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|CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015|
The estimated fair value of TWCs equity investments was based on applying implied multiples to estimated cash flows. The implied multiples were estimated based on precedent transactions and comparable companies. Acquisition accounting rules require that the increase in the carrying value of the TWC equity investments be allocated to the underlying net assets of the investees. This allocation has not yet been performed, and for pro forma purposes, is allocated to non-amortizing goodwill of the investees and thus no pro forma adjustment related to these investments is reflected in the unaudited pro forma consolidated statements of operations.
The pro forma adjustment to reclassify $647 million of TWCs current portion of long-term debt to long-term debt is a result of conforming to Charters balance sheet classification. When Charter has availability to repay debt maturing in the next twelve months with its existing revolving credit facility, which is anticipated to be the case following the TWC transactions, those current maturities are classified as long-term debt. Long-term debt was also adjusted to reflect new debt raised to fund the TWC transactions.
The following table presents pro forma cash sources and uses as a result of the TWC transactions.
Pro Forma Cash Sources and Uses (in millions)
The TWC transactions are assumed to be a non-taxable business combination for pro forma purposes. A pro forma adjustment was recorded for the deferred tax impact of acquisition accounting adjustments primarily related to property, plant and equipment, franchises, customer relationships and assumed TWC long-term debt. The incremental deferred tax liabilities of $16.6 billion were calculated based on the tax effect of an