Charter 2012 Annual Report Download - page 86

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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
(dollars in millions, except share or per share data or where indicated)
F- 11
during the years ended December 31, 2012, 2011 and 2010, respectively, were: risk-free interest rate of 1.5%, 2.5% and 2.5%;
expected volatility of 38.4%, 38.4% and 47.7%, and expected lives of 6.3 years, 6.6 years and 6.3 years. The grant date weighted
average cost of equity used was 16.2% and 15.5% during the years ended December 31, 2012 and 2011, respectively. Volatility
assumptions were based on historical volatility of Charter and a peer group. The Company’s volatility assumptions represent
management’s best estimate and were partially based on historical volatility of a peer group because management does not believe
Charter’s pre-emergence from bankruptcy historical volatility to be representative of its future volatility. Expected lives were
calculated based on the simplified-method due to insufficient historical exercise data. The valuations assume no dividends are
paid.
Income Taxes
The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and
the tax basis of the Company’s assets and liabilities and expected benefits of utilizing loss carryforwards. The impact on deferred
taxes of changes in tax rates and tax law, if any, applied to the years during which temporary differences are expected to be settled,
are reflected in the consolidated financial statements in the period of enactment (see Note 16).
Loss per Common Share
Basic loss per common share is computed by dividing the net loss by the weighted-average common shares outstanding during
the respective periods. Diluted loss per common share equals basic loss per common share for the periods presented, as the effect
of stock options and other convertible securities are antidilutive because the Company incurred net losses.
Segments
The Company’s operations are conducted through the use of a unified network and are managed and reported to its Chief Executive
Officer ("CEO"), the Company's chief operating decision maker, on a consolidated basis. The CEO assesses performance and
allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company
has one reportable segment, broadband services.
3. Allowance for Doubtful Accounts
Activity in the allowance for doubtful accounts is summarized as follows for the years presented:
Year Ended December 31,
2012 2011 2010
Balance, beginning of period $ 16 $ 17 $ 11
Charged to expense 105 117 133
Uncollected balances written off, net of recoveries (107)(118)(127)
Balance, end of period $ 14 $ 16 $ 17