COMMITMENTS AND CONTINGENCIES. Leases The Company leases certain facilities and equipment under noncancelable operating leases. Leases and rental costs charged to expense for the year ended December 31, 1999, and for the period from December 24, 1998, through December 31, 1998, were $11.2 million and $70, respectively. As of December 31, 1999, future minimum lease payments are as follows: 2000........................................................ $9,036 2001........................................................ 7,141 2002........................................................ 4,645 2003........................................................ 3,153 2004........................................................ 2,588 Thereafter.................................................. 8,845 The Company also rents utility poles in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the year ended December 31, 1999, and for the period from December 24, 1998, through December 31, 1998, was $14.3 million and $137, respectively. Litigation The Company is a party to lawsuits and claims that arose in the ordinary course of conducting its business. In the opinion of management, after consulting with legal counsel, the outcome of these lawsuits and claims will not have a material adverse effect on the Company's consolidated financial position or results of operations. Redeemable Securities As previously disclosed in Charter's Registration Statement on Form S-1, as amended, the Rifkin and Falcon sellers who own membership units of Charter Holdco, including those sellers that exchanged their units for common stock of Charter, and certain Helicon sellers who purchased Class A common stock in November 1999, may have rescission rights arising out of possible violations of Section 5 of the Securities Act of 1933, as amended, in connection with the offers and sales of these equity interests. Accordingly, the maximum potential cash obligation related to the rescission rights, estimated at $750.9 million, has been 103 excluded from stockholders' equity or minority interest and classified as "redeemable securities" on the consolidated balance sheet at December 31, 1999. One year after the dates of issuance of these equity interests (when these rescission rights will have expired), the Company will reclassify the respective amounts to stockholders' equity or minority interest, as applicable. Regulation in the Cable Television Industry The cable television industry is subject to extensive regulation at the federal, local and, in some instances, state levels. The Cable Communications Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and together with the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the development and regulation of cable television systems. The Federal Communications Commission (FCC) has principal responsibility for implementing the policies of the Cable Acts. Many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Legislation and regulations continue to change, and the Company cannot predict the impact of future developments on the cable television industry. The 1992 Cable Act and the FCC's rules implementing that act generally have increased the administrative and operational expenses of cable television systems and have resulted in additional regulatory oversight by the FCC and local or state franchise authorities. The Cable Acts and the corresponding FCC regulations have established rate regulations. The 1992 Cable Act permits certified local franchising authorities to order refunds of basic service tier rates paid in the previous twelve-month period determined to be in excess of the maximum permitted rates. During 1999, the amounts refunded by the Company have been insignificant. The Company may be required to refund additional amounts in the future. The Company believes that it has complied in all material respects with the provisions of the 1992 Cable Act, including the rate setting provisions promulgated by the FCC. However, in jurisdictions that have chosen not to certify, refunds covering the previous twelve-month period may be ordered upon certification if the Company is unable to justify its basic rates. As of December 31, 1999, approximately 18% of the Company's local franchising authorities are certified to regulate basic tier rates. The Company is unable to estimate at this time the amount of refunds, if any, that may be payable by the Company in the event certain of its rates are successfully challenged by franchising authorities or found to be unreasonable by the FCC. The Company does not believe that the amount of any such refunds would have a material adverse effect on the consolidated financial position or results of operations of the Company. The 1996 Telecom Act, among other things, immediately deregulated the rates for certain small cable operators and in certain limited circumstances rates on the basic service tier, and as of March 31, 1999, deregulated rates on the cable programming service tier (CPST). The FCC has taken the position that it will still adjudicate pending CPST complaints but will strictly limit its review, and possible refund orders, to the time period predating the sunset date, March 31, 1999. The Company does not believe any adjudications regarding their pre-sunset complaints will have a material adverse effect on the Company's consolidated financial position or results of operations. A number of states subject cable television systems to the jurisdiction of centralized state governmental agencies, some of which impose regulation of a character similar to that of a public utility. State governmental agencies are required to follow FCC rules when prescribing rate regulation, and thus, state regulation of cable television rates is not allowed to be more restrictive than the federal or local regulation.
