UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	For the quarterly period ended	~~September 30, 2018~~March 31, 2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	For the transition period from		to



Commission File Number	Registrant; State of Incorporation; Address and Telephone Number	IRS Employer Identification No.

001-38126		38-3980194
	Altice USA, Inc.
	Delaware
	1 Court Square West
	Long Island City, New York 11101
	(516) 803-2300

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the

Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrants were required to submit and post such files). Yes ý No o

Indicate by check mark whether each Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	oý	Accelerated filer	o
Non-accelerated filer	ýo	Smaller reporting company	o
(Do not check if a smaller reporting company)		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o



Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).	Yes	o	No	ý

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	ATUS	New York Stock Exchange



Number of shares of common stock outstanding as of ~~November 2, 2018:~~April 26, 2019:	~~715,100,411~~675,031,483



ALTICE USA, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		Page
Item 1. Financial Statements of Altice USA, Inc. and Subsidiaries
	~~Condensed~~ Consolidated Balance Sheets - ~~September 30, 2018~~March 31, 2019 (Unaudited) and December 31, ~~2017~~2018	34
	~~Condensed~~ Consolidated Statements of Operations - Three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017 (Unaudited)~~	5
	~~Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and nine months ended September 30, 2018 and 2017~~ (Unaudited)	6
	~~Condensed~~ Consolidated Statements of ~~Stockholders’ Equity~~Comprehensive Loss - ~~Nine~~Three months ended ~~September 30,~~March 31, 2019 and 2018 (Unaudited)	7
	~~Condensed~~ Consolidated Statements of Stockholders’ Equity - Three months ended March 31, 2019 and 2018 (Unaudited)	8
	Consolidated Statements of Cash Flows - ~~Nine~~Three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (Unaudited)	89

	Notes to ~~Condensed~~ Consolidated Financial Statements (Unaudited)	1011

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		3728

Item 3. Quantitative and Qualitative Disclosures About Market Risk		5741

Item 4. Controls and Procedures		5943

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		6043

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		6044

Item 6. Exhibits		6146

SIGNATURES		6247

PART I. FINANCIAL INFORMATION

This ~~Quarterly Report includes~~Form 10-Q contains statements that ~~express~~constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Act of 1934, as amended. In this Form 10-Q there are statements concerning our ~~opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding~~ future ~~events or future~~operating results and ~~therefore are, or may be deemed to be, “forward‑looking statements.” These “forward‑looking statements” appear throughout this Quarterly Report and relate to matters such as anticipated~~ future ~~growth in revenues, operating income, cash provided by operating activities and other~~ financial ~~measures.~~performance. Words such as ~~“expects,” “anticipates,” “believes,” “estimates,” “may,” “will,” “should,” “could,” “seeks,” “potential,” “continue,” “intends,” “plans”~~"expects", "anticipates", "believes", "estimates", "may", "will", "should", "could", "potential", "continue", "intends", "plans" and similar words and terms used in the discussion of future operating results, future financial performance and future events identify ~~forward‑looking~~forward-looking statements. ~~All of these forward‑looking~~Investors are cautioned that such forward-looking statements are ~~based on management’s current expectations~~not guarantees of future performance, results or events and ~~beliefs about future events. As with any projection~~involve risks and uncertainties and that actual results or ~~forecast, they are susceptible to uncertainty and changes in circumstances.~~developments may differ materially from the forward-looking statements as a result of various factors.

We operate in a highly competitive, consumer and technology driven and rapidly changing business that is affected by government regulation and economic, strategic, technological, political and social conditions. Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained in the forward‑looking statements. In addition, important factors that could cause our actual results to differ materially from those in our forward‑looking statements include:

competition for broadband, ~~pay television~~video and telephony customers from existing competitors (such as broadband communications companies, ~~direct broadcast satellite ("DBS")~~wireless data and telephony providers, DBS providers and ~~Internet‑based~~Internet-based providers) and new competitors entering our footprint;

changes in consumer preferences, laws and regulations or technology that may cause us to change our operational strategies;

increased difficulty negotiating programming agreements on favorable terms, if at all, resulting in increased costs to us and/or the loss of popular programming;

increasing programming costs and delivery expenses related to our products and services;

our ability to achieve anticipated customer and revenue growth, to successfully introduce new products and services and to implement our growth strategy;

our ability to complete our capital investment plans on time and on budget, including our plan to build a fiber-to-the-home ("FTTH") network, and deploy Altice One, our ~~new~~ home communications hub;

our ability to develop and deploy mobile voice and data services pursuant to the agreement we entered into with Sprint in the fourth quarter of 2017, and our ability to attract customers to these services;

the effects of economic conditions or other factors which may negatively affect our customers’ demand for our current and future products and services;

the effects of industry conditions;

demand for digital and linear advertising products and services;

our substantial indebtedness and debt service obligations;

adverse changes in the credit market;

changes as a result of any tax reforms that may affect our business;

financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate;

the restrictions contained in our financing agreements;

our ability to generate sufficient cash flow to meet our debt service obligations;

fluctuations in interest rates which may cause our interest expense to vary from quarter to quarter;

technical failures, equipment defects, physical or electronic break-ins to our services, computer viruses and similar problems;

the disruption or failure of our network, information systems or technologies as a result of computer hacking, computer viruses, “cyber-attacks,” misappropriation of data, outages, natural disasters and other material events;

our ability to obtain necessary hardware, software, communications equipment and services and other items from our vendors at reasonable costs;

our ability to effectively integrate acquisitions and to maximize expected operating efficiencies from our acquisitions or as a result of the transactions, if any;

significant unanticipated increases in the use of bandwidth-intensive Internet-based services;

the outcome of litigation, government investigations and other proceedings;

our ability to successfully operate our business following the completion of our separation from Altice ~~Europe N.V.;~~Europe; and

other risks and uncertainties inherent in our cable and other broadband communications businesses and our other businesses, including those listed under the caption ~~“Risk Factors”~~"Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") filed on March ~~6, 2018~~1, 2019 (the "Annual Report").

These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward‑looking statements. Other unknown or unpredictable factors could cause our actual results to differ materially from those expressed in any of our forward‑looking statements.

Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements are made only as of the date of this ~~Quarterly~~Annual Report. Except to the extent required by law, we do not undertake, and specifically decline any obligation, to update any forward‑looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. We qualify all forward‑looking statements by these cautionary statements.

Certain numerical figures included in this ~~quarterly report~~Quarterly Report have been subject to rounding adjustments. Accordingly, such numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Item 1. Financial Statements


ALTICE USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)					ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
ASSETS	September 30, 2018 (Unaudited)		December 31, 2017		March 31, 2019 (Unaudited)		December 31, 2018
Current Assets:
Cash and cash equivalents	$	486,208	$	329,848	$	123,007	$	298,781
Restricted cash	253		252		258		257
Accounts receivable, trade (less allowance for doubtful accounts of $13,259 and $13,420)	436,550		370,765
Accounts receivable, trade (less allowance for doubtful accounts of $12,007 and $13,520)					405,030		448,399
Prepaid expenses and other current assets	167,836		130,425		181,726		136,285
Amounts due from affiliates	18,387		19,764		1,021		17,557
Derivative contracts	3,269		52,545		—		1,975
Total current assets	1,112,503		903,599		711,042		903,254
Property, plant and equipment, net of accumulated depreciation of $3,708,770 and $2,599,579	5,760,479		6,023,826
Property, plant and equipment, net of accumulated depreciation of $4,384,560 and $4,044,671					5,772,026		5,828,881
Right-of-use operating lease assets					259,223		—
Investment securities pledged as collateral	1,521,045		1,720,357		1,717,350		1,462,626
Derivative contracts	31,510		—		—		109,344
Other assets	97,537		57,904		75,030		84,382
Amortizable customer relationships, net of accumulated amortization of $1,979,595 and $1,409,021	3,991,289		4,561,863
Amortizable trade names, net of accumulated amortization of $678,248 and $588,574	388,835		478,509
Other amortizable intangibles, net of accumulated amortization of $16,772 and $10,978	20,872		26,082
Amortizable intangibles, net of accumulated amortization of $3,083,406 and $2,882,787					3,992,205		4,192,824
Indefinite-lived cable television franchises	13,020,081		13,020,081		13,020,081		13,020,081
Goodwill	8,012,416		8,019,861		8,012,416		8,012,416
Total assets	$	33,956,567	$	34,812,082	$	33,559,373	$	33,613,808

See accompanying notes to ~~condensed~~ consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (In thousands, except share and per share amounts)
ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (In thousands, except share and per share amounts)							ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (In thousands, except share and per share amounts)

LIABILITIES AND STOCKHOLDERS' EQUITY	September 30, 2018 (Unaudited)			December 31, 2017			March 31, 2019 (Unaudited)			December 31, 2018

Current Liabilities:
Accounts payable	$	883,408		$	795,128		$	835,481		$	857,502
Accrued liabilities:
Interest	321,327			397,422
Employee related costs	123,387			147,727
Other accrued expenses	329,122			411,988
Interest payable							272,018			386,475
Accrued employee related costs							100,925			139,806
Amounts due to affiliates	23,424			10,998			5,538			26,096
Deferred revenue	131,133			111,197			145,019			140,053
Liabilities under derivative contracts	—			52,545
Credit facility debt	57,650			42,650
Senior notes and debentures	531,206			507,744
Capital lease obligations	4,147			9,539
Notes payable	71,873			33,424
Current portion of long-term debt							123,966			158,625
Other current liabilities							318,873			312,634
Total current liabilities	2,476,677			2,520,362			1,801,820			2,021,191
Defined benefit plan obligations	84,755			103,163
Other liabilities	169,473			144,289			231,721			271,554
Deferred tax liability	4,809,745			4,769,286			4,717,667			4,723,937
Liabilities under derivative contracts	153,850			187,406			223,054			132,908
Collateralized indebtedness	1,400,398			1,349,474
Credit facility debt	6,163,843			4,600,873
Senior notes and debentures	14,824,532			15,352,688
Capital lease obligations	17,304			12,441
Notes payable	5,218			32,478
Deficit investment in affiliates	—			3,579
Right-of-use operating lease liability							245,871			—
Long-term debt, net of current maturities							23,137,835			22,653,975
Total liabilities	30,105,795			29,076,039			30,357,968			29,803,565
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 16)
Redeemable equity	179,799			231,290			190,339			130,007
Stockholders' Equity:
Preferred Stock, $.01 par value, 100,000,000 shares authorized, no shares issued and outstanding	—			—
Class A common stock: $0.01 par value, 4,000,000,000 shares authorized, 510,702,726 and 246,982,292 issued and outstanding	5,107			2,470
Class B common stock: $0.01 par value, 1,000,000,000 shares authorized, 490,086,674 issued and 213,146,331and 490,086,674 outstanding	2,131			4,901
Preferred stock, $.01 par value, 100,000,000 shares authorized, no shares issued and outstanding							—			—
Class A common stock: $0.01 par value, 4,000,000,000 shares authorized, 490,946,066 issued and outstanding as of March 31, 2019 and 496,064,027 issued and outstanding as of December 31, 2018							4,909			4,961
Class B common stock: $0.01 par value, 1,000,000,000 shares authorized, 490,086,674 issued and 188,838,546 outstanding as of March 31, 2019 and 212,976,259 outstanding as of December 31, 2018							1,888			2,130
Class C common stock: $0.01 par value, 4,000,000,000 shares authorized, no shares issued and outstanding	—			—			—			—
Paid-in capital	3,618,709			4,665,229			2,777,554			3,423,803
Retained earnings	38,744			840,636			226,831			251,830
	3,664,691			5,513,236			3,011,182			3,682,724
Accumulated other comprehensive loss	(2,291		)	(10,022		)	(8,212		)	(11,783		)
Total stockholders' equity	3,662,400			5,503,214			3,002,970			3,670,941
Noncontrolling interest	8,573			1,539			8,096			9,295
Total stockholders' equity	3,670,973			5,504,753			3,011,066			3,680,236
	$	33,956,567		$	34,812,082		$	33,559,373		$	33,613,808

See accompanying notes to ~~condensed~~ consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Revenue (including revenue from affiliates of $545, $426, $1,397 and $820, respectively) (See Note 14) $ 2,417,801
$ 2,322,521
$ 7,111,668
$ 6,947,142
Operating expenses:
Programming and other direct costs (including charges from affiliates of $1,671, $1,196, $6,690 and $3,026, respectively) (See Note 14) 790,533
755,101
2,373,021
2,272,147
Other operating expenses (including charges from affiliates of $905, $8,302, $15,154 and $24,266, respectively) (See Note 14) 569,070
570,111
1,727,842
1,769,477
Restructuring and other expense 16,587
53,448
29,865
142,765
Depreciation and amortization (including impairments) 536,053
823,286
1,827,285
2,138,800
1,912,243
2,201,946
5,958,013
6,323,189
Operating income 505,558
120,575
1,153,655
623,953
Other income (expense):
Interest expense (including $90,405 related to affiliates and related parties in 2017) (See Note 9) (389,594 ) (379,066 ) (1,157,395 ) (1,232,730 )
Interest income 1,427
961
9,843
1,373
Gain (loss) on investments and sale of affiliate interests, net 111,684
(18,900 ) (182,031 ) 169,888
Gain (loss) on derivative contracts, net (79,628 ) (16,763 ) 130,883
(154,270 )
Gain (loss) on interest rate swap contracts (19,554 ) 1,051
(64,405 ) 12,539
Loss on extinguishment of debt and write-off of deferred financing costs (including $513,723 related to affiliates and related parties in 2017) (See Note 9) —
(38,858 ) (41,616 ) (600,240 )
Other expense, net (186 ) (2,984 ) (12,473 ) (9,019 )
(375,851 ) (454,559 ) (1,317,194 ) (1,812,459 )
Income (loss) before income taxes 129,707
(333,984 ) (163,539 ) (1,188,506 )
Income tax benefit (expense) (95,968 ) 141,550
(29,675 ) 439,945
Net income (loss) 33,739
(192,434 ) (193,214 )
(748,561 )
Net income attributable to noncontrolling interests (1,186 ) (135 ) (1,039 ) (737 )
Net income (loss) attributable to Altice USA, Inc. stockholders $ 32,553
$ (192,569 ) $ (194,253 ) $ (749,298 )
INCOME (LOSS) PER SHARE:
Basic income (loss) per share attributable to Altice USA, Inc. stockholders:
Net income (loss) $ 0.04
$ (0.26 )
$ (0.26 ) $ (1.10 )
Basic weighted average common shares (in thousands) 732,963
$ 737,069
735,685
682,234
Diluted income (loss) per share attributable to Altice USA, Inc. stockholders:
Net income (loss) $ 0.04
$ (0.26 ) $ (0.26 ) $ (1.10 )
Diluted weighted average common shares (in thousands) 732,963
737,069
735,685
682,234

~~See accompanying notes to condensed consolidated financial statements.~~

ALTICE USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017

Net income (loss) $ 33,739
$ (192,434 ) $ (193,214 ) $ (748,561 )
Other comprehensive income (loss):
Defined benefit pension plans:
Unrecognized actuarial gain (loss) 9,602
(4,056 ) 13,794
(8,389 )
Applicable income taxes (2,592 ) 1,622
(3,723 ) 3,356
Unrecognized gain (loss) arising during period, net of income taxes 7,010
(2,434 ) 10,071
(5,033 )
Settlement loss included in other expense, net 65
1,014
929
1,403
Applicable income taxes (18 ) (406 ) (252 ) (561 )
Settlement loss included in other expense, net, net of income taxes 47
608
677
842
Curtailment loss —

—

—

(3,195 )
Applicable income taxes —

—

—

1,278
Curtailment loss, net of income taxes —

—

—

(1,917 )
Foreign currency translation adjustment 437

—

1,351

—
Applicable income taxes (27 )
—

(365 )
—
Foreign currency translation adjustment, net 410

—

986

—
Other comprehensive gain (loss) 7,467
(1,826 ) 11,734
(6,108 )
Comprehensive income (loss) 41,206
(194,260 ) (181,480 ) (754,669 )
Comprehensive income attributable to noncontrolling interests (1,186 ) (135 ) (1,039 ) (737 )
Comprehensive income (loss) attributable to Altice USA, Inc. stockholders $ 40,020
$ (194,395 ) $ (182,519 ) $ (755,406 )

ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)

	Three Months Ended March 31,
	2019			2018
Revenue (including revenue from affiliates of $592 and $125, respectively) (See Note 15)	$	2,396,567		$	2,329,714
Operating expenses:
Programming and other direct costs (including charges from affiliates of $1,687 and $1,154, respectively) (See Note 15)	812,985			787,361
Other operating expenses (including charges from affiliates of $2,246 and $7,994, respectively) (See Note 15)	564,432			583,023
Restructuring and other expense	15,244			3,587
Depreciation and amortization (including impairments)	561,428			642,705
	1,954,089			2,016,676
Operating income	442,478			313,038
Other income (expense):
Interest expense	(388,283		)	(377,258		)
Interest income	1,819			3,103
Gain (loss) on investments and sale of affiliate interests, net	254,725			(248,602		)
Gain (loss) on derivative contracts, net	(177,029		)	168,352
Loss on interest rate swap contracts	(23,672		)	(31,922		)
Loss on extinguishment of debt and write-off of deferred financing costs	(157,902		)	(4,705		)
Other income (expense), net	80			(11,658		)
	(490,262		)	(502,690		)
Loss before income taxes	(47,784		)	(189,652		)
Income tax benefit	22,586			60,703
Net loss	(25,198		)	(128,949		)
Net loss (income) attributable to noncontrolling interests	199			(2		)
Net loss attributable to Altice USA, Inc. stockholders	$	(24,999	)	$	(128,951	)
Loss per share:
Basic and diluted loss per share:	$	(0.04	)	$	(0.17	)
Basic and diluted weighted average common shares (in thousands)	695,528			737,069
Cash dividends declared per common share	$	—		$	—

