Print Page  Close Window

SEC Filings

PREM14A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form PREM14A on 06/26/2015
Entire Document
 


Table of Contents

equity awards will be converted into equity awards with respect to New Charter Class A common stock, after giving effect to the Stock Award Exchange Ratio (as defined under “The Merger Agreement—Treatment of TWC Equity Awards”).

Net actuarial gains (losses) and prior service credits are included in TWC’s accumulated other comprehensive loss component of equity and reclassified into the results of operations based on service period assumptions. Because TWC’s equity, including accumulated other comprehensive loss, is eliminated in the opening balance sheet pursuant to acquisition accounting, the results for the periods following the TWC transactions will not include any impact from the amortization of these deferred net actuarial gains (losses) and prior service credits.

 

(b) Charter increased depreciation and amortization by $749 million and $3.6 billion for the three months ended March 31, 2015 and year ended December 31, 2014, respectively, as follows (in millions).

 

    Three Months Ended
March 31, 2015
    Year Ended
December 31, 2014
 
    Depreciation     Amortization     Total     Depreciation     Amortization     Total  

TWC pro forma expense based on fair value

  $ 844      $ 791      $ 1,635      $ 3,376      $ 3,559      $ 6,935   

TWC historical expense

        (886         (3,371
     

 

 

       

 

 

 

Total pro forma depreciation and amortization adjustment

$ 749    $ 3,564   
     

 

 

       

 

 

 

The increase was estimated using a preliminary average useful life of 6 years for property, plant and equipment and 9 years for customer relationships. Customer relationships are amortized using an accelerated method (sum of the years’ digits) to reflect the period over which the relationships are expected to generate cash flows. The effect of a one-year decrease in the weighted average useful lives of property, plant and equipment and customer relationships would be an increase to depreciation and amortization expense of approximately $243 million and $1.1 billion for the three months ended March 31, 2015 and year ended December 31, 2014, respectively, while the effect of a one-year increase would result in a decrease of approximately $183 million and $806 million for the three months ended March 31, 2015 and year ended December 31, 2014, respectively. The pro forma adjustments are based on current estimates and may not reflect actual depreciation and amortization once the purchase price allocation is finalized and final determination of useful lives is made.

 

(c) For the three months ended March 31, 2015 and year ended December 31, 2014, interest expense, net, increased by $211 million and $846 million, respectively, as follows (in millions).

 

     Three Months Ended
March 31, 2015
    Year Ended
December 31, 2014
 

Additional interest expense on new debt issued

   $ (284   $ (1,136

Amortization of deferred financing fees and original issue discount

     (6     (25

Amortization of net premium as a result of adjusting assumed TWC long-term debt to fair value

     74        295   

Elimination of amortization related to TWC’s previously deferred financing fees and debt discounts

     5        20   
  

 

 

   

 

 

 
$ (211 $ (846
  

 

 

   

 

 

 

Although the nature of the debt financing may be secured through various combinations of bank debt, unsecured notes and secured notes, for pro forma purposes, we have assumed issuing $21.1 billion in new first lien debt (including bank debt and senior secured notes) and $2.5 billion unsecured notes at an estimated 4.8% weighted average cost of debt. A 0.125% change in interest rates would increase (decrease) interest expense by $7 million and $27 million for the three months ended March 31, 2015 and year ended December 31, 2014, respectively.

 

82