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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 September 30, 2021
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: 001-33664
chtr-20210930_g1.jpg
Charter Communications, Inc.
(Exact name of registrant as specified in its charter)
Delaware
84-1496755
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
400 Washington Blvd.
Stamford
Connecticut
06902
(Address of Principal Executive Offices)
(Zip Code)
(203) 905-7801
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock $.001 Par ValueCHTRNASDAQ Global Select Market

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 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 o    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

Number of shares of Class A common stock outstanding as of September 30, 2021: 179,291,073

Number of shares of Class B common stock outstanding as of September 30, 2021: 1




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CHARTER COMMUNICATIONS, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS
Page No.

This quarterly report on Form 10-Q is for the three and nine months ended September 30, 2021. 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, “Charter,” “we,” “us” and “our” refer to Charter Communications, Inc. 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,” “grow,” “focused on” and “potential,” among others. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this quarterly report are set forth in this quarterly report on Form 10-Q, in our annual report on Form 10-K, and in other reports or documents that we file from time to time with the SEC, and include, but are not limited to:

our ability to sustain and grow revenues and cash flow from operations by offering Internet, video, voice, mobile, advertising and other services to residential and commercial customers, to adequately meet the customer experience demands in our service areas and to maintain and grow our customer base, particularly in the face of increasingly aggressive competition, the need for innovation and the related capital expenditures;
the impact of competition from other market participants, including but not limited to incumbent telephone companies, direct broadcast satellite ("DBS") operators, wireless broadband and telephone providers, digital subscriber line (“DSL”) providers, fiber to the home providers and providers of video content over broadband Internet connections;
general business conditions, unemployment levels and the level of activity in the housing sector and economic uncertainty or downturn, including the impacts of the Novel Coronavirus (“COVID-19”) pandemic to our customers, our vendors and local, state and federal governmental responses to the pandemic;
our ability to obtain programming at reasonable prices or to raise prices to offset, in whole or in part, the effects of higher programming costs (including retransmission consents and distribution requirements);
our ability to develop and deploy new products and technologies including mobile products and any other consumer services and service platforms;
any events that disrupt our networks, information systems or properties and impair our operating activities or our reputation;
the effects of governmental regulation on our business including subsidies to consumers, subsidies and incentives for competitors, costs, disruptions and possible limitations on operating flexibility related to, and our ability to comply with, regulatory conditions applicable to us;
the ability to hire and retain key personnel;
our ability to procure necessary services and equipment from our vendors at reasonable costs;
the availability and access, in general, of funds to meet our debt obligations prior to or when they become due and to fund our operations and necessary capital expenditures, either through (i) cash on hand, (ii) free cash flow, or (iii) access to the capital or credit markets; and
our ability to comply with all covenants in our indentures and credit facilities, any violation of which, if not cured in a timely manner, could trigger a default of our other obligations under cross-default provisions.

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

ii


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except share data)

September 30,
2021
December 31,
2020
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$466 $1,001 
Accounts receivable, less allowance for doubtful accounts of $182 and $217, respectively
2,645 2,539 
Prepaid expenses and other current assets387 369 
Total current assets3,498 3,909 
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $33,340 and $31,639, respectively
34,179 34,357 
Customer relationships, net4,419 5,615 
Franchises67,322 67,322 
Goodwill29,554 29,554 
Total investment in cable properties, net135,474 136,848 
OTHER NONCURRENT ASSETS3,523 3,449 
Total assets$142,495 $144,206 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities$9,241 $8,867 
Current portion of long-term debt2,996 1,008 
Total current liabilities12,237 9,875 
LONG-TERM DEBT85,376 81,744 
DEFERRED INCOME TAXES18,980 18,108 
OTHER LONG-TERM LIABILITIES4,376 4,198 
SHAREHOLDERS’ EQUITY:
Class A common stock; $0.001 par value; 900 million shares authorized;
195,918,833 and 193,730,992 shares issued, respectively
  
Class B common stock; $0.001 par value; 1,000 shares authorized;
1 share issued and outstanding
  
Preferred stock; $0.001 par value; 250 million shares authorized;
no shares issued and outstanding
  
Additional paid-in capital30,015 29,000 
Accumulated deficit(2,151)(5,195)
Treasury stock at cost; 16,627,760 and no shares, respectively
(10,834) 
Total Charter shareholders’ equity 17,030 23,805 
Noncontrolling interests4,496 6,476 
Total shareholders’ equity21,526 30,281 
Total liabilities and shareholders’ equity$142,495 $144,206 

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


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per share data)
Unaudited

Three Months Ended September 30, Nine Months Ended September 30,
2021202020212020
REVENUES$13,146 $12,039 $38,470 $35,473 
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)
7,958 7,483 23,551 22,212 
Depreciation and amortization2,270 2,370 7,065 7,295 
Other operating (income) expenses, net(9)14 284 23 
10,219 9,867 30,900 29,530 
Income from operations2,927 2,172 7,570 5,943 
OTHER INCOME (EXPENSES):
Interest expense, net
(1,016)(946)(3,003)(2,883)
Other expenses, net(157)(117)(237)(413)
(1,173)(1,063)(3,240)(3,296)
Income before income taxes1,754 1,109 4,330 2,647 
Income tax expense
(347)(177)(844)(372)
Consolidated net income1,407 932 3,486 2,275 
Less: Net income attributable to noncontrolling interests(190)(118)(442)(299)
Net income attributable to Charter shareholders$1,217 $814 $3,044 $1,976 
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic$6.69 $4.01 $16.33 $9.62 
Diluted$6.50 $3.90 $15.78 $9.35 
Weighted average common shares outstanding, basic
181,925,180 202,826,502 186,380,681 205,468,736 
Weighted average common shares outstanding, diluted
187,166,071 208,722,129 197,316,667 211,399,781 


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


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(dollars in millions)
Unaudited

Class A Common StockClass B Common StockAdditional Paid-in CapitalAccumulated DeficitTreasury StockTotal Charter Shareholders’ EquityNon-controlling InterestsTotal Shareholders’ Equity
BALANCE, December 31, 2020$ $ $29,000 $(5,195)$ $23,805 $6,476 $30,281 
Consolidated net income   807  807 114 921 
Stock compensation expense  134   134  134 
Exercise of stock options  9   9  9 
Purchases of treasury stock    (3,652)(3,652) (3,652)
Purchase of noncontrolling interest, net of tax  (237)  (237)(192)(429)
Change in noncontrolling interest ownership, net of tax  131   131 (175)(44)
Distributions to noncontrolling interest      (39)(39)
BALANCE, March 31, 2021  29,037 (4,388)(3,652)20,997 6,184 27,181 
Consolidated net income   1,020  1,020 138 1,158 
Stock compensation expense  100   100  100 
Exercise of stock options  17   17  17 
Purchases of treasury stock    (3,516)(3,516) (3,516)
Purchase of noncontrolling interest, net of tax  (279)  (279)(213)(492)
Preferred unit conversion and change in noncontrolling interest ownership, net of tax  1,003   1,003 (1,333)(330)
Distributions to noncontrolling interest      (32)(32)
BALANCE, June 30, 2021  29,878 (3,368)(7,168)19,342 4,744 24,086 
Consolidated net income   1,217  1,217 190 1,407 
Stock compensation expense  98   98  98 
Exercise of stock options  17   17  17 
Purchases of treasury stock    (3,666)(3,666) (3,666)
Purchase of noncontrolling interest, net of tax  (197)  (197)(148)(345)
Change in noncontrolling interest ownership, net of tax  219   219 (290)(71)
BALANCE, September 30, 2021$ $ $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



CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(dollars in millions)
Unaudited

