SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Exact name of registrant as specified in its charter)

~~Stamford, Connecticut 06901~~

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrants have submitted electronically ~~and posted on their corporate website, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer xSmaller reporting company o☐ Emerging growth company o☐

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o ☐ No x

CCO HOLDINGS, ~~LLC~~LLC.

CCO HOLDINGS CAPITAL CORP.

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, ~~2017~~2020

TABLE OF CONTENTS



						Page No.
PART I				FINANCIAL INFORMATION

Item 1				Financial Statements ‑ CCO Holdings, LLC and Subsidiaries
			Consolidated Balance Sheets as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019			1
			Consolidated Statements of Operations
			for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019			2
			Consolidated Statements of ~~Comprehensive Income~~Changes in Member's Equity
			for the three and nine months ended September 30, ~~2017~~2020 and ~~2016~~2019			3
			Consolidated Statements of Cash Flows
	for the nine months ended September 30, ~~2017~~2020 and ~~2016~~2019			45
			Notes to Consolidated Financial Statements			56

Item 2				Management's Discussion and Analysis of Financial Condition and Results of Operations		3021

Item 3				Quantitative and Qualitative Disclosure About Market Risk		4735

Item 4				Controls and Procedures		4736

PART II				OTHER INFORMATION

Item 1				Legal Proceedings		4937

Item 1A				Risk Factors		4937

Item 6		Exhibits		~~Exhibits~~37		49

Signatures					S-1

Exhibit Index					E-1

This quarterly report on Form 10-Q is for the three and nine months ended September 30, ~~2017~~.2020. The United States Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you directly to those documents. In this quarterly report, “CCO Holdings,” “we,” “us” and “our” refer to CCO Holdings, LLC and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report 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, our plans, strategies and prospects, both business and financial including, without limitation, the forward-looking statements set forth in the “Results of Operations” and “Liquidity and Capital Resources” sections under Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this quarterly report. 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, the factors described under “Risk Factors” under Part I, Item 1A of our most recent Form 10-K filed with the SEC. Many of the forward-looking statements contained in this quarterly report may be identified by the use of forward-looking words such as “believe,” “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”~~“increases,” “focused on” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this quarterly report are set forth in this quarterly report on Form 10-Q, in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

•the impact of the COVID-19 pandemic on the economy, our ~~ability~~customers, our vendors, local, state and federal governmental responses to ~~promptly, efficiently~~the pandemic and ~~effectively integrate acquired operations;~~our businesses generally;

•our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, ~~Internet,~~ voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our ~~markets~~service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;

•the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers video provided over the Internet by (i) market participants that have not historically competed in the multichannel video business, (ii) traditional multichannel video distributors, and (iii) content providers that have historically licensed cable networks to multichannel video distributors, and providers of ~~advertising~~video content over ~~the Internet;~~broadband Internet connections;

~~general business conditions, economic uncertainty or downturn, unemployment levels and the level of activity in the housing sector;~~

•our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents);


•	~~our ability to develop and deploy new products and technologies including wireless products, our cloud-based user interface, Spectrum Guide~~^®~~, and downloadable security for set-top boxes, and any other cloud-based consumer services and service platforms;~~

•our ability to develop and deploy new products and technologies including mobile products and any other consumer services and service platforms;

•any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;

•the effects of governmental regulation on our business ~~or potential business combination transactions~~ including costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us as a result of the Time Warner Cable Inc. and Bright House Networks, LLC ~~Transactions;~~transactions;

~~any events that disrupt our networks, information systems~~•general business conditions, economic uncertainty or ~~properties~~downturn, including the impacts of the COVID-19 pandemic to unemployment levels and ~~impair our operating activities or our reputation;~~the level of activity in the housing sector;

•the ability to retain and hire key personnel;

•the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and

•our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

All forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by this cautionary statement. We are under no duty or obligation to update any of the forward-looking statements after the date of this quarterly report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions)


	September 30, 2020		December 31, 2019
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,015	$	3,249
Accounts receivable, less allowance for doubtful accounts of $223 and $151, respectively	2,032		2,195
Prepaid expenses and other current assets	647		711
Total current assets	3,694		6,155

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $30,332 and $27,595, respectively	33,387		33,908
Customer relationships, net	6,050		7,453
Franchises	67,322		67,322
Goodwill	29,554		29,554
Total investment in cable properties, net	136,313		138,237

OTHER NONCURRENT ASSETS	2,653		2,351

Total assets	$	142,660	$	146,743
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,881	$	8,142
Payables to related party	94		298
Current portion of long-term debt	1,715		3,500
Total current liabilities	9,690		11,940

LONG-TERM DEBT	77,947		75,578
LOANS PAYABLE - RELATED PARTY	1,006		959
DEFERRED INCOME TAXES	55		55
OTHER LONG-TERM LIABILITIES	3,496		2,922

MEMBER’S EQUITY:
Member's equity	50,443		55,266
Accumulated other comprehensive loss	0		0
Total CCO Holdings member’s equity	50,443		55,266
Noncontrolling interests	23		23
Total member’s equity	50,466		55,289

Total liabilities and member’s equity	$	142,660	$	146,743

The accompanying notes are an integral part of these consolidated financial statements.

September 30,
2017 December 31,
2016
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,974
$ 1,324
Accounts receivable, less allowance for doubtful accounts of
$103 and $124, respectively 1,573
1,387
Prepaid expenses and other current assets 275
300
Total current assets 3,822
3,011

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $16,350 and $11,085, respectively 33,066
32,718
Customer relationships, net 12,589
14,608
Franchises 67,316
67,316
Goodwill 29,554
29,509
Total investment in cable properties, net 142,525
144,151

OTHER NONCURRENT ASSETS 1,115
1,157

Total assets $ 147,462
$ 148,319

LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 7,503
$ 6,897
Payables to related party 636
621
Current portion of long-term debt 2,068
2,028
Total current liabilities 10,207
9,546

LONG-TERM DEBT 66,064
59,719
LOANS PAYABLE - RELATED PARTY 818
640
DEFERRED INCOME TAXES 39
25
OTHER LONG-TERM LIABILITIES 2,307
2,526

MEMBER'S EQUITY:
Member's equity 68,005
75,845
Accumulated other comprehensive loss (2 ) (7 )
Total CCO Holdings member's equity 68,003
75,838
Noncontrolling interests 24
25
Total member’s equity 68,027
75,863

Total liabilities and member’s equity $ 147,462
$ 148,319

CCO HOLDINGS, LLC AND SUBSIDIARIES
~~CONSOLIDATED STATEMENTS OF OPERATIONS~~
~~(dollars in millions)~~

~~Unaudited~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
REVENUES $ 10,458
$ 10,037
$ 30,979
$ 18,728

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below) 6,705
6,490
19,871
12,173
Depreciation and amortization 2,699
2,435
7,839
4,409
Other operating expenses, net 145
206
374
513
9,549
9,131
28,084
17,095
Income from operations 909
906
2,895
1,633

OTHER EXPENSES:
Interest expense, net (795 ) (729 ) (2,268 ) (1,391 )
Loss on extinguishment of debt —
—
(35 ) (110 )
Gain (loss) on financial instruments, net 17
71
(15 ) 16
Other pension benefits (costs) (17 ) 13
9
533
Other expense, net (2 ) (2 ) (2 ) (2 )
(797 ) (647 ) (2,311 ) (954 )

Income before income taxes 112
259
584
679
Income tax benefit (expense) (6 ) 7
(35 ) —
Consolidated net income 106
266
549
679
Less: Net income attributable to noncontrolling interests —
(1 ) (1 ) (1 )
Net income attributable to CCO Holdings member $ 106
$ 265
$ 548
$ 678

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~OPERATIONS

(dollars in millions)

Unaudited


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
REVENUES	$	12,037	$	11,449	$	35,467	$	33,997

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	7,509		7,450		22,283		21,950
Depreciation and amortization	2,366		2,411		7,283		7,453
Other operating expenses, net	17		18		29		77
	9,892		9,879		29,595		29,480
Income from operations	2,145		1,570		5,872		4,517

OTHER INCOME (EXPENSES):
Interest expense, net	(947)		(973)		(2,904)		(2,865)
Loss on extinguishment of debt	(58)		0		(121)		0
Gain (loss) on financial instruments, net	69		(34)		(185)		(116)
Other pension benefits (costs), net	(115)		9		(94)		27
Other expense, net	(11)		(3)		(6)		(129)
	(1,062)		(1,001)		(3,310)		(3,083)

Income before income taxes	1,083		569		2,562		1,434
Income tax expense	(10)		(10)		(23)		(86)
Consolidated net income	1,073		559		2,539		1,348
Less: Net income attributable to noncontrolling interests	0		0		(1)		(1)
Net income attributable to CCO Holdings member	$	1,073	$	559	$	2,538	$	1,347

The accompanying notes are an integral part of these consolidated financial statements.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Consolidated net income $ 106
$ 266
$ 549
$ 679
Net impact of interest rate derivative instruments 1
2
4
6
Foreign currency translation adjustment 1
(1 ) 1
(1 )
Consolidated comprehensive income 108
267
554
684
Less: Comprehensive income attributable to noncontrolling interests —
(1 ) (1 ) (1 )
Comprehensive income attributable to CCO Holdings member $ 108
$ 266
$ 553
$ 683

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S EQUITY

(dollars in millions)

Unaudited


	Member's Equity		Accumulated Other Comprehensive Loss		Total CCO Holdings Member’s Equity		Noncontrolling Interests		Total Member’s Equity
BALANCE, December 31, 2019	$	55,266	$	0	$	55,266	$	23	$	55,289
Consolidated net income	459		0		459		0		459
Stock compensation expense	90		0		90		0		90
Contributions from parent	27		0		27		0		27
Distributions to parent	(2,685)		0		(2,685)		0		(2,685)
Distributions to noncontrolling interest	0		0		0		(1)		(1)
BALANCE, March 31, 2020	53,157		0		53,157		22		53,179
Consolidated net income	1,006		0		1,006		1		1,007
Stock compensation expense	90		0		90		0		90
Contributions from parent	12		0		12		0		12
Distributions to parent	(1,290)		0		(1,290)		0		(1,290)
BALANCE, June 30, 2020	52,975		0		52,975		23		52,998
Consolidated net income	1,073		0		1,073		0		1,073
Stock compensation expense	83		0		83		0		83
Contributions from parent	4		0		4		0		4
Distributions to parent	(3,692)		0		(3,692)		0		(3,692)
BALANCE, September 30, 2020	$	50,443	$	0	$	50,443	$	23	$	50,466

The accompanying notes are an integral part of these consolidated financial statements.

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S EQUITY

(dollars in millions)

Unaudited


	Member's Equity		Accumulated Other Comprehensive Loss		Total CCO Holdings Member’s Equity		Noncontrolling Interests		Total Member’s Equity
BALANCE, December 31, 2018	$	60,532	$	(2)	$	60,530	$	24	$	60,554
Consolidated net income	350		0		350		0		350
Stock compensation expense	85		0		85		0		85

Contributions from parent	9		0		9		0		9
Distributions to parent	(1,040)		0		(1,040)		0		(1,040)
Distributions to noncontrolling interest	0		0		0		(1)		(1)
BALANCE, March 31, 2019	59,936		(2)		59,934		23		59,957
Consolidated net income	438		0		438		1		439
Stock compensation expense	82		0		82		0		82
Contributions from parent	42		0		42		0		42
Distributions to parent	(1,044)		0		(1,044)		0		(1,044)
BALANCE, June 30, 2019	59,454		(2)		59,452		24		59,476
Consolidated net income	559		0		559		0		559
Stock compensation expense	71		0		71		0		71
Contributions from parent	3		0		3		0		3
Distributions to parent	(3,138)		0		(3,138)		0		(3,138)
Distributions to noncontrolling interest	0		0		0		(1)		(1)
BALANCE, September 30, 2019	$	56,949	$	(2)	$	56,947	$	23	$	56,970

The accompanying notes are an integral part of these consolidated financial statements.

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

Unaudited


	Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	2,539	$	1,348
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization	7,283		7,453
Stock compensation expense	263		238
Noncash interest income, net	(33)		(89)
Other pension (benefits) costs, net	94		(27)
Loss on extinguishment of debt	121		0
Loss on financial instruments, net	185		116
Deferred income taxes	0		54
Other, net	(28)		155
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	163		(567)
Prepaid expenses and other assets	(228)		(207)
Accounts payable, accrued liabilities and other	79		(104)
Receivables from and payables to related party	(122)		(23)
Net cash flows from operating activities	10,316		8,347

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(5,352)		(4,913)
Change in accrued expenses related to capital expenditures	(70)		(449)
Other, net	(33)		85
Net cash flows from investing activities	(5,455)		(5,277)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	10,352		13,157
Repayments of long-term debt	(9,711)		(10,886)
Borrowings of loans payable - related parties	6		—
Payments for debt issuance costs	(91)		(48)
Contributions from parent	43		54
Distributions to parent	(7,667)		(5,222)
Distributions to noncontrolling interest	(1)		(2)
Other, net	(26)		(133)
Net cash flows from financing activities	(7,095)		(3,080)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(2,234)		(10)
CASH AND CASH EQUIVALENTS, beginning of period	3,249		300
CASH AND CASH EQUIVALENTS, end of period	$	1,015	$	290

CASH PAID FOR INTEREST	$	3,020	$	3,065
CASH PAID FOR TAXES	$	36	$	27

The accompanying notes are an integral part of these consolidated financial statements.

Nine Months Ended September 30,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $ 549
$ 679
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization 7,839
4,409
Stock compensation expense 198
168
Accelerated vesting of equity awards 43
202
Noncash interest income, net (284 ) (148 )
Other pension benefits (9 ) (533 )
Loss on extinguishment of debt 35
110
(Gain) loss on financial instruments, net 15
(16 )
Deferred income taxes 14
(14 )
Other, net 82
(10 )
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable (77 ) (2 )
Prepaid expenses and other assets 64
105
Accounts payable, accrued liabilities and other 6
483
Receivables from and payables to related party, including deferred management fees 46
105
Net cash flows from operating activities 8,521
5,538

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (6,096 ) (3,437 )
Change in accrued expenses related to capital expenditures 276
86
Purchases of cable systems, net of cash acquired —
(7 )
Other, net (63 ) (8 )
Net cash flows from investing activities (5,883 ) (3,366 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 12,115
5,997
Repayments of long-term debt (5,534 ) (4,120 )
Borrowings (repayments) loans payable - related parties 163
(253 )
Payments for debt issuance costs (83 ) (283 )
Contributions from parent —
478
Distributions to parent (8,641 ) (3,084 )
Proceeds from termination of interest rate derivatives —
88
Other, net (8 ) (4 )
Net cash flows from financing activities (1,988 ) (1,181 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 650
991
CASH AND CASH EQUIVALENTS, beginning of period 1,324
5
CASH AND CASH EQUIVALENTS, end of period $ 1,974
$ 996

CASH PAID FOR INTEREST $ 2,544
$ 1,479
CASH PAID FOR TAXES $ 21
$ 3

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

1. Organization and Basis of Presentation

Organization

CCO Holdings, LLC (together with its subsidiaries, “CCO Holdings,” or the “Company”) is ~~the second largest cable operator in the United States and~~ a leading broadband connectivity company and cable operator. Over an advanced communications ~~company providing video, Internet and voice services to~~network, the Company offers a full range of state-of-the-art residential and business ~~customers. In addition,~~services including Spectrum Internet, TV, Mobile and Voice. For small and medium-sized companies, Spectrum Business® delivers the ~~Company sells video~~same suite of broadband products and ~~online~~services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising ~~inventory to local, regional~~ and ~~national advertising customers and fiber-delivered communications and managed information technology solutions to larger enterprise customers.~~production for the modern media landscape. The Company also ~~owns~~distributes award-winning news coverage, sports and ~~operates regional sports networks~~high-quality original programming to its customers through Spectrum Networks and ~~local sports, news and lifestyle channels and sells security and home management services to the residential marketplace.~~Spectrum Originals.

CCO Holdings is a holding company whose principal assets are the equity interests in its operating subsidiaries. CCO Holdings is a direct subsidiary of CCH I Holdings, LLC, ~~(“CCH I”),~~ which is an indirect subsidiary of Charter Communications, Inc. (“Charter”), Charter Communications Holdings, LLC (“Charter Holdings”) and Spectrum Management Holding Company, LLC (“Spectrum Management”). All of the outstanding capital stock of CCO Holdings Capital Corp. is owned by CCO Holdings. The consolidated financial statements include the accounts of CCO Holdings and all of its subsidiaries where the underlying operations reside. All significant intercompany accounts and transactions among consolidated entities have been eliminated. Charter, Charter Holdings and Spectrum Management have performed financing, cash management, treasury and other services for CCO Holdings on a centralized basis. Changes in member’s equity in the consolidated balance sheets related to these activities have been considered cash receipts (contributions) and payments (distributions) for purposes of the consolidated statements of cash flows and are reflected in financing activities.

The Company’s operations are managed and reported to its Chairman and Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has ~~one~~1 reportable segment, cable services.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures typically included in ~~CCO Holdings’~~the Company's Annual Report on Form 10-K have been condensed or omitted for this quarterly report. The accompanying consolidated financial statements are unaudited and are subject to review by regulatory authorities. However, in the opinion of management, such financial statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. Interim results are not necessarily indicative of results for a full year.

The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant judgments and estimates include capitalization of labor and overhead ~~costs; depreciation~~costs, impairments of franchises and ~~amortization costs; purchase accounting valuations of assets~~goodwill, pension benefits and ~~liabilities including, but not limited to, property, plant and equipment, intangibles and goodwill; pension benefits;~~ income ~~taxes; contingencies and programming expense.~~taxes. Actual results could differ from those estimates.

Certain prior period amounts have been reclassified to conform with the ~~2017~~2020 presentation.

2. ~~Mergers and Acquisitions~~

~~The Transactions~~

On May 18, 2016, the transactions contemplated by the Agreement and Plan of Mergers dated as of May 23, 2015 (the “Merger Agreement”), by and among Time Warner Cable Inc. (“Legacy TWC”), Charter Communications, Inc. prior to the closing of the Merger Agreement (“Legacy Charter”), CCH I, LLC, previously a wholly owned subsidiary of Legacy Charter and certain other subsidiaries of CCH I, LLC were completed (the “TWC Transaction,” and together with the Bright House Transaction described below, the “Transactions”). As a result of the TWC Transaction, CCH I, LLC became the new public parent company that holds the operations of the combined companies and was renamed Charter Communications, Inc. As of the date of completion of the

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~Transactions, the total value of the TWC Transaction was approximately $85 billion, including cash, equity and Legacy TWC assumed debt.~~

Also, on May 18, 2016, Legacy Charter and Advance/Newhouse Partnership (“A/N”), the former parent of Bright House Networks, LLC (“Legacy Bright House”), completed their previously announced transaction, pursuant to a definitive Contribution Agreement (the “Contribution Agreement”), under which Charter acquired Legacy Bright House (the “Bright House Transaction”) for approximately $12.2 billion consisting of cash, convertible preferred units of Charter Holdings and common units of Charter Holdings. Pursuant to the Bright House Transaction, Charter became the owner of the membership interests in Legacy Bright House and the other assets primarily related to Legacy Bright House (other than certain excluded assets and liabilities and non-operating cash).

In connection with the TWC Transaction, Liberty Broadband purchased shares of Charter Class A common stock to partially finance the cash portion of the TWC Transaction consideration, and in connection with the Bright House Transaction, Liberty Broadband purchased shares of Charter Class A common stock (the “Liberty Transactions”).

~~Acquisition Accounting~~

Charter applied acquisition accounting to the Transactions. The total purchase price was allocated to the identifiable tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values. The fair values were primarily based on third-party valuations using assumptions developed by management and other information compiled by management including, but not limited to, future expected cash flows. The excess of the purchase price over those fair values was recorded as goodwill.

~~The tables below present the final allocation of the purchase price to the assets acquired and liabilities assumed in the Transactions.~~

~~TWC Allocation of Purchase Price~~

Cash and cash equivalents $ 1,058
Current assets 1,417
Property, plant and equipment 21,413
Customer relationships 13,460
Franchises 54,085
Goodwill 28,337
Other noncurrent assets 1,040
Accounts payable and accrued liabilities (4,107 )
Debt (24,900 )
Deferred income taxes (28,120 )
Other long-term liabilities (3,162 )
Noncontrolling interests (4 )
$ 60,517

Charter made measurement period adjustments to the fair value of certain assets acquired and liabilities assumed in the TWC Transaction during the six months ended June 30, 2017 upon completion of the measurement period, including a decrease to working capital of $73 million and a decrease of $28 million to deferred income tax liabilities, resulting in a net increase of $45 million to goodwill.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~Bright House Allocation of Purchase Price~~

Current assets $ 131
Property, plant and equipment 2,884
Customer relationships 2,150
Franchises 7,225
Goodwill 44
Other noncurrent assets 86
Accounts payable and accrued liabilities (330 )
Other long-term liabilities (12 )
Noncontrolling interests (22 )
$ 12,156

In connection with the Transactions, subsidiaries of Charter contributed down to the Company the net assets and liabilities of Legacy TWC and Legacy Bright House except for the deferred tax liabilities of Charter, as noted above, and net assets of approximately $1.0 billion primarily comprised of cash and cash equivalents used as a source for the cash portion of the TWC purchase price.

~~Selected Pro Forma Financial Information~~

The following unaudited pro forma financial information of the Company is based on the historical consolidated financial statements of Legacy Charter, Legacy TWC and Legacy Bright House and is intended to provide information about how the Transactions and related financing may have affected the Company’s historical consolidated financial statements if they had closed as of January 1, 2015. The pro forma financial information below is based on available information and assumptions that the Company believes are reasonable. The pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what the Company’s financial condition or results of operations would have been had the transactions described above occurred on the date indicated. The pro forma financial information also should not be considered representative of the Company’s future financial condition or results of operations.

