billing and subscriber information systems, general ledgers, phone switches
and certain headend applications, all of which are third party supported. The
Company has received written assurances from the providers of all third party-
supported applications to the effect that such applications are either Year
2000 compliant or subject to plans to become Year 2000 compliant. The Company
is currently quantifying its non-IT applications which may be affected by Year
2000 issues and have an effect on its operations.
The Company continues to monitor Year 2000 issues and expect to have all
systems identified by the end of 1998 and compliance determinations completed
by the end of the first calendar quarter of 1999. Based on the results of its
compliance determinations, appropriate contingency plans will be finalized to
the extent possible.
The Company has not incurred any material Year 2000 costs to date, and
excluding the need for contingency plans, does not expect to incur any
material Year 2000 costs in the future because most of the applications it
uses are maintained by third parties who have borne such Year 2000 compliance
The Company cannot be certain that it or third parties supporting its
systems have resolved or will resolve all Year 2000 issues in a timely manner.
Failure by the Company or any such third party to successfully address the
relevant Year 2000 issues could result in disruptions of the Company's
business and the incurrence of significant expenses by the Company.
Additionally, the Company could be affected by any disruption to third parties
with which the Company does business if such third parties have not
successfully addressed their Year 2000 issues.
IMPACT OF INFLATION
With the exception of programming costs, the Company does not believe that
inflation has had or will likely have a significant effect on its results of
operations or capital expenditure programs. Programming cost increases in the
past have tended to exceed inflation and may continue to do so in the future.
The Company, in accordance with FCC regulations, may pass along programming
cost increases to its subscribers.
NEW ACCOUNTING STANDARDS
During fiscal 1997 and 1998, the Financial Accounting Standards Board
("FASB") issued Statement No. 130, "Reporting Comprehensive Income" ("FAS
130"), Statement No. 131, "Disclosures about Segments of an Enterprise and
Related Information" ("FAS 131"), Statement No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits" ("FAS 132"), and Statement
No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"). FAS 130 establishes standards
for reporting and display of comprehensive income and its components (revenue,
expenses, gains and losses) in a full set of financial statements. The Company
expects to adopt FAS 130 as of the second quarter of 1998. FAS 131 requires
disclosure of financial and descriptive information about an entity's
reportable operating segments under the "management approach" as defined in
such Statement. The Company will adopt FAS 131 as of December 31, 1998. FAS
132 standardizes the disclosure requirements for pensions and other
postretirement benefits. The Company expects to adopt FAS 132 as of the second
quarter of 1998. FAS 133 provides a comprehensive and consistent standard for
the recognition and measurement of derivatives and hedging activities. The
Company will adopt FAS 133 as of January 1, 2000. The impact of the adoption
of these standards on the Company's financial statements is not expected to be