UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

FORM 10-Q

______________

(Mark One)


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

For the quarterly period ended September 30, ~~2021~~2022


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

For the Transition Period From to


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

CCO Holdings, LLC

CCO Holdings Capital Corp.

(Exact name of registrant as specified in its charter)


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

400 Washington Blvd.	Stamford	Connecticut	06902
(Address of Principal Executive Offices)			(Zip Code)

(203) 905-7801

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

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

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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

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

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

Number of shares of common stock of CCO Holdings Capital Corporation outstanding as of September 30, ~~2021:~~2022: 1

CCO HOLDINGS, LLC

CCO HOLDINGS CAPITAL CORP.

QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, ~~2021~~2022

TABLE OF CONTENTS


		Page No.
PART I	FINANCIAL INFORMATION

Item 1	Financial Statements ‑ CCO Holdings, LLC and Subsidiaries
	Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021	1
	Consolidated Statements of Operations
	for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	2
	Consolidated Statements of Changes in Member's Equity
	for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	3
	Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021	4
	Notes to Consolidated Financial Statements	5

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	2012

Item 3	Quantitative and Qualitative Disclosure About Market Risk	3526

Item 4	Controls and Procedures	3526

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	3727

Item 1A	Risk Factors	3727

Item 5	Other Information	27

Item 6	Exhibits	3727

Signatures		S-1

Exhibit Index		E-1

This quarterly report on Form 10-Q is for the three and nine months ended September 30, ~~2021.~~2022. 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~~in 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,” “grow,” “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:

•our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, 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 and providers of video content over broadband Internet connections;

•general business conditions, unemployment levels and the level of activity in the housing sector and economic uncertainty or downturn, including the impacts of the Novel Coronavirus (“COVID-19”) pandemic to sales opportunities from residential move activity, our customers, our vendors and local, state and federal governmental responses to the pandemic;

•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 and distribution requirements);

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

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

•the effects of governmental regulation on our business including subsidies to consumers, subsidies and incentives for competitors, costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us;

•the ability to hire and retain key personnel;

•our ability to procure necessary services and equipment from our vendors in a timely manner and at reasonable costs;

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

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

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

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions)


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	204	$	710	Cash and cash equivalents	$	241	$	321
Accounts receivable, less allowance for doubtful accounts of $182 and $217, respectively		2,607		2,503
Accounts receivable, less allowance for doubtful accounts of $230 and $157, respectively						Accounts receivable, less allowance for doubtful accounts of $230 and $157, respectively	2,795		2,539
Receivables from related party						Receivables from related party	33		—
Prepaid expenses and other current assets	Prepaid expenses and other current assets	328		325		Prepaid expenses and other current assets	369		341
Total current assets	Total current assets	3,139		3,538		Total current assets	3,438		3,201

INVESTMENT IN CABLE PROPERTIES:	INVESTMENT IN CABLE PROPERTIES:					INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $33,239 and $31,558, respectively		33,151		33,490
Customer relationships, net		4,419		5,615
Property, plant and equipment, net of accumulated depreciation of $35,292 and $34,108, respectively						Property, plant and equipment, net of accumulated depreciation of $35,292 and $34,108, respectively	34,106		33,327
Customer relationships, net of accumulated amortization of $15,177 and $14,180, respectively						Customer relationships, net of accumulated amortization of $15,177 and $14,180, respectively	3,073		4,060
Franchises	Franchises	67,322		67,322		Franchises	67,363		67,346
Goodwill	Goodwill	29,554		29,554		Goodwill	29,563		29,562
Total investment in cable properties, net	Total investment in cable properties, net	134,446		135,981		Total investment in cable properties, net	134,105		134,295

OTHER NONCURRENT ASSETS	OTHER NONCURRENT ASSETS	3,129		3,102		OTHER NONCURRENT ASSETS	4,418		3,215

Total assets	Total assets	$	140,714	$	142,621	Total assets	$	141,961	$	140,711
LIABILITIES AND MEMBER’S EQUITY	LIABILITIES AND MEMBER’S EQUITY					LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	8,537	$	8,243	Accounts payable and accrued liabilities	$	9,277	$	8,771
Payables to related party	Payables to related party	19		96		Payables to related party	—		1
Current portion of long-term debt	Current portion of long-term debt	2,996		1,008		Current portion of long-term debt	1,522		2,997
Total current liabilities	Total current liabilities	11,552		9,347		Total current liabilities	10,799		11,769

LONG-TERM DEBT	LONG-TERM DEBT	85,376		81,744		LONG-TERM DEBT	95,510		88,564
LOANS PAYABLE - RELATED PARTY	LOANS PAYABLE - RELATED PARTY	1,039		1,001		LOANS PAYABLE - RELATED PARTY	753		1,027
DEFERRED INCOME TAXES	DEFERRED INCOME TAXES	53		53		DEFERRED INCOME TAXES	57		57
OTHER LONG-TERM LIABILITIES	OTHER LONG-TERM LIABILITIES	3,288		3,268		OTHER LONG-TERM LIABILITIES	3,784		3,067

MEMBER’S EQUITY:	MEMBER’S EQUITY:					MEMBER’S EQUITY:
CCO Holdings member's equity	CCO Holdings member's equity	39,383		47,185		CCO Holdings member's equity	31,034		36,203
Noncontrolling interests	Noncontrolling interests	23		23		Noncontrolling interests	24		24
Total member’s equity	Total member’s equity	39,406		47,208		Total member’s equity	31,058		36,227

Total liabilities and member’s equity	Total liabilities and member’s equity	$	140,714	$	142,621	Total liabilities and member’s equity	$	141,961	$	140,711

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

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in millions)

Unaudited


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
REVENUES	REVENUES	$	13,144	$	12,037	$	38,464	$	35,467	REVENUES	$	13,550	$	13,144	$	40,346	$	38,464

COSTS AND EXPENSES:	COSTS AND EXPENSES:									COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)	Operating costs and expenses (exclusive of items shown separately below)	7,979		7,509		23,613		22,283		Operating costs and expenses (exclusive of items shown separately below)	8,277		7,979		24,650		23,613
Depreciation and amortization	Depreciation and amortization	2,264		2,366		7,049		7,283		Depreciation and amortization	2,169		2,264		6,688		7,049
Other operating (income) expenses, net	Other operating (income) expenses, net	(7)		17		292		29		Other operating (income) expenses, net	204		(7)		146		292
		10,236		9,892		30,954		29,595			10,650		10,236		31,484		30,954
Income from operations	Income from operations	2,908		2,145		7,510		5,872		Income from operations	2,900		2,908		8,862		7,510

OTHER INCOME (EXPENSES):	OTHER INCOME (EXPENSES):									OTHER INCOME (EXPENSES):
Interest expense, net	Interest expense, net	(1,013)		(947)		(2,995)		(2,904)		Interest expense, net	(1,157)		(1,013)		(3,313)		(2,995)
Other expenses, net		(155)		(115)		(243)		(406)
Other income (expenses), net										Other income (expenses), net	(36)		(155)		7		(243)
		(1,168)		(1,062)		(3,238)		(3,310)			(1,193)		(1,168)		(3,306)		(3,238)

Income before income taxes	Income before income taxes	1,740		1,083		4,272		2,562		Income before income taxes	1,707		1,740		5,556		4,272
Income tax expense	Income tax expense	(13)		(10)		(34)		(23)		Income tax expense	(11)		(13)		(36)		(34)
Consolidated net income	Consolidated net income	1,727		1,073		4,238		2,539		Consolidated net income	1,696		1,727		5,520		4,238
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	—		—		(1)		(1)		Less: Net income attributable to noncontrolling interests	—		—		(1)		(1)
Net income attributable to CCO Holdings member	Net income attributable to CCO Holdings member	$	1,727	$	1,073	$	4,237	$	2,538	Net income attributable to CCO Holdings member	$	1,696	$	1,727	$	5,519	$	4,237

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


		CCO Holdings Member’s Equity		Noncontrolling Interests		Total Member’s Equity			CCO Holdings Member’s Equity		Noncontrolling Interests		Total Member’s Equity
BALANCE, December 31, 2020		$	47,185	$	23	$	47,208
Consolidated net income		1,099		—		1,099
Stock compensation expense		134		—		134
Distributions to parent		(4,244)		—		(4,244)
Distributions to noncontrolling interest		—		(1)		(1)
BALANCE, March 31, 2021		44,174		22		44,196
BALANCE, December 31, 2021								BALANCE, December 31, 2021	$	36,203	$	24	$	36,227
Consolidated net income	Consolidated net income	1,411		1		1,412		Consolidated net income	1,709		—		1,709
Stock compensation expense	Stock compensation expense	100		—		100		Stock compensation expense	147		—		147
Contributions from parent	Contributions from parent	2		—		2		Contributions from parent	81		—		81
Distributions to parent	Distributions to parent	(4,105)		—		(4,105)		Distributions to parent	(3,775)		—		(3,775)
BALANCE, June 30, 2021		41,582		23		41,605
Distributions to noncontrolling interest								Distributions to noncontrolling interest	—		(1)		(1)
BALANCE, March 31, 2022								BALANCE, March 31, 2022	34,365		23		34,388
Consolidated net income								Consolidated net income	2,114		1		2,115
Stock compensation expense								Stock compensation expense	104		—		104
Contributions from parent								Contributions from parent	5		—		5
Distributions to parent								Distributions to parent	(4,307)		—		(4,307)
BALANCE, June 30, 2022								BALANCE, June 30, 2022	32,281		24		32,305
Consolidated net income	Consolidated net income	1,727		—		1,727		Consolidated net income	1,696		—		1,696
Stock compensation expense	Stock compensation expense	98		—		98		Stock compensation expense	109		—		109
Distributions to parent	Distributions to parent	(4,024)		—		(4,024)		Distributions to parent	(3,052)		—		(3,052)
BALANCE, September 30, 2021		$	39,383	$	23	$	39,406
BALANCE, September 30, 2022								BALANCE, September 30, 2022	$	31,034	$	24	$	31,058


		CCO Holdings Member’s Equity		Noncontrolling Interests		Total Member’s Equity			CCO Holdings Member’s Equity		Noncontrolling Interests		Total Member’s Equity
BALANCE, December 31, 2019		$	55,266	$	23	$	55,289
BALANCE, December 31, 2020								BALANCE, December 31, 2020	$	47,185	$	23	$	47,208
Consolidated net income								Consolidated net income	1,099		—		1,099
Stock compensation expense								Stock compensation expense	134		—		134
Distributions to parent								Distributions to parent	(4,244)		—		(4,244)
Distributions to noncontrolling interest								Distributions to noncontrolling interest	—		(1)		(1)
BALANCE, March 31, 2021								BALANCE, March 31, 2021	44,174		22		44,196
Consolidated net income	Consolidated net income	459		—		459		Consolidated net income	1,411		1		1,412
Stock compensation expense	Stock compensation expense	90		—		90		Stock compensation expense	100		—		100
Contributions from parent	Contributions from parent	27		—		27		Contributions from parent	2		—		2
Distributions to parent	Distributions to parent	(2,685)		—		(2,685)		Distributions to parent	(4,105)		—		(4,105)
Distributions to noncontrolling interest		—		(1)		(1)
BALANCE, March 31, 2020		53,157		22		53,179
BALANCE, June 30, 2021								BALANCE, June 30, 2021	41,582		23		41,605
Consolidated net income	Consolidated net income	1,006		1		1,007		Consolidated net income	1,727		—		1,727
Stock compensation expense	Stock compensation expense	90		—		90		Stock compensation expense	98		—		98
Contributions from parent		12		—		12
Distributions to parent	Distributions to parent	(1,290)		—		(1,290)		Distributions to parent	(4,024)		—		(4,024)
BALANCE, June 30, 2020		52,975		23		52,998
Consolidated net income		1,073		—		1,073
Stock compensation expense		83		—		83
Contributions from parent		4		—		4
Distributions to parent		(3,692)		—		(3,692)
BALANCE, September 30, 2020		$	50,443	$	23	$	50,466
BALANCE, September 30, 2021								BALANCE, September 30, 2021	$	39,383	$	23	$	39,406

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

CCO HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

Unaudited


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	Consolidated net income	$	4,238	$	2,539	Consolidated net income	$	5,520	$	4,238
Adjustments to reconcile consolidated net income to net cash flows from operating activities:	Adjustments to reconcile consolidated net income to net cash flows from operating activities:					Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization	Depreciation and amortization	7,049		7,283		Depreciation and amortization	6,688		7,049
Stock compensation expense	Stock compensation expense	332		263		Stock compensation expense	360		332
Noncash interest income, net	Noncash interest income, net	(27)		(33)		Noncash interest income, net	(25)		(27)
Other, net	Other, net	285		372		Other, net	(56)		285
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:	Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:					Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable	Accounts receivable	(104)		79		Accounts receivable	(256)		(104)
Prepaid expenses and other assets	Prepaid expenses and other assets	(111)		(144)		Prepaid expenses and other assets	(79)		(111)
Accounts payable, accrued liabilities and other	Accounts payable, accrued liabilities and other	321		79		Accounts payable, accrued liabilities and other	(258)		321
Receivables from and payables to related party	Receivables from and payables to related party	(56)		(122)		Receivables from and payables to related party	(8)		(56)
Net cash flows from operating activities	Net cash flows from operating activities	11,927		10,316		Net cash flows from operating activities	11,886		11,927

CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(5,536)		(5,352)		Purchases of property, plant and equipment	(6,456)		(5,536)
Change in accrued expenses related to capital expenditures	Change in accrued expenses related to capital expenditures	(51)		(70)		Change in accrued expenses related to capital expenditures	284		(51)
Other, net	Other, net	59		(33)		Other, net	(232)		59
Net cash flows from investing activities	Net cash flows from investing activities	(5,528)		(5,455)		Net cash flows from investing activities	(6,404)		(5,528)

CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	Borrowings of long-term debt	15,263		10,352		Borrowings of long-term debt	21,528		15,263
Repayments of long-term debt	Repayments of long-term debt	(9,651)		(9,711)		Repayments of long-term debt	(15,659)		(9,651)
Borrowings (repayments) of loans payable - related parties, net						Borrowings (repayments) of loans payable - related parties, net	(290)		13
Payments for debt issuance costs	Payments for debt issuance costs	(76)		(91)		Payments for debt issuance costs	(71)		(76)
Borrowings of loans payable - related parties		13		6
Distributions to parent	Distributions to parent	(12,373)		(7,667)		Distributions to parent	(11,134)		(12,373)
Contributions from parent	Contributions from parent	2		43		Contributions from parent	86		2
Distributions to noncontrolling interest	Distributions to noncontrolling interest	(1)		(1)		Distributions to noncontrolling interest	(1)		(1)
Other, net	Other, net	(82)		(26)		Other, net	(21)		(82)
Net cash flows from financing activities	Net cash flows from financing activities	(6,905)		(7,095)		Net cash flows from financing activities	(5,562)		(6,905)

NET DECREASE IN CASH AND CASH EQUIVALENTS	NET DECREASE IN CASH AND CASH EQUIVALENTS	(506)		(2,234)		NET DECREASE IN CASH AND CASH EQUIVALENTS	(80)		(506)
CASH AND CASH EQUIVALENTS, beginning of period	CASH AND CASH EQUIVALENTS, beginning of period	710		3,249		CASH AND CASH EQUIVALENTS, beginning of period	321		710
CASH AND CASH EQUIVALENTS, end of period	CASH AND CASH EQUIVALENTS, end of period	$	204	$	1,015	CASH AND CASH EQUIVALENTS, end of period	$	241	$	204

CASH PAID FOR INTEREST	CASH PAID FOR INTEREST	$	3,024	$	3,020	CASH PAID FOR INTEREST	$	3,230	$	3,024
CASH PAID FOR TAXES	CASH PAID FOR TAXES	$	34	$	36	CASH PAID FOR TAXES	$	37	$	34

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

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 a leading broadband connectivity company and cable operator. Over an advanced high-capacity, two-way telecommunications network, the Company offers 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. The Company also distributes award-winning news coverage ~~sports~~ and ~~high-quality original~~sports programming to its customers through Spectrum ~~Networks and Spectrum Originals.~~Networks.

