ALTICE USA, INC., 10-Q filed on 11/7/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2018
Nov. 02, 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 Q3  
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2018  
Entity Common Stock, Shares Outstanding   715,100,411
v3.10.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Current Assets:    
Cash and cash equivalents $ 486,208 $ 329,848
Restricted cash 253 252
Accounts receivable, trade (less allowance for doubtful accounts of $13,259 and $13,420) 436,550 370,765
Prepaid expenses and other current assets 167,836 130,425
Amounts due from affiliates 18,387 19,764
Derivative contracts 3,269 52,545
Total current assets 1,112,503 903,599
Property, plant and equipment, net of accumulated depreciation of $3,708,770 and $2,599,579 5,760,479 6,023,826
Investment securities pledged as collateral 1,521,045 1,720,357
Derivative contracts 31,510 0
Other assets 97,537 57,904
Amortizable intangible assets, net of accumulated amortization 4,400,996 5,066,454
Indefinite-lived cable television franchises 13,020,081 13,020,081
Goodwill 8,012,416 8,019,861
Total assets 33,956,567 34,812,082
Current Liabilities:    
Accounts payable 883,408 795,128
Interest 321,327 397,422
Employee related costs 123,387 147,727
Other accrued expenses 329,122 411,988
Amounts due to affiliates 23,424 10,998
Deferred revenue 131,133 111,197
Liabilities under derivative contracts 0 52,545
Credit facility debt 57,650 42,650
Senior notes and debentures 531,206 507,744
Capital lease obligations 4,147 9,539
Notes payable 71,873 33,424
Total current liabilities 2,476,677 2,520,362
Defined benefit plan obligations 84,755 103,163
Other liabilities 169,473 144,289
Deferred tax liability 4,809,745 4,769,286
Liabilities under derivative contracts 153,850 187,406
Collateralized indebtedness 1,400,398 1,349,474
Credit facility debt 6,163,843 4,600,873
Senior notes and debentures 14,824,532 15,352,688
Capital lease obligations 17,304 12,441
Notes payable 5,218 32,478
Deficit investment in affiliates 0 3,579
Total liabilities 30,105,795 29,076,039
Commitments and contingencies (Note 15)
Redeemable equity 179,799 231,290
Stockholders' Equity:    
Preferred Stock, $.01 par value, 100,000,000 shares authorized, no shares issued and outstanding 0 0
Paid-in capital 3,618,709 4,665,229
Retained earnings 38,744 840,636
Total stockholders' equity before accumulated other comprehensive Income and non-controlling interest 3,664,691 5,513,236
Accumulated other comprehensive loss (2,291) (10,022)
Total stockholders' equity 3,662,400 5,503,214
Noncontrolling interest 8,573 1,539
Total stockholders' equity 3,670,973 5,504,753
Total liabilities and stockholders' equity 33,956,567 34,812,082
Common Class A    
Stockholders' Equity:    
Common stock 5,107 2,470
Common Class B [Member]    
Stockholders' Equity:    
Common stock 2,131 4,901
Common Class C    
Stockholders' Equity:    
Common stock 0 0
Customer relationships    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization 3,991,289 4,561,863
Trade names    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization 388,835 478,509
Amortizable intangible assets    
Current Assets:    
Amortizable intangible assets, net of accumulated amortization $ 20,872 $ 26,082
v3.10.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2018
Dec. 31, 2017
Current Assets:    
Accounts receivable, trade allowance for doubtful accounts $ 13,259 $ 13,420
Property, plant and equipment, accumulated depreciation 3,393,628 2,599,579
Amortizable intangible assets, accumulated amortization $ 2,674,615 $ 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) 510,702,726 246,982,292
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest 510,702,726  
Common Class B [Member]    
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
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest 213,146,331 490,086,674
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
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest 0 0
Customer relationships    
Current Assets:    
Amortizable intangible assets, accumulated amortization $ 1,979,595 $ 1,409,021
Trade names    
Current Assets:    
Amortizable intangible assets, accumulated amortization 678,248 588,574
Amortizable intangible assets    
Current Assets:    
Amortizable intangible assets, accumulated amortization $ 16,772 $ 10,978
v3.10.0.1
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]        
Revenue (including revenue from affiliates of $545, $426, $1,397 and $820, respectively) (See Note 14) $ 2,417,801 $ 2,322,521 $ 7,111,668 $ 6,947,142
Operating expenses:        
Programming and other direct costs (including charges from affiliates of $1,671, $1,196, $6,690 and $3,026, respectively) (See Note 14) 790,533 755,101 2,373,021 2,272,147
Other operating expenses (including charges from affiliates of $905, $8,302, $15,154 and $24,266, respectively) (See Note 14) 569,070 570,111 1,727,842 1,769,477
Restructuring and other expense 16,587 53,448 29,865 142,765
Depreciation and amortization (including impairments) 536,053 823,286 1,827,285 2,138,800
Total operating expenses 1,912,243 2,201,946 5,958,013 6,323,189
Operating income 505,558 120,575 1,153,655 623,953
Other income (expense):        
Interest expense (including $90,405 related to affiliates and related parties in 2017) (See Note 9) (389,594) (379,066) (1,157,395) (1,232,730)
Interest income 1,427 961 9,843 1,373
Gain (loss) on investments and sale of affiliate interests, net 111,684 (18,900) (182,031) 169,888
