Charter Communications Inc. said late Thursday that a shareholder lawsuit had
been filed against it in federal court in California claiming that the MSO used
'misleading accounting practices that had the effect of misrepresenting its
results of operations.'
Charter said the lawsuit, seeking class-action status, was filed in the U.S.
District Court for the Central District of California July 31. It did not name
who filed the suit, nor specify the claims in the suit.
Senior vice president of communications David Andersen said in a prepared
statement: 'Our financial statements comply with generally accepted accounting
principles in all material respects, and they and the related SEC [Securities
and Exchange Commission] filings provide an accurate picture of the company, its
financial condition, results of operations and the assumptions underlying
He continued, 'KPMG [International] was retained as our new outside
independent auditors April 22, 2002. They have issued a review report that will
be included with our second-quarter 10-Q filing with the SEC. In this report,
KPMG has indicated that they are not aware of any material modifications that
should be made to the financial statements they have reviewed in order for our
financial statements to be in conformity with generally accepted accounting
Andersen added, 'We intend to vigorously defend ourselves against this
action, and we believe our financial reports and disclosures will be
Merrill Lynch & Co. analyst Jessica Reif Cohen recently downgraded
Charter's stock, partly due to concerns over the MSO counting some
cable-modem-only customers as basic-video customers and to Charter's practice of
accounting for launch fees paid by cable networks as advertising revenue.
At the company's annual meeting July 23, CEO Carl Vogel strongly defended
Charter's accounting practices.