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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Charter Communications, Inc.    CHTR

CHARTER COMMUNICATIONS, INC.

(CHTR)
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CHARTER COMMUNICATIONS : MO/ Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K)

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01/31/2020 | 07:11am EDT
Reference is made to "Part I. Item 1A. Risk Factors" and "Cautionary Statement
Regarding Forward-Looking Statements," which describe important factors that
could cause actual results to differ from expectations and non-historical
information contained herein. In addition, the following discussion should be
read in conjunction with the audited consolidated financial statements and
accompanying notes thereto of Charter included in "Part II. Item 8. Financial
Statements and Supplementary Data."

Overview


We are the second largest cable operator in the United States and a leading
broadband communications services company providing video, Internet and voice
services to approximately 29.2 million residential and small and medium business
customers at December 31, 2019. We also offer mobile service to residential
customers and recently launched mobile service to small and medium business
customers. In addition, we sell video and online advertising inventory to local,
regional and national advertising customers and tailored communications and
managed solutions to larger enterprise customers. We also own and operate
regional sports networks and local sports, news and community channels. See
"Part I. Item 1. Business - Products and Services" for further description of
these services, including customer statistics for different services.

In 2019, with the integration of TWC and Bright House substantially behind us, we are realizing the benefits of operating as one company, with a unified product, marketing and service infrastructure. We remain focused on driving customer relationship growth

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by deploying superior products and services packaged with attractive pricing. We
expect our insourced, high quality workforce will continue to drive an improved
customer experience which will result in lower customer churn, longer customer
lifetimes and, combined with our continued ramping of our self-installation
program, improved productivity with fewer customer calls and truck rolls per
customer relationship. With approximately 85% of our residential customer base
now in SPP packages, we expect additional benefits from lower legacy package
migration activity, combined with SPP customers rolling off introductory pricing
and price increases. 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. With the completion of our all-digital conversion, roll-out of
DOCSIS 3.1 technology across our footprint, and the integration of TWC and
Bright House substantially complete, we have experienced a meaningful reduction
in cable capital expenditures as a percent of revenue in 2019 and expect
continued lower cable capital intensity in 2020.

We launched our mobile product, Spectrum Mobile, in the second half of 2018
under our MVNO reseller agreement with Verizon. Our Spectrum Mobile service is
offered to customers subscribing to our Internet service and runs on Verizon's
mobile network combined with Spectrum WiFi. In the second quarter of 2019, we
expanded our Spectrum Mobile bring-your-own-device program across all sales
channels to include a broader set of devices which we believe lowers the cost
for consumers of switching mobile carriers, and reduces the short-term working
capital impact of selling new mobile devices on installment plans. We expect
these developments, along with the launch of 5G service offerings in 2020, to
contribute to the growth of our mobile business. We also continue to explore
ways to drive even more mobile traffic to our network. We plan to use our WiFi
network in conjunction with additional unlicensed, and potentially licensed,
spectrum to improve network performance and expand capacity to offer consumers a
superior mobile service at a lower total cost to us.  Further, we have
experimental wireless licenses from the FCC that we are utilizing to test next
generation mobile services in several service areas around the country.

We believe Spectrum-branded mobile services will drive higher sales of our core
products, create longer customer lives and increase profitability and cash flow
over time. As a result of growth costs associated with our new mobile product
line, we cannot be certain that we will be able to grow revenues or maintain our
margins at recent historical rates. During the years ended December 31, 2019 and
2018, our mobile product line increased revenues by $726 million and $106
million, respectively, reduced Adjusted EBITDA by approximately $520 million and
$240 million, respectively, and reduced free cash flow by approximately $1.2
billion and $594 million, respectively. As we continue to grow our mobile
service and scale the business, we expect continued negative impacts to Adjusted
EBITDA, as well as negative working capital impacts from the timing of
device-related cash flows when we sell the handset or tablet to customers
pursuant to equipment installment plans.

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

                                    Years ended December 31,
                            2019          2018      2019 vs. 2018 Growth
Revenues               $   45,764$ 43,634                 4.9 %
Adjusted EBITDA        $   16,855$ 16,059                 5.0 %
Income from operations $    6,511$  5,221                24.7 %



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


Growth in total revenue was primarily due to growth in our residential Internet,
mobile and commercial business customers. Adjusted EBITDA and income from
operations growth was impacted by growth in revenue and increases in operating
costs and expenses, primarily mobile, programming and regulatory, connectivity
and produced content. Income from operations was also affected by a decrease in
depreciation and amortization expense.

Approximately 91% of our revenues for each of the years ended December 31, 2019
and 2018 are attributable to monthly subscription fees charged to customers for
our video, Internet, voice, mobile and commercial services. Generally, these
customer subscriptions may be discontinued by the customer at any time subject
to a fee for certain commercial customers. The remaining 9% of revenue is
derived primarily from advertising revenues, franchise and other regulatory fee
revenues (which are collected


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by us but then paid to local authorities), VOD and pay-per-view programming,
installation, processing fees or reconnection fees charged to customers to
commence or reinstate service, revenue from regional sports and news channels
and commissions related to the sale of merchandise by home shopping services.

Critical Accounting Policies and Estimates


Certain of our accounting policies require our management to make difficult,
subjective and/or complex judgments. Management has discussed these policies
with the Audit Committee of Charter's board of directors, and the Audit
Committee has reviewed the following disclosure. We consider the following
policies to be the most critical in understanding the estimates, assumptions and
judgments that are involved in preparing our financial statements, and the
uncertainties that could affect our results of operations, financial condition
and cash flows:

• Capitalization of labor and overhead costs

• Valuation and impairment of franchises and goodwill

• Income taxes

• Defined benefit pension plans

Capitalization of labor and overhead costs


Costs associated with network construction or upgrades, placement of the
customer drop to the dwelling and the placement of outlets within a dwelling
along with the costs associated with the deployment of new customer premise
equipment necessary to provide video, Internet or voice services, are
capitalized.  Costs capitalized include materials, direct labor and certain
indirect costs.  These indirect costs are associated with the activities of
personnel who assist in installation activities, and consist of compensation and
overhead costs associated with these support functions.  While our
capitalization is based on specific activities, once capitalized, we track these
costs on a composite basis by fixed asset category at the cable system level,
and not on a specific asset basis.  For assets that are sold or retired, we
remove the estimated applicable cost and accumulated depreciation.  The costs of
disconnecting service and removing customer premise equipment from a dwelling
and the costs to reconnect a customer drop or to redeploy previously installed
customer premise equipment are charged to operating expense as incurred. Costs
for repairs and maintenance are charged to operating expense as incurred, while
plant and equipment replacement, including replacement of certain components,
betterments, and replacement of cable drops and outlets, are capitalized.