Gain (loss) on investments and sale of affiliate interests, net (111,684)   199,312  
Gain (loss) on derivative contracts, net (79,628) (16,763) 130,883 (154,270)
Gain (loss) on interest rate swap contracts (19,554) 1,051 (64,405) 12,539
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 9) 0 (38,858) (41,616) (600,240)
Other expense, net (186) (2,984) (12,473) (9,019)
Total other income (expense) (375,851) (454,559) (1,317,194) (1,812,459)
Income (loss) before income taxes 129,707 (333,984) (163,539) (1,188,506)
Income tax benefit (expense) (95,968) 141,550 (29,675) 439,945
Net income (loss) 33,739 (192,434) (193,214) (748,561)
Net income attributable to noncontrolling interests     (1,039) (737)
Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest (1,186) (135) (1,039) (737)
Net income (loss) attributable to Altice USA, Inc. stockholders $ 32,553 $ (192,569) $ (194,253) $ (749,298)
Earnings Per Share, Basic $ 0.04 $ (0.26) $ (0.26) $ (1.10)
Weighted Average Number of Shares Outstanding, Basic 732,963 737,069 735,685 682,234
Earnings Per Share, Diluted $ 0.04 $ (0.26) $ (0.26) $ (1.10)
Weighted Average Number of Shares Outstanding, Diluted 732,963 737,069 735,685 682,234
v3.10.0.1
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Statement [Abstract]        
Revenue from affiliates $ 545 $ 426 $ 1,397 $ 820
Programming and other direct costs from affiliates 1,671 1,196 6,690 3,026
Other operating expenses, net 905 8,302 15,154 24,266
Interest expense to related parties and affiliates 0 0 0 (90,405)
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 9) 0 (38,858) (41,616) (600,240)
Related Party Transaction, Loss on Extinguishment of Debt of Deferred Financing Costs $ 0 $ 0 $ 0 $ 513,723
v3.10.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]        
Net loss $ 33,739 $ (192,434) $ (193,214) $ (748,561)
Defined benefit pension plans:        
Unrecognized actuarial gain (loss) 9,602 (4,056) 13,794 (8,389)
Applicable income taxes 2,592 (1,622) 3,723 (3,356)
Unrecognized gain (loss) arising during period, net of income taxes 7,010 (2,434) 10,071 (5,033)
Settlement loss included in other expense, net 65 1,014 929 1,403
Applicable income taxes (18) (406) (252) (561)
Settlement loss included in other expense, net, net of income taxes 47 608 677 842
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss), before Reclassification and Tax 437 0 1,351 0
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax (27) 0 (365) 0
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax 410 0 986 0
Other comprehensive gain (loss) 7,467 (1,826) 11,734 (6,108)
Comprehensive income (loss) 41,206 (194,260) (181,480) (754,669)
Comprehensive income attributable to noncontrolling interests (1,186) (135) (1,039) (737)
Comprehensive income (loss) attributable to Altice USA, Inc. stockholders 40,020 (194,395) (182,519) (755,406)
Customer Relationships [Member]        
Defined benefit pension plans:        
Settlement loss included in other expense, net 0 0 0 (3,195)
Applicable income taxes 0 0 0 1,278
Settlement loss included in other expense, net, net of income taxes $ 0 $ 0 $ 0 $ (1,917)
v3.10.0.1
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2018 - USD ($)
$ in Thousands
Total
Total Stockholders' Equity
Paid-in Capital
Retained Earnings
Accumulated Other Comprehensive Loss
Non-controlling Interest
Common Class A
Common Stock
Common Class B [Member]
Common Stock
ATS Acquisition
ATS Acquisition
Total Stockholders' Equity
ATS Acquisition
Paid-in Capital
ATS Acquisition
Retained Earnings
Dividends $ (1,499,935) $ (1,499,935) $ (963,711) $ (536,224)                
Payments for Repurchase of Common Stock 240,799 240,799 240,666 0 $ 0 $ 0 $ (133) $ 0        
Acquisitionofi24 14,369 14,369 (61,049) (73,578) (1,840)              
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 (194,253) (194,253)   (194,253)                
Net loss attributable to noncontrolling interests 1,039         1,039            
Proceeds from (Payments to) Noncontrolling Interests 5,995         5,995            
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss) Due to Settlements, Net of Tax 10,748                      
Pension liability adjustments, net of income taxes 11,734                      
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax 986                      
Share-based compensation expense 46,176 46,176 46,176                  
Redeemable equity vested (72,924) (72,924) (72,924)                  
Other changes to equity (859) (859) (859) 0                
Adoption of ASU No. 2018-02       2,163 (2,163)              
Ending balance at Sep. 30, 2018 3,670,973 3,662,400 3,618,709 $ 38,744 $ (2,291) $ 8,573 5,107 2,131        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Class B Shares Exchanged fro Class A 0           $ 2,770 $ (2,770)        
Redeemable Equity Vested $ 124,415 $ 124,415 $ 124,415                  
v3.10.0.1
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Cash flows from operating activities:    
Net loss $ (193,214) $ (748,561)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Depreciation and amortization (including impairments) 1,827,285 2,138,800
Equity in net loss of affiliates 10,849 5,697
Loss (gain) on investments and sale of affiliate interests, net 182,031 (169,888)
Loss (gain) on derivative contracts, net (130,883) 154,270
Loss on extinguishment of debt and write-off of deferred financing costs 41,616 600,240
Amortization of deferred financing costs and discounts (premiums) on indebtedness 60,526 18,517
Settlement loss included in other expense, net 929 1,403
