ALTICE USA, INC., 10-Q filed on 5/14/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
May 04, 2018
Document and Entity Information [Abstract]    
Entity Registrant Name Altice USA, Inc.  
Entity Central Index Key 0001702780  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2018  
Entity Common Stock, Shares Outstanding   737,068,966
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Current Assets:    
Cash and cash equivalents $ 1,427,651 $ 329,848
Restricted cash 253 252
Accounts receivable, trade (less allowance for doubtful accounts of $10,481 and $13,420) 330,761 370,765
Prepaid expenses and other current assets 142,366 130,425
Amounts due from affiliates 21,146 19,764
Derivative contracts 9,211 52,545
Total current assets 1,931,388 903,599
Property, plant and equipment, net of accumulated depreciation of $2,983,696 and $2,599,579 5,819,544 6,023,826
Investment securities pledged as collateral 1,467,781 1,720,357
Derivative contracts 63,343 0
Other assets 122,786 57,904
Amortizable intangible assets, net of accumulated amortization 4,834,637 5,066,454
Indefinite-lived cable television franchises 13,020,081 13,020,081
Goodwill 8,019,849 8,019,861
Total assets 35,279,409 34,812,082
Current Liabilities:    
Accounts payable 725,625 795,128
Interest 296,400 397,422
Employee related costs 104,824 147,727
Other accrued expenses 318,098 411,988
Amounts due to affiliates 11,078 10,998
Deferred revenue 122,395 111,197
Liabilities under derivative contracts 9,211 52,545
Credit facility debt 53,900 42,650
Senior notes and debentures 1,042,143 507,744
Capital lease obligations 7,699 9,539
Notes payable 69,084 33,424
Total current liabilities 2,760,457 2,520,362
Defined benefit plan obligations 97,908 103,163
Other liabilities 131,565 144,289
Deferred tax liability 4,729,578 4,769,286
Liabilities under derivative contracts 114,319 187,406
Collateralized indebtedness 1,351,271 1,349,474
Credit facility debt 5,636,102 4,600,873
Senior notes and debentures 14,767,823 15,352,688
Capital lease obligations 11,869 12,441
Notes payable 34,003 32,478
Deficit investment in affiliates 12,891 3,579
Total liabilities 29,647,786 29,076,039
Commitments and contingencies
Redeemable equity 234,637 231,290
Stockholders' Equity:    
Preferred Stock, $.01 par value, 100,000,000 shares authorized, no shares issued and outstanding 0 0
Paid-in capital 4,682,646 4,665,229
Retained earnings 713,848 840,636
Total stockholders' equity before accumulated other comprehensive Income and non-controlling interest 5,403,865 5,513,236
Accumulated other comprehensive loss (8,420) (10,022)
Total stockholders' equity 5,395,445 5,503,214
Noncontrolling interest 1,541 1,539
Total stockholders' equity 5,396,986 5,504,753
Total liabilities and stockholders' equity 35,279,409 34,812,082
Common Class A    
Stockholders' Equity:    
Common stock 2,470 2,470
Common Class B    
Stockholders' Equity:    
Common stock 4,901 4,901
Common Class C    
Stockholders' Equity:    
Common stock 0 0
Customer relationships    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization 4,367,742 4,561,863
Trade names    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization 442,807 478,509
Amortizable intangible assets    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization $ 24,088 $ 26,082
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2018
Dec. 31, 2017
Current Assets:    
Accounts receivable, trade allowance for doubtful accounts $ 10,481 $ 13,420
Property, plant and equipment, accumulated depreciation 2,983,696 2,599,579
Amortizable intangible assets, accumulated amortization $ 2,240,390 $ 2,008,573
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 Class A    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 4,000,000,000 4,000,000,000
Common stock, shares issued (in shares) 246,982,292 246,982,292
Common stock, shares outstanding (in shares) 246,982,292 246,982,292
Common Class B    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 1,000,000,000 1,000,000,000
Common stock, shares issued (in shares) 490,086,674 490,086,674
Common stock, shares outstanding (in shares) 490,086,674 490,086,674
Common Class C    
Stockholders' Equity:    
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 4,000,000,000 4,000,000,000
Common stock, shares issued (in shares) 0 0
Common stock, shares outstanding (in shares) 0 0
Customer relationships    
Current Assets:    
Amortizable intangible assets, accumulated amortization $ 1,603,142 $ 1,409,021
Trade names    
Current Assets:    
Amortizable intangible assets, accumulated amortization 624,276 588,574
Amortizable intangible assets    
Current Assets:    
Amortizable intangible assets, accumulated amortization $ 12,972 $ 10,978
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Revenue (including revenue from affiliates of $125 and $141, respectively) (See Note 14) $ 2,329,714 $ 2,302,259
Operating expenses:    
Programming and other direct costs (including charges from affiliates of $1,154 and $735, respectively) (See Note 14) 787,361 758,352
Other operating expenses (including charges from affiliates of $7,994 and $7,298, respectively) (See Note 14) 583,023 608,144
Restructuring and other expense 3,587 76,929
Depreciation and amortization (including impairments) 642,705 608,724
Total operating expenses 2,016,676 2,052,149
Operating income 313,038 250,110
Other income (expense):    
Interest expense (including interest expense to affiliates and related parties of$47,588 in 2017) (See Note 14) (377,258) (433,294)
Interest income 3,103 232
Gain (loss) on investments and sale of affiliate interests, net (248,602) 131,658
Gain (loss) on derivative contracts, net 168,352 (71,044)
Gain (loss) on interest rate swap contracts (31,922) 2,342
Loss on extinguishment of debt and write-off of deferred financing costs (4,705) 0
Other expense, net (11,658) (2,100)
Total other income (expense) (502,690) (372,206)
Loss before income taxes (189,652) (122,096)
Income tax benefit 60,703 45,908
Net loss (128,949) (76,188)
Net income attributable to noncontrolling interests (2) (237)
Net loss attributable to Altice USA, Inc. stockholders $ (128,951) $ (76,425)
Basic and diluted net loss per share (in dollars per share) $ (0.17) $ (0.12)
Basic and diluted weighted average common shares (in shares) 737,069 649,525
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Revenue from affiliates $ 125 $ 141
Programming and other direct costs from affiliates 1,154 735
Other operating expense from affiliates 7,994 7,298
Interest expense to related parties and affiliates $ 0 $ 47,588
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Net loss $ (128,949) $ (76,188)
Defined benefit pension plans:    
Unrecognized actuarial gain 4,551 0
Applicable income taxes (1,228) 0
