8-K – 2026-07-23 – tm2621145d1_ex99-4.htm

EX-99.4
5
tm2621145d1_ex99-4.htm
EXHIBIT 99.4

 

Exhibit 99.4

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
STATEMENTS

 

The accompanying unaudited pro forma condensed
combined financial statements as of and for the three months ended March 31, 2026 and for the year ended December 31, 2025
are intended to reflect the impact of the Cox Transactions on the consolidated financial statements of Charter Communications, Inc.
(“Charter”), as if the Cox Transactions had occurred as of March 31, 2026 for the unaudited pro forma condensed combined
balance sheet and as of January 1, 2025 for the unaudited pro forma condensed combined statements of operations. The accompanying
unaudited pro forma financial statements present the pro forma financial position and results of operations of Charter based on the historical
financial statements and accounting records of Charter and Cox Communications, Inc (“Cox Communications”) and the related
pro forma transaction accounting adjustments as described in the accompanying notes. The transaction accounting adjustments are intended
to reflect U.S. generally accepted accounting principles (“GAAP”) to illustrate the effects of the transactions on Charter’s
historical financial statements.

 

The Transactions

 

On May 16, 2025, Charter, Charter Communications
Holdings, LLC (“Charter Holdings”), and Cox Enterprises, Inc. (“Cox Enterprises”) entered into a Transaction
Agreement (the “Transaction Agreement”) pursuant to which (i) Cox Enterprises will sell and transfer to Charter 100%
of the equity interests of certain subsidiaries of Cox Communications that conduct Cox Communications’ commercial fiber and managed
IT and cloud services businesses (the “Equity Sale”), (ii) Cox Enterprises will contribute the equity interests of Cox
Communications and certain other assets (other than certain excluded assets) primarily related to Cox Communications’ residential
cable business to Charter Holdings (the “Contribution”), and (iii) Cox Enterprises will pay $1.00 to Charter (collectively,
the “Cox Transactions”). Under the Transaction Agreement, Charter and Cox Enterprises may designate one or more wholly owned
subsidiaries to take actions with respect to Charter and Cox Enterprises, respectively.

 

Pursuant to the Transaction Agreement, at the
closing of the Cox Transactions:

 

· in consideration of the Equity Sale, Charter
will pay $3.5 billion in cash to Cox Enterprises;

 

· in consideration of the Contribution,
Charter Holdings will (i) pay to Cox Enterprises $650 million in cash and (ii) issue
to Cox Enterprises convertible preferred units of Charter Holdings with an aggregate liquidation
preference of $6.0 billion, which will pay a 6.875% dividend per annum, and approximately
33.6 million Charter Holdings common units. The Charter Holdings convertible preferred units
will be convertible into Charter Holdings common units, with an initial conversion price
of $477.41, subject to certain adjustments. The Charter Holdings common units will be exchangeable
by the holder, in certain circumstances, for cash or, at the election of Charter, Charter
Class A common stock on a one-for-one basis, subject to certain adjustments; and

 

· in consideration of the $1.00 payment
from Cox Enterprises to Charter, Charter will issue to Cox Enterprises one share of the newly
created Charter Class C common stock. The Charter Class C common stock will be
equivalent, economically, to the outstanding Charter Class A common stock and the Charter
Class B common stock but will have a number of votes per share that reflect the voting
power of the Charter Holdings common units and the Charter Holdings convertible preferred
units held by Cox Enterprises on an as-converted, as-exchanged basis.

 

The combined entity will assume Cox Communications’
approximately $12.4 billion in outstanding net debt and finance leases.

 

Basis of Presentation

 

The unaudited pro forma financial statements
are based on (i) the unaudited consolidated financial statements of Charter as of and for the three months ended March 31,
2026 contained in Charter’s Quarterly Report on Form 10-Q filed with the SEC on April 24, 2026, (ii) the unaudited
consolidated financial statements of Cox Communications as of and for the three months ended March 31, 2026 contained in this Current
Report on Form 8-K, (iii) the audited consolidated financial statements of Charter as of and for the year ended December 31,
2025 contained in Charter’s Annual Report on Form 10-K filed with the SEC on January 30, 2026, and (iv) the audited
consolidated financial statements of Cox Communications as of and for the year ended December 31, 2025 contained in this Current
Report on Form 8-K.