We make judgments regarding the installation and construction activities to be
capitalized. We capitalized direct labor and overhead of $1.6 billion and $1.8
billion, respectively, for the years ended December 31, 2019 and 2018. We
capitalize direct labor and overhead using standards developed from actual costs
and applicable operational data. We calculate standards annually (or more
frequently if circumstances dictate) for items such as the labor rates, overhead
rates, and the actual amount of time required to perform a capitalizable
activity. For example, the standard amounts of time required to perform
capitalizable activities are based on studies of the time required to perform
such activities. Overhead rates are established based on an analysis of the
nature of costs incurred in support of capitalizable activities, and a
determination of the portion of costs that is directly attributable to
capitalizable activities. The impact of changes that resulted from these studies
were not material in the periods presented.

Labor costs directly associated with capital projects are capitalized. Capitalizable activities performed in connection with installations include such activities as:

• dispatching a "truck roll" to the customer's dwelling or business for service

connection or placement of new equipment;

• verification of serviceability to the customer's dwelling or business (i.e.,

determining whether the customer's dwelling is capable of receiving service

by our cable network);

• customer premise activities performed by in-house field technicians and

third-party contractors in connection with the installation, replacement and

betterment of equipment and materials to enable video, Internet or voice

services; and

• verifying the integrity of the customer's network connection by initiating

test signals downstream from the headend to the customer premise equipment,

as well as testing signal levels at the utility pole or pedestal.




Judgment is required to determine the extent to which overhead costs incurred
result from specific capital activities, and therefore should be capitalized.
The primary costs that are included in the determination of the overhead rate
are (i) employee benefits and payroll taxes associated with capitalized direct
labor, (ii) direct variable costs associated with capitalizable activities,
(iii) the cost of support personnel, such as care personnel and dispatchers, who
assist with capitalizable installation activities, and (iv) indirect costs
directly attributable to capitalizable activities.

While we believe our existing capitalization policies are appropriate, a significant change in the nature or extent of our operating practices could affect management's judgment about the extent to which we should capitalize direct labor or overhead in the future.

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We monitor the appropriateness of our capitalization policies, and perform updates to our internal studies on an ongoing basis to determine whether facts or circumstances warrant a change to our capitalization policies.

Valuation and impairment of franchises


The net carrying value of franchises as of both December 31, 2019 and 2018 was
approximately $67.3 billion (representing 45% and 46% of total assets,
respectively). For more information and a complete discussion of how we value
and test franchise assets for impairment, see Note 5 to the accompanying
consolidated financial statements contained in "Part II. Item 8. Financial
Statements and Supplementary Data."

We perform an impairment assessment of franchise assets annually or more
frequently as warranted by events or changes in circumstances. We performed a
qualitative assessment in 2019. Our assessment included consideration of a fair
value appraisal performed for tax purposes in the beginning of 2019 as of a
December 31, 2018 valuation date (the "Appraisal") along with a multitude of
factors that affect the fair value of our franchise assets. Examples of such
factors include environmental and competitive changes within our operating
footprint, actual and projected operating performance, the consistency of our
operating margins, equity and debt market trends, including changes in our
market capitalization, and changes in our regulatory and political landscape,
among other factors. Based on our assessment, we concluded that it was more
likely than not that the estimated fair values of our franchise assets equals or
exceeds their carrying values and that a quantitative impairment test is not
required.

Valuation and impairment of goodwill


The net carrying value of goodwill as of both December 31, 2019 and 2018 was
approximately $29.6 billion (representing 20% of total assets). We have
determined that we have one reporting unit for purposes of the assessment of
goodwill impairment. For more information and a complete discussion on how we
test goodwill for impairment, see Note 5 to the accompanying consolidated
financial statements contained in "Part II. Item 8. Financial Statements and
Supplementary Data." We perform our impairment assessment of goodwill annually
as of November 30. As with our franchise impairment testing, we elected to
perform a qualitative assessment of goodwill in 2019 which included the
Appraisal and other factors described above. Based on the Appraisal, we
determined that the fair value of the reporting unit significantly exceeded the
net asset carrying value of the reporting unit. Given the completion of the
assessment and absence of significant adverse changes in factors impacting our
fair value estimates, we concluded that it is more likely than not that our
goodwill is not impaired.

Income taxes


As of December 31, 2019, Charter had approximately $7.5 billion of federal tax
net operating loss carryforwards resulting in a gross deferred tax asset of
approximately $1.6 billion. These losses resulted from the operations of Charter
Holdco and its subsidiaries and from loss carryforwards received as a result of
the merger with TWC in 2016. Federal tax net operating loss carryforwards expire
in the years 2020 through 2035. In addition, as of December 31, 2019, Charter
had state tax net operating loss carryforwards, resulting in a gross deferred
tax asset (net of federal tax benefit) of approximately $257 million. State tax
net operating loss carryforwards generally expire in the years 2020 through
2039. Such tax loss carryforwards can accumulate and be used to offset Charter's
future taxable income. After December 31, 2019, $905 million of Charter's
federal tax loss carryforwards are subject to Section 382 and other
restrictions. Pursuant to these restrictions, Charter estimates that
approximately $226 million annually over each of the next four years of federal
tax loss carryforwards, should become unrestricted and available for Charter's
use. Charter's state tax loss carryforwards are subject to similar but varying
restrictions.

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will be realized. In evaluating the need for a valuation allowance,
management takes into account various factors, including the expected level of
future taxable income, available tax planning strategies and reversals of
existing taxable temporary differences. Approximately $9 million of valuation
allowance associated with federal capital loss carryforwards and approximately
$37 million of valuation allowance associated with state tax loss carryforwards
and other miscellaneous deferred tax assets remains on the December 31, 2019
consolidated balance sheet.

In determining our tax provision for financial reporting purposes, we establish
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. In evaluating whether a tax position has met the
more-likely-than-not recognition threshold, we presume the position will be
examined by the appropriate taxing authority that has full knowledge of all
relevant information. A tax position that meets the more-likely-than-not
recognition threshold is measured to determine the amount of benefit to be
recognized in our financial statements. The tax position is measured as the
largest amount of benefit that has a greater than 50% likelihood of being
realized when the position is ultimately resolved. There is considerable
judgment involved in determining whether positions taken on the tax return are
"more


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likely than not" of being sustained. We adjust our uncertain tax reserve
estimates periodically because of ongoing examinations by, and settlements with,
the various taxing authorities, as well as changes in tax laws, regulations and
interpretations.

No tax years for Charter are currently under examination by the IRS for income
tax purposes. Charter's 2016 through 2019 tax years remain open for examination
and assessment. Charter's short period return dated May 17, 2016 (prior to the
merger with TWC and acquisition of Bright House) remain subject to examination
and assessment. Years prior to 2016 remain open solely for purposes of
examination of Charter's loss and credit carryforwards. The IRS is currently
examining Charter Holdings' income tax return for 2016. Charter Holdings' 2017
through 2019 tax years remain open for examination and assessment. The IRS is
currently examining TWC's income tax returns for 2011 through 2014. TWC's tax
year 2015 remains subject to examination and assessment. Prior to TWC's
separation from Time Warner Inc. ("Time Warner") in March 2009, TWC was included
in the consolidated U.S. federal and certain state income tax returns of Time
Warner. The IRS has examined Time Warner's 2008 through 2010 income tax returns
and the results are under appeal. We do not anticipate that these examinations
will have a material impact on our consolidated financial position or results of
operations. In addition, we are also subject to ongoing examinations of our 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 our
consolidated financial position or results of operations during the year ended
December 31, 2019, nor do we anticipate a material impact in the future.

Defined benefit pension plans


We sponsor three qualified defined benefit pension plans and one nonqualified
defined benefit pension plan that provide pension benefits to a majority of
employees who were employed by TWC before the merger with TWC. As of
December 31, 2019, the accumulated benefit obligation and fair value of plan
assets was $3.4 billion and $3.2 billion, respectively, and the net underfunded
liability was recorded as a $1 million noncurrent asset, $4 million current
liability and $160 million long-term liability. As of December 31, 2018, the
accumulated benefit obligation and fair value of plan assets was $3.0 billion
and $2.9 billion, respectively, and the net underfunded liability was recorded
as a $1 million noncurrent asset, $4 million current liability and $95 million
long-term liability.

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. We have 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. We use a December 31 measurement date for our pension plans.

We recognized net periodic pension costs of $69 million and net periodic pension
benefits of $192 million in 2019 and 2018, respectively. Net periodic pension
benefit or expense is determined using certain assumptions, including the
expected long-term rate of return on plan assets, discount rate and mortality
assumptions. We determined the discount rate used to compute pension expense
based on the yield of a large population of high-quality corporate bonds with
cash flows sufficient in timing and amount to settle projected future defined
benefit payments. In developing the expected long-term rate of return on assets,
we considered the current pension portfolio's composition, past average rate of
earnings, and our asset allocation targets. We used a discount rate of 3.48% to
determine the December 31, 2019 pension plan benefit obligation. A decrease in
the discount rate of 25 basis points would result in a $157 million increase in
our pension plan benefit obligation as of December 31, 2019 and net periodic
pension expense recognized in 2019 under our mark-to-market accounting policy.
The expected long-term rate of return on plan assets used to determine net
periodic pension benefit for the year ended December 31, 2020 is expected to be
5.00%. A decrease in the expected long-term rate of return of 25 basis points to
4.75%, while holding all other assumptions constant, would result in an increase
in our 2020 net periodic pension expense of approximately $7 million. See Note
22 to the accompanying consolidated financial statements contained in "Part II.
Item 8. Financial Statements and Supplementary Data" for additional discussion
on these assumptions.



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Results of Operations


A discussion of changes in our results of operations during the year ended
December 31, 2018 compared to the year ended December 31, 2017 has been omitted
from this Annual Report on Form 10-K, but may be found in "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
Annual Report on Form 10-K for the year ended December 31, 2018, filed with the
SEC on January 31, 2019, which is available free of charge on the SECs website
at www.sec.gov and on our investor relations website at ir.charter.com.

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

                                                                 Year Ended December 31,
                                                                 2019               2018
Revenues                                                   $      45,764$      43,634

Costs and Expenses: Operating costs and expenses (exclusive of items shown separately below)

                                                 29,224    

27,860

Depreciation and amortization                                      9,926    

10,318

Other operating expenses, net                                        103                 235
                                                                  39,253              38,413
Income from operations                                             6,511               5,221

Other Expenses:
Interest expense, net                                             (3,797 )            (3,540 )
Loss on extinguishment of debt                                       (25 )                 -
Loss on financial instruments, net                                   (54 )              (110 )
Other pension benefits (costs), net                                  (69 )               192
Other expense, net                                                  (135 )               (77 )
                                                                  (4,080 )            (3,535 )

Income before income taxes                                         2,431               1,686
Income tax expense                                                  (439 )              (180 )
Consolidated net income                                            1,992               1,506
Less: Net income attributable to noncontrolling interests           (324 )              (276 )
Net income attributable to Charter shareholders            $       1,668

$ 1,230


EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER
SHAREHOLDERS:
Basic                                                      $        7.60$        5.29
Diluted                                                    $        7.45$        5.22

Weighted average common shares outstanding, basic            219,506,735    

232,356,665

Weighted average common shares outstanding, diluted 223,786,380

235,525,226




Revenues. Total revenues grew $2.1 billion or 4.9% during the year ended
December 31, 2019 as compared to 2018 primarily due to increases in the number
of residential Internet and commercial business customers, price adjustments as
well as the launch of our mobile service in the second half of 2018 offset by a
decrease in video customers.