Unrecognized gain arising during period, net of income taxes 3,323 0
Settlement losses included in other expense, net 606 0
Applicable income taxes (164) 0
Settlement losses included in other expense, net, net of income taxes 442 0
Other comprehensive gain 3,765 0
Comprehensive loss (125,184) (76,188)
Comprehensive income attributable to noncontrolling interests (2) (237)
Comprehensive loss attributable to Altice USA, Inc. stockholders $ (125,186) $ (76,425)
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Settlement loss related to pension plan $ 606 $ 0
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Mar. 31, 2018 - USD ($)
$ in Thousands
Total
Total Stockholders' Equity
Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Income (loss)
Non-controlling Interest
Common Class A
Common Stock
Common Class B
Common Stock
ATS Acquisition
ATS Acquisition
Total Stockholders' Equity
ATS Acquisition
Paid-in Capital
ATS Acquisition
Retained Earnings
Beginning balance (As Reported) at Dec. 31, 2017 $ 5,495,840 $ 5,494,301 $ 4,642,128 $ 854,824 $ (10,022) $ 1,539 $ 2,470 $ 4,901        
Beginning balance (Restatement Adjustment)                 $ (3,753) $ (3,753) $ 23,101 $ (26,854)
Beginning balance (Restatement Adjustment, Impact of ASC 606) 12,666 12,666   12,666                
Beginning balance at Dec. 31, 2017 5,504,753 5,503,214 4,665,229 840,636 (10,022) 1,539 2,470 4,901        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Net loss attributable to stockholders (128,951) (128,951)   (128,951)                
Net income attributable to noncontrolling interests 2         2            
Pension liability adjustments, net of income taxes 3,765 3,765     3,765              
Share-based compensation expense 21,623 21,623 21,623                  
Change in fair value of redeemable equity (3,347) (3,347) (3,347)                  
Other changes to equity (859) (859) (859) 0                
Adoption of ASU No. 2018-02       2,163 (2,163)              
Ending balance at Mar. 31, 2018 $ 5,396,986 $ 5,395,445 $ 4,682,646 $ 713,848 $ (8,420) $ 1,541 $ 2,470 $ 4,901        
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net loss $ (128,949) $ (76,188)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization (including impairments) 642,705 608,724
Equity in net loss of affiliates 10,442 2,757
Loss (gain) on investments and sale of affiliate interests, net 248,602 (131,658)
Loss (gain) on derivative contracts, net (168,352) 71,044
Loss on extinguishment of debt and write-off of deferred financing costs 4,705 0
Amortization of deferred financing costs and discounts (premiums) on indebtedness 16,950 1,812
Settlement loss related to pension plan 606 0
Share-based compensation expense 21,623 7,848
Deferred income taxes (65,833) (52,184)
Provision for doubtful accounts 13,500 15,694
Change in assets and liabilities, net of effects of acquisitions and dispositions:    
Accounts receivable, trade 25,207 34,707
Other receivables (28,759) 0
Prepaid expenses and other assets 9,609 (10,113)
Amounts due from and due to affiliates (1,465) (131,564)
Accounts payable 11,297 147,999
Accrued liabilities (224,787) (253,707)
Deferred revenue 11,929 11,257
Liabilities related to interest rate swap contracts 31,922 (2,342)
Net cash provided by operating activities 430,952 244,086
Cash flows from investing activities:    
Payment for acquisition, net of cash acquired (28,940) (43,608)
Sale of affiliate interests (3,537) 0
Capital expenditures (257,615) (257,427)
Proceeds related to sale of equipment, including costs of disposal 965 596
Increase in other investments (2,500) (550)
Additions to other intangible assets 0 (183)
Net cash used in investing activities (291,627) (301,172)
Cash flows from financing activities:    
Proceeds from credit facility debt, net of discounts 1,642,500 225,000
Repayment of credit facility debt (610,663) (183,288)
Issuance of senior notes and debentures 1,000,000 0
Proceeds from collateralized indebtedness 0 156,136
Repayment of collateralized indebtedness and related derivative contracts 0 (150,084)
Redemption of senior notes, including premiums and fees (1,057,019) 0
Proceeds from notes payable 6,812 0
Principal payments on capital lease obligations (3,067) (4,207)
Additions to deferred financing costs (19,225) (1,290)
Other (859) 0
Net cash provided by financing activities 958,479 42,267
Net increase (decrease) in cash and cash equivalents 1,097,804 (14,819)
Cash, cash equivalents and restricted cash at beginning of year 330,100 503,093
Cash, cash equivalents and restricted cash at end of period $ 1,427,904 $ 488,274
v3.8.0.1
DESCRIPTION OF BUSINESS AND RELATED MATTERS
3 Months Ended
Mar. 31, 2018
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 March 31, 2018, 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 acquired Cablevision Systems Corporation ("Cablevision" or "Optimum") on June 21, 2016.
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.
The accompanying condensed combined consolidated financial statements ("condensed 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 on a combined basis. All significant inter-company accounts and transactions have been eliminated in consolidation.
The accompanying condensed consolidated operating results for the three months ended March 31, 2017 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 3 for further details of the impact on the Company's historical financial statements.
In June 2017, the Company completed its initial public offering ("IPO") of 71,724,139 shares of its Class A 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".
Acquisition of Altice Technical Services US Corp
ATS was formed in 2017 to provide network construction and maintenance services and commercial and residential installations, disconnections, and maintenance. The Company believes the services it receives from ATS are of higher quality and at a lower cost than the Company could achieve without ATS, including for the construction of its new fiber-to-the home ("FTTH") network.
During the second quarter of 2017, a substantial portion of the Company's technical workforce at the Cablevision segment either accepted employment with ATS or became employees of ATS and ATS commenced operations and began to perform services for the Company. A substantial portion of the Cequel segment technical workforce became employees of ATS in December 2017.
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 3 for the impact of the ATS Acquisition on the Company's condensed consolidated balance sheet as of December 31, 2017.
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;
The 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
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information.  Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.