 

1

 

 

The Cox Transactions will be accounted for using
the acquisition method of accounting with Charter as the accounting acquirer. As of the date of this current report, Charter has not
completed the detailed valuation studies necessary to arrive at final estimates of the fair market value of the assets to be acquired
and the liabilities to be assumed and the related allocations of purchase price, nor has it identified all adjustments necessary to conform
Cox Communications to Charter’s accounting policies. As indicated in Note 1 to the unaudited pro forma financial statements, based
on information currently available, Charter has made certain adjustments to the historical book values of the assets and liabilities
of Cox Communications to reflect preliminary estimates of fair values necessary to prepare the unaudited pro forma financial statements.
Actual results may differ from these unaudited pro forma financial statements once the Cox Transactions are completed which includes
determining the final purchase price for Cox Communications, completing the valuation studies necessary to finalize the required purchase
price allocations, and identifying any additional conforming accounting policy changes for Cox Communications. There can be no assurance
that such finalization will not result in material changes.

 

The unaudited pro forma financial statements
are provided for illustrative purposes only and are based on available information and assumptions that Charter believes are reasonable
and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of Charter
would have been had the Cox Transactions occurred on the dates indicated, nor are they necessarily indicative of future consolidated
results of operations or consolidated financial position. The actual financial position and results of operations will differ, perhaps
significantly, from the pro forma amounts reflected herein due to a variety of factors, including access to additional information, changes
in value not currently identified and changes in operating results following the date of the pro forma financial statements. The assumptions
underlying the pro forma adjustments are described in greater detail in the accompanying notes to the unaudited pro forma condensed combined
financial statements.

 

Items Not Adjusted in the Unaudited Pro
Forma Financial Information

 

The unaudited pro forma financial statements
do not reflect all reclassifications or adjustments to conform the Cox Communications financial statement presentation or accounting
policies to those adopted by Charter. At this time, Charter is not aware of any intercompany transactions that would have a material
impact on the unaudited pro forma financial statements that are not reflected in the pro forma adjustments. Further review may identify
additional intercompany transactions, reclassifications or differences between the accounting policies of the companies that, when conformed,
could have a material impact on the unaudited pro forma financial statements of the combined company.

 

The unaudited pro forma financial statements
do not include any adjustment for liabilities or related costs that may result from integration activities, since management has not
completed the process of making these assessments. Significant liabilities and related costs may ultimately be recorded for employee
severance or relocation, costs of vacating some facilities and costs associated with other exit and integration activities. The unaudited
pro forma statements of operations also do not include any revenue or expense synergies or dis-synergies resulting from the Cox Transactions.

 

In connection with the Cox Transactions, at the
closing, Charter, Cox Enterprises and Advance/Newhouse Partnership (“A/N”) will enter into the amended tax receivables agreement,
which will set forth the terms pursuant to which Charter will pay Cox Enterprises and A/N, as applicable, for tax benefits arising from
Cox Enterprises’ or A/N’s potential future exchanges of their respective Charter Holdings common units and Charter Holdings
convertible preferred units, as applicable, into cash or Charter Class A common stock pursuant to the amended exchange agreement.
The amended tax receivables agreement will provide for a payment by Charter of 50% of the tax benefits when realized by Charter from
the step-up in tax basis resulting from any such future exchanges. A/N is currently party to the existing tax receivables agreement with
Charter, and such agreement will be amended and restated by the amended tax receivables agreement at the closing. Charter has not recorded
a pro forma adjustment for the tax receivables agreement with Cox Enterprises as a contingent consideration obligation in the preliminary
purchase price allocation as it is impractical to estimate its fair value since the tax benefit is dependent on uncertain future events
that are outside Charter’s control. A future exchange is not based on a fixed and determinable date and the exchange is not certain
to occur.

