UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~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. Yesx No oYes

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). Yesx No oYes

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 oNon-accelerated filerxSmaller 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

All of the issued and outstanding shares of capital stock of CCO Holdings Capital Corp. are held by CCO Holdings, LLC. All of the limited liability company membership interests of CCO Holdings, LLC are held by CCH I Holdings, LLC (a subsidiary of Charter Communications, Inc., a reporting company under the Exchange Act). There is no public trading market for any of the aforementioned limited liability company membership interests or shares of capital stock.

CCO Holdings, LLC and CCO Holdings Capital Corp. meet the conditions set forth in General Instruction I(1)(a) and (b) to Form 10-K and are therefore filing with the reduced disclosure format.

CCO HOLDINGS, LLC

CCO HOLDINGS CAPITAL CORP.

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, ~~2018~~2019

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, ~~2018~~2019 and December 31, ~~2017~~2018	1
	Consolidated Statements of Operations
	for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018	2
	Consolidated Statements of ~~Comprehensive Income~~Changes in Member's Equity
	for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018	3
	Consolidated Statements of Cash Flows
	for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018	4
	Notes to Consolidated Financial Statements	5

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	3029

Item 3	Quantitative and Qualitative Disclosure About Market Risk	4241

Item 4	Controls and Procedures	4241

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	43

Item 1A	Risk Factors	43

Item 6	Exhibits	43

Signatures		S- 1

Exhibit Index		E- 1

This quarterly report on Form 10-Q is for the three and nine months ended September 30, ~~2018~~2019. 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” 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:

~~our ability to efficiently and effectively integrate acquired operations;~~

our ability to sustain and grow revenues and cash flow from operations by offering 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 over the Internet;

our ability to efficiently and effectively integrate acquired operations;

the effects of governmental regulation on our business 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;

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 mobile 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;

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

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, 2018			December 31, 2017			September 30, 2019			December 31, 2018
	(unaudited)						(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	351		$	330		$	290		$	300
Accounts receivable, less allowance for doubtful accounts of
$125 and $113, respectively	1,707			1,611
Accounts receivable, less allowance for doubtful accounts of $170 and $129, respectively							2,252			1,699
Prepaid expenses and other current assets	335			243			548			400
Total current assets	2,393			2,184			3,090			2,399

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated
depreciation of $21,475 and $18,049, respectively	34,293			33,552
Property, plant and equipment, net of accumulated depreciation of $26,306 and $23,038, respectively							33,560			34,658
Customer relationships, net	10,136			11,951			7,956			9,565
Franchises	67,319			67,319			67,322			67,319
Goodwill	29,554			29,554			29,554			29,554
Total investment in cable properties, net	141,302			142,376			138,392			141,096

OPERATING LEASE RIGHT-OF-USE ASSETS							930			—
OTHER NONCURRENT ASSETS	1,347			1,133			1,398			1,403

Total assets	$	145,042		$	145,693		$	143,810		$	144,898

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,646		$	8,141		$	7,321		$	7,903
Payables to related party	523			635			489			545
Operating lease liabilities							180			—
Current portion of long-term debt	3,339			2,045			3,509			3,290
Total current liabilities	11,508			10,821			11,499			11,738

LONG-TERM DEBT	69,135			68,186			71,390			69,537
LOANS PAYABLE - RELATED PARTY	920			888			959			925
DEFERRED INCOME TAXES	—			32			52			—
LONG-TERM OPERATING LEASE LIABILITIES							794			—
OTHER LONG-TERM LIABILITIES	1,942			2,184			2,146			2,144

MEMBER’S EQUITY:
Member's equity	61,515			63,559			56,949			60,532
Accumulated other comprehensive loss	(2		)	(1		)	(2		)	(2		)
Total CCO Holdings member's equity	61,513			63,558			56,947			60,530
Noncontrolling interests	24			24			23			24
Total member’s equity	61,537			63,582			56,970			60,554

Total liabilities and member’s equity	$	145,042		$	145,693		$	143,810		$	144,898

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in millions)

Unaudited


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2019			2018			2019			2018
REVENUES	$	10,887		$	10,458		$	32,390		$	30,979		$	11,449		$	10,887		$	33,997		$	32,390

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	7,018			6,705			20,742			19,871			7,450			7,018			21,950			20,742
Depreciation and amortization	2,479			2,699			7,776			7,839			2,411			2,479			7,453			7,776
Other operating expenses, net	18			145			112			374			18			18			77			112
	9,515			9,549			28,630			28,084			9,879			9,515			29,480			28,630
Income from operations	1,372			909			3,760			2,895			1,570			1,372			4,517			3,760

OTHER EXPENSES:
OTHER INCOME (EXPENSES):
Interest expense, net	(912		)	(795		)	(2,658		)	(2,268		)	(973		)	(912		)	(2,865		)	(2,658		)
Loss on extinguishment of debt	—			—			—			(35		)
Gain (loss) on financial instruments, net	12			17			—			(15		)	(34		)	12			(116		)	—
Other pension benefits (costs)	207			(17		)	247			9
Other pension benefits, net													9			207			27			247
Other expense, net	(4		)	(2		)	(49		)	(2		)	(3		)	(4		)	(129		)	(49		)
	(697		)	(797		)	(2,460		)	(2,311		)	(1,001		)	(697		)	(3,083		)	(2,460		)

Income before income taxes	675			112			1,300			584			569			675			1,434			1,300
Income tax expense	(8		)	(6		)	(13		)	(35		)	(10		)	(8		)	(86		)	(13		)
Consolidated net income	667			106			1,287			549			559			667			1,348			1,287
Less: Net income attributable to noncontrolling interests	—			—			(1		)	(1		)	—			—			(1		)	(1		)
Net income attributable to CCO Holdings member	$	667		$	106		$	1,286		$	548		$	559		$	667		$	1,347		$	1,286

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~CHANGES IN MEMBER’S EQUITY

(dollars in millions)

Unaudited

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Consolidated net income $ 667
$ 106
$ 1,287
$ 549
Foreign currency translation adjustment —
1
(1 ) 1
Net impact of interest rate derivative instruments —
1
—
4
Consolidated comprehensive income 667
108
1,286
554
Less: Comprehensive income attributable to noncontrolling interests —
—
(1 ) (1 )
Comprehensive income attributable to CCO Holdings member $ 667
$ 108
$ 1,285
$ 553



	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			—			350			—			350
Stock compensation expense	85			—			85			—			85
Contributions from parent	9			—			9			—			9
Distributions to parent	(1,040		)	—			(1,040		)	—			(1,040		)
Distributions to noncontrolling interest	—			—			—			(1		)	(1		)
BALANCE, March 31, 2019	59,936			(2		)	59,934			23			59,957
Consolidated net income	438			—			438			1			439
Stock compensation expense	82			—			82			—			82
Contributions from parent	42			—			42			—			42
Distributions to parent	(1,044		)	—			(1,044		)	—			(1,044		)
BALANCE, June 30, 2019	59,454			(2		)	59,452			24			59,476
Consolidated net income	559			—			559			—			559
Stock compensation expense	71			—			71			—			71
Contributions from parent	3			—			3			—			3
Distributions to parent	(3,138		)	—			(3,138		)	—			(3,138		)
Distributions to noncontrolling interest	—			—			—			(1		)	(1		)
BALANCE, September 30, 2019	$	56,949		$	(2	)	$	56,947		$	23		$	56,970



	Member's Equity			Accumulated Other Comprehensive Loss			Total CCO Holdings Member’s Equity			Noncontrolling Interests			Total Member's Equity
BALANCE, December 31, 2017	$	63,559		$	(1	)	$	63,558		$	24		$	63,582
Consolidated net income	264			—			264			—			264
Stock compensation expense	72			—			72			—			72
Accelerated vesting of equity awards	5			—			5			—			5
Cumulative effect of accounting change	49			—			49			—			49
Contributions from parent	72			—			72			—			72
Distributions to parent	(747		)	—			(747		)	—			(747		)
Distributions to noncontrolling interest	—			—			—			(1		)	(1		)
BALANCE, March 31, 2018	63,274			(1		)	63,273			23			63,296
Consolidated net income	355			—			355			1			356
Stock compensation expense	70			—			70			—			70
Changes in accumulated other comprehensive loss	—			(1		)	(1		)	—			(1		)
Contributions from parent	5			—			5			—			5
Distributions to parent	(1,909		)	—			(1,909		)	—			(1,909		)
BALANCE, June 30, 2018	61,795			(2		)	61,793			24			61,817
Consolidated net income	667			—			667			—			667
Stock compensation expense	71			—			71			—			71
Cumulative effect of accounting change	38			—			38			—			38
Contributions from parent	50			—			50			—			50
Distributions to parent	(1,107		)	—			(1,107		)	—			(1,107		)
BALANCE, September 30, 2018	$	61,514		$	(2	)	$	61,512		$	24		$	61,536

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

Unaudited


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	1,287		$	549		$	1,348		$	1,287
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization	7,776			7,839			7,453			7,776
Stock compensation expense	213			198			238			213
Accelerated vesting of equity awards	5			43			—			5
Noncash interest income, net	(243		)	(284		)	(89		)	(243		)
Other pension benefits	(247		)	(9		)
Loss on extinguishment of debt	—			35
Other pension benefits, net							(27		)	(247		)
Loss on financial instruments, net	—			15			116			—
Deferred income taxes	4			14			54			4
Other, net	54			82			155			54
Changes in operating assets and liabilities, net of effects from acquisitions:
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	(96		)	(77		)	(567		)	(96		)
Prepaid expenses and other assets	(101		)	64			(207		)	(101		)
Accounts payable, accrued liabilities and other	(60		)	6			(104		)	(60		)
Receivables from and payables to related party, including deferred management fees	(88		)	46
Receivables from and payables to related party							(23		)	(88		)
Net cash flows from operating activities	8,504			8,521			8,347			8,504

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(6,692		)	(6,096		)	(4,913		)	(6,692		)
Change in accrued expenses related to capital expenditures	(620		)	276			(449		)	(620		)
Other, net	(93		)	(63		)	85			(93		)
Net cash flows from investing activities	(7,405		)	(5,883		)	(5,277		)	(7,405		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	11,552			12,115			13,157			11,552
Repayments of long-term debt	(8,964		)	(5,534		)	(10,886		)	(8,964		)
Borrowings of loans payable - related parties	7			163			—			7
Payments for debt issuance costs	(29		)	(83		)	(48		)	(29		)
Contributions from parent	127			—			54			127
Distributions to parent	(3,763		)	(8,641		)	(5,222		)	(3,763		)
Distributions to noncontrolling interest	(1		)	—			(2		)	(1		)
Other, net	(7		)	(8		)	(133		)	(7		)
Net cash flows from financing activities	(1,078		)	(1,988		)	(3,080		)	(1,078		)

NET INCREASE IN CASH AND CASH EQUIVALENTS	21			650
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS							(10		)	21
CASH AND CASH EQUIVALENTS, beginning of period	330			1,324			300			330
CASH AND CASH EQUIVALENTS, end of period	$	351		$	1,974		$	290		$	351

CASH PAID FOR INTEREST	$	2,920		$	2,544		$	3,065		$	2,920
CASH PAID FOR TAXES	$	19		$	21		$	27		$	19

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 communications company providing video, Internet and voice services to residential and business customers. The Company also ~~recently launched its~~offers mobile service to residential customers and recently launched mobile service to a select number of small and medium business customers. In addition, the Company sells video and online advertising inventory to local, regional and national advertising customers and fiber-delivered communications and managed information technology solutions to larger enterprise customers. The Company also owns and operates regional sports networks and local sports, news and ~~lifestyle channels and sells security and home management services to the residential marketplace.~~community channels.

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”). 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' 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 and amortization costs; impairments of property, plant and equipment, intangibles and goodwill; pension benefits; income taxes; contingencies and programming expense. Actual results could differ from those estimates.

~~Certain prior period amounts have been reclassified to conform with the 2018 presentation.~~

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

2. Franchises, Goodwill and Other Intangible Assets

Indefinite-lived and finite-lived intangible assets consist of the following as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



	September 30, 2019							December 31, 2018
	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	$	67,319	$	—		$	67,319
Goodwill	29,554		—			29,554		29,554		—			29,554
	$	96,876	$	—		$	96,876	$	96,873	$	—		$	96,873

Finite-lived intangible assets:
Customer relationships	$	18,230	$	(10,274	)	$	7,956	$	18,229	$	(8,664	)	$	9,565
Other intangible assets	405		(111		)	294		409		(92		)	317
	$	18,635	$	(10,385	)	$	8,250	$	18,638	$	(8,756	)	$	9,882

September 30, 2018 December 31, 2017
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Indefinite-lived intangible assets:
Franchises $ 67,319
$ —
$ 67,319
$ 67,319
$ —
$ 67,319
Goodwill 29,554
—
29,554
29,554
—
29,554
$ 96,873
$ —
$ 96,873
$ 96,873
$ —
$ 96,873

Finite-lived intangible assets:
Customer relationships $ 18,229
$ (8,093 ) $ 10,136
$ 18,229
$ (6,278 ) $ 11,951
Other intangible assets 397
(82 ) 315
731
(201 ) 530
$ 18,626
$ (8,175 ) $ 10,451
$ 18,960
$ (6,479 ) $ 12,481

Amortization expense related to customer relationships and other intangible assets for the three and nine months ended September 30, ~~2018~~2019 was $516 million and $1.6 billion, respectively, and $583 million and $1.8 ~~billion, respectively, and $664 million and $2.1~~ billion for the three and nine months ended September 30, ~~2017,~~2018, respectively. Effective January 1, 2018 with the adoption of Accounting Standards Update (“ASU”) 2014-09, up-front fees paid to market and serve customers who reside in residential multiple dwelling units (“MDUs”) are no longer recorded as intangibles and amortized to depreciation and amortization expense, but are now being recorded as noncurrent assets and are amortized to operating costs and expenses. See Note 15.

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



Three months ended December 31, 2019	$	514
2020	1,875
2021	1,599
2022	1,329
2023	1,072
Thereafter	1,861
	$	8,250

Three months ended December 31, 2018 $ 582
2019 2,153
2020 1,871
2021 1,596
2022 1,326
Thereafter 2,923
$ 10,451

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 and other relevant factors.

3. Investments

The Company recorded impairments on equity investments of approximately $121 million and $58 million during the nine months ended September 30, 2019 and 2018, respectively, which was recorded in other expense, net in the consolidated statements of operations.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

3.4. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



	September 30, 2019		December 31, 2018
Accounts payable – trade	$	610	$	702
Deferred revenue	526		494
Accrued liabilities:
Programming costs	2,064		2,044
Labor	726		705
Capital expenditures	973		1,472
Interest	943		1,045
Taxes and regulatory fees	532		508
Other	947		933
	$	7,321	$	7,903

September 30, 2018 December 31, 2017
Accounts payable – trade $ 551
$ 673
Deferred revenue 498
395
Accrued liabilities:
Programming costs 2,055
1,907
Labor 712
747
Capital expenditures 1,318
1,935
Interest 1,011
1,054
Taxes and regulatory fees 563
548
Other 938
882
$ 7,646
$ 8,141

~~4. Long-Term Debt~~5. Leases

~~Long-term debt consists~~The primary leased asset classes of the ~~following~~Company include real estate, dark fiber, colocation facilities and other equipment. The lease agreements include both lease and non-lease components, which the Company accounts for separately depending on the election made for each leased asset class. For real estate and dark fiber leased asset classes, the Company accounts for lease and non-lease components as a single lease component and includes all fixed payments in the measurement of ~~September 30, 2018~~lease liabilities and ~~December 31, 2017:~~lease assets. For colocation facilities leased asset class, the Company accounts for lease and non-lease components separately including only the fixed lease payment component in the measurement of lease liabilities and lease assets.

In addition to fixed lease payments, certain of the Company’s lease agreements include variable lease payments which are tied to an index or rate such as the change in the Consumer Price Index. These variable payments are not included in the measurement of the lease liabilities and lease assets.

