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SEC Filings

10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 08/09/2016
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Notes to the Pro Forma Statements of Operations Adjustments

Refer to Exhibit 99.1 included in Charter's Current Report on Form 8-K/A filed with the Securities and Exchange Commission on July 29, 2016 for more detailed information regarding these adjustments.

(a)
Adjustments to revenues and operating costs and expenses reflect:
a reclassification to conform to Charter’s financial statement classification for processing fees revenue, among other revenue items; and
eliminations of revenue/expense between Charter, TWC and Bright House including the TWC management fee incurred by Bright House.
Operating costs and expenses also include adjustments for:
incremental replacement stock award compensation expense for TWC employees;
elimination of amortization of actuarial gains (losses) and prior service credits for pension plans;
a Bright House adjustment to capitalize residential installation labor and other labor costs to conform to Charter’s capitalization accounting policy; and
elimination of costs related to parent company obligations not assumed by Charter in the Bright House transactions; and
other reclassifications to conform to Charter’s financial statement classification.

(b)
Adjustments to depreciation and amortization represent additional expense as a result of adjusting TWC and Bright House property, plant and equipment and customer relationships to fair value in accordance with acquisition accounting. 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)
Adjustments to other operating (income) expenses, net reflect:
elimination of TWC stock compensation expense classified by TWC as merger-related in other operating expense;
elimination of Charter and TWC transaction costs directly related to the transactions; and
other reclassifications to conform to Charter’s financial statement classification.

(d)
Adjustments to interest expense, net reflect:
additional interest expense on new debt issued and related amortization of deferred financing fees;
amortization of net premium as a result of adjusting assumed TWC long-term debt to fair value;
elimination of amortization related to TWC’s previously deferred financing fees and debt discounts;
elimination of historical interest expense incurred by Bright House as debt is not assumed in the Bright House transactions.

(e)
The income tax benefit impact of the pro forma adjustments was determined by applying an estimated Charter tax rate of 39% to the pro forma loss before taxes of Charter following the Transactions, and, with respect to the Bright House Transaction, less the impact on the tax rate as a result of the noncontrolling interest allocation of the Charter Holdings partnership. The three months ended June 30, 2016 also eliminates the reduction of the valuation allowance as the reduction was a direct result of the Transactions.

(f)
Adjustment to noncontrolling interest represents A/N’s relative economic common ownership interest in Charter Holdings and Charter Holdings 6% cash dividend to preferred unit holders.

(g)
Basic weighted average common shares outstanding were adjusted for the shares issued to TWC shareholders (including the Liberty Parties), shares purchased by the Liberty parties and a reduction of Charter shares outstanding as a result of applying the Parent Merger Exchange Ratio. Diluted weighted average common shares outstanding is based on basic weighted average common shares outstanding adjusted for the dilutive effect of equity awards and Charter Holdings convertible preferred units and common units to the extent they were dilutive.