Nine Months Ended September 30, 2016
Revenues $ 29,748
Net income attributable to CCO Holdings member $ 1,112

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

3.2. Franchises, Goodwill and Other Intangible Assets

Indefinite-lived and finite-lived intangible assets consist of the following as of September 30, ~~2017~~2020 and December 31, ~~2016:~~2019:


	September 30, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived intangible assets:
Franchises	$	67,322	$	—	$	67,322	$	67,322	$	—	$	67,322
Goodwill	29,554		—		29,554		29,554		—		29,554
	$	96,876	$	—	$	96,876	$	96,876	$	—	$	96,876

Finite-lived intangible assets:
Customer relationships	$	18,230	$	(12,180)	$	6,050	$	18,230	$	(10,777)	$	7,453
Other intangible assets	405		(150)		255		405		(122)		283
	$	18,635	$	(12,330)	$	6,305	$	18,635	$	(10,899)	$	7,736

September 30, 2017 December 31, 2016
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Indefinite-lived intangible assets:
Franchises $ 67,316
$ —
$ 67,316
$ 67,316
$ —
$ 67,316
Goodwill 29,554
—
29,554
29,509
—
29,509
Other intangible assets —
—
—
4
—
4
$ 96,870
$ —
$ 96,870
$ 96,829
$ —
$ 96,829

Finite-lived intangible assets:
Customer relationships $ 18,227
$ (5,638 ) $ 12,589
$ 18,226
$ (3,618 ) $ 14,608
Other intangible assets 673
(181 ) 492
615
(128 ) 487
$ 18,900
$ (5,819 ) $ 13,081
$ 18,841
$ (3,746 ) $ 15,095

Amortization expense related to customer relationships and other intangible assets for the three and nine months ended September 30, ~~2017~~2020 was ~~$664~~$445 million and ~~$2.1~~$1.4 billion, respectively, and ~~was $748~~$516 million and ~~$1.2~~$1.6 billion for the three and nine months ended September 30, ~~2016,~~2019, respectively.

The Company expects amortization expense on its finite-lived intangible assets will be as follows:


Three months ended December 31, 2020	$	443
2021	1,599
2022	1,329
2023	1,072
2024	821
Thereafter	1,041
	$	6,305

Three months ended December 31, 2017 $ 662
2018 2,470
2019 2,187
2020 1,895
2021 1,611
Thereafter 4,256
$ 13,081

Actual amortization expense in future periods will differ from these estimates as a result of new intangible asset acquisitions or divestitures, changes in useful lives, impairments ~~adoption of new accounting standards~~ and other relevant factors.

~~4. Accounts Payable and Accrued Liabilities~~3. Investments

~~Accounts payable and accrued liabilities consist~~The Company recorded impairments on equity investments of approximately $121 million during the ~~following as of~~ nine months ended September 30, ~~2017~~ ~~and~~ ~~December 31, 2016~~:2019 which were recorded in other expense, net in the consolidated statements of operations.

September 30, 2017 December 31, 2016
Accounts payable – trade $ 519
$ 416
Deferred revenue 405
352
Accrued liabilities:
Programming costs 1,947
1,783
Labor 741
953
Capital expenditures 1,389
1,107
Interest 994
958
Taxes and regulatory fees 572
529
Other 936
799
$ 7,503
$ 6,897

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

4. Accounts Payable and Accrued Liabilities

~~5. Long-Term Debt~~

~~Long-term debt consists~~Accounts payable and accrued liabilities consist of the following as of September 30, ~~2017~~2020 and December 31, ~~2016~~:2019:


	September 30, 2020		December 31, 2019
Accounts payable – trade	$	704	$	727
Deferred revenue	477		460
Accrued liabilities:
Programming costs	1,913		2,042
Labor	1,124		939
Capital expenditures	1,264		1,441
Interest	962		1,052
Taxes and regulatory fees	537		501
Operating lease liabilities	203		184
Other	697		796
	$	7,881	$	8,142

5. Leases

Operating lease expenses were $98 million and $289 million for the three and nine months ended September 30, 2020, respectively, and $92 million and $281 million for the three and nine months ended September 30, 2019, respectively, inclusive of $32 million and $94 million for the three and nine months ended September 30, 2020, respectively, and $31 million and $92 million for the three and nine months ended September 30, 2019, respectively, of both short-term lease costs and variable lease costs that were not included in the measurement of operating lease liabilities.

Cash paid for amounts included in the measurement of operating lease liabilities, recorded as operating cash flows in the statements of cash flows, were $189 million and $185 million for the nine months ended September 30, 2020 and 2019, respectively. Operating lease right-of-use assets obtained in exchange for operating lease obligations were $250 million and $171 million for the nine months ended September 30, 2020 and 2019, respectively.

Supplemental balance sheet information related to leases is as follows.


	September 30, 2020			December 31, 2019
Operating lease right-of-use assets:
Included within other noncurrent assets	$	1,012		$	925

Operating lease liabilities:
Current portion included within accounts payable and accrued liabilities	$	203		$	184
Long-term portion included within other long-term liabilities	876			788
	$	1,079		$	972

Weighted average remaining lease term for operating leases	6.3 years			6.6 years
Weighted average discount rate for operating leases	4.1		%	4.4		%

September 30, 2017 December 31, 2016
Principal Amount Accreted Value Principal Amount Accreted Value
CCO Holdings, LLC:
5.250% senior notes due March 15, 2021 $ 500
$ 497
$ 500
$ 496
6.625% senior notes due January 31, 2022 —
—
750
741
5.250% senior notes due September 30, 2022 1,250
1,234
1,250
1,232
5.125% senior notes due February 15, 2023 1,000
992
1,000
992
5.125% senior notes due May 1, 2023 1,150
1,142
1,150
1,141
5.750% senior notes due September 1, 2023 500
496
500
496
5.750% senior notes due January 15, 2024 1,000
992
1,000
991
5.875% senior notes due April 1, 2024 1,700
1,686
1,700
1,685
5.375% senior notes due May 1, 2025 750
745
750
744
5.750% senior notes due February 15, 2026 2,500
2,463
2,500
2,460
5.500% senior notes due May 1, 2026 1,500
1,489
1,500
1,487
5.875% senior notes due May 1, 2027 800
794
800
794
5.125% senior notes due May 1, 2027 3,250
3,215
—
—
5.000% senior notes due February 1, 2028 1,500
1,486
—
—
Charter Communications Operating, LLC:
3.579% senior notes due July 23, 2020 2,000
1,987
2,000
1,983
4.464% senior notes due July 23, 2022 3,000
2,976
3,000
2,973
4.908% senior notes due July 23, 2025 4,500
4,461
4,500
4,458
3.750% senior notes due February 15, 2028 1,000
985
—
—
4.200% senior notes due March 15, 2028 1,250
1,237
—
—
6.384% senior notes due October 23, 2035 2,000
1,981
2,000
1,980
6.484% senior notes due October 23, 2045 3,500
3,466
3,500
3,466
5.375% senior notes due May 1, 2047 2,500
2,506
—
—
6.834% senior notes due October 23, 2055 500
495
500
495
Credit facilities 8,768
8,681
8,916
8,814
Time Warner Cable, LLC:
5.850% senior notes due May 1, 2017 —
—
2,000
2,028
6.750% senior notes due July 1, 2018 2,000
2,068
2,000
2,135
8.750% senior notes due February 14, 2019 1,250
1,356
1,250
1,412
8.250% senior notes due April 1, 2019 2,000
2,177
2,000
2,264
5.000% senior notes due February 1, 2020 1,500
1,588
1,500
1,615
4.125% senior notes due February 15, 2021 700
732
700
739
4.000% senior notes due September 1, 2021 1,000
1,048
1,000
1,056
5.750% sterling senior notes due June 2, 2031 ^(a)
838
905
770
834
6.550% senior debentures due May 1, 2037 1,500
1,687
1,500
1,691
7.300% senior debentures due July 1, 2038 1,500
1,790
1,500
1,795
6.750% senior debentures due June 15, 2039 1,500
1,725
1,500
1,730
5.875% senior debentures due November 15, 2040 1,200
1,258
1,200
1,259
5.500% senior debentures due September 1, 2041 1,250
1,258
1,250
1,258
8

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

Maturities of lease liabilities are as follows.


	Operating leases
Three months ended December 31, 2020	$	66
2021	258
2022	225
2023	200
2024	162
Thereafter	378
Undiscounted lease cash flow commitments	1,289
Reconciling impact from discounting	(210)
Lease liabilities on consolidated balance sheet as of September 30, 2020	$	1,079

The Company has $61 million and $62 million of finance lease liabilities recognized in the consolidated balance sheets as of September 30, 2020 and December 31, 2019, respectively, included within accounts payable and accrued liabilities and other long-term liabilities.The related finance lease right-of-use assets are recorded in property, plant and equipment, net.The Company’s finance leases were not considered material for further supplemental lease disclosures.

6. Long-Term Debt

Long-term debt consists of the following as of September 30, 2020 and December 31, 2019:


	September 30, 2020				December 31, 2019
	Principal Amount		Accreted Value		Principal Amount		Accreted Value
CCO Holdings, LLC:
5.250% senior notes due September 30, 2022	$	0	$	0	$	1,250	$	1,241
5.125% senior notes due February 15, 2023	0		0		1,000		995
4.000% senior notes due March 1, 2023	500		498		500		497
5.125% senior notes due May 1, 2023	0		0		1,150		1,145
5.750% senior notes due September 1, 2023	0		0		500		497
5.750% senior notes due January 15, 2024	0		0		150		149
5.875% senior notes due April 1, 2024	0		0		1,700		1,690
5.375% senior notes due May 1, 2025	750		747		750		746
5.750% senior notes due February 15, 2026	2,500		2,474		2,500		2,471
5.500% senior notes due May 1, 2026	1,500		1,492		1,500		1,491
5.875% senior notes due May 1, 2027	800		796		800		796
5.125% senior notes due May 1, 2027	3,250		3,224		3,250		3,222
5.000% senior notes due February 1, 2028	2,500		2,471		2,500		2,469
5.375% senior notes due June 1, 2029	1,500		1,501		1,500		1,501
4.750% senior notes due March 1, 2030	3,050		3,042		3,050		3,041
4.500% senior notes due August 15, 2030	2,750		2,750		0		0
4.250% senior notes due February 1, 2031	3,000		3,001		0		0
4.500% senior notes due May 1, 2032	1,400		1,387		0		0
Charter Communications Operating, LLC:
3.579% senior notes due July 23, 2020	0		0		2,000		1,997
4.464% senior notes due July 23, 2022	3,000		2,990		3,000		2,987
Senior floating rate notes due February 1, 2024	900		902		900		902

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)


4.500% senior notes due February 1, 2024													4.500% senior notes due February 1, 2024	1,100		1,094		1,100		1,093
4.908% senior notes due July 23, 2025													4.908% senior notes due July 23, 2025	4,500		4,474		4,500		4,471
3.750% senior notes due February 15, 2028													3.750% senior notes due February 15, 2028	1,000		988		1,000		987
4.200% senior notes due March 15, 2028													4.200% senior notes due March 15, 2028	1,250		1,241		1,250		1,240
5.050% senior notes due March 30, 2029													5.050% senior notes due March 30, 2029	1,250		1,241		1,250		1,241
2.800% senior notes due April 1, 2031													2.800% senior notes due April 1, 2031	1,600		1,583		0		0
6.384% senior notes due October 23, 2035													6.384% senior notes due October 23, 2035	2,000		1,983		2,000		1,982
5.375% senior notes due April 1, 2038													5.375% senior notes due April 1, 2038	800		786		800		786
6.484% senior notes due October 23, 2045													6.484% senior notes due October 23, 2045	3,500		3,468		3,500		3,467
5.375% senior notes due May 1, 2047													5.375% senior notes due May 1, 2047	2,500		2,506		2,500		2,506
5.750% senior notes due April 1, 2048													5.750% senior notes due April 1, 2048	2,450		2,391		2,450		2,391
5.125% senior notes due July 1, 2049													5.125% senior notes due July 1, 2049	1,250		1,240		1,250		1,240
4.800% senior notes due March 1, 2050													4.800% senior notes due March 1, 2050	2,800		2,797		2,800		2,798
3.700% senior notes due April 1, 2051													3.700% senior notes due April 1, 2051	1,400		1,380		0		0
6.834% senior notes due October 23, 2055													6.834% senior notes due October 23, 2055	500		495		500		495
Credit facilities													Credit facilities	10,219		10,147		10,427		10,345
Time Warner Cable, LLC:													Time Warner Cable, LLC:
5.000% senior notes due February 1, 2020													5.000% senior notes due February 1, 2020	0		0		1,500		1,503
4.125% senior notes due February 15, 2021													4.125% senior notes due February 15, 2021	700		704		700		711
4.000% senior notes due September 1, 2021													4.000% senior notes due September 1, 2021	1,000		1,011		1,000		1,021
5.750% sterling senior notes due June 2, 2031 (a)													5.750% sterling senior notes due June 2, 2031 (a)	806		860		828		886
6.550% senior debentures due May 1, 2037													6.550% senior debentures due May 1, 2037	1,500		1,670		1,500		1,675
7.300% senior debentures due July 1, 2038													7.300% senior debentures due July 1, 2038	1,500		1,766		1,500		1,772
6.750% senior debentures due June 15, 2039													6.750% senior debentures due June 15, 2039	1,500		1,708		1,500		1,713
5.875% senior debentures due November 15, 2040													5.875% senior debentures due November 15, 2040	1,200		1,254		1,200		1,255
5.500% senior debentures due September 1, 2041													5.500% senior debentures due September 1, 2041	1,250		1,258		1,250		1,258
5.250% sterling senior notes due July 15, 2042 ^(b)	871			839			800			771			5.250% sterling senior notes due July 15, 2042 (b)	839		810		861		831
4.500% senior debentures due September 15, 2042	1,250			1,137			1,250			1,135			4.500% senior debentures due September 15, 2042	1,250		1,144		1,250		1,142
Time Warner Cable Enterprises LLC:													Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023	1,000			1,243			1,000			1,273			8.375% senior debentures due March 15, 2023	1,000		1,115		1,000		1,148
8.375% senior debentures due July 15, 2033	1,000			1,315			1,000			1,324			8.375% senior debentures due July 15, 2033	1,000		1,273		1,000		1,284
Total debt	66,777			68,132			60,036			61,747			Total debt	79,064		79,662		78,416		79,078
Less current portion:													Less current portion:
5.850% senior notes due May 1, 2017	—			—			(2,000		)	(2,028		)
6.750% senior notes due July 1, 2018	(2,000		)	(2,068		)	—			—
5.000% senior notes due February 1, 2020													5.000% senior notes due February 1, 2020	0		0		(1,500)		(1,503)
3.579% senior notes due July 23, 2020													3.579% senior notes due July 23, 2020	0		0		(2,000)		(1,997)
4.125% senior notes due February 15, 2021													4.125% senior notes due February 15, 2021	(700)		(704)		0		0
4.000% senior notes due September 1, 2021													4.000% senior notes due September 1, 2021	(1,000)		(1,011)		0		0
Long-term debt	$	64,777		$	66,064		$	58,036		$	59,719		Long-term debt	$	77,364	$	77,947	$	74,916	$	75,578


^(a)	~~Principal amount includes £625 million valued at $838 million and $770 million as of September 30, 2017 and December 31, 2016, respectively, using the exchange rate at the respective dates.~~


^(b)	~~Principal amount includes £650 million valued at $871 million and $800 million as of September 30, 2017 and December 31, 2016, respectively, using the exchange rate at the respective dates.~~

(a)Principal amount includes £625 million remeasured at $806 million and $828 million as of September 30, 2020 and December 31, 2019, respectively, using the exchange rate at the respective dates.

(b)Principal amount includes £650 million remeasured at $839 million and $861 million as of September 30, 2020 and December 31, 2019, respectively, using the exchange rate at the respective dates.

The accreted values presented in the table above represent the principal amount of the debt ~~less the~~adjusted for original issue discount or premium at the time of sale, deferred financing costs, and, in regards to ~~the Legacy TWC~~ debt assumed in acquisitions, fair value premium adjustments as a result of applying acquisition accounting plus the accretion of those amounts to the balance sheet date. However, the amount that is currently payable if the debt becomes immediately due is equal to the principal amount of the debt.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

In regards to the fixed-rate British pound sterling denominated notes (the “Sterling Notes”), the principal amount of the debt and any premium or discount is remeasured into US dollars ~~is remeasured~~ as of each balance sheet date. See Note 7.8. The Company has availability under the Charter Communications Operating, LLC ("Charter Operating") credit facilities of approximately ~~$2.9~~$4.7 billion as of September 30, ~~2017~~.2020.

~~CCO Holdings~~

In February ~~2016,~~2020, CCO Holdings and CCO Holdings Capital Corp. ~~("CCO Holdings Capital")~~ jointly issued ~~$1.7~~$1.65 billion aggregate principal amount of ~~5.875%~~4.500% senior unsecured notes due ~~2024~~2030 at par and in ~~April 2016, they~~March 2020, an additional $1.1 billion of the same series of notes were issued ~~$1.5 billion aggregate principal amount of 5.500% senior notes due 2026~~ at a price of ~~100.075%~~102.5% of the aggregate principal amount. ~~The net proceeds from both issuances were used to repurchase all of CCO Holdings’ 7.000% senior notes due 2019, 7.375% senior notes due~~Also in March 2020, and 6.500% senior notes due 2021 and to pay related fees and expenses and for general corporate purposes. These debt repurchases resulted in a loss on extinguishment of debt of $110 million for the nine months ended September 30, 2016.

~~In February 2017,~~ CCO Holdings and CCO Holdings Capital ~~jointly~~Corp. issued ~~$1.0~~$1.4 billion aggregate principal amount of ~~5.125%~~4.500% senior unsecured notes due May 1, 2027. The net proceeds were used to redeem CCO Holdings’ 6.625% senior notes due 2022, pay related fees and expenses and for general corporate purposes. The Company recorded a loss on extinguishment of debt of $33 million for the nine months ended September 30, 2017 related to these transactions.

~~In March 2017, CCO Holdings and CCO Holdings Capital jointly issued an additional $1.0 billion aggregate principal amount of 5.125% senior notes due May 1, 2027~~2032 at a price of 99.0% of the aggregate principal amount. The net proceeds, as well as cash on hand, were used in April 2017 to redeem Time Warner Cable, LLC's 5.850% senior notes due 2017, pay related fees and expenses and for general corporate purposes. The Company recorded a loss on extinguishment of debt of $1 million for the nine months ended September 30, 2017 related to these transactions.

In April 2017, CCO Holdings and CCO Holdings Capital jointly issued an additional $1.25 billion aggregate principal amount of 5.125% senior notes due May 1, 2027 at a price of 100.5% of the aggregate principal amount.par. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.250% senior notes due September 30, 2022, 5.125% senior notes due February 15, 2023, 5.125% senior notes due May 1, 2023, 5.750% senior notes due September 1, 2023 and 5.750% senior notes due January 15, 2024, as well as distributions to the Company's parent companies to fund buybacks of Charter Class A common stock orand Charter Holdings common units. The Company recorded a loss on extinguishment of debt of $63 million during the nine months ended September 30, 2020 related to these transactions.

In ~~August 2017,~~July 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.5 billion aggregate principal amount of ~~5.000%~~4.250% senior unsecured notes due ~~February 1, 2028. The net proceeds were used to pay related fees~~2031 at par and ~~expenses and for general corporate purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars~~later in ~~millions, except where indicated)~~

~~In October 2017, CCO Holdings and CCO Holdings Capital jointly issued $500 million aggregate principal amount of 4.000% senior notes due March 1, 2023 (the "2023 Notes") and~~July 2020, an additional ~~$1.0~~$1.5 billion ~~aggregate principal amount~~ of ~~5.000% senior~~the same series of notes ~~due February 1, 2028~~were issued at a price of ~~98.5% of the aggregate principal amount (together with the notes issued in February, March, April and October 2017 described above, the "Notes")~~102%. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.875% senior notes due April 1, 2024, as well as distributions to the Company's parent companies to fund buybacks of Charter Class A common stock orand Charter Holdings common units. The Company recorded a loss on extinguishment of debt of $58 million during the three and nine months ended September 30, 2020 related to these transactions.

In October 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued an additional $1.5 billion of its 4.500% senior unsecured notes due 2032 at 103.75% of the aggregate principal amount. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.375% senior notes due May 1, 2025, as well as distributions to the Company's parent companies to fund potential buybacks of Charter Class A common stock and Charter Holdings common units.

The ~~Notes~~CCO Holdings notes are senior debt obligations of CCO Holdings and CCO Holdings Capital Corp. and rank equally with all other current and future unsecured, unsubordinated obligations of CCO Holdings and CCO Holdings ~~Capital.~~Capital Corp. They are structurally subordinated to all obligations of subsidiaries of CCO Holdings.

CCO Holdings may redeem some or all of the ~~Notes~~notes at any time at a premium. Beginning in ~~2025 (2021 for 2023 Notes),~~2028 and 2029, the optional redemption price declines to 100% of the principal amount, plus accrued and unpaid interest, if any.

In addition, at any time prior to varying dates in ~~2020 (2019 for the~~ 2023, ~~Notes),~~ CCO Holdings may redeem up to 40% of the aggregate principal amount of the ~~Notes~~notes at a premium plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more equity offerings (as defined in the indenture); provided that certain conditions are met. In the event of specified change of control events, CCO Holdings must offer to purchase the outstanding ~~Notes~~notes from the holders at a purchase price equal to 101% of the total principal amount of the ~~Notes,~~notes, plus any accrued and unpaid interest.

~~Charter Operating~~

In January 2017, Charter Operating entered into an amendment to its Amended and Restated Credit Agreement dated May 18, 2016 (the “Credit Agreement”) decreasing the applicable LIBOR margin on both the term loan E and term loan F to 2.00% and eliminating the LIBOR floor. The Company recorded a loss on extinguishment of debt of $1 million for the nine months ended September 30, 2017 related to these transactions.

