Charter 2015 Annual Report Download - page 110

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, 2014 AND 2013
(dollars in millions, except share or per share data or where indicated)
F- 13
5. Property, Plant and Equipment
Property, plant and equipment consists of the following as of December 31, 2015 and 2014:
December 31,
2015 2014
Cable distribution systems $ 8,158 $ 7,919
Customer premise equipment and installations 4,632 4,388
Vehicles and equipment 384 335
Buildings and improvements 570 499
Furniture, fixtures and equipment 1,119 716
14,863 13,857
Less: accumulated depreciation (6,518)(5,484)
$ 8,345 $ 8,373
The Company periodically evaluates the estimated useful lives used to depreciate its assets and the estimated amount of assets
that will be abandoned or have minimal use in the future. A significant change in assumptions about the extent or timing of future
asset retirements, or in the Company’s use of new technology and upgrade programs, could materially affect future depreciation
expense.
Depreciation expense for the years ended December 31, 2015, 2014 and 2013 was $1.9 billion, $1.8 billion, and $1.6 billion,
respectively.
6. Franchises, Goodwill and Other Intangible Assets
Franchise rights represent the value attributed to agreements or authorizations with local and state authorities that allow access to
homes in cable service areas. For valuation purposes, they are defined as the future economic benefits of the right to solicit and
service potential customers (customer marketing rights), and the right to deploy and market new services to potential customers
(service marketing rights).
Management estimates the fair value of franchise rights at the date of acquisition and determines if the franchise has a finite life
or an indefinite life. All franchises that qualify for indefinite life treatment are tested for impairment annually or more frequently
as warranted by events or changes in circumstances. In determining whether our franchises have an indefinite life, the Company
considered the likelihood of franchise renewals, the expected costs of franchise renewals, and the technological state of the associated
cable systems, with a view to whether or not it is in compliance with any technology upgrading requirements specified in a franchise
agreement. The Company has concluded that as of December 31, 2015 and 2014 all of its franchises qualify for indefinite life
treatment.
Franchise assets are aggregated into essentially inseparable units of accounting to conduct valuations. The units of accounting
generally represent geographical clustering of our cable systems into groups. The Company assesses qualitative factors to determine
whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite lived
intangible asset has been impaired. If, after this optional qualitative assessment, the Company determines that it is not more likely
than not that an indefinite lived intangible asset has been impaired, then no further quantitative testing is necessary. In completing
the qualitative impairment testing, the Company evaluates the impact of various factors to the expected future cash flows attributable
to its units of accounting and to the assumed discount rate which would be used to determine the present value of those cash flows.
Such factors include macro-economic and industry conditions including the capital markets, regulatory, and competitive
environment, and costs of programming and customer premise equipment along with changes to our organizational structure and
strategies. A recent valuation of the Company was performed for tax purposes during 2015 and was included as a key factor in
the Company’s qualitative assessment of the Company’s franchise assets. After consideration of the qualitative factors, in 2015