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SEC Filings

S-1/A
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form S-1/A on 11/04/1999
Entire Document
 
<PAGE>   60
 
            NOTES TO THE UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
 
     NOTE A:  Pro forma operating results for Charter Communications Holding
Company, including the acquisition of us on December 23, 1998 by Mr. Allen and
the acquisition of Sonic Communications, Inc., consist of the following (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                     12/24/98   1/1/98
                                                                     THROUGH    THROUGH
                                     1/1/98 THROUGH 12/23/98         12/31/98   5/20/98
                                ----------------------------------   --------   -------
                                                                CHARTER
                                   CCA      CHARTERCOMM     COMMUNICATIONS
                                  GROUP      HOLDINGS       HOLDING COMPANY      SONIC    ELIMINATIONS     SUBTOTAL
                                ---------   -----------   -------------------   -------   ------------     ---------
<S>                             <C>         <C>           <C>        <C>        <C>       <C>              <C>
Revenues......................  $ 324,432    $196,801     $ 49,731   $13,713    $17,276     $    --        $ 601,953
                                ---------    --------     --------   -------    -------     -------        ---------
Operating expenses:
  Operating, general and
    administrative............    164,145      98,331       25,952     7,134      8,993          --          304,555
  Depreciation and
    amortization..............    136,689      86,741       16,864     8,318      2,279          --          250,891
  Stock option compensation
    expense...................         --          --           --       845         --          --              845
  Management fees/corporate
    expense charges...........     17,392      14,780        6,176       473         --          --           38,821
                                ---------    --------     --------   -------    -------     -------        ---------
    Total operating
      expenses................    318,226     199,852       48,992    16,770     11,272          --          595,112
                                ---------    --------     --------   -------    -------     -------        ---------
Income (loss) from
  operations..................      6,206      (3,051)         739    (3,057)     6,004          --            6,841
Interest expense..............   (113,824)    (66,121)     (17,277)   (2,353)    (2,624)      1,900(c)      (200,299)
Other income (expense)........      4,668      (1,684)        (684)      133        (15)     (1,900)(c)          518
                                ---------    --------     --------   -------    -------     -------        ---------
Income (loss) before income
  taxes.......................   (102,950)    (70,856)     (17,222)   (5,277)     3,365          --         (192,940)
Provision for income taxes....         --          --           --        --      1,346          --            1,346
                                ---------    --------     --------   -------    -------     -------        ---------
Income (loss) before
  extraordinary item..........  $(102,950)   $(70,856)    $(17,222)  $(5,277)   $ 2,019     $    --        $(194,286)
                                =========    ========     ========   =======    =======     =======        =========
 
<CAPTION>
 
                                        PRO FORMA
                                --------------------------
 
                                ADJUSTMENTS        TOTAL
                                -----------      ---------
<S>                             <C>              <C>
Revenues......................   $      --       $ 601,953
                                 ---------       ---------
Operating expenses:
  Operating, general and
    administrative............          --         304,555
  Depreciation and
    amortization..............     119,515(a)      370,406
  Stock option compensation
    expense...................          --             845
  Management fees/corporate
    expense charges...........     (22,328)(b)      16,493
                                 ---------       ---------
    Total operating
      expenses................      97,187         692,299
                                 ---------       ---------
Income (loss) from
  operations..................     (97,187)        (90,346)
Interest expense..............      (4,471)(d)    (204,770)
Other income (expense)........          --             518
                                 ---------       ---------
Income (loss) before income
  taxes.......................    (101,658)       (294,598)
Provision for income taxes....      (1,346)(e)          --
                                 ---------       ---------
Income (loss) before
  extraordinary item..........   $(100,312)      $(294,598)
                                 =========       =========
</TABLE>

 
-------------------------
 
(a)  Represents additional amortization of franchises as a result of the
     acquisition of us by Mr. Allen. A large portion of the purchase price was
     allocated to franchises ($3.6 billion) that are amortized over 15 years.
     The adjustment to depreciation and amortization expense consists of the
     following (dollars in millions):
 

<TABLE>
<CAPTION>
                                                                          WEIGHTED AVERAGE       DEPRECIATION/
                                                         FAIR VALUE    USEFUL LIFE (IN YEARS)    AMORTIZATION
                                                         ----------    ----------------------    -------------
    <S>                                                  <C>           <C>                       <C>
    Franchises.........................................   $3,600.0               15                 $240.0
    Cable distribution systems.........................    1,439.2               12                  115.3
    Land, buildings and improvements...................       41.3               11                    3.5
    Vehicles and equipment.............................       61.2                5                   11.6
                                                                                                    ------
      Total depreciation and amortization..............                                              370.4
      Less-historical depreciation and amortization....                                             (250.9)
                                                                                                    ------
         Adjustment....................................                                             $119.5
                                                                                                    ======
</TABLE>

 
(b) Reflects the reduction in corporate expense charges of approximately $8.2
    million to reflect the actual costs incurred. Management fees charged to CCA
    Group and CharterComm Holdings, companies not controlled by Charter
    Investment, Inc. at that time, exceeded the allocated costs incurred by
    Charter Investment, Inc. on behalf of those companies by $8.2 million. Also
    reflects the elimination of approximately $14.4 million of change of control
    payments under the terms of then-existing equity appreciation rights plans.
    Such payments were triggered by the acquisition of us by Mr. Allen. Such
    payments were made by Charter Investment, Inc. and were not subject to
    reimbursement by us, but were allocated to us for financial reporting
    purposes. The equity appreciation rights plans were terminated in connection
    with the acquisition of us by Mr. Allen, and these costs will not recur.
 
(c)  Represents the elimination of intercompany interest on a note payable from
     Charter Communications Holding Company to CCA Group.
 
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