Form 8-K
8-K — CHARTER COMMUNICATIONS, INC. /MO/
Accession: 0001104659-26-089522
Filed: 2026-08-03
Period: 2026-08-03
CIK: 0001091667
SIC: 4841 (CABLE & OTHER PAY TELEVISION SERVICES)
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — tm2621789d1_8k.htm (Primary)
EX-23.1 — EXHIBIT 23.1 (tm2621789d1_ex23-1.htm)
EX-99.1 — EXHIBIT 99.1 (tm2621789d1_ex99-1.htm)
EX-99.2 — EXHIBIT 99.2 (tm2621789d1_ex99-2.htm)
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8-K — FORM 8-K
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): August 3,
2026
Charter Communications, Inc.
CCO Holdings, LLC
CCO Holdings Capital Corp.
(Exact
name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation
or organization)
001-33664
84-1496755
001-37789
86-1067239
333-112593-01
20-0257904
(Commission File Number)
(I.R.S. Employer Identification Number)
400 Washington Blvd.
Stamford, Connecticut 06902
(Address of principal executive offices including
zip code)
(203) 905-7801
(Registrant’s telephone number, including
area code)
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading
Symbol(s)
Name
of each exchange on which registered
Class A Common Stock, $.001 Par Value
CHTR
NASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b- 2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Co-Registrant CIK
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Co-Registrant Amendment Flag
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Co-Registrant Form Type
8-K
Co-Registrant DocumentPeriodEndDate
2026-08-3
Incorporate State Country Code
Delaware
Co-Registrant Written Communications
false
Co-Registrant Solicitating Materials
false
Co-Registrant PreCommencement Tender Offer
false
Co-Registrant PreCommencement Issuer Tender Offer
false
Co-Registrant AddressLine1
400 Washington Blvd.
Co-Registrant City or Town
Stamford
Co-Registrant State
Connecticut
Co-Registrant Postal Zip code
06901
Co-Registrant City area code
203
Co-Registrant Local Phone number
905-7801
Co-Registrant Emerging Growth Company
false
Co-Registrant CIK
0001271834
Co-Registrant Amendment Flag
false
Co-Registrant Form Type
8-K
Co-Registrant DocumentPeriodEndDate
2026-08-3
Incorporate State Country Code
Delaware
Co-Registrant Written Communications
false
Co-Registrant Solicitating Materials
false
Co-Registrant PreCommencement Tender Offer
false
Co-Registrant PreCommencement Issuer Tender Offer
false
Co-Registrant AddressLine1
400 Washington Blvd.
Co-Registrant City or Town
Stamford
Co-Registrant State
Connecticut
Co-Registrant Postal Zip code
06901
Co-Registrant City area code
203
Co-Registrant Local Phone number
905-7801
Co-Registrant Emerging Growth Company
false
ITEM 8.01. OTHER EVENTS.
As previously disclosed, on
May 16, 2025, Charter Communications, Inc., a Delaware corporation (“Charter”), entered into a Transaction Agreement (the
“Transaction Agreement”) by and among Charter, Charter Communications Holdings, LLC, a Delaware limited liability company
and subsidiary of Charter (“Charter Holdings”), and Cox Enterprises, Inc., a Delaware corporation (“Cox Enterprises”),
pursuant to which (i) Cox Enterprises will sell and transfer to Charter 100% of the equity interests of certain subsidiaries of Cox Communications,
Inc., a wholly owned subsidiary of Cox Enterprises (“Cox Communications”), that conduct Cox Communications’ commercial
fiber and managed IT and cloud services businesses, (ii) Cox Enterprises will contribute the equity interests of Cox Communications (after
its conversion into a limited liability company pursuant to a preclosing restructuring) and certain other assets (other than certain excluded
assets) primarily related to Cox Communications’ residential cable business to Charter Holdings and (iii) Cox Enterprises will pay
$1.00 to Charter (the transactions described in clauses (i)-(iii), collectively, the “Transactions”).
Charter is filing this Current
Report on Form 8-K to provide the (i) unaudited interim condensed consolidated financial statements of Cox Communications as of and for
the three and six months ended June 30, 2026, and (ii) certain pro forma financial information regarding the Transactions as of and for
the six months ended June 30, 2026 and for the year ended December 31, 2025. The unaudited pro forma condensed combined financial statements
as of and for the six months ended June 30, 2026 and for the year ended December 31, 2025 are intended to reflect the impact of the Transactions
on the consolidated financial statements of Charter as if the Transactions had occurred as of June 30, 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.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit
Number
Description
23.1
Consent
of Deloitte & Touche LLP.
99.1
Unaudited
interim condensed consolidated financial statements of Cox Communications, Inc. as of and for the three and six months ended June
30, 2026, and the accompanying notes thereto.
99.2
Unaudited
pro forma condensed combined financial statements of Charter Communications, Inc. as of and for the six months ended June 30, 2026
and for the year ended December 31, 2025, and the accompanying notes thereto.
