<PAGE> 1
EXHIBIT 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On September 11, 2000, Time Warner Telecom Inc. ("Time Warner Telecom") and GST
Telecommunications, Inc. and its subsidiaries ("GST") entered into a definitive
asset purchase agreement (the "Purchase Agreement") pursuant to which Time
Warner Telecom will acquire substantially all of GST's assets, with certain
exclusions, out of bankruptcy (the "Acquisition") for cash consideration of $640
million plus the payment of certain liabilities and fees up to a maximum of $50
million, for a total purchase price of $690 million, subject to certain purchase
price adjustments. On September 21, 2000, Time Warner Telecom received approval
for this transaction from the U.S. District Court for the District of Delaware.
GST is a facilities-based integrated communications provider offering voice,
data and Internet services primarily to business customers in selected markets
in the western United States.
The assets excluded from the GST purchase include:
o most of the assets and operations in Hawaii;
o specific customer contracts and certain businesses that were determined
to be inconsistent with Time Warner Telecom's core strategy; and
o other assets and liabilities consisting principally of cash and cash
equivalents, restricted investments, certain accounts receivable, certain
prepaid expenses and other current assets, certain accounts payable,
deferred revenue and certain other current liabilities.
The closing of the Purchase Agreement is subject to various terms and closing
conditions, including state and federal regulatory approvals. Although we cannot
assure you that the approvals will be obtained or that the Purchase Agreement
will be consummated, Time Warner Telecom currently expects to close the
transaction in late fourth quarter of 2000 or the first quarter of 2001.
In connection with the Acquisition and Time Warner Telecom's capital expenditure
plans, Time Warner Telecom has obtained commitments for approximately $1.25
billion of additional financing, including $525 million of secured term loan
financing available to subsidiaries of Time Warner Telecom, and up to a $700
million unsecured bridge financing available to Time Warner Telecom (together,
the "Credit Facilities"). After the Acquisition, Time Warner Telecom expects to
have the undrawn portion of the secured term loan financing available for
capital expenditures, working capital and other general corporate purposes for
24 months from the date of closing. Time Warner Telecom intends to replace some
or all of the borrowings it may make under the unsecured bridge facility and may
refinance borrowings under the secured facility with a combination of unsecured
long-term fixed rate debt and/or equity securities of Time Warner Telecom. If
market conditions are favorable, Time Warner Telecom may seek to obtain some or
all of such permanent financing at or prior to the closing of the Acquisition.
However, for purposes of the unaudited pro forma condensed combined financial
statements, Time Warner Telecom has assumed that it will borrow an aggregate of
$925 million under the Credit Facilities at the closing of the Acquisition to
finance the Acquisition and capital expenditures that it expects to make during
2001.
The selected unaudited pro forma condensed combined financial information
presented below has been derived from the unaudited or audited historical
financial statements of Time Warner Telecom and GST and reflects a preliminary
estimate of certain pro forma adjustments based on information and assumptions
that management of Time Warner Telecom and GST believes are reasonable.
<PAGE> 2
The unaudited pro forma condensed combined balance sheet as of June 30, 2000
gives effect to the Acquisition as if it had been consummated on June 30, 2000.
The accompanying unaudited pro forma condensed combined statements of operations
for the year ended December 31, 1999 and the six months ended June 30, 2000
gives effect to the Acquisition as if it had been consummated on January 1,
1999.
The Acquisition will be accounted for using the purchase method of accounting.
Accordingly, the purchase price will be initially allocated to the assets
acquired and liabilities assumed, at their estimated relative fair values, and
will be subject to adjustment based upon appraisals or other analyses. There can
be no assurance that the final allocations and other purchase accounting
adjustments will not differ significantly from the estimated amounts reflected
in the unaudited pro forma condensed combined financial statements, including,
but not limited to, changes based on the final determination of the fair values
of the assets and liabilities acquired, actual interest rates incurred on the
Credit Facilities or the permanent financing, estimated lives of assets and
actual transaction costs incurred.