In April ~~2017,~~2020, Charter Operating and Charter Communications Operating Capital Corp. jointly issued ~~$1.25~~$1.6 billion aggregate principal amount of ~~5.375%~~2.800% senior secured notes due ~~May 1, 2047~~April 2031 at a price of ~~99.968%~~99.561% of the aggregate principal amount and $1.4 billion aggregate principal amount of 3.700% senior secured notes due April 2051 at a price of 99.217% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate ~~purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.~~purposes.

In ~~July 2017,~~June 2020, Charter Operating and Charter Communications Operating Capital Corp. ~~jointly issued $1.0 billion aggregate principal amount~~redeemed all of ~~3.750% senior notes due February 15, 2028 at a price of 99.166% of the aggregate principal amount and an additional $500 million aggregate principal amount of 5.375%~~their 3.579% senior secured notes due May 1, 2047 at a price of 106.529% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.July 2020.

In September 2017, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.25 billion aggregate principal amount of 4.200% senior notes due March 15, 2028 at a price of 99.757% of the aggregate principal amount and an additional $750 million aggregate principal amount of 5.375% senior secured notes due May 1, 2047 at a price of 98.969% of the aggregate principal amount (collectively together with the notes issued in April and July 2017 described above, the "Charter Operating Notes"). The net proceeds were used to pay related fees and expenses and for general corporate purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.

The Charter Operating ~~Notes~~notes are guaranteed by CCO Holdings ~~Time Warner Cable, LLC, Time Warner Cable Enterprises LLC~~ and substantially all of the operating subsidiaries of Charter Operating. In addition, the Charter Operating ~~Notes~~notes are secured by a perfected first priority security interest in substantially all of the assets of Charter Operating to the extent such liens can be perfected under the Uniform Commercial Code by the filing of a financing statement. The liens rank equally with the liens on the collateral securing obligations under the Charter Operating credit facilities and continue to exist as long as the liens securing such facilities exist. Charter Operating may redeem some or all of the Charter Operating notes at any time at a premium.

~~6. Loans Payable - Related Party~~

Loans payable - related party as of September 30, 2017 and December 31, 2016 consists of loans from Charter Communications Holdings Company, LLC (“Charter Holdco”) to the Company of $655 million and $640 million, respectively. Loans payable -

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

a financing statement and the liens rank equally with the liens on the collateral securing obligations under the Charter Operating credit facilities. Charter Operating may redeem some or all of the Charter Operating notes at any time at a premium.

The Charter Operating notes are subject to the terms and conditions of the indenture governing the Charter Operating notes. The Charter Operating notes contain customary representations and warranties and affirmative covenants with limited negative covenants. The Charter Operating indenture also contains customary events of default.

7. Loans Payable - Related Party

Loans payable - related party as of September 30, ~~2017 also includes a loan~~2020 and December 31, 2019 consists of loans from Charter Communications Holding Company, LLC (“Charter Holdco”) to the Company of $727 million and $699 million, respectively, and loans from Charter to the Company of ~~$163 million.~~$279 million and $260 million, respectively. Interest ~~accrues on loans payable - related party~~accrued at LIBOR plus ~~1.75%.~~1.25% on the loans payable from Charter Holdco during the period ending September 30, 2020 and LIBOR plus 1.50% during the period ending December 31, 2019. Interest accrued at LIBOR plus 2.00% on the loans payable from Charter during both periods ending September 30, 2020 and December 31, 2019.

7.8. Accounting for Derivative Instruments and Hedging Activities

The Company uses derivative instruments to manage ~~interest rate risk on variable debt and~~ foreign exchange risk on the Sterling Notes, and does not hold or issue derivative instruments for speculative trading purposes.

Interest rate derivative instruments are used to manage interest costs and to reduce the Company’s exposure to increases in floating interest rates. The Company manages its exposure to fluctuations in interest rates by maintaining a mix of fixed and variable rate debt. Using interest rate derivative instruments, the Company agrees to exchange, at specified intervals through 2017, the difference between fixed and variable interest amounts calculated by reference to agreed-upon notional principal amounts. As of September 30, 2017 and December 31, 2016, the Company had $850 million in notional amounts of interest rate derivative instruments outstanding. The notional amounts of interest rate derivative instruments do not represent amounts exchanged by the parties and, thus, are not a measure of exposure to credit loss. The amounts exchanged were determined by reference to the notional amount and the other terms of the contracts.

Cross-currency derivative instruments are used to effectively convert £1.275 billion aggregate principal amount of fixed-rate British pound sterling denominated debt, including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt. The cross-currency swaps have maturities of June 2031 and July 2042. The Company is required to post collateral on the cross-currency derivative instruments when the derivative contracts are in a liability position. In ~~May 2016,~~April 2019, the Company entered into a collateral holiday agreement for ~~80%~~60% of both the 2031 and 2042 cross-currency swaps, which eliminates the requirement to post collateral for three ~~years.~~

~~The effect of derivative instruments~~years, as well as a ten year collateral cap on the remaining 40% of the cross-currency swaps which limits the required collateral posting on that 40% of the cross-currency swaps to $150 million. The fair value of the Company's cross-currency derivatives was $454 million and $224 million and is included in other long-term liabilities on its consolidated balance sheets ~~is presented in the table below:~~as of September 30, 2020 and December 31, 2019, respectively.

September 30, 2017 December 31, 2016
Interest Rate Derivatives
Accrued interest $ 1
$ 5
Accumulated other comprehensive loss $ (1 ) $ (5 )

Cross-Currency Derivatives
Other long-term liabilities $ 125
$ 251

The Company’s ~~interest rate and cross-currency~~ derivative instruments are not designated as hedges and are marked to fair value each period, with the impact recorded as a gain or loss on financial instruments, net in the consolidated statements of operations. While these derivative instruments are not designated as ~~cash flow~~ hedges for accounting purposes, management continues to believe such instruments are closely correlated with the respective debt, thus managing associated risk.

The effect of financial instruments on the consolidated statements of operations is presented in the table below.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Gain (loss) on Financial Instruments, Net:
Change in fair value of interest rate derivative instruments $ —
$ 7
$ 4
$ 5
Change in fair value of cross-currency derivative instruments 68
17
126
(168 )
Foreign currency remeasurement of Sterling Notes to U.S. dollars (50 ) 49
(141 ) 196
Loss on termination of interest rate derivative instruments —
—
—
(11 )
Loss reclassified from accumulated other comprehensive loss due to discontinuance of hedge accounting (1 ) (2 ) (4 ) (6 )
$ 17
$ 71
$ (15 ) $ 16


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Gain (Loss) on Financial Instruments, Net:
Change in fair value of cross-currency derivative instruments	$	135	$	(86)	$	(230)	$	(172)
Foreign currency remeasurement of Sterling Notes to U.S. dollars	(66)		52		45		56
	$	69	$	(34)	$	(185)	$	(116)

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

8.9. Fair Value Measurements

~~The accounting~~Accounting guidanceestablishes a three-level hierarchy for disclosure of fair value measurements, based on the transparency of inputs to the valuation of an asset or liability as of the measurement date, as follows:

•Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Financial Assets and Liabilities

The Company has estimated the fair value of its financial instruments as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019 using available market information or other appropriate valuation methodologies. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented in the accompanying consolidated financial statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.

The carrying amounts of cash and cash equivalents, receivables, payables and other current assets and liabilities approximate fair value because of the short maturity of those instruments.

A portion of the Company’s cash and cash equivalents as of September 30, 2017 and December 31, 2016 were invested in money market funds. The money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange which approximates fair value. The money market funds potentially subject the Company to concentration of credit risk. The amount invested within any one financial instrument did not exceed $500 million and $250 million as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017 and December 31, 2016, there were no significant concentrations of financial instruments in a single investee, industry or geographic location.

Interest rate derivative instruments are valued using a present value calculation based on an implied forward LIBOR curve (adjusted for Charter Operating’s and counterparties’ credit risk). The weighted average pay rate for the Company’s currently effective interest rate derivative instruments was 1.59% at ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ (exclusive of applicable spreads). The cross-currency derivative instruments are valued using a present value calculation based on expected forward interest and exchange rates (adjusted for Charter Operating’s and counterparties’ credit risk).

Financial instruments accounted for at fair value on a recurring basis ~~are presented in the table below.~~

September 30, 2017 December 31, 2016
Level 1 Level 2 Level 1 Level 2
Assets
Money market funds $ 1,312
$ —
$ 1,003
$ —

Liabilities
Interest rate derivative instruments $ —
$ 1
$ —
$ 5
Cross-currency derivative instruments $ —
$ 125
$ —
$ 251

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~A summary~~and classified within Level 2 of the ~~carrying value~~valuation hierarchy include the Company's cross-currency derivative instruments and ~~fair value of debt~~were valued at $454 million and $224 million as of September 30, ~~2017~~2020 and December 31, ~~2016~~ ~~is as follows:~~2019, respectively.

September 30, 2017 December 31, 2016
Carrying Value Fair Value Carrying Value Fair Value
Senior notes and debentures $ 59,451
$ 62,657
$ 52,933
$ 55,203
Credit facilities $ 8,681
$ 8,788
$ 8,814
$ 8,943

The estimated fair value of the Company’s senior notes and debentures as of September 30, ~~2017~~2020 and December 31, ~~2016~~2019 is based on quoted market prices in active markets and is classified within Level 1 of the valuation hierarchy, while the estimated fair value of the Company’s credit facilities is based on quoted market prices in inactive markets and is classified within Level 2.

A summary of the carrying value and fair value of debt as of September 30, 2020 and December 31, 2019 is as follows:


	September 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior notes and debentures	$	69,515	$	78,793	$	68,733	$	74,938
Credit facilities	$	10,147	$	9,983	$	10,345	$	10,448

Nonfinancial Assets and Liabilities

The Company’s nonfinancial assets such as equity-method investments, franchises, property, plant, and equipment, and other intangible assets 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. ~~No material~~When such impairments ~~were~~are recorded, ~~during the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016. Upon closing~~fair values are generally classified within Level 3 of the ~~Transactions, all of Legacy TWC and Legacy Bright House nonfinancial assets and liabilities were recorded at fair values. See Note 2.~~valuation hierarchy.

9.13

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

10. Revenues

The Company’s revenues by product line are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Internet	$	4,722	$	4,195	$	13,659	$	12,322
Video	4,221		4,359		13,014		13,134
Voice	449		477		1,357		1,470
Residential revenue	9,392		9,031		28,030		26,926

Small and medium business	988		974		2,967		2,882
Enterprise	617		644		1,845		1,939
Commercial revenue	1,605		1,618		4,812		4,821

Advertising sales	460		394		1,074		1,134
Mobile	368		192		936		490
Other	212		214		615		626
	$	12,037	$	11,449	$	35,467	$	33,997

11. Operating Costs and Expenses

Operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, consist of the following for the periods presented:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Programming	$	2,727	$	2,790	$	8,492	$	8,482
Regulatory, connectivity and produced content	612		612		1,651		1,770
Costs to service customers	1,902		1,894		5,598		5,483
Marketing	788		793		2,273		2,296
Mobile	456		337		1,243		874
Other	1,024		1,024		3,026		3,045
	$	7,509	$	7,450	$	22,283	$	21,950

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Programming $ 2,699
$ 2,404
$ 7,952
$ 4,648
Regulatory, connectivity and produced content 523
515
1,553
944
Costs to service customers 1,943
2,016
5,798
3,663
Marketing 629
596
1,812
1,143
Transition costs 23
32
104
78
Other 888
927
2,652
1,697
$ 6,705
$ 6,490
$ 19,871
$ 12,173

Programming costs consist primarily of costs paid to programmers for basic, premium, digital, video on demand and pay-per-view programming. Regulatory, connectivity and produced content costs represent payments to franchise and regulatory authorities, costs directly related to providing Internet, video ~~Internet~~ and voice services as well as payments for sports, local and news content produced by the Company. Included in regulatory, connectivity and produced content costs is content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the ~~applicable season.~~contract period. Costs to service customers include costs related to field operations, network operations and customer care for the Company’s residential and small and medium business customers, including internal and third-party labor for the non-capitalizable portion of installations, service and repairs, maintenance, bad debt expense, billing and collection, occupancy and vehicle costs. Marketing costs represent the costs of marketing to current and potential commercial and residential customers including labor costs. ~~Transition~~Mobile costs represent ~~incremental~~ costs ~~incurred to integrate~~associated with the ~~TWC~~Company's mobile service such as device and ~~Bright House operations~~service costs, marketing, sales and ~~to increase the scale of the Company’s business as a result of the Transactions. See Note 2.~~commissions, retail stores, personnel costs and taxes, among others. Other includes corporate overhead, advertising sales expenses, indirect costs associated with the Company’s enterprise business customers and regional sports and news networks, property tax and insurance expense and stock compensation expense, among others.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

12. Other Operating Expenses, Net

Other operating expenses, net consist of the following for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Merger and restructuring costs $ 67
$ 205
$ 293
$ 513
Special charges, net 80
4
86
10
Gain on sale of assets, net (2 ) (3 ) (5 ) (10 )
$ 145
$ 206
$ 374
$ 513

~~Merger and restructuring costs~~

Merger and restructuring costs represent costs incurred in connection with merger and acquisition transactions and related restructuring, such as advisory, legal and accounting fees, employee retention costs, employee termination costs related to the Transactions and other exit costs. The Company expects to incur additional merger and restructuring costs in connection with the Transactions. Changes in accruals for merger and restructuring costs from December 31, 2016 through September 30, 2017 are presented below:

In addition to the costs incurred indicated above, the Company recorded $6 million and $43 million of expense related to accelerated vesting of equity awards of terminated employees during the three and nine months ended September 30, 2017, respectively, and $57 million and $202 million during the three and nine months ended September 30, 2016, respectively.

Special charges, net

Special charges, net primarily includes employee termination costs ~~not related to the Transactions~~ and net amounts of litigation settlements. ~~In 2017, special charges, net also includes an $83 million charge related to the Company's withdrawal liability from a multiemployer pension plan.~~

~~Gain~~(Gain) loss on sale of assets, net

~~Gain~~(Gain) loss on sale of assets, net represents the net ~~gain~~(gain) loss recognized on the sales and disposals of fixed assets and cable systems. The nine months ended September 30, 2019 includes a $41 million impairment of non-strategic assets.

~~11.~~13. Stock Compensation Plans

Charter’s stock incentive plans provide for grants of nonqualified stock options, incentive stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and restricted stock. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting services for the Company, are eligible for grants under the stock incentive plans.

Charter granted the following equity awards for the periods presented.

Charter stock options and restricted stock units generally cliff vest three years from the date of grant. Certain stock options and restricted stock units vest based on achievement of stock price hurdles. Stock options generally expire ten years from the grant date and restricted stock units have no voting rights. Restricted stock generally vests one year from the date of grant.

As of September 30, 2020, total unrecognized compensation remaining to be recognized in future periods totaled $222 million for stock options, $2 million for restricted stock and $260 million for restricted stock units and the weighted average period over which they are expected to be recognized is two years for stock options, seven months for restricted stock and two years for restricted stock units.

The Company recorded stock compensation expense of $83 million and $263 million for the three and nine months ended September 30, 2020, respectively, and $71 million and $238 million for the three and nine months ended September 30, 2019, respectively, which is included in operating costs and expenses.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

CCO Holdings is a single member limited liability company not subject to income tax. CCO Holdings holds all operations through indirect subsidiaries. The majority of these indirect subsidiaries are limited liability companies that are not subject to income tax.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

Certain indirect subsidiaries that are required to file separate returns are subject to federal and state tax. CCO Holdings’ tax provision reflects the tax provision of the entities required to file separate returns.

Generally, the taxable income, gains, losses, deductions and credits of CCO Holdings are passed through to its indirect members, Charter and Advance/Newhouse Partnership (“A/N.N”). Charter is responsible for its share of taxable income or loss of CCO Holdings allocated to it in accordance with the Charter Holdings Limited Liability Company Agreement ~~(“LLC Agreement”)~~ and partnership tax rules and regulations. Charter also records financial statement deferred tax assets and liabilities related to its investment, and its underlying net assets, in CCO Holdings.

~~For~~The Company recorded income tax expense of $10 million and $23 million for the three and nine months ended September 30, ~~2017, the Company recorded income tax expense of $6~~2020, respectively, and $10 million and ~~$35 million, respectively, and income tax benefit of $7~~$86 million for the three and nine months ended September 30, ~~2016.~~2019, respectively. Income tax ~~benefit for~~expense decreased during the nine months ended September 30, ~~2016 was insignificant. Income~~2020 compared to the corresponding period in 2019 primarily as a result of an internal entity simplification that increased expense in 2019.

On March 18, 2020, the Families First Coronavirus Response Act ("FFCR Act"), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous tax provisions, such as deferring payroll tax payments, establishing a credit for the retention of certain employees, relaxing limitations on the deductibility of interest, and updating the definition of qualified improvement property. This legislation currently has no material impact to income tax expense ~~is generally recognized through increases in deferred tax liabilities as well as through current federal and state income tax expense.~~on the Company’s financial statements.

In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be “more likely than not” of being sustained upon examination, based on their technical merits. There is considerable judgment involved in making such a determination. The Company has recorded unrecognized tax benefits totaling approximately ~~$158~~$103 million and ~~$159~~$110 million, excluding interest and penalties, as of September 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. The Company does not currently anticipate that its reserve for uncertain tax positions will significantly increase or decrease during ~~2017;~~2020; however, various events could cause the Company’s current expectations to change in the future. These uncertain tax positions, if ever recognized in the financial statements, would be recorded in the consolidated statements of operations as part of the income tax provision.

No tax years for Charter ~~Charter Holdings, or Charter Holdco, the Company’s indirect parent companies, for income tax purposes,~~ are currently under examination by the ~~IRS. Legacy Charter’s~~Internal Revenue Service ("IRS") for income tax purposes. Charter's 2016 through 2019 tax years ~~ending 2014 through 2016~~ remain ~~subject to~~open for examination and assessment. ~~Years~~Charter’s short period return dated May 17, 2016 (prior to the Time Warner Cable Inc. ("TWC") and Bright House Networks, LLC ("Bright House") transactions) and prior ~~to 2014~~years remain open solely for purposes of examination of ~~Legacy~~ Charter’s loss and credit carryforwards. The IRS is currently examining ~~Legacy~~Charter Holdings’ income tax return for 2016. Charter Holdings’ 2017 through 2019 tax years remain open for examination and assessment. The IRS is currently examining TWC’s income tax returns for 2011 through 2014. ~~Legacy~~ TWC’s tax year 2015 remains subject to examination and assessment. Prior to ~~Legacy~~ TWC’s separation from Time Warner Inc. (“Time Warner”) in March 2009, ~~(the “Separation”), Legacy~~ TWC was included in the consolidated U.S. federal and certain state income tax returns of Time Warner. The IRS ~~is currently examining~~has examined Time Warner’s 2008 through 2010 income tax ~~returns. Time Warner’s income tax~~ returns ~~for 2005 to 2007, which~~and the results are ~~periods prior to the Separation, were settled with the exception of an immaterial item that has been referred to the IRS Appeals Division.~~under appeal. The Company does not anticipate that these examinations will have a material impact on the Company’s consolidated financial position or results of operations. In addition, the Company is also subject to ongoing examinations of the Company’s tax returns by state and local tax authorities for various periods. Activity related to these state and local examinations did not have a material impact on the Company’s consolidated financial position or results of operations during the three and nine months ended September 30, ~~2017,~~2020, nor does the Company anticipate a material impact in the future.

~~12.~~15. Comprehensive Income

Comprehensive income equaled net income attributable to CCO Holdings member for each of the three and nine months ended September 30, 2020 and 2019.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

16. Related Party Transactions

~~On May 23, 2015,~~The following sets forth certain transactions in ~~connection with~~which the ~~execution~~Company and the directors, executive officers, and affiliates of the ~~Merger Agreement~~Company are involved.

Liberty Broadband and A/N

Under the ~~amendment~~terms of ~~the Contribution Agreement, Charter entered into~~ the Amended and Restated Stockholders Agreement with Liberty Broadband, A/N and ~~Legacy~~ Charter, ~~(the “Stockholders Agreement”) and the LLC Agreement with Liberty Broadband and A/N. As of the closing of the Merger Agreement and the Contribution Agreement on~~dated May 18, 2016, the Stockholders Agreement replaced Legacy Charter’s existing stockholders agreement with Liberty Broadband, dated September 29, 2014, and superseded the amended and restated stockholders agreement among Legacy Charter, Charter, Liberty Broadband and A/N, dated March 31, 2015.

~~Under the terms of the Stockholders Agreement,~~23, 2015, the number of Charter’s directors is fixed at 13, and includes its CEO. ~~Upon the closing of the Bright House Transaction, two~~Two designees selected by A/N ~~became~~are members of the board of directors of Charter and three designees selected by Liberty Broadband ~~continued as~~are members of the board of directors of Charter. The remaining eight directors are not affiliated with either A/N or Liberty Broadband. Each of A/N and Liberty Broadband is entitled to nominate at least one director to each of the committees of Charter’s board of directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds for each of A/N and Liberty Broadband, and provided that the Nominating and Corporate Governance Committee and the Compensation and Benefit Committee each have at least a majority of directors independent from A/N, Liberty Broadband and ~~the Company~~Charter (referred to as the “unaffiliated directors”). Each of the Nominating and Corporate Governance Committee and the Compensation and Benefits Committee is currently comprised of three unaffiliated

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

directors and one designee of each of A/N and Liberty Broadband. A/N and Liberty Broadband also have certain other committee designation and other governance rights. ~~Upon the closing of the Bright House Transaction,~~ Mr. Thomas Rutledge, the Company’s CEO, ~~became~~is the chairman of the board of Charter.

In December ~~2016,~~2017, Charter and A/N entered into aan amendment to the letter agreement (the ~~"Letter Agreement"~~“Letter Agreement”) that requires A/N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter Class A common stock from persons other than A/N effected by Charter during the immediately preceding calendar month, at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such immediately preceding calendar month. A/N and Charter both have the right to terminate or suspend the pro rata repurchase arrangement on a prospective basis once Charter or Charter Holdings have repurchased shares of Class A common stock or Charter Holdings common units from A/N and its affiliates for an aggregate purchase price of $537 million which threshold has been reached.basis.

~~The Company is aware that~~ Dr. John Malone, ~~may be deemed to have~~ a ~~37.9% voting interest in Liberty Interactive~~director emeritus of Charter and is Chairman of the board of directors ~~an executive officer position,~~and holder of 48.8% of voting interest in Liberty ~~Interactive. Liberty Interactive~~Broadband, also serves on the board of directors of Qurate Retail, Inc. ("Qurate"). As reported in Qurate's SEC filings, Dr. Malone owns ~~38.2%~~approximately 1.2 million shares of the Series A common stock and approximately 27.7 million shares of the Series B common stock of Qurate and has a 40.9% voting interest in Qurate for the election of directors. Qurate wholly owns HSN, Inc. (“HSN”) and ~~has the right to elect 20% of the board members of HSN. Liberty Interactive wholly owns~~ QVC, Inc. (“QVC”). The Company has programming relationships with HSN and ~~QVC which pre-date the transaction with Liberty Media Corporation.~~QVC. For the three and nine months ended September 30, ~~2017,~~2020, the Company recorded ~~payments~~revenue in aggregate of approximately ~~$17~~$12 million and ~~$50~~$36 million, respectively, and for ~~the~~ three and nine months ended September 30, ~~2016,~~2019, the Company recorded ~~payments~~revenue in aggregate of approximately ~~$18~~$11 million and ~~$33~~$35 million, respectively, from HSN and QVC as part of channel carriage fees and revenue sharing arrangements for home shopping sales made to customers in the Company’s footprint.

Dr. Malone and Mr. Steven Miron, ~~each~~ a member of Charter’s board of directors, also serve on the board of directors of Discovery, ~~Communications,~~ Inc., (“Discovery”) ~~and the Company is aware that~~. As reported in Discovery's SEC filings, Dr. Malone owns ~~5.1% in~~1.2% of the ~~aggregate~~series A common stock, 93.6% of the series B common stock and 3.6% of the series C common stock of Discovery and has a ~~28.5%~~27.9% voting interest in Discovery for the election of directors. ~~The Company is aware that~~As reported in Discovery's SEC filings, Advance/Newhouse Programming Partnership (“A/N PP”), an affiliate of A/N and inof which Mr. Miron is the CEO, owns 100% of the Series AA-1 preferred stock of Discovery and 100% of the Series CC-1 preferred stock of Discovery ~~representing approximately 34.6%~~and has a 23.9% voting interest for matters other than the election of ~~the outstanding equity of Discovery’s stock, on an as-converted basis.~~directors. A/N PP also has the right to appoint three directors out of a total of ~~eleven~~twelve directors to Discovery’s board to be elected by the holders of Discovery’s Series A preferred stock. In addition, Dr. Malone is a member of the board of directors of Lions Gate Entertainment Corp. ("Lions Gate", parent company of Starz, Inc.) and owns approximately 5.9% in the aggregate of the common stock of Lions Gate and has 8.1% of the voting power, pursuant to his ownership of Lions Gate Class A voting shares.board. The Company purchases programming from ~~both Discovery and Lions Gate pursuant to agreements entered into prior to Dr. Malone and Mr. Miron joining Charter’s board of directors.~~Discovery. Based on publicly available information, the Company does not believe that ~~either~~ Discovery ~~or Lions Gate~~ would currently be considered a related ~~parties.~~party. The ~~amounts~~amount paid in the aggregate to Discovery ~~and Lions Gate represent~~represents less than 3%2% of total operating costs and expenses for the three and nine months ended September 30, ~~2017~~2020 and ~~2016.~~2019.

The Company and its parent companies have agreements with certain ~~equity-method~~equity investees pursuant to which the Company has made or received related party transaction payments. The Company and its parent companies recorded payments to ~~equity-method~~equity investees totaling ~~$62~~$50 million and ~~$208~~$167 million during the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~$67~~$78 million and ~~$108~~$245 million during the three and nine months ended September 30, 2016, respectively. The Company recorded advertising revenues from transactions with equity-method investees totaling $3 million and $8 million during the three and nine months ended September 30, 2017, respectively, and $3 million and $4 million during the three and nine months ended September 30, 2016,2019, respectively.

~~13.~~CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

In August 2015, a purported stockholder of Charter, Matthew Sciabacucchi, filed a lawsuit in the Delaware Court of Chancery, on behalf of a putative class of Charter stockholders, challenging the transactions ~~between~~involving Charter, TWC, A/N, and Liberty Broadband announced by Charter on May 26, 2015. The lawsuit, ~~names~~which named as defendants ~~Liberty Broadband, Legacy~~ Charter ~~the~~and its board of directors, ~~of Charter, and Charter. Plaintiff~~ alleged that the ~~Liberty Transactions improperly benefit~~transactions resulted from breaches of fiduciary duty by Charter’s directors and that Liberty Broadband improperly benefited from the challenged transactions at the expense of other Charter ~~shareholders, and that Charter issued a false and misleading proxy statement in connection with~~stockholders. The lawsuit has proceeded to the Transactions and the Liberty Transactions. Plaintiff requested, among other things, that the Delaware Court of Chancery enjoin the September 21, 2015 special meeting of Charter stockholders at which Charter stockholders were asked to vote on the Transactions and the Liberty Transactions until the defendants disclosed certain information relating to Charter, the Transactions

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

and the Liberty Transactions. The disclosures demanded by the plaintiff included (i) certain unlevered free cash flow projections for Charter and (ii) a Form of Proxy and Right of First Refusal Agreement (“Proxy”) by and among Liberty Broadband, A/N, Legacy Charter and Charter, which was referenced in the description of the Second Amended and Restated Stockholders Agreement, dated May 23, 2015, among Legacy Charter, Charter, Liberty Broadband and A/N. On September 9, 2015, Charter issued supplemental disclosures containing unlevered free cash flow projections for Charter. In return, the plaintiff agreed its disclosure claims were moot and withdrew its application to enjoin the Charter stockholder vote on the Transactions and the Liberty Transactions. Charter filed a motion to dismiss this litigation and on May 31, 2017, the court issued an opinion, concluding a number of issues but reserving ruling on Charter’s motion until further briefing can be done regarding whether plaintiff’s claims are direct or derivative. The parties are presently providing the additional briefing that the court seeks.discovery phase. Charter denies any liability, believes that it has substantial defenses, and ~~intends to~~is vigorously ~~defend~~defending this ~~suit.~~lawsuit. Although Charter is unable to predict the outcome of this lawsuit, it does not expect the outcome will have a material effect on its operations, financial condition or cash flows.

The California Attorney General and the Alameda County, California District Attorney are investigating whether certain of ~~Legacy~~ Charter’s waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. That investigation was commenced in January 2014. A similar investigation involving ~~Legacy~~ TWC was initiated in February 2012. Charter is cooperating with these investigations. While the Company is unable to predict the outcome of these investigations, it does not expect that the outcome will have a material effect on its operations, financial condition, or cash flows.

On December 19, 2011, Sprint Communications Company L.P. (“Sprint”) filed a complaint in the ~~U.S.~~United States District Court for the District of Kansas alleging that ~~Legacy~~ TWC infringed 12certain U.S. patents purportedly relating to Voice over Internet Protocol (“VoIP”) services. ~~Over~~At the ~~course of the litigation Sprint dismissed its claims relating to five of the asserted patents, and shortly before~~ trial, ~~Sprint dropped its claims with respect to two additional patents. A trial on the remaining five patents began on February 13, 2017. On March 3, 2017~~ the jury returned a verdict of $140 million against ~~Legacy~~ TWC and further concluded that ~~Legacy~~ TWC had willfully infringed Sprint’s patents. The court subsequently declined to enhance the damage award as a result of the purported willful ~~infringement. On May 30, 2017, the court~~infringement and awarded Sprint an additional $6 million, representing pre-judgment interest on the damages award. ~~On June 28, 2017,~~The Company has now paid the verdict, interest and costs in full. The Company ~~filed its notice of appeal with the United States Court of Appeals for the Federal Circuit. In addition to its appeal, the Company will continue~~continues to pursue indemnity from ~~one~~its vendors and has brought a patent suit against Sprint (TC Tech, LLC v. Sprint) in the United States District Court for the District of ~~its vendors.~~Delaware implicating Sprint's LTE technology and a similar suit against T-Mobile USA, Inc. in the Western District of Texas. The ~~impact~~ultimate outcomes of the ~~verdict was reflected in~~pursuit of indemnity against the ~~adjustment to net current liabilities as described in Note 2.~~Company’s vendors and the TC Tech litigation cannot be predicted. The Company does not expect ~~that~~ the outcome of ~~this~~its indemnity claims nor the outcome of the TC Tech litigation will have a material adverse effect on its operations or financial condition. ~~The ultimate outcome of this litigation or the pursuit of indemnity against the Company’s vendor cannot be predicted.~~

~~On October 23, 2015, the New York Office of the Attorney General (the “NY AG”) began an investigation of Legacy TWC's advertised Internet speeds~~Sprint filed a second patent suit against Charter and ~~other Internet product advertising. On February 1,~~Bright House Networks, LLC on December 2, 2017 ~~the NY AG filed suit~~ in the ~~Supreme~~United States District Court for the ~~State~~District of ~~New York alleging~~Delaware. This suit alleges infringement of 11 patents related to the Company's provision of VoIP services (ten of which were asserted against Legacy TWC in the matter described above).

On February 18, 2020 Sprint filed a lawsuit against Charter, Bright House, and TWC in the District Court for Johnson County, Kansas. Sprint alleges that ~~Legacy TWC's advertising~~Charter misappropriated trade secrets from Sprint years ago through employees hired by Bright House. Sprint asserts that the alleged trade secrets relate to the VoIP business of ~~Internet speeds was false~~Charter and ~~misleading.~~Bright House. Charter has removed this case to the United States District Court for the District of Kansas.

Sprint filed a third patent suit against Charter on May 17, 2018 in the United States District Court for the Eastern District of Virginia. This suit alleges infringement of two patents related to the Company's video on demand services. The ~~suit seeks restitution and injunctive relief. On May 26, 2017,~~court transferred this case to the United States District Court for the District of Delaware on December 20, 2018 pursuant to an agreement between the parties.

While the Company ~~moved~~is vigorously defending these suits and is unable to ~~dismiss~~predict the ~~NY AG’s complaint. The Company intends to defend itself vigorously. However, no assurances can be made that such defenses would ultimately be successful. At this time,~~outcome of the Sprint lawsuits, the Company does not expect that the ~~outcome of this~~ litigation will have a material ~~adverse~~ effect on its operations, financial condition, or cash flows.

~~The~~In addition to the Sprint litigation described above, the Company and its parent companies are defendants or co-defendants in several additional lawsuits involving alleged infringement of various ~~patents~~intellectual property relating to various aspects of their businesses. Other industry participants are also defendants in certain of these cases or related cases. In the event that a court ultimately determines that the Company infringes on any intellectual property, ~~rights,~~ the Company may be subject to substantial damages and/or an injunction that could require the Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as negotiate royalty or license agreements with respect to the ~~patents~~intellectual property at issue. While the Company believes the lawsuits are without merit and intends to defend the actions vigorously, no assurance

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

can be given that any adverse outcome would not be material to the Company’s consolidated financial condition, results of operations, or liquidity. The Company cannot predict the outcome of any such claims nor can it reasonably estimate a range of possible loss.

The Company and its parent companies are party to other lawsuits, claims and regulatory inquiries that arise in the ordinary course of conducting their ~~business, including lawsuits claiming violation of wage and hour laws and breach of contract by vendors, including by one of its programmers.~~business. The ultimate outcome of these other legal matters pending against the Company cannot be predicted, and although such lawsuits and claims are not expected individually to have a material adverse effect on the Company’s consolidated

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

financial condition, results of operations or liquidity, such lawsuits could have, in the aggregate, a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity. Whether or not the Company ultimately prevails in any particular lawsuit or claim, litigation can be time consuming and costly and injure the Company’s reputation.

~~14.~~ ~~Stock Compensation Plans~~

Charter’s 2009 Stock Incentive Plan provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and restricted stock. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting services for the Company, are eligible for grants under the 2009 Stock Incentive Plan.

~~Charter granted the following equity awards for the periods presented after applying the parent company merger ratio as a result of the Transactions, as applicable.~~

~~Charter stock options and restricted stock units cliff vest upon the~~ ~~three~~ ~~year anniversary of each grant. Certain stock options and restricted stock units vest based on achievement of stock price hurdles. Stock options generally expire~~ ~~ten~~ ~~years from the grant date and restricted stock units have no voting rights. Restricted stock generally vests~~ ~~one~~ year from the date of grant. Legacy TWC restricted stock units that were converted into Charter restricted stock units generally vest 50% on each of the third and fourth anniversary of the grant date. Legacy TWC stock options that were converted into Charter stock options vest ratably over a four-year period and expire ten years from the grant date.

~~As of~~ ~~September 30, 2017, total unrecognized compensation remaining to be recognized in future periods totaled~~ ~~$242 million~~ ~~for stock options,~~ ~~$2 million~~ ~~for restricted stock and~~ ~~$209 million~~ ~~for restricted stock units and the weighted average period over which they are expected to be recognized is~~ ~~three~~ ~~years for stock options,~~ ~~one~~ ~~year for restricted stock and~~ ~~two~~ ~~years for restricted stock units.~~

The Company recorded $64 million and $198 million of stock compensation expense for the three and nine months ended September 30, 2017, respectively and $81 million and $168 million for the three and nine months ended September 30, 2016, respectively, which is included in operating costs and expenses. The Company also recorded $6 million and $43 million of expense for the three and nine months ended September 30, 2017, respectively, and $57 million and $202 million for the three and nine months ended September 30, 2016, respectively, related to accelerated vesting of equity awards of terminated employees which is recorded in merger and restructuring costs.

~~15.~~18. Employee Benefit Plans

The Company sponsors ~~two~~three qualified defined benefit pension plans ~~the TWC Pension Plan~~ and ~~the TWC Union Pension Plan,~~one nonqualified defined benefit pension plan that provide pension benefits to a majority of ~~Legacy~~employees who were employed by TWC ~~employees. The Company also provides a nonqualified defined benefit pension plan for certain employees under~~before the ~~TWC Excess Pension Plan.~~merger with TWC.

Pension benefits are based on formulas that reflect the employees’ years of service and compensation during their employment period. Actuarial gains or losses are changes in the amount of either the benefit obligation or the fair value of plan assets resulting from experience different from that assumed or from changes in assumptions. The Company has elected to follow a mark-to-market pension accounting policy for recording the actuarial gains or losses annually during the fourth quarter, or earlier if a remeasurement event occurs during an interim period. No future compensation increases or future service will be credited to participants of the pension plans given the frozen nature of the plans.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

The components of net periodic pension ~~cost (benefit)~~benefit (costs) for the three and nine months ended September 30, ~~2017~~2020 and ~~2016 consisted of the following:~~

~~The service cost component of net periodic pension cost (benefit) is~~2019 are recorded in ~~operating costs and expenses~~other pension benefits, net in the consolidated statements of operations ~~while~~and consisted of the ~~remaining components are recorded in other pension benefits (costs).~~ following:

During the three and nine months ended September 30, ~~2017,~~2020, settlements for lump-sum distributions to ~~qualified and nonqualified~~ pension plan participants exceeded the estimated annual interest cost of the plans. As a result, the pension liability and pension asset values were reassessed as of September 30, ~~2017~~2020 utilizing remeasurement date assumptions in accordance with the Company's mark-to-market pension accounting policy to record gains and losses in the period in which a remeasurement event occurs. The ~~$30~~$125 million remeasurement loss recorded during the three and nine months ended September 30, ~~2017~~2020 was primarily driven by ~~the adoption of the revised lump sum conversion mortality tables published by the Internal Revenue Service effective January 1, 2018, and the effects of a decrease of~~changes in the discount rate ~~from 4.20% at December 31, 2016 to 3.88% at September 30, 2017. The effects of these changes were partially offset by a gain~~as well as net gains to record pension assets to fair ~~value at September 30, 2017. The expected long-term rate of return on plan assets remains at 6.50%.~~value.

The $675 million pension curtailment gain and $157 million net remeasurement loss recognized during the nine months ended September 30, 2016 resulted from an amendment to the plans made subsequent to the TWC Transaction. During the second quarter of 2016, the Company amended the pension plans to freeze future benefit accruals to current active plan participants, driving the recognition of the pension curtailment gain, as no future compensation increases or future service will be credited to participants of the pension plans. Upon announcement and approval of the plan amendment, the assumptions underlying the pension liability and pension asset values were reassessed utilizing remeasurement date assumptions, resulting in the net remeasurement loss.

The Company made no cash contributions to the qualified pension plans during the three and nine months ended September 30, ~~2017~~2020 and ~~2016;~~2019; however, the Company may make discretionary cash contributions to the qualified pension plans in the future. Such contributions will be dependent on a variety of factors, including current and expected interest rates, asset performance, the funded status of the qualified pension plans and management’s judgment. For the nonqualified unfunded pension plan, the Company will continue to make contributions during ~~2017~~2020 to the extent benefits are paid.

~~16.~~ ~~Consolidating Schedules~~

Each of Charter Operating, TWC, LLC, TWCE, CCO Holdings and certain subsidiaries jointly, severally, fully and unconditionally guarantee the outstanding debt securities of the others (other than the CCO Holdings notes) on an unsecured senior basis and the condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10, ~~Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.~~ Certain Charter Operating subsidiaries that are regulated telephone entities only become guarantor subsidiaries upon approval by regulators. This information is not intended to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance with generally accepted accounting principles.

~~The “Charter Operating and Restricted Subsidiaries” column is presented to comply with the terms of the Credit Agreement.~~

~~Condensed consolidating financial statements as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ ~~and for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~follow.~~

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~17.~~19. Recently Issued Accounting Standards

Recently Adopted Accounting Standards ~~Adopted January 1, 2017~~

ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”)

In ~~March~~June 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued ~~ASU No. 2016-09,~~ ~~Improvements~~Accounting Standards Update ("ASU") 2016-13, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to ~~Employee Share-Based Payment Accounting, which includes multiple provisions intended to simplify various aspects~~be assessed for impairment under the current expected credit loss model rather than an incurred loss model. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the ~~accounting for share-based payments.~~reported amount. The new standard (1) requires all excess tax benefits and deficiencies to be recognized as income tax expense or benefit in the income statement in the period in which they occur regardless of whether the benefit reduces taxes payable in the current period, (2) requires classification of excess tax benefits as an operating activity on the statements of cash flows, (3) allows an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur and (4) causes the threshold under which employee share-based awards partially settled in cash can qualify for equity classification to increase to the maximum statutory tax rates in the applicable jurisdiction. ASU 2016-09 will be effective for interim and annual periods after December 15, 2016 (January 1, 2017 for the Company). The new standard generally requires a modified retrospective transition through a cumulative-effect adjustment asprimary financial assets of the ~~beginning~~Company in scope of ~~the period of adoption, with certain provisions requiring either a prospective or retrospective transition.~~ASU 2016-13 include accounts receivables and equipment installment plan notes receivables. The Company adopted ASU ~~2016-09~~2016-13 on January 1, 2017. On January 1, 2017, the Company also established an accounting policy election to assume zero forfeitures for stock award grants and account for forfeitures when they occur which prospectively impacts stock compensation expense. Other aspects2020. The adoption of ~~adoption~~ ASU ~~2016-09~~2016-13 did not have a material impact to the ~~Company’s~~Company's consolidated financial statements.

ASU No. 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15")

In ~~March 2017,~~August 2018, the FASB issued ASU ~~No. 2017-07,~~ ~~Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ~~("ASU 2017-07"),~~2018-15 which requires ~~employers~~upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to ~~report~~be amortized to hosting expense over the ~~service cost~~term of the arrangement, beginning when the module or component of ~~net periodic pension cost in~~ the same line item as other compensation costs arising from services rendered during the period. The standard also requires the other components of net periodic cost be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. ASU 2017-07 will be effectivehosting arrangement is ready for annual periods beginning after December 15, 2017, and early adoption is permitted. The new standard requires retrospective application and allows a practical expedient that permits an employer to use the amounts disclosed in its ~~pension plan footnote for the prior comparative periods as the estimation basis for applying the retrospective presentation.~~intended use. The Company ~~early~~ adopted ASU ~~2017-07~~2018-15 on January 1, ~~2017 and utilized the practical expedient to estimate the impact on the prior comparative period information presented in interim and annual financial statements.~~2020. The ~~Company previously recorded service cost with other compensation costs in operating costs and expenses in the consolidated statements~~adoption of operations, and recorded other pension benefits (costs), in other operating expenses, net. Adoption of the standard results in the reclassification of other pension benefits (costs) to other expenses, net (non-operating). Adopting the standard will reduce 2016 income from operations presented for comparative purposes in the 2017 annual financial statements by $899 million withASU 2018-15 did not have a ~~corresponding decrease to other expenses of $899 million, with no~~material impact to ~~net income. For~~ the ~~three~~Company's consolidated financial statements.

ASU No. 2019-02, Improvements to Accounting for Costs of Films and nine months ended September 30, 2016, the adoption of the standard resulted in reductions of income from operations by $13 million and $533 million, respectively, with corresponding decreases to other expenses, with no impact to net income. License Agreements for Program Materials ("ASU ~~2017-07 does not impact the consolidated balance sheets or statements of cash flows.~~2019-02")

~~Accounting Standards Not Yet Adopted~~

In ~~May 2014,~~March 2019, the FASB issued ASU 2019-02 which aligns the accounting for production costs of an episodic television series with the accounting for production costs of films regarding cost capitalization, amortization, impairment, presentation and disclosure. The Company adopted ASU 2019-02 on January 1, 2020. The adoption of ASU 2019-02 did not have a material impact to the Company's consolidated financial statements.

ASU No. ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU ~~2014-09”~~2019-12”),

In December 2019, the FASB issued ASU 2019-12 which is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The new standard provides a single principles-based, five-step modelintended to ~~be applied~~simplify various aspects related to all contracts with customers, which steps are to (1) identify the contract(s) with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction priceaccounting for income taxes. ASU 2019-12 removes certain exceptions to the ~~performance obligations~~general principles in ~~the contract~~Topic 740 and ~~(5) recognize revenue when each performance obligation is satisfied.~~also clarifies and amends existing guidance to improve consistent application. ASU ~~2014-09~~2019-12 will be effective for interim and annual periods beginning after December 15, ~~2017 (January 1, 2018 for the Company).~~2020. Early adoption is permitted. The Company ~~has substantially completed the review of its revenue arrangements and does not currently expect that the~~elected to early adopt ASU 2019-12 on January 1, 2020. The adoption of ~~the new standard will~~ASU 2019-12 did not have a material impact on the ~~Company’s~~Company's consolidated financial ~~position or results~~statements.

Amendments to the financial disclosures requirements for guarantors and issuers of ~~operations. However,~~guaranteed securities under SEC Regulation S-X

In March 2020, the ~~adoption is anticipated~~SEC adopted amendments to ~~result~~the financial disclosure requirements of Regulation S-X for guarantors and issuers of guaranteed securities. The final rule streamlines disclosure obligations under the existing rules, including replacing condensed consolidating financial information with summarized financial information for the "obligor group" of issuers and guarantors to the extent material, no longer requiring subsidiary issuer and guarantor cash flow information, and no longer requiring financial information for non-guarantor subsidiaries. It also permits presentation of the required disclosures to be included in the ~~deferral~~Management's Discussion and Analysis ("MD&A") section of residential installation revenues and enterprise commission expenses over a period of time instead of recognized immediately. The adoption is also anticipated to result in the reclassification to operating costs and expenses the amortization of up-front fees paid to market and serve customers who reside in residential multiple dwelling units (“MDUs”) instead of amortized as an intangible to depreciation and amortization expense. The new standard also requires additional disclosures regarding the nature, timing and uncertainty of the Company’s revenue transactions. The Company intends to adopt the provisions of the guidance using a cumulative effect adjustment as of the January 1, 2018 adoption date.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(dollars in millions, except where indicated)~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases~~ (“ASU 2016-02”), which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. Lessees are allowed to account for short-term leases (i.e., leases with a term of 12 months or less) off-balance sheet, consistent with current operating lease accounting. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02 will be effective for interimquarterly and annual ~~periods beginning after December 15, 2018 (January 1, 2019 for~~reports rather than the ~~Company). The new standard requires a modified retrospective transition through a cumulative-effect adjustment as of~~notes to the ~~beginning of the earliest period presented in the~~Company's consolidated financial statements. The Company is ~~currently~~voluntarily complying with the new disclosure requirements beginning with its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and has included summarized financial information in the process of evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements including identifying the population of leases, evaluating technology solutions and collecting lease data.MD&A.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Classification of Certain Cash Receipts and Cash Payments~~ (“ASU 2016-15”), which clarifies how entities should classify cash receipts and cash payments related to eight specific cash flow matters on the statement of cash flows, with the objective of reducing existing diversity in practice. ASU 2016-15 will be effective for interim and annual periods beginning after December 15, 2017 (January 1, 2018 for the Company). Early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2016-15 will have on its consolidated financial statements.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment~~ (“ASU 2017-04”), which eliminates step two from the goodwill impairment test. Under the new standard, to the extent the carrying amount of a reporting unit exceeds the fair value, the Company will record an impairment charge equal to the difference. The impairment charge recognized should not exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 will be effective for interim and annual periods beginning after December 15, 2019 (January 1, 2020 for the Company). Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Company is currently in the process of evaluating the impact that the adoption of ASU 2017-04 will have on its consolidated financial statements.

~~In May 2017, the FASB issued ASU No. 2017-09,~~ ~~Scope of Modification Accounting~~ ("ASU 2017-09"), which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. ASU 2017-09 will be applied prospectively to awards modified on or after the effective date. ASU 2017-09 will be effective for interim and annual periods beginning after December 15, 2017 (January 1, 2018 for the Company). Early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2017-09 will have on its consolidated financial statements.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CCO Holdings, LLC (“CCO Holdings”) is a holding company whose principal assets are the equity interests in its operating subsidiaries. CCO Holdings is a direct subsidiary of CCH I Holdings, LLC (“CCH I”), which is an indirect subsidiary of Charter Communications, Inc. (“Charter”), Charter Communications Holdings, LLC (“Charter Holdings”) and Spectrum Management Holding Company, ~~LLC (“Spectrum Holdings”).~~LLC. All of the outstanding capital stock of CCO Holdings Capital Corp. is owned by CCO Holdings. The consolidated financial statements include the accounts of CCO Holdings and all of its subsidiaries where the underlying operations reside. All significant intercompany accounts and transactions among consolidated entities have been ~~eliminated.~~eliminated

We are ~~the second largest~~a leading broadband connectivity company and cable operator serving more than 30 million customers in 41 states through its Spectrum brand. Over an advanced communications network, we offer a full range of state-of-the-art residential and business services including Spectrum Internet, TV, Mobile and Voice. For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. We also distribute award-winning news coverage, sports and high-quality original programming to our customers through Spectrum Networks and Spectrum Originals.

As the COVID-19 pandemic continues to significantly impact the United States, we have continued to deliver services uninterrupted by the pandemic. Because we have invested significantly in our network and through normal course capacity increases, we have been able to respond to the significant increase in network activity from the private and public response to COVID-19 as we do our part as a major provider of Internet services in the United States by, among other things, enabling social distancing through telecommuting and e-learning across our footprint of 41 states. We have invested significantly in our self-service infrastructure, and customers have accelerated the adoption of our self-installation and digital self-service capabilities. Increased demand for our connectivity and the positive response to our Remote Education Offer ("REO") pursuant to which new customers with students or educators in the household were eligible to receive our Internet service for free for 60 days, and the Keep Americans Connected (“KAC”) Pledge which paused collection efforts and related disconnects for residential and small and medium business ("SMB") customers with COVID-19 related payment challenges through June 30, 2020, have positively impacted our results for the nine months ended September 30, 2020 with retention rates for these customers similar to our average customer base.

During the three and nine months ended September 30, 2020, our results were negatively impacted by COVID-19, including recording $218 million of estimated customer credits to be provided to video customers offset by $173 million in-period recognition of estimated rebates from sports programming networks as a ~~leading broadband communications services company providing~~result of canceled sporting events and related costs. The difference between the $218 million estimated credit to customers which lowered video ~~Internet~~revenue and ~~voice services~~the $163 million reduction in programming expense and $10 million reduction in regulatory, connectivity and produced content costs relates to an expected reduction in sports rights content costs which is being amortized over the life of the contract, consistent with the deferral of expense in the three months ended June 30, 2020 when games were canceled. We intend to provide a credit on our customers’ invoices for all of the rebates provided by the sports programming networks when details are finalized with these networks.

We have also seen declines in advertising revenues as a result of COVID-19 and lower revenues from seasonal plans offered to SMB and Enterprise hospitality customers that have requested a reduced level of service due to temporary business closure or because these customers have reduced their service offering to their own customers ("Seasonal Plan"). In addition, in an effort to assist COVID-19 impacted customers with overdue balances at the end of the KAC program, we waived approximately ~~27.0~~$85 million of receivables which was recorded as a reduction of revenue in the second quarter of 2020.

We cannot predict the ultimate impact of COVID-19 on our business, including the depth and duration of the economic impact to household formation and growth and our residential and business ~~customers at September 30, 2017.~~customers’ ability to pay for our products and services including the impact of extended unemployment benefits and other stimulus packages. We expect that some of the COVID-19 programs discussed above may result in incremental churn and bad debt during the remainder of the year and into 2021. In addition, there is uncertainty regarding the impact of government emergency declarations, the ability of our suppliers and vendors to provide products and services to us, the pace of new housing construction, changes in business spend in our local

and national ad sales business, the effects to our employees’ health and safety and resulting reorientation of our work activities, and the risk of limitations on the deployment and maintenance of our services (including by limiting our customer support and on-site service repairs and installations).

Although the ultimate impact of the COVID-19 pandemic cannot be predicted, we ~~sell~~remain focused on driving customer relationship growth by deploying superior products and services packaged with attractive pricing. Further, we expect to continue to drive customer relationship growth through sales of bundled services and improving customer retention despite the expectation for continued losses of video and ~~online advertising inventory~~wireline voice customers.

Our Spectrum Mobile service is offered to ~~local, regional~~customers subscribing to our Internet service and ~~national advertising customers~~runs on Verizon's mobile network combined with Spectrum WiFi. In March 2020, we launched 5G service offerings and ~~fiber-delivered communications and managed information technology ("IT") solutions~~we expect that, along with broader availability of our Spectrum Mobile bring-your-own-device program, to ~~larger enterprise customers.~~contribute to the growth of our mobile business. We also ~~own~~continue to explore ways to drive even more mobile traffic to our network. We plan to use our WiFi network in conjunction with additional unlicensed, and ~~operate regional sports networks~~potentially licensed, spectrum to improve network performance and ~~local sports, news~~expand capacity to offer consumers a superior mobile service at a lower total cost to us. In October 2020, we purchased approximately $464 million of Citizens Broadband Radio Service ("CBRS") licenses from the Federal Communications Commission ("FCC") in our effort to support our wireless network. Further, we have experimental wireless licenses from the FCC that we are utilizing to test next generation mobile services in several service areas around the country.

We believe Spectrum-branded mobile services will drive higher sales of our core products, create longer customer lives and ~~community channels~~increase profitability and ~~sell security and home management services to the residential marketplace.~~

~~The Transactions~~

On May 18, 2016, the transactions contemplated by the Agreement and Plan of Mergers dated as of May 23, 2015 (the “Merger Agreement”), by and among Time Warner Cable Inc. (“Legacy TWC”), Charter Communications, Inc. prior to the closing of the Merger Agreement (“Legacy Charter”), CCH I, LLC, previously a wholly owned subsidiary of Legacy Charter and certain other subsidiaries of CCH I, LLC were completed (the “TWC Transaction,” and together with the Bright House Transaction described below, the “Transactions”).cash flow over time. As a result of ~~the TWC Transaction, CCH I, LLC became the~~growth costs associated with our new ~~public parent company that holds the operations of the combined companies and was renamed Charter Communications, Inc.~~

Also, on May 18, 2016, Legacy Charter and Advance/Newhouse Partnership (“A/N”), the former parent of Bright House Networks, LLC (“Legacy Bright House”), completed their previously announced transaction, pursuant to a definitive Contribution Agreement (the “Contribution Agreement”), under which Charter acquired Legacy Bright House (the “Bright House Transaction”). Pursuant to the Bright House Transaction, Charter became the owner of the membership interests in Legacy Bright House and the other assets primarily related to Legacy Bright House (other than certain excluded assets and liabilities and non-operating cash).

In connection with the TWC Transaction, Legacy Charter and Liberty Broadband completed their previously announced transactions pursuant to their investment agreement, in which Liberty Broadband purchased shares of Charter Class A common stock to partially finance the cash portion of the TWC Transaction consideration, and in connection with the Bright House Transaction, Liberty Broadband purchased shares of Charter Class A common stock (the “Liberty Transactions”).

~~Comcast Wireless Cooperation Agreement~~

In May 2017, Charter announced an agreement with Comcast Corporation (“Comcast”) to, for one year, explore potential opportunities for operational cooperation in our respective wireless businesses to accelerate and enhance each company’s ability to participate in the national wireless marketplace. Charter and Comcast have each separately activated a mobile virtual network operator (“MVNO”) reseller agreement with Verizon Wireless, and have each agreed to explore working together in a number of potential operational areas in the wireless space, including: creating common operating platforms; technical standards development and harmonization; device forward and reverse logistics; and emerging wireless technology platforms. The efficiencies created are expected to provide more choice, innovative products and competitive prices for customers in each of our respective footprints. Additionally, the companies have agreed to work only together with respect to national mobile network operators, through potential commercial arrangements, including MVNOs and other material transactions in the wireless industry, for a period of one year. We intend to consider and pursue opportunities in the wireless space which may include entering into joint ventures or partnerships with wireless or cable providers which may require significant investment in our wireless business. There is no assurance we will enter into such arrangements or that if we do, that they will be successful.

Since 2012, Legacy Charter has actively invested in its network and operations and has improved the quality and value of the products and packages that it offers. Through the roll-out of Spectrum pricing and packaging ("SPP") across Legacy Charter, we have simplified our offers and improved our packaging of products, delivering more value to new and existing customers. Further,

through the transition of our Legacy Charter markets to our all-digital platform, we increased our offerings to more than 200 HD channels in most of the Legacy Charter markets and offered Internet speeds of at least 60 or 100 Mbps, among other benefits. We believe that this product ~~set combined with improved customer service, as we insource our workforce in our call centers and in our field operations, has led to lower customer churn and longer customer lifetimes.~~

In September 2016, we began launching SPP to Legacy TWC and Legacy Bright House markets and as of September 30, 2017, we offer SPP in all Legacy TWC and Legacy Bright House markets. In the second half of 2017, we began converting the remaining Legacy TWC and Legacy Bright House analog markets to an all-digital platform. The bulk of this all-digital initiative will take place in 2018. Our corporate organization, as well as our marketing, sales and product development departments, are now centralized. Field operations are managed through eleven regional areas, each designed to represent a combination of designated marketing areas and managed with largely the same set of field employees that were with the three legacy companies prior to completion of the Transactions. Over a multi-year period, Legacy TWC and Legacy Bright House customer care centers will migrate to Legacy Charter's model of using segmented, virtualized, U.S.-based in-house call centers. We are focused on deploying superior products and service with minimal service disruptions as we integrate our information technology and network operations. We expect customer and financial results to trend similarly to Legacy Charter following the implementation of Legacy Charter's operating strategies across the Legacy TWC and Legacy Bright House markets. As a result of implementing our operating strategy across Legacy TWC and Legacy Bright House,line, we cannot be certain that we will be able to grow revenues or maintain our margins at recent historical rates. During the three and nine months ended September 30, 2020, our mobile product line increased revenues by $368 million and $936 million, respectively, reduced Adjusted EBITDA by approximately $88 million and $307 million, respectively, and reduced free cash flow by approximately $265 million and $758 million, respectively. During the three and nine months ended September 30, 2019, our mobile product line increased revenues by $192 million and $490 million, respectively, reduced Adjusted EBITDA by approximately $145 million and $384 million, respectively, and reduced free cash flow by approximately $256 million and $844 million, respectively. As we continue to grow our mobile service and scale the business, we expect continued negative impacts to Adjusted EBITDA, as well as negative working capital impacts from the timing of device-related cash flows when we sell the handset or tablet to customers pursuant to equipment installment plans.

We realized revenue, Adjusted EBITDA and income from operations during the periods presented as follows (in millions; all percentages are calculated using whole numbers. Minor differences may exist due to rounding).:

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 % Change 2017 2016 % Change
Actual
Revenues $ 10,458
$ 10,037
4.2 % $ 30,979
$ 18,728
65.4 %
Adjusted EBITDA $ 3,817
$ 3,628
5.2 % $ 11,306
$ 6,723
68.2 %
Income from operations $ 909
$ 906
0.3 % $ 2,895
$ 1,633
77.3 %

Adjusted EBITDA is defined as ~~consolidated~~ net income attributable to CCO Holdings member plus net income attributable to noncontrolling interest, net interest expense, income taxes, depreciation and amortization, stock compensation expense, loss on extinguishment of debt, (gain) loss on financial instruments, net, other pension (benefits) costs, net, other (income) expense, net and other operating (income) expenses, net, such as ~~merger and restructuring costs,~~ special charges and ~~gain (loss)~~(gain) loss on sale or retirement of assets. See “—Use of Adjusted EBITDA and Free Cash Flow” for further information on Adjusted EBITDA and free cash flow.

Growth in total revenue ~~and Adjusted EBITDA~~ for the three and nine months ended September 30, ~~2017~~2020 compared to the corresponding prior ~~period~~periods was primarily due to growth in our residential Internet and ~~commercial businesses,~~mobile customers. Adjusted EBITDA and income from operations growth was impacted by growth in revenue and increases in operating costs and expenses, primarily mobile, and for the nine months ended September 30, 2017 compared to the corresponding prior period was primarily due to the Transactions. On a pro forma basis for the nine months ended September 30, 2017, assuming the Transactions occurred as of January 1, 2015, total revenue growth was primarily due to growth in our Internet and commercial businesses offset by an early contract termination benefit at Legacy TWC and Legacy Bright House in 2016 and lower advertising sales revenue due to a decrease in political and local advertising. In addition to the items noted above, Adjusted EBITDA growth on a pro forma basis was affected by2020, increases ~~in programming costs and transition costs offset by decreases~~ in costs to service customers offset by lower regulatory, connectivity and ~~other operating expenses.~~produced content costs. Income from operations ~~on a pro forma basis~~ was ~~additionally~~also affected by ~~an increase~~a decrease in depreciation and amortization ~~offset by a decrease in merger~~expense and ~~restructuring costs.~~other operating expenses, net.

On a pro forma basis, income from operations for the nine months ended September 30, 2016 has been reduced from what was previously reported by $549 million to reflect the adoption of Accounting Standards Update No. 2017-07, ~~Improving the~~

~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ~~("ASU 2017-07")~~. ~~For more information, see Note 17 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”~~

~~We incurred the following transition costs in connection with the Transactions (in millions).~~

Amounts included in transition operating expenses and transition capital expenditures represent incremental costs incurred to integrate the Legacy TWC and Legacy Bright House operations and to bring the three companies’ systems and processes into a uniform operating structure. Costs are incremental and would not be incurred absent the integration. Other operating expenses associated with the Transactions represent merger and restructuring costs and include advisory, legal and accounting fees, employee retention costs, employee termination costs and other exit costs.

All customer statistics as of September 30, 2017 include the operations of Legacy TWC, Legacy Bright House and Legacy Charter, each of which is based on individual legacy company reporting methodology. These methodologies differ and their differences may be material. Statistical reporting will be conformed over time to a single reporting methodology. The following table summarizes our customer statistics for Internet, video, ~~Internet~~mobile and voice as of September 30, ~~2017~~2020 and ~~2016~~2019 (in thousands except per customer data and footnotes).

Customer Relationships (b)

Monthly Residential Revenue per Residential Customer (c)

Monthly SMB Revenue per SMB Customer (d)

Enterprise Primary Service Units ("PSUs") (e)

(a)We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of September 30, 2020 and 2019, customers include approximately 181,700 and 148,000 customers, respectively, whose accounts were over 60 days past due, approximately 52,300 and 16,400 customers, respectively, whose accounts were over 90 days past due and approximately 26,000 and 14,100 customers, respectively, whose accounts were over 120 days past due. Included in the September 30, 2020 aging statistics are approximately 60,200 customers that would have been disconnected under our normal collection policies, but were not due to certain state mandates in place.

(b)Customer relationships include the number of customers that receive one or more levels of service, encompassing Internet, video and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units (“MDUs”) and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships exclude enterprise and mobile-only customer relationships.

(c)Monthly residential revenue per residential customer is calculated as total residential quarterly revenue divided by three divided by average residential customer relationships during the respective quarter and excludes mobile revenue and customers.

(d)Monthly SMB revenue per SMB customer is calculated as total SMB quarterly revenue divided by three divided by average SMB customer relationships during the respective quarter and excludes mobile revenue and customers.

(e)Enterprise PSUs represent the aggregate number of fiber service offerings counting each separate service offering at each customer location as an individual PSU.

Approximate as of
September 30,
2017 (a) 2016 (a)(b)
Customer Relationships (c)
Residential 25,470
24,551
Small and Medium Business 1,523
1,367
Total Customer Relationships 26,993
25,918

Residential Primary Service Units (“PSU”)
Video 16,542
16,887
Internet 22,282
21,017
Voice 10,405
10,288
49,229
48,192

Monthly Residential Revenue per Residential Customer (d) $ 110.12
$ 109.70

Small and Medium Business PSUs
Video 440
388
Internet 1,321
1,185
Voice 881
751
2,642
2,324

Monthly Small and Medium Business Revenue per Customer (e) $ 206.64
$ 214.53

Enterprise PSUs (f) 108
93
23

~~(a)~~

We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of September 30, 2017 and 2016, customers include approximately 218,300 and 200,900 customers, respectively, whose accounts were over 60 days past due, approximately 20,300 and 15,200 customers, respectively, whose accounts were over 90 days past due, and approximately 12,000 and 8,900 customers, respectively, whose accounts were over 120 days past due.

~~(b)~~

In the second quarter of 2017, we conformed the seasonal customer program in the Legacy Bright House footprint to our program. Prior to the plan change, Legacy Bright House customers enrolling in the seasonal plan were charged a one-time fee and counted as customer disconnects, and as new connects, when moving off the seasonal plan. Under our seasonal plan, residential customers pay a reduced monthly fee while the seasonal plan is active and remain reported as customers. Excluding the impact of net customer disconnect activity related to the previous seasonal plan, Legacy Bright House residential customer relationships, video, Internet and voice PSUs at September 30, 2016 would have been higher by approximately 54,000, 48,000, 66,000 and 45,000 respectively.

~~(c)~~

Customer relationships include the number of customers that receive one or more levels of service, encompassing video, Internet and voice services, without regard to which service(s) such customers receive. Customers who reside in residential multiple dwelling units (“MDUs”) and that are billed under bulk contracts are counted based on the number of billed units within each bulk MDU. Total customer relationships excludes enterprise customer relationships.


~~(d)~~	Monthly residential revenue per residential customer is calculated as total residential video, Internet and voice quarterly revenue divided by three divided by average residential customer relationships during the respective quarter.


