This quarterly report on Form 10-Q is for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~.2020. The United States Securities and Exchange Commission (“SEC”) allows us to “incorporate by reference” information that we file with the SEC, which means that we can disclose important information to you by referring you directly to those documents. In this quarterly report, “CCO Holdings,” “we,” “us” and “our” refer to CCO Holdings, LLC and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding, among other things, our plans, strategies and prospects, both business and financial including, without limitation, the forward-looking statements set forth in the “Results of Operations” and “Liquidity and Capital Resources” sections under Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this quarterly report. Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions including, without limitation, the factors described under “Risk Factors” under Part I, Item 1A of our most recent Form 10-K filed with the SEC. Many of the forward-looking statements contained in this quarterly report may be identified by the use of forward-looking words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “will,” “may,” “intend,” “estimated,” “aim,” “on track,” “target,” “opportunity,” “tentative,” “positioning,” “designed,” “create,” “predict,” “project,” “initiatives,” “seek,” “would,” “could,” “continue,” “ongoing,” “upside,” ~~“increases”~~“increases,” “focused on” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this quarterly report are set forth in this quarterly report on Form 10-Q, in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

•the impact of the COVID-19 pandemic on the economy, our customers, our vendors, local, state and federal governmental responses to the pandemic and our businesses generally;

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

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

•our ability to ~~efficiently~~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 ~~effectively integrate acquired operations;~~deploy new products and technologies including mobile products and any other consumer services and service platforms;

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

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

•general business conditions, economic uncertainty or downturn, including the impacts of the COVID-19 pandemic to 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 and any other consumer services and service platforms;~~

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

•the 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)


	June 30, 2020		December 31, 2019
	(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,858	$	3,249
Accounts receivable, less allowance for doubtful accounts of $218 and $151, respectively	1,961		2,195
Prepaid expenses and other current assets	625		711
Total current assets	4,444		6,155

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $29,068 and $27,595, respectively	33,304		33,908
Customer relationships, net	6,486		7,453
Franchises	67,322		67,322
Goodwill	29,554		29,554
Total investment in cable properties, net	136,666		138,237

OTHER NONCURRENT ASSETS	2,564		2,351

Total assets	$	143,674	$	146,743
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,757	$	8,142
Payables to related party	138		298
Current portion of long-term debt	706		3,500
Total current liabilities	8,601		11,940

LONG-TERM DEBT	77,663		75,578
LOANS PAYABLE - RELATED PARTY	1,024		959
DEFERRED INCOME TAXES	55		55
OTHER LONG-TERM LIABILITIES	3,333		2,922

MEMBER’S EQUITY:
Member's equity	52,975		55,266
Accumulated other comprehensive loss	—		—
Total CCO Holdings member’s equity	52,975		55,266
Noncontrolling interests	23		23
Total member’s equity	52,998		55,289

Total liabilities and member’s equity	$	143,674	$	146,743

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

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

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $26,306 and $23,038, respectively 33,560
34,658
Customer relationships, net 7,956
9,565
Franchises 67,322
67,319
Goodwill 29,554
29,554
Total investment in cable properties, net 138,392
141,096

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

Total assets $ 143,810
$ 144,898
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 7,321
$ 7,903
Payables to related party 489
545
Operating lease liabilities 180
—
Current portion of long-term debt 3,509
3,290
Total current liabilities 11,499
11,738

LONG-TERM DEBT 71,390
69,537
LOANS PAYABLE - RELATED PARTY 959
925
DEFERRED INCOME TAXES 52
—
LONG-TERM OPERATING LEASE LIABILITIES 794
—
OTHER LONG-TERM LIABILITIES 2,146
2,144

MEMBER’S EQUITY:
Member's equity 56,949
60,532
Accumulated other comprehensive loss (2 ) (2 )
Total CCO Holdings member's equity 56,947
60,530
Noncontrolling interests 23
24
Total member’s equity 56,970
60,554

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

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in millions)

Unaudited


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
REVENUES	$	11,694	$	11,345	$	23,430	$	22,548

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	7,322		7,258		14,774		14,500
Depreciation and amortization	2,424		2,495		4,917		5,042
Other operating expenses, net	2		63		12		59
	9,748		9,816		19,703		19,601
Income from operations	1,946		1,529		3,727		2,947

OTHER INCOME (EXPENSES):
Interest expense, net	(965)		(955)		(1,957)		(1,892)
Loss on extinguishment of debt	(36)		—		(63)		—
Gain (loss) on financial instruments, net	64		(119)		(254)		(82)
Other pension benefits, net	11		9		21		18
Other income (expense), net	(6)		(16)		5		(126)
	(932)		(1,081)		(2,248)		(2,082)

Income before income taxes	1,014		448		1,479		865
Income tax expense	(7)		(9)		(13)		(76)
Consolidated net income	1,007		439		1,466		789
Less: Net income attributable to noncontrolling interests	(1)		(1)		(1)		(1)
Net income attributable to CCO Holdings member	$	1,006	$	438	$	1,465	$	788

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

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

OTHER INCOME (EXPENSES):
Interest expense, net (973 ) (912 ) (2,865 ) (2,658 )
Gain (loss) on financial instruments, net (34 ) 12
(116 ) —
Other pension benefits, net 9
207
27
247
Other expense, net (3 ) (4 ) (129 ) (49 )
(1,001 ) (697 ) (3,083 ) (2,460 )

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

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

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S EQUITY

(dollars in millions)

Unaudited


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


	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

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

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


	Six Months Ended June 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	1,466	$	789
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization	4,917		5,042
Stock compensation expense	180		167
Noncash interest income, net	(21)		(72)
Other pension benefits, net	(21)		(18)
Loss on extinguishment of debt	63		—
Loss on financial instruments, net	254		82
Deferred income taxes	—		54
Other, net	(22)		160
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	236		(336)
Prepaid expenses and other assets	(163)		(163)
Accounts payable, accrued liabilities and other	(104)		(217)
Receivables from and payables to related party	(90)		(78)
Net cash flows from operating activities	6,695		5,410

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(3,338)		(3,262)
Change in accrued expenses related to capital expenditures	(174)		(428)
Other, net	(5)		80
Net cash flows from investing activities	(3,517)		(3,610)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	7,322		10,714
Repayments of long-term debt	(7,892)		(10,123)
Borrowings of loans payable - related parties	25		—
Payments for debt issuance costs	(62)		(32)
Contributions from parent	39		51
Distributions to parent	(3,975)		(2,084)
Distributions to noncontrolling interest	(1)		(1)
Other, net	(25)		(127)
Net cash flows from financing activities	(4,569)		(1,602)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(1,391)		198
CASH AND CASH EQUIVALENTS, beginning of period	3,249		300
CASH AND CASH EQUIVALENTS, end of period	$	1,858	$	498

CASH PAID FOR INTEREST	$	1,985	$	2,017
CASH PAID FOR TAXES	$	29	$	22

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

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

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

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

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

CASH PAID FOR INTEREST $ 3,065
$ 2,920
CASH PAID FOR TAXES $ 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 connectivity company and cable operator. Over an advanced communications ~~company providing video, Internet and voice services to~~network, the Company offers a full range of state-of-the-art residential and business ~~customers.~~services including Spectrum Internet, TV, Mobile and Voice. For small and medium-sized companies, Spectrum Business^® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach^® delivers tailored advertising and production for the modern media landscape. The Company also ~~offers mobile service~~distributes award-winning news coverage, sports and high-quality original programming to ~~residential~~its customers through Spectrum Networks 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 community channels.Spectrum Originals.

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

The Company’s operations are managed and reported to its Chairman and Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has 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'~~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;~~costs, impairments of ~~property, plant~~franchises and ~~equipment, intangibles~~goodwill, pension benefits and ~~goodwill; pension benefits;~~ income ~~taxes; contingencies and programming expense.~~taxes. Actual results could differ from those estimates.

Certain prior period amounts have been reclassified to conform with the 2020 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~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

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


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

Finite-lived intangible assets:
Customer relationships	$	18,230	$	(11,744)	$	6,486	$	18,230	$	(10,777)	$	7,453
Other intangible assets	405		(141)		264		405		(122)		283
	$	18,635	$	(11,885)	$	6,750	$	18,635	$	(10,899)	$	7,736

Amortization expense related to customer relationships and other intangible assets for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was ~~$516~~$478 million and ~~$1.6 billion,~~$986 million, respectively, and ~~$583~~$548 million and ~~$1.8~~$1.1 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

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


Six months ended December 31, 2020	$	889
2021	1,599
2022	1,329
2023	1,072
2024	821
Thereafter	1,040
	$	6,750

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~~$11 million and ~~$58~~$121 million during the ~~nine~~three and six months ended ~~September~~June 30, 2019 ~~and 2018, respectively,~~ which ~~was~~were 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)

4. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

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


	June 30, 2020		December 31, 2019
Accounts payable – trade	$	646	$	727
Deferred revenue	471		460
Accrued liabilities:
Programming costs	2,033		2,042
Labor	911		939
Capital expenditures	1,211		1,441
Interest	1,040		1,052
Taxes and regulatory fees	520		501
Operating lease liabilities	192		184
Other	733		796
	$	7,757	$	8,142

5. Leases

~~The primary leased asset classes~~Operating lease expenses were $96 million and $191 million for the three and six months ended June 30, 2020, respectively, and $95 million and $189 million for the three and six months ended June 30, 2019, respectively, inclusive of $30 million and $62 million for the ~~Company include real estate, dark fiber, colocation facilities~~three and ~~other equipment. The~~six months ended June 30, 2020, respectively, and $27 million and $61 million for the three and six months ended June 30, 2019, respectively, of both short-term lease ~~agreements include both lease~~costs 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 lease liabilities and 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~~costs that were not included in the measurement of operating lease liabilities.

Cash paid for amounts included in the measurement of operating lease liabilities, recorded as operating cash flows in the statements of cash flows, were $125 million and $122 million for the six months ended June 30, 2020 and 2019, respectively. Operating lease ~~assets.~~

~~Lease~~right-of-use assets ~~and lease liabilities are initially recognized based on the present value of the future lease payments over the expected lease term. As~~obtained in exchange 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~~obligations were $162 million and $115 million for the ~~subscription service revenue~~six months ended June 30, 2020 and 2019, respectively.

Supplemental balance sheet information related to leases is as ~~a single performance obligation in accordance with revenue recognition accounting guidance as the subscription service is the predominant component.~~follows.