The unaudited pro forma condensed combined financial statements may not be
indicative of the results that might have been achieved if the Acquisition had
been completed and in effect for the periods indicated or the results that may
be achieved in the period immediately prior to closing or in the future. The
unaudited pro forma condensed combined financial statements presented below
should be read in conjunction with the historical financial statements and
related notes thereto of Time Warner Telecom and GST.
2
<PAGE> 3
TIME WARNER TELECOM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 2000
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
GST
--------------------------------------------------
Exclusions Related to Pro Forma
Historical Historical the Purchase Pro Forma GST TWTC and
TWTC GST Agreement (1) to be Acquired GST Subtotal
---------- ---------- --------------------- -------------- ------------
<C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 105,157 29,392 (29,392) (a) - 105,157
Restricted investments - 150 (150) (a) - -
Marketable debt securities 68,467 - - - 68,467
Trade and other receivables, net 66,213 40,708 (13,562) (a) 27,146 93,359
Construction contracts receivable - 35,127 (10,349) (a) 24,778 24,778
Investments - 910 - 910 910
Prepaid expenses and other current
assets 3,780 9,884 (783) (a) 9,101 12,881
---------- --------- ---------- -------- ---------
Total current assets 243,617 116,171 (54,236) 61,935 305,552
---------- --------- ---------- -------- ---------
Restricted investments - 3,457 (3,457) (a) - -
Property, plant and equipment 1,012,331 994,929 (84,674) (a) 910,255 1,922,586
Less accumulated depreciation (234,688) (151,169) 14,777 (a) (136,392) (371,080)
---------- --------- ---------- -------- ---------
777,643 843,760 (69,897) 773,863 1,551,506
Intangible and other assets, net of
accumulated amortization 80,358 74,102 (30,635) (a) 43,467 123,825
---------- --------- ---------- -------- ---------
$1,101,618 1,037,490 (158,225) 879,265 1,980,883
========== ========= ========== ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable $ 59,277 7,780 (31) (a) 7,749 67,026
Deferred revenue 36,106 11,733 (1,668) (a) 10,065 46,171
Other current liabilities 105,021 19,058 (5,666) (a) 13,392 118,413
---------- --------- ---------- -------- ---------
Total current liabilities 200,404 38,571 (7,365) 31,206 231,610
---------- --------- ---------- -------- ---------
Liabilities subject to compromise - 1,319,713 (1,271,744) (a) 47,969 47,969
Long-term debt and capital lease
obligations 403,419 - - - 403,419
Deferred income taxes 38,262 - - - 38,262
Other long-term liabilities - 5,460 - 5,460 5,460
Redeemable preference shares - 74,008 (74,008) (a) - -
Stockholders' equity (deficit):
Common stock 1,054 251,112 544,501 (a) 795,613 796,667
Additional paid-in capital 574,177 - - - 574,177
Accumulated other comprehensive
income, net of taxes 15,476 - - - 15,476
Accumulated deficit (131,174) (651,374) 650,391 (a) (983) (132,157)
---------- --------- ---------- -------- ---------
Total shareholders' deficit 459,533 (400,262) 1,194,892 794,630 1,254,163
---------- --------- ---------- -------- ---------
$1,101,618 1,037,490 (158,225) 879,265 1,980,883
========== ========= ========== ======== =========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Adjustments Pro Forma
for TWTC TWTC
Acquisition(3) Combined
-------------- ---------
<C> <C>
ASSETS
Current assets:
Cash and cash equivalents 925,000 (a) 307,157
(33,000) (b)
(690,000) (c)
Restricted investments - -
Marketable debt securities - 68,467
Trade and other receivables, net - 93,359
Construction contracts receivable - 24,778
Investments - 910
Prepaid expenses and other current
assets - 12,881
-------- ---------
Total current assets 202,000 507,552
-------- ---------
Restricted investments - -
Property, plant and equipment (256,183) (c) 1,666,403
Less accumulated depreciation 136,392 (c) (234,688)
-------- ---------
