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SEC Filings

S-1
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1 on 07/28/1999
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<PAGE>   159
 
          CHARTER COMMUNICATIONS HOLDING COMPANY, LLC AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Organization and Basis of Presentation
 
     Charter Communications Holding Company, LLC (CCHC), a Delaware limited
liability company, was formed in 1999 as a wholly owned subsidiary of Charter
Investment, Inc. (Charter), formerly Charter Communications, Inc. 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 of
$211 million, excluding $214 million in debt assumed (the "Paul Allen
Transaction"). In conjunction with the Paul Allen Transaction, Charter acquired
100% of the interests it did not already own in CharterComm Holdings, LLC
(CharterComm Holdings) and CCA Group (comprised of CCA Holdings Corp., CCT
Holdings Corp. and Charter Communications Long Beach Inc.), all cable television
operating companies for $2.0 billion, excluding $1.8 billion in debt assumed
from unrelated third parties for fair value. Charter previously managed and
owned minority interests in these companies. These acquisitions were accounted
for using the purchase method of accounting, and accordingly, results of
operations of CharterComm Holdings and CCA Group are included in the financial
statements from the date of acquisition. In February 1999, Charter transferred
all of its cable television operating subsidiaries to a wholly owned subsidiary
of Charter Communications Holdings, LLC (Charter Holdings), Charter
Communications Operating, LLC (Charter Operating). Charter Holdings is a wholly
owned subsidiary of CCHC. This transfer was accounted for as a reorganization of
entities under common control similar to a pooling of interests.
 
     As a result of the change in ownership of CCP, CharterComm Holdings and CCA
Group, CCHC has applied push-down accounting in the preparation of the
consolidated financial statements. Accordingly, CCHC increased its members'
equity by $2.2 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, including amounts assigned to franchises of
$3.6 billion. The allocation of the purchase price is based, in part, on
preliminary information which is subject to adjustment upon obtaining complete
valuation information of intangible assets. The valuation information is
expected to be finalized in the third quarter of 1999. Management believes that
finalization of the purchase price will not have a material impact on the
results of operations or financial position of CCHC.
 
     On April 7, 1999, the cable television operating subsidiaries of Marcus
Cable Company, L.L.C. (Marcus) were transferred to Charter Operating. 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 CCHC include the accounts of
Charter Operating and CCP and 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
 
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