<PAGE> 1
FORM 8-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): February 14, 2000
-----------------
CHARTER COMMUNICATIONS, INC.
----------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
--------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
000-27927 43-1857213
--------- ----------
(COMMISSION FILE NUMBER) (FEDERAL EMPLOYER
IDENTIFICATION NUMBER)
12444 Powerscourt Drive - Suite 400
St. Louis, Missouri 63131
- ---------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) (314) 965-0555
--------------
<PAGE> 2
This Current Report on Form 8-K/A amends Charter Communications, Inc.'s
previous Current Report on Form 8-K (dated February 14, 2000 and filed on
February 29, 2000) and includes the required unaudited pro forma financial
statements.
ITEM 2. ACQUISITIONS OF ASSETS.
On February 14, 2000, Charter Communications Holding Company, LLC (Charter
Holdco) and Charter Communications Holdings, LLC, each managed by Charter
Communications, Inc., completed the acquisition (the "Bresnan Acquisition") of
Bresnan Communications Company Limited Partnership, pursuant to a Purchase and
Contribution Agreement, entered into as of June 29, 1999, by and among BCI
(USA), LLC, William J. Bresnan, Blackstone BC Capital Partners L.P., Blackstone
BC Offshore Capital Partners L.P., TCID of Michigan, Inc., TCI Bresnan LLC and
Charter Holdco, as amended by the first amendment. Immediately prior to the
Bresnan Acquisition, Charter Holdco was 40.6% owned by the Company and Charter
Holdings was 100% owned by Charter Holdco. Prior to the Bresnan Acquisition,
Charter Holdco assigned a portion of its rights to purchase Bresnan
Communications Company to Charter Holdings.
As part of the transactions described above, Charter Holdco and Charter
Holdings purchased approximately 52% of Bresnan Communications Company from
certain of the Bresnan sellers for cash, and certain of the Bresnan sellers
contributed approximately 18% of Bresnan Communications Company to Charter
Holdco in exchange for approximately 14.8 million Class C common membership
units of Charter Holdco then transferred its purchased interests in Bresnan
Communications Company to Charter Holdings. Thereafter, Charter Holdings and
certain of the Bresnan sellers, TCID of Michigan, Inc. and TCI Bresnan LLC,
contributed all of the outstanding interests in Bresnan Communications Company
to CC VIII, LLC, a subsidiary of Charter Holdings, and Bresnan Communications
Company was dissolved. In exchange for the contribution of their interests in
Bresnan Communications Company to CC VIII, TCID of Michigan, Inc. and TCI
Bresnan LLC received approximately 24.2 million Class A preferred membership
units in CC VIII representing approximately 30% of the equity of CC VIII and are
entitled to a 2% annual return on the preferred membership units. As a result of
the dissolution of Bresnan Communications Company, CC VIII succeeded to all of
the rights and obligations of Bresnan Communications Company and became the
successor parent entity of the Bresnan subsidiaries, including Bresnan
Communications Group, LLC and the Bresnan cable systems, CC VIII is a Delaware
limited liability company and is managed by the Charter Communications, Inc. The
members of CC VIII are Charter Holdings, TCID of Michigan, Inc. and TCI Bresnan
LLC.
The purchase price for Bresnan Communications Company was approximately
$3.1 billion, subject to adjustment, and was comprised of approximately $1.1
billion in cash, approximately $380.6 million and $629.5 million in equity in
Charter Holdco and CC VIII, respectively, and approximately $964.4 million in
assumed debt. The cash portion of the purchase price was funded with a portion
of the proceeds from the Company's initial public offering of Class A common
stock and $30.0 million in additional borrowings under Bresnan's credit
facilities.
The Bresnan cable systems are located primarily in Michigan, Minnesota,
Wisconsin, and Nebraska and serve approximately 690,000 customers, including
approximately 24,000 customers served by cable systems acquired by Bresnan
Communications Company since December 31, 1999. For the year ended December 31,
1999, the revenues from the Bresnan cable systems and cable systems acquired
since December 31, 1999 were approximately $290.7 million.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of business acquired.
Audited financial statements for each of the three years in the period
ended December 31, 1999 (incorporated by reference to Amendment No. 1
to the Registration Statement on Form S-4 of Charter Communications
Holdings, LLC and Charter Communications Holding Capital Corporation
filed on April 18, 2000, File No. 333-77499).
(b) Unaudited pro forma financial statements.
Pursuant to Article 11 of Regulation S-X, pro forma unaudited
financial statements are included herein, beginning on page P-1.
(c) Exhibits.
None.
3
<PAGE> 4
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following Unaudited Pro Forma Financial Statements of Charter
Communications, Inc. are based on the historical financial statements of Charter
Communications, Inc. Since January 1, 1999, Charter Holdco and Charter Holdings
have closed numerous acquisitions. In addition, Charter Holdings merged with
Marcus Cable Holdings, LLC in April 1999. The consolidated financial statements
are adjusted on a pro forma basis to illustrate the estimated effects of the
Bresnan Acquisition and the sale of the January 2000 Charter Holdings Notes as
if such transactions had occurred on December 31, 1999 for the unaudited pro
forma balance sheet and to illustrate the estimated effects of the following
transactions as if they had occurred on January 1, 1999 for the unaudited pro
forma statement of operations:
(1) the acquisition of Marcus Cable Company, L.L.C. by Paul G. Allen and
Marcus Holdings, merger with and into Charter Holdings effective March
31, 1999;
(2) the acquisitions by Charter Holdco, Charter Holdings and their
subsidiaries completed from January 1, 1999 through March 31, 2000,
including the transfer of an Indiana Cable system in the acquisition
with Intermedia Capital Partners IV, L.P., Intermedia Partners and
affiliates, (collectively referred to as the "Recent Acquisitions")
and the Bresnan Acquisition;
(3) the refinancing of the previous credit facilities of the Charter
companies and certain subsidiaries acquired in 1999 and the Bresnan
Acquisition; and
(4) the sale of the March 1999 Charter Holdings Notes and the January 2000
Charter Holdings Notes, and the repurchase of certain of the Falcon
Communications, L.P., Avalon Cable of Michigan Holdings, Inc., and
Bresnan notes and debentures.
The Unaudited Pro Forma Balance Sheet also illustrates the effects of the
issuance of common membership units in Charter Holdco in connection with the
Bresnan Acquisition. As such, the consolidated pro forma financial statements of
Charter Communications, Inc. reflect a minority interest equal to 60.4% of the
equity of Charter Holdco and depict 60.4% of the losses being allocated to
minority interest.
The Unaudited Pro Forma Financial Statements reflect the application of the
principles of purchase accounting to the transactions listed in items (1) and
(2) above. The allocation of certain purchase prices is based, in part, on
preliminary information, which is subject to adjustment upon obtaining complete
valuation information of intangible assets and is subject to post-closing
purchase price adjustments. We believe that finalization of the purchase prices
and the allocation will not have a material impact on the results of operations
or financial position of Charter Communications, Inc.
The Unaudited Pro Forma Financial Statements of Charter Communications,
Inc. do not purport to be indicative of what our financial position or results
of operations would actually have been had the transactions described above been
completed on the dates indicated or to project our results of operations for any
future date.
P-1
<PAGE> 5
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA DATA
FOR THE YEAR ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------------------------
CHARTER
COMMUNICATIONS, RECENT BRESNAN OFFERING
INC. ACQUISITIONS ACQUISITION ADJUSTMENTS
(NOTE A) (NOTE B) SUBTOTAL (NOTE B) (NOTE C) TOTAL
--------------- ------------ ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues............................... $1,553,424 $1,070,970 $ 2,624,394 $ 292,860 $ -- $ 2,917,254
---------- ---------- ----------- --------- -------- ------------
Operating expenses:
Operating, general and administrative 806,941 524,295 1,331,236 161,217 -- 1,492,453
Depreciation and amortization........ 808,981 649,223 1,458,204 219,915 -- 1,678,119
Option compensation expense.......... 79,979 -- 79,979 -- -- 79,979
Corporate expense charges (Note D)... 51,428 43,036 94,464 15,324 -- 109,788
Management fees...................... -- 15,540 15,540 221 -- 15,761
---------- ---------- ----------- --------- -------- ------------
Total operating expenses........... 1,747,329 1,232,094 2,979,423 396,677 -- 3,376,100
---------- ---------- ----------- --------- -------- ------------
Loss from operations................... (193,905) (161,124) (355,029) (103,817) -- (458,846)
Interest expense....................... (502,031) (397,227) (899,258) (84,190) (34,187) (1,017,635)
Interest income........................ 4,329 1,329 5,658 26 -- 5,684
Other income (expense)................. 285 (457) (172) -- -- (172)
---------- ----------- ------------ --------- -------- ------------
Loss before income taxes and minority (691,322) (557,479) (1,248,801) (187,981) (34,187) (1,470,969)
interest...............................
Income tax benefit (expense)........... (1,030) (2,752) (3,782) 35 -- (3,747)
Minority interest (Note E)............. 418,319 338,491 756,810 121,206 20,655 898,671
---------- ---------- ----------- --------- -------- ------------
Net loss .............................. $ (274,033) $ (221,740) $ (495,773) $ (66,740) $(13,532) $ (576,045)
========== ========== =========== ========= ======== ============
Basic and diluted loss per common
share (Note F)...................... $ (2.59)
=============
Weighted average common shares
outstanding- Basic and diluted 222,089,746
(Note G) ============
OTHER FINANCIAL DATA:
Adjusted EBITDA (Note H)............... $ 746,483 $ 546,675 $ 1,293,158 $ 131,643 $ 1,424,801
Adjusted EBITDA margin (Note I)........ 48.1% 51.0% 49.3% 45.0% 48.8%
</TABLE>
P-2
<PAGE> 6
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NOTE A: Pro forma operating results for Charter Communications, Inc. consist of
the following (dollars in thousands):
<TABLE>
<CAPTION>
HISTORICAL
------------------------------
YEAR ENDED 1/1/99
12/31/99 THROUGH
CHARTER 3/31/99
COMMUNICATIONS, MARCUS PRO FORMA
INC. HOLDINGS(a) ADJUSTMENTS TOTAL
--------------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues.......................... $1,428,244 $125,180 $ -- $1,553,424
---------- -------- -------- ----------
Operating expenses:
Operating, general and 737,957 68,984 806,941
administrative....................
Depreciation and amortization... 745,315 51,688 11,978 (b) 808,981
Option compensation expense..... 79,979 -- -- 79,979
Corporate expense charges....... 51,428 -- -- 51,428
Management fees................. -- 4,381 (4,381)(c) --
---------- -------- -------- ----------
Total operating expenses...... 1,614,679 125,053 7,597 1,747,329
---------- -------- -------- ----------
Income (loss) from operations..... (186,435) 127 (7,597) (193,905)
Interest expense.................. (477,799) (27,067) 2,835 (d) (502,031)
Interest income................... 34,467 104 (30,242)(e) 4,329
Other income (expense)............ (8,039) (158) 8,482 (f) 285
---------- -------- --------- ----------
Loss before income taxes and
minority interest ................ (637,806) (26,994) (26,522) (691,322)
Income tax expense................ (1,030) -- -- (1,030)
Minority interest................. 572,607 -- (154,288)(g) 418,319
---------- -------- --------- ----------
Net loss ......................... $ (66,229) $(26,994) $(180,810) $ (274,033)
========== ======== ========= ==========
</TABLE>
(a) Marcus Holdings represents the results of operations of Marcus Cable
through March 31, 1999, the date of its merger with Charter Holdings.
(b) As a result of Mr. Allen acquiring the controlling interest in Marcus
Cable, a large portion of the purchase price was recorded as franchises
($2.5 billion) that are amortized over 15 years. This resulted in
additional amortization for the period from January 1, 1999 through March
31, 1999. The adjustment to depreciation and amortization expense consists
of the following (dollars in millions):
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
USEFUL LIFE DEPRECIATION/
FAIR VALUE (IN YEARS) AMORTIZATION
---------- ----------- ----------------
<S> <C> <C> <C>
Franchises................................... $ 2,500.0 15 $ 40.8
Cable distribution systems................... 720.0 8 21.2
Land, buildings and improvements............. 28.3 10 0.7
Vehicles and equipment....................... 13.6 3 1.0
-------
Total depreciation and amortization........ 63.7
Less-- historical depreciation and
amortization of (51.7)
-------
Marcus Cable.............................
Adjustment............................... $ 12.0
=======
</TABLE>
(c) Reflects the elimination of management fees.
(d) Interest expense was reduced by the effects of the extinguishment of
substantially all of our long-term debt in March 1999, excluding borrowings
of our previous credit facilities, and the refinancing of all previous
credit facilities.
(e) Reflects the elimination of interest income on excess cash since we assumed
substantially all such cash was used to finance a portion of the
acquisitions completed in 1999.
(f) Reflects the elimination of non-recurring expenses related to the March
1999 extinguishment and refinancing of debt.
(g) Adjusts minority interest to reflect the allocation of 60.4% of pro forma
losses to minority interest.
P-3
<PAGE> 7
NOTE B: Pro forma operating results for the Recent Acquisitions and the
Bresnan Acquisition consist of the following (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
-------------------------------------------------------------------------
RECENT ACQUISITIONS - HISTORICAL
-------------------------------------------------------------------------
GREATER
AMERICAN MEDIA INTERMEDIA
RENAISSANCE(a) CABLE(a) SYSTEMS(a) HELICON(a) RIFKIN(a) SYSTEMS(a)
-------------- -------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues................. $20,396 $12,311 $42,348 $49,564 $152,364 $152,789
------- ------- ------- ------- -------- --------
Operating expenses:
Operating general
and administrative... 9,382 6,465 26,067 31,563 95,077 84,174
Depreciation and
amortization......... 8,912 5,537 5,195 16,617 77,985 79,325
Equity-based deferred
compensation......... -- -- -- -- -- --
Management fees........ -- 369 -- 2,511 2,513 2,356
------- ------- ------- ------- -------- --------
Total operating
expenses........... 18,294 12,371 31,262 50,691 175,575 165,855
------- ------- ------- ------- -------- --------
Income (loss) from
operations............. 2,102 (60) 11,086 (1,127) (23,211) (13,066)
Interest expense......... (6,321) (3,218) (565) (20,682) (34,926) (17,636)
Interest income.......... 122 32 -- 124 -- 187
Other income (expense)... -- 2 (398) -- (12,742) (2,719)
------- ------- ------- ------- -------- --------
Income (loss) before
income tax expense
(benefit).............. (4,097) (3,244) 10,123 (21,685) (70,879) (33,234)
Income tax expense
(benefit).............. (65) 5 4,535 -- (1,975) (2,681)
------- ------- ------- ------- -------- --------
Income (loss) before
extraordinary $(4,032) $(3,249) $ 5,588 $(21,685) $(68,904) $(30,553)
======= ======= ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
---------------------------------------------------------
RECENT ACQUISITIONS - HISTORICAL
---------------------------------------------------------
FALCON(a) FANCH(a) AVALON(a) OTHER(a) TOTAL
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Revenues................. $371,616 $185,917 $94,383 $11,303 1,092,991
-------- -------- ------- ------- ---------
Operating expenses:
Operating general
and administrative... 220,108 85,577 53,089 6,213 617,715
Depreciation and
amortization......... 196,260 62,097 39,943 3,746 495,617
Equity-based deferred
compensation......... 44,600 -- -- -- 44,600
Management fees........ -- 6,162 -- 447 14,358
-------- -------- ------- ------- ---------
Total operating
expenses........... 460,968 153,836 93,032 10,406 1,172,290
-------- -------- ------- ------- ---------
Income (loss) from
operations............. (89,352) 32,081 1,351 897 (79,299)
Interest expense......... (114,993) (40,162) (1,944) (240,447)
Interest income.......... -- -- 764 -- 1,229
Other income (expense)... 8,021 (7,796) 4,499 (30) (11,163)
-------- -------- ------- ------- ---------
Income (loss) before
income tax expense
(benefit).............. (196,324) 24,285 (33,548) (1,077) (329,680)
Income tax expense
(benefit).............. 2,509 197 (13,936) -- (11,411)
-------- -------- ------- ------- ---------
Income (loss) before
extraordinary $(198,833) $24,088 $(19,612) $(1,077) (318,269)
========= ======= ======== ======= =========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
----------------------------------------------------------------------
RECENT ACQUISITIONS
----------------------------------------------------------------------
PRO FORMA
---------------------------------------------------------
HISTORICAL ACQUISITIONS DISPOSITIONS ADJUSTMENTS TOTAL
---------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Revenues................... $1,092,991 $ 34,462 $ (53,513) $ (2,970)(d) $1,070,970
---------- ---------- --------- --------- ----------
Operating expenses:
Operating, general and
and administrative ...... 617,715 18,646 (25,424) (86,642)(d)(e) 524,295
Depreciation and
amortization .......... 495,617 8,032 (22,827) 168,401 (f) 649,223
Equity-based deferred
compensation........... 44,600 -- -- (44,600)(g) --
Corporate expense
charges................ -- 33 -- 43,003 (e) 43,036
Management fees.......... 14,358 1,182 -- -- 15,540
---------- ---------- --------- --------- ----------
Total operating
expenses............. 1,172,290 27,893 (48,251) 80,162 1,232,094
---------- ---------- --------- --------- ----------
Income (loss) from
operations............... (79,299) 6,569 (5,262) (83,132) (161,124)
Interest expense........... (240,447) (2,128) 13 (154,665)(h) (397,227)
Interest income............ 1,229 100 -- -- 1,329
Other income (expense)..... (11,163) (7) (2,576) 13,289 (i) (457)
---------- ---------- --------- --------- ----------
Income (loss) before income
taxes, minority interest
and extraordinary item... (329,680) 4,534 (7,825) (224,508) (557,479)
Income tax expense
(benefit)................ (11,411) (12) -- 14,175 (j) 2,752
Minority interest.......... -- -- -- 338,491 (k) 338,491
---------- ---------- --------- --------- ----------
Income (loss) before
extraordinary item....... $ (318,269) $ 4,546 $ (7,825) $ 99,808 $ (221,740)
========== ========== ========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
----------------------------------------------------------------------
BRESNAN ACQUISITION
----------------------------------------------------------------------
PRO FORMA
---------------------------------------------------------
HISTORICAL ACQUISITIONS DISPOSITIONS ADJUSTMENTS TOTAL
---------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues................... $ 283,574 $ 9,399 $ (113) $ -- $ 292,860
---------- ---------- --------- --------- ----------
Operating expenses:
Operating, general and
and administrative ...... 176,611 6,724 (69) (22,049)(e) 161,217
Depreciation and
amortization .......... 59,752 3,133 (23) 157,053 (f) 219,915
Equity-based deferred
compensation........... -- -- -- -- --
Corporate expense
charges................ -- 1,246 -- 14,078 (e) 15,324
Management fees.......... -- 221 -- -- 221
---------- ---------- --------- --------- ----------
Total operating
expenses............. 236,363 11,324 (92) 149,082 396,677
---------- ---------- --------- --------- ----------
Income (loss) from
operations............... 47,211 (1,925) (21) (149,082) (103,817)
Interest expense........... (67,291) (274) 24 (16,649)(h) (84,190)
Interest income............ -- 26 -- -- 26
Other income (expense)..... (344) 49,031 -- (48,687)(i) --
---------- ---------- --------- --------- ----------
Income (loss) before income
taxes, minority interest
and extraordinary item... (20,424) 46,858 3 (214,418) (187,981)
Income tax expense
(benefit)................ -- (35) -- -- (35)
Minority interest.......... -- -- -- 121,206 (k) 121,206
---------- ---------- --------- --------- ----------
Income (loss) before
extraordinary item....... $ (20,424) $ 46,893 $ 3 $ (93,212) $ (66,740)
========== ========== ========= ========= ==========
</TABLE>
P-4
<PAGE> 8
(a) Renaissance represents the results of operations of Renaissance Media
Group, LLC through April 30, 1999, the date of acquisition by Charter
Holdings. American Cable represents the results of operations of American
Cable Entertainment, LLC through May 7, 1999, the date of acquisition by
Charter Holdings. Greater Media Systems represents the results of
operations of cable systems of Greater Media Cablevision, Inc. through June
30, 1999, the date of acquisition by Charter Holdings. InterMedia
represents the results of operations of cable systems of Capital Partners
IV, L.P., InterMedia Partners and affiliates through October 1, 1999, the
date of acquisition by Charter Holdings. Helicon represents the results of
operations of Helicon Partners I, L.P. and affiliates through July 30,
1999, the date of acquisition by Charter Holdings. Falcon represents the
results of operations of cable systems of Falcon Communications, L.P.
through November 12, 1999, the date of acquisition by Charter Holdco.
Avalon represents the results of operations of cable systems of Avalon
Cable of Michigan Holding, Inc. through November 15, 1999, the date of
acquisition by Charter Holdco. Fanch represents the results of operations
of cable systems of Fanch Cablevision L.P. and affiliates. Other represents
the results of operations of Vista Broadband Communications, L.L.C. through
July 30, 1999, the date of acquisition by Charter Holdings and the results
of operations of cable systems of Cable Satellite of South Miami, Inc.
through August 4, 1999, the date of acquisition by Charter Holdings. Rifkin
includes the results of operations of Rifkin Acquisition Partners,
L.L.L.P., Rifkin Cable Income Partners L.P., Indiana Cable Associates, Ltd.
and R/N South Florida Cable Management Limited Partnership, all under
common ownership through September 13, 1999, the date of acquisition by
Charter Holdings, as follows (dollars in thousands):
<TABLE>
<CAPTION>
RIFKIN RIFKIN INDIANA SOUTH
ACQUISITION CABLE INCOME CABLE FLORIDA OTHER TOTAL
----------- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues................... $ 68,829 $ 3,807 $ 6,034 $ 17,516 $ 56,178 $152,364
Income (loss) from operations (6,954) 146 (3,714) (14,844) 2,155 (23,211)
Loss before extraordinary (21,571) (391) (4,336) (15,605) (27,001) (68,904)
item.......................
</TABLE>
(b) Represents the historical results of operations for the period from January
1, 1999 through the dates of purchases for acquisitions completed by
Rifkin, Fanch, Avalon and Bresnan before December 31, 1999 and for the year
ended December 31, 1999 for the systems acquired by Bresnan after December
31, 1999.
These acquisitions were accounted for using the purchase method of
accounting. The purchase prices in millions and closing dates for
significant acquisitions are as follows:
<TABLE>
<CAPTION>
RIFKIN FANCH BRESNAN
ACQUISITIONS ACQUISITIONS ACQUISITIONS
------------- -------------- --------------
<S> <C> <C> <C>
Purchase price $ 165.0 $ 42.2 $ 40.0
Closing date....... February 1999 February 1999 January 1999
Purchase price $ 53.8 $ 248.0 $ 27.0
Closing date...... July 1999 February 1999 March 1999
Purchase price $ 70.5 $ 35.2
Closing date...... March 1999 January 2000
Purchase price $ 50.0
Closing date...... June 1999
</TABLE>
(c) Represents the elimination of the operating results related to the cable
systems transferred to InterMedia as part of a swap of cable systems in
October 1999. The agreed value of our systems transferred to InterMedia was
$420.0 million. This number includes 30,000 customers served by an Indiana
cable system that we did not transfer at the time of the InterMedia closing
because some of the necessary regulatory approvals were still pending. This
system was transferred in March 2000. No material gain or loss occurred on
the disposition as these systems were recently acquired and recorded at
fair value at that time. Also represents the elimination of the operating
results related to the sale of a Bresnan cable system sold in January 1999.
(d) Reflects the elimination of historical revenues and expenses associated
with an entity not included in the purchase by Charter.
P-5
<PAGE> 9
(e) Reflects a reclassification of expenses representing corporate expenses
that would have occurred at Charter Investment, Inc. totaling $57.1
million. The remaining adjustment primarily relates to the elimination of
severance payments of $32.2 million and the write-off of debt issuance
costs of $7.4 million that were included in operating, general and
administrative expense.
(f) Represents additional depreciation and amortization as a result of the
Recent Acquisitions and the Bresnan Acquisition. A large portion of the
purchase price was allocated to franchises ($12.4 billion) that are
amortized over 15 years. The adjustment to depreciation and amortization
expense consists of the following (dollars in millions):
<TABLE>
<CAPTION>
WEIGHTED AVERAGE DEPRECIATION/
FAIR VALUE USEFUL LIFE AMORTIZATION
---------- ---------------- -------------
<S> <C> <C> <C>
Franchises................................ $12,356.5 15 $ 666.6
Cable distribution systems................ 1,729.1 8 177.3
Land, buildings and improvements.......... 53.9 10 4.1
Vehicles and equipment.................... 89.1 3 21.1
-------
Total depreciation and amortization..... 869.1
Less-historical depreciation and
amortization.......................... (543.6)
-------
Adjustment............................ $ 325.5
=======
</TABLE>
(g) Reflects the elimination of approximately $44.6 million of change in
control payments under the terms of Falcon's equity-based compensation
plans that were triggered by the acquisition of Falcon by Charter Holdco.
These plans will be terminated and the employees will participate in the
option plan of Charter Holdco. As such, these costs will not recur.
(h) Reflects additional interest expense on borrowings, which were used to
finance the acquisitions as follows (dollars in millions):
<TABLE>
<S> <C>
$170.0 million of credit facilities at a composite
current $ 12.2
rate of 8.6% -- Avalon...........................
$150.0 million 9.375% senior subordinated
notes-- Avalon.................................. 12.3
$196.0 million 11.875% senior discount notes-- 11.6
Avalon............................................
$850.0 million of credit facilities at a composite
current 62.0
rate of 8.5%-- Fanch............................
$1.0 billion of credit facilities at a composite
current 71.9
rate of 8.0%-- Falcon...........................
$375.0 million 8.375% senior debentures-- Falcon.. 27.2
$435.3 million 9.285% senior discount
debentures-- Falcon............................. 26.0
$631.2 million of credit facilities at a composite
current 52.9
rate of 8.4%-- Bresnan..........................
$170.0 million 8.0% senior notes-- Bresnan........ 13.6
$275.0 million 9.25% senior discount notes-- Bresnan 17.7
Interest expense on additional borrowings used to
finance 174.0
--------
acquisitions at a composite current rate of 8.8%
Total pro forma interest expense............. 481.4
Less-historical interest expense from acquired
companies................................... (310.1)
--------
Adjustment................................. $ 171.3
========
</TABLE>
An increase in the interest rate of 0.125% on all variable rate debt would
result in an increase in interest expense of $8.1 million.
(i) Represents the elimination of gain (loss) on sale of cable television
systems whose results of operations have been eliminated in (c) above.
(j) Represents an adjustment to eliminate income tax benefit as a result
of expected recurring future losses and record income tax expense.
Income tax expense represents taxes assessed by certain state
jurisdictions for certain indirect subsidiaries. The losses will not
be tax benefited, and a net deferred tax asset will not be recorded.
P-6
<PAGE> 10
(k) Represents the allocation of losses to the minority interest based on
ownership of Charter Holdco.
NOTE C: The offering adjustment of approximately $34.2 million in higher
interest expense consists of the following (dollars in millions):
<TABLE>
<CAPTION>
INTEREST
DESCRIPTION EXPENSE
----------------------------------------- --------
<S> <C>
$675.0 million of 10.00% senior notes.... $ 67.5
$325.0 million of 10.25% senior notes.... 33.3
$532.0 million of 11.75% senior discount 36.3
notes....................................
Amortization of debt issuance costs...... 5.0
--------
Total pro forma interest expense....... 142.1
Less-historical interest expense....... (107.9)
--------
Adjustment.......................... $ 34.2
========
</TABLE>
The offering adjustment to minority interest represents the allocation of
60.4% of the interest expense adjustment to minority interest.
NOTE D: From January 1, 1999 through November 9, 1999, the date of the
initial public offering of Charter Communications, Inc., Charter Investment,
Inc. provided management services to subsidiaries of Charter Communications
Operating, LLC. From and after the initial public offering of Charter
Communications Inc., such management services were provided by Charter
Communications, Inc.
NOTE E: Represents the allocation of losses to the minority interest based
on ownership of Charter Holdco. These membership units are exchangeable on a
one-for-one basis for shares of Class A common stock of Charter Communications,
Inc.
NOTE F: Basic and diluted loss per common share assume none of the
membership units of Charter Holdco or CC VIII are exchanged for shares of Class
A common stock in Charter Communications, Inc. and none of the outstanding
options to purchase membership units of Charter Holdco that will be
automatically exchanged for Charter Communications, Inc. common stock are
exercised. Basic and diluted loss per share equals net loss divided by weighted
average shares outstanding. If all the membership units were exchanged or
options exercised, the effects would be antidilutive.
NOTE G: Represents the Class A and Class B shares of common stock
outstanding as of December 31, 1999, plus the additional shares of Class A
common stock issued to the Falcon sellers when the Bresnan Acquisition closed.
NOTE H: Adjusted EBITDA represents net loss before interest, income taxes,
depreciation and amortization, minority interest, option compensation expense,
corporate expense charges, management fees, and other income (expense). Adjusted
EBITDA is presented because it is a widely accepted financial indicator of a
cable company's ability to service indebtedness. However, adjusted EBITDA should
not be considered as an alternative to income from operations or to cash flows
from operating, investing or financing activities, as determined in accordance
with generally accepted accounting principles. Adjusted EBITDA should also not
be construed as an indication of a company's operating performance or as a
measure of liquidity. In addition, because adjusted EBITDA is not calculated
identically by all companies, the presentation here may not be comparable to
other similarly titled measures of other companies. Management's discretionary
use of funds depicted by adjusted EBITDA may be limited by working capital, debt
service and capital expenditure requirements and by restrictions related to
legal requirements, commitments and uncertainties.
NOTE I: Adjusted EBITDA margin represents adjusted EBITDA as a percentage
of revenues.
P-7
<PAGE> 11
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1999
---------------------------------------------------------------------------------------
CHARTER RECENT BRESNAN OFFERING
COMMUNICATIONS, ACQUISITIONS ACQUISITION ADJUSTMENTS
INC. (NOTE A) SUBTOTAL (NOTE B) (NOTE C) TOTAL
------------- ------------ ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................ $ 133,706 $(12,908) $ 120,798 $ 6,490 $ -- $ 127,288
Accounts receivable, net................. 93,743 (151) 93,592 9,145 -- 102,737
Prepaid expenses and other............... 35,142 53 35,195 -- -- 35,195
------------- -------- ----------- ---------- -------- -----------
Total current assets................ 262,591 (13,006) 249,585 15,635 -- 265,220
Property, plant and equipment............ 3,490,573 (19,070) 3,471,503 376,541 -- 3,848,044
Franchises............................... 14,985,793 (58,068) 14,927,725 2,753,699 -- 17,681,424
Other assets............................. 227,550 (72) 227,478 1,697 50,282 279,457
------------- --------- ----------- ---------- -------- -----------
Total assets........................ $ 18,966,507 $ (90,216) $18,876,291 $3,147,572 $ 50,282 $22,074,145
============= ========== =========== ========== ======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
Expenses............................ $ 706,775 $(90,216) $ 616,559 $ 66,529 $(16,140) $ 666,948
Payables to manager of cable systems--
related party............................ 13,183 -- 13,183 -- -- 13,183
------------- -------- ----------- ---------- -------- -----------
Total current liabilities........... 719,958 (90,216) 629,742 66,529 (16,140) 680,131
Long-term debt........................... 8,936,455 -- 8,936,455 2,056,913 66,422 11,059,790
Deferred management fees-- related party. 21,623 -- 21,623 -- -- 21,623
Other long-term liabilities.............. 145,124 -- 145,124 10,020 -- 155,144
Minority interest........................ 5,381,331 -- 5,381,331 (138,772) -- 5,242,559
Redeemable securities (Note D)........... 750,937 -- 750,937 1,095,239 -- 1,846,176
Stockholders' equity..................... 3,011,079 -- 3,011,079 57,643 -- 3,068,722
------------- -------- ----------- ---------- -------- -----------
Total liabilities and stockholders'
equity........................... $ 18,966,507 $(90,216) $18,876,291 $3,147,572 $ 50,282 $22,074,145
============= ========= =========== ========== ======== ===========
</TABLE>
P-8
<PAGE> 12
NOTES TO THE UNAUDITED PRO FORMA BALANCE SHEET
NOTE A: Pro forma balance sheets for the Recent Acquisitions and the
Bresnan Acquisition consist of the following (dollars in thousands):
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
--------------------------------------------------------------------------
RECENT ACQUISITIONS
--------------------------------------------------------------------------
PRO FORMA
--------------------------------------------------------------------------
HISTORICAL ACQUISITIONS(a) DISPOSITIONS ADJUSTMENTS TOTAL
---------- --------------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents.... $ -- $ 236 $ (144) $(13,000)(c) $(12,908)
Accounts receivable, net..... -- 29 (180) -- (151)
Receivable from related
party..................... -- 125 -- (125)(d) --
Prepaid expenses and other... -- 119 (66) -- 53
-------- -------- -------- -------- --------
Total current assets..... -- 509 (390) (13,125) (13,006)
Property, plant and equipment -- 3,137 (22,207) -- (19,070)
Franchises................... -- -- (67,832) 9,764 (e) (58,068)
Other assets................. -- 819 (72) (819)(f) (72)
-------- -------- -------- -------- --------
Total assets............. $ -- $ 4,465 $(90,501) $ (4,180) $(90,216)
======== ======== ======== ======== ========
Accounts payable and accrued
expenses................. -- 285 (90,501) -- (90,216)
-------- -------- -------- -------- --------
Total current liabilities -- 285 (90,501) -- (90,216)
Long-term debt............... -- 2,702 -- (2,702)(g) --
Other long-term liabilities.. -- -- -- -- --
Minority interest............ -- -- -- -- --
Redeemable securities........ -- -- -- -- --
Equity (deficit)............. -- 1,478 -- (1,478)(j) --
-------- -------- -------- -------- --------
Total liabilities and
equity (deficit)....... $ -- $ 4,465 $(90,501) $ (4,180) $(90,216)
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
-----------------------------------------------------------
BRESNAN ACQUISITION
-----------------------------------------------------------
PRO FORMA
-----------------------------------------------------------
HISTORICAL ACQUISITIONS(a) ADJUSTMENTS TOTAL
---------- --------------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and cash equivalents.... $ 6,285 $ 205 $ -- $ 6,490
Accounts receivable, net..... 9,006 139 -- 9,145
Receivable from related
party..................... -- -- -- --
Prepaid expenses and other... -- -- -- --
-------- -------- ---------- ----------
Total current assets..... 15,291 344 -- 15,635
Property, plant and equipment 375,106 1,435 -- 376,541
Franchises................... 328,068 -- 2,425,631 2,753,699
Other assets................. 19,038 -- (17,341)(f) 1,697
-------- -------- ---------- ----------
Total assets............. $737,503 $ 1,779 $2,408,290 $3,147,572
======== ======== ========== ==========
Accounts payable and accrued
expenses................. 66,261 268 -- 66,529
-------- -------- ---------- ----------
Total current liabilities 66,261 268 -- 66,529
Long-term debt............... 895,607 -- 1,161,306 2,056,913
Other long-term liabilities.. 10,020 -- -- 10,020
Minority interest............ -- -- (138,772)(h) (138,772)
Redeemable securities........ -- -- 1,095,239 1,095,239
Equity (deficit)............. (234,385) 1,511 290,517 (j) 57,643
-------- -------- ---------- ----------
Total liabilities and
equity (deficit)....... $737,503 $ 1,779 $2,408,290 $3,147,572
======== ======== ========== ==========
</TABLE>
(a) Represents the historical balance sheets as of December 31, 1999 for
acquisitions completed subsequent to December 31, 1999.
(b) Represents the historical assets and liabilities as of December 31, 1999 of
an Indiana cable system transferred in March 2000 to InterMedia as part of
a swap of cable systems. The cable system swapped was accounted for at fair
value. No gain or loss was recorded in conjunction with the swap.
(c) Represents Charter Holdings' historical cash used to finance a portion of
an acquisition that occurred after December 31, 1999.
(d) Reflects assets retained by the seller.
(e) Substantial amounts of the purchase price have been allocated to franchises
based on estimated fair values. The allocation of these purchase prices are
as follows (dollars in thousands):
<TABLE>
<CAPTION>
BRESNAN OTHER
---------- ----------
<S> <C> <C>
Working capital................... $ (50,894) $ 99
Property, plant and equipment..... 376,541 3,137
Franchises........................ 2,753,699 9,764
Other............................. 1,697 --
---------- ----------
$3,081,043 $ 13,000
========== ==========
</TABLE>
The Bresnan Acquisition was financed through the issuance of $1.0 billion
of equity to the Bresnan sellers, $964.4 million in debt assumed and
additional borrowings under the CC VIII Operating, LLC -- Bresnan credit
facilities.
(f) Represents the elimination of the unamortized historical cost of goodwill
and deferred financing costs based on the allocation of the purchase price
(see (e) above).
P-9
<PAGE> 13
(g) Represents the following (dollars in millions):
<TABLE>
<S> <C>
Total historical debt.............................. $ (898.3)
Long-term debt:
8.0% senior notes-- Bresnan................... 171.7
9.25% senior discount notes-- Bresnan......... 196.0
Credit facilities:
Charter Operating........................... 885.0
CC VII - Falcon............................. 173.0
CC VIII Operating-- Bresnan................. 631.2
---------
Total long-term debt.......................... 2,056.9
---------
Adjustment.................................... $ 1,158.6
=========
</TABLE>
(h) Represents equity interests in subsidiaries issued to the Bresnan sellers
of $1.0 billion, loss on issuance of equity by Charter Holdco of $57.6
million, and the adjustment to record redeemable securities (see (i)).
(i) The Bresnan sellers who acquired common membership units in Charter Holdco
and preferred membership units in CC VIII may have rescission rights
arising from possible violations of Section 5 of the Securities Act of
1933, as amended, in connection with the offers and sales of those equity
interests. Accordingly, the maximum potential cash obligation related to
the rescission rights, estimated at $1.1 billion, has been excluded from
minority interest, and is classified as redeemable securities. One year
after the date of issuance of these equity interests (when these rescission
rights will have expired), the amounts will be reclassified to minority
interest.
(j) Represents the elimination of the historical equity of recent acquisitions
of $1.5 million and historical deficits of $234.4 million related to the
Bresnan cable system as well as the gain on issuance of equity by Charter
Holdco of $57.6 million.
NOTE C: Offering adjustments represent additional long-term debt of $1.3
billion from the issuance and sale of the January 2000 Charter Holdings Notes,
the use of the proceeds from the January 2000 Charter Holdings Notes to
repurchase the Avalon 9.375% senior subordinated notes, Falcon debentures and
Bresnan notes including accrued and unpaid interest, pursuant to the Avalon,
Falcon and Bresnan change of control offers, and the addition to other assets of
the expenses paid in connection with the issuance and sale of the original notes
which were capitalized and will be amortized over the term of the related debt.
NOTE D: The Rifkin, Falcon, Helicon and Bresnan sellers who own equity
interests in Charter Communications, Inc. and certain direct and indirect
subsidiaries may have rescission rights arising out of possible violations of
Section 5 of the Securities Act of 1933, as amended, in connection with the
offers and sales of those equity interests. Accordingly, the maximum potential
cash obligation related to the rescission rights, estimated at $1.8 billion, has
been excluded from stockholders' equity and minority interest, and classified as
redeemable securities. One year after the dates of issuance of these equity
interests (when these rescission rights will have expired), we will reclassify
the respective amounts to stockholders' equity and minority interest.
P-10
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Charter Communications, Inc. has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CHARTER COMMUNICATIONS, INC.,
registrant
Dated April 28, 2000 By: /s/ KENT D. KALKWARF
--------------------------------------------
Name: Kent D. Kalkwarf
Title: Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
S-1