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 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 1one reportable segment.

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 the Company's Annual Report on Form 10-K have been condensed or omitted for this quarterly report. The accompanying consolidated financial statements are unaudited and are subject to review by regulatory authorities. However, in the opinion of management, such financial statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. Interim results are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Areas involving significant judgments and estimates include capitalization of labor and overhead costs ~~impairments of franchises~~ and ~~goodwill,~~ pension ~~benefits and income taxes.~~benefits. Actual results could differ from those estimates.

~~Certain prior period amounts have been reclassified~~Comprehensive income equaled net income attributable to ~~conform with the 2021 presentation.~~

CCO ~~HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

~~2. Franchises, Goodwill and Other Intangible Assets~~

~~Indefinite-lived and finite-lived intangible assets consist of the following as of September 30, 2021 and December 31, 2020:~~

September 30, 2021 December 31, 2020
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
Wireless spectrum licenses 464 — 464 464 — 464
$ 97,340 $ — $ 97,340 $ 97,340 $ — $ 97,340
Finite-lived intangible assets:
Customer relationships $ 18,232 $ (13,813) $ 4,419 $ 18,230 $ (12,615) $ 5,615
Other intangible assets 420 (187) 233 420 (159) 261
$ 18,652 $ (14,000) $ 4,652 $ 18,650 $ (12,774) $ 5,876

~~Amortization expense related to customer relationships and other intangible assets~~Holdings member for the three and nine months ended September 30, ~~2021 was $377 million~~2022 and ~~$1.2 billion, respectively, and $445 million and $1.4 billion for the three and nine months ended September 30, 2020, respectively.~~

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

Three months ended December 31, 2021 $ 375
2022 1,332
2023 1,075
2024 824
2025 576
Thereafter 470
$ 4,652

Actual amortization expense in future periods could differ from these estimates as a result of new intangible asset acquisitions or divestitures, changes in useful lives, impairments, adoption of new accounting standards and other relevant factors.2021.

3.2. Investments

~~During the nine months ended September 30, 2021,~~In June 2022, the Company and Comcast Corporation ("Comcast") entered into a 50/50 joint venture to develop and offer a next-generation streaming platform on a variety of streaming devices and smart TVs. Comcast licensed its streaming platform and hardware to the joint venture and contributed the retail business for XClass TVs and Xumo, a streaming service it acquired in 2020. The Company's investment is approximately $981 million with $175 million paid in June 2022 and with the remaining non-cancelable required contributions to be paid over multiple years and recorded ~~impairments on equity investments~~as accrued obligations as of ~~approximately $165 million which was recorded in other expenses, net in the consolidated statements of operations.~~

September 30,

~~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 30, 2021 and December 31, 2020:~~

September 30, 2021 December 31, 2020
Accounts payable – trade $ 659 $ 737
Deferred revenue 498 436
Accrued liabilities:
Programming costs 2,106 1,940
Labor 1,230 1,370
Capital expenditures 1,123 1,227
Interest 1,067 1,083
Taxes and regulatory fees 571 523
Operating lease liabilities 229 202
Other 1,054 725
$ 8,537 $ 8,243

~~5. Leases~~

Operating lease expenses were $104 million and $309 million for the three and nine months ended September 30, 2021, respectively, and $98 million and $289 million for the three and nine months ended September 30, 2020, respectively, inclusive of $32 million and $98 million for the three and nine months ended September 30, 2021, respectively, and $32 million and $94 million for the three and nine months ended September 30, 2020, respectively, of both short-term lease costs and variable lease costs that were not included in the measurement of operating lease liabilities.

Cash paid for amounts included in the measurement of operating lease liabilities, recorded as operating cash flows in the statements of cash flows, were $209 million and $189 million for the nine months ended September 30, 2021 and 2020, respectively. ~~Operating lease right-of-use assets obtained in exchange for operating lease obligations were $267 million and $250 million for the nine months ended September 30, 2021 and 2020, respectively.~~

~~Supplemental balance sheet information related to leases is as follows.~~

September 30, 2021 December 31, 2020
Operating lease right-of-use assets:
Included within other noncurrent assets $ 1,151 $ 1,065
Operating lease liabilities:
Current portion included within accounts payable and accrued liabilities $ 229 $ 202
Long-term portion included within other long-term liabilities 1,014 941
$ 1,243 $ 1,143
Weighted average remaining lease term for operating leases 5.9 years 6.4 years
Weighted average discount rate for operating leases 3.5 % 3.9 %

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~Maturities~~2022. The Company accounts for the investment as an equity method investment and records investment income (loss) on its share of ~~operating lease liabilities as of September 30, 2021 are as follows.~~the joint venture income (loss).

Three months ended December 31, 2021 $ 72
2022 286
2023 275
2024 227
2025 181
Thereafter 386
Undiscounted lease cash flow commitments 1,427
Reconciling impact from discounting (184)
Lease liabilities on consolidated balance sheet as of September 30, 2021 $ 1,243

3. Accounts Payable and Accrued Liabilities

~~The Company had $63 million of finance lease liabilities recognized in the consolidated balance sheets as of September 30, 2021 and December 31, 2020 included within accounts~~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~~consist of the following as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

September 30, 2021 December 31, 2020
Principal Amount Accreted Value Principal Amount Accreted Value
CCO Holdings, LLC:
4.000% senior notes due March 1, 2023 $ 500 $ 499 $ 500 $ 498
5.750% senior notes due February 15, 2026 — — 2,500 2,475
5.500% senior notes due May 1, 2026 750 747 1,500 1,492
5.875% senior notes due May 1, 2027 — — 800 796
5.125% senior notes due May 1, 2027 3,250 3,228 3,250 3,225
5.000% senior notes due February 1, 2028 2,500 2,474 2,500 2,472
5.375% senior notes due June 1, 2029 1,500 1,501 1,500 1,501
4.750% senior notes due March 1, 2030 3,050 3,042 3,050 3,042
4.500% senior notes due August 15, 2030 2,750 2,750 2,750 2,750
4.250% senior notes due February 1, 2031 3,000 3,002 3,000 3,001
4.500% senior notes due May 1, 2032 2,900 2,927 2,900 2,928
4.500% senior notes due June 1, 2033 1,750 1,728 — —
4.250% senior notes due January 15, 2034 2,000 1,981 — —
Charter Communications Operating, LLC:
4.464% senior notes due July 23, 2022 3,000 2,996 3,000 2,992
Senior floating rate notes due February 1, 2024 900 901 900 902
4.500% senior notes due February 1, 2024 1,100 1,096 1,100 1,094
4.908% senior notes due July 23, 2025 4,500 4,479 4,500 4,475
3.750% senior notes due February 15, 2028 1,000 990 1,000 989
4.200% senior notes due March 15, 2028 1,250 1,242 1,250 1,241
5.050% senior notes due March 30, 2029 1,250 1,242 1,250 1,242
2.800% senior notes due April 1, 2031 1,600 1,584 1,600 1,583
2.300% senior notes due February 1, 2032 1,000 992 1,000 991


	September 30, 2022		December 31, 2021
Accounts payable – trade	$	705	$	706
Deferred revenue	521		458
Accrued liabilities:
Programming costs	1,979		2,036
Labor	1,198		1,299
Capital expenditures	1,546		1,281
Interest	1,189		1,099
Taxes and regulatory fees	584		533
Operating lease liabilities	257		237
Other	1,298		1,122
	$	9,277	$	8,771

4. Long-Term Debt

A summary of our debt as of September 30, 2022 and December 31, 2021 is as follows:

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

6.384% senior notes due October 23, 2035 2,000 1,984 2,000 1,983
5.375% senior notes due April 1, 2038 800 787 800 786
3.500% senior notes due June 1, 2041 1,500 1,483 — —
6.484% senior notes due October 23, 2045 3,500 3,468 3,500 3,468
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 2,392 2,450 2,392
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 2,797
3.700% senior notes due April 1, 2051 2,050 2,031 2,050 2,030
3.900% senior notes due June 1, 2052 2,400 2,321 — —
6.834% senior notes due October 23, 2055 500 495 500 495
3.850% senior notes due April 1, 2061 1,850 1,809 1,350 1,339
4.400% senior notes due December 1, 2061 1,400 1,389 — —
Credit facilities 11,480 11,422 10,150 10,081
Time Warner Cable, LLC:
4.000% senior notes due September 1, 2021 — — 1,000 1,008
5.750% sterling senior notes due June 2, 2031 (a)
842 894 854 911
6.550% senior debentures due May 1, 2037 1,500 1,664 1,500 1,668
7.300% senior debentures due July 1, 2038 1,500 1,757 1,500 1,763
6.750% senior debentures due June 15, 2039 1,500 1,701 1,500 1,706
5.875% senior debentures due November 15, 2040 1,200 1,252 1,200 1,254
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)
876 847 889 859
4.500% senior debentures due September 15, 2042 1,250 1,147 1,250 1,145
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023 1,000 1,069 1,000 1,104
8.375% senior debentures due July 15, 2033 1,000 1,258 1,000 1,270
Total debt 87,948 88,372 82,143 82,752
Less current portion:
4.000% senior notes due September 1, 2021 — — (1,000) (1,008)
4.464% senior notes due July 23, 2022 (3,000) (2,996) — —
Long-term debt $ 84,948 $ 85,376 $ 81,143 $ 81,744


	September 30, 2022						December 31, 2021
	Principal Amount		Carrying Value		Fair Value		Principal Amount		Carrying Value		Fair Value
Senior unsecured notes	$	26,650	$	26,564	$	21,760	$	23,950	$	23,882	$	24,630



Senior secured notes and debentures(a)	56,724		57,112		45,620		56,525		57,011		64,346



Credit facilities(b)	13,413		13,356		12,824		10,723		10,668		10,665
	$	96,787	$	97,032	$	80,204	$	91,198	$	91,561	$	99,641

(a)~~Principal amount includes~~Includes the Company's £625 million ~~remeasured at $842~~and £650 million ~~and $854 million as of September 30, 2021 and December 31, 2020, respectively,~~fixed-rate British pound sterling denominated notes (the “Sterling Notes”) remeasured using the exchange rate at the respective dates.

(b)~~Principal amount includes £650 million remeasured at $876 million and $889 million as of September 30, 2021 and December 31, 2020, respectively, using the exchange rate at the respective dates.~~

The accreted values presented in the table above represent the principal amount of the debt adjusted for original issue discount or premium at the time of sale, deferred financing costs, and, in regards to 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 US dollars as of each balance sheet date. See Note 8. The Company has availability under the Charter Communications Operating, LLC ("Charter Operating") credit facilities of approximately ~~$3.2~~$4.6 billion as of September 30, ~~2021.~~

2022.

In March 2021, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.5 billion aggregate principal amount of 3.500% senior secured notes due June 2041 at a price of 99.544% of the aggregate principal amount,

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

$1.0 billion aggregate principal amount of 3.900% senior secured notes due June 2052 at a price of 99.951% of the aggregate principal amount and an additional $500 million aggregate principal amount of 3.850% senior secured notes due April 2061 at a price of 94.668% 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, including $750 million of CCO Holdings 5.750% notes due February 2026.

In June 2021, Charter Operating and Charter Communications Operating Capital Corp. issued an additional $1.4 billion of 3.900% senior secured notes due June 2052 priced at 95.578% of the aggregate principal amount and $1.4 billion aggregate principal amount of 4.400% senior secured notes due December 2061 at a price of 99.906% of the aggregate principal amount. 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, including $500 million of CCO Holdings' 5.750% notes due February 2026, all of CCO Holdings' 5.875% notes due May 2027, and in July 2021, $1.0 billion of Time Warner Cable, LLC's 4.000% notes due September 2021.

In October 2021, Charter Operating and Charter Communications Operating Capital Corp. issued an $1.25 billion aggregate principal amount of 2.250% senior secured notes due January 2029 priced at 99.835% of the aggregate principal amount, $1.35 billion aggregate principal amount of 3.500% senior secured notes due March 2042 at a price of 99.253% of the aggregate principal amount and $1.4 billion aggregate principal amount of 3.950% senior secured notes due June 2062 at a price of 99.186% of the aggregate principal amount. 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.

The Charter Operating notes are guaranteed by CCO Holdings and substantially all of the 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 and substantially all of its subsidiaries to the extent such liens can be perfected under the Uniform Commercial Code by the filing of a financing statement and the liens rank equally with the liens on the collateral securing obligations under the Charter Operating credit facilities. Charter Operating may redeem some or all of the Charter Operating notes at any time at a premium.

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

In April 2021, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.0 billion of 4.500% senior unsecured notes due June 2033 at par, and in June 2021, an additional $750 million of the same series of notes was issued at a price of 99.250% of the aggregate principal amount. The net proceeds were used 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, to repay certain indebtedness and to pay related fees and expenses.

In August 2021, CCO Holdings and CCO Holdings Capital Corp. jointly issued $2.0 billion of 4.250% senior unsecured notes due January 2034 at par. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including repaying $1.25 billion of CCO Holdings' 5.750% notes due February 2026 and $750 million of CCO Holdings' 5.500% notes due May 2026, 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 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. The optional redemption price declines to 100% of the principal amount, plus accrued and unpaid interest, if any, on or after varying dates in 2030 through 2031.

In addition, at any time prior to varying dates in 2024 through 2025, 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

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

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.

~~Losses on extinguishment of debt are recorded in other expenses, net in the consolidated statements of operations and consisted of the following.~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
CCO Holdings notes redemption $ (71) $ (58) $ (146) $ (121)
Time Warner Cable, LLC notes redemption 2 — 2 —
$ (69) $ (58) $ (144) $ (121)

~~7. Loans Payable - Related Party~~

Loans payable - related party as of September 30, 2021 and December 31, 2020 consists of loans from Charter Communications Holding Company, LLC (“Charter Holdco”) to Charter Operating of $743 million and $727 million, respectively, and loans from Charter to Charter Operating of $296 million and $274 million, respectively. Interest accrued at LIBOR plus 1.25% on the loans payable from Charter Holdco and LIBOR plus 2.00% on the loans payable from Charter during the periods ending September 30, 2021 and December 31, 2020.

~~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. In March 2021, the collateral holiday for 20% of the swaps was extended to November 2022 in consideration for the Company's agreement to post collateral over a threshold amount on that 20% portion of the swaps from March 2021 through October 2021. The fair value of the Company's cross-currency derivatives was $317 million and $184 million and is included in other long-term liabilities on its consolidated balance sheets as of September 30, 2021 and December 31, 2020, 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 in the consolidated statements of operations in other expenses, net. 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.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

~~The effect of financial instruments are recorded in other expenses, net in the consolidated statements of operations and consisted of the following.~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Change in fair value of cross-currency derivative instruments $ (111) $ 135 $ (133) $ (230)
Foreign currency remeasurement of Sterling Notes to U.S. dollars 47 (66) 26 45
Gain (loss) on financial instruments, net $ (64) $ 69 $ (107) $ (185)

~~9. Fair Value Measurements~~

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

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

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

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

~~Financial Assets and Liabilities~~

The Company has estimated the fair value of its financial instruments as of September 30, 2021 and December 31, 2020 using available market information or other appropriate valuation methodologies. Considerable judgment, however, is required in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented in the accompanying consolidated financial statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.

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

As of September 30, 2021 and December 31, 2020, accounts receivable, net on the consolidated balance sheets includes approximately $377 million and $338 million of current equipment installment plan receivables, respectively, and other noncurrent assets includes approximately $170 million and $134 million of noncurrent equipment installment plan receivables, respectively.

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 which are recorded in other-long term liabilities on the consolidated balance sheets and were valued at $317 million and $184 million as of September 30, 2021 and December 31, 2020, respectively.

The estimated fair value of the Company’s senior unsecured and secured notes and debentures as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 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.

In January 2022, CCO Holdings and CCO Holdings Capital Corp. jointly issued $1.2 billion of 4.750% senior unsecured notes due February 2032 at par. The net proceeds were used 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, to repay certain indebtedness and to pay related fees and expenses.

In March 2022, Charter Operating and Charter Communications Operating Capital Corp. jointly issued $1.0 billion aggregate principal amount of 4.400% senior secured notes due April 2033 at a price of 99.634% of the aggregate principal amount, $1.5 billion aggregate principal amount of 5.250% senior secured notes due April 2053 at a price of 99.300% of the aggregate

126

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~A summary~~principal amount and $1.0 billion aggregate principal amount of 5.500% senior secured notes due April 2063 at a price of 99.255% of the ~~carrying value~~aggregate principal amount. The net proceeds were used for general corporate purposes, including distributions to the Company's parent companies to fund buybacks of Charter Class A common stock and ~~fair value~~Charter Holdings common units, to repay certain indebtedness and to pay related fees and expenses.

In May and June 2022, Charter Operating and Charter Communications Operating Capital Corp. redeemed all of ~~debt~~their outstanding 4.464% senior notes due July 2022.

In May 2022, Charter Operating entered into an amendment to its credit agreement (the "Amendment") to: (i) upsize term A loans by $2.3 billion to $6.05 billion and extend the maturity to August 31, 2027 from March 31, 2023 and February 1, 2025, (ii) create and borrow a new tranche of $500 million of term A-6 loans maturing August 31, 2028, (iii) increase the size of Charter Operating's revolving credit facility and extend the maturity date to August 31, 2027 from March 31, 2023 and February 1, 2025 and (iv) make certain other amendments to the credit agreement. The Company used a portion of the proceeds from the Amendment to repay all of the term A-2 loans, term A-4 loans and borrowings under the revolving credit facility outstanding prior to the effective date of the Amendment.

After giving effect to the Amendment: (i) the aggregate principal amount of term A-5 loans outstanding as of September 30, ~~2021~~2022 is $6.0 billion with a pricing of Secured Overnight Financing Rate ("SOFR") plus 1.25%, (ii) the aggregate principal amount of term A-6 loans outstanding as of September 30, 2022 is $494 million with a pricing of SOFR plus 1.50% and ~~December 31, 2020 is~~(iii) the aggregate amount of the revolving credit facility increased to a total capacity of $5.5 billion and the interest rate benchmark changed from London Interbank Offering Rate ("LIBOR") to SOFR, with a pricing of SOFR plus 1.25%. The aggregate principal amount of term B-1 loans (maturing April 30, 2025) and term B-2 loans (maturing February 1, 2027) outstanding as ~~follows:~~

September 30, 2021 December 31, 2020
Carrying Value Fair Value Carrying Value Fair Value
Senior notes and debentures $ 76,950 $ 85,880 $ 72,671 $ 84,163
Credit facilities $ 11,422 $ 11,428 $ 10,081 $ 10,063

~~Nonfinancial Assets~~of September 30, 2022 are $2.4 billion and ~~Liabilities~~$3.7 billion, respectively, with LIBOR-based pricing unchanged.

The ~~Company’s nonfinancial assets such as equity-method investments, franchises,~~Amendment also removed mandatory prepayment requirements upon asset sales and property ~~plant,~~or casualty insurance recoveries, made changes to the affirmative covenants, including changes to the financial reporting covenants, and ~~equipment,~~made changes to the negative covenants, including removal of certain negative covenants in their entirety.

In August 2022, CCO Holdings and ~~other intangible assets are not measured~~CCO Holdings Capital Corp. jointly issued $1.5 billion of 6.375% senior unsecured notes due September 2029 at ~~fair value~~par. The net proceeds were used 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, to repay certain indebtedness and to pay related fees and expenses.

Losses 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~~extinguishment of debt are recorded ~~fair values are generally classified within Level 3~~in other income (expenses), net in the consolidated statements of operations and consisted of the ~~valuation hierarchy.~~following.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
CCO Holdings notes redemption	$	—	$	(71)	$	—	$	(146)
Charter Operating credit facility refinancing	—		—		(2)		—
Time Warner Cable, LLC notes redemption	—		2		—		2
Charter Operating notes redemption	—		—		(1)		—
	$	—	$	(69)	$	(3)	$	(144)

~~10. Revenues~~5. Loans Payable - Related Party

~~The Company’s revenues by product line are~~Loans payable - related party as ~~follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Internet $ 5,363 $ 4,722 $ 15,670 $ 13,659
Video 4,502 4,221 13,224 13,014
Voice 409 449 1,202 1,357
Residential revenue 10,274 9,392 30,096 28,030
Small and medium business 1,062 988 3,116 2,967
Enterprise 656 617 1,930 1,845
Commercial revenue 1,718 1,605 5,046 4,812
Advertising sales 391 460 1,146 1,074
Mobile 535 368 1,546 936
Other 226 212 630 615
$ 13,144 $ 12,037 $ 38,464 $ 35,467
of September 30, 2022 and December 31, 2021 consists of loans from Charter Communications Holding Company, LLC (“Charter Holdco”) to Charter Operating of $753 million and $743 million, respectively, and loans from Charter to Charter Operating of $284 million as of December 31, 2021. Interest accrued at LIBOR plus 1.25% on the loans payable from Charter Holdco and LIBOR plus 2.00% on the loans payable from Charter during the periods ending September 30, 2022 and December 31, 2021.

137

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~11.~~6. Accounting for Derivative Instruments and Hedging Activities

Cross-currency derivative instruments are used to manage foreign exchange risk on the Sterling Notes by effectively converting £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 fair value of the Company's cross-currency derivatives, which are classified within Level 2 of the valuation hierarchy, was $772 million and $290 million and is included in other long-term liabilities on its consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively.

The effect of financial instruments are recorded in other income (expenses), net in the consolidated statements of operations and consisted of the following.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Change in fair value of cross-currency derivative instruments	$	(322)	$	(111)	$	(482)	$	(133)
Foreign currency remeasurement of Sterling Notes to U.S. dollars	129		47		304		26
Loss on financial instruments, net	$	(193)	$	(64)	$	(178)	$	(107)

7. Revenues

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Internet	$	5,571	$	5,363	$	16,585	$	15,670
Video	4,379		4,502		13,209		13,224
Voice	391		409		1,180		1,202
Residential revenue	10,341		10,274		30,974		30,096

Small and medium business	1,082		1,062		3,221		3,116
Enterprise	673		656		2,003		1,930
Commercial revenue	1,755		1,718		5,224		5,046

Advertising sales	481		391		1,324		1,146
Mobile	750		535		2,166		1,546
Other	223		226		658		630
	$	13,550	$	13,144	$	40,346	$	38,464

As of September 30, 2022 and December 31, 2021, accounts receivable, net on the consolidated balance sheets includes approximately $492 million and $391 million of current equipment installment plan receivables, respectively, and other noncurrent assets includes approximately $225 million and $189 million of noncurrent equipment installment plan receivables, respectively.

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

8. 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,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Programming	Programming	$	2,983	$	2,727	$	8,949	$	8,492	Programming	$	2,871	$	2,983	$	8,820	$	8,949
Regulatory, connectivity and produced content	Regulatory, connectivity and produced content	634		612		1,902		1,651		Regulatory, connectivity and produced content	587		634		1,742		1,902
Costs to service customers	Costs to service customers	1,899		1,902		5,530		5,598		Costs to service customers	1,982		1,899		5,801		5,530
Marketing	Marketing	788		788		2,280		2,273		Marketing	861		788		2,493		2,280
Mobile	Mobile	607		456		1,765		1,243		Mobile	846		607		2,403		1,765
Other	Other	1,068		1,024		3,187		3,026		Other	1,130		1,068		3,391		3,187
		$	7,979	$	7,509	$	23,613	$	22,283		$	8,277	$	7,979	$	24,650	$	23,613

Programming costs consist primarily of costs paid to programmers for basic, premium, digital, video on demand and pay-per-view programming. Regulatory, connectivity and produced content costs represent payments to franchise and regulatory authorities, costs directly related to providing video, Internet and voice services as well as payments for sports, local and news content produced by the Company. Included in regulatory, connectivity and produced content costs is content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the contract period. Costs to service customers include costs related to field operations, network operations and customer care for the Company’s residential and SMB 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~~residential and ~~residential~~commercial 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, 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.~~9. Other Operating (Income) Expenses, Net

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Special charges, net	Special charges, net	$	(5)	$	31	$	250	$	56	Special charges, net	$	200	$	(5)	$	141	$	250
(Gain) loss on disposal of assets, net	(Gain) loss on disposal of assets, net	(2)		(14)		42		(27)		(Gain) loss on disposal of assets, net	4		(2)		5		42
		$	(7)	$	17	$	292	$	29		$	204	$	(7)	$	146	$	292

Special charges, net

Special charges, net for the three and nine months ended September 30, 2022 primarily includes litigation settlements and the nine months ended September 30, 2022 also includes a $54 million gain related to the settlement of a multiemployer pension plan. For the nine months ended September 30, 2021, special charges, net includes net amounts of litigation settlements, including the $220 million ~~tentative~~ settlement with Sprint Communications Company L.P. ~~(“Sprint”)~~ and T-Mobile USA, Inc. ~~("T-Mobile") for the nine months ended September 30, 2021 discussed in Note 18,~~, and employee termination costs.

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

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

149

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

~~13.~~10. Other ~~Expenses,~~Income (Expenses), Net

Other ~~expenses,~~income (expenses), net consist of the following for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Loss on extinguishment of debt (see Note 6) $ (69) $ (58) $ (144) $ (121)
Gain (loss) on financial instruments, net (see Note 8) (64) 69 (107) (185)
Net periodic pension benefits (costs) (see Note 19) (15) (115) 176 (94)
Loss on equity investments, net (see Note 3) (7) (11) (168) (6)
$ (155) $ (115) $ (243) $ (406)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Loss on extinguishment of debt (see Note 4)	$	—	$	(69)	$	(3)	$	(144)
Loss on financial instruments, net (see Note 6)	(193)		(64)		(178)		(107)
Net periodic pension benefits (costs)	207		(15)		241		176
Loss on equity investments, net	(50)		(7)		(53)		(168)
	$	(36)	$	(155)	$	7	$	(243)

Net periodic pension benefits

During the three and nine months ended September 30, 2022 and nine months ended September 30, 2021, settlements for lump-sum distributions to pension plan participants exceeded the estimated annual interest cost of the plans. As a result, the pension liability and pension asset values were reassessed 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. Net periodic pension benefits includes a $189 million remeasurement gain recorded during the three and nine months ended September 30, 2022 and a $155 million remeasurement gain recorded during the nine months ended September 30, 2021 which were primarily driven by changes in the discount rate offset by losses to record assets to fair value.

Loss on equity investments, net

Loss on equity investments, net includes impairments on equity investments of approximately $165 million for the nine months ended September 30, 2021.

~~14.~~11. 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,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020	2021	2020		2022	2021	2022	2021
Stock options	Stock options	36,900	17,100	1,278,700	1,282,400	Stock options	50,700	36,900	1,455,100	1,278,700
Restricted stock	Restricted stock	—	—	4,600	6,000	Restricted stock	—	—	6,800	4,600
Restricted stock units	Restricted stock units	8,900	5,000	363,100	420,900	Restricted stock units	175,600	8,900	618,700	363,100

Stock options and restricted stock units generally cliff vest three years from the date of grant. Stock options generally expire ten years from the grant date and restricted stock units have no voting rights. Restricted stock generally vests one year from the date of grant.

As of September 30, ~~2021,~~2022, total unrecognized compensation remaining to be recognized in future periods totaled ~~$272~~$268 million for stock options, $2 million for restricted stock and ~~$257~~$329 million for restricted stock units and the weighted average period over which they are expected to be recognized is two years for stock options, seven months for restricted stock and two years for restricted stock units.

The Company recorded stock compensation expense of $98 million and $332 million for the three and nine months ended September 30, 2021, respectively, and $83 million and $263 million for the three and nine months ended September 30, 2020, respectively, which is included in operating costs and expenses.

~~15. 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.Charter has elected the accounting policy not to allocate income taxes to its subsidiaries 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, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

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 $13 million and $34 million for the three and nine months ended September 30, 2021, respectively, and $10 million and $23 million for the three and nine months ended September 30, 2020, respectively.

