ALTICE USA, INC., 10-Q filed on 7/31/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Jul. 26, 2019
Document and Entity Information [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2019  
Document Transition Report false  
Entity File Number 001-38126  
Entity Tax Identification Number 38-3980194  
Entity Registrant Name Altice USA, Inc.  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 1 Court Square West  
Entity Address, City or Town Long Island City,  
Entity Address, State or Province NY  
Entity Address, Postal Zip Code 11101  
City Area Code (516)  
Local Phone Number 803-2300  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Title of 12(b) Security Class A Common Stock, par value $0.01 per share  
Trading Symbol ATUS  
Security Exchange Name NYSE  
Entity Common Stock, Shares Outstanding   647,731,515
Entity Central Index Key 0001702780  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Amendment Flag false  
v3.19.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 138,715 $ 298,781
Restricted cash 260 257
Accounts receivable, trade (less allowance for doubtful accounts of $15,881 and $13,520) 420,321 448,399
Prepaid expenses and other current assets 182,401 136,285
Amounts due from affiliates 1,222 17,557
Derivative contracts 0 1,975
Total current assets 742,919 903,254
Property, plant and equipment, net of accumulated depreciation of $4,704,512 and $4,044,671 5,814,965 5,828,881
Right-of-use lease assets 289,932 0
Investment securities pledged as collateral 1,816,147 1,462,626
Derivative contracts 0 109,344
Other assets 92,518 84,382
Amortizable intangibles, net of accumulated amortization of $3,284,685 and $2,882,787 3,865,003 4,192,824
Indefinite-lived cable television franchises 13,020,081 13,020,081
Goodwill 8,138,086 8,012,416
Total assets 33,779,651 33,613,808
Current Liabilities:    
Accounts payable 909,120 857,502
Interest payable 335,063 386,475
Accrued employee related costs 133,817 139,806
Amounts due to affiliates 6,479 26,096
Deferred revenue 141,546 140,053
Debt 660,223 158,625
Other current liabilities 332,692 312,634
Total current liabilities 2,518,940 2,021,191
Other liabilities 238,872 271,554
Deferred tax liability 4,765,958 4,723,937
Liabilities under derivative contracts 289,156 132,908
Right-of-use operating lease liability 277,744 0
Long-term debt, net of current maturities 22,980,286 22,653,975
Total liabilities 31,070,956 29,803,565
Commitments and contingencies (Note 16)
Redeemable equity 174,931 130,007
Stockholders' Equity:    
Preferred stock, $.01 par value, 100,000,000 shares authorized, no shares issued and outstanding 0 0
Paid-in capital 2,220,348 3,423,803
Retained earnings 313,198 251,830
Total stockholders' equity before accumulated other comprehensive Income and non-controlling interest 2,540,099 3,682,724
Treasury stock, at cost (16,479 Altice USA Class A common shares) 0 0
Accumulated other comprehensive loss (14,474) (11,783)
Total stockholders' equity 2,525,625 3,670,941
Noncontrolling interest 8,139 9,295
Total stockholders' equity 2,533,764 3,680,236
Total liabilities and stockholders' equity 33,779,651 33,613,808
Common Class A    
Stockholders' Equity:    
Common stock 4,681 4,961
Common Class B    
Stockholders' Equity:    
Common stock 1,872 2,130
Common Class C    
Stockholders' Equity:    
Common stock $ 0 $ 0
v3.19.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
ASSETS    
Accounts receivable, trade allowance for doubtful accounts $ 15,881 $ 13,520
Property, plant and equipment, accumulated depreciation 4,704,512 4,044,671
Amortizable intangible assets, accumulated amortization $ 3,284,685 $ 2,882,787
Stockholders' Equity:    
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 100,000,000 100,000,000
Preferred stock, shares issued (in shares) 0 0
Preferred stock, shares outstanding (in shares) 0 0
Common stock, shares outstanding (in shares) 655,226,030  
Common Class A    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 4,000,000,000 4,000,000,000
Common stock, shares issued (in shares) 468,084,705 496,064,027
Common stock, shares outstanding (in shares) 468,068,226 496,064,027
Treasury stock (in shares) 16,479  
Common Class B    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 1,000,000,000 1,000,000,000
Common stock, shares issued (in shares) 490,086,674 490,086,674
Common stock, shares outstanding (in shares) 187,157,804 212,976,259
Common Class C    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 4,000,000,000 4,000,000,000
Common stock, shares issued (in shares) 0 0
Common stock, shares outstanding (in shares) 0 0
v3.19.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Revenue (including revenue from affiliates of $496, $727, $1,088 and $852, respectively) (See Note 15) $ 2,451,081 $ 2,364,153 $ 4,847,648 $ 4,693,867
Operating expenses:        
Programming and other direct costs (including charges from affiliates of $2,087, $3,865, $3,774 and $5,019 respectively) (See Note 15) 818,994 795,127 1,631,979 1,582,488
Other operating expenses (including charges from affiliates of $2,020, $6,255, $4,266 and $14,249, respectively) (See Note 15) 569,459 575,749 1,133,891 1,158,772
Restructuring and other expense 11,465 9,691 26,709 13,278
Depreciation and amortization (including impairments) 568,620 648,527 1,130,048 1,291,232
Total operating expenses 1,968,538 2,029,094 3,922,627 4,045,770
Operating income 482,543 335,059 925,021 648,097
Other income (expense):        
Interest expense (381,218) (390,543) (769,501) (767,801)
Interest income 605 5,313 2,424 8,416
Gain (loss) on investments and sale of affiliate interests, net 103,146 (45,113) 357,871 (293,715)
Gain (loss) on derivative contracts, net (49,624) 42,159 (226,653) 210,511
Loss on interest rate swap contracts (26,900) (12,929) (50,572) (44,851)
Loss on extinguishment of debt and write-off of deferred financing costs (1,194) (36,911) (159,096) (41,616)
Other income (expense), net 212 (629) 292 (12,287)
Total other income (expense) (354,973) (438,653) (845,235) (941,343)
Income (loss) before income taxes 127,570 (103,594) 79,786 (293,246)
Income tax benefit (expense) (41,160) 5,590 (18,574) 66,293
Net income (loss) 86,410 (98,004) 61,212 (226,953)
Net loss (income) attributable to noncontrolling interests (43) 149 156 147
Net income (loss) attributable to Altice USA, Inc. stockholders $ 86,367 $ (97,855) $ 61,368 $ (226,806)
Income (loss) per share:        
Basic income (loss) per share (in dollars per share) $ 0.13 $ (0.13) $ 0.09 $ (0.31)
Basic weighted average common shares (in shares) 668,031 737,069 681,703 737,069
Diluted income (loss) per share (in dollars per share) $ 0.13 $ (0.13) $ 0.09 $ (0.31)
Diluted weighted average common shares (in shares) 668,648 737,069 682,014 737,069
Cash dividends declared per common share (in dollars per share) $ 0 $ 0 $ 0 $ 0
v3.19.2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Revenue from affiliates $ 496 $ 727 $ 1,088 $ 852
Programming and other direct costs from affiliates 2,087 3,865 3,774 5,019
Other operating expenses from affiliates $ 2,020 $ 6,255 $ 4,266 $ 14,249
v3.19.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Statement of Comprehensive Income [Abstract]        
Net income (loss) $ 86,410 $ (98,004) $ 61,212 $ (226,953)
Defined benefit pension plans:        
Unrecognized actuarial gain (loss) (8,567) (359) (3,648) 4,192
Applicable income taxes 2,282 97 989 (1,131)
Unrecognized actuarial gain (loss) arising during period, net of income taxes (6,285) (262) (2,659) 3,061
Settlement loss included in other expense, net 367 258 538 864
Applicable income taxes (101) (70) (147) (234)
Settlement loss included in other expense, net, net of income taxes 266 188 391 630
Foreign currency translation adjustment (336) 914 (580) 914
Applicable income taxes 93 (338) 157 (338)
Foreign currency translation adjustment, net (243) 576 (423) 576
Other comprehensive income (loss) (6,262) 502 (2,691) 4,267
Comprehensive income (loss) 80,148 (97,502) 58,521 (222,686)
Comprehensive loss (income) attributable to noncontrolling interests (43) 149 156 147
Comprehensive income (loss) attributable to Altice USA, Inc. stockholders $ 80,105 $ (97,353) $ 58,677 $ (222,539)
v3.19.2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Total Stockholders' Equity
Paid-in Capital
Retained Earnings (Accumulated Deficit)
Treasury Stock
Accumulated Other Comprehensive Income
Non-controlling Interest
Common Class A
Common Stock
Common Class B
Common Stock
Beginning balance at Dec. 31, 2017 $ 5,504,753 $ 5,503,214 $ 4,665,229 $ 840,636   $ (10,022) $ 1,539 $ 2,470 $ 4,901
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net loss attributable to stockholders (128,951) (128,951)   (128,951)          
Net loss (income) attributable to noncontrolling interests 2           2    
Pension liability adjustments, net of income taxes 3,765 3,765       3,765      
Share-based compensation expense 21,623 21,623 21,623            
Change in redeemable equity (3,347) (3,347) (3,347)            
Other changes to equity (859) (859) (859)            
Ending balance at Mar. 31, 2018 5,396,986 5,395,445 4,682,646 713,848   (8,420) 1,541 2,470 4,901
Beginning balance at Dec. 31, 2017 5,504,753 5,503,214 4,665,229 840,636   (10,022) 1,539 2,470 4,901
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net loss attributable to stockholders (226,806)                
Net loss (income) attributable to noncontrolling interests (147)                
Foreign currency translation adjustment, net of income taxes 576                
Ending balance at Jun. 30, 2018 3,867,193 3,859,806 3,856,682 6,191   (10,438) 7,387 4,928 2,443
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Adoption of ASU No. 2018-02 | ASU No. 2018-02       2,163   (2,163)      
Beginning balance at Mar. 31, 2018 5,396,986 5,395,445 4,682,646 713,848   (8,420) 1,541 2,470 4,901
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net loss attributable to stockholders (97,855) (97,855)   (97,855)          
Net loss (income) attributable to noncontrolling interests (149)                
Pension liability adjustments, net of income taxes (74)                
Foreign currency translation adjustment, net of income taxes 576                
Share-based compensation expense 12,226 12,226 12,226            
Redeemable equity vested 111,521 111,521 111,521            
Change in redeemable equity 47,049 47,049 47,049            
Conversion of Class B to Class A shares               2,458 (2,458)
Shares issued in connection with acquisition (15,049) (15,049) 61,049 (73,578)   (2,520)      
Contributions from noncontrolling interests 5,995                
Dividend payment (1,499,935) (1,499,935) (963,711) (536,224)          
Ending balance at Jun. 30, 2018 3,867,193 3,859,806 3,856,682 6,191   (10,438) 7,387 4,928 2,443
Beginning balance at Dec. 31, 2018 3,680,236 3,670,941 3,423,803 251,830 $ 0 (11,783) 9,295 4,961 2,130
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net loss attributable to stockholders (24,999) (24,999)   (24,999)          
Net loss (income) attributable to noncontrolling interests (199)           (199)    
Distributions from noncontrolling interests (1,000)           (1,000)    
Pension liability adjustments, net of income taxes 3,752 3,752       3,752      
Foreign currency translation adjustment, net of income taxes (181) (181)       (181)      
Share-based compensation expense 13,790 13,790 13,790            
Redeemable equity vested 1,364 1,364 1,364            
Change in redeemable equity (61,696) (61,696) (61,696)            
Class A shares acquired through share repurchase program and retired (600,001) (600,001) (599,707)         (294)  
Conversion of Class B to Class A shares               242 (242)
Ending balance at Mar. 31, 2019 3,011,066 3,002,970 2,777,554 226,831 0 (8,212) 8,096 4,909 1,888
Beginning balance at Dec. 31, 2018 3,680,236 3,670,941 3,423,803 251,830 0 (11,783) 9,295 4,961 2,130
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net loss attributable to stockholders 61,368                
Net loss (income) attributable to noncontrolling interests (156)                
Foreign currency translation adjustment, net of income taxes (423)                
Ending balance at Jun. 30, 2019 2,533,764 2,525,625 2,220,348 313,198 0 (14,474) 8,139 4,681 1,872
Beginning balance at Mar. 31, 2019 3,011,066 3,002,970 2,777,554 226,831 0 (8,212) 8,096 4,909 1,888
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Net loss attributable to stockholders 86,367 86,367   86,367          
Net loss (income) attributable to noncontrolling interests 43           43    
Pension liability adjustments, net of income taxes (6,019) (6,019)       (6,019)      
Foreign currency translation adjustment, net of income taxes (243) (243)       (243)      
Share-based compensation expense 16,077 16,077 16,077            
Redeemable equity vested 61,702 61,702 61,702            
Change in redeemable equity (46,294) (46,294) (46,294)            
Class A shares acquired through share repurchase program and retired (599,952) (599,952) (599,703)         (249)  
