CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
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|
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|
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4.908% senior notes due July 23, 2025
|
—
|
|
|
—
|
|
|
4,500
|
|
|
4,497
|
|
6.384% senior notes due October 23, 2035
|
—
|
|
|
—
|
|
|
2,000
|
|
|
1,999
|
|
6.484% senior notes due October 23, 2045
|
—
|
|
|
—
|
|
|
3,500
|
|
|
3,498
|
|
6.834% senior notes due October 23, 2055
|
—
|
|
|
—
|
|
|
500
|
|
|
500
|
|
CCO Safari III, LLC:
|
|
|
|
|
|
|
|
Credit facilities
|
—
|
|
|
—
|
|
|
3,800
|
|
|
3,788
|
|
CCO Holdings, LLC:
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|
|
|
|
|
|
7.000% senior notes due January 15, 2019
|
—
|
|
|
—
|
|
|
600
|
|
|
594
|
|
7.375% senior notes due June 1, 2020
|
—
|
|
|
—
|
|
|
750
|
|
|
744
|
|
5.250% senior notes due March 15, 2021
|
500
|
|
|
496
|
|
|
500
|
|
|
496
|
|
6.500% senior notes due April 30, 2021
|
—
|
|
|
—
|
|
|
1,500
|
|
|
1,487
|
|
6.625% senior notes due January 31, 2022
|
750
|
|
|
741
|
|
|
750
|
|
|
740
|
|
5.250% senior notes due September 30, 2022
|
1,250
|
|
|
1,232
|
|
|
1,250
|
|
|
1,229
|
|
5.125% senior notes due February 15, 2023
|
1,000
|
|
|
992
|
|
|
1,000
|
|
|
990
|
|
5.125% senior notes due May 1, 2023
|
1,150
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|
|
1,141
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|
|
1,150
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|
|
1,140
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|
5.750% senior notes due September 1, 2023
|
500
|
|
|
496
|
|
|
500
|
|
|
495
|
|
5.750% senior notes due January 15, 2024
|
1,000
|
|
|
991
|
|
|
1,000
|
|
|
990
|
|
5.875% senior notes due April 1, 2024
|
1,700
|
|
|
1,685
|
|
|
—
|
|
|
—
|
|
5.375% senior notes due May 1, 2025
|
750
|
|
|
744
|
|
|
750
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|
|
744
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|
5.750% senior notes due February 15, 2026
|
2,500
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|
|
2,460
|
|
|
—
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|
|
—
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|
5.500% senior notes due May 1, 2026
|
1,500
|
|
|
1,487
|
|
|
—
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|
|
—
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|
5.875% senior notes due May 1, 2027
|
800
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|
|
794
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|
|
800
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|
|
794
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|
Charter Communications Operating, LLC:
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3.579% senior notes due July 23, 2020
|
2,000
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|
|
1,983
|
|
|
—
|
|
|
—
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|
4.464% senior notes due July 23, 2022
|
3,000
|
|
|
2,973
|
|
|
—
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|
|
—
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|
4.908% senior notes due July 23, 2025
|
4,500
|
|
|
4,458
|
|
|
—
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|
|
—
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|
6.384% senior notes due October 23, 2035
|
2,000
|
|
|
1,980
|
|
|
—
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|
|
—
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|
6.484% senior notes due October 23, 2045
|
3,500
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3,466
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|
|
—
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|
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—
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|
6.834% senior notes due October 23, 2055
|
500
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|
|
495
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|
|
—
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|
|
—
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|
Credit facilities
|
8,916
|
|
|
8,814
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|
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3,552
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|
3,502
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|
Time Warner Cable, LLC:
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5.850% senior notes due May 1, 2017
|
2,000
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|
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2,028
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|
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—
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|
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—
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|
6.750% senior notes due July 1, 2018
|
2,000
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2,135
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—
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—
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|
8.750% senior notes due February 14, 2019
|
1,250
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1,412
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|
|
—
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|
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—
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8.250% senior notes due April 1, 2019
|
2,000
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2,264
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|
|
—
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|
|
—
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|
5.000% senior notes due February 1, 2020
|
1,500
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1,615
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|
|
—
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|
|
—
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|
4.125% senior notes due February 15, 2021
|
700
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|
|
739
|
|
|
—
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|
|
—
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|
4.000% senior notes due September 1, 2021
|
1,000
|
|
|
1,056
|
|
|
—
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|
|
—
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|
5.750% sterling senior notes due June 2, 2031
(a)
|
770
|
|
|
834
|
|
|
—
|
|
|
—
|
|
6.550% senior debentures due May 1, 2037
|
1,500
|
|
|
1,691
|
|
|
—
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|
|
—
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|
7.300% senior debentures due July 1, 2038
|
1,500
|
|
|
1,795
|
|
|
—
|
|
|
—
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|
6.750% senior debentures due June 15, 2039
|
1,500
|
|
|
1,730
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|
|
—
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|
|
—
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|
5.875% senior debentures due November 15, 2040
|
1,200
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|
|
1,259
|
|
|
—
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|
|
—
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|
5.500% senior debentures due September 1, 2041
|
1,250
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|
|
1,258
|
|
|
—
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|
|
—
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|
5.250% sterling senior notes due July 15, 2042
(b)
|
800
|
|
|
771
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|
|
—
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|
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—
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|
4.500% senior debentures due September 15, 2042
|
1,250
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|
|
1,135
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|
|
—
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—
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|
Time Warner Cable Enterprises LLC:
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CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.375% senior debentures due March 15, 2023
|
1,000
|
|
|
1,273
|
|
|
—
|
|
|
—
|
|
8.375% senior debentures due July 15, 2033
|
1,000
|
|
|
1,324
|
|
|
—
|
|
|
—
|
|
Total debt
|
60,036
|
|
|
61,747
|
|
|
35,902
|
|
|
35,723
|
|
Less current portion:
|
|
|
|
|
|
|
|
5.850% senior notes due May 1, 2017
|
(2,000
|
)
|
|
(2,028
|
)
|
|
—
|
|
|
—
|
|
Long-term debt
|
$
|
58,036
|
|
|
$
|
59,719
|
|
|
$
|
35,902
|
|
|
$
|
35,723
|
|
|
|
(a)
|
Principal amount includes
£625 million
valued at
$770 million
as of
December 31, 2016
using the exchange rate at that date.
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|
|
(b)
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Principal amount includes
£650 million
valued at
$800 million
as of
December 31, 2016
using the exchange rate at that date.
|
The accreted values presented in the table above represent the principal amount of the debt less the original issue discount at the time of sale, deferred financing costs, and, (i) in regards to the Legacy TWC debt assumed, a fair value premium adjustment as a result of applying acquisition accounting plus/minus the accretion of those amounts to the balance sheet date and (ii) in regards to the fixed-rate British pound sterling denominated notes (the “Sterling Notes”), a remeasurement of the principal amount of the debt and any premium or discount into US dollars as of the balance sheet date. See Note 12. However, the amount that is currently payable if the debt becomes immediately due is equal to the principal amount of the debt. The Company has availability under the Charter Operating credit facilities of approximately
$2.8 billion
as of
December 31, 2016
.
In December 2016, Charter Operating entered into an amendment to its Credit Agreement decreasing the applicable LIBOR margin on the term loan A, term loan H, term loan I and revolver to
1.75%
,
2.00%
,
2.25%
and
1.75%
, respectively, eliminating the LIBOR floor on the term loan H and term loan I and extending the maturity of term loan H to 2022 and term loan I to 2024. The Company recorded a loss on extinguishment of debt of
$1 million
for the year ended
December 31, 2016
related to these transactions.
In February 2016, CCO Holdings and CCO Holdings Capital jointly issued
$1.7 billion
aggregate principal amount of
5.875%
senior notes due 2024 (the “2024 Notes”) and, in April 2016, they issued
$1.5 billion
aggregate principal amount of
5.500%
senior notes due 2026 (the “2026 Notes”) at a price of
100.075%
of the aggregate principal amount. The net proceeds from both issuances were used to repurchase all of CCO Holdings’
7.000%
senior notes due 2019,
7.375%
senior notes due 2020 and
6.500%
senior notes due 2021 and to pay related fees and expenses and for general corporate purposes. These debt repurchases resulted in a loss on extinguishment of debt of
$110 million
for the year ended
December 31, 2016
.
In April 2015, CCO Holdings and CCO Holdings Capital closed on transactions in which they issued
$1.15 billion
aggregate principal amount of
5.125%
senior unsecured notes due 2023 (the “2023 Notes”),
$750 million
aggregate principal amount of
5.375%
senior unsecured notes due 2025 (the “2025 Notes”) and
$800 million
aggregate principal amount of
5.875%
senior unsecured notes due 2027 (the “2027 Notes”). The net proceeds from the issuance of the 2023 Notes and 2025 Notes were used to finance tender offers and a subsequent call in which
$1.0 billion
aggregate principal amount of CCO Holdings’ outstanding
7.250%
senior notes due 2017 and
$700 million
aggregate principal amount of CCO Holdings’ outstanding
8.125%
senior notes due 2020 were repurchased, as well as for general corporate purposes. The net proceeds from the issuance of the 2027 Notes were used to call
$800 million
of the
$1.4 billion
aggregate principal amount of CCO Holdings’ outstanding
7.000%
senior notes due 2019. These debt repurchases resulted in a loss on extinguishment of debt of
$123 million
for the year ended December 31, 2015.
The Company also recorded a loss on extinguishment of debt of approximately
$5 million
for the year ended December 31, 2015 as a result of the repayment of debt upon termination of the proposed transactions with Comcast Corporation (“Comcast”).
CCO Holdings Notes
The CCO Holdings notes are senior debt obligations of CCO Holdings and CCO Holdings Capital and rank equally with all other current and future unsecured, unsubordinated obligations of CCO Holdings and CCO Holdings Capital. They are structurally subordinated to all obligations of subsidiaries of CCO Holdings.
CCO Holdings may redeem some or all of the CCO Holdings notes at any time at a premium. The optional redemption price declines to
100%
of the respective series’ principal amount, plus accrued and unpaid interest, if any, on or after varying dates in 2017 through 2024.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
In addition, at any time prior to varying dates in 2017 through 2021, CCO Holdings may redeem up to
35%
(
40%
in regards to certain notes issued in 2015 and 2016) of the aggregate principal amount of the notes at a premium plus accrued and unpaid interest to the redemption date, with the net cash proceeds of one or more equity offerings (as defined in the indenture); provided that certain conditions are met. In the event of specified change of control events, CCO Holdings must offer to purchase the outstanding CCO Holdings 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.
High-Yield Restrictive Covenants; Limitation on Indebtedness.
The indentures governing the CCO Holdings notes contain certain covenants that restrict the ability of CCO Holdings, CCO Holdings Capital and all of their restricted subsidiaries to:
|
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•
|
pay dividends on equity or repurchase equity;
|
|
|
•
|
sell all or substantially all of their assets or merge with or into other companies;
|
|
|
•
|
in the case of restricted subsidiaries, create or permit to exist dividend or payment restrictions with respect to CCO Holdings, guarantee their parent companies debt, or issue specified equity interests;
|
|
|
•
|
engage in certain transactions with affiliates; and
|
The above limitations in certain circumstances regarding incurrence of debt, payment of dividends and making investments contained in the indentures of CCO Holdings permit CCO Holdings and its restricted subsidiaries to perform the above, so long as, after giving pro forma effect to the above, the leverage ratio would be below a specified level for the issuer. The leverage ratio under the indentures is
6.0
to
1.0
.
Charter Operating Notes
The Charter Operating notes are guaranteed by CCO Holdings, TWC, LLC (as defined below), TWCE (as defined below) and substantially all of the operating subsidiaries of Charter Operating (collectively, the “Subsidiary Guarantors”). In addition, the Charter Operating notes are secured by a perfected first priority security interest in substantially all of the assets of Charter Operating to the extent such liens can be perfected under the Uniform Commercial Code by the filing of a financing statement and the liens rank equally with the liens on the collateral securing obligations under the Charter Operating credit facilities. Charter Operating may redeem some or all of the Charter Operating notes at any time at a premium.
The Charter Operating notes are subject to the terms and conditions of the indenture 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.
Charter Operating Credit Facilities
The Charter Operating credit facilities have an outstanding principal amount of
$8.9 billion
at
December 31, 2016
as follows:
|
|
•
|
term loan A with a remaining principal amount of
$2.5 billion
, which is repayable in quarterly installments and aggregating
$132 million
in 2017 and 2018,
$231 million
in 2019 and
$264 million
in 2020, with the remaining balance due at final maturity on May 18, 2021. Pricing on term loan A is LIBOR plus
1.75%
;
|
|
|
•
|
term loan E with a remaining principal amount of approximately
$1.4 billion
, which is repayable in equal quarterly installments and aggregating
$15 million
in each loan year, with the remaining balance due at final maturity on July 1, 2020. Pricing on term loan E is LIBOR plus
2.25%
with a LIBOR floor of
0.75%
(see Note 25 for amendments to the Charter Operating credit facilities completed in 2017);
|
|
|
•
|
term loan F with a remaining principal amount of approximately
$1.2 billion
, which is repayable in equal quarterly installments and aggregating
$12 million
in each loan year, with the remaining balance due at final maturity on January
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
3, 2021. Pricing on term loan F is LIBOR plus
2.25%
with a LIBOR floor of
0.75%
(see Note 25 for amendments to the Charter Operating credit facilities completed in 2017);
|
|
•
|
term loan H with a remaining principal amount of approximately
$993 million
, which is repayable in equal quarterly installments and aggregating
$10 million
in each loan year, with the remaining balance due at final maturity on January 15, 2022. Pricing on term loan H is LIBOR plus
2.00%
;
|
|
|
•
|
term loan I with a remaining principal amount of approximately
$2.8 billion
, which is repayable in equal quarterly installments and aggregating
$28 million
in each loan year, with the remaining balance due at final maturity on January 15, 2024. Pricing on term loan I is LIBOR plus
2.25%
; and
|
|
|
•
|
revolving loan allowing for borrowings of up to
$3.0 billion
, maturing on May 18, 2021. Pricing on the revolving loan is LIBOR plus
1.75%
with a commitment fee of
0.30%
. As of
December 31, 2016
,
$220 million
of the revolving loan was utilized to collateralize a like principal amount of letters of credit out of
$278 million
of letters of credit issued on the Company’s behalf.
|
Amounts outstanding under the Charter Operating credit facilities bear interest, at Charter Operating’s election, at a base rate or LIBOR (
0.77%
and
0.42%
as of
December 31, 2016
and
December 31, 2015
, respectively), as defined, plus an applicable margin.
The Charter Operating credit facilities also allow us to enter into incremental term loans in the future, with amortization as set forth in the notices establishing such term loans. Although the Charter Operating credit facilities allow for the incurrence of a certain amount of incremental term loans subject to pro forma compliance with its financial maintenance covenants, no assurance can be given that the Company could obtain additional incremental term loans in the future if Charter Operating sought to do so or what amount of incremental term loans would be allowable at any given time under the terms of the Charter Operating credit facilities.
The obligations of Charter Operating under the Charter Operating credit facilities are guaranteed by the Subsidiary Guarantors. The obligations are also secured by (i) a lien on substantially all of the assets of Charter Operating and the Subsidiary Guarantors, to the extent such lien can be perfected under the Uniform Commercial Code by the filing of a financing statement, and (ii) a pledge by CCO Holdings of the equity interests owned by it in any of Charter Operating’s subsidiaries, as well as intercompany obligations owing to it by any of such entities.
Restrictive Covenants
The Charter Operating credit facilities contain representations and warranties, and affirmative and negative covenants customary for financings of this type. The financial covenants measure performance against standards set for leverage to be tested as of the end of each quarter. The Charter Operating credit facilities contain provisions requiring mandatory loan prepayments under specific circumstances, including in connection with certain sales of assets, so long as the proceeds have not been reinvested in the business. Additionally, the Charter Operating credit facilities provisions contain an allowance for restricted payments so long as the consolidated leverage ratio is no greater than
3.5
after giving pro forma effect to such restricted payment. The Charter Operating credit facilities permit Charter Operating and its subsidiaries to make distributions to pay interest on the currently outstanding subordinated and parent company indebtedness, provided that, among other things, no default has occurred and is continuing under the Charter Operating credit facilities. The Charter Operating credit facilities also contain customary events of default.