In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be “more likely than not” of being sustained upon examination, based on their technical merits. There is considerable judgment involved in making such a determination. The Company has recorded unrecognized tax benefits totaling approximately $102 million, excluding interest and penalties, as of September 30, 2021 and December 31, 2020. The Company does not currently anticipate that its reserve for uncertain tax positions will significantly increase or decrease during 2021; 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 2020 tax years remain open for examination and assessment. Charter’s short period return dated May 17, 2016 (prior to the merger with Time Warner Cable Inc. ("TWC") and acquisition of Bright House Networks, LLC ("Bright House")) and prior 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’ 2018 through 2020 tax years remain open for examination and assessment, while 2017 remains open solely for purposes of credit carryforwards. 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 months ended September 30, 2021, nor does the Company anticipate a material impact in the future.

~~16.~~ ~~Comprehensive Income~~

~~Comprehensive income equaled net income attributable to CCO Holdings member for each of the three and nine months ended September 30, 2021 and 2020.~~

~~17.~~ ~~Related Party Transactions~~

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

~~Liberty Broadband and A/N~~

Under the terms of the Stockholders Agreement, 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 Corporation ("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 Liberty Broadband. A/N and Liberty Broadband also have certain other committee designations and other governance rights. Mr. Thomas Rutledge, the Company’s CEO, is the chairman of the board of Charter.

1610

CCO HOLDINGS, LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(dollars in millions, except where indicated)

In December 2016, Charter and A/N entered into a letter agreement, as amended in December 2017 (the “A/N 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.

In February 2021, Charter and Liberty Broadband entered into a letter agreement (the “LBB Letter Agreement”). The LBB Letter Agreement implements Liberty Broadband’s obligations under the Stockholders Agreement to participate in share repurchases by Charter. Under the LBB Letter Agreement, Liberty Broadband will sell to Charter, generally on a monthly basis, a number of shares of Charter Class A common stock representing an amount sufficient for Liberty Broadband’s ownership of Charter to be reduced such that it does not exceed the ownership cap then applicable to Liberty Broadband under the Stockholders Agreement at a purchase price per share equal to the volume weighted average price per share paid by Charter for shares repurchased during such immediately preceding calendar month other than (i) purchases from A/N, (ii) purchases in privately negotiated transactions or (iii) purchases for the withholding of shares of Charter Class A common stock pursuant to equity compensation programs of Charter.

Gregory Maffei, a director of Charter and President and CEO and director and holder of 12.6% voting interest in Liberty Broadband, is Chairman of the board of directors of Qurate Retail, Inc. ("Qurate") and Dr. John Malone, a director emeritus of Charter and Chairman of the board of directors and holder of 45.8% of voting interest in Liberty Broadband, also serves on the Qurate board of directors. As reported in SEC filings of Qurate, Mr. Maffei and Dr. Malone, Mr. Maffei has ownership of an approximate 6.3% voting interest in Quarate and Dr. Malone has ownership of an approximate 41.2% voting interest in Qurate. Qurate wholly owns HSN, Inc. (“HSN”) and QVC, Inc. (“QVC”). The Company ~~has programming relationships with HSN and QVC. For the three and nine months ended September 30, 2021, the Company~~ recorded ~~revenue in aggregate~~stock compensation expense of ~~approximately $10~~$109 million and $33 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, and approximately $12 million and $36$360 million for the three and nine months ended September 30, ~~2020, respectively.~~

~~Dr. Malone~~2022, respectively, and Mr. Steven Miron, a member of Charter’s board of directors, also serve on the board of directors of Discovery, Inc. (“Discovery”). As reported in Discovery's SEC filings, Dr. Malone owns less than 1.0% of the series A common stock, 95.0% of the series B common stock$98 million and 3.7% of the series C common stock of Discovery and has a 26.5% voting interest in Discovery for the election of directors. As reported in Discovery's SEC filings, Advance/Newhouse Programming Partnership (“A/N PP”), an affiliate of A/N and in 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 23.2% 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 twelve directors to Discovery’s board. The Company purchases programming from 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$332 million for the three and nine months ended September 30, 2021, respectively, which is included in operating costs and ~~2020.~~

~~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 $52 million and $169 million during the three and nine months ended September 30, 2021, respectively, and $50 million and $167 million during the three and nine months ended September 30, 2020, respectively.expenses.

~~18.~~12. Contingencies

In ~~August 2015,~~March 2020, Charter Communications, LLC (“CC, LLC”), an indirect subsidiary of the Company, was named as a ~~purported stockholder~~defendant in a lawsuit filed in Dallas, Texas related to the fatal stabbing of an individual in her home by an off duty CC, LLC technician: William Goff, as Personal Representative of Betty Jo McClain Thomas, deceased, et al. v. Roy James Holden, Jr. and Charter ~~Matthew Sciabacucchi,~~Communications, LLC, Case No. CC-20-01579-E, pending in County Court at Law No. 5 for Dallas County, Texas. The complaint alleged that CC, LLC was responsible for Mrs. Thomas' death. Following a two phase trial, the jury returned a verdict finding CC, LLC ninety percent at fault for Mrs. Thomas’ death, and awarded compensatory damages of $375 million to plaintiffs and then awarded $7.0 billion in punitive damages to plaintiffs on July 26, 2022. On October 7, 2022, plaintiffs filed a ~~lawsuit in~~motion for a judgment that proposed a reduced total award of $1.144 billion. The trial judge signed the ~~Delaware Court of Chancery, on behalf of~~judgment, and CC, LLC posted a ~~putative class of Charter stockholders, challenging~~$25 million bond to stay 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. Charter denies any liability,

~~CCO HOLDINGS,~~judgment pending appeals. CC, LLC ~~AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

~~believes that it has substantial defenses, and is~~will continue to vigorously ~~defending this lawsuit. Although Charter is unable to predict the outcome of~~defend this lawsuit ~~it does not expect the outcome will have a material effect on its operations, financial condition or cash flows.~~including pursuing all available appeals.

The ~~California Attorney General~~Company has considered various factors, including the legal and factual circumstances of the case, the trial record, the jury verdicts, the status of the proceedings, applicable law, the views of legal counsel, the court’s rulings in advance of and during the trial, along with post-trial motions of the parties in determining the various grounds for appeal that the Company expects to vigorously pursue and the ~~Alameda County, California District Attorney are investigating whether certain~~likelihood 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 witha successful appeal. Based on these ~~investigations. While~~factors, the Company has concluded that a loss from this case is ~~unable to predict~~not probable and reasonably estimable. Therefore, the ~~outcome~~Company has not accrued a liability for the adverse verdict in its financial statements as of ~~these investigations, it does not expect that the outcome will have a material effect on its operations, financial condition, or cash flows.~~September 30, 2022.

Sprint filed a patent suit against Charter and Bright House on December 2, 2017 in the United States District Court for the District of Delaware. This suit alleges infringement of 9 patents related to the Company's provision of Voice over Internet Protocol (“VoIP”) services. Sprint previously sued TWC with respect to eight of these patents and obtained a final judgment of $151 million inclusive of interest and costs, which the Company paid in November 2019. The Company has also brought a patent suit against Sprint (TC Tech, LLC v. Sprint) in the United States District Court for the District of Delaware implicating Sprint's LTE technology and a similar suit against T-Mobile in the United States District Court for the Western District of Texas.

Sprint filed a subsequent patent suit against Charter on May 17, 2018 in the United States District Court for the Eastern District of Virginia. This suit alleges infringement of two patents related to the Company's video on demand services. The 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.

On February 18, 2020, Sprint filed a lawsuit against Charter, Bright House and TWC. 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, TWC and Bright House. The case is now pending in the United States District Court for the District of Kansas.

Charter, T-Mobile and Sprint have tentatively reached a settlement of all of the foregoing suits that would result in a payment of $220 million by Charter to T-Mobile. The Company can give no assurance that this tentative settlement will be finalized. Pending finalization of the settlement and in the event the settlement is not finalized, the Company will vigorously defend these Sprint suits and prosecute the suits it has brought against T-Mobile and Sprint. While the Company is unable to predict the outcome of these lawsuits, it does not expect that 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.

~~CCO HOLDINGS, LLC AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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

~~19.~~ ~~Employee Benefit Plans~~

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

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

The components of net periodic pension benefit (costs) for the three and nine months ended September 30, 2021 and 2020 are recorded in in other expenses, net in the consolidated statements of operations and consisted of the following:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Interest cost $ (24) $ (29) $ (72) $ (85)
Expected return on plan assets 40 39 124 116
Remeasurement gain (loss), net (31) (125) 124 (125)
Net periodic pension benefits (costs) $ (15) $ (115) $ 176 $ (94)

During the three and nine months ended September 30, 2021, settlements for lump-sum distributions to 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, 2021 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 $31 million remeasurement loss during the three months ended September 30, 2021 was primarily driven by losses to record assets to fair value and the $124 million remeasurement gain recorded during the nine months ended September 30, 2021 was primarily driven by changes in the discount rate.

The Company made no cash contributions to the qualified pension plans during the three and nine months ended September 30, 2021 and 2020; 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 2021 to the extent benefits are paid.

1911

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. 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 a leading broadband connectivity company and cable operator serving more than 3132 million customers in 41 states through our Spectrum brand. Over an advanced high-capacity, two-way telecommunications 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~~sports programming to our customers through Spectrum ~~Networks and Spectrum Originals.~~Networks.

Overview

In 2021 and 2020, the Novel Coronavirus (“COVID-19”) pandemic significantly impacted how our customers use our products and services, how they interact with us, and how our employees work and provide services to our customers. Customer activity levels remain below normal which contributed to lower operating expense from reduced service transactions and lower bad debt in the first nine months of 2021, however, we expect trends to return to pre-COVID-19 levels as the economy continues to reopen and normal activities resume.

In May 2021, the Federal Communications Commission ("FCC") introduced the Emergency Broadband Benefit ("EBB") program to help households pay for Internet service. The EBB program provides eligible low-income households with up to $50 per month towards Internet service. Although Congress may extend the EBB program funding as currently proposed in an infrastructure bill, we expect the FCC to run out of funding under the current EBB program allocation sometime in early 2022. If funding is not extended by Congress, our customers in the current EBB program will generally roll out of that program, continue to be our customers and be serviced consistent with our business practices regarding collections, disconnect process and bad debt. Many of these customers were serviced prior to the EBB program consistent with our normal business practices. However, we cannot predict how such an expiration of the EBB program would ultimately impact our experience with disconnects and bad debt for our customers currently in the EBB program.

~~Although the ultimate impact of the COVID-19 pandemic cannot be predicted,~~2022, we remain focused on driving customer relationship ~~growth~~growth. Residential and small and medium business ("SMB") customer relationships increased by ~~deploying superior products~~17,000 during the third quarter of 2022 and ~~services packaged with attractive pricing. In October~~192,000 from September 30, 2021 to September 30, 2022, which excludes mobile-only customers. We continue to see lower customer move rates and switching behavior among providers, which has reduced our selling opportunities. Our rural construction initiative is underway which we ~~announced~~expect will expand our footprint by approximately 1 million homes and ~~implemented new Spectrum Mobile multi-line pricing designed to drive more mobile line sales per customer,~~businesses over the next six years, and ~~in turn, drive more broadband sales and the associated retention benefits. Further,~~ we expect to ~~continue to drive customer relationship growth through sales of bundled services and improving customer retention despite the expectation for continued losses of video and wireline voice customers.~~

~~Our Spectrum Mobile service is offered to customers subscribing to~~participate in additional government subsidy programs that would further expand our ~~Internet service and runs on Verizon Communications Inc.'s ("Verizon") mobile network combined with Spectrum WiFi.~~footprint. We continue to ~~explore ways~~evolve our network to ~~drive even~~provide increased Internet speeds and reliability and invest in our products and customer service platforms. We offer Spectrum Internet products with speeds up to 1 Gbps across our entire footprint. Our Advanced WiFi, a managed WiFi service that provides customers an optimized home network while providing greater control of their connected devices with enhanced security and privacy, is available to nearly all Internet customers. We continue to invest in our ability to provide a differentiated Internet connectivity experience for our mobile and fixed Internet customers with the availability of over 500,000 out of home WiFi access points across our footprint. In October, we introduced Spectrum One, which brings together Spectrum Internet, Advanced WiFi and Unlimited Spectrum Mobile™, to offer consumers faster, more reliable and secure online connections on their favorite devices at home and on the go in a high-value package. In addition, we continue to work towards the construction of our own 5G mobile ~~traffic to our network. We intend to use~~data-only network leveraging the Citizens Broadband Radio Service (“CBRS”) Priority Access Licenses (“PALs”) we purchased in ~~2020, along with unlicensed CBRS spectrum,~~2020. By continually improving our product set and offering consumers the opportunity to ~~build~~save money by switching to our ~~own 5G mobile network~~services, we believe we can continue to penetrate our expanding footprint and attract more spend on additional products for our existing ~~infrastructure in targeted geographies where there is high outdoor cellular traffic volume. This effort, in combination with our expanding WiFi network~~customers. During the nine months ended September 30, 2022, we added 1,113,000 mobile lines and ~~continued 5G enhancements within~~239,000 Internet customers, and for the ~~Verizon~~quarter ended September 30, 2022, we added 396,000 mobile ~~virtual network operator (“MVNO”) partnership agreement, should position our mobile product for continued customer experience~~lines and ~~cost structure improvements.~~75,000 Internet customers.

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~~During the three and nine months ended September 30, 2022, our ~~new~~ mobile product line ~~we cannot be certain that we will be able to grow~~increased revenues ~~or maintain our margins at recent historical rates.~~by $750 million and $2.2 billion, respectively, reduced Adjusted EBITDA by approximately $96 million and $237 million, respectively, and reduced free cash flow by approximately $208 million and $768 million, respectively. During the three and nine months ended September 30, 2021, our mobile product line increased revenues by $535 million and $1.5 billion, respectively, reduced Adjusted EBITDA by approximately $72 million and $219 million, respectively, and reduced free cash flow by approximately $145 million and $606 million, respectively. ~~During the three and nine months ended September 30,~~

~~2020, our mobile product line increased revenues by $368 million and $936 million, respectively, reduced~~Mobile Adjusted EBITDA ~~by approximately $88 million and $307 million, respectively, and reduced free cash flow by approximately $265 million and $758 million, respectively. Primarily~~may continue to be negative primarily as a result of growth-related sales and marketing and other customer acquisition costs for mobile services, and depending on the pace of that ~~growth, we expect mobile Adjusted EBITDA will continue to be negative.~~growth. We also expect to continue to see negative free cash flow from the timing of device-related cash flows when we sell devices to customers pursuant to equipment installment plans and capital expenditures related to ~~retail store and~~ CBRS build-out.

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~~numbers; minor differences may exist due to rounding):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021		2020		% Change		2021		2020		% Change			2022		2021		% Change		2022		2021		% Change
Revenues	Revenues	$	13,144	$	12,037	9.2	%	$	38,464	$	35,467	8.4	%	Revenues	$	13,550	$	13,144	3.1	%	$	40,346	$	38,464	4.9	%
Adjusted EBITDA	Adjusted EBITDA	$	5,263	$	4,611	14.1	%	$	15,183	$	13,447	12.9	%	Adjusted EBITDA	$	5,382	$	5,263	2.3	%	$	16,056	$	15,183	5.8	%
Income from operations	Income from operations	$	2,908	$	2,145	35.6	%	$	7,510	$	5,872	27.9	%	Income from operations	$	2,900	$	2,908	(0.2)	%	$	8,862	$	7,510	18.0	%

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, other ~~expenses,~~income (expenses), net and other operating (income) expenses, net, such as special charges and (gain) loss on sale or retirement of assets. See ~~“—Use~~“Use of Adjusted EBITDA and Free Cash Flow” for further information on Adjusted EBITDA and free cash flow.

Growth in total revenue was primarily due to growth in our residential Internet, mobile and commercial customers and price adjustments. Adjusted EBITDA growth and changes in income from operations ~~growth was~~were impacted by growth in revenue and increases in operating costs and expenses, primarily ~~programming~~mobile, costs to service customers and ~~mobile as well as regulatory, connectivity and produced content costs.~~marketing.

2113

The following table summarizes our customer statistics for Internet, video, voice and mobile as of September 30, ~~2021~~2022 and ~~2020~~2021 (in thousands except per customer data and footnotes).


		Approximate as of					Approximate as of
		September 30,					September 30,
		2021 (a)		2020 (a)			2022 (a)		2021 (a)
Customer Relationships (b)	Customer Relationships (b)					Customer Relationships (b)
Residential	Residential	29,823		28,912		Residential	29,946		29,823
Small and Medium Business ("SMB")		2,126		2,021
SMB						SMB	2,195		2,126
Total Customer Relationships	Total Customer Relationships	31,949		30,933		Total Customer Relationships	32,141		31,949

Monthly Residential Revenue per Residential Customer (c)	Monthly Residential Revenue per Residential Customer (c)	$	115.15	$	109.03	Monthly Residential Revenue per Residential Customer (c)	$	115.16	$	115.15
Monthly SMB Revenue per SMB Customer (d)	Monthly SMB Revenue per SMB Customer (d)	$	167.29	$	164.77	Monthly SMB Revenue per SMB Customer (d)	$	164.89	$	167.29

Internet	Internet					Internet
Residential	Residential	27,965		26,807		Residential	28,320		27,965
SMB	SMB	1,934		1,826		SMB	2,008		1,934
Total Internet Customers	Total Internet Customers	29,899		28,633		Total Internet Customers	30,328		29,899

Video	Video					Video
Residential	Residential	15,287		15,705		Residential	14,642		15,287
SMB	SMB	604		530		SMB	649		604
Total Video Customers	Total Video Customers	15,891		16,235		Total Video Customers	15,291		15,891

Voice	Voice					Voice
Residential	Residential	8,784		9,335		Residential	7,929		8,784
SMB	SMB	1,273		1,207		SMB	1,287		1,273
Total Voice Customers	Total Voice Customers	10,057		10,542		Total Voice Customers	9,216		10,057

Mobile Lines (e)	Mobile Lines (e)					Mobile Lines (e)
Residential	Residential	3,085		2,020		Residential	4,516		3,085
SMB	SMB	99		40		SMB	161		99
Total Mobile Lines	Total Mobile Lines	3,184		2,060		Total Mobile Lines	4,677		3,184

Enterprise Primary Service Units ("PSUs") (f)	Enterprise Primary Service Units ("PSUs") (f)	284		272		Enterprise Primary Service Units ("PSUs") (f)	282		269

(a)We calculate the aging of customer accounts based on the monthly billing cycle for each account. On that basis, as of September 30, ~~2021~~2022 and ~~2020,~~2021, customers include approximately ~~160,700~~151,700 and ~~181,700~~119,200 customers, respectively, whose accounts were over 60 days past due, approximately ~~42,000~~55,500 and ~~52,300~~21,100 customers, respectively, whose accounts were over 90 days past due and approximately ~~32,600~~149,300 and ~~26,000~~31,800 customers, respectively, whose accounts were over 120 days past due. Bad debt expense associated with these past due accounts has been reflected in our consolidated statements of operations. The increase in past due accounts is predominately due to pre-existing and incremental unsubsidized amounts of customers’ bills for those customers participating in government assistance programs, including video services. These customers are downgraded to a fully subsidized Internet-only service.

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

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

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

(e)Mobile lines include phones and tablets which require one of our standard rate plans (e.g., "Unlimited" or "By the Gig"). Mobile lines exclude wearables and other devices that do not require standard phone rate plans.

(f)Enterprise PSUs represent the aggregate number of fiber service offerings counting each separate service offering at each customer location 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 ~~2020~~2021 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 September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues	Revenues	$	13,144	$	12,037	$	38,464	$	35,467	Revenues	$	13,550	$	13,144	$	40,346	$	38,464

Costs and Expenses:	Costs and Expenses:									Costs and Expenses:
Operating costs and expenses (exclusive of items shown separately below)	Operating costs and expenses (exclusive of items shown separately below)	7,979		7,509		23,613		22,283		Operating costs and expenses (exclusive of items shown separately below)	8,277		7,979		24,650		23,613
Depreciation and amortization	Depreciation and amortization	2,264		2,366		7,049		7,283		Depreciation and amortization	2,169		2,264		6,688		7,049
Other operating (income) expenses, net	Other operating (income) expenses, net	(7)		17		292		29		Other operating (income) expenses, net	204		(7)		146		292
		10,236		9,892		30,954		29,595			10,650		10,236		31,484		30,954
Income from operations	Income from operations	2,908		2,145		7,510		5,872		Income from operations	2,900		2,908		8,862		7,510

Other Income (Expenses):	Other Income (Expenses):									Other Income (Expenses):
Interest expense, net	Interest expense, net	(1,013)		(947)		(2,995)		(2,904)		Interest expense, net	(1,157)		(1,013)		(3,313)		(2,995)
Other expenses, net		(155)		(115)		(243)		(406)
Other income (expenses), net										Other income (expenses), net	(36)		(155)		7		(243)
		(1,168)		(1,062)		(3,238)		(3,310)			(1,193)		(1,168)		(3,306)		(3,238)

Income before income taxes	Income before income taxes	1,740		1,083		4,272		2,562		Income before income taxes	1,707		1,740		5,556		4,272
Income tax expense	Income tax expense	(13)		(10)		(34)		(23)		Income tax expense	(11)		(13)		(36)		(34)
Consolidated net income	Consolidated net income	1,727		1,073		4,238		2,539		Consolidated net income	1,696		1,727		5,520		4,238
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	—		—		(1)		(1)		Less: Net income attributable to noncontrolling interests	—		—		(1)		(1)

Net income attributable to CCO Holdings member	Net income attributable to CCO Holdings member	$	1,727	$	1,073	$	4,237	$	2,538	Net income attributable to CCO Holdings member	$	1,696	$	1,727	$	5,519	$	4,237

Revenues. Total revenues grew ~~$1.1 billion~~$406 million and ~~$3.0~~$1.9 billion for the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020~~2021 primarily due to increases in the number of residential Internet, mobile and commercial customers and price adjustments.

2315

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


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021		2020		% Change		2021		2020		% Change			2022		2021		% Change		2022		2021		% Change
Internet	Internet	$	5,363	$	4,722	13.6	%	$	15,670	$	13,659	14.7	%	Internet	$	5,571	$	5,363	3.9	%	$	16,585	$	15,670	5.8	%
Video	Video	4,502		4,221		6.7	%	13,224		13,014		1.6	%	Video	4,379		4,502		(2.7)	%	13,209		13,224		(0.1)	%
Voice	Voice	409		449		(8.8)	%	1,202		1,357		(11.4)	%	Voice	391		409		(4.6)	%	1,180		1,202		(1.9)	%
Residential revenue	Residential revenue	10,274		9,392		9.4	%	30,096		28,030		7.4	%	Residential revenue	10,341		10,274		0.7	%	30,974		30,096		2.9	%

Small and medium business	Small and medium business	1,062		988		7.5	%	3,116		2,967		5.0	%	Small and medium business	1,082		1,062		1.9	%	3,221		3,116		3.4	%
Enterprise	Enterprise	656		617		6.4	%	1,930		1,845		4.7	%	Enterprise	673		656		2.6	%	2,003		1,930		3.8	%
Commercial revenue	Commercial revenue	1,718		1,605		7.1	%	5,046		4,812		4.9	%	Commercial revenue	1,755		1,718		2.2	%	5,224		5,046		3.5	%

Advertising sales	Advertising sales	391		460		(15.1)	%	1,146		1,074		6.6	%	Advertising sales	481		391		22.9	%	1,324		1,146		15.6	%
Mobile	Mobile	535		368		45.4	%	1,546		936		65.2	%	Mobile	750		535		40.2	%	2,166		1,546		40.1	%
Other	Other	226		212		6.3	%	630		615		2.2	%	Other	223		226		(1.3)	%	658		630		4.5	%
		$	13,144	$	12,037	9.2	%	$	38,464	$	35,467	8.4	%		$	13,550	$	13,144	3.1	%	$	40,346	$	38,464	4.9	%

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


		Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)			Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Increase related to rate, product mix and bundle allocation changes		$	415	$	1,139
Increase related to rate and product mix changes						Increase related to rate and product mix changes	$	124	$	490
Increase in average residential Internet customers	Increase in average residential Internet customers	226		872		Increase in average residential Internet customers	84		425
		$	641	$	2,011		$	208	$	915

The increase related to rate and product mix ~~and bundle allocation changes~~ was primarily due to ~~price adjustments,~~reduced bundle discounts and promotional roll-off and higher bundled revenue allocation as well as $29 million of credits related to prior year's Keep Americans Connected ("KAC") Pledge which reduced revenue during the nine months ended September 30, 2020.roll-off. Residential Internet customers grew by ~~1,158,000~~355,000 customers from September 30, ~~2020~~2021 to September 30, ~~2021.~~2022.

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

Three months ended
September 30, 2021
compared to
three months ended
September 30, 2020
Increase / (Decrease) Nine months ended
September 30, 2021
compared to
nine months ended
September 30, 2020
Increase / (Decrease)
Customer credits estimated in 2020 due to COVID-19 $ 218 $ 262
Increase related to rate, product mix and bundle allocation changes 156 136
Decrease in average residential video customers (92) (137)
Decrease in video on demand and pay-per-view (1) (38)
Decrease in installation — (13)
$ 281 $ 210


	Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Decrease in average residential video customers	$	(178)	$	(423)
Increase related to rate and product mix changes	55		408


	$	(123)	$	(15)

~~We recorded $218 million of estimated customer credits related to canceled sporting events which reduced revenue during the three and nine months ended~~Residential video customers decreased by 645,000 from September 30, ~~2020 and $44 million of credits related~~2021 to ~~prior year's KAC program which reduced revenue during the nine months ended~~ September 30, ~~2020.~~2022. The increase related to rate and product mix ~~and bundle allocation changes~~ was primarily due to price adjustments and promotional roll-off and was partly offset by a higher mix of lower cost video packages within our video customer ~~base and lower bundled revenue allocation. Residential video customers decreased by 418,000 from September 30, 2020 to September 30, 2021.~~base.

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

Three months ended
September 30, 2021
compared to
three months ended
September 30, 2020
Increase / (Decrease) Nine months ended
September 30, 2021
compared to
nine months ended
September 30, 2020
Increase / (Decrease)
Decrease related to rate and bundle allocation changes $ (17) $ (107)
Decrease in average residential voice customers (23) (48)
$ (40) $ (155)
-


	Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Decrease in average residential voice customers	$	(38)	$	(97)
Increase related to rate	20		75
	$	(18)	$	(22)

~~The decrease related to rate and bundle allocation changes was impacted by value-based pricing and changes in bundled revenue allocations.~~ Residential wireline voice customers decreased by ~~551,000~~855,000 customers from September 30, ~~2020~~2021 to September 30, ~~2021.~~2022.

The increase in SMB revenues is attributable to the following (dollars in millions):

Three months ended
September 30, 2021
compared to
three months ended
September 30, 2020
Increase / (Decrease) Nine months ended
September 30, 2021
compared to
nine months ended
September 30, 2020
Increase / (Decrease)
Increase in SMB customers $ 58 $ 162
Increase related to COVID-19 programs which reduced prior year revenue 11 24
Increase (decrease) related to rate and product mix changes 5 (37)
$ 74 $ 149


	Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Increase in SMB customers	$	36	$	124
Decrease related to rate and product mix changes	(16)		(19)
	$	20	$	105

SMB customers grew by ~~105,000~~69,000 from September 30, ~~2020~~2021 to September 30, 2021. The decrease related to rate and product mix changes during the nine months ended September 30, 2021 compared to the corresponding period in 2020 was primarily due to value-based pricing related to Spectrum pricing and packaging ("SPP") net of promotional roll-off and price adjustments.2022.

Enterprise revenues increased ~~$39~~$17 million and ~~$85~~$73 million during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020~~2021 primarily due to an increase in Internet PSUs ~~$18 million of impacts from COVID-19 related programs which reduced revenues in the nine months ended September 30, 2020 as well as~~offset by a $16 million one-time benefit incurred during the three and nine months ended September 30, 2021 ~~offset by~~as well as lower wholesale PSUs. Enterprise PSUs increased ~~12,000~~13,000 from September 30, ~~2020~~2021 to September 30, ~~2021.~~2022.

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 $69~~increased $90 million and $178 million during the three and nine months ended September 30, ~~2021~~2022, respectively, as compared to the corresponding ~~period~~periods in 2020 primarily due to a decrease in political revenue partially offset by an increase in advanced advertising revenue. Advertising sales revenues increased $72 million during the nine months ended September 30, 2021 ~~as compared to the corresponding period in 2020~~ primarily due to an increase in ~~advanced advertising revenues and local and national advertising revenues as well as the impacts of COVID-19 that lowered revenues in 2020 offset by a decrease in political.~~political revenue.

During the three and nine months ended September 30, 2022, mobile revenues included approximately $303 million and $894 million of device revenues, respectively, and approximately $447 million and $1.3 billion of service revenues, respectively. During the three and nine months ended September 30, 2021, mobile revenues ~~represented~~included approximately $201 million and $643 million of device revenues, respectively, and approximately $334 million and $903 million of service revenues,

respectively. During the three and nine months ended September 30, 2020, mobile revenues represented approximately $172 million and $461 million of device revenues, respectively, and approximately $196 million and $475 million of service revenues, respectively. The increases in revenues are a result of an increase of ~~1,124,000~~1,493,000 mobile lines from September 30, ~~2020~~2021 to September 30, ~~2021.~~2022.

Other revenues consist of revenue from processing fees, regional sports and news channels (excluding intercompany charges or advertising sales on those channels), subsidy revenue, home shopping, ~~late payment fees,~~ video device sales, wire maintenance fees and other miscellaneous revenues. Other revenues ~~increased $14~~decreased $3 million and ~~$15~~increased $28 million during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020~~2021. The increase during the nine months ended September 30, 2022 compared to the corresponding prior period in 2021 is primarily due to subsidy revenue related to our rural construction initiative and an increase in ~~late payment~~processing fees ~~and~~offset by a decrease in sales of video devices.

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


		Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)			Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Programming	Programming	$	256	$	457	Programming	$	(112)	$	(129)
Regulatory, connectivity and produced content	Regulatory, connectivity and produced content	22		251		Regulatory, connectivity and produced content	(47)		(160)
Costs to service customers	Costs to service customers	(3)		(68)		Costs to service customers	83		271
Marketing	Marketing	—		7		Marketing	73		213
Mobile	Mobile	151		522		Mobile	239		638
Other	Other	44		161		Other	62		204
		$	470	$	1,330		$	298	$	1,037

Programming costs were approximately ~~$3.0~~$2.9 billion and ~~$8.9~~$3.0 billion for the three ~~and nine~~ months ended September 30, 2022 and 2021, ~~respectively,~~ representing ~~37%~~35% and ~~38%~~37% of total operating costs and expenses, respectively, and ~~$2.7~~$8.8 billion and ~~$8.5~~$8.9 billion for the ~~three and~~ nine months ended September 30, ~~2020, respectively,~~2022 and 2021, representing 36% and 38% of total operating costs and ~~expense,~~expenses, respectively. Programming costs consist primarily of costs paid to programmers for basic, digital, premium, video on demand, and pay-per-view programming. Programming costs ~~increased~~decreased as a result of $163 million of estimated rebates from sports programming networks as a result of canceled sporting events due to COVID-19 which reduced programming costs during the three and nine months ended September 30, 2020, as well as contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent offset by fewer customers and a higher mix of lower cost video packages within our video customer ~~base.~~base along with favorable one-time impacts offset by contractual rate adjustments, including renewals and increases in amounts paid for retransmission consent. We expect programming rates per customer 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 and broadcast station groups 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. 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 $22~~decreased $47 million and ~~$251~~$160 million during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020. The increase during~~2021 primarily due to lower costs of video devices sold to customers and regulatory pass-through fees. Regulatory, connectivity and produced content for the nine months ended September 30, ~~2021 as~~2022 compared to the corresponding prior period ~~in 2020 is primarily~~also decreased due to ~~higher~~lower sports rights costs as a result of more ~~National Basketball Association ("NBA") and Major League Baseball ("MLB")~~basketball games during 2021 as compared to ~~the corresponding period in 2020~~2022 as the prior ~~period had cancelation of MLB games and the current~~ period had additional games due to the delayed start of the 2020 - 2021 NBA season as a result of COVID-19.

Costs to service customers ~~decreased $3~~increased $83 million and ~~$68~~$271 million during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020 despite 3.3% customer growth. The decrease~~2021 primarily due to higher bad debt and higher fuel costs offset by lower labor costs as a result of productivity improvements driven by improved network performance and digital self-service platforms.

Marketing increased $73 million and $213 million during the three and nine months ended September 30, ~~2021~~2022, respectively, compared to the corresponding ~~period~~periods in ~~2020 was~~2021 primarily due to ~~fewer transactions and a decrease in bad debt expense partly driven by government stimulus packages offset by the~~ higher labor costs associated with higher staffing levels and our commitment to a minimum $20 per hour wage in ~~2022.~~2022 as well as insourcing of inbound sales and retention call centers.

Mobile costs of $846 million and $2.4 billion for the three and nine months ended September 30, 2022, respectively, and $607 million and $1.8 billion for the three and nine months ended September 30, 2021, respectively, ~~and $456 million and $1.2 billion for the three and nine months ended September 30, 2020, respectively,~~ were comprised of mobile

device costs and mobile service, customer acquisition and operating costs. The increase is attributable to an increase in the number of mobile lines.

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


		Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)			Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Corporate costs	Corporate costs	$	27	$	53	Corporate costs	$	9	$	67
Advertising sales expense						Advertising sales expense	27		54
Stock compensation expense	Stock compensation expense	15		69		Stock compensation expense	11		28
Property tax and insurance		9		5
Enterprise	Enterprise	6		15		Enterprise	11		28
Advertising sales expense		(17)		17
Other	Other	4		2		Other	4		27
		$	44	$	161		$	62	$	204

Corporate costs increased during the ~~three and~~ nine months ended September 30, ~~2021~~2022 compared to the corresponding prior ~~periods~~period primarily due to higher labor costs. Stock compensation expense increased during the nine months ended September 30, 2021 compared to the corresponding period in 2020 primarily due to changes in certain equity award provisions that result in additional expense at the time of grant.costs and computer and software expense. Advertising sales expense ~~decreased during the three months ended September 30, 2021 compared to the corresponding period in 2020~~increased due to ~~lower cost~~higher costs of sales fees driven by ~~lower~~higher political revenue ~~offset by~~and higher labor costs.

Depreciation and amortization. Depreciation and amortization expense decreased by ~~$102~~$95 million and ~~$234~~$361 million during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020~~2021 primarily due to certain assets acquired in acquisitions becoming fully depreciated offset by an increase in depreciation as a result of more recent capital expenditures.

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


		Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)			Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Special charges, net	Special charges, net	$	(36)	$	194	Special charges, net	$	205	$	(109)
(Gain) loss on disposal of assets, net	(Gain) loss on disposal of assets, net	12		69		(Gain) loss on disposal of assets, net	6		(37)
		$	(24)	$	263		$	211	$	(146)

See Note 129 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for more information.

Interest expense, net. Net interest expense increased by ~~$66~~$144 million and ~~$91~~$318 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020.~~2021. The increase in net interest expense is the result of an increase in weighted average debt outstanding of approximately ~~$7.8~~$8.4 billion and ~~$6.3~~$9.0 billion during the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in ~~2020 offset by reductions~~2021 as well as an increase in weighted average interest rates. The increase in weighted average debt outstanding is primarily due to the issuance of notes throughout ~~2020~~2021 and ~~2021 for general corporate purposes including distributions to parent companies for stock buybacks and debt repayments.~~2022.

2719

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

Three months ended
September 30, 2021
compared to
three months ended
September 30, 2020
Increase / (Decrease) Nine months ended
September 30, 2021
compared to
nine months ended
September 30, 2020
Increase / (Decrease)
Loss on extinguishment of debt (see Note 6) $ (11) $ (23)
Gain (loss) on financial instruments, net (see Note 8) (133) 78
Net periodic pension benefits (see Note 19) 100 270
Loss on equity investments, net (see Note 3) 4 (162)
$ (40) $ 163


	Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Loss on extinguishment of debt (see Note 4)	$	69	$	141
Loss on financial instruments, net (see Note 6)	(129)		(71)
Net periodic pension benefits (costs)	222		65
Loss on equity investments, net	(43)		115
	$	119	$	250

See Note 1310 and the Notes referenced above to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for more information.

Income tax expense. We recognized income tax expense of $11 million and $36 million for the three and nine months ended September 30, 2022, respectively, and $13 million and $34 million for the three and nine months ended September 30, 2021, ~~respectively, and $10 million and $23 million for the three and nine months ended September 30, 2020,~~ respectively. ~~For more information, see Note 15 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 $31 million and increased ~~from $1.1~~$1.3 billion ~~and $2.5 billion for~~during the three and nine months ended September 30, ~~2020,~~2022, respectively, compared to ~~$1.7 billion and $4.2 billion for~~ the ~~three and nine months ended September 30,~~corresponding periods in 2021, ~~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 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 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 $342 million and $1.0 billion for the three and nine months ended September 30, 2022, respectively, and $337 million and $979 million for the three and nine months ended September 30, 2021, ~~respectively, and $308 million and $927 million for the three and nine months ended September 30, 2020,~~ respectively.

2820

A reconciliation of Adjusted EBITDA and free cash flow to net income attributable to CCO Holdings member and net cash flows from operating activities, respectively, is as follows (dollars in millions).:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net income attributable to CCO Holdings member	Net income attributable to CCO Holdings member	$	1,727	$	1,073	$	4,237	$	2,538	Net income attributable to CCO Holdings member	$	1,696	$	1,727	$	5,519	$	4,237
Plus: Net income attributable to noncontrolling interest	Plus: Net income attributable to noncontrolling interest	—		—		1		1		Plus: Net income attributable to noncontrolling interest	—		—		1		1
Interest expense, net	Interest expense, net	1,013		947		2,995		2,904		Interest expense, net	1,157		1,013		3,313		2,995
Income tax expense	Income tax expense	13		10		34		23		Income tax expense	11		13		36		34
Depreciation and amortization	Depreciation and amortization	2,264		2,366		7,049		7,283		Depreciation and amortization	2,169		2,264		6,688		7,049
Stock compensation expense	Stock compensation expense	98		83		332		263		Stock compensation expense	109		98		360		332
Other expenses, net	Other expenses, net	148		132		535		435		Other expenses, net	240		148		139		535
Adjusted EBITDA	Adjusted EBITDA	$	5,263	$	4,611	$	15,183	$	13,447	Adjusted EBITDA	$	5,382	$	5,263	$	16,056	$	15,183

Net cash flows from operating activities	Net cash flows from operating activities	$	4,232	$	3,621	$	11,927	$	10,316	Net cash flows from operating activities	$	4,141	$	4,232	$	11,886	$	11,927
Less: Purchases of property, plant and equipment	Less: Purchases of property, plant and equipment	(1,861)		(2,014)		(5,536)		(5,352)		Less: Purchases of property, plant and equipment	(2,406)		(1,861)		(6,456)		(5,536)
Change in accrued expenses related to capital expenditures	Change in accrued expenses related to capital expenditures	74		104		(51)		(70)		Change in accrued expenses related to capital expenditures	156		74		284		(51)
Free cash flow	Free cash flow	$	2,445	$	1,711	$	6,340	$	4,894	Free cash flow	$	1,891	$	2,445	$	5,714	$	6,340

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 March 2021, Charter Communications Operating, LLC ("Charter Operating") and Charter Communications Operating Capital Corp. jointly issued $1.5 billion aggregate principal amount of 3.500% senior secured notes due June 2041 at a price of 99.544% of the aggregate principal amount, $1.0 billion aggregate principal amount of 3.900% senior secured notes due June 2052 at a price of 99.951% of the aggregate principal amount and an additional $500 million aggregate principal amount of 3.850% senior secured notes due April 2061 at a price of 94.668% of the aggregate principal amount. The net proceeds were used to pay related fees and expenses and for general corporate purposes, including distributions to parent companies to fund buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness, including $750 million of CCO Holdings, LLC's ("CCO Holdings") 5.750% notes due February 2026.

~~In April 2021,~~August 2022, CCO Holdings and CCO Holdings Capital Corp. jointly issued ~~$1.0~~$1.5 billion of ~~4.500%~~6.375% senior unsecured notes due ~~June 2033~~September 2029 at ~~par, and in June 2021, an additional $750 million of the same series of notes was issued at a price of 99.250% of the aggregate principal amount.~~par. The net proceeds were used for general corporate purposes, including ~~distributions to parent companies~~ to fund ~~potential~~ buybacks of Charter Class A common stock and Charter Holdings common units, to repay certain indebtedness and to pay related fees and expenses.

In June 2021, Charter Operating and Charter Communications Operating Capital Corp. issued an additional $1.4 billion of 3.900% senior secured notes due June 2052 priced at 95.578% of the aggregate principal amount and $1.4 billion aggregate principal amount of 4.400% senior secured notes due December 2061 at a price of 99.906% of the aggregate principal amount. Net proceeds were used to pay related fees and expenses and for general corporate purposes, including distributions to parent companies to fund buybacks of Charter Class A common stock and Charter Holdings common units as well as repaying certain indebtedness, including $500 million of CCO Holdings' 5.750% notes due February 2026, all of CCO Holdings' 5.875% notes due May 2027, and in July 2021, $1.0 billion of Time Warner Cable, LLC's 4.000% notes due September 2021.

including repaying $1.25 billion of CCO Holdings' 5.750% notes due February 2026 and $750 million of CCO Holdings' 5.500% notes due May 2026 as well as distributions to parent companies to fund buybacks of Charter Class A common stock and Charter Holdings common units.

In October 2021, Charter Operating and Charter Communications Operating Capital Corp. issued an $1.25 billion aggregate principal amount of 2.250% senior secured notes due January 2029 priced at 99.835% of the aggregate principal amount, $1.35 billion aggregate principal amount of 3.500% senior secured notes due March 2042 at a price of 99.253% of the aggregate principal amount and $1.4 billion aggregate principal amount of 3.950% senior secured notes due June 2062 at a price of 99.186% of the aggregate principal amount. Net proceeds were used to pay related fees and expenses and for general corporate purposes, including distributions to parent companies to fund 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 30, ~~2021~~2022 was ~~$87.9~~$96.8 billion, consisting of ~~$11.5~~$13.4 billion of credit facility debt, ~~$52.5~~$56.7 billion of investment grade senior secured notes and ~~$24.0~~$26.7 billion of high-yield senior unsecured notes. Our business requires significant cash to fund principal and interest payments on our debt.

Our projected cash needs and projected sources of liquidity depend upon, among other things, our actual results, and the timing and amount of our expenditures. As we continue to grow our market penetration of our mobile ~~services,~~product, we ~~expect an initial funding period~~will continue to ~~grow a new product as well as~~experience negative working capital impacts from the timing of device-related cash flows when we sell devices to customers pursuant to equipment installment plans. Further, in 2022, Charter ~~expects to~~has become a meaningful federal cash tax payer as the majority of their net operating losses ~~will~~ have been ~~utilized.~~utilized, which will be funded by distributions from us. Free cash flow was $1.9 billion and $5.7 billion for the three and nine months ended September 30, 2022, respectively, and $2.4 billion and $6.3 billion for the three and nine months ended September 30, 2021, ~~respectively, and $1.7 billion and $4.9 billion for the three and nine months ended September 30, 2020,~~ respectively. See table below for factors impacting free cash flow during the three and nine months ended September 30, ~~2021~~2022 compared to the corresponding prior periods. As of September 30, ~~2021,~~2022, the amount available under our credit facilities was approximately ~~$3.2~~$4.6 billion and cash on hand was approximately ~~$204~~$241 million. We expect to utilize free cash flow, cash on hand and availability under our credit facilities as well as future refinancing transactions to further extend the maturities of our obligations. The timing and terms of any refinancing transactions will be subject to market conditions among other considerations. Additionally, we may, from time to time, and depending on market conditions and other factors, use cash on hand and the proceeds from securities offerings or other borrowings to retire our debt through open market purchases, privately negotiated purchases, tender offers or redemption

provisions. We believe we have sufficient liquidity from cash on hand, free cash flow and Charter ~~Operating’s~~Communications Operating, LLC's ("Charter Operating") 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 expanding the capacity of our network, the expansion of our network ~~such as~~ through our ~~Rural Digital Opportunity Fund ("RDOF") project and participation in other federal, state and municipal programs,~~rural broadband construction initiative, the build-out and deployment of our CBRS spectrum, and mergers and acquisitions as well as distributions to 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 first lien level. Our leverage ratio was ~~4.3~~4.5 times Adjusted EBITDA as of September 30, ~~2021.~~2022. As Adjusted EBITDA grows, we expect to increase the total amount of our indebtedness to maintain leverage within Charter's target leverage range. Excluding purchases from Liberty Broadband Corporation (“Liberty Broadband”) discussed below, during the three and nine months ended September 30, 2022, Charter purchased in the public market approximately 3.3 million and 12.6 million shares of Charter Class A common stock, respectively, for approximately $1.4 billion and $6.5 billion, respectively, and during the three and nine months ended September 30, 2021, Charter purchased in the public market approximately 3.5 million and 11.5 million shares of Charter Class A common stock, respectively, for approximately $2.7 billion and $7.8 billion, respectively, and during the three and nine months ended September 30, 2020, Charter purchased approximately 5.5 million and 11.9 million shares of Charter Class A common stock, respectively, for approximately $3.3 billion and $6.5 billion, respectively. Since the beginning of its buyback program in September 2016 through September 30, ~~2021,~~2022, Charter has purchased ~~in the public market~~ approximately ~~99.2~~145.7 million shares of Class A common stock and Charter Holdings common units for approximately ~~$42.4 billion.~~$67.2 billion, including purchases from Liberty Broadband and A/N discussed below.

In February 2021, Charter and Liberty Broadband entered into a letter agreement (the “LBB Letter Agreement”). The LBB Letter Agreement implements Liberty Broadband’s obligations under the Amended and Restated Stockholders Agreement ~~with~~among Charter, Liberty Broadband and ~~Advance/Newhouse Partnership (“~~A/~~N”),~~N, dated as of May 23, 2015 (as amended, the “Stockholders Agreement”) to participate in share repurchases by Charter. Under the LBB Letter Agreement, Liberty Broadband will sell to Charter, generally on a monthly basis, a number of shares of Charter Class A common stock representing an amount sufficient for Liberty Broadband’s ownership of Charter to be reduced such that it does not exceed the ownership cap then applicable to Liberty Broadband under the Stockholders Agreement at a purchase price per share equal to the volume weighted average price per share paid by Charter for shares repurchased during such immediately preceding calendar month

other than (i) purchases from A/N, (ii) purchases in privately negotiated transactions or (iii) purchases for the withholding of shares of Charter Class A common stock pursuant to equity compensation programs of Charter. Charter purchased from Liberty Broadband 1.7 million and 5.0 million shares of Charter Class A common stock for approximately $796 million and $2.6 billion during the three and nine months ended September 30, 2022, respectively, and 1.2 million and 4.0 million shares of Charter Class A common stock for approximately $880 million and $2.6 billion during the three and nine months ended September 30, 2021, respectively. In October ~~2021,~~2022, Charter purchased from Liberty Broadband an additional ~~0.7~~0.5 million shares of Charter Class A common stock for approximately ~~$561~~$183 million.

In December 2016, Charter and A/N entered into a letter agreement, as amended in December 2017 (the "A/N 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. During the three and nine months ended September 30, 2022, Charter Holdings purchased from A/N 0.8 million and 2.6 million Charter Holdings common units for approximately $385 million and $1.4 billion, respectively, and during the three and nine months ended September 30, 2021, Charter Holdings purchased from A/N 0.6 million and 2.3 million Charter Holdings common units ~~respectively,~~ for approximately $410 million and $1.5 billion, respectively, and during the three and nine months ended September 30, 2020, Charter Holdings purchased from A/N 0.6 million and 1.7 million Charter Holdings common units, respectively, for approximately $366 million and $884 million, respectively.

As of September 30, ~~2021,~~2022, Charter had remaining board authority to purchase an additional ~~$1.5 billion~~$680 million of Charter’s Class A common stock and/or Charter Holdings common units, excluding purchases from Liberty Broadband. 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 $734~~decreased $554 million and ~~$1.4 billion~~$626 million during the three and nine months ended September 30, ~~2021, respectively,~~2022 compared to the corresponding prior periods in ~~2020~~2021 due to the following (dollars in millions).:


		Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)			Three months ended September 30, 2022 compared to three months ended September 30, 2021 Increase / (Decrease)		Nine months ended September 30, 2022 compared to nine months ended September 30, 2021 Increase / (Decrease)
Increase in capital expenditures						Increase in capital expenditures	$	(545)	$	(920)
Increase in cash paid for interest, net						Increase in cash paid for interest, net	(56)		(204)
Increase in Adjusted EBITDA	Increase in Adjusted EBITDA	$	652	$	1,736	Increase in Adjusted EBITDA	119		873
Decrease (increase) in capital expenditures		153		(184)
Changes in working capital, excluding change in accrued interest		(102)		(115)
Increase in cash paid for interest, net		(6)		(19)
Changes in working capital, excluding change in accrued interest and taxes						Changes in working capital, excluding change in accrued interest and taxes	132		14
Other, net	Other, net	37		28		Other, net	(204)		(389)
		$	734	$	1,446		$	(554)	$	(626)

Free cash flow was reduced by $208 million and $768 million during the three and nine months ended September 30, 2022, respectively, and $145 million and $606 million during the three and nine months ended September 30, 2021, respectively, due to mobile impacts negatively affecting working capital, capital expenditures and ~~$265~~Adjusted EBITDA. The increase in capital expenditures is primarily due to the rural construction initiative of $525 million and ~~$758 million~~$1.1 billion during the three and nine months ended September 30, ~~2020, respectively, due~~2022, respectively. Other, net for the three and nine months ended September 30, 2022 includes the payment of litigation settlements including the payment of a previously recorded litigation settlement with Sprint Communications Company L.P. and T-Mobile USA, Inc for the nine months ended September 30, 2022. See Note 9 to ~~mobile with impacts negatively affecting working capital, capital expenditures and Adjusted EBITDA.~~

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

Financial Information about Guarantors, Issuers of Guaranteed Securities, Affiliates Whose Securities Collateralize a Registrant’s Securities and Consolidated Subsidiaries

Each of CCO Holdings, Charter Operating, Time Warner Cable, LLC and Time Warner Cable Enterprises LLC (collectively, the “Issuers”) and substantially all of Charter Operating’s direct and indirect subsidiaries (the “Obligor Subsidiaries” and together with the Issuers, collectively, the “Obligor Group” and each an “Obligor”) jointly, severally, fully and unconditionally guarantee the outstanding debt securities of the respective Issuers (other than the CCO Holdings unsecured notes) and Charter Operating’s credit facilities on a senior basis (collectively, the “Guaranteed and Secured Debt”). Such guarantees are pari passu in right of payment with all senior indebtedness of the guarantors and senior in right of payment to subordinated obligations of the guarantors. Each guarantee will be limited to the maximum amount that can be guaranteed by the relevant guarantor without rendering the relevant guarantee, as it relates to that guarantor, voidable or otherwise ineffective or limited under applicable law, and enforcement of each guarantee would be subject to certain generally available defenses. The Guaranteed and Secured Debt is structurally subordinated to the creditors (including trade creditors) and preference shareholders (if any) of Charter Operating’s non-guarantor subsidiaries.

The Guaranteed and Secured Debt and the subsidiary guarantees thereof are also secured by (i) a lien on substantially all of the assets of Charter Operating and the Obligor Subsidiaries, to the extent such lien can be perfected under the Uniform Commercial Code by the filing of a financing statement, and (ii) a pledge of substantially all of the equity interests of subsidiaries owned by Charter Operating or the Obligor Subsidiaries (the “Pledged Equity Interests”), as well as intercompany obligations owing to it by any of such entities ((i) and (ii) collectively, the “Collateral”). In addition, payments of a mortgage note, currently outstanding for approximately ~~$322~~$311 million, incurred by a single-asset special purpose entity to finance construction of the first building of the new Charter headquarters in Stamford, Connecticut are guaranteed by the Obligor Group and rank equally with the liens on the Collateral securing the Guaranteed and Secured Debt. No assets of any of Charter Operating’s non-guarantor subsidiaries (including any capital stock owned by any such subsidiary) will constitute Collateral. The subsidiary guarantees are effectively senior to all unsecured debt or debt secured by a junior liens of the subsidiary guarantors, in each case to the extent of the value of the collateral securing the guarantee obligations of the subsidiary guarantors. Upon the occurrence and during the continuance of an event of default under the Guaranteed and Secured Debt,

subject to the terms of an intercreditor agreement, the security documents governing the Guaranteed and Secured Debt provide for (among other available remedies) the foreclosure upon and sale of the Collateral by the collateral agent(s) of the respective Guaranteed and Secured Debt and the distribution of the net proceeds of any such sale to the holders and/or the lenders of the Guaranteed and Secured Debt on a pro rata basis, subject to any prior liens on the Collateral. We believe there is no separate trading market for the Pledged Equity Interests.

Certain Charter Operating subsidiaries that are regulated entities are only designated as guarantor subsidiaries, and certain related assets (including the capital stock of such regulated entities) are only required to be pledged as Collateral, upon approval by regulators. The guaranteed obligations and collateral of an Obligor Subsidiary (including Pledged Equity Interests) may be released under certain circumstances permitted under the documentation governing the Guaranteed and Secured Debt, including if an Obligor Subsidiary no longer qualifies as a “Subsidiary” of Charter Operating under transactions not prohibited by the Charter Operating credit agreement.

See Note 9 to the consolidated financial statements contained in our ~~2020~~2021 Annual Report on Form 10-K for further details about the terms, conditions and other factors that may affect payments to holders and the collateral arrangements of the Guaranteed and Secured Debt.

Because the assets, liabilities and results of operations of the combined Obligor Group are not materially different than corresponding amounts presented in the consolidated financial statements of CCO Holdings, summarized financial information of the Obligor Group have been omitted pursuant to SEC Regulation S-X Rule 13-01, Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered and S-X Rule 13-02, Affiliates Whose Securities Collateralize Securities Registered Or Being Registered. The information below is being presented to comply with the terms of the Charter Operating credit agreement. This information is not intended to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance with generally accepted accounting principles.

CCO Holdings Charter Operating and Consolidated Subsidiaries CCO Holdings Charter Operating and Consolidated Subsidiaries
September 30, 2021 December 31, 2020
Balance Sheet Data:
Current assets $ — $ 3,139 $ 100 $ 3,438
Receivables from related party $ 36 $ — $ 43 $ —
Noncurrent assets $ — $ 137,575 $ — $ 139,083
Loans receivables to related party $ 579 $ — $ 567 $ —
Current liabilities $ 285 $ 11,248 $ 347 $ 8,904
Payable to related party $ — $ 55 $ — $ 139
Noncurrent liabilities $ 23,880 $ 64,837 $ 24,180 $ 60,885
Loans payable to related party $ — $ 1,618 $ — $ 1,568
Noncontrolling interests $ — $ 23 $ — $ 23
CCO Holdings Charter Operating and Consolidated Subsidiaries CCO Holdings Charter Operating and Consolidated Subsidiaries
Nine Months Ended September 30,
2021 2020
Statement of Operations Data:
Revenue $ — $ 38,464 $ — $ 35,467
Income from operations $ — $ 7,510 $ — $ 5,872
Net income $ 4,237 $ 5,268 $ 2,538 $ 3,544
Statement of Cash Flows Data:
Net cash flows from operating activities $ (943) $ 12,870 $ (873) $ 11,189
Net cash flows from investing activities $ 17,487 $ (5,528) $ 6,701 $ (5,455)
Net cash flows from financing activities $ (16,644) $ (7,748) $ (6,328) $ (7,468)

Limitations on Distributions

Distributions by us and our subsidiaries to a parent company for payment of principal on parent company notes are restricted under CCO Holdings indentures ~~and Charter Operating credit facilities~~ governing ~~our~~CCO Holdings' indebtedness, unless there is no default under the applicable indenture, and ~~credit facilities, and~~ unless ~~each applicable entity’s~~CCO Holdings' leverage ratio test is met at the time of such distribution. As of September 30, ~~2021,~~2022, there was no default under any of these indentures, ~~or credit facilities,~~ and ~~each applicable entity~~CCO Holdings met its ~~applicable~~ leverage ratio ~~tests~~test based on September 30, ~~2021~~2022 financial results. There can be no assurance that ~~they~~CCO Holdings will satisfy ~~these tests~~its leverage ratio test at the time of the contemplated distribution. ~~Distributions by Charter Operating for payment of principal on parent company (CCO Holdings) 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 and Cash Equivalents. We held ~~$204~~$241 million and ~~$710~~$321 million in cash and cash equivalents as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

Operating Activities. Net cash provided by operating activities ~~increased $1.6 billion~~decreased $41 million during the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020,~~2021, primarily due to changes in working capital, the payment of litigation settlements and higher cash paid for interest, offset by an increase in Adjusted EBITDA of ~~$1.7 billion.~~$873 million.

Investing Activities. Net cash used in investing activities was $6.4 billion and $5.5 billion for ~~both~~ the nine months ended September 30, 2022 and 2021, ~~and 2020,~~ respectively. The increase in cash used was primarily due to an increase in capital expenditures, offset by changes in accrued expenses related to capital expenditures that increased by $335 million.

Financing Activities. Net cash used in financing activities decreased ~~$190 million~~$1.3 billion during the nine months ended September 30, ~~2021~~2022 compared to the nine months ended September 30, ~~2020~~2021 primarily due to a decrease in distributions to parent companies and an increase in the amount by which borrowings of long-term debt exceeded ~~repayments offset by distributions to parent companies.~~repayments.

Capital Expenditures

We have significant ongoing capital expenditure requirements. Capital expenditures were $2.4 billion and $6.5 billion for the three and nine months ended September 30, 2022, respectively, and $1.9 billion and $5.5 billion for the three and nine months ended September 30, 2021, ~~respectively, and $2.0 billion and $5.4 billion for the three and nine months ended September 30, 2020,~~ respectively. The increase ~~during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020~~ was primarily due to an increase in ~~scalable infrastructure driven~~line extensions and customer premise

equipment, partly offset by ~~augmentation of network capacity for customer growth and usage, with incremental spending~~a decrease in support capital. The increase in line extensions was primarily due to ~~reclaim network headroom maintained prior to COVID-19.~~the rural construction initiative. See the table below for more details.

We currently expect ~~2021~~full year 2022 cable capital expenditures, excluding capital expenditures associated with our rural construction initiative, to be ~~relatively consistent as a percentage of cable revenue versus 2020.~~between $7.1 billion and $7.3 billion. The actual amount of our capital expenditures in ~~2021~~2022 will depend on a number of factors including further spend related to product development, ~~and~~ growth rates of both our residential and commercial ~~businesses.~~businesses, supply chain timing and the pace of rural construction.

Our capital expenditures are funded primarily from cash flows from operating activities and borrowings on our credit facility. In addition, our accrued liabilities related to capital expenditures increased by $284 million and decreased by $51 ~~million and $70~~ million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

The following tables present our major capital expenditures categories in accordance with National Cable and Telecommunications Association (“NCTA”) disclosure guidelines for the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Customer premise equipment (a)	Customer premise equipment (a)	$	513	$	520	$	1,496	$	1,501	Customer premise equipment (a)	$	577	$	513	$	1,606	$	1,496
Scalable infrastructure (b)	Scalable infrastructure (b)	375		424		1,223		979		Scalable infrastructure (b)	418		375		1,178		1,223
Line extensions (c)	Line extensions (c)	392		439		1,191		1,204		Line extensions (c)	826		392		2,062		1,191
Upgrade/rebuild (d)	Upgrade/rebuild (d)	178		175		484		459		Upgrade/rebuild (d)	208		178		535		484
Support capital (e)	Support capital (e)	403		456		1,142		1,209		Support capital (e)	377		403		1,075		1,142
Total capital expenditures	Total capital expenditures	$	1,861	$	2,014	$	5,536	$	5,352	Total capital expenditures	$	2,406	$	1,861	$	6,456	$	5,536

Of which: Commercial services										Of which: Commercial services	$	369	$	353	$	1,110	$	1,083

Capital expenditures included in total related to:	Capital expenditures included in total related to:									Capital expenditures included in total related to:
Commercial services		$	353	$	358	$	1,083	$	942
Core cable (f)										Core cable (f)	$	1,785	$	1,742	$	5,077	$	5,181
Mobile	Mobile	$	119	$	139	$	355	$	351	Mobile	96		119		265		355
Rural construction initiative (g)										Rural construction initiative (g)	525		—		1,114		—
Total capital expenditures										Total capital expenditures	$	2,406	$	1,861	$	6,456	$	5,536

(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., digital receivers 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).

(f)Core cable represents total capital expenditures excluding mobile and rural construction initiative capital expenditures.

(g)The rural construction initiative subcategory includes expenditures associated with our Rural Construction Initiative (for which separate reporting was initiated in 2022), excluding customer premise equipment and installation.

Recently Issued Accounting Standards

~~For a discussion of our recently issued accounting policies, see~~See Note 2122 to the ~~consolidated financial statements contained in our 2020~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021 for a discussion of recently issued accounting standards. There have been no material changes from the recently issued accounting ~~policies~~standards described in our Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~We use derivative instruments~~There have been no material changes to ~~manage foreign exchange~~the interest rate 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 areas previously disclosed 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. In March 2021, the collateral holiday for 20% of the swaps was extended to November 2022 in consideration for our agreement to post collateral over a threshold amount on that 20% portion of the swaps from March 2021 through October 2021. The fair valuePart II, Item 7A of our ~~cross-currency derivatives included in other long-term liabilities~~Annual Report on ~~our consolidated balance sheets was $317 million and $184 million as of September 30, 2021 and~~Form 10-K for the year ended December 31, ~~2020, respectively. For more information, see~~2021. See Note 84 to the accompanying consolidated financial statements contained in “Item 1. Financial ~~Statements.”~~

AsStatements” for a discussion of notes issued during the three and nine months ended September 30, 2021 and December 31, 2020, the weighted average interest rate on credit facility debt was approximately 1.6% and 1.7%, respectively, and the weighted average interest rate on the senior notes was approximately 5.0% and 5.1%, respectively, resulting in a blended weighted average interest rate of 4.5% and 4.7%, respectively. The interest rate on approximately 86% and 87% of the total principal amount of our debt was effectively fixed as of September 30, 2021 and December 31, 2020, respectively.

~~The table set forth below summarizes the fair values and contract terms of financial instruments subject to interest rate risk maintained by us as of September 30, 2021 (dollars in millions).~~

2021 2022 2023 2024 2025 Thereafter Total Fair Value
Debt:
Fixed-Rate $ — $ 3,000 $ 1,500 $ 1,100 $ 4,500 $ 65,468 $ 75,568 $ 84,954
Average Interest Rate — % 4.46 % 6.92 % 4.50 % 4.91 % 4.99 % 5.00 %
Variable Rate $ 69 $ 277 $ 436 $ 1,165 $ 6,858 $ 3,575 $ 12,380 $ 12,354
Average Interest Rate 1.57 % 1.62 % 2.19 % 2.80 % 2.93 % 3.55 % 3.03 %

Interest rates on variable-rate debt are estimated using the average implied forward LIBOR for the year of maturity based on the yield curve in effect at September 30, 2021 including applicable bank spread.2022.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our design and operation of disclosure controls and procedures with respect to the information generated for use in this quarterly report. The

evaluation was based upon reports and certifications provided by a number of executives. Based on, and as of the date of that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective to provide reasonable assurances that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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

During the quarter ended September 30, ~~2021,~~2022, 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.

3626

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 1812 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements” for Legal Proceedings.

Item 1A. Risk Factors.

Our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 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.

Item 5.Other Information.

On October 27, 2022, Charter and David G. Ellen, Senior Executive Vice President of Charter, entered into an amended employment agreement (the “Amendment”) to amend the Amended and Restated Employment Agreement by and between Mr. Ellen and Charter, dated as of July 1, 2021 (the “Employment Agreement” and together with the Amendment, the “Amended Agreement”). Pursuant to the Amended Agreement, Mr. Ellen has agreed to remain employed by Charter through November 30, 2023 as Senior Executive Vice President. Mr. Ellen and Charter may mutually agree to terminate the Amended Agreement before such date in addition to the other termination events provided for in the Amended Agreement. Mr. Ellen’s compensation will remain the same as provided for under the Employment Agreement. Pursuant to the Amendment, Mr. Ellen will be entitled to certain additional compensation upon the expiration of the extended term or upon termination earlier upon mutual agreement between Mr. Ellen and Charter.

The foregoing description of the Amended Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment that is incorporated by reference herein as Exhibit 10.6 and the previously filed Employment Agreement that is incorporated by reference herein as Exhibit 10.5.

Item 6. Exhibits.

See Exhibit Index.

3727

SIGNATURES

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


	CCO HOLDINGS, LLC
	Registrant

	By:	/s/ Kevin D. Howard
		Kevin D. Howard
Date: October ~~29, 2021~~28, 2022		Executive Vice President, Chief Accounting Officer and Controller

	CCO HOLDINGS CAPITAL CORP.
	Registrant

	By:	/s/ Kevin D. Howard
		Kevin D. Howard
Date: October ~~29, 2021~~28, 2022		Executive Vice President, Chief Accounting Officer and Controller

S-1

Exhibit Index


Exhibit						Description

~~10.1~~4.1						~~Seventh~~Indenture, dated as of May 23, 2019, 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 4.1 to the Current Report on Form 8-K filed by Charter Communications, Inc. on May 30, 2019).
4.2						Ninth Supplemental Indenture, dated as of August ~~16, 2021,~~9, 2022, 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 August ~~18, 2021)~~15, 2022).
~~10.2~~4.3						Form of ~~4.250%~~6.375% Senior Notes due ~~2034~~2029 (included in Exhibit ~~10.1)~~4.2 hereto).
~~10.3~~10.1						Exchange and Registration Rights Agreement, dated August ~~16, 2021,~~9, 2022, relating to the ~~4.250%~~6.375% Senior Notes due ~~2034,~~2029, 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 August ~~18, 2021)~~15, 2022).
~~10.4~~10.2						Amended and Restated Employment Agreement, dated as of September 20, 2022, by and between Charter Communications, Inc. and ~~Chris Winfrey, dated October 19, 2021~~Thomas M. Rutledge (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Charter Communications, Inc. on ~~October 19, 2021)~~September 21, 2022).
~~10.5~~10.3						Amended and Restated Employment Agreement, dated as of September 20, 2022, by and between Charter Communications, Inc. and ~~Jessica Fischer, dated as of February 5, 2021~~Christopher L. Winfrey (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Charter Communications, Inc. on September 21, 2022).
10.4						Employment Agreement, dated as of September 20, 2022, by and between Charter Communications, Inc. and Richard J. DiGeronimo (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by Charter Communications, Inc. on September 21, 2022).
10.5						Employment Agreement, dated July 27, 2021, between Charter Communications, Inc. and David G. Ellen (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q of Charter Communications, Inc. filed on July 30, 2021 (File No. 001-33664)).
10.6						Amendment to Employment Agreement, dated as of October ~~19, 2021)~~27, 2022, by and between Charter Communications, Inc. and David G. Ellen (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q filed by Charter Communications, Inc. on October 28, 2022).
22.1						Issuers and Guarantors of Guaranteed Securities and Affiliate Securities Pledged as Collateral.
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~~LLC Quarterly Report on Form 10-Q for the three and nine months ended September 30, ~~2021,~~2022, filed with the Securities and Exchange Commission on October ~~29, 2021,~~28, 2022, 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


	September 30, 2021						December 31, 2020
	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
Wireless spectrum licenses	464		—		464		464		—		464
	$	97,340	$	—	$	97,340	$	97,340	$	—	$	97,340

Finite-lived intangible assets:
Customer relationships	$	18,232	$	(13,813)	$	4,419	$	18,230	$	(12,615)	$	5,615
Other intangible assets	420		(187)		233		420		(159)		261
	$	18,652	$	(14,000)	$	4,652	$	18,650	$	(12,774)	$	5,876


Three months ended December 31, 2021	$	375
2022	1,332
2023	1,075
2024	824
2025	576
Thereafter	470
	$	4,652


	September 30, 2021			December 31, 2020
Operating lease right-of-use assets:
Included within other noncurrent assets	$	1,151		$	1,065

Operating lease liabilities:
Current portion included within accounts payable and accrued liabilities	$	229		$	202
Long-term portion included within other long-term liabilities	1,014			941
	$	1,243		$	1,143

Weighted average remaining lease term for operating leases	5.9 years			6.4 years
Weighted average discount rate for operating leases	3.5		%	3.9		%


6.384% senior notes due October 23, 2035	2,000		1,984		2,000		1,983
5.375% senior notes due April 1, 2038	800		787		800		786
3.500% senior notes due June 1, 2041	1,500		1,483		—		—
6.484% senior notes due October 23, 2045	3,500		3,468		3,500		3,468
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		2,392		2,450		2,392
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		2,797
3.700% senior notes due April 1, 2051	2,050		2,031		2,050		2,030
3.900% senior notes due June 1, 2052	2,400		2,321		—		—
6.834% senior notes due October 23, 2055	500		495		500		495
3.850% senior notes due April 1, 2061	1,850		1,809		1,350		1,339
4.400% senior notes due December 1, 2061	1,400		1,389		—		—
Credit facilities	11,480		11,422		10,150		10,081
Time Warner Cable, LLC:
4.000% senior notes due September 1, 2021	—		—		1,000		1,008
5.750% sterling senior notes due June 2, 2031 (a)	842		894		854		911
6.550% senior debentures due May 1, 2037	1,500		1,664		1,500		1,668
7.300% senior debentures due July 1, 2038	1,500		1,757		1,500		1,763
6.750% senior debentures due June 15, 2039	1,500		1,701		1,500		1,706
5.875% senior debentures due November 15, 2040	1,200		1,252		1,200		1,254
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)	876		847		889		859
4.500% senior debentures due September 15, 2042	1,250		1,147		1,250		1,145
Time Warner Cable Enterprises LLC:
8.375% senior debentures due March 15, 2023	1,000		1,069		1,000		1,104
8.375% senior debentures due July 15, 2033	1,000		1,258		1,000		1,270
Total debt	87,948		88,372		82,143		82,752
Less current portion:
4.000% senior notes due September 1, 2021	—		—		(1,000)		(1,008)
4.464% senior notes due July 23, 2022	(3,000)		(2,996)		—		—
Long-term debt	$	84,948	$	85,376	$	81,143	$	81,744


	Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)
Customer credits estimated in 2020 due to COVID-19	$	218	$	262
Increase related to rate, product mix and bundle allocation changes	156		136
Decrease in average residential video customers	(92)		(137)
Decrease in video on demand and pay-per-view	(1)		(38)
Decrease in installation	—		(13)
	$	281	$	210


	Three months ended September 30, 2021 compared to three months ended September 30, 2020 Increase / (Decrease)		Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 Increase / (Decrease)
Decrease related to rate and bundle allocation changes	$	(17)	$	(107)
Decrease in average residential voice customers	(23)		(48)
	$	(40)	$	(155)


	CCO Holdings		Charter Operating and Consolidated Subsidiaries		CCO Holdings		Charter Operating and Consolidated Subsidiaries
	September 30, 2021				December 31, 2020
Balance Sheet Data:
Current assets	$	—	$	3,139	$	100	$	3,438
Receivables from related party	$	36	$	—	$	43	$	—
Noncurrent assets	$	—	$	137,575	$	—	$	139,083
Loans receivables to related party	$	579	$	—	$	567	$	—
Current liabilities	$	285	$	11,248	$	347	$	8,904
Payable to related party	$	—	$	55	$	—	$	139
Noncurrent liabilities	$	23,880	$	64,837	$	24,180	$	60,885
Loans payable to related party	$	—	$	1,618	$	—	$	1,568
Noncontrolling interests	$	—	$	23	$	—	$	23

	CCO Holdings		Charter Operating and Consolidated Subsidiaries		CCO Holdings		Charter Operating and Consolidated Subsidiaries
	Nine Months Ended September 30,
	2021				2020
Statement of Operations Data:
Revenue	$	—	$	38,464	$	—	$	35,467
Income from operations	$	—	$	7,510	$	—	$	5,872
Net income	$	4,237	$	5,268	$	2,538	$	3,544

Statement of Cash Flows Data:
Net cash flows from operating activities	$	(943)	$	12,870	$	(873)	$	11,189
Net cash flows from investing activities	$	17,487	$	(5,528)	$	6,701	$	(5,455)
Net cash flows from financing activities	$	(16,644)	$	(7,748)	$	(6,328)	$	(7,468)