See accompanying notes to ~~unaudited Consolidated Financial Statements.~~the condensed consolidated financial statements.

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						June 30,						June 30,
(in thousands, except per share and share data)	2017			2016			2017			2016
(in thousands, except per share and share data)													2018			2017			2018			2017
Revenues	$	241,042		$	204,557		$	448,469		$	407,362		$	268,414		$	240,991		$	534,175		$	448,425
Costs and expenses
Operating (excluding depreciation and amortization)		83,849			75,672			152,932			152,100			91,783			84,048			186,522			153,131
Selling, general and administrative		51,194			43,482			96,927			87,375			54,196			50,965			105,145			97,349
Depreciation and amortization		46,890			34,689			85,295			69,382			49,033			48,022			97,811			87,558
(Gain) loss on disposal of assets		462			157			(5,686	)		565
Total operating costs and expenses		182,395			154,000			329,468			309,422
(Gain) loss on disposal of assets, net														2,734			462			9,368			(5,686	)
Total costs and expenses														197,746			183,497			398,846			332,352
Income from operations		58,647			50,557			119,001			97,940			70,668			57,494			135,329			116,073
Interest expense		(11,782	)		(7,549	)		(19,389	)		(15,104	)		(14,953	)		(11,782	)		(29,676	)		(19,389	)
Other income (expense), net		(322	)		183			(35	)		693			882			(322	)		1,499			(35	)
Income before income taxes		46,543			43,191			99,577			83,529			56,597			45,390			107,152			96,649
Provision for income taxes		17,967			16,558			37,787			29,852
Income tax provision														12,812			17,530			22,714			36,674
Net income	$	28,576		$	26,633		$	61,790		$	53,677		$	43,785		$	27,860		$	84,438		$	59,975

Other comprehensive gain (loss), net of tax		2			(28	)		4			(55	)
Comprehensive income	$	28,578		$	26,605		$	61,794		$	53,622

Net income per common share:
Basic	$	5.03		$	4.64		$	10.88		$	9.30		$	7.70		$	4.91		$	14.83		$	10.56
Diluted	$	4.97		$	4.62		$	10.76		$	9.27		$	7.65		$	4.85		$	14.73		$	10.45
Weighted average common shares outstanding:
Basic		5,678,394			5,743,465			5,677,411			5,769,859			5,687,095			5,678,394			5,694,774			5,677,411
Diluted		5,745,617			5,766,312			5,740,837			5,788,385			5,722,869			5,745,617			5,732,634			5,740,837

Other comprehensive gain (loss), net of tax														-			2			1			4
Comprehensive income													$	43,785		$	27,862		$	84,439		$	59,979

Dividends declared per common share													$	1.75		$	1.50		$	3.50		$	3.00

See accompanying notes to ~~unaudited Consolidated Financial Statements.~~the condensed consolidated financial statements.

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CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

						Additional					Treasury			Accumulated Other			Total								Additional					Treasury			Accumulated Other			Total
	Common Stock					Paid-In		Retained			Stock,			Comprehensive			Stockholders’			Common Stock					Paid-In		Retained			Stock,			Comprehensive			Stockholders’
(in thousands, except share data)	Shares			Amount		Capital		Earnings			at cost			Loss			Equity
Balance at December 31, 2016		5,708,223		$	59	$	17,669	$	511,776		$	(74,547	)	$	(446	)	$	454,511
(in thousands, except share data)																				Shares			Amount		Capital		Earnings			at cost			Loss			Equity
Balance at December 31, 2017																					5,731,442		$	59	$	28,412	$	728,386		$	(80,058	)	$	(352	)	$	676,447
Net income		-			-		-		61,790			-			-			61,790			-			-		-		84,438			-			-			84,438
Changes in pension, net of tax		-			-		-		-			-			4			4			-			-		-		-			-			1			1
Equity-based compensation		-			-		4,845		-			-			-			4,845			-			-		4,844		-			-			-			4,844
Issuance of restricted stock awards, net of forfeitures		18,238			-		-		-			-			-			-
Issuance of equity awards, net of forfeitures																					15,693			-		-		-			-			-			-
Repurchases of common stock		(700	)		-		-		-			(399	)		-			(399	)		(34,028	)		-		-		-			(22,556	)		-			(22,556	)
Withholding tax for equity awards		(666	)		-		-		-			(438	)		-			(438	)		(9,770	)		-		-		-			(7,201	)		-			(7,201	)
Dividends paid to stockholders		-			-		-		(17,165	)		-			-			(17,165	)		-			-		-		(20,040	)		-			-			(20,040	)
Balance at June 30, 2017		5,725,095		$	59	$	22,514	$	556,401		$	(75,384	)	$	(442	)	$	503,148
Balance at June 30, 2018																					5,703,337		$	59	$	33,256	$	792,784		$	(109,815	)	$	(351	)	$	715,933

See accompanying notes to ~~unaudited Consolidated Financial Statements.~~the condensed consolidated financial statements.

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CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2017			2016
(in thousands)							2018			2017
Cash flows from operating activities:
Net income	$	61,790		$	53,677		$	84,438		$	59,975
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		85,295			69,382			97,811			87,558
Amortization of debt issuance costs		1,191			809
Amortization of debt issuance cost								2,012			1,191
Equity-based compensation		4,845			6,466			4,844			4,845
Write-off of debt issuance costs		613			-			110			613
Deferred income taxes		7,832			(3,330	)
(Gain) loss on disposal of assets		(5,686	)		565
Changes in operating assets and liabilities:
Change in deferred income taxes								9,559			6,719
(Gain) loss on disposal of assets, net								9,368			(5,686	)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable, net		1,741			3,612			(4,351	)		2,263
Income tax receivable		(11,992	)		-
Prepaid assets		(1,248	)		(1,388	)
Income taxes receivable								12,318			(11,992	)
Prepaid and other current assets								(7,206	)		(1,247	)
Accounts payable and accrued liabilities		(14,073	)		(4,974	)		(15,439	)		(14,073	)
Deferred revenue		89			(160	)		3,783			181
Income taxes payable		-			(23	)
Other assets and liabilities, net		462			944
Other noncurrent assets and liabilities, net								(645	)		512
Net cash provided by operating activities		130,859			125,580			196,602			130,859

Cash flows from investing activities:
Purchase of business, net of cash acquired		(728,783	)		-			-			(728,783	)
Capital expenditures		(76,430	)		(65,023	)		(90,868	)		(76,430	)
Change in accrued expenses related to capital expenditures		(1,505	)		(10,958	)		(2,517	)		(1,505	)
Proceeds from sales of property, plant and equipment		10,912			459			1,569			10,912
Net cash used in investing activities		(795,806	)		(75,522	)		(91,816	)		(795,806	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		750,000			-			-			750,000
Payment of debt issuance costs		(15,224	)		-			(2,131	)		(15,224	)
Payments on long-term debt		(95,008	)		(1,258	)		(5,633	)		(95,008	)
Repurchases of common stock		(399	)		(46,511	)		(22,556	)		(399	)
Payment of withholding tax for equity awards		(438	)		-			(7,201	)		(438	)
Dividends paid to stockholders		(17,165	)		(17,303	)		(20,040	)		(17,165	)
Cash overdraft		(5,066	)		(1,444	)
Change in cash overdraft								(5,455	)		(5,066	)
Net cash provided by (used in) financing activities		616,700			(66,516	)		(63,016	)		616,700

Change in cash and cash equivalents		(48,247	)		(16,458	)		41,770			(48,247	)
Cash and cash equivalents, beginning of period		138,040			119,199			161,752			138,040
Cash and cash equivalents, end of period	$	89,793		$	102,741		$	203,522		$	89,793

Supplemental cash flow disclosures:
Cash paid for interest	$	14,031		$	14,248
Cash paid for income taxes	$	41,947		$	32,615
Cash paid for interest, net of capitalized interest							$	27,924		$	14,031
Cash paid for income taxes, net of refunds received							$	1,293		$	41,947

See accompanying notes to ~~unaudited Consolidated Financial Statements.~~the condensed consolidated financial statements.

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CABLE ONE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business. Cable One, Inc. (“Cable One” ~~or the “Company”~~) owns and operates cable systems that provide data, video and voice services to residential and commercial subscribers in 21 Western, Midwestern and Southern states of the United ~~States of America. Prior to July 1, 2015, Cable One operated as a wholly owned subsidiary of Graham Holdings Company (“GHC”).~~States. As of June 30, ~~2017,~~ 2018, Cable One provided service to ~~640,337~~653,876 data customers, ~~384,004~~340,112 video customers and ~~138,286~~129,683 voice customers.

On May 1, 2017, Cable One completed the acquisition of all of the outstanding equity interests of RBI Holding LLC (“NewWave”) ~~and NewWave~~, which became a wholly owned subsidiary of Cable One. ~~Cable One paid a purchase price of $741.0 million in cash on a debt-free basis and subject~~Refer to ~~customary post-closing adjustments. See Note 2~~note 4 for details on ~~this transaction.~~the transaction and note 8 for details on the related financing.

Unless otherwise stated or the context otherwise indicates, all references in this Quarterly Report on Form ~~10-Q~~10-Q to “Cable One,” “us,” “our,” “we” or the “Company” refer to Cable One, Inc. and its wholly owned subsidiaries.

Basis of Presentation. The condensed consolidated financial statements and accompanying ~~Consolidated Financial Statements~~notes thereto have been prepared in accordance with: (i) generally accepted accounting principles in the United States (“GAAP”) for interim financial information; and (ii) the guidance of Rule ~~10-01~~10-01 of Regulation ~~S-X~~S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for financial statements required to be filed with the Securities and Exchange Commission (the “SEC”). As permitted under such ~~rule,~~guidance, certain notes and other financial information normally required by GAAP have been omitted. Management believes the ~~accompanying Consolidated Financial Statements~~condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows as of and for the periods presented herein. These ~~Consolidated Financial Statements~~condensed consolidated financial statements are unaudited and should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form ~~10-K~~10-K for the fiscal year ended December 31, ~~2016.~~2017 filed with the SEC on March 1, 2018 (the “2017 Form 10-K”).

The December 31, 2017 year-end balance sheet data presented herein was derived from the Company’s audited consolidated financial statements included in the 2017 Form 10-K, but does not include all disclosures required by GAAP. The Company’s interim results of operations may not be indicative of its future results.

~~The December 31, 2016 year-end balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required by GAAP.~~

~~Certain reclassifications have been made to prior period amounts to conform to the current period presentation.~~

Principles of Consolidation. The ~~accompanying Consolidated Financial Statements~~condensed consolidated financial statements include the accounts of the Company, including its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Segment Reporting. Accounting Standard Codification (“ASC”) 280 - Segment Reporting requires the disclosure of factors used to identify an ~~enterprise’s~~entity’s reportable segments. The Company’s operations are organized and managed on the basis of cable systems within its geographic regions. Each cable system derives revenues from the delivery of similar products and services to a customer base that is also similar. Each cable system deploys similar technology to deliver the Company’s products and services, operates within a similar regulatory environment, has similar economic characteristics and is managed by the Company’s chief operating decision maker as part of an aggregate of all cable systems. Management evaluated the criteria for aggregation under ASC 280 and ~~believes~~has concluded that the Company meets each of the respective criteria set forth therein. Accordingly, management has identified one reportable segment.

Use of Estimates. The preparation of the ~~Consolidated Financial Statements~~condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported herein. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates and underlying assumptions.

~~Change~~Revenue Recognition. The Company recognizes revenue in ~~Accounting Estimate.~~accordance with ASC 606 - Revenue from Contracts with Customers. Residential revenues are generated through individual and bundled subscriptions for data, video and voice services on month to month terms, without penalty for cancellation. As ~~a result of additional information available~~bundled subscriptions are typically offered at discounted rates, the sales price is allocated amongst the respective product lines based on the relative selling price at which each service is sold under standalone service agreements. Business revenues are generated through individual and bundled subscriptions for data, video and voice services under contracts with terms ranging from ~~new systems and processes, the Company changed its accounting estimate related~~one month to the capitalization of certain internal labor and related costs associated with construction and customer installation activities beginning in the first quarter of 2017. Capitalized labor costs increased $5.1 million in the second quarter of 2017 compared to the second quarter of 2016 and $11.0 million for the six months ended June 30, 2017 compared to the year ago period as a result of the change in estimate.several years.

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The Company also generally receives an allocation of scheduled advertising time as part of its distribution agreements with cable and broadcast networks, which the Company sells to local, regional and national advertisers under contracts with terms that are typically less than one year. In most instances, the available advertising time is sold directly by the Company’s internal sales force. As the Company is acting as principal in these arrangements, the advertising that is sold is reported as revenue on a gross basis. In instances where advertising time is sold by contracted third-party agencies, the Company is not acting as principal and the advertising sold is therefore reported net of agency fees. Advertising revenues are recognized when the related advertisements are aired.

The unit of account for revenue recognition is a performance obligation, which is a requirement to transfer a distinct good or service to a customer. Customers are billed for the services to which they subscribe based upon published or contracted rates, with the sales price being allocated to each performance obligation. For arrangements with multiple performance obligations, the sales price is allocated based on the relative standalone selling price for each subscribed service. Generally performance obligations are satisfied, and revenue is recognized, over the period of time in which customers simultaneously receive and consume the Company’s defined performance obligations, which are delivered in a similar pattern of transfer. Advertising revenue is recognized at the point in time when the underlying performance obligation is complete.

The Company also incurs certain incremental costs to acquire residential and business customers, such as commission costs and third-party costs to service specific customers. These costs are capitalized as contract assets and amortized over the applicable period. For commissions, the amortization period is the average customer tenure, which is approximately five years for both residential and business customers. All other costs are amortized over the requisite contract period.

Recently Adopted ~~and Issued~~ Accounting Pronouncements. In May 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. ~~2017-09,~~2017-09, Compensation – Stock Compensation (Topic ~~718)~~718): Scope of Modification Accounting. ASU ~~2017-09~~2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in accordance with ~~Topic~~ ASC 718. The ASU iswas effective ~~for all entities for interim and annual reporting periods beginning after December 15, 2017, with early~~January 1, 2018. The adoption ~~permitted. The Company is evaluating the impact~~ of ~~adopting~~ this guidance did not have a material impact on ~~its Consolidated Financial Statements.~~the Company’s consolidated financial statements, but may have an impact in the future.

In January 2017, the FASB issued ASU No. ~~2017-04,~~2017-04, Intangibles - Goodwill and Other (Topic ~~350)~~350): Simplifying the Test for Goodwill Impairment. ASU ~~2017-04~~2017-04 removes ~~Step 2~~step two of the ~~current~~previous goodwill impairment test under ASC 350 and replaces it with a simplified model. Under the simplified model, a goodwill impairment will be calculated as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. The amount of any impairment under the simplified model may differ from what would have been recognized under the ~~two-step~~previous two-step test. The ASU is effective for annual and any interim impairment tests performed for periods beginning after December 15, 2019, with early adoption permitted. The ~~provisions~~Company elected to early adopt the standard on January 1, 2018. The adoption of ~~ASU 2017-04 would~~ this guidance did not have ~~affected our last goodwill impairment assessment,~~a material impact on the Company’s consolidated financial statements, but ~~no assurance can be provided that the simplified testing methodology will not affect our goodwill impairment assessment~~may have an impact in the future.

In January 2017, the FASB issued ASU No. ~~2017-01,~~2017-01, Business Combinations (Topic ~~805)~~805): Clarifying the Definition of a Business. The purpose of the amendment is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ~~For public entities, the amendments in~~The ASU ~~2017-01 are~~was effective ~~for interim and annual reporting periods beginning after December 15, 2017.~~ January 1, 2018. The ~~Company is evaluating the impact~~adoption of ~~adopting~~ this guidance did not have an impact on ~~any future transactions.~~the Company’s consolidated financial statements as no asset acquisitions or business combinations have occurred since the effective date, but may have an impact in the future.

In August 2016, the FASB issued ASU No. ~~2016-15,~~2016-15, Statement of Cash Flows (Topic ~~230)~~230): Classification of Certain Cash Receipts and Cash Payments. The guidance clarifies the way in which certain cash receipts and cash payments should be classified onwithin the ~~statement~~consolidated statements of cash flows and also how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. ASU ~~2016-15 is~~2016-15 was effective ~~for the first quarter~~January 1, 2018. The adoption of ~~2018, with early adoption permitted. The Company is evaluating the impact of adopting~~ this guidance did not have a material impact on ~~its Consolidated Financial Statements.~~the classification of any cash flows within the Company’s consolidated statements of cash flows, but may have an impact in the future.