Assumed Legacy TWC Indebtedness
The Company assumed approximately
$22.4 billion
in aggregate principal amount of Time Warner Cable, LLC (successor to Legacy TWC outstanding debt obligations, “TWC, LLC”) senior notes and debentures and Time Warner Cable Enterprises LLC (“TWCE”) senior debentures with varying maturities. The Company applied acquisition accounting to Legacy TWC, and as a result, the debt assumed was adjusted to fair value using quoted market values as of the closing date. This fair value adjustment resulted in recognition of a net debt premium of approximately
$2.4 billion
.
TWC, LLC Senior Notes and Debentures
The TWC, LLC senior notes and debentures are guaranteed by CCO Holdings, Charter Operating, TWCE and the Subsidiary Guarantors and rank equally with the liens on the collateral securing obligations under the Charter Operating notes and credit facilities. Interest on each series of TWC, LLC senior notes and debentures is payable semi-annually (with the exception of the Sterling Notes, which is payable annually) in arrears.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The TWC, LLC indenture contains customary covenants relating to restrictions on the ability of TWC, LLC or any material subsidiary to create liens and on the ability of TWC, LLC and TWCE to consolidate, merge or convey or transfer substantially all of their assets. The TWC, LLC indenture also contains customary events of default.
The TWC, LLC senior notes and debentures may be redeemed in whole or in part at any time at TWC, LLC’s option at a redemption price equal to the greater of (i) all of the applicable principal amount being redeemed and (ii) the sum of the present values of the remaining scheduled payments on the applicable TWC, LLC senior notes and debentures discounted to the redemption date on a semi-annual basis (with the exception of the Sterling Notes, which are on an annual basis), at a comparable government bond rate plus a designated number of basis points as further described in the indenture and the applicable note or debenture, plus, in each case, accrued but unpaid interest to, but not including, the redemption date.
The Company may offer to redeem all, but not less than all, of the Sterling Notes in the event of certain changes in the tax laws of the U.S. (or any taxing authority in the U.S.). This redemption would be at a redemption price equal to
100%
of the principal amount, together with accrued and unpaid interest on the Sterling Notes to, but not including, the redemption date.
TWCE Senior Debentures
The TWCE senior debentures are guaranteed by CCO Holdings, Charter Operating, TWC, LLC and the Subsidiary Guarantors and rank equally with the liens on the collateral securing obligations under the Charter Operating notes and credit facilities. Interest on each series of TWCE senior debentures is payable semi-annually in arrears. The TWCE senior debentures are not redeemable before maturity.
The TWCE indenture contains customary covenants relating to restrictions on the ability of TWCE or any material subsidiary to create liens and on the ability of TWC, LLC and TWCE to consolidate, merge or convey or transfer substantially all of their assets. The TWCE indenture also contains customary events of default.
Limitations on Distributions
Distributions by the Company’s subsidiaries to a parent company for payment of principal on parent company notes are restricted under the indentures and credit facilities discussed above, unless there is no default under the applicable indenture and credit facilities, and unless each applicable subsidiary’s leverage ratio test is met at the time of such distribution. As of
December 31, 2016
, there was no default under any of these indentures or credit facilities and each subsidiary met its applicable leverage ratio tests based on
December 31, 2016
financial results. Such distributions would be restricted, however, if any such subsidiary fails to meet these tests at the time of the contemplated distribution. In the past, certain subsidiaries have from time to time failed to meet their leverage ratio test. There can be no assurance that they will satisfy these tests at the time of the contemplated distribution. Distributions by Charter Operating for payment of principal on parent company notes are further restricted by the covenants in its credit facilities.
However, without regard to leverage, during any calendar year or any portion thereof during which the borrower is a flow-through entity for tax purposes, and so long as no event of default exists, the borrower may make distributions to the equity interests of the borrower in an amount sufficient to make permitted tax payments.
In addition to the limitation on distributions under the various indentures, distributions by the Company’s subsidiaries may be limited by applicable law, including the Delaware Limited Liability Company Act, under which the Company’s subsidiaries may make distributions if they have “surplus” as defined in the act.
Liquidity and Future Principal Payments
The Company continues to have significant amounts of debt, and its business requires significant cash to fund principal and interest payments on its debt, capital expenditures and ongoing operations. As set forth below, the Company has significant future principal payments. The Company continues to monitor the capital markets, and it expects to undertake refinancing transactions and utilize free cash flow and cash on hand to further extend or reduce the maturities of its principal obligations. The timing and terms of any refinancing transactions will be subject to market conditions.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Based upon outstanding indebtedness as of
December 31, 2016
, the amortization of term loans, and the maturity dates for all senior and subordinated notes, total future principal payments on the total borrowings under all debt agreements as of
December 31, 2016
, are as follows:
|
|
|
|
|
|
Year
|
|
Amount
|
2017
|
|
$
|
2,197
|
|
2018
|
|
2,197
|
|
2019
|
|
3,546
|
|
2020
|
|
5,216
|
|
2021
|
|
5,128
|
|
Thereafter
|
|
41,752
|
|
|
|
|
|
|
$
|
60,036
|
|
10. Common Stock
Charter’s Class A common stock and Class B common stock are identical except with respect to certain voting, transfer and conversion rights. Holders of Class A common stock are entitled to
one
vote per share. Charter’s Class B common stock represents the share issued to A/N in connection with the Bright House Transaction. One share of Charter’s Class B common stock has a number of votes reflecting the voting power of the Charter Holdings common units and Charter Holdings convertible preferred units held by A/N as of the applicable record date on an if-converted, if-exchanged basis, and is generally intended to reflect A/N’s economic interests in Charter Holdings.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The following table summarizes our shares outstanding for the three years ended
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
Class A Common Stock
|
|
Class B Common Stock
|
BALANCE, December 31, 2013
|
|
106,144,075
|
|
|
—
|
|
Exercise of stock options
|
|
640,342
|
|
|
—
|
|
Restricted stock issuances, net of cancellations
|
|
9,090
|
|
|
—
|
|
Stock issuances from exercise of warrants
|
|
5,243,167
|
|
|
—
|
|
Restricted stock unit vesting
|
|
104,270
|
|
|
—
|
|
Purchase of treasury stock
|
|
(141,257
|
)
|
|
—
|
|
BALANCE, December 31, 2014
|
|
111,999,687
|
|
|
—
|
|
|
|
|
|
|
Exercise of stock options
|
|
579,173
|
|
|
—
|
|
Restricted stock issuances, net of cancellations
|
|
6,920
|
|
|
—
|
|
Restricted stock unit vesting
|
|
98,831
|
|
|
—
|
|
Purchase of treasury stock
|
|
(245,783
|
)
|
|
—
|
|
BALANCE, December 31, 2015
|
|
112,438,828
|
|
|
—
|
|
|
|
|
|
|
Reorganization of common stock
|
|
(10,771,404
|
)
|
|
—
|
|
Issuance of shares in TWC Transaction
|
|
143,012,155
|
|
|
—
|
|
Issuance of shares to Liberty Broadband for cash
|
|
25,631,339
|
|
|
—
|
|
Issuance of share to A/N in Bright House Transaction
|
|
—
|
|
|
1
|
|
Exchange of Charter Holdings units held by A/N
|
|
1,852,832
|
|
|
—
|
|
Exercise of stock options
|
|
1,014,664
|
|
|
—
|
|
Restricted stock issuances, net of cancellations
|
|
9,811
|
|
|
—
|
|
Restricted stock unit vesting
|
|
1,738,792
|
|
|
—
|
|
Purchase of treasury stock
|
|
(6,029,225
|
)
|
|
—
|
|
BALANCE, December 31, 2016
|
|
268,897,792
|
|
|
1
|
|
The shares outstanding balances shown above as of and prior to December 31, 2015 represent historical shares outstanding of Legacy Charter before applying the Parent Merger Exchange Ratio. The
10.8 million
shares associated with the reorganization of Charter Class A common stock represents the reduction to Legacy Charter Class A common shares outstanding as of the acquisition date as a result of applying the Parent Merger Exchange Ratio. See Note 2.
In December 2016, A/N exchanged
1.9 million
Charter Holdings common units for Charter Class A common stock. See Note 11.
Share Repurchases
In 2016, the Company purchased approximately
5.1 million
shares of Charter Class A common stock for approximately
$1.3 billion
pursuant to authorizations by Charter’s board of directors of
$3 billion
. Accordingly, as of December 31, 2016 and provided Charter’s leverage ratio remains at
4
to
4.5
times and Charter Operating’s leverage remains below
3.5
times, management has authority to cause the Company to purchase an additional
$1.7 billion
of Charter’s Class A common stock without taking into account shares or units that may be purchased from A/N. Effective November 1, 2016, Charter's board of directors granted authority for a new
$750 million
of Class A common stock buybacks under the rolling six-month authority without taking into account any Class A common stock purchased prior to November 1. As a result, a portion of the
$1.7 billion
of authority is under the authority of management to approve up to
$750 million
for Class A common stock buybacks in any six-month period.
During the years ended
December 31, 2016
,
2015
and
2014
, the Company withheld
908,066
,
177,696
and
127,725
shares, respectively, of its common stock in payment of
$216 million
,
$38 million
and
$19 million
, respectively, of tax withholdings owed by employees upon vesting of restricted shares and stock options. During the years ended
December 31, 2016
and
2015
, Company
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
also withheld
50,503
shares and
44,541
shares, respectively, of its Class A common stock representing the exercise costs owed by employees upon exercise of stock options.
In
December 31, 2016
and
2015
, Charter’s board of directors approved the retirement of the then currently outstanding treasury stock and those shares were retired as of
December 31, 2016
and
2015
.
The Company accounted for treasury stock using the cost method and the treasury shares upon repurchase were reflected on the Company’s consolidated balance sheets as a component of total shareholders’ equity. Upon retirement, these treasury shares are allocated between additional paid-in capital and accumulated deficit based on the cost of original issue included in additional paid-in capital.
In 2014, the Company issued approximately
5.2 million
shares of Charter Class A common stock as a result of exercises by holders who received warrants pursuant to the Joint Plan of Reorganization upon the Company’s emergence from bankruptcy in 2009. The exercises resulted in proceeds to the Company of approximately
$90 million
. As of December 31, 2016 and 2015, there were no warrants outstanding.
11. Noncontrolling Interests
Noncontrolling interests represents consolidated subsidiaries of which the Company owns less than
100%
. The Company is a holding company whose principal asset is a controlling equity interest in Charter Holdings, the indirect owner of the Company’s cable systems. Noncontrolling interests on the Company’s balance sheet primarily includes A/N’s equity interests in Charter Holdings, which is comprised of a common ownership interest and a convertible preferred ownership interest.
In connection with the closing of the Bright House Transaction, Charter Holdings issued approximately
31.0 million
common units to A/N, which are exchangeable at any time into either Charter Class A common stock on a one-for-one basis, or, at Charter’s option, cash, based on the then current market price of Charter Class A common stock. Net income (loss) of Charter Holdings attributable to A/N’s common noncontrolling interest for financial reporting purposes is based on the weighted average effective common ownership interest of approximately
10%
which was
$129 million
for the year ended
December 31, 2016
. Charter Holdings distributed
$3 million
to A/N as a pro rata tax distribution on its common units during the year ended
December 31, 2016
. Charter Holdings also issued approximately
25 million
convertible preferred units to A/N with a face amount of
$2.5 billion
that pay a
6%
annual preferred dividend. The
6%
annual preferred dividend is paid quarterly in cash, if and when declared, provided that, if dividends are suspended at any time, the dividends will accrue until they are paid. Net income (loss) of Charter Holdings attributable to the preferred noncontrolling interest for financial reporting purposes is based on the preferred dividend which was
$93 million
for the year ended
December 31, 2016
. Each convertible preferred unit is convertible into either
0.37334
of a Charter Holdings common unit (if then held by A/N) or
0.37334
of a share of Charter Class A common stock (if then held by a third party), representing a conversion price of
$267.85
per unit, based on a conversion feature as defined in the Limited Liability Company Agreement of Charter Holdings. After May 18, 2021, Charter may redeem the convertible preferred units if the price of Charter Class A common stock exceeds
130%
of the conversion price. These Charter Holdings common and convertible preferred units held by A/N are recorded in noncontrolling interests as permanent equity in the consolidated balance sheet.
The common units and convertible preferred units issued to A/N as consideration for the Bright House Transaction were initially measured at their fair value of
$7.0 billion
and
$3.2 billion
, respectively, in accordance with acquisition accounting. However, upon formation of Charter Holdings and subsequent to the acquisition, the carrying amounts of the controlling and noncontrolling interests were adjusted to reflect the relative effective common ownership interest in Charter Holdings. This resulted in an increase to noncontrolling interest of approximately
$589 million
and a corresponding decrease to additional paid-in capital of
$589 million
, net of
$225 million
of deferred income taxes, for the year ended
December 31, 2016
.
In December 2016, Charter and A/N entered into a letter agreement (the "Letter Agreement") pursuant to which A/N exchanged
1.9 million
Charter Holdings common units held by A/N for shares of Charter Class A common stock for an aggregate purchase price of
$537 million
. The common units exchanged had a net carrying value in noncontrolling interest of approximately
$460 million
. The exchange of A/N common units resulted in a tax step-up of the assets of Charter Holdings which is further discussed in Note 17. The Letter Agreement also 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
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
from persons other than A/N during such immediately preceding calendar month. Pursuant to the Letter Agreement, Charter Holdings purchased from A/N
752,767
Charter Holdings common units at a price per unit of
$289.83
, or
$218 million
. The common units purchased had a net carrying value in noncontrolling interest of approximately
$187 million
. As of
December 31, 2016
, A/N held
28.4 million
Charter Holdings common units.
12. Accounting for Derivative Instruments and Hedging Activities
The Company uses derivative instruments to manage interest rate risk on variable debt and foreign exchange risk on the Sterling Notes, and does not hold or issue derivative instruments for speculative trading purposes.
Interest rate derivative instruments are used to manage interest costs and to reduce the Company’s exposure to increases in floating interest rates. The Company manages its exposure to fluctuations in interest rates by maintaining a mix of fixed and variable rate debt. Using interest rate derivative instruments, the Company agrees to exchange, at specified intervals through 2017, the difference between fixed and variable interest amounts calculated by reference to agreed-upon notional principal amounts. As of
December 31, 2016
and
2015
, the Company had
$850 million
and
$1.1 billion
, respectively, in notional amounts of interest rate derivative instruments outstanding. The notional amounts of interest rate derivative instruments do not represent amounts exchanged by the parties and, thus, are not a measure of exposure to credit loss. The amounts exchanged were determined by reference to the notional amount and the other terms of the contracts.
Upon closing of the TWC Transaction, the Company acquired interest rate derivative instrument assets with a fair value of
$85 million
(excluding accrued interest), which were terminated and settled with their respective counterparties in the second quarter of 2016 with an
$88 million
cash payment to the Company of which
$14 million
was for interest accrued through the date of termination. The termination resulted in an
$11 million
loss for the year ended
December 31, 2016
which was recorded in gain (loss) on financial instruments, net in the consolidated statements of operations.
Upon closing of the TWC Transaction, the Company assumed cross-currency derivative instrument liabilities with a fair value of
$72 million
(excluding accrued interest). Cross-currency derivative instruments are used to effectively convert
£1.275 billion
aggregate principal amount of fixed-rate British pound sterling denominated debt, including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt. The cross-currency swaps have maturities of June 2031 and July 2042. The Company is required to post collateral on the cross-currency derivative instruments when the derivative contracts are in a liability position. In May 2016, the Company entered into a collateral holiday agreement for
80%
of both the 2031 and 2042 cross-currency swaps, which eliminates the requirement to post collateral for
three
years.
