What changed in this filing

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Item 1. Financial Statements

2023-04-28 compared with 2022-10-28 · 70 added, 202 removed, 271 unchanged (50% of the section changed)

4 unchanged sentences

(dollars in millions, except share data)

September 30,

2023 December 31,

47 unchanged sentences

(dollars in millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

REVENUES $ 13,653 $ 13,200

1 unchanged sentence

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

8,247 7,958 24,574 23,551

Depreciation and amortization 2,206 2,294

Other operating (income) expenses, net 202 ( 9 ) 141 284

Other operating expenses, net 10 1

10,727 10,429

28 unchanged sentences

Exercise of stock options — — 2 — — 2 — 2

Purchases of treasury stock — — — — ( 3,333 ) ( 3,333 ) — ( 3,333 )

Purchases of treasury stock, including excise tax — — — — ( 920 ) ( 920 ) — ( 920 )

Purchase of noncontrolling interest, net of tax — — ( 40 ) — — ( 40 ) ( 68 ) ( 108 )

2 unchanged sentences

BALANCE, March 31, 2023 $ — $ — $ 24,138 $ ( 13,800 ) $ ( 920 ) $ 9,418 $ 3,484 $ 12,902

Consolidated net income — — — 1,471 — 1,471 237 1,708

Stock compensation expense — — 104 — — 104 — 104

Exercise of stock options — — 4 — — 4 — 4

Purchases of treasury stock — — — — ( 3,687 ) ( 3,687 ) — ( 3,687 )

Purchase of noncontrolling interest, net of tax — — ( 256 ) — — ( 256 ) ( 238 ) ( 494 )

Change in noncontrolling interest ownership, net of tax — — 183 — — 183 ( 244 ) ( 61 )

Distributions to noncontrolling interest — — — — — — ( 5 ) ( 5 )

BALANCE, June 30, 2022 — — 26,900 ( 10,001 ) ( 7,020 ) 9,879 3,634 13,513

Consolidated net income — — — 1,185 — 1,185 182 1,367

Stock compensation expense — — 109 — — 109 — 109

Purchases of treasury stock — — — — ( 2,225 ) ( 2,225 ) — ( 2,225 )

Purchase of noncontrolling interest, net of tax — — ( 155 ) — — ( 155 ) ( 179 ) ( 334 )

Change in noncontrolling interest ownership, net of tax — — 96 — — 96 ( 127 ) ( 31 )

Distributions to noncontrolling interest — — — — — — ( 49 ) ( 49 )

BALANCE, September 30, 2022 $ — $ — $ 26,950 $ ( 8,816 ) $ ( 9,245 ) $ 8,889 $ 3,461 $ 12,350

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

CHARTER COMMUNICATIONS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(dollars in millions)

Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Treasury Stock Total Charter Shareholders’ Equity Non-controlling Interests Total Shareholders’ Equity

8 unchanged sentences

BALANCE, March 31, 2022 $ — $ — $ 26,865 $ ( 11,472 ) $ ( 3,333 ) $ 12,060 $ 3,884 $ 15,944

Consolidated net income — — — 1,020 — 1,020 138 1,158

Stock compensation expense — — 100 — — 100 — 100

Exercise of stock options — — 17 — — 17 — 17

Purchases of treasury stock — — — — ( 3,516 ) ( 3,516 ) — ( 3,516 )

Purchase of noncontrolling interest, net of tax — — ( 279 ) — — ( 279 ) ( 213 ) ( 492 )

Preferred unit conversion and change in noncontrolling interest ownership, net of tax — — 1,003 — — 1,003 ( 1,333 ) ( 330 )

Distributions to noncontrolling interest — — — — — — ( 32 ) ( 32 )

BALANCE, June 30, 2021 — — 29,878 ( 3,368 ) ( 7,168 ) 19,342 4,744 24,086

Consolidated net income — — — 1,217 — 1,217 190 1,407

Stock compensation expense — — 98 — — 98 — 98

Exercise of stock options — — 17 — — 17 — 17

Purchases of treasury stock — — — — ( 3,666 ) ( 3,666 ) — ( 3,666 )

Purchase of noncontrolling interest, net of tax — — ( 197 ) — — ( 197 ) ( 148 ) ( 345 )