	June 30, 2020			December 31, 2019

Operating lease right-of-use assets:
Included within other noncurrent assets	$	979		$	925

Operating lease liabilities:
Current portion included within accounts payable and accrued liabilities	$	192		$	184
Long-term portion included within other long-term liabilities	846			788
	$	1,038		$	972

Weighted average remaining lease term for operating leases	6.4 years			6.6 years
Weighted average discount rate for operating leases	4.2		%	4.4		%

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

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

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


	Operating leases
Six months ended December 31, 2020	$	127
2021	241
2022	208
2023	183
2024	146
Thereafter	357
Undiscounted lease cash flow commitments	1,262
Reconciling impact from discounting	(224)
Lease liabilities on consolidated balance sheet as of June 30, 2020	$	1,038

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

6. Long-Term Debt

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


	June 30, 2020						December 31, 2019
	Principal Amount		Accreted Value		Principal Amount		Accreted Value
CCO Holdings, LLC:
5.250% senior notes due September 30, 2022	$	—	$	—	$	1,250	$	1,241
5.125% senior notes due February 15, 2023	—		—		1,000		995
4.000% senior notes due March 1, 2023	500		498		500		497
5.125% senior notes due May 1, 2023	—		—		1,150		1,145
5.750% senior notes due September 1, 2023	—		—		500		497
5.750% senior notes due January 15, 2024	—		—		150		149
5.875% senior notes due April 1, 2024	1,700		1,691		1,700		1,690
5.375% senior notes due May 1, 2025	750		746		750		746
5.750% senior notes due February 15, 2026	2,500		2,473		2,500		2,471
5.500% senior notes due May 1, 2026	1,500		1,492		1,500		1,491
5.875% senior notes due May 1, 2027	800		796		800		796
5.125% senior notes due May 1, 2027	3,250		3,224		3,250		3,222
5.000% senior notes due February 1, 2028	2,500		2,470		2,500		2,469
5.375% senior notes due June 1, 2029	1,500		1,501		1,500		1,501
4.750% senior notes due March 1, 2030	3,050		3,041		3,050		3,041
4.500% senior notes due August 15, 2030	2,750		2,750		—		—
4.500% senior notes due May 1, 2032	1,400		1,387		—		—
Charter Communications Operating, LLC:
3.579% senior notes due July 23, 2020	—		—		2,000		1,997
4.464% senior notes due July 23, 2022	3,000		2,989		3,000		2,987
Senior floating rate notes due February 1, 2024	900		902		900		902
4.500% senior notes due February 1, 2024	1,100		1,094		1,100		1,093

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)


4.908% senior notes due July 23, 2025	4,500		4,473		4,500		4,471
3.750% senior notes due February 15, 2028	1,000		988		1,000		987
4.200% senior notes due March 15, 2028	1,250		1,241		1,250		1,240
5.050% senior notes due March 30, 2029	1,250		1,241		1,250		1,241
2.800% senior notes due April 1, 2031	1,600		1,582		—		—
6.384% senior notes due October 23, 2035	2,000		1,983		2,000		1,982
5.375% senior notes due April 1, 2038	800		786		800		786
6.484% senior notes due October 23, 2045	3,500		3,467		3,500		3,467
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		2,450		2,391
5.125% senior notes due July 1, 2049	1,250		1,240		1,250		1,240
4.800% senior notes due March 1, 2050	2,800		2,797		2,800		2,798
3.700% senior notes due April 1, 2051	1,400		1,379		—		—
6.834% senior notes due October 23, 2055	500		495		500		495
Credit facilities	10,288		10,213		10,427		10,345
Time Warner Cable, LLC:
5.000% senior notes due February 1, 2020	—		—		1,500		1,503
4.125% senior notes due February 15, 2021	700		706		700		711
4.000% senior notes due September 1, 2021	1,000		1,015		1,000		1,021
5.750% sterling senior notes due June 2, 2031 ^(a)	775		827		828		886
6.550% senior debentures due May 1, 2037	1,500		1,672		1,500		1,675
7.300% senior debentures due July 1, 2038	1,500		1,768		1,500		1,772
6.750% senior debentures due June 15, 2039	1,500		1,709		1,500		1,713
5.875% senior debentures due November 15, 2040	1,200		1,254		1,200		1,255
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)	805		778		861		831
4.500% senior debentures due September 15, 2042	1,250		1,143		1,250		1,142
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023	1,000		1,126		1,000		1,148
8.375% senior debentures due July 15, 2033	1,000		1,277		1,000		1,284
Total debt	77,768		78,369		78,416		79,078
Less current portion:
5.000% senior notes due February 1, 2020	—		—		(1,500)		(1,503)
3.579% senior notes due July 23, 2020	—		—		(2,000)		(1,997)
4.125% senior notes due February 15, 2021	(700)		(706)		—		—
Long-term debt	$	77,068	$	77,663	$	74,916	$	75,578

~~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

^(a)

~~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~~Principal amount includes £625 million remeasured at $775 million and $828 million 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~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019, respectively, using the exchange rate at the respective dates.

^(b)Principal amount includes £650 million remeasured at $805 million and $861 million as of June 30, 2020 and December 31, 2019, respectively, using the exchange rate at the respective dates.

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 $769 million and $796 million as of September 30, 2019 and December 31, 2018, respectively, using the exchange rate at the respective dates.~~


^(b)	~~Principal amount includes £650 million remeasured at $799 million and $827 million as of September 30, 2019 and December 31, 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~~adjusted for original issue discount or premium at the time of sale, deferred financing costs, and, in regards to ~~Time Warner Cable, LLC and Time Warner Cable Enterprises LLC~~ debt assumed in acquisitions, fair value premium adjustments as a result of applying acquisition accounting plus the accretion of those amounts to the balance sheet date. However, the amount that is currently payable if the debt becomes immediately due is equal to the principal amount of the debt. 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.~~US dollars as of each balance sheet date. See Note 8.9. The Company has ~~availability under the Charter Communications Operating, LLC ("Charter Operating") credit facilities of approximately~~

~~$4.3 billion~~ ~~as of~~ ~~September 30, 2019~~.

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 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, which may include Time Warner Cable, LLC's 5.000% senior notes due 2020.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~In October 2019, Charter Operating and~~availability under the Charter Communications Operating, LLC ("Charter Operating") credit facilities of approximately $4.7 billion as of June 30, 2020.

In February 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.65 billion aggregate principal amount of 4.500% senior unsecured notes due 2030 at par and in March 2020, an additional $1.1 billion of the same series of notes were issued at a price of 102.5% of the aggregate principal amount. Also in March 2020, CCO Holdings and CCO Holdings Capital Corp. issued $1.4 billion aggregate principal amount of 4.500% senior unsecured notes due 2032 at par. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.250% senior notes due September 30, 2022, 5.125% senior notes due February 15, 2023, 5.125% senior notes due May 1, 2023, 5.750% senior notes due September 1, 2023 and 5.750% senior notes due January 15, 2024, as well as distributions to the Company's parent companies to fund buybacks of Charter Class A common stock and Charter Holdings common units. The Company recorded a loss on extinguishment of debt of $36 million and $63 million during the three and six months ended June 30, 2020, respectively, related to these transactions.

In July 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.5 billion aggregate principal amount of ~~4.800%~~4.250% senior unsecured notes due ~~2050~~2031 at par and later in July 2020, an additional $1.5 billion of the same series of notes were issued at a price of ~~99.436% of the aggregate principal amount.~~102%. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.875% senior notes due April 1, 2024, as well as distributions to the Company's parent companies to fund ~~potential~~ buybacks of Charter Class A common stock and Charter Holdings common ~~units as well as repaying~~units.

The CCO Holdings notes are senior debt obligations of CCO Holdings and CCO Holdings Capital Corp. and rank equally with all other current and future unsecured, unsubordinated obligations of CCO Holdings and CCO Holdings Capital Corp. 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 2028 and 2029, the optional redemption price declines to 100% of the principal amount, plus accrued and unpaid interest, if any.

In addition, at any time prior to varying dates in 2023, 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 ~~indebtedness.~~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.

In April 2020, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.6 billion aggregate principal amount of 2.800% senior secured notes due April 2031 at a price of 99.561% of the aggregate principal amount and $1.4 billion aggregate principal amount of 3.700% senior secured notes due April 2051 at a price of 99.217% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate purposes.

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

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 ~~indentures~~indenture governing the Charter Operating notes. The Charter Operating notes contain customary representations and warranties and affirmative covenants with limited negative covenants. The Charter Operating ~~indentures~~indenture also contains customary events of default.

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.

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 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.

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.

7. Loans Payable - Related Party

Loans payable - related party as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 consists of loans from Charter Communications Holding Company, LLC (“Charter Holdco”) to the Company of ~~$699~~$727 million and ~~$674~~$699 million, respectively, and loans from ~~Charter~~

1210

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

Charter to the Company of ~~$260~~$297 million and ~~$251~~$260 million, respectively. Interest accrued at LIBOR plus 1.25% on the loans payable ~~- related party at~~from Charter Holdco during the period ending June 30, 2020 and LIBOR plus 1.50% during the period ending December 31, 2019. Interest accrued at LIBOR plus 2.00% on the loans payable from Charter during both periods ending ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018.~~2019.

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 April 2019, the Company entered into a collateral holiday agreement for 60% of both the 2031 and 2042 cross-currency swaps, which eliminates the requirement to post collateral for three 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~~$589 million and ~~$237~~$224 million and is included in other long-term liabilities on its consolidated balance sheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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 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,							Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018				2020		2019		2020		2019
Gain (Loss) on Financial Instruments, Net:													Gain (Loss) on Financial Instruments, Net:
Change in fair value of cross-currency derivative instruments	$	(86	)	$	(10	)	$	(172	)	$	(63	)	Change in fair value of cross-currency derivative instruments	$	61	$	(163)	$	(365)	$	(86)
Foreign currency remeasurement of Sterling Notes to U.S. dollars	52			22			56			63			Foreign currency remeasurement of Sterling Notes to U.S. dollars	3		44		111		4
	$	(34	)	$	12		$	(116	)	$	—			$	64	$	(119)	$	(254)	$	(82)

9. Fair Value Measurements

Accounting guidance establishes 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~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 using available market information or other appropriate valuation methodologies. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented in the accompanying ~~consolidated financial statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.~~

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

consolidated financial statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.

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

Financial instruments accounted for at fair value on a recurring basis and classified within Level 2 of the valuation hierarchy include the Company's cross-currency derivative instruments and were valued at ~~$409~~$589 million and ~~$237~~$224 million as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

The estimated fair value of the Company’s senior notes and debentures as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 is based on quoted market prices in active markets and is classified within Level 1 of the valuation hierarchy, while the estimated fair value of the Company’s credit facilities is based on quoted market prices in inactive markets and is classified within Level 2.

A summary of the carrying value and fair value of debt as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 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


	June 30, 2020						December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
Senior notes and debentures	$	68,156	$	74,279	$	68,733	$	74,938
Credit facilities	$	10,213	$	9,926	$	10,345	$	10,448

Nonfinancial Assets and Liabilities

The Company’s nonfinancial assets such as equity-method investments, franchises, property, plant, and equipment, and other intangible assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. When such impairments are recorded, fair values are generally classified within Level 3 of the valuation hierarchy.

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


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Internet	$	4,530	$	4,103	$	8,937	$	8,127
Video	4,371		4,391		8,793		8,775
Voice	451		489		908		993
Residential revenue	9,352		8,983		18,638		17,895

Small and medium business	983		963		1,979		1,908
Enterprise	606		652		1,228		1,295
Commercial revenue	1,589		1,615		3,207		3,203

Advertising sales	249		395		614		740
Mobile	310		158		568		298
Other	194		194		403		412
	$	11,694	$	11,345	$	23,430	$	22,548

1412

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 June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Programming	$	2,873	$	2,827	$	5,765	$	5,692
Regulatory, connectivity and produced content	488		597		1,039		1,158
Costs to service customers	1,848		1,767		3,696		3,589
Marketing	719		768		1,485		1,503
Mobile	413		277		787		537
Other	981		1,022		2,002		2,021
	$	7,322	$	7,258	$	14,774	$	14,500

Programming costs consist primarily of costs paid to programmers for basic, premium, digital, video on demand and pay-per-view programming. Regulatory, connectivity and produced content costs represent payments to franchise and regulatory authorities, costs directly related to providing Internet, video ~~Internet~~ and voice services as well as payments for sports, local and news content produced by the Company. Included in regulatory, connectivity and produced content costs is content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the ~~applicable season.~~contract period. Costs to service customers include costs related to field operations, network operations and customer care for the Company’s residential and small and medium business customers, including internal and third-party labor for the non-capitalizable portion of installations, service and repairs, maintenance, bad debt expense, billing and collection, occupancy and vehicle costs. Marketing costs represent the costs of marketing to current and potential commercial and residential customers including labor costs. 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


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Special charges, net	$	6	$	24	$	25	21
(Gain) loss on sale of assets, net	(4)		39		(13)		38
	$	2	$	63	$	12	$	59

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

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

1513

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

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.