The effect of derivative instruments on the consolidated balance sheets is presented in the table below:
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2016
|
|
2015
|
Interest Rate Derivatives
|
|
|
|
Accrued interest
|
$
|
5
|
|
|
$
|
3
|
|
Other long-term liabilities
|
$
|
—
|
|
|
$
|
10
|
|
Accumulated other comprehensive loss
|
$
|
(5
|
)
|
|
$
|
(13
|
)
|
|
|
|
|
Cross-Currency Derivatives
|
|
|
|
Other long-term liabilities
|
$
|
251
|
|
|
$
|
—
|
|
The Company’s interest rate and cross-currency derivative instruments are not designated as hedges and are marked to fair value each period, with the impact recorded as a gain or loss on financial instruments, net in the consolidated statements of operations. While these derivative instruments are not designated as cash flow hedges for accounting purposes, management continues to believe such instruments are correlated with the respective debt, thus managing associated risk.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The effect of financial instruments on the consolidated statements of operations is presented in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Gain (Loss) on Financial Instruments, Net:
|
|
|
|
|
|
Change in fair value of interest rate derivative instruments
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
12
|
|
Change in fair value of cross-currency derivative instruments
|
(179
|
)
|
|
—
|
|
|
—
|
|
Remeasurement of Sterling Notes to U.S. dollars
|
279
|
|
|
—
|
|
|
—
|
|
Loss on termination of interest rate derivative instruments
|
(11
|
)
|
|
—
|
|
|
—
|
|
Loss reclassified from accumulated other comprehensive loss due to discontinuance of hedge accounting
|
(8
|
)
|
|
(9
|
)
|
|
(19
|
)
|
|
$
|
89
|
|
|
$
|
(4
|
)
|
|
$
|
(7
|
)
|
13. Fair Value Measurements
The accounting guidance
establishes a three-level hierarchy for disclosure of fair value measurements, based upon 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
December 31, 2016
and
2015
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.
The Company’s cash and cash equivalents as of
December 31, 2016
and restricted cash and cash equivalents as of December 31, 2015 were primarily invested in money market funds and 90 day or less commercial paper. The money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange and commercial paper is valued at cost plus the accretion of the discount on a yield to maturity basis, which approximated fair value. The money market funds and commercial paper potentially subject the Company to concentration of credit risk. The amount invested within any one financial instrument did not exceed
$250 million
and
$1.5 billion
as of
December 31, 2016
and December 31, 2015, respectively. As of
December 31, 2016
and 2015, there were no significant concentrations of financial instruments in a single investee, industry or geographic location.
Interest rate derivative instruments are valued using a present value calculation based on an implied forward LIBOR curve (adjusted for Charter Operating’s and counterparties’ credit risk). The weighted average pay rate for the Company’s currently effective interest rate derivative instruments was
1.59%
and
1.61%
at
December 31, 2016
and
2015
, respectively (exclusive of applicable spreads).
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The Company’s financial instruments that are accounted for at fair value on a recurring basis are presented in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 1
|
|
Level 2
|
Assets
|
|
|
|
|
|
|
|
Money market funds
|
$
|
1,205
|
|
|
$
|
—
|
|
|
$
|
14,330
|
|
|
$
|
—
|
|
Commercial paper
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,934
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Interest rate derivative instruments
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Cross-currency derivative instruments
|
$
|
—
|
|
|
$
|
251
|
|
|
$
|
—
|
|
|
$
|
—
|
|
A summary of the carrying value and fair value of the Company’s debt at
December 31, 2016
and
2015
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
Debt
|
|
|
|
|
|
|
|
|
Senior notes and debentures
|
|
$
|
52,933
|
|
|
$
|
55,203
|
|
|
$
|
28,433
|
|
|
$
|
28,744
|
|
Credit facilities
|
|
$
|
8,814
|
|
|
$
|
8,943
|
|
|
$
|
7,290
|
|
|
$
|
7,274
|
|
The estimated fair value of the Company’s senior notes and debentures as of
December 31, 2016
and
2015
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.
Non-financial Assets and Liabilities
The Company’s nonfinancial assets such as equity-method investments, franchises, property, plant, and equipment, and other intangible assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as upon a business combination and when there is evidence that an impairment may exist.
No
impairments were recorded in
2016
,
2015
and
2014
. Upon closing of the Transactions, all of Legacy TWC and Legacy Bright House nonfinancial assets and liabilities were recorded at fair values. See Note 2.
14. 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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Programming
|
$
|
7,034
|
|
|
$
|
2,678
|
|
|
$
|
2,459
|
|
Regulatory, connectivity and produced content
|
1,467
|
|
|
435
|
|
|
428
|
|
Costs to service customers
|
5,173
|
|
|
1,705
|
|
|
1,679
|
|
Marketing
|
1,699
|
|
|
628
|
|
|
617
|
|
Transition costs
|
156
|
|
|
72
|
|
|
14
|
|
Other
|
3,126
|
|
|
908
|
|
|
776
|
|
|
$
|
18,655
|
|
|
$
|
6,426
|
|
|
$
|
5,973
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Programming costs consist primarily of costs paid to programmers for basic, premium, digital, video on demand, and pay-per-view programming. Regulatory, connectivity and produced content costs represent payments to franchise and regulatory authorities, costs directly related to providing video, Internet and voice services as well as payments for sports, local and news content produced by the Company. Included in regulatory, connectivity and produced content costs is content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games which are recorded as games are exhibited over the applicable season. Costs to service customers include costs related to field operations, network operations and customer care for the Company’s residential and small and medium business customers, including internal and third-party labor for installations, service and repairs, maintenance, billing and collection, occupancy and vehicle costs. Marketing costs represent the costs of marketing to current and potential commercial and residential customers including labor costs. Transition costs represent incremental costs incurred to integrate the TWC and Bright House operations and to increase the scale of the Company’s business as a result of the Transactions. See Note 2. Other includes bad debt expense, corporate overhead, advertising sales expenses, indirect costs associated with the Company’s enterprise business customers and regional sports and news networks, property tax expense and insurance expense and stock compensation expense, among others.
15. Other Operating Expenses, Net
Other operating expenses, net consist of the following for the years presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
Merger and restructuring costs
|
$
|
970
|
|
|
$
|
70
|
|
|
$
|
38
|
|
Other pension benefits
|
(899
|
)
|
|
—
|
|
|
—
|
|
Special charges, net
|
17
|
|
|
15
|
|
|
14
|
|
(Gain) loss on sale of assets, net
|
(2
|
)
|
|
4
|
|
|
10
|
|
|
$
|
86
|
|
|
$
|
89
|
|
|
$
|
62
|
|
Merger and restructuring costs
Merger and restructuring costs represent costs incurred in connection with merger and acquisition transactions and related restructuring, such as advisory, legal and accounting fees, employee retention costs, employee termination costs related to the Transactions and other exit costs. The Company expects to incur additional merger and restructuring costs in connection with the Transactions. Changes in accruals for merger and restructuring costs from January 1, 2016 through
December 31, 2016
are presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Retention Costs
|
|
Employee Termination Costs
|
|
Transaction and Advisory Costs
|
|
Other Costs
|
|
Total
|
Liability, December 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
33
|
|
Liability assumed in the Transactions
|
80
|
|
|
9
|
|
|
3
|
|
|
—
|
|
|
92
|
|
Costs incurred
|
26
|
|
|
337
|
|
|
318
|
|
|
41
|
|
|
722
|
|
Cash paid
|
(99
|
)
|
|
(102
|
)
|
|
(329
|
)
|
|
(41
|
)
|
|
(571
|
)
|
Remaining liability, December 31, 2016
|
$
|
7
|
|
|
$
|
244
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
276
|
|
In addition to the costs indicated above, the Company recorded
$248 million
of expense related to accelerated vesting of equity awards of terminated employees for the year ended
December 31, 2016
.
Other pension benefits
Other pension benefits include the pension curtailment gain, remeasurement gain, expected return on plan assets and interest cost components of net periodic pension benefit. See Note 21.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Special charges, net
Special charges, net primarily includes employee termination costs not related to the Transactions and net amounts of litigation settlements.
(Gain) loss on sale of assets, net
(Gain) loss on sale of assets, net represents the net (gain) loss recognized on the sales and disposals of fixed assets and cable systems.
16.
Stock Compensation Plans
Legacy Charter’s 2009 Stock Incentive Plan (assumed by Charter upon closing of the Transactions) provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and restricted stock. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting services for the Company, are eligible for grants under the 2009 Stock Incentive Plan. In April 2016, Charter’s board of directors and stockholders approved an additional
9 million
shares of Charter Class A common stock (or units convertible into Charter Class A common stock) under the 2009 Stock Incentive Plan which now allows for the issuance of up to
21 million
shares of Charter Class A common stock (or units convertible into Charter Class A common stock).
At the closing of the TWC Transaction, Legacy TWC employee equity awards were converted into Charter Class A common stock equity awards on the same terms and conditions as were applicable under the Legacy TWC equity awards, except that the number of shares covered by each award and the option exercise prices were adjusted for the Stock Award Exchange Ratio (as defined in the Merger Agreement) such that the intrinsic value of the Converted TWC Awards was approximately equal to that of the original awards at the closing of the Transactions. The Converted TWC Awards represented approximately
4.2 million
Charter restricted stock units and
0.8 million
Charter stock options (
0.5 million
of which were exercisable at the time of conversion) and continue to be subject to the terms of the Legacy TWC equity plans. The Converted TWC Awards were measured at their fair value as of the closing of the TWC Transaction. Of that fair value,
$514 million
related to Legacy TWC employee pre-combination service and was treated as consideration transferred in the TWC Transaction (see Note 2), while
$539 million
relates to post-combination service and is being amortized to stock compensation expense over the remaining vesting period of the awards. The fair values of the Converted TWC Awards were based on a valuation using assumptions developed by management and other information compiled by management including, but not limited to, historical volatility and exercise trends of Legacy Charter and Legacy TWC. The Parent Merger Exchange Ratio was also applied to outstanding Legacy Charter equity awards and option exercise prices; however, the terms of the equity awards did not change as a result of the Transactions.
Legacy Charter Stock options and restricted stock units cliff vest upon the
three
year anniversary of each grant. Stock options generally expire
ten
years from the grant date and restricted stock units have no voting rights. Certain stock options and restricted stock units vest based on achievement of stock price hurdles. Restricted stock generally vests annually over
one
year beginning from the date of grant. Legacy TWC restricted stock units that were converted into Charter restricted stock units generally vest
50%
on each of the third and fourth anniversary of the grant date. Legacy TWC stock options that were converted into Charter stock options vest ratably over a
four
-year period and expire
ten
years from the grant date.
As of
December 31, 2016
, total unrecognized compensation remaining to be recognized in future periods totaled
$262 million
for stock options,
$1 million
for restricted stock and
$279 million
for restricted stock units and the weighted average period over which they are expected to be recognized is
4
years for stock options,
4
months for restricted stock and
3
years for restricted stock units. The Company recorded
$244 million
,
$78 million
and
$55 million
of stock compensation expense for the years ended
December 31, 2016
,
2015
and
2014
, respectively, which is included in operating costs and expenses. The Company also recorded
$248 million
of expense for the year ended
December 31, 2016
related to accelerated vesting of equity awards of terminated employees which is recorded in merger and restructuring costs.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
A summary of the activity for the Company’s stock options (after applying the Parent Merger Exchange Ratio) for the years ended
December 31, 2016
,
2015
and
2014
, is as follows (shares in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Aggregate Intrinsic Value
|
Outstanding, beginning of period
|
3,923
|
|
|
$
|
122.03
|
|
|
|
|
3,336
|
|
|
$
|
95.44
|
|
|
|
|
2,841
|
|
|
$
|
66.20
|
|
|
|
Granted
|
5,999
|
|
|
$
|
218.91
|
|
|
|
|
1,176
|
|
|
$
|
177.14
|
|
|
|
|
1,116
|
|
|
$
|
151.24
|
|
|
|
Converted TWC Awards
|
839
|
|
|
$
|
86.46
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
Exercised
|
(1,015
|
)
|
|
$
|
96.33
|
|
|
$
|
146
|
|
|
(524
|
)
|
|
$
|
72.27
|
|
|
$
|
68
|
|
|
(579
|
)
|
|
$
|
58.07
|
|
|
$
|
55
|
|
Canceled
|
(154
|
)
|
|
$
|
173.98
|
|
|
|
|
(65
|
)
|
|
$
|
155.23
|
|
|
|
|
(42
|
)
|
|
$
|
115.65
|
|
|
|
Outstanding, end of period
|
9,592
|
|
|
$
|
181.39
|
|
|
$
|
1,022
|
|
|
3,923
|
|
|
$
|
122.03
|
|
|
|
|
3,336
|
|
|
$
|
95.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining contractual life
|
8
|
|
years
|
|
|
|
7
|
|
years
|
|
|
|
7
|
|
years
|
|
|
Options exercisable, end of period
|
1,665
|
|
|
$
|
71.71
|
|
|
$
|
360
|
|
|
1,224
|
|
|
$
|
61.88
|
|
|
|
|
1,193
|
|
|
$
|
61.76
|
|
|
|
Options expected to vest, end of period
|
7,686
|
|
|
$
|
205.49
|
|
|
$
|
634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average fair value of options granted
|
$
|
47.42
|
|
|
|
|
|
|
$
|
66.20
|
|
|
|
|
|
|
$
|
60.92
|
|
|
|
|
|
A summary of the activity for the Company’s restricted stock (after applying the Parent Merger Exchange Ratio) for the years ended
December 31, 2016
,
2015
and
2014
, is as follows (shares in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
Shares
|
|
Weighted Average Grant Price
|
|
Shares
|
|
Weighted Average Grant Price
|
|
Shares
|
|
Weighted Average Grant Price
|
Outstanding, beginning of period
|
197
|
|
|
$
|
65.79
|
|
|
390
|
|
|
$
|
63.30
|
|
|
590
|
|
|
$
|
62.09
|
|
Granted
|
10
|
|
|
$
|
231.83
|
|
|
6
|
|
|
$
|
201.34
|
|
|
8
|
|
|
$
|
153.25
|
|
Vested
|
(197
|
)
|
|
$
|
65.79
|
|
|
(199
|
)
|
|
$
|
65.16
|
|
|
(208
|
)
|
|
$
|
63.43
|
|
Canceled
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding, end of period
|
10
|
|
|
$
|
231.81
|
|
|
197
|
|
|
$
|
65.79
|
|
|
390
|
|
|
$
|
63.30
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
A summary of the activity for the Company’s restricted stock units (after applying the Parent Merger Exchange Ratio) for the years ended
December 31, 2016
,
2015
and
2014
, is as follows (shares in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
Shares
|
|
Weighted Average Grant Price
|
|
Shares
|
|
Weighted Average Grant Price
|
|
Shares
|
|
Weighted Average Grant Price
|
Outstanding, beginning of period
|
337
|
|
|
$
|
150.96
|
|
|
294
|
|
|
$
|
115.01
|
|
|
260
|
|
|
$
|
82.64
|
|
Granted
|
895
|
|
|
$
|
213.09
|
|
|
148
|
|
|
$
|
179.17
|
|
|
139
|
|
|
$
|
151.00
|
|
Converted TWC Awards
|
4,162
|
|
|
$
|
224.90
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Vested
|
(1,739
|
)
|
|
$
|
219.60
|
|
|
(90
|
)
|
|
$
|
78.65
|
|
|
(94
|
)
|
|
$
|
77.67
|
|
Canceled
|
(342
|
)
|
|
$
|
219.91
|
|
|
(15
|
)
|
|
$
|
155.43
|
|
|
(11
|
)
|
|
$
|
124.44
|
|
Outstanding, end of period
|
3,313
|
|
|
$
|
192.41
|
|
|
337
|
|
|
$
|
150.96
|
|
|
294
|
|
|
$
|
115.01
|
|
17. Income Taxes
Substantially all of the Company’s operations are held through Charter Holdings and its direct and indirect subsidiaries. Charter Holdings and the majority of its subsidiaries are generally limited liability companies that are not subject to income tax. However, certain of these limited liability companies are subject to state income tax. In addition, the subsidiaries that are corporations are subject to income tax. Generally, the taxable income, gains, losses, deductions and credits of Charter Holdings are passed through to its members, Charter and A/N. Charter is responsible for its share of taxable income or loss of Charter Holdings allocated to it in accordance with the LLC Agreement and partnership tax rules and regulations. As a result, Charter's primary deferred tax component recorded in the consolidated balance sheets relates to its excess financial reporting outside basis, excluding amounts attributable to nondeductible goodwill, over Charter's tax basis in the investment in Charter Holdings.
