Company Quick10K Filing
Quick10K
CCO Holdings
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
8-K 2019-10-01 Enter Agreement, Off-BS Arrangement, Off-BS Arrangement, Regulation FD, Other Events, Exhibits
8-K 2019-07-26 Earnings, Exhibits
8-K 2019-07-10 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-06-25 Other Events, Exhibits
8-K 2019-05-23 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-04-23 Shareholder Vote
8-K 2019-04-19 Regulation FD
8-K 2019-01-24 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-01-17 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-01-14 Other Events, Exhibits
8-K 2018-10-26 Earnings, Exhibits
8-K 2018-08-15 Off-BS Arrangement, Other Events, Exhibits
8-K 2018-08-09 Other Events, Exhibits
8-K 2018-07-24 Officers, Amend Bylaw, Regulation FD, Exhibits
8-K 2018-07-11 Regulation FD
8-K 2018-07-03 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-06-28 Other Events, Exhibits
8-K 2018-04-27 Earnings, Exhibits
8-K 2018-04-25 Shareholder Vote
8-K 2018-04-17 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-04-03 Other Events, Exhibits
8-K 2018-02-02 Earnings, Exhibits
TPCA Tropicana Entertainment 1,739
RMP Rampart Studios 563
EFSI Eagle Financial Services 106
MDIT Medite Cancer Diagnostics 19
VLDI Validian 14
ASDN Astro Aerospace 11
KPAY KinerjaPay 7
PL Protective Life 0
CLIC CLIC Technology 0
LTRP Liberty Tripadvisor Holdings 0
CCOH 2019-06-30
Part I. Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 ccoh6302019exh-311.htm
EX-31.2 ccoh6302019exh-312.htm
EX-32.1 ccoh6302019exh-321.htm
EX-32.2 ccoh6302019exh-322.htm

CCO Holdings Earnings 2019-06-30

CCOH 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-Q
______________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From             to             
Commission File Number: 001-37789
    333-112593-01
CCO Holdings, LLC
CCO Holdings Capital Corp.
(Exact name of registrant as specified in its charter)

Delaware
 
86-1067239
Delaware
 
20-0257904
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
400 Atlantic Street
Stamford
Connecticut
06901
(Address of Principal Executive Offices)
(Zip Code)
(203) 905-7801
(Registrant's telephone number, including area code)

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

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

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

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

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

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

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

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

Number of shares of common stock of CCO Holdings Capital Corporation outstanding as of June 30, 2019: 1






CCO HOLDINGS, LLC
CCO HOLDINGS CAPITAL CORP.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
JUNE 30, 2019

TABLE OF CONTENTS
 
 
 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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


i



CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

our ability to sustain and grow revenues and cash flow from operations by offering video, Internet, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers, video provided over the Internet by (i) market participants that have not historically competed in the multichannel video business, (ii) traditional multichannel video distributors, and (iii) content providers that have historically licensed cable networks to multichannel video distributors, and providers of advertising over the Internet;
our ability to efficiently and effectively integrate acquired operations;
the effects of governmental regulation on our business including costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us as a result of the Time Warner Cable Inc. and Bright House Networks, LLC Transactions;
general business conditions, economic uncertainty or downturn, unemployment levels and the level of activity in the housing sector;
our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents);
our ability to develop and deploy new products and technologies including mobile products and any other consumer services and service platforms;
any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
the ability to retain and hire key personnel;
the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

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


ii



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.