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 June 30,			Six Months Ended June 30,
	2020	2019	2020	2019
Stock options	11,600	31,500	1,265,300	1,782,400
Restricted stock	6,000	8,100	6,000	8,100
Restricted stock units	7,600	13,200	415,900	686,900

Charter stock options and restricted stock units generally cliff vest ~~upon~~three years from the ~~three year anniversary~~date 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. ~~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 fourth anniversary of the grant date.~~

As of ~~September~~June 30, ~~2019~~,2020, total unrecognized compensation remaining to be recognized in future periods totaled ~~$211~~$263 million for stock options, $2$3 million for restricted stock and ~~$246~~$309 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~~ten months for restricted stock and two years for restricted stock units.

The Company recorded ~~$71~~stock compensation expense of $90 million and ~~$238~~$180 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$71~~$82 million and ~~$213~~$167 million ~~of stock compensation expense~~ for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, which is included in operating costs and expenses. The Company also recorded $5 million of expense related to accelerated vesting of equity awards of terminated employees, which is recorded in other operating expenses, net in the consolidated statements of operations for the nine months ended September 30, 2018.

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.

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 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~~$7 million and $13 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2020, respectively, and $9 million and $76 million for the three and six months ended June 30, 2019, respectively. Income tax expense ~~increased~~decreased during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the corresponding period in ~~2018~~2019 primarily as a result of an internal entity simplification ~~and higher pretax income~~that increased expense in 2019.

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

In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be “more likely than not” of being sustained upon examination, based on ~~their~~

1614

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

their technical merits. There is considerable judgment involved in making such a determination. The Company has recorded unrecognized tax benefits totaling approximately ~~$116~~$103 million and ~~$119~~$110 million, excluding interest and penalties, as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. The Company does not currently anticipate that its reserve for uncertain tax positions will significantly increase or decrease during ~~2019;~~2020; however, various events could cause the Company’s current expectations to change in the future. These uncertain tax positions, if ever recognized in the financial statements, would be recorded in the consolidated statements of operations as part of the income tax provision.

No tax years for Charter are currently under examination by the Internal Revenue Service ("IRS") for income tax purposes. Charter's 2016 through ~~2018~~2019 tax years remain open for examination and assessment. Charter’s short period return dated May 17, 2016 (prior to the ~~acquisition of TWC~~Time Warner Cable Inc. ("TWC") and Bright House Networks, ~~LLC) remains subject to examination~~LLC ("Bright House") transactions) and ~~assessment. Years~~ prior ~~to 2016~~years 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~~through 2019 tax years remain open for 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, TWC was included in the consolidated U.S. federal and certain state income tax returns of Time Warner. The IRS has examined Time Warner’s 2008 through 2010 income tax 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~~six months ended ~~September~~June 30, ~~2019,~~2020, nor does the Company anticipate a material impact in the future.

15. Comprehensive Income

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

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 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.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

The Company is aware that Dr. John Malone, a director emeritus of Charter and Chairman of the board of directors and holder of ~~49.0%~~48.8% of voting interest in Liberty Broadband, may be deemed to have a ~~39.9%~~40.9% voting interest in Qurate Retail, Inc. ("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 each of the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, the Company recorded revenue in aggregate of approximately ~~$11~~$12 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~~$24 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 and ~~2.6%~~3.6% of the series C common stock of Discovery and has a ~~28.2%~~27.9% 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 ~~24.1%~~23.9% voting interest for matters other than the election of directors. A/N PP also has the right to appoint three directors out of a total of ~~eleven~~twelve directors to Discovery’s ~~board to be elected by the holders of Discovery’s Series A-1 preferred stock.~~board. The Company purchases programming from ~~Discovery pursuant to agreements entered into prior to Dr. Malone and Mr. Miron joining Charter’s board of directors.~~Discovery. Based on publicly available information, the Company does not believe that Discovery would currently be considered a related party. The amount paid in the aggregate to Discovery represents less than 2% of total operating costs and expenses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019.

Equity Investments

The Company and its parent companies have agreements with certain 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 investees totaling ~~$78~~$54 million and ~~$245~~$117 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$99~~$81 million and ~~$248~~$167 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

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 is vigorously 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.

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.~~United States District Court for the District of Kansas alleging that TWC infringed certain U.S. patents purportedly relating to Voice over Internet Protocol (“VoIP”) services. At the trial, 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 ~~appealed~~has now paid the ~~case to the United States Court of Appeals for the Federal Circuit where the Company lost the appeal.~~verdict, interest and costs in full. 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.~~United States District Court for the District of Delaware implicating Sprint's LTE technology. The expected financial impact of the Sprint verdict has been reflected in the 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 outcomes of ~~the appeal of the Sprint Kansas case,~~ the pursuit of indemnity against the Company’s vendor and the TC Tech litigation cannot be predicted. The Company does not expect the outcome of its indemnity claim nor the outcome of the TC Tech litigation will have a material adverse effect on its operations or financial condition.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

Sprint filed a second patent 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 1511 patents related to the Company's provision of VoIP services (ten of which were asserted against Legacy TWC in the matter described above).

On February 18, 2020 Sprint filed a lawsuit against Charter, ~~is vigorously defending~~Bright House, and TWC in the District Court for Johnson County, Kansas. Sprint alleges that Charter misappropriated trade secrets from Sprint years ago through employees hired by Bright House. Sprint asserts that the alleged trade secrets relate to the VoIP business of Charter and Bright House. Charter has removed this ~~case. While~~case to the ~~Company is unable to predict~~United States District Court for the ~~outcome~~District of ~~this Sprint suit, it does not expect that this litigation will have a material effect on its operations, financial condition, or cash flows.~~Kansas.

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

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 intellectual property relating to various aspects of their businesses. Other industry participants are also defendants in certain of these cases or related cases. In the event that a court ultimately determines that the Company infringes on any intellectual property, 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 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 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.

18. Employee Benefit Plans

The Company sponsors three qualified defined benefit pension plans and one nonqualified defined benefit pension plan that provide pension benefits to a majority of employees who were employed by TWC before the ~~acquisition of~~merger with TWC. ~~The Company also provides a nonqualified defined benefit pension 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.

1917

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~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are recorded in other pension benefits, 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 June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Interest cost	$	(28)	$	(32)	$	(56)	$	(64)
Expected return on plan assets	39		41		77		82
Net periodic pension benefits	$	11	$	9	$	21	$	18

During the three and nine months ended September 30, 2018, 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 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 Company made no cash contributions to the qualified pension plans during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018;~~2019; however, the Company may make discretionary cash contributions to the qualified pension plans in the future. Such contributions will be dependent on a variety of factors, including current and expected interest rates, asset performance, the funded status of the qualified pension plans and management’s judgment. For the nonqualified unfunded pension plan, the Company will continue to make contributions during ~~2019~~2020 to the extent benefits are paid.

19. Recently Issued Accounting Standards

Accounting Standards Adopted January 1, ~~2018~~2020

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

~~Upon adoption of ASU 2014-09, the Company recorded a cumulative-effect adjustment, which included an increase to total member’s equity of $49 million as of January 1, 2018.~~

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

The Company identified a $38 million increase to total 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.

~~Accounting Standards 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 lease asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification is based on criteria largely similar to the criteria applied under legacy lease accounting, but without explicit bright lines.

The Company 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, the Company recognized and measured operating leases on the consolidated balance sheet without revising comparative period information or disclosure. At transition, the Company elected the package of practical expedients permitted under the transition guidance within the standard, which eliminates the reassessment

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

of past leases, classification and initial direct costs. The Company 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 the 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~~Financial Accounting Standards Board ("FASB") issued ~~ASU~~Accounting Standards Update ("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 evaluating the impact, if any, the~~adopted ASU 2016-13 on January 1, 2020. The adoption of ASU 2016-13 ~~will~~did not have ~~on its~~a material impact to the Company's consolidated financial 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. 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. The Company does not expect the adoption of ASU 2017-04 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.~~arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The Company adopted ASU 2018-15 ~~will be effective for interim and annual periods beginning after December 15, 2019 (January~~on January 1, ~~2020 for the Company).~~2020. The ~~Company does not expect the~~ adoption of ASU 2018-15 todid not have a material impact ~~on its~~to the Company's 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. The Company adopted ASU 2019-02 on January 1, 2020. The adoption of ASU 2019-02 did not have a material impact to the Company's consolidated financial statements.

ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”)

In December 2019, the FASB issued ASU 2019-12, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, ~~2019 (January 1, 2020 for the Company).~~2020. Early adoption is permitted. The Company ~~does not expect the~~elected to early adopt ASU 2019-12 on January 1, 2020. The adoption of ASU ~~2019-02 to~~2019-12 did not have a material impact on ~~its~~the Company's consolidated financial statements.

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 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~~six months ended ~~September~~June 30, 2020 and 2019. Condensed consolidating financial statements as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 and for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019 ~~and 2018~~ follow.

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 June 30, 2020

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations		CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	200	$	1,658	$	—	$	1,858
Accounts receivable, net	—		1,961		—		1,961
Receivables from related party	43		—		(43)		—
Prepaid expenses and other current assets	—		625		—		625
Total current assets	243		4,244		(43)		4,444

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		33,304		—		33,304
Customer relationships, net	—		6,486		—		6,486
Franchises	—		67,322		—		67,322
Goodwill	—		29,554		—		29,554
Total investment in cable properties, net	—		136,666		—		136,666

INVESTMENT IN SUBSIDIARIES	74,548		—		(74,548)		—
LOANS RECEIVABLE – RELATED PARTY	567		—		(567)		—
OTHER NONCURRENT ASSETS	—		2,564		—		2,564

Total assets	$	75,358	$	143,474	$	(75,158)	$	143,674

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	314	$	7,443	$	—	$	7,757
Payables to related party	—		181		(43)		138
Current portion of long-term debt	—		706		—		706
Total current liabilities	314		8,330		(43)		8,601

LONG-TERM DEBT	22,069		55,594		—		77,663
LOANS PAYABLE – RELATED PARTY	—		1,591		(567)		1,024
DEFERRED INCOME TAXES	—		55		—		55
OTHER LONG-TERM LIABILITIES	—		3,333		—		3,333

MEMBER’S EQUITY
Controlling interest	52,975		74,548		(74,548)		52,975
Noncontrolling interests	—		23		—		23
Total member’s equity	52,975		74,571		(74,548)		52,998

Total liabilities and member’s equity	$	75,358	$	143,474	$	(75,158)	$	143,674

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

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

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

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

Total assets $ 77,498
$ 143,810
$ (77,498 ) $ 143,810

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

LONG-TERM DEBT 20,249
51,141
—
71,390
LOANS PAYABLE – RELATED PARTY —
1,504
(545 ) 959
DEFERRED INCOME TAXES —
52
—
52
LONG-TERM OPERATING LEASE LIABILITIES —
794
—
794
OTHER LONG-TERM LIABILITIES —
2,146
—
2,146

MEMBER’S EQUITY
Controlling interest 56,947
76,898
(76,898 ) 56,947
Noncontrolling interests —
23
—
23
Total member’s equity 56,947
76,921
(76,898 ) 56,970

Total liabilities and member’s equity $ 77,498
$ 143,810
$ (77,498 ) $ 143,810
20

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, 2019

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations		CCO Holdings Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	500	$	2,749	$	—	$	3,249
Accounts receivable, net	—		2,195		—		2,195
Receivables from related party	59		—		(59)		—
Prepaid expenses and other current assets	—		711		—		711
Total current assets	559		5,655		(59)		6,155