The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.
The financial statements presented in this report are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.
The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2018.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
Recently 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 No. 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. The Company elected to adopt ASU No. 2018-02 during the first quarter of 2018. The adoption resulted in the reclassification of stranded tax amounts of $2,163 associated with net unrecognized losses from the Company's pension plans from accumulated other comprehensive loss to retained earnings.
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 was adopted by the Company on January 1, 2018 and had no impact to the Company's condensed consolidated financial statements.
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 three months ended March 31, 2017 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 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 3 for information on the impact of the adoption of ASU No. 2017-07.
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 Company adopted the new guidance on January 1, 2018 and had no impact to the Company's condensed 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 was adopted by the Company on January 1, 2018 and had no impact to the Company's condensed consolidated financial statements.
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 3 for information on the impact of the adoption of ASC 606.
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 Company adopted the new guidance on January 1, 2018 and had no impact to the Company's condensed consolidated financial statements.
Recently Issued But Not Yet Adopted Accounting Pronouncements
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 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. The Company has not yet completed the evaluation of the effect that ASU No. 2016-02 will have on its consolidated financial statements.
Reclassifications
Certain reclassifications have been made to the 2017 financial statements to conform to the 2018 presentation.
v3.8.0.1
CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION
3 Months Ended
Mar. 31, 2018
Accounting Changes and Error Corrections [Abstract]  
CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION
CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION
Adoption of ASC 606 - Revenue from Contracts with Customers
On January 1, 2018, the Company adopted the guidance pursuant to ASC 606. The Company elected to apply the guidance on a full retrospective basis, which required the Company to reflect the impact of the updated guidance for all periods presented. The adoption of the guidance resulted in the deferral of certain installation revenue, the deferral of certain commission expenses, and a reduction of revenue due to the reclassification of certain third party giveaways and incentives from operating expense. Additionally, the Company made changes in the composition of revenue resulting from the allocation of value related to bundled services sold to residential customers at a discount.
Installation Services Revenue
Pursuant to ASC 606, the Company's installation services revenue is deferred and recognized over the benefit period. For residential customers, the benefit period is less than one year. For business and wholesale customers, the benefit period is the contract term. Prior to the adoption of ASC 606, the Company recognized installation services revenue for residential and small and medium-sized business ("SMB") customers when installations were completed. As a result of the deferral of installation services revenue for residential and SMB customers, the Company recognized contract liabilities of $6,978 and recorded a cumulative effect adjustment of $5,093 (net of tax of $1,885) to retained earnings. The accounting for installation services revenue related to business and wholesale customers has not changed.
Commission Expenses
Pursuant to ASC 606, the Company defers commission expenses related to obtaining a contract with a customer when the expected period of benefit is greater than one year and amortizes these costs over the average contract term. For commission expenses related to customer contracts with a term of one year or less, the Company is utilizing the practical expedient and is recognizing the costs when incurred.  Prior to the adoption of ASC 606, the Company recognized commission expenses related to the sale of its services when incurred. As a result of the change in the timing of recognition of these commission expenses, the Company recognized contract assets of $24,329 and recorded a cumulative effect adjustment of $17,759 (net of tax of $6,570) to retained earnings.
Third Party Product Giveaways and Incentives
When the Company acts as the agent in providing certain product giveaways or incentives, revenue is recorded net of the costs of the giveaways and incentives. For the three months ended March 31, 2017, costs of $3,417 for the giveaways and incentives recorded in other operating expense have been reclassified to revenue.
Bundled Services
The Company provides bundled services at a discounted rate to its customers. Under ASC 606, revenue should be allocated to separate performance obligations within a bundled offering based on the relative stand-alone selling price of each service within the bundle. In connection with the adoption of ASC 606, the Company revised the amounts allocated to each performance obligation within its bundled offerings which reduced previously reported revenue for telephony services and increased previously reported revenue allocated to pay television and broadband services.
Adoption of ASU No. 2017-07 - Compensation-Retirement Benefits (Topic 715)
On January 1, 2018, the Company adopted the guidance pursuant to ASU No. 2017‑07. ASU No. 2017‑07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. In connection with the adoption of ASU No. 2017‑07, the Company retroactively reclassified certain pension costs from other operating expenses to other income (expense), net. The adoption of ASU No. 2017-07 had no impact on the Company's condensed consolidated balance sheet.
Acquisition of ATS
As discussed in Note 1, the Company completed the ATS Acquisition in the first quarter of 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 the formation of ATS, including goodwill of $23,101, representing the amount previously transferred to ATS.
The following table summarizes the impact of adopting ASC 606 and the impact of the ATS Acquisition on the Company's condensed consolidated balance sheet: 
 