CCO HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
 
June 30,
2019
 
December 31,
2018
 
(unaudited)
 
 
ASSETS
 
 
 
CURRENT ASSETS:
 
 
 
Cash and cash equivalents
$
498

 
$
300

Accounts receivable, less allowance for doubtful accounts of
 
 
 
$155 and $129, respectively
2,035

 
1,699

Prepaid expenses and other current assets
525

 
400

Total current assets
3,058

 
2,399

 
 
 
 
INVESTMENT IN CABLE PROPERTIES:
 
 
 
Property, plant and equipment, net of accumulated
 
 
 
depreciation of $24,950 and $23,038, respectively
33,876

 
34,658

Customer relationships, net
8,461

 
9,565

Franchises
67,319

 
67,319

Goodwill
29,554

 
29,554

Total investment in cable properties, net
139,210

 
141,096

 
 
 
 
OPERATING LEASE RIGHT-OF-USE ASSETS
989

 

OTHER NONCURRENT ASSETS
1,390

 
1,403

 
 
 
 
Total assets
$
144,647

 
$
144,898

LIABILITIES AND MEMBER’S EQUITY
 
 
 
CURRENT LIABILITIES:
 
 
 
Accounts payable and accrued liabilities
$
7,252

 
$
7,903

Payables to related party
435

 
545

Operating lease liabilities
178

 

Current portion of long-term debt
1,522

 
3,290

Total current liabilities
9,387

 
11,738

 
 
 
 
LONG-TERM DEBT
71,784

 
69,537

LOANS PAYABLE - RELATED PARTY
959

 
925

DEFERRED INCOME TAXES
52

 

LONG-TERM OPERATING LEASE LIABILITIES
851

 

OTHER LONG-TERM LIABILITIES
2,138

 
2,144

 
 
 
 
MEMBER’S EQUITY:
 
 
 
Member's equity
59,454

 
60,532

Accumulated other comprehensive loss
(2
)
 
(2
)
Total CCO Holdings member's equity
59,452

 
60,530

Noncontrolling interests
24

 
24

Total member’s equity
59,476

 
60,554

 
 
 
 
Total liabilities and member’s equity
$
144,647

 
$
144,898


The accompanying notes are an integral part of these consolidated financial statements.
1



CCO HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions)
Unaudited
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
REVENUES
$
11,345

 
$
10,850

 
$
22,548

 
$
21,503

 
 
 
 
 
 
 
 
COSTS AND EXPENSES:
 
 
 
 
 
 
 
Operating costs and expenses (exclusive of items shown separately below)
7,258

 
6,882

 
14,500

 
13,724

Depreciation and amortization
2,495

 
2,590

 
5,042

 
5,297

Other operating expenses, net
63

 
29

 
59

 
94

 
9,816

 
9,501

 
19,601

 
19,115

Income from operations
1,529

 
1,349

 
2,947

 
2,388

 
 
 
 
 
 
 
 
OTHER INCOME (EXPENSES):
 
 
 
 
 
 
 
Interest expense, net
(955
)
 
(888
)
 
(1,892
)
 
(1,746
)
Loss on financial instruments, net
(119
)
 
(75
)
 
(82
)
 
(12
)
Other pension benefits, net
9

 
20

 
18

 
40

Other expense, net
(16
)
 
(43
)
 
(126
)
 
(45
)
 
(1,081
)
 
(986
)
 
(2,082
)
 
(1,763
)
 
 
 
 
 
 
 
 
Income before income taxes
448

 
363

 
865

 
625

Income tax expense
(9
)
 
(7
)
 
(76
)
 
(5
)
Consolidated net income
439

 
356

 
789

 
620

Less: Net income attributable to noncontrolling interests
(1
)
 
(1
)
 
(1
)
 
(1
)
Net income attributable to CCO Holdings member
$
438

 
$
355

 
$
788

 
$
619




The accompanying notes are an integral part of these consolidated financial statements.
2



CCO HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBER’S EQUITY
(dollars in millions)
Unaudited
 
Member's Equity
Accumulated Other Comprehensive Loss
Total CCO Holdings Member’s Equity
Non-controlling Interests
Total Member's Equity
BALANCE, December 31, 2018
$
60,532

$
(2
)
$
60,530

$
24

$
60,554

Consolidated net income
350


350


350

Stock compensation expense
85


85


85

Contributions from parent
9


9


9

Distributions to parent
(1,040
)

(1,040
)

(1,040
)
Distributions to noncontrolling interest



(1
)
(1
)
BALANCE, March 31, 2019
59,936

(2
)
59,934

23

59,957

Consolidated net income
438


438

1

439

Stock compensation expense
82


82


82

Contributions from parent
42


42


42

Distributions to parent
(1,044
)

(1,044
)

(1,044
)
BALANCE, June 30, 2019
$
59,454

$
(2
)
$
59,452

$
24

$
59,476


 
Member's Equity
Accumulated Other Comprehensive Loss
Total CCO Holdings Member’s Equity
Non-controlling Interests
Total Member's Equity
BALANCE, December 31, 2017
$
63,559

$
(1
)
$
63,558

$
24

$
63,582

Consolidated net income
264


264


264

Stock compensation expense
72


72


72

Accelerated vesting of equity awards
5


5


5

Cumulative effect of accounting changes
49


49


49

Contributions from parent
72


72


72

Distributions to parent
(747
)

(747
)

(747
)
Distributions to noncontrolling interest



(1
)
(1
)
BALANCE, March 31, 2018
63,274

(1
)
63,273

23

63,296

Consolidated net income
355


355

1

356

Stock compensation expense
70


70


70

Changes in accumulated other comprehensive loss

(1
)
(1
)

(1
)
Contributions from parent
5


5


5

Distributions to parent
(1,909
)

(1,909
)

(1,909
)
BALANCE, June 30, 2018
$
61,795

$
(2
)
$
61,793

$
24

$
61,817


The accompanying notes are an integral part of these consolidated financial statements.
3



CCO HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Unaudited
 
Six Months Ended June 30,
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Consolidated net income
$
789

 
$
620

Adjustments to reconcile consolidated net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
5,042

 
5,297

Stock compensation expense
167

 
142

Accelerated vesting of equity awards

 
5

Noncash interest income, net
(72
)
 
(177
)
Other pension benefits, net
(18
)
 
(40
)
Loss on financial instruments, net
82

 
12

Deferred income taxes
54

 

Other, net
160

 
51

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(336
)
 
20

Prepaid expenses and other assets
(163
)
 
(78
)
Accounts payable, accrued liabilities and other
(217
)
 
1

Receivables from and payables to related party
(78
)
 
(137
)
Net cash flows from operating activities
5,410

 
5,716

 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property, plant and equipment
(3,262
)
 
(4,574
)
Change in accrued expenses related to capital expenditures
(428
)
 
(466
)
Other, net
80

 
(55
)
Net cash flows from investing activities
(3,610
)
 
(5,095
)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Borrowings of long-term debt
10,714

 
5,628

Repayments of long-term debt
(10,123
)
 
(3,500
)
Borrowings of loans payable - related parties

 
7

Payments for debt issuance costs
(32
)
 
(17
)
Contributions from parent
51

 
77

Distributions to parent
(2,084
)
 
(2,656
)
Distributions to noncontrolling interest
(1
)
 
(1
)
Other, net
(127
)
 
(5
)
Net cash flows from financing activities
(1,602
)
 
(467
)
 
 
 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS
198

 
154

CASH AND CASH EQUIVALENTS, beginning of period
300

 
330

CASH AND CASH EQUIVALENTS, end of period
$
498

 
$
484

 
 
 
 
CASH PAID FOR INTEREST
$
2,017

 
$
1,889

CASH PAID FOR TAXES
$
22

 
$
19



The accompanying notes are an integral part of these consolidated financial statements.
4


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)



1.    Organization and Basis of Presentation

Organization

CCO Holdings, LLC (together with its subsidiaries, “CCO Holdings,” or the “Company”) is the second largest cable operator in the United States and a leading broadband communications company providing video, Internet and voice services to residential and business customers. The Company also recently launched its mobile service to residential customers. In addition, the Company sells video and online advertising inventory to local, regional and national advertising customers and fiber-delivered communications and managed information technology solutions to larger enterprise customers. The Company also owns and operates regional sports networks and local sports, news and community channels.