Lease assets and lease liabilities are initially recognized based on the present value of the future lease payments over the expected lease term. As for most leases the implicit rate is not readily determinable, the Company uses a discount rate in determining the present value of future payments based on the yield-to-maturity of the Company’s secured publicly traded USD denominated debt instruments interpolating the duration of the debt to the term of the executed lease.

The Company’s leases have base rent periods and some have optional renewal periods. Leases with base rent periods of less than 12 months are not recorded on the balance sheet. For purposes of measurement of lease liabilities, the expected lease terms may include renewal options when it is reasonably certain that the Company will exercise such options. Based on conditions of the Company's existing leases and its overall business strategies, the majority of the Company's renewal options are not reasonably certain in determining the expected lease term. The Company will periodically reassess expected lease terms (and purchase options, if applicable) based on significant triggering events or compelling economic reasons to exercise such options.

The Company’s primary lease income represents sublease income on certain real estate leases. Sublease income is included in other revenue and presented gross from rent expense. For customer premise equipment ("CPE") where such CPE would qualify as a lease, the Company applies the practical expedient to combine the operating lease with the subscription service revenue as a single performance obligation in accordance with revenue recognition accounting guidance as the subscription service is the predominant component.

September 30, 2018 December 31, 2017
Principal Amount Accreted Value Principal Amount Accreted Value
CCO Holdings, LLC:
5.250% senior notes due March 15, 2021 $ 500
$ 498
$ 500
$ 497
5.250% senior notes due September 30, 2022 1,250
1,237
1,250
1,235
5.125% senior notes due February 15, 2023 1,000
993
1,000
993
4.000% senior notes due March 1, 2023 500
496
500
495
5.125% senior notes due May 1, 2023 1,150
1,143
1,150
1,143
5.750% senior notes due September 1, 2023 500
497
500
496
5.750% senior notes due January 15, 2024 1,000
993
1,000
992
5.875% senior notes due April 1, 2024 1,700
1,688
1,700
1,687
5.375% senior notes due May 1, 2025 750
745
750
745
5.750% senior notes due February 15, 2026 2,500
2,466
2,500
2,464
5.500% senior notes due May 1, 2026 1,500
1,490
1,500
1,489
5.875% senior notes due May 1, 2027 800
795
800
794
5.125% senior notes due May 1, 2027 3,250
3,218
3,250
3,216
5.000% senior notes due February 1, 2028 2,500
2,465
2,500
2,462
Charter Communications Operating, LLC:
3.579% senior notes due July 23, 2020 2,000
1,991
2,000
1,988
4.464% senior notes due July 23, 2022 3,000
2,981
3,000
2,977
Senior floating rate notes due February 1, 2024 900
903
—
—
4.500% senior notes due February 1, 2024 1,100
1,091
—
—
4.908% senior notes due July 23, 2025 4,500
4,465
4,500
4,462
3.750% senior notes due February 15, 2028 1,000
986
1,000
985
4.200% senior notes due March 15, 2028 1,250
1,239
1,250
1,238
6.384% senior notes due October 23, 2035 2,000
1,982
2,000
1,981
5.375% senior notes due April 1, 2038 800
785
—
—

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

The components of lease related expenses, net are as follows.

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
2,500
2,506
5.750% senior notes due April 1, 2048 1,700
1,683
—
—
6.834% senior notes due October 23, 2055 500
495
500
495
Credit facilities 9,576
9,493
9,479
9,387
Time Warner Cable, LLC:
6.750% senior notes due July 1, 2018 —
—
2,000
2,045
8.750% senior notes due February 14, 2019 1,250
1,279
1,250
1,337
8.250% senior notes due April 1, 2019 2,000
2,060
2,000
2,148
5.000% senior notes due February 1, 2020 1,500
1,551
1,500
1,579
4.125% senior notes due February 15, 2021 700
723
700
730
4.000% senior notes due September 1, 2021 1,000
1,036
1,000
1,045
5.750% sterling senior notes due June 2, 2031 ^(a)
815
876
845
912
6.550% senior debentures due May 1, 2037 1,500
1,682
1,500
1,686
7.300% senior debentures due July 1, 2038 1,500
1,782
1,500
1,788
6.750% senior debentures due June 15, 2039 1,500
1,720
1,500
1,724
5.875% senior debentures due November 15, 2040 1,200
1,257
1,200
1,258
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)
847
817
879
847
4.500% senior debentures due September 15, 2042 1,250
1,139
1,250
1,137
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023 1,000
1,202
1,000
1,232
8.375% senior debentures due July 15, 2033 1,000
1,302
1,000
1,312
Total debt 71,538
72,474
69,003
70,231
Less current portion:
6.750% senior notes due July 1, 2018 —
—
(2,000 ) (2,045 )
8.750% senior notes due February 14, 2019 (1,250 ) (1,279 ) —
—
8.250% senior notes due April 1, 2019 (2,000 ) (2,060 ) —
—
Long-term debt $ 68,288
$ 69,135
$ 67,003
$ 68,186



	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease expense ^(a)	$	92		$	281

Finance lease expense:
Amortization of right-of-use assets	3			10
Interest on lease liabilities	1			4
Total finance lease expense	4			14

Sublease income	(5		)	(15		)
Total lease related expenses, net	$	91		$	280


^(a)	Includes short-term leases and variable leases costs of $31 million and $92 million for the three and nine months ended September 30, 2019, respectively.

Supplemental cash flow information related to leases is as follows.



	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	185
Operating cash flows from finance leases	$	4
Financing cash flows from finance leases	$	5

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	171
Finance leases	$	27

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

Supplemental balance sheet information related to leases is as follows.



	September 30, 2019
Operating leases:
Operating lease right-of-use assets	$	930

Current operating lease liabilities	$	180
Long-term operating lease liabilities	794
Total operating lease liabilities	$	974

Finance leases:
Finance lease right-of-use assets (included within property, plant and equipment, net)	$	165

Current finance lease liabilities (included within accounts payable and accrued liabilities)	$	7
Long-term finance lease liabilities (included within other long-term liabilities)	51
Total finance lease liabilities	$	58

Weighted average remaining lease term
Operating leases	6.8 years
Finance leases	16.3 years

Weighted average discount rate
Operating leases	4.5		%
Finance leases	5.7		%

Maturities of lease liabilities are as follows.



	Operating leases			Finance leases
Three months ended December 31, 2019	$	59		$	1
2020	237			6
2021	208			6
2022	173			6
2023	149			5
Thereafter	410			59
Undiscounted lease cash flow commitments	1,236			83
Reconciling impact from discounting	(262		)	(25		)
Lease liabilities on consolidated balance sheet as of September 30, 2019	$	974		$	58

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for companies adopting the lease standard prospectively without revising comparative period information.



	Operating leases		Capital leases
2019	$	233	$	10
2020	215		9
2021	176		9
2022	142		9
2023	119		10
Thereafter	342		64
	$	1,227	$	111

6. Long-Term Debt

Long-term debt consists of the following as of September 30, 2019 and December 31, 2018:



	September 30, 2019				December 31, 2018
	Principal Amount		Accreted Value		Principal Amount		Accreted Value
CCO Holdings, LLC:
5.250% senior notes due March 15, 2021	$	500	$	499	$	500	$	498
5.250% senior notes due September 30, 2022	1,250		1,240		1,250		1,238
5.125% senior notes due February 15, 2023	1,000		995		1,000		994
4.000% senior notes due March 1, 2023	500		497		500		496
5.125% senior notes due May 1, 2023	1,150		1,145		1,150		1,144
5.750% senior notes due September 1, 2023	500		497		500		497
5.750% senior notes due January 15, 2024	1,000		994		1,000		993
5.875% senior notes due April 1, 2024	1,700		1,690		1,700		1,688
5.375% senior notes due May 1, 2025	750		746		750		745
5.750% senior notes due February 15, 2026	2,500		2,470		2,500		2,467
5.500% senior notes due May 1, 2026	1,500		1,491		1,500		1,490
5.875% senior notes due May 1, 2027	800		795		800		795
5.125% senior notes due May 1, 2027	3,250		3,221		3,250		3,219
5.000% senior notes due February 1, 2028	2,500		2,468		2,500		2,466
5.375% senior notes due June 1, 2029	1,500		1,501		—		—
Charter Communications Operating, LLC:
3.579% senior notes due July 23, 2020	2,000		1,996		2,000		1,992
4.464% senior notes due July 23, 2022	3,000		2,985		3,000		2,982
Senior floating rate notes due February 1, 2024	900		902		900		903
4.500% senior notes due February 1, 2024	1,100		1,092		1,100		1,091
4.908% senior notes due July 23, 2025	4,500		4,470		4,500		4,466
3.750% senior notes due February 15, 2028	1,000		987		1,000		986
4.200% senior notes due March 15, 2028	1,250		1,240		1,250		1,240
5.050% senior notes due March 30, 2029	1,250		1,241		—		—
6.384% senior notes due October 23, 2035	2,000		1,982		2,000		1,982
5.375% senior notes due April 1, 2038	800		786		800		785
6.484% senior notes due October 23, 2045	3,500		3,467		3,500		3,467

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)



5.375% senior notes due May 1, 2047	2,500			2,506			2,500			2,506
5.750% senior notes due April 1, 2048	2,450			2,391			1,700			1,683
5.125% senior notes due July 1, 2049	1,250			1,240			—			—
6.834% senior notes due October 23, 2055	500			495			500			495
Credit facilities	10,834			10,759			10,038			9,959
Time Warner Cable, LLC:
8.750% senior notes due February 14, 2019	—			—			1,250			1,260
8.250% senior notes due April 1, 2019	—			—			2,000			2,030
5.000% senior notes due February 1, 2020	1,500			1,513			1,500			1,541
4.125% senior notes due February 15, 2021	700			714			700			721
4.000% senior notes due September 1, 2021	1,000			1,024			1,000			1,033
5.750% sterling senior notes due June 2, 2031 ^(a)	769			823			796			855
6.550% senior debentures due May 1, 2037	1,500			1,676			1,500			1,680
7.300% senior debentures due July 1, 2038	1,500			1,774			1,500			1,780
6.750% senior debentures due June 15, 2039	1,500			1,714			1,500			1,719
5.875% senior debentures due November 15, 2040	1,200			1,255			1,200			1,256
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)	799			771			827			798
4.500% senior debentures due September 15, 2042	1,250			1,142			1,250			1,140
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023	1,000			1,159			1,000			1,191
8.375% senior debentures due July 15, 2033	1,000			1,288			1,000			1,298
Total debt	74,202			74,899			71,961			72,827
Less current portion:
8.750% senior notes due February 14, 2019	—			—			(1,250		)	(1,260		)
8.250% senior notes due April 1, 2019	—			—			(2,000		)	(2,030		)
5.000% senior notes due February 1, 2020	(1,500		)	(1,513		)	—			—
3.579% senior notes due July 23, 2020	(2,000		)	(1,996		)	—			—
Long-term debt	$	70,702		$	71,390		$	68,711		$	69,537


^(a)	Principal amount includes £625 million remeasured at ~~$815~~$769 million and ~~$845~~$796 million as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, using the exchange rate at the respective dates.


^(b)	Principal amount includes £650 million remeasured at ~~$847~~$799 million and ~~$879~~$827 million as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, 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 original issue discount at the time of sale, deferred financing costs, and, in regards to Time Warner Cable, LLC and Time Warner Cable Enterprises LLC debt assumed, 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. 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 U.S. dollars as of each balance sheet date. See Note 6.8. The Company has availability under the Charter Communications Operating, LLC ("Charter Operating") credit facilities of approximately $~~3.4~~4.3 billion as of September 30, ~~2018~~2019.

In ~~April 2018,~~July 2019, Charter Operating and Charter Communications Operating Capital Corp. jointly issued ~~$800 million aggregate principal amount of 5.375% senior notes due April 1, 2038 at a price of 98.846% of the aggregate principal amount and $1.7~~$1.25 billion aggregate principal amount of ~~5.750%~~5.125% senior notes due ~~April 1, 2048~~2049 at a price of ~~99.706%~~99.880% of the aggregate principal amount. The net proceeds ~~together with cash on hand, were~~will be used ~~to repay certain existing indebtedness, including the redemption of all of the outstanding $2.0 billion in aggregate principal amount of Time Warner Cable, LLC’s 6.750% notes due July 1, 2018,~~ to pay related fees and expenses and for general corporate purposes, including distributions to the Company's parent companies ~~for funding~~to fund potential buybacks of Charter Class A common stock and Charter Holdings common ~~units.~~units as well as repaying certain indebtedness, which may include Time Warner Cable, LLC's 5.000% senior notes due 2020.

811

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

In ~~July 2018,~~October 2019, Charter Operating and Charter Communications Operating Capital Corp. jointly issued ~~$400 million aggregate principal amount of senior floating rate notes due February 1, 2024 at par and $1.1~~$1.5 billion aggregate principal amount of ~~4.500%~~4.800% senior unsecured notes due ~~February 1, 2024~~2050 at a price of ~~99.893%~~99.436% of the aggregate principal amount. In August 2018, Charter Operating and Charter Communications Operating Capital Corp. jointly issued an additional $500 million aggregate principal amount of senior floating rate notes due February 1, 2024 at a price of 101.479% of the aggregate principal amount. Interest on the floating rate notes accrues at LIBOR plus 1.650%. The net proceeds ~~were~~will be used to pay related fees and expenses and for general corporate purposes, including distributions to the Company's parent companies ~~for funding~~to fund potential buybacks of Charter Class A common stock and Charter Holdings common ~~units.~~units as well as repaying certain indebtedness.

The Charter Operating notes are guaranteed by CCO Holdings and substantially all of the operating subsidiaries of Charter Operating. In addition, the Charter Operating 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 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~~indentures 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~~indentures also contains customary events of default.

~~Loss on extinguishment~~In October 2019, Charter Operating entered into an amendment to its Credit Agreement repricing $4.5 billion of ~~debt consisted~~its revolving loan and $4.0 billion of term loan A to LIBOR plus 1.25% and its existing term loan B to LIBOR plus 1.75%. In addition, $4.5 billion of the ~~following~~revolving loan and $4.0 billion of term loan A maturities were extended to 2025 and $3.8 billion of term loan B maturities were extended to 2027.

In May 2019, CCO Holdings and CCO Holdings Capital Corp. jointly issued $750 million aggregate principal amount of 5.375% senior unsecured notes due 2029 at par and in July 2019, an additional $750 million of the same series of notes were issued at a price of 102.000% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including distributions to the ~~nine months ended September 30, 2017.~~Company's parent companies to fund buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.

On October 1, 2019, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.35 billion aggregate principal amount of 4.750% senior unsecured notes due 2030 at par and on October 24, 2019, an additional $500 million of the same series of notes were issued at a price of 101.250% of the aggregate principal amount. The net proceeds from the October 1, 2019 issuance were used to finance a tender offer and call redemption of $500 million aggregate principal amount of CCO Holdings' 5.250% senior unsecured notes due 2021 and $850 million aggregate principal amount of CCO Holdings' 5.750% senior unsecured notes due 2024, as well as to pay related fees and expenses and for general corporate purposes. The net proceeds from the October 24, 2019 issuance will be used to pay related fees and expenses and for general corporate purposes, including distributions to the Company's parent companies to fund potential buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.

Nine Months Ended September 30,
2017
CCO Holdings notes redemption $ (33 )
Time Warner Cable, LLC notes redemption (1 )
Charter Operating credit facility refinancing (1 )
$ (35 )

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

CCO Holdings may redeem some or all of the notes at any time at a premium. Beginning in 2027, 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 2022, CCO Holdings may redeem up to 40% of the aggregate principal amount of the 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 from the holders at a purchase price equal to 101% of the total principal amount of the notes, plus any accrued and unpaid interest.

