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S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 09/28/1999
Entire Document
 
<PAGE>   646
    THE COMBINED OPERATIONS OF PEGASUS CABLE TELEVISION OF CONNECTICUT, INC.
       AND THE MASSACHUSETTS OPERATIONS OF PEGASUS CABLE TELEVISION, INC.
 
             NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
 
resulting gains or losses are included in the statement of operations. Initial
subscriber installation costs, including material, labor and overhead costs of
the hookup, are capitalized as part of the distribution facilities. The costs of
disconnection and reconnection are charged to expense.
 
     Depreciation is computed for financial reporting purposes using the
straight-line method based upon the following lives:
 

<TABLE>
<S>                                                           <C>
Reception and distribution facilities.......................   7 to 11 years
Building and improvements...................................  12 to 39 years
Equipment, furniture and fixtures...........................   5 to 10 years
Vehicles....................................................    3 to 5 years
</TABLE>

 
  Intangible Assets:
 
     Intangible assets are stated at cost and amortized by the straight-line
method. Costs of successful franchise applications are capitalized and amortized
over the lives of the related franchise agreements, while unsuccessful franchise
applications and abandoned franchises are charged to expense. Financing costs
incurred in obtaining long-term financing are amortized over the term of the
applicable loan. Intangible assets are reviewed periodically for impairment or
whenever events or circumstances provide evidence that suggest that the carrying
amounts may not be recoverable. The Company assesses the recoverability of its
intangible assets by determining whether the amortization of the respective
intangible asset balance can be recovered through projected undiscounted future
cash flows.
 
     Amortization of intangible assets is computed for financial reporting
purposes using the straight-line method based upon the following lives:
 

<TABLE>
<S>                                                           <C>
Organization costs..........................................   5 years
Other intangibles...........................................   5 years
Deferred franchise costs....................................  15 years
</TABLE>

 
  Revenue:
 
     The Combined Operations recognize revenue when video and audio services are
provided.
 
  Advertising Costs:
 
     Advertising costs are charged to operations as incurred and totaled
$20,998, $12,768, $14,706 and $8,460 for the years ended December 31, 1995, 1996
and 1997 and for the six months ended June 30, 1998, respectively.
 
  Cash and Cash Equivalents:
 
     Cash and cash equivalents include highly liquid investments purchased with
an initial maturity of three months or less. The Combined Operations have cash
balances in excess of the federally insured limits at various banks.
 
  Income Taxes:
 
     The Combined Operations is not a separate tax paying entity. Accordingly,
its results of operations have been included in the tax returns filed by PCC.
The accompanying financial statements include tax computations assuming the
Combined Operations filed separate returns
 
                                      F-401