Charter Holdings, the indirect owner of the Company’s cable systems, generally allocates its taxable income, gains, losses, deductions and credits proportionately according to the members’ respective ownership interests, except for special allocations required under Section 704(c) of the Internal Revenue Code and the Treasury Regulations (“Section 704(c)”). Pursuant to Section 704(c) and the LLC Agreement, each item of income, gain, loss and deduction with respect to any property contributed to the capital of the partnership shall, solely for tax purposes, be allocated among the members so as to take into account any variation between the adjusted basis of such property to the partnership for U.S. federal income tax purposes and its initial gross asset value using the “traditional method” as described in the Treasury Regulations.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Income Tax Benefit (Expense)
For the years ended
December 31, 2016
,
2015
, and
2014
, the Company recorded deferred income tax benefit (expense) as shown below. The tax provision in future periods will vary based on current and future temporary differences, as well as future operating results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Current expense:
|
|
|
|
|
|
|
Federal income taxes
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
State income taxes
|
|
(29
|
)
|
|
(4
|
)
|
|
(2
|
)
|
Current income tax expense
|
|
(33
|
)
|
|
(5
|
)
|
|
(3
|
)
|
|
|
|
|
|
|
|
Deferred benefit (expense):
|
|
|
|
|
|
|
Federal income taxes
|
|
2,549
|
|
|
53
|
|
|
(192
|
)
|
State income taxes
|
|
409
|
|
|
12
|
|
|
(41
|
)
|
Deferred income tax benefit (expense)
|
|
2,958
|
|
|
65
|
|
|
(233
|
)
|
Income tax benefit (expense)
|
|
$
|
2,925
|
|
|
$
|
60
|
|
|
$
|
(236
|
)
|
Income tax benefit for the year ended
December 31, 2016
was recognized primarily through the reversal of approximately
$3.3 billion
of valuation allowance (see further discussion below), net of tax effect of permanent differences, a decrease to the anticipated blended state rate applied to Legacy Charter deferred tax balances as a result of the Transactions, a change in a state tax law, and prior to the closing of the Transactions, increases (decreases) in deferred tax liabilities related to Charter’s franchises which are characterized as indefinite-lived for book financial reporting purposes.
Prior to July 2, 2015, Charter Communications Holding Company, LLC ("Charter Holdco") was treated as a partnership for tax purposes. Effective on July 2, 2015, Charter elected to treat two of its wholly owned subsidiaries as disregarded entities for federal and state income tax purposes (the “Election”). The subsidiaries that made the Election were two of the three partners in Charter Holdco. This Election resulted in a deemed liquidation of Charter Holdco into Charter solely for federal and state income tax purposes, and resulted in a net increase of
$638 million
to the tax basis of Charter Holdco’s amortizable and depreciable assets. After the Election, all taxable income, gains, losses, deductions and credits of Charter Holdco and its indirect limited liability company subsidiaries were treated as income of Charter. In addition, the indirect subsidiaries of Charter Holdco that are corporations joined the Charter consolidated group. The impact of the Election to the Charter income tax provision, net of valuation allowance, was
$187 million
of income tax benefit recorded as a discrete tax event during the year ended December 31, 2015.
The Company’s effective tax rate differs from that derived by applying the applicable federal income tax rate of
35%
for the years ended
December 31, 2016
,
2015
, and
2014
, respectively, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
Statutory federal income taxes
|
|
$
|
(288
|
)
|
|
$
|
116
|
|
|
$
|
(18
|
)
|
Statutory state income taxes, net
|
|
(36
|
)
|
|
(4
|
)
|
|
(2
|
)
|
Nondeductible expenses
|
|
(62
|
)
|
|
(12
|
)
|
|
(10
|
)
|
Net income attributable to noncontrolling interest
|
|
78
|
|
|
—
|
|
|
—
|
|
Change in valuation allowance
|
|
3,171
|
|
|
(250
|
)
|
|
(203
|
)
|
Organizational restructuring
|
|
—
|
|
|
187
|
|
|
—
|
|
Federal tax credits
|
|
16
|
|
|
18
|
|
|
—
|
|
State rate changes
|
|
65
|
|
|
4
|
|
|
(3
|
)
|
Other
|
|
(19
|
)
|
|
1
|
|
|
—
|
|
Income tax benefit (expense)
|
|
$
|
2,925
|
|
|
$
|
60
|
|
|
$
|
(236
|
)
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The change in the valuation allowance above differs from the change between the beginning and ending deferred tax position due to a change in deferred tax assets and the establishment of a valuation allowance on the net operating losses which results in no impact to the consolidated statements of operations.
Deferred Tax Assets (Liabilities)
The tax effects of these temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at
December 31, 2016
and
2015
are presented below.
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2016
|
|
2015
|
Deferred tax assets:
|
|
|
|
|
Loss carryforwards
|
|
$
|
4,127
|
|
|
$
|
4,247
|
|
Goodwill
|
|
—
|
|
|
315
|
|
Other intangibles
|
|
—
|
|
|
211
|
|
Accrued and other
|
|
243
|
|
|
227
|
|
Total gross deferred tax assets
|
|
4,370
|
|
|
5,000
|
|
Less: valuation allowance
|
|
(200
|
)
|
|
(3,186
|
)
|
Deferred tax assets
|
|
$
|
4,170
|
|
|
$
|
1,814
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
Investment in partnership
|
|
$
|
(30,832
|
)
|
|
$
|
—
|
|
Indefinite-lived intangibles
|
|
—
|
|
|
(1,582
|
)
|
Property, plant and equipment
|
|
—
|
|
|
(1,822
|
)
|
Accrued and other
|
|
(3
|
)
|
|
—
|
|
Deferred tax liabilities
|
|
(30,835
|
)
|
|
(3,404
|
)
|
Net deferred tax liabilities
|
|
$
|
(26,665
|
)
|
|
$
|
(1,590
|
)
|
Net deferred tax liabilities included approximately
$25 million
and
$28 million
at
December 31, 2016
and
2015
, respectively, relating to certain indirect subsidiaries that file separate income tax returns.
Valuation Allowance
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. Due to Legacy Charter’s history of losses, Legacy Charter was historically unable to assume future taxable income in its analysis and accordingly valuation allowances were established against the deferred tax assets, net of deferred tax liabilities, from definite-lived assets for book accounting purposes. However, as a result of the TWC Transaction, deferred tax liabilities resulting from the book fair value adjustment increased significantly and future taxable income that will result from the reversal of existing temporary differences for which deferred tax liabilities are recognized, is sufficient to conclude it is more likely than not that the Company will realize substantially all of its deferred tax assets. As a result, Charter reversed approximately
$3.3 billion
of its valuation allowance and recognized a corresponding income tax benefit in the consolidated statements of operations for the
year
ended
December 31, 2016
. Approximately
$145 million
of valuation allowance associated with federal tax net operating loss carryforwards acquired in the TWC Transaction and approximately
$55 million
of valuation allowance associated with state tax loss carryforwards and other miscellaneous deferred tax assets remains on the
December 31, 2016
consolidated balance sheet.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Net Operating Loss Carryforwards
As of
December 31, 2016
, Charter had approximately
$11.2 billion
of federal tax net operating loss carryforwards resulting in a gross deferred tax asset of approximately
$3.9 billion
. Federal tax net operating loss carryforwards expire in the years 2018 through 2035. These losses resulted from the operations of Charter Holdco and its subsidiaries. In addition, as of
December 31, 2016
, Charter had state tax net operating loss carryforwards, resulting in a gross deferred tax asset (net of federal tax benefit) of approximately
$304 million
. State tax net operating loss carryforwards generally expire in the years 2017 through 2035.
Upon closing of the TWC Transaction, Charter experienced a third “ownership change” as defined in Section 382 of the Internal Revenue Code; resulting in a third set of limitations on Charter’s use of its existing federal and state net operating losses, capital losses, and tax credit carryforwards. Both the first ownership change limitations that applied as a result of Legacy Charter’s emergence from bankruptcy in 2009 and second ownership change limitations that applied as a result of Liberty Media Corporation’s purchase in 2013 of a
27%
beneficial interest in Legacy Charter will also continue to apply. As of
December 31, 2016
, all of Charter's federal tax loss carryforwards are subject to Section 382 and other restrictions. Pursuant to these restrictions, Charter estimates that approximately
$5.4 billion
in 2017,
$3.8 billion
in 2018,
$432 million
in 2019 and an additional
$226 million
annually over each of the next five years of federal tax loss carryforwards should become unrestricted and available for Charter’s use. An additional
$415 million
is currently subject to a valuation allowance. Since the limitation amounts accumulate for future use to the extent they are not utilized in any given year, Charter believes its loss carryforwards should become fully available to offset future taxable income. Charter’s state loss carryforwards are subject to similar, but varying, limitations on their future use. If Charter was to experience another “ownership change” in the future, its ability to use its loss carryforwards could be subject to further limitations.
Tax Receivable Agreement
Under the LLC Agreement, A/N has rights to: (1) convert at any time some or all of its preferred units in Charter Holdings for common units in Charter Holdings, and (2) exchange at any time some or all of its common units in Charter Holdings for Charter’s Class A common stock or cash, at Charter’s option. Pursuant to a Tax Receivable Agreement ("TRA") between Charter and A/N, Charter must pay to A/N
50%
of the tax benefit when realized by Charter from the step-up in tax basis resulting from any future exchange or sale of the preferred and common units. Charter did not record a liability for this obligation as of the acquisition date since the tax benefit is dependent on uncertain future events that are outside of Charter’s control, such as the timing of a conversion or exchange. A future exchange or sale is not based on a fixed and determinable date and the exchange or sale is not certain to occur. If all of A/N's partnership units were to be exchanged or sold in the future, the undiscounted value of the obligation is currently estimated to be in the range of
zero
to
$3 billion
depending on measurement of the tax step-up in the future and Charter’s ability to realize the tax benefit in the periods following the exchange or sale. Factors impacting these calculations include, but are not limited to, the fair value of the equity at the time of the exchange and the effective tax rates when the benefits are realized.
In connection with the Letter Agreement between Charter and A/N whereby
1.9 million
Charter Holdings common units held by A/N were exchanged for shares of Charter Class A common stock for an aggregate purchase price of
$537 million
, an immediate step-up of
$580 million
in the tax basis of the assets of Charter Holdings occurred. As it relates to the exchange and tax step-up, a net deferred tax asset of approximately
$82 million
was recorded and a resulting TRA liability owed to A/N of
$137 million
which, as a transaction with a shareholder, was recorded directly to additional paid in capital. The TRA liability is recorded on an iterative, undiscounted basis and included in other long-term liabilities on the consolidated balance sheets as of December 31, 2016.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Uncertain Tax Positions
In connection with the TWC Transaction, the Company assumed
$181 million
of gross unrecognized tax benefits, exclusive of interest and penalties, which are recorded within other long-term liabilities. The net amount of the unrecognized tax benefits that could impact the effective tax rate is
$154 million
. The Company has determined that it is reasonably possible that its existing reserve for uncertain tax positions as of December 31, 2016 could decrease by
$35 million
during the year ended December 31, 2017 related to various ongoing audits, settlement discussions and expiration of statute of limitations with various state and local agencies; 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. A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of interest and penalties, included in other long-term liabilities on the accompanying consolidated balance sheets of the Company is as follows:
|
|
|
|
|
BALANCE, December 31, 2014
|
$
|
—
|
|
Additions on current year tax positions
|
5
|
|
|
|
BALANCE, December 31, 2015
|
5
|
|
Additions on prior year tax positions
|
1
|
|
Additions on current year tax positions
|
7
|
|
Additions on tax positions assumed in the TWC Transaction
|
181
|
|
Reductions on settlements and expirations with taxing authorities
|
(22
|
)
|
|
|
BALANCE, December 31, 2016
|
$
|
172
|
|
No tax years for Charter, Charter Holdings, or Charter Communications Holding Company, LLC for income tax purposes, are currently under examination by the IRS. Legacy Charter’s tax years ending 2013 through the short period return dated May 17, 2016 remain subject to examination and assessment. Years prior to 2013 remain open solely for purposes of examination of Legacy Charter’s loss and credit carryforwards. The IRS is currently examining Legacy TWC’s income tax returns for 2011 and 2012. Legacy TWC’s tax years ending 2013 through 2015 remain subject to examination and assessment. Prior to Legacy TWC’s separation from Time Warner Inc. (“Time Warner”) in March 2009 (the “Separation”), Legacy TWC was included in the consolidated U.S. federal and certain state income tax returns of Time Warner. The IRS is currently examining Time Warner’s 2008 through 2010 income tax returns. Time Warner’s income tax returns for 2005 to 2007, which are periods prior to the Separation, were settled with the exception of an immaterial item that has been referred to the IRS Appeals Division. 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 in
2016
, nor does the Company anticipate a material impact in the future.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
18. Earnings (Loss) Per Share
Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to Charter shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share considers the impact of potentially dilutive securities using the treasury stock and if-converted methods and is based on the weighted average number of shares used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options, restricted stock, restricted stock units, equity awards with market conditions and Charter Holdings convertible preferred units and common units. Weighted average number of shares outstanding for all periods presented has been recast to reflect the application of the Parent Merger Exchange Ratio. Basic loss per common share equaled diluted loss per common share for the years ended December 31, 2015 and 2014 because the Company incurred a net loss during those periods. The following is the computation of diluted earnings per common share for the year ended
December 31, 2016
.
|
|
|
|
|
|
2016
|
Numerator:
|
|
Net income attributable to Charter shareholders
|
$
|
3,522
|
|
Effect of dilutive securities:
|
|
Charter Holdings common units
|
129
|
|
Charter Holdings convertible preferred units
|
93
|
|
Net income attributable to Charter shareholders after assumed conversions
|
$
|
3,744
|
|
|
|
Denominator:
|
|
Weighted average common shares outstanding, basic
|
206,539,100
|
|
Effect of dilutive securities:
|
|
Assumed exercise or issuance of shares relating to stock plans
|
3,088,871
|
|
Weighted average Charter Holdings common units
|
19,333,227
|
|
Weighted average Charter Holdings convertible preferred units
|
5,830,241
|
|
Weighted average common shares outstanding, diluted
|
234,791,439
|
|
|
|
Basic earnings per common share attributable to Charter shareholders
|
$
|
17.05
|
|
Diluted earnings per common share attributable to Charter shareholders
|
$
|
15.94
|
|
19. Related Party Transactions
The following sets forth certain transactions in which the Company and the directors, executive officers, and affiliates of the Company are involved or, in the case of the management arrangements, subsidiaries that are debt issuers that pay certain of their parent companies for services.
Charter is a party to management arrangements with Spectrum Management Holding Company, LLC ("Spectrum Management") and certain of their subsidiaries. Under these agreements, Charter, Spectrum Management and Charter Holdco provide management services for the cable systems owned or operated by their subsidiaries. Costs associated with providing these services are charged directly to the Company’s operating subsidiaries. All other costs incurred on behalf of Charter’s operating subsidiaries are considered a part of the management fee. These costs are recorded as a component of operating costs and expenses, in the accompanying consolidated financial statements. The management fee charged to the Company’s operating subsidiaries approximated the expenses incurred by Spectrum Management, Charter Holdco and Charter on behalf of the Company’s operating subsidiaries in
2016
,
2015
and
2014
.
Liberty Broadband and A/N
On May 23, 2015, in connection with the execution of the Merger Agreement and the amendment of the Contribution Agreement, Charter entered into the Amended and Restated Stockholders Agreement with Liberty Broadband, A/N and Legacy Charter (the “Stockholders Agreement”) and the Charter Holdings Limited Liability Operating Agreement (“LLC Agreement”) with Liberty
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Broadband and A/N. As of the closing of the Merger Agreement and the Contribution Agreement on May 18, 2016, the Stockholders Agreement replaced Legacy Charter’s existing stockholders agreement with Liberty Broadband, dated September 29, 2014, and superseded the amended and restated stockholders agreement among Legacy Charter, Charter, Liberty Broadband and A/N, dated March 31, 2015.