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net	—		33,908		—		33,908
Customer relationships, net	—		7,453		—		7,453
Franchises	—		67,322		—		67,322
Goodwill	—		29,554		—		29,554
Total investment in cable properties, net	—		138,237		—		138,237

INVESTMENT IN SUBSIDIARIES	76,409		—		(76,409)		—
LOANS RECEIVABLE – RELATED PARTY	545		—		(545)		—
OTHER NONCURRENT ASSETS	—		2,351		—		2,351

Total assets	$	77,513	$	146,243	$	(77,013)	$	146,743

LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	296	$	7,846	$	—	$	8,142
Payables to related party	—		357		(59)		298
Current portion of long-term debt	—		3,500		—		3,500
Total current liabilities	296		11,703		(59)		11,940

LONG-TERM DEBT	21,951		53,627		—		75,578
LOANS PAYABLE – RELATED PARTY	—		1,504		(545)		959
DEFERRED INCOME TAXES	—		55		—		55
OTHER LONG-TERM LIABILITIES	—		2,922		—		2,922

MEMBER’S EQUITY
Controlling interest	55,266		76,409		(76,409)		55,266
Noncontrolling interests	—		23		—		23
Total member’s equity	55,266		76,432		(76,409)		55,289

Total liabilities and member’s equity	$	77,513	$	146,243	$	(77,013)	$	146,743

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
21

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 six months June 30, 2020

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations		CCO Holdings Consolidated
REVENUES	$	—	$	23,430	$	—	$	23,430

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	—		14,774		—		14,774
Depreciation and amortization	—		4,917		—		4,917
Other operating expense, net	—		12		—		12
	—		19,703		—		19,703
Income from operations	—		3,727		—		3,727

OTHER INCOME (EXPENSES):
Interest expense, net	(587)		(1,370)		—		(1,957)
Loss on extinguishment of debt	(63)		—		—		(63)
Loss on financial instruments, net	—		(254)		—		(254)
Other pension benefits, net	—		21		—		21
Other income, net	—		5		—		5
Equity in income of subsidiaries	2,115		—		(2,115)		—
	1,465		(1,598)		(2,115)		(2,248)

Income before income taxes	1,465		2,129		(2,115)		1,479
Income tax expense	—		(13)		—		(13)
Consolidated net income	1,465		2,116		(2,115)		1,466
Less: Net income attributable to noncontrolling interests	—		(1)		—		(1)
Net income	$	1,465	$	2,115	$	(2,115)	$	1,465

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

Guarantor Subsidiaries
CCO Holdings Charter Operating and Restricted Subsidiaries Eliminations CCO Holdings Consolidated
REVENUES $ —
$ 33,997
$ —
$ 33,997

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below) —
21,950
—
21,950
Depreciation and amortization —
7,453
—
7,453
Other operating expense, net —
77
—
77
—
29,480
—
29,480
Income from operations —
4,517
—
4,517

OTHER INCOME (EXPENSES):
Interest expense, net (785 ) (2,080 ) —
(2,865 )
Loss on financial instruments, net —
(116 ) —
(116 )
Other pension benefits, net —
27
—
27
Other expense, net —
(129 ) —
(129 )
Equity in income of subsidiaries 2,132
—
(2,132 ) —
1,347
(2,298 ) (2,132 ) (3,083 )

Income before income taxes 1,347
2,219
(2,132 ) 1,434
Income tax expense —
(86 ) —
(86 )
Consolidated net income 1,347
2,133
(2,132 ) 1,348
Less: Net income attributable to noncontrolling interests —
(1 ) —
(1 )
Net income $ 1,347
$ 2,132
$ (2,132 ) $ 1,347
22

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 Operations
For the six months ended June 30, 2019

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations		CCO Holdings Consolidated
REVENUES	$	—	$	22,548	$	—	$	22,548

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	—		14,500		—		14,500
Depreciation and amortization	—		5,042		—		5,042
Other operating expense, net	—		59		—		59
	—		19,601		—		19,601
Income from operations	—		2,947		—		2,947

OTHER INCOME (EXPENSES):
Interest expense, net	(511)		(1,381)		—		(1,892)
Loss on financial instruments, net	—		(82)		—		(82)
Other pension benefits, net	—		18		—		18
Other expense, net	—		(126)		—		(126)
Equity in income of subsidiaries	1,299		—		(1,299)		—
	788		(1,571)		(1,299)		(2,082)

Income before income taxes	788		1,376		(1,299)		865
Income tax expense	—		(76)		—		(76)
Consolidated net income	788		1,300		(1,299)		789
Less: Net income attributable to noncontrolling interests	—		(1)		—		(1)
Net income	$	788	$	1,299	$	(1,299)	$	788

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

Guarantor Subsidiaries
CCO Holdings Charter Operating and Restricted Subsidiaries Eliminations CCO Holdings Consolidated
Consolidated net income $ 1,286
$ 2,049
$ (2,048 ) $ 1,287
Foreign currency translation adjustment (1 ) (1 ) 1
(1 )
Consolidated comprehensive income $ 1,285
$ 2,048
$ (2,047 ) $ 1,286
Less: Comprehensive income attributable to noncontrolling interests —
(1 ) —
(1 )
Comprehensive income $ 1,285
$ 2,047
$ (2,047 ) $ 1,285
23

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 six months ended June 30, 2020

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations		CCO Holdings Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES	$	(565)	$	7,260	$	—	$	6,695

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—		(3,338)		—		(3,338)
Change in accrued expenses related to capital expenditures	—		(174)		—		(174)
Contributions to subsidiaries	(4,385)		—		4,385		—
Distributions from subsidiaries	8,541		—		(8,541)		—
Other, net	—		(5)		—		(5)
Net cash flows from investing activities	4,156		(3,517)		(4,156)		(3,517)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	4,178		3,144		—		7,322
Repayments of long-term debt	(4,092)		(3,800)		—		(7,892)
Borrowings of loans payable - related parties	—		25		—		25
Payments for debt issuance costs	(41)		(21)		—		(62)
Distributions to noncontrolling interest	—		(1)		—		(1)
Contributions from parent	39		4,385		(4,385)		39
Distributions to parent	(3,975)		(8,541)		8,541		(3,975)
Other, net	—		(25)		—		(25)
Net cash flows from financing activities	(3,891)		(4,834)		4,156		(4,569)

NET DECREASE IN CASH AND CASH EQUIVALENTS	(300)		(1,091)		—		(1,391)
CASH AND CASH EQUIVALENTS, beginning of period	500		2,749		—		3,249
CASH AND CASH EQUIVALENTS, end of period	$	200	$	1,658	$	—	$	1,858

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

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 six months ended June 30, 2019

	Guarantor Subsidiaries
	CCO Holdings		Charter Operating and Restricted Subsidiaries		Eliminations		CCO Holdings Consolidated
NET CASH FLOWS FROM OPERATING ACTIVITIES	$	(509)	$	5,919	$	—	$	5,410

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—		(3,262)		—		(3,262)
Change in accrued expenses related to capital expenditures	—		(428)		—		(428)
Contribution to subsidiaries	(792)		—		792		—
Distributions from subsidiaries	2,591		—		(2,591)		—
Other, net	—		80		—		80
Net cash flows from investing activities	1,799		(3,610)		(1,799)		(3,610)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	750		9,964		—		10,714
Repayments of long-term debt	—		(10,123)		—		(10,123)
Payments for debt issuance costs	(7)		(25)		—		(32)
Distributions to noncontrolling interest	—		(1)		—		(1)
Contributions from parent	51		792		(792)		51
Distributions to parent	(2,084)		(2,591)		2,591		(2,084)
Other, net	—		(127)		—		(127)
Net cash flows from financing activities	(1,290)		(2,111)		1,799		(1,602)

NET INCREASE IN CASH AND CASH EQUIVALENTS	—		198		—		198
CASH AND CASH EQUIVALENTS, beginning of period	—		300		—		300
CASH AND CASH EQUIVALENTS, end of period	$	—	$	498	$	—	$	498

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

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

General

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

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

Overview

As the COVID-19 pandemic continues to significantly impact the United States, we have continued to deliver services uninterrupted by the pandemic. Because we have invested significantly in our network and through normal course capacity increases, we have been able to respond to the significant increase in network activity from the private and public response to COVID-19 as we do our part as a major provider of Internet services in the United States by, among other things, enabling social distancing through telecommuting and ~~a leading broadband communications services company providing video, Internet~~e-learning across our footprint of 41 states. We have invested significantly in our self-service infrastructure, and ~~voice~~customers have accelerated the adoption of our self-installation and digital self-service capabilities. Our front-line service infrastructure in call centers and field operations continues to experience higher service transaction volume and is performing well. Much of that increase in activity has been driven by increased demand for our connectivity services to ~~approximately 29.0 million~~residential, healthcare, government and educational customers. The response to our Remote Education Offer ("REO") pursuant to which new customers with students or educators in the household were eligible to receive our Internet service for free for 60 days generated 448,000 new Internet customers as of June 30, 2020, of which 288,000 had rolled off the promotional period by the end of the quarter while 160,000 remained within their free period. The REO program ended June 30, 2020 and is no longer being offered to new customers.

We also participated in the Federal Communications Commission's ("FCC") Keep Americans Connected (“KAC”) Pledge, pausing collection efforts and related disconnects for residential and small and medium business ("SMB") customers with COVID-19 related payment challenges through June 30, 2020. Approximately 700,000 residential and SMB customers requested protection from disconnection under this program of which, at ~~September~~the peak of the program approximately 222,000 customers would have been disconnected under our normal collection policies. In an effort to assist these COVID-19 impacted customers with overdue balances, we waived approximately $85 million of receivables which was recorded as a reduction of revenue during the three and six months ended June 30, ~~2019. We also offer mobile service to residential customers and recently launched mobile service to a select number of small and medium business customers.~~2020. Any remaining balance will be paid over the next twelve months with continued service. In addition, we ~~sell video~~have offered a seasonal plan at reduced rates to SMB and ~~online advertising inventory~~Enterprise hospitality customers that have requested a reduced level of service due to temporary business closure or because these customers have reduced their service offering to their own customers ("Seasonal Plan").

We cannot predict the ultimate impact of COVID-19 on our business, including the depth and duration of the economic impact to household formation and growth and our residential and business customers’ ability to pay for our products and services including the impact of extended unemployment benefits and other stimulus packages. We expect that some of the COVID-19 programs discussed above may result in incremental churn and bad debt during the remainder of the year. In addition, there is uncertainty regarding the impact of government emergency declarations, the ability of our suppliers and vendors to provide products and services to us, the pace of new housing construction, changes in business spend in our local ~~regional~~ and national ~~advertising customers~~ad sales business, the effects to our employees’ health and ~~fiber-delivered communications~~safety and ~~managed information technology solutions to larger enterprise customers. We also own~~resulting reorientation of our work activities, and ~~operate regional sports networks~~the risk of limitations on the deployment and ~~local sports, news~~maintenance of our services (including by limiting our customer support and ~~community channels.~~on-site service repairs and installations).