5.7. Loans Payable - Related Party

Loans payable - related party as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 consists of loans from Charter Communications ~~Holdings~~Holding Company, LLC (“Charter Holdco”) to the Company of ~~$674~~$699 million and ~~$655~~$674 million, respectively, and loans from Charter

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

to the Company of ~~$246~~$260 million and ~~$233~~$251 million, respectively. Interest accrued on loans payable - related party at LIBOR plus 1.50% ~~and 1.75%~~ during the periods ending September 30, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018.

6.8. Accounting for Derivative Instruments and Hedging Activities

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

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.~~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 $409 million and $237 million and is included in other long-term liabilities on its consolidated balance sheets ~~was $88 million and $25 million included in other long-term liabilities~~ as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

The Company’s 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

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

instruments are not designated as 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,
	2019			2018			2019			2018
Gain (Loss) on Financial Instruments, Net:
Change in fair value of cross-currency derivative instruments	$	(86	)	$	(10	)	$	(172	)	$	(63	)
Foreign currency remeasurement of Sterling Notes to U.S. dollars	52			22			56			63
	$	(34	)	$	12		$	(116	)	$	—

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Gain (Loss) on Financial Instruments, Net:
Change in fair value of cross-currency derivative instruments (10 ) 68
$ (63 ) $ 126
Foreign currency remeasurement of Sterling Notes to U.S. dollars 22
(50 ) 63
(141 )
Other, net —
(1 ) —
—
$ 12
$ 17
$ —
$ (15 )

7.9. Fair Value Measurements

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, ~~2018~~2019 and December 31, ~~2017~~2018 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.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

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. ~~As of September 30, 2018 and December 31, 2017, there were no significant concentrations of financial instruments in a single investee, industry or geographic location.~~

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

September 30, 2018 December 31, 2017
Level 1 Level 2 Level 1 Level 2
Liabilities
Cross-currency derivative instruments $ —
$ 88
$ —
$ 25

~~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 $409 million and $237 million as of September 30, ~~2018~~2019 and December 31, ~~2017 is as follows:~~2018, respectively.

September 30, 2018 December 31, 2017
Carrying Value Fair Value Carrying Value Fair Value
Senior notes and debentures $ 62,981
$ 62,966
$ 60,844
$ 63,443
Credit facilities $ 9,493
$ 9,577
$ 9,387
$ 9,440

The estimated fair value of the Company’s senior notes and debentures as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 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, 2019 and December 31, 2018 is as follows:



	September 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior notes and debentures	$	64,140	$	69,315	$	62,868	$	61,087
Credit facilities	$	10,759	$	10,842	$	9,959	$	9,608

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~~fair values are generally classified within Level 3 of the ~~three and nine months ended~~ ~~September 30, 2018~~ ~~and~~ ~~2017~~.valuation hierarchy.

8.10. Revenues

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Video	$	4,359	$	4,332	$	13,134	$	12,987
Internet	4,195		3,809		12,322		11,286
Voice	477		512		1,470		1,599
Residential revenue	9,031		8,653		26,926		25,872

Small and medium business	974		922		2,882		2,737
Enterprise	644		632		1,939		1,881
Commercial revenue	1,618		1,554		4,821		4,618

Advertising sales	394		440		1,134		1,223
Mobile	192		17		490		17
Other	214		223		626		660
	$	11,449	$	10,887	$	33,997	$	32,390

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

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,
	2019		2018		2019		2018
Programming	$	2,790	$	2,778	$	8,482	$	8,333
Regulatory, connectivity and produced content	612		546		1,770		1,639
Costs to service customers	1,894		1,854		5,483		5,492
Marketing	793		790		2,296		2,310
Mobile	337		94		874		135
Other	1,024		956		3,045		2,833
	$	7,450	$	7,018	$	21,950	$	20,742

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Programming $ 2,778
$ 2,699
$ 8,333
$ 7,952
Regulatory, connectivity and produced content 546
523
1,639
1,553
Costs to service customers 1,854
1,823
5,492
5,385
Marketing 790
761
2,310
2,286
Mobile 94
—
135
—
Other 956
899
2,833
2,695
$ 7,018
$ 6,705
$ 20,742
$ 19,871

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 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. 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. Mobile costs represent costs associated with the Company's mobile service such as device and service costs, marketing, sales and 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.

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,
	2019			2018		2019		2018
Special charges, net	$	23		$	14	$	44	$	121
(Gain) loss on sale of assets, net	(5		)	4		33		(9		)
	$	18		$	18	$	77	$	112

Special charges, net

Special charges, net primarily includes employee termination costs and net amounts of litigation settlements. The three and nine months ended September 30, 2018 includes $14 million and $85 million of merger and restructuring costs, respectively. The nine months ended September 30, 2018 also includes a $22 million charge related to the Company's withdrawal liability from a multiemployer pension plan.

Gain (loss) on sale of assets, net

Gain (loss) on sale of assets, net represents the net 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.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~9. Other Operating Expenses, Net~~

~~Other operating expenses, net consist~~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:~~presented.



	Three Months Ended September 30,		Nine Months Ended September 30,
	2019	2018	2019	2018
Stock options	39,400	24,200	1,821,800	1,490,700
Restricted stock	200	500	8,300	10,200
Restricted stock units	11,300	13,500	698,200	518,900

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Merger and restructuring costs $ 14
$ 67
$ 90
$ 293
Special charges, net —
80
31
86
(Gain) loss on sale of assets, net 4
(2 ) (9 ) (5 )
$ 18
$ 145
$ 112
$ 374

~~Merger~~Charter stock options and ~~restructuring costs~~

~~Merger~~restricted stock units generally cliff vest upon the three year anniversary of each grant. Certain stock options and ~~restructuring costs represent costs incurred in connection with merger~~restricted stock units vest based on achievement of stock price hurdles. Stock options generally expire ten years from the grant date and ~~acquisition transactions and related restructuring, such as advisory, legal and accounting fees, employee retention costs, employee termination costs related to~~restricted stock units have no voting rights. Restricted stock generally vests one year from the ~~acquisition in 2016~~date of grant. Time Warner Cable Inc. ("TWC") restricted stock units that were converted into Charter restricted stock units generally vest 50% on each of the third and ~~Bright House Networks, LLC ("Bright House")~~fourth anniversary of the grant date.

As of September 30, 2019, total unrecognized compensation remaining to be recognized in future periods totaled $211 million for stock options, $2 million for restricted stock and ~~other exit costs. Changes~~$246 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 $71 million and $238 million for the three and nine months ended September 30, 2019, respectively, and $71 million and $213 million of stock compensation expense for the three and nine months ended September 30, 2018, respectively, which is included in ~~accruals for merger~~operating costs and ~~restructuring costs are presented below:~~

Employee Retention Costs Employee Termination Costs Transaction and Advisory Costs Other Costs Total
Liability, December 31, 2016 $ 7
$ 244
$ 25
$ —
$ 276
Costs incurred 4
226
4
68
302
Cash paid (10 ) (298 ) (12 ) (60 ) (380 )
Remaining liability, December 31, 2017 1
172
17
8
198
Costs incurred —
59
1
25
85
Cash paid —
(155 ) —
(23 ) (178 )
Remaining liability, September 30, 2018 $ 1
$ 76
$ 18
$ 10
$ 105

~~In addition to the costs incurred indicated above, the~~expenses. The Company also recorded $5 million of expense related to accelerated vesting of equity awards of terminated employees, ~~during~~which is recorded in other operating expenses, net in the consolidated statements of operations for the nine months ended September 30, ~~2018, and $6 million and $43 million during the three and nine months ended September 30, 2017, respectively.~~2018.

~~Special charges, net~~

Special charges, net primarily includes employee termination costs not related to the acquisition of TWC and Bright House and net amounts of litigation settlements. The nine months ended September 30, 2018 includes a $22 million charge related to the Company's withdrawal liability from a multiemployer pension plan while the three and nine months ended September 30, 2017 includes an $83 million charge related to the Company's withdrawal liability from a multiemployer pension plan.

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

~~(Gain) loss on sale of assets, net represents the net (gain) loss recognized on the sales and disposals of fixed assets and cable systems.~~

~~10.~~14. Income Taxes

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. 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.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

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”). 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.

The Company recorded income tax expense of $10 million and $86 million for the three and nine months ended September 30, 2019, respectively, and $8 million and $13 million for the three and nine months ended September 30, 2018, ~~respectively, and $6 million and $35 million for the three and nine months ended September 30, 2017,~~ respectively. Income tax expense ~~decreased~~increased during the nine months ended September 30, ~~2018~~2019 compared to the corresponding ~~prior~~ period in 2018 primarily ~~due to audit settlements previously recorded~~ as ~~uncertain tax positions offset by state~~a result of an internal entity simplification and higher pretax income ~~tax accruals~~.

The Company has reported provisional amounts for the income tax effects of Tax Cuts & Jobs Act (“Tax Reform”) for which the accounting is incomplete but a reasonable estimate could be determined. There were no specific impacts of Tax Reform that could not be reasonably estimated which the Company accounted for under prior tax law. Based on a continued analysis of the estimates and further guidance on the application of the law, it is anticipated that additional revisions may occur throughout the allowable measurement period.

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

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

technical merits. There is considerable judgment involved in making such a determination. The Company has recorded unrecognized tax benefits totaling approximately ~~$124~~$116 million and ~~$134~~$119 million, excluding interest and penalties, as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. The Company does not currently anticipate that its reserve for uncertain tax positions will significantly increase or decrease during ~~2018;~~2019; 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 ~~or Charter Holdco, the Company's indirect parent companies, for income tax purposes,~~ are currently under examination by the Internal Revenue Service ("IRS"). for income tax purposes. Charter's 2016 ~~and 2017~~through 2018 tax years remain open for examination and assessment. Charter’s ~~tax years ending 2015 through the~~ short period return dated May 17, 2016 (prior to the acquisition of TWC and Bright ~~House) remain~~House Networks, LLC) remains subject to examination and assessment. Years prior to ~~2015~~2016 remain open solely for purposes of examination of Charter’s loss and credit carryforwards. The IRS is currently examining Charter Holdings’ income tax return for 2016. Charter Holdings’ 2017 and 2018 tax ~~year remains~~years remain open for ~~examination.~~examination and assessment. The IRS is currently examining TWC’s income tax returns for 2011 through 2014. TWC’s tax year 2015 remains subject to examination and assessment. Prior to TWC’s separation from Time Warner Inc. (“Time Warner”) in March 2009, ~~(the “Separation”),~~ 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.~~returns and the results are 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, ~~2018,~~2019, nor does the Company anticipate a material impact in the future.

~~11.~~15. Comprehensive Income

Comprehensive income equaled net income attributable to CCO Holdings member for the three and nine months ended September 30, 2019 and three months ended September 30, 2018. The following table sets forth the consolidated statements of comprehensive income for the nine months ended September 30, 2018.



	Nine Months Ended September 30, 2018
Consolidated net income	$	1,287
Foreign currency translation adjustment	(1		)
Consolidated comprehensive income	1,286
Less: Comprehensive income attributable to noncontrolling interest	(1		)
Comprehensive income attributable to CCO Holdings member	$	1,285

16. Related Party Transactions

The following sets forth certain transactions in which the Company and the directors, executive officers, and affiliates of the Company are involved.

Liberty Broadband and A/N

Under the terms of the Amended and Restated Stockholders Agreement with Liberty Broadband Corporation (“Liberty Broadband”), A/N and Charter, dated May 23, 2015, the number of Charter’s directors is fixed at 13, and includes its CEO. Two designees selected by A/N are members of the board of directors of Charter and three designees selected by Liberty Broadband 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

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

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 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 directors and one designee of each of A/N and

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

Liberty Broadband. A/N and Liberty Broadband also have certain other committee designation and other governance rights. Mr. Thomas Rutledge, the Company’s CEO, is the chairman of the board of Charter.

In December 2017, Charter and A/N entered into an 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 $400 million which threshold has been reached.basis.

The Company is aware that Dr. John Malone, a director emeritus of Charter and Chairman of the board of directors and holder of ~~47.1%~~49.0% of voting interest in Liberty Broadband, may be deemed to have a ~~37.5%~~39.9% voting interest in Qurate Retail, Inc. ("~~Qurate," formerly known as Liberty Interactive Corporation)~~Qurate") and is on the board of directors of Qurate. Qurate wholly owns HSN, Inc. (“HSN”) and QVC, Inc. (“QVC”). The Company has programming relationships with HSN and QVC. For the three and nine months ended September 30, 2019, the Company recorded revenue in aggregate of approximately $11 million and $35 million, respectively, and for the three and nine months ended September 30, 2018, the Company recorded revenue in aggregate of approximately $18 million and $51 ~~million, respectively, and for the three and nine months ended September 30, 2017, the Company recorded revenue in aggregate of approximately $17 million and $50~~ 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, a member of Charter’s board of directors, also serve on the board of directors of Discovery Communications, Inc., (“Discovery”). The Company is aware that Dr. Malone owns 1.2% of the series A common stock, 93.6% of the series B common stock ~~of Discovery, 6%~~and 2.6% of the series C common stock of Discovery and has a ~~28%~~28.2% voting interest in Discovery for the election of directors. The Company is aware that Advance/Newhouse Programming Partnership (“A/N PP”), an affiliate of A/N and of which Mr. Miron is the CEO, owns 100% of the Series A-1 preferred stock of Discovery and 100% of the Series C-1 preferred stock of Discovery and has a ~~24.2%~~24.1% voting interest for the election of directors. A/N PP has the right to appoint three directors out of a total of eleven directors to Discovery’s board to be elected by the holders of Discovery’s Series A-1 preferred stock. The Company purchases programming from Discovery pursuant to agreements entered into prior to Dr. Malone and Mr. Miron joining Charter’s board of directors. Based on publicly available information, the Company does not believe that Discovery would currently be considered a related party. The amount paid in the aggregate to Discovery represents less than 3%2% of total operating costs and expenses for the three and nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018.

Equity Investments

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 $78 million and $245 million during the three and nine months ended September 30, 2019, respectively, and $99 million and $248 million during the three and nine months ended September 30, 2018, ~~respectively, and $62 million and $208 million during the three and nine months ended September 30, 2017,~~ respectively.

~~12.~~17. Contingencies

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 involving Charter, TWC, A/N, and Liberty Broadband announced by Charter on May 26, 2015. The lawsuit, which named as defendants Charter and its board of directors, alleged that the 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 stockholders. The lawsuit has proceeded to the discovery phase. Charter denies any liability, believes that it has substantial defenses, and ~~intends to~~is vigorously ~~defend~~defending this 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.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

The California Attorney General and the Alameda County, California District Attorney are investigating whether certain of 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 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.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

On December 19, 2011, Sprint Communications Company L.P. (“Sprint”) filed a complaint in the U.S. District Court for the District of Kansas alleging that TWC infringed certain U.S. patents purportedly relating to Voice over Internet Protocol (“VoIP”) services. AAt the trial, ~~began on February 13, 2017. On March 3, 2017~~ the jury returned a verdict of $140 million against TWC and further concluded that TWC had willfully infringed Sprint’s patents. The court subsequently declined to enhance the damage award as a result of the purported willful infringement and awarded Sprint an additional $6 million, representing pre-judgment interest on the damages award. The Company ~~has~~ appealed the case to the United States Court of Appeals for the Federal ~~Circuit.~~Circuit where the Company lost the appeal. The Company has filed a petition for writ of certiorari with the United States Supreme Court, and the Company could receive the decision of the Supreme Court as to whether the Court will grant the petition as early as November 2019. In addition to pursuing its appeal, the Company continues to pursue indemnity from one of its vendors and has brought a patent suit against Sprint (TC Tech, LLC v. Sprint) in the U.S. District Court for the District of Delaware implicating Sprint's LTE technology. The expected financial impact of the Sprint verdict ~~was~~has been reflected in the ~~measurement period adjustments to net current liabilities.~~Company's financial statements. The Company does not expect that the outcome of this litigation will have a material adverse effect on its operations or financial condition. The ultimate ~~outcome~~outcomes of ~~this litigation or~~the appeal of the Sprint Kansas case, the pursuit of indemnity against the Company’s vendor and the TC Tech litigation cannot be predicted.