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

The Company’s operations are managed and reported to its Chairman and Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company has one reportable segment, cable services.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures typically included in CCO Holdings’ Annual Report on Form 10-K have been condensed or omitted for this quarterly report. The accompanying consolidated financial statements are unaudited and are subject to review by regulatory authorities. However, in the opinion of management, such financial statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. Interim results are not necessarily indicative of results for a full year.

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



5


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)


2.    Franchises, Goodwill and Other Intangible Assets

Indefinite-lived and finite-lived intangible assets consist of the following as of June 30, 2019 and December 31, 2018:

 
 
June 30, 2019
 
December 31, 2018
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Franchises
 
$
67,319

 
$

 
$
67,319

 
$
67,319

 
$

 
$
67,319

Goodwill
 
29,554

 

 
29,554

 
29,554

 

 
29,554

 
 
$
96,873

 
$

 
$
96,873

 
$
96,873

 
$

 
$
96,873

 
 
 
 
 
 
 
 
 
 
 
 
 
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
 
$
18,229

 
$
(9,768
)
 
$
8,461

 
$
18,229

 
$
(8,664
)
 
$
9,565

Other intangible assets
 
409

 
(114
)
 
295

 
409

 
(92
)
 
317

 
 
$
18,638

 
$
(9,882
)
 
$
8,756

 
$
18,638

 
$
(8,756
)
 
$
9,882



Amortization expense related to customer relationships and other intangible assets for the three and six months ended June 30, 2019 was $548 million and $1.1 billion, respectively, and $614 million and $1.3 billion for the three and six months ended June 30, 2018, respectively.
    
The Company expects amortization expense on its finite-lived intangible assets will be as follows:

Six months ended December 31, 2019
 
$
1,029

2020
 
1,873

2021
 
1,597

2022
 
1,327

2023
 
1,070

Thereafter
 
1,860

 
 
$
8,756



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

3.    Investments

The Company recorded impairments on equity investments of approximately $11 million and $121 million during the three and six months ended June 30, 2019, respectively, and $39 million and $58 million during the three and six months ended June 30, 2018, respectively, which was recorded in other expense, net in the consolidated statements of operations.



6


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)


4.    Accounts Payable and Accrued Liabilities

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

 
June 30, 2019
 
December 31, 2018
Accounts payable – trade
$
714

 
$
702

Deferred revenue
389

 
494

Accrued liabilities:
 
 
 
Programming costs
2,108

 
2,044

Labor
660

 
705

Capital expenditures
1,016

 
1,472

Interest
1,001

 
1,045

Taxes and regulatory fees
511

 
508

Other
853

 
933

 
$
7,252

 
$
7,903



5.    Leases

The primary leased asset classes of the Company include real estate, dark fiber, colocation facilities and other equipment. The lease agreements include both lease and non-lease components, which the Company accounts for separately depending on the election made for each leased asset class. For real estate and dark fiber leased asset classes, the Company accounts for lease and non-lease components as a single lease component and includes all fixed payments in the measurement of lease liabilities and lease assets. For colocation facilities leased asset class, the Company accounts for lease and non-lease components separately including only the fixed lease payment component in the measurement of lease liabilities and lease assets.

In addition to fixed lease payments, certain of the Company’s lease agreements include variable lease payments which are tied to an index or rate such as the change in the Consumer Price Index. These variable payments are not included in the measurement of the lease liabilities and lease assets.

Lease assets and lease liabilities are initially recognized based on the present value of the future lease payments over the expected lease term. As for most leases the implicit rate is not readily determinable, the Company uses a discount rate in determining the present value of future payments based on the yield-to-maturity of the Company’s secured publicly traded USD denominated debt instruments interpolating the duration of the debt to the term of the executed lease.