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In ~~March 2016,~~ May 2014, the FASB issued ASU No. ~~2016-09,~~ ~~Compensation~~ 2014- ~~Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~. The updated guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. ASU 2016-09 was effective beginning in the first quarter of 2017. The Company will prospectively record a deferred tax benefit or expense associated with the difference between book and tax for equity-based compensation expense, which is expected to result in increased volatility to the Company’s income tax expense. The Company also established an accounting policy election to assume zero forfeitures for stock award grants and account for forfeitures when they occur which prospectively impacts stock compensation expense. Other aspects of the adoption of ASU 2016-09 did not have a material impact to the Company’s Consolidated Financial Statements.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~. ASU 2016-02 requires lessees to record most of their leases on the balance sheet, which will be recognized as a right-of-use asset and a lease liability. The Company will be required to classify each separate lease component as an operating or finance lease at the lease commencement date. Initial measurement of the right-of-use asset and lease liability is the same for operating and finance leases, however, expense recognition and amortization of the right-of-use asset differs. Operating leases will reflect lease expense on a straight-line basis similar to current operating leases. The straight-line expense will reflect the interest expense on the lease liability (effective interest method) and amortization of the right-of-use asset, which will be presented as a single line item in the operating expense section of the income statement. Finance leases will reflect a front-loaded expense pattern similar to the pattern for current capital leases. ASU 2016-02 is effective for the first quarter of 2019, with early adoption permitted. The Company is evaluating the impact of adopting this guidance~~on its Consolidated Financial Statements.~~

~~In May 2014, the FASB issued ASU No. 2014-09,~~09, Revenue from Contracts with Customers ~~(Topic 606)~~(Topic 606). ASU ~~2014-09~~2014-09 provides new guidance related to how an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard provides a single principles-based, five step model to be applied to all contracts with customers: (i) identify the contract(s) with the customer, (ii) identify the performance obligation(s) in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligation(s) in the contract and (v) recognize revenue when each performance obligation is satisfied. The updated guidance also ~~expands~~requires additional disclosures regarding the ~~required disclosures to include the disaggregation~~nature and timing of revenue ~~from contracts with customers into categories that depict how~~recognition as well as any uncertainty surrounding potential revenue recognition. The Company adopted the ~~nature, timing~~updated guidance on January 1, 2018 on a full retrospective basis, which required all periods presented to reflect the impact of the updated guidance. Upon adoption, the Company also implemented changes in the presentation of certain revenues and ~~uncertainty~~expenses, which resulted in the deferral of ~~revenue~~all business installation revenues and ~~cash flows are affected by economic factors. During 2016,~~ residential and business customer acquisition costs, to be recognized over a period of time instead of immediately. The adoption of the new standard did not have a material impact on the Company’s consolidated financial statements for any period presented. Refer to note 3 for further details of the impact on the Company’s 2017 consolidated financial statements and the requisite disclosures pertaining to the transition to the new standard.

Recently Issued But Not Yet Adopted Accounting Pronouncements. In June 2018, the FASB issued ~~additional interpretive guidance relating~~ASU No.2018-07,Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the ~~standard which covered the topics~~scope of ~~principal versus agent considerations~~ASC 718 to include share-based payment transactions for acquiring goods and ~~identifying performance obligations and licensing.~~services from nonemployees. The ~~standard~~update is effective for the first quarter of 2019, with early adoption permitted. The Company does not expect ASU 2018-07 to have a material impact on the Company’s consolidated financial statements upon adoption, but it may have an impact in the future.

In February 2016, the FASB issued ASU No.2016-02,Leases (Topic 842). ASU 2016-02 requires lessees to record most of their leases on the balance sheet as a right-of-use asset and a corresponding lease liability. The Company will be required to classify each separate lease component as an operating or finance lease at the lease commencement date. Initial measurement of the right-of-use asset and lease liability is the same for both operating and finance leases, however, expense recognition and amortization of the right-of-use asset differs. Operating leases will reflect lease expense on a straight-line basis similar to current operating leases while finance leases will reflect a front-loaded expense pattern similar to current capital leases. ASU 2016-02 is effective for the first quarter of ~~2018.~~2019, with early adoption permitted. The two permitted transition methods under the standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company is currently in the process of evaluating which method of transition will be utilized. Further, the Company is currently conducting an assessment to prepare for implementationadoption of this ~~guidance. To date, this assessment has included using workshops and questionnaires to identify revenue streams, analyzing contracts and assessing other areas that may~~update will result in ~~different accounting treatment under this topic, including installation~~an increase to the Company’s asset and ~~commission structure. The Company has reached a preliminary conclusion that~~liability balances due to new and existing operating leases being recorded on the majority of its residential customer revenue is not under an extended contract and will be evaluated on a month-to-month basis, and as such, does not anticipate significant changes related to revenue recognition for such customers. Revenue related to business contracts, installation and other up-front charges, costs to obtain contracts and other topics are still being evaluated.balance sheet. The Company continues to evaluate the quantitative impact of adopting this guidanceon its consolidated financial statements.

2.	REVISION OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

As previously disclosed in note 2 to the Company’s consolidated financial statements included in the 2017 Form 10-K, the Company changed its accounting for the capitalization of certain internal labor and related costs associated with construction and customer installation activities commencing in the first quarter of 2017. The Company initially classified the entire change as a change in accounting estimate. During the fourth quarter of 2017, the Company determined that a portion of what had previously been reflected as a change in estimate should have been categorized as a change in accounting principle, a portion was determined to be a correction of an error and a portion remained a change in estimate. The changes determined to be a change in estimate or change in accounting principle were applied prospectively for all of 2017.

The Company estimates that the change in principle resulted in a decrease in operating expenses (excluding depreciation and amortization) of approximately $3.6 million and $3.8 million, a decrease in selling, general and administrative expenses of approximately $0.1 million and $0.1 million and an increase in depreciation and amortization expense of $0.7 million and $0.2 million for the three months ended June 30, 2018 and 2017, respectively, compared to the results under the prior principle. The Company estimates that the change in principle resulted in a decrease in operating expenses (excluding depreciation and amortization) of approximately $7.5 million and $7.7 million, a decrease in selling, general and administrative expenses of approximately $0.1 million and $0.1 million and an increase in depreciation and amortization expense of $1.4 million and $0.5 million for the six months ended June 30, 2018 and 2017, respectively, compared to the results under the prior principle.

Although the Company determined the error to be immaterial to its previously issued financial statements, the cumulative effect of the error would have been material if corrected in 2017. Therefore, as disclosed in the 2017 Form 10-K, the Company revised its historical consolidated financial statements to properly reflect the impact of the ~~standard~~labor capitalization, including the related impact to depreciation expense and income taxes. In connection with this revision, the Company also corrected for other previously identified immaterial errors. The condensed consolidated financial statements for the three and six months ended June 30, 2017 included in this Quarterly Report on ~~related disclosures as well as~~Form 10-Q have been similarly revised to reflect the ~~acquired NewWave operations.~~

correction of these errors and should be read in conjunction with note 2 and note 17 in the 2017 Form 10-K.

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The following tables present the effect of the revision on the condensed consolidated financial statements for the three and six months ended June 30, 2017 (in thousands, except per share data):

Three Months Ended June 30, 2017

As Reported

Adjustment

As Revised

Condensed Consolidated Statement of Operations and Comprehensive Income Information

Costs and expenses

Depreciation and amortization

46,890

1,132

48,022

Total costs and expenses

182,395

1,132

183,527

Income from operations

58,647

(1,132

)

57,515

Income before income taxes

46,543

(1,132

)

45,411

Income tax provision

17,967

(430

)

17,537

Net income

28,576

(702

)

27,874

Net income per common share:

Basic

5.03

(0.12

)

4.91

Diluted

4.97

(0.12

)

4.85

Comprehensive income

28,578

(702

)

27,876

Six Months Ended June 30, 2017

As Reported

Adjustment

As Revised

Condensed Consolidated Statement of Operations and Comprehensive Income Information

Costs and expenses

Selling, general and administrative

96,927

523

97,450

Depreciation and amortization

85,295

2,263

87,558

Total costs and expenses

329,468

2,787

332,255

Income from operations

119,001

(2,787

)

116,214

Income before income taxes

99,577

(2,787

)

96,790

Income tax provision

37,787

(1,059

)

36,728

Net income

61,790

(1,728

)

60,062

Net income per common share:

Basic

10.88

(0.30

)

10.58

Diluted

10.76

(0.30

)

10.46

Comprehensive income

61,794

(1,728

)

60,066

Condensed Consolidated Statement of Cash Flows Information

Net income

61,790

(1,728

)

60,062

Depreciation and amortization

85,295

2,263

87,558

Change in accounts receivable, net

1,741

522

2,263

Change in deferred income taxes

7,832

(1,059

)

6,773

Net cash provided by operating activities

130,859

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3.	ADOPTION OF NEW REVENUE RECOGNITION STANDARD

The Company adopted ASC 606 on January 1, 2018 using the full retrospective method, resulting in a recasting of prior period consolidated financial statements. The adoption resulted in the deferral of all business installation revenues and residential and business customer acquisition costs, to be recognized over a period of time, instead of immediately. The impact of the ASC 606 adoption on the comparative 2017 condensed consolidated financial statements was as follows (in thousands, except per share data):

December 31, 2017

As Reported

ASC 606

Adjustment

As Recasted

Condensed Consolidated Balance Sheet Information

Assets

Current Assets:

Accounts receivable, net

51,141

(21,211

)

29,930

Prepaid and other current assets

8,160

2,738

10,898

Total Current Assets

242,384

(18,473

)

223,911

Other noncurrent assets

6,179

4,776

10,955

Total Assets

2,218,329

(13,697

)

2,204,632

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable and accrued liabilities

117,963

(108

)

117,855

Deferred revenue

38,266

(23,258

)

15,008

Total Current Liabilities

170,604

(23,366

)

147,238

Deferred income taxes

205,636

1,518

207,154

Other noncurrent liabilities

9,991

3,120

13,111

Total Liabilities

1,546,913

(18,728

)

1,528,185

Stockholders' Equity

Retained earnings

723,354

5,032

728,386

Total Stockholders' Equity

671,416

5,031

676,447

Total Liabilities and Stockholders' Equity

2,218,329

(13,697

)

2,204,632

Three Months Ended June 30, 2017

As Reported

/ Revised ⁽¹⁾

ASC 606

Adjustment

As Recasted

Condensed Consolidated Statement of Operations and Comprehensive Income Information

Revenues

241,042

(51

)

240,991

Costs and expenses

Operating (excluding depreciation and amortization)

83,849

199

84,048

Selling, general and administrative

51,194

(229

)

50,965

Total costs and expenses

183,527

(30

)

183,497

Income from operations

57,515

(21

)

57,494

Income before income taxes

45,411

(21

)

45,390

Income tax provision

17,537

)

17,530

Net income

27,874

(14

)

27,860

Net income per common share:

Basic

4.91

Diluted

4.85

Comprehensive income

27,876

(14

)

27,862

_________

⁽¹⁾	Refer to note 2 for details regarding the revision.

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Six Months Ended June 30, 2017

As Reported/

Revised ⁽¹⁾

ASC 606

Adjustment

As Recasted

Condensed Consolidated Statement of Operations and Comprehensive Income Information

Revenues

448,469

(44

)

448,425

Costs and expenses

Operating (excluding depreciation and amortization)

152,932

199

153,131

Selling, general and administrative

97,450

(101

)

97,349

Total costs and expenses

332,255

332,352

Income from operations

116,214

(141

)

116,073

Income before income taxes

96,790

(141

)

96,649

Income tax provision

36,728

(54

)

36,674

Net income

60,062

(87

)

59,975

Net income per common share:

Basic

10.58

(0.02

)

10.56

Diluted

10.46

(0.01

)

10.45

Comprehensive income

60,066

(87

)

59,979

Condensed Consolidated Statement of Cash Flows Information

Net income

60,062

(87

)

59,975

Change in deferred income taxes

6,773

(54

)

6,719

Change in deferred revenue

181

Change in other noncurrent assets and liabilities, net

462

512

Net cash provided by operating activities

130,859

_________

2.⁽¹⁾

Refer to note 2 for details regarding the revision.

The adoption of ASC 606 did not result in any changes to previously reported total net cash flows from operating, financing or investing activities.

A summary of changes in timing and presentation to the Company’s historical consolidated financial statements is presented below:

●

The net decrease in total assets reflects a decrease in accounts receivable to remove amounts billed to customers for which the associated performance obligations have not yet been satisfied, partially offset by the deferral of incremental costs incurred to obtain customers, which were historically expensed immediately.

●

The net decrease in total liabilities reflects a decrease in deferred revenue to remove amounts billed to customers for which the associated performance obligations have not yet been satisfied, partially offset by the recognition of deferred revenue related to certain up-front and installation fees collected from business customers, which were historically recognized when billed and the net tax effect of establishing additional deferred assets and liabilities.

●	The changes in revenues and expenses are a result of the deferred recognition of incremental customer acquisition costs and up-front and installation business services fees over a period of time, compared to the historical treatment of immediate recognition.

4.	NEWWAVE ACQUISITION

On ~~January 18,~~May 1, 2017, ~~Cable One announced that it had entered into an Agreement and Plan~~the Company acquired all of ~~Merger (the “Merger Agreement”)~~the outstanding equity interests in NewWave for $740.2 million in cash on a debt-free basis. Refer to ~~acquire NewWave from funds affiliated with GTCR LLC, a private equity firm based in Chicago.~~note 8 for details regarding the financing of the transaction. NewWave was a cable operator providing data, video and voice services to residential and business customers throughout non-urban areas of Arkansas, Illinois, Indiana, Louisiana, Mississippi, Missouri and Texas. Cable One and NewWave shared similar strategies, customer demographics, and products. Accordingly, the acquisition of NewWave offers the Company opportunities for revenue growth and adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) margin expansion as well as the potential to realize cost synergies. ~~The Company paid a purchase price of $741.0 million in cash and completed the transaction on May 1, 2017. See Note 6 for details regarding the financing of the acquisition.~~

~~The Company accounted for the NewWave acquisition as a business combination pursuant to ASC 805 -~~ ~~Business Combinations~~~~. Accordingly, acquisition costs are not included as components~~

Table of consideration transferred, and instead are accounted for as expenses in the period in which the costs are incurred. During the three and six months ended June 30, 2017, the Company incurred acquisition-related costs of approximately $3.2 million and $4.7 million, respectively, which are included in Selling, general and administrative expenses within the Company’s Consolidated Statements of Operations and Comprehensive Income.

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In accordance with ASC 805, Cable One uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill as of the acquisition date is measured as the excess of purchase price consideration over the fair value of net tangible and identifiable intangible assets acquired. The adjustments described below were developed based on Cable One management's assumptions and estimates, including assumptions relating to the consideration paid and the allocation thereof to the assets acquired and liabilities assumed from NewWave based on preliminary estimates of fair value. The preliminary estimates of the fair values of consideration transferred and assets acquired and liabilities assumed are based on the information that was available as of the acquisition date. Cable One believes that the information available provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. The preliminary measurements of fair value set forth herein are subject to change and such changes could be material. The Company expects to finalize the valuation as soon as practicable but no later than one year from the acquisition date. The following table summarizes the ~~provisional~~ allocation of the purchase price consideration as of the acquisition date, reflecting all measurement period adjustments recorded in 2017(in thousands):

Provisional
Allocation

Assets
Cash and cash equivalents
$ 12,220
Accounts receivable
15,027
Prepaid assets
1,184
Property, plant and equipment
192,234
Intangibles
476,300
Other assets
370
Total
697,335

Liabilities

Accounts payable and accrued liabilities
24,542
Deferred revenue
14,516
Deferred income taxes
10,720
Total
49,778

Net assets acquired
647,557
Purchase price consideration
741,003
Goodwill recognized
$ 93,446

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~~Acquired intangible assets consist of the following (dollars in thousands):~~

Provisional
Estimated
Fair Value

Provisional Estimated
Weighted Average
Useful Life (in years)

Franchise agreements
$ 320,000
Indefinite

Customer relationships
$ 155,000 14
Trademark and trade name
$ 1,300 1

	Purchase Price Allocation
Assets Acquired
Cash and cash equivalents	$	12,220
Accounts receivable		15,027
Prepaid and other current assets		2,286
Property, plant and equipment		192,234
Intangible assets		476,300
Other noncurrent assets		1,184
Total Assets Acquired		699,251

Liabilities Assumed
Accounts payable and accrued liabilities		25,125
Deferred revenue		14,516
Deferred income taxes		6,644
Total Liabilities Assumed		46,285

Net Assets Acquired		652,966
Purchase price consideration		740,166
Goodwill Recognized	$	87,200

The ~~total weighted average amortization~~measurement period ~~for the acquired intangibles is 13.9 years.~~ended on April 30, 2018 and no measurement period adjustments were recorded during 2018.

The acquisition produced $93.4 million of goodwill, increasing the Company’s goodwill balance to $178.4 million at June 30, 2017. Goodwill represents the excess of the purchase price consideration over the fair value of the underlying net assets acquired and largely results from expected future synergies from combining operations as well as an assembled workforce, which does not qualify for separate recognition. As an indefinite-lived asset, goodwill is not amortized but rather is subject to impairment testing on at least an annual basis. Goodwill arising from the NewWave acquisition is deductible for tax purposes.

For the period from May 1, 2017 to June 30, 2017, the Company recognized revenue of $32.2 million and net income of $2.1 million relating to NewWave, which included charges for the amortization of acquired intangible assets of $2.1 million.

The following unaudited pro forma combined results of operations for the three and six months ended June 30, 2017 and 2016 have been prepared as if the acquisition of NewWave had occurred on January 1, 2016 and include adjustments for depreciation expense, amortization of intangibles, interest expense from financing, non-recurring acquisition-related transaction fees and the related aggregate impact on the provision for income taxes (in thousands, except per share data):

Three Months Ended June 30,

Six Months Ended June 30,

2017

2016

2017

2016

Revenues
$ 257,195 $ 249,790 $ 512,385 $ 496,950
Net income
$ 30,585 $ 23,922 $ 63,525 $ 47,550
Net income per common share:

Basic
$ 5.39 $ 4.17 $ 11.19 $ 8.24
Diluted
$ 5.32 $ 4.15 $ 11.07 $ 8.21

The unaudited pro forma combined results of operations is provided for informational purposes only and is not necessarily indicative of or intended to represent the results that would have been achieved had the NewWave acquisition been consummated as of January 1, 2016 or the results that may be achieved in the future.

~~The amount of franchise~~Fees imposed on the Company by various governmental authorities are passed through monthly to the Company’s customers and are periodically remitted to authorities. These fees ~~recorded~~were $4.1 million and $4.0 million for the three months ended June 30, 2018 and 2017, respectively, and $8.2 million and $7.5 million for the six months ended June 30, 2018 and 2017, respectively. Further, as the Company acts as principal, these fees are reported in video revenues on a gross basis with corresponding expenses included within operating expenses in the condensed consolidated statements of operations and comprehensive income.

