications, Inc. (“Charter”) is a holding company
whose principal asset is a 100% common equity interest in Charter
Communications Holding Company, LLC (“Charter Holdco”).
Charter Holdco is the sole owner of Charter’s subsidiaries where the
underlying operations reside, which are collectively, with Charter,
referred to herein as the “Company.”
e Company is a cable operator providing services in the United
States. e Company offers to residential and commercial customers
traditional cable video programming (basic and digital video), high-
speed Internet services, and telephone services, as well as advanced
video services such as Charter OnDemand™, high definition
television, and digital video recorder (“DVR”) service. e Company
sells its cable video programming, high-speed Internet, telephone,
and advanced video services primarily on a subscription basis. e
Company also sells local advertising on cable networks.
Basis of Presentation
e consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States (“GAAP”). On May 7, 2009, the Company filed a
Joint Plan of Reorganization (the “Plan”) and a related disclosure
statement (the “Disclosure Statement”) with the United States
Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”). On November 30, 2009 the Company
emerged from protection under Chapter 11 of the United States
Code (the “Bankruptcy Code”). Upon the Company’s emergence
from bankruptcy, the Company applied fresh start accounting. is
resulted in the Company becoming a new entity on December 1,
2009, with a new capital structure, a new accounting basis in the
identifiable assets and liabilities assumed and no retained earnings
or accumulated losses. Accordingly, the consolidated financial
statements on or after December 1, 2009 (“Successor”) are not
comparable to the consolidated financial statements prior to that
date. e financial statements for the periods through November 30,
2009 (“Predecessor”) do not include the effect of any changes in our
capital structure or changes in the fair value of assets and liabilities as
a result of fresh start accounting.
e preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Areas involving significant judgments
and estimates include capitalization of labor and overhead costs;
depreciation and amortization costs; impairments of property,
plant and equipment, intangibles and goodwill; income taxes;
contingencies; programming expense and fresh start accounting.
Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to conform with
the 2010 presentation.
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Consolidation
e accompanying consolidated financial statements include the
accounts of Charter and its majority owned subsidiaries. e
Company consolidates variable interest entities based upon
evaluation of the Company’s power, through voting rights or similar
rights, to direct the activities of another entity that most significantly
impact the entity’s economic performance; its obligation to absorb
the expected losses of the entity; and its right to receive the expected
residual returns of the entity. All significant intercompany accounts
and transactions among consolidated entities have been eliminated.
Cash and Cash Equivalents
e Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. ese
investments are carried at cost, which approximates market value.
Cash and cash equivalents consist primarily of money market funds
and commercial paper. Restricted cash and cash equivalents consist of
amounts held in escrow accounts pending final resolution from the
Bankruptcy Court (see Note 23). Restricted cash is included in cash
and cash equivalents on the accompanying condensed consolidated
statements of cash flows. Approximately $17 million of restricted
cash held in an escrow account established in bankruptcy proceedings
was used to pay for professional services for the year ended December
31, 2010.
Property, Plant and Equipment
Additions to property, plant and equipment are recorded at cost,
including all material, labor and certain indirect costs associated