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10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 11/03/2016
Entire Document
 
Exhibit
Exhibit 99.1

Reconciliation of Pro Forma Financial Information

The following pro forma financial information is based on (i) the unaudited consolidated financial statements of Charter Communications, Inc. ("Charter") and Time Warner Cable Inc. ("TWC") contained in their respective 2015 and 2016 Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission ("SEC"); (ii) the audited consolidated financial statements of Charter and TWC contained in their respective 2015 Annual Reports on Form 10-K as filed with the SEC; (iii) the 2015 and first quarter of 2016 condensed consolidated unaudited quarterly financial statements of Bright House Networks, LLC ("Bright House") contained in Charter's Current Reports on Form 8-K filed with the SEC on November 5, 2015 and July 29, 2016, Charter's preliminary joint proxy statement/prospectus filed with the SEC on June 26, 2015 and Charter's definitive joint proxy statement/prospectus filed with the SEC on August 20, 2015; (iv) the 2015 consolidated audited financial statements of Bright House contained in Charter's Current Reports on Form 8-K filed with the SEC on April 7, 2016; and (v) the unaudited consolidated financial information of TWC and Bright House for the 47 day period from April 1, 2016 to May 17, 2016.

The results of operations data on a pro forma basis are provided for illustrative purposes only and are based on available information and assumptions that Charter believes are reasonable and do not purport to represent what the actual consolidated results of operations of Charter would have been had the Transactions occurred as of January 1, 2015, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.





CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT SHARE DATA)
 
Three Months ended March 31, 2015
 
 
Charter
 
 
 
Pro Forma
 
Charter
 
Bright
 
Pro Forma
 
Charter
 
 
Historical
 
TWC
 
Adjustments
 
Pro Forma
 
House
 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
2,362

 
$
5,777

 
$
46

a 
$
8,185

 
$
978

 
$
(42
)
a 
$
9,121

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
1,581

 
3,781

 
73

a 
5,435

 
668

 
(82
)
a 
6,021

 
Depreciation and amortization
514

 
886

 
657

b 
2,057

 
111

 
110

b 
2,278

 
Other operating expenses, net
18

 
26

 
(25
)
c 
19

 

 
(1
)
c 
18

 
 
2,113

 
4,693

 
705

 
7,511

 
779

 
27

 
8,317

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
249

 
1,084

 
(659
)
 
674

 
199

 
(69
)
 
804

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(289
)
 
(348
)
 
(156
)
d 
(793
)
 
(7
)
 
(1
)
d 
(801
)
 
Loss on financial instruments, net
(6
)
 

 

 
(6
)
 

 

 
(6
)
 
Other income, net

 
10

 

 
10

 
1

 

 
11

 
 
(295
)
 
(338
)
 
(156
)
 
(789
)
 
(6
)
 
(1
)
 
(796
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(46
)
 
746

 
(815
)
 
(115
)
 
193

 
(70
)
 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
(35
)
 
(288
)
 
368

e 
45

 

 
(35
)
e 
10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
(81
)
 
458

 
(447
)
 
(70
)
 
193

 
(105
)
 
18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest

 

 

 

 

 
(34
)
f 
(34
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
(81
)
 
$
458

 
$
(447
)
 
$
(70
)
 
$
193

 
$
(139
)
 
$
(16
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted
$
(0.73
)
 
 
 
 
 


 
 
 
 
 
$
(0.06
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic and diluted
111,655,617

 
 
 
 
 


 
 
 
 
 
269,516,043

g 




 
Three Months ended June 30, 2015
 
 
Charter
 
 
 
Pro Forma
 
Charter
 
Bright
 
Pro Forma
 
Charter
 
 
Historical
 
TWC
 
Adjustments
 
Pro Forma
 
House
 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
2,430

 
$
5,926

 
$
45

a 
$
8,401

 
$
989

 
$
(40
)
a 
$
9,350

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
1,601

 
3,896

 
79

a 
5,576

 
665

 
(80
)
a 
6,161

 
Depreciation and amortization
528

 
919

 
657

b 
2,104

 
113

 
110

b 
2,327

 
Other operating (income) expenses, net
32

 
82

 
(89
)
c 
25

 
(22
)
 
(2
)
c 
1

 
 
2,161

 
4,897

 
647

 
7,705

 
756

 
28

 
8,489

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
269

 
1,029

 
(602
)
 
696

 
233

 
(68
)
 
861

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(229
)
 
(350
)
 
(156
)
d 
(735
)
 
(9
)
 
(1
)
d 
(745
)
 
Loss on extinguishment of debt
(128
)
 

 

 
(128
)
 

 

 
(128
)
 
Gain on financial instruments, net
1

 

 

 
1

 

 

 
1

 
Other income, net

 
127

 

 
127

 

 

 
127

 
 
(356
)
 
(223
)
 
(156
)
 
(735
)
 
(9
)
 
(1
)
 
(745
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(87
)
 
806

 
(758
)
 
(39
)
 
224

 
(69
)
 
116

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(35
)
 
(343
)
 
393

e 
15

 

 
(43
)
e 
(28
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
(122
)
 
463

 
(365
)
 
(24
)
 
224

 
(112
)
 
88

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest

 

 

 

 

 
(45
)
f 
(45
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
(122
)
 
$
463

 
$
(365
)
 
$
(24
)
 
$
224

 
$
(157
)
 
$
43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(1.09
)
 
 
 
 
 


 
 
 
 
 
$
0.16

 
Diluted
$
(1.09
)
 
 
 
 
 


 
 
 
 
 
$
0.16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
111,783,504

 
 
 
 
 


 
 
 
 
 
269,643,930

g 
Weighted average common shares outstanding, diluted
111,783,504

 
 
 


 


 
 
 


 
273,081,641

g 





 
Three Months ended September 30, 2015
 
 
Charter
 
 
 
Pro Forma
 
Charter
 
Bright
 
Pro Forma
 
Charter
 
 
Historical
 
TWC
 
Adjustments
 
Pro Forma
 
House
 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
2,450

 
$
5,922

 
$
48

a 
$
8,420

 
$
964

 
$
(42
)
a 
$
9,342

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
1,620

 
3,942

 
83

a 
5,645

 
666

 
(82
)
a 
6,229

 
Depreciation and amortization
538

 
935

 
657

b 
2,130

 
116

 
110

b 
2,356

 
Other operating (income) expenses, net
19

 
44

 
(67
)
c 
(4
)
 
(2
)
 

 
(6
)
 
 
2,177

 
4,921

 
673

 
7,771

 
780

 
28

 
8,579

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
273

 
1,001

 
(625
)
 
649

 
184

 
(70
)
 
763

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(353
)
 
(351
)
 
(10
)
d 
(714
)
 
(9
)
 
(1
)
d 
(724
)
 
Loss on financial instruments, net
(5
)
 

 

 
(5
)
 

 

 
(5
)
 
Other income, net
(3
)
 
10

 

 
7

 

 

 
7

 
 
(361
)
 
(341
)
 
(10
)
 
(712
)
 
(9
)
 
(1
)
 
(722
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(88
)
 
660

 
(635
)
 
(63
)
 
175

 
(71
)
 
41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
142

 
(223
)
 
106

e 
25

 

 
(26
)
e 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income
54

 
437

 
(529
)
 
(38
)
 
175

 
(97
)
 
40

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest

 

 

 

 

 
(38
)
f 
(38
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income before non-recurring charges directly attributable to the Transactions
$
54

 
$
437

 
$
(529
)
 
$
(38
)
 
$
175

 
$
(135
)
 
$
2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.48

 
 
 
 
 


 
 
 
 
 
$
0.01

 
Diluted
$
0.48

 
 
 
 
 


 
 
 
 
 
$
0.01

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
111,928,113

 
 
 
 
 


 
 
 
 
 
269,788,539

g 
Weighted average common shares outstanding, diluted
113,339,885

 
 
 


 


 
 
 


 
273,183,733

g 





 
Three Months ended December 31, 2015
 
 
Charter
 
 
 
Pro Forma
 
Charter
 
Bright
 
Pro Forma
 
Charter
 
 
Historical
 
TWC
 
Adjustments
 
Pro Forma
 
House
 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
2,512

 
$
6,072

 
$
44

a 
$
8,628

 
$
992

 
$
(39
)
a 
$
9,581

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
1,624

 
3,940

 
78

a 
5,642

 
656

 
(73
)
a 
6,225

 
Depreciation and amortization
545

 
956

 
657

b 
2,158

 
119

 
110

b 
2,387

 
Other operating (income) expenses, net
20

 
51

 
(70
)
c 
1

 
(1
)
 
1

c 
1

 
 
2,189

 
4,947

 
665

 
7,801

 
774

 
38

 
8,613

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
323

 
1,125

 
(621
)
 
827

 
218

 
(77
)
 
968

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(435
)
 
(352
)
 
98

d 
(689
)
 
(8
)
 
(1
)
d 
(698
)
 
Gain on financial instruments, net
6

 

 

 
6

 

 

 
6

 
Other expense, net
(4
)
 
3

 

 
(1
)
 

 

 
(1
)
 
 
(433
)
 
(349
)
 
98

 
(684
)
 
(8
)
 
(1
)
 
(693
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(110
)
 
776

 
(523
)
 
143

 
210

 
(78
)
 
275

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(12
)
 
(290
)
 
246

e 
(56
)
 

 
(27
)
e 
(83
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
(122
)
 
486

 
(277
)
 
87

 
210

 
(105
)
 
192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest

 

 

 

 

 
(62
)
f 
(62
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
(122
)
 
$
486

 
$
(277
)
 
$
87

 
$
210

 
$
(167
)
 
$
130

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(1.09
)
 
 
 
 
 


 
 
 
 
 
$
0.48

 
Diluted
$
(1.09
)
 
 
 
 
 


 
 
 
 
 
$
0.48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
112,106,255

 
 
 
 
 


 
 
 
 
 
269,966,681

g 
Weighted average common shares outstanding, diluted
112,106,255

 
 
 


 


 
 
 


 
273,363,706

g 





 
Three Months ended March 31, 2016
 
 
Charter
 
 
 
Pro Forma
 
Charter
 
Bright
 
Pro Forma
 
Charter
 
 
Historical
 
TWC
 
Adjustments
 
Pro Forma
 
House
 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
2,530

 
$
6,191

 
$
45

a 
$
8,766

 
$
1,015

 
$
(39
)
a 
$
9,742

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
1,671

 
4,032

 
64

a 
5,767

 
685

 
(77
)
a 
6,375

 
Depreciation and amortization
539

 
974

 
556

b 
2,069

 
112

 
104

b 
2,285

 
Other operating (income) expenses, net
18

 
40

 
(46
)
c 
12

 
(1
)
 
2

c 
13

 
 
2,228

 
5,046

 
574

 
7,848

 
796

 
29

 
8,673

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
302

 
1,145

 
(529
)
 
918

 
219

 
(68
)
 
1,069

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(454
)
 
(350
)
 
105

d 
(699
)
 
(5
)
 
(4
)
d 
(708
)
 
Loss on financial instruments, net
(5
)
 

 

 
(5
)
 

 

 
(5
)
 
Other income, net
(3
)
 
11

 

 
8

 

 

 
8

 
 
(462
)
 
(339
)
 
105

 
(696
)
 
(5
)
 
(4
)
 
(705
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(160
)
 
806

 
(424
)
 
222

 
214

 
(72
)
 
364

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(28
)
 
(312
)
 
253

e 
(87
)
 

 
(28
)
e 
(115
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
(188
)
 
494

 
(171
)
 
135

 
214

 
(100
)
 
249

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest

 

 

 

 

 
(70
)
f 
(70
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
(188
)
 
$
494

 
$
(171
)
 
$
135

 
$
214

 
$
(170
)
 
$
179

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS (LOSS) PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(1.68
)
 
 
 
 
 


 
 
 
 
 
$
0.66

 
Diluted
$
(1.68
)
 
 
 
 
 


 
 
 
 
 
$
0.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
112,311,539

 
 
 
 
 


 
 
 
 
 
270,171,965

g 
Weighted average common shares outstanding, diluted
112,311,539

 
 
 


 


 
 
 


 
273,445,951

g 





 
Three Months ended June 30, 2016
 
 
Charter
 
 
 
Pro Forma
 
Charter
 
Bright
 
Pro Forma
 
Charter
 
 
Historical
1 
TWC
2 
Adjustments
 
Pro Forma
 
House
2 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
6,161

 
$
3,285

 
$
20

a 
$
9,466

 
$
531

 
$
(28
)
a 
$
9,969

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
4,004

 
2,169

 
35

a 
6,208

 
344

 
(53
)
a 
6,499

 
Depreciation and amortization
1,436

 
515

 
275

b 
2,226

 
64

 
48

b 
2,338

 
Other operating (income) expenses, net
31

 
20

 
(287
)
c 
(236
)
 

 
(1
)
c 
(237
)
 
 
5,471

 
2,704

 
23

 
8,198

 
408

 
(6
)
 
8,600

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
690

 
581

 
(3
)
 
1,268

 
123

 
(22
)
 
1,369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(593
)
 
(182
)
 
54

d 
(721
)
 

 
(2
)
d 
(723
)
 
Loss on extinguishment of debt
(110
)
 

 

 
(110
)
 

 

 
(110
)
 
Loss on financial instruments, net
(50
)
 

 

 
(50
)
 

 

 
(50
)
 
Other income, net
(2
)
 
4

 

 
2

 

 

 
2

 
 
(755
)
 
(178
)
 
54

 
(879
)
 

 
(2
)
 
(881
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(65
)
 
403

 
51

 
389

 
123

 
(24
)
 
488

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
3,179

 
(160
)
 
(3,154
)
e 
(135
)
 

 
(22
)
e 
(157
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income
3,114

 
243

 
(3,103
)
 
254

 
123

 
(46
)
 
331

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(47
)
 

 

 
(47
)
 

 
(36
)
f 
(83
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income before non-recurring charges directly attributable to the Transactions
$
3,067

 
$
243

 
$
(3,103
)
 
$
207

 
$
123

 
$
(82
)
 
$
248

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER COMMON SHARE:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
16.73

 
 
 
 
 


 
 
 
 
 
$
0.92

 
Diluted
$
15.17

 
 
 
 
 


 
 
 
 
 
$
0.91

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic and diluted
183,362,776

 
 
 
 
 


 
 
 
 
 
270,464,654

g 
Weighted average common shares outstanding, diluted
205,214,266

 
 
 


 


 
 
 


 
273,802,246

g 

1.
Includes the results of operations of Charter for the three months ended June 30, 2016 and the results of operations of Legacy TWC and Legacy Bright House from the date of acquisition (May 18, 2016) through June 30, 2016.
2.
Includes the results of operations of Legacy TWC and Legacy Bright House for the period from April 1, 2016 through May 17, 2016.




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.