Share-based compensation expense 46,176 40,932
Deferred income taxes 14,399 (470,841)
Provision for doubtful accounts 50,643 54,501
Change in assets and liabilities, net of effects of acquisitions and dispositions:    
Accounts receivable, trade (111,446) (45,493)
Other receivables (138) (5,520)
Prepaid expenses and other assets (41,890) (816)
Amounts due from and due to affiliates 7,203 (40,355)
Accounts payable 85,497 53,433
Accrued liabilities (198,196) (303,717)
Deferred revenue 56,326 9,382
Liabilities related to interest rate swap contracts 62,549 (9,552)
Net cash provided by operating activities 1,770,262 1,282,432
Cash flows from investing activities:    
Capital expenditures (832,824) (718,919)
Payments for acquisitions, net of cash acquired (10,753) (43,608)
Sale of affiliate interests (3,537) 0
Payments for Derivative Instrument, Investing Activities 0 (24,039)
Proceeds related to sale of equipment, including costs of disposal 7,802 3,398
Increase in other investments (2,500) (4,800)
Additions to other intangible assets (584) (1,700)
Net cash used in investing activities (842,396) (789,668)
Cash flows from financing activities:    
Proceeds from credit facility debt, net of discounts 2,217,500 5,602,425
Repayment of credit facility debt (635,738) (3,684,668)
Issuance of senior notes and debentures 2,050,000 0
Redemption of senior notes, including premiums and fees (2,623,756) (1,729,400)
Proceeds from collateralized indebtedness, net 516,513 662,724
Net Cash Receipt Payment on Collateralized Indebtedness Settlement (516,513) (654,989)
Payments of Dividends (1,499,935) (919,317)
Proceeds from notes payable 15,955 24,649
Repayments of Notes Payable (14,089)  
Principal payments on capital lease obligations (8,581) (11,518)
Cash Payments for the Repurchase of Common Shares (226,803) 0
Additions to deferred financing costs (21,570) (9,486)
Other (859) 0
Payment for Contingent Consideration Liability, Financing Activities (30,000) 0
Proceeds from Partnership Contribution 5,995  
Proceeds from Contributed Capital   50,800
Proceeds from Issuance Initial Public Offering 0 348,460
Net cash used in financing activities (771,881) (320,320)
Net increase in cash and cash equivalents 155,985 172,444
Effect of Exchange Rate on Cash and Cash Equivalents 376 0
Cash and Cash Equivalents, Period Increase (Decrease) 156,361 172,444
Cash, cash equivalents and restricted cash at beginning of year 330,100 503,093
Cash, cash equivalents and restricted cash at end of period 486,461 $ 675,537
Non-controlling Interest    
Cash flows from financing activities:    
Proceeds from Partnership Contribution $ 5,995  
v3.10.0.1
DESCRIPTION OF BUSINESS AND RELATED MATTERS
9 Months Ended
Sep. 30, 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. Prior to the Altice N.V. distribution discussed below, Altice USA was majority-owned by Altice N.V., a public company with limited liability (naamloze vennootshcap) under Dutch law. Since the completion of the Altice N.V. distribution discussed below, the Company is no longer majority-owned by Altice N.V. Altice N.V. changed its name to Altice Europe N.V. ("Altice Europe") upon completion of the distribution.
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 (the "Cequel Acquisition") 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 "Cablevision Acquisition").
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 and the i24 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 and nine months ended September 30, 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. 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 was 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 and on the Company's statement of operations for the three and nine months ended September 30, 2017.
Acquisition of i24NEWS
In April 2018, Altice N.V. transferred its ownership of i24 US and i24 Europe ("i24NEWS"), Altice N.V.'s 24/7 international news and current affairs channels to the Company for minimal consideration (the "i24 Acquisition"). As the acquisition was a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of i24NEWS as of April 1, 2018. Operating results for periods prior to April 1, 2018 and the balance sheet as of December 31, 2017 have not been revised to reflect the i24 Acquisition as the impact was deemed immaterial.
Altice N.V. Distribution
On June 8, 2018, Altice N.V. distributed 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”). The Distribution took place by way of a special distribution in kind by Altice N.V. of its 67.2% interest in the Company to Altice N.V. shareholders. Each shareholder of Altice N.V. on May 23, 2018, the Distribution record date, received 0.4163 shares of the Company's common stock for every share held by such shareholder in Altice N.V. Between May 24, 2018 and June 4, 2018, each Altice N.V. shareholder was given the opportunity to elect the percentage of shares of the Company's Class A common stock and shares of the Company's Class B common stock such shareholder would receive in the Distribution, whereby the number of shares of the Company's Class B common stock to be distributed was subject to a cap of 50% of the total shares of the Company's common stock being distributed (the “Class B Cap”). Because the Class B Cap had been exceeded, the shares of the Company's Class B common stock delivered to Altice N.V.’s shareholders of record who elected to receive them were subject to proration, and such shareholders received shares of the Company's Class A common stock.
Immediately following the Distribution, there were 489,384,523 shares of Altice USA Class A common stock and 247,684,443 shares of Altice USA Class B common stock outstanding.
Prior to Altice N.V.'s announcement of the Distribution, the Board of Directors of Altice USA, acting through its independent directors, approved the payment of a $2.035 dividend to all shareholders of record on May 22, 2018. The payment of the dividend, aggregating $1,499,935, was made on June 6, 2018, and was funded with cash at CSC Holdings LLC, a wholly-owned subsidiary of Cablevision, from financings completed in January 2018, and cash generated from operations at Cequel. In connection with the payment of the dividend, the Company recorded a decrease in retained earnings of $536,224, representing the cumulative earnings through the payment date, and a decrease in paid in capital of $963,711.
In connection with the Distribution, the Management Advisory and Consulting Services Agreement with Altice N.V. which provided certain consulting, advisory and other services was terminated. Compensation under the terms of the agreement was an annual fee of $30,000 paid by the Company.
In addition, the Board of Directors of Altice USA also authorized a share repurchase program of $2.0 billion, effective June 8, 2018. Under the repurchase program, shares of Altice USA Class A common stock may be purchased from time to time in the open market and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934.  Size and timing of these purchases will be determined based on market conditions and other factors.  
From inception through September 30, 2018, the Company repurchased an aggregate of 13,219,909 shares for a total purchase price of approximately $240,799.  These acquired shares were retired and the cost for these shares was recorded in paid in capital in the Company's condensed consolidated balance sheet.  As of September 30, 2018, the Company had approximately $1,759,201 of availability remaining under its stock repurchase program and had 723,849,057 combined Class A and Class B shares outstanding.
v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 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 and the Company's financial statements and notes thereto included on Form 8-K filed on May 21, 2018.
The financial statements presented in this report are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.
The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 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 it 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 and nine months ended September 30, 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 it had no impact to the Company's condensed consolidated financial statements.
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 November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the statement of cash flows disclose the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU No. 2016-18 provides specific guidance on the presentation of restricted cash in the statement of cash flows. ASU No. 2016-18 was adopted by the Company on January 1, 2018 and was applied retrospectively for all periods presented.
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 it 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 it 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 (See Note 3).
Recently Issued But Not Yet Adopted Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to clarify certain disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 becomes effective for the Company on January 1, 2022, although early adoption is permitted. The Company does not expect the adoption of ASU 2017-14 to have a material impact on its consolidated financial statements.
Also in August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service Contract, which requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU No. 2018-14 becomes effective for the Company on January 1, 2020, although early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU No. 2018-15 will have on its consolidated financial statements.
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. Although the Company has not yet completed its evaluation of the guidance, or quantified its impact, the Company believes the most significant impact will be the recognition of right of use assets and liabilities on its consolidated balance sheet. The Company expects its lease obligations designated as operating leases will be reported on the consolidated balance sheets upon adoption. The Company is also evaluating other potential lease arrangements of the business, including arrangements that have been previously disclosed as a contractual commitment. The Company is currently in the process of collecting and validating lease data and implementing a software solution. In addition, the Company is assessing practical expedients and policy elections offered by the standard, and is evaluating its processes and internal controls to meet the accounting, reporting and disclosure requirements.
Reclassifications
Certain reclassifications have been made to the 2017 financial statements to conform to the 2018 presentation.
v3.10.0.1
CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION
9 Months Ended
Sep. 30, 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 and nine months ended September 30, 2017, costs of $4,094 and $13,490, respectively 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 following table summarizes the impact of adopting ASC 606 and ASU No. 2017-07 and the impact of the ATS Acquisition on the Company's condensed consolidated statements of operations:
 