(119,791) 1,431,715
Intangible and other assets, net of
accumulated amortization 33,000 (b) 115,543
(41,282) (c)
-------- ---------
73,927 2,054,810
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable - 67,026
Deferred revenue - 46,171
Other current liabilities (2,031) (c) 116,382
-------- ---------
Total current liabilities (2,031) 229,579
-------- ---------
Liabilities subject to compromise (47,969) (c) -
Long-term debt and capital lease
obligations 925,000 (a) 1,328,419
Deferred income taxes - 38,262
Other long-term liabilities (5,460) (c) -
Redeemable preference shares - -
Stockholders' equity (deficit):
Common stock (795,613) (c) 1,054
Additional paid-in capital - 574,177
Accumulated other comprehensive
income, net of taxes - 15,476
Accumulated deficit - (132,157)
-------- ---------
Total shareholders' deficit (795,613) 458,550
-------- ---------
73,927 2,054,810
======== =========
</TABLE>
<PAGE> 4
TIME WARNER TELECOM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2000
(Amounts in Thousands)
(unaudited)
<TABLE>
<CAPTION>
GST
--------------------------------------------------
Exclusions Related to
Historical Historical the Purchase GST Pro Forma
TWTC GST Agreement (1) Adjustments (2)
---------- ---------- --------------------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Telecommunication services $ 231,911 107,690 (50,430) (a) -
Construction, facility sales and other - 12,598 - (12,598) (a)
Product - 205 (205) (a) -
--------- ------- ------- -------
Total revenue 231,911 120,493 (50,635) (12,598)
--------- ------- ------- -------
Operating costs and expenses:
Operating 82,547 78,675 (41,989) (a) -
Cost of construction revenues - 8,483 - (8,483) (a)
Cost of product revenues - 307 (307) (a) -
Selling, general and administrative 78,188 66,813 (26,356) (a) -
Depreciation and amortization 44,799 45,494 (8,431) (a) 1,500 (b)
-
--------- ------- ------- -------
Total costs and expenses 205,534 199,772 (77,083) (6,983)
--------- ------- ------- -------
Operating income (loss): 26,377 (79,279) 26,448 (5,615)
Interest expense, net of amounts capitalized (20,614) (50,038) 4,838 (a) -
Interest income 6,796 1,530 (1,530) (b) -
Other - 47,534 (2,685) (a) -
(44,849) (c)
--------- ------- ------- -------
Income (loss) before reorganization expenses
and income tax expense (benefit) 12,559 (80,253) (17,778) (5,615)
Reorganization expenses - 4,598 (4,598) (d) -
--------- ------- ------- -------
Income (loss) before income taxes 12,559 (84,851) (13,180) (5,615)
Income tax expense (benefit) 5,652 - - -
--------- ------- ------- -------
Net income (loss) $ 6,907 (84,851) (13,180) (5,615)
========= ======= ======= =======
Earnings (loss) per share:
Basic $ 0.07
=========
Diluted $ 0.06
=========
Weighted average shares outstanding:
Basic 105,126
=========
Diluted 108,363
=========
</TABLE>
<TABLE>
<CAPTION>
GST
-------------- Pro Forma
Pro Forma Adjustments Pro Forma
Pro Forma GST TWTC and for TWTC TWTC
to be Acquired GST Subtotal Acquisition (3) Combined
-------------- ------------ --------------- ---------
<S> <C> <C> <C> <C>
Revenue:
Telecommunication services 57,260 289,171 - 289,171
Construction, facility sales and other - - - -
Product - - - -
-------- ------- ------- -------
Total revenue 57,260 289,171 - 289,171
-------- ------- ------- -------
Operating costs and expenses:
Operating 36,686 119,233 - 119,233
Cost of construction revenues - - - -
Cost of product revenues - - - -
Selling, general and administrative 40,457 118,645 - 118,645
Depreciation and amortization 38,563 83,362 (10,853) (d) 71,983
(526) (e)
-------- ------- ------- -------
Total costs and expenses 115,706 321,240 (11,379) 309,861
-------- ------- ------- -------
Operating income (loss): (58,446) (32,069) 11,379 (20,690)
Interest expense, net of amounts capitalized (45,200) (65,814) 44,033 (f) (74,306)
(50,875) (g)
(1,650) (h)
Interest income - 6,796 - 6,796
Other - - - -
-------- ------- ------- -------
