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S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 09/28/1999
Entire Document
 
<PAGE>   649
    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)
 
$4,216,682, $5,243,384 and $5,692,013 in accounts receivable, affiliates;
$581,632, $6,433 and $331,374 in accounts payable; and $299,030, $299,030 and
$299,030 in other liabilities, respectively. These related party balances arose
primarily as a result of financing capital expenditures, interest payments,
programming and other operating expenses.
 
8. INCOME TAXES:
 
     The deferred income tax assets and liabilities recorded in the balance
sheet are as follows:
 

<TABLE>
<CAPTION>
                                                  DECEMBER 31,    DECEMBER 31,     JUNE 30,
                                                      1996            1997           1998
                                                  ------------    ------------    -----------
<S>                                               <C>             <C>             <C>
ASSETS:
Excess of tax basis over book basis from tax
  gain recognized upon incorporation of PCT And
  PCT-CT........................................  $   707,546     $   707,546     $   707,546
Loss carryforwards..............................    1,324,236       1,039,849         957,318
Other...........................................        6,997          11,856          11,856
                                                  -----------     -----------     -----------
Total deferred tax assets.......................    2,038,779       1,759,251       1,676,720
                                                  -----------     -----------     -----------
LIABILITIES:
Excess of book basis over tax basis of property,
  plant and equipment and intangible asset......     (258,311)       (294,934)       (335,014)
Other...........................................     (118,086)       (134,859)       (135,267)
                                                  -----------     -----------     -----------
Total deferred tax liabilities..................     (376,397)       (429,793)       (470,281)
                                                  -----------     -----------     -----------
Net deferred tax assets.........................    1,662,382       1,329,458       1,206,439
Valuation allowance.............................   (1,662,382)     (1,329,458)     (1,206,439)
                                                  -----------     -----------     -----------
Net deferred tax liabilities....................  $        --     $        --     $        --
                                                  ===========     ===========     ===========
</TABLE>

 
     The Combined Operations have recorded a valuation allowance to reflect the
estimated amount of deferred tax assets which may not be realized due to the
expiration of deferred tax assets related to the incorporation of PCT and PCT-CT
and the expiration of net operating loss carryforwards.
 
9. EMPLOYEE BENEFIT PLANS:
 
     The Company employees participate in PCC's stock option plan that awards
restricted stock (the "Restricted Stock Plan") to eligible employees of the
Company.
 
  Restricted Stock Plan
 
     The Restricted Stock Plan provides for the granting of restricted stock
awards representing a maximum of 270,000 shares (subject to adjustment to
reflect stock dividends, stock splits, recapitalizations and similar changes in
the capitalization of PCC) of Class A Common Stock of the Company to eligible
employees who have completed at least one year of service. Restricted stock
received under the Restricted Stock Plan vests over four years. The Plan
terminates in September 2006. The expense for this plan amounted to $82,425,
$80,154 and $63,533 in 1996 and 1997 and for the six months ended June 30, 1998,
respectively.
 
                                      F-404