See accompanying notes to ~~condensed~~ consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)

Class A
Common
Stock

Class B
Common
Stock

Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Loss

Total
Stockholders'
Equity

Non-controlling
Interest

Total
Equity
Balance at January 1, 2018, as reported $ 2,470
$ 4,901
$ 4,642,128
$ 854,824
$ (10,022 ) $ 5,494,301
$ 1,539
$ 5,495,840
Impact of change in accounting policies (See Note 3) —
—
—
12,666
—
12,666
—
12,666
Impact of ATS Acquisition (See Note 3) —
—
23,101
(26,854 ) —
(3,753 ) —
(3,753 )
Balance at January 1, 2018, as adjusted 2,470
4,901
4,665,229
840,636
(10,022 ) 5,503,214
1,539
5,504,753
Net loss attributable to stockholders —
—
—
(194,253 ) —
(194,253 ) —
(194,253 )
Net loss attributable to noncontrolling interests —
—
—
—
—
—
1,039
1,039
Contributions from noncontrolling interests —
—
—
—
—
—
5,995
5,995
Pension liability adjustments, net of income taxes —
—
—
—
10,748
10,748
—
10,748
Foreign currency translation adjustment —
—
—
—
986
986
—
986
Share-based compensation expense —
—
46,176
—
—
46,176
—
46,176
Redeemable equity vested —
—
124,415
—
—
124,415
—
124,415
Change in redeemable equity —
—
(72,924 ) —
—
(72,924 ) —
(72,924 )
Dividend payment —
—
(963,711 ) (536,224 ) —
(1,499,935 ) —
(1,499,935 )
Class A shares acquired through share repurchase program and retired (133 ) —
(240,666 ) —
—
(240,799 ) —
(240,799 )
Conversion of Class B to Class A shares, including $2,424 in connection with the Distribution 2,770
(2,770 ) —
—
—
—
—
—
Impact of i24 Acquisition —
—
61,049
(73,578 ) (1,840 ) (14,369 )
(14,369 )
Other changes to equity —
—
(859 ) —
—
(859 ) —
(859 )
Adoption of ASU No. 2018-02 —
—
—
2,163
(2,163 ) —
—
—
Balance at September 30, 2018 $ 5,107
$ 2,131
$ 3,618,709
$ 38,744
$ (2,291 ) $ 3,662,400
$ 8,573
$ 3,670,973

ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) (Unaudited)

	Three Months Ended March 31,
	2019			2018
Net loss	$	(25,198	)	$	(128,949	)
Other comprehensive income (loss):
Defined benefit pension plans:
Unrecognized actuarial gain	4,918			4,551
Applicable income taxes	(1,292		)	(1,228		)
Unrecognized gain arising during period, net of income taxes	3,626			3,323
Settlement loss included in other expense, net	171			606
Applicable income taxes	(45		)	(164		)
Settlement loss included in other expense, net, net of income taxes	126			442
Foreign currency translation adjustment	(245		)	—
Applicable income taxes	64			—
Foreign currency translation adjustment, net	(181		)	—
Other comprehensive income	3,571			3,765
Comprehensive loss	(21,627		)	(125,184		)
Comprehensive loss (income) attributable to noncontrolling interests	199			(2		)
Comprehensive loss attributable to Altice USA, Inc. stockholders	$	(21,428	)	$	(125,186	)

See accompanying notes to ~~condensed~~ consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
2018 2017
Cash flows from operating activities:
Net loss $ (193,214 ) $ (748,561 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization (including impairments) 1,827,285
2,138,800
Equity in net loss of affiliates 10,849
5,697
Loss (gain) on investments and sale of affiliate interests, net 182,031
(169,888 )
Loss (gain) on derivative contracts, net (130,883 ) 154,270
Loss on extinguishment of debt and write-off of deferred financing costs 41,616
600,240
Amortization of deferred financing costs and discounts (premiums) on indebtedness 60,526
18,517
Settlement loss related to pension plan 929
1,403
Share-based compensation expense 46,176
40,932
Deferred income taxes 14,399
(470,841 )
Provision for doubtful accounts 50,643
54,501
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade (111,446 ) (45,493 )
Other receivables (138 ) (5,520 )
Prepaid expenses and other assets (41,890 ) (816 )
Amounts due from and due to affiliates 7,203
(40,355 )
Accounts payable 85,497
53,433
Accrued liabilities (198,196 ) (303,717 )
Deferred revenue 56,326
9,382
Liabilities related to interest rate swap contracts 62,549
(9,552 )
Net cash provided by operating activities 1,770,262
1,282,432
Cash flows from investing activities:
Capital expenditures (832,824 ) (718,919 )
Payments for acquisitions, net of cash acquired (10,753 ) (43,608 )
Sale of affiliate interest (3,537 ) —
Settlement of put call options —
(24,039 )
Proceeds related to sale of equipment, including costs of disposal 7,802
3,398
Increase in other investments (2,500 ) (4,800 )
Additions to other intangible assets (584 ) (1,700 )
Net cash used in investing activities (842,396 ) (789,668 )

See accompanying notes to condensed consolidated financial statements.



ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (In thousands) (Unaudited)
	Class A Common Stock			Class B Common Stock			Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Stockholders' Equity			Non-controlling Interest			Total Equity
Balance at January 1, 2019	$	4,961		$	2,130		$	3,423,803		$	251,830		$	(11,783	)	$	3,670,941		$	9,295		$	3,680,236
Net loss attributable to stockholders	—			—			—			(24,999		)	—			(24,999		)	—			(24,999		)
Net loss attributable to noncontrolling interests	—			—			—			—			—			—			(199		)	(199		)
Distributions from noncontrolling interests	—			—			—			—			—			—			(1,000		)	(1,000		)
Pension liability adjustments, net of income taxes	—			—			—			—			3,752			3,752			—			3,752
Foreign currency translation adjustment, net of income taxes	—			—			—			—			(181		)	(181		)	—			(181		)
Share-based compensation expense	—			—			13,790			—			—			13,790			—			13,790
Redeemable equity vested	—			—			1,364			—			—			1,364			—			1,364
Change in redeemable equity	—			—			(61,696		)	—			—			(61,696		)	—			(61,696		)
Class A shares acquired through share repurchase program and retired	(294		)	—			(599,707		)	—			—			(600,001		)	—			(600,001		)
Conversion of Class B to Class A shares	242			(242		)	—			—			—			—			—			—
Balance at March 31, 2019	$	4,909		$	1,888		$	2,777,554		$	226,831		$	(8,212	)	$	3,002,970		$	8,096		$	3,011,066



Balance at January 1, 2018, as adjusted	$	2,470	$	4,901	$	4,665,229		$	840,636		$	(10,022	)	$	5,503,214		$	1,539	$	5,504,753
Net loss attributable to stockholders	—		—		—			(128,951		)	—			(128,951		)	—		(128,951		)
Net income attributable to noncontrolling interests	—		—		—			—			—			—			2		2
Pension liability adjustments, net of income taxes	—		—		—			—			3,765			3,765			—		3,765
Share-based compensation expense	—		—		21,623			—			—			21,623			—		21,623
Change in redeemable equity	—		—		(3,347		)	—			—			(3,347		)	—		(3,347		)
Other changes to equity	—		—		(859		)	—			—			(859		)	—		(859		)
Adoption of ASU No. 2018-02	—		—		—			2,163			(2,163		)	—			—		—
Balance at March 31, 2018	$	2,470	$	4,901	$	4,682,646		$	713,848		$	(8,420	)	$	5,395,445		$	1,541	$	5,396,986

See accompanying notes to consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(25,198	)	$	(128,949	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization (including impairments)	561,428			642,705
Equity in net loss of affiliates	—			10,442
Loss (gain) on investments and sale of affiliate interests, net	(254,725		)	248,602
Loss (gain) on derivative contracts, net	177,029			(168,352		)
Loss on extinguishment of debt and write-off of deferred financing costs	157,902			4,705
Amortization of deferred financing costs and discounts (premiums) on indebtedness	26,066			16,950
Settlement loss related to pension plan	171			606
Share-based compensation expense	13,790			21,623
Deferred income taxes	(19,918		)	(65,833		)
Provision for doubtful accounts	15,091			13,500
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade	28,278			25,207
Other receivables	(708		)	(28,759		)
Prepaid expenses and other assets	(3,744		)	9,609
Amounts due from and due to affiliates	(4,023		)	(1,465		)
Accounts payable	33,889			11,297
Interest payable, accrued employee related costs and other liabilities	(235,369		)	(224,787		)
Deferred revenue	8,915			11,929
Liabilities related to interest rate swap and derivative contracts	25,120			31,922
Net cash provided by operating activities	503,994			430,952
Cash flows from investing activities:
Capital expenditures	(340,386		)	(257,615		)
Sale of affiliate interest	—			(3,537		)
Proceeds related to sale of equipment, including costs of disposal	479			965
Increase in other investments	—			(2,500		)
Net cash used in investing activities	(339,907		)	(262,687		)

ALTICE USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (In thousands)
ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (In thousands) (Unaudited)							ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (In thousands) (Unaudited)

	Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2019			2018
Cash flows from financing activities:
Proceeds from credit facility debt, net of discounts	$	2,217,500		$	5,602,425		$	1,390,000		$	1,642,500
Repayment of credit facility debt	(635,738		)	(3,684,668		)	(361,250		)	(610,663		)
Issuance of senior notes and debentures	2,050,000			—
Issuance of senior notes and debentures, including premiums							1,754,375			1,000,000
Redemption of senior notes, including premiums and fees	(2,623,756		)	(1,729,400		)	(2,462,692		)	(1,057,019		)
Proceeds from collateralized indebtedness, net	516,513			662,724
Repayment of collateralized indebtedness and related derivative contracts, net	(516,513		)	(654,989		)
Dividends to stockholders	(1,499,935		)	(919,317		)
Proceeds from notes payable	15,955			24,649			—			6,812
Repayment of notes payable	(14,089		)	—			(58,500		)	—
Principal payments on capital lease obligations	(8,581		)	(11,518		)
Principal payments on finance lease obligations							(1,611		)	(3,067		)
Purchase of shares of Altice USA, Inc. Class A common stock, pursuant to a share repurchase program	(226,803		)	—			(586,759		)	—
Additions to deferred financing costs	(21,570		)	(9,486		)	(11,678		)	(19,225		)
Contingent payment for acquisition							(500		)	(28,940		)
Distributions to noncontrolling interests, net							(1,000		)	—
Other	(859		)	—			—			(859		)
Contingent payment for acquisition	(30,000		)	—
Contributions from noncontrolling interests, net	5,995			50,800
Proceeds from IPO, net of fees	—			348,460
Net cash used in financing activities	(771,881		)	(320,320		)
Net increase in cash and cash equivalents	155,985			172,444

Net cash provided by (used in) financing activities							(339,615		)	929,539
Net increase (decrease) in cash and cash equivalents							(175,528		)	1,097,804
Effect of exchange rate changes on cash and cash equivalents	376			—			(245		)	—
Net increase in cash and cash equivalents	156,361			172,444
Net increase (decrease) in cash and cash equivalents							(175,773		)	1,097,804
Cash, cash equivalents and restricted cash at beginning of year	330,100			503,093			299,038			330,100
Cash, cash equivalents and restricted cash at end of period	$	486,461		$	675,537
Cash, cash equivalents and restricted cash at end of year							$	123,265		$	1,427,904

See accompanying notes to ~~condensed~~ consolidated financial statements.

910

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND RELATED MATTERS

The Company and Related Matters

Altice USA, Inc. ("Altice USA" or the "Company") was incorporated in Delaware on September 14, 2015. ~~Prior to~~Through June 8, 2018, the ~~Altice N.V. distribution discussed below, Altice USA~~Company was majority-owned by Altice Europe N.V. ("Altice Europe"), a public company with limited liability (naamloze vennootshcap) under Dutch law. ~~Since the completion~~On June 8, 2018, Altice Europe distributed substantially all of ~~the Altice N.V. distribution discussed below,~~its equity interest in the Company through a distribution in kind to holders of Altice Europe's common shares A and common shares B (the “Distribution”). The Company is ~~no longer~~now majority-owned by ~~Altice N.V. Altice N.V. changed its name to Altice Europe N.V.~~Patrick Drahi through Next Alt. S.a.r.l. ("~~Altice Europe"~~Next Alt") ~~upon completion of the distribution.~~.

The Company provides broadband communications and video services in the United States and markets its services under two brands: Optimum, in the New York metropolitan area, and Suddenlink, principally in markets in the south-central United States. It delivers broadband, ~~pay television,~~video, telephony services, proprietary content and advertising services to residential and business customers.

~~Altice N.V., through~~ As these brands are managed on a subsidiary, acquired Cequel Corporation ("Cequel" or "Suddenlink") on December 21, 2015 (the "Cequel Acquisition") and Cequel was contributed to Altice USA on June 9, 2016. Altice USA acquired Cablevision Systems Corporation ("Cablevision" or "Optimum") on June 21, 2016 (the "Cablevision Acquisition").

~~The~~consolidated basis, the Company classifies its operations ~~into two reportable segments: Cablevision, which operates~~ in ~~the New York metropolitan area, and Cequel, which principally operates in markets in the south-central United States.~~one segment.

The accompanying ~~condensed~~ combined consolidated financial statements ("~~condensed~~ consolidated financial statements") include the accounts of the Company and all subsidiaries in which the Company has a controlling interest and gives effect to the ATS Acquisition and the i24 Acquisition discussed ~~below on a combined basis.~~below. All significant inter-company accounts and transactions have been eliminated in consolidation.

The accompanying condensed consolidated operating results for the three and nine months ended September 30, 2017 reflect the retrospective adoption of Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers and ASU No. 2017-07 Compensation-Retirement Benefits (Topic 715). See Note 3 for further details of the impact on the Company's historical financial statements.

In June 2017, the Company completed its initial public offering ("IPO") of 71,724,139 shares of its Class A common stock. The Company’s Class A common stock began trading on June 22, 2017, on the New York Stock Exchange under the symbol "ATUS".

Acquisition of Altice Technical Services US Corp

~~ATS~~Altice Technical Services US Corp. ("ATS") was formed ~~in 2017~~ to provide network construction and maintenance services and commercial and residential installations, disconnections, and maintenance. During the second quarter of 2017, a substantial portion of the Company's technical workforce at ~~the~~ Cablevision ~~segment~~ either accepted employment with ATS or became employees of ATS and ATS commenced operations and began to perform services for the Company. A substantial portion of the Cequel ~~segment~~ technical workforce became employees of ATS in December 2017. Additionally, in the second quarter of 2017, the Company entered into an Independent Contractor Agreement with ATS that governed the terms of the services provided to the Company and entered into a Transition Services Agreement for the use of the Company's resources to provide various overhead functions to ATS, including accounting, legal and human resources and for the use of certain facilities, vehicles and technician tools during a transitional period. The Transition Services Agreement required ATS to reimburse the Company for its cost to provide such services.

In January 2018, the Company acquired 70% of the equity interests in ~~Altice Technical Services US Corp. ("ATS")~~ATS for $1.00 (the "ATS Acquisition") and the Company became the owner of 100% of the equity interests in ATS in March 2018. ATS was previously owned by Altice ~~N.V.~~Europe and a member of ATS's management through a holding company. As the acquisition ~~was~~is a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of ATS for all periods since its formation. ~~See Note 3 for the impact of~~In connection with the ATS Acquisition, on the ~~Company's condensed consolidated balance sheet as~~Company recorded goodwill of ~~December 31, 2017 and on~~$23,101, representing the ~~Company's statement of operations for the three and nine months ended September 30, 2017.~~amount previously transferred to ATS.

Acquisition of i24NEWS

In April 2018, Altice ~~N.V.~~Europe transferred its ownership of i24 US and i24 Europe ("i24NEWS"), Altice ~~N.V.'s~~Europe's 24/7 international news and current affairs channels to the Company for minimal consideration (the "i24 Acquisition"). As the acquisition was a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of i24NEWS as of April 1, 2018. Operating results for periods prior to April 1, 2018 ~~and the balance sheet as of December 31, 2017~~ have not been revised to reflect the i24 Acquisition as the impact was deemed immaterial.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Altice ~~N.V.~~Europe Distribution

On June 8, 2018, Altice ~~N.V.~~Europe distributed substantially all of its equity interest in the Company through a distribution in kind to holders of Altice ~~N.V.'s~~Europe's common shares A and common shares B (the “Distribution”). The Distribution took place by way of a special distribution in kind by Altice ~~N.V.~~Europe of its 67.2% interest in the Company to Altice ~~N.V.~~Europe shareholders. Each shareholder of Altice ~~N.V.~~Europe on May 23, 2018, the Distribution record date, received 0.4163 shares of the Company's common stock for every share held by such shareholder in Altice ~~N.V. Between May 24, 2018~~Europe.

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and June 4, 2018, each Altice N.V. shareholder was given the opportunity to elect the percentage of shares of the Company's Class A common stock and shares of the Company's Class B common stock such shareholder would receive in the Distribution, whereby the number of shares of the Company's Class B common stock to be distributed was subject to a cap of 50% of the total shares of the Company's common stock being distributed (the “Class B Cap”). Because the Class B Cap had been exceeded, the shares of the Company's Class B common stock delivered to Altice N.V.’s shareholders of record who elected to receive them were subject to proration, and such shareholders received shares of the Company's Class A common stock.per share amounts)

~~Immediately following the Distribution, there were 489,384,523 shares of Altice USA Class A common stock and 247,684,443 shares of Altice USA Class B common stock outstanding.~~(Unaudited)

Prior to Altice ~~N.V.'s~~Europe's announcement of the Distribution, the Board of Directors of Altice USA, acting through its independent directors, approved the payment of a $2.035 dividend to all shareholders of record on May 22, 2018. The payment of the dividend, aggregating $1,499,935, was made on June 6, 2018, and wasfunded with cash at CSC Holdings LLC, a wholly-owned subsidiary of Cablevision, from financings completed in January 2018, and cash generated from operations at Cequel. In connection with the payment of the dividend, the Company recorded a decrease in retained earnings of $536,224, representing the cumulative earnings through the payment date, and a decrease in paid in capital of $963,711.

In connection with the Distribution, the Management Advisory and Consulting Services Agreement with Altice ~~N.V.~~Europe which provided certain consulting, advisory and other services was terminated. ~~Compensation under the terms of the agreement was an annual fee of $30,000 paid by the Company.~~See Note 15 for further details.

Stock Repurchase Plan

In ~~addition,~~June 2018, the Board of Directors of Altice USA also authorized a share repurchase program of $2.0 ~~billion, effective June 8, 2018.~~billion. Under the repurchase program, shares of Altice USA Class A common stock may be purchased from time to time in the open market and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. Size and timing of these purchases will be determined based on market conditions and other factors.

From inception through ~~September 30, 2018,~~March 31, 2019, the Company repurchased an aggregate of ~~13,219,909~~57,284,354 shares for a total purchase price of approximately ~~$240,799.~~$1,100,000. These acquired shares were retired and the cost for these shares was recorded in paid in capital in the Company's ~~condensed~~ consolidated balance sheet. As of ~~September 30, 2018,~~March 31, 2019, the Company had approximately ~~$1,759,201~~$900,000 of availability remaining under its stock repurchase program and had ~~723,849,057~~679,784,612 combined Class A and Class B shares outstanding.

NOTE 2. ~~SUMMARY~~BASIS OF ~~SIGNIFICANT ACCOUNTING POLICIES~~PRESENTATION

The accompanying unaudited ~~condensed~~ consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.

The interim ~~condensed~~ consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2017 and the Company's financial statements and notes thereto included on Form 8-K filed on May 21,~~ 2018.

The financial statements presented in this report are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, ~~2018.~~2019.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

~~Recently Adopted Accounting Pronouncements~~Reclassifications

~~In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of~~ Certain Tax Effects from Accumulated Other Comprehensive Income. The primary provision of ASU No. 2018-02 allows for the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU No. 2018-02 also requires certain disclosures about stranded tax effects. ASU No. 2018-02 is effective for the Company on January 1, 2019, with early adoption permitted and will be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company elected to adopt ASU No. 2018-02 during the first quarter of 2018. The adoption resulted in the reclassification of stranded tax amounts of $2,163 associated with net unrecognized losses from the Company's pension plans from accumulated other comprehensive loss to retained earnings.

~~In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718). ASU No. 2017-09 provides clarity and guidance on which changes~~reclassifications have been made to the ~~terms or conditions of a share-based payment award require an entity~~2018 financial statements to ~~apply modification accounting in Topic 718. ASU No. 2017-09 was adopted by the Company on January 1, 2018 and it had no impact~~conform to the ~~Company's condensed consolidated financial statements.~~2019 presentation.

In March 2017, the FASB issued ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715). ASU No. 2017-07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. It also provides guidance on how to present the service cost component and the other components of net benefit cost in the income statement and what component of net benefit cost is eligible for capitalization. ASU No. 2017‑07 was adopted by the Company on January 1, 2018 and was applied retrospectively. As a result of the adoption, the Company reclassified the non-service cost components of the Company's pension expense for the three and nine months ended September 30, 2017 from other operating expenses to other income (expense), net. The Company elected to apply the practical expedient which allowed it to reclassify amounts disclosed previously in the benefits plan note as the basis for applying retrospective presentation for comparative periods, as the Company determined it was impracticable to disaggregate the cost components for amounts capitalized and amortized in those periods. See Note 3 for information on the impact of the adoption of ASU No. 2017-07.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, which amends Topic 805 to interpret the definition of a business by adding guidance to assist in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted the new guidance on January 1, 2018 and it had no impact to the Company's condensed consolidated financial statements.

In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, in order to clarify the Codification and to correct any unintended application of the guidance. The amendments in this update affected the guidance in ASC 606. ASC 606 was adopted by the Company on January 1, 2018 on a full retrospective basis, which required the Company to reflect the impact of the updated guidance for all periods presented. The adoption of ASC 606 did not have a material impact on the Company’s financial position or results of operations. See Note 3 for information on the impact of the adoption of ASC 606.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the statement of cash flows disclose the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of period total amounts shown on the statement of cash flows. ASU No. 2016-18 provides specific guidance on the presentation of restricted cash in the statement of cash flows. ASU No. 2016-18 was adopted by the Company on January 1, 2018 and was applied retrospectively for all periods presented.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments which clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. ASU No. 2016-15 also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The Company adopted the new guidance on January 1, 2018 and it had no impact to the Company's condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities. ASU No. 2016-01 modifies how entities measure certain equity investments and also modifies the recognition of changes in the fair value of financial liabilities measured under the fair value option. Entities will be required to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income. For financial liabilities measured using the fair value option, entities will be required to record changes in fair value caused by a change in instrument-specific credit risk (own credit risk) separately in other comprehensive income. ASU No. 2016-01 was adopted by the Company on January 1, 2018 and it had no impact to the Company's condensed consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASC 606"), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASC 606 replaced most existing revenue recognition guidance in GAAP (See Note 3).NOTE 3. ACCOUNTING PRONOUNCEMENTS

Recently Issued But Not Yet Adopted Accounting Pronouncements

ASU No. 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU 2018-14")

In August 2018, the FASB issued ASU ~~No.~~ 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to clarify certain disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 becomes effective for the Company on January 1, 2022, although early adoption is

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

permitted. The Company does not expect the adoption of ASU ~~2017-14~~2018-14 to have a material impact on its consolidated financial statements.

ASU No. 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service Contract ("ASU 2018-15")

Also in August 2018, the FASB issued ASU ~~No.~~ 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service Contract, which requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU ~~No.~~ 2018-14 becomes effective for the Company on January 1, 2020, although early adoption is permitted. The Company is currently in the process of evaluating the impact that the adoption of ASU ~~No.~~ 2018-15 will have on its consolidated financial statements.

ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350) ("ASU 2017-04")

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ~~ASU No.~~ASU. 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two‑step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU ~~No.~~ 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance becomes effective for the Company on January 1, 2019. Although the Company has not yet completed its evaluation of the guidance, or quantified its impact, the Company believes the most significant impact will be the recognition of right of use assets and liabilities on its consolidated balance sheet. The Company expects its lease obligations designated as operating leases will be reported on the consolidated balance sheets upon adoption. The Company is also evaluating other potential lease arrangements of the business, including arrangements that have been previously disclosed as a contractual commitment. The Company is currently in the process of collecting and validating lease data and implementing a software solution. In addition, the Company is assessing practical expedients and policy elections offered by the standard, and is evaluating its processes and internal controls to meet the accounting, reporting and disclosure requirements.

~~Reclassifications~~

~~Certain reclassifications have been made to the 2017 financial statements to conform to the 2018 presentation.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~NOTE 3. CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION~~

~~Adoption of ASC 606 - Revenue from Contracts with Customers~~

On January 1, 2018, the Company adopted the guidance pursuant to ASC 606. The Company elected to apply the guidance on a full retrospective basis, which required the Company to reflect the impact of the updated guidance for all periods presented. The adoption of the guidance resulted in the deferral of certain installation revenue, the deferral of certain commission expenses, and a reduction of revenue due to the reclassification of certain third party giveaways and incentives from operating expense. Additionally, the Company made changes in the composition of revenue resulting from the allocation of value related to bundled services sold to residential customers at a discount.

~~Installation Services Revenue~~

Pursuant to ASC 606, the Company's installation services revenue is deferred and recognized over the benefit period. For residential customers, the benefit period is less than one year. For business and wholesale customers, the benefit period is the contract term. Prior to the adoption of ASC 606, the Company recognized installation services revenue for residential and small and medium-sized business ("SMB") customers when installations were completed. As a result of the deferral of installation services revenue for residential and SMB customers, the Company recognized contract liabilities of $6,978 and recorded a cumulative effect adjustment of $5,093 (net of tax of $1,885) to retained earnings. The accounting for installation services revenue related to business and wholesale customers has not changed.

~~Commission Expenses~~

Pursuant to ASC 606, the Company defers commission expenses related to obtaining a contract with a customer when the expected period of benefit is greater than one year and amortizes these costs over the average contract term. For commission expenses related to customer contracts with a term of one year or less, the Company is utilizing the practical expedient and is recognizing the costs when incurred. Prior to the adoption of ASC 606, the Company recognized commission expenses related to the sale of its services when incurred. As a result of the change in the timing of recognition of these commission expenses, the Company recognized contract assets of $24,329 and recorded a cumulative effect adjustment of $17,759 (net of tax of $6,570) to retained earnings.

~~Third Party Product Giveaways and Incentives~~

When the Company acts as the agent in providing certain product giveaways or incentives, revenue is recorded net of the costs of the giveaways and incentives. For the three and nine months ended September 30, 2017, costs of $4,094 and $13,490, respectively for the giveaways and incentives recorded in other operating expense have been reclassified to revenue.

~~Bundled Services~~

The Company provides bundled services at a discounted rate to its customers. Under ASC 606, revenue should be allocated to separate performance obligations within a bundled offering based on the relative stand-alone selling price of each service within the bundle.In connection with the adoption of ASC 606, the Company revised the amounts allocated to each performance obligation within its bundled offerings which reduced previously reported revenue for telephony services and increased previously reported revenue allocated to pay television and broadband services.

~~Adoption of ASU No. 2017-07 - Compensation-Retirement Benefits (Topic 715)~~

On January 1, 2018, the Company adopted the guidance pursuant to ASU No. 2017‑07. ASU No. 2017‑07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. In connection with the adoption of ASU No. 2017‑07, the Company retroactively reclassified certain pension costs from other operating expenses to other income (expense), net. The adoption of ASU No. 2017-07 had no impact on the Company's condensed consolidated balance sheet.

~~Acquisition of ATS~~

As discussed in Note 1, the Company completed the ATS Acquisition in the first quarter of 2018. ATS was previously owned by Altice N.V. and a member of ATS's management through a holding company. As the acquisition is a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~of ATS for all periods since the formation of ATS, including goodwill of $23,101, representing the amount previously transferred to ATS.~~

~~The following table summarizes the impact of adopting ASC 606 and the impact of the ATS Acquisition on the Company's condensed consolidated balance sheet:~~

December 31, 2017
As Reported Impact of ASC 606 Impact of ATS Acquisition As Adjusted
Cash and cash equivalents $ 273,329
$ —
$ 56,519
$ 329,848
Other current assets 580,231
14,068
(20,548 ) 573,751
Property, plant and equipment, net 6,063,829
—
(40,003 ) 6,023,826
Goodwill 7,996,760
—
23,101
8,019,861
Other assets, long-term 19,861,076
10,261
(6,541 ) 19,864,796
Total assets $ 34,775,225
$ 24,329
$ 12,528
$ 34,812,082
Current liabilities $ 2,492,983
$ 6,978
$ 20,401
$ 2,520,362
Deferred tax liability, long-term 4,775,115
4,685
(10,514 ) 4,769,286
Liabilities, long-term 21,779,997
—
6,394
21,786,391
Total liabilities 29,048,095
11,663
16,281
29,076,039
Redeemable equity 231,290
—
—
231,290
Paid-in capital 4,642,128
—
23,101
4,665,229
Retained earnings 854,824
12,666
(26,854 ) 840,636
Total stockholders' equity 5,495,840
12,666
(3,753 ) 5,504,753
Total liabilities and stockholders' equity $ 34,775,225
$ 24,329
$ 12,528
$ 34,812,082

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~The following table summarizes the impact of adopting ASC 606 and ASU No. 2017-07 and the impact of the ATS Acquisition on the Company's condensed consolidated statements of operations:~~

Three Months Ended September 30, 2017
As Reported Impact of ASC 606 Impact of ASU No. 2017-07 Impact of ATS Acquisition As Adjusted
Residential:
Pay TV $ 1,054,392
$ 15,807
$ —
$ (253 ) $ 1,069,946
Broadband 646,094
12,372
—
(188 ) 658,278
Telephony 204,753
(32,155 ) —
(119 ) 172,479
Business services and wholesale 324,760
(118 ) —
—
324,642
Advertising 89,292
—
—
—
89,292
Other 7,884
—
—
—
7,884
Total revenue 2,327,175
(4,094 ) —
(560 ) 2,322,521

Programming and other direct costs 755,101
—
—
—
755,101
Other operating expenses 560,497
(4,094 ) (2,921 ) 16,629
570,111
Restructuring and other expense 53,448
—
—
—
53,448
Depreciation and amortization 823,265
—
—
21
823,286
Operating income 134,864
—
2,921
(17,210 ) 120,575
Other expense, net (451,638 ) —
(2,921 ) —
(454,559 )
Loss before income taxes (316,774 ) —
—
(17,210 ) (333,984 )
Income tax benefit 134,688
—
—
6,862
141,550
Net loss $ (182,086 ) $ —
$ —
$ (10,348 ) $ (192,434 )

Nine Months Ended September 30, 2017
As Reported Impact of ASC 606 Impact of ASU No. 2017-07 Impact of ATS Acquisition As Adjusted
Residential:
Pay TV $ 3,185,610
$ 39,630
$ —
$ (253 ) $ 3,224,987
Broadband 1,887,279
39,725
—
(188 ) 1,926,816
Telephony 624,077
(92,257 ) —
(119 ) 531,701
Business services and wholesale 968,291
(588 ) —
—
967,703
Advertising 270,154
—
—
—
270,154
Other 25,781
—
—
—
25,781
Total revenue 6,961,192
(13,490 ) —
(560 ) 6,947,142

Programming and other direct costs 2,272,147
—
—
—
2,272,147
Other operating expenses 1,767,624
(13,490 ) (9,852 ) 25,195
1,769,477
Restructuring and other expense 142,765
—
—
—
142,765
Depreciation and amortization 2,138,776
—
—
24
2,138,800
Operating income 639,880
—
9,852
(25,779 ) 623,953
Other expense, net (1,802,608 ) —
(9,852 ) 1
(1,812,459 )
Loss before income taxes (1,162,728 ) —
—
(25,778 ) (1,188,506 )
Income tax benefit 429,664
—
—
10,281
439,945
Net loss $ (733,064 ) $ —
$ —
$ (15,497 ) $ (748,561 )

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE 4. NET ~~INCOME (LOSS)~~LOSS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS

Net Loss Per Share

Basic net ~~income (loss)~~loss per common share attributable to Altice USA stockholders is computed by dividing net ~~income (loss)~~loss attributable to Altice USA stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share attributable to Altice USA stockholders reflects the dilutive effects of stock options. For such awards that are performance based, the diluted effect is reflected upon the achievement of the performance criteria. Diluted net loss per common share attributable to Altice USA stockholders excludes the effects of common stock equivalents ~~as they are anti-dilutive.~~

~~Anti-dilutive~~of 11,480,467 shares ~~(options whose exercise price exceeds the average market price of the Company's common stock during the period) totaling approximately 5,841,000~~and 5,165,746 shares ~~have been excluded from diluted weighted average shares outstanding when calculating diluted net income per share attributable to Altice USA stockholders~~ for the three months ended ~~September 30, 2018. In addition, approximately 73,000 performance based options for the three months ended September 30,~~March 31, 2019 and 2018, ~~issued pursuant to the Company's employee stock plan have also been excluded from the diluted weighted average shares outstanding~~respectively, as ~~the performance criteria on these awards had not yet been satisfied for the respective period.~~

The weighted average number of shares used to compute basic and diluted net loss per share for the nine months ended September 30, 2017 reflect the retroactive impact of certain organizational transactions that occurred prior to the Company's IPO.they are anti-dilutive.

