Item 1. Financial Statements.

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in millions, except share data)

			September 30, 2022						December 31, 2021
			(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	480					$	601
Accounts receivable, less allowance for doubtful accounts of $230 and $157, respectively			2,841						2,579
Prepaid expenses and other current assets			433						386
Total current assets			3,754						3,566
INVESTMENT IN CABLE PROPERTIES:
Property, plant and equipment, net of accumulated depreciation of $35,414 and $34,253, respectively			35,005						34,310
Customer relationships, net of accumulated amortization of $15,177 and $14,180, respectively			3,073						4,060
Franchises			67,363						67,346
Goodwill			29,563						29,562
Total investment in cable properties, net			135,004						135,278
OTHER NONCURRENT ASSETS			4,911						3,647
Total assets			$	143,669					$	142,491
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities			$	10,073					$	9,461
Current portion of long-term debt			1,522						2,997
Total current liabilities			11,595						12,458
LONG-TERM DEBT			95,510						88,564
DEFERRED INCOME TAXES			19,153						19,096
OTHER LONG-TERM LIABILITIES			5,061						4,217
SHAREHOLDERS’ EQUITY:
Class A common stock; $0.001 par value; 900 million shares authorized;
173,847,120 and 172,741,236 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 capital			26,950						26,725
Accumulated deficit			(8,816)						(12,675)
Treasury stock at cost; 18,174,839 and no shares, respectively			(9,245)						—
Total Charter shareholders’ equity			8,889						14,050
Noncontrolling interests			3,461						4,106
Total shareholders’ equity			12,350						18,156
Total liabilities and shareholders’ equity			$	143,669					$	142,491

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

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,
			2022						2021						2022						2021
REVENUES			$	13,550					$	13,146					$	40,348					$	38,470
COSTS AND EXPENSES:
Operating costs and expenses (exclusive of items shown separately below)			8,247						7,958						24,574						23,551
Depreciation and amortization			2,177						2,270						6,711						7,065
Other operating (income) expenses, net			202						(9)						141						284
			10,626						10,219						31,426						30,900
Income from operations			2,924						2,927						8,922						7,570
OTHER INCOME (EXPENSES):
Interest expense, net			(1,160)						(1,016)						(3,329)						(3,003)
Other income (expenses), net			(37)						(157)						65						(237)
			(1,197)						(1,173)						(3,264)						(3,240)
Income before income taxes			1,727						1,754						5,658						4,330
Income tax expense			(360)						(347)						(1,194)						(844)
Consolidated net income			1,367						1,407						4,464						3,486
Less: Net income attributable to noncontrolling interests			(182)						(190)						(605)						(442)
Net income attributable to Charter shareholders			$	1,185					$	1,217					$	3,859					$	3,044
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CHARTER SHAREHOLDERS:
Basic			$	7.51					$	6.69					$	23.51					$	16.33
Diluted			$	7.38					$	6.50					$	23.06					$	15.78
Weighted average common shares outstanding, basic			157,971,109						181,925,180						164,189,703						186,380,681
Weighted average common shares outstanding, diluted			160,638,186						187,166,071						167,351,777						197,316,667

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)

Unaudited

			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
BALANCE, December 31, 2021			$	—		$	—		$	26,725		$	(12,675)		$	—		$	14,050		$	4,106		$	18,156
Consolidated net income			—			—			—			1,203			—			1,203			186			1,389
Stock compensation expense			—			—			147			—			—			147			—			147
Exercise of stock options			—			—			1			—			—			1			—			1
Purchases of treasury stock			—			—			—			—			(3,333)			(3,333)			—			(3,333)
Purchase of noncontrolling interest, net of tax			—			—			(197)			—			—			(197)			(156)			(353)
Change in noncontrolling interest ownership, net of tax			—			—			189			—			—			189			(250)			(61)
Distributions to noncontrolling interest			—			—			—			—			—			—			(2)			(2)
BALANCE, March 31, 2022			—			—			26,865			(11,472)			(3,333)			12,060			3,884			15,944
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)

Unaudited

			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
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.

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

Unaudited

			Nine Months Ended September 30,
			2022						2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income			$	4,464					$	3,486
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization			6,711						7,065
Stock compensation expense			360						332
Noncash interest income, net			(12)						(20)
Deferred income taxes			165						668
Other, net			(113)						279
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable			(262)						(106)
Prepaid expenses and other assets			(96)						(127)
Accounts payable, accrued liabilities and other			(79)						436
Net cash flows from operating activities			11,138						12,013
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(6,456)						(5,563)
Change in accrued expenses related to capital expenditures			284						(51)
Other, net			(174)						(148)
Net cash flows from investing activities			(6,346)						(5,762)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt			21,528						15,263
Repayments of long-term debt			(15,659)						(9,651)
Payments for debt issuance costs			(71)						(76)
Purchase of treasury stock			(9,245)						(10,834)
Proceeds from exercise of stock options			5						43
Purchase of noncontrolling interest			(1,379)						(1,500)
Distributions to noncontrolling interest			(56)						(71)
Other, net			(36)						40
Net cash flows from financing activities			(4,913)						(6,786)
NET DECREASE IN CASH AND CASH EQUIVALENTS			(121)						(535)
CASH AND CASH EQUIVALENTS, beginning of period			601						1,001
CASH AND CASH EQUIVALENTS, end of period			$	480					$	466
CASH PAID FOR INTEREST			$	3,251					$	3,038
CASH PAID FOR TAXES			$	882					$	99

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

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 and sports programming to its customers through Spectrum Networks.

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, pension benefits and income taxes. 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.

2. Investments

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).

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

3. 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 – trade			$	740					$	724
Deferred revenue			525						461
Accrued liabilities:
Programming costs			1,979						2,036
Labor			1,206						1,304
Capital expenditures			1,546						1,281
Interest			1,189						1,099
Taxes and regulatory fees			711						592
Property and casualty			499						490
Operating lease liabilities			291						269
Other			1,387						1,205
			$	10,073					$	9,461

4. 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
									Principal Amount						Carrying Value						Fair Value												Principal Amount						Carrying Value						Fair Value
Senior unsecured notes									$	26,650					$	26,564					$	21,760											$	23,950					$	23,882					$	24,630
Senior secured notes and debentures(a)									56,724						57,112						45,620												56,525						57,011						64,346
Credit facilities(b)									13,413						13,356						12,824												10,723						10,668						10,665
									$	96,787					$	97,032					$	80,204											$	91,198					$	91,561					$	99,641

(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

(UNAUDITED)

(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. 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.

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)

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

5. Common Stock

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						$
Share buybacks			5,006,943						$	2,218					4,738,842						$	3,584					17,597,370						$	9,065					15,442,417						$	10,450
Income tax withholding			14,595						7						104,949						82						304,070						180						572,869						384
Exercise cost			43,916												116,961												273,399												612,474
			5,065,454						$	2,225					4,960,752						$	3,666					18,174,839						$	9,245					16,627,760						$	10,834

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
Number of shares purchased			1,724,540						1,200,547						4,952,224						3,962,155
Amount of shares purchased			$	796					$	880					$	2,602					$	2,642

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. 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.

In 2021, Charter’s board of directors approved the retirement of the then currently held treasury stock and those shares were retired as of December 31, 2021. The Company accounts for treasury stock using the cost method and includes treasury stock as a component of total shareholders’ equity.

6. Noncontrolling Interests

Noncontrolling interests represents consolidated subsidiaries of which the Company owns less than 100%. The Company is a holding company whose principal asset is a controlling equity interest in Charter Holdings, the indirect owner of the Company’s cable systems. Noncontrolling interests on the Company’s balance sheet 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. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(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
Number of units purchased			836,655						565,972						2,557,256						2,270,660
Amount of units purchased			$	385					$	410					$	1,379					$	1,500
Decrease in noncontrolling interest based on carrying value			$	(179)					$	(148)					$	(573)					$	(553)
Decrease in additional paid-in-capital, net of tax			$	(155)					$	(197)					$	(608)					$	(713)

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
Decrease in noncontrolling interest			$	(127)					$	(290)					$	(621)					$	(1,798)
Increase in additional paid-in-capital, net of tax			$	96					$	219					$	468					$	1,353

7. Accounting for Derivative Instruments and Hedging Activities

Cross-currency derivative instruments are used to manage foreign exchange risk on the Sterling Notes by effectively converting £1.275 billion aggregate principal amount of fixed-rate British pound sterling denominated debt, including annual interest payments and the payment of principal at maturity, to fixed-rate U.S. dollar denominated debt. The 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 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
Change in fair value of cross-currency derivative instruments			$	(322)					$	(111)					$	(482)					$	(133)
Foreign currency remeasurement of Sterling Notes to U.S. dollars			129						47						304						26
Loss on financial instruments, net			$	(193)					$	(64)					$	(178)					$	(107)

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

8. Revenues

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Internet			$	5,571					$	5,363					$	16,585					$	15,670
Video			4,379						4,502						13,209						13,224
Voice			391						409						1,180						1,202
Residential revenue			10,341						10,274						30,974						30,096
Small and medium business			1,082						1,062						3,221						3,116
Enterprise			673						656						2,003						1,930
Commercial revenue			1,755						1,718						5,224						5,046
Advertising sales			481						391						1,324						1,146
Mobile			750						535						2,166						1,546
Other			223						228						660						636
			$	13,550					$	13,146					$	40,348					$	38,470

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.

9. 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
Programming			$	2,871					$	2,983					$	8,820					$	8,949
Regulatory, connectivity and produced content			587						634						1,742						1,902
Costs to service customers			1,982						1,899						5,801						5,530
Marketing			861						788						2,493						2,280
Mobile			846						607						2,403						1,765
Other			1,100						1,047						3,315						3,125
			$	8,247					$	7,958					$	24,574					$	23,551

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

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(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.

10. 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

Special charges, net

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.

11. 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)

Net periodic pension benefits

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

(UNAUDITED)

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

12. Stock Compensation Plans

Charter’s stock incentive plans provide for grants of nonqualified stock options, incentive stock options, stock appreciation rights, dividend equivalent rights, performance units and performance shares, share awards, phantom stock, restricted stock units and restricted stock. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting services for the Company, are eligible for grants under the stock incentive plans.

Charter granted the following equity awards for the periods presented.

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
Stock options			50,700						36,900						1,455,100						1,278,700
Restricted stock			—						—						6,800						4,600
Restricted stock units			175,600						8,900						618,700						363,100

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

13. 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.

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(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
Numerator:
Net income attributable to Charter shareholders			$	1,185					$	1,217					$	3,859					$	3,044
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
Denominator:
Weighted average common shares outstanding, basic			157,971,109						181,925,180						164,189,703						186,380,681
Effect of dilutive securities:
Assumed exercise or issuance of shares relating to stock plans			2,667,077						5,240,891						3,162,074						5,158,105
Weighted average Charter Holdings convertible preferred units			—						—						—						5,777,881
Weighted average common shares outstanding, diluted			160,638,186						187,166,071						167,351,777						197,316,667
Basic earnings per common share attributable to Charter shareholders			$	7.51					$	6.69					$	23.51					$	16.33
Diluted earnings per common share attributable to Charter shareholders			$	7.38					$	6.50					$	23.06					$	15.78

14. 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. v. 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

(UNAUDITED)

(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.