ALTICE USA, INC., 8-K filed on 5/21/2018
Current report filing
v3.8.0.1
Document and Entity Information
12 Months Ended
Dec. 31, 2017
Document and Entity Information [Abstract]  
Entity Registrant Name Altice USA, Inc.
Entity Central Index Key 0001702780
Document Type 8-K
Amendment Flag false
Document Period End Date Dec. 31, 2017
v3.8.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Dec. 31, 2017
Dec. 31, 2016
Current Assets:    
Cash and cash equivalents $ 329,848 $ 486,792
Restricted cash 252 16,301
Accounts receivable, trade (less allowance for doubtful accounts of $13,420 and $11,677) 370,765 349,626
Prepaid expenses and other current assets 130,425 102,219
Amounts due from affiliates 19,764 22,182
Investment securities pledged as collateral 0 741,515
Derivative contracts 52,545 352
Total current assets 903,599 1,718,987
Property, plant and equipment, net of accumulated depreciation of $2,599,579 and $1,039,297 6,023,826 6,597,635
Investment in affiliates 930 5,606
Investment securities pledged as collateral 1,720,357 741,515
Derivative contracts 0 10,604
Other assets 56,974 58,806
Amortizable intangible assets, net of accumulated amortization 5,066,454 6,352,644
Indefinite-lived cable television franchises 13,020,081 13,020,081
Goodwill 8,019,861 7,992,700
Total assets 34,812,082 36,498,578
Current Liabilities:    
Accounts payable 795,128 705,672
Accrued liabilities:    
Interest 397,422 576,778
Employee related costs 147,727 232,864
Other accrued expenses 411,988 352,315
Amounts due to affiliates 10,998 127,363
Deferred revenue 111,197 101,794
Liabilities under derivative contracts 52,545 13,158
Collateralized indebtedness 0 622,332
Credit facility debt 42,650 33,150
Senior notes and debentures 507,744 926,045
Capital lease obligations 9,539 15,013
Notes payable 33,424 5,427
Total current liabilities 2,520,362 3,711,911
Defined benefit plan obligations 103,163 84,106
Notes payable to affiliates and related parties 0 1,750,000
Other liabilities 144,289 113,485
Deferred tax liability 4,769,286 7,971,500
Liabilities under derivative contracts 187,406 78,823
Collateralized indebtedness 1,349,474 663,737
Credit facility debt 4,600,873 3,411,640
Senior guaranteed notes 2,291,185 2,289,494
Senior notes and debentures 13,061,503 14,291,786
Capital lease obligations 12,441 13,142
Notes payable 32,478 8,299
Deficit investments in affiliates 3,579 0
Total liabilities 29,076,039 34,387,923
Commitments and contingencies
Redeemable equity 231,290 68,147
Stockholders' Equity:    
Preferred stock, $.01 par value, 100,000,000 shares authorized, no shares issued and outstanding at December 31, 2017 0 0
Paid-in capital 4,665,229 3,003,554
Retained earnings (accumulated deficit) 840,636 (963,312)
Total stockholders' equity before accumulated other comprehensive Income and non-controlling interest 5,513,236 2,040,242
Accumulated other comprehensive income (loss) (10,022) 1,979
Total stockholders' equity 5,503,214 2,042,221
Noncontrolling interest 1,539 287
Total stockholders' equity 5,504,753 2,042,508
Total liabilities and stockholders' equity 34,812,082 36,498,578
Common Class A    
Stockholders' Equity:    
Common stock 2,470 0
Common Class B    
Stockholders' Equity:    
Common stock 4,901 0
Common Class C    
Stockholders' Equity:    
Common stock 0 0
Undesignated Common Stock    
Stockholders' Equity:    
Common stock 0 0
Customer relationships    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization 4,561,863 5,345,608
Trade names    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization 478,509 983,386
Amortizable intangible assets    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization $ 26,082 $ 23,650
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2017
Dec. 31, 2016
Current Assets:    
Accounts receivable, trade allowance for doubtful accounts $ 13,420 $ 11,677
Prepaid expenses and other current assets 130,425 102,219
Property, plant and equipment, accumulated depreciation 2,599,579 1,039,297
Amortizable intangible assets, accumulated amortization $ 2,008,573 $ 666,766
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, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares)   1,000
Common stock, shares issued (in shares)   100
Common stock, shares outstanding (in shares)   100
Common Class A    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01  
Common stock, shares authorized (in shares) 4,000,000,000  
Common stock, shares issued (in shares) 246,982,292  
Common stock, shares outstanding (in shares) 246,982,292  
Common Class B    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01  
Common stock, shares authorized (in shares) 1,000,000,000  
Common stock, shares issued (in shares) 490,086,674  
Common stock, shares outstanding (in shares) 490,086,674  
Common Class C    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01  
Common stock, shares authorized (in shares) 4,000,000,000  
Common stock, shares issued (in shares) 0  
Common stock, shares outstanding (in shares) 0  
Customer relationships    
Current Assets:    
Amortizable intangible assets, accumulated amortization $ 1,409,021 $ 580,276
Trade names    
Current Assets:    
Amortizable intangible assets, accumulated amortization 588,574 83,397
Amortizable intangible assets    
Current Assets:    
Amortizable intangible assets, accumulated amortization $ 10,978 $ 3,093
v3.8.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Income Statement [Abstract]    
Revenue (including revenue from affiliates of $1,100 and $1,086, respectively) (See Note 14) $ 9,306,950 $ 6,017,212
Operating expenses:    
Programming and other direct costs (including charges from affiliates of $4,176 and $1,947, respectively) (See Note 14) 3,035,655 1,911,230
Other operating expenses (including charges from affiliates of $33,140 and $18,854, respectively) (See Note 14) 2,347,315 1,702,472
Restructuring and other expense 152,401 240,395
Depreciation and amortization (including impairments) 2,930,571 1,700,306
Total operating expenses 8,465,942 5,554,403
Operating income 841,008 462,809
Other income (expense):    
Interest expense (including interest expense to affiliates and related parties of $90,405 and $112,712, respectively) (See Note 14) (1,603,132) (1,456,541)
Interest income 1,921 13,811
Gain on investments, net 237,354 141,896
Loss on derivative contracts, net (236,330) (53,696)
Gain (loss) on interest rate swap contracts 5,482 (72,961)
Loss on extinguishment of debt and write-off of deferred financing costs (including $513,723 related to affiliates and related parties in 2017) (See Note 14) (600,240) (127,649)
Other income (expense), net (13,651) 1,186
Total other income (expense) (2,208,596) (1,553,954)
Loss before income taxes (1,367,588) (1,091,145)
Income tax benefit 2,862,352 259,666
Net income (loss) 1,494,764 (831,479)
Net loss (income) attributable to noncontrolling interests (1,587) (551)
Net income (loss) attributable to Altice USA, Inc. stockholders $ 1,493,177 $ (832,030)
Basic income (loss) per share (in dollars per share) $ 2.15 $ (1.28)
Basic weighted average common shares (in thousands) (in shares) 696,055,000 649,525,000
Diluted income (loss) per share (in dollars per share) $ 2.15 $ (1.28)
Diluted weighted average common shares (in thousands) (in shares) 696,055,000 649,525,000
Cash dividends declared per common share (in dollars per share) $ 1.29 $ 0.69
v3.8.0.1
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Income Statement [Abstract]    
Revenue from affiliates $ 1,100 $ 1,086
Programming and other direct costs from affiliates 4,176 1,947
Other operating expenses from affiliates 33,140 18,854
Interest expense to related parties and affiliates 90,405 112,712
Loss on extinguishment of debt and write-off of deferred financing costs (including $513,723 related to affiliates and related parties in 2017) (See Note 14) $ 513,723 $ 0
v3.8.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ 1,494,764 $ (831,479)
Defined benefit pension plans:    
Unrecognized actuarial gain (loss) (18,632) 3,452
Applicable income taxes 7,441 (1,381)
Unrecognized gain (loss) arising during period, net of income taxes (11,191) 2,071
Curtailment loss, net of settlement losses of $1,845 for 2017 included in net periodic benefit cost (1,350) (154)
Applicable income taxes 540 62
Curtailment loss, net of settlement losses included in net periodic benefit cost, net of income taxes (810) (92)
Other comprehensive gain (loss) (12,001) 1,979
Comprehensive income (loss) 1,482,763 (829,500)
Comprehensive income attributable to noncontrolling interests (1,587) (551)
Comprehensive Income (loss) attributable to Altice USA, Inc. stockholders $ 1,481,176 $ (830,051)
v3.8.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Statement of Comprehensive Income [Abstract]    
Settlement loss (gain) related to pension plan $ 1,845 $ 0
v3.8.0.1
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Organizational Transactions Prior to IPO
IPO
Total Stockholders' Equity
Total Stockholders' Equity
Organizational Transactions Prior to IPO
Total Stockholders' Equity
IPO
Paid-in Capital
Paid-in Capital
Organizational Transactions Prior to IPO
Paid-in Capital
IPO
Retained Earnings (Accumulated Deficit)
Accumulated Other Comprehensive Income
Non-controlling Interest
Common Class A
Common Stock
Common Class A
Common Stock
Organizational Transactions Prior to IPO
Common Class A
Common Stock
IPO
Common Class B
Common Stock
Common Class B
Common Stock
Organizational Transactions Prior to IPO
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Impact of change in accounting policy in connection with the adoption of ASU No. 2014-09 $ 12,666     $ 12,666           $ 12,666              
Balance, as adjusted 2,120,746     2,120,746     $ 2,252,028     (131,282)              
Beginning balance at Dec. 31, 2015 2,108,080     2,108,080     2,252,028     (143,948) $ 0 $ 0 $ 0        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Net income (loss) attributable to stockholders (832,030)     (832,030)           (832,030)              
Noncontrolling interests acquired (264)                     (264)          
Net income attributable to noncontrolling interests 551                     551          
Pension liability adjustments, net of income taxes 1,979     1,979             1,979            
Share-based compensation expense 14,368     14,368     14,368                    
Change in redeemable equity (68,148)     (68,148)     (68,148)                    
Contributions from stockholders 1,246,499     1,246,499     1,246,499                    
Distributions to stockholders/non-controlling interest (445,176)     (445,176)     (445,176)                    
Excess tax benefit on share-based awards 31     31     31                    
Tax impact related to the Newsday Holdings, LLC transactions 3,952     3,952     3,952                    
Ending balance at Dec. 31, 2016 2,042,508     2,042,221     3,003,554     (963,312) 1,979 287 0     $ 0  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                                  
Net income (loss) attributable to stockholders 1,493,177     1,493,177           1,493,177              
Net income attributable to noncontrolling interests 1,587                     1,587          
Pension liability adjustments, net of income taxes (12,001)     (12,001)             (12,001)            
Share-based compensation expense 57,430     57,430     57,430                    
Change in redeemable equity (163,142)     (163,142)     (163,142)                    
Contributions from stockholders 51,135     51,135     51,135                    
Receivable from parent (50,000)     (50,000)     (50,000)                    
Distributions to stockholders/non-controlling interest (840,035)     (839,700)     (839,700)         (335)          
Recognition of previously unrealized excess tax benefits related to share-based awards in connection with the adoption of ASU 2016-09 310,771     310,771           310,771              