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

                               Years ended December 31,
                             2019        2018      % Growth
Video                     $  17,607$ 17,348       1.5  %
Internet                     16,667      15,181       9.8  %
Voice                         1,920       2,114      (9.1 )%
Residential revenue          36,194      34,643       4.5  %

Small and medium business     3,868       3,665       5.6  %
Enterprise                    2,556       2,528       1.1  %
Commercial revenue            6,424       6,193       3.7  %

Advertising sales             1,568       1,785     (12.1 )%
Mobile                          726         106        NM
Other                           852         907      (6.2 )%
                          $  45,764$ 43,634       4.9  %


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


                                                  2019 compared to 2018
Increase related to rate changes                $               758
Decrease in average residential video customers                (412 )
Decrease in VOD and pay-per-view                                (87 )
                                                $               259



The increase related to rate changes was primarily due to price adjustments including annual increases and promotional roll-off. Residential video customers decreased by 484,000 in 2019 compared to 2018.

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


                                                    2019 compared to 2018
Increase in average residential Internet customers $                   790
Increase related to rate changes                                       696
                                                   $                 1,486



Residential Internet customers grew by 1,283,000 in 2019 compared to 2018. The increase related to rate changes was primarily due to price adjustments including promotional roll-off.

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


                                                 2019 compared to 2018
Decrease in average residential voice customers $              (102 )
Decrease related to rate changes                                (92 )
                                                $              (194 )





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The decrease related to rate changes was primarily due to value-based pricing.
Residential wireline voice customers decreased by 692,000 in 2019 compared to
2018.

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


                                                  2019 compared to 2018
Increase in small and medium business customers $               317
Decrease related to rate changes                               (114 )
                                                $               203



Small and medium business PSUs increased by 237,000 in 2019 compared to 2018.
The decrease related to rate changes was primarily due to value-based pricing
related to SPP, net of promotional roll-off and price adjustments.

Enterprise revenues increased $28 million during the year ended December 31,
2019 as compared to the corresponding period in 2018 primarily due to growth in
customers offset by the sale of non-strategic assets. Enterprise PSUs increased
by 19,000 in 2019 compared to 2018.

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 $217 million during the year ended December 31, 2019 as compared to
the corresponding period in 2018 primarily due to a decrease in political
revenue.

During the year ended December 31, 2019, mobile revenues included approximately
$488 million of device revenues and approximately $238 million of service
revenues. During the year ended December 31, 2018, mobile revenues included
approximately $97 million of device revenues and approximately $9 million of
service revenues. As of December 31, 2019, we had 1,082,000 mobile lines
compared to 134,000 mobile as of December 31, 2108.

Other revenues consist of revenue from regional sports and news channels
(excluding intercompany charges or advertising sales on those channels), home
shopping, late payment fees, wire maintenance fees and other miscellaneous
revenues. The decrease during the year ended December 31, 2019 as compared to
the corresponding period in 2018 was primarily due to a decrease in late payment
fees and home shopping revenue offset by the sale 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, was attributable to the following (dollars in millions):


                                               2019 compared to 2018
Programming                                   $               166
Regulatory, connectivity and produced content                 156
Costs to service customers                                    (50 )
Marketing                                                       2
Mobile                                                        900
Other                                                         190
                                              $             1,364



Programming costs were approximately $11.3 billion and $11.1 billion,
representing 39% and 40% of operating costs and expenses for the years ended
December 31, 2019 and 2018, respectively. Programming costs consist primarily of
costs paid to programmers for basic, digital, premium, VOD, and pay-per-view
programming. The increase in programming costs is primarily a result of
contractual rate adjustments, including renewals and increases in amounts paid
for retransmission consents partly offset by lower video customers and
pay-per-view.  We expect programming rates will continue to increase due to a
variety of factors, including annual increases imposed by programmers with
additional selling power as a result of media consolidation, increased demands
by owners of broadcast stations for payment for retransmission consent or
linking carriage of other services to retransmission consent, and additional
programming, particularly new services. We have been unable to fully pass these
increases on to our customers and do not expect to be able to do so in the
future without a potential loss of customers.


                                       33
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Regulatory, connectivity and produced content increased $156 million during the
year ended December 31, 2019 compared to the corresponding period in 2018
primarily due to higher costs of video devices sold to customers, regulatory
pass-through fees and original programming costs.

Costs to service customers decreased $50 million during the year ended
December 31, 2019 compared to the corresponding period in 2018 primarily due to
lower maintenance and labor costs driven by fewer customer calls and truck rolls
with improved productivity and a higher number of self-installations.

Mobile costs of $1.2 billion and $346 million for the years ended December 31,
2019 and 2018, respectively, were comprised of mobile device costs and mobile
service and operating costs.

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

                             2019 compared to 2018
Corporate costs            $                80
Property tax and insurance                  54
Stock compensation expense                  30
Sports and news                             26
Advertising sales expense                  (32 )
Other                                       32
                           $               190



Depreciation and amortization. Depreciation and amortization expense decreased
by $392 million during the year ended December 31, 2019 compared to the
corresponding period in 2018 primarily due to certain assets acquired from TWC
and Bright House becoming fully depreciated offset by an increase in
depreciation as a result of more recent capital expenditures.

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


                                2019 compared to 2018
Merger and restructuring costs $               (87 )
Loss on sale of assets, net                    (43 )
Special charges, net                            (2 )
                               $              (132 )


The decrease in merger and restructuring costs is primarily due to lower employee retention and employee termination costs incurred during 2019 as compared to 2018.


The decrease in loss on sale of assets, net for the year ended December 31, 2019
as compared to the year ended December 31, 2018 is primarily due to a $42
million impairment of non-strategic assets incurred during 2019 compared to a
$75 million impairment of non-strategic assets incurred during 2018. For more
information, see Note 15 to the accompanying consolidated financial statements
contained in "Part II. Item 8. Financial Statements and Supplementary Data."