Change in noncontrolling interest ownership, net of tax — — 219 — — 219 ( 290 ) ( 71 )

BALANCE, September 30, 2021 $ — $ — $ 30,015 $ ( 2,151 ) $ ( 10,834 ) $ 17,030 $ 4,496 $ 21,526

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

3 unchanged sentences

(dollars in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

26 unchanged sentences

Net cash flows from financing activities ( 695 ) ( 30 )

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 121 ) ( 535 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 111 ) 1,830

CASH AND CASH EQUIVALENTS, beginning of period 645 601

10 unchanged sentences

(together with its controlled subsidiaries, “Charter,” or the “Company”) is a leading broadband connectivity company and cable operator.

Over an advanced high-capacity, two-way telecommunications network, the Company offers a full range of state-of-the-art residential and business services including Spectrum Internet ® , TV, Mobile and Voice.

Over an advanced communications network, the Company offers a full range of state-of-the-art residential and business services including Spectrum Internet ® , TV, Mobile and Voice.

For small and medium-sized companies, Spectrum Business ® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise™ provides highly customized, fiber-based solutions.

16 unchanged sentences

Actual results could differ from those estimates.

Comprehensive income equaled net income attributable to Charter shareholders for the three and nine months ended September 30, 2022 and 2021.

In June 2022, the Company and Comcast Corporation ("Comcast") entered into a 50/50 joint venture to develop and offer a next-generation streaming platform on a variety of streaming devices and smart TVs.

Comcast licensed its streaming platform and hardware to the joint venture and contributed the retail business for XClass TVs and Xumo, a streaming service it acquired in 2020.

The Company's investment is approximately $ 981 million with $ 175 million paid in June 2022 and with the remaining non-cancelable required contributions to be paid over multiple years and recorded as accrued obligations as of September 30, 2022.

The Company accounts for the investment as an equity method investment and records investment income (loss) on its share of the joint venture income (loss).

Certain prior period amounts have been reclassified to conform with the 2023 presentation.

Comprehensive income equaled net income attributable to Charter shareholders for the three months ended March 31, 2023 and 2022.

CHARTER COMMUNICATIONS, INC.

3 unchanged sentences

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following as of September 30, 2022 and December 31, 2021:

September 30, 2022 December 31, 2021

Accounts payable and accrued liabilities consist of the following as of March 31, 2023 and December 31, 2022:

March 31, 2023 December 31, 2022

Accounts payable – trade $ 746 $ 952

11 unchanged sentences

Long-Term Debt

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

September 30, 2022 December 31, 2021

A summary of our debt as of March 31, 2023 and December 31, 2022 is as follows:

March 31, 2023 December 31, 2022

Principal Amount Carrying Value Fair Value Principal Amount Carrying Value Fair Value

5 unchanged sentences

$ 97,763 $ 97,972 $ 85,541 $ 97,368 $ 97,603 $ 82,798

(a) Includes the Company's £ 625 million and £ 650 million fixed-rate British pound sterling denominated notes (the “Sterling Notes”) remeasured using the exchange rate at the respective dates.

(b) The Company has availability under the Charter Operating credit facilities of approximately $ 4.6 billion as of September 30, 2022.

The estimated fair value of the Company’s senior unsecured and secured notes and debentures as of September 30, 2022 and December 31, 2021 is based on quoted market prices in active markets and is classified within Level 1 of the valuation hierarchy, while the estimated fair value of the Company’s credit facilities is based on quoted market prices in inactive markets and is classified within Level 2.

In January 2022, CCO Holdings, LLC ("CCO Holdings") and CCO Holdings Capital Corp.

jointly issued $ 1.2 billion of 4.750 % senior unsecured notes due February 2032 at par.

The net proceeds were used for general corporate purposes, including to fund buybacks of Charter Class A common stock and Charter Holdings common units, to repay certain indebtedness and to pay related fees and expenses.

In March 2022, Charter Operating and Charter Communications Operating Capital Corp.

jointly issued $ 1.0 billion aggregate principal amount of 4.400 % senior secured notes due April 2033 at a price of 99.634 % of the aggregate principal amount, $ 1.5 billion aggregate principal amount of 5.250 % senior secured notes due April 2053 at a price of 99.300 % of the aggregate principal amount and $ 1.0 billion aggregate principal amount of 5.500 % senior secured notes due April 2063 at a price of 99.255 % of the aggregate principal amount.