Under the terms of the Stockholders Agreement, the number of Charter’s directors is fixed at 13, and includes its chief executive officer. Upon the closing of the Bright House Transaction, two designees selected by A/N became members of the board of directors of Charter and three designees selected by Liberty Broadband continued as members of the board of directors of Charter. The remaining eight directors are not affiliated with either A/N or Liberty Broadband. Each of A/N and Liberty Broadband is entitled to nominate at least one director to each of the committees of Charter’s board of directors, subject to applicable stock exchange listing rules and certain specified voting or equity ownership thresholds for each of A/N and Liberty Broadband, and provided that the Nominating and Corporate Governance Committee and the Compensation and Benefit Committee each have at least a majority of directors independent from A/N, Liberty Broadband and the Company (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 designation and other governance rights. Upon the closing of the Bright House Transaction, Mr. Thomas Rutledge, the Company’s Chief Executive Officer (“CEO”), became the chairman of the board of Charter.
In December 2016, the Company and A/N entered into the Letter Agreement in which A/N exchanged Charter Holdings common units for shares of Charter Class A common stock and the Company purchased from A/N Charter Holdings common units. The Letter Agreement also requires pro rata participation by A/N and its affiliates in any repurchases of shares of Charter Class A common stock until A/N has sold shares or units totaling
$537 million
(
$218 million
has already been completed), subject to Liberty Broadband's right of first refusal to purchase shares or units from A/N upon A/N's sale to any third party, excluding the Company. See Note 11 for more information. Pursuant to the TRA between Charter and A/N, Charter must pay to A/N
50%
of the tax benefit when realized by Charter from the step-up in tax basis resulting from any future exchange or sale of the preferred and common units. See Note 17 for more information.
The Company is aware that Dr. John Malone may be deemed to have a
36.4%
voting interest in Liberty Interactive and is Chairman of the board of directors, an executive officer position, of Liberty Interactive. Liberty Interactive owns
38.3%
of the common stock of HSN, Inc. (“HSN”) and has the right to elect
20%
of the board members of HSN. Liberty Interactive wholly owns QVC, Inc. (“QVC”). The Company has programming relationships with HSN and QVC which pre-date the transaction with Liberty Media. For the years ended
December 31, 2016
,
2015
and
2014
, the Company recorded payments in aggregate of approximately
$53 million
,
$17 million
and
$14 million
, respectively, from HSN and QVC as part of channel carriage fees and revenue sharing arrangements for home shopping sales made to customers in the Company’s footprint.
Dr. Malone and Mr. Steven Miron, each a member of Charter’s board of directors, also serve on the board of directors of Discovery Communications, Inc., (“Discovery”) and the Company is aware that Dr. Malone owns
5.2%
in the aggregate of the common stock of Discovery and has a
28.7%
voting interest in Discovery for the election of directors. The Company is aware that Advance/Newhouse Programming Partnership (“A/N PP”), an affiliate of A/N and in which Mr. Miron is the CEO, owns
100%
of the Series A preferred stock of Discovery and
100%
of the Series C preferred stock of Discovery, representing approximately
34.0%
of the outstanding equity of Discovery’s stock, on an as-converted basis. A/N PP has the right to appoint three directors out of a total of ten directors to Discovery’s board to be elected by the holders of Discovery’s Series A preferred stock. In addition, Dr. Malone is a member of the board of directors of Lions Gate Entertainment Corp. ("Lions Gate", parent company of Starz, Inc.) and owns approximately
5.9%
in the aggregate of the common stock of Lions Gate and has
8.1%
of the voting power, pursuant to his ownership of Lions Gate Class A voting shares. The Company purchases programming from both Discovery and Lions Gate pursuant to agreements entered into prior to Dr. Malone and Mr. Miron joining Charter’s board of directors. Based on publicly available information, the Company does not believe that either Discovery or Lions Gate would currently be considered related parties. The amounts paid in the aggregate to Discovery and Lions Gate represent less than
3%
of total operating costs and expenses for the years ended
December 31, 2016
,
2015
and
2014
.
Equity Investments
The Company has agreements with certain equity-method investees (see Note 7) pursuant to which the Company has made or received related party transaction payments. The Company recorded payments to equity-method investees totaling
$171 million
and
$28 million
during the years ended
December 31, 2016
and
2015
, respectively. The Company recorded advertising revenues
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
from transactions with equity-method investees totaling
$7 million
during the year ended
December 31, 2016
. The Company has loans outstanding to investees of
$5 million
as of
December 31, 2016
.
20. Commitments and Contingencies
Commitments
The following table summarizes the Company’s payment obligations as of
December 31, 2016
for its contractual obligations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
Capital and Operating Lease Obligations
(a)
|
$
|
1,324
|
|
|
$
|
259
|
|
|
$
|
225
|
|
|
$
|
180
|
|
|
$
|
142
|
|
|
108
|
|
|
$
|
410
|
|
Programming Minimum Commitments
(b)
|
310
|
|
|
225
|
|
|
37
|
|
|
26
|
|
|
22
|
|
|
—
|
|
|
—
|
|
Other
(c)
|
13,187
|
|
|
1,334
|
|
|
810
|
|
|
704
|
|
|
664
|
|
|
539
|
|
|
9,136
|
|
|
$
|
14,821
|
|
|
$
|
1,818
|
|
|
$
|
1,072
|
|
|
$
|
910
|
|
|
$
|
828
|
|
|
$
|
647
|
|
|
$
|
9,546
|
|
|
|
(a)
|
The Company leases certain facilities and equipment under non-cancelable capital and operating leases. Leases and rental costs charged to expense for the years ended
December 31, 2016
,
2015
and
2014
were
$215 million
,
$49 million
,
$43 million
, respectively.
|
|
|
(b)
|
The Company pays programming fees under multi-year contracts ranging from
three
to
ten
years, 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 statement of operations were
$7.0 billion
,
$2.7 billion
and
$2.5 billion
for the years ended
December 31, 2016
,
2015
and
2014
respectively. Certain of the Company’s 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 the Company’s programming contracts.
|
|
|
(c)
|
“Other” represents other guaranteed minimum commitments, including rights negotiated directly with content owners for distribution on Company-owned channels or networks and commitments related to the Company’s role as an advertising and distribution sales agent for third party-owned channels or networks as well as commitments to the Company’s customer premise equipment vendors.
|
The following items are not included in the contractual obligation table due to various factors discussed below. However, the Company incurs these costs as part of its operations:
|
|
•
|
The Company rents utility poles used in its operations. Generally, pole rentals are cancelable on short notice, but the Company anticipates that such rentals will recur. Rent expense incurred for pole rental attachments for the years ended
December 31, 2016
,
2015
and
2014
was
$115 million
,
$53 million
and
$49 million
, respectively.
|
|
|
•
|
The Company pays franchise fees under multi-year franchise agreements based on a percentage of revenues generated from video service per year. The Company also pays 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
$534 million
,
$212 million
and
$208 million
for the years ended
December 31, 2016
,
2015
and
2014
respectively.
|
|
|
•
|
The Company also has
$278 million
in letters of credit, of which
$220 million
is secured under the Charter Operating credit facility, primarily to its 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
2016
. The Company made no cash contributions to the qualified pension plans in
2016
; however, the Company is permitted to make discretionary cash contributions to the qualified pension plans in
2017
. For the nonqualified pension plan, the Company contributed
$5 million
during
2016
and will continue to make contributions in
2017
to the extent benefits are paid.
|
Legal Proceedings
In 2014, following an announcement by Comcast and Legacy TWC of their intent to merge, Breffni Barrett and others filed suit in the Supreme Court of the State of New York for the County of New York against Comcast, Legacy TWC and their respective officers and directors. Later five similar class actions were consolidated with this matter (the “NY Actions”). The NY Actions
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
were settled in July 2014, however, such settlement was terminated following the termination of the Comcast and TWC merger in April 2015. In May 2015, Charter and TWC announced their intent to merge. Subsequently, the parties in the NY Actions filed a Second Consolidated Class Action Complaint (the “Second Amended Complaint”), removing Comcast as a defendant and naming TWC, the members of the TWC board of directors, Charter and the merger subsidiaries as defendants. The Second Amended Complaint generally alleges, among other things, that the members of the TWC board of directors breached their fiduciary duties to TWC stockholders during the Charter merger negotiations and by entering into the merger agreement and approving the mergers, and that Charter aided and abetted such breaches of fiduciary duties. The complaint sought, among other relief, injunctive relief enjoining the stockholder vote on the mergers, unspecified declaratory and equitable relief, compensatory damages in an unspecified amount, and costs and attorneys’ fees.
In September 2015, the parties entered into a memorandum of understanding (“MOU”) to settle the action. Pursuant to the MOU, the defendants issued certain supplemental disclosures relating to the mergers on a Form 8-K, and plaintiffs agreed to release with prejudice all claims that could have been asserted against defendants in connection with the mergers. The settlement is conditioned on, among other things, approval by the New York Supreme Court. That court gave preliminary approval to the settlement in October 2016. A hearing to consider final approval of this settlement is set for March 2017. In the event that the New York Supreme Court does not approve the settlement, Charter intends to vigorously defend this case.
In August 2015, a purported stockholder of Charter, Matthew Sciabacucchi, filed a lawsuit in the Delaware Court of Chancery, on behalf of a putative class of Charter stockholders, challenging the transactions between Charter, TWC, A/N, and Liberty Broadband announced by Charter on May 26, 2015 (collectively, the “Transactions”). The lawsuit names as defendants Liberty Broadband, Charter, the board of directors of Charter, and New Charter. Plaintiff alleged that the Transactions improperly benefit Liberty Broadband at the expense of other Charter shareholders, and that Charter issued a false and misleading proxy statement in connection with the Transactions. Plaintiff requested, among other things, that the Delaware Court of Chancery enjoin the September 21, 2015 special meeting of Charter stockholders at which Charter stockholders were asked to vote on the Transactions until the defendants disclosed certain information relating to Charter and the Transactions. The disclosures demanded by the plaintiff included (i) certain unlevered free cash flow projections for Charter and (ii) a Form of Proxy and Right of First Refusal Agreement (“Proxy”) by and among Liberty Broadband, A/N, Charter and New Charter, which was referenced in the description of the Second Amended and Restated Stockholders Agreement, dated May 23, 2015, among Charter, New Charter, Liberty Broadband and A/N. On September 9, 2015, Charter issued supplemental disclosures containing unlevered free cash flow projections for Charter. In return, the plaintiff agreed its disclosure claims were moot and withdrew its application to enjoin the Charter stockholder vote on the Transactions. Charter has filed a motion to dismiss this litigation but the court has not yet ruled upon it. Charter denies any liability, believes that it has substantial defenses, and intends to vigorously defend this suit.
The California Attorney General and the Alameda County, California District Attorney are investigating whether certain of Legacy Charter’s waste disposal policies, procedures and practices are in violation of the California Business and Professions Code and the California Health and Safety Code. That investigation was commenced in January 2014. A similar investigation involving Legacy TWC was initiated in February 2012. Charter is cooperating with these investigations. While the Company is unable to predict the outcome of these investigations, it does not expect that the outcome will have a material effect on its operations, financial condition, or cash flows.
On December 19, 2011, Sprint Communications Company L.P. (“Sprint”) filed a complaint in the U.S. District Court for the District of Kansas alleging that Legacy TWC infringes 12 U.S. patents purportedly relating to Voice over Internet Protocol (“VoIP”) services. Over the course of the litigation Sprint dismissed its claims relating to five of the asserted patents, and shortly before trial Sprint dropped its claims with respect to two additional patents. A trial on the remaining five patents is scheduled to begin on February 13, 2017. The plaintiff is seeking monetary damages of approximately
$150 million
. The plaintiff is also claiming that TWC willfully infringed the patents, and may seek up to treble damages as well as attorneys’ fees and costs. Charter intends to vigorously defend against this lawsuit. However, no assurances can be made that such defenses would ultimately be successful. At this time, the Company does not expect that the outcome of this litigation will have a material adverse effect on its operations, financial condition or cash flows although the ultimate outcome of the litigation cannot be predicted.
On October 23, 2015, the New York Office of the Attorney General (the “NY AG”) began an investigation of Legacy TWC's advertised Internet speeds and other Internet product advertising. On February 1, 2017, the NY AG filed suit in the Supreme Court for the State of New York alleging that Legacy TWC's advertising of Internet speeds was false and misleading. The suit seeks restitution and injunctive relief. The Company denies that Legacy TWC engaged in any wrongdoing and the Company intends to defend itself vigorously. However, no assurances can be made that such defenses would ultimately be successful. At this time,
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
the Company does not expect that the outcome of this litigation will have a material adverse effect on its operations, financial condition or cash flows.
The Company is a defendant or co-defendant in several lawsuits involving alleged infringement of various patents relating to various aspects of its businesses. Other industry participants are also defendants in certain of these cases. In the event that a court ultimately determines that the Company infringes on any intellectual property rights, the Company may be subject to substantial damages and/or an injunction that could require the Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as negotiate royalty or license agreements with respect to the patents 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 is party to lawsuits, claims and regulatory inquiries that arise in the ordinary course of conducting its business, including lawsuits claiming violation of wage and hour laws and breach of contract by vendors, including by three programmers. 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.
21. Employee Benefit Plans
Pension Plans
Upon completion of the TWC Transaction, Charter assumed sponsorship of Legacy TWC’s pension plans. The Company sponsors two qualified defined benefit pension plans, the TWC Pension Plan and the TWC Union Pension Plan, that provide pension benefits to a majority of Legacy TWC employees. The Company also provides a nonqualified defined benefit pension plan for certain employees under the TWC Excess Pension Plan.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Changes in the projected benefit obligation, fair value of plan assets and funded status of the pension plans from January 1, 2016 through December 31, 2016 are presented below:
|
|
|
|
|
|
2016
|
Projected benefit obligation at beginning of year
|
$
|
—
|
|
Benefit obligation assumed in the TWC Transaction
|
4,009
|
|
Service cost
|
86
|
|
Interest cost
|
87
|
|
Curtailment amendment
|
(675
|
)
|
Actuarial gain
|
(149
|
)
|
Benefits paid
|
(98
|
)
|
Projected benefit obligation at end of year
|
$
|
3,260
|
|
|
|
Accumulated benefit obligation at end of year
|
$
|
3,260
|
|
|
|
Fair value of plan assets at beginning of year
|
$
|
—
|
|
Fair value of plan assets acquired in the TWC Transaction
|
2,877
|
|
Actual return on plan assets
|
162
|
|
Employer contributions
|
5
|
|
Benefits paid
|
(98
|
)
|
Fair value of plan assets at end of year
|
$
|
2,946
|
|
|
|
Funded status
|
$
|
(314
|
)
|
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the qualified pension plans and the nonqualified pension plan as of
December 31, 2016
consisted of the following:
|
|
|
|
|
|
|
|
|
|
Qualified Pension Plans
|
|
Nonqualified Pension Plan
|
|
December 31, 2016
|
Projected benefit obligation
|
$
|
3,204
|
|
|
$
|
56
|
|
Accumulated benefit obligation
|
$
|
3,204
|
|
|
$
|
56
|
|
Fair value of plan assets
|
$
|
2,946
|
|
|
$
|
—
|
|
Pretax amounts recognized in the consolidated balance sheet as of
December 31, 2016
consisted of the following:
|
|
|
|
|
|
December 31, 2016
|
Noncurrent asset
|
$
|
1
|
|
Current liability
|
(6
|
)
|
Long-term liability
|
(309
|
)
|
Net amounts recognized in consolidated balance sheet
|
$
|
(314
|
)
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The components of net periodic benefit costs for the year ended
December 31, 2016
consisted of the following:
|
|
|
|
|
|
Year Ended December 31, 2016
|
Service cost
|
$
|
86
|
|
Interest cost
|
87
|
|
Expected return on plan assets
|
(116
|
)
|
Pension curtailment gain
|
(675
|
)
|
Remeasurement gain
|
(195
|
)
|
Net periodic pension benefit
|
$
|
(813
|
)
|
The
$195 million
remeasurement gain recorded during the year ended
December 31, 2016
was primarily driven by the effects of an increase of the discount rate from
3.99%
at the closing date of the TWC Transaction to
4.20%
at
December 31, 2016
and a gain to record pension assets at
December 31, 2016
fair values.