Interest expense, net. Net interest expense increased by $257 million in 2019
from 2018 primarily due to an increase in weighted average debt outstanding of
approximately $3.0 billion primarily as a result of the issuance of notes in
2019 and 2018 for general corporate purposes including stock buybacks and debt
repayments offset by a decrease in weighted average interest rates.

Loss on extinguishment of debt. Loss on extinguishment of debt of $25 million
for the year ended December 31, 2019 primarily represents losses recognized as a
result of the repurchase of CCO Holdings notes and amendments to Charter
Operating's credit facilities. For more information, see Note 9 to the
accompanying consolidated financial statements contained in "Part II. Item 8.
Financial Statements and Supplementary Data."



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Loss on financial instruments, net. Gains and losses on financial instruments
are recognized due to changes in the fair value of our interest rate and our
cross currency derivative instruments, and the foreign currency remeasurement of
the fixed-rate British pound sterling denominated notes (the "Sterling Notes")
into U.S. dollars. For more information, see Note 12 to the accompanying
consolidated financial statements contained in "Part II. Item 8. Financial
Statements and Supplementary Data."

Other pension benefits (costs), net. Other pension benefits (costs), net
increased by $261 million during the year ended December 31, 2019 compared to
the corresponding period in 2018 primarily due to a remeasurement loss recorded
in 2019 versus a remeasurement gain in 2018. For more information, see Note 22
to the accompanying consolidated financial statements contained in "Part II.
Item 8. Financial Statements and Supplementary Data."

Other expense, net. Other expense, net includes impairments on equity
investments of approximately $121 million and $58 million for the years ended
December 31, 2019 and 2018, respectively. For more information, see Note 6 to
the accompanying consolidated financial statements contained in "Part II. Item
8. Financial Statements and Supplementary Data."

Income tax expense. We recognized income tax expense of $439 million and $180
million for the years ended December 31, 2019 and 2018, respectively. Income tax
expense increased during the year ended December 31, 2019 compared to the
corresponding period in 2018 primarily as a result of higher pretax income and
lower benefit from state tax rate changes. For more information, see Note 17 to
the accompanying consolidated financial statements contained in "Part II. Item
8. Financial Statements and Supplementary Data."

Net income attributable to noncontrolling interest. Net income attributable to
noncontrolling interest for financial reporting purposes represents A/N's
portion of Charter Holdings' net income based on its effective common unit
ownership interest and the preferred dividend of $150 million for each of the
years ended December 31, 2019 and 2018. For more information, see Note 11 to the
accompanying consolidated financial statements contained in "Part II. Item 8.
Financial Statements and Supplementary Data."

Net income attributable to Charter shareholders. Net income attributable to Charter shareholders was $1.7 billion and $1.2 billion for the years ended December 31, 2019 and 2018, 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
Charter shareholders and net cash flows from operating activities reported in
accordance with GAAP. These terms, as defined by us, may not be comparable to
similarly titled measures used by other companies. Adjusted EBITDA and free cash
flow are reconciled to net income attributable to Charter shareholders 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 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 fees were in the
amount of $1.2 billion and $1.1 billion for the years ended December 31, 2019
and 2018, respectively.



                                       35
--------------------------------------------------------------------------------

                                                                Years ended December 31,
                                                                 2019               2018
Net income attributable to Charter shareholders            $       1,668$       1,230
Plus: Net income attributable to noncontrolling interest             324                 276
Interest expense, net                                              3,797               3,540
Income tax expense                                                   439                 180
Depreciation and amortization                                      9,926    

10,318

Stock compensation expense                                           315                 285
Loss on extinguishment of debt                                        25                   -
Loss on financial instruments, net                                    54                 110
Other pension (benefits) costs, net                                   69                (192 )
Other, net                                                           238                 312
Adjusted EBITDA                                            $      16,855$      16,059

Net cash flows from operating activities                   $      11,748$      11,767
Less: Purchases of property, plant and equipment                  (7,195 )            (9,125 )
Change in accrued expenses related to capital expenditures            55                (470 )
Free cash flow                                             $       4,608$       2,172

Liquidity and Capital Resources

Overview


We have significant amounts of debt.  The principal amount of our debt as of
December 31, 2019 was $78.4 billion, consisting of $10.4 billion of credit
facility debt, $45.9 billion of investment grade senior secured notes and $22.1
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 new mobile services, we expect an initial funding
period to grow a new product as well as negative working capital impacts from
the timing of device-related cash flows when we provide the handset or tablet to
customers pursuant to equipment installment plans. Free cash flow was $4.6
billion and $2.2 billion for the years ended December 31, 2019 and 2018,
respectively. See table below for factors impacting free cash flow during the
year ended December 31, 2019 compared to 2018. As of December 31, 2019, the
amount available under our credit facilities was approximately $4.7 billion and
cash on hand was approximately $3.5 billion. We expect to utilize free cash
flow, cash on hand and availability under our credit facilities as well as
future refinancing transactions to further extend the maturities of our
obligations. The timing and terms of any refinancing transactions will be
subject to market conditions among other considerations. Additionally, we may,
from time to time, and depending on market conditions and other factors, use
cash on hand and the proceeds from securities offerings or other borrowings to
retire our debt through open market purchases, privately negotiated purchases,
tender offers or redemption provisions. We believe we have sufficient liquidity
from cash on hand, free cash flow and Charter Operating's revolving credit
facility as well as access to the capital markets to fund our projected cash
needs.

We continue to evaluate the deployment of our cash on hand and anticipated
future free cash flow including to invest in our business growth and other
strategic opportunities, including mergers and acquisitions as well as stock
repurchases and dividends. Charter's target leverage of net debt to the last
twelve months Adjusted EBITDA remains at 4 to 4.5 times Adjusted EBITDA, and up
to 3.5 times Adjusted EBITDA at the Charter Operating level. Our leverage ratio
was 4.5 times Adjusted EBITDA as of December 31, 2019. As Adjusted EBITDA grows,
we expect to increase the total amount of our indebtedness to maintain leverage
within Charter's target leverage range. During the years ended December 31, 2019
and 2018, Charter purchased approximately 16.7 million and 14.1 million shares,
respectively, of Charter Class A common stock for approximately $6.7 billion and
$4.3 billion, respectively.