NOTE 5. REVENUE AND CONTRACT ASSETS

~~Revenue Recognition~~The following table presents the composition of revenue:

~~Residential Services~~

The Company derives revenue through monthly charges to residential customers of its pay television, broadband, and telephony services, including installation services. In addition, the Company derives revenue from digital video recorder ("DVR"), video-on-demand ("VOD"), pay-per-view, home shopping commissions and equipment fees which are reflected in "Residential pay TV" revenues. The Company recognizes pay television, broadband, and telephony revenues as the services are provided to a customer on a monthly basis. Revenue from the sale of bundled services at a discounted rate is allocated to each product based on the standalone selling price of each performance obligation within the bundled offer. The relative standalone selling price requires judgment and is typically determined based on the current prices at which the separate services are sold by the Company. Installation revenue for the Company's residential services is deferred and recognized over the benefit period, which is estimated to be less than one year. The estimated benefit period takes into account both quantitative and qualitative factors including the significance of average installation fees to total recurring revenue per customer.



	Three Months Ended March 31,
	2019		2018
Residential:
Video	$	1,017,330	$	1,033,708
Broadband	775,573		701,621
Telephony	154,464		166,038
Business services and wholesale	350,689		333,090
Advertising	93,545		87,582
Other	4,966		7,675
Total revenue	$	2,396,567	$	2,329,714

The Company is assessed non-income related taxes by governmental authorities, including franchising authorities (generally under multi-year agreements), and collects such taxes from its customers. In instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities are recorded as programming and other direct costs and amounts received from the customers are recorded as revenue. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated ~~$63,703~~$64,236 and ~~$190,895,~~$63,830, respectively. ~~For the three and nine months ended September 30, 2017 the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $64,254 and $194,045, respectively.~~

~~Business and Wholesale Services~~

The Company derives revenue from the sale of products and services to both large enterprise and SMB customers, including broadband, telephony, networking, and pay television services reflected in "Business services and wholesale" revenues. The Company's business services also include Ethernet, data transport, and IP-based virtual private networks. The Company also provides managed services to businesses, including hosted telephony services (cloud based SIP-based private branch exchange), managed Wi-Fi, managed desktop and server backup and managed collaboration services including audio and web conferencing. The Company also offers fiber-to-the-tower services to wireless carriers for cell tower backhaul and enable wireline communications service providers to connect to customers that their own networks

1713

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~do not reach. The Company recognizes revenues for these services as the services are provided to a customer on a monthly basis.~~

Substantially all of our SMB customers are billed monthly and large enterprise customers are billed in accordance with the terms of their contracts which is typically also on a monthly basis. Contracts with large enterprise customers typically range from three to five years. Installation revenue related to our large enterprise customers is deferred and recognized over the average contract term. Installation revenue related to SMB customers is deferred and recognized over the benefit period, which is less than a year. The estimated benefit period for SMB customers takes into account both quantitative and qualitative factors including the significance of average installation fees to total recurring revenue per customer.

~~Advertising~~

As part of the agreements under which the Company acquires pay television programming, the Company typically receives an allocation of scheduled advertising time during such programming into which the Company's cable systems can insert commercials. In several of the markets in which the Company operates, it has entered into agreements commonly referred to as interconnects with other cable operators to jointly sell local advertising. In some of these markets, the Company represents the advertising sales efforts of other cable operators; in other markets, other cable operators represent the Company. Advertising revenues are recognized when commercials are aired. Arrangements in which the Company controls the sale of advertising and acts as the principal to the transaction, the Company recognizes revenue earned from the advertising customer on a gross basis and the amount remitted to the distributor as an operating expense. Arrangements in which the Company does not control the sale of advertising and acts as an agent to the transaction, the Company recognizes revenue net of any fee remitted to the distributor.

The Company's advanced advertising businesses provide data-driven, audience-based advertising solutions using advanced analytics tools that provide granular measurement of consumer groups, accurate hyper-local ratings and other insights into target audience behavior not available through traditional sample-based measurement services. Revenue earned from the Company's advanced advertising businesses are recognized when services are provided.

~~Other~~

~~Revenues derived from other sources are recognized when services are provided or events occur.~~

Contract Assets

Incremental costs incurred in obtaining a contract with a customer are deferred and recorded as a contract asset if the period of benefit is expected to be greater than one year. Sales commissions for enterprise and certain SMB customers are deferred and amortized over the average contract term. For sales commission expenses related to residential and SMB customers with a term of one year or less, the Company is utilizing the practical expedient and is recognizing the costs when incurred. Cost of fulfilling a contract with a customer are deferred and recorded as a contract asset if they generate or enhance resources of the Company that will be used in satisfying future performance obligations and are expected to be recovered. Installation costs related to residential and SMB customers that are not capitalized as part of the initial deployment of new customer premise equipment are expensed as incurred pursuant to industry-specific guidance.

The following table provides information about contracts assets and contract liabilities related to contracts with customers:


	September 30, 2018		December 31, 2017, as adjusted		March 31, 2019		December 31, 2018
Contract assets (a)	$	25,806	$	24,329	$	27,242	$	26,405
Deferred revenue (b)	173,956		117,679		198,971		190,056


(a)	Contract assets include primarily sales commissions for enterprise customers that are deferred and amortized over the average contract term.

(b)

Deferred revenue represents payments received from customers for services that have yet to be provided and installation revenue which is deferred and recognized over the benefit period. The majority of the Company's deferred revenue represents payments for services for up to one month in advance from residential and SMB customers which is realized within the following month as services are performed.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~payments for services for up to one month in advance from residential and SMB customers which is realized within the following month as services are performed.~~

A significant portion of our revenue is derived from residential and SMB customer contracts which are month-to month. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Contracts with enterprise ~~and wholesale~~ customers generally range from three to five years, and services may only be terminated in accordance with the contractual terms.

NOTE 6. SUPPLEMENTAL CASH FLOW INFORMATION

The Company considers the balance of its investment in funds that substantially hold securities that mature within three months or less from the date the fund purchases these securities to be cash equivalents. The carrying amount of cash and cash equivalents either approximates fair value due to the short-term maturity of these instruments or are at fair value.

The Company's non-cash investing and financing activities and other supplemental data were as follows:


	Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2019		2018
Non-Cash Investing and Financing Activities:
Continuing Operations:
Conversion of notes payable to affiliates and related parties of $1,750,000 (together with accrued and unpaid interest and applicable premium) to common stock (See Note 9)	$	—	$	2,264,252

Property and equipment accrued but unpaid	166,800		84,847		$	158,025	$	91,036
Notes payable issued to vendor for the purchase of equipment	49,780		25,879		16,266		30,237
Capital lease obligations	8,162		—
Leasehold improvements paid by landlord	350		3,998
Unsettled purchases of shares of Altice USA, Inc. Class A common stock, pursuant to a share repurchase program					13,242		—
Right-of-use assets acquired in exchange for finance lease obligations					4,970		656
Deferred financing costs accrued but unpaid	1,006		—		1,663		—
Contingent consideration for acquisitions	6,733		30,000
Receivable related to the sale of an investment	11,954		—
Unsettled purchases of shares of Altice USA, Inc. Class A common stock, pursuant to a share repurchase program	13,996		—
Supplemental Data:
Cash interest paid	1,174,154		1,481,363		475,109		464,763
Income taxes paid, net	12,148		26,396
Income taxes paid (refunded), net					110		(1,027		)

The Company’s previously reported statement of cash flows for the three months ended March 31, 2017 reflected distributions to stockholders of $79,617 in cash flows from operating activities. These distributions should have been reflected in cash flows from financing activities.

NOTE 7. RESTRUCTURING ~~COSTS~~ AND OTHER EXPENSE

Restructuring

Beginning in the first quarter of 2016, the Company commenced restructuring initiatives that were intended to simplify the Company's organizational structure.

1914

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)



The following table summarizes the activity for these initiatives:
	Severance and Other Employee Related Costs			Facility Realignment and Other Costs			Total
Accrual balance at December 31, 2018	$	21,454		$	13,615		$	35,069
Restructuring charges	2,522			4,569			7,091
Payments and other	(13,866		)	(536		)	(14,402		)
Impact of the adoption of ASC 842 (a)	—			(13,849		)	(13,849		)
Accrual balance at March 31, 2019	$	10,110		$	3,799		$	13,909


(a)	Certain accrued restructuring liabilities were netted against right-of-use operating assets on the Company's consolidated balance sheet as of January 1, 2019 in connection with the Company's adoption of ASC 842 (see Note 8).

The following table summarizes the activity for these initiatives during 2018:
Severance and Other Employee Related Costs Facility Realignment and Other Costs Total
Accrual balance at December 31, 2017 $ 113,474
$ 9,626
$ 123,100
Restructuring charges 4,182
3,334
7,516
Payments and other (65,692 ) (5,853 ) (71,545 )
Accrual balance at June 30, 2018 51,964
7,107
59,071
Restructuring charges 5,841
8,826
14,667
Payments and other (24,991 ) (2,613 ) (27,604 )
Accrual balance at September 30, 2018 $ 32,814
$ 13,320
$ 46,134

~~The~~In addition, for the three months ended March 31, 2019, the Company recorded restructuring charges of ~~$52,081~~$8,549 related to the impairment of right-of-use operating lease assets, included in the Company's restructuring initiatives, as their carrying amount was not recoverable and ~~$141,078 for the three and nine months ended September 30, 2017 relating to these restructuring initiatives.~~exceeded their fair value.

Cumulative costs to date relating to these initiatives amounted to ~~$327,521 and $71,162 for our Cablevision and Cequel segments, respectively.~~$423,166.

Transaction Costs

The Company ~~incurred~~recorded a net credit of $396 during the three months ended March 31, 2019 resulting from an adjustment to the contingent liability initially recorded for a business acquired in fourth quarter of 2017. The Company recorded transaction costs of ~~$1,920 and $7,682~~$2,266 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018, ~~relating~~related to the Distribution discussed in Note 1.

NOTE 8. LEASES

On January 1, 2019, the Company adopted FASB Accounting Standards Codification, or ASC, Topic 842, Leases ("ASC 842"), which increases transparency and ~~$1,367~~comparability by recognizing a lessee’s rights and ~~$1,687~~obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet. The Company adopted the new guidance using the modified retrospective approach with a cumulative-effect adjustment recorded on January 1, 2019. As a result, the consolidated balance sheet as of December 31, 2018 was not restated and is not comparative.

The adoption of ASC 842 resulted in the recognition of ROU assets of $274,292 and lease liabilities for operating leases of $299,900 on the ~~three~~Company's consolidated balance sheet as of January 1, 2019, with no material impact to its consolidated statements of operations. The difference between the ROU assets and ~~nine months ended September 30, 2017~~the operating lease liability represents the reclassification of (i) deferred rent balances, resulting from the historical operating leases, and (ii) certain accrued restructuring liabilities (See Note 7). The Company's accounting for finance leases remained substantially unchanged from its accounting for capital leases in prior periods.

The Company elected the package of practical expedients permitted within the standard, which allow an entity to forgo reassessing (i) whether a contract contains a lease, (ii) classification of leases, and (iii) whether capitalized costs associated with a lease meet the definition of initial direct costs. Also, the Company elected the expedient allowing an entity to use hindsight to determine the lease term and impairment of ROU assets and the expedient related to land easements which allows the ~~acquisition~~Company not to retrospectively treat land easements as leases; however, the Company must apply lease accounting prospectively to land easements if they meet the definition of a ~~business.~~lease.

For contracts entered into on or after the effective date, at the inception of a contract the Company will assess whether the contract is, or contains, a lease. The Company's assessment is based on: (i) whether the contract involves the use of a distinct identified asset, (ii) whether the Company obtained the right to substantially all the economic benefit from the use of the asset throughout the period, and (iii) whether the Company has the right to direct the use of the asset. Leases entered into prior to January 1, 2019, are accounted for under ASC 840 and were not reassessed for classification.

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases, and is subsequently measured at amortized cost using the effective interest method. The Company generally uses its incremental borrowing rate as the discount rate for leases, unless an interest rate is implicitly stated in the lease. The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise, or an option to extend the lease controlled by the lessor. All ROU assets are reviewed for impairment.

Lease expense for operating leases consists of the lease payments plus any initial direct costs and is recognized on a straight-line basis over the lease term. Lease expense for finance leases consists of the amortization of the asset on a straight-line basis over the earlier of the lease term or its useful life and interest expense determined on an amortized cost basis. The lease payments are allocated between a reduction of the lease liability and interest expense.

The Company's operating leases are comprised primarily of facility leases and finance leases are comprised primarily of vehicle leases.

Balance sheet information related to our leases is presented below:



		March 31,		January 1,		December 31,
	Balance Sheet location	2019		2019		2018
Operating leases:
Right-of-use lease assets	Right-of-use operating lease assets	$	259,223	$	274,292	$	—
Right-of-use lease liability, current	Other current liabilities	41,188		48,033		—
Right-of-use lease liability, long-term	Right-of-use operating lease liability	245,871		251,867		—
Finance leases:
Right-of-use lease assets	Property, plant and equipment	28,562		30,891		30,891
Right-of-use lease liability, current	Current portion of long-term debt	6,293		5,928		5,928
Right-of-use lease liability, long-term	Long-term debt	21,011		19,262		19,262

The following provides details of the Company's lease expense:



	Three Months Ended March 31,
	2019
Operating lease expense, net	$	15,278
Finance lease expense:
Amortization of assets	1,562
Interest on lease liabilities	358
Total finance lease expense	1,920
	$	17,198

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Other information related to leases is presented below:



	As of March 31,
	2019
Right-of-use assets acquired in exchange for operating lease obligations	$	4,193

Cash Paid For Amounts Included In Measurement of Liabilities:
Operating cash flows from finance leases	358
Operating cash flows from operating leases	16,482

Weighted Average Remaining Lease Term:
Operating leases	8.9 years
Finance leases	4.8 years
Weighted Average Discount Rate:
Operating leases	6.25		%
Finance leases	5.82		%

The minimum future annual payments under non-cancellable leases during the next five years and thereafter, at rates now in force, are as follows:



	Financing leases			Operating leases
2019 (excluding the three months ended March 31, 2019)	$	5,775		$	43,386
2020	6,859			58,231
2021	5,538			49,829
2022	5,510			39,308
2023	4,967			29,260
Thereafter	2,580			157,402
Total future minimum lease payments, undiscounted	31,229			377,416
Less: Imputed interest	(3,925		)	(90,357		)
Present value of future minimum lease payments	$	27,304		$	287,059

NOTE 8.9. INTANGIBLE ASSETS

The following table summarizes information relating to the Company's acquired amortizable intangible assets:


	September 30, 2018							December 31, 2017
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Estimated Useful Lives	As of March 31, 2019							As of December 31, 2018
																Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Estimated Useful Lives
Customer relationships	$	5,970,884	$	(1,979,595	)	$	3,991,289	$	5,970,884	$	(1,409,021	)	$	4,561,863	8 to 18 years	$	5,970,884	$	(2,337,085	)	$	3,633,799	$	5,970,884	$	(2,162,110	)	$	3,808,774	8 to 18 years
Trade names	1,067,083		(678,248		)	388,835		1,067,083		(588,574		)	478,509		2 to 5 years	1,067,083		(725,748		)	341,335		1,067,083		(701,998		)	365,085		2 to 5 years
Other amortizable intangibles	37,644		(16,772		)	20,872		37,060		(10,978		)	26,082		1 to 15 years	37,644		(20,573		)	17,071		37,644		(18,679		)	18,965		1 to 15 years
	$	7,075,611	$	(2,674,615	)	$	4,400,996	$	7,075,027	$	(2,008,573	)	$	5,066,454		$	7,075,611	$	(3,083,406	)	$	3,992,205	$	7,075,611	$	(2,882,787	)	$	4,192,824

Amortization expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 aggregated ~~$208,172~~$200,619 and ~~$666,041, respectively, and for the three and nine months ended September 30, 2017 aggregated $426,419 and $981,657,~~$231,817, respectively.