The Company’s leases have base rent periods and some with optional renewal periods. Leases with base rent periods of less than 12 months are not recorded on the balance sheet. For purposes of measurement of lease liabilities, the expected lease terms may include renewal options when it is reasonably certain that the Company will exercise such options. Based on conditions of the Company's existing leases and its overall business strategies, the majority of the Company's renewal options are not reasonably certain in determining the expected lease term. The Company will periodically reassess expected lease terms (and purchase options, if applicable) based on significant triggering events or compelling economic reasons to exercise such options.

The Company’s primary lease income represents sublease income on certain real estate leases. Sublease income is included in other revenue and presented gross from rent expense. For customer premise equipment ("CPE") where such CPE would qualify as a lease, the Company applies the practical expedient to combine the operating lease with the subscription service revenue as a single performance obligation in accordance with revenue recognition accounting guidance as the subscription service is the predominant component.



7


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)


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

 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
Operating lease expense (a)
$
95

 
$
189

 
 
 
 
Finance lease expense:
 
 
 
Amortization of right-of-use assets
3

 
7

Interest on lease liabilities
2

 
3

Total finance lease expense
5

 
10

 
 
 
 
Sublease income
(5
)
 
(10
)
Total lease related expenses, net
$
95

 
$
189


(a) 
Includes short-term leases and variable leases costs of $27 million and $61 million for the three and six months ended June 30, 2019, respectively.

Supplemental cash flow information related to leases is as follows.

 
Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
122

Operating cash flows from finance leases
$
2

Financing cash flows from finance leases
$
4

 
 
Right-of-use assets obtained in exchange for lease obligations:
 
Operating leases
$
115

Finance leases
$
26





8


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)


Supplemental balance sheet information related to leases is as follows.

 
June 30, 2019
Operating leases:
 
Operating lease right-of-use assets
$
989

 
 
Current operating lease liabilities
$
178

Long-term operating lease liabilities
851

Total operating lease liabilities
$
1,029

 
 
Finance leases:
 
Finance lease right-of-use assets (included within property, plant and equipment, net)
$
202

 
 
Current finance lease liabilities (included within accounts payable and accrued liabilities)
$
6

Long-term finance lease liabilities (included within other long-term liabilities)
97

Total finance lease liabilities
$
103

 
 
Weighted average remaining lease term
 
Operating leases
6.9 years

Finance leases
13.1 years

 
 
Weighted average discount rate
 
Operating leases
4.5
%
Finance leases
5.6
%


Maturities of lease liabilities are as follows.

 
Operating leases
 
Finance leases
Six months ended December 31, 2019
$
123

 
$
5

2020
238

 
11

2021
205

 
12

2022
170

 
12

2023
145

 
12

Thereafter
396

 
95

Undiscounted lease cash flow commitments
1,277

 
147

Reconciling impact from discounting
(248
)
 
(44
)
Lease liabilities on consolidated balance sheet as of June 30, 2019
$
1,029

 
$
103





9


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)


The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for companies adopting the lease standard prospectively without revising comparative period information.

 
Operating leases
 
Finance leases
2019
$
233

 
$
10

2020
215

 
9

2021
176

 
9

2022
142

 
9

2023
119

 
10

Thereafter
342

 
64

 
$
1,227

 
$
111



6.    Long-Term Debt

Long-term debt consists of the following as of June 30, 2019 and December 31, 2018:

 
June 30, 2019
 
December 31, 2018
 
Principal Amount
 
Accreted Value
 
Principal Amount
 
Accreted Value
CCO Holdings, LLC:
 
 
 
 
 
 
 