~~(e)~~	Monthly small and medium business revenue per customer is calculated as total small and medium business quarterly revenue divided by three divided by average small and medium business customer relationships during the respective quarter.


~~(f)~~	~~Enterprise PSUs represent the aggregate number of fiber service offerings counting each separate service offering as an individual PSU.~~

Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and the means by which we develop estimates therefore, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2016~~2019 Annual Report on Form 10-K. There have been no material changes from the critical accounting policies described in our Form 10-K.

Results of Operations

We completed the Transactions on May 18, 2016 and have included the Legacy TWC and Legacy Bright House operating results since that date. In accordance with U.S. generally accepted accounting principles (“GAAP”), operating results from Legacy TWC and Legacy Bright House prior to the closing of the Transactions have been excluded. For purposes of management’s discussion and analysis, we have given explanations of increases and decreases in our results of operations on an actual basis, as well as on a pro forma basis assuming the Transactions occurred as of January 1, 2015. Due to the size of the Transactions, we believe that providing a discussion of our results of operations on a pro forma basis provides management and investors a more meaningful perspective on our financial and operational performance and trends. The results of operations data on a pro forma basis are provided for illustrative purposes only and are based on available information and assumptions that we believe are reasonable and do not purport to represent what our actual consolidated results of operations would have been had the Transactions occurred as of January 1, 2015, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

See Exhibit 99.1 in CCO Holdings' Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2016 filed with the SEC on November 10, 2016 for pro forma financial information for each quarter of 2015 and the first and second quarter of 2016.

The following table sets forth the consolidated statements of operations for the periods presented (dollars in ~~millions, except per share data)~~millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues	$	12,037	$	11,449	$	35,467	$	33,997

Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)	7,509		7,450		22,283		21,950
Depreciation and amortization	2,366		2,411		7,283		7,453
Other operating expenses, net	17		18		29		77
	9,892		9,879		29,595		29,480
Income from operations	2,145		1,570		5,872		4,517

Other Income (Expenses):
Interest expense, net	(947)		(973)		(2,904)		(2,865)
Loss on extinguishment of debt	(58)		—		(121)		—
Gain (loss) on financial instruments, net	69		(34)		(185)		(116)
Other pension benefits (costs), net	(115)		9		(94)		27
Other expense, net	(11)		(3)		(6)		(129)
	(1,062)		(1,001)		(3,310)		(3,083)

Income before income taxes	1,083		569		2,562		1,434
Income tax expense	(10)		(10)		(23)		(86)
Consolidated net income	1,073		559		2,539		1,348
Less: Net income attributable to noncontrolling interests	—		—		(1)		(1)

Net income attributable to CCO Holdings member	$	1,073	$	559	$	2,538	$	1,347

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues $ 10,458
$ 10,037
$ 30,979
$ 18,728

Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below) 6,705
6,490
19,871
12,173
Depreciation and amortization 2,699
2,435
7,839
4,409
Other operating expenses, net 145
206
374
513
9,549
9,131
28,084
17,095
Income from operations 909
906
2,895
1,633

Other Expenses:
Interest expense, net (795 ) (729 ) (2,268 ) (1,391 )
Loss on extinguishment of debt —
—
(35 ) (110 )
Gain (loss) on financial instruments, net 17
71
(15 ) 16
Other pension benefits (costs) (17 ) 13
9
533
Other expense, net (2 ) (2 ) (2 ) (2 )
(797 ) (647 ) (2,311 ) (954 )

Income before income taxes 112
259
584
679
Income tax benefit (expense) (6 ) 7
(35 ) —
Consolidated net income 106
266
549
679
Less: Net income attributable to noncontrolling interests —
(1 ) (1 ) (1 )

Net income attributable to CCO Holdings member $ 106
$ 265
$ 548
$ 678

Revenues.Total revenues grew ~~$421~~$588 million and ~~$12.3~~$1.5 billion for the three and nine months ended September 30, ~~2017~~2020, respectively, compared to the corresponding periods in ~~2016, respectively,~~2019 primarily due to increases in the number of residential Internet and ~~commercial business~~mobile customers, ~~as well as~~ price adjustments and during the three months ended September 30, 2020, advertising sales offset by a decrease in ~~basic~~ video customers and ~~advertising sales, and in the nine month period~~$218 million of estimated customer credits to be issued to our video customers due to ~~the Transactions which increased total revenues by approximately $11.4 billion. On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, total revenue growth was 4.1% for~~canceled sporting events. For the nine months ended September 30, ~~2017~~2020, total revenues also decreased as compared to the corresponding prior period ~~in 2016.~~due to $85 million of waived receivables related to the KAC program.

3424

Revenues by service offering were as follows (dollars in millions; all percentages are calculated using whole numbers. Minor differences may exist due to rounding):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		% Change		2020		2019		% Change
Internet	$	4,722	$	4,195	12.5	%	$	13,659	$	12,322	10.8	%
Video	4,221		4,359		(3.2)	%	13,014		13,134		(0.9)	%
Voice	449		477		(5.8)	%	1,357		1,470		(7.7)	%
Residential revenue	9,392		9,031		4.0	%	28,030		26,926		4.1	%

Small and medium business	988		974		1.5	%	2,967		2,882		2.9	%
Enterprise	617		644		(4.3)	%	1,845		1,939		(4.9)	%
Commercial revenue	1,605		1,618		(0.8)	%	4,812		4,821		(0.2)	%

Advertising sales	460		394		16.8	%	1,074		1,134		(5.3)	%
Mobile	368		192		91.8	%	936		490		91.3	%
Other	212		214		(0.8)	%	615		626		(1.7)	%
	$	12,037	$	11,449	5.1	%	$	35,467	$	33,997	4.3	%

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 % Change 2017 2016 % Change
Actual
Video $ 4,213
$ 4,094
2.9 % $ 12,416
$ 7,869
57.8 %
Internet 3,556
3,206
10.9 % 10,467
5,960
75.6 %
Voice 611
728
(16.1 )% 1,955
1,286
51.9 %
Residential revenue 8,380
8,028
4.4 % 24,838
15,115
64.3 %

Small and medium business 931
867
7.4 % 2,755
1,589
73.3 %
Enterprise 553
508
8.9 % 1,640
903
81.6 %
Commercial revenue 1,484
1,375
8.0 % 4,395
2,492
76.3 %

Advertising sales 373
420
(11.1 )% 1,091
729
49.9 %
Other 221
214
3.0 % 655
392
66.9 %
$ 10,458
$ 10,037
4.2 % $ 30,979
$ 18,728
65.4 %

The increase in Internet revenues from our residential customers is attributable to the following (dollars in millions):

Nine Months Ended September 30,
2017 2016
Actual Pro forma % Change
Video $ 12,416
$ 12,292
1.0 %
Internet 10,467
9,376
11.6 %
Voice 1,955
2,186
(10.6 )%
Residential revenue 24,838
23,854
4.1 %

Small and medium business 2,755
2,518
9.4 %
Enterprise 1,640
1,499
9.4 %
Commercial revenue 4,395
4,017
9.4 %

Advertising sales 1,091
1,190
(8.2 )%
Other 655
687
(4.8 )%
$ 30,979
$ 29,748
4.1 %


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Increase in average residential Internet customers	$	373	$	895
Increase related to rate, product mix and allocation changes	154		442
	$	527	$	1,337

Residential Internet customers grew by 2,212,000 customers from September 30, 2019 to September 30, 2020 due to higher demand for our services. The increase related to rate, product mix and allocation changes was primarily due to price adjustments including promotional roll-off. The increase during the nine months ended September 30, 2020 as compared to the corresponding prior period was also impacted by a $29 million reduction related to the KAC program credits.

Video revenues consist primarily of revenues from basic and digital video services provided to our residential customers, as well as franchise fees, equipment ~~rental~~service fees and video installation revenue. ~~Residential video customers decreased by 345,000 from~~ ~~September 30, 2016~~ to ~~September 30, 2017~~.

The ~~increase~~decrease in video revenues is attributable to the following (dollars in millions):


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Estimated customer credits due to COVID-19	$	(218)	$	(262)
Decrease in average residential video customers	(20)		(224)
Decrease in video on demand and pay-per-view	(18)		(26)
Increase related to rate, product mix and allocation changes	118		392
	$	(138)	$	(120)

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Bundle revenue allocation and price adjustments $ 140
$ 169
Increase in video on demand and pay-per-view 55
45
Decrease in average basic video customers (76 ) (102 )
TWC Transaction —
3,806
Bright House Transaction —
629
$ 119
$ 4,547
25

~~On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, the increase in video revenues is attributable to the following (dollars in millions):~~

Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Bundle revenue allocation and price adjustments $ 299
Increase in video on demand and pay-per-view 46
Decrease in average basic video customers (221 )
$ 124

~~Residential Internet customers grew by 1,265,000 customers from~~ ~~September 30, 2016~~ to ~~September 30, 2017. The increase in Internet revenues from our residential customers is attributable to the following (dollars in millions):~~

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Increase in average residential Internet customers $ 205
$ 410
Price adjustments, bundle revenue allocation and service level changes 145
258
TWC Transaction —
3,268
Bright House Transaction —
571
$ 350
$ 4,507

~~On a pro forma basis, assuming~~We recorded $218 million of estimated customer credits related to canceled sporting events during the ~~Transactions occurred as of January 1, 2015, the increase in Internet revenues is attributable to the following (dollars in millions):~~

Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Increase in average residential Internet customers $ 629
Price adjustments, bundle revenue allocation and service level changes 462
$ 1,091

~~Residential voice customers grew by 117,000 customers from~~ three and nine months ended September 30, ~~2016~~2020 and $44 million of customer credits related to KAC program during the nine months ended September 30, ~~2017~~.2020. The ~~change~~increase related to rate, product mix and allocation changes was primarily due to price adjustments including annual increases and promotional roll-off, partly offset by a higher mix of lower cost video packages within our video customer base. Residential video customers decreased by 20,000 from September 30, 2019 to September 30, 2020.

The decrease in voice revenues from our residential customers is attributable to the following (dollars in millions):


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Decrease in average residential voice customers	$	(16)	$	(77)
Decrease related to rate, product mix and allocation changes	(12)		(36)
	$	(28)	$	(113)

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Bundle revenue allocation and price adjustments $ (126 ) $ (180 )
Increase in average residential voice customers 9
20
TWC Transaction —
707
Bright House Transaction —
122
$ (117 ) $ 669

~~On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, the decrease in~~Residential wireline voice ~~revenues is attributable to the following (dollars in millions):~~

Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Bundle revenue allocation and price adjustments $ (271 )
Increase in average residential voice customers 40
$ (231 )

~~Small and medium business PSUs grew~~customers decreased by ~~318,000~~260,000 customers from September 30, ~~2016~~2019 to September 30, ~~2017.~~ 2020. The decrease related to rate, product mix and allocation changes was primarily due to value-based pricing. The decrease during the nine months ended September 30, 2020 as compared to the corresponding prior period was also impacted by a $3 million reduction related to the KAC program credits.

The increase in small and medium business commercial revenues is attributable to the following (dollars in millions):


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Increase in small and medium business customers	$	42	$	150
Decrease related to rate and product mix changes	(28)		(65)
	$	14	$	85

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Increase in small and medium business customers $ 100
$ 195
Price adjustments (36 ) (58 )
TWC Transaction —
890
Bright House Transaction —
139
$ 64
$ 1,166

~~On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, the increase in small~~Small and medium business ~~commercial revenues is attributable to the following (dollars in millions):~~

Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Increase in small and medium business customers $ 299
Price adjustments (62 )
$ 237

~~Enterprise PSUs increased 15,000~~customers grew by 91,000 from September 30, ~~2016~~2019 to September 30, ~~2017. Enterprise commercial revenues increased $45~~2020. The decrease related to rate and product mix changes during the three and nine months ended September 30, 2020 as compared to the corresponding prior periods included reductions of $11 million and ~~$737~~$28 million, respectively, related to COVID-19 programs.

Enterprise revenues decreased $27 million and $94 million during the three and nine months ended September 30, ~~2017~~2020, respectively, compared to the corresponding periods in ~~2016, respectively,~~2019 primarily due to ~~growth in customers and~~the sale of non-strategic assets in the ~~nine month period due to the Transactions which increased enterprise commercial revenues by $655 million. On a pro forma basis, assuming the Transactions occurred as~~third quarter of ~~January 1, 2015, enterprise commercial revenues increased $141 million~~2019. The decrease during the nine months ended September 30, ~~2017~~2020 as compared to the corresponding prior period ~~in 2016 primarily due~~was also impacted by a revenue reduction of $18 million related to ~~growth in customers.~~the COVID-19 Enterprise hospitality seasonal program. Enterprise PSUs increased 8,000 from September 30, 2019 to September 30, 2020.

Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors, as well as local cable and advertising on regional sports and news channels. Advertising sales revenues ~~decreased $47~~increased $66 million during the three months ended September 30, ~~2017~~2020 as compared to the corresponding period in ~~2016~~2019 primarily due to an increase in political revenue, partially offset by a decrease in ~~political advertising.~~local ad revenues due to COVID-19. Advertising sales revenues ~~increased $362 million during the nine months ended~~ ~~September 30, 2017~~ compared to the corresponding period in 2016 primarily due to the Transactions which increased advertising sales revenues by $425 million. On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, advertising sales revenues decreased ~~$99~~$60 million during the nine months ended September 30, ~~2017~~2020 as compared to the corresponding period in ~~2016 primarily~~2019 due to ~~a decrease~~lower local and national ad revenues due to COVID-19, partially offset by an increase in political revenue.

During the three and ~~local advertising.~~nine months ended September 30, 2020, mobile revenues represented approximately $172 million and $461 million of device revenues, respectively, and approximately $196 million and $475 million of service revenues, respectively. During the three and nine months ended September 30, 2019, mobile revenues represented approximately $123 million and $348 million of device revenues, respectively, and approximately $69 million and $142 million of service revenues,

respectively. The revenue increases are attributable to an increase in mobile lines from 794,000 as of September 30, 2019 to 2,060,000 mobile lines as of September 30, 2020.

Other revenues consist of revenue from regional sports and news channels (excluding intercompany charges or advertising sales on those channels), home shopping, late payment fees, wire maintenance fees and other miscellaneous revenues. Other revenues ~~increased $7~~decreased $2 million and ~~$263~~$11 million during the three and nine months ended September 30, ~~2017, respectively,~~2020 compared to the corresponding periods in 2016. The Transactions increased other revenues for the nine months ended September 30, 2017 compared to the corresponding period in 2016 by $255 million. On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, other revenues decreased by $32 million during the nine months ended September 30, 2017 compared to the corresponding period in 20162019 primarily due to a ~~settlement incurred~~decrease in ~~2016 related to~~late payment fees and home security revenue offset by an ~~early contract termination at Legacy TWC~~increase in the sale of video devices and ~~Legacy Bright House.~~regional sports and news revenue.

Operating costs and expenses. The ~~increases~~increase in our operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, are attributable to the following (dollars in millions):


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Programming	$	(63)	$	10
Regulatory, connectivity and produced content	—		(119)
Costs to service customers	8		115
Marketing	(5)		(23)
Mobile	119		369
Other	—		(19)
	$	59	$	333

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Programming $ 295
$ 3,304
Regulatory, connectivity and produced content 8
609
Costs to service customers (73 ) 2,135
Marketing 33
669
Transition costs (9 ) 26
Other (39 ) 955
$ 215
$ 7,698

Programming costs were approximately $2.7 billion and ~~$2.4~~$8.5 billion representing 40% and 37% of total operating costs and expenses for the three months ended September 30, 2017 and 2016, respectively, and $8.0 billion and $4.6 billion, representing 40% and 38% of total operating costs and expenses for the nine months ended September 30, 2017 and 2016, respectively. The increase in operating costs and expenses for the three and nine months ended September 30, ~~2017 compared to the corresponding prior period was primarily due to an increase in programming costs~~2020, respectively, representing 36% and ~~the Transactions.~~

~~The change in other expense is attributable to the following (dollars in millions):~~

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Corporate costs $ (35 ) $ 225
Enterprise 4
240
Advertising sales expense 12
245
Property tax and insurance 1
115
Stock compensation expense (17 ) 30
Other (4 ) 100
$ (39 ) $ 955

~~The increase in other expense for the nine months ended September 30, 2017 compared to the corresponding prior period was primarily due to the Transactions.~~

On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, increases in our operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, are attributable to the following (dollars in millions):

Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Programming $ 724
Regulatory, connectivity and produced content (17 )
Costs to service customers (135 )
Marketing 8
Transition costs 26
Other (106 )
$ 500

~~On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, programming costs were approximately $7.2 billion, representing 37%~~38% of total operating costs and expenses, respectively, and $2.8 billion and $8.5 billion for the three and nine months ended September 30, ~~2016.~~

2019, respectively, representing 37% and 39% of total operating costs and expenses, respectively. Programming costs consist primarily of costs paid to programmers for basic, digital, premium, video on demand, and pay-per-view programming. ~~The increase in programming~~Programming costs ~~for~~during the three ~~months ended September 30, 2017~~ and nine months ended September 30, ~~2017, on a pro forma basis assuming the Transactions occurred~~2020 were reduced by $163 million of estimated rebates from sports programming networks as ~~of January 1, 2015, compared to the corresponding periods in 2016 is primarily~~ a result of canceled sporting events due to COVID-19 and further benefited from a higher mix of lower cost video packages within our video customer base and lower video customers. The decrease was offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission ~~consents, higher expanded basic package customers and higher pay-per-view events offset by synergies as a result of the Transactions.~~consent. We expect programming ~~expenses~~rates will continue to increase due to a variety of factors, including annual increases imposed by programmers with additional selling power as a result of media consolidation, increased demands by owners of broadcast stations for payment for retransmission consent or linking carriage of other services to retransmission consent, and additional programming, particularly new services. We have been unable to fully pass these increases on to our customers ~~nor~~and do wenot expect to be able to do so in the future without a potential loss of customers.

~~Costs to service customers~~Regulatory, connectivity and produced content remained constant and decreased ~~$73 million and $135~~$119 million during the three ~~months ended September 30, 2017~~ and nine months ended September 30, ~~2017, on a pro forma basis assuming the Transactions occurred as of January 1, 2015,~~2020, respectively, compared to the corresponding periods in ~~2016~~2019 primarily due to ~~benefits~~deferred sports rights costs associated with the shortened baseball season resulting from ~~combining Legacy TWC~~COVID-19.

Costs to service customers increased $8 million and ~~Legacy Bright House into Charter, including lower employee benefit~~$115 million during the three and ~~maintenance costs,~~nine months ended September 30, 2020, respectively, compared to the corresponding periods in 2019 primarily due to higher labor costs resulting from COVID-19 related wage increases and ~~material capitalization~~flex time benefits along with 6.8% customer growth offset by a decrease in bad debt expense given the revenue write-off associated with the KAC program and better collections enhanced by government stimulus benefits.

Marketing costs decreased $5 million and $23 million during the three and nine months ended September 30, 2020, respectively, compared to the corresponding periods in 2019 primarily due to timing of media spend and, during the nine months ended September 30, 2020, a payroll tax credit.

Mobile costs of $456 million and $1.2 billion for the three and nine months ended September 30, 2020, respectively, and $337 million and $874 million for the three and nine months ended 2019, respectively, were comprised of mobile device costs and mobile service, customer acquisition and operating costs. The increases are attributable to increases in ~~placement~~the number of ~~new customer equipment and improved productivity.~~mobile lines.

~~On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, the~~27

The increase in other expense is attributable to the following (dollars in millions):


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Enterprise	$	(16)	$	(66)
Property tax and insurance	(12)		(32)
Advertising sales expense	9		(26)
Corporate costs	(5)		27
Stock compensation expense	12		25
Other	12		53
	$	—	$	(19)

Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Corporate costs $ (139 )
Enterprise 21
Advertising sales expense 38
Property tax and insurance (15 )
Stock compensation expense (21 )
Other 10
$ (106 )

~~Depreciation and amortization.Depreciation and amortization expense increased by $264 million during the three months ended September 30, 2017 compared~~Enterprise costs decreased primarily due to the ~~corresponding period in 2016 primarily as a result~~sale of ~~higher capital expenditures~~non-strategic assets in the ~~current year. Depreciation and amortization~~third quarter of 2019. Advertising sales expense ~~increased by $3.4 billion~~decreased during the nine months ended September 30, ~~2017~~2020 compared to the corresponding prior period ~~in 2016 primarily as a result~~due to lower cost of ~~additional depreciation~~sales fees driven by lower revenue.

Depreciation and amortization.Depreciation and amortization ~~related to the Transactions, inclusive of the incremental amounts as a result of the higher fair values recorded in acquisition accounting.~~

~~Other operating expenses, net.~~ ~~The decrease in other operating expenses, net are attributable to the following (dollars in millions):~~

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Merger and restructuring costs $ (138 ) $ (220 )
Special charges, net 76
76
(Gain) loss on sale of assets, net 1
5
$ (61 ) $ (139 )

~~The decrease in merger~~expense decreased by $45 million and ~~restructuring costs~~$170 million during the three and nine months ended September 30, ~~2017~~2020, respectively, compared to the corresponding periods in ~~2016 is~~2019 primarily due to a decrease in depreciation and amortization as certain assets acquired in acquisitions become fully depreciated offset by an increase in depreciation as a result of ~~approximately $118~~more recent capital expenditures.

Other operating expenses, net. The change in other operating expenses, net is attributable to the following (dollars in millions):


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Special charges, net	$	8	$	12
(Gain) loss on sale of assets, net	(9)		(60)
	$	(1)	$	(48)

See Note 12 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for more information.