December 31, 2017
 
As Reported
 
Impact of ASC 606
 
Impact of ATS Acquisition
 
As Adjusted
Cash and cash equivalents
$
273,329

 
$

 
$
56,519

 
$
329,848

Other current assets
580,231

 
14,068

 
(20,548
)
 
573,751

Property, plant and equipment, net
6,063,829

 

 
(40,003
)
 
6,023,826

Goodwill
7,996,760

 

 
23,101

 
8,019,861

Other assets, long-term
19,861,076

 
10,261

 
(6,541
)
 
19,864,796

Total assets
$
34,775,225

 
$
24,329

 
$
12,528

 
$
34,812,082

Current liabilities
$
2,492,983

 
$
6,978

 
$
20,401

 
$
2,520,362

Deferred tax liability, long-term
4,775,115

 
4,685

 
(10,514
)
 
4,769,286

Liabilities, long-term
21,779,997

 

 
6,394

 
21,786,391

Total liabilities
29,048,095

 
11,663

 
16,281

 
29,076,039

Redeemable equity
231,290

 

 

 
231,290

Paid-in capital
4,642,128

 

 
23,101

 
4,665,229

Retained earnings
854,824

 
12,666

 
(26,854
)
 
840,636

Total stockholders' equity
5,495,840

 
12,666

 
(3,753
)
 
5,504,753

Total liabilities and stockholders' equity
$
34,775,225

 
$
24,329

 
$
12,528

 
$
34,812,082

The ATS Acquisition did not have an impact on the Company's condensed consolidated statement of operations for the three months ended March 31, 2017. The following table summarizes the impact of adopting ASC 606 and ASU No. 2017-07 on the Company's condensed consolidated statement of operations:
 
Three Months Ended March 31, 2017
 
As Reported
 
Impact of ASC 606
 
Impact of ASU No. 2017-07
 
As Adjusted
Residential:
 
 
 
 
 
 
 
Pay TV
$
1,071,361

 
$
12,517

 
$

 
$
1,083,878

Broadband
611,769

 
14,149

 

 
625,918

Telephony
210,873

 
(29,912
)
 

 
180,961

Business services and wholesale
319,591

 
(171
)
 

 
319,420

Advertising
83,361

 

 

 
83,361

Other
8,721

 

 

 
8,721

Total revenue
2,305,676

 
(3,417
)
 

 
2,302,259

 
 
 
 
 

 

Programming and other direct costs
758,352

 

 

 
758,352

Other operating expenses
613,437

 
(3,417
)
 
(1,876
)
 
608,144

Restructuring and other expense
76,929

 

 

 
76,929

Depreciation and amortization
608,724

 

 

 
608,724

Operating income
248,234

 

 
1,876

 
250,110

Other expense, net
(370,330
)
 

 
(1,876
)
 
(372,206
)
Loss before income taxes
(122,096
)
 

 

 
(122,096
)
Income tax benefit
45,908

 

 

 
45,908

Net loss
$
(76,188
)
 