5.250% senior notes due March 15, 2021
$
500

 
$
498

 
$
500

 
$
498

5.250% senior notes due September 30, 2022
1,250

 
1,239

 
1,250

 
1,238

5.125% senior notes due February 15, 2023
1,000

 
995

 
1,000

 
994

4.000% senior notes due March 1, 2023
500

 
497

 
500

 
496

5.125% senior notes due May 1, 2023
1,150

 
1,144

 
1,150

 
1,144

5.750% senior notes due September 1, 2023
500

 
497

 
500

 
497

5.750% senior notes due January 15, 2024
1,000

 
994

 
1,000

 
993

5.875% senior notes due April 1, 2024
1,700

 
1,689

 
1,700

 
1,688

5.375% senior notes due May 1, 2025
750

 
746

 
750

 
745

5.750% senior notes due February 15, 2026
2,500

 
2,469

 
2,500

 
2,467

5.500% senior notes due May 1, 2026
1,500

 
1,491

 
1,500

 
1,490

5.875% senior notes due May 1, 2027
800

 
795

 
800

 
795

5.125% senior notes due May 1, 2027
3,250

 
3,221

 
3,250

 
3,219

5.000% senior notes due February 1, 2028
2,500

 
2,467

 
2,500

 
2,466

5.375% senior notes due June 1, 2029
750

 
743

 

 

Charter Communications Operating, LLC:
 
 
 
 
 
 
 
3.579% senior notes due July 23, 2020
2,000

 
1,995

 
2,000

 
1,992

4.464% senior notes due July 23, 2022
3,000

 
2,984

 
3,000

 
2,982

Senior floating rate notes due February 1, 2024
900

 
902

 
900

 
903

4.500% senior notes due February 1, 2024
1,100

 
1,092

 
1,100

 
1,091

4.908% senior notes due July 23, 2025
4,500

 
4,468

 
4,500

 
4,466

3.750% senior notes due February 15, 2028
1,000

 
987

 
1,000

 
986

4.200% senior notes due March 15, 2028
1,250

 
1,240

 
1,250

 
1,240

5.050% senior notes due March 30, 2029
1,250

 
1,240

 

 

6.384% senior notes due October 23, 2035
2,000

 
1,982

 
2,000

 
1,982

5.375% senior notes due April 1, 2038
800

 
786

 
800

 
785

6.484% senior notes due October 23, 2045
3,500

 
3,467

 
3,500

 
3,467




10


CCO HOLDINGS, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except where indicated)


5.375% senior notes due May 1, 2047
2,500

 
2,506

 
2,500

 
2,506

5.750% senior notes due April 1, 2048
2,450

 
2,390

 
1,700

 
1,683

6.834% senior notes due October 23, 2055
500

 
495

 
500

 
495

Credit facilities
11,167

 
11,089

 
10,038

 
9,959

Time Warner Cable, LLC:
 
 
 
 
 
 
 
8.750% senior notes due February 14, 2019

 

 
1,250

 
1,260

8.250% senior notes due April 1, 2019

 

 
2,000

 
2,030

5.000% senior notes due February 1, 2020
1,500

 
1,522

 
1,500

 
1,541

4.125% senior notes due February 15, 2021
700

 
716

 
700

 
721

4.000% senior notes due September 1, 2021
1,000

 
1,027

 
1,000

 
1,033

5.750% sterling senior notes due June 2, 2031 (a)
794

 
851

 
796

 
855

6.550% senior debentures due May 1, 2037
1,500

 
1,678

 
1,500

 
1,680

7.300% senior debentures due July 1, 2038
1,500

 
1,776

 
1,500

 
1,780

6.750% senior debentures due June 15, 2039
1,500

 
1,716

 
1,500

 
1,719

5.875% senior debentures due November 15, 2040
1,200

 
1,256

 
1,200

 
1,256

5.500% senior debentures due September 1, 2041
1,250

 
1,258

 
1,250

 
1,258

5.250% sterling senior notes due July 15, 2042 (b)
825

 
796

 
827

 
798

4.500% senior debentures due September 15, 2042
1,250

 
1,141

 
1,250

 
1,140

Time Warner Cable Enterprises LLC:
 
 
 
 
 
 
 
8.375% senior debentures due March 15, 2023
1,000

 
1,170

 
1,000

 
1,191

8.375% senior debentures due July 15, 2033
1,000

 
1,291

 
1,000

 
1,298

Total debt
72,586

 
73,306

 
71,961

 
72,827

Less current portion: