Charter 2015 Annual Report Download - page 62

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Approximately 91%, 90% and 89% of our revenues for years ended December 31, 2015, 2014 and 2013, respectively, are
attributable to monthly subscription fees charged to customers for our video, Internet, voice, and commercial services provided
by our cable systems. Generally, these customer subscriptions may be discontinued by the customer at any time subject to a fee
for certain commercial customers. The remaining 9%, 10% and 11% of revenue for fiscal years 2015, 2014 and 2013, respectively,
is derived primarily from advertising revenues, franchise and other regulatory fee revenues (which are collected by us but then
paid to local authorities), pay-per-view and video on demand programming, installation, processing fees or reconnection fees
charged to customers to commence or reinstate service, and commissions related to the sale of merchandise by home shopping
services.
Our expenses primarily consist of operating costs, depreciation and amortization expense and interest expense. Operating costs
primarily include programming costs, connectivity, franchise and other regulatory costs, the costs to service our customers such
as field, network and customer operations costs, marketing costs and transition costs related to the TWC Transaction, Bright House
Transaction and Comcast Transactions. Transition costs represent incremental costs incurred to increase the scale of our business
as a result of the TWC Transaction, Bright House Transaction and Comcast Transactions.
We incurred the following transition costs in connection with the TWC Transaction, Bright House Transaction and Comcast
Transactions. See "Part I. Item 1. Business" for a discussion regarding the TWC Transaction, Bright House Transaction and
Comcast Transactions,
Years ended December 31,
2015 2014 2013
Operating expenses $ 72 $ 14 $ —
Other operating expenses $ 70 $ 38 $ 16
Interest expense $ 521 $ 75 $ —
Capital expenditures $ 115 $ 27 $ —
In July 2013, Charter and Charter Operating acquired Bresnan from a wholly owned subsidiary of Cablevision, for $1.625 billion
in cash, as well as a working capital adjustment and a reduction for certain funded indebtedness of Bresnan (the "Bresnan
Acquisition"). Bresnan managed cable operating systems in Colorado, Montana, Wyoming and Utah that passed approximately
670,000 homes and served approximately 375,000 residential and commercial customer relationships at the time they were acquired.
We have a history of net losses. Our net losses are principally attributable to insufficient revenue to cover the combination of
operating expenses, interest expenses that we incur because of our debt, depreciation expenses resulting from the capital investments
we have made and continue to make in our cable properties, amortization expenses related to our customer relationship intangibles
and non-cash taxes resulting from increases in our deferred tax liabilities.
Critical Accounting Policies and Estimates
Certain of our accounting policies require our management to make difficult, subjective and/or complex judgments. Management
has discussed these policies with the Audit Committee of Charter’s board of directors, and the Audit Committee has reviewed the
following disclosure. We consider the following policies to be the most critical in understanding the estimates, assumptions and
judgments that are involved in preparing our financial statements, and the uncertainties that could affect our results of operations,
financial condition and cash flows:
• Property, plant and equipment
• Capitalization of labor and overhead costs
• Valuation and impairment of property, plant and equipment
• Useful lives of property, plant and equipment
• Intangible assets
• Valuation and impairment of franchises
• Valuation and impairment and amortization of customer relationships
• Valuation and impairment of goodwill
• Income taxes
• Litigation
• Programming agreements