$

 
$

 
$
(76,188
)
v3.8.0.1
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
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 loss per share for the three months ended March 31, 2017 reflect the retroactive impact of certain organizational transactions that occurred prior to the Company's IPO.
v3.8.0.1
REVENUE AND CONTRACT ASSETS
3 Months Ended
Mar. 31, 2018
Revenue from Contract with Customer [Abstract]  
REVENUE AND CONTRACT ASSETS
REVENUE AND CONTRACT ASSETS
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 three months ended March 31, 2018 and 2017 the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $63,830 and $64,986, 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:
 
March 31, 2018
 
December 31, 2017, as adjusted
Contract assets (a)
$
23,682

 
$
24,329

Deferred revenue (b)
129,560

 
117,679


 

(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.
v3.8.0.1
SUPPLEMENTAL CASH FLOW INFORMATION
3 Months Ended
Mar. 31, 2018
Supplemental Cash Flow Elements [Abstract]  
SUPPLEMENTAL CASH FLOW INFORMATION
SUPPLEMENTAL CASH FLOW INFORMATION
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.
The Company's non-cash investing and financing activities and other supplemental data were as follows:
 
Three Months Ended March 31,
 
2018
 
2017
Non-Cash Investing and Financing Activities:
 
 
 
Continuing Operations:
 
 
 
Property and equipment accrued but unpaid
$
91,036

 
$
61,170

Notes payable to vendor
30,237

 

Capital lease obligations
656

 

Supplemental Data:
 
 
 
Cash interest paid
464,763

 
524,864

Income taxes paid (refunded), net
(1,027
)
 
1,553

v3.8.0.1
RESTRUCTURING COSTS AND OTHER EXPENSE
3 Months Ended
Mar. 31, 2018
Restructuring and Related Activities [Abstract]  
RESTRUCTURING COSTS AND OTHER EXPENSE
RESTRUCTURING COSTS 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 during 2018:
 
 
 
Severance and Other Employee Related Costs
 
Facility Realignment and Other Costs
 
Total
Accrual balance at December 31, 2017
$
113,474

 
$
9,626

 
$
123,100

Restructuring charges
1,818

 
(497
)
 
1,321

Payments and other
(38,469
)
 
(4,475
)
 
(42,944
)
Accrual balance at March 31, 2018
$
76,823

 
$
4,654

 
$
81,477


The Company recorded restructuring charges of $76,751 for the three months ended March 31, 2017 relating to the 2016 Restructuring Plan.
Cumulative costs to date relating to the 2016 Restructuring Plan amounted to $310,294 and $67,526 for our Cablevision segment and Cequel segments, respectively.
Transaction Costs
The Company incurred transaction costs of $2,266 for the three months ended March 31, 2018 relating to the Distribution discussed in Note 1 and $178 for the three months ended March 31, 2017 related to the acquisition of a business.
v3.8.0.1
INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS
INTANGIBLE ASSETS
The following table summarizes information relating to the Company's acquired amortizable intangible assets: 
 
March 31, 2018
 
December 31, 2017
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated Useful Lives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
5,970,884

 
$
(1,603,142
)
 
$
4,367,742

 
$
5,970,884

 
$
(1,409,021
)
 
$
4,561,863

 
8 to 18 years
Trade names
1,067,083

 
(624,276
)
 
442,807

 
1,067,083

 
(588,574
)
 
478,509

 
2 to 5 years
Other amortizable intangibles
37,060

 
(12,972
)
 
24,088

 
37,060

 
(10,978
)
 
26,082

 
1 to 15 years
 
$
7,075,027

 
$
(2,240,390
)
 
$
4,834,637

 
$
7,075,027

 
$
(2,008,573
)
 
$
5,066,454

 
 
Amortization expense for the three months ended March 31, 2018 and 2017 aggregated $231,817, and $238,019, respectively.
The following table summarizes information relating to the Company's acquired indefinite-lived intangible assets:
 
March 31, 2018
 
December 31, 2017
 
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
5,866,108

 
2,153,741

 
8,019,849

 
5,866,120

 
2,153,741

 
8,019,861

Total
$
13,979,683

 
$
7,060,247

 
$
21,039,930

 
$
13,979,695

 
$
7,060,247

 
$
21,039,942


The carrying amount of goodwill is presented below:
Gross goodwill as of December 31, 2017, as reported
$
7,996,760

ATS goodwill included in Cablevision segment (See Note 3 for further details)
23,101

Gross goodwill as of December 31, 2017, as adjusted
8,019,861

Adjustment to purchase accounting relating to business acquired in fourth quarter of 2017
(12
)
Net goodwill as of March 31, 2018
$
8,019,849

v3.8.0.1
DEBT
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
DEBT
DEBT
The following table provides details of the Company's outstanding credit facility debt:
 
 
 
 
 
March 31, 2018
 
December 31, 2017
 
Maturity Date
 
Interest Rate
 
Principal Amount
 
Carrying Amount (a)
 
Principal Amount
 
Carrying Amount (a)
CSC Holdings Restricted Group:
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility (b)
$20,000 on October 9, 2020, remaining balance on November 30, 2021
 