Issuance of common stock pursuant to IPO   $ 2,264,252 $ 349,071   $ 2,264,252 $ 349,071   $ 2,257,002 $ 348,950         $ 2,349 $ 121   $ 4,901
Ending balance at Dec. 31, 2017 $ 5,504,753     $ 5,503,214     $ 4,665,229     $ 840,636 $ (10,022) $ 1,539 $ 2,470     $ 4,901  
v3.8.0.1
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Cash flows from operating activities:    
Net income (loss) $ 1,494,764 $ (831,479)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation and amortization (including impairments) 2,930,571 1,700,306
Impairment of assets included in restructuring charges 0 2,445
Gain on sale of affiliate interests 0 (206)
Equity in net loss of affiliates 10,040 1,132
Gain on investments, net (237,354) (141,896)
Loss on derivative contracts, net 236,330 53,696
Loss on extinguishment of debt and write-off of deferred financing costs 600,240 127,649
Amortization of deferred financing costs and discounts (premiums) on indebtedness 31,046 27,799
Settlement loss related to pension plan 1,845 3,298
Share-based compensation expense 57,430 14,368
Deferred income taxes (2,880,154) (263,989)
Excess tax benefit on share-based awards 0 (31)
Provision for doubtful accounts 74,183 53,249
Change in assets and liabilities, net of effects of acquisitions and dispositions:    
Accounts receivable, trade (89,683) (58,760)
Other receivables (12,835) 9,413
Prepaid expenses and other assets (7,426) 56,395
Amounts due from and due to affiliates (34,326) 41,351
Accounts payable 73,888 (11,814)
Accrued liabilities (241,701) 312,871
Deferred revenue 12,310 9,835
Liabilities related to interest rate swap contracts (921) 78,823
Net cash provided by operating activities 2,018,247 1,184,455
Cash flows from investing activities:    
Payment for acquisition, net of cash acquired (46,703) (8,988,774)
Net proceeds from sale of affiliate interests 0 13,825
Capital expenditures (951,349) (625,541)
Proceeds related to sale of equipment, including costs of disposal 9,743 5,885
Increase in other investments (4,773) (4,608)
Settlement of put-call options (97,410) 0
Additions to other intangible assets (1,707) (106)
Net cash used in investing activities (1,092,199) (9,599,319)
Cash flows from financing activities:    
Proceeds from credit facility debt 5,593,675 5,510,256
Repayment of credit facility debt (4,411,581) (9,133,543)
Proceeds from notes payable to affiliates and related parties 0 1,750,000
Issuance of senior notes 0 1,310,000
Proceeds from collateralized indebtedness 838,794 179,388
Repayment of collateralized indebtedness and related derivative contracts (831,059) (143,102)
Distributions to stockholders (919,317) (365,559)
Repayment of senior notes, including premiums and fees (1,729,400) 0
Proceeds from notes payable 33,733 0
Excess tax benefit on share-based awards 0 31
Principal payments on capital lease obligations (15,157) (18,837)
Additions to deferred financing costs (8,600) (203,712)
Proceeds from IPO, net of fees 349,071 0
Contributions from stockholders 1,135 1,246,499
Distributions to noncontrolling interests, net (335) 0
Net cash provided by (used in) financing activities (1,099,041) 131,421
Net decrease in cash and cash equivalents (172,993) (8,283,443)
Cash, cash equivalents and restricted cash at beginning of year 503,093 8,786,536
Cash, cash equivalents and restricted cash at end of year $ 330,100 $ 503,093
v3.8.0.1
DESCRIPTION OF BUSINESS AND RELATED MATTERS
12 Months Ended
Dec. 31, 2017
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. As of December 31, 2017, Altice USA is majority‑owned by Altice N.V., a public company with limited liability (naamloze vennootshcap) under Dutch law. Upon the completion of the Altice N.V. distribution discussed below, the Company will no longer be majority-owned by Altice N.V.
The Company provides broadband communications and video services in the United States. It delivers broadband, pay television, telephony services, proprietary content and advertising services to residential and business customers.
Altice N.V., through a subsidiary, acquired Cequel Corporation ("Cequel" or "Suddenlink") on December 21, 2015 and Cequel was contributed to Altice USA on June 9, 2016. Altice USA had no operations of its own other than the issuance of debt prior to the contribution of Cequel on June 9, 2016 by Altice N.V. The results of operations of Cequel for the year ended December 31, 2016 have been included in the results of operations of Altice USA for the same periods, as Cequel was under common control with Altice USA.
Altice USA acquired Cablevision Systems Corporation ("Cablevision" or "Optimum") on June 21, 2016 (see discussion below) and the results of operations of Cablevision are included with the results of operations of Cequel for the year ended December 31, 2017. The year ended December 31, 2016 operating results include the operating results of Cablevision from the date of acquisition, June 21, 2016.
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 discussed below. All significant inter-company accounts and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements also reflect the retrospective adoption of Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers and ASU No. 2017‑07 Compensation-Retirement Benefits (Topic 715). See Note 20 for further details of the impact on the Company's historical financial statements.
The Company classifies its operations into two reportable segments: Cablevision, which operates in the New York metropolitan area, and Cequel, which principally operates in markets in the south‑central United States.
Acquisition of Altice Technical Services US Corp
ATS was formed to provide network construction and maintenance services and commercial and residential installations, disconnections, and maintenance. In the second quarter of 2017, the Company entered into an Independent Contractor Agreement with ATS that governs the terms of the services described above. The Company believes the services it receives from ATS will be of higher quality and at a lower cost than the Company could achieve without ATS, including for the construction of our new fiber-to-the home ("FTTH") network. The Company also 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 that generally ended on December 31, 2017, although the term can be extended on a service-by-service basis. The Transition Services Agreement requires ATS to reimburse the Company for its cost to provide such services.
In January 2018, the Company acquired 70% of the equity interests in Altice Technical Services US Corp. ("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 N.V. 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. See Note 20 for the impact of the ATS Acquisition on the Company's consolidated balance sheet and statement of operations as of and for the year ended December 31, 2017. In connection with the ATS Acquisition, the Company recorded goodwill of $23,101, representing the amount previously transferred to ATS.
Initial Public Offering
In June 2017, the Company completed its initial public offering ("IPO") of 71,724,139 shares of its Class A common stock (12,068,966 shares sold by the Company and 59,655,173 shares sold by existing stockholders) at a price to the public of $30.00 per share, including the underwriters full exercise of their option to purchase 7,781,110 shares to cover overallotments. At the date of the IPO, Altice N.V. owned approximately 70.2% of the Company's issued and outstanding common stock, which represented approximately 98.2% of the voting power of the Company's outstanding common stock. The Company’s Class A common stock began trading on June 22, 2017, on the New York Stock Exchange under the symbol "ATUS".
In connection with the sale of its Class A common stock, the Company received proceeds of approximately $362,069, before deducting the underwriting discount and expenses directly related to the issuance of the securities of $12,998. The Company did not receive any proceeds from the sale of shares by the selling stockholders. In July 2017, the Company used approximately $350,120 of the proceeds to fund the redemption of $315,779 principal amount of 10.875% senior notes that mature in 2025 issued by CSC Holdings, an indirect wholly-owned subsidiary of the Company, and the related call premium of approximately $34,341.
The following organizational transactions were consummated prior to the IPO:
the Company amended and restated its certificate of incorporation to, among other things, provide for Class A common stock, Class B common stock and Class C common stock;
BC Partners LLP ("BCP") and Canada Pension Plan Investment Board (‘‘CPPIB and together with BCP, the‘‘Co-Investors’’) and Uppernext S.C.S.p. ("Uppernext"), an entity controlled by Mr. Patrick Drahi (founder and controlling stockholder of Altice N.V.), exchanged their indirect ownership interest in the Company for shares of the Company’s common stock;
Neptune Management LP (‘‘Management LP’’) redeemed its Class B units for shares of the Company’s common stock that it received from the redemption of its Class B units in Neptune Holding US LP;
the Company converted $525,000 aggregate principal amount of notes issued by the Company to the Co-Investors (together with accrued and unpaid interest and applicable premium) into shares of the Company’s common stock at the IPO price (see Note 9 for further details);
$1,225,000 aggregate principal amount of notes issued by the Company to a subsidiary of Altice N.V. (together with accrued and unpaid interest and applicable premium) was transferred to CVC 3 B.V., an indirect subsidiary of Altice N.V. ("CVC 3") and then the Company converted such notes into shares of the Company’s common stock at the IPO price (see Note 9 for further details);
the Co-Investors, Neptune Holding US LP, A4 S.A. (an entity controlled by the family of Mr. Drahi), and former Class B unitholders of Management LP (including Uppernext) exchanged shares of the Company’s common stock for new shares of the Company’s Class A common stock; and
CVC 3 and A4 S.A. exchanged shares of the Company’s common stock for new shares of the Company’s Class B common stock.
Acquisition of Cablevision Systems Corporation
On June 21, 2016 (the "Cablevision Acquisition Date"), pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of September 16, 2015, by and among Cablevision, Altice N.V., Neptune Merger Sub Corp., a wholly-owned subsidiary of Altice N.V. ("Merger Sub"), Merger Sub merged with and into Cablevision, with Cablevision surviving the merger (the "Cablevision Acquisition").
In connection with the Cablevision Acquisition, each outstanding share of the Cablevision NY Group Class A common stock, par value $0.01 per share ("CNYG Class A Shares"), and Cablevision NY Group Class B common stock, par value $0.01 per share ("CNYG Class B Shares", and together with the CNYG Class A Shares, the "Shares"), and together with the Cablevision NY Group Class A common stock, the "Shares" other than Shares owned by Cablevision, Altice N.V. or any of their respective wholly-owned subsidiaries, in each case not held on behalf of third parties in a fiduciary capacity, received $34.90 in cash without interest, less applicable tax withholdings (the "Cablevision Acquisition Consideration").
Pursuant to an agreement, dated December 21, 2015, by and among CVC 2 B.V., CIE Management IX Limited, for and on behalf of the limited partnerships BC European Capital IX-1 through 11 and Canada Pension Plan Investment Board, certain affiliates of BCP and CPPIB (the "Co-Investors") funded approximately $1,000,000 toward the payment of the aggregate Per Share Cablevision Acquisition Consideration, and indirectly acquired approximately 30% of the Shares of Cablevision.
Also in connection with the Cablevision Acquisition, outstanding equity-based awards granted under Cablevision’s equity plans were cancelled and converted into cash based upon the $34.90 per Share Cablevision Acquisition Consideration in accordance with the original terms of the awards. The total consideration for the outstanding CNYG Class A Shares, the outstanding CNYG Class B Shares, and the equity-based awards amounted to $9,958,323.