Income (loss) before reorganization expenses
and income tax expense (benefit) (103,646) (91,087) 2,887 (88,200)
Reorganization expenses - - - -
-------- ------- ------- -------
Income (loss) before income taxes (103,646) (91,087) 2,887 (88,200)
Income tax expense (benefit) - 5,652 (5,652) (i) -
-------- ------- ------- -------
Net income (loss) (103,646) (96,739) 8,539 (88,200)
======== ======= ======= =======
Earnings (loss) per share:
Basic (0.84)
=======
Diluted (0.84)
=======
Weighted average shares outstanding:
Basic 105,126
=======
Diluted 105,126
=======
</TABLE>
<PAGE> 5
TIME WARNER TELECOM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
Year ended December 31, 1999
(Amounts in Thousands)
(unaudited)
<TABLE>
<CAPTION>
GST
-------------------------------------------------------------------
Exclusions Related to
Historical Historical the Purchase GST Pro Forma Pro Forma GST
TWTC GST Agreement (1) Adjustments (2) to be Acquired
---------- ---------- --------------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Revenue:
Telecommunication services $ 268,753 202,686 (114,724) (a) - 87,962
Construction, facility sales and other - 115,147 - (115,147) (a) -
Product - 4,089 (4,089) (a) - -
--------- -------- -------- -------- --------
Total revenue 268,753 321,922 (118,813) (115,147) 87,962
--------- -------- -------- -------- --------
Operating costs and expenses:
Operating 117,567 150,835 (89,063) (a) - 61,772
Cost of construction revenues - 74,940 - (74,940) (a) -
Cost of product revenues - 2,484 (2,484) (a) - -
Selling, general and administrative 113,389 122,974 (56,786) (a) - 66,188
Depreciation and amortization 68,785 70,973 (22,263) (a) 2,437 (b) 51,147
--------- -------- -------- -------- --------
Total costs and expenses 299,741 422,206 (170,596) (72,503) 179,107
--------- -------- -------- -------- --------
Operating income (loss): (30,988) (100,284) 51,783 (42,644) (91,145)
Interest expense, net of amounts capitalized (45,264) (115,481) 10,287 (a) - (105,194)
Interest income 16,589 9,736 (9,736) (b) - -
Other - 23,460 4,571 (a) - -
(28,031) (c)
Equity in income of unconsolidated affiliate 202 - - - -
--------- -------- -------- -------- --------
Income (loss) before income taxes (59,461) (182,569) 28,874 (42,644) (196,339)
Income tax expense (benefit) 29,804 - - - -
--------- -------- -------- -------- --------
Net income (loss) $ (89,265) (182,569) 28,874 (42,644) (196,339)
========= ======== ======== ======== ========
Basic and diluted loss per common share $ (0.93)
=========
Average common shares outstanding 95,898
=========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Adjustments Pro Forma
TWTC and for TWTC TWTC
GST Subtotal Acquisition (3) Combined
------------ --------------- ---------
<S> <C> <C> <C>
Revenue:
Telecommunication services 356,715 - 356,715
Construction, facility sales and other - - -
Product - - -
-------- ------- --------
Total revenue 356,715 - 356,715
-------- ------- --------
Operating costs and expenses:
Operating 179,339 - 179,339
Cost of construction revenues - - -
Cost of product revenues - - -
Selling, general and administrative 179,577 - 179,577
Depreciation and amortization 119,932 (21,706) (d) 95,353
(2,873) (e)
-------- ------- --------
Total costs and expenses 478,848 (24,579) 454,269
-------- ------- --------
Operating income (loss): (122,133) 24,579 (97,554)
Interest expense, net of amounts capitalized (150,458) 102,381 (f) (153,127)
(101,750) (g)
(3,300) (h)
Interest income 16,589 - 16,589
Other - - -
Equity in income of unconsolidated affiliate 202 - 202
-------- ------- --------
Income (loss) before income taxes (255,800) 21,910 (233,890)
Income tax expense (benefit) 29,804 (29,804) (i) -
-------- ------- --------
Net income (loss) (285,604) 51,714 (233,890)
======== ======= ========
Basic and diluted loss per common share (2.44)
========
Average common shares outstanding 95,898
========
</TABLE>
<PAGE> 6
TIME WARNER TELECOM INC.