Other revenues are comprised primarily of customer late charges and reconnect fees.

A significant portion of the Company’s revenues is derived from customers who may cancel their subscriptions at any time without penalty. As such, the amount of deferred revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from the Company’s existing customers. Revenues from customers with contractually specified terms and non-cancelable service periods are recognized over the terms of the underlying contracts, which generally range from one to five years.

Contract Costs. The Company capitalizes the incremental costs incurred in obtaining customers, such as commission costs and certain third-party costs. Commission expense is recognized using a portfolio approach over the calculated average residential and business customer tenure. Deferred commissions totaled $7.7 million and $7.5 million as of June 30, 2018 and December 31, 2017, respectively, and were included within prepaid and other current assets and other noncurrent assets in the condensed consolidated balance sheets. Commission amortization expense was $0.9 million for both the three months ended June 30, 2018 and 2017 and $1.7 million for both the six months ended June 30, 2018 and 2017 and was included in ~~residential video revenues above was $4.0~~selling, general and administrative expenses within the condensed consolidated statements of operations and comprehensive income. Deferred commissions of $2.8 million included within prepaid and ~~$3.6 million for the three months ended~~ other current assets as of June 30, ~~2017 and 2016, respectively, and $7.5 million and $7.2 million for~~2018 are expected to be amortized over the ~~six months ended June 30, 2017 and 2016, respectively.~~

811

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Contract Liabilities. As residential and business customers are billed for subscription services in advance of the service period, the timing of revenue recognition differs from the timing of billing. Deferred revenue liabilities are recorded when the Company collects payments in advance of providing the associated services. Current deferred revenue liabilities, consisting of refundable customer prepayments, up-front charges and installation fees, were $18.8 million and $15.0 million as of June 30, 2018 and December 31, 2017, respectively. Noncurrent deferred revenue liabilities, consisting of up-front charges and installation fees from business customers, were $2.5 million and $3.1 million as of June 30, 2018 and December 31, 2017, respectively, and were included within other noncurrent liabilities in the condensed consolidated balance sheets.

Significant Judgments. The Company often provides multiple services to a single customer. The provision of customer premise equipment, installation services and service upgrades may be highly integrated and interdependent with the data, video or voice services provided. Judgment is required to determine whether the provision of such customer premise equipment, installation services and service upgrades is considered distinct and accounted for separately, or not distinct and accounted for together with the related subscription service.

The transaction price for a bundle of services is frequently less than the sum of the standalone selling prices of each individual service. The Company allocates the sales price for such bundles to each individual service provided based on the relative standalone selling price for each subscribed service. Standalone selling prices of the Company’s residential data and video services are directly observable, while standalone selling prices for the Company’s residential voice services are estimated using the adjusted market assessment approach, which relies upon information from peer companies who sell residential voice services individually.

The Company also uses significant judgment to determine the appropriate period over which to amortize deferred residential and business commission costs, which was determined to be the average customer tenure. Based on historical data and current expectations, the Company determined the average customer tenure for both residential and business customers to be approximately five years.

Depreciation expense was ~~$44.8~~$46.0 million and ~~$34.7~~$45.9 million for the three months ended June 30, ~~2017~~ 2018 and ~~2016,~~2017, respectively, and ~~$83.2~~$92.1 million and ~~$69.3~~$85.4 million for the six months ended June 30, ~~2017~~ 2018 and ~~2016,~~2017, respectively.

~~The~~In January 2017, a portion of the Company's previous headquarters building and adjoining property ~~were held~~was sold for ~~sale at December 31, 2016. In January 2017, the Company sold a portion of this property for $10.1~~$10.1 million in gross proceeds and the Company recognized a related gain of ~~$6.6~~$6.6 million. The remaining property’s carrying value of ~~$4.6~~$4.6 million is included in ~~Other~~other noncurrent assets in the ~~Consolidated Balance Sheet~~condensed consolidated balance sheets as assets held for sale at both June 30, 2018 and December 31, 2017.

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Intangible asset amortization expense was $3.0 million and $2.1 million for the three months ended June 30, 2018 and 2017, respectively, and $5.7 million and $2.2 million for the six months ended June 30, 2018 and 2017, respectively.

As of June 30, 2018, the future amortization of intangible assets was as follows (in thousands):

Actual amortization expense in future periods may differ from the amounts above as a result of new intangible asset acquisitions or divestitures, changes in useful life estimates, impairments or other relevant factors.

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~~Senior Unsecured~~ Notes. On June 17, 2015, the Company issued ~~$450~~$450 million aggregate principal amount of 5.75% senior unsecured notes due 2022 (the “Notes”). The Notes mature on June 15, 2022 and interest is payable on June 15^th15th and December 15^th15th of each year.

The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any other applicable securities laws. The Notes were offered in the United States only to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration set forth in Rule 144A under the Securities Act and outside the United States to non-U.S. persons in reliance on the exemption from registration set forth in Regulation S under the Securities Act.

The Notes were issued pursuant to an indenture ~~(the “Indenture”)~~ dated as of June 17, ~~2015.~~2015 (the “Indenture”). The Indenture provides for early redemption of the Notes, at the option of the Company, at the prices and subject to the terms specified in the Indenture. The Indenture includes certain covenants relating to debt incurrence, liens, restricted payments, asset sales and transactions with affiliates, changes in control and mergers or sales of all or substantially all of the Company’s assets. The Indenture also provides for customary events of default (subject, in certain cases, to customary grace periods).

Senior Credit Facilities. On June 30, 2015, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent, and the other agents party thereto. The Credit Agreement provided for a ~~five-year~~five-year revolving credit facility in an aggregate principal amount of ~~$200~~$200 million (the “Revolving Credit Facility”) and a ~~five-year~~five-year term loan facility in an aggregate principal amount of ~~$100~~$100 million (the “Term Loan Facility” ~~and, together with the Revolving Credit Facility, the “Original Credit Facilities”~~). Concurrently with its entry into the Credit Agreement, the Company borrowed the full amount of the Term Loan ~~Facility (the “Term Loan”).~~

Borrowings under the Original Credit Facilities bore interest, at the Company’s option, at a rate per annum determined by reference to either the London Interbank Offered Rate (“LIBOR”) or an adjusted base rate, in each case plus an applicable interest rate margin. The applicable interest rate margin with respect to LIBOR borrowings was a rate per annum between 1.50% and 2.25% and the applicable interest rate margin with respect to adjusted base rate borrowings was a rate per annum between 0.50% and 1.25%, in each case determined on a quarterly basis by reference to a pricing grid based upon the Company’s total net leverage ratio. In addition, the Company is required to pay commitment fees on any unused portion of the Revolving Credit Facility at a rate between 0.25% per annum and 0.40% per annum, determined by reference to the pricing grid.

Facility. The Revolving Credit Facility also gives the Company the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility of $2.8 million at June 30, 2017 were held for the benefit of certain general and liability insurance matters and bore interest at a rate of 1.625% per annum. The Company had $197.2 million available for borrowing under the Revolving Credit Facility at June 30, 2017.

On May 1, 2017, the Company ~~entered into a Restatement Agreement (the “Restatement Agreement”) with JPMorgan, as administrative agent,~~ and the lenders ~~party thereto, pursuant to which the Company~~ amended and restated the Credit Agreement ~~(as so amended and restated, the~~(the “Amended and Restated Credit Agreement”) and the Company incurred ~~$750~~$750 million of senior secured loans (the “New Loans”) which were used, together with cash on hand, to ~~(i)~~ finance the ~~transactions contemplated by the Merger Agreement, (ii)~~NewWave acquisition, repay in full the Term Loan Facility and ~~(iii)~~ pay related fees and expenses.

The New Loans consist of ~~(a)~~ a ~~five-year incremental~~five-year term “A” loan in an aggregate principal amount of ~~$250~~$250 million (the “Term Loan A”) and ~~(b)~~ a ~~seven-year incremental~~seven-year term “B” loan in an aggregate principal amount of ~~$500~~$500 million (the “Term Loan B” and, together with the Term Loan A and the Revolving Credit Facility, the “Senior Credit Facilities”)~~, which~~. The obligations under the Amended and Restated Credit Agreement are guaranteed by the Company’s wholly owned domestic subsidiaries and are secured, subject to certain exceptions, by substantially all assets of the Company and the guarantors.

On April 23, 2018, the Company entered into Amendment No.1 (the “Repricing Amendment”) to the Amended and Restated Credit Agreement. The Repricing Amendment amended the Amended and Restated Credit Agreement to, among other things, (i) decrease the applicable margin for the Term Loan B to 1.75% for London Interbank Offered Rate (“LIBOR”) borrowings and 0.75% for base rate borrowings, (ii) reset the period during which a prepayment premium in respect of the Term Loan B may be required for a Repricing Transaction until six months after the effective date of the Repricing Amendment and (iii) reset the period during which the Term Loan B benefits from certain “most favored nation” pricing protections until 12 months after the effective date of the Repricing Amendment. Other than as set forth above, all other material terms and provisions of the Senior Credit Facilities described below remain substantially the same.

The interest margins applicable to the ~~New Loans under the Amended and Restated~~Senior Credit ~~Agreement~~Facilities are, at the Company’s option, equal to either LIBOR or a base rate, plus an applicable margin equal to, ~~(x)~~(i) with respect to the Term Loan A ~~2.25%~~and the Revolving Credit Facility, 1.50% to ~~1.50%~~2.25% for LIBOR loans and ~~1.25%~~0.50% to ~~0.50%~~1.25% for base rate loans, determined on a quarterly basis by reference to a pricing grid based on the Company’s total net leverage ratio and ~~(y)~~(ii) with respect to the Term Loan B, (x) 2.25% for LIBOR loans and 1.25% for base rate ~~loans.~~ loans through April 22, 2018 and (y) 1.75% for LIBOR loans and 0.75% for base rate loans after April 22, 2018.

The Term Loan A may be prepaid at any time without premium and amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of 2.5% per annum for the first year after funding, 5.0% per annum for the second year after funding, 7.5% per annum for the third year after funding and 10.0% per annum for the fourth and fifth years after funding, with the outstanding balance due upon maturity. The Term Loan B amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of 1.0% per annum, with the outstanding balance due upon maturity. The Term Loan B is subject to a 1.0% prepayment ~~penalty~~premium if prepaid in connection with a “Repricing Transaction” (as defined in the Amended and Restated Credit Agreement) within six months of ~~funding,~~the effective date of the Repricing Amendment (as defined below), benefits from certain “most favored nation” pricing protections and is not subject to the financial maintenance covenants under the Amended and Restated Credit Agreement. Other than as set forth above, the New Loans are subject to terms substantially similar to those under the Credit Agreement.

Table of ~~June 30, 2017, outstanding borrowings under the Term Loan A and Term Loan B were $250 million and $500 million, and bore interest at a rate of 2.93% per annum and 3.43% per annum, respectively.~~

In connection with the New Loans, the Company incurred $15.2 million in debt issuance costs, of which $0.6 million was written off during the quarter ended June 30, 2017. Unamortized debt issuance costs totaled $21.6 million and $8.1 million at June 30, 2017 and December 31, 2016, respectively.

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The Company may, subject to ~~the~~certain specified terms and ~~conditions of the Amended and Restated Credit Agreement,~~provisions, obtain additional credit facilities of up to ~~$425~~$425 million under the Amended and Restated Credit Agreement plus an unlimited amount so long as, on a pro forma basis, the Company’s First Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) is no greater than 1.80 to 1.00. The Amended and Restated Credit Agreement contains customary representations, warranties and affirmative and negative covenants ~~including limitations on indebtedness, liens, restricted payments, prepayments~~as well as customary events of certain indebtedness, investments, dispositions of assets, restrictions on subsidiary distributions and negative pledge clauses, fundamental changes, transactions with affiliates and amendments to organizational documents.default. The Amended and Restated Credit Agreement also requires the Company to maintain specified ratios of total net ~~leverage~~indebtedness and first lien net ~~leverage~~indebtedness to consolidated operating cash flow. The Amended and Restated Credit Agreement also contains customary events of default, including non-payment of principal, interest, fees or other amounts, material inaccuracy of any representation or warranty, failure to observe or perform any covenant, default in respect of other material debt of the Company and of its restricted subsidiaries, bankruptcy or insolvency, the entry against the Company or any of its restricted subsidiaries of a material judgment, the occurrence of certain ERISA events, impairment of the loan documentation and the occurrence of a change of control.

The Company was in compliance with all debt covenants as of June 30, ~~2017.~~ 2018.

As of June 30, 2018, outstanding borrowings under the Term Loan A and Term Loan B were $243.8 million and $495.0 million, respectively, and each bore interest at a rate of 4.09% per annum. Letter of credit issuances under the Revolving Credit Facility totaled $3.1 million and the Company had $196.9 million available for borrowing under the Revolving Credit Facility at June 30, 2018.

In connection with the Repricing Amendment, the Company incurred debt issuance costs of $2.1 million, of which $0.1 million was expensed immediately. The Company recorded $1.0 million and $0.8 million of debt issuance cost amortization for the three months ended June 30, 2018 and 2017, respectively, and $2.0 million and $1.2 million for the six months ended June 30, 2018 and 2017, respectively. These amounts are included within interest expense in the condensed consolidated statements of operations and comprehensive income.

As of June 30, 2018, the future maturities of long-term debt were as follows (in thousands):

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The grant date fair value of the Company’s SARs ~~was~~is measured ~~based on~~using the Black-Scholes valuation model. The weighted average inputs used in the model for grants awarded during the six months ended June 30, ~~2017~~ 2018 were as follows:

~~Compensation expense associated with SARs is recognized on a straight-line basis over the vesting period.~~ Equity-based compensation expense for SARs was ~~$0.8~~$0.9 million and ~~$1.5~~$0.8 million for the three ~~and six~~ months ended June 30, 2018 and 2017, respectively, and $1.8 million and $1.5 million for the six months ended June 30, 2018 and 2017, respectively. At June 30, ~~2017,~~ 2018, there was ~~$8.9~~$7.1 million of unrecognized compensation expense related to SARs, which is expected to be recognized over a weighted average period of ~~1.4~~1.1 years.

~~Compensation Expense~~. Total equity-based compensation expense recognized was $2.4 million and $3.4 million for the three months ended June 30, 2017 and 2016, respectively, and $4.8 million and $6.5 million for the six months ended June 30, 2017 and 2016, respectively, and was included in Selling, general and administrative expenses within the Consolidated Statements of Operations and Comprehensive Income. The Company has recorded an income tax benefit of $3.7 ~~million related to equity-based awards granted through June 30, 2017. The deferred tax asset related to all outstanding equity-based awards was $6.3 million as of June 30, 2017.~~

the accounting under ASC 740 was complete as well as provisional amounts for those specific income tax effects of the 2017 Federal tax reform legislation for which the accounting under ASC 740 was incomplete but a reasonable estimate could be determined. The Company has recognized the provisional tax impacts related to acceleration of depreciation and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements included in the 2017 Form 10-K. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued and actions the Company may take as a result of the 2017 Federal tax reform legislation. The accounting is expected to be complete when the Company’s 2017 Federal corporate income tax return is filed later in 2018.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF OPERATIONS

~~GHC Agreements.~~ ~~On June 16, 2015, Cable One entered into several agreements with GHC~~Cautionary Statement Regarding Forward-Looking Statements

This document contains “forward-looking statements” that ~~set forth~~involve risks and uncertainties. These statements can be identified by the ~~principal actions taken~~fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about the cable industry and our business and financial results. Forward-looking statements often include words such as “will,” “should,” “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Important factors that could cause our actual results to differ materially from those in our forward-looking statements include government regulation, economic, strategic, political and social conditions and the ~~spin-off and that govern the relationship~~following factors:

Any forward-looking statements made by us in this document speak only as of the ~~parties following the spin-off, including~~date on which they are made. We are under no obligation, and expressly disclaim any obligation, to update or alter our forward-looking statements, whether as a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement. The aggregate costs and reimbursements paid to GHC totaled $0.1 million and $0.3 million for the three and six months ended June 30, 2017, respectively.result of new information, subsequent events or otherwise.

1620

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~~Item 2.~~ ~~Management’s~~ ~~Discussion and Analysis of Financial Condition and Results of Operations~~

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with our ~~unaudited Consolidated Financial Statements~~condensed consolidated financial statements and ~~related~~accompanying notes included in this Quarterly Report on Form 10-Q and the audited ~~Consolidated Financial Statements~~consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2016~~2017 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our ~~Annual Report on~~2017 Form ~~10-K filed with the SEC on March 1, 2017.~~10-K. Our results of operations for the three and six months ended June 30, ~~2017~~2018 may not be indicative of our future results.

Overview

~~Our Business~~

We are a fully integrated provider of data, video and voice services in 21 Western, Midwestern and Southern states. We provide these broadband services to residential and business customers in more than 750 communities. The markets we serve are primarily non-metropolitan, secondary markets, with 77% of our customers located in seven states: Arizona, Idaho, Illinois, Mississippi, Missouri, Oklahoma and Texas. Our biggest customer concentrations are in the Mississippi Gulf Coast region and in the greater Boise, Idaho region. We are among the ~~seventh-largest~~10 largest cable system ~~operator~~operators in the United States based on customers and revenues in ~~2016,~~2017, providing service to ~~805,483~~799,616 residential and business customers out of approximately 2.1 million homes passed as of June 30, ~~2017.~~2018. Of these customers, ~~640,337~~653,876 subscribed to data services, ~~384,004~~340,112 subscribed to video services and ~~138,286~~129,683 subscribed to voice services.