Sprint filed a second suit against Charter and Bright House Networks, LLC on December 2, 2017 in the United States District Court for the District of Delaware. This suit alleges infringement of 15 patents related to the Company's provision of VoIP services (ten of which were ~~already~~ asserted against Legacy TWC in the matter described above). Charter ~~will~~is vigorously ~~defend~~defending this case. While the Company is unable to predict the outcome of this Sprint suit, it does not expect that this litigation will have a material effect on its operations, financial condition, or cash flows.

Sprint filed a third suit against Charter on May 17, 2018 in the United States District Court for the Eastern District of Virginia. This suit alleges infringement of three patents related to the Company's video on demand services. The Company ~~will~~is vigorously ~~defend~~defending this case. The 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 is unable to predict the outcome of this litigation, it does not expect that this litigation will have a material effect on its operations, financial condition, or cash flows.

The New York Public Service Commission (the “PSC”) has issued multiple orders against Charter including two orders on July 27, 2018 relating to the agreement by which the PSC approved Charter’s merger with TWC. One order finds that Charter had failed to satisfy one of its merger conditions by not extending its high speed broadband network according to the PSC’s recent interpretation of which homes and businesses Charter built to should count, and it directs the initiation of a court action to impose financial and other penalties on Charter. The second order, rescinds the PSC’s January 2016 approval of Charter’s acquisition of TWC’s New York operations and directs Charter to submit a plan to effect an orderly transition to a successor provider or providers for Charter to cease operations in New York within six months of the order. As the PSC and Charter have entered into discussions with the possibility of resolving the PSC related matters, the PSC has extended such deadline on three occasions with the last extension requiring submission of an exit plan by December 24, 2018. On July 30, 2018, the PSC filed a petition for penalties and injunctive relief in the Supreme Court of the State of New York seeking penalties of $100,000 per day from June 18, 2018 and until Charter complies with the PSC order and also seeks injunctive relief from the court to enjoin failure to comply with the New York Public Service Laws or any regulation or order of the PSC. While the Company believes the actions by the PSC are without merit and intends to defend the actions vigorously and does not believe the results of the proceedings will have a material adverse effect on Charter, no assurance can be given that, should an adverse outcome result, it would not be material to its consolidated financial condition, results of operations or liquidity. The Company cannot predict the outcome of the PSC claims, including any negotiations, nor can it reasonably estimate a range of possible loss in the event of an adverse result.

On October 23, 2015, the New York Office of the Attorney General (the “NY AG”) began an investigation of TWC's advertised Internet speeds and other Internet product advertising. On February 1, 2017, the NY AG filed suit in the Supreme Court for the State of New York alleging that TWC's advertising of Internet speeds was false and misleading. The suit seeks restitution and injunctive relief. The Company continues to defend itself vigorously. Although no assurances can be made that such defenses would ultimately be successful, 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.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

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. 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 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 ~~parties~~party to other lawsuits, claims and regulatory inquiries that arise in the ordinary course of conducting their 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 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.

~~13.~~ ~~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.~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Stock options 24,200
20,900
1,490,700
1,167,100
Restricted stock 500
—
10,200
9,500
Restricted stock units 13,500
5,100
518,900
283,000

~~Charter stock options and restricted stock units generally 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. 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.~~

~~As of~~ ~~September 30, 2018, total unrecognized compensation remaining to be recognized in future periods totaled~~ ~~$235 million~~ ~~for stock options,~~ ~~$2 million~~ ~~for restricted stock and~~ ~~$224 million~~ ~~for restricted stock units and the weighted average period over which they are expected to be recognized is~~ ~~two~~ ~~years for stock options,~~ ~~one~~ ~~year for restricted stock and~~ ~~two~~ ~~years for restricted stock units.~~

The Company recorded $71 million and $213 million of stock compensation expense for the three and nine months ended September 30, 2018, respectively, and $64 million and $198 million or the three and nine months ended and September 30, 2017, respectively, which is included in operating costs and expenses. The Company also recorded $5 million for the nine months ended September 30, 2018, and $6 million and $43 million for the three and nine months ended September 30, 2017, respectively, of expense related to accelerated vesting of equity awards of terminated employees, which is recorded in merger and restructuring costs in other operating expenses, net in the consolidated statements of operations.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

~~14.~~18. Employee Benefit Plans

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

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 benefit (costs) for the three and nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 are recorded in other pension benefits, ~~(costs)~~net in the consolidated statements of operations and consisted of the following:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Interest cost	$	(32	)	$	(32	)	$	(96	)	$	(96	)
Expected return on plan assets	41			52			123			156
Remeasurement gain, net	—			187			—			187
Net periodic pension benefits	$	9		$	207		$	27		$	247

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Interest cost $ (32 ) $ (33 ) $ (96 ) $ (101 )
Expected return on plan assets 52
46
156
140
Remeasurement gain (loss), net 187
(30 ) 187
(30 )
Net periodic pension benefit (costs) $ 207
$ (17 ) $ 247
$ 9

During the three and nine months ended September 30, 2018, ~~and 2017,~~ 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, 2018 ~~and 2017~~ 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 $187 million remeasurement gain recorded during the three and nine months ended September 30, 2018 was primarily driven by the effects of an increase of the discount rate from 3.68% at December 31, 2017 to 4.24% at September 30, 2018. This was partially offset by a loss to record pension assets to fair value at September 30, 2018. The $30 million remeasurement loss recorded during the three and nine months ended September 30, 2017 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 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 to record pension assets to fair value at September 30, 2017. The expected long-term rate of return on plan assets has decreased from 6.50% at December 31, 2017 to 5.75% at September 30, 2018 reflecting changes in the mix of plan assets.

The Company made no cash contributions to the qualified pension plans during the three and nine months ended September 30, ~~2018~~2019 and ~~2017;~~2018; 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 ~~2018~~2019 to the extent benefits are paid.

~~15.~~19. Recently Issued Accounting Standards

Accounting Standards Adopted January 1, 2018

ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”)

~~In May 2014, the Financial Accounting Standards Board ("FASB") issued~~Upon adoption of ASU 2014-09, the Company recorded a cumulative-effect adjustment, which ~~is a comprehensive revenue recognition standard that superseded nearly all revenue recognition guidance under U.S. GAAP. ASU 2014-09 provides a single principles-based, five step model~~included an increase to ~~be applied to all contracts with customers, which steps are to (1) identify the contract(s) with~~

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when each performance obligation is satisfied.

~~The Company adopted ASU 2014-09~~total member’s equity of $49 million as of January 1, 2018 using the modified retrospective transition method with a cumulative-effect adjustment to equity. The adoption of ASU 2014-09 did not have a material impact on the Company’s financial position or results of operation. Previously reported results will not be restated under this transition method. The adoption results in the deferral of residential and small and medium business installation revenues and enterprise commission expenses over a period of time instead of recognized immediately. The adoption also results in the reclassification of the amortization of up-front fees paid to market and serve customers who reside in residential MDUs to operating costs and expenses instead of amortized as an intangible to depreciation and amortization expense.2018.

The January 1, 2018 adoption cumulative-effect adjustment consisted of an increase to other noncurrent assets of $120 million, an increase to accounts payable and accrued liabilities of $71 million, an increase to deferred income tax liabilities of $11 million and an increase to total shareholders’ equity of $38 million. The Company applied the cumulative-effect adjustment to all contracts as of January 1, 2018. Operating results for the three and nine months ended September 30, 2018 are not materially different than results that would have been reported under guidance in effect before application of ASU 2014-09.

~~Nature of Services~~

~~Residential Services~~

Residential customers are offered video, Internet and voice services primarily on a subscription basis. Residential customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized ratably over a one month service period as the subscription services are delivered. Each optional service purchased is generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Residential video customers have the option to purchase additional tiers of services, as well as video-on-demand (“VOD”) programming and pay-per-view programming on a per-event basis. Video revenues consist primarily of revenues from the selected programming service tier, as well as VOD fees, pay-per-view fees, retransmission fees, regulatory fees, equipment service fees and video installation fees.

Residential Internet customers receive data download and upload services with speeds dependent on the selected tier of service. Customers are also offered a security suite, an in-home WiFi product, and an out-of-home WiFi service. Internet revenues consist primarily of data services, WiFi service fees and Internet installation fees.

Residential voice customers receive unlimited local and long distance calling to United States, Canada, Mexico, and Puerto Rico, voicemail, call waiting, caller ID, call forward and other features. Customers may also purchase international calling either by the minute, or through packages of minutes per month. Voice revenues consist primarily of voice services and regulatory fees.

~~Small and Medium Business~~

Small and medium business customers are offered video, Internet and voice services similar to those provided to residential customers. Small and medium business customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized ratably over a one month service period as the subscription services are delivered.

~~Enterprise Solutions~~

Enterprise Solutions include fiber-delivered communications and managed information technology solutions to larger businesses, as well as high-capacity last-mile data connectivity services to mobile and wireline carriers, Internet service providers, and other competitive carriers on a wholesale basis. Services are primarily offered on a subscription basis with a contractually specified and non-cancelable service period. The non-cancelable contract terms for enterprise services generally range from two to seven years. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized ratably over the contract period as the subscription services are delivered. Enterprise subscription services are billed as monthly recurring

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

charges to customers and related installation services, if applicable, are billed upon completion of the customer installation. Installation services are not accounted for as distinct performance obligations, but rather a component of the connectivity services, and therefore upfront installation fees are deferred and recognized as revenue over the related contract period.

~~Advertising Services~~

The Company offers local, regional and national businesses the opportunity to advertise in individual and multiple markets on cable television networks and digital outlets. Placement of advertising is accounted for as a distinct performance obligation and revenue is recognized at the point in time when the advertising is distributed. In some markets, the Company has formed advertising interconnects or entered into representation agreements with other video distributors, under which the Company sells advertising on behalf of those distributors. In other markets, the Company has entered into representation agreements under which another operator in the area will sell advertising on the Company’s behalf. For representation arrangements in which the Company controls the sale of advertising and acts as the principal to the transaction, the Company recognizes revenue earned from the advertising customer on a gross basis and the amount remitted to the distributor as an operating expense. For other representation arrangements in which the Company does not control the sale of advertising and acts as an agent to the transaction, the Company recognizes revenue net of any fee remitted to the distributor.

~~Mobile~~

At the end of the second quarter of 2018, the Company launched its mobile product which is available to residential customers subscribing to its Internet service. Mobile services are sold under an unlimited data plan or a by-the-gig data usage plan and revenue is recognized as the services are provided. Customers can purchase mobile devices and accessory products and have the option to pay for devices under an installment plan. Revenue is recognized from the sale of devices at the time of shipment.

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

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Video $ 4,332
$ 4,208
$ 12,987
$ 12,401
Internet 3,809
3,555
11,286
10,464
Voice 512
611
1,599
1,955
Residential revenue 8,653
8,374
25,872
24,820

Small and medium business 922
896
2,737
2,652
Enterprise 632
594
1,881
1,761
Commercial revenue 1,554
1,490
4,618
4,413

Advertising sales 440
373
1,223
1,091
Mobile 17
—
17
—
Other 223
221
660
655
$ 10,887
$ 10,458
$ 32,390
$ 30,979

Fees imposed on the Company by various governmental authorities are passed through on a monthly basis to the Company’s customers and are periodically remitted to authorities. Fees of $239 million and $730 million for the three and nine months ended September 30, 2018, respectively, and $244 million and $717 million for the three and nine months ended September 30, 2017, respectively, are reported in video, voice, mobile and commercial revenues, on a gross basis with a corresponding operating expense because the Company is acting as a principal. Certain taxes, such as sales taxes imposed on the Company’s customers, collected and remitted to state and local authorities, are recorded on a net basis because the Company is acting as an agent in such situation.

A significant portion of our revenue is derived from customers who may generally cancel their subscriptions at any time without penalty. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Revenue from customers with a contractually specified term and non-

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

~~cancelable service period will be recognized over the term of such contracts, which is generally two to seven years for our enterprise contracts.~~

~~Significant Judgments~~

The Company often provides multiple services to a customer. Provision of customer premise equipment, installation services, and additional service tiers may have a significant level of integration and interdependency with the subscription video, Internet, voice, or connectivity services provided. Judgment is required to determine whether provision of customer premise equipment, installation services, and additional service tiers are considered distinct and accounted for separately, or not distinct and accounted for together with the subscription services.

Allocation of the transaction price to the distinct performance obligations in bundled residential service subscriptions requires judgment. The transaction price for a bundle of residential services is frequently less than the sum of the standalone selling prices of each individual service. The Company allocates the residential services bundle discount among the services to which the discount relates based on the relative standalone selling prices of those services. Standalone selling prices for the Company’s residential video and Internet services are directly observable, while standalone selling price for the Company’s residential voice service is estimated using the adjusted market assessment approach which relies upon information from peers and competitors who sell residential voice services individually.

The Company believes residential and small and medium business non-refundable upfront installation fees charged to customers result in a material right to renew the contract as such fees are not required to be paid upon subsequent renewals. The residential and small and medium business upfront fee is deferred over the period the fee remains material to the customer, which the Company has estimated to be approximately six months. Estimation of the period the fee remains material to the customer requires consideration of both quantitative and qualitative factors including average installation fee, average revenue per customer, and customer behavior, among others.

~~Contract Liabilities~~

Timing of revenue recognition may differ from the timing of invoicing to customers. Residential, small and medium business, and enterprise customers are invoiced for subscription services in advance of the service period. Deferred revenue liabilities, or contract liabilities, are recorded when the Company collects payments in advance of performing the services. Deferred revenue liabilities, or contract liabilities, are also recorded when the Company invoices customers upfront for installation services that are recognized as revenue over time. Residential and small and medium business installation revenues are deferred over the period the fee remains material to the customer. Enterprise installation revenues are deferred using a portfolio approach over the average contract life of each enterprise service category. As of September 30, 2018, current deferred revenue liabilities consisting of refundable customer prepayments of $410 million and upfront installation fees of $88 million were included in accounts payable and accrued liabilities. As of September 30, 2018, long-term deferred revenue liabilities consisting of enterprise upfront installation fees of $34 million were included in other long-term liabilities.

~~Contract Costs~~

The Company recognizes an asset for incremental costs of obtaining a contract with a customer if the amortization period of those costs is expected to be longer than one year and the costs are expected to be recovered. Enterprise sales commission costs meet the requirements to be deferred and, as a result, are recognized using a portfolio approach over a commission expense weighted-average enterprise contract period. Deferred enterprise commission costs are included in other noncurrent assets in the consolidated balance sheet and totaled $138 million as of September 30, 2018. As the amortization period of residential and small and medium business commissions costs is less than one year, the Company applies the practical expedient that allows such costs to be expensed as incurred. The Company has determined that the amortization period associated with residential and small and medium business commission costs is less than one year based on qualitative and quantitative factors.

The Company recognizes an asset for costs incurred to fulfill a contract when those costs are directly related to services provided under the contract, generate or enhance resources of the entity that will be used in performing service obligations under the contract, and are expected to be recovered. Up-front fees paid to MDUs, such as apartment building owners, in order to gain access to market and serve tenants who reside within the MDU meet the requirements to be deferred and, as a result, are recognized over the term of the MDU contract. Deferred upfront MDU fees are amortized on a straight-line basis and are included in other noncurrent

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

assets in the consolidated balance sheet and totaled $266 million as of September 30, 2018. Amortization expense of $16 million and $46 million was included in regulatory, connectivity and produced content within operating expenses in the consolidated statements of operations for the three and nine months ended September 30, 2018, respectively. Residential and small and medium business installation costs not capitalized into property, plant and equipment are expensed as incurred under cable industry-specific guidance.

~~ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~ ~~(“ASU 2016-15”)~~

In August 2016, the FASB issued 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. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact to the Company’s consolidated financial statements.

ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16")

In October 2016, the FASB issued ASU 2016-16 which requires both the selling entity and the buying entity in an intra-entity asset transfer (other than the transfer of inventory) to immediately recognize the current and deferred income tax consequences of the transaction. Income tax effects of intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. The Company adopted the standard on January 1, 2018, using a modified retrospective approach, with the cumulative-effect adjustment recognized directly to shareholders equity for the income tax effects of intra-entity asset transfers (other than transfers of inventory) that happened before the adoption date. The Company identified a ~~$39~~$38 million increase to total ~~shareholders'~~member's equity and corresponding increase to deferred tax assets related to the adoption of ASU 2016-16, which was recorded during the three months ended September 30, 2018.

~~ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”)~~

In November 2016, the FASB issued ASU 2016-18 which requires that amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 does not provide a definition of restricted cash or restricted cash equivalents. The Company adopted ASU 2016-18 on January 1, 2018. The new guidance will only be applicable to amounts described by the Company as restricted cash. The adoption of ASU 2016-18 did not have a material impact to the Company’s consolidated financial statements.

~~ASU No. 2017-09, Scope of Modification Accounting (“ASU 2017-09”)~~

In May 2017, the FASB issued 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 is applied prospectively to awards modified on or after the effective date. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have a material impact to the Company’s consolidated financial statements.

Accounting Standards ~~Not Yet~~ Adopted January 1, 2019

ASU No. 2016-02, Leases (“ASU 2016-02”)

In February 2016, the FASB issued ASU 2016-02, which requires lessees to recognize almost all leases on their balance sheet as a ~~right-of-use~~lease 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~~is based on criteria ~~that are~~ largely similar to ~~those~~the criteria applied ~~in current~~under legacy lease accounting, but without explicit bright lines.

The Company ~~plans to adopt~~adopted ASU 2016-02 using the modified retrospective approach with a cumulative-effect adjustment recorded at the beginning of the period of adoption (January 1, 2019). Therefore, ~~upon adoption,~~ the Company ~~will recognize~~recognized and ~~measure~~measured operating leases on the consolidated balance sheet without revising comparative period information or disclosure. ~~The modified retrospective approach includes a number~~At transition, the Company elected the package of ~~optional~~ practical expedients ~~that entities may elect to apply. The Company anticipates~~permitted under the transition guidance within the standard, which eliminates the reassessment

2120

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~electing the transition package practical expedient which would eliminate the reassessment~~ of past leases, classification and initial direct costs. The Company ~~anticipates adopting~~did not elect to use hindsight to reassess lease terms or impairment at the adoption date. The Company elected the land easements practical expedient which allows ~~adopters~~ the ~~ability~~Company not to retrospectively treat land easements as leases; however, must apply lease accounting prospectively to land easements if they meet the definition of a lease.

The Company implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The new standard resulted in the recording of leased assets and lease liabilities for the Company’s operating leases of approximately $963 million and $990 million, respectively, as of January 1, 2019. The difference between the leased assets and lease liabilities primarily represents the prior year end deferred rent liabilities balance, resulting from historical straight-lining of operating leases, which was effectively reclassified upon adoption to reduce the measurement of the leased assets. The adoption of the standard did not have an impact on the Company’s member's equity and is not anticipated to have an impact on the Company’s results from operations and cash flows. The adoption of the new standard resulted in additional interim and annual lease disclosures. See Note 5 for interim lease disclosures for the three and nine months ended September 30, 2019.

Accounting Standards Not Yet Adopted

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

In June 2016, the FASB issued ASU 2016-13, which requires a financial asset (or a group of financial assets) measured at amortized cost basis to 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 reported amount. ASU 2016-13 will be effective for interim and annual periods beginning after December 15, 2019 (January 1, 2020 for the Company). The primary financial assets of the Company in scope of ASU 2016-13 include accounts receivables and equipment installment plan notes receivables. The Company is currently in the process of ~~ASU 2016-02 is ongoing, including~~ evaluating ~~and quantifying~~ the impact, if any, the adoption of ASU 2016-13 will have on its consolidated financial statements, identifying the population of leases (and embedded leases), implementing a selected technology solution and collecting and validating lease data. Although the Company has not yet completed the evaluation of the new standard, or quantified its impact, the Company expects its lease obligations designated as operating leases (as disclosed in Note 18 to the audited consolidated financial statements in its most recent Annual Report on Form 10-K) will be reported on the consolidated balance sheet upon adoption.statements.

ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”)

In January 2017, the FASB issued 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.

~~ASU No. 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13")~~

In August 2018, the FASB issued ASU 2018-13 which amends fair value measurement disclosure requirements aiming to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing the disclosures. ASU 2018-13 will be effective for interim and annual periods beginning after December 15, 2019 (January 1, 2020 for the Company). Early adoption is permitted. The Company does not expect the adoption of ASU ~~2017-13~~2017-04 to have a material impact on its consolidated financial statements.

~~ASU No. 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14")~~

In August 2018, the FASB issued ASU 2018-14 which amends Accounting Standards Codification 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 will be effective for interim and annual periods beginning after December 15, 2021 (January 1, 2022 for the Company). Early adoption is permitted. The Company does not expect the adoption of ASU 2017-14 to have a material impact on its 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 August 2018, the FASB issued ASU 2018-15, which requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the ~~arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.~~arrangement. ASU 2018-15 will be effective for ~~annual~~interim and ~~interim~~annual periods beginning after December 15, 2019 (January 1, 2020 for the Company). ~~Early adoption is permitted.~~ The Company ~~is currently in the process of evaluating the impact that~~does not expect the adoption of ASU 2018-15 ~~will~~to have a material impact on its consolidated financial statements.

ASU No. 2019-02, Improvements to Accounting for Costs of Films and License Agreements for Program Materials ("ASU 2019-02")

In 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. ASU 2019-02 will be effective for interim and annual periods beginning after December 15, 2019 (January 1, 2020 for the Company). The Company does not expect the adoption of ASU 2019-02 to have a material impact on its consolidated financial statements.

~~16.~~

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

20. 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

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

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.

Comprehensive income equaled net income attributable to CCO Holdings member for the nine months ended September 30, 2019. Condensed consolidating financial statements as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 and for the nine months ended September 30, 2019 and 2018 ~~and 2017~~ follow.

CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Balance Sheets
As of September 30, 2018

Guarantor Subsidiaries
CCO Holdings Charter Operating and Restricted Subsidiaries Eliminations CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ —
$ 351
$ —
$ 351
Accounts receivable, net —
1,707
—
1,707
Receivables from related party 53
—
(53 ) —
Prepaid expenses and other current assets —
335
—
335
Total current assets 53
2,393
(53 ) 2,393

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net —
34,293
—
34,293
Customer relationships, net —
10,136
—
10,136
Franchises —
67,319
—
67,319
Goodwill —
29,554
—
29,554
Total investment in cable properties, net —
141,302
—
141,302

INVESTMENT IN SUBSIDIARIES 79,969
—
(79,969 ) —
LOANS RECEIVABLE – RELATED PARTY 526
—
(526 ) —
OTHER NONCURRENT ASSETS —
1,347
—
1,347

Total assets $ 80,548
$ 145,042
$ (80,548 ) $ 145,042

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 311
$ 7,335
$ —
$ 7,646
Payables to related party —
576
(53 ) 523
Current portion of long-term debt —
3,339
—
3,339
Total current liabilities 311
11,250
(53 ) 11,508

LONG-TERM DEBT 18,724
50,411
—
69,135
LOANS PAYABLE – RELATED PARTY —
1,446
(526 ) 920
OTHER LONG-TERM LIABILITIES —
1,942
—
1,942

MEMBER’S EQUITY
Controlling interest 61,513
79,969
(79,969 ) 61,513
Noncontrolling interests —
24
—
24
Total member’s equity 61,513
79,993
(79,969 ) 61,537

Total liabilities and member’s equity $ 80,548
$ 145,042
$ (80,548 ) $ 145,042

2322

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

																			CCO Holdings, LLC and Subsidiaries	Condensed Consolidating Balance Sheets
As of December 31, 2017
As of September 30, 2019										As of September 30, 2019

	Guarantor Subsidiaries									Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations			CCO Holdings Consolidated		CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations			CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	330	$	—		$	330	$	—	$	290	$	—		$	290
Accounts receivable, net	—		1,611		—			1,611		—		2,252		—			2,252
Receivables from related party	55		—		(55		)	—		55		—		(55		)	—
Prepaid expenses and other current assets	—		243		—			243		—		548		—			548
Total current assets	55		2,184		(55		)	2,184		55		3,090		(55		)	3,090

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		33,552		—			33,552		—		33,560		—			33,560
Customer relationships, net	—		11,951		—			11,951		—		7,956		—			7,956
Franchises	—		67,319		—			67,319		—		67,322		—			67,322
Goodwill	—		29,554		—			29,554		—		29,554		—			29,554
Total investment in cable properties, net	—		142,376		—			142,376		—		138,392		—			138,392

INVESTMENT IN SUBSIDIARIES	81,980		—		(81,980		)	—		76,898		—		(76,898		)	—
OPERATING LEASE RIGHT-OF-USE ASSETS										—		930		—			930
LOANS RECEIVABLE – RELATED PARTY	511		—		(511		)	—		545		—		(545		)	—
OTHER NONCURRENT ASSETS	—		1,133		—			1,133		—		1,398		—			1,398

Total assets	$	82,546	$	145,693	$	(82,546	)	$	145,693	$	77,498	$	143,810	$	(77,498	)	$	143,810

LIABILITIES AND MEMBER’S EQUITY	LIABILITIES AND MEMBER’S EQUITY									LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	280	$	7,861	$	—		$	8,141	$	302	$	7,019	$	—		$	7,321
Operating lease liabilities										—		180		—			180
Payables to related party	—		690		(55		)	635		—		544		(55		)	489
Current portion of long-term debt	—		2,045		—			2,045		—		3,509		—			3,509
Total current liabilities	280		10,596		(55		)	10,821		302		11,252		(55		)	11,499

LONG-TERM DEBT	18,708		49,478		—			68,186		20,249		51,141		—			71,390
LOANS PAYABLE – RELATED PARTY	—		1,399		(511		)	888		—		1,504		(545		)	959
DEFERRED INCOME TAXES	—		32		—			32		—		52		—			52
LONG-TERM OPERATING LEASE LIABILITIES										—		794		—			794
OTHER LONG-TERM LIABILITIES	—		2,184		—			2,184		—		2,146		—			2,146

MEMBER’S EQUITY
Controlling interest	63,558		81,980		(81,980		)	63,558		56,947		76,898		(76,898		)	56,947
Noncontrolling interests	—		24		—			24		—		23		—			23
Total member’s equity	63,558		82,004		(81,980		)	63,582		56,947		76,921		(76,898		)	56,970

Total liabilities and member’s equity	$	82,546	$	145,693	$	(82,546	)	$	145,693	$	77,498	$	143,810	$	(77,498	)	$	143,810

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
Condensed Consolidating Statements of Operations
For the nine months ended September 30, 2018

	Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
REVENUES	$	—		$	32,390		$	—		$	32,390

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	—			20,742			—			20,742
Depreciation and amortization	—			7,776			—			7,776
Other operating expenses, net	—			112			—			112
	—			28,630			—			28,630
Income from operations	—			3,760			—			3,760

OTHER INCOME (EXPENSES):
Interest expense, net	(762		)	(1,896		)	—			(2,658		)
Other pension benefits, net	—			247			—			247
Other expense, net	—			(49		)	—			(49		)
Equity in income of subsidiaries	2,048			—			(2,048		)	—
	1,286			(1,698		)	(2,048		)	(2,460		)

Income before income taxes	1,286			2,062			(2,048		)	1,300
Income tax expense	—			(13		)	—			(13		)
Consolidated net income	1,286			2,049			(2,048		)	1,287
Less: Net income attributable to noncontrolling interests	—			(1		)	—			(1		)
Net income	$	1,286		$	2,048		$	(2,048	)	$	1,286

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2019

	Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES	$	(762	)	$	9,109		$	—		$	8,347

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(4,913		)	—			(4,913		)
Change in accrued expenses related to capital expenditures	—			(449		)	—			(449		)
Contributions to subsidiaries	(1,559		)	—			1,559			—
Distributions from subsidiaries	5,988			—			(5,988		)	—
Other, net	—			85			—			85
Net cash flows from investing activities	4,429			(5,277		)	(4,429		)	(5,277		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	1,515			11,642			—			13,157
Repayments of long-term debt	—			(10,886		)	—			(10,886		)
Payments for debt issuance costs	(14		)	(34		)	—			(48		)
Distributions to noncontrolling interest	—			(2		)	—			(2		)
Contributions from parent	54			1,559			(1,559		)	54
Distributions to parent	(5,222		)	(5,988		)	5,988			(5,222		)
Other, net	—			(133		)	—			(133		)
Net cash flows from financing activities	(3,667		)	(3,842		)	4,429			(3,080		)

NET DECREASE IN CASH AND CASH EQUIVALENTS	—			(10		)	—			(10		)
CASH AND CASH EQUIVALENTS, beginning of period	—			300			—			300
CASH AND CASH EQUIVALENTS, end of period	$	—		$	290		$	—		$	290

CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2018

Guarantor Subsidiaries
CCO Holdings Charter Operating and Restricted Subsidiaries Eliminations CCO Holdings Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES $ (728 ) $ 9,232
$ —
$ 8,504

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment —
(6,692 ) —
(6,692 )
Change in accrued expenses related to capital expenditures —
(620 ) —
(620 )
Contributions to subsidiaries (127 ) —
127
—
Distributions from subsidiaries 4,491
—
(4,491 ) —
Other, net —
(93 ) —
(93 )
Net cash flows from investing activities 4,364
(7,405 ) (4,364 ) (7,405 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt —
11,552
—
11,552
Repayments of long-term debt —
(8,964 ) —
(8,964 )
Borrowings of loans payable - related parties —
7
—
7
Payments for debt issuance costs —
(29 ) —
(29 )
Distributions to noncontrolling interest —
(1 ) —
(1 )
Contributions from parent 127
127
(127 ) 127
Distributions to parent (3,763 ) (4,491 ) 4,491
(3,763 )
Other, net —
(7 ) —
(7 )
Net cash flows from financing activities (3,636 ) (1,806 ) 4,364
(1,078 )

NET INCREASE IN CASH AND CASH EQUIVALENTS —
21
—
21
CASH AND CASH EQUIVALENTS, beginning of period —
330
—
330
CASH AND CASH EQUIVALENTS, end of period $ —
$ 351
$ —
$ 351

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Statements of Cash Flows
For the nine months ended September 30, 2018

	Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES	$	(728	)	$	9,232		$	—		$	8,504

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(6,692		)	—			(6,692		)
Change in accrued expenses related to capital expenditures	—			(620		)	—			(620		)
Contribution to subsidiaries	(127		)	—			127			—
Distributions from subsidiaries	4,491			—			(4,491		)	—
Other, net	—			(93		)	—			(93		)
Net cash flows from investing activities	4,364			(7,405		)	(4,364		)	(7,405		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	—			11,552			—			11,552
Repayments of long-term debt	—			(8,964		)	—			(8,964		)
Borrowings of loans payable - related parties	—			7			—			7
Payments for debt issuance costs	—			(29		)	—			(29		)
Distributions to noncontrolling interest	—			(1		)	—			(1		)
Contributions from parent	127			127			(127		)	127
Distributions to parent	(3,763		)	(4,491		)	4,491			(3,763		)
Other, net	—			(7		)	—			(7		)
Net cash flows from financing activities	(3,636		)	(1,806		)	4,364			(1,078		)

NET INCREASE IN CASH AND CASH EQUIVALENTS	—			21			—			21
CASH AND CASH EQUIVALENTS, beginning of period	—			330			—			330
CASH AND CASH EQUIVALENTS, end of period	$	—		$	351		$	—		$	351

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
Contribution to subsidiary (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 of 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

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”). 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.

We are the second largest cable operator in the United States and a leading broadband communications services company providing video, Internet and voice services to approximately ~~27.9~~29.0 million residential and small and medium business customers at September 30, ~~2018.~~2019. We also ~~recently launched our~~offer mobile service to residential customers and recently launched mobile service to a select number of small and medium business customers. In addition, we sell video and online advertising inventory to local, regional and national advertising customers and fiber-delivered communications and managed information technology ~~("IT")~~ solutions to larger enterprise customers. We also own and operate regional sports networks and local sports, news and community ~~channels and sell security and home management services in the residential marketplace.~~channels.

~~In 2017,~~Since the close of the merger in 2016 of Charter and Time Warner Cable Inc. ("TWC") and the acquisition of Bright House Networks, LLC ("Bright House"), we ~~completed~~have been focused on integrating the ~~roll-out~~practices and systems of Charter, TWC and Bright House, centralizing our product, marketing, sales and service operations, insourcing the TWC and Bright House workforces in our call centers and field operations, and rolling out Spectrum pricing and packaging ("SPP") to ~~Time Warner Cable Inc. ("TWC")~~TWC and Bright House ~~Networks, LLC ("Bright House") markets simplifying our offers and improving our packaging~~service areas. In 2018, we completed the conversion of ~~products, allowing us to deliver more value to new and existing customers. As of September 30, 2018, over 70% of our residential customers are in an SPP package. In 2017, we also began converting~~ the remaining TWC and Bright House analog ~~markets~~service areas to an all-digital platform enabling us to deliver more HD channels and higher Internet speeds. ~~As of September 30, 2018, 96%~~Nearly all of our footprint ~~was~~is now all-digital. ~~Our corporate organization,~~Additionally, we have doubled minimum Internet speeds to 200 Mbps in a number of service areas at no additional cost to new and existing SPP Internet customers. In 2018, leveraging DOCSIS 3.1 technology, we also expanded the availability of our Spectrum Internet Gig service to nearly all of our footprint. With our integration nearly complete, we are focused on operating as ~~well as our~~one company, with a unified product, marketing ~~sales~~ and ~~product development departments, are centralized. Field operations are managed through eleven regional areas, each designed~~service infrastructure, which will allow us to ~~represent a combination of designated marketing areas. In 2017,~~accelerate growth and innovate faster. With significantly less customer-facing change expected in 2019, we ~~began migrating TWC and Bright House customer care centers to our model of using virtualized, U.S.-based in-house call centers. We~~ are focused on deploying superior products and service with minimal service ~~disruptions as~~disruptions. We expect our growing levels of productivity will result in lower customer churn, longer customer lifetimes and improved productivity with fewer customer calls and truck rolls per customer relationship. With nearly 85% of our residential customer base now in SPP packages, we ~~integrate our information technology~~expect additional benefits from lower legacy package migration activity, combined with SPP customers rolling off introductory pricing and ~~network operations. We intend~~modest price increases. Further, we expect to continue to ~~insource~~drive customer relationship growth through sales of video, Internet, wireline voice and mobile packaged services. Additionally, with the completion of our all-digital conversion, roll-out of DOCSIS 3.1 technology across our footprint, and the integration of TWC and Bright House ~~workforces~~mostly complete, we have experienced a meaningful reduction in ~~our call centers~~capital expenditures in dollars and as a percent of revenue in ~~our field operations, which we~~2019 and expect these reductions to ~~lead to lower customer churn and longer customer lifetimes. Our integration activities will~~ continue ~~in 2018 with~~for the ~~expectation that by 2019, we will have substantially integrated the practices and systems~~remainder of ~~Charter, TWC and Bright House.~~2019.

At the end of the second quarter of 2018, we launched our mobile product, Spectrum Mobile, under our mobile virtual network operator ("MVNO") reseller agreement with ~~Verizon Communications Inc. ("Verizon").~~Verizon. Our Spectrum ~~mobile~~Mobile service is offered to our ~~residential~~ customers subscribing to our Internet service and runs on Verizon's mobile network combined with ~~our existing network of in-home and outdoor WiFi hotspots.~~Spectrum WiFi. We began mass market advertising of Spectrum Mobile in September 2018. In the ~~future,~~second quarter of 2019, we ~~may also offer~~expanded our Spectrum Mobile bring-your-own-device ("BYOD") program across all sales channels to include a broader set of devices. We believe our BYOD program will lower the cost for consumers of switching mobile carriers, and will reduce the short-term working capital impact of selling new mobile devices on installment plans. We expect these developments to contribute to the growth of our mobile business. We also continue to explore ways to manage our own network and drive even more mobile traffic to our network through our continued deployment of in-home and outdoor WiFi hotspots. In addition, we plan to use our WiFi network in conjunction with additional unlicensed or licensed spectrum to improve network performance and expand capacity to offer consumers a superior mobile service at a lower total cost to ~~small~~us. Further, we have experimental wireless licenses from the Federal Communications Commission 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 medium business customers on similar terms. During the nine months ended September 30, 2018, we invested in our mobile operating partnership with Comcast Corporation, with a portion representing our equity investment in the partnershipincrease profitability and a portion representing a prepayment of software development and related services for the mobile back office platform. As the partnership delivers services, we will reflect such services as capital or operating expense depending on the nature of services delivered.cash flow over time. As a result of growth costs ~~for a~~associated with our new mobile product line, ~~and implementing our operating strategy across TWC and Bright House,~~ 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, 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. During the three and nine months ended September 30, 2018, our mobile product line increased revenues ~~increased~~ by $17 million during both time periods, reduced Adjusted EBITDA ~~was reduced~~ by approximately $77 million and $118 million, respectively, and reduced free cash flow ~~was reduced~~ by ~~approximately~~ $149 million and $290 million, ~~respectively, related~~respectively. As we continue to ~~mobile.~~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):

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, other (income) expense, net and other operating (income) expenses, such as ~~merger and restructuring costs,~~ special charges and (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 ~~Adjusted EBITDA and income from operations~~ for the three and nine months ended September 30, ~~2018~~2019 compared to the corresponding prior periods was primarily due to growth in our residential Internet, mobile and commercial business customers. ~~In addition to the items noted above,~~ Adjusted EBITDA and income from operations growth was ~~offset~~impacted by growth in revenue and increases in operating costs and expenses, primarily ~~programming~~mobile, other and ~~mobile.~~programming. Income from operations ~~for the nine months ended September 30, 2018~~ was ~~additionally~~also affected by a decrease in depreciation and amortization ~~merger and restructuring costs and special charges, net.~~expense.

The following table summarizes our customer statistics for video, Internet and voice as of September 30, ~~2018~~2019 and ~~2017~~2018 (in thousands except per customer data and footnotes).

Customer Relationships ^(c)(b)

Monthly Residential Revenue per Residential Customer ^(d)

Monthly Residential Revenue per Residential Customer ^(c)

Monthly Small and Medium Business Revenue per Customer ^(d)

Monthly Small and Medium Business Revenue per Customer ^(e)

Enterprise PSUs ^(f)

Enterprise PSUs ^(e)

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 ~~2017~~2018 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

In the second quarter of 2018, certain revenue line items and associated expenses were recast to reflect the customer changes described in note (a) under "Overview" above and to classify certain expenses more closely with organizational responsibility. There were no changes to total revenue, Adjusted EBITDA, capital expenditures, free cash flow or net income. The following table sets forth the consolidated statements of operations for the periods presented (dollars in millions):

Revenues.Total revenues grew ~~$429~~$562 million and ~~$1.4~~$1.6 billion for the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017~~2018 primarily due to increases in the number of residential Internet and commercial

business customers, price adjustments as well as the launch of our mobile service in the second half of 2018 offset by a decrease in ~~limited basic~~ video customers.

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

Video revenues consist primarily of revenues from basic and digital video services provided to our residential customers, as well as franchise fees, equipment service fees and video installation revenue. The increase in video revenues is attributable to the following (dollars in millions):

The increases related to rate changes were primarily due to price adjustments including annual increases and promotional ~~roll-off, service level changes and bundle revenue allocation.~~roll-off. Residential video customers decreased by ~~258,000~~415,000 from September 30, ~~2017~~2018 to September 30, ~~2018.~~2019.

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

Residential Internet customers grew by ~~1,081,000~~1,259,000 customers from September 30, ~~2017~~2018 to September 30, ~~2018.~~2019. The increases related to rate changes were primarily due to price adjustments including promotional ~~roll-off and bundle revenue allocation.~~roll-off.

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

The decreases related to rate changes were primarily due to value-based ~~pricing and bundle revenue allocation.~~pricing. Residential wireline voice customers decreased by ~~183,000~~623,000 customers from September 30, ~~2017~~2018 to September 30, ~~2018.~~2019.

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

Small and medium business ~~PSUs~~customers grew by ~~341,000~~138,000 from September 30, ~~2017~~2018 to September 30, ~~2018.~~2019. The decreases related to rate changes were primarily due to ~~value~~value-based pricing related to SPP, net of promotional roll-off and price adjustments.

~~Enterprise PSUs increased 33,000 from September 30, 2017 to September 30, 2018.~~ Enterprise revenues increased ~~$38~~$12 million and ~~$120~~$58 million during the three and nine months ended September 30, ~~2018~~2019, respectively, compared to the corresponding periods in ~~2017~~2018 primarily due to growth in ~~customers.~~customers offset by the sale of non-strategic assets. Enterprise PSUs increased 21,000 from September 30, 2018 to September 30, 2019.

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 ~~increased $67~~decreased $46 million and ~~$132~~$89 million during the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017~~2018 primarily due to ~~an increase~~a decrease in political revenue.

During the three and ~~continued roll-out~~nine months ended September 30, 2019, mobile revenues represented approximately $123 million and $348 million of ~~addressability~~device revenues, respectively, and ~~newer advanced advertising products that allows for more targeted media purchases using~~approximately $69 million and $142 million of service revenues, respectively, related to our ~~inventory.~~

~~Mobile~~mobile service. During both the three and nine months ended September 30, 2018, mobile revenues ~~represent~~represented approximately $16 million of device revenues and approximately $1 million of service revenues related to our mobile service. As of September 30, 2019, we had 794,000 mobile lines.

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 $2~~decreased $9 million and $5$34 million during the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017~~2018 primarily due to ~~an increase~~a decrease in late payment ~~fees.~~fees and home shopping revenue offset by the sale of video devices.

Operating costs and expenses. The 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):

Programming costs were approximately $2.8 billion and ~~$2.7~~$8.5 billion for the three and nine months ended September 30, 2019, respectively, representing 37% and 39% of total operating costs and expenses, respectively, and $2.8 billion and $8.3 billion for the three and nine months ended September 30, 2018, respectively, representing 40% of total operating costs and expenses for each of the three months ended September 30, 2018 and 2017, respectively, and $8.3 billion and $8.0 billion, representing 40% of total operating costs and expenses for each of the nine months ended September 30, 2018 and 2017, respectively.both time periods. Programming costs consist primarily of costs paid to programmers for basic, digital, premium, ~~video on demand~~VOD, and pay-per-view programming. The increase in programming costs is primarily a result of contractual rate adjustments, including renewals and increases in amounts paid for retransmission consents partly offset by lower video customers ~~pay-per-view~~ and ~~one-time programming benefits during the three and nine months ended September 30, 2018.~~pay-per-view. We expect programming expenses 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.

Regulatory, connectivity and produced content increased ~~$23~~$66 million and ~~$86~~$131 million during the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017~~2018 primarily due to the adoption of Accounting Standards Update 2014-09 as of January 1, 2018, which results in the reclassification of expenses related to the amortization of up-front fees paid to market and serve customers who reside in MDUs that were recorded in depreciation and amortization expense in the prior-year period to regulatory, connectivity and produced content expenses, as well as higher regulatory pass-through fees, ~~related~~original programming costs and costs of video devices sold to ~~higher video revenue. For more information, see Note 18 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”~~customers.

Costs to service customers increased ~~$31~~$40 million and ~~$107~~decreased $9 million during the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017~~2018. The increase during the three months ended September 30, 2019 compared to the corresponding period in 2018 was primarily due to an increase in bad debt expense. Bad debt expense increased despite lower non-pay churn due to billing simplification changes we made which pushed out collections and resulted in higher balances at disconnect.

Mobile costs of $337 million and $874 million for the three and nine months ended September 30, 2019, respectively, and $94 million and $135 million for the three and nine months ended September 30, 2018, respectively, were comprised of mobile ~~launch~~device costs, ~~device~~mobile launch costs and mobile service and operating costs.

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

Depreciation and amortization.Depreciation and amortization expense decreased by ~~$220~~$68 million and ~~$63~~$323 million during the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017.~~2018. The decrease was primarily due to a decrease in depreciation and amortization as certain assets acquired from TWC and Bright House become fully depreciated offset by an increase in depreciation as a result of more recent capital expenditures.

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

~~The~~Special charges, net decreased during the nine months ended September 30, 2019 compared to the corresponding period in 2018 primarily due to a decrease in merger and restructuring ~~costs during the three and~~costs. The nine months ended September 30, 2018 ~~compared to the corresponding periods in 2017 is primarily due to~~also included a ~~decrease of approximately $33~~$22 million and $169 million of employee termination and retention costs, respectively. The decrease in special charges, net during the three and nine months ended September 30, 2018 compared to the corresponding prior periods is primarily duecharge related to a withdrawal liability from a multiemployer pension ~~plan~~plan. Loss on sale of ~~approximately $22 million recorded~~assets, net increased during the nine months ended September 30, 2019 compared to the corresponding period in 2018 ~~versus $83~~primarily due to a $41 million ~~recorded~~impairment of non-strategic assets recognized during the ~~three and~~ nine months ended September 30, ~~2017.~~2019. See Note 912 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Interest expense, net. Net interest expense increased by ~~$117~~$61 million and ~~$390~~$207 million for the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017~~2018 primarily as a result of an increase in weighted average debt outstanding of approximately $8$2.4 billion during both time periods, primarily due to the issuance of notes throughout ~~2017~~2018 and ~~2018~~2019 for general corporate purposes including distributions to parent companies for stock ~~buybacks.~~buybacks and debt repayments.

~~Loss on extinguishment of debt.~~ Loss on extinguishment of debt of $35 million for the nine months ended September 30, 2017 primarily represents losses recognized as a result of repurchases of CCO Holdings notes. For more information, see Note 4 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Gain (loss) on financial instruments, net. We recorded losses on financial instruments of $34 million and $116 million during the three and nine months ended September 30, 2019, respectively, and a gain of $12 million during the three months ended September 30, ~~2018, and a gain of $17 million and loss of $15 million during the three and nine months ended September 30, 2017, respectively.~~2018. Gains and losses on financial instruments are primarily recognized due to changes in the fair value of 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 68 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other pension benefits, ~~(costs).~~ ~~Other~~net. Net other pension benefits ~~(costs) increased~~decreased by ~~$224~~$198 million and ~~$238~~$220 million during the three and nine months ended September 30, ~~2018,~~2019, respectively, compared to the corresponding periods in ~~2017. The increase during the three and months ended September 30,~~ 2018 ~~compared to the corresponding periods in 2017 was~~ primarily due to a remeasurement gain in the third quarter ~~remeasurements~~of 2018 as a result of significant lump sum settlement payments to participants. ~~The remeasurements resulted~~For more information, see Note 18 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 investments. Other expense, net also includes impairments on equity investments of approximately $121 million and $58 million during the nine months ended September 30, 2019 and 2018, respectively.