Three Months Ended September 30, 2017
 
As Reported
 
Impact of ASC 606
 
Impact of ASU No. 2017-07
 
Impact of ATS Acquisition
 
As Adjusted
Residential:
 
 
 
 
 
 
 
 
 
Pay TV
$
1,054,392

 
$
15,807

 
$

 
$
(253
)
 
$
1,069,946

Broadband
646,094

 
12,372

 

 
(188
)
 
658,278

Telephony
204,753

 
(32,155
)
 

 
(119
)
 
172,479

Business services and wholesale
324,760

 
(118
)
 

 

 
324,642

Advertising
89,292

 

 

 

 
89,292

Other
7,884

 

 

 

 
7,884

Total revenue
2,327,175

 
(4,094
)
 

 
(560
)
 
2,322,521

 
 
 
 
 

 
 
 

Programming and other direct costs
755,101

 

 

 

 
755,101

Other operating expenses
560,497

 
(4,094
)
 
(2,921
)
 
16,629

 
570,111

Restructuring and other expense
53,448

 

 

 

 
53,448

Depreciation and amortization
823,265

 

 

 
21

 
823,286

Operating income
134,864

 

 
2,921

 
(17,210
)
 
120,575

Other expense, net
(451,638
)
 

 
(2,921
)
 

 
(454,559
)
Loss before income taxes
(316,774
)
 

 

 
(17,210
)
 
(333,984
)
Income tax benefit
134,688

 

 

 
6,862

 
141,550

Net loss
$
(182,086
)
 
$

 
$

 
$
(10,348
)
 
$
(192,434
)


 
Nine Months Ended September 30, 2017
 
As Reported
 
Impact of ASC 606
 
Impact of ASU No. 2017-07
 
Impact of ATS Acquisition
 
As Adjusted
Residential:
 
 
 
 
 
 
 
 
 
Pay TV
$
3,185,610

 
$
39,630

 
$

 
$
(253
)
 
$
3,224,987

Broadband
1,887,279

 
39,725

 

 
(188
)
 
1,926,816

Telephony
624,077

 
(92,257
)
 

 
(119
)
 
531,701

Business services and wholesale
968,291

 
(588
)
 

 

 
967,703

Advertising
270,154

 

 

 

 
270,154

Other
25,781

 

 

 

 
25,781

Total revenue
6,961,192

 
(13,490
)
 

 
(560
)
 
6,947,142

 
 
 
 
 
 
 
 
 
 
Programming and other direct costs
2,272,147

 

 

 

 
2,272,147

Other operating expenses
1,767,624

 
(13,490
)
 
(9,852
)
 
25,195

 
1,769,477

Restructuring and other expense
142,765

 

 

 

 
142,765

Depreciation and amortization
2,138,776

 

 

 
24

 
2,138,800

Operating income
639,880

 

 
9,852

 
(25,779
)
 
623,953

Other expense, net
(1,802,608
)
 

 
(9,852
)
 
1

 
(1,812,459
)
Loss before income taxes
(1,162,728
)
 

 

 
(25,778
)
 
(1,188,506
)
Income tax benefit
429,664

 

 

 
10,281

 
439,945

Net loss
$
(733,064
)
 
$

 
$

 
$
(15,497
)
 
$
(748,561
)
v3.10.0.1
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
9 Months Ended
Sep. 30, 2018
Earnings Per Share [Abstract]  
NET LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS
NET INCOME (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. For such awards that are performance based, the diluted effect is reflected upon the achievement of the performance criteria. Diluted net loss per common share attributable to Altice USA excludes the effects of common stock equivalents as they are anti-dilutive.
Anti-dilutive shares (options whose exercise price exceeds the average market price of the Company's common stock during the period) totaling approximately 5,841,000 shares, have been excluded from diluted weighted average shares outstanding when calculating diluted net income per share attributable to Altice USA stockholders for the three months ended September 30, 2018. In addition, approximately 73,000 performance based options for the three months ended September 30, 2018, issued pursuant to the Company's employee stock plan have also been excluded from the diluted weighted average shares outstanding as the performance criteria on these awards had not yet been satisfied for the respective period.
The weighted average number of shares used to compute basic and diluted net loss per share for the nine months ended September 30, 2017 reflect the retroactive impact of certain organizational transactions that occurred prior to the Company's IPO.
v3.10.0.1
REVENUE AND CONTRACT ASSETS
9 Months Ended
Sep. 30, 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, home shopping commissions and equipment fees 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 relative 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 and nine months ended September 30, 2018 the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $63,703 and $190,895, respectively. For the three and nine months ended September 30, 2017 the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $64,254 and $194,045, 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:
 
September 30, 2018
 
December 31, 2017,
as adjusted
Contract assets (a)
$
25,806

 
$
24,329

Deferred revenue (b)
173,956

 
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 and wholesale customers generally range from three to five years, and services may only be terminated in accordance with the contractual terms.
v3.10.0.1
SUPPLEMENTAL CASH FLOW INFORMATION
9 Months Ended
Sep. 30, 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:
 
Nine Months Ended September 30,
 
2018
 
2017
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
166,800

 
84,847

Notes payable issued to vendor for the purchase of equipment
49,780

 
25,879

Capital lease obligations
8,162

 

Leasehold improvements paid by landlord
350

 
3,998

Deferred financing costs accrued but unpaid
1,006

 

Contingent consideration for acquisitions
6,733

 
30,000

Receivable related to the sale of an investment
11,954

 

Unsettled purchases of shares of Altice USA, Inc. Class A common stock, pursuant to a share repurchase program
13,996

 

Supplemental Data:
 
 
 
Cash interest paid
1,174,154

 
1,481,363

Income taxes paid, net
12,148

 
26,396

 
The Company’s previously reported statement of cash flows for the three months ended March 31, 2017 reflected distributions to stockholders of $79,617 in cash flows from operating activities. These distributions should have been reflected in cash flows from financing activities.
v3.10.0.1
RESTRUCTURING COSTS AND OTHER EXPENSE
9 Months Ended
Sep. 30, 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 restructuring initiatives that were intended to simplify the Company's organizational structure.
The following table summarizes the activity for these initiatives 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
4,182

 
3,334

 
7,516

Payments and other
(65,692
)
 
(5,853
)
 
(71,545
)
Accrual balance at June 30, 2018
51,964

 
7,107

 
59,071

Restructuring charges
5,841

 
8,826

 
14,667

Payments and other
(24,991
)
 
(2,613
)
 
(27,604
)
Accrual balance at September 30, 2018
$
32,814

 
$
13,320

 
$
46,134


The Company recorded restructuring charges of $52,081 and $141,078 for the three and nine months ended September 30, 2017 relating to these restructuring initiatives.
Cumulative costs to date relating to these initiatives amounted to $327,521 and $71,162 for our Cablevision and Cequel segments, respectively.
Transaction Costs
The Company incurred transaction costs of $1,920 and $7,682 for the three and nine months ended September 30, 2018 relating to the Distribution discussed in Note 1 and $1,367 and $1,687 for the three and nine months ended September 30, 2017 related to the acquisition of a business.
v3.10.0.1
INTANGIBLE ASSETS
9 Months Ended
Sep. 30, 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: 
 
September 30, 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

 
$
(1,979,595
)
 
$
3,991,289

 
$
5,970,884

 
$
(1,409,021
)
 
$
4,561,863

 
8 to 18 years
Trade names
1,067,083

 
(678,248
)
 
388,835

 
1,067,083

 
(588,574
)
 
478,509

 
2 to 5 years
Other amortizable intangibles
37,644

 
(16,772
)
 
20,872

 
37,060

 
(10,978
)
 
26,082

 
1 to 15 years
 
$
7,075,611

 
$
(2,674,615
)
 
$
4,400,996

 
$
7,075,027

 
$
(2,008,573
)
 
$
5,066,454

 
 
Amortization expense for the three and nine months ended September 30, 2018 aggregated $208,172 and $666,041, respectively, and for the three and nine months ended September 30, 2017 aggregated $426,419 and $981,657, respectively.
The following table summarizes information relating to the Company's acquired indefinite-lived intangible assets:
 
September 30, 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
5,873,716

 
2,138,700

 
8,012,416

 
5,866,120

 
2,153,741

 
8,019,861

Total
$
13,987,291

 
$
7,045,206

 
$
21,032,497

 
$
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

Goodwill recorded in Cablevision segment in connection with an acquisition during the third quarter of 2018
7,608

Adjustment to Cablevision segment purchase accounting relating to business acquired in fourth quarter of 2017
(12
)
Reclassification of Cequel segment goodwill to property, plant and equipment
(15,041
)
Net goodwill as of September 30, 2018
$
8,012,416

v3.10.0.1
DEBT
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
DEBT
DEBT
The following table provides details of the Company's outstanding credit facility debt:
 
 
 
 
 
September 30, 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
 
5.40
%
 
$
575,000

 
$
554,908

 
$
450,000

 
$
425,488

Term Loan Facility
July 17, 2025
 
4.41
%
 
2,962,500

 
2,946,318

 
2,985,000

 
2,967,818

Incremental Term Loan Facility
January 25, 2026
 
4.66
%
 
1,496,250

 
1,478,995

 

 

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

 

 

 

Term Loan Facility
July 28, 2025
 
4.49
%
 
1,249,188

 
1,241,272

 
1,258,675

 
1,250,217

 
 
 
 
 
$
6,282,938

 
6,221,493

 
$
4,693,675

 
4,643,523

Less: Current portion
 
 
 
57,650

 
 
 
42,650

Long-term debt
 
 
 
$
6,163,843

 
 
 
$
4,600,873


(a)
The carrying amount is net of the unamortized deferred financing costs and/or discounts/premiums.
(b)
At September 30, 2018, $139,929 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $1,585,071 of the facility was undrawn and available, subject to covenant limitations.
(c)
At September 30, 2018, $7,636 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $342,364 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 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 the 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.
In July 2018, the Company borrowed $575,000 under the CSC Holdings revolving credit facility agreement and used a portion of the proceeds to repay the $500,000 principal amount of senior notes due July 15, 2018.
As of September 30, 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:
 
 
 
 
 
 
 
 
September 30, 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)
(q)

 

 
500,000

 
507,744

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

 
531,206

 
526,000

 
541,165

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

 
966,913

 
1,000,000

 
960,146

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

 
668,918

 
750,000

 
660,601

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

 
1,780,504

 
1,800,000

 
1,777,914

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

 
1,662,507

 
1,684,221

 
1,661,135

CSC Holdings Senior Guaranteed Notes:
 
 
 
 
 
 
 
 
 
October 9, 2015

October 15, 2025
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