ST. LOUIS--(BUSINESS WIRE)--Nov. 19, 2002--Charter Communications, Inc. (Nasdaq:CHTR) has determined that an additional $1.4 billion of franchise costs and $1.2 billion of deferred income tax liability should have been recorded relating to the differences between the financial statement and tax basis of assets acquired in connection with 18 cable businesses acquired throughout 1999 and 2000. None of the changes described below are expected to have any cash impact on the Company and do not impact previously reported revenue, operating cash flow or past or future cash tax obligations.
After consultation with the staff of the Securities and Exchange Commission (SEC) as to the appropriate period in which to record these amounts, the Company will restate previously issued financial statements for the years ended December 31, 2001 and 2000. The balance of the adjustment will be recorded as $105.1 million of minority interest and $68.9 million additional paid in capital. These adjustments also will result in the Company restating prior periods to record $178.8 million of amortization expense related to periods prior to 2002 as if the additional franchise costs had been recorded at the time of the acquisitions. Additionally, the recording of the franchise cost resulted in a reassessment by management of the impairment of franchises with indefinite lives as of January 1, 2002, the date of adoption for SFAS No. 142 by Charter. This reassessment resulted in recognition of impairment at adoption of $82.8 million (approximately $38.5 million after minority interest effects). Accordingly, this adjustment will be recorded by Charter as of January 1, 2002 and has been reflected in the results of operations for the nine months ended September 30, 2002 financial statements.
As a result of the foregoing, and in order to properly reflect deferred tax liabilities relating to the differences between the financial statement and tax basis of assets acquired in business combinations that existed at the dates of acquisition, the Company has determined that certain adjustments are required to its consolidated financial statements for the three and nine months ended September 30, 2001 and as of December 31, 2001 to be included in its September 30, 2002 Form 10-Q. Overall the adjustments increased the net loss for the three and nine months ended September 30, 2001 by $8.9 million, or $.03 per share, and by $25.0 million, or $.09 per share, respectively. The adjustments also increased the accumulated deficit of the Company at December 31, 2001 by $54.2 million.
The Company will also restate the financial statements contained in its previously filed March 31, 2002 Form 10-Q, the June 30, 2002 Form 10-Q and the December 31, 2001 Form 10-K to reflect the adjustments discussed above. The Company has engaged KPMG LLP to perform reaudits as of and for the years ended December 31, 2001 and 2000 as a result of the restatement process. The Company will attempt to conclude the reaudits promptly. All December 31, 2001 comparative financial information which will be contained in the Company's Form 10-Q for the quarter ended September 30, 2002 is considered unaudited until such amendments are filed.
The following tables summarize the effects on the December 31, 2001 consolidated balance sheet and the consolidated statements of operations for the three and nine month periods ended September 30, 2001 for the adjustments to prior years' acquisition accounting, as discussed in the immediately preceding paragraph.
Consolidated Balance Sheet (dollars in thousands) As of December 31, 2001 Previously Reported Restated Franchises 17,138,774 18,338,776 Total Assets 24,961,824 26,161,826 Other Long-Term Liabilities 341,057 1,494,641 Total Shareholders' Equity 2,861,792 2,883,336 Consolidated Statement of Operations (dollars in thousands) Three Months Ended September 30, 2001 Previously Reported Restated Depreciation and Amortization 775,438 798,417 Loss from Operations (245,409) (273,792) Income Tax Benefit - 3,750 Net Loss Applicable to Common Stock (655,947) (326,602) Nine Months Ended September 30, 2001 Previously Reported Restated Depreciation and Amortization 2,192,285 2,261,222 Loss from Operations (857,161) (931,502) Income Tax Benefit - 11,250 Net Loss Applicable to Common Stock (1,955,908) 897,222)
The Company said it expected to file its September 30, 2002 Form 10-Q reflecting these adjustments on Tuesday, November 19, 2002.
About Charter Communications
Charter Communications, A Wired World Company(TM), is among the nation's largest broadband communications companies, currently serving approximately 6.7 million customers in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform marketed under the Charter Digital Cable(R) brand and high-speed Internet access via Charter Pipeline(R). Commercial high-speed data, video and Internet solutions are provided under the Charter Business Networks(TM) brand. Advertising sales and production services are sold under Charter Media(TM).
More information about Charter can be found at www.charter.com.
Cautionary Statement Regarding Forward-Looking Statements:
This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, our plans, strategies and prospects, both business and financial, including the statement under the caption "Looking Ahead." Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Many of the forward-looking statements contained in this news release may be identified by the use of forward-looking words such as "believe," "expect," "anticipate," "should," "planned," "will," "may," "intend," "estimated," and "potential," among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this news release are set forth in reports or documents that we file from time to time with the United States Securities and Exchange Commission or the SEC, and include, but are not limited to:
our ability to grow revenues and cash flow by offering advanced products and services;
our ability to achieve free cash flow;
our ability to maintain and grow the number of basic, digital and modem customers;
the cost and availability of funding for anticipated capital expenditures for our upgrades, new equipment and facilities;
our ability to support new advanced services through our plant technology upgrade;
our ability to compete effectively in a highly competitive and changing environment;
our ability to obtain programming as needed and at reasonable prices;
our ability to continue to do business with existing vendors, particularly high-tech companies that do not have a long operating history;
the results of the pending grand jury inquiry filed by the United States Attorney's Office for the Eastern District of Missouri, as well as other purported class action litigation against the company;
general business conditions and economic uncertainty; and
the effects of governmental regulation on our business and our ability to retain local franchises.
All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no obligation to update any of the forward-looking statements after the date of this news release to conform these statements to actual results or to changes in our expectations.
|CONTACT:||Charter Communications, Inc.|
|Media: Andy Morgan, 314/543-2217|
|Mary Jo Moehle, 314/543-2397|