Income tax expense.We recognized income tax expense of $10 million and $86 million for the three and nine months ended September 30, 2019, respectively, and $8 million and $13 million for the three and nine months ended September 30, 2018, respectively. Income tax expense increased during the nine months ended September 30, 2019 compared to the corresponding period in 2018 primarily as a ~~$187 million gain in the third quarter~~result of ~~2018 versus a $30 million loss in the third quarter of 2017.~~ an internal entity simplification and higher pretax income. For more information, see Note 14 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 investments.~~

~~Income tax expense.~~We recognized income tax expense of $8 million and $13 million for the three and nine months ended September 30, 2018, respectively, and $6 million and $35 million for the three and nine months ended September 30, 2017, respectively. Income tax expense increased during the nine months ended September 30, 2018 compared to the corresponding prior period primarily due to audit settlements previously recorded as uncertain tax positions offset by state income tax accruals. ~~For more information, see Note 10 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.

Net income attributable to CCO Holdings member.Net income attributable to CCO Holdings member ~~increased~~decreased from ~~$106 million for the three months ended September 30, 2017 to~~ $667 million for the three months ended September 30, 2018 ~~and from $548~~to $559 million for the three months ended September 30, 2019 and remained constant at $1.3 billion for both the nine months ended September 30, ~~2017 to $1,286 million for the nine months ended September 30,~~2019 and 2018 primarily as a result of the factors described above.

Use of Adjusted EBITDAand Free Cash Flow

We use certain measures that are not defined by 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 Charter shareholders 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 $317 million and $916 million for the three and nine months ended September 30, 2019, respectively, and $278 million and $816 million for the three and nine months ended September 30, 2018, ~~respectively, and $262 million and $791 million for the three and nine months ended September 30, 2017,~~ respectively.

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.

In ~~April 2018, Charter Operating~~May 2019, CCO Holdings, LLC and ~~Charter Communications Operating~~CCO Holdings Capital Corp. jointly issued ~~$800~~$750 million aggregate principal amount of 5.375% senior unsecured notes due ~~April 1, 2038~~2029 at par and in July 2019, an additional $750 million of the same series of notes were issued at a price of ~~98.846%~~102.000% of the aggregate principal ~~amount and $1.7 billion aggregate principal amount of 5.750% senior notes due April 1, 2048 at a price of 99.706% of the aggregate principal~~ amount. The net proceeds, together with cash on hand, were used to repay certain existing indebtedness, including the redemption of all of the outstanding $2.0 billion in aggregate principal amount of Time Warner Cable, LLC’s 6.750% notes due July 1, 2018, to pay related fees and expenses and for general corporate purposes, including distributions to our parent companies for funding buybacks of Charter Class A common stock and Charter Holdings common units.

In July 2018, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $400 million aggregate principal amount of senior floating rate notes due February 1, 2024 at par and $1.1 billion aggregate principal amount of 4.500% senior notes due February 1, 2024 at a price of 99.893% of the aggregate principal amount. In August 2018, Charter Operating and Charter Communications Operating Capital Corp. jointly issued an additional $500 million aggregate principal amount of senior floating rate notes due February 1, 2024 at a price of 101.479% of the aggregate principal amount. Interest on the floating rate notes accrues at LIBOR plus 1.650%. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including distributions to our parent companies ~~for funding~~to fund buybacks of Charter Class A common stock and Charter Holdings common ~~units.~~units as well as repaying certain indebtedness.

In July 2019, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.25 billion aggregate principal amount of 5.125% senior notes due 2049 at a price of 99.880% of the aggregate principal amount. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including distributions to our parent companies to fund potential buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness, which may include Time Warner Cable, LLC's 5.000% senior notes due 2020.

On October 1, 2019, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.35 billion aggregate principal amount of 4.750% senior unsecured notes due 2030 at par and on October 24, 2019, an additional $500 million of the same series of notes were issued at a price of 101.250% of the aggregate principal amount. The net proceeds from the October 1, 2019 issuance were used to finance a tender offer and call redemption of $500 million aggregate principal amount of CCO Holdings' 5.250% senior unsecured notes due 2021 and $850 million aggregate principal amount of CCO Holdings' 5.750% senior unsecured notes due 2024, as well as to pay related fees and expenses and for general corporate purposes. The net proceeds from the October 24, 2019 issuance will be used to pay related fees and expenses and for general corporate purposes, including distributions to our parent companies to fund potential buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.

In October 2019, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.5 billion aggregate principal amount of 4.800% senior unsecured notes due 2050 at a price of 99.436% of the aggregate principal amount. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including distributions to our parent

companies to fund potential buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness.

In October 2019, Charter Operating entered into an amendment to its Credit Agreement repricing $4.5 billion of its revolving loan and $4.0 billion of term loan A to LIBOR plus 1.25% and its existing term loan B to LIBOR plus 1.75%. In addition, $4.5 billion of the revolving loan and $4.0 billion of term loan A maturities were extended to 2025 and $3.8 billion of term loan B maturities were extended to 2027.

Overview of Our Contractual Obligations and Liquidity

We have significant amounts of debt. The principal amount of our debt as of September 30, ~~2018~~2019 was ~~$71.5~~$74.2 billion, consisting of ~~$9.6~~$10.8 billion of credit facility debt, ~~$43.1~~$43.0 billion of investment grade senior secured notes and ~~$18.9~~$20.4 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 launch our new 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 provide the handset or tablet

to customers pursuant to equipment installment plans. Free cash flow was $1.3 billion and $3.0 billion for the three and nine months ended September 30, 2019, respectively, and $516 million and $1.2 billion for the three and nine months ended September 30, 2018, ~~respectively, and $579 million and $2.7 billion~~respectively. See table below for factors impacting free cash flow during the three and nine months ended September 30, ~~2017, respectively. The decrease in free cash flow for the nine months ended September 30, 2018~~2019 compared to the corresponding prior ~~period is primarily due to an unfavorable change in working capital as well as an increase in capital expenditures partially offset by higher Adjusted EBITDA.~~periods. As of September 30, ~~2018,~~2019, the amount available under our credit facilities was approximately $~~3.4~~4.3 billion and cash on hand was approximately ~~$351~~$290 million. 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 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 companies for stock repurchases and dividends. Charter's target leverage remains at 4 to 4.5 times Adjusted EBITDA, and up to 3.5 times Adjusted EBITDA at the Charter Operating level. Our leverage was 4.5 times Adjusted EBITDA as of September 30, ~~2018. We may~~2019. 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, 2019, Charter purchased approximately 6.9 million and 11.8 million shares, respectively, of Charter Class A common stock for approximately $2.7 billion and $4.5 billion, respectively, and during the three and nine months ended September 30, 2018, Charter purchased ~~approximately~~ 3.0 million and 10.3 million shares, respectively, of Charter Class A common stock for approximately $929 million and $3.1 billion, respectively, and during the three and nine months ended September 30, 2017, Charter purchased approximately 9.5 million and 21.9 million shares, respectively, of Charter Class A common stock for approximately $3.5 billion and $7.6 billion, respectively.

In December 2017, Charter and A/N entered into an 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 $400 million which threshold has been reached.basis. Charter Holdings purchased from A/N 0.9 million and 1.6 million Charter Holdings common units at an average price per unit of $391.62 and $366.76, or $339 million and $593 million, during the three and nine months ended September 30, 2019, respectively, and 0.5 million and 1.5 million Charter Holdings common units at an average price per unit of $292.81 and $306.11, or $145 million and $473 million, during the three and nine months ended September 30, 2018, respectively. Charter Holdings purchased from A/N 1.4 million and 2.7 million Charter Holdings common units at an average price per unit of $355.83 and $341.49, or $493 million and $922 million, during the three and nine months ended September 30, 2017, respectively.

As of September 30, ~~2018,~~2019, Charter had remaining board authority to purchase an additional ~~$788 million~~$1.4 billion of Charter’s Class A common stock and/or Charter Holdings common units. 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 ~~decreased $63~~increased $749 million and ~~$1.5~~$1.8 billion during the three and nine months ended September 30, 2019 compared to the corresponding prior periods in 2018 due to the following (dollars in millions).

Free cash flow was reduced by $256 million and $844 million during the three and nine months ended September 30, 2019, respectively, and $149 million and $290 million during the three and nine months ended September 30, 2018, respectively, ~~compared to the corresponding prior periods in 2017 due to the following (dollars in millions).~~

~~Free cash flow was reduced by $149 million and $290 million~~ due to mobile ~~during the three and nine months ended September 30, 2018, respectively, compared to the corresponding prior periods~~ with impacts negatively affecting working capital, capital expenditures and Adjusted EBITDA. The decrease in working capital during the nine months ended September 30, 2018 compared to the corresponding prior period, excluding change in accrued interest, is primarily due to the timing of fourth quarter 2017 capital expenditures and other payments.

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, ~~2018~~2019, 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, ~~2018~~2019 financial results. 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, 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 ~~$351~~$290 million and $~~330~~300 million in cash and cash equivalents as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

Operating Activities.Net cash provided by operating activities decreased $17157 million during the nine months ended September 30, ~~2018~~2019 compared to the nine months ended September 30, ~~2017,~~2018, primarily due to changes in working capital, excluding the change in accrued interest and accrued expenses related to capital expenditures, that used ~~$350~~$509 million more cash and an increase in cash paid for interest, net of ~~$379~~$129 million offset by an increase in Adjusted EBITDA of ~~$555 million and a decrease in merger and restructuring costs of $165~~$424 million.

Investing Activities.Net cash used in investing activities was ~~$7.4~~$5.3 billion and ~~$5.9~~$7.4 billion for the nine months ended September 30, 2019 and 2018, respectively. The decrease in cash used was primarily due to a decrease in capital expenditures.

Financing Activities.Net cash used in financing activities was $3.1 billionand ~~2017,~~$1.1 billion for the nine months ended September 30, 2019 and 2018, respectively. The increase in cash used was primarily due to an increase ~~in capital expenditures and changes in accrued expenses related to capital expenditures.~~

~~Financing Activities.Net cash used in financing activities was~~ ~~$1.1 billion~~ ~~and $2.0 billion for the~~ ~~nine~~ ~~months ended September 30, 2018 and 2017, respectively. The decrease in cash used was primarily due to a decrease~~ in distributions to parent companies offset by a decrease in the amount by which borrowings of long-term debt exceeded repayments.

Capital Expenditures

We have significant ongoing capital expenditure requirements. Capital expenditures were $1.7 billion and $4.9 billion for the three and nine months ended September 30, 2019, respectively, and $2.1 billion and $6.7 billion for the three and nine months ended September 30, 2018, ~~respectively, and $2.4 billion and $6.1 billion for the three and nine months ended September 30, 2017,~~ respectively. The ~~increase during the nine months ended September 30, 2018 compared to the corresponding prior period~~decrease was primarily due to ~~higher scalable infrastructure related to the timing of spend and planned product improvements, higher support capital investments due to the timing of spend and mobile and higher line extensions~~lower customer premise equipment expenditures as a result of ~~regulatory merger conditions, offset by~~the completion of our all-digital conversion and fewer SPP migrations, lower scalable infrastructure as a ~~decrease~~result of the completion of the roll-out of DOCSIS 3.1 technology across our footprint in ~~CPE expenditures due to timing.~~2018 and lower support spending with the substantial completion of the integration of TWC and Bright House. See the table below for more details.

We currently expect capital expenditures, excluding capital expenditures related to mobile, to be slightly below $7 billion in 2019, versus $8.9 billion in 2018. The actual amount of our capital expenditures in ~~2018~~2019 will depend on a number of factors including ~~our all-digital transition in the TWC and Bright House markets,~~ further spend related to 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 decreased by ~~$620~~$449 million and ~~increased by $276~~$620 million for the nine months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively.

The following tables present our major capital expenditures categories in accordance with National Cable and Telecommunications Association (“NCTA”) disclosure guidelines for the three and nine months ended September 30, ~~2018~~2019 and ~~2017.~~2018. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):

Recently Issued Accounting Standards

See Note 1519 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for a discussion

of recently issued accounting standards.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

We use derivative instruments to manage foreign exchange risk on the Sterling Notes, and do not hold or issue derivative instruments for speculative trading purposes.

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 derivative instruments have maturities of June 2031 and July 2042. We are required to post collateral on the cross-currency derivative instruments when such instruments are in a liability position. In ~~May 2016,~~April 2019, we 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.~~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. For more information, see Note 68 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the weighted average interest rate on ~~the~~ credit facility debt was approximately ~~4.1%~~3.8% and ~~3.4%~~4.3%, respectively, and the weighted average interest rate on the senior notes was approximately ~~5.6%~~5.4% and ~~5.7%~~5.6%, respectively, resulting in a blended weighted average interest rate of 5.2% and 5.4% ~~as of both time periods.~~, respectively. The interest rate on approximately ~~85%~~84% and ~~86%~~85% of the total principal amount of our debt was effectively fixed as of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

The table set forth below summarizes the fair values and contract terms of financial instruments subject to interest rate risk maintained by us as of September 30, ~~2018~~2019 (dollars in millions).

Interest rates on variable-rate debt are estimated using the average implied forward LIBOR for the year of maturity based on the yield curve in effect at September 30, ~~2018~~2019 including applicable bank spread.

Item 4.Controls and Procedures.

As of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our design and operation of disclosure controls and procedures with respect to the information generated for use in this quarterly report. The evaluation was based upon reports and certifications provided by a number of executives. Based on, and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon the evaluation, we believe that our controls provide such reasonable assurances.

During the quarter ended September 30, ~~2018,~~2019, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings.

Our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 includes “Legal Proceedings” under Item 3 of Part I. Other than as described ~~below and~~ in Note 1217 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements,” there have been no material changes from the legal proceedings described in our Form 10-K.

On March 28, 2017, prior to the expiration of the collective bargaining agreement on March 31, 2017, approximately 1,600 of our employees in New York City and New Jersey, represented by Local 3 of the International Brotherhood of Electrical Workers (the “IBEW”) commenced a strike. Local 3 called the strike because it rejected Charter’s proposal of substantial increases in wages and enrolling employees in Charter’s robust health and retirement benefits, preferring relatively flat wages and continuing to participate in the IBEW sponsored multi-employer pension and medical plans. During the strike, Charter and the IBEW continued to negotiate but ultimately reached an impasse. As a result of the impasse, Charter implemented the terms of its proposal, which terms are consistent with terms adopted in contracts between Charter and two other local IBEW union groups negotiated during the same period. A group of employees represented by Local 3 have subsequently petitioned for an election to decertify the IBEW as the collective bargaining representative for the New York City and New Jersey bargaining unit employees.

During this period, the New York Public Service Commission (the “PSC”) has issued multiple orders against Charter including denying a simple franchise transfer of a small upstate New York cable system that Charter had planned to quickly upgrade to bring robust broadband services to the community for the first time. These orders include two orders on July 27, 2018 relating to the agreement by which the PSC approved Charter’s merger with Time Warner Cable. One order rejected Charter’s arguments as to why Charter has complied with the merger conditions and finds that Charter had failed to satisfy one of its merger conditions by not extending its high speed broadband network according to the PSC’s recent interpretation of which homes and businesses Charter built to should count, and it directs the initiation of a court action to impose financial and other penalties on Charter. The second order, based primarily upon Charter’s progress in meeting its broadband expansion commitment as judged by the PSC, rescinds the PSC’s January 2016 approval of Charter’s acquisition of Time Warner Cable’s New York operations and directs Charter to submit a plan to effect an orderly transition to a successor provider or providers for Charter to cease operations in New York within six months of the order. Such plan had been ordered to be submitted within 60 days of the July 27, 2018 order. However, as the PSC and Charter have entered into discussions with the possibility of resolving the PSC related matters, the PSC has extended such deadline on three occasions with the last extension requiring submission of an exit plan by December 24, 2018. On July 30, 2018, the PSC filed a petition for penalties and injunctive relief in the Supreme Court of the State of New York seeking penalties of $100,000 per day from June 18, 2018 and until Charter complies with the PSC order and also seeks injunctive relief from the court to enjoin failure to comply with the New York Public Service Laws or any regulation or order of the PSC. Charter continues to believe that its plain reading of the merger conditions is correct and that it is in compliance with the merger conditions. Although Charter has entered into discussions with the PSC with the possibility of resolving the PSC matters, Charter has substantial defenses and appeal rights regarding the actions of the PSC and will aggressively defend against these unprecedented actions by the PSC. We expect these proceedings to continue for up to several years unless a settlement is reached. While we believe the actions by the PSC are without merit and intend to defend the actions vigorously and do not believe the results of the proceedings will have a material adverse effect on Charter, no assurance can be given that, should an adverse outcome result, it would not be material to our consolidated financial condition, results of operations or liquidity. We cannot predict the outcome of the PSC claims, including any negotiations, nor can we reasonably estimate a range of possible loss in the event of an adverse result.

