Noncontrolling Interests (Notes)

6 Months Ended

Jun. 30, 2021

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 A/N's equity interests in Charter Holdings, which is comprised of a common ownership interest and prior to June 18, 2021, a convertible preferred ownership interest.

On June 18, 2021, the Company caused the conversion of all of A/N's 25 million Charter Holdings convertible preferred units into Charter Holdings common units. Each preferred unit was converted into 0.37334 Charter Holdings common units, representing a conversion price of $267.85 per unit, based on a conversion feature as defined in the Limited Liability Company Agreement of Charter Holdings, resulting in the issuance of a total of 9.3 million common units to A/N.

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 7% prior to conversion of the preferred units and 11% after conversion during 2021 and 8% during 2020, and was $105 million and $181 million for the three and six months ended June 30, 2021, respectively, and $72 million and $105 million for the three and six months ended June 30, 2020, 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 $32 million and $70 million for the three and six months ended June 30, 2021, respectively, and $37 million and $75 million for the three and six months ended June 30, 2020, respectively.

The following table represents Charter Holdings' purchase of Charter Holdings common units from A/N pursuant to the A/N Letter Agreement (see Note 19) and the effect on total shareholders' equity during the three and six months ended June 30, 2021 and 2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Number of units purchased	912,034		280,069		1,704,688		1,075,676
Average price per unit	$	639.28	$	445.15	$	639.28	$	481.68
Amount of units purchased	$	583	$	125	$	1,090	$	518
Decrease in noncontrolling interest based on carrying value	$	(213)	$	(69)	$	(405)	$	(264)
Decrease in additional paid-in-capital, net of tax	$	(279)	$	(42)	$	(516)	$	(191)

Total shareholders' equity was also adjusted during the three and six months ended June 30, 2021 and 2020 due to the changes in Charter Holdings' ownership including the impact of the preferred unit conversion discussed above as follows.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Decrease in noncontrolling interest	$	(1,333)	$	(52)	$	(1,508)	$	(161)
Increase in additional paid-in-capital, net of tax	$	1,003	$	41	$	1,134	$	123

As a result of the preferred unit conversion, the preferred noncontrolling interest carrying amount of $3.2 billion was reclassified to common noncontrolling interest and remeasured to $2.0 billion representing the relative effective Charter Holdings common ownership amount in all Charter Holdings partnership capital account balances resulting in a $1.2 billion reclass from noncontrolling interest to additional paid-in capital. A deferred tax liability of $300 million was recorded with the offset to additional paid-in capital as part of the Charter Holdings ownership change equity adjustments.