8-K – 2026-07-23 – 0001104659-26-086302-xbrl.zip

REVENUES  
$ 13,597    
$ 3,059    
$ 13  
2a    
$ 16,669  

   
       
       
     
     
     

COSTS AND EXPENSES:  
       
       
     
     
     

Operating costs and expenses (exclusive of items shown separately below)  
  8,163    
  1,740    
  (52 )
2b    
  9,851  

Depreciation and amortization  
  2,211    
  538    
  114  
2c    
  2,863  

Other operating expenses, net  
  15    
  46    
  2  
2d    
  63  

   
  10,389    
  2,324    
  64  
     
  12,777  

Income from operations  
  3,208    
  735    
  (51 )
     
  3,892  

   
       
       
     
     
     

OTHER INCOME (EXPENSES):  
       
       
     
     
     

Interest expense, net  
  (1,256 )  
  (111 )  
  (137 )
2e    
  (1,504 )

Other expenses, net  
  (124 )  
  16    
  (17 )
2f    
  (125 )

   
  (1,380 )  
  (95 )  
  (154 )
     
  (1,629 )

   
       
       
     
     
     

Income before income taxes  
  1,828    
  640    
  (205 )
     
  2,263  

Income tax expense  
  (465 )  
  (138 )  
  159  
2g    
  (444 )

Consolidated net income  
  1,363    
  502    
  (46 )
     
  1,819  

Less: Net income attributable to noncontrolling interests  
  (200 )  
  —    
  (520 )
2h    
  (720 )

Net income attributable to Charter shareholders  
$ 1,163    
$ 502    
$ (566 )
     
$ 1,099  

   
       
       
     
     
     

EARNINGS PER COMMON SHARE:  
       
       
     
     
     

Basic  
$ 9.27    
       
     
2i    
$ 8.79  

Diluted  
$ 9.17    
       
     
2i    
$ 8.70  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:  
       
       
     
     
     

Basic  
  125    
       
     
2i    
  125  

Diluted  
  127    
       
     
2i    
  127  

 

See accompanying “Notes to Unaudited Pro

Forma Condensed Combined Financial Statements”

 

4

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT

OF OPERATIONS  

YEAR ENDED DECEMBER 31, 2025

(dollars and weighted average shares outstanding

in millions, except per share amounts)

 

   
Charter


(Historical)    
Cox


Communications


(Historical)    
Pro Forma


Adjustments  
     
Pro Forma
Combined  

REVENUES  
$ 54,774    
$ 12,531    
$ 54  
2a    
$ 67,359  

   
       
       
     
     
     

COSTS AND EXPENSES:  
       
       
     
     
     

Operating costs and expenses (exclusive of items shown separately below)  
  32,739    
  7,543    
  (222 )
2b    
  40,060  

Depreciation and amortization  
  8,711    
  2,158    
  505  
2c    
  11,374  

Impairment of intangible assets  
  —    
  5,604    
  —  
     
  5,604  

Other operating expenses, net  
  416    
  192    
  153  
2d    
  761  

   
  41,866    
  15,497    
  436  
     
  57,799  

Income (loss) from operations  
  12,908    
  (2,966 )  
  (382 )
     
  9,560  

   
       
       
     
     
     

OTHER INCOME (EXPENSES):  
       
       
     
     
     

Interest expense, net  
  (5,042 )  
  (424 )  
  (568 )
2e    
  (6,034 )

Other expenses, net  
  (408 )  
  (30 )  
  (30 )
2f    
  (468 )

   
  (5,450 )  
  (454 )  
  (598 )
     
  (6,502 )

   
       
       
     
     
     

Income (loss) before income taxes  
  7,458    
  (3,420 )  
  (980 )
     
  3,058  

Income tax expense  
  (1,692 )  
  772    
  425  
2g    
  (495 )

Consolidated net income (loss)  
  5,766    
  (2,648 )  
  (555 )
     
  2,563  

Less: Net income attributable to noncontrolling interests  
  (779 )  
  —    
  (388 )
2h    
  (1,167 )

Net income (loss) attributable to Charter shareholders  
$ 4,987    
$ (2,648 )  
$ (943 )
     
$ 1,396  

   
       
       
     
     
     