104
The
cover page from this Current Report on Form 8-K, formatted in Inline XBRL
Cautionary Note Regarding Forward-Looking
Statements
This
communication includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other
things, the proposed transaction between Charter and Cox Enterprises. Although we believe that our plans, intentions and expectations
as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize
these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including,
without limitation: (i) the effect of the announcement of the proposed transaction on the ability of Charter and Cox Enterprises to operate
their respective businesses and retain and hire key personnel and to maintain favorable business relationships; (ii) the timing of
the proposed transaction; (iii) the ability to satisfy closing conditions to the completion of the proposed transaction (including
stockholder and regulatory approvals); (iv) the possibility that the transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events; (v) the ultimate outcome and results of integrating operations and application
of Charter’s operating strategies to the acquired assets and the ultimate ability to realize synergies at the levels currently expected
as well as potential dis-synergies; (vi) the impact of the proposed transaction on our stock price and future operating results,
including due to transaction and integration costs, increased interest expense, business disruption, and diversion of management time
and attention; (vii) the reduction in our current stockholders’ percentage ownership and voting interest as a result of the
proposed transaction; (viii) the increase in our indebtedness as a result of the proposed transaction, which will increase interest
expenses and may decrease our operating flexibility; (ix) litigation relating to the proposed transaction; (x) other risks related
to the completion of the proposed transaction and actions related thereto; and (xi) the factors described under “Risk Factors”
from time to time in Charter’s filings with the SEC. Many of the forward-looking statements contained in this communication may
be identified by the use of forward-looking words such as “believe,” “future,” “expect,” “anticipate,”
“should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,”
“on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,”
“create,” “predict,” “project,” “initiatives,” “seek,” “would,”
“could,” “continue,” “ongoing,” “upside,” “increases,” “grow,”
“focused on” and “potential,” among others.
All
forward-looking statements speak only as of the date they are made and are based on information available at that time. Charter assumes
no obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements
were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements
involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, each of Charter Communications, Inc., CCO Holdings, LLC and CCO Holdings Capital Corp.
has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
CHARTER COMMUNICATIONS,
INC.,
Registrant
By:
/s/ Kevin D. Howard
Name:
Kevin D. Howard
Title:
Executive
Vice President, Chief Accounting Officer and Controller
Date: August 3,
2026
CCO HOLDINGS,
LLC,
Registrant
By:
/s/ Kevin D. Howard
Name:
Kevin D. Howard
Title:
Executive
Vice President, Chief Accounting Officer and Controller
Date: August 3,
2026
CCO HOLDINGS
CAPITAL CORP.,
Registrant
By:
/s/
Kevin D. Howard
Name:
Kevin
D. Howard
Title:
Executive
Vice President, Chief Accounting Officer and Controller
Date: August 3, 2026
EX-23.1 — EXHIBIT 23.1
EX-23.1
Filename: tm2621789d1_ex23-1.htm · Sequence: 2
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No. 333-297735 on Form S-3 of Charter Communications, Inc.
of our report dated February 27, 2026, relating to the financial statements of Cox Communications, Inc. appearing in the Current
Report on Form 8-K filed by Charter Communications, Inc. on July 23, 2026.
/s/ Deloitte & Touche LLP
Atlanta, GA
August 3, 2026
EX-99.1 — EXHIBIT 99.1
EX-99.1
Filename: tm2621789d1_ex99-1.htm · Sequence: 3
Exhibit 99.1
COX COMMUNICATIONS, INC.
(A Wholly-Owned Subsidiary of Cox Enterprises, Inc.)
TABLE OF CONTENTS
Page
Condensed
Consolidated Financial Statements as of June 30, 2026 and December 31, 2025 and for the three and six months ended June 30,
2026 and 2025:
Condensed
Consolidated Balance Sheets (Unaudited)
1
Condensed
Consolidated Statements of Operations (Unaudited)
2
Condensed
Consolidated Statements of Cash Flows (Unaudited)
3
Condensed
Consolidated Statements of Changes in Equity (Unaudited)
4
Notes
to Condensed Consolidated Financial Statements (Unaudited)
5
COX COMMUNICATIONS, INC.
(A Wholly-Owned Subsidiary of Cox Enterprises, Inc.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
December 31,
(in millions)
2026
2025
ASSETS
Cash and cash equivalents
$ 79
$ 64
Accounts receivable — net of allowance of $58 and $38, respectively
633
657
Amounts due from Cox Enterprises, Inc.
4,632
4,025
Prepaid expenses and other current assets
350
352
Total current assets
5,694
5,098
Property and equipment — net
12,504
12,603
Goodwill
1,260
1,260
Intangible assets — net
11,357
11,374
Other noncurrent assets
417
394
TOTAL ASSETS
$ 31,232
$ 30,729
LIABILITIES AND EQUITY
Accounts payable
$ 518
$ 497
Accrued labor and benefits
401
482
Accrued programming costs
161
180
Accrued expenses and other current liabilities
791
790
Current portion of long-term debt
1,038
1,038
Total current liabilities
2,909
2,987
Long-term debt
11,457
11,474
Deferred income taxes
4,542
4,446
Other noncurrent liabilities
466
873
Total liabilities
19,374
19,780
EQUITY
Common stock, $1.00 par value; 1,000 shares authorized and 100 shares issued and outstanding
—
—
Additional paid-in capital
4,575
4,540
Retained earnings
7,283
6,409
Total equity
11,858
10,949
TOTAL LIABILITIES AND EQUITY
$ 31,232
$ 30,729
See notes to Condensed Consolidated Financial Statements.
1
COX COMMUNICATIONS, INC.