—%
 
$

 
$

 
$
450,000

 
$
425,488

Term Loan Facility
July 17, 2025
 
4.04%
 
2,977,500

 
2,960,859

 
2,985,000

 
2,967,818

Incremental Term Loan Facility
January 25, 2026
 
4.28%
 
1,500,000

 
1,481,825

 

 

Cequel:
 
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility (c)
$65,000 on November 30, 2021, and remaining balance on April 5, 2023
 
 

 

 

 

Term Loan Facility
July 28, 2025
 
4.13%
 
1,255,513

 
1,247,318

 
1,258,675

 
1,250,217

 
 
 
 
 
$
5,733,013

 
5,690,002

 
$
4,693,675

 
4,643,523

Less: Current portion
 
 
 
53,900

 
 
 
42,650

Long-term debt
 
 
 
$
5,636,102

 
 
 
$
4,600,873


(a)
The carrying amount is net of the unamortized deferred financing costs and/or discounts/premiums.
(b)
At March 31, 2018, $115,973 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $2,184,027 of the facility was undrawn and available, subject to covenant limitations.
(c)
At March 31, 2018, $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.
In January 2018, CSC Holdings borrowed $150,000 under its revolving credit facility and entered into a new $1,500,000 incremental term loan facility (the "Incremental Term Loan") under its existing CVC Credit Facilities Agreement. The Incremental Term Loan was priced at 99.5% and will mature on January 25, 2026. The Incremental Term Loan is comprised of eurodollar borrowings or alternate base rate borrowings, and bears 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 (i) with respect to any alternate base rate loan, 1.50% per annum and (ii) with respect to any eurodollar loan, 2.50% per annum.
The Company made a voluntary repayment of $600,000 under the CSC Holdings revolving credit facility in January 2018.
On March 22, 2018, Altice US Finance I Corporation, an indirect wholly-owned subsidiary of the Company, entered into a Fourth Amendment to Cequel Credit Agreement (Extension Amendment), by and among the borrower, the Revolving Consent Lenders (as defined in the Fourth Amendment) and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (the “Fourth Amendment”).  The Fourth Amendment amends and supplements the Borrower’s credit agreement, dated as of June 12, 2015, as amended by the first amendment (refinancing amendment), dated as of October 25, 2016, the second amendment (extension amendment), dated as of December 9, 2016, and the third amendment (incremental loan assumption agreement and refinancing amendment), dated as of March 15, 2017, (as so amended and as may be further amended, restated, modified or supplemented from time to time and as further amended by the Fourth Amendment among, inter alios, the borrower, the lenders party thereto and the administrative agent.
The Fourth Amendment extends the maturity date of the revolving loans and/or commitments of the Revolving Consent Lenders to April 5, 2023. The Fourth Amendment and the extended maturity date will not apply to the revolving loans and/or commitments of revolving lenders under the Cequel Credit Agreement that are not Revolving Consent Lenders.
As of March 31, 2018, the Company was in compliance with all of its financial covenants under the CSC Holdings Credit Facilities Agreement and the Cequel Credit Facilities Agreement.
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:
 
 
 
 
 
 
 
 
March 31, 2018
 
December 31, 2017
Date Issued
 
Maturity Date
 
Interest Rate
 
 
 
Principal Amount
 
Carrying Amount (a)
 
Principal Amount
 
Carrying Amount (a)
CSC Holdings Senior Notes:
 
 
 
 
 
 
 
 
 
February 6, 1998
 
February 15, 2018
 
7.875
%
(b)
(f)
(o)
$

 
$

 
$
300,000

 
$
301,184

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

 
504,213

 
500,000

 
507,744

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

 
537,930

 
526,000

 
541,165

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

 
962,332

 
1,000,000

 
960,146

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

 
663,291

 
750,000

 
660,601

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

 
1,778,745

 
1,800,000

 
1,777,914

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

 
1,661,516

 
1,684,221

 
1,661,135

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

 
987,037

 
1,000,000

 
986,717

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

 
1,304,581

 
1,310,000

 
1,304,468

January 29, 2018
 
February 1, 2028
 
5.375
%
(n)
 
 
1,000,000

 
991,665

 

 

Cablevision Senior Notes (k):
 
 
 
 
 
 
 
 
 
April 15, 2010
 
April 15, 2018
 
7.750
%
(c)
(f)
(o)

 

 
750,000

 
754,035

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

 
492,795

 
500,000

 
492,009

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

 
575,348

 
649,024

 
572,071

Cequel and Cequel Capital Senior Notes (l):
 
 
 
 
 
 
 
 
 
Oct. 25, 2012 Dec. 28, 2012
 
September 15, 2020
 
6.375
%
(d)
(m)
 
1,050,000

 
1,029,364

 
1,050,000

 
1,027,493

May 16, 2013 Sept. 9, 2014
 
December 15, 2021
 
5.125
%
(d)
 
 
1,250,000

 
1,144,929

 
1,250,000

 
1,138,870

June 12, 2015
 
July 15, 2025
 
7.750
%
(i)
 
 
620,000

 
604,755

 
620,000

 
604,374

Altice US Finance I Corporation Senior Secured Notes (l):
 
 
 
 
 
 
 