In December 2017, Charter and A/N entered into an amendment to the letter
agreement (the "Letter Agreement") that requires A/N to sell to Charter or to
Charter Holdings, on a monthly basis, a number of shares of Charter Class A
common stock or Charter Holdings common units that represents a pro rata
participation by A/N and its affiliates in any repurchases of shares of Charter
Class A common stock from persons other than A/N effected by Charter during the
immediately preceding calendar month, at a purchase price equal to the average
price paid by Charter for the shares repurchased from persons other than A/N
during such immediately preceding calendar month. A/N and Charter both have the
right to terminate or suspend the pro rata repurchase arrangement on a
prospective basis. Charter Holdings purchased from A/N 2.3 million and 2.1
million Charter Holdings common


                                       36
--------------------------------------------------------------------------------

units at an average price per unit of $388.72 and $308.90, or $885 million and $656 million, during the years ended December 31, 2019 and 2018, respectively.


As of December 31, 2019, Charter had remaining board authority to purchase an
additional $1.4 billion of Charter's Class A common stock and/or Charter
Holdings common units. Although Charter expects to continue to buy back its
common stock consistent with its leverage target range, Charter is not obligated
to acquire any particular amount of common stock, and the timing of any
purchases that may occur cannot be predicted and will largely depend on market
conditions and other potential uses of capital. Purchases may include open
market purchases, tender offers or negotiated transactions.

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.

Recent Events


In December 2019, CCO Holdings and CCO Holdings Capital Corp. jointly issued an
additional $1.2 billion aggregate principal amount of 4.750% senior unsecured
notes due 2030 at a price of 101.125% of the aggregate principal amount. The net
proceeds were or will be used to pay related fees and expenses and for general
corporate purposes, including to fund buybacks of Charter Class A common stock
and Charter Holdings common units as well as repaying certain indebtedness.

In December 2019, Charter Operating and Charter Communications Operating Capital
Corp. jointly issued an additional $1.3 billion aggregate principal amount of
4.800% senior secured notes due 2050 at a price of 101.964% of the aggregate
principal amount. The net proceeds were or will be used to pay related fees and
expenses and for general corporate purposes, including to fund buybacks of
Charter Class A common stock and Charter Holdings common units as well as
repaying certain indebtedness.

In addition to the debt issued in December 2019 as described above, CCO Holdings
and CCO Holdings Capital Corp. jointly issued $3.35 billion aggregate principal
amount of senior unsecured notes at varying rates, prices and maturity dates in
2019, and Charter Operating and Charter Communications Operating Capital Corp.
jointly issued $4.75 billion aggregate principal amount of senior secured notes
at varying rates, prices and maturity dates in 2019. The net proceeds were used
to pay related fees and expenses and for general corporate purposes, including
funding buybacks of Charter Class A common stock and Charter Holdings common
units as well as repaying certain indebtedness.

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

Free cash flow increased $2.4 billion during the year ended December 31, 2019 compared to the corresponding prior period due to the following.


                                                                      2019 compared to 2018
Decrease in capital expenditures                                     $      

1,930

Increase in Adjusted EBITDA                                                 

796

Change in working capital, excluding change in accrued interest                     (255 )
Increase in cash paid for interest, net                                              (75 )
Other, net                                                                            40
                                                                     $             2,436


Free cash flow was reduced by $567 million during the year ended December 31, 2019 compared to the corresponding prior period due to mobile with impacts negatively affecting working capital, capital expenditures and Adjusted EBITDA.

                                       37
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Contractual Obligations

The following table summarizes our payment obligations as of December 31, 2019 under our long-term debt and certain other contractual obligations and commitments (dollars in millions.)

                                                               Payments by Period
                                                  Less than 1                                     More than 5
                                      Total          year          1-3 years       3-5 years         years
Long-Term Debt Principal
Payments (a)                       $  78,416$     3,777$     6,504$     8,701$    59,434
Long-Term Debt Interest Payments
(b)                                   50,577           3,924           7,551           6,635          32,467
Finance and Operating Lease
Obligations (c)                        1,594             272             492             360             470
Programming Minimum Commitments
(d)                                      276             216              49              11               -
Other (e)                             12,658           2,536           3,034             892           6,196
                                   $ 143,521$    10,725$    17,630$    16,599$    98,567

(a) The table presents maturities of long-term debt outstanding as of

December 31, 2019. Refer to Notes 9 and 21 to our accompanying consolidated

financial statements contained in "Part II. Item 8. Financial Statements and

     Supplementary Data" for a description of our long-term debt and other
     contractual obligations and commitments.

(b) Interest payments on variable debt are estimated using amounts outstanding

at December 31, 2019 and the average implied forward LIBOR rates applicable

for the quarter during the interest rate reset based on the yield curve in

effect at December 31, 2019. Actual interest payments will differ based on

actual LIBOR rates and actual amounts outstanding for applicable periods.

(c) We lease certain facilities and equipment under noncancelable finance and

operating leases. Finance lease obligations represented $95 million of total

     finance and operating lease obligations as of December 31, 2019. Lease and
     rental costs charged to expense for the years ended December 31, 2019 and
     2018 were $445 million and $382 million, respectively.

(d) We pay programming fees under multi-year contracts typically based on a flat

fee per customer, which may be fixed for the term, or may in some cases

escalate over the term. Programming costs included in the accompanying

statement of operations were approximately $11.3 billion and $11.1 billion

for the years ended December 31, 2019 and 2018, respectively. Certain of our

programming agreements are based on a flat fee per month or have guaranteed

minimum payments. The table sets forth the aggregate guaranteed minimum

commitments under our programming contracts.

(e) "Other" represents other guaranteed minimum commitments, including rights

negotiated directly with content owners for distribution on company-owned

channels or networks, commitments related to our role as an advertising and

     distribution sales agent for third party-owned channels or networks,
     commitments to our customer premise equipment and device vendors and
     contractual obligations related to third-party network augmentation.