(A Wholly-Owned Subsidiary of Cox Enterprises, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)
2026
2025
2026
2025
REVENUES
$ 3,008
$ 3,140
$ 6,067
$ 6,323
OPERATING EXPENSES:
Operating costs and expenses (a)
1,821
1,880
3,561
3,802
Depreciation and amortization
523
551
1,061
1,095
Other — net
93
71
139
56
Total operating expenses
2,437
2,502
4,761
4,953
OPERATING INCOME
571
638
1,306
1,370
NON-OPERATING EXPENSES:
Interest expense — net
(109 )
(111 )
(220 )
(219 )
Investments expense — net
(3 )
(14 )
(2 )
(55 )
Miscellaneous income — net
16
7
31
14
Total non-operating expenses
(96 )
(118 )
(191 )
(260 )
INCOME BEFORE INCOME TAXES
475
520
1,115
1,110
INCOME TAX EXPENSE
(103 )
(105 )
(241 )
(234 )
NET INCOME
$ 372
$ 415
$ 874
$ 876
(a) See Note 8 — Transactions with Affiliated
Companies for impacts associated with related parties.
See notes to Condensed Consolidated Financial Statements.
2
COX COMMUNICATIONS, INC.
(A Wholly-Owned Subsidiary of Cox Enterprises, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
(in millions)
2026
2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 874
$ 876
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
1,061
1,095
Deferred income taxes
4
(24 )
Investments expense — net
2
55
Provision for credit losses
40
40
Restructuring and other
33
(169 )
Changes in certain assets and liabilities:
Increase in accounts receivable
(16 )
(38 )
Increase in prepaid expenses and other assets
(8 )
—
Increase (decrease) in accounts payable
20
(32 )
Decrease in accrued expenses and other liabilities
(418 )
(177 )
Other — net
16
(22 )
Net cash provided by operating activities
1,608
1,604
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(963 )
(1,136 )
(Increase) decrease in amounts due from Cox Enterprises, Inc.
(607 )
366
Other — net
4
30
Net cash used in investing activities
(1,566 )
(740 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt
(20 )
(867 )
Other — net
(7 )
(11 )
Net cash used in financing activities
(27 )
(878 )
NET CHANGE IN CASH AND CASH EQUIVALENTS
15
(14 )
CASH AND CASH EQUIVALENTS — Beginning of period
64
97
CASH AND CASH EQUIVALENTS — End of period
$ 79
$ 83
See notes to Condensed Consolidated Financial Statements.
3
COX COMMUNICATIONS, INC.
(A Wholly-Owned Subsidiary of Cox Enterprises, Inc.)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN EQUITY
(Unaudited)
(in millions)
Common
Stock
Additional Paid-
In Capital
Retained
Earnings
Total
BALANCE — January 1, 2026
$
—
$
4,540
$
6,409
$
10,949
Net income
—
—
502
502
Contribution to capital from Cox Enterprises, Inc.
—
28
—
28
BALANCE — March 31, 2026
—
4,568
6,911
11,479
Net income
—
—
372
372
Contribution to capital from Cox Enterprises, Inc.
—
7
—
7
BALANCE — June 30, 2026
$
—
$
4,575
$
7,283
$
11,858
(in millions)
Common
Stock
Additional Paid-
In Capital
Retained
Earnings
Total
BALANCE — January 1, 2025
$
—
$
4,429
$
10,057
$
14,486
Net income
—
—
461
461
BALANCE — March 31, 2025
—
4,429
10,518
14,947
Net income
—
—
415
415
BALANCE — June 30, 2025
$
—
$
4,429
$
10,933
$
15,362
See notes to Condensed Consolidated Financial Statements.
4
COX COMMUNICATIONS, INC.
(A Wholly-Owned Subsidiary of Cox Enterprises, Inc.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION
OF BUSINESS, BASIS OF PRESENTATION AND OTHER ITEMS
Cox Communications, Inc. (together with
its consolidated subsidiaries, "Cox" or "the Company"), a wholly-owned subsidiary of Cox Enterprises, Inc. ("CEI"),
is committed to creating meaningful moments of human connection through technology. As the largest private broadband company in the United
States, Cox operates fiber-powered networks in more than 30 states, providing connections and advanced managed IT and cloud services
for homes and businesses. Cox Mobile, Cox’s mobile phone service, is available across markets nationwide. The commercial division
of Cox, Cox Business, provides a broad commercial solutions portfolio, including advanced managed IT and cloud services and fiber-based
network solutions that support connected environments, unique hospitality experiences and diverse applications.
Basis of Presentation
The accompanying unaudited interim Condensed
Consolidated Financial Statements of Cox have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)
for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by GAAP
for complete consolidated financial statements. In the opinion of management, the unaudited interim Condensed Consolidated Financial
Statements include all adjustments, of a normal recurring nature, necessary for a fair presentation of the condensed consolidated results
of operations, financial position and cash flows for the interim periods presented. All intercompany transactions and account balances
have been eliminated in consolidation. Cox has included the results of operations of acquired companies from the date of acquisition.
These unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial
Statements and notes therein as of and for the year ended December 31, 2025. Results of operations for interim periods are not necessarily
indicative of results that might be expected for future interim periods or for the full year ending December 31, 2026.