NOTES TO THE PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed combined balance sheet is
presented as of June 30, 2000. The accompanying unaudited pro forma condensed
combined statements of operations are presented for the year ended December 31,
1999 and the six months ended June 30, 2000. The adjustments contained in the
accompanying pro forma condensed combined financial statements reflect the
following:
(1) EXCLUSIONS RELATED TO THE ASSET PURCHASE AGREEMENT
(a) To reflect the exclusion of assets and liabilities of GST that are not
being acquired, either because they are excluded from the Purchase
Agreement or because they were disposed of by GST prior to
June 30, 2000.
The assets and liabilities excluded from the Purchase Agreement consist
of the majority of GST's Hawaiian assets and operations, certain other
businesses and contracts, and other assets and liabilities, as well as
the related revenue and expenses associated with these excluded assets
and liabilities. Other assets and liabilities excluded consist
principally of cash and cash equivalents, restricted investments,
certain accounts receivable, certain prepaid expenses and other current
assets and certain accounts payable, deferred revenue and certain other
current liabilities. The businesses and contracts being excluded relate
primarily to the operator services/hospitality business and certain
contracts for resold local and long distance services.
The dispositions by GST that occurred between January 1, 1999 and June
30, 2000 have been treated as if they were consummated prior to January
1, 1999. These divestitures consisted of:
o a California Internet service provider;
o a Texas company which provided long distance and ancillary
telecommunications services, and produced software used in the
telecommunications industry; and
o the assets and liabilities primarily related to GST's Guam
operations.
(b) To eliminate GST's historical interest income as residual cash balances
are not being acquired.
(c) To reflect the exclusion of non-recurring items consisting of the
following:
o For the year ended December 31, 1999:
- a $28.0 million favorable legal settlement.
o For the six months ended June 30, 2000:
- a $2.5 million favorable legal settlement; and
- a $42.3 million gain on the sale of an investment
<PAGE> 7
(d) The exclusion of $4.6 million consisting of retention bonuses paid to
employees and fees paid for professional services related to the
bankruptcy reorganization of GST.
(2) GST PRO FORMA ADJUSTMENTS
(a) To reflect the exclusion of revenue and expenses related to GST
construction and facility sales of conduit and dark fiber previously
sold by GST. The historical GST construction and facility sales
activities included:
o outright sales to third parties, which represented $15.6 million
and $2.8 million in revenue and $12.6 million and $3.4 million in
associated expenses for the year ended December 31, 1999 and the
six months ended June 30, 2000, respectively; and
o the consummation of "sales-type" leases, which represented $99.5
and $9.8 million in revenue and $62.3 million and $5.1 million in
associated expenses for the year ended December 31, 1999 and the
six months ended June 30, 2000, respectively.
This construction and facility sales activity is non-recurring in
nature. Any construction and facility sales following the acquisition
will be recorded when and if such transactions occur.
Historically, GST had treated certain long-term fiber and conduit lease
contracts entered into prior to June 30, 1999 as "sales-type" leases
and recognized the related revenue under the percentage of completion
method. In June 1999, the Financial Accounting Standards Board ("FASB")
issued Interpretation No. 43, Real Estate Sales, an Interpretation of
FASB Statement No. 66 ("FIN 43"). FIN 43 is effective for sales of real
estate with property improvements or integral equipment entered into
after June 30, 1999. Under FIN 43, conduit and dark fiber are
considered integral equipment. Accordingly, for contracts entered into
after June 30, 1999, sales-type lease accounting is no longer
appropriate for dark fiber and conduit leases and therefore, such
transactions will be accounted for as operating leases unless title
transfers to the lessee. Assuming that GST adopted the methodology
prescribed by FIN 43 as of January 1, 1999, GST construction and
facility sales would have aggregated $0.7 million and $1.5 million in
revenue and $0.5 million and $1.1 million in depreciation expense for
the year ended December 31, 1999 and the six months ended June 30,
2000, respectively, and such amounts would have been included as an
adjustment under the Exclusions Related to the Purchase Agreement.