We generate substantially all of our revenues through five primary products. Ranked by share of our total revenues through the first six months of ~~2017,~~2018, they are residential data ~~(43.1%~~(45.4%), residential video ~~(35.1%~~(33.0%), business services (data, voice and video ~~and voice~~ – ~~13.3%~~14.3%), residential voice ~~(4.7%~~(4.0%) and advertising sales ~~(2.6%~~(2.1%). The profit margins, growth rates and capital intensity of our five primary products vary significantly due to differences in competition, product maturity and relative costs.

On May 1, 2017, we completed the acquisition of all of the outstanding equity interests of ~~NewWave, and NewWave became a wholly owned subsidiary of ours.~~NewWave. We paid a purchase price of ~~$741.0~~$740.2 million in cash on a debt-free basis, ~~and~~ subject to customary post-closing adjustments. ~~See Note 2 of the Notes to our Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for details on this transaction.~~ Our results of operations for the three and six months ended June 30, 2018 include the full impact of NewWave operations, while our comparable results for 2017 include only two months of NewWave operations, ~~following~~as the ~~completion of the acquisition.~~acquisition was not completed until May 1, 2017.

Prior to 2012, we were focused on growing revenues through subscriber retention and growth in overall primary service units (“PSUs”). Accordingly, our strategies consisted of, among others, offering promotional discounts to new and existing subscribers adding new services and to subscribers purchasing more than one service offering. Since 2012, we have adapted our strategy to face the industry-wide trends of declining profitability of residential video services and declining revenues from residential voice services. We believe the declining profitability of residential video services is primarily due to ~~competition from other content providers and~~ increasing programming costs and retransmission fees and competition from other content providers and the declining revenues from residential voice services is primarily due to the increasing use of wireless voice services in addition to, or instead of, ~~landline~~residential voice service. Beginning in 2013, we shifted our focus away from maximizing customer PSUs and towards growing and maintaining our higher margin businesses, namely residential data and business services. Separately, we have also focused on retaining customers with a high expected lifetime value (“LTV”), who are less attracted by discounting, require less support and churn less. This strategy focuses on increasing Adjusted EBITDA, Adjusted EBITDA less capital expenditures and margins ~~(see~~(refer to the section entitled “Use of Adjusted EBITDA” for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure).

The trends described above have impacted our four largest product lines in the following ways:

●

Residential data. We experienced growth in the number of, and revenues from, our residential data customers every year since 2013. We expect this growth to continue due to projected increases in the number of potential customers for us to serve, as there are still a number of households in our markets that do not subscribe to data services from any provider. We expect to capture a portion of these customers and anticipate capturing additional market share from existing data subscribers due to our ~~recent~~continued upgrades in broadband capacity, ~~and~~ our ability to offer higher access speeds than many of our ~~competitors.~~ competitors and our Wi-Fi support service.

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●

Residential video. Residential video service is a competitive and highly penetrated business. As we focus on the higher-margin businesses of residential data and business services, we are de-emphasizing our residential video business and, as a result, expect residential video revenues to continue to decline in the future.

●

Residential voice. We have experienced declines in residential voice customers as a result of homes in the United States deciding to terminate their ~~landline~~residential voice service and exclusively use wireless voice service. We believe this trend will continue because of competition from wireless voice ~~service.~~service providers. Revenues from residential voice customers have declined over recent years, and we expect this decline will continue.

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●

Business services. We have experienced significant growth in business data and voice customers and revenues and expect this growth to continue. We attribute this growth to our strategic focus shift on increasing sales to business ~~customers. More~~customers and our recently ~~we have~~ expanded ~~our~~ efforts to attract enterprise business customers. Margins in products sold to business customers have remained attractive, and we expect this trend to continue.

We continue to experience increased competition, particularly from telephone companies, cable and municipal overbuilders, over-the-top (“OTT”) video providers and direct broadcast satellite (“DBS”) television providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. We made elevated levels of capital investments between 2012 and ~~2015~~2017 to increase our cable plant capacities and reliability, launch all-digital video services, which has freed up approximately ~~three-fourths~~half of average plant bandwidth for data services, and increase data capacity by moving from four-channel bonding to 32-channel bonding. We expect to continue devoting financial resources to infrastructure improvements, including in the new markets we acquired in the NewWave transaction, because we believe these investments are necessary to remain competitive. We expect to spend up to $50 million during 2018 and 2019, in addition to the $10 million spent in 2017, to enhance the acquired NewWave systems by rebuilding low capacity markets, launching all-digital video services, implementing 32-channel bonding to enable a 1 gigabit-per-second (“Gbps”) download speed product launch, converting back office functions such as billing, accounting and service provisioning and migrating products to legacy Cable One platforms.

Our goals are to continue to grow residential data and business services and to maintain profit margins to deliver strong Adjusted EBITDA. To achieve these goals, we intend to continue our industrial engineering-driven cost management, remain focused on customers with high LTV and follow through with further planned investments in broadband plant upgrades and new data services offerings for residential and business customers.

Our business is subject to extensive governmental regulation. Such regulation has led to increases in our operational and administrative expenses. In addition, we could be significantly impacted by changes to the existing regulatory framework, whether triggered by legislative, administrative or judicial rulings. In 2015, the FCC used its Title II authority to regulate broadband internet access services through the Open Internet Order (the “Order”)~~. According to the Order, the FCC will forbear from systematic rate regulation of internet access service at the subscriber level,~~, which ~~we believe will permit us to continue to manage data usage efficiently by establishing appropriate rates. However, the Order also imposes~~imposed on all providers of broadband internet access service, including us, obligations that limit the ways certain types of traffic can be ~~managed. In June 2016,~~managed and prescribes certain additional disclosure requirements. The Order was upheld in the ~~U.S. Court of Appeals for~~courts, but in September 2017, several parties, including the ~~D.C. Circuit upheld the Order in its entirety. On May 1, 2017, the U.S. Court of Appeals for the D.C. Circuit denied a petition for an~~ ~~en banc~~ ~~rehearing of the June 2016 decision upholding the Order. Parties have been granted until September 28, 2017 to file~~American Cable Association and NCTA – The Internet & Television Association (the “NCTA”), filed petitions for certiorari with the U.S. Supreme Court. ~~In May~~Responses to the petitions are due by August 15, 2018, and the FCC filed its response on August 2, 2018. However, in December 2017, the FCC ~~issued a Notice~~rescinded the majority of ~~Proposed Rulemaking to revise~~ the ~~Open Internet~~open internet rules previously adopted in the Order, with the exception of the disclosure requirements. Several parties have challenged the FCC’s new rules in Federal courts, and ~~the FCC is seeking comment on its proposals with reply comments due by August 16, 2017.~~those appeals are pending. Congress and numerous states also ~~has~~have proposed legislation regarding net neutrality. Several states have adopted legislation that requires entities providing broadband internet access service in the ~~Open Internet rules.~~state to comply with net neutrality requirements or that prohibits state and local government agencies from contracting with internet service providers that engage in certain network management activities based on paid prioritization, content blocking or other discrimination. We cannot predict whether or when future changes to the regulatory framework will occur at the FCC, in Congress, at the state level or in the courts. We also cannot predict whether or to what extent the rules as revised by the FCC, Congress, the states or the courts may affect our operations or impose costs on our business.

Results of Operations

~~PSUs~~Revision of Previously Issued Financial Statements and Adoption of Revenue Recognition Standard

In conjunction with the error correction in the fourth quarter of 2017 associated with our historical accounting for certain categories of internal labor and related costs, we revised our historical consolidated financial statements to properly reflect the impact of the labor capitalization, including the related impact to depreciation expense and income taxes. As a result, the financial statements for the three and six months ended June 30, 2017 have been revised to reflect the error correction. Refer to note 2 to the condensed consolidated financial statements for additional details.

Further, we adopted the revenue recognition standard, ASC 606 - Revenue from Contracts with Customers, effective January 1, 2018, using the full retrospective method. The adoption resulted in the deferral of all business installation revenues and residential and business customer acquisition costs, to be recognized over a period of time, instead of immediately. The financial statements for the three and six months ended June 30, 2017 have been recasted to reflect the impact of the revenue recognition standard adoption. Refer to note 3 to the condensed consolidated financial statements for additional details.

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PSU and Customer Counts ~~by Primary Products~~

AsDuring the 12 months ended June 30, 2018, our total PSUs decreased 38,956, or 3.4%, compared to our total PSUs as of June 30, ~~2017, our total~~2017. Business PSUs and residential data PSUs increased ~~194,396 year-over-year, with increases in~~7,846 and 7,185, respectively, while residential ~~data,~~ video PSUs and residential voice PSUs ~~of 119,446, 41,834,~~decreased 43,302 and ~~10,713, respectively, and an increase in business PSUs of 22,403.~~10,685, respectively. Our total customer relationships ~~increased 145,540,~~decreased 5,867, or ~~22.1%~~0.7%, ~~year-over-year. The~~ year-over-year, ~~increases were primarily attributable to new customers acquired as~~with a ~~result of the NewWave acquisition during the second quarter of 2017 and continued organic growth~~5,351 increase in ~~our primary focus product lines of~~business customer relationships being offset by an 11,218 decrease in residential ~~data and business services.~~customer relationships.

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The following table provides an overview of selected customer data for ~~our cable systems for~~ the time periods specified:

	As of June 30,				Annual Net Gain/(Loss)				As of June 30,				Annual Net Gain/(Loss)
	2017		2016		Change		% Change		2018		2017		Change			% Change
Residential data PSUs		585,049		465,603		119,446		25.7		592,234		585,049		7,185			1.2
Residential video PSUs ⁽¹⁾		366,816		324,982		41,834		12.9
Residential video PSUs ⁽¹⁾										323,514		366,816		(43,302	)		(11.8	)
Residential voice PSUs		114,519		103,806		10,713		10.3		103,834		114,519		(10,685	)		(9.3	)
Total residential PSUs		1,066,384		894,391		171,993		19.2		1,019,582		1,066,384		(46,802	)		(4.4	)

Business data PSUs ⁽²⁾		55,288		42,714		12,574		29.4
Business data PSUs ⁽²⁾										61,642		55,288		6,354			11.5
Business video PSUs		17,188		13,992		3,196		22.8		16,598		17,188		(590	)		(3.4	)
Business voice PSUs ⁽³⁾		23,767		17,134		6,633		38.7
Business voice PSUs ⁽³⁾										25,849		23,767		2,082			8.8
Total business PSUs		96,243		73,840		22,403		30.3		104,089		96,243		7,846			8.2

Total PSUs		1,162,627		968,231		194,396		20.1		1,123,671		1,162,627		(38,956	)		(3.4	)

Total residential customer relationships		741,225		610,293		130,932		21.5		730,007		741,225		(11,218	)		(1.5	)
Total business customer relationships		64,258		49,650		14,608		29.4		69,609		64,258		5,351			8.3
Total customer relationships		805,483		659,943		145,540		22.1		799,616		805,483		(5,867	)		(0.7	)

_________


⁽¹⁾	Residential video PSUs include all basic residential customers who receive video services and may have one or more digital set-top boxes or cable cards deployed. Residential bulk multi-dwelling accounts are included in our video PSUs at the individual unit level.
⁽²⁾	Business data PSUs include commercial accounts that receive data service via a cable modem and commercial accounts that receive broadband service optically via fiber connections.
⁽³⁾	Business voice customers who have multiple voice lines are only counted once in the PSU total.

The following table provides an overview of selected customer data for our legacy Cable One cable systems excluding the impact of PSUs and customers ~~attained as a result of the~~from legacy NewWave ~~acquisition~~cable systems for the time periods specified:

	As of June 30,				Annual Net Gain/(Loss)						As of June 30,				Annual Net Gain/(Loss)
	2017		2016		Change			% Change			2018		2017		Change			% Change
Residential data PSUs		474,815		465,603		9,212			2.0			483,589		474,815		8,774			1.8
Residential video PSUs ⁽¹⁾		284,695		324,982		(40,287	)		(12.4	)
Residential video PSUs ⁽¹⁾												253,236		284,695		(31,459	)		(11.1	)
Residential voice PSUs		92,100		103,806		(11,706	)		(11.3	)		83,385		92,100		(8,715	)		(9.5	)
Total residential PSUs		851,610		894,391		(42,781	)		(4.8	)		820,210		851,610		(31,400	)		(3.7	)

Business data PSUs ⁽²⁾		46,909		42,714		4,195			9.8
Business data PSUs ⁽²⁾												51,044		46,909		4,135			8.8
Business video PSUs		13,295		13,992		(697	)		(5.0	)		12,560		13,295		(735	)		(5.5	)
Business voice PSUs ⁽³⁾		19,156		17,134		2,022			11.8
Business voice PSUs ⁽³⁾												20,695		19,156		1,539			8.0
Total business PSUs		79,360		73,840		5,520			7.5			84,299		79,360		4,939			6.2

Total PSUs		930,970		968,231		(37,261	)		(3.8	)		904,509		930,970		(26,461	)		(2.8	)

Total residential customer relationships		601,883		610,293		(8,410	)		(1.4	)		597,162		601,883		(4,721	)		(0.8	)
Total business customer relationships		53,426		49,650		3,776			7.6			57,312		53,426		3,886			7.3
Total customer relationships		655,309		659,943		(4,634	)		(0.7	)		654,474		655,309		(835	)		(0.1	)

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⁽¹⁾	Residential video PSUs include all basic residential customers who receive video services and may have one or more digital set-top boxes or cable cards deployed. Residential bulk multi-dwelling accounts are included in our video PSUs at the individual unit level.
⁽²⁾	Business data PSUs include commercial accounts that receive data service via a cable modem and commercial accounts that receive broadband service optically via fiber connections.
⁽³⁾	Business voice customers who have multiple voice lines are only counted once in the PSU total.

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In recent years, our customer mix has shifted, causing subscribers to move from triple-play packages combining data, video and voice services to single and double-play packages. This is largely because some residential video customers have defected to DBS services and OTT offerings ~~in lieu of video~~ and more households have discontinued ~~landline~~residential voice service. In addition, we have focused on selling data-only packages to new customers rather than on cross-selling video to these customers.

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Co~~mparison~~Comparison of Three Months Ended June 30, ~~2017~~2018 to Three Months Ended June 30, ~~2016~~2017

Revenues

Revenues increased ~~$36.5~~$27.4 million, or ~~17.8%~~11.4%, due primarily to increases in residential data, business services and residential video ~~and business services~~ revenues of ~~$17.1~~$19.0 million, ~~$10.9~~$6.0 million and ~~$8.1~~$2.6 million, respectively. The increase was the result of ~~the~~an additional month of NewWave operations ~~since May 1, 2017~~ and organic growth in our higher margin product lines of residential data and business ~~services.~~services, partially offset by a decrease in residential voice revenues.

Revenues by service offering were as follows for the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, together with the percentages of total revenues that each item represented for the periods presented (dollars in thousands):

	Three Months Ended June 30,
	2017				2016				2017 vs. 2016						Three Months Ended June 30,
			% of				% of		$			%			2018				2017				2018 vs. 2017
	Revenues		Revenues		Revenues		Revenues		Change			Change			Revenues		% of Total		Revenues		% of Total		$ Change			% Change
Residential data	$	103,155		42.8	$	86,031		42.1	$	17,124			19.9		$	122,471		45.6	$	103,497		42.9	$	18,974			18.3
Residential video		84,873		35.2		74,016		36.2		10,857			14.7			87,462		32.6		84,873		35.2		2,589			3.1
Residential voice		11,417		4.7		10,944		5.4		473			4.3			10,504		3.9		11,417		4.7		(913	)		(8.0	)
Business services		32,543		13.5		24,491		12.0		8,052			32.9			38,485		14.3		32,493		13.5		5,992			18.4
Advertising sales		5,970		2.5		6,616		3.2		(646	)		(9.8	)		5,916		2.2		5,970		2.5		(54	)		(0.9	)
Other		3,084		1.3		2,459		1.1		625			25.4			3,576		1.4		2,741		1.2		835			30.5
Total revenues	$	241,042		100.0	$	204,557		100.0	$	36,485			17.8		$	268,414		100.0	$	240,991		100.0	$	27,423			11.4

Average monthly revenue per unit for the indicated service offerings were as follows for the three months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

	Three Months Ended June 30,				2017 vs. 2016				Three Months Ended June 30,				2018 vs. 2017
	2017		2016		$ Change		% Change		2018		2017		$ Change			% Change
Residential data ⁽¹⁾	$	62.52	$	61.49	$	1.03		1.7	$	68.47	$	62.52	$	5.95			9.5
Residential video ⁽¹⁾	$	82.11	$	74.59	$	7.52		10.1	$	88.55	$	82.11	$	6.44			7.8
Residential voice ⁽¹⁾	$	35.09	$	34.55	$	0.54		1.6	$	33.22	$	35.09	$	(1.87	)		(5.3	)
Business services ⁽²⁾	$	180.38	$	166.61	$	13.77		8.3	$	185.29	$	177.43	$	7.86			4.4

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⁽¹⁾	Average monthly revenue per unit values represent the applicable quarterly residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each period, divided by three, except that for any new PSUs added as a result of an acquisition occurring during the reporting period, the associated average monthly revenue per unit values represent the applicable residential service revenues (excluding installation and activation fees) divided by the ~~corresponding weighted average of the~~pro-rated number of PSUs during such period.
⁽²⁾	Average monthly revenue per unit values represent quarterly business services revenues (excluding installation and activation fees) divided by the average of the number of business customer relationships at the beginning and end of each period, divided by three, except that for any new business customer relationships added as a result of an acquisition occurring during the reporting period, the associated average monthly revenue per unit values represent business services revenues (excluding installation and activation fees) divided by the ~~weighted average of the~~pro-rated number of business customer relationships during such period.