~~Overview~~

~~Since~~Although the ~~close~~ultimate impact of the ~~merger in 2016 of Charter and Time Warner Cable Inc. ("TWC") and the acquisition of Bright House Networks, LLC ("Bright House"),~~COVID-19 pandemic cannot be predicted, we ~~have been~~remain focused on integrating the 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 TWC and Bright House service areas. In 2018, we completed the conversion of the remaining TWC and Bright House analog service areas to an all-digital platform enabling us to deliver more HD channels and higher Internet speeds. Nearly all of our footprint is now all-digital. 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 one company, with a unified product, marketing and service infrastructure, which will allow us to acceleratedriving customer relationship growth ~~and innovate faster. With significantly less customer-facing change expected in 2019, we are focused on~~by deploying superior products and ~~service~~services packaged with minimal service 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 expect additional benefits from lower legacy package migration activity, combined with SPP customers rolling off introductory pricing and modest price increases.attractive pricing. Further, we expect to

continue to drive customer relationship growth through sales of bundled services and improving customer retention despite the expectation for continued losses of video ~~Internet,~~and wireline voice ~~and mobile packaged services. Additionally, with~~customers. 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 ~~mostly~~substantially complete, we ~~have experienced a meaningful reduction~~expect continued lower cable capital intensity in ~~capital expenditures in dollars and as a percent of revenue in 2019 and expect these reductions to continue for the remainder of 2019.~~2020.

~~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.~~ Our Spectrum Mobile service is offered to ~~our~~ customers subscribing to our Internet service and runs on Verizon's mobile network combined with Spectrum WiFi. ~~We began mass market advertising~~In March 2020, we launched 5G service offerings and we expect that, along with broader availability of ~~Spectrum Mobile in September 2018. In the second quarter of 2019, we 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~~network. We plan to use our WiFi network in conjunction with additional unlicensed, orand potentially licensed, spectrum to improve network performance and expand capacity to offer consumers a superior mobile service at a lower total cost to us. Further, we have experimental wireless licenses from the ~~Federal Communications Commission~~FCC that we are utilizing to test next generation mobile services in several service areas around the country.

We believe Spectrum-branded mobile services will drive higher sales of our core products, create longer customer lives and increase profitability and cash flow over time. As a result of growth costs associated with our new mobile product line, we cannot be certain that we will be able to grow revenues or maintain our margins at recent historical rates. During the three and ~~nine~~six months ended ~~September~~June 30, 2020, our mobile product line increased revenues by $310 million and $568 million, respectively, reduced Adjusted EBITDA by approximately $103 million and $219 million, respectively, and reduced free cash flow by approximately $233 million and $493 million, respectively. During the three and six months ended June 30, 2019, our mobile product line increased revenues by ~~$192~~$158 million and ~~$490~~$298 million, respectively, reduced Adjusted EBITDA by approximately ~~$145~~$119 million and ~~$384~~$239 million, respectively, and reduced free cash flow by approximately

~~$256~~ $297 million and $844 million, respectively. During the three and nine months ended September 30, 2018, our mobile product line increased revenues by $17 million during both time periods, reduced Adjusted EBITDA by approximately $77 million and $118 million, respectively, and reduced free cash flow by $149 million and $290$588 million, respectively. As we continue to grow our mobile service and scale the business, we expect continued negative impacts to Adjusted EBITDA, as well as negative working capital impacts from the timing of device-related cash flows when we sell the handset or tablet to customers pursuant to equipment installment plans.

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


	Three Months Ended June 30,										Six Months Ended June 30,
	2020		2019		% Change		2020		2019		% Change
Revenues	$	11,694	$	11,345	3.1	%	$	23,430	$	22,548	3.9	%
Adjusted EBITDA	$	4,462	$	4,169	7.0	%	$	8,836	$	8,215	7.6	%
Income from operations	$	1,946	$	1,529	27.3	%	$	3,727	$	2,947	26.5	%

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 % Change 2019 2018 % Change
Revenues $ 11,449
$ 10,887
5.2 % $ 33,997
$ 32,390
5.0 %
Adjusted EBITDA $ 4,070
$ 3,940
3.3 % $ 12,285
$ 11,861
3.6 %
Income from operations $ 1,570
$ 1,372
14.5 % $ 4,517
$ 3,760
20.2 %

Adjusted EBITDA is defined as 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 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 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the corresponding prior periods was primarily due to growth in our residential Internet, mobile and ~~commercial~~small and medium business customers. Adjusted EBITDA and income from operations growth was impacted by growth in revenue and increases in operating costs and expenses, primarily mobile, ~~other~~costs to service customers and ~~programming.~~programming offset by lower regulatory, connectivity and produced content costs. Income from operations was also affected by a decrease in depreciation and amortization ~~expense.~~expense and other operating expenses, net.

The following table summarizes our customer statistics for Internet, video, ~~Internet~~mobile and voice as of ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 (in thousands except per customer data and footnotes).


	Approximate as of
	June 30,
	2020 ^(a)		2019 ^(a)
Customer Relationships ^(b)
Residential	28,496		26,755
Small and Medium Business	1,980		1,902
Total Customer Relationships	30,476		28,657

Residential Primary Service Units (“PSU”)
Internet	26,313		24,244
Video	15,652		15,802
Voice	9,398		9,808

Monthly Residential Revenue per Residential Customer ^(c)	$	110.82	$	112.20

Small and Medium Business PSUs
Internet	1,783		1,701
Video	516		518
Voice	1,169		1,097

Monthly Small and Medium Business Revenue per Customer ^(d)	$	166.06	$	170.42

Mobile Lines	1,697		518

Enterprise PSUs ^(e)	270		258

^(a)We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of June 30, 2020 and 2019, customers include approximately 124,500 and 152,900 customers, respectively, whose accounts were over 60 days past due, approximately 18,400 and 13,800 customers, respectively, whose accounts were over 90 days past due and approximately 10,400 and 15,800 customers, respectively, whose accounts were over 120 days past due. As detailed in the table below, our customer counts include those customers who connected as part of our Remote Education Offer and those customers who we have not disconnected in our normal timelines associated with our Keep Americans Connected Pledge.

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

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

^(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. Monthly small and medium business revenue per small and medium customer excludes mobile revenue and customers.

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

Approximate as of
September 30,

2019 ^(a)

2018 ^(a)
Customer Relationships ^(b)

Residential 27,037
26,063
Small and Medium Business 1,930
1,792
Total Customer Relationships 28,967
27,855

Residential Primary Service Units (“PSU”)
Video 15,725
16,140
Internet 24,595
23,336
Voice 9,595
10,218

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

Small and Medium Business PSUs
Video 520
488
Internet 1,730
1,594
Voice 1,120
1,024

Monthly Small and Medium Business Revenue per Customer ^(d)
$ 169.44
$ 173.52

Enterprise PSUs ^(e)
264
243
28

The table above includes the impact on customers of COVID-19 related offers and programs launched by us in the first quarter of 2020 as follows (in thousands except footnotes).

^(a)


	Remote Education Offer ^(a)		Keep Americans Connected ^(b)	Seasonal Plan^(c)	Total
Residential
Customer Relationships	160		208	n/a	368
Internet PSUs	160		202	n/a	362
Video PSUs	58	^(d)	148	n/a	206
Voice PSUs	46	^(d)	90	n/a	136
Mobile Lines	10	^(d)	8	n/a	18

Small and Medium Business
Customer Relationships	n/a		14	13	27
Internet PSUs	n/a		13	11	24
Video PSUs	n/a		6	13	19
Voice PSUs	n/a		11	8	19
Mobile Lines	n/a		—	—	—

Enterprise PSUs
Enterprise PSUS	n/a		1	9	10

^(a)The REO represents residential customers receiving free Internet service by participating in Charter's free 60-day Internet offer available to households with K-12 and/or college students or educators who were not Spectrum Internet customers. This offer for new customers ended on June 30, 2020. These residential customers are generally eligible to purchase additional products and services (i.e. video, voice and mobile) at current promotional rates. Of the 448,000 Internet customers who were added as part of the REO through June 30, 2020 (of which 119,000 were added in March), 160,000 remained within their 60-day free period with 288,000 having rolled off the promotional period as of June 30, 2020. Nearly 90% of cumulative connects on the REO remained Internet customers as of July 27, 2020.

^(b)As part of our March 2020 pledge to the FCC which we extended through June 30, KAC represents customers who requested to not be disconnected from service due to COVID-19 related payment challenges and would have been disconnected under our normal collection policies during the pledge period. Approximately 600,000 residential customers and 100,000 SMB customers had requested protection from disconnection, of which at the peak of the program, 208,000 and 14,000, respectively, would have been disconnected under our normal collection policies. Approximately 30% of the KAC customer bills were current, and over 60% were making partial or full payments. In an effort to assist these COVID-19 impacted customers with overdue balances, we waived $76 million of residential, $6 million of SMB and $3 million of mobile receivables, each of which were recorded as a reduction to revenue in the second quarter. These customers no longer have an overdue balance and will be subject to Charter's standard collection practices going forward.

^(c)Represents small and medium businesses and Enterprise hospitality customers who have requested a reduced level of service and now pay a reduced price for their service due to temporary business closure or because these customers have reduced their service offering to their own customers.

^(d)Customers who are receiving free Internet Service as part of the REO who have subscribed to products in addition to Spectrum Internet (i.e., video, voice, mobile) during the 60-day Free Internet Offer. Billings are not deferred for these additional services.

Customer statistics do not include mobile. We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of September 30, 2019 and 2018, customers include approximately 148,000 and 231,400 customers, respectively, whose accounts were over 60 days past due, approximately 16,400 and 23,100 customers, respectively, whose accounts were over 90 days past due and approximately 14,100 and 18,500 customers, respectively, whose accounts were over 120 days past due.

^(b)

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


^(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.


^(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.


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

Critical Accounting Policies and Estimates

For a discussion of our critical accounting policies and the means by which we develop estimates therefore, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2018~~2019 Annual Report on Form 10-K. There have been no material changes from the critical accounting policies described in our Form 10-K.

Results of Operations

The following table sets forth the consolidated statements of operations for the periods presented (dollars in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	11,694	$	11,345	$	23,430	$	22,548

Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)	7,322		7,258		14,774		14,500
Depreciation and amortization	2,424		2,495		4,917		5,042
Other operating expenses, net	2		63		12		59
	9,748		9,816		19,703		19,601
Income from operations	1,946		1,529		3,727		2,947

Other Income (Expenses):
Interest expense, net	(965)		(955)		(1,957)		(1,892)
Loss on extinguishment of debt	(36)		—		(63)		—
Gain (loss) on financial instruments, net	64		(119)		(254)		(82)
Other pension benefits, net	11		9		21		18
Other income (expense), net	(6)		(16)		5		(126)
	(932)		(1,081)		(2,248)		(2,082)

Income before income taxes	1,014		448		1,479		865
Income tax expense	(7)		(9)		(13)		(76)
Consolidated net income	1,007		439		1,466		789
Less: Net income attributable to noncontrolling interests	(1)		(1)		(1)		(1)

Net income attributable to CCO Holdings member	$	1,006	$	438	$	1,465	$	788

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Revenues $ 11,449
$ 10,887
$ 33,997
$ 32,390

Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below) 7,450
7,018
21,950
20,742
Depreciation and amortization 2,411
2,479
7,453
7,776
Other operating expenses, net 18
18
77
112
9,879
9,515
29,480
28,630
Income from operations 1,570
1,372
4,517
3,760

Other Income (Expenses):
Interest expense, net (973 ) (912 ) (2,865 ) (2,658 )
Gain (loss) on financial instruments, net (34 ) 12
(116 ) —
Other pension benefits, net 9
207
27
247
Other expense, net (3 ) (4 ) (129 ) (49 )
(1,001 ) (697 ) (3,083 ) (2,460 )

Income before income taxes 569
675
1,434
1,300
Income tax expense (10 ) (8 ) (86 ) (13 )
Consolidated net income 559
667
1,348
1,287
Less: Net income attributable to noncontrolling interests —
—
(1 ) (1 )

Net income attributable to CCO Holdings member $ 559
$ 667
$ 1,347
$ 1,286

Revenues. Total revenues grew ~~$562~~$349 million and ~~$1.6 billion~~$882 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018~~2019 primarily due to increases in the number of residential Internet and commercial

business customers, price adjustments as well as ~~the launch of~~an increase in our mobile service ~~in the second half of 2018~~ offset by a decrease in video ~~customers.~~customers and $85 million of waived receivables related to the KAC program.