June 12, 2015
 
July 15, 2023
 
5.375
%
(h)
 
 
1,100,000

 
1,083,159

 
1,100,000

 
1,082,482

April 26, 2016
 
May 15, 2026
 
5.500
%
(j)
 
 
1,500,000

 
1,488,306

 
1,500,000

 
1,488,024

 
 
 
 
 
 
 
 
$
16,239,245

 
15,809,966

 
$
16,289,245

 
15,860,432

Less: current portion
 
 
1,042,143

 
 
 
507,744

Long-term debt
 
 
$
14,767,823

 
 
 
$
15,352,688

 
(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)
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.
(l)
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.
(m)
These notes were repaid in April 2018 with the proceeds from the issuance of new senior notes (see Note 17).
(n)
The 2028 Guaranteed Notes are redeemable at any time on or after February 1, 2023 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any.  In addition, up to 40% of the original aggregate principal amount of the notes may be redeemed using the proceeds of certain equity offerings before February 1, 2021, at a redemption price equal to 105.375%, plus accrued and unpaid interest.
(o)
These notes were repaid in February 2018 with the proceeds from the 2028 Guaranteed Notes (defined below) and with the proceeds from the Incremental Term Loan.
In January 2018, CSC Holdings issued $1,000,000 aggregate principal amount of 5.375% senior guaranteed notes due February 1, 2028 (the "2028 Guaranteed Notes"). The 2028 Guaranteed Notes are senior unsecured obligations and rank pari passu in right of payment with all of the existing and future senior indebtedness, including the existing senior notes and the CVC Credit Facilities and rank senior in right of payment to all of existing and future subordinated indebtedness.
The proceeds from the 2028 Guaranteed Notes, together with proceeds from the Incremental Term Loan (discussed above), borrowings under the CVC revolving credit facility and cash on hand, were used in February 2018 to repay $300,000 principal amount of CSC Holdings' senior notes due in February 2018 and $750,000 principal amount of Cablevision senior notes due in April 2018 and will be used to fund a dividend of $1,500,000 to the Company's stockholders immediately prior to and in connection with the Distribution discussed in Note 1.
The indentures under which the senior notes and debentures were issued contain various covenants.  The Company was in compliance with all of its financial covenants under these indentures as of March 31, 2018.
Notes Payable to Affiliates and Related Parties
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 matured on December 20, 2023 and $875,000 bore interest at 11% and matured on December 20, 2024.
In connection with the Company's IPO in June 2017, the Company converted the notes payable to affiliates and related parties (together with accrued and unpaid interest of $529 and applicable premium of $513,723) into shares of the Company’s common stock at the IPO price. The premium was recorded as a loss on extinguishment of debt on the Company's statement of operations in the second quarter of 2017. In connection with the conversion of the notes, the Company recorded a credit to paid in capital of $2,264,252 in the second quarter of 2017.
For the three months ended March 31, 2017, the Company recognized $47,588 of interest expense related to these notes prior to their conversion.
Summary of Debt Maturities
The future maturities of debt payable by the Company under its various debt obligations outstanding as of March 31, 2018, including notes payable, collateralized indebtedness (see Note 10), and capital leases, are as follows:
Years Ending December 31,
Cablevision
 
Cequel
 
Total
2018
$
581,298

 
$
14,193

 
$
595,491

2019
579,587

 
32,563

 
612,150

2020
547,517

 
1,062,715

 
1,610,232

2021
2,506,407

 
1,262,725

 
3,769,132

2022
695,806

 
12,730

 
708,536

Thereafter
11,812,663

 
4,416,240

 
16,228,903

v3.8.0.1
DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS
DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS
Prepaid Forward Contracts
The Company has entered into various transactions to limit the exposure against equity price risk on its shares of Comcast Corporation ("Comcast") common stock.  The Company has monetized all of its stock holdings in Comcast through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock.  At maturity, the contracts provide for the option to deliver cash or shares of Comcast stock with a value determined by reference to the applicable stock price at maturity.  These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing the Company to retain upside appreciation from the hedge price per share to the relevant cap price.  
The Company received cash proceeds upon execution of the prepaid forward contracts discussed above which has been reflected as collateralized indebtedness in the accompanying condensed consolidated balance sheets.  In addition, the Company separately accounts for the equity derivative component of the prepaid forward contracts.  These equity derivatives have not been designated as hedges for accounting purposes.  Therefore, the net fair values of the equity derivatives have been reflected in the accompanying condensed consolidated balance sheets as an asset or liability and the net increases or decreases in the fair value of the equity derivative component of the prepaid forward contracts are included in gain (loss) on derivative contracts in the accompanying condensed consolidated statements of operations.
All of the Company's monetization transactions are obligations of its wholly-owned subsidiaries that are not part of the Restricted Group; however, CSC Holdings has provided guarantees of the subsidiaries' ongoing contract payment expense obligations and potential payments that could be due as a result of an early termination event (as defined in the agreements).  If any one of these contracts were terminated prior to its scheduled maturity date, the Company would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date.  As of March 31, 2018, the Company did not have an early termination shortfall relating to any of these contracts.
The Company monitors the financial institutions that are counterparties to its equity derivative contracts.  All of the counterparties to such transactions carry investment grade credit ratings as of March 31, 2018.
Interest Rate Swap Contracts
In June 2016, the Company entered into two fixed to floating interest rate swap contracts. One fixed to floating interest rate swap is converting $750,000 from a fixed rate of 1.6655% to six-month LIBO rate and a second tranche of $750,000 from a fixed rate of 1.68% to six-month LIBO rate. The objective of these swaps is to cover the exposure of the 2026 Senior Secured Notes issued by Cequel to changes in the market interest rate. These swap contracts were not designated as hedges for accounting purposes. Accordingly, the changes in the fair value of these interest rate swap contracts are recorded through the statements of operations.
The Company does not hold or issue derivative instruments for trading or speculative purposes.
The following represents the location of the assets and liabilities associated with the Company's derivative instruments within the condensed consolidated balance sheets:
 
 
 
 
Asset Derivatives
 
Liability Derivatives
Derivatives Not Designated as Hedging Instruments
 
Balance Sheet
Location
 
Fair Value at March 31, 2018
 
Fair Value at December 31, 2017
 
Fair Value at March 31, 2018
 
Fair Value at December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Prepaid forward contracts
 
Derivative contracts, current
 
$
9,211

 
$
52,545

 
$
(9,211
)
 
$
(52,545
)
Prepaid forward contracts
 
Derivative contracts, long-term
 
63,343

 

 
(4,495
)
 
(109,504
)
Interest rate swap contracts
 
Liabilities under derivative contracts, long-term
 

 

 
(109,824
)
 
(77,902
)
 
 
 
 
$
72,554

 
$
52,545

 
$
(123,530
)
 
$
(239,951
)

Gain (loss) related to the Company's derivative contracts related to the Comcast common stock for the three months ended March 31, 2018 and 2017 of $168,352 and $(71,044), respectively, are reflected in gain (loss) on derivative contracts, net in the Company's condensed consolidated statement of operations.
For the three months ended March 31, 2018 and 2017, the Company recorded a gain (loss) on investments of $(252,576) and $131,658, respectively, primarily representing the net increase (decrease) in the fair values of the investment securities pledged as collateral. 
For the three months ended March 31, 2018 and 2017, the Company recorded a gain (loss) on interest rate swap contracts of $(31,922) and $2,342, respectively.
v3.8.0.1
FAIR VALUE MEASUREMENT
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable.  Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions.  The fair value hierarchy consists of the following three levels:
Level I - Quoted prices for identical instruments in active markets.
Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level III - Instruments whose significant value drivers are unobservable.
The following table presents for each of these hierarchy levels, the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis:
 
Fair Value
Hierarchy
 
March 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
 
Money market funds
Level I
 
$
1,121,432

 
$
5,949

Investment securities pledged as collateral
Level I
 
1,467,781

 
1,720,357

Prepaid forward contracts
Level II
 
72,554

 
52,545

Liabilities:
 
 
 
 
 
Prepaid forward contracts
Level II
 
13,706

 
162,049

Interest rate swap contracts
Level II
 
109,824

 
77,902

Contingent consideration related to 2017 acquisitions
Level III
 
3,233

 
32,233


The Company's cash equivalents, investment securities and investment securities pledged as collateral are classified within Level I of the fair value hierarchy because they are valued using quoted market prices.
The Company's derivative contracts and liabilities under derivative contracts on the Company's balance sheets are valued using market-based inputs to valuation models.  These valuation models require a variety of inputs, including contractual terms, market prices, yield curves, and measures of volatility.  When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit risk considerations.  Such adjustments are generally based on available market evidence.  Since model inputs can generally be verified and do not involve significant management judgment, the Company has concluded that these instruments should be classified within Level II of the fair value hierarchy.
The fair value of the contingent consideration as of March 31, 2018 related to acquisitions in the first quarter and fourth quarters of 2017 of approximately $1,000 and $2,233, respectively. The estimated amount recorded as of March 31, 2018 is the remaining unpaid contractual amount for the first quarter 2017 acquisition and approximately 51% of the contractual amount for the fourth quarter 2017 acquisition. The fair value of the consideration was estimated based on a probability assessment of attaining the targets as of March 31, 2018.
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate fair value of each class of financial instruments for which it is practicable to estimate:
Credit Facility Debt, Collateralized Indebtedness, Senior Notes and Debentures, Senior Secured Notes, Senior Guaranteed Notes, and Notes Payable
The fair values of each of the Company's debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities. The fair value of notes payable is based primarily on the present value of the remaining payments discounted at the borrowing cost.
The carrying values, estimated fair values, and classification under the fair value hierarchy of the Company's financial instruments, excluding those that are carried at fair value in the accompanying condensed consolidated balance sheets, are summarized as follows:
 
 
 
March 31, 2018
 
December 31, 2017
 
Fair Value
Hierarchy
 
Carrying
Amount (a)
 
Estimated
Fair Value
 
Carrying
Amount (a)
 
Estimated
Fair Value
CSC Holdings debt instruments: