CCO HOLDINGS LLC - FORM 10-Q - EX-99.1 - EXHIBIT 99.1 - August 15, 2016

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10-Q - 10-Q - CCO HOLDINGS LLCccoh63016-10q.htm
EX-32.2 - EXHIBIT 32.2 - CCO HOLDINGS LLCccoh6302016exh-322.htm
EX-32.1 - EXHIBIT 32.1 - CCO HOLDINGS LLCccoh6302016exh-321.htm
EX-31.2 - EXHIBIT 31.2 - CCO HOLDINGS LLCccoh6302016exh-312.htm
EX-31.1 - EXHIBIT 31.1 - CCO HOLDINGS LLCccoh6302016exh-311.htm
EX-3.3 - EXHIBIT 3.3 - CCO HOLDINGS LLCccoh6302016exh33.htm
Exhibit 99.1

Reconciliation of Pro Forma Financial Information

The following pro forma financial information is based on (i) the quarterly unaudited consolidated financial statements of CCO Holdings, LLC ("CCO Holdings"); (ii) the unaudited consolidated financial statements of Time Warner Cable Inc. ("TWC") contained in its 2015 and 2016 Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission ("SEC"); (iii) the audited consolidated financial statements of CCO Holdings contained in Exhibit 99.2 in the Company's Current Report on Form 8-K filed with the SEC on June 6, 2016; (iv) the audited consolidated financial statements of TWC contained in its 2015 Annual Reports on Form 10-K as filed with the SEC; (v) 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; (vi) 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 (vii) 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 CCO Holdings believes are reasonable and do not purport to represent what the actual consolidated results of operations of CCO Holdings 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.




CCO HOLDINGS, LLC AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
 
Three Months ended March 31, 2015
 
CCO Holdings
 
 
 
Pro Forma
 
CCO Holdings
 
Bright
 
Pro Forma
 
CCO Holdings
 
Historical
 
TWC
 
Adjustments
 
Pro Forma
 
House
 
Adjustments
 
Pro Forma
 
 
 
 
 
 
 
 
 
 
 
 
 
 
REVENUES
$
2,362

 
$
5,777

 
$
46

a 
$
8,185

 
$
978

 
$
(22
)
a 
$
9,141

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

 
3,781

 
81

a 
5,443

 
668

 
(62
)
a 
6,049

Depreciation and amortization
514

 
886

 
553

b 
1,953

 
111

 
95

b 
2,159

Other operating expenses, net
18

 
26

 
(25
)
c 
19

 
—

 
(1
)
c 
18

 
2,113

 
4,693

 
609

 
7,415

 
779

 
32

 
8,226

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
249

 
1,084

 
(563
)
 
770

 
199

 
(54
)
 
915

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(242
)
 
(348
)
 
(203
)
d 
(793
)
 
(7
)
 
(1
)
d 
(801
)
Loss on financial instruments, net
(6
)
 
—

 
—

 
(6
)
 
—

 
—

 
(6
)
Other income, net
—

 
10

 
—

 
10

 
1

 
—

 
11

 
(248
)
 
(338
)
 
(203
)
 
(789
)
 
(6
)
 
(1
)
 
(796
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
1

 
746

 
(766
)
 
(19
)
 
193

 
(55
)
 
119

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(1
)
 
(288
)
 
288

e 
(1
)
 
—

 
—

 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
—

 
458

 
(478
)
 
(20
)
 
193

 
(55
)
 
118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(10
)
 
—

 
—

 
(10
)
 
—

 
—

 
(10
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
(10
)
 
$
458

 
$
(478
)
 
$
(30
)
 
$
193

 
$
(55
)
 
$
108




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

 
$
5,926

 
$
45

a 
$
8,401

 
$
989

 
$
(20
)
a 
$
9,370

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

 
3,896

 
84

a 
5,581

 
665

 
(60
)
a 
6,186

Depreciation and amortization
528

 
919

 
553

b 
2,000

 
113

 
94

b 
2,207

Other operating (income) expenses, net
32

 
82

 
(89
)
c 
25

 
(22
)
 
(2
)
c 
1

 
2,161

 
4,897

 
548

 
7,606

 
756

 
32

 
8,394

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
269

 
1,029

 
(503
)
 
795

 
233

 
(52
)
 
976

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(214
)
 
(350
)
 
(171
)
d 
(735
)
 
(9
)
 
(1
)
d 
(745
)
Loss on extinguishment of debt
(126
)
 
—

 
—

 
(126
)
 
—

 
—

 
(126
)
Gain on financial instruments, net
1

 
—

 
—

 
1

 
—

 
—

 
1

Other income, net
—

 
127

 
—

 
127

 
—

 
—

 
127

 
(339
)
 
(223
)
 
(171
)
 
(733
)
 
(9
)
 
(1
)
 
(743
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
(70
)
 
806

 
(674
)
 
62

 
224

 
(53
)
 
233

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(6
)
 
(343
)
 
343

e 
(6
)
 
—

 
—

 
(6
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
(76
)
 
463

 
(331
)
 
56

 
224

 
(53
)
 
227

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(11
)
 
—

 
—

 
(11
)
 
—

 
—

 
(11
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
(87
)
 
$
463

 
$
(331
)
 
$
45

 
$
224

 
$
(53
)
 
$
216





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

 
$
5,922

 
$
48

a 
$
8,420

 
$
964

 
$
(23
)
a 
$
9,361

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

 
3,942

 
82

a 
5,644

 
666

 
(63
)
a 
6,247

Depreciation and amortization
538

 
935

 
553

b 
2,026

 
116

 
95

b 
2,237

Other operating (income) expenses, net
19

 
44

 
(67
)
c 
(4
)
 
(2
)
 
—

 
(6
)
 
2,177

 
4,921

 
568

 
7,666

 
780

 
32

 
8,478

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
273

 
1,001

 
(520
)
 
754

 
184

 
(55
)
 
883

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(192
)
 
(351
)
 
(171
)
d 
(714
)
 
(9
)
 
(1
)
d 
(724
)
Loss on financial instruments, net
(5
)
 
—

 
—

 
(5
)
 
—

 
—

 
(5
)
Other income, net
—

 
10

 
—

 
10

 
—

 
—

 
10

 
(197
)
 
(341
)
 
(171
)
 
(709
)
 
(9
)
 
(1
)
 
(719
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
76

 
660

 
(691
)
 
45

 
175

 
(56
)
 
164

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
219

 
(223
)
 
223

e 
219

 
—

 
—

 
219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income
295

 
437

 
(468
)
 
264

 
175

 
(56
)
 
383

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(13
)
 
—

 
—

 
(13
)
 
—

 
—

f 
(13
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income before non-recurring charges directly attributable to the Transactions
$
282

 
$
437

 
$
(468
)
 
$
251

 
$
175

 
$
(56
)
 
$
370





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

 
$
6,072

 
$
44

a 
$
8,628

 
$
992

 
$
(19
)
a 
$
9,601

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

 
3,940

 
79

a 
5,643

 
656

 
(53
)
a 
6,246

Depreciation and amortization
545

 
956

 
553

b 
2,054

 
119

 
94

b 
2,267

Other operating (income) expenses, net
20

 
51

 
(70
)
c 
1

 
(1
)
 
1

c 
1

 
2,189

 
4,947

 
562

 
7,698

 
774

 
42

 
8,514

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
323

 
1,125

 
(518
)
 
930

 
218

 
(61
)
 
1,087

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(192
)
 
(352
)
 
(145
)
d 
(689
)
 
(8
)
 
(1
)
d 
(698
)
Gain on financial instruments, net
6

 
—

 
—

 
6

 
—

 
—

 
6

Other expense, net
—

 
3

 
—

 
3

 
—

 
—

 
3

 
(186
)
 
(349
)
 
(145
)
 
(680
)
 
(8
)
 
(1
)
 
(689
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
137

 
776

 
(663
)
 
250

 
210

 
(62
)
 
398

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(2
)
 
(290
)
 
290

e 
(2
)
 
—

 
—

 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
135

 
486

 
(373
)
 
248

 
210

 
(62
)
 
396

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(12
)
 
—

 
—

 
(12
)
 
—

 
 
f 
(12
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
123

 
$
486

 
$
(373
)
 
$
236

 
$
210

 
$
(62
)
 
$
384





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

 
$
6,191

 
$
45

a 
$
8,766

 
$
1,015

 
$
(18
)
a 
$
9,763

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

 
4,032

 
60

a 
5,763

 
685

 
(56
)
a 
6,392

Depreciation and amortization
539

 
974

 
450

b 
1,963

 
112

 
88

b 
2,163

Other operating (income) expenses, net
18

 
40

 
(46
)
c 
12

 
(1
)
 
2

c 
13

 
2,228

 
5,046

 
464

 
7,738

 
796

 
34

 
8,568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
302

 
1,145

 
(419
)
 
1,028

 
219

 
(52
)
 
1,195

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(200
)
 
(350
)
 
(149
)
d 
(699
)
 
(5
)
 
(4
)
d 
(708
)
Loss on financial instruments, net
(5
)
 
—

 
—

 
(5
)
 
—

 
—

 
(5
)
Other income, net
—

 
11

 
—

 
11

 
—

 
—

 
11

 
(205
)
 
(339
)
 
(149
)
 
(693
)
 
(5
)
 
(4
)
 
(702
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
97

 
806

 
(568
)
 
335

 
214

 
(56
)
 
493

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
—

 
(312
)
 
312

e 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) before non-recurring charges directly attributable to the Transactions
$
97

 
$
494

 
$
(256
)
 
$
335

 
$
214

 
$
(56
)
 
$
493





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

 
$
3,285

 
$
20

a 
$
9,466

 
$
531

 
$
(9
)
a 
$
9,988

 
 
 
 
 
 
 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
4,012

 
2,169

 
38

a 
6,219

 
344

 
(34
)
a 
6,529

Depreciation and amortization
1,435

 
515

 
221

b 
2,171

 
64

 
39

b 
2,274

Other operating (income) expenses, net
(231
)
 
20

 
(25
)
c 
(236
)
 
—

 
(1
)
c 
(237
)
 
5,216

 
2,704

 
234

 
8,154

 
408

 
4

 
8,566

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
945

 
581

 
(214
)
 
1,312

 
123

 
(13
)
 
1,422

 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(462
)
 
(182
)
 
(77
)
d 
(721
)
 
—

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

 
—

 
(110
)
 
—

 
—

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

 
—

 
(50
)
 
—

 
—

 
(50
)
Other income, net
—

 
4

 
—

 
4

 
—

 
—

 
4

 
(622
)
 
(178
)
 
(77
)
 
(877
)
 
—

 
(2
)
 
(879
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before taxes
323

 
403

 
(291
)
 
435

 
123

 
(15
)
 
543

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
(7
)
 
(160
)
 
160

e 
(7
)
 
—

 
—

 
(7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income before non-recurring charges directly attributable to the Transactions
$
316

 
$
243

 
$
(131
)
 
$
428

 
$
123

 
$
(15
)
 
$
536


1.
Includes the results of operations of CCO Holdings 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 CCO Holdings' financial statement classification for processing fees revenue, among other revenue items; and
•
eliminations of revenue/expense between CCO Holdings, 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 CCO Holdings' capitalization accounting policy; and
•
elimination of costs related to parent company obligations not assumed in the Bright House transactions;
•
incremental expense from a related party eliminated in consolidation at the parent level; and
•
other reclassifications to conform to CCO Holdings' 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 CCO Holdings and TWC transaction costs directly related to the transactions; and
•
other reclassifications to conform to CCO Holdings' 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)
Adjustments to income tax benefit (expense) to reflect the elimination of income tax expense at TWC as TWC is no longer a corporate entity.








CCO HOLDINGS LLC Reports