In connection with the Cablevision Acquisition, in October 2015, Neptune Finco Corp. ("Finco"), an indirect wholly-owned subsidiary of Altice N.V. formed to complete the financing described herein and the merger with CSC Holdings, LLC ("CSC Holdings"), a wholly-owned subsidiary of Cablevision, borrowed an aggregate principal amount of $3,800,000 under a term loan facility (the "Term Credit Facility") and entered into revolving loan commitments in an aggregate principal amount of $2,000,000 (the "Revolving Credit Facility" and, together with the Term Credit Facility, the "Credit Facilities").
Finco also issued $1,800,000 aggregate principal amount of 10.125% senior notes due 2023 (the "2023 Notes"), $2,000,000 aggregate principal amount of 10.875% senior notes due 2025 (the "2025 Notes"), and $1,000,000 aggregate principal amount of 6.625% senior guaranteed notes due 2025 (the "2025 Guaranteed Notes") (collectively the "Cablevision Acquisition Notes").
On June 21, 2016, immediately following the Cablevision Acquisition, Finco merged with and into CSC Holdings, with CSC Holdings surviving the merger (the "CSC Holdings Merger"), and the Cablevision Acquisition Notes and the Credit Facilities became obligations of CSC Holdings.
On June 21, 2016, in connection with the Cablevision Acquisition, the Company issued notes payable to affiliates and related parties aggregating $1,750,000, of which $875,000 bore interest at 10.75% and $875,000 bore interest at 11%. See Note 9 for a discussion regarding the conversion of these notes payable to shares of the Company's common stock prior to the consummation of the IPO.
The Cablevision Acquisition was accounted for as a business combination in accordance with ASC Topic 805. Accordingly, the Company stepped up 100% of the assets and liabilities assumed to their fair value at the Cablevision Acquisition Date. See Note 3 for further details.
Acquisition of Cequel Corporation
On December 21, 2015, Altice N.V., though a subsidiary, acquired approximately 70% of the total outstanding equity interests in Cequel (the "Cequel Acquisition") from the direct and indirect stockholders of Cequel Corporation (the "Sellers"). The consideration for the acquired equity interests, which was based on a total equity valuation for 100% of the capital and voting rights of Cequel, was $3,973,528, including $2,797,928 of cash consideration, $675,600 of retained equity held by entities affiliated with BC Partners and CPPIB and $500,000 funded by the issuance by an affiliate of Altice N.V. of a senior vendor note that was subscribed by entities affiliated with BC Partners and CPPIB. Following the closing of the Cequel Acquisition, entities affiliated with BC Partners and CPPIB retained a 30% equity interest in a parent entity of the Company. In addition, the carried interest plans of the stockholders were cashed out whereby payments were made to participants in such carried interest plans, including certain officers and directors of Cequel.
Altice N.V. Distribution
On January 8, 2018, Altice N.V. announced plans for the separation of the Company from Altice N.V. Altice N.V. will distribute substantially all of its equity interest in the Company through a distribution in kind to holders of Altice N.V.'s common shares A and common shares B (the “Distribution”). Following the Distribution, Altice N.V. will no longer own a controlling equity interest in the Company, and the Company will operate independently from Altice N.V.
The implementation of the Distribution is expected to be subject to certain conditions precedent being satisfied or waived. Although Altice N.V. and the Company have not yet negotiated the final terms of the Distribution and related transactions, the Company expects that the following will be conditions to the Distribution:
Approval of Altice N.V. shareholders of (i) the distribution in kind and (ii) the board resolution approving the change in identity and character of the business of Altice N.V. resulting from the Distribution;
Receipt of certain U.S. regulatory approvals, which could take up to 180 days;
This Registration Statement filed on January 8, 2018 being declared effective by the U.S. Securities and Exchange Commission (the ‘‘Commission’’);
The entry into the Master Separation Agreement and the entry into, amendments to or termination of various arrangements between Altice N.V. and the Company, such as a license to use the Altice brand, the stockholders’ agreement among Altice USA, Altice N.V. and certain other parties and the management agreement pursuant to which the Company pays a quarterly management fee to Altice N.V.; and
The declaration and payment of a one-time $1.5 billion dividend to Altice USA stockholders as of a record date prior to the Distribution (the ‘‘Pre-Distribution Dividend’’).
Prior to Altice N.V.'s announcement of the Distribution, the Board of Directors of Altice USA, acting through its independent directors, approved in principle the payment of the Pre-Distribution Dividend to all shareholders immediately prior to completion of the separation. Formal approval of the Pre-Distribution Dividend and setting of a record date are expected to occur in the second quarter of 2018. The payment of the Pre-Distribution Dividend will be funded with available Cablevision revolving facility capacity and available cash from new financings, completed in January 2018, at CSC Holdings LLC, a wholly-owned subsidiary of Cablevision. In addition, the Board of Directors of Altice USA has authorized a share repurchase program of $2.0 billion, effective following completion of the separation.
In connection with the Distribution, it is expected that the Management Advisory and Consulting Services Agreement with Altice N.V. which provides certain consulting, advisory and other services will be terminated. Compensation under the terms of the agreement is an annual fee of $30,000 paid by the Company.
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Summary of Significant Accounting Policies
Revenue Recognition
Residential Services
The Company derives revenue through monthly charges to residential customers of its pay television, broadband, and telephony services, including installation services. In addition, the Company derives revenue from digital video recorder ("DVR"), video-on-demand ("VOD"), pay‑per‑view, and home shopping commissions which are reflected in "Residential pay TV" revenues. The Company recognizes pay television, broadband, and telephony revenues as the services are provided to a customer on a monthly basis. Revenue from the sale of bundled services at a discounted rate is allocated to each product based on the standalone selling price of each performance obligation within the bundled offer. The standalone selling price requires judgment and is typically determined based on the current prices at which the separate services are sold by the Company. Installation revenue for the Company's residential services is deferred and recognized over the benefit period, which is estimated to be less than one year. The estimated benefit period takes into account both quantitative and qualitative factors including the significance of average installation fees to total recurring revenue per customer.
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 years ended December 31, 2017 and 2016, the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $259,075 and $154,732, respectively.
Business and Wholesale Services
The Company derives revenue from the sale of products and services to both large enterprise and SMB customers, including broadband, telephony, networking, and pay television services reflected in "Business services and wholesale" revenues. The Company's business services also include Ethernet, data transport, and IP-based virtual private networks. The Company also provides managed services to businesses, including hosted telephony services (cloud based SIP-based private branch exchange), managed Wi-Fi, managed desktop and server backup and managed collaboration services including audio and web conferencing. The Company also offers fiber-to-the-tower services to wireless carriers for cell tower backhaul and enable wireline communications service providers to connect to customers that their own networks do not reach. The Company recognizes revenues for these services as the services are provided to a customer on a monthly basis.
Substantially all of our SMB customers are billed monthly and large enterprise customers are billed in accordance with the terms of their contracts which is typically also on a monthly basis. Contracts with large enterprise customers typically range from three to five years. Installation revenue related to our large enterprise customers is deferred and recognized over the average contract term. Installation revenue related to SMB customers is deferred and recognized over the benefit period, which is less than a year. The estimated benefit period for SMB customers takes into account both quantitative and qualitative factors including the significance of average installation fees to total recurring revenue per customer.
Advertising
As part of the agreements under which the Company acquires pay television programming, the Company typically receives an allocation of scheduled advertising time during such programming into which the Company's cable systems can insert commercials. In several of the markets in which the Company operates, it has entered into agreements commonly referred to as interconnects with other cable operators to jointly sell local advertising. In some of these markets, the Company represents the advertising sales efforts of other cable operators; in other markets, other cable operators represent the Company. Advertising revenues are recognized when commercials are aired. Arrangements in which the Company controls the sale of advertising and acts as the principal to the transaction, the Company recognizes revenue earned from the advertising customer on a gross basis and the amount remitted to the distributor as an operating expense. Arrangements in which the Company does not control the sale of advertising and acts as an agent to the transaction, the Company recognizes revenue net of any fee remitted to the distributor.
The Company's advanced advertising businesses provide data-driven, audience-based advertising solutions using advanced analytics tools that provide granular measurement of consumer groups, accurate hyper-local ratings and other insights into target audience behavior not available through traditional sample-based measurement services. Revenue earned from the Company's advanced advertising businesses are recognized when services are provided.
Other
Revenues derived from other sources are recognized when services are provided or events occur.
Contract Assets
Incremental costs incurred in obtaining a contract with a customer are deferred and recorded as a contract asset if the period of benefit is expected to be greater than one year. Sales commissions for enterprise and certain SMB customers are deferred and amortized over the average contract term. For sales commission expenses related to residential and SMB customers with a term of one year or less, the Company is utilizing the practical expedient and is recognizing the costs when incurred.  Cost of fulfilling a contract with a customer are deferred and recorded as a contract asset if they generate or enhance resources of the Company that will be used in satisfying future performance obligations and are expected to be recovered. Installation costs related to residential and SMB customers that are not capitalized as part of the initial deployment of new customer premise equipment are expensed as incurred pursuant to industry-specific guidance.
The following table provides information about contracts assets and contract liabilities related to contracts with customers:
 