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


	Three Months Ended June 30,										Six Months Ended June 30,
	2020		2019		% Change		2020		2019		% Change
Internet	$	4,530	$	4,103	10.4	%	$	8,937	$	8,127	10.0	%
Video	4,371		4,391		(0.4)	%	8,793		8,775		0.2	%
Voice	451		489		(7.7)	%	908		993		(8.6)	%
Residential revenue	9,352		8,983		4.1	%	18,638		17,895		4.2	%

Small and medium business	983		963		2.0	%	1,979		1,908		3.7	%
Enterprise	606		652		(7.1)	%	1,228		1,295		(5.2)	%
Commercial revenue	1,589		1,615		(1.7)	%	3,207		3,203		0.1	%

Advertising sales	249		395		(37.0)	%	614		740		(17.1)	%
Mobile	310		158		96.1	%	568		298		90.9	%
Other	194		194		0.3	%	403		412		(2.2)	%
	$	11,694	$	11,345	3.1	%	$	23,430	$	22,548	3.9	%

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 % Change 2019 2018 % Change
Video $ 4,359
$ 4,332
0.6 % $ 13,134
$ 12,987
1.1 %
Internet 4,195
3,809
10.1 % 12,322
11,286
9.2 %
Voice 477
512
(6.8 )% 1,470
1,599
(8.0 )%
Residential revenue 9,031
8,653
4.4 % 26,926
25,872
4.1 %

Small and medium business 974
922
5.7 % 2,882
2,737
5.3 %
Enterprise 644
632
1.8 % 1,939
1,881
3.0 %
Commercial revenue 1,618
1,554
4.1 % 4,821
4,618
4.4 %

Advertising sales 394
440
(10.6 )% 1,134
1,223
(7.3 )%
Mobile 192
17
NM
490
17
NM
Other 214
223
(4.3 )% 626
660
(5.1 )%
$ 11,449
$ 10,887
5.2 % $ 33,997
$ 32,390
5.0 %

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Increase in average residential Internet customers	$	299	$	529
Increase related to rate, product mix and allocation changes	128		281
	$	427	$	810

Residential Internet customers grew by 2,069,000 customers from June 30, 2019 to June 30, 2020 due in part to higher demand for our services and the impacts of COVID-19 programs. The increase related to rate, product mix and allocation changes was primarily due to price adjustments including promotional roll-off offset by a $29 million reduction related to the KAC program credits.

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Increase related to rate, product mix and allocation changes	$	53	$	228
Decrease in average residential video customers	(79)		(202)
Increase (decrease) in video on demand and pay-per-view	6		(8)
	$	(20)	$	18

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 $ 167
$ 497
Decrease in average residential video customers (110 ) (291 )
Decrease in video on demand and pay-per-view (30 ) (59 )
$ 27
$ 147

The ~~increases~~increase related to rate, product mix and allocation changes ~~were~~was primarily due to price adjustments including annual increases and promotional ~~roll-off.~~roll-off partly offset by a $44 million reduction related to KAC program credits and a higher mix of streaming and lighter video packages within our video customer base. Residential video customers decreased by ~~415,000~~150,000 from ~~September~~June 30, ~~2018~~2019 to ~~September~~June 30, ~~2019.~~

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

2020.

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 in average residential Internet customers $ 199
$ 577
Increase related to rate changes 187
459
$ 386
$ 1,036
31

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

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Decrease in average residential voice customers	$	(27)	$	(61)
Decrease related to rate, product mix and allocation changes	(11)		(24)
	$	(38)	$	(85)

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 average residential voice customers $ (29 ) $ (68 )
Decrease related to rate changes (6 ) (61 )
$ (35 ) $ (129 )

~~The decreases related to rate changes were primarily due to value-based pricing.~~ Residential wireline voice customers decreased by ~~623,000~~410,000 customers from ~~September~~June 30, ~~2018~~2019 to ~~September~~June 30, ~~2019.~~2020. The decrease related to rate, product mix and allocation changes was primarily due to value-based pricing and a $3 million reduction related to KAC program credits.

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Increase in small and medium business customers	$	44	$	106
Decrease related to rate and product mix changes	(24)		(35)
	$	20	$	71

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 in small and medium business customers $ 76
$ 251
Decrease related to rate changes (24 ) (106 )
$ 52
$ 145

Small and medium business customers grew by ~~138,000~~78,000 from ~~September~~June 30, ~~2018~~2019 to ~~September~~June 30, ~~2019.~~2020. The ~~decreases~~decrease related to rate and product mix changes ~~were~~was primarily due to ~~value-based pricing~~a $17 million reduction related to ~~SPP, net of promotional roll-off and price adjustments.~~COVID-19 programs.

Enterprise revenues ~~increased $12~~decreased $46 million and ~~$58~~$67 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018~~2019 primarily due to ~~growth in customers offset by~~ the sale of non-strategic ~~assets.~~assets in the third quarter of 2019 and a revenue reduction of $18 million related to the Enterprise hospitality seasonal program. Enterprise PSUs increased ~~21,000~~12,000 from ~~September~~June 30, ~~2018~~2019 to ~~September~~June 30, ~~2019.~~2020.

Advertising sales revenues consist primarily of revenues from commercial advertising customers, programmers and other vendors, as well as local cable and advertising on regional sports and news channels. Advertising sales revenues decreased ~~$46~~$146 million and ~~$89~~$126 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018 primarily~~2019 due to ~~a decrease in political revenue.~~lower local and national ad revenues due to COVID-19.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, mobile revenues represented approximately ~~$123~~$158 million and ~~$348~~$289 million of device revenues, respectively, and approximately ~~$69~~$152 million and ~~$142~~$279 million of service revenues, ~~respectively, related to our mobile service.~~respectively. During ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, mobile revenues represented approximately ~~$16~~$111 million and $225 million of device revenues, respectively, and approximately $1$47 million and $73 million of service revenues, ~~related~~respectively. The revenue increases are attributable to ~~our~~an increase in mobile ~~service. As~~lines from 518,000 as of ~~September~~June 30, 2019 ~~we had 794,000~~to 1,697,000 mobile ~~lines.~~lines as of June 30, 2020.

Other revenues consist of revenue from regional sports and news channels (excluding intercompany charges or advertising sales on those channels), home shopping, late payment fees, wire maintenance fees and other miscellaneous revenues. Other revenues remained unchanged during the three months ended June 30, 2020 compared to the corresponding period in 2019 and decreased $9 million ~~and $34 million~~ during the ~~three and nine~~six months ended ~~September~~June 30, ~~2019, respectively,~~2020 compared to the corresponding periods in ~~2018~~2019 primarily due to a decrease in home security revenue and late payment fees ~~and home shopping revenue~~ offset by an increase in the sale of video devices.

3332

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Programming	$	46	$	73
Regulatory, connectivity and produced content	(109)		(119)
Costs to service customers	81		107
Marketing	(49)		(18)
Mobile	136		250
Other	(41)		(19)
	$	64	$	274

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)
Programming $ 12
$ 149
Regulatory, connectivity and produced content 66
131
Costs to service customers 40
(9 )
Marketing 3
(14 )
Mobile 243
739
Other 68
212
$ 432
$ 1,208

Programming costs were approximately ~~$2.8~~$2.9 billion and ~~$8.5~~$5.8 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, representing ~~37% and~~ 39% of total operating costs and expenses ~~respectively,~~for both time periods, and $2.8 billion and ~~$8.3~~$5.7 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, representing ~~40%~~39% of total operating costs and expenses for both time periods. Programming costs consist primarily of costs paid to programmers for basic, digital, premium, ~~VOD,~~video on demand, 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~~consent partly offset by lower video customers, nonrecurring benefits and ~~pay-per-view.~~a higher mix of lower cost video packages within our video customer base. We expect programming ~~expenses~~rates will continue to increase due to a variety of factors, including annual increases imposed by programmers with additional selling power as a result of media consolidation, increased demands by owners of broadcast stations for payment for retransmission consent or linking carriage of other services to retransmission consent, and additional programming, particularly new services. We have been unable to fully pass these increases on to our customers and do not expect to be able to do so in the future without a potential loss of customers.

Regulatory, connectivity and produced content ~~increased $66~~decreased $109 million and ~~$131~~$119 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018~~2019 primarily due to ~~higher~~timing of sports rights fees driven by delayed games due to COVID-19 and lower regulatory pass-through fees offset by higher original programming costs and costs of video devices sold to customers.

Costs to service customers increased ~~$40~~$81 million and ~~decreased $9~~$107 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018. The increase~~2019 primarily due to higher labor costs resulting from COVID-19 related wage increases and flex time benefits along with 6.3% customer growth partially offset by lower medical costs and one-time payroll tax credits. Bad debt expense increased only slightly given the revenue write-off associated with the KAC program and better collections enhanced by government stimulus benefits.

Marketing costs decreased $49 million and $18 million during the three and six months ended ~~September~~June 30, ~~2019~~2020, respectively, compared to the corresponding ~~period~~periods in ~~2018 was~~2019 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~~better media placement rates and ~~resulted in higher balances at disconnect.~~a one-time payroll tax credit.

Mobile costs of ~~$337~~$413 million and ~~$874~~$787 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$94~~$277 million and ~~$135~~$537 million for the three and ~~nine~~six months ended ~~September 30, 2018,~~2019, respectively, were comprised of mobile device costs ~~mobile launch costs~~ and mobile service and operating costs. The increases are attributable to increases in the number of mobile lines.

3433

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Corporate costs	$	17	$	31
Stock compensation expense	8		13
Advertising sales expense	(45)		(34)
Enterprise	(26)		(49)
Other	5		20
	$	(41)	$	(19)

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)
Corporate costs $ 33
$ 69
Property tax and insurance 9
49
Stock compensation expense —
25
Enterprise —
14
Advertising sales expense 2
7
Other 24
48
$ 68
$ 212

Advertising sales expense decreased due to lower cost of sales fees driven by lower revenue. Enterprise costs decreased primarily due to the sale of non-strategic assets in the third quarter of 2019.

Depreciation and amortization. Depreciation and amortization expense decreased by ~~$68~~$71 million and ~~$323~~$125 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018. The decrease was~~2019 primarily due to a decrease in depreciation and amortization as certain assets acquired ~~from TWC and Bright House~~in acquisitions become fully depreciated offset by an increase in depreciation as a result of more recent capital expenditures.

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


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Special charges, net	$	(18)	$	4
(Gain) loss on sale of assets, net	(43)		(51)
	$	(61)	$	(47)

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. The nine months ended September 30, 2018 also included a $22 million charge related to a withdrawal liability from a multiemployer pension plan. Loss on sale of assets, net increased during the nine months ended September 30, 2019 compared to the corresponding period in 2018 primarily due to a $41 million impairment of non-strategic assets recognized during the nine months ended September 30, 2019. See Note 12 to the accompanying consolidated financial statements contained in “Item 1. Financial ~~Statements.”~~Statements” for more information.

Interest expense, net. Net interest expense increased by ~~$61~~$10 million and ~~$207~~$65 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018~~2019 primarily as a result of an increase in weighted average debt outstanding of approximately ~~$2.4~~$6.5 billion ~~during both time periods,~~and $5.5 billion, respectively, primarily due to the issuance of notes throughout ~~2018~~2019 and ~~2019~~2020 for general corporate purposes including distributions to parent companies for stock buybacks and debt ~~repayments.~~repayments offset by a reduction in weighted average interest rates.