Appears in 1 contract
Samples: Form 10 K
COMMITMENTS AND CONTINGENCIES. Leases The Company leases certain facilities and equipment under noncancelable agreements which are accounted for as operating leases that expire at various dates through 2011. The Company also leases certain aviation equipment which are accounted for as operating leases. Leases and rental costs charged The terms of these arrangements are one to expense for five years with options to renew annually at the election of the Company. If the Company elects to not renew the lease, the Company is required to purchase the aviation equipment at its stipulated lease value. The Company may also sublease the aviation equipment to a customer on a short- or long-term basis. Future minimum payments under leases with initial or remaining terms of one year ended December or more at May 31, 1999, and for the period from December 24, 1998, through December 31, 1998, were $11.2 million and $70, respectively. As of December 31, 1999, future minimum lease payments 2000 are as follows: 2000........................................................ YEAR FACILITIES AND EQUIPMENT AVIATION EQUIPMENT - 2001..................................................... $9,036 2001........................................................ 7,141 5,682 $2,787 2002........................................................ 4,645 ..................................................... 4,343 2,787 2003........................................................ 3,153 ..................................................... 3,621 2,787 2004........................................................ 2,588 Thereafter.................................................. 8,845 ..................................................... 3,243 2,787 2005 and thereafter...................................... 3,639 20,117 Rental expense during the past three fiscal years was as follows: 2000 1999 1998 Facilities and Equipment $9,663 $8,339 $6,991 The Company also rents utility poles in its operations. Generallyroutinely issues letters of credit, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the year ended December 31, 1999, and for the period from December 24, 1998, through December 31, 1998, was $14.3 million and $137, respectively. Litigation The Company is a party to lawsuits and claims that arose performance bonds or credit guarantees in the ordinary course of conducting its business. These instruments are typically issued in conjunction with insurance contracts or other business requirements. The total of these instruments outstanding at May 31, 2000 was approximately $51,500. The Company is involved in various claims and legal actions, including environmental matters, arising in the ordinary course of business. In the opinion of management, after consulting with legal counsel, the outcome ultimate disposition of these lawsuits and claims matters will not have a material adverse effect on the Company's consolidated financial position condition or results of operations. Redeemable Securities As previously disclosed in Charter's Registration Statement on Form S-1NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (IN THOUSANDS, as amended, the Rifkin and Falcon sellers who own membership units of Charter Holdco, including those sellers that exchanged their units for common stock of Charter, and certain Helicon sellers who purchased Class A common stock in November 1999, may have rescission rights arising out of possible violations of Section 5 of the Securities Act of 1933, as amended, in connection with the offers and sales of these equity interests. Accordingly, the maximum potential cash obligation related to the rescission rights, estimated at $750.9 million, has been 103 excluded from stockholders' equity or minority interest and classified as "redeemable securities" on the consolidated balance sheet at December 31, 1999. One year after the dates of issuance of these equity interests (when these rescission rights will have expiredEXCEPT PER SHARE AND PERCENTAGE DATA), the Company will reclassify the respective amounts to stockholders' equity or minority interest, as applicable. Regulation in the Cable Television Industry The cable television industry is subject to extensive regulation at the federal, local and, in some instances, state levels. The Cable Communications Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and together with the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the development and regulation of cable television systems. The Federal Communications Commission (FCC) has principal responsibility for implementing the policies of the Cable Acts. Many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Legislation and regulations continue to change, and the Company cannot predict the impact of future developments on the cable television industry. The 1992 Cable Act and the FCC's rules implementing that act generally have increased the administrative and operational expenses of cable television systems and have resulted in additional regulatory oversight by the FCC and local or state franchise authorities. The Cable Acts and the corresponding FCC regulations have established rate regulations. The 1992 Cable Act permits certified local franchising authorities to order refunds of basic service tier rates paid in the previous twelve-month period determined to be in excess of the maximum permitted rates. During 1999, the amounts refunded by the Company have been insignificant. The Company may be required to refund additional amounts in the future. The Company believes that it has complied in all material respects with the provisions of the 1992 Cable Act, including the rate setting provisions promulgated by the FCC. However, in jurisdictions that have chosen not to certify, refunds covering the previous twelve-month period may be ordered upon certification if the Company is unable to justify its basic rates. As of December 31, 1999, approximately 18% of the Company's local franchising authorities are certified to regulate basic tier rates. The Company is unable to estimate at this time the amount of refunds, if any, that may be payable by the Company in the event certain of its rates are successfully challenged by franchising authorities or found to be unreasonable by the FCC. The Company does not believe that the amount of any such refunds would have a material adverse effect on the consolidated financial position or results of operations of the Company. The 1996 Telecom Act, among other things, immediately deregulated the rates for certain small cable operators and in certain limited circumstances rates on the basic service tier, and as of March 31, 1999, deregulated rates on the cable programming service tier (CPST). The FCC has taken the position that it will still adjudicate pending CPST complaints but will strictly limit its review, and possible refund orders, to the time period predating the sunset date, March 31, 1999. The Company does not believe any adjudications regarding their pre-sunset complaints will have a material adverse effect on the Company's consolidated financial position or results of operations. A number of states subject cable television systems to the jurisdiction of centralized state governmental agencies, some of which impose regulation of a character similar to that of a public utility. State governmental agencies are required to follow FCC rules when prescribing rate regulation, and thus, state regulation of cable television rates is not allowed to be more restrictive than the federal or local regulation.