December 31,
 
2017
 
2016
Contract assets (a)
$
24,329

 
$
24,329

Deferred revenue (b)
117,679

 
103,996

 
(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. The majority of the Company's deferred revenue represents payments for services for up to one month in advance from residential and 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.
Multiple-Element Transactions
In the normal course of business, the Company may enter into multiple-element transactions where it is simultaneously both a customer and a vendor with the same counterparty or in which it purchases multiple products and/or services, or settles outstanding items contemporaneously with the purchase of a product or service, from a single counterparty. The Company's policy for accounting for each transaction negotiated contemporaneously is to record each deliverable of the transaction based on its best estimate of selling price in a manner consistent with that used to determine the price to sell each deliverable on a standalone basis.  In determining the fair value of the respective deliverable, the Company will utilize quoted market prices (as available), historical transactions or comparable transactions.
Technical and Operating Expenses
Costs of revenue related to sales of services are classified as "programming and other direct costs" in the accompanying consolidated statements of operations.
Programming Costs
Programming expenses related to the Company's pay television service represent fees paid to programming distributors to license the programming distributed to customers.  This programming is acquired generally under multi-year distribution agreements, with rates usually based on the number of customers that receive the programming.  If there are periods when an existing distribution agreement has expired and the parties have not finalized negotiations of either a renewal of that agreement or a new agreement for certain periods of time, the Company continues to carry and pay for these services until execution of definitive replacement agreements or renewals.  The amount of programming expense recorded during the interim period is based on the Company's estimates of the ultimate contractual agreement expected to be reached, which is based on several factors, including previous contractual rates, customary rate increases and the current status of negotiations.  Such estimates are adjusted as negotiations progress until new programming terms are finalized.
In addition, the Company has received, or may receive, incentives from programming distributors for carriage of the distributors' programming.  The Company generally recognizes these incentives as a reduction of programming costs in "programming and other direct costs", generally over the term of the distribution agreement.
Advertising Expenses
Advertising costs are charged to expense when incurred and are reflected in "other operating expenses" in the accompanying consolidated statements of operations.  Advertising costs amounted to $224,120 and $135,513 for the years ended December 31, 2017 and 2016, respectively.
Share-Based Compensation
Share-based compensation expense is based on the fair value of the portion of share-based payment awards that are ultimately expected to vest. Share-based compensation cost relates to awards of units in a carried unit plan and options.
For carried interest units, the Company measures share-based compensation cost at the grant date fair value and recognizes the expense over the requisite service period or when it is probable any related performance condition will be met. For carried interest units with graded vesting requirement, compensation cost is recognized on an accelerated method under the graded vesting method over the requisite service period for the carried interest unit. Carried interest units that vest entirely at the end of the vesting requirement are expensed on a straight-line basis.
The Company estimated the fair value of carried interest units using an option pricing model. Key inputs that were used in applying the option pricing method were total equity value, equity volatility, risk free rate and time to liquidity event. The estimate of total equity value was determined using a combination of the income approach, which incorporated cash flow projections that were discounted at an appropriate rate, and the market approach, which involved applying a market multiple to the Company’s projected operating results. The Company estimated volatility based on the historical equity volatility of comparable publicly-traded companies. Subsequent to the IPO, such subjective valuations and estimates were no longer necessary as the Company relied on the market price of the Company’s common stock to determine the fair value of share-based compensation awards. See Note 13 to the consolidated financial statements for additional information about our share-based compensation.
For stock option awards, the Company recognizes compensation expense based on the estimated grant date fair value using the Black-Scholes valuation model. For options not subject to performance based vesting conditions, the Company recognizes the compensation expense using a straight-line amortization method.
Income Taxes
The Company's provision for income taxes is based on current period income, changes in deferred tax assets and liabilities and changes in estimates with regard to uncertain tax positions.  Deferred tax assets are subject to an ongoing assessment of realizability.  The Company provides deferred taxes for the outside basis difference of its investment in partnerships. 
Cash and Cash Equivalents
The Company's cash investments are placed with money market funds and financial institutions that are investment grade as rated by Standard & Poor's and Moody's Investors Service.  The Company selects money market funds that predominantly invest in marketable, direct obligations issued or guaranteed by the United States government or its agencies, commercial paper, fully collateralized repurchase agreements, certificates of deposit, and time deposits.
The Company considers the balance of its investment in funds that substantially hold securities that mature within three months or less from the date the fund purchases these securities to be cash equivalents.  The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or are at fair value.
Accounts Receivable
Accounts receivable are recorded at net realizable value. The Company periodically assesses the adequacy of valuation allowances for uncollectible accounts receivable by evaluating the collectability of outstanding receivables and general factors such as historical collection experience, length of time individual receivables are past due, and the economic and competitive environment.
Investments
Investment securities and investment securities pledged as collateral are classified as trading securities and are stated at fair value with realized and unrealized holding gains and losses included in net income.
Long-Lived Assets and Amortizable Intangible Assets
Property, plant and equipment, including construction materials, are carried at cost, and include all direct costs and certain indirect costs associated with the construction of cable systems, and the costs of new equipment installations.  Equipment under capital leases is recorded at the present value of the total minimum lease payments.  Depreciation on equipment is calculated on the straight-line basis over the estimated useful lives of the assets or, with respect to equipment under capital leases and leasehold improvements, amortized over the shorter of the lease term or the assets' useful lives and reported in depreciation and amortization (including impairments) in the consolidated statements of operations.
The Company capitalizes certain internal and external costs incurred to acquire or develop internal-use software.  Capitalized software costs are amortized over the estimated useful life of the software and reported in depreciation and amortization.
Customer relationships, trade names and other intangibles established in connection with acquisitions that are finite-lived are amortized in a manner that reflects the pattern in which the projected net cash inflows to the Company are expected to occur, such as the sum of the years' digits method, or when such pattern does not exist, using the straight-line basis over their respective estimated useful lives.
The Company reviews its long-lived assets (property, plant and equipment, and intangible assets subject to amortization that arose from acquisitions) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.  If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill and the value of franchises acquired in purchase business combinations which have indefinite useful lives are not amortized.  Rather, such assets are tested for impairment annually or upon the occurrence of a triggering event.
The Company assesses qualitative factors for its reporting units that carry goodwill.  If the qualitative assessment results in a conclusion that it is more likely than not that the fair value of a reporting unit exceeds the carrying value, then no further testing is performed for that reporting unit.
When the qualitative assessment is not used, or if the qualitative assessment is not conclusive and it is necessary to calculate the fair value of a reporting unit, then the impairment analysis for goodwill is performed at the reporting unit level using a two-step approach.  The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of the reporting unit with its carrying amount, including goodwill utilizing an enterprise-value based premise approach.  If the carrying amount of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of goodwill impairment loss, if any.  The second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill.  If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.  The implied fair value of goodwill is determined in the same manner as the amount of goodwill which would be recognized in a business combination.
The Company assesses qualitative factors to determine whether it is necessary to perform the one-step quantitative identifiable indefinite-lived intangible assets impairment test.  This quantitative test is required only if the Company concludes that it is more likely than not that a unit of accounting’s fair value is less than its carrying amount.  When the qualitative assessment is not used, or if the qualitative assessment is not conclusive, the impairment test for other intangible assets not subject to amortization requires a comparison of the fair value of the intangible asset with its carrying value.  If the carrying value of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
Deferred Financing Costs
Deferred financing costs are being amortized to interest expense using the effective interest method over the terms of the related debt.
Derivative Financial Instruments
The Company accounts for derivative financial instruments as either assets or liabilities measured at fair value.  The Company uses derivative instruments to manage its exposure to market risks from changes in certain equity prices and interest rates and does not hold or issue derivative instruments for speculative or trading purposes.  These derivative instruments are not designated as hedges, and changes in the fair values of these derivatives are recognized in the statements of operations as gains (losses) on derivative contracts. 
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when the Company believes it is probable that a liability has been incurred and the amount of the contingency can be reasonably estimated.
Recently Adopted Accounting Pronouncements
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASC 606"), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC 606 replaced most existing revenue recognition guidance in GAAP and allowed the use of either the retrospective or cumulative effect transition method.
In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, in order to clarify the Codification and to correct any unintended application of the guidance. The amendments in this update affected the guidance in ASC 606. ASC 606 was adopted by the Company on January 1, 2018 on a full retrospective basis, which required the Company to reflect the impact of the updated guidance for all periods presented. The adoption of ASC 606 did not have a material impact on the Company’s financial position or results of operations. See Note 20 for information on the impact of the adoption of ASC 606.
In March 2017, the FASB issued ASU No. 2017‑07 Compensation-Retirement Benefits (Topic 715). ASU No. 2017‑07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. It also provides guidance on how to present the service cost component and the other components of net benefit cost in the income statement and what component of net benefit cost is eligible for capitalization. ASU No. 2017‑07 was adopted by the Company on January 1, 2018 and was applied retrospectively. As a result of the adoption, the Company reclassified the non-service cost components of the Company's pension expense for the years ended December 31, 2017 and 2016 from other operating expenses to other income (expense), net. The Company elected to apply the practical expedient which allowed it to reclassify amounts disclosed previously in the benefits plan note (Note 17 of the consolidated financial statements) as the basis for applying retrospective presentation for comparative periods, as the Company determined it was impracticable to disaggregate the cost components for amounts capitalized and amortized in those periods. See Note 20 for information on the impact of the adoption of ASU No. 2017-07.
In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which provides simplification of income tax accounting for share-based payment awards. The new guidance became effective for the Company on January 1, 2017. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, forfeitures, and intrinsic value were applied using the modified retrospective transition method. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term were applied prospectively. The Company elected to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using the prospective transition method. In connection with the adoption on January 1, 2017, a deferred tax asset of approximately $310,771 for previously unrealized excess tax benefits was recognized with the offset recorded to accumulated deficit.
Recently Issued But Not Yet Adopted Accounting Pronouncements
In February 2018, the FASB issued ASU No. 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The primary provision of ASU No. 2018-02 allows for the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 also requires certain disclosures about stranded tax effects. ASU No. 2018‑02 is effective for the Company on January 1, 2019, with early adoption permitted and will be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.
In May 2017, the FASB issued ASU No. 2017‑09, Compensation- Stock Compensation (Topic 718). ASU No. 2017‑09 provides clarity and guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU No. 2017‑09 is effective for the Company on January 1, 2018 and will be applied prospectively.
In January 2017, the FASB issued ASU No. 2017‑04, Intangibles-Goodwill and Other (Topic 350). ASU No. 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 No. 2017‑04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.
In January 2017, the FASB issued ASU No. 2017‑01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which amends Topic 805 to interpret the definition of a business by adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The new guidance is effective for the Company on January 1, 2018 and will be applied prospectively.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. ASU No. 2016-15 also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The new guidance is effective for the Company on January 1, 2018 and will be applied retrospectively. The Company does not believe that the adoption of ASU No. 2016-15 will have a material effect on its consolidated statements of cash flows.
In February 2016, the FASB issued ASU No. 2016-02, Leases, 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 becomes effective for the Company on January 1, 2019 with early adoption permitted and will be applied using the modified retrospective method. The Company has not yet completed the evaluation of the effect that ASU No. 2016-02 will have on its consolidated financial statements.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities.  ASU No. 2016-01 modifies how entities measure certain equity investments and also modifies the recognition of changes in the fair value of financial liabilities measured under the fair value option. Entities will be required to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. For financial liabilities measured using the fair value option, entities will be required to record changes in fair value caused by a change in instrument-specific credit risk (own credit risk) separately in other comprehensive income. ASU No. 2016-01 is effective for the Company on January 1, 2018.  The Company does expect the adoption of ASU No. 2016-01 to have any effect on its consolidated financial statements.
Common Stock of Altice USA
At December 31, 2017, the Company had 246,982,292 shares of Class A common stock and 490,086,674 shares of Class B common stock, with a par value of $0.01, issued and outstanding. Each holder of Class A common stock has one vote per share while holders of Class B common stock have twenty-five votes per share. Class B shares can be converted to Class A common stock at anytime with a conversion ratio of one Class A common share for one Class B common share. 
At December 31, 2016, the Company had 100 shares of common stock, with a par value of $0.01, issued and outstanding.
Dividends and Distributions
The Company may pay dividends on its capital stock only from net profits and surplus as determined under Delaware law.  If dividends are paid on the Altice USA common stock, holders of the Altice USA Class A common stock and Altice USA Class B common stock are entitled to receive dividends, and other distributions in cash, stock or property, equally on a per share basis, except that stock dividends with respect to Altice USA Class A common stock may be paid only with shares of Altice USA Class A common stock and stock dividends with respect to Altice USA Class B common stock may be paid only with shares of Altice USA Class B common stock.
The Company's indentures restrict the amount of dividends and distributions in respect of any equity interest that can be made.
Prior to the Company's IPO, the Company declared and paid cash distributions to stockholders aggregating $839,700 in the second quarter of 2017. In 2016, the Company declared cash distributions of $445,176 of which $365,559 were paid in 2016 and $79,617 were paid in the first quarter of 2017.
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. Diluted net loss per common share attributable to Altice USA stockholders excludes the effects of common stock equivalents as they are anti-dilutive. The weighted average number of shares used to compute basic and diluted net income (loss) per share reflect the retroactive impact of the organizational transactions, discussed in Note 1, that occurred prior to the Company's IPO.
The following table presents a reconciliation of weighted average shares used in the calculation of the basic and diluted net income per share attributable to Altice USA stockholders for the year ended December 31, 2017:
Basic weighted average shares outstanding
696,055,000

 
 
Effect of dilution:
 
Stock options

Diluted weighted average shares outstanding
696,055,000


Anti-dilutive shares totaling approximately 14,000 shares, have been excluded from diluted weighted average shares outstanding for the year ended December 31, 2017. 
Concentrations of Credit Risk
Financial instruments that may potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents and trade account receivables.  The Company monitors the financial institutions and money market funds where it invests its cash and cash equivalents with diversification among counterparties to mitigate exposure to any single financial institution.  The Company's emphasis is primarily on safety of principal and liquidity and secondarily on maximizing the yield on its investments.  Management believes that no significant concentration of credit risk exists with respect to its cash and cash equivalents because of its assessment of the creditworthiness and financial viability of the respective financial institutions.
The Company did not have a single customer that represented 10% or more of its consolidated revenues for the years ended December 31, 2017 and 2016, or 10% or more of its consolidated net trade receivables at December 31, 2017 and 2016, respectively.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("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 revenues and expenses during the reporting period.  Actual results could differ from those estimates.  See Note 11 for a discussion of fair value estimates.
Reclassifications
Certain reclassifications have been made to the 2016 financial statements to conform to the 2017 presentation.
v3.8.0.1
BUSINESS COMBINATIONS
12 Months Ended
Dec. 31, 2017
Business Combinations [Abstract]  
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS
ATS Acquisition
As the ATS acquisition discussed in Note 1 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. See Note 20 for the impact of the ATS Acquisition on the Company's consolidated balance sheet and statement of operations as of and for the year ended December 31, 2017.
Cablevision Acquisition
As discussed in Note 1, the Company completed the Cablevision Acquisition on June 21, 2016. The acquisition was accounted for as a business combination in accordance with ASC Topic 805. Accordingly, the Company recorded the fair value of the assets and liabilities assumed at the date of acquisition.
The following table provides the allocation of the total purchase price of $9,958,323 to the identifiable tangible and intangible assets and liabilities of Cablevision based on their respective fair values. The remaining useful lives represent the period over which acquired tangible and intangible assets with a finite life are being depreciated or amortized.
 
Fair Values
 
Estimated Useful Lives
 
 
 
 
Current assets
$
1,923,071

 
 
Accounts receivable
271,305

 
 
Property, plant and equipment
4,864,621

 
2-18 years
Goodwill
5,842,172

 
 
Indefinite-lived cable television franchises
8,113,575

 
Indefinite-lived
Customer relationships
4,850,000

 
8 to 18 years
Trade names (a)
1,010,000

 
12 years
Amortizable intangible assets
23,296

 
1-15 years
Other non-current assets
748,998

 
 
Current liabilities
(2,311,201
)
 
 
Long-term debt
(8,355,386
)
 
 
Deferred income taxes.
(6,832,773
)
 
 
Other non-current liabilities
(189,355
)
 
 
Total
$
9,958,323

 
 
 
(a)
See Note 8 for additional information regarding a change in the remaining estimated useful lives of the Company's trade names.
The fair value of customer relationships and cable television franchises were valued using derivations of the "income" approach. The future expected earnings from these assets were discounted to their present value equivalent.
Trade names were valued using the relief from royalty method, which is based on the present value of the royalty payments avoided as a result of the company owning the intangible asset.
The basis for the valuation methods was the Company’s projections. These projections were based on management’s assumptions including among others, penetration rates for pay television, broadband, and telephony; revenue growth rates; operating margins; and capital expenditures. The assumptions are derived based on the Company’s and its peers’ historical operating performance adjusted for current and expected competitive and economic factors surrounding the cable industry. The discount rates used in the analysis are intended to reflect the risk inherent in the projected future cash flows generated by the respective intangible asset. The value is highly dependent on the achievement of the future financial results contemplated in the projections. The estimates and assumptions made in the valuation are inherently subject to significant uncertainties, many of which are beyond the Company's control, and there is no assurance that these results can be achieved. The primary assumptions for which there is a reasonable possibility of the occurrence of a variation that would have significantly affected the value include the assumptions regarding revenue growth, programming expense growth rates, the amount and timing of capital expenditures and the discount rate utilized.
In establishing fair value for the vast majority of the acquired property, plant and equipment, the cost approach was utilized. The cost approach considers the amount required to replace an asset by constructing or purchasing a new asset with similar utility, then adjusts the value in consideration of physical depreciation, and functional and economic obsolescence as of the appraisal date. The cost approach relies on management’s assumptions regarding current material and labor costs required to rebuild and repurchase significant components of property, plant and equipment along with assumptions regarding the age and estimated useful lives of property, plant and equipment.
The estimates of expected useful lives take into consideration the effects of contractual relationships, customer attrition, eventual development of new technologies and market competition.
Long-term debt assumed was valued using quoted market prices (Level 2). The carrying value of most other assets and liabilities approximated fair value as of the acquisition date.
As a result of applying business combination accounting, the Company recorded goodwill, which represented the excess of organization value over amounts assigned to the other identifiable tangible and intangible assets arising from expectations of future operational performance and cash generation.
The following table presents the unaudited pro forma revenue and net loss for the period presented as if the Cablevision Acquisition had occurred on January 1, 2016:
 
Year Ended December 31, 2016
Revenue
$
9,154,816

Net loss
$
(721,257
)

The pro forma results presented above include the impact of additional amortization expense related to the identifiable intangible assets recorded in connection with the Cablevision Acquisition, additional depreciation expense related to the fair value adjustment to property, plant and equipment and the incremental interest resulting from the issuance of debt to fund the Cablevision Acquisition, net of the reversal of interest and amortization of deferred financing costs related to credit facilities that were repaid on the date of the Cablevision Acquisition and the accretion/amortization of fair value adjustments associated with the long-term debt acquired.
Other Acquisitions
In connection with certain acquisitions completed in the first and fourth quarters of 2017, the Company recorded amortizable intangibles of $45,000 relating to customer relationships and $9,400 relating to other amortizable intangibles. The Company recorded goodwill of $23,948, which represents the excess of the estimated purchase price of approximately $80,000 (based on current probability of contingent consideration) over the net book value of assets acquired. These values are 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). The acquired entities are included in the Cablevision segment.
v3.8.0.1
SUPPLEMENTAL CASH FLOW INFORMATION
12 Months Ended
Dec. 31, 2017
Supplemental Cash Flow Elements [Abstract]  
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
The Company's non-cash investing and financing activities and other supplemental data were as follows:
 
Years Ended December 31,
 
2017
 
2016
Non-Cash Investing and Financing Activities:
 
 
 
Continuing Operations:
 
 
 
Conversion of notes payable to affiliates and related parties of $1,750,000 (together with accrued and unpaid interest and applicable premium) to common stock (See Note 9)
$
2,264,252

 
$

Property and equipment accrued but unpaid
171,604

 
155,653

Distributions declared but not paid

 
79,617

Leasehold improvements paid by landlord
3,998

 

Notes payable to vendor
40,131

 
12,449

Capital lease obligations
9,385

 

Deferred financing costs accrued but unpaid

 
2,570

Supplemental Data:
 
 
 
Cash interest paid
1,765,126

 
1,192,370

Income taxes paid, net
29,006

 
1,538

v3.8.0.1
RESTRUCTURING AND OTHER EXPENSE
12 Months Ended
Dec. 31, 2017
Restructuring and Related Activities [Abstract]  
RESTRUCTURING AND OTHER EXPENSE
RESTRUCTURING AND OTHER EXPENSE
Restructuring
Beginning in the first quarter of 2016, the Company commenced its restructuring initiatives (the "2016 Restructuring Plan") that are intended to simplify the Company's organizational structure.
The following table summarizes the activity for the 2016 Restructuring Plan:
 
 
 
Severance and Other Employee Related Costs
 
Facility Realignment and Other Costs
 
Total
Restructuring charges incurred in 2016
$
215,420

 
$
11,157

 
$
226,577

Payments and other
(113,301
)
 
(2,760
)
 
(116,061
)
Accrual balance at December 31, 2016
102,119

 
8,397

 
110,516

Restructuring charges
142,679

 
7,243

 
149,922

Payments and other
(131,324
)
 
(6,014
)
 
(137,338
)
Accrual balance at December 31, 2017
$
113,474

 
$
9,626

 
$
123,100


Cumulative costs to date relating to the 2016 Restructuring Plan amounted to $309,297 and $67,202 for our Cablevision segment and Cequel segment, respectively.
Transaction Costs
For the year ended December 31, 2017, the Company incurred transaction costs of $2,479 related to the acquisition of a business during the first quarter of 2017 and other transactions. For the year ended December 31, 2016, the Company incurred transaction costs of $13,845, related to the acquisitions of Cablevision and Cequel.
v3.8.0.1
PROPERTY, PLANT AND EQUIPMENT
12 Months Ended
Dec. 31, 2017
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT
Costs incurred in the construction of the Company's cable systems, including line extensions to, and upgrade of, the Company's hybrid fiber/coaxial infrastructure, initial placement of the feeder cable to connect a customer that had not been previously connected, and headend facilities are capitalized.  These costs consist of materials, subcontractor labor, direct consulting fees, and internal labor and related costs associated with the construction activities.  The internal costs that are capitalized consist of salaries and benefits of the Company's employees and the portion of facility costs, including rent, taxes, insurance and utilities, that supports the construction activities.  These costs are depreciated over the estimated life of the plant (10 to 25 years) and headend facilities (4 to 25 years).  Costs of operating the plant and the technical facilities, including repairs and maintenance, are expensed as incurred.
Installation costs associated with the initial deployment of new customer premise equipment (“CPE”) necessary to provide pay television, broadband or telephony services are also capitalized. These costs include materials, subcontractor labor, internal labor, and other related costs associated with the connection activities.  The departmental activities supporting the connection process are tracked through specific metrics, and the portion of departmental costs that is capitalized is determined through a time weighted activity allocation of costs incurred based on time studies used to estimate the average time spent on each activity.  These installation costs are amortized over the estimated useful lives of the CPE necessary to provide pay television, broadband or telephony services.  In circumstances where CPE tracking is not available, the Company estimates the amount of capitalized installation costs based on whether or not the business or residence had been previously connected to the network. These installation costs are depreciated over their estimated useful life of 3-5 years. The portion of departmental costs related to disconnecting services and removing CPE from a customer, costs related to connecting CPE that has been previously connected to the network and repair and maintenance are expensed as incurred.
The estimated useful lives assigned to our property, plant and equipment are reviewed on an annual basis or more frequently if circumstances warrant and such lives are revised to the extent necessary due to changing facts and circumstances.  Any changes in estimated useful lives are reflected prospectively.
Property, plant and equipment (including equipment under capital leases) consist of the following assets, which are depreciated or amortized on a straight-line basis over the estimated useful lives shown below:
 
 
December 31, 2017
 
December 31, 2016
 
Estimated
Useful Lives
Customer premise equipment
$
1,093,726

 
$
871,049

 
3 to 5 years
Headends and related equipment
1,626,293

 
1,482,631

 
4 to 25 years
Infrastructure
4,003,845

 
3,740,494

 
3 to 25 years
Equipment and software
918,298

 
735,012

 
3 to 10 years
Construction in progress (including materials and supplies)
240,496

 
84,321

 
 
Furniture and fixtures
52,545

 
45,576

 
5 to 12 years
Transportation equipment
138,147

 
135,488

 
5 to 10 years
Buildings and building improvements
394,421

 
390,337

 
10 to 40 years
Leasehold improvements
108,071

 
104,309

 
Term of lease
Land
47,563

 
47,715

 
 
 
8,623,405

 
7,636,932

 
 
Less accumulated depreciation and amortization
(2,599,579
)
 
(1,039,297
)
 
 
 
$
6,023,826

 
$
6,597,635

 
 

For the years ended December 31, 2017 and December 31, 2016, the Company capitalized certain costs aggregating $151,646 and $75,804, respectively, related to the acquisition and development of internal use software, which are included in the table above. 
Depreciation expense on property, plant and equipment (including capital leases) for the years ended December 31, 2017 and 2016 amounted to $1,588,764 and $1,046,896, respectively.
The gross amount of buildings and equipment and related accumulated depreciation recorded under capital leases is presented below:
 
December 31,
 
2017
 
2016
Buildings and equipment
$
48,936

 
$
53,833

Less accumulated depreciation
(12,972
)
 
(6,306
)
 
$
35,964

 
$
47,527

v3.8.0.1
OPERATING LEASES
12 Months Ended
Dec. 31, 2017
Leases [Abstract]  
OPERATING LEASES
OPERATING LEASES
The Company leases certain office, production, and transmission facilities, as well as office equipment, under terms of leases expiring at various dates through 2100.  The leases generally provide for escalating rentals over the term of the lease plus certain real estate taxes and other costs or credits.  Costs associated with such operating leases are recognized on a straight-line basis over the initial lease term.  The difference between rent expense and rent paid is recorded as deferred rent.  In addition, the Company rents space on utility poles for its operations.  The Company's pole rental agreements are for varying terms, and management anticipates renewals as they expire.  Rent expense, including pole rentals, for the years ended December 31, 2017 and 2016 amounted to $95,017 and $65,881, respectively.
The minimum future annual payments for all operating leases (with initial or remaining terms in excess of one year) during the next five years and thereafter, including pole rentals from January 1, 2018 through December 31, 2022, at rates now in force are as follows:
2018
$
74,992

2019
72,142

2020
69,203

2021
63,735

2022
55,234

Thereafter
140,406

v3.8.0.1
INTANGIBLE ASSETS
12 Months Ended
Dec. 31, 2017
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 December 31, 2017
 
As of December 31, 2016
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated Useful Lives
Customer relationships
$
5,970,884

 
$
(1,409,021
)
 
$
4,561,863

 
$
5,925,884

 
$
(580,276
)
 
$
5,345,608

 
8 to 18 years
Trade names (a)
1,067,083

 
(588,574
)
 
478,509

 
1,066,783

 
(83,397
)
 
983,386

 
2 to 5 years
Other amortizable intangibles
37,060

 
(10,978
)
 
26,082

 
26,743

 
(3,093
)
 
23,650

 
1 to 15 years
 
$
7,075,027

 
$
(2,008,573
)
 
$
5,066,454

 
$
7,019,410

 
$
(666,766
)
 
$
6,352,644

 
 
 
(a)
On May 23, 2017, Altice N.V. announced the adoption of a global brand to replace the Company's brands in the future, reducing the remaining useful lives of these trade name intangibles to three years from the date of the adoption, which reflected one year as an in-use asset and two years as a defensive asset. In December 2017, the Company made a decision to postpone the adoption of a global brand that would have replaced the Optimum brand, increasing the useful life of the Optimum trade name intangible asset to 5 years.
Amortization expense for the years ended December 31, 2017 and 2016 and aggregated $1,341,807 and $653,410, respectively.
The following table sets forth the estimated amortization expense on intangible assets for the periods presented:
Estimated amortization expense
 

Year Ending December 31, 2018
$
873,133

Year Ending December 31, 2019
777,846

Year Ending December 31, 2020
696,240

Year Ending December 31, 2021
616,718

Year Ending December 31, 2022
537,100


The following table summarizes information relating to the Company's acquired indefinite-lived intangible assets as of December 31, 2017
 
As of December 31, 2017
 
As of December 31, 2016
 
Cablevision
 
Cequel
 
Total
 
Cablevision
 
Cequel
 
Total
Cable television franchises
$
8,113,575

 
$
4,906,506

 
$
13,020,081

 
$
8,113,575

 
$
4,906,506

 
$
13,020,081

Goodwill
5,866,120

 
2,153,741

 
8,019,861

 
5,838,959

 
2,153,741

 
7,992,700

Total
$
13,979,695

 
$
7,060,247

 
$
21,039,942

 
$
13,952,534

 
$
7,060,247

 
$
21,012,781


The carrying amount of goodwill is presented below:
Gross goodwill as of January 1, 2016
$
2,040,402