Loss on extinguishment of debt. Loss on extinguishment of debt of $36 million and $63 million for the three and six months ended June 30, 2020, respectively, represents losses recognized as a result of the redemption of CCO Holdings notes. For more information, see Note 6 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Gain (loss) on financial instruments, net. We recorded gains on financial instruments of $64 million and losses on financial instruments of ~~$34 million and $116~~$254 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~a gain~~losses on financial instruments of ~~$12~~$119 million and $82 million during the three and six months ended ~~September~~June 30, ~~2018.~~2019, respectively. Gains and losses on financial instruments are primarily recognized due to changes in the fair value of our 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 8 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other pension benefits, net. Net other pension benefits ~~decreased~~increased by ~~$198~~$2 million and ~~$220~~$3 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, compared to the corresponding periods in ~~2018 primarily due to a remeasurement gain in the third quarter of 2018 as a result of significant lump sum settlement payments to participants.~~2019. For more information, see Note 18 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other ~~expense,~~income (expense), net. Other ~~expense,~~income (expense), net primarily represents equity losses on our equity investments. Other expense, net also includes ~~impairments~~an impairment on equity investments of approximately ~~$121~~$11 million and ~~$58~~$121 million during the ~~nine~~three and six months ended ~~September~~June 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~~$7 million and $13 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2020, respectively, and $9 million and $76 million for the three and six months ended June 30, 2019, respectively. Income tax expense ~~increased~~decreased during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the corresponding period in ~~2018~~2019 primarily as a result of an internal entity simplification ~~and higher pretax income~~that increased expense in 2019.. For more information, see Note 14 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 ~~decreased~~increased from ~~$667~~$438 million and $788 million for the three and six months ended ~~September~~June 30, ~~2018~~2019, respectively, to ~~$559 million~~$1.0 billion and $1.5 billion for the three and six months ended ~~September~~June 30, ~~2019 and remained constant at $1.3 billion for both the nine months ended September 30, 2019 and 2018~~2020, respectively, primarily as a result of the factors described above.

Use of Adjusted EBITDA and Free Cash Flow

We use certain measures that are not defined by ~~GAAP~~U.S. generally accepted accounting principles ("GAAP") to evaluate various aspects of our business. Adjusted EBITDA and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, 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 net income attributable to ~~Charter shareholders~~CCO Holdings member and net cash flows from operating activities, respectively, below.

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

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

Management and Charter’s board of directors use Adjusted EBITDA and free cash flow to assess our performance and our ability to service our debt, fund operations and make additional investments with internally generated funds. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under our credit facilities or outstanding notes to determine compliance with the covenants contained in the facilities and notes (all such documents have been previously filed with the Securities and Exchange Commission (the “SEC”)). For the purpose of calculating compliance with leverage covenants, we use Adjusted EBITDA, as presented, excluding certain expenses paid by our operating subsidiaries to other Charter entities. Our debt covenants refer to these expenses as management fees, which were ~~$317~~$308 million and ~~$916~~$619 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$278~~$299 million and ~~$816~~$599 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

3635


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net income attributable to CCO Holdings member	$	1,006	$	438	$	1,465	$	788
Plus: Net income attributable to noncontrolling interest	1		1		1		1
Interest expense, net	965		955		1,957		1,892
Income tax expense	7		9		13		76
Depreciation and amortization	2,424		2,495		4,917		5,042
Stock compensation expense	90		82		180		167
Loss on extinguishment of debt	36		—		63		—
(Gain) loss on financial instruments, net	(64)		119		254		82
Other pension benefits, net	(11)		(9)		(21)		(18)
Other, net	8		79		7		185
Adjusted EBITDA	$	4,462	$	4,169	$	8,836	$	8,215

Net cash flows from operating activities	$	3,505	$	2,723	$	6,695	$	5,410
Less: Purchases of property, plant and equipment	(1,877)		(1,597)		(3,338)		(3,262)
Change in accrued expenses related to capital expenditures	214		(52)		(174)		(428)
Free cash flow	$	1,842	$	1,074	$	3,183	$	1,720

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net income attributable to CCO Holdings member $ 559
$ 667
$ 1,347
$ 1,286
Plus: Net income attributable to noncontrolling interest —
—
1
1
Interest expense, net 973
912
2,865
2,658
Income tax expense 10
8
86
13
Depreciation and amortization 2,411
2,479
7,453
7,776
Stock compensation expense 71
71
238
213
(Gain) loss on financial instruments, net 34
(12 ) 116
—
Other pension benefits, net (9 ) (207 ) (27 ) (247 )
Other, net 21
22
206
161
Adjusted EBITDA $ 4,070
$ 3,940
$ 12,285
$ 11,861

Net cash flows from operating activities $ 2,937
$ 2,788
$ 8,347
$ 8,504
Less: Purchases of property, plant and equipment (1,651 ) (2,118 ) (4,913 ) (6,692 )
Change in accrued expenses related to capital expenditures (21 ) (154 ) (449 ) (620 )
Free cash flow $ 1,265
$ 516
$ 2,985
$ 1,192

Liquidity and Capital Resources

Introduction

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.

Recent Events

In ~~May 2019,~~February 2020, CCO Holdings ~~LLC~~ and CCO Holdings Capital Corp. jointly issued ~~$750 million~~$1.65 billion aggregate principal amount of ~~5.375%~~4.500% senior unsecured notes due ~~2029~~2030 at par and in ~~July 2019,~~March 2020, an additional ~~$750 million~~$1.1 billion of the same series of notes were issued at a price of ~~102.000%~~102.5% of the aggregate principal amount. Also in March 2020, CCO Holdings and CCO Holdings Capital Corp. issued $1.4 billion aggregate principal amount of 4.500% senior unsecured notes due 2032 at par. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.250% senior notes due September 30, 2022, 5.125% senior notes due February 15, 2023, 5.125% senior notes due May 1, 2023, 5.750% senior notes due September 1, 2023 and 5.750% senior notes due January 15, 2024, as well as distributions to our parent companies to fund potential buybacks of Charter Class A common stock and Charter Holdings common units.

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

In July 2020, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.5 billion aggregate principal amount of 4.250% senior unsecured notes due 2031 at par and later in July 2020, an additional $1.5 billion of the same series of notes were issued at a price of 102%. The net proceeds will be used to pay related fees and expenses and for general corporate purposes, including repaying certain indebtedness, including repayment of all of CCO Holdings' 5.875% senior notes due April 1, 2024, as well as distributions to our parent companies to fund buybacks of Charter Class A common stock and Charter Holdings common ~~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

units.

3736

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

Overview of Our Contractual Obligations and Liquidity

We have significant amounts of debt. The principal amount of our debt as of ~~September~~June 30, ~~2019~~2020 was ~~$74.2~~$77.8 billion, consisting of ~~$10.8~~$10.3 billion of credit facility debt, ~~$43.0~~$45.3 billion of investment grade senior secured notes and ~~$20.4~~$22.2 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~~continue to grow 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~~sell the handset or tablet to customers pursuant to equipment installment plans. Free cash flow was ~~$1.3~~$1.8 billion and ~~$3.0~~$3.2 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$516 million~~$1.1 billion and ~~$1.2~~$1.7 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively. See table below for factors impacting free cash flow during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the corresponding prior periods. As of ~~September~~June 30, ~~2019,~~2020, the amount available under our credit facilities was approximately ~~$4.3~~$4.7 billion and cash on hand was approximately ~~$290 million.~~$1.9 billion. We expect to utilize free cash flow, cash on hand and availability under our credit facilities as well as future refinancing transactions to further extend the maturities of our obligations. The timing and terms of any refinancing transactions will be subject to market conditions 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 of net debt to the last twelve months Adjusted EBITDA remains at 4 to 4.5 times Adjusted EBITDA, and up to 3.5 times Adjusted EBITDA at the Charter Operating level. Our leverage ratio was ~~4.5~~4.3 times Adjusted EBITDA as of ~~September~~June 30, ~~2019.~~2020. As Adjusted EBITDA grows, we expect to increase the total amount of our indebtedness to maintain leverage within Charter's target leverage range. During the three and ~~nine~~six months ended ~~September~~June 30, 2020, Charter purchased approximately 2.0 million and 6.5 million of Charter Class A common stock for approximately $1.0 billion and $3.2 billion, respectively, and during the three and six months ended June 30, 2019, Charter purchased approximately ~~6.9~~2.2 million and ~~11.8~~4.9 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 3.0~~$837 million and ~~10.3 million shares, respectively, of Charter Class A common stock for approximately $929 million and $3.1~~$1.7 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. Charter Holdings purchased from A/N ~~0.9~~0.3 million and ~~1.6~~1.1 million Charter Holdings common units at an average price per unit of ~~$391.62~~$445.15 and ~~$366.76,~~$481.68, or ~~$339~~$125 million and ~~$593~~$518 million, during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~0.5~~0.4 million and ~~1.5~~0.8 million Charter Holdings common units at an average price per unit of ~~$292.81~~$358.21 and ~~$306.11,~~$338.12, or ~~$145~~$161 million and ~~$473~~$254 million, during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

As of ~~September~~June 30, ~~2019,~~2020, Charter had remaining board authority to purchase an additional ~~$1.4 billion~~$837 million of Charter’s Class A common stock and/or Charter Holdings common units. Although Charter expects to continue to buy back its common stock consistent with its leverage target range, Charter is not obligated to acquire any particular amount of common stock, and the timing of any purchases that may occur cannot be predicted and will largely depend on market conditions and other potential uses of capital.Purchases may include open market purchases, tender offers or negotiated transactions. To the extent such purchases occur, CCO Holdings and its subsidiaries are the primary source for funding such purchases through distributions to their parent companies.

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

Free Cash Flow

Free cash flow increased ~~$749~~$768 million and ~~$1.8~~$1.5 billion during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the corresponding prior periods in ~~2018~~2019 due to the following (dollars in millions).


	Three months ended June 30, 2020 compared to three months ended June 30, 2019 Increase / (Decrease)		Six months ended June 30, 2020 compared to six months ended June 30, 2019 Increase / (Decrease)
Changes in working capital, excluding change in accrued interest	$	629	$	917
Increase in Adjusted EBITDA	293		621
Decrease in cash paid for interest, net	115		29
Increase in capital expenditures	(280)		(76)
Other, net	11		(28)
	$	768	$	1,463

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

Free cash flow was reduced by ~~$256~~$233 million and ~~$844~~$493 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$149~~$297 million and ~~$290~~$588 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively, due to mobile with impacts negatively affecting working capital, capital expenditures and Adjusted EBITDA.

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~~June 30, ~~2019~~,2020, there was no default under any of these indentures or credit facilities, and each subsidiary met its applicable leverage ratio tests based on ~~September~~June 30, ~~2019~~2020 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 Restricted Cash. We held ~~$290 million~~$1.9 billion and ~~$300 million~~$3.2 billion in cash and cash equivalents as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Operating Activities. Net cash provided by operating activities ~~decreased~~ ~~$157 million~~increased $1.3 billion during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, primarily due to an increase in Adjusted EBITDA of $621 million and changes in working capital, excluding the change in accrued interest and accrued expenses related to capital expenditures, that used ~~$509~~$663 million ~~more cash and an increase in cash paid for interest, net of $129 million offset by an increase in Adjusted EBITDA of $424 million.~~less cash.

Investing Activities. Net cash used in investing activities was ~~$5.3~~$3.5 billion and ~~$7.4~~$3.6 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The decrease in cash used was primarily due to ~~a decrease~~the change in accrued expenses related to capital expenditures.

