<PAGE> 1
EXHIBIT 99.6
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On January 11, 2001, Time Warner Telecom Inc. ("Time Warner Telecom") acquired
substantially all of the assets, with certain exceptions, of GST
Telecommunications, Inc. and its subsidiaries ("GST") out of bankruptcy (the
"Acquisition") pursuant to a definitive asset purchase agreement (the "Purchase
Agreement") for cash consideration of $632 million plus the payment of certain
liabilities and fees of $36 million, for a total purchase price of $668 million.
GST was a facilities-based integrated communications provider that offered
voice, data and Internet services primarily to business customers in selected
markets in the western United States.
The assets excluded from the Acquisition consist of:
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 other current assets, certain accounts
payable, deferred revenue, and certain other current
liabilities.
In connection with the Acquisition and Time Warner Telecom's capital expenditure
plans, Time Warner Telecom obtained commitments for $1.25 billion of additional
financing, including $525 million of secured term loan financing available to
subsidiaries of Time Warner Telecom, and $700 million in unsecured bridge
financing available to Time Warner Telecom (together, the "Credit Facilities").
The Acquisition was initially financed with borrowings under the unsecured
bridge loan facility. Under the terms of the secured term loan facility, the
Time Warner Telecom was required to draw $250 million at closing of the
Acquisition. The drawn and undrawn availability under the secured facility is
available to Time Warner Telecom for capital expenditures, working capital and
other general corporate purposes for 24 months from January 11, 2001. Time
Warner Telecom intends to replace some or all of the borrowings under the
unsecured bridge facility and may refinance borrowings under the secured
facility with a combination of unsecured long-term fixed rate debt, convertible
debt and/or equity securities of Time Warner Telecom. However, for purposes of
the unaudited pro forma condensed combined financial statements, Time Warner
Telecom has assumed that the Acquisition has been permanently financed with $950
million of borrowings under the Credit Facilities to finance the Acquisition and
a significant portion of 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.
The unaudited pro forma condensed combined balance sheet as of September 30,
2000 gives effect to the Acquisition as if it had been consummated on September
30, 2000. The accompanying unaudited pro forma condensed combined statements of
operations for the year
<PAGE> 2
ended December 31, 1999 and the nine months ended September 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 final appraisals and other analyses.
There can be no assurance that the final purchase price allocations and other
purchase accounting adjustments will not differ significantly from the estimated
amounts reflected in the unaudited pro forma condensed combined financial
statements.
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.
<PAGE> 3
TIME WARNER TELECOM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
September 30, 2000
(Amounts in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
GST
-----------------------------------------------------
Exclusions Related to
Historical Historical the Asset Purchase Pro Forma GST
TWTC GST Agreement(1) to be Acquired
----------- ----------- --------------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 74,091 30,740 (30,740)(a) --
Restricted investments -- 10,152 (10,152)(a) --
Marketable debt securities 28,578 -- -- --
Trade and other receivables, net 81,821 43,881 (13,294)(a) 30,587
Construction contracts receivable -- 37,625 (7,822)(a) 29,803
Investments -- 910 -- 910
Prepaid expenses and other current assets 2,247 8,519 (3,574)(a) 4,945
----------- ----------- ----------- -----------
Total current assets 186,737 131,827 (65,582) 66,245
----------- ----------- ----------- -----------
Restricted investments -- 3,510 (3,510)(a) --
Property, plant and equipment 1,082,016 1,016,591 (82,087)(a) 934,504
Less accumulated depreciation (257,881) (364,433) 209,829 (a) (154,604)
----------- ----------- ----------- -----------
824,135 652,158 127,742 779,900
Intangible and other assets,
net of accumulated amortization 93,663 2,661 36,738 (a) 39,399
----------- ----------- ----------- -----------
$ 1,104,535 790,156 95,388 885,544
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 46,407 1,214 (323)(a) 891