Item 1A.Risk Factors.

Our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 includes "Risk Factors" under Item 1A of Part I. There have been no material changes from the updated risk factors described in our Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, CCO Holdings, LLC and CCO Holdings Capital Corp. has duly caused this quarterly report to be signed on their behalf by the undersigned, thereunto duly authorized.

The following financial ~~statements~~information from CCO Holdings, LLC's Quarterly Report on Form 10-Q for the three and nine months ended September 30, ~~2018,~~2019, filed with the Securities and Exchange Commission on October 29, ~~2018,~~2019, formatted in ~~XBRL (eXtensible~~iXBRL (inline eXtensible Business Reporting Language): includes: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of ~~Comprehensive Income;~~Changes in Member's Equity; (iv) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements.



Delaware			86-1067239
Delaware			20-0257904
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification ~~Number)~~No.)

400 Atlantic Street ~~Stamford, Connecticut 06901~~	Stamford	~~(203) 905-7801~~Connecticut	06901
(Address of ~~principal executive offices including zip code)~~			Principal Executive Offices)	(~~Registrant’s telephone number, including area code)~~Zip Code)



~~(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, 2018~~
or

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



	September 30, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Indefinite-lived intangible assets:
Franchises	$	67,319	$	—		$	67,319	$	67,319	$	—		$	67,319
Goodwill	29,554		—			29,554		29,554		—			29,554
	$	96,873	$	—		$	96,873	$	96,873	$	—		$	96,873

Finite-lived intangible assets:
Customer relationships	$	18,229	$	(8,093	)	$	10,136	$	18,229	$	(6,278	)	$	11,951
Other intangible assets	397		(82		)	315		731		(201		)	530
	$	18,626	$	(8,175	)	$	10,451	$	18,960	$	(6,479	)	$	12,481



Three months ended December 31, 2018	$	582
2019	2,153
2020	1,871
2021	1,596
2022	1,326
Thereafter	2,923
	$	10,451



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			2,500			2,506
5.750% senior notes due April 1, 2048	1,700			1,683			—			—
6.834% senior notes due October 23, 2055	500			495			500			495
Credit facilities	9,576			9,493			9,479			9,387
Time Warner Cable, LLC:
6.750% senior notes due July 1, 2018	—			—			2,000			2,045
8.750% senior notes due February 14, 2019	1,250			1,279			1,250			1,337
8.250% senior notes due April 1, 2019	2,000			2,060			2,000			2,148
5.000% senior notes due February 1, 2020	1,500			1,551			1,500			1,579
4.125% senior notes due February 15, 2021	700			723			700			730
4.000% senior notes due September 1, 2021	1,000			1,036			1,000			1,045
5.750% sterling senior notes due June 2, 2031 ^(a)	815			876			845			912
6.550% senior debentures due May 1, 2037	1,500			1,682			1,500			1,686
7.300% senior debentures due July 1, 2038	1,500			1,782			1,500			1,788
6.750% senior debentures due June 15, 2039	1,500			1,720			1,500			1,724
5.875% senior debentures due November 15, 2040	1,200			1,257			1,200			1,258
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)	847			817			879			847
4.500% senior debentures due September 15, 2042	1,250			1,139			1,250			1,137
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023	1,000			1,202			1,000			1,232
8.375% senior debentures due July 15, 2033	1,000			1,302			1,000			1,312
Total debt	71,538			72,474			69,003			70,231
Less current portion:
6.750% senior notes due July 1, 2018	—			—			(2,000		)	(2,045		)
8.750% senior notes due February 14, 2019	(1,250		)	(1,279		)	—			—
8.250% senior notes due April 1, 2019	(2,000		)	(2,060		)	—			—
Long-term debt	$	68,288		$	69,135		$	67,003		$	68,186



	Nine Months Ended September 30,
	2017
CCO Holdings notes redemption	$	(33	)
Time Warner Cable, LLC notes redemption	(1		)
Charter Operating credit facility refinancing	(1		)
	$	(35	)



	September 30, 2018				December 31, 2017
	Level 1		Level 2		Level 1		Level 2
Liabilities
Cross-currency derivative instruments	$	—	$	88	$	—	$	25



	Employee Retention Costs			Employee Termination Costs			Transaction and Advisory Costs			Other Costs			Total
Liability, December 31, 2016	$	7		$	244		$	25		$	—		$	276
Costs incurred	4			226			4			68			302
Cash paid	(10		)	(298		)	(12		)	(60		)	(380		)
Remaining liability, December 31, 2017	1			172			17			8			198
Costs incurred	—			59			1			25			85
Cash paid	—			(155		)	—			(23		)	(178		)
Remaining liability, September 30, 2018	$	1		$	76		$	18		$	10		$	105



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Balance Sheets
As of September 30, 2018

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations			CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	351	$	—		$	351
Accounts receivable, net	—		1,707		—			1,707
Receivables from related party	53		—		(53		)	—
Prepaid expenses and other current assets	—		335		—			335
Total current assets	53		2,393		(53		)	2,393

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		34,293		—			34,293
Customer relationships, net	—		10,136		—			10,136
Franchises	—		67,319		—			67,319
Goodwill	—		29,554		—			29,554
Total investment in cable properties, net	—		141,302		—			141,302

INVESTMENT IN SUBSIDIARIES	79,969		—		(79,969		)	—
LOANS RECEIVABLE – RELATED PARTY	526		—		(526		)	—
OTHER NONCURRENT ASSETS	—		1,347		—			1,347

Total assets	$	80,548	$	145,042	$	(80,548	)	$	145,042

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	311	$	7,335	$	—		$	7,646
Payables to related party	—		576		(53		)	523
Current portion of long-term debt	—		3,339		—			3,339
Total current liabilities	311		11,250		(53		)	11,508

LONG-TERM DEBT	18,724		50,411		—			69,135
LOANS PAYABLE – RELATED PARTY	—		1,446		(526		)	920
OTHER LONG-TERM LIABILITIES	—		1,942		—			1,942

MEMBER’S EQUITY
Controlling interest	61,513		79,969		(79,969		)	61,513
Noncontrolling interests	—		24		—			24
Total member’s equity	61,513		79,993		(79,969		)	61,537

Total liabilities and member’s equity	$	80,548	$	145,042	$	(80,548	)	$	145,042



CCO Holdings, LLC and Subsidiaries
Condensed Consolidating Balance Sheets
As of December 31, 2018

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations			CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	300	$	—		$	300
Accounts receivable, net	—		1,699		—			1,699
Receivables from related party	57		—		(57		)	—
Prepaid expenses and other current assets	—		400		—			400
Total current assets	57		2,399		(57		)	2,399

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		34,658		—			34,658
Customer relationships, net	—		9,565		—			9,565
Franchises	—		67,319		—			67,319
Goodwill	—		29,554		—			29,554
Total investment in cable properties, net	—		141,096		—			141,096

INVESTMENT IN SUBSIDIARIES	78,960		—		(78,960		)	—
LOANS RECEIVABLE – RELATED PARTY	526		—		(526		)	—
OTHER NONCURRENT ASSETS	—		1,403		—			1,403

Total assets	$	79,543	$	144,898	$	(79,543	)	$	144,898

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	283	$	7,620	$	—		$	7,903
Payables to related party	—		602		(57		)	545
Current portion of long-term debt	—		3,290		—			3,290
Total current liabilities	283		11,512		(57		)	11,738

LONG-TERM DEBT	18,730		50,807		—			69,537
LOANS PAYABLE – RELATED PARTY	—		1,451		(526		)	925
OTHER LONG-TERM LIABILITIES	—		2,144		—			2,144

MEMBER’S EQUITY
Controlling interest	60,530		78,960		(78,960		)	60,530
Noncontrolling interests	—		24		—			24
Total member’s equity	60,530		78,984		(78,960		)	60,554

Total liabilities and member’s equity	$	79,543	$	144,898	$	(79,543	)	$	144,898



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

																									CCO Holdings, LLC and Subsidiaries	Condensed Consolidating Statements of Comprehensive Income	For the nine months ended September 30, 2018

	Guarantor Subsidiaries												Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated			CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
Consolidated net income	$	1,286		$	2,049		$	(2,048	)	$	1,287		$	1,286		$	2,049		$	(2,048	)	$	1,287
Foreign currency translation adjustment	(1		)	(1		)	1			(1		)	(1		)	(1		)	1			(1		)
Consolidated comprehensive income	1,285			2,048			(2,047		)	1,286			$	1,285		$	2,048		$	(2,047	)	$	1,286
Less: Comprehensive income attributable to noncontrolling interests	—			(1		)	—			(1		)	—			(1		)	—			(1		)
Comprehensive income	$	1,285		$	2,047		$	(2,047	)	$	1,285		$	1,285		$	2,047		$	(2,047	)	$	1,285


	Approximate as of				Approximate as of
	September 30,				September 30,
	2018 ^(b)		2017 ^(a)(b)		2019 ^(a)		2018 ^(a)
Customer Relationships ^(c)(b)
Residential	26,063		25,329		27,037		26,063
Small and Medium Business	1,792		1,623		1,930		1,792
Total Customer Relationships	27,855		26,952		28,967		27,855

Residential Primary Service Units (“PSU”)
Video	16,140		16,398		15,725		16,140
Internet	23,336		22,255		24,595		23,336
Voice	10,218		10,401		9,595		10,218
	49,694		49,054

Monthly Residential Revenue per Residential Customer ^(d)	$	111.13	$	110.66
Monthly Residential Revenue per Residential Customer ^(c)					$	112.00	$	111.13

Small and Medium Business PSUs
Video	488		438		520		488
Internet	1,594		1,429		1,730		1,594
Voice	1,024		898		1,120		1,024
	3,106		2,765
Monthly Small and Medium Business Revenue per Customer ^(d)					$	169.44	$	173.52

Monthly Small and Medium Business Revenue per Customer ^(e)	$	173.52	$	186.66

Enterprise PSUs ^(f)	243		210
Enterprise PSUs ^(e)					264		243


^(d)(c)	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)(d)	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)(e)	Enterprise PSUs represent the aggregate number of fiber service offerings counting each separate service offering as an individual PSU.


	Three months ended September 30, 2018 compared to three months ended September 30, 2017 Increase / (Decrease)			Nine months ended September 30, 2018 compared to nine months ended September 30, 2017 Increase / (Decrease)			Three months ended September 30, 2019 compared to three months ended September 30, 2018 Increase / (Decrease)			Nine months ended September 30, 2019 compared to nine months ended September 30, 2018 Increase / (Decrease)
Increase related to rate changes	$	247		$	878		$	167		$	497
Decrease in average residential video customers	(69		)	(222		)	(110		)	(291		)
Decrease in video on demand and pay-per-view	(54		)	(70		)	(30		)	(59		)
	$	124		$	586		$	27		$	147



	Three months ended September 30, 2019 compared to three months ended September 30, 2018 Increase / (Decrease)			Nine months ended September 30, 2019 compared to nine months ended September 30, 2018 Increase / (Decrease)
Decrease in capital expenditures	$	467		$	1,779
Increase in Adjusted EBITDA	130			424
Changes in working capital, excluding change in accrued interest	180			(338		)
Increase in cash paid for interest, net	(13		)	(129		)
Other, net	(15		)	57
	$	749		$	1,793


(a)	Customer premise equipment includes costs incurred at the customer residence to secure new customers and revenue generating units, including 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).


(c)	Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).


(d)	Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.


(e)	Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles).



	CCO HOLDINGS, LLC,
	Registrant

	By:	/s/ Kevin D. Howard
		Kevin D. Howard
Date: October 29, 2019		~~Senior~~Executive Vice President, ~~- Finance,~~Chief Accounting Officer and Controller ~~and~~
~~Date: October 29, 2018~~		~~Chief Accounting Officer~~


	CCO HOLDINGS CAPITAL CORP.
	Registrant

	By:	/s/ Kevin D. Howard
		Kevin D. Howard
Date: October 29, 2019		~~Senior~~Executive Vice President, ~~- Finance,~~Chief Accounting Officer and Controller ~~and~~
~~Date: October 29, 2018~~		~~Chief Accounting Officer~~



Exhibit		Description

10.1		~~Underwriting~~Employment Agreement ~~dated as of June 28, 2018, among~~between Charter Communications, ~~Operating, LLC, Charter Communications Operating Capital Corp., CCO Holdings, LLC, as parent guarantor, the subsidiary guarantors party thereto and Citigroup Global Markets~~ Inc. and ~~Morgan Stanley & Co. LLC, as representatives of the several underwriters named therein~~Kevin D. Howard, dated August 2, 2019 (incorporated by reference to Exhibit ~~99.1~~10.1 to the ~~current report~~Current Report on Form 8-K filed by Charter Communications, Inc. on ~~July 3, 2018 (File No. 001-33664))~~August 7, 2019).
10.2		~~Tenth~~Second Supplemental Indenture, dated as of ~~July 3, 2018,~~October 1, 2019, among ~~Charter Communications Operating, LLC, Charter Communications Operating Capital Corp., as issuers,~~ CCO Holdings, LLC, ~~the subsidiary guarantors party thereto~~CCO Holdings Capital Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee ~~and collateral agent~~ (incorporated by reference to Exhibit 4.2 to the ~~current report~~Current Report on Form 8-K filed by Charter Communications, Inc. on ~~July 9, 2018 (File No. 001-33664))~~October 7, 2019).
10.3		~~Underwriting~~Form of 4.750% Senior Notes due 2030 (included in Exhibit 10.2).
10.4		Exchange and Registration Rights Agreement, dated ~~as of August 9, 2018,~~October 1, 2019, relating to the 4.750% Senior Notes due 2030, among ~~Charter Communications Operating, LLC, Charter Communications Operating Capital Corp.,~~ CCO Holdings, LLC, CCO Holdings Capital Corp. and BofA Securities, Inc., as ~~parent guarantor,~~representative of the ~~subsidiary guarantors party thereto and Morgan Stanley & Co. LLC, as underwriter~~several Purchasers (as defined therein) (incorporated by reference to Exhibit ~~99.1~~10.1 to the ~~current report~~Current Report on Form 8-K filed by Charter Communications, Inc. on ~~August 15, 2018 (File No. 001-33664))~~October 7, 2019).
31.1*31.1		Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the under the Securities Exchange Act of 1934.
31.2*31.2		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934.
32.1*32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).
32.2*32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).
101**101		The following financial ~~statements~~information from CCO Holdings, LLC's Quarterly Report on Form 10-Q for the three and nine months ended September 30, ~~2018,~~2019, filed with the Securities and Exchange Commission on October 29, ~~2018,~~2019, formatted in ~~XBRL (eXtensible~~iXBRL (inline eXtensible Business Reporting Language): includes: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of ~~Comprehensive Income;~~Changes in Member's Equity; (iv) the Consolidated Statements of Cash Flows; and (vi) the Notes to the Consolidated Financial Statements.
104		Cover Page, formatted in iXBRL and contained in Exhibit 101.


**	This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (15 U.S.C. 78r) or otherwise subject to the liability of that section. Such exhibit will not be deemed to be incorporated by reference into any filing under the Securities Act or Securities Exchange Act, except to the extent that the company specifically incorporates it by reference.