Appears in 1 contract
Samples: Annual Report
COMMITMENTS AND CONTINGENCIES. Leases The Company leases certain facilities and equipment under noncancelable noncancellable operating leases. Leases and rental costs charged to expense for the year years ended December 31, 2000 and 1999, and for the period from December 24, 1998, through December 31, 1998, were $14.2 million, $11.2 million and $70, respectively. As of December 31, 19992000, future minimum lease payments are as follows: 2000........................................................ YEAR AMOUNT ---- ------- 2001............................................... $9,036 2001........................................................ 7,141 11,077 2002........................................................ 4,645 ............................................... 7,557 2003........................................................ 3,153 ............................................... 5,242 2004........................................................ 2,588 ............................................... 4,101 2005............................................... 3,173 Thereafter.................................................. 8,845 ......................................... 10,364 The Company also rents utility poles in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the year years ended December 31, 2000 and 1999, and for the period from December 24, 1998, through December 31, 1998, was $31.6 million, $14.3 million and $137, respectively. Litigation The Company is a party to lawsuits and claims that arose in the ordinary course of conducting its business. In the opinion of management, after consulting with legal counsel, and taking into account recorded liabilities, the outcome of these lawsuits and claims will not have a material adverse effect on the Company's consolidated financial position or results of operations. 95 Redeemable Securities As previously disclosed in Charter's Registration Statement on Form S-1In connection with the acquisitions of Rifkin, as amendedFalcon, the Rifkin and Falcon Bresnan, sellers who own acquired Charter Holdco membership units or, in the case of Bresnan, additional equity interests in a subsidiary of Charter Holdco, including those sellers that exchanged their units for common stock of CharterHoldings, and certain the Helicon sellers who purchased acquired shares of Class A common stock in November 1999, Charter's initial public offering may have rescission rights against Charter and Charter Holdco arising out of possible violations of Section 5 of the Securities Act of 1933, as amended, in connection with the offers and sales of these equity interests. Accordingly, the maximum potential cash obligation related to the rescission rights, estimated at $750.9 million1.1 billion as of December 31, 2000 (see Note 21), has been 103 excluded from stockholdersshareholders' equity or minority interest and classified as "redeemable securities" on the consolidated balance sheet at December 31, 1999sheet. One year after the dates of issuance of these equity interests (when these possible rescission rights will have expired), the Company will reclassify the respective amounts to stockholdersshareholders' equity or minority interest, as applicable. Certain of these rescission rights expired during the year ended December 31, 2000, and were reclassified to minority interest and equity, as applicable. Regulation in the Cable Television Industry The cable television industry is subject to extensive regulation at the federal, local and, in some instances, state levels. The Cable Communications Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and together with the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the development and regulation of cable television systems. The Federal Communications Commission (FCC) has principal responsibility for implementing the policies of the Cable Acts. Many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Legislation and regulations continue to change, and the Company cannot predict the impact of future developments on the cable television industry. The 1992 Cable Act and the FCC's rules implementing that act generally have increased the administrative and operational expenses of cable television systems and have resulted in additional regulatory oversight by the FCC and local or state franchise authorities. The Cable Acts and the corresponding FCC regulations have established rate regulations. The 1992 Cable Act permits certified local franchising authorities to order refunds of basic service tier rates paid in the previous twelve-month period determined to be in excess of the maximum permitted rates. During 2000 and 1999, the amounts refunded by the Company have been insignificant. The Company may be required to refund additional amounts in the future. The Company believes that it has complied in all material respects with the provisions of the 1992 Cable Act, including the rate setting provisions promulgated by the FCC. However, in jurisdictions that have chosen not to certify, refunds covering the previous twelve-month period may be ordered upon certification if the Company is unable to justify its basic rates. As of December 31, 19992000, approximately 1817% of the Company's local franchising authorities are certified to regulate basic tier rates. The Company is unable to estimate at this time the amount of refunds, if any, that may be payable by the Company in the event certain of its rates are successfully challenged by franchising authorities or found to be unreasonable by the FCC. The Company does not believe that the amount of any such refunds would have a material adverse effect on the consolidated financial position or results of operations of the Company. The 1996 Telecom Act, among other things, immediately deregulated the rates for certain small cable operators and in certain limited circumstances rates on the basic service tier, and as of March 31, 1999, deregulated rates on the cable programming service tier (CPST). The FCC has taken the position that it will still adjudicate pending CPST complaints but will strictly limit its review, and possible refund orders, to the time period predating the sunset date, March 31, 1999. The Company does not believe any adjudications 96 regarding their pre-sunset complaints will have a material adverse effect on the Company's consolidated financial position or results of operations. A number of states subject cable television systems to the jurisdiction of centralized state governmental agencies, some of which impose regulation of a character similar to that of a public utility. State governmental agencies are required to follow FCC rules when prescribing rate regulation, and thus, state regulation of cable television rates is not allowed to be more restrictive than the federal or local regulation.
Appears in 1 contract
Samples: Annual Report
COMMITMENTS AND CONTINGENCIES. Leases Lease Commitments At December 31, 2000, the Company was obligated under eighty non-cancelable operating lease agreements with renewal options on properties used principally for branch operations. The Company expects to renew such agreements at expiration in the normal course of business. The leases certain facilities contain escalation clauses commencing at various times during the lives of the leases. Such clauses provide for increases in the annual rental, based on increases in the consumer price index. At December 31, 2000, the Company had entered into several non-cancelable operating lease agreements for rental of Bank-owned properties. The leases contain escalation clauses that provide for periodic increases in the annual rental, again based on increases in the consumer price index. The projected minimum annual rental commitments under these leases, exclusive of taxes and other charges, are summarized as follows: (in thousands) Rental Income Rental Expense -------------------------------------------------------------------------------- 2001 $1,245 $ 5,557 2002 1,138 4,532 2003 1,055 3,097 2004 820 2,534 2005 810 2,250 2006 and thereafter 1,371 14,425 -------------------------------------------------------------------------------- Total minimum future rentals $6,439 $32,395 ================================================================================ Included in "occupancy and equipment expense," the rental expense under noncancelable operating leases. Leases these leases was approximately $1,072,000, $485,000, and rental costs charged to expense $446,000 for the year years ended December 31, 1999, and for the period from December 24, 1998, through December 31, 1998, were $11.2 million and $70, respectively. As of December 31, 1999, future minimum lease payments are as follows: 2000........................................................ $9,036 2001........................................................ 7,141 2002........................................................ 4,645 2003........................................................ 3,153 2004........................................................ 2,588 Thereafter.................................................. 8,845 The Company also rents utility poles in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the year ended December 31, 1999, and for the period from December 24, 1998, through December 31, 1998, was $14.3 million and $137, respectively. Litigation The Company is a party to lawsuits Rental income on Bank-owned properties, netted in occupancy and claims that arose in the ordinary course of conducting its business. In the opinion of managementequipment expense, after consulting with legal counselwas approximately $1.1 million, the outcome of these lawsuits and claims will not have a material adverse effect on the Company's consolidated financial position or results of operations. Redeemable Securities As previously disclosed in Charter's Registration Statement on Form S-1, as amended, the Rifkin and Falcon sellers who own membership units of Charter Holdco, including those sellers that exchanged their units for common stock of Charter$1.3 million, and certain Helicon sellers who purchased Class A common stock in November 1999$1.2 million for the corresponding periods. On December 15, may have rescission rights arising out of possible violations of Section 5 of the Securities Act of 1933, as amended, in connection with the offers and sales of these equity interests. Accordingly, the maximum potential cash obligation related to the rescission rights, estimated at $750.9 million, has been 103 excluded from stockholders' equity or minority interest and classified as "redeemable securities" on the consolidated balance sheet at December 31, 1999. One year after the dates of issuance of these equity interests (when these rescission rights will have expired)2000, the Company will reclassify relocated its corporate headquarters to the respective amounts to stockholders' equity or minority interest, as applicable. Regulation in the Cable Television Industry The cable television industry is subject to extensive regulation at the federal, local andformer headquarters of Haven Bancorp, in some instancesWestbury, state levelsNew York. The Cable Communications Policy Act of 1984 Haven had purchased the office building and land in December 1997 under a lease agreement and Payment-in-lieu-of-Tax (the "1984 Cable ActPILOT"), the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and together ) agreement with the 1984 Cable Act, the Town of Hempstead Industrial Development Agency ("Cable ActsXXX"), and the Telecommunications Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the development and regulation of cable television systems. The Federal Communications Commission (FCC) which has principal responsibility for implementing the policies of the Cable Acts. Many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Legislation and regulations continue to change, and the Company cannot predict the impact of future developments on the cable television industry. The 1992 Cable Act and the FCC's rules implementing that act generally have increased the administrative and operational expenses of cable television systems and have resulted in additional regulatory oversight been assumed by the FCC and local or state franchise authorities. The Cable Acts and the corresponding FCC regulations have established rate regulations. The 1992 Cable Act permits certified local franchising authorities to order refunds of basic service tier rates paid in the previous twelve-month period determined to be in excess of the maximum permitted rates. During 1999, the amounts refunded by the Company have been insignificant. The Company may be required to refund additional amounts in the future. The Company believes that it has complied in all material respects with the provisions of the 1992 Cable Act, including the rate setting provisions promulgated by the FCC. However, in jurisdictions that have chosen not to certify, refunds covering the previous twelve-month period may be ordered upon certification if the Company is unable to justify its basic rates. As of December 31, 1999, approximately 18% of the Company's local franchising authorities are certified to regulate basic tier rates. The Company is unable to estimate at this time the amount of refunds, if any, that may be payable by the Company in the event certain of its rates are successfully challenged by franchising authorities or found to be unreasonable by the FCC. The Company does not believe that the amount of any such refunds would have a material adverse effect on the consolidated financial position or results of operations of the Company. The 1996 Telecom ActUnder the XXX and PILOT agreements, among other thingsthe Company assigned the building and land to the XXX, immediately deregulated the rates is subleasing it for certain small cable operators and in certain limited circumstances rates on the basic service tier$1.00 per year for a 10-year period, and as will repurchase the building for $1.00 upon expiration of March 31, 1999, deregulated rates on the cable programming service tier (CPST). The FCC has taken the position that it will still adjudicate pending CPST complaints but will strictly limit its review, and possible refund orders, to the time period predating the sunset date, March 31, 1999. The Company does not believe any adjudications regarding their pre-sunset complaints will have a material adverse effect on the Company's consolidated lease term in exchange for XXX financial position or results of operations. A number of states subject cable television systems to the jurisdiction of centralized state governmental agencies, some of which impose regulation of a character similar to that of a public utility. State governmental agencies are required to follow FCC rules when prescribing rate regulation, and thus, state regulation of cable television rates is not allowed to be more restrictive than the federal or local regulationassistance.
Appears in 1 contract
COMMITMENTS AND CONTINGENCIES. Leases The Company has obligations under various noncancelable long-term operating leases certain facilities for office space and equipment. Some of these leases contain escalation clauses for operating costs, property taxes and insurance. In addition, the Company has various obligations under other office space and equipment under noncancelable operating leasesleases of less than one year. Leases Total rent expense was $15,805 and rental costs charged to expense $13,107 and $5,417 for the year years ended December 31, 19992000, 1999 and for the period from December 24, 1998, through December 31, 1998, were $11.2 million and $70, respectively. As of December 31, 1999, The future minimum lease payments rental commitments under noncancelable long-term operating leases due over the next five years are as follows: 20002001........................................................ $9,036 2001........................................................ 7,141 13,706 2002........................................................ 4,645 9,597 2003........................................................ 3,153 7,003 2004........................................................ 2,588 6,041 2005........................................................ 3,376 Thereafter.................................................. 8,845 2,990 ------- $42,713 ======= The Company also rents utility poles and its affiliates are involved in its operations. Generally, pole rentals litigation on a number of matters and are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the year ended December 31, 1999, and for the period from December 24, 1998, through December 31, 1998, was $14.3 million and $137, respectively. Litigation The Company is a party subject to lawsuits and certain claims that arose which arise in the ordinary normal course of conducting its business. In , none of which, in the opinion of management, after consulting with legal counsel, the outcome of these lawsuits and claims will not is expected to have a material adverse effect on the Company's consolidated financial position or position, results of operationsoperations or liquidity. Redeemable Securities As previously disclosed The Company has retained certain self-insurance risks with respect to losses for third party liability, property damage and group health insurance provided to employees. The Company is jointly and severally liable as guarantor on four credit obligations entered into by partnerships in Charter's Registration Statement on Form S-1, as amended, which the Rifkin and Falcon sellers who own membership units of Charter Holdco, including those sellers that exchanged their units for common stock of Charter, and certain Helicon sellers who purchased Class A common stock in November 1999, may have rescission rights arising out of possible violations of Section 5 of the Securities Act of 1933, as amended, in connection with the offers and sales of these Company has equity interests. Accordingly, The maximum amount of the maximum potential cash obligation related to guaranteed debt totals $148.6 million; the rescission rights, estimated at $750.9 million, has been 103 excluded from stockholders' equity or minority interest and classified as "redeemable securities" on the consolidated balance sheet amount outstanding at December 31, 1999. One year after the dates of issuance of these equity interests (when these rescission rights will have expired), the Company will reclassify the respective amounts to stockholders' equity or minority interest, as applicable. Regulation in the Cable Television Industry The cable television industry is subject to extensive regulation at the federal, local and, in some instances, state levels. The Cable Communications Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and together with the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the development and regulation of cable television systems. The Federal Communications Commission (FCC) has principal responsibility for implementing the policies of the Cable Acts. Many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Legislation and regulations continue to change, and the Company cannot predict the impact of future developments on the cable television industry. The 1992 Cable Act and the FCC's rules implementing that act generally have increased the administrative and operational expenses of cable television systems and have resulted in additional regulatory oversight by the FCC and local or state franchise authorities. The Cable Acts and the corresponding FCC regulations have established rate regulations. The 1992 Cable Act permits certified local franchising authorities to order refunds of basic service tier rates paid in the previous twelve-month period determined to be in excess of the maximum permitted rates. During 1999, the amounts refunded by the Company have been insignificant. The Company may be required to refund additional amounts in the future. The Company believes that it has complied in all material respects with the provisions of the 1992 Cable Act, including the rate setting provisions promulgated by the FCC. However, in jurisdictions that have chosen not to certify, refunds covering the previous twelve-month period may be ordered upon certification if the Company is unable to justify its basic rates. As of December 31, 1999, approximately 18% of the Company's local franchising authorities are certified to regulate basic tier rates2000 totaled $112.7 million. The Company is unable subject to estimate costs arising out of environmental laws and regulations, which include obligations to remove or limit the effects on the environment of the disposal or release of certain wastes or substances at this time various sites including sites which have been previously sold. It is the Company's policy to accrue and charge against earnings environmental cleanup costs when it is probable that a liability has been incurred and an amount of refundsis reasonably estimable. As assessments and cleanups proceed, these accruals are reviewed and adjusted, if anynecessary, that may be payable by the Company in the event certain of its rates are successfully challenged by franchising authorities or found to be unreasonable by the FCCas additional information becomes available. The Company is currently a party to, or involved in, legal proceedings directed at the cleanup of Superfund sites. The Company has accrued an allocated share of the total estimated cleanup costs for these sites. Based upon management's evaluation of the other potentially responsible parties, the Company does not believe expect to incur additional amounts even though the Company has joint and several liability. Other proceedings F-24 63 involving environmental matters such as alleged discharge of oil or waste material into water or soil are pending against the Company. It is not possible to quantify future environmental costs because many issues relate to actions by third parties or changes in environmental regulation. However, based on information presently available, management believes that the amount ultimate disposition of any such refunds would currently known matters will not have a material adverse effect on the consolidated financial position or position, results of operations or liquidity of the Company. Environmental liabilities are paid over an extended period and the timing of such payments cannot be predicted with any confidence. Aggregate environmental-related accruals were $5.3 million and $8.2 million as of December 31, 2000 and 1999, respectively. 64 INDEPENDENT AUDITORS' REPORT FINANCIAL STATEMENT SCHEDULE The 1996 Telecom ActBoard of Directors and Stockholders The St. Xxx Company: Under date of February 6, among other things2001, immediately deregulated the rates for certain small cable operators and in certain limited circumstances rates we reported on the basic service tierconsolidated balance sheets of The St. Xxx Company and subsidiaries as of December 31, 2000 and 1999, and as the related consolidated statements of March income, changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 19992000, deregulated rates as contained in this annual report on Form 10-K for the cable programming service tier (CPST)year 2000. The FCC has taken In connection with our audits of the position that it will still adjudicate pending CPST complaints but will strictly limit its reviewaforementioned consolidated financial statements, and possible refund orders, to we also audited the time period predating related consolidated financial statement schedule as listed in the sunset date, March 31, 1999accompanying index. The Company does not believe any adjudications regarding their pre-sunset complaints will have a material adverse effect on This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audit. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial position or results statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Jacksonville, Florida February 6, 2001 -------------------------------------- COSTS CAPITALIZED --------------------------------------- BUILDINGS & SUBSEQUENT TO LAND & LAND BUILDINGS AND DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION IMPROVEMENTS IMPROVEMENTS TOTAL ----------- ------------ -------- ------------ ----------------- ------------ ------------- -------- Bay County, Florida w/Infrastructure..... $-- $ 2,378 $ -- $ 11,108 $ 13,486 $ -- $ 13,486 Office and Misc. Buildings............ -- 2 297 2,561 464 2,397 2,860 Timberlands............ -- 3,896 -- 13,793 17,689 -- 17,689 Leasehold improvements......... -- -- -- 27 27 -- 27 Broward County, Florida Building............... -- 2,474 -- 10,186 2,474 10,186 12,660 Leasehold improvements......... -- -- -- 500 -- 500 500 Xxxxxxx County, Florida Timberlands............ -- 1,774 -- 6,281 8,056 -- 8,056 Xxxxx County, Florida Office Buildings....... -- -- 1,034 540 423 1,151 1,574 City & Residential Lots................. -- 115 5 -- 115 5 120 Timberlands............ -- 69 -- 244 313 -- 313 Construction in Progress............. -- 172 -- 57,981 14,246 43,906 58,152 Franklin County, Florida Unimproved Land........ -- 68 -- (0) 68 -- 68 Land with Infrastructure....... -- -- -- 170 170 -- 170 Timberlands............ -- 1,241 -- 4,395 5,636 -- 5,636 Gadsden County, Florida Timberlands............ -- 1,302 -- 4,611 5,914 -- 5,914 Gulf County, Florida Misc. Buildings........ -- 112 111 231 343 111 454 Land with Hillsborough County, Florida Leasehold Improvements......... -- -- -- 342 -- 342 342 Land with Infrastructure....... -- 3,485 -- 15,044 3,485 15,044 18,529 Jefferson County, Florida Misc. Buildings........ -- -- -- 181 -- 181 181 Timberlands............ -- 1,547 -- 5,476 7,023 -- 7,023 Xxxx County, Florida Land w/Infrastructure..... -- 603 -- 22,732 23,335 -- 23,335 Misc. Buildings........ -- 36 264 4 -- 304 304 Timberlands............ -- 923 -- 3,269 4,192 -- 4,192 ----------- ------------ ---------------- ------------------------------- Bay County, Florida Land w/Infrastructure..... $ 37 Various 20 years Office and Misc. Buildings............ 861 Various 10 to 30 years Timberlands............ 334 Various 20 years Leasehold improvements......... 3 Various Lesser of operationslease term to 5 years Broward County, Florida Building............... 84 Various 30 years Leasehold improvements......... 176 Various Lesser of lease term to 5 years Xxxxxxx County, Florida Timberlands............ 152 Various 20 years Xxxxx County, Florida Office Buildings....... 375 Various 30 to 40 years City & Residential Lots................. 5 Various 10 to 20 years Timberlands............ 6 Various 20 years Construction in Progress............. -- Franklin County, Florida Unimproved Land........ -- Land with Infrastructure....... -- 2000 -- Timberlands............ 107 Various 20 years Gadsden County, Florida Timberlands............ 112 Various 20 years Gulf County, Florida Misc. A number Buildings........ Land with 1 Various 10 to 30 years Infrastructure....... -- Various -- Timberlands............ 449 Various 20 years Hillsborough County, Florida Leasehold Improvements......... 52 Various Lesser of states subject cable television systems lease term to the jurisdiction of centralized state governmental agencies5 years Land with Infrastructure....... 283 Various -- Jefferson County, some of which impose regulation of a character similar Florida Misc. Buildings........ -- Various 10 to that of a public utility30 years Timberlands............ 133 Various 20 years Xxxx County, Florida Land w/Infrastructure..... 73 Various 20 years Misc. State governmental agencies are required Buildings........ 0 Various 10 to follow FCC rules when prescribing rate regulation30 years Timberlands............ 79 Various 20 years X-0 00 XXX XX. XXX COMPANY SCHEDULE III (CONSOLIDATED) -- REAL ESTATE AND ACCUMULATED DEPRECIATION -- (CONTINUED) DECEMBER 31, and thus2000 (IN THOUSANDS) -------------------------------------- COSTS CAPITALIZED --------------------------------------- BUILDINGS & SUBSEQUENT TO LAND & LAND BUILDINGS AND DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION IMPROVEMENTS IMPROVEMENTS TOTAL ----------- ------------ -------- ------------ ----------------- ------------ ------------- -------- Liberty County, state regulation of cable television rates is not allowed Florida Misc. Buildings........ $-- $ -- $ -- $ 73 $ -- $ 73 $ 73 Timberlands............ -- 2,930 -- 10,372 13,302 -- 13,302 Manatee County Leasehold improvements......... -- -- -- 111 111 -- 111 Orange County, Florida Leasehold improvements......... -- -- -- 257 -- 257 257 Construction in Progress............. -- 10,356 99 6 10,362 99 10,461 Palm Beach County, Florida Leasehold improvements......... Construction in -- -- -- 447 -- 447 447 progress............. -- -- -- 14,346 -- 14,346 14,346 Pinellas County, Florida Office Buildings....... -- -- 28,960 -- -- 28,960 28,960 Leasehold improvements......... -- -- -- 416 -- 416 416 St. Xxxxx County, Florida Land w/Infrastructure..... Leasehold -- 3,846 -- 21,885 25,731 -- 25,731 Improvements......... -- -- -- 14 -- 14 14 Volusia County, Florida Land w/infrastructure..... -- 4,091 -- 13,537 17,628 -- 17,628 Building............... -- -- 107 -- -- 107 107 Wakulla County, Florida Misc. Buildings........ -- -- -- 112 -- 112 112 Unimproved Land........ -- 8 -- -- 8 -- 8 Timberlands............ -- 1,175 -- 4,159 5,334 -- 5,334 Xxxxxx County, Florida Land w/Infrastructure..... -- 59 -- 53,533 50,919 2,673 53,592 Building............... -- -- 90 -- -- 90 90 Timberlands............ -- 354 -- 1,255 1,609 -- 1,609 Other Florida Counties Misc. Land............. -- 29 -- 3,544 3,317 255 3,572 Leasehold improvements......... -- -- -- 1,671 -- 1,671 1,671 Timberlands............ -- 685 -- 2,710 3,395 -- 3,395 DESCRIPTION ACCUMULATED DEPRECIATION DATE CAPITALIZED OR ACQUIRED DEPRECIABLE LIFE USED IN CALCULATION IN LATEST INCOME STATEMENT ----------- ------------ ---------------- ------------------------------- Liberty County, Florida Misc. Buildings........ $ -- Various 10 to be more restrictive than the federal or local regulation.30 years
Appears in 1 contract
Samples: Annual Report
COMMITMENTS AND CONTINGENCIES. Leases Minimum Operating Lease Commitments - The Company Companies have operating leases certain facilities for various facilities, automobiles and equipment machinery and equipment, which expire at various times through 2009. The annual aggregate rental commitments required under noncancelable operating these leases. Leases and rental costs charged to , except for those providing for month-to-month tenancy, are as follows: Fiscal Year Ending August 31, Amount ---------- 2003 $ 847,399 2004 721,728 2005 637,445 2006 618,168 2007 608,464 Thereafter 866,180 ---------- Total $4,299,384 ========== Rent expense was approximately $524,000 for the year ended December August 31, 19992002. The Analytica Group, Inc., Accent Rx and Accentia, Inc. NOTES TO COMBINED FINANCIAL STATEMENTS August 31, 2002 NOTE J - COMMITMENTS AND CONTINGENCIES - Continued The Company executed a sublease for all of its space in November 2001, with subtenant occupancy beginning in May 2002. The sublease expires in November 2005, with the subtenant having an option to renew until February 2009. In connection with this sublease, the Company will be liable for the period from December 24difference in its lease commitment and the sublease, 1998, through December 31, 1998, were $11.2 million and $70, respectively. As of December 31, 1999, future minimum lease payments are as follows: 2000........................................................ $9,036 2001........................................................ 7,141 2002........................................................ 4,645 2003........................................................ 3,153 2004........................................................ 2,588 Thereafter.................................................. 8,845 The Company also rents utility poles in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the year ended December Amount of Fiscal Year Ending August 31, 1999Sublease ----------------------------- ----------- 2003 $ 457,388 2004 320,017 2005 223,682 2006 513,968 2007 608,464 Thereafter 866,180 ---------- Total $2,989,699 ========== Litigation ---------- The Companies are, and for the period from December 24time to time, 1998, through December 31, 1998, was $14.3 million and $137, respectively. Litigation The Company is a party involved in litigation relating to lawsuits and claims that arose arising out of its operations in the ordinary course of conducting its business. In the opinion of management, after consulting with legal counsel, the outcome of these lawsuits and claims will not have a material adverse effect on the Company's consolidated financial position or results of operations. Redeemable Securities As previously disclosed in Charter's Registration Statement on Form S-1, as amended, the Rifkin and Falcon sellers who own membership units of Charter Holdco, including those sellers that exchanged their units for common stock of Charter, and certain Helicon sellers who purchased Class A common stock in November 1999, may have rescission rights arising out of possible violations of Section 5 of the Securities Act of 1933, as amended, in connection with the offers and sales of these equity interests. Accordingly, the maximum potential cash obligation related to the rescission rights, estimated at $750.9 million, has been 103 excluded from stockholders' equity or minority interest and classified as "redeemable securities" on the consolidated balance sheet at December 31, 1999. One year after the dates of issuance of these equity interests (when these rescission rights will have expired), the Company will reclassify the respective amounts to stockholders' equity or minority interest, as applicable. Regulation in the Cable Television Industry The cable television industry is subject to extensive regulation at the federal, local and, in some instances, state levels. The Cable Communications Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act" and together with the 1984 Cable Act, the "Cable Acts"), and the Telecommunications Act of 1996 (the "1996 Telecom Act"), establish a national policy to guide the development and regulation of cable television systems. The Federal Communications Commission (FCC) has principal responsibility for implementing the policies of the Cable Acts. Many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals. Legislation and regulations continue to change, and the Company cannot predict the impact of future developments on the cable television industry. The 1992 Cable Act and the FCC's rules implementing that act generally have increased the administrative and operational expenses of cable television systems and have resulted in additional regulatory oversight by the FCC and local or state franchise authorities. The Cable Acts and the corresponding FCC regulations have established rate regulations. The 1992 Cable Act permits certified local franchising authorities to order refunds of basic service tier rates paid in the previous twelve-month period determined to be in excess of the maximum permitted rates. During 1999, the amounts refunded by the Company have been insignificant. The Company may be required to refund additional amounts in the future. The Company believes that it has complied in all material respects with the provisions of the 1992 Cable Act, including the rate setting provisions promulgated by the FCC. However, in jurisdictions that have chosen not to certify, refunds covering the previous twelve-month period may be ordered upon certification if the Company is unable to justify its basic rates. As of December 31, 1999, approximately 18% of the Company's local franchising authorities are certified to regulate basic tier rates. The Company is unable to estimate at this time the amount of refunds, if any, that may be payable by the Company in the event certain of its rates are successfully challenged by franchising authorities or found to be unreasonable by the FCC. The Company does not believe that the amount aware of any such refunds claims at August 31, 2002. Major Supplier -------------- Accent Rx entered into a five-year supplier agreement (the "Agreement") with McKesson. The agreement provides for, but is not limited to, minimum monthly purchase levels, monthly minimum purchases by location, pricing, and payment terms, as defined. For the year ended August 31, 2002, Accent Rx purchased substantially all of its pharmaceuticals from McKesson. The agreement contains a 2% late fee if Accent Rx is past due with their obligations. The agreement also contains a service fee of one percent assessed semi-monthly on all balances past due 15 days or more. The total amount of fees paid to McKesson under this agreement was approximately $_______ for the year ended August 31, 2002. The Agreement also contains provisions that would have allow McKesson or Accent Rx to terminate the agreement at any time if certain conditions are met, unless either party shall cure the default provision within a material adverse effect on thirty-day period. Although management of the consolidated financial position or results Company believes that the likelihood of operations the loss of McKesson as a supplier is not probable, if McKesson terminated the current distribution relationship with Accent Rx, management believes that it could establish a similar arrangement with another supplier, as there are several distributors of pharmaceutical products in the industry. The Analytica Group, Inc., Accent Rx and Accentia, Inc. NOTES TO COMBINED FINANCIAL STATEMENTS August 31, 2002 NOTE J - COMMITMENTS AND CONTINGENCIES - Continued Employment Agreements --------------------- As of August 31, 2002, Accent Rx has employment agreements with two executives of the Company. The 1996 Telecom Actemployment agreement with Accent Rx's Chief Executive Officer was effective in September 2001, among other thingsand terminates in September 2004. The agreement includes an annual salary of $300,000, immediately deregulated adjusted in the rates future for certain small cable operators and in certain limited circumstances rates on the basic service tier, and as of March 31, 1999, deregulated rates on the cable programming service tier (CPST)revenue run rates. The FCC has taken the position that it will still adjudicate pending CPST complaints but will strictly limit its review, and possible refund orders, to the time period predating the sunset date, March 31, 1999. The Company does not believe any adjudications regarding their pre-sunset complaints will have a material adverse effect on employment agreement with the Company's consolidated financial position or results Chief Financial Officer was effective in February 2002, and terminates in January 2004, and includes an annual salary of operations$200,000 subject to adjustment in the future based on certain revenue run rates. A number Analytica Group, Inc. entered into employment contracts with three of states subject cable television systems the officers of the Company. Future minimum payments under the employment agreements as of August 31, 2002 are: 2003 $578,125 2004 635,938 2005 391,738 In March 1999, Analytica Ltd. issued an irrevocable letter of credit, acting as security, in the amount of $113,000 for the benefit of the lessor under the terms of an operating lease of its office space. Annually, this letter of credit is automatically renewed for a period of one year, with a final expiration date of July 31, 2003. Analytica Ltd. maintained an amount of deposit in a cash account with the issuing institution that was at least equal to the jurisdiction issuance amount as collateral for this letter of centralized state governmental agenciescredit arrangement. The amount deposited was approximately $122,000 at August 31, some of which impose regulation of 2002. NOTE K - RELATED PARTY TRANSACTIONS The Company has a character similar to that of a public utilitymanagement fee agreement with an affiliate company. State governmental agencies are required to follow FCC rules when prescribing rate regulationThis agreement became effective during 2002, and thusthe Company recognized $400,000 in management fee income for the period ended August 31, state regulation 2002. The Analytica Group, Inc., Accent Rx and Accentia, Inc. NOTES TO COMBINED FINANCIAL STATEMENTS August 31, 2002 NOTE L - EMPLOYEE BENEFIT PLAN The Company maintains a defined contribution plan qualified under Section 401(k) of cable television rates the Internal Revenue Code. Any employee who is at least twenty-one years of age may enroll in the plan. Participants may contribute up to 12% of their compensation up to a maximum of $11,000. Employer contributions are 50% of employee contributions, not allowed to be more restrictive than exceed 6% of compensation, and are determined annually. For the federal or local regulation.period ended August 31, 2002, the Company contributed $6,513. Participants are always 100% vested in their contributions and earnings. The employer contributions and earnings are subject to the following vesting schedule: Vested Years of service Interest ---------------- -------- 1 0 % 2 0 % 3 100 %
Appears in 1 contract