~~The following table summarizes information relating to the Company's acquired indefinite-lived intangible assets:~~

September 30, 2018 December 31, 2017
Cablevision Cequel Total Cablevision Cequel Total
Cable television franchises $ 8,113,575
$ 4,906,506
$ 13,020,081
$ 8,113,575
$ 4,906,506
$ 13,020,081
Goodwill 5,873,716
2,138,700
8,012,416
5,866,120
2,153,741
8,019,861
Total $ 13,987,291
$ 7,045,206
$ 21,032,497
$ 13,979,695
$ 7,060,247
$ 21,039,942

2017

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~The carrying amount of goodwill is presented below:~~

Gross goodwill as of December 31, 2017, as reported $ 7,996,760
ATS goodwill included in Cablevision segment (See Note 3 for further details) 23,101
Gross goodwill as of December 31, 2017, as adjusted 8,019,861
Goodwill recorded in Cablevision segment in connection with an acquisition during the third quarter of 2018 7,608
Adjustment to Cablevision segment purchase accounting relating to business acquired in fourth quarter of 2017 (12 )
Reclassification of Cequel segment goodwill to property, plant and equipment (15,041 )
Net goodwill as of September 30, 2018 $ 8,012,416

NOTE 9.10. DEBT

The following table provides details of the Company's outstanding ~~credit facility~~ debt:

September 30, 2018 December 31, 2017
Maturity Date Interest Rate Principal Amount Carrying Amount (a) Principal Amount Carrying Amount (a)
CSC Holdings Restricted Group:
Revolving Credit Facility (b) $20,000 on October 9, 2020, remaining balance on November 30, 2021 5.40 % $ 575,000
$ 554,908
$ 450,000
$ 425,488
Term Loan Facility July 17, 2025 4.41 % 2,962,500
2,946,318
2,985,000
2,967,818
Incremental Term Loan Facility January 25, 2026 4.66 % 1,496,250
1,478,995
—
—
Cequel:
Revolving Credit Facility (c) $65,000 on November 30, 2021, and remaining balance on April 5, 2023 — % —
—
—
—
Term Loan Facility July 28, 2025 4.49 % 1,249,188
1,241,272
1,258,675
1,250,217
$ 6,282,938
6,221,493
$ 4,693,675
4,643,523
Less: Current portion 57,650
42,650
Long-term debt $ 6,163,843
$ 4,600,873



		Interest Rate			March 31, 2019						December 31, 2018
Date Issued	Maturity Date	Interest Rate			Principal Amount			Carrying Amount (a)			Principal Amount			Carrying Amount (a)
CSC Holdings Senior Notes:
February 12, 2009	February 15, 2019	8.625	%		$	—		$	—		$	526,000		$	527,749
November 15, 2011	November 15, 2021	6.750	%		1,000,000			971,652			1,000,000			969,285
May 23, 2014	June 1, 2024	5.250	%		750,000			674,731			750,000			671,829
October 9, 2015	January 15, 2023	10.125	%		—			—			1,800,000			1,781,424
October 9, 2015	October 15, 2025	10.875	%		1,684,221			1,663,549			1,684,221			1,663,027
November 27, 2018	December 15, 2021	5.125	%		1,240,762			1,161,667			1,240,762			1,155,264
November 27, 2018	July 15, 2025	7.750	%		617,881			604,295			617,881			603,889
November 27, 2018	April 1, 2028	7.500	%		1,045,882			1,044,175			1,045,882			1,044,143
CSC Holdings Senior Guaranteed Notes:
October 9, 2015	October 15, 2025	6.625	%		1,000,000			988,396			1,000,000			988,052
September 23, 2016	April 15, 2027	5.500	%		1,310,000			1,305,056			1,310,000			1,304,936
January 29, 2018	February 1, 2028	5.375	%		1,000,000			992,232			1,000,000			992,064
November 27, 2018	July 15, 2023	5.375	%		1,095,825			1,079,260			1,095,825			1,078,428
November 27, 2018	May 15, 2026	5.500	%		1,498,806			1,484,671			1,498,806			1,484,278
January 24, 2019	February 1, 2029	6.500	%		1,750,000			1,746,831			—			—
Cablevision Senior Notes (b):
April 15, 2010	April 15, 2020	8.000	%		500,000			496,159			500,000			495,302
September 27, 2012	September 15, 2022	5.875	%		649,024			589,400			649,024			585,817
October 19, 2018	December 15, 2021	5.125	%		8,886			8,320			8,886			8,274
October 19, 2018	July 15, 2025	7.750	%		1,740			1,691			1,740			1,690
October 19, 2018	April 1, 2028	7.500	%		4,118			4,111			4,118			4,110
					15,157,145			14,816,196			15,733,145			15,359,561
CSC Holdings Credit Facility Debt (Restricted Group):
Revolving Credit Facility (c) (e)		4.879	%	(d)	300,000			284,969			250,000			231,425
Term Loan B	July 17, 2025	4.734	%	(d)	2,947,500			2,932,491			2,955,000			2,939,425
Incremental Term Loan B-2	January 25, 2026	4.984	%	(d)	1,488,750			1,472,554			1,492,500			1,475,778
Incremental Term Loan B-3	January 15, 2026	4.734	%	(d)	1,275,000			1,269,135			1,275,000			1,268,931
Incremental Term Loan B-4	April 15, 2027	5.591	%	(d)	1,000,000			986,152			—			—
					7,011,250			6,945,301			5,972,500			5,915,559
Collateralized indebtedness (see Note 11)					1,459,638			1,411,869			1,459,638			1,406,182
Finance lease obligations (see Note 8)					27,304			27,304			25,190			25,190
Notes Payable					61,131			61,131			106,108			106,108
					23,716,468			23,261,801			23,296,581			22,812,600
Less: current portion of credit facility debt					(65,250		)	(65,250		)	(54,563		)	(54,563		)
Less: current portion of notes payable					(52,423		)	(52,423		)	(98,134		)	(98,134		)
Less: current portion of finance lease obligations					(6,293		)	(6,293		)	(5,928		)	(5,928		)
					(123,966		)	(123,966		)	(158,625		)	(158,625		)
Long-term debt					$	23,592,502		$	23,137,835		$	23,137,956		$	22,653,975

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)


(a)	The carrying amount is net of the unamortized deferred financing costs and/or discounts/~~premiums.~~premiums and with respect to certain notes, a fair value adjustment resulting from the Cequel and Cablevision acquisitions.


(b)	At September 30, 2018, $139,929 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $1,585,071 of the facility was undrawn and available, subject to covenant limitations.


~~(c)~~	At September 30, 2018, $7,636 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $342,364 of the facility was undrawn and available, subject to covenant limitations.

In January 2018, CSC Holdings borrowed $150,000 under its revolving credit facility and entered into a new $1,500,000 incremental term loan facility (the "Incremental Term Loan") under its existing credit facilities agreement. The Incremental Term Loan was priced at 99.5% and will mature on January 25, 2026. The Incremental Term Loan is comprised of eurodollar borrowings or alternate base rate borrowings, and bears interest at a rate per annum equal to the adjusted LIBO rate or the alternate base rate, as applicable, plus the applicable margin, where the applicable margin is (i) with respect to any alternate base rate loan, 1.50% per annum and (ii) with respect to any eurodollar loan, 2.50% per annum.

~~The Company made a voluntary repayment of $600,000 under the CSC Holdings revolving credit facility in January 2018.~~

On March 22, 2018, Altice US Finance I Corporation, an indirect wholly-owned subsidiary of the Company, entered into a Fourth Amendment to the Cequel Credit Agreement (Extension Amendment), by and among the borrower, the Revolving Consent Lenders (as defined in the Fourth Amendment) and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (the “Fourth Amendment”). The Fourth Amendment amends and supplements the Borrower’s

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

credit agreement, dated as of June 12, 2015, as amended by the first amendment (refinancing amendment), dated as of October 25, 2016, the second amendment (extension amendment), dated as of December 9, 2016, and the third amendment (incremental loan assumption agreement and refinancing amendment), dated as of March 15, 2017, as so amended and as may be further amended, restated, modified or supplemented from time to time and as further amended by the Fourth Amendment among, inter alios, the borrower, the lenders party thereto and the administrative agent.

The Fourth Amendment extends the maturity date of the revolving loans and/or commitments of the Revolving Consent Lenders to April 5, 2023. The Fourth Amendment and the extended maturity date will not apply to the revolving loans and/or commitments of revolving lenders under the Cequel Credit Agreement that are not Revolving Consent Lenders.

In July 2018, the Company borrowed $575,000 under the CSC Holdings revolving credit facility agreement and used a portion of the proceeds to repay the $500,000 principal amount of senior notes due July 15, 2018.

~~As of September 30, 2018, the Company was in compliance with all of its financial covenants under the CSC Holdings credit facilities agreement and the Cequel credit facilities agreement.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~Senior Guaranteed Notes, Senior Secured Notes and Senior Notes and Debentures~~

~~The following table summarizes the Company's senior guaranteed notes, senior secured notes and senior notes and debentures:~~

September 30, 2018 December 31, 2017
Date Issued Maturity Date Interest Rate Principal Amount Carrying Amount (a) Principal Amount Carrying Amount (a)
CSC Holdings Senior Notes:
February 6, 1998 February 15, 2018 7.875 % (b) (f) (o) $ —
$ —
$ 300,000
$ 301,184
July 21, 1998 July 15, 2018 7.625 % (b) (f) (q) —
—
500,000
507,744
February 12, 2009 February 15, 2019 8.625 % (c) (f) 526,000
531,206
526,000
541,165
November 15, 2011 November 15, 2021 6.750 % (c) (f) 1,000,000
966,913
1,000,000
960,146
May 23, 2014 June 1, 2024 5.250 % (c) (f) 750,000
668,918
750,000
660,601
October 9, 2015 January 15, 2023 10.125 % (e) 1,800,000
1,780,504
1,800,000
1,777,914
October 9, 2015 October 15, 2025 10.875 % (e) 1,684,221
1,662,507
1,684,221
1,661,135
CSC Holdings Senior Guaranteed Notes:
October 9, 2015
October 15, 2025
6.625 % (e)

1,000,000

987,707

1,000,000

986,717
September 23, 2016
April 15, 2027
5.500 % (g)

1,310,000

1,304,816

1,310,000

1,304,468
January 29, 2018
February 1, 2028
5.375 % (n)

1,000,000

991,896

—

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

—

750,000

754,035
April 15, 2010
April 15, 2020
8.000 % (c) (f) 500,000

494,445

500,000

492,009
September 27, 2012
September 15, 2022
5.875 % (c) (f) 649,024

582,236

649,024

572,071
Cequel and Cequel Capital Senior Notes (l):
Oct. 25, 2012 Dec. 28, 2012 September 15, 2020 6.375 % (d) (m) —
—
1,050,000
1,027,493
May 16, 2013 Sept. 9, 2014 December 15, 2021 5.125 % (d) 1,250,000
1,157,405
1,250,000
1,138,870
June 12, 2015 July 15, 2025 7.750 % (i) 620,000
605,540
620,000
604,374
April 5, 2018
April 1, 2028
7.500 % (p)

1,050,000

1,048,222

—

—
Altice US Finance I Corporation Senior Secured Notes (l):
June 12, 2015 July 15, 2023 5.375 % (h) 1,100,000
1,084,542
1,100,000
1,082,482
April 26, 2016 May 15, 2026 5.500 % (j) 1,500,000
1,488,881
1,500,000
1,488,024
$ 15,739,245
15,355,738
$ 16,289,245
15,860,432
Less: current portion 531,206
507,744
Long-term debt $ 14,824,532
$ 15,352,688


~~(a)~~	~~The carrying amount is net of the unamortized deferred financing costs and/or discounts/premiums.~~


~~(b)~~	~~The debentures are not redeemable by CSC Holdings prior to maturity.~~


~~(c)~~	~~Notes are redeemable at any time at a specified "make-whole" price plus accrued and unpaid interest to the redemption date.~~


~~(d)~~	~~The Company may redeem some or more of all the notes at the redemption price set forth in the relevant indenture, plus accrued and unpaid interest.~~


~~(e)~~	The Company may redeem some or all of the 2023 Notes at any time on or after January 15, 2019, and some or all of the 2025 Notes and 2025 Guaranteed Notes at any time on or after October 15, 2020, at the redemption prices set forth in the relevant indenture, plus accrued and unpaid interest, if any. The Company may also redeem up to 40% of each series of

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

the notes using the proceeds of certain equity offerings before October 15, 2018, at a redemption price equal to 110.125% for the 2023 Notes, 110.875% for the 2025 Notes and 106.625% for the 2025 Guaranteed Notes, in each case plus accrued and unpaid interest. In addition, at any time prior to January 15, 2019, CSC Holdings may redeem some or all of the 2023 Notes, and at any time prior to October 15, 2020, the Company may redeem some or all of the 2025 Notes and the 2025 Guaranteed Notes, at a price equal to 100% of the principal amount thereof, plus a “make whole” premium specified in the relevant indenture plus accrued and unpaid interest.


~~(f)~~	~~The carrying value of the notes was adjusted to reflect their fair value on the date of the Cablevision Acquisition (aggregate reduction~~ ~~of $52,788 at the date of the acquisition).~~

~~(g)~~

The 2027 Guaranteed Notes are redeemable at any time on or after April 15, 2022 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any. In addition, up to 40% may be redeemed for each series of the 2027 Guaranteed Notes using the proceeds of certain equity offerings before October 15, 2019, at a redemption price equal to 105.500%, plus accrued and unpaid interest.


~~(h)~~	~~Some or all of these notes may be redeemed at any time on or after July 15, 2018, plus accrued and unpaid interest, if any.~~


~~(i)~~	~~Some or all of these notes may be redeemed at any time on or after July 15, 2020, plus accrued and unpaid interest, if any.~~


~~(j)~~	Some or all of these notes may be redeemed at any time on or after May 15, 2021, plus accrued and unpaid interest, if any. Up to 40% of the notes may be redeemed using the proceeds of certain equity offerings before May 15, 2019, at a redemption price equal to 105.500%.


~~(k)~~	The issuers of these notes have no ability to service interest or principal on the notes, other than through any dividends or distributions received from CSC Holdings. CSC Holdings is restricted, in certain circumstances, from paying dividends or distributions to the issuers by the terms of the CSC Holdings credit facilities agreement.

~~(l)~~(c)

The issuers of these notes have no ability to service interest or principal on the notes, other than through any contributions/distributions from Cequel Communications, LLC (an indirect subsidiary of Cequel and the parent of Altice US Finance I). Cequel Communications, LLC is restricted in certain circumstances, from paying dividends or distributions to the issuers by the termsAt March 31, 2019, $163,014 of the ~~Cequel~~revolving credit ~~facilities agreement.~~facility was restricted for certain letters of credit issued on behalf of the Company and $2,099,486 of the facility was undrawn and available, subject to covenant limitations.


~~(m)~~(d)	~~These notes were repaid in April 2018 with the proceeds from the issuance of new senior notes.~~Represents interest rate at March 31, 2019.

~~(n)~~

The 2028 Guaranteed Notes are redeemable at any time on or after February 1, 2023 at the redemption prices set forth in the indenture, plus accrued and unpaid interest, if any. In addition, up to 40% of the original aggregate principal amount of the notes may be redeemed using the proceeds of certain equity offerings before February 1, 2021, at a redemption price equal to 105.375%~~, plus accrued and unpaid interest.~~


~~(o)~~	~~These notes were repaid in February 2018 with the proceeds from the 2028 Guaranteed Notes (defined below) and with the proceeds from the Incremental Term Loan.~~

~~(p)~~(e)

The 2028 Senior Notes are redeemable at any time prior to April 1, 2023 at a redemption price equal to 100% of the principal amount thereof plus the applicable premium plus accrued and unpaid interest, if any. Up to 40% of the original aggregate principal amount of the 2028 Senior Notes may be redeemed using the proceeds of certain equity offerings before April 1, 2021, at a redemption price equal to 107.50% of the principal amount, plus accrued and unpaid interest. In addition, the 2028 Senior Notes are redeemable at any time on or after April 1, 2023 at the redemption prices set forth in indenture, plus accrued and unpaid interest.


~~(q)~~	~~These notes were repaid in July 2018 with borrowings under CSC Holdings~~ revolving credit facility ~~agreement.~~matures on January 31, 2024, however $350,000 is due on November 30, 2021.

In January ~~2018,~~2019, CSC Holdings issued ~~$1,000,000~~$1,500,000 in aggregate principal amount of ~~5.375%~~ senior guaranteed notes due ~~February 1, 2028 (the "2028~~2029 ("CSC Holdings 2029 Guaranteed Notes"). The ~~2028 Guaranteed Notes are senior unsecured obligations~~notes bear interest at a rate of 6.5% and rank pari passu in right of payment with all of the existing and future senior indebtedness, including the existing senior notes and the CVC Credit Facilities and rank senior in right of payment to all of existing and future subordinated indebtedness.

will mature on February 1, 2029. The net proceeds from the ~~2028 Guaranteed Notes, together with proceeds from~~sale of the ~~Incremental Term Loan (discussed above), borrowings under the CVC revolving credit facility and cash on hand,~~notes were used ~~in February 2018~~ to repay ~~$300,000~~certain indebtedness, including to repay at maturity $526,000 aggregate principal amount of CSC Holdings' 8.625% senior notes due in February ~~2018 and $750,000 principal~~2019 plus accrued interest, redeem approximately $905,300 of the aggregate outstanding amount of ~~Cablevision~~CSC Holdings' 10.125% senior notes due ~~in April 2018~~2023 at a redemption price of 107.594% plus accrued interest, and ~~a portion was used to fund the dividend of $1,499,935 to the Company's stockholders immediately prior to~~paid fees and ~~in connection~~expenses associated with the ~~Distribution discussed in Note 1.~~transactions. In connection with ~~the redemption~~this refinancing, $526,000 of ~~Cablevision~~short-term senior notes ~~the Company paid~~were reclassified to long-term debt as of December 31, 2018.

In February 2019, CSC Holdings issued an additional $250,000 CSC Holdings 2029 Guaranteed Notes at a ~~call premium~~price of ~~approximately $7,019, which was recorded as a loss on extinguishment of debt and also recorded a write-off~~101.75% of the ~~unamortized premium of $2,314.~~

~~In April 2018, Cequel Communications Holdings I, LLC and Cequel Capital Corporation each an indirect, wholly owned subsidiary of the Company, issued $1,050,000 aggregate~~ principal ~~amount of 7.50% senior notes due April 1, 2028 (the "2028 Senior Notes").~~value. The proceeds of these notes were used to repay amounts outstanding under the CSC Holdings Revolving Credit Facility.