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Revenues by service offering, excluding the impact of revenues related to legacy NewWave cable systems, were as follows for the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, together with the percentages of total revenues that each item represented for the periods presented (dollars in thousands):

Three Months Ended June 30,

2017

2016

2017 vs. 2016

% of

% of
$
%

Revenues

Revenues

Revenues

Revenues

Change

Change

Residential data
$ 92,413 44.2 $ 86,031 42.1 $ 6,382 7.4
Residential video
70,840 33.9 74,016 36.2 (3,176
)
(4.3
)
Residential voice
9,803 4.7 10,944 5.4 (1,141
)
(10.4
)
Business services
27,901 13.4 24,491 12.0 3,410 13.9
Advertising sales
5,699 2.7 6,616 3.2 (917
)
(13.9
)
Other
2,200 1.1 2,459 1.1 (259
)
(10.5
)
Total revenues
$ 208,856 100.0 $ 204,557 100.0 $ 4,299 2.1

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	Three Months Ended June 30,
	2018				2017				2018 vs. 2017
	Revenues		% of Total		Revenues		% of Total		$ Change			% Change
Residential data	$	103,009		46.9	$	92,693		44.4	$	10,316			11.1
Residential video		68,721		31.3		70,840		33.9		(2,119	)		(3.0	)
Residential voice		8,848		4.0		9,803		4.7		(955	)		(9.7	)
Business services		30,997		14.1		27,852		13.3		3,145			11.3
Advertising sales		5,566		2.5		5,699		2.7		(133	)		(2.3	)
Other		2,299		1.2		1,919		1.0		380			19.8
Total revenues	$	219,440		100.0	$	208,806		100.0	$	10,634			5.1

Average monthly revenue per unit, excluding the impact of revenues and customers ~~attained as a result of the~~related to legacy NewWave ~~acquisition in the second quarter of 2017~~cable systems, were as follows for the three months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

	Three Months Ended June 30,				2017 vs. 2016				Three Months Ended June 30,				2018 vs. 2017
	2017		2016		$ Change		% Change		2018		2017		$ Change			% Change
Residential data ⁽¹⁾	$	64.70	$	61.49	$	3.21		5.2	$	70.62	$	64.70	$	5.92			9.2
Residential video ⁽¹⁾	$	81.65	$	74.59	$	7.06		9.5	$	88.98	$	81.65	$	7.33			9.0
Residential voice ⁽¹⁾	$	34.98	$	34.55	$	0.43		1.2	$	34.83	$	34.98	$	(0.15	)		(0.4	)
Business services ⁽²⁾	$	175.69	$	166.61	$	9.08		5.4	$	179.81	$	172.49	$	7.32			4.2

_________


⁽¹⁾	Average monthly revenue per unit values represent the applicable quarterly residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each ~~period.~~period, divided by three.
⁽²⁾	Average monthly revenue per unit values represent quarterly business services revenues (excluding installation and activation fees) divided by the average of the number of business customer relationships at the beginning and end of each ~~period.~~period, divided by three.

Residential data service revenues increased ~~$17.1~~$19.0 million, or ~~19.9%~~18.3%, ~~due primarily to an increase in residential data customers of 25.7% year-over-year~~ as a result of the NewWave operations, ~~during~~organic subscriber growth, a modem rental rate adjustment in the ~~second~~first quarter of ~~2017 and organic subscriber growth,~~2018, a reduction in package discounting and increased customer subscriptions to premium ~~tiers by residential customers.~~tiers.

Residential video service revenues increased ~~$10.9~~$2.6 million, or ~~14.7%~~3.1%, due primarily to ~~an increase in residential video customers of 12.9% as a result of~~the incremental impact from the NewWave operations ~~during the second quarter of 2017~~ and a ~~rate adjustment~~broadcast television surcharge increase in the first quarter of ~~2017.~~2018, partially offset by an 11.8% year-over-year decrease in residential video subscribers.

Residential voice service revenues ~~increased $0.5~~decreased $0.9 million, or ~~4.3%~~8.0%, due primarily to ~~an increase~~a 9.3% year-over-year decrease in residential voice ~~customers of 10.3% as a result of the NewWave operations during the second quarter of 2017.~~subscribers.

Business services revenues increased ~~$8.1~~$6.0 million, or ~~32.9%~~18.4%, due primarily to the NewWave operations, ~~during the second quarter of 2017,~~ growth in our business data and voice services to small and medium-sized businesses and enterprise customers and a rate adjustment for business video customers in the first quarter of ~~2017.~~2018. Total business customer relationships increased ~~29.4%~~8.3% year-over-year. Overall, business services comprised 14.3% of our total revenues for the second quarter of 2018 compared to 13.5% of our total revenues for the second quarter of ~~2017 compared to 12.0% of our total revenues for the second quarter of 2016.~~

~~Advertising sales revenues decreased $0.6 million, or 9.8%, primarily as a result of fewer video customers to be reached by advertising spots.~~

~~Other revenues increased $0.6 million, or 25.4%, in the second quarter of~~ 2017.

~~Operating~~ Costs and Expenses

Operating expenses (excluding depreciation and amortization) were ~~$83.9~~$91.8 million in the second quarter of ~~2017~~2018 and increased ~~$8.2~~$7.7 million, or ~~10.8%~~9.2%, compared to the second quarter of ~~2016.~~2017 primarily as a result of the additional month of NewWave operations. Operating expenses as a percentage of revenues were ~~34.8%~~34.2% for the second quarter of ~~2017~~2018 compared to ~~37.0%~~34.9% for the ~~year ago~~year-ago quarter. ~~Additional operating~~Operating expenses attributable to the NewWave operations were ~~$15.9~~$23.6 million for the second quarter of ~~2017. This increase was partially offset by a $3.9 million decrease in labor costs~~2018. Excluding the expenses associated with ~~our change~~the NewWave operations, operating expenses would have been $68.1 million in ~~accounting estimate for capitalized labor costs discussed~~the second quarter of 2018 compared to $68.0 million in ~~Note 1~~the second quarter of 2017. Operating expenses as a percentage of revenues, excluding the impact of the ~~Notes~~NewWave operations, would have been 31.1% in the second quarter of 2018 compared to ~~our Consolidated Financial Statements, a $1.6 million decrease~~32.6% in ~~programming costs resulting from fewer video subscribers, and a decrease in backbone and internet connectivity fees.~~the second quarter of 2017.

Table of Contents

Selling, general and administrative expenses were $54.2 million for the second quarter of 2018 and increased ~~$7.7~~$3.2 million, or ~~17.7%~~6.3%, compared to ~~$51.2~~the second quarter of 2017. Selling, general and administrative expenses as a percentage of revenues were 20.2% and 21.1% for the second quarter of 2018 and 2017, respectively. Selling, general and administrative expenses attributable to the NewWave operations were $7.8 million for the second quarter of 2018, an increase of $3.0 million from the second quarter of 2017. Excluding the expenses associated with the NewWave operations, selling, general and administrative expenses would have been $46.4 million compared to $46.1 million in the prior year quarter. Increases in medical insurance expenses of $2.0 million and marketing expenses of $1.4 million were offset by a decrease in acquisition-related costs of $3.2 million. Selling, general and administrative expenses as a percentage of revenues, ~~were 21.2% and 21.3% for~~excluding the impact of the NewWave operations, would have been 21.1% in the second quarter of ~~2017~~2018 and ~~2016, respectively. Additional selling, general~~22.1% in the second quarter of 2017.

Depreciation and ~~administrative expenses attributable to the NewWave operations were $5.0~~amortization expense was $49.0 million for the second quarter of ~~2017. The remaining increase was due~~2018 and increased $1.0 million, or 2.1%, compared to ~~higher acquisition-related expenses of $2.8 million and severance costs of $1.3 million, partially offset by a $1.2 million decrease in labor costs in~~ the second quarter of ~~2017 associated with our aforementioned change in accounting estimate for capitalized labor costs.~~

~~Depreciation and amortization increased $12.2 million, or 35.2%, including $7.9 million attributable to the NewWave operations.~~2017. The increase was due primarily to new assets placed in service since the second quarter of ~~2016, including~~2017 and the additional month of depreciation and amortization on property, plant and equipment and ~~amortized~~finite-lived intangible assets acquired as part of the NewWave acquisition, partially offset by assets that became fully depreciated since the second quarter of ~~2016.~~2017. Depreciation and amortization expense related to the NewWave operations was $12.3 million for the second quarter of 2018 compared to $7.9 million in the second quarter of 2017. As a percentage of revenues, depreciation and amortization expense was ~~19.5%~~18.3% for the second quarter of ~~2017~~2018 compared to ~~17.0%~~19.9% for the second quarter of ~~2016.~~2017.

~~Table~~

We recognized a $2.7 million net loss on asset disposals during the second quarter of ~~Contents~~

2018 compared to a $0.5 million net loss on asset disposals in the second quarter of 2017.

Interest Expense

Interest expense increased ~~$4.2~~$3.2 million, or ~~56.1%~~26.9%, to $15.0 million due primarily to additional outstanding debt incurred ~~during the second quarter of~~on May 1, 2017 to finance the NewWave acquisition.

~~Other~~ Income ~~(Expense)~~Tax Provision

Other expense of $0.3 million in the second quarter of 2017 was primarily attributable to the write-off of $0.6 million of debt issuance costs related to the additional debt incurred to finance the NewWave acquisition, partially offset by interest income. OtherThe income ~~of $0.2 million in the second quarter of 2016 consisted of interest income.~~

~~Provision for Income Taxes~~

~~Provision for income taxes increased $1.4~~tax provision decreased $4.7 million, or ~~8.5%, due primarily to an increase in income before taxes of $3.4 million.~~26.9%. Our effective tax rate was ~~38.6%~~22.6% and ~~38.3% for the three months ended June 30, 2017 and 2016, respectively.~~

~~Net Income~~

~~As a result of the factors described above, our net income was $28.6 million~~38.6% for the second quarter of 2018 and 2017, ~~compared~~respectively. The decrease in the effective tax rate was due primarily to ~~$26.6~~a reduction in the Federal corporate income tax rate from 35% to 21% as a result of the 2017 Federal tax reform legislation and $1.2 million ~~for~~of income tax benefits attributable to state tax rate changes recorded during the second quarter of ~~2016, an increase of 7.3%.~~2018.

Co~~mparison~~Comparison of Six Months Ended June 30, ~~2017~~2018 to Six Months Ended June 30, ~~2016~~2017

Revenues

Revenues increased ~~$41.1~~$85.8 million, or ~~10.1%~~19.1%, due primarily to increases in residential data, residential video and business services revenues of ~~$23.9~~$48.3 million, ~~$8.5~~$18.9 million and ~~$11.2~~$16.7 million, respectively. The increase was the result of ~~the~~four additional months of NewWave operations ~~since May 1, 2017~~ and organic growth in our higher margin product lines of residential data and business ~~services, partially offset by decreases in residential voice and advertising revenues of $1.0 million and $2.0 million, respectively.~~services.

Revenues by service offering were as follows for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, together with the percentages of total revenues that each item represented for the periods presented (dollars in thousands):

	Six Months Ended June 30,
	2017				2016				2017 vs. 2016						Six Months Ended June 30,
			% of				% of		$			%			2018				2017				2018 vs. 2017
	Revenues		Revenues		Revenues		Revenues		Change			Change			Revenues		% of Total		Revenues		% of Total		$ Change			% Change
Residential data	$	193,356		43.1	$	169,470		41.6	$	23,886			14.1		$	242,330		45.4	$	194,018		43.3	$	48,312			24.9
Residential video		157,328		35.1		148,869		36.5		8,459			5.7			176,219		33.0		157,328		35.1		18,891			12.0
Residential voice		21,284		4.7		22,258		5.5		(974	)		(4.4	)		21,176		4.0		21,284		4.7		(108	)		(0.5	)
Business services		59,505		13.3		48,318		11.9		11,187			23.2			76,177		14.3		59,461		13.3		16,716			28.1
Advertising sales		11,592		2.6		13,619		3.3		(2,027	)		(14.9	)		11,158		2.1		11,592		2.6		(434	)		(3.7	)
Other		5,404		1.2		4,828		1.2		576			11.9			7,115		1.2		4,742		1.0		2,373			50.0
Total revenues	$	448,469		100.0	$	407,362		100.0	$	41,107			10.1		$	534,175		100.0	$	448,425		100.0	$	85,750			19.1

Table of Contents

Average monthly revenue per unit for the indicated service offerings were as follows for the six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

	Six Months Ended June 30,				2017 vs. 2016				Six Months Ended June 30,				2018 vs. 2017
	2017		2016		$ Change		% Change		2018		2017		$ Change			% Change
Residential data ⁽¹⁾	$	63.33	$	60.97	$	2.36		3.9	$	68.00	$	63.33	$	4.67			7.4
Residential video ⁽¹⁾	$	81.10	$	73.53	$	7.57		10.3	$	87.58	$	81.10	$	6.48			8.0
Residential voice ⁽¹⁾	$	34.63	$	34.53	$	0.10		0.3	$	32.98	$	34.63	$	(1.65	)		(4.8	)
Business services ⁽²⁾	$	176.87	$	165.98	$	10.89		6.6	$	184.68	$	174.05	$	10.63			6.1

__________


⁽¹⁾	Average monthly revenue per unit values represent the applicable year-to-date residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each period, divided by six, except that for any new PSUs added as a result of an acquisition occurring during the reporting period, the associated average monthly revenue per unit values represent the applicable residential service revenues (excluding installation and activation fees) divided by the ~~corresponding weighted average of the~~pro-rated number of PSUs during such period.
⁽²⁾	Average monthly revenue per unit values represent year-to-date business services revenues (excluding installation and activation fees) divided by the average of the number of business customer relationships at the beginning and end of each period, divided by six, except that for any new business customer relationships added as a result of an acquisition occurring during the reporting period, the associated average monthly revenue per unit values represent business services revenues (excluding installation and activation fees) divided by the ~~weighted average of the~~pro-rated number of business customer relationships during such period.

~~Table of Contents~~

Revenues by service offering, excluding the impact of revenues related to legacy NewWave cable systems, were as follows for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, together with the percentages of total revenues that each item represented for the periods presented (dollars in thousands):

	Six Months Ended June 30,
	2017				2016				2017 vs. 2016						Six Months Ended June 30,
			% of				% of		$			%			2018				2017				2018 vs. 2017
	Revenues		Revenues		Revenues		Revenues		Change			Change			Revenues		% of Total		Revenues		% of Total		$ Change			% Change
Residential data	$	182,614		43.9	$	169,470		41.6	$	13,144			7.8		$	204,132		46.8	$	183,214		44.0	$	20,918			11.4
Residential video		143,295		34.4		148,869		36.5		(5,574	)		(3.7	)		138,178		31.6		143,295		34.4		(5,117	)		(3.6	)
Residential voice		19,670		4.7		22,258		5.5		(2,588	)		(11.6	)		17,841		4.1		19,670		4.7		(1,829	)		(9.3	)
Business services		54,863		13.2		48,318		11.9		6,545			13.5			61,281		14.0		54,820		13.2		6,461			11.8
Advertising sales		11,321		2.7		13,619		3.3		(2,298	)		(16.9	)		10,474		2.4		11,321		2.7		(847	)		(7.5	)
Other		4,520		1.1		4,828		1.2		(308	)		(6.4	)		4,682		1.1		3,920		1.0		762			19.4
Total revenues	$	416,283		100.0	$	407,362		100.0	$	8,921			2.2		$	436,588		100.0	$	416,240		100.0	$	20,348			4.9

Average monthly revenue per unit, excluding the impact of revenues and customers ~~attained as a result of the~~related to legacy NewWave ~~acquisition in the second quarter of 2017~~cable systems, were as follows for the six months ended June 30, ~~2017~~2018 and ~~2016:~~2017:

	Six Months Ended June 30,				2017 vs. 2016				Six Months Ended June 30,				2018 vs. 2017
	2017		2016		$ Change		% Change		2018		2017		$ Change		% Change
Residential data ⁽¹⁾	$	64.49	$	60.97	$	3.52		5.8	$	70.22	$	64.49	$	5.73		8.9
Residential video ⁽¹⁾	$	80.79	$	73.53	$	7.26		9.9	$	87.95	$	80.79	$	7.16		8.9
Residential voice ⁽¹⁾	$	34.54	$	34.53	$	0.01		-	$	34.58	$	34.54	$	0.04		0.1
Business services ⁽²⁾	$	174.25	$	165.98	$	8.27		5.0	$	179.34	$	171.33	$	8.01		4.7

__________


⁽¹⁾	Average monthly revenue per unit values represent the applicable year-to-date residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each ~~period.~~period, divided by six.
⁽²⁾	Average monthly revenue per unit values represent year-to-date business services revenues (excluding installation and activation fees) divided by the average of the number of business customer relationships at the beginning and end of each ~~period.~~period, divided by six.

Residential data service revenues increased ~~$23.9~~$48.3 million, or ~~14.1%~~24.9%, ~~due primarily to an increase in residential data customers of 25.7% year-over-year~~ as a result of the NewWave operations, ~~during~~organic subscriber growth, a modem rental rate adjustment in the ~~second~~first quarter of ~~2017 and organic subscriber growth,~~2018, a reduction in package discounting and increased customer subscriptions to premium ~~tiers by residential customers.~~tiers.

Residential video service revenues increased ~~$8.5~~$18.9 million, or ~~5.7%~~12.0%, due primarily to ~~an increase in residential video customers of 12.9% as a result of~~ the NewWave operations ~~during the second quarter of 2017~~ and a ~~rate adjustment~~broadcast television surcharge increase in the first quarter of ~~2017.~~2018, partially offset by an 11.8% year-over-year decrease in residential video subscribers.

Residential voice service revenues decreased ~~$1.0~~$0.1 million, or ~~4.4%~~0.5%, due primarily to a 9.3% year-over-year decrease in ~~legacy Cable One~~residential voice ~~customers,~~subscribers, partially offset by ~~increased customers as a result~~an additional four months of ~~the~~ NewWave ~~operations during the second quarter of 2017.~~operations.