Conversion of Class B to Class A shares               16 (16)
Issuance of stock 244 244 244            
Shares issued in connection with acquisition 10,773 10,773 10,768         5  
Ending balance at Jun. 30, 2019 $ 2,533,764 $ 2,525,625 $ 2,220,348 $ 313,198 $ 0 $ (14,474) $ 8,139 $ 4,681 $ 1,872
v3.19.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net income (loss) $ 61,212 $ (226,953)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization (including impairments) 1,130,048 1,291,232
Equity in net loss of affiliates 0 10,849
Loss (gain) on investments and sale of affiliate interests, net (357,871) 293,715
Loss (gain) on derivative contracts, net 226,653 (210,511)
Loss on extinguishment of debt and write-off of deferred financing costs 159,096 41,616
Amortization of deferred financing costs and discounts (premiums) on indebtedness 53,876 36,971
Settlement loss related to pension plan 538 864
Share-based compensation expense related to equity classified awards 29,867 33,849
Deferred income taxes 19,604 (80,280)
Provision for doubtful accounts 34,814 29,462
Change in assets and liabilities, net of effects of acquisitions and dispositions:    
Accounts receivable, trade 1,804 (37,224)
Other receivables 2,740 (5,926)
Prepaid expenses and other assets (39,477) (31,951)
Amounts due from and due to affiliates (3,282) 8,573
Accounts payable 18,549 49,449
Interest payable, accrued employee related costs and other liabilities (98,551) (110,227)
Deferred revenue 12,022 20,536
Liabilities related to interest rate swap and derivative contracts 41,322 45,199
Net cash provided by operating activities 1,292,964 1,159,243
Cash flows from investing activities:    
Capital expenditures (657,253) (498,297)
Payment for acquisitions, net of cash acquired (172,659) (5,308)
Sale of affiliate interest 0 (3,537)
Proceeds related to sale of equipment, including costs of disposal 898 6,858
Increase in other investments 0 (2,500)
Additions to other intangible assets 867 0
Net cash used in investing activities (829,881) (502,784)
Cash flows from financing activities:    
Proceeds from credit facility debt, net of discounts 1,940,000 1,642,500
Repayment of credit facility debt (602,830) (621,325)
Issuance of senior notes and debentures, including premiums 1,754,375 2,050,000
Redemption of senior notes, including premiums and fees (2,462,692) (2,123,756)
Proceeds from collateralized indebtedness, net 0 337,124
Repayment of collateralized indebtedness and related derivative contracts, net 0 337,124
Dividends to stockholders 0 1,499,935
Proceeds from notes payable 39,856 0
Repayment of notes payable (74,061) (446)
Principal payments on finance lease obligations (3,273) (6,019)
Purchase of shares of Class A common stock, pursuant to a share repurchase program (1,199,953) 0
Additions to deferred financing costs (12,488) (22,277)
Contingent payment for acquisition (500) (28,940)
Contributions from (distributions to) noncontrolling interests (1,000) 5,995
Other 0 (859)
Net cash used in financing activities (622,566) (605,062)
Net increase (decrease) in cash and cash equivalents (159,483) 51,397
Effect of exchange rate changes on cash and cash equivalents (580) (104)
Net increase (decrease) in cash and cash equivalents (160,063) 51,293
Cash, cash equivalents and restricted cash at beginning of year 299,038 330,100
Cash, cash equivalents and restricted cash at end of period $ 138,975 $ 381,393
v3.19.2
DESCRIPTION OF BUSINESS AND RELATED MATTERS
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
DESCRIPTION OF BUSINESS AND RELATED MATTERS DESCRIPTION OF BUSINESS AND RELATED MATTERS
The Company and Related Matters
Altice USA, Inc. ("Altice USA" or the "Company") was incorporated in Delaware on September 14, 2015. Through June 8, 2018, the Company was majority-owned by Altice Europe N.V. ("Altice Europe"), a public company with limited liability (naamloze vennootshcap) under Dutch law. On June 8, 2018, Altice Europe distributed substantially all of its equity interest in the Company through a distribution in kind to holders of Altice Europe's common shares A and common shares B (the “Distribution”). The Company is now majority-owned by Patrick Drahi through Next Alt. S.a.r.l. ("Next Alt").
The Company provides broadband communications and video services in the United States and markets its services under two brands: Optimum, in the New York metropolitan area, and Suddenlink, principally in markets in the south-central United States. It delivers broadband, video, telephony services, proprietary content and advertising services to residential and business customers. As these brands are managed on a consolidated basis, the Company classifies its operations in one segment.
The accompanying combined consolidated financial statements ("consolidated financial statements") include the accounts of the Company and all subsidiaries in which the Company has a controlling interest and gives effect to the ATS Acquisition and the i24 Acquisition discussed below. All significant inter-company accounts and transactions have been eliminated in consolidation.
Acquisition of Altice Technical Services US Corp
Altice Technical Services US Corp. ("ATS") was formed to provide network construction and maintenance services and commercial and residential installations, disconnections, and maintenance. During the second quarter of 2017, a substantial portion of the Company's technical workforce at Cablevision, a wholly-owned subsidiary of Altice USA, either accepted employment with ATS or became employees of ATS and ATS commenced operations and began to perform services for the Company. A substantial portion of the Cequel technical workforce became employees of ATS in December 2017. Additionally, in the second quarter of 2017, the Company entered into an Independent Contractor Agreement with ATS that governed the terms of the services provided to the Company and entered into a Transition Services Agreement for the use of the Company's resources to provide various overhead functions to ATS, including accounting, legal and human resources and for the use of certain facilities, vehicles and technician tools during a transitional period. The Transition Services Agreement required ATS to reimburse the Company for its cost to provide such services.
In January 2018, the Company acquired 70% of the equity interests in ATS for $1.00 (the "ATS Acquisition") and the Company became the owner of 100% of the equity interests in ATS in March 2018. ATS was previously owned by Altice Europe and a member of ATS's management through a holding company. As the acquisition is a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of ATS for all periods since its formation. In connection with the ATS Acquisition, the Company recorded goodwill of $23,101, representing the amount previously transferred to ATS.
Acquisition of i24NEWS
In April 2018, Altice Europe transferred its ownership of i24 US and i24 Europe ("i24NEWS"), Altice Europe's 24/7 international news and current affairs channels to the Company for minimal consideration (the "i24 Acquisition"). As the acquisition was a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of i24NEWS as of April 1, 2018. Operating results for periods prior to April 1, 2018 have not been revised to reflect the i24 Acquisition as the impact was deemed immaterial.
Altice Europe Distribution
On June 8, 2018, Altice Europe distributed substantially all of its equity interest in the Company through a distribution in kind to holders of Altice Europe's common shares A and common shares B (the “Distribution”). The Distribution took place by way of a special distribution in kind by Altice Europe of its 67.2% interest in the Company to Altice Europe shareholders. Each shareholder of Altice Europe on May 23, 2018, the Distribution record date, received 0.4163 shares of the Company's common stock for every share held by such shareholder in Altice Europe.
Prior to Altice Europe's announcement of the Distribution, the Board of Directors of Altice USA, acting through its independent directors, approved the payment of a $2.035 dividend to all shareholders of record on May 22, 2018. The payment of the dividend, aggregating $1,499,935, was made on June 6, 2018, and was funded with cash at CSC Holdings LLC, a wholly-owned subsidiary of Cablevision, from financings completed in January 2018, and cash generated from operations. In connection with the payment of the dividend, the Company recorded a decrease in retained earnings of $536,224, representing the cumulative earnings through the payment date, and a decrease in paid in capital of $963,711.
In connection with the Distribution, the Management Advisory and Consulting Services Agreement with Altice Europe which provided certain consulting, advisory and other services was terminated. See Note 15 for further details.
Stock Repurchase Plan
In June 2018, the Board of Directors of Altice USA also authorized a share repurchase program of $2.0 billion. Under the repurchase program, shares of Altice USA Class A common stock may be purchased from time to time in the open market and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. Size and timing of these purchases will be determined based on market conditions and other factors.  
During the six months ended June 30, 2019, the Company repurchased 54,254,675 shares for a total purchase price of approximately $1,199,953. From inception through June 30, 2019, the Company repurchased an aggregate of 82,283,355 shares for a total purchase price of approximately $1,699,953. These acquired shares were retired and the cost for these shares was recorded in paid in capital in the Company's consolidated balance sheet. As of June 30, 2019, the Company had approximately $300,047 of availability remaining under its stock repurchase program and had 655,226,030 combined Class A and Class B shares outstanding.
v3.19.2
BASIS OF PRESENTATION
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
BASIS OF PRESENTATION BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information.  Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.
The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
The financial statements presented in this report are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.
The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2019.
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 liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to the 2018 financial statements to conform to the 2019 presentation.
v3.19.2
ACCOUNTING PRONOUNCEMENTS
6 Months Ended
Jun. 30, 2019
Accounting Changes and Error Corrections [Abstract]  
ACCOUNTING PRONOUNCEMENTS ACCOUNTING PRONOUNCEMENTS
Recently Issued But Not Yet Adopted Accounting Pronouncements
ASU No. 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14")
In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to clarify certain disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 becomes effective for the Company on January
1, 2021, although early adoption is permitted. The Company does not expect the adoption of ASU 2018-14 to have a material impact on its consolidated financial statements.
ASU No. 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15")
Also in August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That is a Service Contract, which requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU 2018-15 becomes effective for the Company on January 1, 2020, although early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU 2018-15 will have on its consolidated financial statements.
ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) ("ASU 2017-04")
In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.
ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments ("ASU 2016-13")
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. ASU No.2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be assessed for impairment under the current expected credit loss model rather than an incurred loss model. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount.  ASU 2016-13 becomes effective for the Company on January 1, 2020. Early adoption is permitted.  The Company is currently in the process of evaluating the impact the adoption of ASU No. 2016-13 will have on its consolidated financial statements.
v3.19.2
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
Net Income (Loss) Per Share
Basic net income (loss) per common share attributable to Altice USA stockholders is computed by dividing net income (loss) attributable to Altice USA stockholders by the weighted average number of common shares outstanding during the period.  Diluted income per common share attributable to Altice USA stockholders reflects the dilutive effects of stock options and restricted stock. For such awards that are performance based, the diluted effect is reflected upon the achievement of the performance criteria.
The following table presents a reconciliation of weighted average shares used in the calculations of the basic and diluted income per share attributable to Altice USA stockholders for the three and six months ended June 30, 2019:
 
