Print Page  Close Window

SEC Filings

CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 11/01/1999
Entire Document
<PAGE>   108
granted will be fully vested after five years from the date of grant. Options
not exercised accumulate and are exercisable, in whole or in part, in any
subsequent period, but not later than ten years from the date of grant.
     Following the closing of the offering, membership units received upon
exercise of the options will be automatically exchanged for shares of Class A
common stock of Charter Communications, Inc. on a one-for-one basis.

                                                       OPTIONS OUTSTANDING                        EXERCISABLE
                                   ------------------------------------------------------------   -----------
                                   NUMBER OF      EXERCISE       TOTAL       REMAINING CONTRACT    NUMBER OF
                                    OPTIONS        PRICE        DOLLARS       LIFE (IN YEARS)       OPTIONS
                                   ----------   ------------  ------------   ------------------   -----------
<S>                                <C>          <C>           <C>            <C>                  <C>
Outstanding as of January 1,
  1999(1)........................   7,044,127      $20.00     $140,882,540          9.2            1,761,032
  February 9, 1999(2)............   9,111,681      20.00       182,233,620                                --
  April 5, 1999(2)...............     473,000      20.73         9,805,290                                --
Cancelled........................    (378,400)  20.00-20.73     (7,595,886)                               --
                                   ----------   ------------  ------------          ---            ---------
Outstanding as of October 15,
  1999...........................  16,250,408    $20.02(3)    $325,325,564          9.3(3)         1,761,032
                                   ==========   ============  ============          ===            =========

(1) Granted to Jerald L. Kent pursuant to his employment agreement and related
    option agreement.
(2) Granted pursuant to the option plan.
(3) Weighted average.
     Charter Communications Holding Company intends to issue upon the closing of
the offering additional options under the plan. The number of options to be
issued has not yet been determined. The exercise price for these options will be
equal to the initial public offering price per share of Class A common stock in
this offering.
     We follow Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" to account for the option plans. We recorded stock option
compensation expense of $845,000 for the year ended December 31, 1998 and $38.2
million for the six months ended June 30, 1999 in the financial statements since
the exercise prices are less than the estimated fair values of the underlying
membership units on the date of grant. The estimated fair value was determined
using the valuation inherent in Mr. Allen's acquisition of Charter and
valuations of public companies in the cable television industry adjusted for
factors specific to us. Compensation expense is accrued over the vesting period
of each grant that varies from four to five years. As of June 30, 1999, deferred
compensation remaining to be recognized in future periods totalled $126 million.
     In June 1998, the Financial Accounting Standards Board adopted SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or
liability measured at its fair value and that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge