Print Page  Close Window

SEC Filings

8-K
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 8-K on 04/07/2016
Entire Document
 

The table below presents a preliminary allocation of purchase price to the assets acquired and liabilities assumed as if the TWC transactions had closed on December 31, 2015.

Preliminary Allocation of Purchase Price (in millions)

Current assets
$
2,457

Property, plant and equipment, net
21,181

Franchises
49,514

Customer relationships, net
18,044

Goodwill
27,318

Other noncurrent assets
907

Current liabilities
(3,925
)
Long-term debt assumed
(24,379
)
Deferred income taxes
(30,341
)
Other long-term liabilities
(768
)
Noncontrolling interest
(2
)
 
$
60,006


The preliminary estimates are based upon currently available information and prior valuation history. As such, additional assets and liabilities may be identified and reflected in the final purchase price allocation.

Upon completion of the fair value assessment following the closing of the TWC transactions, Charter anticipates the finalized fair values of the net assets acquired will differ from the preliminary assessment outlined above. Generally, changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded as adjustments to those assets and liabilities and residual amounts will be allocated to goodwill. If upon completion of the valuations, the fair values are 10% greater or less than the amounts included in the preliminary purchase price allocation above, such a change would not likely have a material impact on the financial position or results of operations of New Charter.

The following summarizes the pro forma balance sheet adjustments relating to the TWC transactions.

(a)
Adjustment of $1.2 billion to cash and cash equivalents represents the use of TWC’s cash and cash equivalents to reduce the amount of debt issued to fund the TWC transactions. No fair value adjustments are reflected in accounts receivable, net as it is estimated to be at fair value. The adjustment of $2 million to prepaid expenses and other current assets represents the elimination of TWC's current deferred financing fees related to its revolver.

(b)
For purposes of the preliminary purchase price allocation, Charter assumed a 25% increase to the net book value of TWC’s property, plant and equipment. This assumption is based on increases to net book values reflected in valuations previously performed on Charter assets and taking into consideration the recent capital expenditure history of TWC relative to Charter and the status of its all-digital rollout among other factors. The fair values of TWC’s franchises and customer relationships were based on previous valuations of Charter assets performed for general business purposes that were allocated to the TWC cable systems by applying a relative percentage of purchase price allocated to the intangible assets. The valuations previously performed on Charter assets represent valuations performed in 2013 for general business purposes and for a significant business combination. Pro forma valuation metrics derived from previous valuations of Charter assets were used as a basis for determining fair value of TWC assets as such metrics take into consideration market participant assumptions and Charter management’s historical valuation methods. Goodwill represents the residual of the purchase price over the fair values of the identified assets acquired and liabilities assumed.


7