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
 
 
(in thousands)
Basic weighted average shares outstanding
668,031

 
681,703

Effect of dilution:
 
 
 
 
Stock options
566

 
285

Restricted stock
51

 
26

Diluted weighted average shares outstanding
668,648

 
682,014


For the three and six months ended June 30, 2019, the weighted average of anti-dilutive shares of approximately 1,292,000 and 6,350,000 shares have been excluded from diluted weighted average shares outstanding. 
Diluted net loss per common share attributable to Altice USA stockholders for the three and six months ended June 30, 2018 excludes the effects of the weighted average common stock equivalents of approximately 5,512,000 shares and 4,073,000 shares, respectively, as they are anti-dilutive.
v3.19.2
REVENUE AND CONTRACT ASSETS
6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
REVENUE AND CONTRACT ASSETS REVENUE AND CONTRACT ASSETS
The following table presents the composition of revenue:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Residential:
 
 
 
 
 
 
 
Video
$
1,018,426

 
$
1,034,404

 
$
2,035,756

 
$
2,068,112

Broadband
806,250

 
712,202

 
1,581,823

 
1,413,823

Telephony
150,232

 
163,499

 
304,696

 
329,537

Business services and wholesale
357,806

 
337,388

 
708,495

 
670,478

Advertising
112,953

 
109,898

 
206,498

 
197,480

Other
5,414

 
6,762

 
10,380

 
14,437

Total revenue
$
2,451,081

 
$
2,364,153

 
$
4,847,648

 
$
4,693,867


The Company is assessed non-income related taxes by governmental authorities, including franchising authorities (generally under multi-year agreements), and collects such taxes from its customers.  In instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities are recorded as programming and other direct costs and amounts received from the customers are recorded as revenue. For the three and six months ended June 30, 2019 the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $63,920 and $128,156, respectively. For the three and six months ended June 30, 2018 the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $63,362 and $127,192, respectively.
Contract Assets
The following table provides information about contracts assets and contract liabilities related to contracts with customers:
 
June 30, 2019
 
December 31, 2018
Contract assets (a)
$
28,236

 
$
26,405

Deferred revenue (b)
204,440

 
190,056

 
(a)
Contract assets include primarily sales commissions for enterprise customers that are deferred and amortized over the average contract term.
(b)
Deferred revenue represents payments received from customers for services that have yet to be provided and installation revenue which is deferred and recognized over the benefit period. A significant portion of the Company's deferred revenue represents payments for services for up to one month in advance from residential and small and medium-sized business ("SMB") customers which is realized within the following month as services are performed.
A significant portion of our revenue is derived from residential and SMB customer contracts which are month-to month. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Contracts with enterprise customers generally range from three to five years, and services may only be terminated in accordance with the contractual terms.
v3.19.2
SUPPLEMENTAL CASH FLOW INFORMATION
6 Months Ended
Jun. 30, 2019
Supplemental Cash Flow Elements [Abstract]  
SUPPLEMENTAL CASH FLOW INFORMATION SUPPLEMENTAL CASH FLOW INFORMATIONThe Company's non-cash investing and financing activities and other supplemental data were as follows:
 
Six Months Ended June 30,
 
2019
 
2018
Non-Cash Investing and Financing Activities:
 
 
 
 
 
 
 
Property and equipment accrued but unpaid
$
245,692

 
$
120,958

Leasehold improvements paid by landlord

 
350

Notes payable issued to vendor for the purchase of equipment
16,204

 
44,466

Right-of-use assets acquired in exchange for finance lease obligations
6,501

 
1,349

Deferred financing costs accrued but unpaid
853

 

Supplemental Data:
 
 
 
Cash interest paid
763,819

 
732,231

Income taxes paid (refunded), net
6,247

 
8,940

v3.19.2
RESTRUCTURING AND OTHER EXPENSE
6 Months Ended
Jun. 30, 2019
Restructuring and Related Activities [Abstract]  
RESTRUCTURING AND OTHER EXPENSE RESTRUCTURING AND OTHER EXPENSE
Restructuring
Beginning in the first quarter of 2016, the Company commenced restructuring initiatives that were intended to simplify the Company's organizational structure ("2016 Restructuring Plan").
The following table summarizes the activity for the 2016 Restructuring Plan:
 
 
 
Severance and Other Employee Related Costs
 
Facility Realignment and Other Costs
 
Total
Accrual balance at December 31, 2018
$
21,454

 
$
13,615

 
$
35,069

Restructuring charges
6,363

 
5,140

 
11,503

Payments and other
(20,749
)
 
(1,734
)
 
(22,483
)
Impact of the adoption of ASC 842 (a)

 
(13,849
)
 
(13,849
)
Accrual balance at June 30, 2019
$
7,068

 
$
3,172

 
$
10,240

 
(a)
Certain accrued restructuring liabilities were netted against right-of-use operating assets on the Company's consolidated balance sheet as of January 1, 2019 in connection with the Company's adoption of ASC 842 (see Note 8).
Cumulative costs to date relating to the 2016 Restructuring Plan amounted to $427,725.
In May 2019, the Company commenced another restructuring initiative to further simplify the Company's organization structure ("2019 Restructuring Plan"). Costs incurred relating to the 2019 Restructuring Plan amounted to $5,540 for the three and six months ended June 30, 2019.
In addition, for the three and six months ended June 30, 2019, the Company recorded restructuring charges of $147 and $8,696, respectively, related to the impairment of right-of-use operating lease assets, included in the Company's restructuring initiatives, as their carrying amount was not recoverable and exceeded their fair value.
Transaction Costs
The Company recorded costs of $574 and $970 during the three and six months ended June 30, 2019, respectively, primarily related to costs incurred in connection with the Company's acquisition of Cheddar Inc. (see Note 9). The Company incurred transaction costs of $3,496 and $5,762 for the three and six months ended June 30, 2018 relating to the Distribution discussed in Note 1.
v3.19.2
LEASES (Notes)
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
LEASES LEASES
On January 1, 2019, the Company adopted FASB Accounting Standards Codification, or ASC, Topic 842, Leases ("ASC 842"), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach with a cumulative-effect adjustment recorded on January 1, 2019. As a result, the consolidated balance sheet as of December 31, 2018 was not restated and is not comparative.
The adoption of ASC 842 resulted in the recognition of ROU assets of $274,292 and lease liabilities for operating leases of $299,900 on the Company's consolidated balance sheet as of January 1, 2019, with no material impact to its consolidated statements of operations. The difference between the ROU assets and the operating lease liability represents the reclassification of (i) deferred rent balances, resulting from the historical operating leases, and (ii) certain accrued restructuring liabilities (See Note 7). The Company's accounting for finance leases remained substantially unchanged from its accounting for capital leases in prior periods.
The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient related to land easements which allows the Company not to retrospectively treat land easements as leases; however, the Company must apply lease accounting prospectively to land easements if they meet the definition of a lease.
For contracts entered into on or after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed for classification.
For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the earlier of the lease term or its useful life and interest expense determined on an amortized cost basis. The lease payments are allocated between a reduction of the lease liability and interest expense.
The Company's operating leases are comprised primarily of facility leases and finance leases are comprised primarily of vehicle leases.
Balance sheet information related to our leases is presented below:
 