The net proceeds were used for general corporate purposes, including to fund

CHARTER COMMUNICATIONS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share amounts and where indicated)

buybacks of Charter Class A common stock and Charter Holdings common units, to repay certain indebtedness and to pay related fees and expenses.

In May and June 2022, Charter Operating and Charter Communications Operating Capital Corp.

redeemed all of their outstanding 4.464 % senior notes due July 2022.

In May 2022, Charter Operating entered into an amendment to its credit agreement (the "Amendment") to:

(i) upsize term A loans by $ 2.3 billion to $ 6.05 billion and extend the maturity to August 31, 2027 from March 31, 2023 and February 1, 2025, (ii) create and borrow a new tranche of $ 500 million of term A-6 loans maturing August 31, 2028, (iii) increase the size of Charter Operating's revolving credit facility and extend the maturity date to August 31, 2027 from March 31, 2023 and February 1, 2025 and (iv) make certain other amendments to the credit agreement.

The Company used a portion of the proceeds from the Amendment to repay all of the term A-2 loans, term A-4 loans and borrowings under the revolving credit facility outstanding prior to the effective date of the Amendment.

After giving effect to the Amendment:

(i) the aggregate principal amount of term A-5 loans outstanding as of September 30, 2022 is $ 6.0 billion with a pricing of Secured Overnight Financing Rate ("SOFR") plus 1.25 %, (ii) the aggregate principal amount of term A-6 loans outstanding as of September 30, 2022 is $ 494 million with a pricing of SOFR plus 1.50 % and (iii) the aggregate amount of the revolving credit facility increased to a total capacity of $ 5.5 billion and the interest rate benchmark changed from London Interbank Offering Rate ("LIBOR") to SOFR, with a pricing of SOFR plus 1.25 %.

The aggregate principal amount of term B-1 loans (maturing April 30, 2025) and term B-2 loans (maturing February 1, 2027) outstanding as of September 30, 2022 are $ 2.4 billion and $ 3.7 billion, respectively, with LIBOR-based pricing unchanged.

The Amendment also removed mandatory prepayment requirements upon asset sales and property or casualty insurance recoveries, made changes to the affirmative covenants, including changes to the financial reporting covenants, and made changes to the negative covenants, including removal of certain negative covenants in their entirety.

In August 2022, CCO Holdings and CCO Holdings Capital Corp.

jointly issued $ 1.5 billion of 6.375 % senior unsecured notes due September 2029 at par.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

CCO Holdings notes redemption

$ — $ ( 71 ) $ — $ ( 146 )

Charter Operating credit facility refinancing — — ( 2 ) —

Time Warner Cable, LLC notes redemption — 2 — 2

Charter Operating notes redemption — — ( 1 ) —

$ — $ ( 69 ) $ ( 3 ) $ ( 144 )

(a) Includes the Company's £ 625 million fixed-rate British pound sterling denominated notes (the “Sterling Notes”) (remeasured at $ 771 million and $ 755 million as of March 31, 2023 and December 31, 2022, respectively, using the exchange rate at the respective dates) and the Company's £ 650 million aggregate principal amount of Sterling Notes (remeasured at $ 802 million and $ 786 million as of March 31, 2023 and December 31, 2022, respectively, using the exchange rate at the respective dates).

(b) The Company has availability under the Charter Operating credit facilities of approximately $ 3.3 billion as of March 31, 2023.

The estimated fair value of the Company’s senior unsecured and secured notes and debentures as of March 31, 2023 and December 31, 2022 is based on quoted market prices in active markets and is classified within Level 1 of the valuation hierarchy, while the estimated fair value of the Company’s credit facilities is based on quoted market prices in inactive markets and is classified within Level 2.

In February 2023, CCO Holdings, LLC ("CCO Holdings") and CCO Holdings Capital Corp.

jointly issued $ 1.1 billion of 7.375 % senior unsecured notes due March 2031 at par.

The net proceeds were used for general corporate purposes, including repaying certain indebtedness, funding buybacks of Charter Class A common stock and Charter Holdings common units and to pay related fees and expenses.

In February 2023, Charter Operating entered into an amendment to its credit agreement to replace London Interbank Offering Rate ("LIBOR") as the benchmark rate applicable to the Term B loans with Secured Overnight Financing Rate ("SOFR") and in

CHARTER COMMUNICATIONS, INC.

2 unchanged sentences

(dollars in millions, except per share amounts and where indicated)

The following represents the Company's purchase of Charter Class A common stock and the effect on the consolidated statements of cash flows during the three and nine months ended September 30, 2022 and 2021.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Shares $ Shares $ Shares $ Shares $

March 2023, Charter Operating entered into another amendment to its credit agreement to incur a new Term B-3 loan with an aggregate principal amount of $ 750 million maturing in 2030 concurrently with the cancelation of certain of Charter Operating's existing Term B-1 and B-2 loans, among other amendments.

Pricing on the new Term B-3 loan is SOFR plus 2.25 %.

After giving effect to the amendments, the aggregate principal amount of Term B-1 loans is $ 2.3 billion with pricing unchanged at SOFR plus 1.75 % and the aggregate principal amount of Term B-2 loans is $ 3.1 billion with pricing unchanged at SOFR plus 1.75 %.

The following represents the Company's purchase of Charter Class A common stock and the effect on the consolidated statements of cash flows during the three months ended March 31, 2023 and 2022.

Three Months Ended March 31,

Shares $ Shares $

Share buybacks 2,304,419 $ 863 5,325,594 $ 3,172

3 unchanged sentences

Share buybacks above include shares of Charter Class A common stock purchased from Liberty Broadband Corporation (“Liberty Broadband”) as follows.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Number of shares purchased 120,149 970,241

Amount of shares purchased $ 42 $ 602

In October 2022, the Company purchased from Liberty Broadband an additional 0.5 million shares of Charter Class A common stock for approximately $ 183 million.

As of September 30, 2022, Charter had remaining board authority to purchase an additional $ 680 million of Charter’s Class A common stock and/or Charter Holdings common units, excluding purchases from Liberty Broadband.

As of March 31, 2023, Charter had remaining board authority to purchase an additional $ 305 million of Charter’s Class A common stock and/or Charter Holdings common units, excluding purchases from Liberty Broadband.

The Company also withholds shares of its Class A common stock in payment of income tax withholding owed by employees upon vesting of equity awards as well as exercise costs owed by employees upon exercise of stock options.

4 unchanged sentences

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 consist primarily of Advance/Newhouse Partnership's (“A/N”) equity interests in Charter Holdings, which is comprised of a common ownership interest and prior to June 18, 2021, a convertible preferred ownership interest.

Net income 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 11 % during 2022 and 7 % prior to conversion of the preferred units and 11% after conversion during 2021, and was $ 182 million and $ 604 million for the three and nine months ended September 30, 2022, respectively, and $ 190 million and $ 371 million for the three and nine months ended September 30, 2021, respectively.

Net income of Charter Holdings attributable to A/N's preferred noncontrolling interest for financial reporting purposes is based on the preferred dividend which was $ 70 million for the nine months ended September 30, 2021.

In June 2021, the Company caused the conversion of all of A/N's Charter Holdings convertible preferred units into Charter Holdings common units.

CHARTER COMMUNICATIONS, INC.

2 unchanged sentences

(dollars in millions, except per share amounts and where indicated)

The following table represents Charter Holdings' purchase of Charter Holdings common units from A/N and the effect on total shareholders' equity during the three and nine months ended September 30, 2022 and 2021.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The following table represents Charter Holdings' purchase of Charter Holdings common units from A/N and the effect on total shareholders' equity during the three months ended March 31, 2023 and 2022.

Three Months Ended March 31,

Number of units purchased 324,100 657,268

2 unchanged sentences

Decrease in additional paid-in-capital, net of tax $ ( 40 ) $ ( 197 )

Total shareholders' equity was also adjusted during the three and nine months ended September 30, 2022 and 2021 due to the changes in Charter Holdings' ownership including the impact of the preferred unit conversion in June 2021 as follows.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Total shareholders' equity was also adjusted during the three months ended March 31, 2023 and 2022 due to the changes in Charter Holdings' ownership as follows.

