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SEC Filings

10-Q
CHARTER COMMUNICATIONS, INC. /MO/ filed this Form 10-Q on 07/27/2017
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depreciation and amortization related to the Transactions, inclusive of the incremental amounts as a result of the higher fair values recorded in acquisition accounting.

Other operating expenses, net. The changes in other operating expenses, net are attributable to the following (dollars in millions):

 
Three months ended
June 30, 2017
compared to
three months ended
June 30, 2016
Increase / (Decrease)
 
Six months ended
June 30, 2017
compared to
six months ended
June 30, 2016
Increase / (Decrease)
Merger and restructuring costs
$
(425
)
 
$
(344
)
Special charges, net
2

 

(Gain) loss on sale of assets, net
7

 
4

 
$
(416
)
 
$
(340
)

The decrease in merger and restructuring costs is primarily due to approximately $262 million of contingent financing and advisory transaction fees paid at the closing of the Transactions in 2016 as well as a decrease of approximately $149 million and $56 million of employee termination and retention costs incurred during the three and six months ended June 30, 2017, respectively, compared to the corresponding periods in 2016. See Note 11 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Interest expense, net. Net interest expense increased by $156 million and $415 million for the three and six months ended June 30, 2017 compared to the corresponding periods in 2016 primarily as a result of an increase of approximately $118 million and $360 million, respectively, of interest expense associated with debt assumed from Legacy TWC, an increase in weighted average debt outstanding primarily due to the issuance of notes in April 2017 as well as a decrease in interest income.

Loss on extinguishment of debt. Loss on extinguishment of debt of $1 million and $35 million for the three and six months ended June 30, 2017, respectively, and $110 million for each of the three and six months ended June 30, 2016 primarily represents losses recognized as a result of repurchases of CCO Holdings, LLC ("CCO Holdings") notes. For more information, see Note 5 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Loss on financial instruments, net. Interest rate derivative instruments are used to manage our interest costs and to reduce our exposure to increases in floating interest rates, and cross-currency derivative instruments are used to manage foreign exchange risk related to the foreign currency denominated debt assumed in the TWC Transaction. We recorded losses of $70 million and $32 million during the three and six months ended June 30, 2017, respectively and $50 million and $55 million during the three and six months ended June 30, 2016, respectively. Gains and losses on financial instruments are recognized due to changes in the fair value of our interest rate and our cross currency derivative instruments, and the foreign currency remeasurement of the fixed-rate British pound sterling denominated notes (the “Sterling Notes”) into U.S. dollars. For more information, see Note 8 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other pension benefits. Other pension benefits decreased by $507 million and $494 million during the three and six months ended June 30, 2017, respectively, compared to the corresponding periods in 2016 primarily due to a $675 million pension curtailment gain offset by an $157 million net remeasurement loss recognized in 2016 that resulted from an amendment to the plans made subsequent to the TWC Transaction. For more information, see Note 17 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.”

Other expense, net. Other expense, net primarily represents equity losses on our equity-method investments.

Income tax benefit (expense). We recognized income tax expense of $48 million and $73 million for the three and six months ended June 30, 2017, respectively, and income tax benefit of $3.2 billion for each of the three and six months ended June 30, 2016. Income tax expense is recognized primarily through increases in deferred tax liabilities, as well as through current federal and state income tax expense. Income tax expense for the three and six months ended June 30, 2017 was reduced by approximately $15 million and $71 million, respectively, due to the recognition of excess tax benefits resulting from share based compensation as a component of the provision for income taxes following the prospective application of ASU 2016-09. For more information, see Note 19 to the accompanying consolidated financial statements contained in “Item 1. Financial Statements.” Income tax benefit for the three and six months ended June 30, 2016 was the result of a reduction of substantially all of Legacy Charter's


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