Class A Common StockClass B Common StockAdditional Paid-in CapitalRetained Earnings Treasury StockTotal Charter Shareholders’ EquityNon-controlling InterestsTotal Shareholders’ Equity
BALANCE, December 31, 2019$ $ $31,405 $40 $ $31,445 $7,366 $38,811 
Consolidated net income   396  396 71 467 
Stock compensation expense  90   90  90 
Exercise of stock options  93   93  93 
Issuance of equity  23   23  23 
Purchases of treasury stock    (2,352)(2,352) (2,352)
Purchase of noncontrolling interest, net of tax  (149)  (149)(195)(344)
Change in noncontrolling interest ownership, net of tax  82   82 (109)(27)
Distributions to noncontrolling interest      (39)(39)
BALANCE, March 31, 2020  31,544 436 (2,352)29,628 7,094 36,722 
Consolidated net income   766  766 110 876 
Stock compensation expense  90   90  90 
Exercise of stock options  28   28  28 
Purchases of treasury stock    (1,155)(1,155) (1,155)
Purchase of noncontrolling interest, net of tax  (42)  (42)(69)(111)
Change in noncontrolling interest ownership, net of tax  41   41 (52)(11)
Distributions to noncontrolling interest      (38)(38)
BALANCE, June 30, 2020  31,661 1,202 (3,507)29,356 7,045 36,401 
Consolidated net income   814  814 118 932 
Stock compensation expense  83   83  83 
Exercise of stock options  50   50  50 
Purchases of treasury stock    (3,361)(3,361) (3,361)
Purchase of noncontrolling interest, net of tax  (154)  (154)(163)(317)
Change in noncontrolling interest ownership, net of tax  118   118 (157)(39)
Distributions to noncontrolling interest      (37)(37)
BALANCE, September 30, 2020$ $ $31,758 $2,016 $(6,868)$26,906 $6,806 $33,712 

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


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
Unaudited
Nine Months Ended September 30,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income $3,486 $2,275 
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization7,065 7,295 
Stock compensation expense332 263 
Noncash interest income, net(20)(31)
Deferred income taxes668 252 
Other, net279 379 
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable(106)75 
Prepaid expenses and other assets(127)(156)
Accounts payable, accrued liabilities and other436 61 
Net cash flows from operating activities12,013 10,413 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment(5,563)(5,352)
Change in accrued expenses related to capital expenditures(51)(70)
Real estate investments through variable interest entities(128)(122)
Other, net(20)(43)
Net cash flows from investing activities(5,762)(5,587)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt15,263 10,352 
Repayments of long-term debt(9,651)(9,711)
Payments for debt issuance costs(76)(91)
Issuance of equity 23 
Purchase of treasury stock(10,834)(6,868)
Proceeds from exercise of stock options43 171 
Purchase of noncontrolling interest(1,500)(884)
Distributions to noncontrolling interest(71)(114)
Borrowings for real estate investments through variable interest entities128 59 
Other, net(88)(26)
Net cash flows from financing activities(6,786)(7,089)
NET DECREASE IN CASH AND CASH EQUIVALENTS (535)(2,263)
CASH AND CASH EQUIVALENTS, beginning of period1,001 3,549 
CASH AND CASH EQUIVALENTS, end of period$466 $1,286 
CASH PAID FOR INTEREST$3,038 $3,023 
CASH PAID FOR TAXES$99 $84 

The accompanying notes are an integral part of these consolidated financial statements.
5


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)


1.    Organization and Basis of Presentation

Organization

Charter Communications, Inc. (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. For small and medium-sized companies, Spectrum Business® delivers the same suite of broadband products and services coupled with special features and applications to enhance productivity, while for larger businesses and government entities, Spectrum Enterprise provides highly customized, fiber-based solutions. Spectrum Reach® delivers tailored advertising and production for the modern media landscape. The Company also distributes award-winning news coverage, sports and high-quality original programming to its customers through Spectrum Networks and Spectrum Originals.