Three Months Ended March 31,

Decrease in noncontrolling interest $ ( 37 ) $ ( 250 )

3 unchanged sentences

dollar denominated debt.

The fair value of the Company's cross-currency derivatives, which are classified within Level 2 of the valuation hierarchy, was $ 772 million and $ 290 million and is included in other long-term liabilities on its consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively.

The fair value of the Company's cross-currency derivatives, which are classified within Level 2 of the valuation hierarchy, was $ 565 million and $ 570 million and is included in other long-term liabilities on its consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Change in fair value of cross-currency derivative instruments

$ ( 322 ) $ ( 111 ) $ ( 482 ) $ ( 133 )

Foreign currency remeasurement of Sterling Notes to U.S.

129 47 304 26

Loss on financial instruments, net $ ( 193 ) $ ( 64 ) $ ( 178 ) $ ( 107 )

Gain (loss) on financial instruments, net $ ( 27 ) $ 14

CHARTER COMMUNICATIONS, INC.

3 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Internet $ 5,718 $ 5,452

1 unchanged sentence

Voice 373 391

Mobile service 497 387

Residential revenue 10,842 10,576

3 unchanged sentences

Advertising sales 355 383

Mobile 750 535 2,166 1,546

Other 683 510

$ 13,653 $ 13,200

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

As of March 31, 2023 and December 31, 2022, accounts receivable, net on the consolidated balance sheets includes approximately $ 632 million and $ 577 million of current equipment installment plan receivables, respectively, and other noncurrent assets includes approximately $ 352 million and $ 261 million of noncurrent equipment installment plan receivables, respectively.

Operating Costs and Expenses

Operating costs and expenses, exclusive of items shown separately in the consolidated statements of operations, consist of the following for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Programming $ 2,799 $ 2,977

Regulatory, connectivity and produced content 587 634 1,742 1,902

Other costs of revenue 1,328 1,108

Costs to service customers 2,095 1,959

Marketing 861 788 2,493 2,280

Mobile 846 607 2,403 1,765

Other 1,100 1,047 3,315 3,125

Sales and marketing 946 880

Other expense 1,343 1,210

$ 8,511 $ 8,134

Programming costs consist primarily of costs paid to programmers for basic, premium, digital, video on demand and pay-per-view programming.

Regulatory, connectivity and produced content costs represent payments to franchise and regulatory authorities, costs directly related to providing video, Internet and voice services as well as payments for sports, local and news content produced by the Company.

Included in regulatory, connectivity and produced content costs is content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the contract period.

Costs to service customers include costs related to field operations, network operations and customer care for the Company’s residential and SMB customers, including internal and third-party labor for the non-capitalizable portion of installations, service and repairs, maintenance, bad debt expense, billing and collection, occupancy and

Programming costs consist primarily of costs paid to programmers for basic, premium, video on demand and pay-per-view programming.

Other costs of revenue include costs directly related to providing Internet, video, voice and mobile services including mobile device costs, payments to franchise and regulatory authorities, payments for sports, local and news content produced by the Company and direct costs associated with selling advertising.

Also included in other costs of revenue are content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games, which are recorded as games are exhibited over the contract period.

Costs to service customers include costs related to field operations, network operations and customer operations for the Company’s products, including mobile, sold to non-bulk residential and SMB customers including internal and third-party labor for the non-capitalizable portion of installations, service and repairs, maintenance, bad debt expense, billing and collection, occupancy and vehicle costs.

Sales and marketing costs represent the costs of selling and marketing our Internet, video, voice and mobile services to current and potential non-bulk residential and

CHARTER COMMUNICATIONS, INC.

2 unchanged sentences

(dollars in millions, except per share amounts and where indicated)

vehicle costs.

Marketing costs represent the costs of marketing to current and potential residential and commercial customers including labor costs.

Mobile costs represent costs associated with the Company's mobile service such as device and service costs, marketing, sales and commissions, retail stores, personnel costs, taxes, among others.

Other includes corporate overhead, advertising sales expenses, indirect costs associated with the Company’s enterprise business customers and regional sports and news networks, property tax and insurance expense and stock compensation expense, among others.

Other Operating (Income) Expenses, Net

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Special charges, net $ 199 $ ( 7 ) $ 135 $ 242

(Gain) loss on disposal of assets, net 3 ( 2 ) 6 42

$ 202 $ ( 9 ) $ 141 $ 284

SMB customers, including labor cost.

Other expense includes indirect costs associated with the Company’s Spectrum Enterprise, Spectrum Reach and Spectrum Networks businesses, including sales and marketing and bad debt expenses as well as costs associated with selling to and servicing bulk properties.

Other expense also includes corporate overhead and stock compensation expense, among others.

Other Operating Expenses, Net

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

Three Months Ended March 31,

Special charges, net $ 10 $ ( 1 )

Special charges, net for the three and nine months ended September 30, 2022 primarily includes litigation settlements and the nine months ended September 30, 2022 also includes a $ 54 million gain related to the settlement of a multiemployer pension plan.

For the nine months ended September 30, 2021, special charges, net includes net amounts of litigation settlements, including the $ 220 million settlement with Sprint Communications Company L.P.

and T-Mobile USA, Inc., and employee termination costs.

Loss on disposal of assets, net — 2

Special charges, net primarily includes net amounts of litigation settlements and employee termination costs.

Other Income (Expenses), Net

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Loss on extinguishment of debt (see Note 4) $ — $ ( 69 ) $ ( 3 ) $ ( 144 )

Loss on financial instruments, net (see Note 7) ( 193 ) ( 64 ) ( 178 ) ( 107 )

Net periodic pension benefits (costs) 207 ( 15 ) 241 176

Gain (loss) on equity investments, net ( 51 ) ( 9 ) 5 ( 162 )

$ ( 37 ) $ ( 157 ) $ 65 $ ( 237 )

Three Months Ended March 31,

Gain (loss) on financial instruments, net (see Note 6) $ ( 27 ) $ 14

Net periodic pension benefits 2 17

During the three and nine months ended September 30, 2022 and nine months ended September 30, 2021, settlements for lump-sum distributions to pension plan participants exceeded the estimated annual interest cost of the plans.

As a result, the pension liability and pension asset values were reassessed utilizing remeasurement date assumptions in accordance with the Company's mark-to-market pension accounting policy to record gains and losses in the period in which a remeasurement event occurs.

Net periodic pension benefits includes a $ 189 million remeasurement gain recorded during the three and nine months ended September 30, 2022 and a $ 155 million remeasurement gain recorded during the nine months ended September 30, 2021 which were primarily driven by changes in the discount rate offset by losses to record assets to fair value.

Gain (loss) on equity investments, net

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

CHARTER COMMUNICATIONS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share amounts and where indicated)

Loss on equity investments, net ( 79 ) ( 8 )

$ ( 104 ) $ 23

Stock Compensation Plans

2 unchanged sentences

Charter granted the following equity awards for the periods presented.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Stock options 4,235,700 1,372,400

Restricted stock — — 6,800 4,600

Restricted stock units 1,514,400 423,600

Stock options and restricted stock units generally cliff vest three years from the date of grant.

Certain stock options and restricted stock units vest based on achievement of stock price hurdles.

Stock options generally expire ten years from the grant date and restricted stock units have no voting rights.

Restricted stock generally vests one year from the date of grant.

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

The Company recorded stock compensation expense of $ 109 million and $ 360 million for the three and nine months ended September 30, 2022, respectively, and $ 98 million and $ 332 million for the three and nine months ended September 30, 2021, respectively, which is included in operating costs and expenses.

Earnings Per Share

Basic earnings per common share is computed by dividing net income 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.

Charter Holdings common units of 19 million and 20 million for the three and nine months ended September 30, 2022, respectively, and 23 million and 18 million for the three and nine months ended September 30, 2021, respectively, were not included in the computation of diluted earnings per share as their effect would have been antidilutive.

As of March 31, 2023, total unrecognized compensation remaining to be recognized in future periods totaled $ 643 million for stock options, $ 0.2 million for restricted stock and $ 701 million for restricted stock units and the weighted average period over which they are expected to be recognized is two years for stock options, one month for restricted stock and two years for restricted stock units.

CHARTER COMMUNICATIONS, INC.