Financing Activities. Net cash used in financing activities was ~~$3.1~~$4.6 billion and ~~$1.1~~$1.6 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. The increase in cash used was primarily due to an increase in distributions to parent companies ~~offset by~~and 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~~$1.9 billion and ~~$4.9~~$3.3 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$2.1~~$1.6 billion and ~~$6.7~~$3.3 billion for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively. The ~~decrease~~increase was primarily due to ~~lower customer premise equipment expenditures as a result of the completion of our all-digital conversion and fewer SPP migrations, lower~~higher scalable infrastructure as a result of ~~the completion of the roll-out of DOCSIS 3.1 technology across our footprint~~core network enhancement and node splits to maintain excess network capacity with growing customers and traffic, higher line extensions driven by continued network expansion, including to rural areas and an increase in ~~2018 and lower support spending with the substantial completion of the integration of TWC and Bright House.~~Internet customer premise equipment. See the table below for more details.

We currently expect 2020 cable capital expenditures ~~excluding capital expenditures related~~ to ~~mobile, to be slightly below $7 billion in 2019,~~decline as a percentage of cable revenue versus ~~$8.9 billion in 2018.~~ 2019.The actual amount of our capital expenditures in ~~2019~~2020 will depend on a number of factors including 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 ~~$449~~$174 million and ~~$620~~$428 million for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ 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~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Customer premise equipment (a)	$	518	$	492	$	981	$	1,057
Scalable infrastructure (b)	385		223		555		520
Line extensions (c)	422		363		765		684
Upgrade/rebuild (d)	155		155		284		286
Support capital (e)	397		364		753		715
Total capital expenditures	$	1,877	$	1,597	$	3,338	$	3,262

Capital expenditures included in total related to:
Mobile	$	125	$	93	$	212	$	181
Commercial services	$	323	$	324	$	584	$	629

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Customer premise equipment (a) $ 470
$ 675
$ 1,527
$ 2,437
Scalable infrastructure (b) 320
505
840
1,578
Line extensions (c) 370
348
1,054
992
Upgrade/rebuild (d) 165
190
451
522
Support capital (e) 326
400
1,041
1,163
Total capital expenditures $ 1,651
$ 2,118
$ 4,913
$ 6,692

Capital expenditures included in total related to:
Mobile $ 100
$ 66
$ 281
$ 136
Commercial services $ 327
$ 342
$ 956
$ 934
All-digital transition $ —
$ 42
$ —
$ 316


~~(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).

(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).

Recently Issued Accounting Standards

See Note 19 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 April 2019, we entered into a collateral holiday agreement for 60% of both the 2031 and 2042 cross-currency swaps, which eliminates the requirement to post collateral for three 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 8 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the weighted average interest rate on credit facility debt was approximately ~~3.8%~~1.7% and ~~4.3%~~3.3%, respectively, and the weighted average interest rate on the senior notes was approximately ~~5.4%~~5.3% and ~~5.6%~~5.4%, respectively, resulting in a blended weighted average interest rate of ~~5.2%~~4.8% and ~~5.4%~~5.1%, respectively. The interest rate on approximately ~~84% and 85%~~86% of the total principal amount of our debt was effectively fixed as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019.

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~~June 30, ~~2019~~2020 (dollars in millions).

2019 2020 2021 2022 2023 Thereafter Total Fair Value
Debt:
Fixed-Rate $ —
$ 3,500
$ 2,200
$ 4,250
$ 4,150
$ 48,368
$ 62,468
$ 68,395
Average Interest Rate — % 4.19 % 4.32 % 4.70 % 5.85 % 5.61 % 5.44 %

Variable Rate $ 71
$ 286
$ 286
$ 286
$ 584
$ 10,221
$ 11,734
$ 11,762
Average Interest Rate 3.49 % 3.01 % 2.79 % 2.79 % 2.78 % 3.20 % 3.11 %


	2020			2021			2022			2023			2024			Thereafter			Total			Fair Value
Debt:
Fixed-Rate	$	—		$	1,700		$	3,000		$	1,500		$	2,800		$	57,580		$	66,580		$	73,353
Average Interest Rate	—		%	4.05		%	4.46		%	6.92		%	5.33		%	5.33		%	5.30		%

Variable Rate	$	138		$	277		$	277		$	436		$	1,165		$	8,895		$	11,188		$	10,852
Average Interest Rate	1.53		%	1.50		%	1.52		%	1.65		%	1.98		%	2.27		%	2.17		%

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~~June 30, ~~2019~~2020 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~~June 30, ~~2019,~~2020, 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, 2018 includes “Legal Proceedings” under Item 3 of Part I. Other than as described in~~See Note 17 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.~~Statements” for Legal Proceedings.

Item 1A. Risk Factors.

Our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 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.~~10-K except as indicated below.

The ongoing COVID-19 pandemic could materially affect our financial condition and results of operations.

The ongoing COVID-19 pandemic has significantly increased economic and demand uncertainty. It is likely that the current pandemic and continued spread of COVID-19 will cause a significant economic recession. At this time, we cannot predict the duration of any business disruption and the ultimate impact of COVID-19 on our business, including the depth and duration of the economic impact to household formation and growth and our residential and business customers’ ability to pay for our products and services including the impact of extended unemployment benefits and other stimulus packages. We expect that some of the COVID-19 programs may result in incremental churn and bad debt during the remainder of the year. In addition, there is uncertainty regarding the impact of government emergency declarations, the ability of our suppliers and vendors to provide products and services to us, the pace of new housing construction, changes in business spend in our local and national ad sales business, the effects to our employees’ health and safety and resulting reorientation of our work activities, and the risk of limitations on the deployment and maintenance of our services (including by limiting our customer support and on-site service repairs and installations). The degree to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

Item 6. Exhibits.

See Exhibit Index.

SIGNATURES

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.

CCO HOLDINGS, LLC

Registrant

~~Registrant~~

By:

~~By:~~

/s/ Kevin D. Howard

Kevin D. Howard

Date: ~~October 29, 2019~~August 3, 2020

Executive Vice President, Chief Accounting Officer and Controller

CCO HOLDINGS CAPITAL CORP.

Registrant

~~Registrant~~

By:

~~By:~~

/s/ Kevin D. Howard

Kevin D. Howard

Date: ~~October 29, 2019~~August 3, 2020

Executive Vice President, Chief Accounting Officer and Controller

~~S- 1~~

S-1

Exhibit Index



Exhibit		Description

10.1		Employment Agreement between Charter Communications, Inc. and Kevin D. Howard, dated August 2, 2019 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Charter Communications, Inc. on August 7, 2019).
~~10.2~~	~~Second~~Fifth Supplemental Indenture, dated as of ~~October 1, 2019,~~July 9, 2020, among CCO Holdings, LLC, CCO Holdings Capital Corp. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed by Charter Communications, Inc. on ~~October 7, 2019)~~July 13, 2020).
~~10.3~~10.2		Form of ~~4.750%~~4.250% Senior Notes due ~~2030~~2031 (included in Exhibit ~~10.2)~~10.1 hereto).
~~10.4~~10.3		Exchange and Registration Rights Agreement, dated ~~October 1, 2019,~~July 9, 2020, relating to the ~~4.750%~~4.250% Senior Notes due ~~2030,~~2031, among CCO Holdings, LLC, CCO Holdings Capital Corp. and ~~BofA Securities, Inc.,~~Morgan Stanley & Co. LLC, as representative of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Charter Communications, Inc. on ~~October 7, 2019)~~July 13, 2020).
~~31.1~~10.4		Exchange and Registration Rights Agreement, dated July 24, 2020, relating to the 4.250% Senior Notes due 2031, among CCO Holdings, LLC, CCO Holdings Capital Corp. and Morgan Stanley & Co. LLC, as representative of the several Purchasers (as defined therein) (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Charter Communications, Inc. on July 28, 2020).
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		Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934.
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		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		The following financial information from CCO Holdings, LLC's Quarterly Report on Form 10-Q for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, filed with the Securities and Exchange Commission on ~~October 29, 2019,~~August 3, 2020, formatted in iXBRL (inline eXtensible Business Reporting Language) includes: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of 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.

~~E- 1~~

E-1



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



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



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

INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $26,306 and $23,038, respectively	33,560			34,658
Customer relationships, net	7,956			9,565
Franchises	67,322			67,319
Goodwill	29,554			29,554
Total investment in cable properties, net	138,392			141,096

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

Total assets	$	143,810		$	144,898
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	7,321		$	7,903
Payables to related party	489			545
Operating lease liabilities	180			—
Current portion of long-term debt	3,509			3,290
Total current liabilities	11,499			11,738

LONG-TERM DEBT	71,390			69,537
LOANS PAYABLE - RELATED PARTY	959			925
DEFERRED INCOME TAXES	52			—
LONG-TERM OPERATING LEASE LIABILITIES	794			—
OTHER LONG-TERM LIABILITIES	2,146			2,144

MEMBER’S EQUITY:
Member's equity	56,949			60,532
Accumulated other comprehensive loss	(2		)	(2		)
Total CCO Holdings member's equity	56,947			60,530
Noncontrolling interests	23			24
Total member’s equity	56,970			60,554

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



	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



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 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



	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



	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		%



	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



	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


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



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

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

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

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

Total assets	$	77,498	$	143,810	$	(77,498	)	$	143,810

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

LONG-TERM DEBT	20,249		51,141		—			71,390
LOANS PAYABLE – RELATED PARTY	—		1,504		(545		)	959
DEFERRED INCOME TAXES	—		52		—			52
LONG-TERM OPERATING LEASE LIABILITIES	—		794		—			794
OTHER LONG-TERM LIABILITIES	—		2,146		—			2,146

MEMBER’S EQUITY
Controlling interest	56,947		76,898		(76,898		)	56,947
Noncontrolling interests	—		23		—			23
Total member’s equity	56,947		76,921		(76,898		)	56,970

Total liabilities and member’s equity	$	77,498	$	143,810	$	(77,498	)	$	143,810



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



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

	Guarantor Subsidiaries
	CCO Holdings			Charter Operating and Restricted Subsidiaries			Eliminations			CCO Holdings Consolidated
REVENUES	$	—		$	33,997		$	—		$	33,997

COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	—			21,950			—			21,950
Depreciation and amortization	—			7,453			—			7,453
Other operating expense, net	—			77			—			77
	—			29,480			—			29,480
Income from operations	—			4,517			—			4,517

OTHER INCOME (EXPENSES):
Interest expense, net	(785		)	(2,080		)	—			(2,865		)
Loss on financial instruments, net	—			(116		)	—			(116		)
Other pension benefits, net	—			27			—			27
Other expense, net	—			(129		)	—			(129		)
Equity in income of subsidiaries	2,132			—			(2,132		)	—
	1,347			(2,298		)	(2,132		)	(3,083		)

Income before income taxes	1,347			2,219			(2,132		)	1,434
Income tax expense	—			(86		)	—			(86		)
Consolidated net income	1,347			2,133			(2,132		)	1,348
Less: Net income attributable to noncontrolling interests	—			(1		)	—			(1		)
Net income	$	1,347		$	2,132		$	(2,132	)	$	1,347



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

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



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

Residential Primary Service Units (“PSU”)
Video	15,725		16,140
Internet	24,595		23,336
Voice	9,595		10,218

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

Small and Medium Business PSUs
Video	520		488
Internet	1,730		1,594
Voice	1,120		1,024

Monthly Small and Medium Business Revenue per Customer ^(d)	$	169.44	$	173.52

Enterprise PSUs ^(e)	264		243



	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	$	167		$	497
Decrease in average residential video customers	(110		)	(291		)
Decrease in video on demand and pay-per-view	(30		)	(59		)
	$	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