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SEC Filings

S-4/A
CHARTER COMMUNICATIONS HOLDINGS CAPITAL CORP filed this Form S-4/A on 05/12/1999
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<PAGE>   165
 
             CHARTER COMMUNICATIONS HOLDINGS, LLC AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
ORGANIZATION AND BASIS OF PRESENTATION
 
     Charter Communications Holdings, LLC (Charter Holdings), a Delaware limited
liability company, was formed in February 1999 as a wholly owned subsidiary of
Charter Communications, Inc. (Charter). Charter, through its wholly owned cable
television operating subsidiary, Charter Communications Properties, LLC (CCP),
commenced operations with the acquisition of a cable television system on
September 30, 1995.
 
     Effective December 23, 1998, through a series of transactions, Paul G.
Allen acquired approximately 94% of Charter for an aggregate purchase price, net
of debt assumed, of $2.2 billion (the "Paul Allen Transaction"). In conjunction
with the Paul Allen Transaction, Charter acquired controlling interests in
CharterComm Holdings, LLC (CharterComm Holdings) and CCA Group (comprised of CCA
Holdings Corp., CCT Holdings Corp. and Charter Communications Long Beach Corp.),
all cable television operating companies. Charter previously managed and owned
minority interests in these companies. In February 1999, Charter transferred all
of its cable television operating subsidiaries to a subsidiary of Charter
Holdings, Charter Communications Operating, LLC (Charter Operating).
 
   
     As a result of the change in ownership of CCP, CharterComm Holdings and CCA
Group, Charter Holdings has applied push-down accounting in the preparation of
the consolidated financial statements. Accordingly, the Company increased its
members' equity by $2.3 billion to reflect the amounts paid by Paul G. Allen and
Charter. The purchase price was allocated to assets acquired and liabilities
assumed based on their relative fair values. The excess of the purchase price
over the amounts assigned to net tangible assets was $3.6 billion and is
included in franchises. The allocation of the purchase price is based, in part,
on preliminary information which is subject to adjustment upon obtaining
complete valuation information. However, no significant adjustments are
anticipated.
    
 
     On April 7, 1999, the cable television operating subsidiaries of Marcus
Cable Company, L.L.C. (Marcus) were transferred to Charter Operating. As a
result of the Marcus transfer, Charter Holdings is owned 54% by Charter and 46%
by companies controlled by Paul G. Allen. The transfer was accounted for as a
reorganization of entities under common control similar to a pooling of
interests since Paul G. Allen and a company controlled by Paul G. Allen
purchased substantially all of the outstanding partnership interests in Marcus
in April 1998, and purchased the remaining interest in Marcus on April 7, 1999.
 
     The consolidated financial statements of Charter Holdings include the
accounts of CCP, the accounts of CharterComm Holdings and CCA Group and their
subsidiaries since December 23, 1998 (date acquired by Charter), and the
accounts of Marcus since December 23, 1998 (date Paul G. Allen controlled both
Charter and Marcus), and are collectively referred to as the "Company" herein.
All subsidiaries are wholly owned. All material intercompany transactions and
balances have been eliminated. The Company derives its primary source of
revenues by providing various levels of cable television programming and
services to residential and business customers. As of December 31, 1998, the
Company provided cable television services to customers in 22 states in the U.S.
 
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