Weighted average assumptions used to determine benefit obligations as of
December 31, 2016
consisted of the following:
|
|
|
|
|
December 31, 2016
|
Discount rate
|
4.20
|
%
|
Rate of compensation increase
|
—
|
%
|
The weighted average of discount rates used to measure the projected benefit obligation at the closing date of the TWC Transaction was
3.99%
. The rate of compensation increase used to measure the projected benefit obligation as of the closing of the TWC Transaction was an age-graded average increase of
4.25%
. The Company utilized the RP 2015/MP2015 mortality tables published by the Society of Actuaries to measure the benefit obligations as of
December 31, 2016
and the closing date of the TWC Transaction.
Weighted average assumptions used to determine net periodic benefit costs for the year ended
December 31, 2016
consisted of the following:
|
|
|
|
|
Year Ended December 31, 2016
|
Expected long-term rate of return on plan assets
|
6.50
|
%
|
Discount rate
(a)
|
3.72
|
%
|
Rate of compensation increase
(b)
|
—
|
%
|
|
|
(a)
|
The discount rate used to determine net periodic pension benefit was
3.99%
from the closing date of the TWC Transaction through remeasurement date (June 30, 2016), and was
3.72%
from remeasurement date through
December 31, 2016
.
|
|
|
(b)
|
The rate of compensation increase used to determine net periodic pension benefit was
4.25%
from the closing date of the TWC Transaction through remeasurement date (June 30, 2016), and
0%
thereafter. See “Pension Plan Curtailment Amendment” below for further discussion.
|
In developing the expected long-term rate of return on plan assets, the Company considered the pension portfolio’s composition, past average rate of earnings and the Company’s future asset allocation targets. The weighted average expected long-term rate of return on plan assets used to determine net periodic pension benefit for the year ended December 31, 2017 is expected to be
6.50%
. The Company determined the discount rates used to determine benefit obligations and net periodic pension benefit 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.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
Pension Plan Curtailment Amendment
Following the closing of the TWC Transaction, Charter amended the pension plans to freeze future benefit accruals to current active plan participants as of August 31, 2016. Effective September 1, 2016, no future compensation increases or future service will be credited to participants of the pension plans and new hires are not eligible to participate in the plans. Upon announcement and approval of the plan amendment, the assumptions underlying the pension liability and pension asset values were reassessed utilizing remeasurement date assumptions in accordance with Charter’s mark-to-market pension accounting policy to record gains and losses in the period in which a remeasurement event occurs. The
$675 million
curtailment gain recorded during the year ended
December 31, 2016
was primarily driven by the reduction of the compensation rate assumption to
0%
in accordance with the terms of the plan amendment, reflecting the pension liability at its accumulated benefit obligation instead of its projected benefit obligation at the remeasurement date.
Pension Plan Assets
The assets of the qualified pension plans are held in a master trust in which the qualified pension plans are the only participating plans (the “Master Trust”). The investment policy for the qualified pension plans is to achieve a reasonable long-term rate of return on plan assets with an acceptable level of risk in order to maintain adequate funding levels. The investment portfolio is a mix of fixed-income and equity securities with the objective of matching plan liability performance, diversifying risk and achieving a target investment return. The pension plan’s Investment Committee establishes risk mitigation policies and regularly monitors investment performance, investment allocation policies, and the execution of these strategies. The Investment Committee engages a third-party investment firm with responsibility of executing the directives of the Investment Committee, monitoring the performance of individual investment managers of the Master Trust, and making adjustments and changes within defined parameters when necessary. On a periodic basis, the Investment Committee conducts a broad strategic review of its portfolio construction and investment allocation policies. Neither the Company, the Investment Committee, nor the third-party investment firm manages any assets internally or directly utilizes derivative instruments or hedging; however, the investment mandate of some investment managers allows the use of derivatives as components of their standard portfolio management strategies. Pension assets are managed in a balanced portfolio comprised of two major components: a return-seeking portion and a liability-matching portion. The expected role of return-seeking investments is to achieve a reasonable long-term growth of pension assets with a prudent level of risk, while the role of liability-matching investments is to provide a partial hedge against liability performance associated with changes in interest rates. The objective within return-seeking investments is to achieve asset diversity in order to balance return and volatility.
The Company adopted an investment strategy referred to as a de-risking glide path to increase the fixed income allocation as the funded status of the qualified pension plans improves. As the qualified pension plans reach set funded status milestones, the assets will be rebalanced to shift more assets from equity to fixed income. Based on the progress with this strategy, the target investment allocation for pension fund assets is permitted to vary within specified ranges subject to Investment Committee approval for return-seeking securities and liability-matching securities. The target and actual investment allocation of the qualified pension plans by asset category as of
December 31, 2016
consisted of the following:
|
|
|
|
|
|
|
|
Target
|
|
Actual Allocation
|
|
Allocation
|
|
December 31, 2016
|
Return-seeking securities
|
75.0
|
%
|
|
64.4
|
%
|
Liability-matching securtties
|
25.0
|
%
|
|
35.4
|
%
|
Other investments
|
—
|
%
|
|
0.2
|
%
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
The following table sets forth the investment assets of the qualified pension plans, which exclude accrued investment income and other receivables, accrued liabilities, and investments with a fair value measured at net asset value per share as a practical expedient, by level within the fair value hierarchy as of
December 31, 2016
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Cash
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Common stocks:
|
|
|
|
|
|
|
|
Domestic
(a)
|
1,065
|
|
|
1,065
|
|
|
—
|
|
|
—
|
|
International
(a)
|
391
|
|
|
391
|
|
|
—
|
|
|
—
|
|
Commingled equity funds
(b)
|
348
|
|
|
—
|
|
|
348
|
|
|
—
|
|
Other equity securities
(c)
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
Corporate debt securities
(d)
|
394
|
|
|
—
|
|
|
394
|
|
|
—
|
|
Commingled bond funds
(b)
|
273
|
|
|
—
|
|
|
273
|
|
|
—
|
|
U.S. Treasury debt securities
(a)
|
260
|
|
|
260
|
|
|
—
|
|
|
—
|
|
Collective trust funds
(e)
|
75
|
|
|
—
|
|
|
75
|
|
|
—
|
|
U.S. government agency asset-backed debt securities
(f)
|
53
|
|
|
—
|
|
|
53
|
|
|
—
|
|
Corporate asset-backed debt securities
(g)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
Other fixed-income securities
(h)
|
89
|
|
|
—
|
|
|
89
|
|
|
—
|
|
Total investment assets
|
2,955
|
|
|
$
|
1,721
|
|
|
$
|
1,234
|
|
|
$
|
—
|
|
Accrued investment income and other receivables
(i)
|
107
|
|
|
|
|
|
|
|
Accrued liabilities
(i)
|
(120
|
)
|
|
|
|
|
|
|
Investments measured at net asset value
(j)
|
4
|
|
|
|
|
|
|
|
Fair value of plan assets
|
$
|
2,946
|
|
|
|
|
|
|
|
|
|
(a)
|
Common stocks, mutual funds and U.S. Treasury debt securities are valued at the closing price reported on the active market on which the individual securities are traded. No single industry comprised a significant portion of common stock held by the qualified pension plan as of
December 31, 2016
.
|
|
|
(b)
|
Commingled equity funds and commingled bond funds are valued using the net asset value provided by the administrator of the fund. The net asset value is based on the readily determinable value of the underlying assets owned by the fund, less liabilities, and then divided by the number of units outstanding.
|
|
|
(c)
|
Other equity securities consist of preferred stocks, which are valued at the closing price reported on the active market on which the individual securities are traded.
|
|
|
(d)
|
Corporate debt securities are valued based on observable prices from the new issue market, benchmark quotes, secondary trading and dealer quotes. An option adjusted spread model is incorporated to adjust spreads of issues that have early redemption features and final spreads are added to the U.S. Treasury curve.
|
|
|
(e)
|
Collective trust funds primarily consist of short-term investment strategies comprised of instruments issued or fully guaranteed by the U.S. government and/or its agencies and are valued using the net asset value provided by the administrator of the fund. The net asset value is based on the readily determinable value of the underlying assets owned by the fund, less liabilities, and then divided by the number of units outstanding.
|
|
|
(f)
|
U.S. government agency asset-backed debt securities consist of pass-through mortgage-backed securities issued by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association valued using available trade information, dealer quotes, market indices and research reports, spreads, bids and offers.
|
|
|
(g)
|
Corporate asset-backed debt securities primarily consist of pass-through mortgage-backed securities issued by U.S. and foreign corporations valued using available trade information, dealer quotes, market indices and research reports, spreads, bids and offers.
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
(h)
|
Other fixed-income securities consist of foreign government debt securities, municipal bonds and U.S. government agency debt securities, which are valued based on observable prices from the new issue market, benchmark quotes, secondary trading and dealer quotes. An option adjusted spread model is incorporated to adjust spreads of issues that have early redemption features and final spreads are added to the U.S. Treasury curve.
|
|
|
(i)
|
Accrued investment income and other receivables includes amounts receivable under foreign exchange contracts of
$70 million
as of
December 31, 2016
. Accrued liabilities includes amounts accrued under foreign exchange contracts of
$71 million
as of
December 31, 2016
. The fair value of the assets and liabilities associated with these foreign exchange contracts are presented on a gross basis and are valued using the exchange rates in effect for the applicable currencies as of the valuation date (a Level 1 fair value measurement).
|
|
|
(j)
|
Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. These investments primarily consist of hedge funds valued utilizing net asset value provided by the administrator of the fund, which is based on the value of the underlying assets owned by the fund, less liabilities, and then divided by the number of units outstanding. Shares of the fund are not redeemable and the underlying assets are anticipated to be liquidated and distributed to investors in the near term. There are no material unfunded commitments with respect to these investments. The fair value amounts presented in this table are intended to permit the reconciliation of the fair value hierarchy to the total fair value of plan assets discussed throughout this footnote.
|
Pension Plan Contributions
The Company made no cash contributions to the qualified pension plans during the year ended
December 31, 2016
; however, the Company may make discretionary cash contributions to the qualified pension plans in the future. Such contributions will be dependent on a variety of factors, including current and expected interest rates, asset performance, the funded status of the qualified pension plans and management’s judgment. For the nonqualified unfunded pension plan, the Company will continue to make contributions during 2017 to the extent benefits are paid.
Benefit payments for the pension plans are expected to be
$170 million
in
2017
,
$174 million
in
2018
,
$177 million
in
2019
,
$180 million
in
2020
,
$182 million
in
2021
and
$911 million
in 2022 to 2026.
Multiemployer Plans
Upon completion of the TWC Transaction, Charter assumed Legacy TWC’s multiemployer plans. The Company contributes to a number of multiemployer plans under the terms of collective-bargaining agreements that cover its union-represented employees. Such multiemployer plans provide medical, pension and retirement savings benefits to active employees and retirees. The Company made contributions to multiemployer plans of
$31 million
for the year ended
December 31, 2016
.
The risks of participating in multiemployer pension plans are different from single-employer pension plans in the following aspects: (a) assets contributed to a multiemployer pension plan by one employer may be used to provide benefits to employees of other participating employers, (b) if a participating employer stops contributing to the multiemployer pension plan, the unfunded obligations of the plan may be borne by the remaining participating employers and (c) if the Company chooses to stop participating in any of the multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
The multiemployer pension plans to which the Company contributes each received a Pension Protection Act “green” zone status in 2015. The zone status is based on the most recent information the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the green zone are at least 80% funded.
Defined Contribution Benefit Plans
The Company’s employees may participate in the Charter Communications, Inc. 401(k) Plan (the “401(k) Plan”). Upon completion of the TWC Transaction, Charter assumed Legacy TWC’s defined contribution plan, the TWC Savings Plan. In June 2016, the Company announced changes to both the 401(k) Plan and the TWC Savings Plan that were effective September 1, 2016 and effective January 1, 2017, the 401(k) Plan and TWC Savings Plan merged into one plan. Employees that qualify for participation can contribute up to
50%
of their salary, on a pre-tax basis, subject to a maximum contribution limit as determined by the Internal Revenue Service. The Company’s matching contribution is discretionary and is equal to
100%
of the amount of the salary reduction the participant elects to defer (up to
6%
of the participant’s eligible compensation), excluding any catch-up contributions and is
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
paid by the Company on a per pay period basis. The Company made contributions to the 401(k) plans totaling
$147 million
,
$23 million
and
$19 million
for the years ended
December 31, 2016
,
2015
and
2014
, respectively.
For employees who are not eligible to participate in the Company’s long-term incentive plan and who are not covered by a collective bargaining agreement, the Company offers a contribution to the new Retirement Accumulation Plan ("RAP"), equal to
3%
of eligible pay. The Company made contributions to the RAP totaling
$48 million
for the year ended
December 31, 2016
.
22. Recently Issued Accounting Standards
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers
(“ASU 2014-09”), which is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The new standard provides a single principles-based, five-step model to be applied to all contracts with customers, which steps are to (1) identify the contract(s) with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when each performance obligation is satisfied. More specifically, revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. ASU 2014-09 will be effective, reflecting the one-year deferral, for interim and annual periods beginning after December 15, 2017 (January 1, 2018 for the Company). Early adoption of the standard is permitted but not before the original effective date. Companies can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is currently in the process of evaluating which method of transition will be utilized. The Company is continuing to assess all potential impacts that the adoption of ASU 2014-09 will have on its consolidated financial statements, including developing new accounting policies, internal controls and processes to facilitate the adoption of the standard. The most significant impacts upon adoption are anticipated to result from the deferral over a period of time instead of recognized immediately of (1) the residential installation revenues which represent nonrefundable up-front fees that convey a material right to the customer and (2) the internal and external commission expenses which represent costs of obtaining a contract.
In April 2015, the FASB issued ASU No. 2015-05,
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
(“ASU 2015-05”), which provides guidance in determining whether fees for purchasing cloud computing services (or hosted software solutions) are considered internal-use software or should be considered a service contract. The cloud computing agreement that includes a software license should be accounted for in the same manner as internal-use software if customer has contractual right to take possession of the software during the hosting period without significant penalty and it is feasible to either run the software on customer’s hardware or contract with another vendor to host the software. Arrangements that don’t meet the requirements for internal-use software should be accounted for as a service contract. ASU 2015-05 was effective for interim and annual periods beginning after December 15, 2015 (January 1, 2016 for the Company). The adoption of ASU 2015-05 did not have a material impact on the Company’s financial statements.
In February 2016, the FASB issued ASU No. 2016-02,
Leases
(“ASU 2016-02”), which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. Lessees are allowed to account for short-term leases (i.e., leases with a term of 12 months or less) off-balance sheet, consistent with current operating lease accounting. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. ASU 2016-02 will be effective for interim and annual periods beginning after December 15, 2018 (January 1, 2019 for the Company). Early adoption is permitted. The new standard requires a modified retrospective transition through a cumulative-effect adjustment as of the beginning of the earliest period presented in the financial statements. The Company is currently in the process of evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements including identifying the population of leases, evaluating technology solutions and collecting lease data.
In March 2016, the FASB issued ASU No. 2016-09,
Improvements to Employee Share-Based Payment Accounting
(“ASU 2016-09”), which includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The new standard (1) requires all excess tax benefits and deficiencies to be recognized as income tax expense or benefit in the income statement in the period in which they occur regardless of whether the benefit reduces taxes payable in the current period, (2) requires classification of excess tax benefits as an operating activity on the statements of cash flows, (3) allows an entity to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur and (4) causes the threshold under which employee share-based awards partially settled in cash can
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
qualify for equity classification to increase to the maximum statutory tax rates in the applicable jurisdiction. ASU 2016-09 will be effective for interim and annual periods after December 15, 2016 (January 1, 2017 for the Company). The new standard generally requires a modified retrospective transition through a cumulative-effect adjustment as of the beginning of the period of adoption, with certain provisions requiring either a prospective or retrospective transition. The Company adopted ASU 2016-09 on January 1, 2017. Upon adoption of ASU 2016-09, the Company will recognize excess tax benefits of approximately
$136 million
in deferred tax assets that were previously not recognized in a cumulative-effect adjustment to retained earnings. The Company will prospectively record a deferred tax benefit or expense associated with the difference between book and tax for stock compensation expense. On January 1, 2017, the Company will also establish an accounting policy election to assume zero forfeitures for stock award grants and account for forfeitures when they occur which will prospectively impact stock compensation expense. Other aspects of adoption ASU 2016-09 are not anticipated to have a material impact to the Company’s consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15,
Classification of Certain Cash Receipts and Cash Payments
(“ASU 2016-15”), which clarifies how entities should classify cash receipts and cash payments related to eight specific cash flow matters on the statement of cash flows, with the objective of reducing existing diversity in practice. ASU 2016-15 will be effective for interim and annual periods beginning after December 15, 2017 (January 1, 2018 for the Company). Early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2016-15 will have on its consolidated financial statements.