The following items are not included in the contractual obligations table because the obligations are not fixed and/or determinable due to various factors discussed below. However, we incur these costs as part of our operations:

• We rent utility poles used in our operations. Generally, pole rentals are

cancelable on short notice, but we anticipate that such rentals will recur.

Rent expense incurred for pole rental attachments for the years ended

December 31, 2019 and 2018 was $180 million and $171 million, respectively.

• We pay franchise fees under multi-year franchise agreements based on a

percentage of revenues generated from video service per year. We also pay

other franchise related costs, such as public education grants, under

multi-year agreements. Franchise fees and other franchise-related costs

included in the accompanying statement of operations were $750 million and

$747 million for the years ended December 31, 2019 and 2018, respectively.

• We have $363 million in letters of credit, of which $36 million is secured

under the Charter Operating credit facility, primarily to our various

casualty carriers as collateral for reimbursement of workers' compensation,

auto liability and general liability claims.

• Minimum pension funding requirements have not been presented in the table

above as such amounts have not been determined beyond 2019. We made no cash

contributions to the qualified pension plans in 2019; however, we are

permitted to make discretionary cash contributions to the qualified pension

plans in 2020. For the nonqualified pension plan, we contributed $4 million

during 2019 and will continue to make contributions in 2020 to the extent

    benefits are paid.



See "Part I. Item 1. Business - Commitments Related to the 2016 Merger with TWC
and Acquisition of Bright House" for a listing of commitments as a result of the
merger with TWC and acquisition of Bright House in 2016.



                                       38
--------------------------------------------------------------------------------

Historical Operating, Investing, and Financing Activities


Cash and Cash Equivalents. We held $3.5 billion and $551 million in cash and
cash equivalents as of December 31, 2019 and 2018, respectively. We also held
$66 million and $214 million in restricted cash as of December 31, 2019 and
2018, respectively, representing escrowed funds of a consolidated variable
interest entity. See Note 6 to the accompanying consolidated financial
statements contained in "Item 1. Financial Statements."

Operating Activities. Net cash provided by operating activities decreased $19
million during the year ended December 31, 2019 compared to the year ended
December 31, 2018, primarily due to changes in working capital, excluding the
change in accrued interest and accrued expenses related to capital expenditures,
that used $780 million more cash and an increase in cash paid for interest, net
of $75 million offset by an increase in Adjusted EBITDA of $796 million.

Investing Activities. Net cash used in investing activities for the years ended
December 31, 2019 and 2018 was $7.3 billion and $9.7 billion, respectively. The
decrease in cash used was primarily due to a decrease in capital expenditures
and increase in accrued expenses related to capital expenditures.

Financing Activities. Net cash used in financing activities decreased $254
million during the year ended December 31, 2019 compared to the year ended
December 31, 2018 primarily due to an increase in the amount by which borrowings
of long-term debt exceeded repayments offset by an increase in the purchase of
treasury stock and noncontrolling interest.

Capital Expenditures


We have significant ongoing capital expenditure requirements.  Capital
expenditures were $7.2 billion and $9.1 billion for the years ended December 31,
2019 and 2018, respectively. The decrease was primarily due to lower customer
premise equipment expenditures as a result of the completion of our all-digital
conversion and fewer SPP migrations, lower scalable infrastructure as a result
of the completion of the roll-out of DOCSIS 3.1 technology across our footprint
and lower support spending with the substantial completion of the integration of
TWC and Bright House. See the table below for more details.

We currently expect 2020 cable capital expenditures to decline as a percentage
of cable revenue versus 2019. The actual amount of our capital expenditures in
2020 will depend on a number of factors including further spend related to
product development and growth rates of both our residential and commercial
businesses.

Our capital expenditures are funded primarily from cash flows from operating
activities and borrowings on our credit facility. In addition, our accrued
liabilities related to capital expenditures increased $55 million and decreased
$470 million for the years ended December 31, 2019 and 2018, respectively.

The following tables present our major capital expenditures categories in accordance with National Cable and Telecommunications Association ("NCTA") disclosure guidelines for the years ended December 31, 2019 and 2018. These disclosure guidelines are not required disclosures under GAAP, nor do they impact our accounting for capital expenditures under GAAP (dollars in millions):


                                                        Year ended December 31,
                                                            2019

2018

Customer premise equipment (a)                     $      2,070$ 3,124
Scalable infrastructure (b)                               1,439                2,227
Line extensions (c)                                       1,444                1,373
Upgrade/rebuild (d)                                         634                  704
Support capital (e)                                       1,608                1,697
Total capital expenditures                         $      7,195$ 9,125

Capital expenditures included in total related to:
Commercial services                                $      1,314$ 1,313
All-digital transition                             $          -              $   344
Mobile                                             $        432$   242

(a) Customer premise equipment includes costs incurred at the customer residence

to secure new customers and revenue generating units, including customer

     installation costs and customer premise equipment (e.g., set-top boxes and
     cable modems).




                                       39
--------------------------------------------------------------------------------

(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).




Debt

As of December 31, 2019, the accreted value of our total debt was approximately $79.1 billion, as summarized below (dollars in millions):

                                      December 31, 2019
                                                  Accreted Value    

Interest Payment Maturity

                              Principal Amount          (a)              Dates          Date (b)
CCO Holdings, LLC:
5.250% senior notes due 2022 $       1,250$       1,241          3/30 & 9/30    9/30/2022
5.125% senior notes due 2023         1,000                  995          2/15 & 8/15    2/15/2023
4.000% senior notes due 2023           500                  497            3/1 & 9/1     3/1/2023
5.125% senior notes due 2023         1,150                1,145           5/1 & 11/1     5/1/2023
5.750% senior notes due 2023           500                  497            3/1 & 9/1     9/1/2023
5.750% senior notes due 2024           150                  149          1/15 & 7/15    1/15/2024
5.875% senior notes due 2024         1,700                1,690           4/1 & 10/1     4/1/2024
5.375% senior notes due 2025           750                  746           5/1 & 11/1     5/1/2025
5.750% senior notes due 2026         2,500                2,471          2/15 & 8/15    2/15/2026
5.500% senior notes due 2026         1,500                1,491           5/1 & 11/1     5/1/2026
5.875% senior notes due 2027           800                  796           5/1 & 11/1     5/1/2027
5.125% senior notes due 2027         3,250                3,222           5/1 & 11/1     5/1/2027
5.000% senior notes due 2028         2,500                2,469            2/1 & 8/1     2/1/2028
5.375% senior notes due 2029         1,500                1,501           6/1 & 12/1     6/1/2029
4.750% senior notes due 2030         3,050                3,041            3/1 & 9/1     3/1/2030
Charter Communications
Operating, LLC:
3.579% senior notes due 2020         2,000                1,997          1/23 & 7/23    7/23/2020
4.464% senior notes due 2022         3,000                2,987          1/23 & 7/23    7/23/2022
Senior floating rate notes             900                  902      2/1, 5/1, 8/1 &     2/1/2024
due 2024                                                                        11/1
4.500% senior notes due 2024         1,100                1,093            2/1 & 8/1     2/1/2024
4.908% senior notes due 2025         4,500                4,471          1/23 & 7/23    7/23/2025
3.750% senior notes due 2028         1,000                  987          2/15 & 8/15    2/15/2028
4.200% senior notes due 2028         1,250                1,240          3/15 & 9/15    3/15/2028
5.050% senior notes due 2029         1,250                1,241          3/30 & 9/30    3/30/2029
6.384% senior notes due 2035         2,000                1,982         4/23 & 10/23   10/23/2035
5.375% senior notes due 2038           800                  786           4/1 & 10/1     4/1/2038
6.484% senior notes due 2045         3,500                3,467         4/23 & 10/23   10/23/2045
5.375% senior notes due 2047         2,500                2,506           5/1 & 11/1     5/1/2047
5.750% senior notes due 2048         2,450                2,391           4/1 & 10/1     4/1/2048
5.125% senior notes due 2049         1,250                1,240            1/1 & 7/1     7/1/2049
4.800% senior notes due 2050         2,800                2,798            3/1 & 9/1     3/1/2050
6.834% senior notes due 2055           500                  495         4/23 & 10/23   10/23/2055
Credit facilities                   10,427               10,345                            Varies
Time Warner Cable, LLC:
5.000% senior notes due 2020         1,500                1,503            2/1 & 8/1     2/1/2020
4.125% senior notes due 2021           700                  711          2/15 & 8/15    2/15/2021
4.000% senior notes due 2021         1,000                1,021            3/1 & 9/1     9/1/2021
5.750% sterling senior notes
due 2031 (c)                           828                  886                  6/2     6/2/2031




                                       40
--------------------------------------------------------------------------------


6.550% senior debentures due
2037                               1,500           1,675           5/1 & 11/1     5/1/2037
7.300% senior debentures due
2038                               1,500           1,772            1/1 & 7/1     7/1/2038
6.750% senior debentures due
2039                               1,500           1,713         6/15 & 12/15    6/15/2039
5.875% senior debentures due
2040                               1,200           1,255         5/15 & 11/15   11/15/2040
5.500% senior debentures due
2041                               1,250           1,258            3/1 & 9/1     9/1/2041
5.250% sterling senior notes
due 2042 (d)                         861             831                 7/15    7/15/2042
4.500% senior debentures due
2042                               1,250           1,142          3/15 & 9/15    9/15/2042
Time Warner Cable
Enterprises LLC:
8.375% senior debentures due
2023                               1,000           1,148          3/15 & 9/15    3/15/2023
8.375% senior debentures due
2033                               1,000           1,284          7/15 & 1/15    7/15/2033
                             $    78,416$    79,078

(a) 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 the TWC debt

assumed, fair value premium adjustments as a result of applying acquisition

accounting plus the accretion of those amounts to the balance sheet date.

However, the amount that is currently payable if the debt becomes

immediately due is equal to the principal amount of the debt. In regards to

     the Sterling Notes, the principal amount of the debt and any premium or
     discount is remeasured into US dollars as of each balance sheet date. We

have availability under our credit facilities of approximately $4.7 billion

as of December 31, 2019.

(b) In general, the obligors have the right to redeem all of the notes set forth

in the above table in whole or in part at their option, beginning at various

times prior to their stated maturity dates, subject to certain conditions,

upon the payment of the outstanding principal amount (plus a specified

redemption premium) and all accrued and unpaid interest.

(c) Principal amount includes £625 million valued at $828 million as of

December 31, 2019 using the exchange rate as of December 31, 2019.

(d) Principal amount includes £650 million valued at $861 million as of

December 31, 2019 using the exchange rate as of December 31, 2019.




See Note 9 to the accompanying consolidated financial statements contained in
"Part II. Item 8. Financial Statements and Supplementary Data" for further
details regarding our outstanding debt and other financing arrangements,
including certain information about maturities, covenants and restrictions
related to such debt and financing arrangements. The agreements and instruments
governing our debt and financing arrangements are complicated and you should
consult such agreements and instruments which are filed with the SEC for more
detailed information.

At December 31, 2019, Charter Operating had a consolidated leverage ratio of
approximately 2.9 to 1.0 and a consolidated first lien leverage ratio of 2.8 to
1.0. Both ratios are in compliance with the ratios required by the Charter
Operating credit facilities of 5.0 to 1.0 consolidated leverage ratio and 4.0 to
1.0 consolidated first lien leverage ratio. A failure by Charter Operating to
maintain the financial covenants would result in an event of default under the
Charter Operating credit facilities and the debt of CCO Holdings. See "Part I.
Item 1A. Risk Factors - The agreements and instruments governing our debt
contain restrictions and limitations that could significantly affect our ability
to operate our business, as well as significantly affect our liquidity."

Recently Issued Accounting Standards


See Note 23 to the accompanying consolidated financial statements contained in
"Part II. Item 8. Financial Statements and Supplementary Data" for a discussion
of recently issued accounting standards.

© Edgar Online, source Glimpses

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