During the three months ended March 31, 2019, CSC Holdings borrowed $400,000 under its revolving credit facility and repaid $350,000 of amounts outstanding under the revolving credit facility, a portion of which was funded from the proceeds of the issuance of an additional $250,000 principal amount of CSC Holdings 2029 Guaranteed Notes (see discussion above).

In January 2019, CSC Holdings refinanced its existing revolving credit facility. After the refinancing, the total size of the new revolving credit facility is $2,562,500, including $2,212,500 extended to January 2024 and priced at LIBOR plus 2.25%. The remaining $350,000 matures in November 2021.

In February 2019, CSC Holdings entered into a $1,000,000 senior secured Term Loan B ("Incremental Term Loan B-4") maturing on April ~~2018~~15, 2027, the proceeds of which were used to redeem ~~the $1,050,000~~$894,700 in aggregate principal amount ~~6 3/8%~~of CSC Holdings’ 10.125% Senior Notes due 2023, representing the entire aggregate principal amount outstanding, and paying related fees, costs and expenses. The Incremental Term Loan B-4 bears interest at a rate per annum equal to LIBOR plus 3.0% and was issued with an original issue discount of 1.0%.

The CSC Credit Facilities Agreement also contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under the CSC Credit Facilities will be entitled to take various actions, including the acceleration of amounts due under the CSC Credit Facilities and all actions permitted to be taken by a secured creditor.

As of March 31, 2019, the Company was in compliance with all of its financial covenants under the CSC Holdings Credit Facilities and with all of its financial covenants under the indentures under which the senior and senior guaranteed notes ~~due September 15, 2020. In connection with the redemption of these notes, the Company~~were issued.

2419

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

~~paid~~The following table provides a ~~call premium~~summary of ~~approximately $16,737, which was recorded as a~~the loss on extinguishment of debt and ~~also recorded a~~the write-off of deferred ~~financings~~financing costs ~~aggregating $20,173.~~

~~The indentures under which~~recorded by the Company upon the redemption of senior notes and ~~debentures were issued contain various covenants. The Company was in compliance with all~~the refinancing of ~~its financial covenants under these indentures as of September 30, 2018.~~credit facilities:

~~Notes Payable to Affiliates and Related Parties~~

On June 21, 2016, in connection with the Cablevision acquisition, the Company issued notes payable to affiliates and related parties aggregating $1,750,000, of which $875,000 bore interest at 10.75% and matured on December 20, 2023 and $875,000 bore interest at 11% and matured on December 20, 2024.

In connection with the Company's IPO in June 2017, the Company converted the notes payable to affiliates and related parties (together with accrued and unpaid interest of $529 and applicable premium of $513,723) into shares of the Company’s common stock at the IPO price. The premium was recorded as a loss on extinguishment of debt on the Company's statement of operations in the second quarter of 2017. In connection with the conversion of the notes, the Company recorded a credit to paid in capital of $2,264,252 in the second quarter of 2017.

~~For the nine months ended September 30, 2017, the Company recognized $90,405 of interest expense related to these notes prior to their conversion.~~



For the Three Months Ended March 31, 2019:
	CSC Holdings 10.125% Senior Notes due 2023	$	154,666
	CSC Holdings credit facility refinancing	3,236
		$	157,902
For the Three Months Ended March 31, 2018:
	Cablevision 7.75% Senior Notes due 2018	$	4,705

Summary of Debt Maturities

The future maturities of debt payable by the Company under its various debt obligations outstanding as of ~~September 30, 2018,~~March 31, 2019, including notes payable and collateralized indebtedness (see Note ~~10)~~11), ~~and capital leases,~~but excluding finance lease obligations (see Note 8), are as follows:


Years Ending December 31,	Cablevision		Cequel		Total
2018	$	30,678	$	6,446	$	37,124
2019	598,210		43,999		642,209
2019 (excluding the three months ended March 31, 2019)							$	94,162
2020	550,396		12,720		563,116		578,253
2021	3,083,892		1,262,729		4,346,621		3,779,571
2022	697,147		12,739		709,886		718,124
2023							1,164,330
Thereafter	11,815,174		5,466,230		17,281,404		17,354,724

NOTE ~~10.~~11. DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

Prepaid Forward Contracts

The Company has entered into various transactions to limit the exposure against equity price risk on its shares of Comcast Corporation ("Comcast") common stock. The Company has monetized all of its stock holdings in Comcast through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock. At maturity, the contracts provide for the option to deliver cash or shares of Comcast stock with a value determined by reference to the applicable stock price at maturity. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing the Company to retain upside appreciation from the hedge price per share to the relevant cap price.

The Company received cash proceeds upon execution of the prepaid forward contracts discussed above which has been reflected as collateralized indebtedness in the accompanying ~~condensed~~ consolidated balance sheets. In addition, the Company separately accounts for the equity derivative component of the prepaid forward contracts. These equity derivatives have not been designated as hedges for accounting purposes. Therefore, the net fair values of the equity derivatives have been reflected in the accompanying ~~condensed~~ consolidated balance sheets as an asset or liability and the net increases or decreases in the fair value of the equity derivative component of the prepaid forward contracts are included in gain (loss) on derivative contracts in the accompanying ~~condensed~~ consolidated statements of operations.

All of the Company's monetization transactions are obligations of its wholly-owned subsidiaries that are not part of the Restricted Group; however, CSC Holdings has provided guarantees of the subsidiaries' ongoing contract payment expense obligations and potential payments that could be due as a result of an early termination event (as defined in the agreements). If any one of these contracts were terminated prior to its scheduled maturity date, the Company would be obligated to

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date. As of ~~September 30, 2018,~~March 31, 2019, the Company did not have an early termination shortfall relating to any of these contracts.

The Company monitors the financial institutions that are counterparties to its equity derivative contracts. All of the counterparties to such transactions carry investment grade credit ratings as of ~~September 30, 2018.~~March 31, 2019.

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Interest Rate Swap Contracts

~~In May 2018, the Company~~To manage interest rate risk, we have from time to time entered into ~~two~~ interest rate swap contracts that mature in April 2019 whereby one contract converts the interest rate on $2,970,000 of the CSC Holdings Term Loan Facility from a one-month LIBO rate to a three-month LIBO rate minus 0.226% and the second contract converts the interest rate on $1,496,250 of the CSC Holdings Incremental Term Loan from a one-month LIBO rate to a three-month LIBO rate minus 0.226%. The objective of these swaps is to potentially pay a lower interest rate than what the Company can elect under the terms of the CSC Holdings credit facilities agreement.

In April 2018, the Company entered into an interest rate swap contract that matures in May 2019 which converts the interest rate on $1,255,513 of the Cequel Term Loan B from a one-month LIBO rate to a three-month LIBO rate minus 0.225%. The objective of this swap is to potentially pay a lower interest rate than what the Company can elect under the terms of the Cequel credit facilities agreement.

In June 2016, the Company entered into two fixed to floating interest rate swap contracts that mature in May 2026. One fixed to floating interest rate swap is converting $750,000 from a fixed rate of 1.6655% to a six-month LIBO rate and a second tranche of $750,000 from a fixed rate of 1.68% to a six-month LIBO rate. The objective of these swaps is to adjust the proportion of total debt that is subject to variable and fixed ~~and~~interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or effectively convert fixed rate borrowings to variable rates to permit the Company to realize lower interest ~~rates~~.

~~These swap contracts were not designated as hedges for accounting purposes. Accordingly,~~expense in a declining interest rate environment. We monitor the ~~changes in the fair value of these~~financial institutions that are counterparties to our interest rate swap contracts and we only enter into interest rate swap contracts with financial institutions that are ~~recorded through~~rated investment grade. All such contracts are carried at their fair market values on our consolidated balance sheets, with changes in fair value reflected in the consolidated statements of operations.

~~The~~As of March 31, 2019, the Company ~~does~~did not hold ~~or issue~~and has not issued derivative instruments for trading or speculative purposes.

The following represents the location of the assets and liabilities associated with the Company's derivative instruments within the ~~condensed~~ consolidated balance sheets:


		Asset Derivatives				Liability Derivatives
Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	Fair Value at September 30, 2018		Fair Value at December 31, 2017		Fair Value at September 30, 2018			Fair Value at December 31, 2017			Balance Sheet Location	Fair Value at
Derivatives Not Designated as Hedging Instruments												Balance Sheet Location	March 31, 2019			December 31, 2018
Derivatives Not Designated as Hedging Instruments
Asset Derivatives:
Interest rate swap contracts	Derivative contracts, current	$	3,269	$	—	$	—		$	—		Derivative contracts, current	$	—		$	1,975
Prepaid forward contracts	Derivative contracts, current	—		52,545		—			(52,545		)	Derivative contracts, long-term	—			109,344
													—			111,319
Liability Derivatives:
Interest rate swap contracts												Other current liabilities	(754		)	(70		)
Prepaid forward contracts	Derivative contracts, long-term	31,510		—		(10,131		)	(109,504		)	Liabilities under derivative contracts, long-term	(67,685		)	—
Interest rate swap contracts	Liabilities under derivative contracts, long-term	—		—		(143,719		)	(77,902		)	Liabilities under derivative contracts, long-term	(155,369		)	(132,908		)
		$	34,779	$	52,545	$	(153,850	)	$	(239,951	)		$	(223,808	)	$	(132,978	)

~~Gains (losses)~~The gain (loss) from the Company's derivative contracts related to the Comcast common stock for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 of ~~$(79,628)~~$(177,029) and ~~$130,883,~~$168,352, respectively, ~~are~~is reflected in gain (loss) on derivative contracts, net in the Company's ~~condensed~~ consolidated ~~statement~~statements of operations.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 the Company recorded a gain (loss) on investments of ~~$111,684~~$254,725 and ~~$(199,312)~~$(252,576), respectively, representing the net increase (decrease) in the fair ~~values~~value of the ~~investment securities~~Comcast common stock pledged as collateral.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 the Company recorded a loss on interest rate swap contracts of ~~$19,554~~$23,672 and ~~$64,405,~~$31,922, respectively.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~Settlements of Collateralized Indebtedness~~

The following table summarizes the settlement of the Company's collateralized indebtedness relating to Comcast shares that were settled by delivering cash equal to the collateralized loan value, net of the value of the related equity derivative contracts during the nine months ended September 30, 2018:

Number of shares 16,139,868
Collateralized indebtedness settled $ (516,537 )
Derivatives contracts settled 24
(516,513 )
Proceeds from new monetization contracts 516,513
Net cash proceeds $ —

The cash to settle the collateralized indebtedness was obtained from the proceeds of new monetization contracts covering an equivalent number of Comcast shares. The terms of the new contracts allow the Company to retain upside participation in Comcast shares up to each respective contract's upside appreciation limit with downside exposure limited to the respective hedge price.

NOTE ~~11.~~12. FAIR VALUE MEASUREMENT

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

Level I - Quoted prices for identical instruments in active markets.

Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level III - Instruments whose significant value drivers are unobservable.

The following table presents for each of these hierarchy levels, the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis:

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)


	Fair Value Hierarchy	September 30, 2018		December 31, 2017		Fair Value Hierarchy	March 31, 2019		December 31, 2018
Assets:
Money market funds	Level I	$	296,123	$	5,949	Level I	$	32,004	$	91,852
Investment securities pledged as collateral	Level I	1,521,045		1,720,357		Level I	1,717,350		1,462,626
Prepaid forward contracts	Level II	31,510		52,545		Level II	—		109,344
Interest rate swap contracts	Level II	3,269		—		Level II	—		1,975
Liabilities:
Prepaid forward contracts	Level II	10,131		162,049		Level II	67,685		—
Interest rate swap contracts	Level II	143,719		77,902		Level II	156,123		132,978
Contingent consideration related to 2017 and 2018 acquisitions	Level III	6,733		32,233		Level III	5,139		6,195

The Company's cash equivalents, investment securities and investment securities pledged as collateral are classified within Level I of the fair value hierarchy because they are valued using quoted market prices.

The Company's derivative contracts and liabilities under derivative contracts on the Company's consolidated balance sheets are valued using market-based inputs to valuation models. These valuation models require a variety of inputs, including contractual terms, market prices, yield curves, and measures of volatility. When appropriate, valuations are adjusted for various factors such as liquidity, bid/offer spreads and credit risk considerations. Such adjustments are generally based on available market evidence. Since model inputs can generally be verified and do not involve significant management

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

judgment, the Company has concluded that these instruments should be classified within Level II of the fair value hierarchy.

The fair value of the contingent consideration as of ~~September 30, 2018 related~~March 31, 2019 is equal to the ~~acquisitions in the third quarter of 2018 and fourth quarter of 2017 amounted~~contractual obligation expected to approximately $4,500 and $2,233, respectively. The estimated amount recorded as of September 30, 2018 is 100% of the contractual amount related to the acquisition in the third quarter 2018 and 51% of the contractual amount related to the acquisition in the fourth quarter 2017. The fair value of the consideration was estimatedbe paid based on a probability assessment of attaining the targets as of ~~September 30, 2018.~~such date. The maximum amount that could be paid if all targets are achieved is approximately $11,000.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate fair value of each class of financial instruments for which it is practicable to estimate:

Credit Facility Debt, Collateralized Indebtedness, Senior Notes and Debentures, Senior ~~Secured Notes, Senior~~ Guaranteed Notes, and Notes Payable

The fair values of each of the Company's debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities. The fair value of notes payable is based primarily on the present value of the remaining payments discounted at the borrowing cost.

The carrying values, estimated fair values, and classification under the fair value hierarchy of the Company's financial instruments, excluding those that are carried at fair value in the accompanying ~~condensed~~ consolidated balance sheets, are summarized as follows:

September 30, 2018 December 31, 2017

Fair Value
Hierarchy

Carrying
Amount (a)

Estimated
Fair Value

Carrying
Amount (a)

Estimated
Fair Value
CSC Holdings debt instruments:

Credit facility debt Level II $ 4,980,221
$ 5,033,750
$ 3,393,306
$ 3,435,000
Collateralized indebtedness Level II 1,400,398
1,352,771
1,349,474
1,305,932
Senior guaranteed notes Level II 3,284,419
3,293,125
2,291,185
2,420,000
Senior notes and debentures Level II 5,610,048
6,245,760
6,409,889
7,221,846
Notes payable Level II 42,810
42,653
56,956
55,289
Cablevision senior notes:
Senior notes and debentures Level II 1,076,681
1,189,098
1,818,115
1,931,239
Cequel debt instruments:

Cequel credit facility debt Level II 1,241,272
1,249,188
1,250,217
1,258,675
Senior secured notes Level II 2,573,423
2,604,930
2,570,506
2,658,930
Senior notes Level II 2,811,167
3,013,615
2,770,737
2,983,615
Notes payable Level II 34,281
34,281
8,946
8,946
$ 23,054,720
$ 24,059,171
$ 21,919,331
$ 23,279,472



		March 31, 2019				December 31, 2018
	Fair Value Hierarchy	Carrying Amount (a)		Estimated Fair Value		Carrying Amount (a)		Estimated Fair Value
CSC Holdings debt instruments:
Credit facility debt	Level II	$	6,945,301	$	7,011,250	$	5,915,559	$	5,972,500
Collateralized indebtedness	Level II	1,411,869		1,392,790		1,406,182		1,374,203
Senior guaranteed notes	Level II	7,596,446		7,925,722		5,847,758		5,646,468
Senior notes and debentures	Level II	6,120,069		6,811,420		8,416,610		8,972,722
Notes payable	Level II	61,131		61,091		106,108		105,836
Cablevision debt instruments:
Senior notes and debentures	Level II	1,099,681		1,216,269		1,095,193		1,163,843
		$	23,234,497	$	24,418,542	$	22,787,410	$	23,235,572

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)


(a)	Amounts are net of unamortized deferred financing costs ~~premiums~~ and ~~discounts.~~discounts/premiums.

The fair value estimates related to the Company's debt instruments presented above are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

~~Fair Value of Non-financial Assets and Liabilities~~

The Company’s non-financial assets such as cable-television franchises, property, plant, and equipment, other intangible assets and cost-method investments, are not measured at fair value on a recurring basis, however, they are subject to fair value adjustments whenever events or circumstances indicate that the carrying amount of these assets may not be

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~recoverable. No material impairments were recorded during the three and nine months ended September 30, 2018 and 2017.~~

NOTE ~~12.~~13. INCOME TAXES

In general, the Company is required to use an estimated annual effective tax rate ("AETR") to measure the income tax expense or benefit recognized on a year to date basis in an interim period. In addition, certain items included in income tax expense as well as the tax impact of certain items included in pretax income must be treated as discrete items. The income tax expense or benefit associated with these discrete items is fully recognized in the interim period in which the items occur.

The Company recorded income tax expense of $95,968 and $29,675 for the three and nine months ended September 30, 2018, respectively. Included in the income tax expense for each period was tax expense of $49,052 as a result of the revaluation of the Company's deferred tax liability in connection with tax law changes in the State of New Jersey. Absent this item, the effective tax rate forFor the three months ended ~~September 30, 2018 would have been 36%. For~~March 31, 2019, the ~~nine months ended September 30, 2018, the~~Company recorded a tax benefit ~~was more than offset by the $49,052 expense recorded~~of $22,586 on pre-tax loss of $47,784, resulting in ~~the period. The tax expense was calculated based upon the actual~~an effective tax rate ~~for~~that was higher than the ~~year-to-date period.~~U.S. statutory tax rate. The higher tax rate was due to revaluation of state deferred taxes primarily due to certain changes to the state tax rates used to measure the Company’s deferred tax liabilities and certain non-deductible expenses.

For the three months ended March 31, 2018, the Company ~~determined this to represent the best estimate~~recorded a tax benefit of ~~the annual~~$60,703 on pre-tax loss of $189,652, resulting in an effective tax rate ~~in light of~~that was higher than the ~~magnitude of the expected income and the significant permanent differences.~~

~~Pursuant to the enactment of the Tax Cuts & Jobs Act ("Tax Reform"), effective on January 1, 2018, the corporate federal income~~U.S. statutory tax rate. The higher tax rate was ~~reduced~~primarily due to 21% from 35%. The Company is subject to Tax Reform’s limitation on interest deductibility which is based on a limit calculated without regard to depreciation or amortization through 2021. The resulting interest deduction that is deferred can be carried forward indefinitely. Nevertheless, as is the case with any future deductible temporary difference, management will continue to evaluate realizability to determine whether a valuation allowance is required as a result of these limitations. Therefore a valuation allowance may need to be recorded in the future subject to the relative levels of future interest expense versus taxable income.

~~The Company recorded income tax benefit of $141,550~~state taxes and ~~$439,945 for the three and nine months ended September 30, 2017, reflecting the AETR of approximately 42% and 37%, respectively.~~

As of September 30, 2018, the Company's federal net operating losses (“NOLs”) were approximately $2,419,000. The utilization of certain pre-merger NOLs of Cablevision and Cequel are limited pursuant to Internal Revenue Code Section 382. The Company does not expect such limitations to impact the ability to utilize the NOLs prior to their expiration.non-deductible expenses.

NOTE ~~13. SHARE BASED~~14. SHARE-BASED COMPENSATION

Carry Unit Plan

Certain employees of the Company and its affiliates received awards of units in a carry unit plan of Neptune Management LP, an entity which has an ownership interest in the Company. The ~~awards generally vest~~following table summarizes activity relating to these carry units:



	Number of Time Vesting Awards		Number of Performance Based Vesting Awards	Weighted Average Grant Date Fair Value
Balance, December 31, 2018	83,575,000		10,000,000	$	1.14
Vested	(1,750,000	)	—	2.77
Forfeited	(2,687,500	)	—	0.97
Balance, March 31, 2019	79,137,500		10,000,000	$	1.11

The weighted average fair value per unit was $2.74 and $1.95 as ~~follows: 50% on~~of March 31, 2019 and December 31, 2018, respectively. For the ~~second anniversary of June 21, 2016 for Cablevision employees or December 21, 2015 for Cequel employees ("Base Date"), 25% on the third anniversary of the Base Date,~~three months ended March 31, 2019 and ~~25% on the fourth anniversary of the Base Date. Neptune Holding US GP LLC, the general partner of Neptune Management LP, has the right to repurchase (or to assign to an affiliate, including~~2018 the Company recognized an expense of $6,473 and $17,501, respectively, related to the ~~right to repurchase) vested awards held by employees for sixty days following their termination. For performance-based awards under the plan, vesting occurs upon achievement or satisfaction~~push down of ~~a specified performance condition. The Company considered the probability of achieving the established performance targets in determining the~~ share-based compensation ~~with respect~~related to ~~these awards at the end of each reporting period.~~

Beginning on the fourth anniversary of the Base Date, the holders of carry units have an annual opportunity (a sixty day period determined by the administrator of the plan) to sell their units back to Neptune Holding US GP LLC (or affiliate, including the Company, designated by Neptune Holding US GP LLC). Accordingly, the carry ~~units are presented as temporary equity on the consolidated balance sheets at fair value. Adjustments to fair value at each reporting period are recorded in paid-in capital.~~

The right of Neptune Holding US GP LLC to assign to an affiliate, including the Company, the right to repurchase an employee’s vested units during the sixty-day period following termination, or to satisfy its obligation to repurchase an employee’s vested units during annual 60 day periods following the fourth anniversary of the Base Date, may be exercised by Neptune Holding US GP LLC in its discretion at the time a repurchase right or obligation arises. The carry unit ~~plan~~plan.

2923

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

requires the purchase price payable to the employee or former employee, as the case may be, to be paid in cash, a promissory note (with a term of not more than 3 years and bearing interest at the long-term applicable federal rate under Section 1274(d) of the Internal Revenue Code) or combination thereof, in each case as determined by Neptune Holding US GP LLC in its discretion at the time of the repurchase. Neptune Holding US GP LLC expects that vested units will be redeemed for shares of the Company's Class A common stock upon vesting.

~~The following table summarizes activity relating to carry units:~~

Number of Time
Vesting Awards

Number of Performance
Based Vesting Awards
Weighted Average Grant Date Fair Value
Balance, December 31, 2017 168,550,001
10,000,000
$ 0.71
Vested (48,337,500 ) —
0.37
Forfeited (15,500,001 ) —
0.56
Balance, September 30, 2018 104,712,500
10,000,000
1.01

The weighted average fair value per unit was $2.28 and $2.50 as of September 30, 2018 and December 31, 2017, respectively. For the three and nine months ended September 30, 2018, the Company recognized an expense of $7,510 and $33,004 related to the push down of share-based compensation expense related to the carry unit plan. For the three and nine months ended September 30, 2017, the Company recognized an expense of $15,005 and $40,932 related to the push down of share-based compensation related to the carry unit plan.

Stock Option Plan

The following table summarizes activity related to the Company's employee stock ~~options for the nine months ended September 30, 2018:~~options:

Shares Under Option
Weighted Average
Exercise
Price Per Share

Weighted Average Remaining
Contractual Term
(in years)

Time
Vesting

Performance
Based Vesting

Aggregate Intrinsic
Value (a)
Balance at December 31, 2017 5,110,747
—
$ 17.45
9.97
$ 8,944
Granted 2,332,540
95,953
17.76

Forfeited (496,491 ) (22,314 ) 17.76

Balance at September 30, 2018 6,946,796
73,639
17.51
9.43
4,417
Options exercisable at September 30, 2018 —
—
—
—
—



	Shares Under Option				Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)
	Time Vesting		Performance Based Vesting		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (a)
Balance at December 31, 2018	11,230,168		73,639		$	17.50	9.47	$	—
Granted	745,865		—		19.49
Forfeited	(202,173	)	(16,736	)	17.69
Balance at March 31, 2019	11,773,860		56,903		17.62		9.24	45,662
Options exercisable at March 31, 2019	—		—		—		—	—


(a)	The aggregate intrinsic value is calculated as the difference between the exercise price and the closing price of the Company's Class A common stock at the respective date.

The Company recognized ~~share based~~share-based compensation expense related to employee stock options for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 of ~~$4,817~~$7,317 and ~~$13,172,~~$4,122, respectively.

~~The following weighted-average assumptions were used to calculate the fair values of stock option awards granted during the nine months ended September 30, 2018:~~



~~Risk-free interest rate~~		~~2.77%~~
~~Expected life (in years)~~		~~6.48~~
~~Dividend yield~~		—%
~~Volatility~~		~~35.23%~~
~~Grant date fair value~~		~~$7.12~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE ~~14.~~15. AFFILIATE AND RELATED PARTY TRANSACTIONS

Equity Method Investments

In April 2018, Altice ~~N.V.~~Europe transferred its ownership of i24 US and i24 Europe ('i24NEWS"), Altice ~~N.V.'s~~Europe's 24/7 international news and current affairs channels to the Company for minimal consideration (the "i24NEWS Acquisition"). As the acquisition was a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of i24NEWS as of April 1, 2018. Operating results for periods prior to April 1, 2018 and the balance sheet as of December 31, 2017 have not been revised to reflect the combination of i24NEWS as the impact was deemed immaterial.

The Company's equity in the net losses of i24NEWS ~~prior to April 1,~~for the three months ended March 31, 2018 of $1,130 ~~for the nine months ended September 30, 2018 and $541 and $3,126 for three and nine months ended September 30, 2017~~ were recorded using the equity method and reflected in other expense, net in the Company's consolidated statements of operations. ~~The Company's investment in i24NEWS as~~In April 2018, Altice Europe transferred its ownership of ~~December 31, 2017 of $930 is included in investment in affiliates on~~i24 US and I24 Europe to the ~~Company's condensed consolidated balance sheet.~~Company for minimal consideration.

In April 2018, the Company redeemed a 24% interest in Newsday LLC ("Newsday") ~~and recognized a gain of $13,298, reflected in gain (loss) on investments and sale of affiliate interests, net in the Company's statements of operations.~~. For the ~~nine~~three months ended ~~September 30,~~March 31, 2018, the Company recorded equity in the net loss of Newsday of ~~$9,719. For the three and nine months ended September 30, 2017, the Company recorded equity in net loss of Newsday of $1,034 and $2,571, respectively,~~$9,312, reflected in other expense, net in the Company's consolidated statements of operations. ~~The Company's deficit investment~~From July 7, 2016 through April 2018, the Company held a 25% ownership interest in Newsday asand prior to July 7, 2016, Newsday was a wholly-owned subsidiary of ~~December 31, 2017 of $3,579 is included in deficit investment in affiliates on the Company's condensed consolidated balance sheets.~~Cablevision.

Affiliate and Related Party Transactions

Altice USA is controlled by Patrick Drahi who is also the controlling stockholder of Altice Europe ~~(formerly Altice N.V.)~~ and its subsidiaries.

As the transactions discussed below were conducted between entities under common control by Mr. Drahi and equity method investees, amounts charged for certain services may not have represented amounts that might have been received or incurred if the transactions were based upon arm's length negotiations.

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The following table summarizes the revenue and charges related to services provided to or received from subsidiaries of Altice Europe and Newsday:

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Revenue $ 545
$ 426
$ 1,397
$ 820
Operating expenses:
Programming and other direct costs (1,671 ) (1,196 ) (6,690 ) $ (3,026 )
Other operating expenses, net (905 ) (8,302 ) (15,154 ) (24,266 )
Operating expenses, net (2,576 ) (9,498 ) (21,844 ) (27,292 )

Interest expense (a) —
—
—
(90,405 )
Other income, net —
—
149
—
Loss on extinguishment of debt and write-off of deferred financing costs —
—
—
(513,723 )
Net charges $ (2,031 ) $ (9,072 ) $ (20,298 ) $ (630,600 )
Capital expenditures $ 3,945
$ 3,549
$ 6,679
$ 12,914


~~(a)~~	~~In connection with the Company's IPO in June 2017, the Company converted the notes payable to affiliates and related parties into shares of the Company’s common stock at the IPO price.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~



	Three Months Ended March 31,
	2019			2018
Revenue	$	592		$	125
Operating expenses:
Programming and other direct costs	$	(1,687	)	$	(1,154	)
Other operating expenses, net	(2,246		)	(7,994		)
Operating expenses, net	(3,933		)	(9,148		)

Net charges	$	(3,341	)	$	(9,023	)
Capital Expenditures	$	3,354		$	1,626

Revenue

The Company recognized revenue primarily ~~in connection with~~from the sale of advertising to ~~Newsday.~~Teads.

Programming and other direct costs

Programming and other direct costs include costs incurred by the Company for the transport and termination of voice and data services provided by a subsidiary of Altice Europe.

Other operating expenses, net

~~A subsidiary of~~ Altice Europe provided certain executive services, as well as consulting, advisory and other services, including, prior to the ~~IPO,~~Company's initial public offering ("IPO") in June 2017, CEO, CFO and COO services, to the Company. Compensation under the terms of the agreement was an annual fee of $30,000 to be paid by the Company. Fees associated with this agreement recorded by the Company amounted to ~~approximately $13,250 for the nine months ended September 30, 2018 and~~ $7,500 ~~and $22,500~~ for the three ~~and nine~~ months ended ~~September 30, 2017, respectively. As of June 20, 2017, the CEO, CFO and COO became employees of the Company and the agreement was assigned to Altice Europe. by a subsidiary of Altice Europe.~~March 31, 2018. This agreement was terminated upon the completion of the Distribution discussed in Note 1.

Other operating expenses also include charges for services provided by other subsidiaries of Altice Europe aggregating ~~$905~~$2,246 and ~~$1,904~~$494, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and $802 and $1,766 for the three and nine months ended September 30, 2017,~~ respectively, ~~net of credits of $76 and $917 for the three and nine months ended September 30, 2017, for transition services provided to Newsday.~~

Capital Expenditures

Capital expenditures ~~include $3,945 and $6,679~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and March 31, 2018 include $3,354 and ~~$3,549 and $12,914, for the three and nine months ended September 30, 2017,~~$1,626, respectively, for equipment ~~purchases~~purchased and software development services provided by subsidiaries of Altice Europe.

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Aggregate amounts that were due from and due to related parties are summarized below:


	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Due from:
Altice US Finance S.A. (a)	$	13,100	$	12,951
CVC 3 (a)					$	—	$	13,100
Newsday (b)	541		2,713		491		490
Altice Management Americas (b)	1,271		33
Altice Europe (b)					530		1,271
Altice Dominican Republic (b)	2,551		—		—		2,550
i24 News (b)	—		4,036
Other Altice Europe subsidiaries (b)	924		31		—		146
	$	18,387	$	19,764	$	1,021	$	17,557
Due to:
Altice Europe (c)	$	13,250	$	—	$	—	$	15,235
Newsday (b)	32		33		22		22
Altice Labs S.A. (d)	1,463		7,354		2,329		4,864
Other Altice Europe subsidiaries (d)	8,679		3,611		3,187		5,975
	$	23,424	$	10,998	$	5,538	$	26,096


(a)	Represents interest on senior notes paid by the Company on behalf of ~~the affiliate.~~Altice US Finance S.A., which merged into CVC 3 in 2018.


(b)	Represents amounts paid by the Company on behalf of or for services provided to the respective related party and for Newsday, the net amounts due from the related party also include charges for certain transition services provided.


(c)	~~Represents amounts due to Altice Europe pursuant~~Includes $13,250 related to the agreement discussed above.


(d)	Represents amounts due to affiliates for the purchase of equipment and advertising services, as well as reimbursement for payments made on our behalf.

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

NOTE ~~15.~~16. COMMITMENTS AND CONTINGENCIES

Legal Matters

~~Following expiration~~In the latter half of the affiliation agreements for carriage of certain Fox broadcast stations and cable networks on October 16, 2010, News Corporation terminated delivery of the programming feeds to Cablevision, and as a result, those stations and networks were unavailable on Cablevision's cable television systems. On October 30, 2010, Cablevision and Fox reached an agreement on new affiliation agreements for these stations and networks, and carriage was restored. Several purported class action lawsuits alleging breach of contract, unjust enrichment, and consumer fraud and seeking unspecified compensatory damages, punitive damages and attorneys' fees were subsequently filed2018, eight named plaintiffs, each on behalf of ~~Cablevision's customers seeking recovery for~~a putative class of stockholders who purchased Company common stock in the ~~lack of Fox programming. Those lawsuits were consolidated~~Company's IPO pursuant to the Registration Statement and Prospectus, filed complaints (seven in ~~an action before the U. S.~~New York State Supreme Court, one in United States District Court for the Eastern District of New York, and a consolidated complaint was filed in that court on February 22, 2011. On March 28, 2012, in ruling on Cablevision's motion to dismiss, the Court dismissed all of plaintiffs’ claims, except for breach of contract. On March 30, 2014, the Court granted plaintiffs’ motion for class certification.York). The ~~parties have entered into a settlement agreement, which was granted final approval by the Court on May 17, 2018. As of December 31, 2017,~~lawsuits name as defendants the Company, ~~had an estimated liability associated with a potential settlement totaling $6,000.~~Altice Europe, and the Company's directors, among others, and assert that all defendants violated Sections 11 and 12 of the Securities Act of 1933 (the “Securities Act”) and that the individual defendants violated Section 15 of the Securities Act as control persons. Plaintiffs claim that the Registration Statement and Prospectus misrepresented or omitted material facts relating to the negative performance of Altice France and Altice Portugal, the disclosure of which in November 2017 negatively impacted the value of Altice USA’s stock. The ~~amount ultimately paid in connection with the proposed settlement could exceed the amount recorded.~~

~~In October 2015, the New York Attorney General began an investigation into whether the major Internet Service Providers in~~ New York State ~~deliver advertised Internet speeds.~~Supreme Court lawsuits are presently being consolidated into one action. The Company ~~is cooperating with this investigation and is currently in discussions with~~intends to vigorously defend the ~~New York Attorney General about resolving the investigation as to the Company, which resolution may involve operational and or financial components. While the Company is unable to predict~~lawsuits. Although the outcome of the ~~investigation or these discussions,~~matter cannot be predicted and the impact of the final resolution of this matter on the Company’s results of operations in any particular subsequent reporting period is not known at this time, itmanagement does not ~~expect~~believe that the ~~outcome~~ultimate resolution of the matter will have a material adverse effect on the operations or financial position of the Company or the ability of the Company to meet its financial obligations as they become due.

