Charter 2011 Annual Report Download - page 92

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2011, 2010 AND 2009
(dollars in millions, except share or per share data or where indicated)
F- 8
1. Organization and Basis of Presentation
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 owns cable systems through its subsidiaries, which are
collectively, with Charter, referred to herein as the “Company.”
The Company is a cable operator providing services in the United States. The Company offers to residential and commercial
customers traditional cable video programming (basic and digital video), Internet services, and telephone services, as well as
advanced video services such as Charter OnDemand™, high definition television, and digital video recorder (“DVR”) service.
The Company sells its cable video programming, Internet, telephone, and advanced video services primarily on a subscription
basis. The Company also sells local advertising on cable networks and on the Internet and provides fiber connectivity to cellular
towers.
On November 17, 2009, the Company’s Joint Plan of Reorganization (the “Plan”) was confirmed by order of the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), and became effective on November 30, 2009
(the “Effective Date”), the date on which the Company emerged from protection under Chapter 11 of the Bankruptcy Code. Upon
the Company’s emergence from bankruptcy, the Company applied fresh start accounting. This 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. The 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.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”).
The 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 2011 presentation.
2. Summary of Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of Charter and its majority owned subsidiaries. The
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
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These
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 21 and 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