Use of Estimates
The preparation of condensed consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the
reported amounts of revenues and expenses during the reporting periods. Estimates are evaluated based on available information and experience,
as well as other assumptions Cox believes reasonable under the circumstances. Actual results could differ from those estimates.
5
Revenue Recognition
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)
2026
2025
2026
2025
Residential
Data
$ 1,350
$ 1,438
$ 2,737
$ 2,916
Video
563
610
1,150
1,230
Telephony
41
50
81
103
Other (a)
136
137
270
275
Total residential
2,090
2,235
4,238
4,524
Commercial
853
852
1,714
1,695
Advertising
65
53
115
104
Total revenues
$ 3,008
$ 3,140
$ 6,067
$ 6,323
(a) Other residential revenues includes
franchise, regulatory, and customer late fees, service protection fees, Cox Mobile and other
miscellaneous revenues.
Operating Costs and Expenses
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)
2026
2025
2026
2025
Programming costs
$ 434
$ 472
$ 875
$ 975
Other costs of revenue
285
282
557
566
Field and technology operations
251
250
481
506
Customer operations
53
53
103
105
Sales and marketing
250
278
502
545
General and administrative
548
545
1,043
1,105
Total operating costs and expenses
$ 1,821
$ 1,880
$ 3,561
$ 3,802
Subsequent Events
Cox has evaluated events that occurred subsequent
to June 30, 2026 for potential recognition and disclosure. Any applicable subsequent events have been evaluated through July 31,
2026, the date of issuance of the unaudited Condensed Consolidated Financial Statements.
6
2. DIVESTITURE
Pending Disposition
of Cox — In May 2025, Charter Communications, Inc. (“Charter”) and Charter Communications Holdings,
LLC (“Charter Holdings”) entered into a transaction agreement with CEI. Pursuant to the transaction agreement, at the closing
of the transactions, (i) CEI will sell and transfer to Charter 100% of the equity interests of certain subsidiaries of Cox that
conduct Cox’s commercial fiber and managed IT and cloud services businesses, (ii) CEI will contribute the equity interests
of Cox and certain other assets (other than certain excluded assets) primarily relating to Cox’s residential cable business to
Charter Holdings, and (iii) CEI will pay $1.00 to Charter. The combined entity will also assume Cox’s approximately $12.4
billion in outstanding net debt and finance leases.
On July 31, 2025, Charter’s shareholders
approved the transaction agreement.
3. SUPPLEMENTAL
CASH FLOW INFORMATION
Six Months Ended June 30,
(in millions)
2026
2025
Significant noncash transactions:
Contribution to capital from Cox Enterprises, Inc.
$ 35
$ —
Property and equipment acquired under finance leases and other financing arrangements
—
153
Supplemental cash flow information:
Cash paid for interest
$ 300
$ 318
Cash paid for income taxes(a)
237
262
(a) The amounts disclosed as income taxes paid include both cash
tax payments made directly to taxing authorities and payments made by Cox to its parent in settlement of its share of consolidated income
tax obligations.
4. RESTRUCTURING
In 2024, Cox announced a new organizational structure,
which allocated needed resources to growth areas of the business. As a result, certain restructuring initiatives were implemented, which
included severance costs.
The following represents the changes in the balances
of the restructuring-related liabilities, which are reflected within accrued labor and benefits in the Condensed Consolidated Balance
Sheets as of June 30, 2026 and December 31, 2025.
(in millions)
June 30, 2026
December 31, 2025
Balance at beginning of period
$ 4
$ 180
Expense(a)
—
—
Payments
(2 )
(176 )
Balance at end of period
$ 2
$ 4
(a) Restructuring-related charges were recorded to other —
net on the Condensed Consolidated Statements of Operations.
7
5. DEBT
June 30, 2026
December 31, 2025
(in millions)
Carrying
Value
Fair Value
Carrying
Value
Fair Value
Notes and debentures (a)
$ 11,849
$ 10,424
$ 11,849
$ 10,631
Finance lease obligations (b)(c)
717
737
Less unamortized discounts, premiums and issuance costs
(71 )
(74 )
Total debt
12,495
12,512
Less current maturities (b)
1,038
1,038
Total long-term debt
$ 11,457
$ 11,474
(a) Require semi-annual cash interest payments based
on their issuance dates.
(b) Current portion
of finance lease obligations totaled $38 million as of June 30, 2026 and December 31, 2025, respectively.
(c) Cox leases certain
office facilities, cable transmission and distribution facilities and automobiles under finance leases.
Guarantee Agreements
Cox is a party to an amended and restated credit
agreement among Cox and CEI, as borrowers, and JP Morgan Chase Bank, N.A., as administrative agent, and certain other lenders and agents
(the “Credit Facility”). CEI designated Cox as a restricted subsidiary under the Credit Facility. At the same time, Cox provided
an unconditional guarantee of CEI’s obligations under the Credit Facility and CEI also provided an unconditional guarantee of Cox's
obligations under the Credit Facility, which will be automatically released upon the release of Cox's guarantee of CEI's obligations
under the Credit Facility. Cox will also guarantee CEI’s obligations under CEI’s commercial paper program. As of June 30,
2026 and December 31, 2025, CEI had no outstanding obligations under the Credit Facility and $125 million and no outstanding commercial
paper subject to Cox’s guarantee, respectively.