Charter is a holding company whose principal asset is a controlling equity interest in Charter Communications Holdings, LLC (“Charter Holdings”), an indirect owner of Charter Communications Operating, LLC (“Charter Operating”) under which substantially all of the operations reside. All significant intercompany accounts and transactions among consolidated entities have been eliminated.

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

Basis of Presentation

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

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

Certain prior period amounts have been reclassified to conform with the 2021 presentation.


6


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

2.    Franchises, Goodwill and Other Intangible Assets

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

September 30, 2021December 31, 2020
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Indefinite-lived intangible assets:
Franchises$67,322 $— $67,322 $67,322 $— $67,322 
Goodwill29,554 — 29,554 29,554 — 29,554 
Wireless spectrum licenses464 — 464 464 — 464 
Trademarks159 — 159 159 — 159 
$97,499 $— $97,499 $97,499 $— $97,499 
Finite-lived intangible assets:
Customer relationships$18,232 $(13,813)$4,419 $18,230 $(12,615)$5,615 
Other intangible assets420 (187)233 420 (159)261 
$18,652 $(14,000)$4,652 $18,650 $(12,774)$5,876 

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

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

Three months ended December 31, 2021$375 
20221,332 
20231,075 
2024824 
2025576 
Thereafter470 
$4,652 

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

3.    Investments

Real Estate Investments through Variable Interest Entities

In July 2018, the Company entered into a build-to-suit lease arrangement with a single-asset special purpose entity ("SPE Building 1") to build the first building in the building complex for the new Charter headquarters in Stamford, Connecticut. The SPE Building 1 obtained a first-lien mortgage note to finance the construction with fixed monthly payments through July 15, 2035 with a 5.612% coupon interest rate. All payments of the mortgage note are guaranteed by Charter. The initial term of the lease is 15 years which commenced on August 1, 2020, with no termination options. At the end of the lease term there is a mirrored put option for the SPE to sell the property to Charter and call option for Charter to purchase the property for a fixed purchase price.

In April 2020, the Company entered into a build-to-suit lease agreement with a second special purpose entity (“SPE Building 2”) to build the adjoining building and atrium, in the building complex for the new Charter headquarters. Charter does not guarantee the financing for SPE Building 2. The initial term of the lease is 15 years commencing February 26, 2022, with no termination options. At the end of the lease term, there is a put option for the SPE Building 2 to sell the property to Charter for

7


CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in millions, except per share amounts and where indicated)

a fixed price. If SPE Building 2 does not exercise the put option and the Company exercises its first renewal term, there is a call option for Charter to purchase the property for a fixed purchase price in year 3 of the first renewal term.

As the Company has determined that SPE Building 1 and SPE Building 2 (collectively, the "SPEs") are variable interest entities ("VIEs") of which the Company became the primary beneficiary upon the effectiveness of the arrangements in July 2018 and April 2020, respectively, the Company has consolidated the assets and liabilities of the SPEs in its consolidated balance sheets as of September 30, 2021 and December 31, 2020 as follows.

September 30, 2021December 31, 2020
Assets
Current assets$5 $3 
Property, plant and equipment$639 $490 
Liabilities
Current liabilities$52 $28 
Other long-term liabilities$600 $470 

Property, plant and equipment includes land, a parking garage and building construction costs, including the capitalization of qualifying interest. Other long-term liabilities includes mortgage note liabilities and liability-classified noncontrolling interests for the SPEs recorded at amortized cost with accretion towards settlement of the put/call option in the leases. As of September 30, 2021 and December 31, 2020, other long-term liabilities include $509 million and $400 million in SPE mortgage note liability, respectively.     

Equity Investments

During the nine months ended September 30, 2021, the Company recorded impairments on equity investments of approximately $165 million which was recorded in other expenses, net in the consolidated statements of operations.

4.    Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following as of September 30, 2021 and December 31, 2020:

September 30, 2021December 31, 2020
Accounts payable – trade$686 $763 
Deferred revenue501 436 
Accrued liabilities:
Programming costs2,106 1,940 
Labor1,235 1,374 
Capital expenditures1,123 1,227