EARNINGS PER COMMON SHARE:  
       
       
     
     
     

Basic  
$ 36.90    
       
     
2i    
$ 10.34  

Diluted  
$ 36.21    
       
     
2i    
$ 10.15  

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:  
       
       
     
     
     

Basic  
  135    
       
     
2i    
  135  

Diluted  
  138    
       
     
2i    
  138  

 

See accompanying “Notes to Unaudited Pro

Forma Condensed Combined Financial Statements”

 

5

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL STATEMENTS

 

Note 1. Cox Transactions Pro Forma Balance

Sheet Adjustments

 

For purposes of the unaudited pro forma financial

statements, the preliminary purchase price is assumed to be approximately $14.3 billion based on preliminary fair value estimates for

each component of consideration transferred to Cox Enterprises. The Charter Holdings common units which are exchangeable into Charter

Class A common stock are fair valued based on a $142.21 closing price of Charter Class A common stock on June 30, 2026,

representing the last business day of the most recently completed month. The Charter Holdings convertible preferred units fair value

estimate is based on an initial preferred instrument multiple above the $6.0 billion aggregate liquidation preference contemplating a

6.875% preferred cash dividend and estimated fair value of Charter Class A common stock upon conversion. The final purchase price

will be different from the preliminary purchase price presented as the fair value of the equity portion of the Cox Transactions consideration

will be based on the fair value of Charter Class A common stock at closing.

 

(in millions, except price per share

data)  
   

Charter Holdings common units issued to Cox Enterprises  
  33.6  

Closing price as of June 30, 2026  
$ 142.21  

Estimated fair value of Charter Holdings common units issued

to Cox Enterprises  
$ 4,776  

Estimated fair value of Charter Holdings convertible preferred

units issued to Cox Enterprises  
  5,378  

Cash paid to Cox Enterprises  
  4,150  

Total preliminary

purchase price  
$ 14,304  

 

The table below presents the allocation of the

preliminary purchase price to the identifiable assets acquired and liabilities assumed at their respective estimated fair values as if

the Cox Transactions had closed on March 31, 2026.

 

(in millions)  
   

Current assets  
$ 1,105  

Property, plant and equipment  
  16,500  

Customer relationships  
  3,600  

Franchises  
  6,475  

Other noncurrent assets  
  640  

Current liabilities (includes current portion of long-term

debt of $1.0 billion)  
  (2,846 )

Long-term debt  
  (10,122 )

Deferred income taxes  
  (594 )

Other long-term liabilities  
  (454 )

   
$ 14,304  

 

The preliminary estimates are based upon currently

available information. As such, additional assets and liabilities may be identified and reflected in the final purchase price allocation.

 

Upon finalization of the fair value assessment,

Charter anticipates the finalized fair values of the net assets acquired will differ from the preliminary assessment outlined above.

Generally, changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded as adjustments

to those assets and liabilities and residual amounts will be allocated to goodwill. If upon completion of the valuations, the fair values

are greater or less than the amounts included in the preliminary purchase price allocation above, such a change would not likely have

a material impact on the financial position or results of operations of Charter.

 

6

 

 

The following summarizes the pro forma balance

sheet adjustments relating to the Cox Transactions:

 

(a) Pro forma adjustment of $154 million to cash

and cash equivalents represents the use of cash to pay approximately $142 million of remaining

transaction costs not already reflected in the historical financial statements including

advisor fees and other expenses directly related to the Cox Transactions, as well as $28

million use of cash to pay debt issuance costs, offset by $16 million source of cash from

Cox Enterprises to reflect minimum operating cash of $100 million to be assumed at closing

per the Transaction Agreement. Refer to (e) below for sources and uses of cash.

 

(b) Represents the elimination of the intercompany

note receivable from Cox Enterprises not assumed in the Cox Transactions.

 

(c) For pro forma purposes, preliminary estimates

are used for allocations of the purchase price to Cox Communications' property, plant and

equipment; customer relationships; and franchises. As of the filing date, Charter has not

completed the detailed valuation studies necessary to determine the fair value of Cox Communications'

assets to be acquired and liabilities to be assumed, or the related allocations of purchase

price. Accordingly, the allocation of purchase price to acquired tangible and intangible

assets is based on preliminary fair value estimates and is subject to revision following

management's final analysis, with assistance from third-party valuation advisors, upon completion

of the Cox transactions. The estimated tangible and intangible asset values and their remaining

useful lives may materially change based on information obtained during the acquisition process

and circumstances occurring prior to closing.

 

(d) Represents the write-down of the Cox Communications

trade name intangible under the market participant assumption that it will not continue as

a market-based intangible. The Spectrum trade name will be used to market or promote the

products and services of the combined company across the Cox footprint whereas the Cox Communications

trade name will become the name of the combined company within one year of closing the Cox

Transactions.

 

(e) Cox Communications’ debt assumed was

adjusted to the most recent available estimated fair value using quoted market values as

of June 30, 2026 representing the last business day of the most recently completed month.

This adjustment resulted in a decrease in long-term debt of approximately $1.3 billion. The

fair value adjustment to long-term debt is a result of quoted market values of Cox Communications’

debt being lower than the face amount of the related debt as a result of market interest

rates being higher than the stated interest rate of the debt. In acquisition accounting,

this results in the recognition of a debt discount that is amortized as an increase to interest

expense over the remaining life of the debt. In addition, long-term debt was also adjusted

to reflect $4.15 billion new debt raised, less debt issuance costs, to fund the preliminary

purchase price of the Cox Transactions. This includes an additional $150 million for Cox

Communications’ repayment of bond at maturity in June 2025 that they no longer

intend to refinance before closing of the Cox Transactions.

 

The following table presents pro forma

cash sources and uses as a result of the Cox Transactions.

 

(in millions)  
   

Sources:  
     

Proceeds from issuance of long-term debt  
$ 4,150  

Cox Communications cash and cash equivalents assumed  
  84  

Cox Enterprises cash contributed to reflect minimum operating

cash  
  16  

Charter cash and cash equivalents on-hand  
  70  

   
$ 4,320  

Uses:  
     

Cash portion of purchase price paid to Cox Enterprises  
$ 4,150  

Remaining transaction costs including advisor fees and

other expenses  
  142  

Debt issuance costs  
  28  

   
$ 4,320  

 

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(f) For pro forma purposes, deferred taxes are

presented dependent on the anticipated tax treatment for the Contribution and the Equity

Sale components of the Cox Transactions. The Contribution is treated as a nontaxable partnership

contribution and no Charter deferred taxes are assumed to be recorded in purchase accounting

as the excess book basis of net assets contributed is associated with the noncontrolling

interest partner, Cox Enterprises, and not the controlling interest partner, Charter. The

Equity Sale is treated as a taxable stock acquisition and the tax attributes of the Cox Communications

subsidiaries acquired are assumed to carry over to Charter and net deferred tax liabilities

of $594 million are estimated to be recorded in purchase accounting reflecting historical

temporary difference of these subsidiaries contemplating additional book step-up and applying

an estimated tax rate of 25%. Lastly, on the relative ownership adjustment of Charter Holdings,

a $945 million reduction in deferred tax liabilities is estimated for the carrying value

adjustment to Charter’s common units held in Charter Holdings applying an estimated

tax rate of 25%. Refer to (h) below on relative ownership adjustment to shareholders’

equity.

 

(g) Pro forma adjustments to controlling interests

and noncontrolling interests in shareholders’ equity are reflected as follows.

 

(in millions)  
   

Controlling Interests:  
     

Elimination of Cox Communications’ historical

equity  
$ (11,479 )

Payment of remaining transaction costs including advisor

fees  
  (142 )

Relative ownership adjustment of Charter

Holdings’ common unit equity balances, net of tax  
  (2,835 )

   
$ (14,456 )

   
     

Noncontrolling Interests:  
     

Fair value of the Charter Holdings common units issued to

Cox Enterprises  
$ 4,776  

Fair value of the Charter Holdings convertible preferred

units issued to Cox Enterprises  
  5,378  

Relative ownership adjustment of Charter

Holdings’ common unit equity balances  
  3,780  

   
$ 13,934  

 

The Charter Holdings common units issued to Cox

Enterprises as a portion of the consideration for the Contribution initially are measured at their fair value of $4.8 billion in accordance

with acquisition accounting. However, upon new partner entry to Charter Holdings, the carrying amounts of the common units of the controlling

interest (Charter) and noncontrolling interests (Cox Enterprises and A/N) are adjusted to reflect their relative effective common ownership

interest in Charter Holdings. Relative ownership adjustment results in an increase to noncontrolling interests of approximately $3.8 billion

and a corresponding decrease to additional paid-in capital of $3.8 billion, net of a $945 million reduction in deferred income

taxes, for Charter’s decrease in book basis in Charter Holdings.