Additionally, a deferred revenue balance would be established, but
would be eliminated in purchase accounting as such balance would
represent a non-monetary liability required to be eliminated as of the
acquisition date.
(b) To reflect the effect of the adoption of Time Warner Telecom's
accounting policy for depreciable lives for fixed asset depreciation
for the periods presented.
(3) GST PRO FORMA ADJUSTMENTS
(a) To reflect the proceeds from borrowings under the Credit Facilities
as follows:
o an approximate $225 million borrowing by subsidiaries of Time Warner
Telecom under the secured term loan facilities; and
o a $700 million borrowing by Time Warner Telecom under the unsecured
bridge facilities.
The proceeds of these borrowings will be used primarily to finance the
Acquisition, with the balance of approximately $202 million available
for expected capital expenditures during 2001. Time Warner Telecom
intends to replace some or all of the borrowings it may take under the
unsecured bridge facilities and may refinance borrowings under the
secured facility.
<PAGE> 8
with a combination of unsecured long-term fixed-rate debt and/or equity
securities of Time Warner Telecom.
(b) To reflect the estimated financing costs in connection with closing of
the Credit Facilities as well as the costs required to obtain permanent
financing at some future date.
(c) To reflect the purchase of a majority of GST's assets under the
Purchase Agreement for cash consideration of $640 million plus the
payment of certain liabilities and fees up to a maximum of $50 million,
for a total purchase price of $690 million. The purchase price is
subject to certain adjustments which cannot be determined until the
Acquisition of certain assets and liabilities of GST is finalized. As
the Acquisition will be accounted for using the purchase method of
accounting, the remaining unamortized balance in intangible assets,
which is primarily comprised of goodwill and deferred loan costs,
non-monetary liabilities, and the remaining equity balance will be
eliminated. As the purchase price is anticipated to be lower than the
fair value of the assets acquired, the values otherwise assignable to
plant, property and equipment will be proportionally reduced to
determine assigned values.
(d) To reflect the reduction in depreciation expense as a result of a
proportional reduction in the historical book values of plant, property
and equipment after considering the excess of the historical book
values over the remaining unallocated purchase price of $256.2 million.
(e) To eliminate the amortization expense arising from historical GST
intangible assets that will be eliminated in purchase accounting.
(f) To eliminate GST's historical interest expense, except for historical
interest expense related to assumed capital lease obligations.
(g) To record interest expense on $925 million in borrowings under the
Credit Facilities at an estimated effective interest rate of 11%. The
actual interest cost under the Credit Facilities may be higher or
lower, depending upon market conditions at closing. Moreover, it is
anticipated that some or all of the borrowings under the unsecured
bridge facilities will be replaced in whole or in part with permanent
financing, which may consist of long-term fixed-rate debt or equity
securities, or a combination thereof. Therefore, the actual interest
expense will likely be different than the estimate. Accordingly:
o A change of 1% per annum in the effective annual interest cost on
aggregate borrowings of $925 million would change pro forma
interest expense by $9.3 million.
o The use of preferred or common equity securities to replace a
portion of the borrowings under the Credit Facilities would reduce
pro forma annual interest expense by an amount proportionate to the
reduction in aggregate amount of the borrowings. If Time Warner
Telecom issues preferred securities to replace a portion of these
borrowings, it would record as a dividend expense the cost of any
preferred dividends.
(h) To record the amortization of deferred financing costs under the Credit
Facilities over an estimated ten-year period. It is anticipated that
some or all of the borrowings under the unsecured bridge facilities
will be replaced with permanent financing, which may consist of
long-term fixed-rate debt or equity securities, or a combination
thereof. If permanent financing is obtained, a portion of the
unamortized
<PAGE> 9
deferred financing costs balance will be expensed. The magnitude of the
write-off and the amortization term cannot be determined until the
nature and amount of the permanent financing is finalized.
(i) The Acquisition represents a purchase of assets. Accordingly, Time
Warner Telecom will not be assuming any GST historical tax attributes,
including net operating loss carryforwards. For pro forma presentation
purposes, the tax benefits of GST related to the periods presented have
been recognized to the extent of the tax expense recorded in the Time
Warner Telecom historical financial statements.