23. Unaudited Quarterly Financial Data
The following table presents quarterly data for the periods presented in the consolidated statement of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
First
Quarter
|
|
Second Quarter
|
|
Third
Quarter
|
|
Fourth Quarter
|
Revenues
|
$
|
2,530
|
|
|
$
|
6,161
|
|
|
$
|
10,037
|
|
|
$
|
10,275
|
|
Income from operations
|
$
|
302
|
|
|
$
|
690
|
|
|
$
|
924
|
|
|
$
|
1,439
|
|
Net income (loss) attributable to Charter shareholders
|
$
|
(188
|
)
|
|
$
|
3,067
|
|
|
$
|
189
|
|
|
$
|
454
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to Charter shareholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
(1.86
|
)
|
|
$
|
16.73
|
|
|
$
|
0.70
|
|
|
$
|
1.69
|
|
Diluted
|
$
|
(1.86
|
)
|
|
$
|
15.17
|
|
|
$
|
0.69
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
|
Weighted average common share outstanding:
|
|
|
|
|
|
|
|
Basic
|
101,552,093
|
|
|
183,362,776
|
|
|
271,263,259
|
|
|
268,584,368
|
|
Diluted
|
101,552,093
|
|
|
205,214,266
|
|
|
275,373,202
|
|
|
272,624,270
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
First
Quarter
|
|
Second Quarter
|
|
Third
Quarter
|
|
Fourth Quarter
|
Revenues
|
$
|
2,362
|
|
|
$
|
2,430
|
|
|
$
|
2,450
|
|
|
$
|
2,512
|
|
Income from operations
|
$
|
249
|
|
|
$
|
269
|
|
|
$
|
273
|
|
|
$
|
323
|
|
Net income (loss) attributable to Charter shareholders
|
$
|
(81
|
)
|
|
$
|
(122
|
)
|
|
$
|
54
|
|
|
$
|
(122
|
)
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share attributable to Charter shareholders:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.81
|
)
|
|
$
|
(1.21
|
)
|
|
$
|
0.54
|
|
|
$
|
(1.21
|
)
|
Diluted
|
$
|
(0.81
|
)
|
|
$
|
(1.21
|
)
|
|
$
|
0.53
|
|
|
$
|
(1.21
|
)
|
|
|
|
|
|
|
|
|
Weighted average common share outstanding:
|
|
|
|
|
|
|
|
Basic
|
100,959,008
|
|
|
101,074,644
|
|
|
101,205,400
|
|
|
101,366,476
|
|
Diluted
|
100,959,008
|
|
|
101,074,644
|
|
|
102,481,924
|
|
|
101,366,476
|
|
24.
Consolidating Schedules
Each of Charter Operating, TWC, LLC, TWCE, CCO Holdings and certain subsidiaries jointly, severally, fully and unconditionally guarantee the outstanding debt securities of the others (other than the CCO Holdings notes) on an unsecured senior basis and the condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10,
Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.
Certain Charter Operating subsidiaries that are regulated telephone entities only become guarantor subsidiaries upon approval by regulators. This information is not intended to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance with generally accepted accounting principles.
The “Charter Operating and Restricted Subsidiaries” column is presented to comply with the terms of the Credit Agreement.
The “Safari Escrow Entities” column included in the condensed consolidating financial statements as of December 31, 2015 and for the years ended December 31, 2015 and 2014 consists of CCOH Safari, CCO Safari II and CCO Safari III. CCOH Safari, CCO Safari II and CCO Safari III issued the CCOH Safari notes, CCO Safari II notes and the CCO Safari III credit facilities, respectively. Upon closing of the TWC Transaction, the CCOH Safari notes became obligations of CCO Holdings and CCO Holdings Capital and the CCO Safari II notes and CCO Safari III credit facilities became obligations of Charter Operating and Charter Communications Operating Capital Corp. CCOH Safari merged into CCO Holdings and CCO Safari II and CCO Safari III merged into Charter Operating.
The “Unrestricted Subsidiary” column included in the condensed consolidating financial statements for the years ended
December 31, 2016
and
2015
consists of CCO Safari which was a non-recourse subsidiary under the Credit Agreement and held the CCO Safari Term G Loans that were repaid in April 2015.
Condensed consolidating financial statements as of
December 31, 2016
and
2015
and for the years ended
December 31, 2016
,
2015
and
2014
follow.
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Balance Sheet
|
As of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Eliminations
|
|
Charter Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
57
|
|
|
$
|
154
|
|
|
$
|
—
|
|
|
$
|
1,324
|
|
|
$
|
—
|
|
|
$
|
1,535
|
|
Accounts receivable, net
|
34
|
|
|
11
|
|
|
—
|
|
|
1,387
|
|
|
—
|
|
|
1,432
|
|
Receivables from related party
|
170
|
|
|
451
|
|
|
62
|
|
|
—
|
|
|
(683
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
—
|
|
|
33
|
|
|
—
|
|
|
300
|
|
|
—
|
|
|
333
|
|
Total current assets
|
261
|
|
|
649
|
|
|
62
|
|
|
3,011
|
|
|
(683
|
)
|
|
3,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT IN CABLE PROPERTIES:
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
245
|
|
|
—
|
|
|
32,718
|
|
|
—
|
|
|
32,963
|
|
Customer relationships, net
|
—
|
|
|
—
|
|
|
—
|
|
|
14,608
|
|
|
—
|
|
|
14,608
|
|
Franchises
|
—
|
|
|
—
|
|
|
—
|
|
|
67,316
|
|
|
—
|
|
|
67,316
|
|
Goodwill
|
—
|
|
|
—
|
|
|
—
|
|
|
29,509
|
|
|
—
|
|
|
29,509
|
|
Total investment in cable properties, net
|
—
|
|
|
245
|
|
|
—
|
|
|
144,151
|
|
|
—
|
|
|
144,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT IN SUBSIDIARIES
|
66,692
|
|
|
75,838
|
|
|
88,760
|
|
|
—
|
|
|
(231,290
|
)
|
|
—
|
|
LOANS RECEIVABLE – RELATED PARTY
|
—
|
|
|
640
|
|
|
494
|
|
|
—
|
|
|
(1,134
|
)
|
|
—
|
|
OTHER NONCURRENT ASSETS
|
—
|
|
|
214
|
|
|
—
|
|
|
1,157
|
|
|
—
|
|
|
1,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
66,953
|
|
|
$
|
77,586
|
|
|
$
|
89,316
|
|
|
$
|
148,319
|
|
|
$
|
(233,107
|
)
|
|
$
|
149,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’/MEMBER’S EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
22
|
|
|
$
|
625
|
|
|
$
|
219
|
|
|
$
|
6,678
|
|
|
$
|
—
|
|
|
$
|
7,544
|
|
Payables to related party
|
—
|
|
|
—
|
|
|
—
|
|
|
683
|
|
|
(683
|
)
|
|
—
|
|
Current portion of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
2,028
|
|
|
—
|
|
|
2,028
|
|
Total current liabilities
|
22
|
|
|
625
|
|
|
219
|
|
|
9,389
|
|
|
(683
|
)
|
|
9,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT
|
—
|
|
|
—
|
|
|
13,259
|
|
|
46,460
|
|
|
—
|
|
|
59,719
|
|
LOANS PAYABLE – RELATED PARTY
|
—
|
|
|
—
|
|
|
—
|
|
|
1,134
|
|
|
(1,134
|
)
|
|
—
|
|
DEFERRED INCOME TAXES
|
26,637
|
|
|
3
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
26,665
|
|
OTHER LONG-TERM LIABILITIES
|
155
|
|
|
64
|
|
|
—
|
|
|
2,526
|
|
|
—
|
|
|
2,745
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’/MEMBER’S EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Controlling interest
|
40,139
|
|
|
66,692
|
|
|
75,838
|
|
|
88,760
|
|
|
(231,290
|
)
|
|
40,139
|
|
Noncontrolling interests
|
—
|
|
|
10,202
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
10,227
|
|
Total shareholders’/member’s equity
|
40,139
|
|
|
76,894
|
|
|
75,838
|
|
|
88,785
|
|
|
(231,290
|
)
|
|
50,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’/member’s equity
|
$
|
66,953
|
|
|
$
|
77,586
|
|
|
$
|
89,316
|
|
|
$
|
148,319
|
|
|
$
|
(233,107
|
)
|
|
$
|
149,067
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Balance Sheet
|
As of December 31, 2015
|
|
|
Non-Guarantor Subsidiaries
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Eliminations
|
|
Charter Consolidated
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Accounts receivable, net
|
8
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
264
|
|
|
—
|
|
|
279
|
|
Receivables from related party
|
51
|
|
|
297
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
(362
|
)
|
|
—
|
|
Prepaid expenses and other current assets
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
61
|
|
Total current assets
|
59
|
|
|
310
|
|
|
—
|
|
|
14
|
|
|
324
|
|
|
(362
|
)
|
|
345
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RESTRICTED CASH AND CASH EQUIVALENTS
|
—
|
|
|
—
|
|
|
22,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,264
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT IN CABLE PROPERTIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
8,317
|
|
|
—
|
|
|
8,345
|
|
Customer relationships, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
856
|
|
|
—
|
|
|
856
|
|
Franchises
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,006
|
|
|
—
|
|
|
6,006
|
|
Goodwill
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,168
|
|
|
—
|
|
|
1,168
|
|
Total investment in cable properties, net
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
16,347
|
|
|
—
|
|
|
16,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT IN SUBSIDIARIES
|
1,468
|
|
|
816
|
|
|
—
|
|
|
11,303
|
|
|
—
|
|
|
(13,587
|
)
|
|
—
|
|
LOANS RECEIVABLE – RELATED PARTY
|
—
|
|
|
333
|
|
|
—
|
|
|
613
|
|
|
563
|
|
|
(1,509
|
)
|
|
—
|
|
OTHER NONCURRENT ASSETS
|
—
|
|
|
216
|
|
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
1,527
|
|
|
$
|
1,703
|
|
|
$
|
22,264
|
|
|
$
|
11,930
|
|
|
$
|
17,350
|
|
|
$
|
(15,458
|
)
|
|
$
|
39,316
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’/MEMBER’S EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
$
|
11
|
|
|
$
|
203
|
|
|
$
|
282
|
|
|
$
|
165
|
|
|
$
|
1,311
|
|
|
$
|
—
|
|
|
$
|
1,972
|
|
Payables to related party
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
345
|
|
|
(362
|
)
|
|
—
|
|
Total current liabilities
|
11
|
|
|
203
|
|
|
299
|
|
|
165
|
|
|
1,656
|
|
|
(362
|
)
|
|
1,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LONG-TERM DEBT
|
—
|
|
|
—
|
|
|
21,778
|
|
|
10,443
|
|
|
3,502
|
|
|
—
|
|
|
35,723
|
|
LOANS PAYABLE – RELATED PARTY
|
—
|
|
|
—
|
|
|
693
|
|
|
—
|
|
|
816
|
|
|
(1,509
|
)
|
|
—
|
|
DEFERRED INCOME TAXES
|
1,562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
1,590
|
|
OTHER LONG-TERM LIABILITIES
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’/MEMBER’S EQUITY (DEFICIT)
|
(46
|
)
|
|
1,468
|
|
|
(506
|
)
|
|
1,322
|
|
|
11,303
|
|
|
(13,587
|
)
|
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’/member’s equity (deficit)
|
$
|
1,527
|
|
|
$
|
1,703
|
|
|
$
|
22,264
|
|
|
$
|
11,930
|
|
|
$
|
17,350
|
|
|
$
|
(15,458
|
)
|
|
$
|
39,316
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Operations
|
For the year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Eliminations
|
|
Charter Consolidated
|
REVENUES
|
$
|
251
|
|
|
$
|
1,004
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,003
|
|
|
$
|
(1,255
|
)
|
|
$
|
29,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses (exclusive of items shown separately below)
|
251
|
|
|
989
|
|
|
—
|
|
|
—
|
|
|
18,670
|
|
|
(1,255
|
)
|
|
18,655
|
|
Depreciation and amortization
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
6,902
|
|
|
—
|
|
|
6,907
|
|
Other operating (income) expenses, net
|
262
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
(177
|
)
|
|
—
|
|
|
86
|
|
|
513
|
|
|
995
|
|
|
—
|
|
|
—
|
|
|
25,395
|
|
|
(1,255
|
)
|
|
25,648
|
|
Income (loss) from operations
|
(262
|
)
|
|
9
|
|
|
—
|
|
|
—
|
|
|
3,608
|
|
|
—
|
|
|
3,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
—
|
|
|
14
|
|
|
(390
|
)
|
|
(727
|
)
|
|
(1,396
|
)
|
|
—
|
|
|
(2,499
|
)
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(110
|
)
|
|
(1
|
)
|
|
—
|
|
|
(111
|
)
|
Gain on financial instruments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|
—
|
|
|
89
|
|
Other expense, net
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(14
|
)
|
Equity in income of subsidiaries
|
851
|
|
|
1,066
|
|
|
—
|
|
|
2,293
|
|
|
—
|
|
|
(4,210
|
)
|
|
—
|
|
|
851
|
|
|
1,069
|
|
|
(390
|
)
|
|
1,456
|
|
|
(1,311
|
)
|
|
(4,210
|
)
|
|
(2,535
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
589
|
|
|
1,078
|
|
|
(390
|
)
|
|
1,456
|
|
|
2,297
|
|
|
(4,210
|
)
|
|
820
|
|
INCOME TAX BENEFIT (EXPENSE)
|
2,933
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
2,925
|
|
Consolidated net income (loss)
|
3,522
|
|
|
1,073
|
|
|
(390
|
)
|
|
1,456
|
|
|
2,294
|
|
|
(4,210
|
)
|
|
3,745
|
|
Less: Net income – noncontrolling interests
|
—
|
|
|
(222
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(223
|
)
|
Net income (loss)
|
$
|
3,522
|
|
|
$
|
851
|
|
|
$
|
(390
|
)
|
|
$
|
1,456
|
|
|
$
|
2,293
|
|
|
$
|
(4,210
|
)
|
|
$
|
3,522
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Operations
|
For the year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Unrestricted Subsidiary
|
|
Eliminations
|
|
Charter Consolidated
|
REVENUES
|
$
|
25
|
|
|
$
|
299
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,754
|
|
|
$
|
—
|
|
|
$
|
(324
|
)
|
|
$
|
9,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses (exclusive of items shown separately below)
|
25
|
|
|
299
|
|
|
—
|
|
|
—
|
|
|
6,426
|
|
|
—
|
|
|
(324
|
)
|
|
6,426
|
|
Depreciation and amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,125
|
|
|
—
|
|
|
—
|
|
|
2,125
|
|
Other operating expenses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|
25
|
|
|
299
|
|
|
—
|
|
|
—
|
|
|
8,640
|
|
|
—
|
|
|
(324
|
)
|
|
8,640
|
|
Income from operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,114
|
|
|
—
|
|
|
—
|
|
|
1,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
—
|
|
|
8
|
|
|
(474
|
)
|
|
(642
|
)
|
|
(151
|
)
|
|
(47
|
)
|
|
—
|
|
|
(1,306
|
)
|
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(123
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(128
|
)
|
Loss on financial instruments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
Other expense, net
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
Equity in income (loss) of subsidiaries
|
(121
|
)
|
|
(168
|
)
|
|
—
|
|
|
1,073
|
|
|
(50
|
)
|
|
—
|
|
|
(734
|
)
|
|
—
|
|
|
(121
|
)
|
|
(167
|
)
|
|
(476
|
)
|
|
308
|
|
|
(205
|
)
|
|
(50
|
)
|
|
(734
|
)
|
|
(1,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
(121
|
)
|
|
(167
|
)
|
|
(476
|
)
|
|
308
|
|
|
909
|
|
|
(50
|
)
|
|
(734
|
)
|
|
(331
|
)
|
INCOME TAX BENEFIT (EXPENSE)
|
(150
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
210
|
|
|
—
|
|
|
—
|
|
|
60
|
|
Consolidated net income (loss)
|
(271
|
)
|
|
(167
|
)
|
|
(476
|
)
|
|
308
|
|
|
1,119
|
|
|
(50
|
)
|
|
(734
|
)
|
|
(271
|
)
|
Less: Net (income) loss – noncontrolling interest
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (loss)
|
$
|
(271
|
)
|
|
$
|
(121
|
)
|
|
$
|
(476
|
)
|
|
$
|
308
|
|
|
$
|
1,073
|
|
|
$
|
(50
|
)
|
|
$
|
(734
|
)
|
|
$
|
(271
|
)
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Operations
|
For the year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Unrestricted Subsidiary
|
|
Eliminations
|
|
Charter Consolidated
|
REVENUES
|
$
|
22
|
|
|
$
|
235
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,108
|
|
|
$
|
—
|
|
|
$
|
(257
|
)
|
|
$
|
9,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses (exclusive of items shown separately below)
|
22
|
|
|
235
|
|
|
—
|
|
|
—
|
|
|
5,973
|
|
|
—
|
|
|
(257
|
)
|
|
5,973
|
|
Depreciation and amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,102
|
|
|
—
|
|
|
—
|
|
|
2,102
|
|
Other operating expenses, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
—
|
|
|
—
|
|
|
62
|
|
|
22
|
|
|
235
|
|
|
—
|
|
|
—
|
|
|
8,137
|
|
|
—
|
|
|
(257
|
)
|
|
8,137
|
|
Income from operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
971
|
|
|
—
|
|
|
—
|
|
|
971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME AND (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
—
|
|
|
8
|
|
|
(30
|
)
|
|
(679
|
)
|
|
(165
|
)
|
|
(45
|
)
|
|
—
|
|
|
(911
|
)
|
Loss on financial instruments, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
Equity in income (loss) of subsidiaries
|
40
|
|
|
(12
|
)
|
|
—
|
|
|
697
|
|
|
(45
|
)
|
|
—
|
|
|
(680
|
)
|
|
—
|
|
|
40
|
|
|
(4
|
)
|
|
(30
|
)
|
|
18
|
|
|
(217
|
)
|
|
(45
|
)
|
|
(680
|
)
|
|
(918
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
40
|
|
|
(4
|
)
|
|
(30
|
)
|
|
18
|
|
|
754
|
|
|
(45
|
)
|
|
(680
|
)
|
|
53
|
|
INCOME TAX EXPENSE
|
(223
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(236
|
)
|
Consolidated net income (loss)
|
(183
|
)
|
|
(4
|
)
|
|
(30
|
)
|
|
18
|
|
|
741
|
|
|
(45
|
)
|
|
(680
|
)
|
|
(183
|
)
|
Less: Net (income) loss – noncontrolling interest
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (loss)
|
$
|
(183
|
)
|
|
$
|
40
|
|
|
$
|
(30
|
)
|
|
$
|
18
|
|
|
$
|
697
|
|
|
$
|
(45
|
)
|
|
$
|
(680
|
)
|
|
$
|
(183
|
)
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
For the year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Eliminations
|
|
Charter Consolidated
|
Consolidated net income (loss)
|
$
|
3,522
|
|
|
$
|
1,073
|
|
|
$
|
(390
|
)
|
|
$
|
1,456
|
|
|
$
|
2,294
|
|
|
$
|
(4,210
|
)
|
|
$
|
3,745
|
|
Net impact of interest rate derivative instruments
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
8
|
|
|
(32
|
)
|
|
8
|
|
Foreign currency translation adjustment
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
|
8
|
|
|
(2
|
)
|
Consolidated comprehensive income (loss)
|
3,528
|
|
|
1,079
|
|
|
(384
|
)
|
|
1,462
|
|
|
2,300
|
|
|
(4,234
|
)
|
|
3,751
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
—
|
|
|
(222
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(223
|
)
|
Comprehensive income (loss)
|
$
|
3,528
|
|
|
$
|
857
|
|
|
$
|
(384
|
)
|
|
$
|
1,462
|
|
|
$
|
2,299
|
|
|
$
|
(4,234
|
)
|
|
$
|
3,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
For the year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Unrestricted Subsidiary
|
|
Eliminations
|
|
Charter Consolidated
|
Consolidated net income (loss)
|
$
|
(271
|
)
|
|
$
|
(167
|
)
|
|
$
|
(476
|
)
|
|
$
|
308
|
|
|
$
|
1,119
|
|
|
$
|
(50
|
)
|
|
$
|
(734
|
)
|
|
$
|
(271
|
)
|
Net impact of interest rate derivative instruments
|
9
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
—
|
|
|
(36
|
)
|
|
9
|
|
Consolidated comprehensive income (loss)
|
(262
|
)
|
|
(158
|
)
|
|
(467
|
)
|
|
317
|
|
|
1,128
|
|
|
(50
|
)
|
|
(770
|
)
|
|
(262
|
)
|
Less: Comprehensive (income) loss attributable to noncontrolling interests
|
—
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Comprehensive income (loss)
|
$
|
(262
|
)
|
|
$
|
(112
|
)
|
|
$
|
(467
|
)
|
|
$
|
317
|
|
|
$
|
1,082
|
|
|
$
|
(50
|
)
|
|
$
|
(770
|
)
|
|
$
|
(262
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
For the year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Unrestricted Subsidiary
|
|
Eliminations
|
|
Charter Consolidated
|
Consolidated net income (loss)
|
$
|
(183
|
)
|
|
$
|
(4
|
)
|
|
$
|
(30
|
)
|
|
$
|
18
|
|
|
$
|
741
|
|
|
$
|
(45
|
)
|
|
$
|
(680
|
)
|
|
$
|
(183
|
)
|
Net impact of interest rate derivative instruments
|
19
|
|
|
19
|
|
|
19
|
|
|
19
|
|
|
19
|
|
|
—
|
|
|
(76
|
)
|
|
19
|
|
Consolidated comprehensive income (loss)
|
(164
|
)
|
|
15
|
|
|
(11
|
)
|
|
37
|
|
|
760
|
|
|
(45
|
)
|
|
(756
|
)
|
|
(164
|
)
|
Less: Comprehensive (income) loss attributable to noncontrolling interests
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Comprehensive income (loss)
|
$
|
(164
|
)
|
|
$
|
59
|
|
|
$
|
(11
|
)
|
|
$
|
37
|
|
|
$
|
716
|
|
|
$
|
(45
|
)
|
|
$
|
(756
|
)
|
|
$
|
(164
|
)
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Cash Flows
|
For the year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Eliminations
|
|
Charter Consolidated
|
NET CASH FLOWS FROM OPERATING ACTIVITIES
|
$
|
(225
|
)
|
|
$
|
(36
|
)
|
|
$
|
(463
|
)
|
|
$
|
(711
|
)
|
|
$
|
9,476
|
|
|
$
|
—
|
|
|
$
|
8,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,325
|
)
|
|
—
|
|
|
(5,325
|
)
|
Change in accrued expenses related to capital expenditures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
603
|
|
|
—
|
|
|
603
|
|
Purchases of cable systems, net
|
(26,781
|
)
|
|
(2,022
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(28,810
|
)
|
Contribution to subsidiaries
|
(1,013
|
)
|
|
(478
|
)
|
|
—
|
|
|
(437
|
)
|
|
—
|
|
|
1,928
|
|
|
—
|
|
Distributions from subsidiaries
|
24,552
|
|
|
26,899
|
|
|
—
|
|
|
5,096
|
|
|
—
|
|
|
(56,547
|
)
|
|
—
|
|
Change in restricted cash and cash equivalents
|
—
|
|
|
—
|
|
|
22,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,264
|
|
Other, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
Net cash flows from investing activities
|
(3,242
|
)
|
|
24,399
|
|
|
22,264
|
|
|
4,659
|
|
|
(4,751
|
)
|
|
(54,619
|
)
|
|
(11,290
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
3,201
|
|
|
9,143
|
|
|
—
|
|
|
12,344
|
|
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,937
|
)
|
|
(7,584
|
)
|
|
—
|
|
|
(10,521
|
)
|
Borrowings (payments) loans payable - related parties
|
—
|
|
|
(300
|
)
|
|
553
|
|
|
(71
|
)
|
|
(182
|
)
|
|
—
|
|
|
—
|
|
Payment for debt issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(73
|
)
|
|
(211
|
)
|
|
—
|
|
|
(284
|
)
|
Issuance of equity
|
5,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
Purchase of treasury stock
|
(1,562
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,562
|
)
|
Proceeds from exercise of stock options
|
86
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86
|
|
Settlement of restricted stock units
|
—
|
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(59
|
)
|
Purchase of noncontrolling interest
|
—
|
|
|
(218
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(218
|
)
|
Distributions to noncontrolling interest
|
—
|
|
|
(96
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
Proceeds from termination of interest rate derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
Contributions from parent
|
—
|
|
|
1,013
|
|
|
—
|
|
|
478
|
|
|
437
|
|
|
(1,928
|
)
|
|
—
|
|
Distributions to parent
|
—
|
|
|
(24,552
|
)
|
|
(22,353
|
)
|
|
(4,546
|
)
|
|
(5,096
|
)
|
|
56,547
|
|
|
—
|
|
Other, net
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
Net cash flows from financing activities
|
3,524
|
|
|
(24,209
|
)
|
|
(21,801
|
)
|
|
(3,948
|
)
|
|
(3,406
|
)
|
|
54,619
|
|
|
4,779
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
57
|
|
|
154
|
|
|
—
|
|
|
—
|
|
|
1,319
|
|
|
—
|
|
|
1,530
|
|
CASH AND CASH EQUIVALENTS, beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of period
|
$
|
57
|
|
|
$
|
154
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,324
|
|
|
$
|
—
|
|
|
$
|
1,535
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Cash Flows
|
For the year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Unrestricted Subsidiary
|
|
Eliminations
|
|
Charter Consolidated
|
NET CASH FLOWS FROM OPERATING ACTIVITIES
|
$
|
(1
|
)
|
|
$
|
(5
|
)
|
|
$
|
(192
|
)
|
|
$
|
(663
|
)
|
|
$
|
3,275
|
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
$
|
2,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,840
|
)
|
|
—
|
|
|
—
|
|
|
(1,840
|
)
|
Change in accrued expenses related to capital expenditures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
Contribution to subsidiaries
|
(20
|
)
|
|
(90
|
)
|
|
—
|
|
|
(46
|
)
|
|
(24
|
)
|
|
—
|
|
|
180
|
|
|
—
|
|
Distributions from subsidiaries
|
26
|
|
|
376
|
|
|
—
|
|
|
715
|
|
|
—
|
|
|
—
|
|
|
(1,117
|
)
|
|
—
|
|
Change in restricted cash and cash equivalents
|
—
|
|
|
—
|
|
|
(18,667
|
)
|
|
—
|
|
|
—
|
|
|
3,514
|
|
|
—
|
|
|
(15,153
|
)
|
Other, net
|
—
|
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
Net cash flows from investing activities
|
6
|
|
|
231
|
|
|
(18,667
|
)
|
|
669
|
|
|
(1,848
|
)
|
|
3,514
|
|
|
(937
|
)
|
|
(17,032
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of long-term debt
|
—
|
|
|
—
|
|
|
21,790
|
|
|
2,700
|
|
|
1,555
|
|
|
—
|
|
|
—
|
|
|
26,045
|
|
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(3,500
|
)
|
|
(2,598
|
)
|
|
(1,745
|
)
|
|
(3,483
|
)
|
|
—
|
|
|
(11,326
|
)
|
Borrowings (payments) loans payable - related parties
|
—
|
|
|
—
|
|
|
581
|
|
|
(18
|
)
|
|
(563
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Payment for debt issuance costs
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
Purchase of treasury stock
|
(38
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
Proceeds from exercise of stock options
|
30
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
Contributions from parent
|
—
|
|
|
95
|
|
|
—
|
|
|
15
|
|
|
46
|
|
|
24
|
|
|
(180
|
)
|
|
—
|
|
Distributions to parent
|
—
|
|
|
(321
|
)
|
|
—
|
|
|
(81
|
)
|
|
(715
|
)
|
|
—
|
|
|
1,117
|
|
|
—
|
|
Net cash flows from financing activities
|
(8
|
)
|
|
(226
|
)
|
|
18,859
|
|
|
(6
|
)
|
|
(1,422
|
)
|
|
(3,459
|
)
|
|
937
|
|
|
14,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
2
|
|
CASH AND CASH EQUIVALENTS, beginning of period
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016, 2015 AND 2014
(dollars in millions, except share or per share data or where indicated)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charter Communications, Inc.
|
Condensed Consolidating Statement of Cash Flows
|
For the year ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Guarantor Subsidiaries
|
|
|
|
Guarantor Subsidiaries
|
|
|
|
|
|
|
|
Charter
|
|
Intermediate Holding Companies
|
|
Safari Escrow Entities
|
|
CCO Holdings
|
|
Charter Operating and Restricted Subsidiaries
|
|
Unrestricted Subsidiary
|
|
Eliminations
|
|
Charter Consolidated
|
NET CASH FLOWS FROM OPERATING ACTIVITIES:
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
$
|
(12
|
)
|
|
$
|
(665
|
)
|
|
$
|
3,086
|
|
|
$
|
(37
|
)
|
|
$
|
—
|
|
|
$
|
2,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,221
|
)
|
|
—
|
|
|
—
|
|
|
(2,221
|
)
|
Change in accrued expenses related to capital expenditures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
Sales of cable systems, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
Contribution to subsidiaries
|
(106
|
)
|
|
(600
|
)
|
|
—
|
|
|
(100
|
)
|
|
(71
|
)
|
|
—
|
|
|
877
|
|
|
—
|
|
Distributions from subsidiaries
|
5
|
|
|
30
|
|
|
—
|
|
|
1,132
|
|
|
—
|
|
|
—
|
|
|
(1,167
|
)
|
|
—
|
|
Change in restricted cash and cash equivalents
|
—
|
|
|
—
|
|
|
(3,598
|
)
|
|
—
|
|
|
—
|
|
|
(3,513
|
)
|
|
—
|
|
|
(7,111
|
)
|
Other, net
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
Net cash flows from investing activities
|
(101
|
)
|
|
(575
|
)
|
|
(3,598
|
)
|
|
1,032
|
|
|
(2,259
|
)
|
|
(3,513
|
)
|
|
(290
|
)
|
|
(9,304
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings of long-term debt
|
—
|
|
|
—
|
|
|
3,500
|
|
|
—
|
|
|
1,823
|
|
|
3,483
|
|
|
—
|
|
|
8,806
|
|
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|
(1,630
|
)
|
|
—
|
|
|
—
|
|
|
(1,980
|
)
|
Borrowings (payments) loans payable - related parties
|
—
|
|
|
—
|
|
|
112
|
|
|
(112
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Payment for debt issuance costs
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(6
|
)
|
Purchase of treasury stock
|
(19
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19
|
)
|
Proceeds from exercise of options and warrants
|
123
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123
|
|
Contributions from parent
|
—
|
|
|
606
|
|
|
—
|
|
|
100
|
|
|
100
|
|
|
71
|
|
|
(877
|
)
|
|
—
|
|
Distributions to parent
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(5
|
)
|
|
(1,132
|
)
|
|
—
|
|
|
1,167
|
|
|
—
|
|
Other, net
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
Net cash flows from financing activities
|
104
|
|
|
583
|
|
|
3,610
|
|
|
(367
|
)
|
|
(843
|
)
|
|
3,550
|
|
|
290
|
|
|
6,927
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
3
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
(18
|
)
|
CASH AND CASH EQUIVALENTS, beginning of period
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of period
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
25.
Subsequent Events
In January 2017, Charter Operating entered into an amendment to its Credit Agreement decreasing the applicable LIBOR margin on both the term loan E and term loan F to
2.00%
and eliminating the LIBOR floor.
In February 2017, CCO Holdings and CCO Holdings Capital Corp. closed on transactions in which they issued
$1.0 billion
aggregate principal amount of
5.125%
senior notes due May 1, 2027. The net proceeds will be used to redeem CCO Holdings’
6.625%
senior notes due 2022, pay related fees and expenses and for general corporate purposes.
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