2 unchanged sentences

(dollars in millions, except per share amounts and where indicated)

The following is the computation of diluted earnings per common share for the three and nine months ended September 30, 2022 and 2021.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The Company recorded stock compensation expense of $ 208 million and $ 147 million for the three months ended March 31, 2023 and 2022, respectively, which is included in operating costs and expenses.

Earnings Per Share

Basic earnings per common share is computed by dividing net income attributable to Charter shareholders by the weighted average number of shares of common stock outstanding during the period.

Charter Holdings common units of 18 million and 21 million for the three months ended March 31, 2023 and 2022, respectively, were not included in the computation of diluted earnings per share as their effect would have been antidilutive.

The following is the computation of diluted earnings per common share for the three months ended March 31, 2023 and 2022.

Three Months Ended March 31,

Net income attributable to Charter shareholders $ 1,021 $ 1,203

Effect of dilutive securities:

Charter Holdings convertible preferred units — — — 70

Net income attributable to Charter shareholders after assumed conversions $ 1,185 $ 1,217 $ 3,859 $ 3,114

Weighted average common shares outstanding, basic 151,438,371 170,688,127

1 unchanged sentence

Assumed exercise or issuance of shares relating to stock plans 2,099,988 3,812,345

Weighted average Charter Holdings convertible preferred units — — — 5,777,881

Weighted average common shares outstanding, diluted 153,538,359 174,500,472

1 unchanged sentence

Diluted earnings per common share attributable to Charter shareholders $ 6.65 $ 6.90

Contingencies

In March 2020, Charter Communications, LLC (“CC, LLC”), an indirect subsidiary of the Company, was named as a defendant in a lawsuit filed in Dallas, Texas related to the fatal stabbing of an individual in her home by an off duty CC, LLC technician:

William Goff, as Personal Representative of Betty Jo McClain Thomas, deceased, et al.

Roy James Holden, Jr.

and Charter Communications, LLC, Case No.

CC-20-01579-E, pending in County Court at Law No.

5 for Dallas County, Texas.

The complaint alleged that CC, LLC was responsible for Mrs.

Thomas' death.

Following a two phase trial, the jury returned a verdict finding CC, LLC ninety percent at fault for Mrs.

Thomas’ death, and awarded compensatory damages of $ 375 million to plaintiffs and then awarded $ 7.0 billion in punitive damages to plaintiffs on July 26, 2022.

On October 7, 2022, plaintiffs filed a motion for a judgment that proposed a reduced total award of $ 1.144 billion.

The trial judge signed the judgment, and CC, LLC posted a $ 25 million bond to stay the judgment pending appeals.

CC, LLC will continue to vigorously defend this lawsuit including pursuing all available appeals.

The Company has considered various factors, including the legal and factual circumstances of the case, the trial record, the jury verdicts, the status of the proceedings, applicable law, the views of legal counsel, the court’s rulings in advance of and during the trial, along with post-trial motions of the parties in determining the various grounds for appeal that the Company expects to vigorously pursue and the likelihood of a successful appeal.

Based on these factors, the Company has concluded that a loss from this case is not probable and reasonably estimable.

Therefore, the Company has not accrued a liability for the adverse verdict in its financial statements as of September 30, 2022.

The Company is a defendant or co-defendant in several lawsuits involving alleged infringement of various intellectual property relating to various aspects of its businesses.

Other industry participants are also defendants in certain of these cases or related cases.

In the event that a court ultimately determines that the Company infringes on any intellectual property, the Company may be subject to substantial damages and/or an injunction that could require the Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as negotiate royalty or license agreements with respect to the

CHARTER COMMUNICATIONS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share amounts and where indicated)

intellectual property at issue.

While the Company believes the lawsuits are without merit and intends to defend the actions vigorously, no assurance can be given that any adverse outcome would not be material to the Company’s consolidated financial condition, results of operations, or liquidity.

The Company cannot predict the outcome of any such claims nor can it reasonably estimate a range of possible loss.

The Company is party to other lawsuits, claims and regulatory inquiries that arise in the ordinary course of conducting its business.

The ultimate outcome of these other legal matters pending against the Company cannot be predicted, and although such lawsuits and claims are not expected individually to have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity, such lawsuits could have, in the aggregate, a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

Whether or not the Company ultimately prevails in any particular lawsuit or claim, litigation can be time consuming and costly and injure the Company’s reputation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements