Charter 2015 Annual Report Download - page 71

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Other operating expenses, net. The changes in other operating expenses, net are attributable to the following (dollars in millions):
2015 compared
to 2014
2014 compared
to 2013
Merger and acquisitions costs $ 32 $ 22
Loss on sale of assets, net $ (6)$ 2
Special charges, net 1 (9)
$27$15
For more information, see Note 14 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial
Statements and Supplementary Data.”
Interest expense, net. Net interest expense increased by $395 million in 2015 from 2014 and by $65 million in 2014 from 2013.
Net interest expense increased in 2015 and 2014 compared to the corresponding prior year periods primarily as a result of an
increase of $446 million and $75 million, respectively, of interest expense associated with the debt held in escrow to fund the
TWC Transaction, Bright House Transaction and Comcast Transactions offset by a decrease in interest rates.
Loss on extinguishment of debt. Loss on extinguishment of debt consists of the following for the years ended December 31,
2015, 2014 and 2013 (dollars in millions):
Year ended December 31,
2015 2014 2013
CCO Holdings notes repurchases $ 123 $ — $ 65
Charter Operating credit amendment / prepayments — — 58
Termination of debt held in escrow related to the Comcast Transactions 5 — —
$ 128 $ — $ 123
For more information, see Note 8 to the accompanying consolidated financial statements contained in “Part II. Item 8. Financial
Statements and Supplementary Data.”
Gain (loss) on derivative instruments, net. Interest rate derivative instruments are held to manage our interest costs and reduce
our exposure to increases in floating interest rates. We recognized losses of $4 million and $7 million and a gain of $11 million
during the years ended December 31, 2015, 2014 and 2013, respectively, which represents the amortization of accumulated other
comprehensive loss for interest rate derivative instruments no longer designated as hedges for accounting purposes and their
change in fair value. For more information, see Note 11 to the accompanying consolidated financial statements contained in “Part
II. Item 8. Financial Statements and Supplementary Data.”
Other expense, net. Other expense, net of $7 million for the year ended December 31, 2015 primarily represents equity losses
on our equity investments. For more information, see Note 17 to the accompanying consolidated financial statements contained
in “Part II. Item 8. Financial Statements and Supplementary Data.”
Income tax expense. Income tax benefit of $60 million and income tax expense of $236 million and $120 million was recognized
for the years ended December 31, 2015, 2014 and 2013, respectively. The income tax benefit in 2015 was primarily due to the
deemed liquidation of Charter Holdco solely for federal and state income tax purposes, resulting in a $187 million deferred income
tax benefit offset by income tax expense recognized during 2015, primarily through increases in deferred tax liabilities. Income
tax expense was recognized in all periods primarily through increases in deferred tax liabilities related to Charter’s franchises,
which are characterized as indefinite lived for book financial reporting purposes, as well as to a lesser extent, through current
federal and state income tax expense. Current federal and state income tax expense included $5 million, $3 million and $8 million,
respectively, for the years ended December 31, 2015, 2014 and 2013. The tax provision in future periods will vary based on current
and future temporary differences, as well as future operating results. For more information, see Note 16 to the accompanying
consolidated financial statements contained in “Part II. Item 8. Financial Statements and Supplementary Data.”