Interest expense, net. Net interest expense decreased by $26 million and ~~$208~~increased by $39 million for the three and nine months ended September 30, 2020, respectively, compared to the corresponding periods in 2019. Changes in net interest expense is the result of ~~employee termination~~reductions in weighted average interest rates as well as increases in weighted average debt outstanding which was approximately $5.6 billion and ~~retention costs. The increase in special charges, net~~$5.7 billion during the three and nine months endedSeptember 30, ~~2017~~2020, respectively, compared to the corresponding ~~period~~periods in ~~2016~~2019. The increases in weighted average debt outstanding is primarily due to ~~an $83~~the issuance of notes throughout 2019 and 2020 for general corporate purposes including distributions to parent companies for stock buybacks and debt repayments.

Loss on extinguishment of debt. Loss on extinguishment of debt of $58 million ~~charge related to~~and $121 million for the ~~Company's withdrawal liability from~~three and nine months ended September 30, 2020, respectively, represents losses recognized as a ~~multiemployer pension plan. See~~result of the redemption of CCO Holdings notes. For more information, see Note 106 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

~~Interest expense, net.~~ Net interest expense increased by $66 million and $877 million for the three and nine months ended September 30, 2017 compared to the corresponding periods in 2016 primarily as a result of an increase in weighted average debt outstanding primarily due to the issuance of notes in 2017. Interest expense associated with debt assumed from Legacy TWC also increased interest expense during the nine months ended September 30, 2017 compared to the corresponding period in 2016 by approximately $350 million as well as interest expense associated with debt incurred to fund the Transactions by approximately $369 million.

~~Loss on extinguishment of debt.~~ Loss on extinguishment of debt of $35 million and $110 million for the nine months ended September 30, 2017 and 2016, respectively, primarily represents losses recognized as a result of repurchases of CCO Holdings, LLC ("CCO Holdings") notes. For more information, see Note 5 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Gain (loss) on financial instruments, net. We recorded ~~a gain~~gains on financial instruments of ~~$17~~$69 million and ~~a loss~~losses on financial instruments of ~~$15~~$185 million during the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~gains~~losses on financial

instruments of ~~$71~~$34 million and ~~$16~~$116 million during the three and nine months ended September 30, ~~2016,~~2019, respectively. Gains and losses on financial instruments are primarily recognized due to changes in the fair value of our ~~interest rate and our cross currency~~cross-currency derivative instruments and the foreign currency remeasurement of the fixed-rate British pound sterling denominated notes (the “Sterling Notes”) into U.S. dollars. For more information, see Note 78 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other pension benefits (costs). ~~Other~~, net. Net other pension benefits ~~decreased~~(costs) increased by ~~$30~~$124 million and ~~$524~~$121 million during the three and nine months ended September 30, ~~2017,~~2020, respectively, compared to the corresponding periods in ~~2016.~~2019. The ~~decrease~~increase during the three and nine months ended September 30, ~~2017~~2020 compared to the corresponding ~~period in 2016~~prior periods was primarily due to a $125 million remeasurement loss in the third quarter ~~2017 remeasurement~~of 2020 as a result of significant lump sum settlement payments to participants. The decrease during the nine months ended September 30, 2017 compared to the corresponding period in 2016 was also affected by a $675 million pension curtailment gain offset by an $157 million net remeasurement loss recognized in 2016 that resulted from an amendment to the plans made subsequent to the TWC Transaction. For more information, see Note 1518 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other expense, net. Other expense, net primarily represents equity losses on our ~~equity-method~~equity investments. Other expense, net also includes an impairment on equity investments of approximately $121 million during the nine months ended September 30, 2019.

Income tax ~~benefit (expense).~~expense.We recognized income tax expense of $6$10 million and ~~$35~~$23 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~income tax benefit of $7~~$10 million and $86 million for the three and nine months ended September 30, ~~2016.~~2019, respectively. Income tax ~~benefit for~~expense decreased during the nine months ended September 30, ~~2016 was insignificant. Income tax~~2020 compared to the corresponding period in 2019 primarily as a result of an internal entity simplification that increased expense ~~is recognized primarily through increases~~ in ~~deferred tax liabilities, as well as through current federal and state income tax expense.~~2019. For more information, see Note 1114 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Net income attributable to noncontrolling interest. Net income attributable to noncontrolling interest relates to our third-party

interest in CV of Viera, LLP, a consolidated joint venture in a small cable system in ~~Florida assumed in the Transactions.~~Florida.

Net income attributable to CCO Holdings member.Net income attributable to CCO Holdings member ~~decreased~~increased from ~~$265~~$559 million and $1.3 billion for the three ~~months ended September 30, 2016 to $106 million for the three months ended September 30, 2017,~~ and ~~from $678 million for the~~ nine months ended September 30, ~~2016~~2019, respectively, to ~~$548 million~~$1.1 billion and $2.5 billion for the three and nine months ended September 30, ~~2017~~2020, respectively, primarily as a result of the factors described above. ~~On a pro forma basis, assuming the Transactions occurred as of January 1, 2015, net income attributable to CCO Holdings member was $1.1 billion for the nine months ended September 30, 2016.~~

Use of Adjusted EBITDAand Free Cash Flow

We use certain measures that are not defined by ~~GAAP~~U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of our business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, ~~consolidated~~ net income attributable to CCO Holdings member and net cash flows from operating activities reported in accordance with GAAP. These terms, as defined by us, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA and free cash flow are reconciled to ~~consolidated~~ net income attributable to CCO Holdings member and net cash flows from operating activities, respectively, below.

Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our businesses as well as other non-cash or special items, and is unaffected by our capital structure or investment activities. However, this measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of financing. These costs are evaluated through other financial measures.

Free cash flow is defined as net cash flows from operating activities, less capital expenditures and changes in accrued expenses related to capital expenditures.

Management and Charter’s board of directors use Adjusted EBITDA and free cash flow to assess our performance and our ability to service our debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under our credit facilities or outstanding notes to determine compliance with

the covenants contained in the facilities and notes (all such documents have been previously filed with the Securities and Exchange Commission (the “SEC”)). For the purpose of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees, which were ~~$262~~$308 million and ~~$791~~$927 million for the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~$330~~$317 million and ~~$634~~$916 million for the three and nine months ended September 30, ~~2016,~~2019, respectively.


														Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2020		2019		2020		2019
	2017			2016			2017			2016
	Actual
Consolidated net income	$	106		$	266		$	549		$	679
Plus: Interest expense, net	795			729			2,268			1,391
Income tax (benefit) expense	6			(7		)	35			—
Net income attributable to CCO Holdings member													Net income attributable to CCO Holdings member	$	1,073	$	559	$	2,538	$	1,347
Plus: Net income attributable to noncontrolling interest													Plus: Net income attributable to noncontrolling interest	—		—		1		1
Interest expense, net													Interest expense, net	947		973		2,904		2,865
Income tax expense													Income tax expense	10		10		23		86
Depreciation and amortization	2,699			2,435			7,839			4,409			Depreciation and amortization	2,366		2,411		7,283		7,453
Stock compensation expense	64			81			198			168			Stock compensation expense	83		71		263		238
Loss on extinguishment of debt	—			—			35			110			Loss on extinguishment of debt	58		—		121		—
(Gain) loss on financial instruments, net	(17		)	(71		)	15			(16		)	(Gain) loss on financial instruments, net	(69)		34		185		116
Other pension (benefits) costs	17			(13		)	(9		)	(533		)
Other pension (benefits) costs, net													Other pension (benefits) costs, net	115		(9)		94		(27)
Other, net	147			208			376			515			Other, net	28		21		35		206
Adjusted EBITDA	$	3,817		$	3,628		$	11,306		$	6,723		Adjusted EBITDA	$	4,611	$	4,070	$	13,447	$	12,285

Net cash flows from operating activities	$	2,893		$	2,790		$	8,521		$	5,538		Net cash flows from operating activities	$	3,621	$	2,937	$	10,316	$	8,347
Less: Purchases of property, plant and equipment	(2,393		)	(1,748		)	(6,096		)	(3,437		)	Less: Purchases of property, plant and equipment	(2,014)		(1,651)		(5,352)		(4,913)
Change in accrued expenses related to capital expenditures	79			(52		)	276			86			Change in accrued expenses related to capital expenditures	104		(21)		(70)		(449)
Free cash flow	$	579		$	990		$	2,701		$	2,187		Free cash flow	$	1,711	$	1,265	$	4,894	$	2,985

Nine Months Ended
September 30, 2016
Pro forma
Consolidated net income $ 1,113
Plus: Interest expense, net 2,160
Depreciation and amortization 7,054
Stock compensation expense 219
Loss on extinguishment of debt 110
Gain on financial instruments, net (16 )
Other pension benefits (549 )
Other, net 505
Adjusted EBITDA $ 10,596

Liquidity and Capital Resources

This section contains a discussion of our liquidity and capital resources, including a discussion of our cash position, sources and uses of cash, access to credit facilities and other financing sources, historical financing activities, cash needs, capital expenditures and outstanding debt.

~~2017 Financing Activities~~Recent Events

In January 2017, Charter Operating entered into an amendment to its Amended and Restated Credit Agreement dated May 18, 2016 decreasing the applicable LIBOR margin on both the term loan E and term loan F to 2.00% and eliminating the LIBOR floor.

In February ~~2017,~~2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued ~~$1.0~~$1.65 billion aggregate principal amount of ~~5.125%~~4.500% senior unsecured notes due ~~May 1, 2027.~~2030 at par and in March 2020, an additional $1.1 billion of the same series of notes were issued at a price of 102.5% of the aggregate principal amount. Also in March 2020, CCO Holdings and CCO Holdings Capital Corp. issued $1.4 billion aggregate principal amount of 4.500% senior unsecured notes due 2032 at par. The net proceeds were used to ~~redeem CCO Holdings’ 6.625% senior notes due 2022,~~ pay related fees and expenses and for general corporate ~~purposes.~~

~~In March 2017,~~purposes, including repaying certain indebtedness, including repayment of all of CCO ~~Holdings and CCO Holdings Capital jointly issued an additional $1.0 billion aggregate principal amount of~~Holdings' 5.250% senior notes due September 30, 2022, 5.125% senior notes due February 15, 2023, 5.125% senior notes due May 1, ~~2027 at a price of 99.0% of the aggregate principal amount. The net proceeds,~~2023, 5.750% senior notes due September 1, 2023 and 5.750% senior notes due January 15, 2024, as well as ~~cash on hand, were used in April 2017~~distributions to ~~redeem Time Warner Cable, LLC's 5.850% senior notes due 2017, pay related fees~~our parent companies to fund buybacks of Charter Class A common stock and ~~expenses and for general corporate purposes.~~Charter Holdings common units.

In April ~~2017, CCO Holdings~~2020, Charter Communications Operating, LLC ("Charter Operating") and ~~CCO Holdings~~Charter Communications Operating Capital Corp. jointly issued ~~an additional $1.25~~$1.6 billion aggregate principal amount of ~~5.125%~~2.800% senior secured notes due ~~May 1, 2027~~April 2031 at a price of ~~100.5%~~99.561% of the aggregate principal amount and $1.4 billion aggregate principal amount of 3.700% senior secured notes due April 2051 at a price of 99.217% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate ~~purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.~~purposes.

In ~~April 2017,~~June 2020, Charter Operating and Charter Communications Operating Capital Corp. redeemed all of their 3.579% senior secured notes due July 2020.

In July 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued ~~$1.25~~$1.5 billion aggregate principal amount of ~~5.375%~~4.250% senior ~~secured~~unsecured notes due ~~May 1, 2047~~2031 at par and later in July 2020, an additional $1.5 billion of the same series of notes were issued at a price of ~~99.968% of the aggregate principal amount.~~102%. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including

repaying certain indebtedness, including repayment of all of CCO Holdings' 5.875% senior notes due April 1, 2024, as well as distributions to our parent companies to fund buybacks of Charter Class A common stock orand Charter Holdings common units.

In ~~July 2017, Charter Operating~~October 2020, CCO Holdings and ~~Charter Communications Operating~~CCO Holdings Capital Corp. jointly issued ~~$1.0~~an additional $1.5 billion ~~aggregate principal amount~~ of ~~3.750%~~its 4.500% senior unsecured notes due ~~February 15, 2028~~2032 at ~~a price of 99.166% of the aggregate principal amount and an additional $500 million aggregate principal amount of 5.375% senior secured notes due May 1, 2047 at a price of 106.529%~~103.75% of the aggregate principal amount. The net proceeds ~~were~~will be used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.375% senior notes due May 1, 2025, as well as distributions to our parent companies to fund potential buybacks of Charter Class A common stock orand Charter Holdings common units.

In August 2017, CCO Holdings and CCO Holdings Capital jointly issued $1.5 billion aggregate principal amount of 5.000% senior notes due February 1, 2028. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.

In September 2017, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.25 billion aggregate principal amount of 4.200% senior notes due March 15, 2028 at a price of 99.757% of the aggregate principal amount and an additional $750 million aggregate principal amount of 5.375% senior secured notes due May 1, 2047 at a price of 98.969% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.

In October 2017, CCO Holdings and CCO Holdings Capital jointly issued $500 million aggregate principal amount of 4.000% senior notes due March 1, 2023 and an additional $1.0 billion aggregate principal amount of 5.000% senior notes due February 1, 2028 at a price of 98.5% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including to fund buybacks of Charter Class A common stock or Charter Holdings common units.

Overview of Our Contractual Obligations and Liquidity

We have significant amounts of debt. The principal amount of our debt as of September 30, ~~2017~~2020 was ~~$66.8~~$79.1 billion, consisting of ~~$8.8~~$10.2 billion of credit facility debt, ~~$40.6~~$45.3 billion of investment grade senior secured notes and ~~$17.4~~$23.5 billion of high-yield senior unsecured notes. Our business requires significant cash to fund principal and interest payments on our debt.

Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures. As we continue to grow our mobile services, we expect an initial funding period to grow a new product as well as negative working capital impacts from the timing of device-related cash flows when we sell the handset or tablet to customers pursuant to equipment installment plans. Free cash flow was ~~$579 million~~$1.7 billion and ~~$2.7~~$4.9 billion for the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~was $990 million~~$1.3 billion and ~~$2.2~~$3.0 billion for the three and nine months ended September 30, ~~2016,~~2019, respectively. See table below for factors impacting free cash flow during the three and nine months ended September 30, 2020 compared to the corresponding prior periods. As of September 30, ~~2017,~~2020, the amount available under our credit facilities was approximately ~~$2.9~~$4.7 billion and cash on hand was approximately ~~$2.0~~$1.0 billion. We expect to utilize free cash flow, cash on hand and availability under our credit facilities as well as future refinancing transactions to further extend the maturities of our obligations. The timing and terms of any refinancing transactions will be subject to market ~~conditions.~~conditions among other considerations. Additionally, we may, from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender offers or redemption provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and Charter Operating’s revolving credit facility as well as access to the capital markets to fund our projected cash needs.

We continue to evaluate the deployment of our cash on hand and anticipated future free cash flow including to invest in our business growth and other strategic opportunities, including mergers and acquisitions as well as distributions to our parent ~~company~~companies for stock repurchases and dividends. Charter's target leverage of net debt to the last twelve months Adjusted EBITDA remains at 4 to 4.5 times Adjusted EBITDA, and up to 3.5 times Adjusted EBITDA at the Charter Operating level. ~~We may~~Our leverage ratio was 4.3 times Adjusted EBITDA as of September 30, 2020. As Adjusted EBITDA grows, we expect to increase the total amount of our indebtedness to maintain leverage within Charter's target leverage range. During the three and nine months ended September 30, ~~2017,~~2020, Charter purchased approximately ~~9.5~~5.5 million and ~~21.9~~11.9 million of Charter Class A common stock for approximately $3.3 billion and $6.5 billion, respectively, and during the three and nine months ended September 30, 2019, Charter purchased approximately 6.9 million and 11.8 million shares, respectively, of Charter Class A common stock for approximately ~~$3.5~~$2.7 billion and ~~$7.6~~$4.5 billion, respectively. As of September 30, 2017, Charter had remaining board authority to purchase an additional $5.2 billion of Charter’s Class A common stock without taking into account shares or units that may be purchased from A/N. Charter is not obligated to acquire any particular amount of common stock, and the timing of any purchases that may occur cannot be predicted and will largely depend on market conditions and other potential uses of capital. Purchases may include open market purchases, tender offers or negotiated transactions. To the extent such purchases occur, CCO Holdings and its subsidiaries are the primary source for funding such purchases through distributions to their parent companies. As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other considerations, improving the operational efficiency, clustering, product development or technology capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions, dispositions or system swaps, or that any such transactions will be material to our operations or results.

In December ~~2016,~~2017, Charter and A/N entered into aan amendment to the letter agreement (the "Letter Agreement") that requires A/N to sell to Charter or to Charter Holdings, on a monthly basis, a number of shares of Charter Class A common stock or Charter Holdings common units that represents a pro rata participation by A/N and its affiliates in any repurchases of shares of Charter Class A common stock from persons other than A/N effected by Charter during the immediately preceding calendar month, at a purchase price equal to the average price paid by Charter for the shares repurchased from persons other than A/N during such immediately preceding calendar month. A/N and Charter both have the right to terminate or suspend the pro rata repurchase arrangement on a prospective basis once Charter or Charter Holdings have repurchased shares of Class A common stock or Charter Holdings common units from A/N and its affiliates for an aggregate purchase price of $537 million which threshold has been reached.basis. Charter Holdings purchased from A/N ~~1.4~~0.6 million and 1.7 million Charter Holdings common units at an average price per unit of ~~$355.83,~~$568.19 and $514.10, or ~~$493~~$366 million and $884 million, during the three and nine months ended September 30, ~~2017,~~2020, respectively, and ~~2.7~~0.9 million and 1.6 million Charter Holdings common units at an average price per unit of ~~$341.49,~~$391.62 and $366.76, or ~~$922 million during the nine months ended September 30, 2017.~~

~~Free cash flow decreased $411~~$339 million and ~~increased $514~~$593 million, during the three and nine months ended September 30, ~~2017, respectively,~~2019, respectively.

As of September 30, 2020, Charter had remaining board authority to purchase an additional $1.6 billion of Charter’s Class A common stock and/or Charter Holdings common units. Although Charter expects to continue to buy back its common stock consistent with its leverage target range, Charter is not obligated to acquire any particular amount of common stock, and the timing of any purchases that may occur cannot be predicted and will largely depend on market conditions and other potential

uses of capital.Purchases may include open market purchases, tender offers or negotiated transactions. To the extent such purchases occur, CCO Holdings and its subsidiaries are the primary source for funding such purchases through distributions to their parent companies.

As possible acquisitions, swaps or dispositions arise, we actively review them against our objectives including, among other considerations, improving the operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate return targets, and we may participate to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions, dispositions or system swaps, or that any such transactions will be material to our operations or results.

Free cash flow increased $446 million and $1.9 billion during the three and nine months ended September 30, 2020 compared to the corresponding prior periods in ~~2016~~2019 due to the following (dollars in millions).

Free cash flow was reduced by $265 million and $758 million during the three and nine months ended September 30, 2020, respectively, and $256 million and $844 million during the three and nine months ended September 30, 2019, respectively, due to mobile with impacts negatively affecting working capital, capital expenditures and Adjusted EBITDA.

Financial Information about Guarantors, Issuers of Guaranteed Securities and Consolidated Subsidiaries

Each of CCO Holdings, Charter Operating, Time Warner Cable, LLC and Time Warner Cable Enterprises LLC (collectively, the “Issuers”) and certain Charter Operating direct and indirect subsidiaries (collectively, the “Obligor Group”) jointly, severally, fully and unconditionally guarantee the outstanding debt securities of the respective Issuers (other than the CCO Holdings unsecured notes) and Charter Operating’s credit facilities on a senior basis (collectively, the “Guaranteed Debt”). Such guarantees are pari passu in right of payment with all senior indebtedness of the guarantors and senior in right of payment to subordinated obligations of the guarantors. Each guarantee will be limited to the maximum amount that can be guaranteed by the relevant guarantor without rendering the relevant guarantee, as it relates to that guarantor, voidable or otherwise ineffective or limited under applicable law, and enforcement of each guarantee would be subject to certain generally available defenses. Certain Charter Operating subsidiaries that are regulated entities are only designated as guarantor subsidiaries upon approval by regulators. The guaranteed obligations of a guarantor may be released under certain circumstances permitted under the documentation governing the Guaranteed Debt, including if a subsidiary guarantor no longer qualifies as a “Subsidiary” of Charter Operating under transactions not prohibited by the Charter Operating credit agreement.

The Guaranteed Debt and the subsidiary guarantees thereof are also secured by (i) a lien on substantially all of the assets of Charter Operating and its subsidiaries, to the extent such lien can be perfected under the Uniform Commercial Code by the filing of a financing statement, and (ii) a pledge by CCO Holdings of the equity interests owned by it in any of Charter Operating’s subsidiaries, as well as intercompany obligations owing to it by any of such entities. Such subsidiary guarantees are effectively senior to all unsecured debt or debt secured by a junior liens of the subsidiary guarantors, in each case to the extent of the value of the collateral securing the guarantee obligations of the subsidiary guarantors.

See Note 9 to the consolidated financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data” in CCO Holdings' 2019 Annual Report on Form 10-K for further details about the terms, conditions and other factors that may

Three months ended
September 30, 2017
compared to
three months ended
September 30, 2016
Increase / (Decrease) Nine months ended
September 30, 2017
compared to
nine months ended
September 30, 2016
Increase / (Decrease)
Increase in Adjusted EBITDA $ 189
$ 4,583
Decrease in merger and restructuring costs 87
61
Increase in capital expenditures (645 ) (2,659 )
Decrease (increase) in cash paid for interest, net 61
(1,059 )
Changes in working capital, excluding change in accrued interest (123 ) (418 )
Other, net 20
6
$ (411 ) $ 514
affect payments to holders of Guaranteed Debt. There have been no material changes from such disclosure described in our Form 10-K.