 
 
June 30,
 
January 1,
 
December 31,
 
Balance Sheet location
 
2019
 
2019
 
2018
Operating leases:
 
 
 
 
 
 
 
Right-of-use lease assets
Right-of-use operating lease assets
 
$
289,932

 
$
274,292

 
$

Right-of-use lease liability, current
Other current liabilities
 
39,123

 
48,033

 

Right-of-use lease liability, long-term
Right-of-use operating lease liability
 
277,744

 
251,867

 

Finance leases:
 
 
 
 
 
 
 
Right-of-use lease assets
Property, plant and equipment
 
28,460

 
30,891

 
30,891

Right-of-use lease liability, current
Current portion of long-term debt
 
6,464

 
5,928

 
5,928

Right-of-use lease liability, long-term
Long-term debt
 
20,632

 
19,262

 
19,262


The following provides details of the Company's lease expense:
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
Operating lease expense, net
$
14,948

 
$
30,226

Finance lease expense:
 
 
 
Amortization of assets
1,630

 
3,192

Interest on lease liabilities
388

 
746

Total finance lease expense
2,018

 
3,938

 
$
16,966

 
$
34,164


Other information related to leases is presented below:
 
As of June 30,
 
2019
Right-of-use assets acquired in exchange for operating lease obligations
$
43,441

 
 
Cash Paid For Amounts Included In Measurement of Liabilities:
 
Operating cash flows from finance leases
746

Operating cash flows from operating leases
32,481

 
 
Weighted Average Remaining Lease Term:
 
Operating leases
9.6 years

Finance leases
4.6 years

Weighted Average Discount Rate:
 
Operating leases
6.06
%
Finance leases
5.86
%

The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:
 
Financing leases
 
Operating leases
2019 (excluding the six months ended June 30, 2019)
$
3,874

 
$
27,832

2020
7,173

 
50,248

2021
5,853

 
45,440

2022
5,824

 
47,024

2023
5,282

 
36,869

Thereafter
2,884

 
218,129

Total future minimum lease payments, undiscounted
30,890

 
425,542

Less: Imputed interest
(3,794
)
 
(108,675
)
Present value of future minimum lease payments
$
27,096

 
$
316,867


The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for companies adopting the lease standard prospectively without revising comparative period information.
 
Financing leases
 
Operating leases
2019
$
5,928

 
$
47,905

2020
5,087

 
50,356

2021
3,969

 
43,362

2022
4,146

 
34,882

2023
3,828

 
25,234

Thereafter
2,232

 
167,941


LEASES LEASES
On January 1, 2019, the Company adopted FASB Accounting Standards Codification, or ASC, Topic 842, Leases ("ASC 842"), which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach with a cumulative-effect adjustment recorded on January 1, 2019. As a result, the consolidated balance sheet as of December 31, 2018 was not restated and is not comparative.
The adoption of ASC 842 resulted in the recognition of ROU assets of $274,292 and lease liabilities for operating leases of $299,900 on the Company's consolidated balance sheet as of January 1, 2019, with no material impact to its consolidated statements of operations. The difference between the ROU assets and the operating lease liability represents the reclassification of (i) deferred rent balances, resulting from the historical operating leases, and (ii) certain accrued restructuring liabilities (See Note 7). The Company's accounting for finance leases remained substantially unchanged from its accounting for capital leases in prior periods.
The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient related to land easements which allows the Company not to retrospectively treat land easements as leases; however, the Company must apply lease accounting prospectively to land easements if they meet the definition of a lease.
For contracts entered into on or after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed for classification.
For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.
Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the earlier of the lease term or its useful life and interest expense determined on an amortized cost basis. The lease payments are allocated between a reduction of the lease liability and interest expense.
The Company's operating leases are comprised primarily of facility leases and finance leases are comprised primarily of vehicle leases.
Balance sheet information related to our leases is presented below:
 
 
 
June 30,
 
January 1,
 
December 31,
 
Balance Sheet location
 
2019
 
2019
 
2018
Operating leases:
 
 
 
 
 
 
 
Right-of-use lease assets
Right-of-use operating lease assets
 
$
289,932

 
$
274,292

 
$

Right-of-use lease liability, current
Other current liabilities
 
39,123

 
48,033

 

Right-of-use lease liability, long-term
Right-of-use operating lease liability
 
277,744

 
251,867

 

Finance leases:
 
 
 
 
 
 
 
Right-of-use lease assets
Property, plant and equipment
 
28,460

 
30,891

 
30,891

Right-of-use lease liability, current
Current portion of long-term debt
 
6,464

 
5,928

 
5,928

Right-of-use lease liability, long-term
Long-term debt
 
20,632

 
19,262

 
19,262


The following provides details of the Company's lease expense:
 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
Operating lease expense, net
$
14,948

 
$
30,226

Finance lease expense:
 
 
 
Amortization of assets
1,630

 
3,192

Interest on lease liabilities
388

 
746

Total finance lease expense
2,018

 
3,938

 
$
16,966

 
$
34,164


Other information related to leases is presented below:
 
As of June 30,
 
2019
Right-of-use assets acquired in exchange for operating lease obligations
$
43,441

 
 
Cash Paid For Amounts Included In Measurement of Liabilities:
 
Operating cash flows from finance leases
746

Operating cash flows from operating leases
32,481

 
 
Weighted Average Remaining Lease Term:
 
Operating leases
9.6 years

Finance leases
4.6 years

Weighted Average Discount Rate:
 
Operating leases
6.06
%
Finance leases
5.86
%

The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:
 
Financing leases
 
Operating leases
2019 (excluding the six months ended June 30, 2019)
$
3,874

 
$
27,832

2020
7,173

 
50,248

2021
5,853

 
45,440

2022
5,824

 
47,024

2023
5,282

 
36,869

Thereafter
2,884

 
218,129

Total future minimum lease payments, undiscounted
30,890

 
425,542

Less: Imputed interest
(3,794
)
 
(108,675
)
Present value of future minimum lease payments
$
27,096

 
$
316,867


The following table presents the Company’s unadjusted lease commitments as of December 31, 2018 as a required disclosure for companies adopting the lease standard prospectively without revising comparative period information.
 
Financing leases
 
Operating leases
2019
$
5,928

 
$
47,905

2020
5,087

 
50,356

2021
3,969

 
43,362

2022
4,146

 
34,882

2023
3,828

 
25,234

Thereafter
2,232

 
167,941


v3.19.2
INTANGIBLE ASSETS
6 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS INTANGIBLE ASSETS
The following table summarizes information relating to the Company's acquired amortizable intangible assets: 
 
As of June 30, 2019
 
As of December 31, 2018
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated Useful Lives
Customer relationships
$
6,017,994

 
$
(2,512,269
)
 
$
3,505,725

 
$
5,970,884

 
$
(2,162,110
)
 
$
3,808,774

 
8 to 18 years
Trade names
1,081,083

 
(749,615
)
 
331,468

 
1,067,083

 
(701,998
)
 
365,085

 
2 to 5 years
Other amortizable intangibles
50,611

 
(22,801
)
 
27,810

 
37,644

 
(18,679
)
 
18,965

 
1 to 15 years
 
$
7,149,688

 
$
(3,284,685
)
 
$
3,865,003

 
$
7,075,611

 
$
(2,882,787
)
 
$
4,192,824

 
 

Amortization expense for the three and six months ended June 30, 2019 aggregated to $201,279 and $401,898, respectively, and for the three and six months ended June 30, 2018 aggregated $226,052 and $457,869, respectively.
The carrying amount of goodwill is presented below:
Goodwill as of December 31, 2018
$
8,012,416

Goodwill recorded in connection with the acquisition of Cheddar Inc.
125,651

Adjustments to purchase accounting
19

Goodwill as of June 30, 2019
$
8,138,086


In June 2019, the Company completed the acquisition of Cheddar Inc., a digital-first news company, for approximately$200,000 in cash and stock, subject to certain closing adjustments as set forth in the merger agreement. The acquisition
was accounted for as a business combination in accordance with ASC Topic 805. The preliminary purchase price of approximately $198,588 was allocated to the identifiable tangible and intangible assets and liabilities of Cheddar based on preliminary fair value information currently available, which is subject to change within the measurement period (up to one year from the acquisition date). Based on the preliminary purchase price, the Company recorded goodwill of $125,651, customer relationships of $47,110, trade names of $14,000 and other amortizable intangible assets of $11,900.
v3.19.2
DEBT
6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
DEBT DEBT
The following table provides details of the Company's outstanding debt:
 
 
 
 
Interest Rate at June 30, 2019
 
June 30, 2019
 
December 31, 2018
Date Issued
 
Maturity Date
 
 
Principal Amount
 
Carrying Amount (a)
 
Principal Amount
 
Carrying Amount (a)
CSC Holdings Senior Notes:
 
 
 
 
 
 
 
 
 
 
February 12, 2009
 
February 15, 2019
 
8.625
%
 
$

 
$

 
$
526,000

 
$
527,749

November 15, 2011
 
November 15, 2021
 
6.750
%
 
1,000,000

 
974,093

 
1,000,000

 
969,285

May 23, 2014
 
June 1, 2024
 
5.250
%
 
750,000

 
677,720

 
750,000

 
671,829

October 9, 2015
 
January 15, 2023
 
10.125
%
 

 

 
1,800,000

 
1,781,424

October 9, 2015
 
October 15, 2025
 
10.875
%
 
1,684,221

 
1,664,092

 
1,684,221

 
1,663,027

November 27, 2018
 
December 15, 2021
 
5.125
%
 
1,240,762

 
1,168,267

 
1,240,762

 
1,155,264

November 27, 2018
 
July 15, 2025
 
7.750
%
 
617,881

 
604,712

 
617,881

 
603,889

November 27, 2018
 
April 1, 2028
 
7.500
%
 
1,045,882

 
1,044,209

 
1,045,882

 
1,044,143

CSC Holdings Senior Guaranteed Notes:
 
 
 
 
 
 
 
 
October 9, 2015
 
October 15, 2025
 
6.625
%
 
1,000,000

 
988,750

 
1,000,000

 
988,052

September 23, 2016
 
April 15, 2027
 
5.500
%
 
1,310,000

 
1,305,177

 
1,310,000

 
1,304,936

January 29, 2018
 
February 1, 2028
 
5.375
%
 
1,000,000

 
992,403

 
1,000,000

 
992,064

November 27, 2018
 
July 15, 2023
 
5.375
%
 
1,095,825

 
1,080,114

 
1,095,825

 
1,078,428

November 27, 2018
 
May 15, 2026
 
5.500
%
 
1,498,806

 
1,485,076

 
1,498,806

 
1,484,278

January 24, 2019
 
February 1, 2029
 
6.500
%
 
1,750,000

 
1,746,881

 

 

Cablevision Senior Notes (b):
 
 
 
 
 
 
 
 
 
 
April 15, 2010
 
April 15, 2020
 
8.000
%
 
500,000

 
497,045

 
500,000

 
495,302

September 27, 2012
 
September 15, 2022
 
5.875
%
 
649,024

 
593,104

 
649,024

 
585,817

October 19, 2018
 
December 15, 2021 (e)
 
5.125
%
 
8,886

 
8,367

 
8,886

 
8,274

October 19, 2018
 
July 15, 2025
 
7.750
%
 
1,740

 
1,692

 
1,740

 
1,690

October 19, 2018
 
April 1, 2028
 
7.500
%
 
4,118

 
4,111

 
4,118

 
4,110

 
 
15,157,145

 
14,835,813

 
15,733,145

 
15,359,561

CSC Holdings Credit Facility Debt (Restricted Group):
 
 
 
 
 
 
 
 
Revolving Credit Facility (c) (d)
 
4.730
%
 
622,857

 
609,754

 
250,000

 
231,425

Term Loan B
 
July 17, 2025
 
4.644
%
 
2,940,000

 
2,925,564

 
2,955,000

 
2,939,425

Incremental Term Loan B-2
 
January 25, 2026
 
4.894
%
 
1,485,000

 
1,469,340

 
1,492,500

 
1,475,778

Incremental Term Loan B-3
 
January 15, 2026
 
4.644
%
 
1,271,813

 
1,266,155

 
1,275,000

 
1,268,931

Incremental Term Loan B-4
 
April 15, 2027
 
5.394
%
 
1,000,000

 
986,518

 

 

 
7,319,670

 
7,257,331

 
5,972,500

 
5,915,559

Collateralized indebtedness (see Note 11)
1,459,638

 
1,417,647

 
1,459,638

 
1,406,182

Finance lease obligations (see Note 8)
27,096

 
27,096

 
25,190

 
25,190

Notes payable and supply chain financing (f)
102,622

 
102,622

 
106,108

 
106,108

 
24,066,171

 
23,640,509

 
23,296,581

 
22,812,600

Less: current portion of senior notes debt
(508,886
)
 
(505,412
)
 

 

Less: current portion of credit facility debt
(67,750
)
 
(67,750
)
 
(54,563
)
 
(54,563
)
Less: current portion of notes payable and supply chain financing
(80,597
)
 
(80,597
)
 
(98,134
)
 
(98,134
)
Less: current portion of finance lease obligations
(6,464
)
 
(6,464
)
 
(5,928
)
 
(5,928
)
 
 
(663,697
)
 
(660,223
)
 
(158,625
)
 
(158,625
)
Long-term debt
$
23,402,474

 
$
22,980,286

 
$
23,137,956

 
$
22,653,975

 
(a)
The carrying amount is net of the unamortized deferred financing costs and/or discounts/premiums and with respect to certain notes, a fair value adjustment resulting from the Cequel and Cablevision acquisitions.
(b)
The issuers of these notes have no ability to service interest or principal on the notes, other than through any dividends or distributions received from CSC Holdings. CSC Holdings is restricted, in certain circumstances, from paying dividends or distributions to the issuers by the terms of the CSC Holdings credit facilities agreement.
(c)
At June 30, 2019, $178,014 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $1,674,129 of the facility was undrawn and available, subject to covenant limitations.
(d)
The revolving credit facility matures on January 31, 2024, however $200,000 is due on November 30, 2021. As discussed in Note 17, the balance of the revolving credit facility was repaid in July 2019 with proceeds from the issuance of $1,000,000 principal amount of senior notes due January 2030.
(e)
In July 2019, the Company redeemed $8,886 principal amount of these senior notes. As a result of the early redemption, the principal amount of these senior notes was reclassified from long-term debt to current debt.
(f)
Includes $39,856 related to supply chain financing agreements entered into in the second quarter of 2019 that is required to be repaid within one year from the date of the respective agreement.
In January 2019, CSC Holdings issued $1,500,000 in aggregate principal amount of senior guaranteed notes due 2029 ("CSC Holdings 2029 Guaranteed Notes"). The notes bear interest at a rate of 6.5% and will mature on February 1, 2029. The net proceeds from the sale of the notes were used to repay certain indebtedness, including to repay at maturity $526,000 aggregate principal amount of CSC Holdings' 8.625% senior notes due February 2019 plus accrued interest, redeem approximately $905,300 of the aggregate outstanding amount of CSC Holdings' 10.125% senior notes due 2023 at a redemption price of 107.594% plus accrued interest, and paid fees and expenses associated with the transactions. In connection with this refinancing, $526,000 of short-term senior notes were reclassified to long-term debt as of December 31, 2018.
In February 2019, CSC Holdings issued an additional $250,000 CSC Holdings 2029 Guaranteed Notes at a price of 101.75% of the principal value. The proceeds of these notes were used to repay amounts outstanding under the CSC Holdings Revolving Credit Facility.
During the six months ended June 30, 2019, CSC Holdings borrowed $950,000 under its revolving credit facility and repaid $577,143 of amounts outstanding under the revolving credit facility, a portion of which was funded from the proceeds of the issuance of an additional $250,000 principal amount of CSC Holdings 2029 Guaranteed Notes (see discussion above).
In January and May 2019, CSC Holdings amended its existing revolving credit facility. After the amendments, the total size of the revolving credit facility that the Company can draw upon as of June 30, 2019 amounted to $2,475,000, including $2,275,000 maturing in January 2024 and priced at LIBOR plus 2.25%. The remaining $200,000 matures in November 2021 and is priced at LIBOR plus 3.25%. In connection with the amendment entered into in May 2019, the Company recorded a write-off of deferred financing costs of $1,195.
In February 2019, CSC Holdings entered into a $1,000,000 senior secured Term Loan B ("Incremental Term Loan B-4") maturing on April 15, 2027, the proceeds of which were used to redeem $894,700 in aggregate principal amount of CSC Holdings’ 10.125% Senior Notes due 2023, representing the entire aggregate principal amount outstanding, and paying related fees, costs and expenses. The Incremental Term Loan B-4 bears interest at a rate per annum equal to LIBOR plus 3.0% and was issued with an original issue discount of 1.0%.
The CSC Credit Facilities Agreement also contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under the CSC Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the CSC Credit Facilities and all actions permitted to be taken by a secured creditor.
As of June 30, 2019, the Company was in compliance with all of its financial covenants under the CSC Holdings Credit Facilities and with all of its financial covenants under the indentures under which the senior and senior guaranteed notes were issued.
The following table provides a summary of the loss on extinguishment of debt and the write-off of deferred financing costs recorded by the Company upon the redemption of senior notes and the refinancing of credit facilities:
 
Three Months Ended
 
Six Months Ended
 
June 30, 2019
 
 
 
 
CSC Holdings 10.125% Senior Notes due 2023
$

 
$
154,666

Refinancing and subsequent amendment to CSC Holdings credit facility
1,194

 
4,430

 
$
1,194

 
$
159,096