Deferred revenue 35,719 12,307 (1,794)(a) 10,513
Other current liabilities 127,356 56,443 (20,853)(a) 35,590
----------- ----------- ----------- -----------
Total current liabilities 209,482 69,964 (22,970) 46,994
----------- ----------- ----------- -----------
Liabilities subject to compromise -- 1,322,642 (1,322,642)(a) --
Long-term debt and capital lease obligations 403,311 -- -- --
Deferred income taxes 21,231 -- -- --
Other long-term liabilities -- 25,460 -- 25,460
Redeemable preference shares -- 74,008 (74,008)(a) --
Stockholders' equity (deficit):
Common stock 1,056 251,575 562,011 (a) 813,586
Additional paid-in capital 590,924 -- -- --
Accumulated other comprehensive income, net of taxes 12,030 -- -- --
Accumulated deficit (133,499) (953,493) 952,997 (a) (496)
----------- ----------- ----------- -----------
Total shareholders' equity (deficit) 470,511 (701,918) 1,515,008 813,090
----------- ----------- ----------- -----------
$ 1,104,535 790,156 95,388 885,544
=========== =========== =========== ===========
<CAPTION>
Pro Forma
Pro Forma Adjustments Pro Forma
TWTC and for TWTC TWTC
GST Subtotal Acquisition(3) Combined
------------ --------------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 74,091 950,000 (a) 322,670
(33,000)(b)
(668,421)(c)
Restricted investments -- -- --
Marketable debt securities 28,578 -- 28,578
Trade and other receivables, net 112,408 -- 112,408
Construction contracts receivable 29,803 -- 29,803
Investments 910 -- 910
Prepaid expenses and other current assets 7,192 -- 7,192
----------- ----------- -----------
Total current assets 252,982 248,579 501,561
----------- ----------- -----------
Restricted investments -- -- --
Property, plant and equipment 2,016,520 (288,118)(c) 1,728,402
Less accumulated depreciation (412,485) 154,604 (c) (257,881)
----------- ----------- -----------
1,604,035 (133,514) 1,470,521
Intangible and other assets,
net of accumulated amortization 133,062 33,000 (b) 128,951
(37,111)(c)
----------- ----------- -----------
1,990,079 110,954 2,101,033
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable 47,298 -- 47,298
Deferred revenue 46,232 -- 46,232
Other current liabilities 162,946 -- 162,946
----------- ----------- -----------
Total current liabilities 256,476 -- 256,476
----------- ----------- -----------
Liabilities subject to compromise -- --
Long-term debt and capital lease obligations 403,311 950,000 (a) 1,353,311
Deferred income taxes 21,231 -- 21,231
Other long-term liabilities 25,460 (25,460)(c) --
Redeemable preference shares -- -- --
Stockholders' equity (deficit):
Common stock 814,642 (813,586)(c) 1,056
Additional paid-in capital 590,924 -- 590,924
Accumulated other comprehensive income, net of taxes 12,030 -- 12,030
Accumulated deficit (133,995) -- (133,995)
-- -- --
----------- ----------- -----------
Total shareholders' equity (deficit) 1,283,601 (813,586) 470,015
----------- ----------- -----------
1,990,079 110,954 2,101,033
=========== =========== ===========
</TABLE>
<PAGE> 4
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 Asset Purchase GST Pro Forma
TWTC GST Agreement(1) Adjustments(2)
------------ ------------ --------------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Telecommunication services $ 268,753 202,686 (117,300)(a) --
Construction, facility sales and other -- 115,147 -- (115,147)(a)
Product -- 4,089 (4,089)(a) --
------------ ------------ ------------ ------------
Total revenue 268,753 321,922 (121,389) (115,147)
------------ ------------ ------------ ------------
Operating costs and expenses:
Operating 117,567 150,835 (90,223)(a) --
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) --
Depreciation and amortization 68,785 70,973 (22,263)(a) 2,437 (b)
------------ ------------ ------------ ------------
Total costs and expenses 299,741 422,206 (171,756) (72,503)
------------ ------------ ------------ ------------
Operating income (loss): (30,988) (100,284) 50,367 (42,644)
Interest expense, net of amounts capitalized (45,264) (115,481) 10,287 (a) --
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) 27,458 (42,644)
Income tax expense (benefit) 29,804 -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ (89,265) (182,569) 27,458 (42,644)
============ ============ ============ ============
Basic and diluted loss per common share $ (0.93)
============
Average common shares outstanding 95,898
============
<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 85,386 354,139 -- 354,139
Construction, facility sales and other -- -- -- --
Product -- -- -- --
------------ ------------ ------------ ------------
Total revenue 85,386 354,139 -- 354,139
------------ ------------ ------------ ------------
Operating costs and expenses:
Operating 60,612 178,179 -- 178,179
Cost of construction revenues -- -- -- --
Cost of product revenues -- -- -- --
Selling, general and administrative 66,188 179,577 -- 179,577
Depreciation and amortization 51,147 119,932 (25,572)(d) 91,487
(2,873)(e)
------------ ------------ ------------ ------------
Total costs and expenses 177,947 477,688 (28,445) 449,243
------------ ------------ ------------ ------------
Operating income (loss): (92,561) (123,549) 28,445 (95,104)
Interest expense, net of amounts capitalized (105,194) (150,458) 102,381(f) (150,177)
(98,800)(g)
(3,300)(h)
Interest income -- 16,589 -- 16,589
Other -- -- -- --
Equity in income of unconsolidated affiliate -- 202 -- 202
------------ ------------ ------------ ------------
Income (loss) before income taxes (197,755) (257,216) 28,726 (228,490)
Income tax expense (benefit) -- 29,804 (29,804)(i) --
------------ ------------ ------------ ------------
Net income (loss) (197,755) (287,020) 58,530 (228,490)
============ ============ ============ ============
Basic and diluted loss per common share (2.38)
============
Average common shares outstanding 95,898
============
</TABLE>
<PAGE> 5
TIME WARNER TELECOM INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2000
(Amounts in Thousands)
(unaudited)
<TABLE>
<CAPTION>
GST
----------------------------------------------------------
Exclusions Related to
Historical Historical the Asset Purchase GST Pro Forma
TWTC GST Agreement(1) Adjustments(2)
------------ ------------ --------------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Telecommunication services $ 353,067 160,223 (72,822)(a) --
Construction, facility sales and other -- 24,563 -- (24,563)(a)
Product -- 205 (205)(a) --
------------ ------------ ------------ ------------
Total revenue 353,067 184,991 (73,027) (24,563)
------------ ------------ ------------ ------------
Operating costs and expenses:
Operating 130,846 113,806 (57,853)(a) --
Cost of construction revenues -- 16,581 -- (16,581)(a)
Cost of product revenues -- 307 (307)(a) --
Selling, general and administrative 122,663 97,380 (38,523)(a) --
Depreciation and amortization 68,793 67,569 (9,407)(a) 4,045 (b)
Impairment of assets -- 260,827 (260,827)(c) -- (a)
------------ ------------ ------------ ------------
Total costs and expenses 322,302 556,470 (366,917) (12,536)
------------ ------------ ------------ ------------
Operating income (loss): 30,765 (371,479) 293,890 (12,027)
Interest expense, net of amounts capitalized (30,657) (52,576) 4,970 (a) --
Interest income 9,016 2,117 (2,117)(b) --
Other -- 47,745 (2,896)(a) --
(44,849)(c)
------------ ------------ ------------ ------------
Income (loss) before reorganization expenses
and income tax expense (benefit) 9,124 (374,193) 248,998 (12,027)
Reorganization expenses -- 12,777 (12,777)(d) --
------------ ------------ ------------ ------------
Income (loss) before income taxes 9,124 (386,970) 261,775 (12,027)
Income tax expense (benefit) 4,542 -- -- --
------------ ------------ ------------ ------------
Net income (loss) $ 4,582 (386,970) 261,775 (12,027)
============ ============ ============ ============
Basic and diluted earnings (loss) per common share $ 0.04
============
Weighted average shares outstanding:
Basic 105,262
============
Diluted 108,427
============
<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 87,401 440,468 -- 440,468
Construction, facility sales and other -- -- -- --
Product -- -- -- --
------------ ------------ ------------ ------------
Total revenue 87,401 440,468 -- 440,468
------------ ------------ ------------ ------------
Operating costs and expenses:
Operating 55,953 186,799 -- 186,799
Cost of construction revenues -- -- -- --
Cost of product revenues -- -- -- --
Selling, general and administrative 58,857 181,520 -- 181,520
Depreciation and amortization 62,207 131,000 (19,179)(d) 108,508
(3,313)(e)
Impairment of assets -- -- -- --
------------ ------------ ------------ ------------
Total costs and expenses 177,017 499,319 (22,492) 476,827
------------ ------------ ------------ ------------
Operating income (loss): (89,616) (58,851) 22,492 (36,359)
Interest expense, net of amounts capitalized (47,606) (78,263) 45,867 (f) (108,971)
(74,100)(g)
(2,475)(h)
Interest income -- 9,016 -- 9,016
Other -- -- -- --
------------ ------------ ------------ ------------
Income (loss) before reorganization expenses
and income tax expense (benefit) (137,222) (128,098) (8,216) (136,314)
Reorganization expenses -- -- -- --
------------ ------------ ------------ ------------
Income (loss) before income taxes (137,222) (128,098) (8,216) (136,314)
Income tax expense (benefit) -- 4,542 (4,542)(i) --
------------ ------------ ------------ ------------
Net income (loss) (137,222) (132,640) (3,674) (136,314)
============ ============ ============ ============
Basic and diluted earnings (loss) per common share (1.29)
============
Weighted average shares outstanding:
Basic 105,262
============
Diluted 105,262
============
</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 September 30, 2000. The accompanying unaudited pro forma
condensed combined statements of operations are presented for the year ended
December 31, 1999 and the nine months ended September 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 were
not acquired, either because they were excluded from the Purchase
Agreement or because they were disposed of by GST prior to September
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 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. Additionally, to reverse the impairment charge by GST in the
third quarter of 2000, which resulted from the consummation of the
Purchase Agreement.
The dispositions by GST that occurred between January 1, 1999 and
September 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 were not 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 nine months ended September 30, 2000:
- a $260.8 million impairment of assets; and
- 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 $12.8 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 $6.6 million in revenue and $12.6 million and $6.5 million in
associated expenses for the year ended December 31, 1999 and the
nine months ended September 30, 2000, respectively; and
o the consummation of "sales-type" leases, which represented $99.5
and $18.0 million in revenue and $62.3 million and $10.1 million
in associated expenses for the year ended December 31, 1999 and
the nine months ended September 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 $2.3 million in
revenue and $0.5 million and $1.7 million in depreciation expense for
the year ended December 31, 1999 and the nine months ended September
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.
<PAGE> 8
(3) TIME WARNER TELECOM PRO FORMA ADJUSTMENTS
(a) To reflect the proceeds from borrowings under the Credit Facilities as
follows:
o a $250 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 facility.
The proceeds of these borrowings were used primarily to finance the
Acquisition, with the balance of approximately $248 million available
for expected capital expenditures during 2001. Time Warner Telecom
intends to replace some or all of its borrowings under the unsecured
bridge facility and may refinance borrowings under the secured term
loan facility with a combination of unsecured long-term fixed-rate
debt, convertible 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 $632 million plus the
payment of certain liabilities and fees of $36 million, for a total
purchase price of $668 million. The final allocation of purchase price
is subject to adjustment based upon final appraisals and other
analyses. 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 $280.3
million.
(e) To eliminate the amortization expense arising from historical GST
intangible assets that has been 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 $950 million in borrowings under the
Credit Facilities at an estimated effective interest rate of 10.4%.
The interest rate margin on the secured term loan facilities stays
fixed over the term of the facilities and the interest rate margin on
the unsecured bridge facility increases over a certain time period.
For purposes of computing interest expense, the Company utilized the
six month London Interbank Offered Rate plus the maximum specified
margin. It is anticipated that some or all of the borrowings under the
unsecured bridge facility will be replaced in whole or in part with
permanent financing, which may consist of long-term fixed-rate debt,
convertible debt or equity securities, or a
<PAGE> 9
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 $950 million would change
pro forma interest expense by $9.5 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 facility
will be replaced with permanent financing, which may consist of
long-term fixed-rate debt, convertible debt or equity securities, or a
combination thereof. If permanent financing is obtained, a portion of
the unamortized 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.
