Issues while creating text Knockout on Times New Roman font in Illustrator.

Why when I knock-out text using Times New Roman does it not knock-out clean?

I am trying to knock out the letters PDC in Times New Roman and it rounds certain areas of the outline out when I knock it out. Is there a setting I need to change?

See in image that the "PDC" that is selected it doesn't cut out clean. When I outline the text it's clean but as soon as select "minus front" in pathfinder it rounds out that area in the letter "D"(upper left inside corner of D) and a area in the letter "P"

My steps for knocking out:

- Outline the letters I want to knock out "PDC"

- Select both the outline letters and the color shape behind

- Go to Pathfinder

- Select Minus Front

{Renamed by MOD}