Goodwill recorded in connection with Cablevision Acquisition
5,838,959

Adjustments to purchase accounting relating to Cequel Acquisition
113,339

Gross goodwill as of January 1, 2017
7,992,700

Goodwill recorded in connection with acquisitions in the first and fourth quarters of 2017 (Cablevision Segment)
23,948

Adjustments to purchase accounting relating to Cablevision Acquisition
3,213

Net goodwill as of December 31, 2017
$
8,019,861

v3.8.0.1
DEBT
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
DEBT
DEBT
CSC Holdings Credit Facilities
In connection with the Cablevision Acquisition, in October 2015, Finco, a wholly-owned subsidiary of the Company, which merged with and into CSC Holdings on June 21, 2016, entered into a senior secured credit facility, which provides U.S. dollar term loans currently in an aggregate principal amount of $3,000,000 ($2,985,000 outstanding at December 31, 2017) (the “CVC Term Loan Facility”, and the term loans extended under the CVC Term Loan Facility, the “CVC Term Loans”) and U.S. dollar revolving loan commitments in an aggregate principal amount of $2,300,000 (the “CVC Revolving Credit Facility” and, together with the Term Loan Facility, the “CVC Credit Facilities”), which are governed by a credit facilities agreement entered into by, inter alios, CSC Holdings, certain lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent and security agent (as amended, restated, supplemented or otherwise modified on June 20, 2016, June 21, 2016, July 21, 2016, September 9, 2016, December 9, 2016 and March 15, 2017, respectively, and as further amended, restated, supplemented or otherwise modified from time to time, the “CVC Credit Facilities Agreement”).
The amendment to the CVC Credit Facilities Agreement entered into on September 9, 2016, extended the maturity date of the CVC Term Loan Facility to October 11, 2024. In October 2016, CSC Holdings used the net proceeds from the sale of $1,310,000 aggregate principal amount of 5.5% senior guaranteed notes due 2027 (the ‘‘2027 Guaranteed Notes’’) (after the deduction of fees and expenses) to prepay outstanding loans under the CSC Holdings Term Credit Facility that were not extended pursuant to this amendment. In connection with the prepayment of the Term Credit Facility, the Company wrote-off the deferred financing costs and the unamortized discount related to the existing term loan aggregating $102,894. Additionally, the Company recorded deferred financing costs and an original issue discount of $7,249 and $6,250, respectively, which are both being amortized to interest expense over the term of the Term Loan Facility.
The amendment to the CVC Credit Facilities Agreement entered into on March 15, 2017 (“Extension Amendment”) increased the Term Loan by $500,000 to $3,000,000 and the maturity date for this facility was extended to July 17, 2025. The closing of the Extension Amendment occurred in April 2017 and the proceeds were used to refinance the entire $2,493,750 principal amount of existing Term Loans and redeem $500,000 of the 8.625% Senior Notes due September 2017 issued by Cablevision. In connection with the Extension Amendment and the redemption of the senior notes, the Company recorded a loss on extinguishment of debt and write-off of deferred financing costs aggregating $18,976.
During the year ended December 31, 2017, CSC Holdings borrowed $1,350,000 under its revolving credit facility ($500,000 was used to make cash distributions to its stockholders) and made voluntary repayments aggregating $1,075,256 with cash on hand.
Under the Extension Amendment, the Company is required to make scheduled quarterly payments equal to 0.25% (or $7,500) of the principal amount of the Term Loan, beginning with the fiscal quarter ended September 30, 2017, with the remaining balance scheduled to be paid on July 17, 2025.
The CVC Credit Facilities permit CSC Holdings to request revolving loans, swing line loans or letters of credit from the revolving lenders, swingline lenders or issuing banks, as applicable, thereunder, from time to time prior to November 30, 2021, unless the commitments under the CVC Revolving Credit Facility have been previously terminated.
Loans comprising each eurodollar borrowing or alternate base rate borrowing, as applicable, bear interest at a rate per annum equal to the adjusted LIBO rate or the alternate base rate, as applicable, plus the applicable margin, where the applicable margin is:
in respect of the CVC Term Loans, (i) with respect to any alternate base rate loan, 1.25% per annum and (ii) with respect to any eurodollar loan, 2.25% per annum, and
in respect of the CVC Revolving Credit Facility loans (i) with respect to any alternate base rate loan, 2.25% per annum and (ii) with respect to any eurodollar loan, 3.25% per annum.
The CVC Credit Facilities Agreement requires the prepayment of outstanding CVC Term Loans, subject to certain exceptions and deductions, with (i) 100% of the net cash proceeds of certain asset sales, subject to reinvestment rights and certain other exceptions; and (ii) commencing with the fiscal year ending December 31, 2017, a pari ratable share (based on the outstanding principal amount of the Term Loans divided by the sum of the outstanding principal amount of all pari passu indebtedness and the Term Loans) of 50% of annual excess cash flow, which will be reduced to 0% if the consolidated net senior secured leverage ratio of CSC Holdings is less than or equal to 4.5 to 1.
The obligations under the CVC Credit Facilities are guaranteed by each restricted subsidiary of CSC Holdings (other than CSC TKR, LLC and its subsidiaries and certain excluded subsidiaries) (the “Initial Guarantors”) and, subject to certain limitations, will be guaranteed by each future material wholly-owned restricted subsidiary of CSC Holdings.  The obligations under the CVC Credit Facilities (including any guarantees thereof) are secured on a first priority basis, subject to any liens permitted by the Credit Facilities, by capital stock held by CSC Holdings or any guarantor in certain subsidiaries of CSC Holdings, subject to certain exclusions and limitations. 
The CVC Credit Facilities Agreement includes certain negative covenants which, among other things and subject to certain significant exceptions and qualifications, limit CSC Holdings' ability and the ability of its restricted subsidiaries to: (i) incur or guarantee additional indebtedness, (ii) make investments, (iii) create liens, (iv) sell assets and subsidiary stock, (v) pay dividends or make other distributions or repurchase or redeem our capital stock or subordinated debt, (vi) engage in certain transactions with affiliates, (vii) enter into agreements that restrict the payment of dividends by subsidiaries or the repayment of intercompany loans and advances; and (viii) engage in mergers or consolidations. In addition, the CVC Revolving Credit Facility includes a financial maintenance covenant solely for the benefit of the lenders under the CVC Revolving Credit Facility consisting of a maximum consolidated net senior secured leverage ratio of CSC Holdings and its restricted subsidiaries of 5.0 to 1.0. The financial covenant will be tested on the last day of any fiscal quarter, but only if on such day there are outstanding borrowings under the CVC Revolving Credit Facility (including swingline loans but excluding any cash collateralized letters of credit and undrawn letters of credit not to exceed $15,000).
The CVC 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 CVC Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the CVC Credit Facilities and all actions permitted to be taken by a secured creditor.
CSC Holdings was in compliance with all of its financial covenants under the CVC Credit Facilities as of December 31, 2017.
Cequel Credit Facilities
On June 12, 2015, Altice US Finance I Corporation, an indirect wholly-owned subsidiary of Cequel, entered into a senior secured credit facility which currently provides term loans in an aggregate principal amount of $1,265,000 ($1,258,675 outstanding at December 31, 2017) (the “Cequel Term Loan Facility” and the term loans extended under the Cequel Term Loan Facility, the “Cequel Term Loans”) and revolving loan commitments in an aggregate principal amount of $350,000 (the “Cequel Revolving Credit Facility” and, together with the Cequel Term Loan Facility, the “Cequel Credit Facilities”) which are governed by a credit facilities agreement entered into by, inter alios, Altice US Finance I Corporation, certain lenders party thereto and JPMorgan Chase Bank, N.A. (as amended, restated, supplemented or otherwise modified on October 25, 2016, December 9, 2016 and March 15, 2017, and as further amended, restated, supplemented or modified from time to time, the “Cequel Credit Facilities Agreement”).
The amendment to the Cequel Credit Facilities Agreement entered into on March 15, 2017 (“Cequel Extension Amendment”) increased the Term Loan by $450,000 to $1,265,000 and the maturity date for this facility was extended to July 28, 2025. The closing of the Extension Amendment occurred in April 2017 and the proceeds were used to refinance the entire $812,963 principal amount of loans under the Term Loan and redeem $450,000 of the 6.375% Senior Notes due September 15, 2020. In connection with the Cequel Extension Amendment and the redemption of the senior notes, the Company recorded a loss on extinguishment of debt and write-off of deferred financings costs aggregating $28,684.
Under the Cequel Extension Amendment, the Company is required to make scheduled quarterly payments equal to 0.25% (or $3,163) of the principal amount of the Cequel Term Loan, beginning with the fiscal quarter ended September 30, 2017, with the remaining balance scheduled to be paid on July 28, 2025.
Loans comprising each eurodollar borrowing or alternate base rate borrowing, as applicable, bear interest at a rate per annum equal to the adjusted LIBO rate or the alternate base rate, as applicable, plus the applicable margin, where the applicable margin is:
in respect of the Cequel Term Loans, (i) with respect to any alternate base rate loan, 1.25% per annum and (ii) with respect to any eurodollar loan, 2.25% per annum, and
in respect of Cequel Revolving Credit Facility loans (i) with respect to any alternate base rate loan, 2.25% per annum and (ii) with respect to any eurodollar loan, 3.25% per annum.
The Cequel Credit Facilities Agreement requires the prepayment of outstanding Term Loans, subject to certain exceptions and deductions, with (i) 100% of the net cash proceeds of certain asset sales, subject to reinvestment rights and certain other exceptions; and (ii) a pari ratable share (based on the outstanding principal amount of the Cequel Term Loans divided by the sum of the outstanding principal amount of all pari passu indebtedness and the Cequel Term Loans) of 50% of annual excess cash flow, which will be reduced to 0% if the consolidated net senior secured leverage ratio is less than or equal to 4.5:1.
The debt under the Cequel Credit Facility is secured by a first priority security interest in the capital stock of Cequel Communications, LLC and substantially all of the present and future assets of Cequel Communications, LLC and its restricted subsidiaries, and is guaranteed by Cequel Communications Holdings II, LLC, an indirect subsidiary of Cequel (the "Parent Guarantor"), as well as all of Cequel Communications, LLC's existing and future direct and indirect subsidiaries, subject to certain exceptions set forth in the Cequel Credit Facilities Agreement. The Cequel Credit Facilities Agreement contains customary representations, warranties and affirmative covenants. In addition, the Cequel Credit Facilities Agreement contains restrictive covenants that limit, among other things, the ability of Cequel Communications, LLC and its subsidiaries to incur indebtedness, create liens, engage in mergers, consolidations and other fundamental changes, make investments or loans, engage in transactions with affiliates, pay dividends, and make acquisitions and dispose of assets. The Cequel Credit Facilities Agreement also contains a maximum senior secured leverage maintenance covenant of 5.0 to 1.0. Additionally, the Cequel Credit Facilities Agreement contains customary events of default, including failure to make payments, breaches of covenants and representations, cross defaults to other indebtedness, unpaid judgments, changes of control and bankruptcy events. The lenders’ commitments to fund amounts under the revolving credit facility are subject to certain customary conditions.
As of December 31, 2017, Cequel was in compliance with all of its financial covenants under the Cequel Credit Facilities Agreement.
The following table provides details of the Company's outstanding credit facility debt:
 
 
 
 
 
 
 
Carrying Amount (a)
 
Maturity Date
 
Interest Rate
 
Principal
 
December 31, 2017
 
December 31, 2016
CSC Holdings Restricted Group:
 
 
 
 
 
 
 
 
 
Revolving Credit Facility (b)
$20,000 on October 9, 2020, remaining balance on November 30, 2021
 
4.75%
 
$
450,000

 
$
425,488

 
$
145,013

Term Loan Facility
July 17, 2025
 
3.74%
 
2,985,000

 
2,967,818

 
2,486,874

Cequel:
 
 
 
 
 
 
 
 
 
Revolving Credit Facility (c)
November 30, 2021
 
 

 

 

Term Loan Facility
July 28, 2025
 
3.82%
 
1,258,675

 
1,250,217

 
812,903

 
 
 
 
 
$
4,693,675

 
4,643,523

 
3,444,790

Less: Current portion
42,650

 
33,150

Long-term debt
$
4,600,873

 
$
3,411,640


(a)
The carrying amount is net of the unamortized deferred financing costs and/or discounts.
(b)
At December 31, 2017, $115,973 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $1,734,027 of the facility was undrawn and available, subject to covenant limitations.
(c)
At December 31, 2017, $13,500 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $336,500 of the facility was undrawn and available, subject to covenant limitations.
Senior Guaranteed Notes, Senior Secured Notes, and Senior Notes and Debentures
The following table summarizes the Company's senior guaranteed notes, senior secured notes and senior notes and debentures:
 
 
 
 
 
Interest Rate
 
Principal Amount
 
Carrying Amount (a)
Issuer
Date Issued
 
Maturity Date
 
 
 
December 31, 2017
 
December 31, 2016
Senior notes:
 
 
 
 
 
 
 
 
 
 
 
CSC Holdings (b)(f)(n)
February 6, 1998
 
February 15, 2018
 
7.875
%
 
$
300,000

 
$
301,184

 
$
310,334

CSC Holdings (b)(f)
July 21, 1998
 
July 15, 2018
 
7.625
%
 
500,000

 
507,744

 
521,654

CSC Holdings (c)(f)
February 12, 2009
 
February 15, 2019
 
8.625
%
 
526,000

 
541,165

 
553,804

CSC Holdings (c)(f)
November 15, 2011
 
November 15, 2021
 
6.750
%
 
1,000,000

 
960,146

 
951,702

CSC Holdings (c)(f)
May 23, 2014
 
June 1, 2024
 
5.250
%
 
750,000

 
660,601

 
650,193

CSC Holdings (e)
October 9, 2015
 
January 15, 2023
 
10.125
%
 
1,800,000

 
1,777,914

 
1,774,750

CSC Holdings (e)(l)
October 9, 2015
 
October 15, 2025
 
10.875
%
 
1,684,221

 
1,661,135

 
1,970,379

Senior guaranteed notes:
 
 
 
 
 
 
 
 
 
 
 
CSC Holdings (e)
October 9, 2015
 
October 15, 2025
 
6.625
%
 
1,000,000

 
986,717

 
985,469

CSC Holdings (g)
September 23, 2016
 
April 15, 2027
 
5.500
%
 
1,310,000

 
1,304,468

 
1,304,025

Senior notes:
 
 
 
 
 
 
 
 
 
 
 
Cablevision (k)(o)
September 23, 2009
 
September 15, 2017
 
8.625
%
 

 

 
926,045

Cablevision (c)(f)(n)(o)
April 15, 2010
 
April 15, 2018
 
7.750
%
 
750,000

 
754,035

 
767,545

Cablevision (c)(f)(o)
April 15, 2010
 
April 15, 2020
 
8.000
%
 
500,000

 
492,009

 
488,992

Cablevision (c)(f)(o)
September 27, 2012
 
September 15, 2022
 
5.875
%
 
649,024

 
572,071

 
559,500

Senior notes:
 
 
 
 
 
 
 
 
 
 
 
Cequel Communications Holdings I and Cequel Capital (d)(m)(p)
Oct. 25, 2012 Dec. 28, 2012
 
September 15, 2020
 
6.375
%
 
1,050,000

 
1,027,493

 
1,457,439

Cequel Communications Holdings I and Cequel Capital (d)(p)
May 16, 2013 Sept. 9, 2014
 
December 15, 2021
 
5.125
%
 
1,250,000

 
1,138,870

 
1,115,767

Cequel Communications Holdings I and Cequel Capital (i)(p)
June 12, 2015
 
July 15, 2025
 
7.750
%
 
620,000

 
604,374

 
602,925

Senior secured notes:
 
 
 
 
 
 
 
 
 
 
 
Altice US Finance I Corporation (h)(p)
June 12, 2015
 
July 15, 2023
 
5.375
%
 
1,100,000

 
1,082,482

 
1,079,869

Altice US Finance I Corporation (j)(p)
April 26, 2016
 
May 15, 2026
 
5.500
%
 
1,500,000

 
1,488,024

 
1,486,933

 
 
 
 
 
 
 
$
16,289,245

 
15,860,432

 
17,507,325

Less: Current portion
 
507,744

 
926,045

Long-term debt
 
$
15,352,688

 
$
16,581,280

 
(a)
The carrying amount is net of the unamortized deferred financing costs and/or discounts/premiums.
(b)
The debentures are not redeemable by CSC Holdings prior to maturity.
(c)
Notes are redeemable at any time at a specified "make-whole" price plus accrued and unpaid interest to the redemption date.
(d)
The Company may redeem some or more of all the notes at the redemption price set forth in the relevant indenture, plus accrued and unpaid interest.
(e)
The Company may redeem some or all of the 2023 Notes at any time on or after January 15, 2019, and some or all of the 2025 Notes and 2025 Guaranteed Notes at any time on or after October 15, 2020, at the redemption prices set forth in the relevant indenture, plus accrued and unpaid interest, if any.  The Company may also redeem up to 40% of each series of the Cablevision Acquisition Notes using the proceeds of certain equity offerings before October 15, 2018, at a redemption price equal to 110.125% for the 2023 Notes, 110.875% for the 2025 Notes and 106.625% for the 2025 Guaranteed Notes, in each case plus accrued and unpaid interest. In addition, at any time prior to January 15, 2019, CSC Holdings may redeem some or all of the 2023 Notes, and at any time prior to October 15, 2020, the Company may redeem some or all of the 2025 Notes and the 2025 Guaranteed Notes, at a price equal to 100% of the principal amount thereof, plus a “make whole” premium specified in the relevant indenture plus accrued and unpaid interest.
(f)
The carrying value of the notes was adjusted to reflect their fair value on the Cablevision Acquisition Date (aggregate reduction of $52,788).
(g)
The 2027 Guaranteed Notes are redeemable at any time on or after April 15, 2022 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any.  In addition, up to 40% may be redeemed for each series of the 2027 Guaranteed Notes using the proceeds of certain equity offerings before October 15, 2019, at a redemption price equal to 105.500%, plus accrued and unpaid interest.
(h)
Some or all of these notes may be redeemed at any time on or after July 15, 2018, plus accrued and unpaid interest, if any. Up to 40% of the notes may be redeemed using the proceeds of certain equity offerings before July 15, 2018, at a redemption price equal to 105.375%.
(i)
Some or all of these notes may be redeemed at any time on or after July 15, 2020, plus accrued and unpaid interest, if any. Up to 40% of the notes may be redeemed using the proceeds of certain equity offerings before July 15, 2018, at a redemption price equal to 107.750%.
(j)
Some or all of these notes may be redeemed at any time on or after May 15, 2021, plus accrued and unpaid interest, if any. Up to 40% of the notes may be redeemed using the proceeds of certain equity offerings before May 15, 2019, at a redemption price equal to 105.500%.
(k)
In April 2017, the Company redeemed $500,000 of the senior notes from proceeds from the CVC Term Loan facility. In September 2017, these senior notes matured and the Company repaid the remaining principal balance of $400,000.
(l)
In July 2017, the Company used approximately $350,120 of the proceeds from the IPO to fund the redemption of $315,779 principal amount of CSC Holdings senior notes due October 2025 and the related call premium of approximately $34,341which was recorded as a loss on extinguishment of debt. The Company also recorded a write-off of deferred financings costs in connection with this redemption aggregating $4,516.
(m)
In April 2017, the Company redeemed $450,000 of the senior notes from proceeds from the Cequel Term Loan facility.
(n)
As a result of the repayment of these notes in February 2018, discussed in Note 20, the carrying amount of these Notes has been classified as long-term indebtedness.
(o)
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 CVC Credit Facilities Agreement.
(p)
The issuers of these notes have no ability to service interest or principal on the notes, other than through any contributions/distributions from Cequel Communications, LLC (an indirect subsidiary of Cequel and the parent of Altice US Finance I). Cequel Communications, LLC is restricted in certain circumstances, from paying dividends or distributions to the issuers by the terms of the Cequel Credit Facilities Agreement.
The indentures under which the senior notes and debentures were issued contain various covenants.