 

Note 2. Cox Transactions Pro Forma Statement

of Operations Adjustments

 

The following summarizes the pro forma statement

of operations adjustments relating to the Cox Transactions.

 

(a) Proforma adjustments to revenues of $13 million

and $54 million for the three months ended March 31, 2026 and year ended December 31,

2025, respectively, represent reclassifications of customer revenues treated as contra-expense

in Cox Communications historical financials in order to conform to Charter’s financial

statement presentation including i) cash collected from customers to recover collection costs

reclassed from operating costs and expenses, ii) cash collected from customers for unreturned

equipment fees reclassed from other operating expenses, net, and iii) real estate sublease

income reclassed from other expenses, net.

 

(b) Pro forma adjustments to operating costs

and expenses of $52 million and $222 million for the three months ended March 31, 2026

and year ended December 31, 2025, respectively, represents costs related to excluded

parent company obligations and intercompany cost allocations from Cox Enterprises that are

to be terminated by Cox Communications at the closing in connection with the Transaction

Agreement. Following the closing, these costs will not be incurred by Charter. Pro forma

adjustments to operating costs and expenses also includes the reclassification of customer

revenues treated as contra-expense in Cox Communications historical financials in order to

conform to Charter’s financial statement presentation. See Note 2(a).

 

8

 

 

(c) Depreciation and amortization increased by

$114 million and $505 million for the three months ended March 31, 2026 and year ended

December 31, 2025, respectively, as follows.

 

   
Three

Months Ended March 31, 2026    
Year Ended

December 31, 2025  

(in millions)  
Depreciation    
Amortization    
Total    
Depreciation    
Amortization  
Total  

Cox Communications pro forma expense based on

fair value  
$ 516    
$ 136    
$ 652    
$ 2,063    
$ 600  
$ 2,663  

Cox Communications historical expense  
       
       
  (538 )  
       
     
  (2,158 )

   
       
       
$ 114    
       
     
$ 505  

 

The increase was estimated using a

preliminary average remaining useful life of 8 years for property, plant and equipment and 11 years for customer relationships. Property,

plant and equipment are depreciated using a straight-line depreciation method. Customer relationships are amortized using an accelerated

method (sum of the years’ digits) to reflect the period over which the relationships are expected to generate cash flows. Following

the acquisition, Cox Communications’ pro forma customer relationships of $3.6 billion would result in amortization expense under

the accelerated method of $600 million for year 1, $545 million for year 2, $491 million for year 3, $436 million for year 4, $382 million

for year 5 and $1.1 billion thereafter. The effect of a one-year decrease in the weighted average useful lives of property, plant and

equipment and customer relationships would be an increase to depreciation and amortization expense of approximately $85 million and $349

million for the three months ended March 31, 2026 and year ended December 31, 2025, respectively, while the effect of a one-year

increase would result in a decrease of approximately $67 million and $275 million for the three months ended March 31, 2026 and

year ended December 31, 2025, respectively. The pro forma adjustments are based on current estimates and may not reflect actual

depreciation and amortization once the purchase price allocation is finalized and final determination of remaining useful lives are made.

 

(d) Pro forma adjustment to increase other operating

expenses, net by $153 million for the year ended December 31, 2025 primarily represents

the payment of remaining transaction costs not already reflected in the historical financial

statements including advisor fees and other expenses directly related to the Cox Transactions.

Transaction costs of $15 million and $128 million are included in the historical income statement

of Charter within other operating expenses, net for the three months ended March 31,

2026 and year ended December 31, 2025, respectively. Pro forma adjustments to other

operating expenses, net for the three months ended March 31, 2026 and year ended December 31,

2025 also includes the reclassification of customer revenues treated as contra-expense in

Cox Communications historical financials in order to conform to Charter’s financial

statement presentation. See Note 2(a).

 

(e) Interest expense, net increased by $137 million

and $568 million for the three months ended March 31, 2026 and year ended December 31,

2025, respectively, as follows.

 

(in millions)  
Three

Months Ended


March 31, 2026    
Year

Ended


December 31, 2025  

Additional interest expense on new debt issued  
$ (68 )  
$ (270 )

Elimination of intercompany note interest income  
  (41 )  
  (188 )

Amortization of discount as a result of adjusting assumed

Cox Communications’ long-term debt to fair value  
  (29 )  
  (118 )

Amortization of new debt issuance costs  
  (1 )  
  (2 )

Elimination of amortization related to

Cox Communications’ debt discounts and debt issuance costs  
  2    
  10  

   
$ (137 )  
$ (568 )

 

9

 

 

(f) Pro forma adjustment to increase other expenses,

net by $17 million and $30 million for the three months ended March 31, 2026 and year

ended December 31, 2025, respectively, primarily represents the elimination of the Cox

Enterprises allocated non-service component of pension benefit. Following the closing, these

pension benefits will not be incurred by Charter. Pro forma adjustments to other expenses,

net also includes the reclassification of customer revenues treated as contra-expense in

Cox Communications historical financials in order to conform to Charter’s financial

statement presentation. See Note 2(a).

 

(g) The pro forma adjustment to income tax expense

of $159 million and $425 million for the three months ended March 31, 2026 and year

ended December 31, 2025, respectively, was determined by removing Cox Communications’

income tax expense and applying an estimated Charter tax rate of 25% to pro forma income

before taxes allocated to Charter after the allocation of profits to the noncontrolling interest

holders.

 

(h) Net income attributable to noncontrolling

interest increased by $520 million and $388 million for the three months ended March 31,

2026 and year ended December 31, 2025, respectively, as shown in the following table.

All ownership amounts are calculated using whole numbers; minor differences may exist due

to rounding.

 

(in millions)  
Three

Months Ended


March 31, 2026    
Year

Ended


December 31, 2025  

Charter Holdings pro forma income before income

taxes  
$ 2,263    
$ 3,058  

Charter Holdings 6.875% cash dividend

to Cox Enterprises preferred unit holders  
  (103 )  
  (413 )

Charter Holdings pro forma income before income taxes available

for allocation to common unit holders  
$ 2,160    
$ 2,645  

Noncontrolling interest in Charter Holdings

excluding preferred units based on pro forma common unit ownership of Charter Holdings (19.5% Cox Enterprises and 9.0% A/N)  
  28.5 %  
  28.5 %

Noncontrolling interest expense - Charter Holdings common

units  
$ 617    
$ 754  

Noncontrolling interest expense - Charter Holdings convertible

preferred units  
  103    
  413  

Eliminate historical noncontrolling interest

expense recorded based on historical A/N common unit ownership of Charter Holdings  
  (200 )  
  (779 )

   
$ 520    
$ 388  

 

10

 

 

(i) The following table sets forth the computation

of pro forma basic and diluted earnings per share for the three months ended March 31,

2026 and year ended December 31, 2025. Not included in the computation of pro forma

diluted earnings per share because the effect would be anti-dilutive are the 33.6 million

Charter Holdings common units and the 12.6 billion equivalent common units for the Charter

Holdings convertible preferred units ($6.0 billion par value divided by $477.41 initial conversion

price) issued to Cox Enterprises on an if-converted, if-exchanged basis.

 

(in millions,

except per share data)  
Three

Months Ended


March 31, 2026    
Year

Ended


December 31, 2025  

Numerator:  
       
     

Pro forma net income attributable

to common stock  
$ 1,099    
$ 1,396  

   
       
     

Denominator:  
       
     

Pro forma Charter weighted average shares outstanding

(basic)  
  125    
  135  

Effect of dilutive securities:  
       
     

Assumed exercise

or issuance of shares relating to stock plans  
  2    
  3  

Pro forma weighted average common shares outstanding,

diluted  
  127    
  138  

   
       
     

Pro forma net income per share attributable to common stock:  
       
     

Basic  
$ 8.79    
$ 10.34  

Diluted  
$ 8.70    
$ 10.15  

 

11