Business services revenues increased ~~$11.2~~$16.7 million, or ~~23.2%~~28.1%, due primarily to the NewWave operations, ~~during the second quarter of 2017,~~ growth in our business data and voice services to small and medium-sized businesses and enterprise customers and a rate adjustment for business video customers in the first quarter of ~~2017.~~2018. Total business customer relationships increased ~~29.4%~~8.3% year-over-year. Overall, business services comprised 14.3% of our total revenues for the six months ended June 30, 2018 compared to 13.3% of our total revenues for the six months ended June 30, ~~2017 compared to 11.9% of our total revenues for the six months ended June 30, 2016.~~

~~Advertising sales revenues decreased $2.0 million, or 14.9%, primarily as a result of fewer video customers to be reached by advertising spots.~~

~~Other revenues increased $0.6 million, or 11.9%.~~2017.

2327

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Operating Costs and Expenses

Operating expenses (excluding depreciation and amortization) were ~~$152.9~~$186.5 million for the six months ended June 30, ~~2017~~2018 and increased ~~$0.8~~$33.4 million, or ~~0.5%~~21.8%, compared to the year ago period. Operating expenses as a percentage of revenues were 34.9% for the first two quarters of 2018 compared to 34.1% for the first ~~half~~two quarters of ~~2017 compared to 37.3% for the first half of 2016. Additional operating~~2017. Operating expenses attributable to the NewWave operations were ~~$15.9~~$47.9 million and $16.1 million for the first ~~half~~two quarters of 2018 and 2017, respectively. Excluding the expenses associated with the NewWave operations, operating expenses would have been $138.6 million for the six months ended June 30, 2018, an increase of $1.5 million, or 1.1%, compared to the first two quarters of 2017. ~~This~~The increase was partially offset by an $8.6 million decrease in labor costs associated with our aforementioned change in accounting estimate for capitalized labor costs, a $2.8 million decrease in programming costs resulting from fewer video subscribers, a $1.6 million decrease in backbone and internet connectivity fees, and lower group insurance anddue primarily to higher repairs and maintenance ~~costs.~~costs of $0.9 million and contract labor costs of $0.7 million. Operating expenses as a percentage of revenues, excluding the impact of NewWave operations, would have been 31.7% for the six months ended June 30, 2018 compared to 32.9% for the six months ended June 30, 2017.

Selling, general and administrative expenses increased ~~$9.5~~$7.8 million, or ~~10.9%~~8.0%, to ~~$96.9~~$105.1 million. Selling, general and administrative expenses as a percentage of revenues were ~~21.6%~~19.7% and ~~21.4%~~21.7% for the six months ended June 30, 2018 and 2017, ~~and 2016,~~ respectively. ~~Additional selling,~~Selling, general and administrative expenses attributable to the NewWave operations were ~~$5.0~~$14.2 million for the first ~~half~~two quarters of ~~2017. The remaining increase was~~2018 and increased $9.4 million from the same period in the prior year. Excluding the expenses associated with the NewWave operations, selling, general and administrative expenses would have decreased $1.6 million, or 1.7%, to $90.9 million due primarily to ~~increases in legacy Cable One~~ acquisition-related ~~expenses of $4.1 million and severance~~ costs of ~~$2.6~~$4.7 million in 2017 and lower severance expense of $2.4 million, partially offset by higher medical insurance expense of $2.9 million, higher net compensation expense of $1.1 million and higher marketing costs of $1.0 million. Selling, general and administrative expenses as a ~~$2.4 million decrease in labor costs associated with our aforementioned change in accounting estimate~~percentage of revenues, excluding the impact of the NewWave operations, would have been 20.8% for ~~capitalized labor costs.~~the six months ended June 30, 2018 compared to 22.2% for the six months ended June 30, 2017.

Depreciation and amortization expense increased ~~$15.9~~$10.3 million, or ~~22.9%~~11.7%, including ~~$7.9~~a $16.9 million increase attributable to the NewWave operations. The increase was due primarily to new assets placed in service since the second quarter of ~~2016,~~2017, including property, plant and equipment and ~~amortized~~finite-lived intangible assets acquired as part of the NewWave acquisition, partially offset by assets that became fully depreciated since the second quarter of ~~2016.~~2017. As a percentage of revenues, depreciation and amortization expense was ~~19.0%~~18.3% for the six months ended June 30, ~~2017~~2018 compared to ~~17.0%~~19.5% for the six months ended June 30, ~~2016.~~2017.

We recognized a net ~~gain~~loss on ~~disposal~~asset disposals of ~~assets of $5.7~~$9.4 million in the first ~~half~~two quarters of 2018. In the first two quarters of 2017, we recognized a net gain of $5.7 million on asset disposals, primarily related to a gain recognized on the sale of a portion of a non-operating property that included our previous headquarters ~~building. In the first half~~building, net of ~~2016, we recognized~~ a ~~net~~ loss ~~of $0.6 million~~ on ~~disposals of assets.~~fixed asset disposals.

Interest Expense

Interest expense increased ~~$4.3~~$10.3 million, or ~~28.4%~~53.1%, to $29.7 million due primarily to additional outstanding debt incurred ~~during the second quarter of~~on May 1, 2017 to finance the NewWave acquisition.

~~Other~~ Income ~~(Expense)~~Tax Provision

~~Other expense of less than $0.1~~The income tax provision decreased $14.0 million, or 38.1%. Our effective tax rate was 21.2% and 37.9% for the six months ended June 30, 2018 and 2017, ~~was primarily attributable to~~respectively. The decrease in the write-off of $0.6 million of debt issuance costs related to the additional debt incurred to finance the NewWave acquisition, largely offset by interest income. Other income of $0.7 million for the comparable year ago period consisted of interest income and certain tax credits.

~~Provision for Income Taxes~~

~~Provision for income taxes increased $7.9 million, or 26.6%, due primarily to an increase in income before taxes of $16.0 million. Our~~ effective tax rate was ~~37.9%~~due primarily to a reduction in the Federal corporate income tax rate, $2.5 million of income tax benefits attributable to equity-based compensation awards and ~~35.7% for~~$1.2 million of income tax benefits attributable to state tax rate changes recorded during the six months ended June 30, 2017 and 2016, respectively. The increase in the effective tax rate primarily relates to $2.2 million of income tax benefits from certain spin-off and state tax items recognized in the first quarter of 2016, which did not recur.2018.

~~Net Income~~

~~As a result of the factors described above, our net income was $61.8 million for the six months ended June 30, 2017 compared to $53.7 million for the six months ended June 30, 2016.~~

Use of Adjusted EBITDA

We use certain measures that are not defined by GAAP to evaluate various aspects of our business. Adjusted EBITDA is a non-GAAP financial measure and should be considered in addition to, ~~and~~ not as superior to, or as a substitute for, net income reported in accordance with GAAP. ~~This term, as defined by us, may not be comparable to similarly titled measures used by other companies.~~ Adjusted EBITDA is reconciled to net income below.

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Adjusted EBITDA is defined as net income plus interest expense, ~~provision for~~ income ~~taxes,~~tax provision, depreciation and amortization, equity-based compensation, ~~expense,~~ severance expense, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on disposal of assets, system conversion costs, other (income) expense ~~net,~~ and other unusual operating expenses, as provided in the table below. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business as well as other non-cash or special items and is unaffected by our capital structure or investment activities. This measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of debt financing. These costs are evaluated through other financial ~~metrics.~~measures.

~~Table of Contents~~

We use Adjusted EBITDA to assess our performance. In addition, Adjusted EBITDA generally correlates to the measure used in the leverage ratio ~~calculation~~calculations under our outstanding ~~Notes and~~ Senior Credit Facilities and Notes to determine compliance with the covenants contained in the ~~Notes and~~ Senior Credit ~~Facilities. For~~Facilities and ability to take certain actions under the ~~purpose of calculating compliance with leverage covenants, we use a measure similar to Adjusted EBITDA, as presented.~~Indenture governing the Notes. Adjusted EBITDA is also a significant performance measure used by us in our annual incentive compensation program. Adjusted EBITDA does not take into account cash used for mandatory debt service requirements or other non-discretionary expenditures, and thus does not represent residual funds available for discretionary uses.

	Three Months Ended June 30,					2017 vs. 2016						Three Months Ended June 30,					2018 vs. 2017
(dollars in thousands)	2017		2016			$ Change			% Change
(dollars in thousands)												2018			2017		$ Change			% Change
Net income ⁽¹⁾	$	28,576	$	26,633		$	1,943			7.3		$	43,785		$	27,860	$	15,925			57.2

Plus: Interest expense		11,782		7,549			4,233			56.1			14,953			11,782		3,171			26.9
Provision for income taxes		17,967		16,558			1,409			8.5
Income tax provision													12,812			17,530		(4,718	)		(26.9	)
Depreciation and amortization		46,890		34,689			12,201			35.2			49,033			48,022		1,011			2.1
Equity-based compensation expense		2,418		3,420			(1,002	)		(29.3	)
Equity-based compensation													2,506			2,418		88			3.6
Severance expense		1,345		-			1,345			NM			241			1,345		(1,104	)		(82.1	)
(Gain) loss on deferred compensation		339		100			239			239.0			600			339		261			77.0
Acquisition-related costs		3,242		445			2,797			NM			-			3,242		(3,242	)		(100.0	)
(Gain) loss on disposal of assets		462		157			305			194.3
(Gain) loss on disposal of assets, net													2,734			462		2,272			NM
System conversion costs													1,327			-		1,327			NM
Other (income) expense, net		322		(183	)		505			NM			(882	)		322		(1,204	)		NM

Adjusted EBITDA ⁽¹⁾	$	113,343	$	89,368		$	23,975			26.8		$	127,109		$	113,322	$	13,787			12.2

	Six Months Ended June 30,						2017 vs. 2016						Six Months Ended June 30,						2018 vs. 2017
(dollars in thousands)	2017			2016			$ Change			% Change
(dollars in thousands)													2018			2017			$ Change			% Change
Net income ⁽¹⁾	$	61,790		$	53,677		$	8,113			15.1		$	84,438		$	59,975		$	24,463			40.8

Plus: Interest expense		19,389			15,104			4,285			28.4			29,676			19,389			10,287			53.1
Provision for income taxes		37,787			29,852			7,935			26.6
Income tax provision														22,714			36,674			(13,960	)		(38.1	)
Depreciation and amortization		85,295			69,382			15,913			22.9			97,811			87,558			10,253			11.7
Equity-based compensation expense		4,845			6,466			(1,621	)		(25.1	)
Equity-based compensation														4,844			4,845			(1	)		(0.0	)
Severance expense		2,599			-			2,599			NM			241			2,599			(2,358	)		(90.7	)
(Gain) loss on deferred compensation		429			(120	)		549			NM			516			429			87			20.3
Acquisition-related costs		4,723			544			4,179			NM			-			4,723			(4,723	)		(100.0	)
(Gain) loss on disposal of assets		(5,686	)		565			(6,251	)		NM
(Gain) loss on disposal of assets, net														9,368			(5,686	)		15,054			NM
System conversion costs														2,167			-			2,167			NM
Other (income) expense, net		35			(693	)		728			(105.1	)		(1,499	)		35			(1,534	)		NM

Adjusted EBITDA ⁽¹⁾	$	211,206		$	174,777		$	36,429			20.8		$	250,276		$	210,541		$	39,735			18.9

__________


NM = Not meaningful.
⁽¹⁾⁽¹⁾ Net income and Adjusted EBITDA for the three and six months ended June 30, 2018 include ~~two months~~the full impact of NewWave operations, while net income and ~~the favorable impact of a reduction in expense of $5.1 million and $11.0 million~~Adjusted EBITDA for the three and six months ended June 30, 2017 ~~respectively, due to a change in accounting estimate related to capitalized labor costs. Without the contribution from~~include only two months of NewWave operations, ~~net income would have been $26.5 million and $59.7 million and Adjusted EBITDA growth would have been 14.2% and 14.4% for the three and six months ended June 30, 2017, respectively. Excluding both the~~as NewWave impact and the change in estimate related to capitalized labor, net income would have been $23.4 million and $52.9 million and Adjusted EBITDA growth would have been 8.4% and 8.1% for the three and six months ended June 30, 2017, respectively.was not acquired until May 1, 2017.

We believe Adjusted EBITDA is useful to investors in evaluating ~~the~~our operating ~~performance of our company.~~performance. Adjusted EBITDA and similar measures with similar titles are ~~commonly~~common measures used by investors, analysts and peers to compare performance in our industry, although our measure of Adjusted EBITDA may not be directly comparable to ~~similar~~similarly titled measures reported by other companies.

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Financial Condition: Liquidity and Capital Resources

Liquidity

Our primary funding requirements are for our ongoing operations, planned capital expenditures, payments of quarterly dividends and share repurchases. We believe that existing cash balances, our Senior Credit Facilities ~~as amended,~~ and operating cash flows will provide adequate support for these funding requirements over the next 12 months. However, our ability to fund operations, make planned capital expenditures, pay quarterly dividends and make share repurchases depends on future operating performance and cash flows, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. As a result of the 2017 Federal tax reform legislation, we expect to realize approximately $38 million to $42 million of cash tax savings during 2018.

During the first two quarters of 2018, our cash and cash equivalents increased $41.8 million. At June 30, 2018, we had $203.5 million of cash on hand compared to $161.8 million at December 31, 2017. Our working capital was $134.2 million and $76.7 million at June 30, 2018 and December 31, 2017, respectively.

The following table shows a summary of our net cash flows for the periods indicated (dollars in thousands):

Six Months Ended June 30,

2017 vs. 2016

2017

2016

$ Change

% Change

Net cash provided by operating activities
$ 130,859 $ 125,580 $ 5,279 4.2
Net cash used in investing activities
(795,806
)
(75,522
)
(720,284
)
NM
Net cash provided by (used in) financing activities
616,700 (66,516
)
683,216 NM
Change in cash and cash equivalents
(48,247
)
(16,458
)
(31,789
)
193.2
Cash and cash equivalents, beginning of period
138,040 119,199 18,841 NM
Cash and cash equivalents, end of period
$ 89,793 $ 102,741 $ (12,948
)
(12.6
)

~~__________~~

~~NM = Not meaningful.~~

During the first half of 2017, our cash and cash equivalents decreased $48.2 million. At June 30, 2017, we had $89.8 million of cash on hand compared to $138.0 million at December 31, 2016. Our working capital was $30.8 million and $74.8 million at June 30, 2017 and December 31, 2016, respectively.

	Six Months Ended June 30,						2018 vs. 2017
	2018			2017			$ Change			% Change
Net cash provided by operating activities	$	196,602		$	130,859		$	65,743			50.2
Net cash used in investing activities		(91,816	)		(795,806	)		703,990			(88.5	)
Net cash provided by (used in) financing activities		(63,016	)		616,700			(679,716	)		(110.2	)
Change in cash and cash equivalents		41,770			(48,247	)		90,017			(186.6	)
Cash and cash equivalents, beginning of period		161,752			138,040			23,712			17.2
Cash and cash equivalents, end of period	$	203,522		$	89,793		$	113,729			126.7

Net cash provided by operating activities was ~~$130.9~~$196.6 million and ~~$125.6~~$130.9 million for the first ~~half~~two quarters of ~~2017~~2018 and ~~2016,~~2017, respectively. The $65.7 million year-over-year ~~change in operating cash flow~~increase was primarily attributable to ~~higher net income adjusted for depreciation~~an increase in Adjusted EBITDA of $39.7 million, lower cash tax payments in 2018 compared to 2017 and ~~amortization, equity-based compensation, deferred taxes and gain on disposal of assets, partially offset by changes in operating assets and liabilities. The~~a favorable change in net operating assets and liabilities, ~~was due primarily to~~partially offset by a ~~change~~$14.1 million increase in ~~income taxes receivable and accounts payable and accrued liabilities as a result of the timing of payments compared to the first half of 2016.~~cash paid for interest.

Net cash used in investing activities was ~~$795.8~~$91.8 million and ~~$75.5~~$795.8 million for the first ~~half~~two quarters of ~~2017~~2018 and ~~2016,~~2017, respectively. The ~~increase~~$704.0 million decrease from the prior year period was due primarily to the $728.8 million purchase of NewWave ~~acquisition~~in the prior year, partially offset by the receipt of $10.1 million of proceeds in 2017 from the sale of a non-operating property and a $15.5 million year-over-year increase in cash paid for capital expenditures primarily attributable to increased NewWave capital spending during 2018.

Net cash used in financing activities was $63.0 million for the first two quarters of 2018 compared to net cash provided by financing activities of $616.7 million for the first two quarters of 2017. The $679.7 million change in net cash flows from the prior year period was primarily a result of the NewWave financing transactions that took place in the second quarter of 2017 and ~~increased capital expenditures, partially offset by $10.1~~a $22.2 million increase in ~~proceeds received for the sale of a non-operating property in the first quarter of 2017.~~

Net cash provided by financing activities was $616.7 million in the first half of 2017 compared to net cash used in financing activities of $66.5 million for the first half of 2016. The change was primarily attributable to new debt incurred in connection with the NewWave acquisition during the second quarter of 2017, partially offset by the payment of debt issuance costs, repayment of the Term Loan and a reduction inyear-over-year share ~~repurchases compared to the comparable prior year period.~~repurchase activity.

On July 1, 2015, the Board authorized up to $250 million of share repurchases (subject to a total cap of 600,000 shares of our common stock). Purchases under the share repurchase program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases are based on a number of factors, including share price and business and market conditions. Since the inception of the share repurchase program through the end of the second quarter of ~~2017,~~2018, we have repurchased ~~165,633~~199,861 shares of our common stock at an aggregate cost of $95.8 million. During the first two quarters of 2018, we repurchased 34,028 shares at an aggregate cost of ~~$73.1 million. During the first half of 2017, we repurchased 700 shares at an aggregate cost of $0.4~~$22.6 million, of which ~~all occurred~~30,717 shares were repurchased for $20.3 million during the ~~first~~second quarter. ~~Additionally, we~~

We currently expect to continue to pay quarterly cash dividends on shares of our common stock, subject to approval of the Board. During the second quarter of ~~2017,~~2018, the Board approved a quarterly dividend of ~~$1.50~~$1.75 per share of common stock, which was paid on June ~~2, 2017.~~8, 2018. On August 7, 2018, the Board approved a quarterly dividend of $2.00 per share of common stock to be paid on September 7, 2018 to holders of record as of August 21, 2018.

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Financing Activity

On June 17, 2015, we issued $450 million aggregate principal amount of 5.75% senior unsecured notes due 2022. The Notes mature on June 15, 2022 and interest is payable on June 15^th15th and December 15^th15th of each year. The Notes are jointly and severally guaranteed on a senior unsecured basis (the ~~“Guarantees”~~“Notes Guarantees”) by each of our ~~existing and future domestic~~ subsidiaries that guarantee the Senior Credit Facilities (the ~~“Guarantors”~~“Notes Guarantors”). In addition, if one of our subsidiaries becomes a guarantor in respect of the Senior Credit Facilities or certain other indebtedness, it is required to provide (subject to customary exceptions) a Notes Guarantee. The Notes are unsecured and senior obligations of the Company. The Notes Guarantees are unsecured and senior obligations of the Notes Guarantors. ~~At our option,~~

The Notes were issued pursuant to the ~~Notes may be redeemed in whole or in part, at any time prior to June 15, 2018, at a price equal to 100% of the aggregate principal amount~~Indenture. The Indenture provides for early redemption of the Notes, ~~plus accrued and unpaid interest, if any, to (but excluding) the redemption date plus a “make-whole” premium. We may also redeem the Notes, in whole or in part,~~ at ~~any time on or after June 15, 2018,~~our option, at the ~~redemption~~ prices and subject to the terms specified in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the redemption date. Additionally, at any time prior to June 15, 2018, we may redeem up to 35% of the aggregate principal amount of the Notes with the net cash proceeds from certain equity offerings at a price equal to 105.75% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to (but excluding) the redemption date.Indenture. The Indenture includes certain covenants relating to debt incurrence, liens, restricted payments, ~~assets~~asset sales and transactions with affiliates, changes in control and mergers or sales of all or substantially all of our assets. The Indenture also provides for customary events of default (subject, in certain cases, to customary grace periods).

On June 30, 2015, we entered into the Credit Agreement ~~among the Company, as borrower,~~with the lenders party thereto, JPMorgan, as administrative agent, and the other agents party thereto. The Credit Agreement provided for a five-year Revolving Credit Facility in an aggregate principal amount of $200 million and a five-year Term Loan Facility in an aggregate principal amount of $100 million. Concurrently with ~~our~~the entry into the Credit Agreement, we borrowed the full amount of the Term Loan Facility. The obligations under the Original Credit Facilities were obligations of the Company and were guaranteed by our subsidiary, Cable One VoIP LLC (“Cable One VoIP”). The obligations under the Original Credit Facilities were secured, subject to certain exceptions, by substantially all of the assets of the Company and Cable One VoIP.

Borrowings under the Original Credit Facilities bore interest, at our option, at a rate per annum determined by reference to either LIBOR or an adjusted base rate, in each case plus an applicable interest rate margin. The applicable interest rate margin with respect to LIBOR borrowings was a rate per annum between 1.50% and 2.25% and the applicable interest rate margin with respect to adjusted base rate borrowings was a rate per annum between 0.50% and 1.25%, in each case determined on a quarterly basis by reference to a pricing grid based upon our total net leverage ratio. In addition, we are required to pay commitment fees on any unused portion of the Revolving Credit Facility at a rate between 0.25% per annum and 0.40% per annum, determined by reference to the pricing grid.

The Revolving Credit Facility also gives us the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility of $2.8 million at June 30, 2017 were held for the benefit of certain general and liability insurance matters and bore interest at a rate of 1.625% per annum. We had $197.2 million available for borrowing under the Revolving Credit Facility at June 30, 2017.

On May 1, 2017, we entered into the ~~Restatement Agreement with JPMorgan, as administrative agent,~~Amended and ~~the lenders party thereto, pursuant to which we amended and restated the~~Restated Credit Agreement and incurred $750 million of New Loans which were used, together with cash on hand, to ~~(i)~~ finance the ~~transactions contemplated by the Merger Agreement, (ii)~~NewWave acquisition, repay in full the Term Loan Facility and ~~(iii)~~ pay related fees and expenses.

The New Loans consist of ~~(a) a~~the five-year Term Loan A in an aggregate principal amount of $250 million and ~~(b) a~~the seven-year Term Loan B in an aggregate principal amount of $500 ~~million, which~~million. The obligations under the Amended and Restated Credit Agreement are guaranteed by our wholly owned domestic subsidiaries and are secured, subject to certain exceptions, by substantially all assets of ~~our company~~the Company and the guarantors.

On April 23, 2018, we entered into the Repricing Amendment to the Amended and Restated Credit Agreement to, among other things, (i) decrease the applicable margin for the Term Loan B to 1.75% for LIBOR borrowings and 0.75% for base rate borrowings, (ii) reset the period during which a prepayment premium in respect of the Term Loan B may be required for a Repricing Transaction until six months after the effective date of the Repricing Amendment and (iii) reset the period during which the Term Loan B benefits from certain “most favored nation” pricing protections until 12 months after the effective date of the Repricing Amendment. Other than as set forth above, all other material terms and provisions of the Senior Credit Facilities remain substantially the same. Excluding the costs of the transaction, the interest rate reduction is expected to save us approximately $2.5 million annually in interest costs.

The interest margins applicable to the ~~New Loans under the Amended and Restated~~Senior Credit ~~Agreement~~Facilities are, at our option, equal to either LIBOR or a base rate, plus an applicable margin equal to, ~~(x)~~(i) with respect to the Term Loan A ~~2.25%~~and the Revolving Credit Facility, 1.50% to ~~1.50%~~2.25% for LIBOR loans and ~~1.25%~~0.50% to ~~0.50%~~1.25% for base rate loans, determined on a quarterly basis by reference to a pricing grid based on our total net leverage ratio and ~~(y)~~(ii) with respect to the Term Loan B, (x) 2.25% for LIBOR loans and 1.25% for base rate ~~loans.~~loans through April 22, 2018 and (y) 1.75% for LIBOR loans and 0.75% for base rate loans after April 22, 2018. The Term Loan A may be prepaid at any time without premium and amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of 2.5% per annum for the first year after funding, 5.0% per annum for the second year after funding, 7.5% per annum for the third year after funding and 10.0% per annum for the fourth and fifth years after funding, with the outstanding balance due upon maturity. The Term Loan B amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of 1.0% per annum, with the outstanding balance due upon maturity. The Term Loan B is subject to a 1.0% prepayment ~~penalty~~premium if prepaid in connection with a Repricing Transaction within six months of ~~funding,~~the effective date of the Repricing Amendment, benefits from certain “most favored nation” pricing protections and is not subject to the financial maintenance covenants under the Amended and Restated Credit Agreement. Other than as set forth above, the New Loans are subject to terms substantially similar to those under the Credit Agreement.

We may, subject to certain specified terms and provisions, obtain additional credit facilities of up to $425 million under the Amended and Restated Credit Agreement plus an unlimited amount so long as, on a pro forma basis, our First Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) is no greater than 1.80 to 1.00. The Amended and Restated Credit Agreement contains customary representations, warranties and affirmative and negative covenants as well as customary events of default. The Amended and Restated Credit Agreement also requires us to maintain specified ratios of total net indebtedness and first lien net indebtedness to consolidated operating cash flow.

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We were in compliance with all debt covenants as of June 30, 2018.

As of June 30, ~~2017,~~2018, outstanding borrowings under the Term Loan A and Term Loan B were ~~$250~~$243.8 million and ~~$500~~$495.0 million, and each bore interest at a rate of ~~2.93%~~4.09% per ~~annum~~annum. Letter of credit issuances under the Revolving Credit Facility totaled $3.1 million and ~~3.43% per annum, respectively.~~we had $196.9 million available for borrowing under the Revolving Credit Facility at June 30, 2018.

In connection with the ~~New Loans,~~Repricing Amendment, we incurred ~~$15.2 million in~~ debt issuance costs of $2.1 million, of which ~~$0.6~~$0.1 million was ~~written off during~~expensed immediately. We recorded $1.0 million and $0.8 million of debt issuance cost amortization for the ~~quarter~~three months ended June 30, ~~2017. Unamortized debt issuance costs totaled $21.6~~2018 and 2017, respectively, and $2.0 million and ~~$8.1~~$1.2 million atfor the six months ended June 30, ~~2017~~2018 and ~~December 31, 2016,~~2017, respectively.

Capital Expenditures

We have significant ongoing capital expenditure requirements. In addition, we expect to spend up to $50 million during 2018 and 2019, in addition to the $10 million spent in 2017, to enhance the acquired NewWave systems by rebuilding low capacity markets, launching all-digital video services, implementing 32-channel bonding to enable a 1 Gbps download speed product launch, converting back office functions such as billing, accounting and service provisioning and migrating products to legacy Cable One platforms. Capital expenditures are funded primarily by cash on hand and cash flows from operating activities.

We have adopted capital expenditure disclosure guidance as supported by the ~~Internet & Television Association (“NCTA”).~~NCTA. These disclosures are not required under GAAP, nor do they impact our accounting for capital expenditures under GAAP. The amounts of capital expenditures reported in this Quarterly Report on Form 10-Q are calculated in accordance with NCTA disclosure ~~guidelines, which include assets acquired during the relevant periods.~~guidelines.

The following table presents our ~~major~~ capital ~~expenditure categories~~expenditures by category in accordance with NCTA disclosure guidelines for the six months ended June 30, ~~2017~~2018 and ~~2016~~2017 (in thousands):

	Six Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2018		2017
Customer premise equipment	$	13,941	$	12,248	$	26,275	$	13,941
Commercial		4,347		2,909		3,750		4,347
Scalable infrastructure		16,872		25,163		18,880		16,872
Line extensions		6,149		4,004		7,309		6,149
Upgrade/rebuild		10,239		6,459		9,856		10,239
Support capital		24,882		14,240		24,798		24,882
Total	$	76,430	$	65,023	$	90,868	$	76,430

Contractual Obligations and Contingent Commitments

The following is a summary of our outstanding contractual obligations ~~remaining~~ as of June 30, ~~2017~~2018 (in thousands):

Years ending December 31,	Programming Purchase Commitments		Operating Leases		Total Debt, including Capital Leases		Other Purchase Obligations⁽¹⁾		Total
2017 (remaining months)	$	108,744	$	1,116	$	5,633	$	12,611	$	128,104
2018		180,550		1,761		14,392		19,204		215,907
Year ending December 31,											Programming Purchase Commitments ⁽¹⁾		Operating Lease Payments		Debt Payments ⁽²⁾		Other Purchase Obligations ⁽³⁾		Total
2018 (remaining six months)											$	111,655	$	948	$	8,758	$	13,239	$	134,600
2019		131,217		1,218		20,642		12,812		165,889		167,592		1,477		20,642		17,552		207,263
2020		62,401		827		26,892		6,878		96,998		100,832		1,055		26,892		12,433		141,212
2021		29,353		550		30,017		5,009		64,929		32,739		763		30,017		7,256		70,775
2022												410		355		180,017		2,070		182,852
Thereafter		11		1,004		1,102,700		4,237		1,107,952		-		472		922,683		4,559		927,714
Total	$	512,276	$	6,476	$	1,200,276	$	60,751	$	1,779,779	$	413,228	$	5,070	$	1,189,009	$	57,109	$	1,664,416

_________

⁽¹⁾	Programming purchase commitments represent contracts that we have with cable television networks and broadcast stations to provide programming services to our subscribers. The amounts reported represent estimates of the future programming costs for these purchase commitments based on tier placement as of June 30, 2018 and the estimated subscriber numbers applied to the per-subscriber rates contained in these contracts. Actual amounts due under such contracts may differ from the amounts above based on the actual subscriber numbers and tier placements at the time. In addition, programming purchases sometimes occur pursuant to non-binding commitments, which are not reflected in the amounts shown.
⁽¹⁾⁽²⁾	~~Includes~~Debt payments include principal repayment obligations as defined by the agreements described in the Financing Activity section and for capital lease payment obligations.
⁽³⁾	Other purchase obligations includes purchase obligations related to capital projects and other legally binding commitments. Other purchase orders made in the ordinary course of business are excluded from the ~~table above.~~amounts shown. Any amounts for which we are liable under purchase orders are ~~reflected in our Consolidated Balance Sheet~~included within ~~Accounts~~accounts payable and accrued ~~liabilities.~~liabilities in our condensed consolidated balance sheet.

Programming and content purchases represent contracts that we have with cable television networks and broadcast stations to provide programming services to our subscribers. The amounts included above represent estimates of the future programming costs for these contract requirements and commitments based on tier placement as of June 30, 2017 and estimated subscriber numbers applied to the per-subscriber rates contained in these contracts. Actual amounts due under such contracts may differ from the amounts above based on the actual subscriber numbers and tier placements. In addition, programming purchases sometimes occur pursuant to non-binding commitments, which are not reflected in the summary above.

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~~Total debt relates to principal repayment obligations as defined by~~We incur the ~~agreements described in the “Financing Activity” section above and for capital leases.~~

~~The~~ following ~~items are not included as contractual obligations due to various factors discussed below. However, we incur these~~ costs as part of our ~~operations:~~operations, however, they are not included within the contractual obligations table above for the reasons discussed below:

●

We rent space on utility poles ~~used~~ in order to provide our ~~operations.~~services to certain subscribers. Generally, pole rentals are cancellable on short notice, ~~but~~and thus are not included in the table above. However, we anticipate that such rentals will recur. Rent expense for pole attachments was ~~$1.9~~$2.2 million and ~~$1.4~~$1.9 million for the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and ~~$3.5~~$4.4 million and ~~$2.9~~$3.5 million for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

●

We pay fees to franchise ~~fees~~authorities under multi-year franchise agreements based on a percentage of revenues generated from video service ~~per~~each year. Franchise fees and other franchise-related costs included in both revenues and operating expenses within the ~~Consolidated Statements~~condensed consolidated statements of ~~Operations~~operations and ~~Comprehensive Income~~comprehensive income were ~~$4.0~~$4.1 million and ~~$3.6~~$4.0 million for the three months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively, and ~~$7.5~~$8.2 million and ~~$7.2~~$7.5 million for the six months ended June 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

●

We have cable franchise agreements requiring the construction of cable plant and the provision of services to customers within the franchise areas. In connection with these obligations under existing franchise agreements, we obtain surety bonds or letters of credit guaranteeing performance to municipalities and public utilities and payment of insurance premiums. Such surety bonds and letters of credit totaled $12.2 million and $12.0 million as of June 30, ~~2017~~2018 and December 31, ~~2016 totaled $8.8 million and $5.1 million,~~2017, respectively. Payments under these arrangements are required only in the remote event of nonperformance. We do not expect that these contingent commitments will result in any amounts being paid.

Off-Balance Sheet Arrangements

With the exception of ~~surety bonds~~the items discussed within the preceding “Contractual Obligations and ~~letters of credit noted above,~~Contingent Commitments” section, we do not have any ~~off-balance-sheet~~off-balance sheet arrangements or financing ~~activities~~arrangements with special-purpose entities.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

An accounting policy is considered to be critical if it is important to our results of operations and financial condition and if it requires management’s most difficult, subjective and complex judgments in its application. ~~Except for~~With the ~~change in~~exception of changes to our revenue recognition accounting ~~estimate regarding labor capitalization as~~policy due to the adoption of the new revenue recognition standard effective January 1, 2018 discussed in ~~Note~~note 1 of the ~~Notes~~notes to our ~~Consolidated Financial Statements included in~~condensed consolidated financial statements within this Quarterly Report on Form 10-Q, there have been no material changes to ~~the~~our critical accounting ~~policies~~policy and ~~estimates included~~estimate disclosures described in our ~~Annual Report on~~2017 Form ~~10-K filed with the SEC on March 1, 2017.~~

~~Table of Contents~~

~~Cautionary Statement Regarding Forward-Looking Statements~~10-K.

This document contains “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about the cable industry and our business and financial results. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Important factors that could cause our actual results to differ materially from those in our forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors:

●

~~the effect of our acquisition of NewWave on our ability to retain and hire key personnel and to maintain relationships with customers, suppliers and other business partners;~~

●

~~the potential diversion of senior management’s attention from our ongoing operations due to the acquisition of NewWave;~~

●

~~uncertainties as to our ability and the amount of time necessary to realize the expected synergies and other benefits of the NewWave transaction;~~

●

~~our ability to integrate NewWave’s operations into our own in an efficient and effective manner;~~

●

~~rising levels of competition from historical and new entrants in our markets;~~

●

~~recent and future changes in technology;~~

●

~~our ability to continue to grow our business services product;~~

●

~~increases in programming costs and retransmission fees;~~

●

~~our ability to obtain support from vendors;~~

●

~~the effects of any significant acquisitions by us;~~

●

~~adverse economic conditions;~~

●

~~the integrity and security of our network and information systems;~~

●

~~legislative and regulatory efforts to impose new legal requirements on our data services;~~

●

~~changing and additional regulation of our data, video and voice services;~~

●

~~our ability to renew cable system franchises;~~

●

~~increases in pole attachment costs;~~

●

~~the failure to meet earnings expectations;~~

●

~~the adequacy of our risk management framework;~~

●

~~changes in tax and other laws and regulations;~~

●

~~changes in GAAP or other applicable accounting policies; and~~

●

~~the other risks and uncertainties detailed in the section titled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 1, 2017.~~

Any forward-looking statements made by us in this document speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

~~Item~~ITEM 3. ~~Quantitative~~ ~~and Qualitative Disclosures About Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential ~~gain/~~gain or loss arising from changes in market rates and prices, such as interest rates. There have been no ~~significant~~material changes to ~~our~~the market risk disclosures ~~included~~described in ~~our Annual Report on~~the 2017 Form ~~10-K filed with the SEC on March 1, 2017.~~10-K.

Table of Contents

ITEM 4. CONTROLS AND PROCEDURES

~~Item 4.~~ ~~Controls~~ ~~and Procedures~~

Disclosure Controls and ~~Procedures~~Procedures

The Company’s management ~~with the participation of the Company’s Chief Executive Officer~~is responsible for establishing and ~~Chief Financial Officer, has evaluated the effectiveness of the Company’s~~maintaining adequate disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosureprocedures. Disclosure controls and procedures ~~were effective in recording, processing, summarizing~~are those controls and ~~reporting, on a timely basis, information required~~procedures that are designed to ~~be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring~~ensure that information required to be disclosed ~~by the Company~~ in the Company’s reports ~~it files~~filed or ~~submits~~submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is accumulated and communicated to ~~the Company’s~~ management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~Internal Control Over~~Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial ~~Reporting~~Officer, the Company carried out an evaluation as of June 30, 2018, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based on the Company’s evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2018 because of the material weakness in the Company’s internal control over financial reporting described below.

AsDuring the second quarter of 2018, the Company identified a material weakness in the Company’s internal controls over the NewWave billing system inherited as a result of the NewWave acquisition ~~on May 1, 2017, we have implemented internal~~(the “NewWave billing system”). Specifically, the Company did not maintain effective access and change management controls ~~over~~to ensure that only authorized users had access to the NewWave billing system and underlying financial ~~reporting~~data and all changes to ~~include consolidation~~the system were authorized.

A material weakness is a deficiency, or a combination of ~~NewWave and acquisition-related accounting and disclosures. The NewWave operations utilize separate information and accounting systems and processes. Our management is~~deficiencies, in ~~the process of reviewing and evaluating the design and operating effectiveness of~~ internal control over financial reporting, ~~relating~~such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The identified deficiencies did not result in a misstatement to the Company’s consolidated financial statements or disclosures; however, the deficiencies, when aggregated, could result in misstatements of certain account balances (such as NewWave ~~operations.~~revenues, accounts receivables and deferred revenues) or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

~~Table~~

As previously disclosed, the Company is integrating NewWave billing activities into its billing system and eliminating the NewWave billing system. The Company is targeting to complete the conversion of ~~Contents~~

the NewWave billing system, which will remediate the material weakness described above, by the end of 2018.

~~Except as disclosed above, there~~Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, ~~2017~~2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II: OTHER INFORMATION

~~Item~~ITEM 1. ~~Legal~~ ~~Proceedings~~LEGAL PROCEEDINGS

None.

~~Item~~ITEM 1A. ~~Risk~~ ~~Factors~~RISK FACTORS

There have been no material changes to ~~our~~the risk factors as previously disclosed in ~~our Annual Report on~~the 2017 Form ~~10-K filed with the SEC on March 1, 2017.~~10-K.

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~~Item~~ITEM 2. ~~Unregistered~~ ~~Sales of Equity Securities and Use of Proceeds~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth certain information relating to the purchases of our common stock by us and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) under the Exchange Act during the three months ended June 30, ~~2017~~2018 (dollars in thousands, except per share data):

Period

Total Number of
Shares Purchased

Average Price
Paid Per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs ⁽¹⁾

Maximum Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs

April 1 to 30, 2017
- $ - - $ 176,865
May 1 to 31, 2017
- $ - - $ 176,865
June 1 to 30, 2017 ⁽²⁾
149 $ 715.26 - $ 176,865
Total
149 $ 715.26 -

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 to 30, 2018 ⁽²⁾		6,280	$	685.98		6,277	$	170,127
May 1 to 31, 2018		17,464	$	647.60		17,464	$	158,817
June 1 to 30, 2018		6,976	$	665.99		6,976	$	154,171
Total		30,720	$	659.62		30,717	$	154,171

_________


⁽¹⁾	On July 1, 2015, the Board authorized up to $250 million of share repurchases (subject to a total cap of 600,000 shares of ~~Company~~ common stock), which was announced on August 7, 2015. The authorization does not have an expiration date. Purchases under the share repurchase program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases is based on a number of factors, including share price and business and market conditions.
⁽²⁾	~~Represents~~Includes three shares withheld from ~~employees~~an employee to satisfy estimated tax withholding obligations in connection with ~~the~~ vesting of restricted ~~shares and exercises of SARs~~stock under the 2015 Plan. The average price paid per share for the common stock withheld was based on the closing price of our common stock on the ~~applicable~~ vesting ~~or exercise~~ date.

~~Item~~ITEM 3. ~~Defaults~~ ~~Upon Senior Securities~~DEFAULTS UPON SENIOR SECURITIES

None.

~~Item~~ITEM 4. MINE SAFETY DISCLOSURES~~Mine~~ ~~Safety Disclosures~~

Not applicable.

~~Item~~ITEM 5. ~~Other~~ ~~Information~~OTHER INFORMATION

Not applicable.

~~Table of Contents~~

~~Item~~ITEM 6. EXHIBITS~~Exhibits~~

Exhibit Number	Description

~~4.1~~	First Supplemental Indenture, dated as of May 1, 2017, among Avenue Broadband Communications LLC, Telecommunications Management, LLC, Ultra Communications Group, LLC, and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of Cable One, Inc. filed on May 4, 2017).

10.1	~~Restatement Agreement,~~Amendment No. 1, dated as of ~~May 1, 2017,~~April 23, 2018, to the Credit Agreement among Cable One, Inc., ~~Cable One VoIP, LLC,~~the lenders or other financial institutions party thereto, and JPMorgan Chase Bank, N.A., as administrative agent ~~and the lenders party thereto~~ (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Cable One, Inc. filed on ~~May 4, 2017).~~

~~10.2~~	~~Amended and Restated Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (incorporated herein by reference to Annex B to the 2017 Proxy Statement of Cable One, Inc. filed on March 28, 2017).~~

~~10.3~~	~~Form of Non-Employee Director Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K of Cable One, Inc. filed on May 4, 2017)~~April 23, 2018).

31.1	Principal Executive Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Principal Financial Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Table of Contents

101.INS	XBRL Instance Document.*

101.SCH	XBRL Taxonomy Extension Schema Document.*

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*

__________

* Filed herewith.

** Furnished herewith.

3236

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Cable One, Inc. (Registrant)

By:	/s/ Julia M. Laulis
	Name:	Julia M. Laulis
	Title:	Chair of the Board, President and Chief Executive Officer

Date: August ~~8, 2017~~9, 2018

By:

/s/ Kevin P. Coyle

Name:

Kevin P. Coyle

Title:

Senior Vice President and

Chief Financial Officer

Date: August ~~8, 2017~~9, 2018

Delaware		13-3060083
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

210 E. Earll Drive, Phoenix, Arizona		85012
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
(Do not check if a smaller reporting company)
		Emerging growth company	☐

Description of Class	Shares Outstanding as of August ~~4, 2017~~ 6, 2018
Common ~~Stock,~~stock, par value $0.01	~~5,725,853~~ 5,703,114

PART I: FINANCIAL INFORMATION		~~Page~~1
~~PART I.~~	~~FINANCIAL INFORMATION~~	1

Item 1.	Condensed Consolidated Financial Statements	1
~~Item 2.~~
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	30
~~Item 4.~~	~~Controls and Procedures~~	3020

~~PART II.~~Item 3. Quantitative and Qualitative Disclosures About Market Risk	~~OTHER INFORMATION~~	3133

Item 4. Controls and Procedures	34

PART II: OTHER INFORMATION	34

Item 1. Legal Proceedings	~~Legal Proceedings~~34
	31
Item 1A. Risk Factors	~~Risk Factors~~34
	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
~~Item 3.~~	~~Defaults Upon Senior Securities~~	31
~~Item 4.~~	~~Mine Safety Disclosures~~	31
~~Item 5.~~	~~Other Information~~	31
~~Item 6.~~	~~Exhibits~~	3235

Item 3. Defaults Upon Senior Securities	35
	~~Signatures~~
Item 4. Mine Safety Disclosures	3335

Item 5. Other Information	35

Item 6. Exhibits	35

SIGNATURES	37

(in thousands, except par value and share data)	June 30, 2017			December 31, 2016
	(Unaudited)
(in thousands, except par value and share data)							June 30, 2018			December 31, 2017
Assets
Current Assets:
Cash and cash equivalents	$	89,793		$	138,040		$	203,522		$	161,752
Accounts receivable, net		45,812			32,526			34,281			29,930
Income tax receivable		16,539			4,547
Prepaid assets		13,256			10,824
Income taxes receivable								9,013			21,331
Prepaid and other current assets								18,104			10,898
Total Current Assets		165,400			185,937			264,920			223,911
Property, plant and equipment, net		803,383			619,621			819,734			831,892
Intangibles, net		971,673			497,480
Intangible assets, net								959,817			965,745
Goodwill		178,374			84,928			172,129			172,129
Other assets		5,664			9,305
Other noncurrent assets								11,458			10,955
Total Assets	$	2,124,494		$	1,397,271		$	2,228,058		$	2,204,632

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	86,601		$	82,703		$	94,444		$	117,855
Deferred revenue		36,795			22,190			18,791			15,008
Long-term debt - current portion		11,250			6,250
Current portion of long-term debt								17,500			14,375
Total Current Liabilities		134,646			111,143			130,735			147,238
Long-term debt		1,167,458			530,886			1,151,915			1,160,682
Deferred income taxes		294,850			276,297			216,713			207,154
Accrued compensation and other liabilities		24,392			24,434
Other noncurrent liabilities								12,762			13,111
Total Liabilities		1,621,346			942,760			1,512,125			1,528,185

Commitments and contingencies (see Note 12)
Commitments and contingencies (refer to note 14)

Stockholders' Equity
Preferred stock ($0.01 par value; 4,000,000 shares authorized; none issued or outstanding)		-			-			-			-
Common stock ($0.01 par value; 40,000,000 shares authorized; 5,887,899 shares issued; and 5,725,095 and 5,708,223 shares outstanding as of June 30, 2017 and December 31, 2016, respectively)		59			59
Common stock ($0.01 par value; 40,000,000 shares authorized; 5,887,899 shares issued; and 5,703,337 and 5,731,442 shares outstanding as of June 30, 2018 and December 31, 2017, respectively)								59			59
Additional paid-in capital		22,514			17,669			33,256			28,412
Retained earnings		556,401			511,776			792,784			728,386
Accumulated other comprehensive loss		(442	)		(446	)		(351	)		(352	)
Treasury stock, at cost (162,804 and 179,676 shares held as of June 30, 2017 and December 31, 2016, respectively)		(75,384	)		(74,547	)
Treasury stock, at cost (184,562 and 156,457 shares held as of June 30, 2018 and December 31, 2017, respectively)								(109,815	)		(80,058	)
Total Stockholders' Equity		503,148			454,511			715,933			676,447
Total Liabilities and Stockholders' Equity	$	2,124,494		$	1,397,271		$	2,228,058		$	2,204,632

	Provisional Allocation
Assets
Cash and cash equivalents	$	12,220
Accounts receivable		15,027
Prepaid assets		1,184
Property, plant and equipment		192,234
Intangibles		476,300
Other assets		370
Total		697,335

Liabilities
Accounts payable and accrued liabilities		24,542
Deferred revenue		14,516
Deferred income taxes		10,720
Total		49,778

Net assets acquired		647,557
Purchase price consideration		741,003
Goodwill recognized	$	93,446

	Provisional Estimated Fair Value		Provisional Estimated Weighted Average Useful Life (in years)
Franchise agreements	$	320,000	Indefinite
Customer relationships	$	155,000		14
Trademark and trade name	$	1,300		1

	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Cable distribution systems	$	1,243,192		$	1,048,790		$	1,370,420		$	1,329,451
Customer premise equipment		201,360			181,852			201,578			200,175
Other equipment and fixtures		380,871			359,957			385,033			378,968
Buildings and leasehold improvements		94,426			88,592			96,898			95,314
Capitalized software		87,752			83,815			94,399			89,773
Construction in progress		53,335			64,822			66,089			67,564
Land		11,591			9,612			11,615			11,585
Total property, plant and equipment		2,072,527			1,837,440
Less accumulated depreciation		(1,269,144	)		(1,217,819	)
Property, plant and equipment, gross								2,226,032			2,172,830
Less: Accumulated depreciation								(1,406,298	)		(1,340,938	)
Property, plant and equipment, net	$	803,383		$	619,621		$	819,734		$	831,892

					June 30, 2017										June 30, 2018
	Useful				Gross				Net		Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying		Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount		Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Finite-Lived Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,138	$	3,840	$	298		1	-	25	$	2,931	$	2,883	$	48
Customer relationships			14		$	155,000	$	1,845	$	153,155			14			160,000		13,333		146,667
NewWave trademark and trade name			1		$	1,300	$	217	$	1,083
Indefinite-Lived Intangible Assets (Excluding Goodwill)
Trademarks and trade names													2.7			1,300		569		731
Total Finite-Lived Intangible Assets															$	164,231	$	16,785	$	147,446

Indefinite-Lived Intangible Assets
Franchise agreements					$	817,137									$	812,371

Year Ending December 31,	Amount
2018 (remaining six months)	$	5,963
2019		11,925
2020		11,437
2021		11,436
2022		11,433
Thereafter		95,252
Total	$	147,446

	June 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017
Notes	$	450,000		$	450,000		$	450,000		$	450,000
Senior Credit Facilities		750,000			95,000			738,750			744,375
Capital lease obligation		276			284			259			267
Total debt		1,200,276			545,284			1,189,009			1,194,642
Less unamortized debt issuance costs		(21,568	)		(8,148	)		(19,594	)		(19,585	)
Less current portion of long-term debt		(11,250	)		(6,250	)
Total Long-term debt	$	1,167,458		$	530,886
Less current portion								(17,500	)		(14,375	)
Total long-term debt							$	1,151,915		$	1,160,682

Years Ending December 31,	Amount
2017 (remaining months)	$	5,633
2018		14,392
Year Ending December 31,			Amount
2018 (remaining six months)			$	8,758
2019		20,642		20,642
2020		26,892		26,892
2021		30,017		30,017
2022				180,017
Thereafter		1,102,700		922,683
Total	$	1,200,276	$	1,189,009

	June 30, 2017
	Carrying		Fair
	Amount		Value
Assets:
Money market investments	$	32,248	$	32,248
Commercial paper	$	39,957	$	39,942
Long-term debt, including current portion:
Notes	$	450,000	$	473,625
Senior Credit Facilities	$	750,000	$	750,000

				Weighted Average
				Grant Date
	Restricted			Fair Value
	Stock			Per Share
Outstanding as of December 31, 2016		38,425		$	402.21
Granted		15,660		$	624.42
Granted due to performance achievement		5,006		$	433.66
Forfeited		(3,992	)	$	418.58
Vested		(1,693	)	$	436.29
Outstanding as of June 30, 2017		53,406		$	466.62

Vested and unissued as of June 30, 2017		3,175		$	436.06

	Restricted Stock			Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2017		51,290		$	472.89
Granted		14,455		$	692.25
Forfeited		(1,011	)	$	610.54
Vested and issued		(24,454	)	$	394.51
Outstanding as of June 30, 2018		40,280		$	595.79

Vested and unissued as of June 30, 2018		4,138		$	493.43

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Fair Value		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)		Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2016		136,000		$	426.80	$	88.07	$	26,510		8.7
Outstanding as of December 31, 2017													102,458		$	477.62	$	100.91	$	23,173		8.1
Granted		21,572		$	620.64	$	138.01	$	-		9.5		14,500		$	702.40	$	168.84	$	-		9.5
Exercised		(6,775	)	$	422.31	$	87.22						(12,707	)	$	431.96	$	89.64
Forfeited		(8,700	)	$	422.31	$	87.22						(2,249	)	$	422.31	$	87.22
Outstanding as of June 30, 2017		142,097		$	456.72	$	95.74	$	36,118		8.4
Outstanding as of June 30, 2018													102,002		$	516.48	$	112.27	$	22,115		7.9

Vested and exercisable as of June 30, 2017		24,150		$	422.81	$	87.33	$	6,957		8.2
Vested and exercisable as of June 30, 2018													15,263		$	490.48	$	104.35	$	3,706		7.6

	~~2017~~2018
Expected volatility		~~20.90~~22.53%	%
Risk-free interest rate		~~2.14~~2.35%	%
Expected term (in years)		~~6.25~~6.25%
Expected dividend yield		~~0.96~~0.99%	%


⁽¹⁾⁽¹⁾	~~SARs outstanding that~~Equity-based awards whose impact is considered to be anti-dilutive under the treasury stock method were ~~not included in~~excluded from the diluted net income per share ~~calculation because the effect would have been~~calculation. The excluded number of anti-dilutive ~~were 2,477~~equity-based awards totaled 5,176 and ~~12,098~~2,477 for the three months ended June 30, ~~2017~~ 2018 and ~~2016,~~2017, respectively, and ~~1,438~~5,435 and ~~6,830~~1,438 for the six months ended June 30, ~~2017~~ 2018 and ~~2016,~~2017, respectively.

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽¹⁾		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 to 30, 2017		-	$	-		-	$	176,865
May 1 to 31, 2017		-	$	-		-	$	176,865
June 1 to 30, 2017 ⁽²⁾		149	$	715.26		-	$	176,865
Total		149	$	715.26		-