In addition, Cox and CEI provide unconditional
cross-guarantees of the other’s obligations under each company’s respective outstanding notes (except for Cox's 6.53% debentures
due 2028, of which no material amounts are outstanding). CEI and Cox may release their obligations under the cross-guarantee simultaneously
with the other party’s release or in other customary circumstances. As of June 30, 2026 and December 31, 2025, CEI had
$175 million of outstanding notes subject to Cox's guarantee.
6. COMMITMENTS
AND CONTINGENCIES
At the time of divesting an ownership interest
in an entity, Cox sometimes agrees to indemnify the buyer for certain liability risks. Cox believes that any liability to the Company
that may arise as a result of such indemnification agreements will not have a material adverse effect on the company taken as a whole.
Legal Proceedings
Sony Music et al. — In July 2018,
Sony Music Entertainment Inc., Warner Bros. Records Inc., Universal Music Corp. and several other music publishers and recording companies
filed a copyright infringement lawsuit against Cox. The plaintiffs alleged that Cox’s handling of Digital Millennium Copyright
Act notices resulted in willful copyright infringement with respect to thousands of songs. Plaintiffs sought monetary damages.
8
In December 2019, a jury returned a verdict
of $1.0 billion against Cox, with a finding of contributory infringement, vicarious infringement and willfulness. Following various post-trial
motions, Cox appealed to the United States Court of Appeals for the Fourth Circuit. In addition to the merits appeal, Cox filed two Rule 60
motions in the trial court seeking relief from the verdict; those Rule 60 motions were heard and denied by the trial court in March 2022.
Cox appealed the Rule 60 rulings to the Fourth Circuit, which held the Rule 60 appeal in abeyance until after the merits appeal.
In February 2024, the Fourth Circuit affirmed the jury's finding of willful contributory infringement but reversed the jury's finding
of vicarious liability and vacated the $1.0 billion judgment against Cox. Both parties' petitions for a rehearing en banc were denied
by the Fourth Circuit. Cox also filed motions in the Fourth Circuit seeking partial appellate costs and an update regarding the Rule 60
appeal. Briefing concluded in the Rule 60 appeal in September 2024. Cox filed an unopposed motion to release the appeal bond,
which was granted in May 2024. Cox’s motion for costs on the judgment bond was denied in August 2024. The trial proceeding
was stayed by the Fourth Circuit until the resolution of the Rule 60 appeal. In November 2024, in response to writs of certiorari
filed by both parties, the United States Supreme Court called for the view of the United States Solicitor General. In May 2025,
the United States Solicitor General submitted its brief amicus curiae recommending that Cox’s writ of certiorari be granted and
Sony’s writ of certiorari be denied. In June 2025, the United States Supreme Court granted Cox’s writ of certiorari
and denied Sony’s writ of certiorari. Cox’s opening brief was filed in August 2025. Oral argument was held in December 2025.
In March 2026, the United States Supreme Court reversed the Fourth Circuit's judgment, holding that as a matter of law, Cox’s
conduct did not meet the standard for contributory copyright infringement.
As a result of the Supreme Court’s decision,
in May 2026, the Fourth Circuit issued judgment in Cox’s favor on the merits appeal. In June 2026, the Fourth Circuit
dismissed as moot Rule 60(b) appeal and the district court entered final judgment in favor of Cox and against Plaintiffs. This
matter is now concluded.
TQ Delta — In July 2015, TQ
Delta filed an action against Cox alleging patent infringement of eight patents related to the Multimedia over Coax Alliance standard,
parts of which are alleged to be implemented in Whole Home DVR. The plaintiff voluntarily dropped two patents in response to the court’s
requirement that the number of claims be reduced. Inter Partes Reviews ("IPRs") were filed against the remaining six patents.
The Patent Trial and Appeal Board invalidated four of the patents during the IPR proceeding, but two patents survived on appeal to the
United States Court of Appeal for the Federal Circuit. The parties have engaged in expert discovery and are awaiting rulings on claim
construction and summary judgment. Trial is scheduled for October 2027. The outcome of this matter cannot be predicted at this time.
Entropic — In February 2023,
Entropic Communications filed two separate actions against Cox alleging patent infringement. The first case was brought with twelve patents
and was related to the Multimedia over Coax Alliance standard. The second case was brought with ten patents with allegations related
to the DOCSIS ("Data Over Cable Service Interface Speculation") and DOCSIS adjacent technologies. Through patent challenges
brought both with the Court and the Patent Trial and Appeals Board ("PTAB"), sixteen patents were effectively invalidated.
Entropic is in the process of appealing the rulings of invalidity issued by the U.S. Patent Office to the Federal Circuit. There has
been no activity in these cases beyond Claim Construction hearings and no schedule has been set in either case. The outcome of this matter
cannot be predicted at this time.
9
Other Patent Matters — Cox is a
defendant or co-defendant in several lawsuits involving alleged infringement of various patents relating to various aspects of its businesses.
In the event that a court ultimately determines that Cox infringes on any intellectual property rights, Cox may be subject to substantial
damages and/or an injunction that could require Cox or its vendors to modify certain products and services Cox offers to its subscribers,
as well as negotiate royalty or license agreements with respect to the patents at issue. While Cox intends to vigorously defend the actions,
no assurance can be given that any adverse outcome would not be material to Cox's Condensed Consolidated Financial Statements. Cox cannot
predict the outcome of any of these matters nor can it reasonably estimate a range of possible loss at this time.
Other Legal Proceedings — Cox and
its subsidiaries are parties to various other legal proceedings that are ordinary and incidental to their businesses.
7. FAIR VALUE MEASUREMENTS
Cox measures certain financial assets and liabilities
at fair value on a recurring basis and also measures certain nonfinancial assets at fair value on a nonrecurring basis. Fair value is
defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market
participants would use in pricing an asset or liability as defined in the below fair value hierarchy:
Level 1 — Observable
inputs such as quoted prices in active markets;
Level 2
— Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3
— Unobservable inputs in which there is little or no market data, which require an entity to develop its own assumptions.
Recurring Fair Value Measurements
Cash Equivalents — Cox's cash equivalents
are measured at fair value on a recurring basis and generally consist of money market funds, time deposits and commercial paper. The
fair values of Cox's cash equivalents fall within Level 1 of the fair value hierarchy and are based on a market approach using quoted
prices and other relevant information generated by market transactions involving identical or comparable assets.
Debt — Cox's notes and debentures
as of June 30, 2026 and December 31, 2025 are based on inputs other than quoted prices in active markets, that are observable
either directly or indirectly and are classified within Level 2.
Other Financial Instruments — The
carrying amounts of the Cox’s accounts receivable, accounts payable and other current assets and liabilities approximate fair value
due to their short-term maturities and/or nature of these instruments.
Non-Recurring Fair Value Measurements
Cox's nonfinancial assets (such as property and
equipment, goodwill and intangible assets), equity method investments and nonmarketable equity securities are not measured at fair value
on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that
an impairment may exist. Inputs used in these fair value measurements are often unobservable and may require judgment, which could affect
the ascribed fair values.
10
8. TRANSACTIONS WITH
AFFILIATED COMPANIES
For all periods presented in the Condensed Consolidated
Financial Statements, related party transactions and activities between Cox, CEI and other CEI subsidiaries may not have been consummated
on terms equivalent to those that would prevail in an arm’s-length transaction where conditions of competitive, free-market dealing
may exist.
Allocated Expenses from CEI
Allocated expenses as shown in the table below
are directly calculated or based on CEI's estimate of services provided to Cox in relation to those provided to other CEI subsidiaries.
Cox believes that these allocations were made on a reasonable basis. However, the allocations are not necessarily indicative of the level
of expenses that might have been incurred had Cox contracted directly with third parties.
Three Months Ended
Six Months Ended
June 30,
June 30,
(in millions)
2026
2025
2026
2025
Employee Benefit Plans
Healthcare and other employee benefits
$ 67
$ 63
$ 135
$ 127
Qualified and nonqualified pension (a)
14
19
27
37
401(k) Plan
20
20
39
39
Postemployment and postretirement benefits (a)
5
6
9
11
Long-term incentive compensation
28
32
56
66
Other Allocated Expenses (b)
Management services
66
69
131
138
Occupancy-related services
8
6
16
13
(a) The service cost component related
to Cox’s qualified and nonqualified pension plans and postretirement benefits is recorded
to operating costs and expenses on the Condensed Consolidated Statements of Operations. The
non-service cost component, which includes interest cost, expected return on plan assets,
prior service cost amortization and actuarial loss amortization, is recorded to miscellaneous
income — net on the Condensed Consolidated Statements of Operations.
(b) Cox receives certain management
(e.g., legal, corporate secretarial, tax, cash management, treasury, internal audit, risk
management, employee benefit administration and other support services) and occupancy-related
(e.g., repairs and maintenance, utilities, insurance and property taxes) services from CEI.
Amounts due from CEI
Cox receives day-to-day cash management services
from CEI, with settlements of outstanding balances between Cox and CEI occurring periodically. The amounts due from CEI are due on demand
and represent the net balance of the intercompany transactions. The interest rate is based on CEI's internal borrowing rate, generally
determined from CEI's rates under the Credit Facility, which ranged from 3.72% to 3.78% during the six months ended June 30, 2026,
and 4.42% to 4.43% during the six months ended June 30, 2025. The associated interest income was $43 million and $45 million for
three months ended June 30, 2026 and 2025, respectively, and was $84 million and $90 million for the six months ended June 30,
2026 and 2025, respectively.
Other Related Party Transactions
There are various other related party activities
between Cox and related parties that individually and in the aggregate, are not material to Cox's Condensed Consolidated Financial Statements.
******
11
EX-99.2 — EXHIBIT 99.2
EX-99.2
Filename: tm2621789d1_ex99-2.htm · Sequence: 4
Exhibit
99.2
UNAUDITED PRO
FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The accompanying
unaudited pro forma condensed combined financial statements as of and for the six months ended June 30, 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 June 30, 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.
1
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 and
six months ended June 30, 2026 contained in Charter’s Quarterly Report on Form 10-Q filed with the SEC on July 24,
2026, (ii) the unaudited consolidated financial statements of Cox Communications as of and for the three and six months ended June 30,
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 Charter’s Current Report on Form 8-K filed with the SEC on July 23, 2026.
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 JUNE 30, 2026
(dollars in millions)
Cox
Charter
Communications
Pro
Forma
Pro
Forma
(Historical)
(Historical)
Adjustments
Combined
ASSETS
CURRENT ASSETS:
Cash
and cash equivalents
$
509
$
79
$
(158
)
1a
$
430
Accounts
receivable, net
3,651
633
—
4,284
Amounts
due from Cox Enterprises, Inc.
—
4,632
(4,632
)
1b
—
Prepaid
expenses and other current assets
813
350
—
1,163
Total current
assets
4,973
5,694
(4,790
)
5,877
INVESTMENT IN CABLE PROPERTIES:
Property,
plant and equipment, net
47,955
12,504
3,996
1c
64,455
Customer
relationships, net
238
479
3,121
1c
3,838
Franchises
67,471
10,275
(3,750
)
1c
73,996
Goodwill
29,710
1,260
(1,260
)
1c
29,710
Total investment
in cable properties, net
145,374
24,518
2,107
171,999
OTHER NONCURRENT ASSETS
5,271
1,020
(351
)
1d
5,940
Total
assets
$
155,618
$
31,232
$
(3,034
)
$
183,816
LIABILITIES
AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts
payable, accrued and other current liabilities
$
12,779
$
1,871
$
—
$
14,650
Current
portion of long-term debt
999
1,038
—
2,037
Total current
liabilities
13,778
2,909
—
16,687
LONG-TERM DEBT
92,960
11,457
2,778
1e
107,195
EQUIPMENT INSTALLMENT PLAN
FINANCING FACILITY
1,596
—
—
1,596
DEFERRED INCOME TAXES
20,237
4,542
(4,991
)
1f
19,788
OTHER LONG-TERM LIABILITIES
5,146
466
—
5,612
SHAREHOLDERS’ EQUITY:
Controlling
interests
16,952
11,858
(15,110
)
1g
13,700
Noncontrolling
interests
4,949
—
14,289
1g
19,238
Total shareholders’
equity
21,901
11,858
(821
)
32,938
Total
liabilities and shareholders’ equity
$
155,618
$
31,232
$
(3,034
)
$
183,816
See
accompanying “Notes to Unaudited Pro Forma Condensed Combined Financial Statements”
3
UNAUDITED PRO
FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED
JUNE 30, 2026
(dollars and
weighted average shares outstanding in millions, except per share amounts)
Cox
Charter
Communications
Pro
Forma
Pro
Forma
(Historical)
(Historical)
Adjustments
Combined
REVENUES
$
27,123
$
6,067
$
25
2a
$
33,215
COSTS AND
EXPENSES:
Operating
costs and expenses (exclusive of items shown separately below)
16,378
3,561
(106
)
2b
19,833
Depreciation
and amortization
4,408
1,061
243
2c
5,712
Other
operating expenses, net
66
139
5
2d
210
20,852
4,761
142
25,755
Income
from operations
6,271
1,306
(117
)
7,460
OTHER INCOME
(EXPENSES):
Interest
expense, net
(2,532
)
(220
)
(278
)
2e
(3,030
)
Other
expenses, net
88
29
(32
)
2f
85
(2,444
)
(191
)
(310
)
(2,945
)
Income before
income taxes
3,827
1,115
(427
)
4,515
Income
tax expense
(940
)
(241
)
327
2g
(854
)
Consolidated
net income
2,887
874
(100
)
3,661
Less: Net
income attributable to noncontrolling interests
(432
)
—
(1,031
)
2h
(1,463
)
Net
income attributable to Charter shareholders
$
2,455
$
874
$
(1,131
)
$
2,198
EARNINGS
PER COMMON SHARE:
Basic
$
20.00
2i
$
17.87
Diluted
$
19.81
2i
$
17.59
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING:
Basic
123
2i
123
Diluted
124
2i
137
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)
Cox
Charter
Communications
Pro
Forma
Pro
Forma
(Historical)
(Historical)
Adjustments
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
162
2d
770
41,866
15,497
445
57,808
Income
(loss) from operations
12,908
(2,966
)
(391
)
9,551
OTHER INCOME
(EXPENSES):
Interest
expense, net
(5,042
)
(424
)
(573
)
2e
(6,039
)
Other
expenses, net
(408
)
(30
)
(30
)
2f
(468
)
(5,450
)
(454
)
(603
)
(6,507
)
Income (loss)
before income taxes
7,458
(3,420
)
(994
)
3,044
Income
tax expense
(1,692
)
772
432
2g
(488
)
Consolidated
net income (loss)
5,766
(2,648
)
(562
)
2,556
Less: Net
income attributable to noncontrolling interests
(779
)
—
(401
)
2h
(1,180
)
Net
income (loss) attributable to Charter shareholders
$
4,987
$
(2,648
)
$
(963
)
$
1,376
EARNINGS
PER COMMON SHARE:
Basic
$
36.90
2i
$
10.19
Diluted
$
36.21
2i
$
10.00
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 recently completed month. The Charter Holdings convertible preferred
units are fair valued based on a binominal lattice simulation model contemplating a 6.875% preferred cash dividend on the instrument’s
$6.0 billion par value 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 June 30, 2026.
(in millions)
Current assets
$ 1,083
Property, plant and equipment
16,500
Customer relationships
3,600
Franchises
6,525
Other noncurrent assets
669
Current liabilities (includes current portion of long-term
debt of $1.0 billion)
(2,909 )
Long-term debt
(10,113 )
Deferred income taxes
(585 )
Other long-term liabilities
(466 )
$ 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 $158 million to cash and cash equivalents represents the use of cash
to pay approximately $151 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 $21 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 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’ bond repayment at maturity
in June 2025 that is no longer intended to be refinanced before closing of the Cox Transactions.
7
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
79
Cox Enterprises cash contributed to reflect minimum operating
cash
21
Charter cash and cash equivalents on-hand
79
$ 4,329
Uses:
Cash portion of purchase price paid to Cox Enterprises
$ 4,150
Remaining transaction costs including advisor fees and other
expenses
151
Debt issuance costs
28
$ 4,329
(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 $585 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 $1.0 billion 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
$ (11,858 )
Payment of remaining transaction costs including advisor fees
(151 )
Relative ownership adjustment of Charter
Holdings’ common unit equity balances, net of tax
(3,101 )
$ (15,110 )
Noncontrolling Interests:
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
Relative ownership adjustment of Charter
Holdings’ common unit equity balances
4,135
$ 14,289
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 $4.1 billion and a corresponding decrease to additional paid-in capital of $4.1 billion, net of a $1.0 billion
reduction in deferred income taxes, for Charter’s decrease in book basis in Charter Holdings.
8
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 $25 million and $54 million for the six months ended June 30,
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 $106 million and $222 million for the
six months ended June 30, 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).
(c) Depreciation
and amortization increased by $243 million and $505 million for the six months ended June 30,
2026 and year ended December 31, 2025, respectively, as follows.
(in millions)
Six Months
Ended June 30, 2026
Year Ended
December 31, 2025
Depreciation
Amortization
Total
Depreciation
Amortization
Total
Cox Communications pro forma expense based on
fair value
$ 1,031
$ 273
$ 1,304
$ 2,063
$ 600
$ 2,663
Cox Communications historical expense
(1,061 )
(2,158 )
$ 243
$ 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
$169 million and $349 million for the six months ended June 30, 2026 and year ended December 31, 2025, respectively, while
the effect of a one-year increase would result in a decrease of approximately $133 million and $275 million for the six months ended
June 30, 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 $162 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 $23 million and $128
million are included in the historical income statement of Charter within other operating
expenses, net for the six months ended June 30, 2026 and year ended December 31,
2025, respectively. Pro forma adjustments to other operating expenses, net for the six months
ended June 30, 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).
9
(e) Interest
expense, net increased by $278 million and $573 million for the six months ended June 30,
2026 and year ended December 31, 2025, respectively, as follows.
Six Months Ended
Year Ended
(in millions)
June 30,
2026
December 31,
2025
Additional interest expense on new debt issued
$ (138 )
$ (275 )
Elimination of intercompany note interest income
(84 )
(188 )
Amortization of discount as a result of adjusting assumed
Cox Communications’ long-term debt to fair value
(59 )
(118 )
Amortization of new debt issuance costs
(1 )
(2 )
Elimination of amortization related to
Cox Communications’ debt discounts and debt issuance costs
4
10
$ (278 )
$ (573 )
(f) Pro
forma adjustment to increase other expenses, net by $32 million and $30 million for the six
months ended June 30, 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 $327 million and $432 million for the six months
ended June 30, 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 $1.0 billion and $401 million
for the six months ended June 30, 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.
Six Months Ended
Year Ended
(in millions)
June 30,
2026
December 31,
2025
Charter Holdings pro forma income before income
taxes
$ 4,515
$ 3,044
Charter Holdings 6.875% cash dividend
to Cox Enterprises preferred unit holders
(207 )
(413 )
Charter Holdings pro forma income before income taxes available
for allocation to common unit holders
$ 4,308
$ 2,631
Noncontrolling interest in Charter Holdings excluding preferred
units based on pro forma common unit ownership of Charter Holdings (20.0% Cox Enterprises and 9.2% A/N)
29.2 %
29.2 %
Noncontrolling interest expense - Charter Holdings common
units
$ 1,256
$ 767
Noncontrolling interest expense - Charter Holdings convertible
preferred units
207
413
Eliminate historical noncontrolling interest
expense recorded based on historical A/N common unit ownership of Charter Holdings
(432 )
(779 )
$ 1,031
$ 401
10
(i) The
following table sets forth the computation of pro forma basic and diluted earnings per share
for the six months ended June 30, 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 for the six months ended June 30,
2026 and year ended December 31, 2025 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
for the year ended December 31, 2025.
Six
Months Ended
Year
Ended
(in
millions, except per share data)
June 30,
2026
December 31,
2025
Numerator:
Pro
forma net income attributable to common stock
$
2,198
$
1,376
Effect of
dilutive securities:
Charter
Holdings convertible preferred units
207
—
Pro
forma net income attributable to common stock after assumed conversions
$
2,405
$
1,376
Denominator:
Pro
forma Charter weighted average shares outstanding, basic
123
135
Effect of
dilutive securities:
Assumed
exercise or issuance of shares relating to stock plans
1
3
Weighted
average Charter Holdings convertible preferred units
13
—
Pro forma
weighted average common shares outstanding, diluted
137
138
Pro forma
net income per share attributable to common stock:
Basic
$
17.87
$
10.19
Diluted
$
17.59
$
10.00
11
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