In March 2020, the SEC adopted amendments to the financial disclosure requirements of Regulation S-X for guarantors and issuers of guaranteed securities. CCO Holdings is voluntarily complying with the new disclosure requirements beginning with its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. Because the assets, liabilities and results of operations of the combined Obligor Group are not materially different than corresponding amounts presented in the consolidated financial statements of CCO Holdings, summarized financial information of the Obligor Group has been omitted pursuant to SEC Regulation S-X Rule 13-01, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered. The information below is being presented to comply with the terms of the Charter Operating credit agreement. This information is not intended to present the financial position, results of operations and cash flow of the individual companies or groups of companies in accordance with generally accepted accounting principles.

Limitations on Distributions

Distributions by us and our subsidiaries to a parent company for payment of principal on parent company notes are restricted under indentures and credit facilities governing our indebtedness, unless there is no default under the applicable indenture and credit facilities, and unless each applicable subsidiary’s leverage ratio test is met at the time of such distribution. As of September 30, ~~2017~~,2020, there was no default under any of these indentures or credit facilities, and each subsidiary met its applicable leverage ratio tests based on September 30, ~~2017~~2020 financial results. ~~Such distributions would be restricted, however, if any such subsidiary fails to meet these tests at the time of the contemplated distribution.~~ There can be no assurance that they will satisfy these tests at the

time of the contemplated distribution. Distributions by Charter Operating for payment of principal on parent company notes are further restricted by the covenants in its credit facilities.

However, without regard to leverage, during any calendar year or any portion thereof during which the borrower is a flow-through entity for tax purposes, and so long as no event of default exists, the borrower may make distributions to the equity

interests of the borrower in an amount sufficient to make permitted tax payments.

In addition to the limitation on distributions under the various indentures, ~~discussed above,~~ distributions by our subsidiaries may be limited by applicable law, including the Delaware Limited Liability Company Act, under which our subsidiaries may only make distributions if they have “surplus” as defined in the act.

Historical Operating, Investing, and Financing Activities

Cash, Cash Equivalents and ~~Cash Equivalents.~~ Restricted Cash. We held ~~$2.0~~$1.0 billion and ~~$1.3~~$3.2 billion in cash and cash equivalents as of September 30, ~~2017~~2020 and December 31, ~~2016~~,2019, respectively.

Operating Activities.Net cash provided by operating activities increased ~~$3.0~~$2.0 billion during the nine months ended September 30, ~~2017~~2020 compared to the nine months ended September 30, ~~2016,~~2019, primarily due to an increase in Adjusted EBITDA of ~~$4.6~~$1.2 billion ~~offset by an increase in cash paid for interest, net of $1.1 billion as a result of the Transactions as well as~~and changes in ~~operating assets and liabilities,~~working capital, excluding the change in accrued interest and accrued expenses related to capital expenditures, that ~~provided $418~~used $805 million less ~~cash during the nine months ended September 30, 2017.~~cash.

Investing Activities.Net cash used in investing activities was ~~$5.9~~$5.5 billion and ~~$3.4~~$5.3 billion for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The increase in cash used was primarily due to an increase in capital ~~expenditures as a result of the Transactions.~~expenditures.

Financing Activities.Net cash used in financing activities was ~~$2.0~~$7.1 billion and ~~$1.2~~$3.1 billion for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The increase in cash used was primarily due to an increase in distributions ~~offset~~to parent companies and a decrease in the amount by ~~an increase in~~which borrowings of long-term debt ~~exceeding~~exceeded repayments.

Capital Expenditures

We have significant ongoing capital expenditure requirements. Capital expenditures were ~~$2.4~~$2.0 billion and ~~$6.1~~$5.4 billion for the three and nine months ended September 30, ~~2017,~~2020, respectively, and $1.7 billion and ~~$3.4~~$4.9 billion for the three and nine months ended September 30, ~~2016,~~2019, respectively. The increase ~~during the nine months ended September 30, 2017 compared~~was primarily due to ~~2016 was~~higher support capital as a result of facility improvements and investments in back office systems and mobile store build-outs, higher line extensions driven by ~~the Transactions. On~~continued network expansion, including to rural areas and higher scalable infrastructure as a ~~pro forma basis, assuming the Transactions occurred as~~result of ~~January 1, 2015, capital expenditures increased $439 million during the nine months ended September 30, 2017 compared to the corresponding period in 2016. The increase~~core network enhancements and node splits given growing customers and traffic and during the three months ended September 30, ~~2017 compared to 2016 was primarily due to~~2020, higher ~~spend on~~Internet customer premise ~~equipment due to the launch of SPP and our all-digital initiative and higher scalable infrastructure costs and support primarily due to the timing of spend.~~equipment. See the table below for more details.

We currently expect 2020 cable capital expenditures to be consistent and possibly lower as a percentage of cable revenue versus 2019, despite the significant acceleration in customer growth and network utilization during COVID-19.The actual amount of our capital expenditures in ~~2017~~2020 will depend on a number of factors including ~~the pace of transition planning~~further spend related to ~~service a larger customer base as a result of the Transactions, our all-digital transition in the Legacy TWC and Legacy Bright House markets~~product development and growth rates of both our residential and commercial businesses.

Our capital expenditures are funded primarily from cash flows from operating activities and borrowings on our credit facility. In addition, our accrued liabilities related to capital expenditures ~~increased~~decreased by ~~$276~~$70 million and ~~$86~~$449 million for the nine months ended September 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

The following tables present our major capital expenditures categories ~~on an actual and pro forma basis, assuming the Transactions occurred as of January 1, 2015,~~ in accordance with National Cable and Telecommunications Association (“NCTA”) disclosure guidelines for the three and nine months ended September 30, ~~2017~~2020 and ~~2016. The disclosure is intended to provide more consistency in the reporting of capital expenditures among peer companies in the cable industry.~~2019. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Stock options	20,900	275,400	1,167,100	5,980,800
Restricted stock	—	400	9,500	10,400
Restricted stock units	5,100	39,300	283,000	890,700



~~(Mark One)~~
x	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


~~For the quarterly period ended September 30, 2017~~
or

o	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,974		$	1,324
Accounts receivable, less allowance for doubtful accounts of
$103 and $124, respectively	1,573			1,387
Prepaid expenses and other current assets	275			300
Total current assets	3,822			3,011

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $16,350 and $11,085, respectively	33,066			32,718
Customer relationships, net	12,589			14,608
Franchises	67,316			67,316
Goodwill	29,554			29,509
Total investment in cable properties, net	142,525			144,151

OTHER NONCURRENT ASSETS	1,115			1,157

Total assets	$	147,462		$	148,319

LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,503		$	6,897
Payables to related party	636			621
Current portion of long-term debt	2,068			2,028
Total current liabilities	10,207			9,546

LONG-TERM DEBT	66,064			59,719
LOANS PAYABLE - RELATED PARTY	818			640
DEFERRED INCOME TAXES	39			25
OTHER LONG-TERM LIABILITIES	2,307			2,526

MEMBER'S EQUITY:
Member's equity	68,005			75,845
Accumulated other comprehensive loss	(2		)	(7		)
Total CCO Holdings member's equity	68,003			75,838
Noncontrolling interests	24			25
Total member’s equity	68,027			75,863

Total liabilities and member’s equity	$	147,462		$	148,319



Cash and cash equivalents	$	1,058
Current assets	1,417
Property, plant and equipment	21,413
Customer relationships	13,460
Franchises	54,085
Goodwill	28,337
Other noncurrent assets	1,040
Accounts payable and accrued liabilities	(4,107		)
Debt	(24,900		)
Deferred income taxes	(28,120		)
Other long-term liabilities	(3,162		)
Noncontrolling interests	(4		)
	$	60,517



Current assets	$	131
Property, plant and equipment	2,884
Customer relationships	2,150
Franchises	7,225
Goodwill	44
Other noncurrent assets	86
Accounts payable and accrued liabilities	(330		)
Other long-term liabilities	(12		)
Noncontrolling interests	(22		)
	$	12,156



	Nine Months Ended September 30, 2016
Revenues	$	29,748
Net income attributable to CCO Holdings member	$	1,112



	September 30, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Indefinite-lived intangible assets:
Franchises	$	67,316	$	—		$	67,316	$	67,316	$	—		$	67,316
Goodwill	29,554		—			29,554		29,509		—			29,509
Other intangible assets	—		—			—		4		—			4
	$	96,870	$	—		$	96,870	$	96,829	$	—		$	96,829

Finite-lived intangible assets:
Customer relationships	$	18,227	$	(5,638	)	$	12,589	$	18,226	$	(3,618	)	$	14,608
Other intangible assets	673		(181		)	492		615		(128		)	487
	$	18,900	$	(5,819	)	$	13,081	$	18,841	$	(3,746	)	$	15,095



Three months ended December 31, 2017	$	662
2018	2,470
2019	2,187
2020	1,895
2021	1,611
Thereafter	4,256
	$	13,081



	September 30, 2017			December 31, 2016
Interest Rate Derivatives
Accrued interest	$	1		$	5
Accumulated other comprehensive loss	$	(1	)	$	(5	)

Cross-Currency Derivatives
Other long-term liabilities	$	125		$	251



	September 30, 2017				December 31, 2016
	Level 1		Level 2		Level 1		Level 2
Assets
Money market funds	$	1,312	$	—	$	1,003	$	—

Liabilities
Interest rate derivative instruments	$	—	$	1	$	—	$	5
Cross-currency derivative instruments	$	—	$	125	$	—	$	251



Commission File Number:			001-37789
			333-112593-01



	Employee Retention Costs			Employee Termination Costs			Transaction and Advisory Costs			Other Costs			Total
Liability, December 31, 2015	$	—		$	—		$	33		$	—		$	33
Liability assumed in the Transactions	80			9			3			—			92
Costs incurred	26			337			66			31			460
Cash paid	(99		)	(102		)	(77		)	(31		)	(309		)
Remaining liability, December 31, 2016	7			244			25			—			276

Costs incurred	4			186			3			57			250
Cash paid	(9		)	(253		)	(4		)	(45		)	(311		)
Remaining liability, September 30, 2017	$	2		$	177		$	24		$	12		$	215



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Balance Sheets
As of September 30, 2017

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations			CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	1,974	$	—		$	1,974
Accounts receivable, net	—		1,573		—			1,573
Receivables from related party	51		—		(51		)	—
Prepaid expenses and other current assets	—		275		—			275
Total current assets	51		3,822		(51		)	3,822

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		33,066		—			33,066
Customer relationships, net	—		12,589		—			12,589
Franchises	—		67,316		—			67,316
Goodwill	—		29,554		—			29,554
Total investment in cable properties, net	—		142,525		—			142,525

INVESTMENT IN SUBSIDIARIES	85,011		—		(85,011		)	—
LOANS RECEIVABLE – RELATED PARTY	511		—		(511		)	—
OTHER NONCURRENT ASSETS	—		1,115		—			1,115

Total assets	$	85,573	$	147,462	$	(85,573	)	$	147,462

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	339	$	7,164	$	—		$	7,503
Payables to related party	—		687		(51		)	636
Current portion of long-term debt	—		2,068		—			2,068
Total current liabilities	339		9,919		(51		)	10,207

LONG-TERM DEBT	17,231		48,833		—			66,064
LOANS PAYABLE – RELATED PARTY	—		1,329		(511		)	818
DEFERRED INCOME TAXES	—		39		—			39
OTHER LONG-TERM LIABILITIES	—		2,307		—			2,307

MEMBER’S EQUITY
Controlling interest	68,003		85,011		(85,011		)	68,003
Noncontrolling interests	—		24		—			24
Total member’s equity	68,003		85,035		(85,011		)	68,027

Total liabilities and member’s equity	$	85,573	$	147,462	$	(85,573	)	$	147,462



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Balance Sheets
As of December 31, 2016

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations			CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	1,324	$	—		$	1,324
Accounts receivable, net	—		1,387		—			1,387
Receivables from related party	62		—		(62		)	—
Prepaid expenses and other current assets	—		300		—			300
Total current assets	62		3,011		(62		)	3,011

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		32,718		—			32,718
Customer relationships, net	—		14,608		—			14,608
Franchises	—		67,316		—			67,316
Goodwill	—		29,509		—			29,509
Total investment in cable properties, net	—		144,151		—			144,151

INVESTMENT IN SUBSIDIARIES	88,760		—		(88,760		)	—
LOANS RECEIVABLE – RELATED PARTY	494		—		(494		)	—
OTHER NONCURRENT ASSETS	—		1,157		—			1,157

Total assets	$	89,316	$	148,319	$	(89,316	)	$	148,319

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	219	$	6,678	$	—		$	6,897
Payables to related party	—		683		(62		)	621
Current portion of long-term debt	—		2,028		—			2,028
Total current liabilities	219		9,389		(62		)	9,546

LONG-TERM DEBT	13,259		46,460		—			59,719
LOANS PAYABLE – RELATED PARTY	—		1,134		(494		)	640
DEFERRED INCOME TAXES	—		25		—			25
OTHER LONG-TERM LIABILITIES	—		2,526		—			2,526

MEMBER’S EQUITY
Controlling interest	75,838		88,760		(88,760		)	75,838
Noncontrolling interests	—		25		—			25
Total member’s equity	75,838		88,785		(88,760		)	75,863

Total liabilities and member’s equity	$	89,316	$	148,319	$	(89,316	)	$	148,319



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Statements of Operations
For the nine months ended September 30, 2017

	Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
REVENUES	$	—		$	30,979		$	—		$	30,979

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	—			19,871			—			19,871
Depreciation and amortization	—			7,839			—			7,839
Other operating expenses, net	—			374			—			374
	—			28,084			—			28,084
Income from operations	—			2,895			—			2,895

OTHER INCOME (EXPENSES):
Interest expense, net	(631		)	(1,637		)	—			(2,268		)
Loss on extinguishment of debt	(33		)	(2		)	—			(35		)
Loss on financial instruments, net	—			(15		)	—			(15		)
Other pension benefits	—			9			—			9
Other expense, net	—			(2		)	—			(2		)
Equity in income of subsidiaries	1,212			—			(1,212		)	—
	548			(1,647		)	(1,212		)	(2,311		)

Income before income taxes	548			1,248			(1,212		)	584
INCOME TAX EXPENSE	—			(35		)	—			(35		)
Consolidated net income	548			1,213			(1,212		)	549
Less: Net income attributable to noncontrolling interests	—			(1		)	—			(1		)
Net income	$	548		$	1,212		$	(1,212	)	$	548



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Statements of Comprehensive Income
For the nine months ended September 30, 2017

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
Consolidated net income	$	548	$	1,213		$	(1,212	)	$	549
Net impact of interest rate derivative instruments	4		4			(4		)	4
Foreign currency translation adjustment	1		1			(1		)	1
Consolidated comprehensive income	553		1,218			(1,217		)	554
Less: Comprehensive income attributable to noncontrolling interests	—		(1		)	—			(1		)
Comprehensive income	$	553	$	1,217		$	(1,217	)	$	553



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2017

	Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES	$	(504	)	$	9,025		$	—		$	8,521

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(6,096		)	—			(6,096		)
Change in accrued expenses related to capital expenditures	—			276			—			276
Contributions to subsidiaries	(693		)	—			693			—
Distributions from subsidiaries	5,912			—			(5,912		)	—
Other, net	—			(63		)	—			(63		)
Net cash flows from investing activities	5,219			(5,883		)	(5,219		)	(5,883		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	4,747			7,368			—			12,115
Repayments of long-term debt	(775		)	(4,759		)	—			(5,534		)
Borrowings loans payable - related parties	—			163			—			163
Payments for debt issuance costs	(46		)	(37		)	—			(83		)
Contributions from parent	—			693			(693		)	—
Distributions to parent	(8,641		)	(5,912		)	5,912			(8,641		)
Other, net	—			(8		)	—			(8		)
Net cash flows from financing activities	(4,715		)	(2,492		)	5,219			(1,988		)

NET INCREASE IN CASH AND CASH EQUIVALENTS	—			650			—			650
CASH AND CASH EQUIVALENTS, beginning of period	—			1,324			—			1,324

CASH AND CASH EQUIVALENTS, end of period	$	—		$	1,974		$	—		$	1,974


	Approximate as of
	September 30,
	2020 (a)		2019 (a)
Customer Relationships (b)
Residential	28,912		27,037
SMB	2,021		1,930
Total Customer Relationships	30,933		28,967

Monthly Residential Revenue per Residential Customer (c)	$	109.03	$	112.00
Monthly SMB Revenue per SMB Customer (d)	$	164.77	$	169.44

Internet
Residential	26,807		24,595
SMB	1,826		1,730
Total Internet Customers	28,633		26,325

Video
Residential	15,705		15,725
SMB	530		520
Total Video Customers	16,235		16,245

Voice
Residential	9,335		9,595
SMB	1,207		1,120
Total Voice Customers	10,542		10,715

Mobile Lines
Residential	2,020		793
SMB	40		1
Total Mobile Lines	2,060		794

Enterprise Primary Service Units ("PSUs") (e)	272		264



	Approximate as of
	September 30,
	2017 (a)		2016 (a)(b)
Customer Relationships (c)
Residential	25,470		24,551
Small and Medium Business	1,523		1,367
Total Customer Relationships	26,993		25,918

Residential Primary Service Units (“PSU”)
Video	16,542		16,887
Internet	22,282		21,017
Voice	10,405		10,288
	49,229		48,192

Monthly Residential Revenue per Residential Customer (d)	$	110.12	$	109.70

Small and Medium Business PSUs
Video	440		388
Internet	1,321		1,185
Voice	881		751
	2,642		2,324

Monthly Small and Medium Business Revenue per Customer (e)	$	206.64	$	214.53

Enterprise PSUs (f)	108		93



	Three months ended September 30, 2017 compared to three months ended September 30, 2016 Increase / (Decrease)			Nine months ended September 30, 2017 compared to nine months ended September 30, 2016 Increase / (Decrease)
Bundle revenue allocation and price adjustments	$	140		$	169
Increase in video on demand and pay-per-view	55			45
Decrease in average basic video customers	(76		)	(102		)
TWC Transaction	—			3,806
Bright House Transaction	—			629
	$	119		$	4,547



	Nine months ended September 30, 2017 compared to nine months ended September 30, 2016 Increase / (Decrease)
Increase in average residential Internet customers	$	629
Price adjustments, bundle revenue allocation and service level changes	462
	$	1,091



	Nine months ended September 30, 2017 compared to nine months ended September 30, 2016 Increase / (Decrease)
Bundle revenue allocation and price adjustments	$	(271	)
Increase in average residential voice customers	40
	$	(231	)



	Nine months ended September 30, 2017 compared to nine months ended September 30, 2016 Increase / (Decrease)
Increase in small and medium business customers	$	299
Price adjustments	(62		)
	$	237



	Nine months ended September 30, 2017 compared to nine months ended September 30, 2016 Increase / (Decrease)
Corporate costs	$	(139	)
Enterprise	21
Advertising sales expense	38
Property tax and insurance	(15		)
Stock compensation expense	(21		)
Other	10
	$	(106	)



	Three months ended September 30, 2017 compared to three months ended September 30, 2016 Increase / (Decrease)			Nine months ended September 30, 2017 compared to nine months ended September 30, 2016 Increase / (Decrease)
Merger and restructuring costs	$	(138	)	$	(220	)
Special charges, net	76			76
(Gain) loss on sale of assets, net	1			5
	$	(61	)	$	(139	)



	Nine Months Ended
	September 30, 2016
	Pro forma
Consolidated net income	$	1,113
Plus: Interest expense, net	2,160
Depreciation and amortization	7,054
Stock compensation expense	219
Loss on extinguishment of debt	110
Gain on financial instruments, net	(16		)
Other pension benefits	(549		)
Other, net	505
Adjusted EBITDA	$	10,596


	Three months ended September 30, 2020 compared to three months ended September 30, 2019 Increase / (Decrease)		Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 Increase / (Decrease)
Changes in working capital, excluding change in accrued interest	$	267	$	1,184
Increase in Adjusted EBITDA	541		1,162
Decrease in cash paid for interest, net	10		39
Increase in capital expenditures	(363)		(439)
Other, net	(9)		(37)
	$	446	$	1,909


	CCO Holdings		Charter Operating and Consolidated Subsidiaries		CCO Holdings		Charter Operating and Consolidated Subsidiaries
	September 30, 2020				December 31, 2019
Balance Sheet Data:
Current assets	$	—	$	3,694	$	500	$	5,655
Receivables from related party	$	42	$	—	$	59	$	—
Noncurrent assets	$	—	$	138,966	$	—	$	140,588
Loans receivables to related party	$	567	$	—	$	545	$	—
Current liabilities	$	299	$	9,297	$	296	$	11,346
Payable to related party	$	—	$	136	$	—	$	357
Noncurrent liabilities	$	23,383	$	58,115	$	21,951	$	56,604
Loans payable to related party	$	—	$	1,573	$	—	$	1,504
Noncontrolling interests	$	—	$	23	$	—	$	23

	Nine Months Ended September 30,
	2020				2019
Statement of Operations Data:
Revenue	$	—	$	35,467	$	—	$	33,997
Income from operations	$	—	$	5,872	$	—	$	4,517
Net income	$	2,538	$	3,544	$	1,347	$	2,132

Statement of Cash Flows Data:
Net cash flows from operating activities	$	(873)	$	11,189	$	(762)	$	9,109
Net cash flows from investing activities	$	6,701	$	(5,455)	$	4,429	$	(5,277)
Net cash flows from financing activities	$	(6,328)	$	(7,468)	$	(3,667)	$	(3,842)



	Nine Months Ended September 30, 2016
	Pro Forma
Customer premise equipment (a)	$	2,074
Scalable infrastructure (b)	1,556
Line extensions (c)	751
Upgrade/rebuild (d)	461
Support capital (e)	815
Total capital expenditures	$	5,657

Capital expenditures included in total related to:
Commercial services	$	931
Transition (f)	$	273


~~(a)~~	Customer premise equipment includes costs incurred at the customer residence to secure new customers and revenue generating units. It also includes customer installation costs and customer premise equipment (e.g., set-top boxes and cable modems).


~~(b)~~	Scalable infrastructure includes costs not related to customer premise equipment, to secure growth of new customers and revenue generating units, or provide service enhancements (e.g., headend equipment).