 

2

 

 

UNAUDITED PRO FORMA CONDENSED
COMBINED BALANCE SHEET

AS OF MARCH 31,
2026

(dollars in millions)

 

   
Charter

(Historical)    
Cox

Communications

(Historical)    
Pro Forma

Adjustments  
     
Pro Forma
Combined  

ASSETS  
       
       
     
     
     

CURRENT ASSETS:  
       
       
     
     
     

Cash and cash equivalents  
$ 517    
$ 84    
$ (154 )
1a    
$ 447  

Accounts receivable, net  
  3,510    
  650    
  —  
     
  4,160  

Amounts due from Cox Enterprises, Inc.  
  —    
  4,154    
  (4,154 )
1b    
  —  

Prepaid expenses and other current assets  
  933    
  355    
  —  
     
  1,288  

Total current assets  
  4,960    
  5,243    
  (4,308 )
     
  5,895  

   
       
       
     
     
     

INVESTMENT IN CABLE PROPERTIES:  
       
       
     
     
     

Property, plant and equipment, net  
  47,198    
  12,534    
  3,966  
1c    
  63,698  

Customer relationships, net  
  324    
  485    
  3,115  
1c    
  3,924  

Franchises  
  67,471    
  10,275    
  (3,800 )
1c    
  73,946  

Goodwill  
  29,710    
  1,260    
  (1,260 )
1c    
  29,710  

Total investment in cable properties, net  
  144,703    
  24,554    
  2,021  
     
  171,278  

   
       
       
     
     
     

OTHER NONCURRENT ASSETS  
  4,981    
  991    
  (351 )
1d    
  5,621  

   
       
       
     
     
     

Total assets  
$ 154,644    
$ 30,788    
$ (2,638 )
     
$ 182,794  

   
       
       
     
     
     

LIABILITIES AND SHAREHOLDERS’ EQUITY  
       
       
     
     
     

CURRENT LIABILITIES:  
       
       
     
     
     

Accounts payable, accrued and other current liabilities  
$ 12,375    
$ 1,804    
$ —  
     
$ 14,179  

Current portion of long-term debt  
  —    
  1,042    
  —  
     
  1,042  

Total current liabilities  
  12,375    
  2,846    
  —  
     
  15,221  

   
       
       
     
     
     

LONG-TERM DEBT  
  94,414    
  11,464    
  2,780  
1e    
  108,658  

EQUIPMENT INSTALLMENT PLAN FINANCING FACILITY  
  1,596    
  —    
  —  
     
  1,596  

DEFERRED INCOME TAXES  
  20,049    
  4,545    
  (4,896 )
1f    
  19,698  

OTHER LONG-TERM LIABILITIES  
  5,140    
  454    
  —  
     
  5,594  

   
       
       
     
     
     

SHAREHOLDERS’ EQUITY:  
       
       
     
     
     

Controlling interests  
  16,385    
  11,479    
  (14,456 )
1g    
  13,408  

Noncontrolling interests  
  4,685    
  —    
  13,934  
1g    
  18,619  

Total shareholders’ equity  
  21,070    
  11,479    
  (522 )
     
  32,027  

   
       
       
     
     
     

Total liabilities and shareholders’ equity  
$ 154,644    
$ 30,788    
$ (2,638 )
     
$ 182,794  

 

 

See accompanying “Notes to Unaudited Pro
Forma Condensed Combined Financial Statements”

 

3

 

 

UNAUDITED PRO FORMA CONDENSED
COMBINED STATEMENT OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2026

(dollars and weighted average shares outstanding
in millions, except per share amounts)

 

   
Charter

(Historical)    
Cox

Communications

(Historical)    
Pro Forma

Adjustments  
     
Pro Forma
Combined  

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  

 

7

 

 

(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