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

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10-Q - 10-Q - CCO HOLDINGS LLCccoh93016-10q.htm
EX-32.2 - EXHIBIT 32.2 - CCO HOLDINGS LLCccoh9302016exh-322.htm
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EX-31.2 - EXHIBIT 31.2 - CCO HOLDINGS LLCccoh9302016exh-312.htm
EX-31.1 - EXHIBIT 31.1 - CCO HOLDINGS LLCccoh9302016exh-311.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 its 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 respective 2015 Annual Report 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 Report 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
 
 
 
 
 
CCO
 
 
 
 
 
CCO
 
Holdings
 
 
 
Pro Forma
 
Holdings
 
Bright
 
Pro Forma
 
Holdings
 
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

 
81

a 
5,443

 
668

 
(82
)
a 
6,029

Depreciation and amortization
514

 
886

 
655

b 
2,055

 
111

 
110

b 
2,276

Other operating expenses, net
18

 
26

 
(25
)
c 
19

 
—

 
(1
)
c 
18

 
2,113

 
4,693

 
711

 
7,517

 
779

 
27

 
8,323

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
249

 
1,084

 
(665
)
 
668

 
199

 
(69
)
 
798

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
(868
)
 
(121
)
 
193

 
(70
)
 
2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(1
)
 
(288
)
 
288

e 
(1
)
 
—

 
—

 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income (loss)
—

 
458

 
(580
)
 
(122
)
 
193

 
(70
)
 
1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(10
)
 
—

 
—

 
(10
)
 
—

 
—

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

 
$
(580
)
 
$
(132
)
 
$
193

 
$
(70
)
 
$
(9
)



 
Three Months ended June 30, 2015
 
CCO
 
 
 
 
 
CCO
 
 
 
 
 
CCO
 
Holdings
 
 
 
Pro Forma
 
Holdings
 
Bright
 
Pro Forma
 
Holdings
 
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

 
84

a 
5,581

 
665

 
(80
)
a 
6,166

Depreciation and amortization
528

 
919

 
655

b 
2,102

 
113

 
110

b 
2,325

Other operating (income) expenses, net
32

 
82

 
(89
)
c 
25

 
(22
)
 
(2
)
c 
1

 
2,161

 
4,897

 
650

 
7,708

 
756

 
28

 
8,492

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
269

 
1,029

 
(605
)
 
693

 
233

 
(68
)
 
858

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
(776
)
 
(40
)
 
224

 
(69
)
 
115

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(6
)
 
(343
)
 
343

e 
(6
)
 
—

 
—

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

 
(433
)
 
(46
)
 
224

 
(69
)
 
109

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(11
)
 
—

 
—

 
(11
)
 
—

 
—

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

 
$
(433
)
 
$
(57
)
 
$
224

 
$
(69
)
 
$
98





 
Three Months ended September 30, 2015
 
CCO
 
 
 
 
 
CCO
 
 
 
 
 
CCO
 
Holdings
 
 
 
Pro Forma
 
Holdings
 
Bright
 
Pro Forma
 
Holdings
 
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

 
82

a 
5,644

 
666

 
(82
)
a 
6,228

Depreciation and amortization
538

 
935

 
655

b 
2,128

 
116

 
110

b 
2,354

Other operating (income) expenses, net
19

 
44

 
(67
)
c 
(4
)
 
(2
)
 
—

 
(6
)
 
2,177

 
4,921

 
670

 
7,768

 
780

 
28

 
8,576

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
273

 
1,001

 
(622
)
 
652

 
184

 
(70
)
 
766

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
(793
)
 
(57
)
 
175

 
(71
)
 
47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax benefit (expense)
219

 
(223
)
 
223

e 
219

 
—

 
—

 
219

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income
295

 
437

 
(570
)
 
162

 
175

 
(71
)
 
266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(13
)
 
—

 
—

 
(13
)
 
—

 
—

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

 
$
437

 
$
(570
)
 
$
149

 
$
175

 
$
(71
)
 
$
253





 
Three Months ended December 31, 2015
 
CCO
 
 
 
 
 
CCO
 
 
 
 
 
CCO
 
Holdings
 
 
 
Pro Forma
 
Holdings
 
Bright
 
Pro Forma
 
Holdings
 
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

 
79

a 
5,643

 
656

 
(73
)
a 
6,226

Depreciation and amortization
545

 
956

 
655

b 
2,156

 
119

 
110

b 
2,385

Other operating (income) expenses, net
20

 
51

 
(70
)
c 
1

 
(1
)
 
1

c 
1

 
2,189

 
4,947

 
664

 
7,800

 
774

 
38

 
8,612

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
323

 
1,125

 
(620
)
 
828

 
218

 
(77
)
 
969

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

 
—

 
—

 
6

 
—

 
—

 
6

Other income, net
—

 
3

 
—

 
3

 
—

 
—

 
3

 
(186
)
 
(349
)
 
(145
)
 
(680
)
 
(8
)
 
(1
)
 
(689
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incomebefore taxes
137

 
776

 
(765
)
 
148

 
210

 
(78
)
 
280

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
(2
)
 
(290
)
 
290

e 
(2
)
 
—

 
—

 
(2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated net income
135

 
486

 
(475
)
 
146

 
210

 
(78
)
 
278

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Noncontrolling interest
(12
)
 
—

 
—

 
(12
)
 
—

 
—

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

 
$
486

 
$
(475
)
 
$
134

 
$
210

 
$
(78
)
 
$
266





 
Three Months ended March 31, 2016
 
CCO
 
 
 
 
 
CCO
 
 
 
 
 
CCO
 
Holdings
 
 
 
Pro Forma
 
Holdings
 
Bright
 
Pro Forma
 
Holdings
 
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

 
60

a 
5,763

 
685

 
(77
)
a 
6,371

Depreciation and amortization
539

 
974

 
554

b 
2,067

 
112

 
104

b 
2,283

Other operating (income) expenses, net
18

 
40

 
(46
)
c 
12

 
(1
)
 
2

c 
13

 
2,228

 
5,046

 
568

 
7,842

 
796

 
29

 
8,667

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
302

 
1,145

 
(523
)
 
924

 
219

 
(68
)
 
1,075

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 before taxes
97

 
806

 
(672
)
 
231

 
214

 
(72
)
 
373

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
—

 
(312
)
 
312

e 
—

 
—

 
—

 
—

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

 
$
494

 
$
(360
)
 
$
231

 
$
214

 
$
(72
)
 
$
373





 
Three Months ended June 30, 2016
 
CCO
 
 
 
 
 
CCO
 
 
 
 
 
CCO
 
Holdings
 
 
 
Pro Forma
 
Holdings
 
Bright
 
Pro Forma
 
Holdings
 
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)
4,012

 
2,169

 
38

a 
6,219

 
344

 
(53
)
a 
6,510

Depreciation and amortization
1,435

 
515

 
274

b 
2,224

 
64

 
48

b 
2,336

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

 
(25
)
c 
(236
)
 
—

 
(1
)
c 
(237
)
 
5,216

 
2,704

 
287

 
8,207

 
408

 
(6
)
 
8,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
945

 
581

 
(267
)
 
1,259

 
123

 
(22
)
 
1,360

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 before taxes
323

 
403

 
(344
)
 
382

 
123

 
(24
)
 
481

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

e 
(7
)
 
—

 
—

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

 
$
243

 
$
(184
)
 
$
375

 
$
123

 
$
(24
)
 
$
474


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 Charter 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