On November 6, 2018, Sprint Communications Company L.P (“Sprint”) filed a complaint in the U.S. District Court for the District of Delaware alleging that the Company infringes Sprint’s patents purportedly relating to Voice over Internet Protocol (“VoIP”) services. On December 3, 2018, Sprint filed a second complaint alleging that the Company infringes Sprint’s patents purportedly relating to VOD services. The lawsuits are part of a pattern of litigation that was initiated as far back as 2007 by Sprint against numerous broadband and telecommunications providers. The Company is investigating the allegations, and will vigorously defend the lawsuits. Although the outcome of the matter cannot be predicted and the impact of the final resolution of this matter on the Company’s results of operations in any particular subsequent reporting period is not known at this time, management does not believe that the ultimate resolution of the

ALTICE USA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

matter will have a material adverse effect on the operations or financial ~~conditions~~position of the Company or the ability of the Company to meet its financial obligations as they become due, but it could be material to the Company’s consolidated results of operations or cash ~~flows.~~flows for any one period.

The Company receives notices from third parties and, in some cases, is named as a defendant in certain lawsuits claiming infringement of various patents relating to various aspects of the Company's businesses. In certain of these cases other industry participants are also defendants. In certain of these cases the Company expects that any potential liability would be the responsibility of the Company's equipment vendors pursuant to applicable contractual indemnification provisions. In the event that the Company is found to infringe on any patent rights, the Company may be subject to substantial damages and/or an injunction that could require the Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as enter into royalty or license agreements with respect to the patents at issue. The Company believes that the claims are without merit, but is unable to predict the outcome of these matters or reasonably estimate a range of possible loss.

In addition to the matters discussed above, the Company is party to various lawsuits, disputes and investigations, some of which may involve claims for substantial damages, fines or penalties. Although the outcome of these other matters cannot be predicted and the impact of the final resolution of these other matters on the Company's results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of these other lawsuits will have a material adverse effect on the financial position of the Company or the ability of the Company to meet its financial obligations as they become due.

~~NOTE 16. SEGMENT INFORMATION~~

The Company classifies its operations into two reportable segments: Cablevision and Cequel. The Company's reportable segments are strategic business units that are managed separately. The Company evaluates segment performance based on several factors, of which the primary financial measure is business segment Adjusted EBITDA, a non-GAAP measure. The Company defines Adjusted EBITDA as net income (loss) excluding income taxes, income (loss) from discontinued operations, non-operating other income or expenses, loss on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments, interest expense (including cash interest expense), interest income, depreciation and amortization (including impairments), share-based compensation expense or benefit, restructuring expense or credits and transaction expenses. The Company has presented the components that reconcile Adjusted EBITDA to operating income, an accepted GAAP measure:

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
Cablevision Cequel Total Cablevision Cequel Total
Operating income (loss) $ 340,455
$ 165,103
$ 505,558
$ (3,103 ) $ 123,678
$ 120,575
Share-based compensation 9,038
3,289
12,327
11,555
3,450
15,005
Restructuring and other expense 14,122
2,465
16,587
35,364
18,084
53,448
Depreciation and amortization (including impairments) 378,549
157,504
536,053
656,122
167,164
823,286
Adjusted EBITDA $ 742,164
$ 328,361
$ 1,070,525
$ 699,938
$ 312,376
$ 1,012,314

Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
Cablevision Cequel Total Cablevision Cequel Total
Operating income $ 714,413
$ 439,242
$ 1,153,655
$ 228,740
$ 395,213
$ 623,953
Share-based compensation 35,567
10,609
46,176
28,597
12,335
40,932
Restructuring and other expense 25,720
4,145
29,865
105,182
37,583
142,765
Depreciation and amortization (including impairments) 1,337,051
490,234
1,827,285
1,641,501
497,299
2,138,800
Adjusted EBITDA $ 2,112,751
$ 944,230
$ 3,056,981
$ 2,004,020
$ 942,430
$ 2,946,450

~~A reconciliation of reportable segment amounts to the Company's condensed consolidated balances are as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Operating income for reportable segments $ 505,558
$ 120,575
$ 1,153,655
$ 623,953
Items excluded from operating income:

Interest expense (389,594 ) (379,066 ) (1,157,395 ) (1,232,730 )
Interest income 1,427
961
9,843
1,373
Gain (loss) on investments and sale of affiliate interests, net 111,684
(18,900 ) (182,031 ) 169,888
Gain (loss) on derivative contracts, net (79,628 ) (16,763 ) 130,883
(154,270 )
Gain (loss) on interest rate swap contracts (19,554 ) 1,051
(64,405 ) 12,539
Loss on extinguishment of debt and write-off of deferred financing costs —
(38,858 ) (41,616 ) (600,240 )
Other expense, net (186 ) (2,984 ) (12,473 ) (9,019 )
Income (loss) before income taxes $ 129,707
$ (333,984 ) $ (163,539 ) $ (1,188,506 )

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~The following tables present the composition of revenue by reportable segment:~~

Three Months Ended September 30, 2018 Three Months Ended September 30, 2017
Cablevision Cequel Eliminations (a) Total Cablevision Cequel Eliminations (a) Total
Residential:
Pay TV $ 783,252
$ 271,415
$ —
$ 1,054,667
$ 798,583
$ 271,363
$ —
$ 1,069,946
Broadband 457,709
272,198
—
729,907
416,972
241,306
—
658,278
Telephony 130,494
30,857
—
161,351
140,830
31,649
—
172,479
Business services and wholesale 242,305
101,888
—
344,193
230,200
94,442
—
324,642
Advertising 105,719
18,107
(760 ) 123,066
72,316
17,456
(480 ) 89,292
Other 2,209
2,408
—
4,617
2,458
5,426
—
7,884
Total Revenue $ 1,721,688
$ 696,873
$ (760 ) $ 2,417,801
$ 1,661,359
$ 661,642
$ (480 ) $ 2,322,521

Nine Months Ended September 30, 2018 Nine Months Ended September 30, 2017
Cablevision Cequel Eliminations (a) Total Cablevision Cequel Eliminations (a) Total
Residential:
Pay TV $ 2,313,229
$ 809,550
$ —
$ 3,122,779
$ 2,397,233
$ 827,754
$ —
$ 3,224,987
Broadband 1,347,486
796,244
—
2,143,730
1,218,504
708,312
—
1,926,816
Telephony 399,714
91,174
—
490,888
432,710
98,991
—
531,701
Business services and wholesale 713,240
301,431
—
1,014,671
689,708
277,995
—
967,703
Advertising 276,343
53,541
(9,338 ) 320,546
216,250
54,384
(480 ) 270,154
Other 8,697
10,357
—
19,054
8,467
17,314
—
25,781
Total Revenue $ 5,058,709
$ 2,062,297
$ (9,338 ) $ 7,111,668
$ 4,962,872
$ 1,984,750
$ (480 ) $ 6,947,142

~~(a) Reflects revenue recognized by Cablevision from the sale of services to Cequel.~~

~~Capital expenditures (cash basis) by reportable segment are presented below:~~

Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Cablevision $ 217,326
$ 180,287
$ 554,483
$ 505,852
Cequel 117,201
75,042
278,341
213,067
$ 334,527
$ 255,329
$ 832,824
$ 718,919

~~Primarily all revenues and assets of the Company's reportable segments are attributed to or located in the United States.~~

~~Total assets by segment are not provided as such amounts are not regularly reviewed by the chief operating decision makers for purposes of decision making regarding resource allocations.~~

NOTE 17. SUBSEQUENT EVENTS

~~Revolver Repayment~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Dollars in thousands, except share and per share amounts)~~

~~(Unaudited)~~

~~On October 15, 2018, CSC Holdings made a voluntary repayment under its revolving credit facility of $125,000.~~

~~Incremental CSC Holdings Term Loan Facility~~

In ~~October 2018, in connection with its intention to combine the Cequel and Cablevision businesses under a single credit silo,~~April 2019, the Company ~~commenced~~reached an ~~exchange of senior and senior secured notes (see below) and successfully entered into~~agreement to acquire Cheddar, a ~~new $1,275,000 7-year senior secured term loan maturing January 2026 (the “Senior Secured Term Loan B��), providing~~digital-first news company, for ~~the refinancing of the entire principal amount of loans under Cequel’s existing Term Loan Facility and other transaction costs related~~$200,000, subject to ~~the credit silo combination. The new Senior Secured Term Loan B will have a margin of 2.25% over LIBOR and was issued with an original issue discount of 25 basis points.~~

~~Senior Notes Exchange~~

On October 2, 2018, Cequel, Cequel Capital and Altice US Finance I Corporation (the "Issuers"), commenced offers to exchange (the "Exchange Offers") any and all outstanding senior notes and senior secured notes issued by them (the "Original Notes") for up to $5,520,000 aggregate principal amount of new notes (the "New Notes") and, in the case of the 5.375% secured notes due 2023 and 5.500% secured notes due 2026, cash. These New Notes will be automatically converted into new CSC Holdings notes upon satisfaction (or waiver) of certain ~~conditions~~closing adjustments as set forth in the ~~Exchange Offers.~~

~~Additionally, in connection with the Exchange Offers, the Issuers solicited consents~~merger agreement. The transaction is expected to ~~amend each~~close upon receipt of the Original Notes, except the 5.125% Notes due 2021, and the indentures governing such notes. The proposed amendments, which require the consent of a majority in outstanding aggregate principal amount of each series of relevant Original Notes, respectively, will eliminate or waive substantially all of the restrictive covenants, eliminate certain events of default, and modify or eliminate certain other provisions. Each of the Exchange Offers is subject to the condition that there have been validly tendered and not validly withdrawn a majority of the outstanding aggregate principal amount of each of the 5.375% Secured Notes due 2023 and 5.500% Secured Notes due 2026 (the “Minimum Tender Condition”).

Eligible holders who validly tendered and did not validly withdraw Original Notes on October 16, 2018 (the "Early Tender Time") received for each $1,000 principal amount of Original Notes tendered and accepted by the applicable Issuer, $1,000 principal amount of New Notes, plus, in the case of the 5.375% secured notes due 2023 and 5.500% secured notes due 2026, at least $2.50 in cash. Eligible holders who didn't validly tender Original Notes after the Early Tender Time, but prior to October 30, 2018 received for each $1,000 principal amount of Original Notes tendered and accepted by the applicable Issuer, $950 principal amount of New Notes.

In connection with the Early Tender Time described above, the Issuers exchanged $1,232,328 aggregate principal amount of the 5.125% Senior Notes due 2021, $610,698 aggregate principal amount of the 7.750% Senior Notes due 2025, $1,045,443 aggregate principal amount of the 7.500% Senior Notes due 2028, $1,095,493 aggregate principal amount of the 5.375% Senior Secured Notes due 2023 and $1,495,642 aggregate principal amount of the 5.500% Senior Secured Notes due 2026.

For the period subsequent to the Early Tender Time through October 30, 2018, the Issuers exchanged $8,786 aggregate principal amount of the 5.125% Senior Notes due 2021, $7,562 aggregate principal amount of the 7.750% Senior Notes due 2025, $439 aggregate principal amount of the 7.500% Senior Notes due 2028, $350 aggregate principal amount of the 5.375% Senior Secured Notes due 2023 and $3,309 aggregate principal amount of the 5.500% Senior Secured Notes due 2026.

The principal amount of the unexchanged Original Notes include $8,886 aggregate principal amount of the 5.125% Senior Notes due 2021, $1,740 aggregate principal amount of the 7.750% Senior Notes due 2025, $4,118 aggregate principal amount of the 7.500% Senior Notes due 2028, $4,157 aggregate principal amount of the 5.375% Senior Secured Notes due 2023 and $1,049 aggregate principal amount of the 5.500% Senior Secured Notes due 2026.

Deferred financing costs and unamortized discounts related to the Cequel term loan, senior notes and secured senior notes aggregated $143,326 at September 30, 2018. The Company is evaluating whether the term loan refinancing and the exchange of notes is deemed an extinguishment of debt and whether any of these costs will be written off in the fourth quarter of 2018.regulatory approval.

3627

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

All dollar amounts, except per customer and per share data, included in the following discussion, are presented in thousands.

The preparation of our ~~condensed~~ consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and contingent liabilities. For a complete discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our ~~condensed~~ consolidated financial statements, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Overview

Our Business

We deliver broadband, ~~pay television,~~video, telephony services, proprietary content and advertising services to approximately 4.9 million residential and business customers. Our footprint extends across 21 states through a fiber‑rich broadband network with approximately 8.7 million homes passed as of September 30, 2018. We have two reportable segments: Cablevision and Cequel. Cablevision provides broadband, pay television and telephony services to residential and business customers in and around the New York metropolitan ~~area. Cequel provides broadband, pay television~~area and ~~telephony services to residential and business customers~~ in the south-central United States, with the majority of ~~its~~our customers located in the ten states of Texas, West Virginia, Louisiana, Arkansas, North Carolina, Oklahoma, Arizona, California, Missouri and Ohio. Our footprint extends across 21 states through a fiber-rich broadband network with approximately 8.8 million homes passed as of March 31, 2019.

Key Factors Impacting Operating Results and Financial Condition

Our future performance is dependent, to a large extent, on the impact of direct competition, general economic conditions (including capital and credit market conditions), our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers. For more information see “Risk Factors” and “Business-Competition” included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

We derive revenue principally through monthly charges to residential ~~subscribers~~customers of our ~~pay television,~~video, broadband, and telephony services. We also derive revenue from DVR, VOD, pay-per-view, installation and home shopping ~~commissions and equipment fees.~~commissions. Our residential ~~pay television,~~video, broadband, and telephony services accounted for approximately ~~44%~~42%, ~~30%~~32% and 7%6%, respectively, of our consolidated revenue for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. We also derive revenue from the sale of a wide and growing variety of products and services to both large enterprise and SMB customers, including broadband, telephony, networking and ~~pay television~~video services. For the ~~nine~~three months ended ~~September 30, 2018, 14%~~March 31, 2019, 15% of our consolidated revenue was derived from these business ~~and wholesale~~ services. In addition, we derive revenues from the sale of advertising ~~primarily from~~ time available on the programming carried on our cable television systems, digital advertising and data analytics revenue, which accounted for approximately 5%4% of our consolidated revenue for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. Our other revenue for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 accounted for less than 1% of our consolidated revenue.

Revenue is impacted by rate increases, changes in the number of customers to our services, including additional services sold to our existing customers, programming package changes by our ~~pay television~~video customers, speed tier changes by our broadband customers, and acquisitions of cable systems that result in the addition of new ~~subscribers.~~customers.

Our ability to increase the number of customers to our services is significantly related to our penetration rates.

We operate in a highly competitive consumer-driven industry and we compete against a variety of broadband, ~~pay television~~video and telephony providers and delivery systems, including broadband communications companies, wireless data and telephony providers, satellite-delivered video signals, Internet-delivered video content and broadcast television signals available to residential and business customers in our service areas. Our competitors include AT&T ~~Inc.~~ and its DirecTV subsidiary, CenturyLink, ~~Inc.,~~ DISH, ~~Network Corp.,~~ Frontier ~~Communications Corp.~~ and ~~Verizon Communications Inc.~~Verizon. Consumers’ selection of an alternate source of service, whether due to economic constraints, technological advances or preference, negatively impacts the demand for our services. For more information on our competitive landscape, see ~~“Risk Factors”~~"Risk Factors" and ~~“Business-Competition”~~"Business-Competition" included in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~

2018.

Our programming costs, which are the most significant component of our operating expenses, have increased and are expected to continue to increase primarily as a result of contractual rate increases and new channel launches. See “-Results of Operations” below for more information regarding our key factors impacting our revenues and operating expenses.

Historically, we have made substantial investments in our network and the development of new and innovative products and other service offerings for our customers as a way of differentiating ourselves from our competitors and may continue to do so in the future. We ~~have commenced construction on~~are constructing a ~~fiber-to-the-home ("FTTH")~~FTTH network, which will enable us to deliver more than 10 Gbps broadband speeds across our entire Optimum footprint and part of our Suddenlink footprint. In addition, in the summer of 2019 we will begin offering full service mobile voice and data services to our customers. We may incur greater than anticipated capital expenditures in connection with ~~this initiative,~~these initiatives, fail to realize anticipated benefits, experience delays and business disruptions or encounter other challenges to executing itthem as planned. See ~~“Liquidity~~“-Liquidity and Capital Resources-Capital Expenditures” for additional information regarding our capital expenditures.

~~Acquisition of Altice Technical Services US Corp~~

As discussed in Note 1 of the Company's condensed consolidated financial statements, the Company completed the ATS Acquisition in January 2018. ATS was previously owned by Altice N.V. and a member of ATS's management through a holding company. As the acquisition is a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of ATS for all periods since the formation of ATS.

~~Acquisition of i24NEWS~~

In April 2018, Altice N.V. transferred its ownership of i24 US and i24 Europe ("i24NEWS"), Altice N.V.'s 24/7 international news and current affairs channels, to the Company for minimal consideration (the "i24 Acquisition"). As the acquisition was a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of i24NEWS as of April 1, 2018. Operating results for periods prior to April 1, 2018 and the balance sheet as of December 31, 2017 have not been revised to reflect the combination of i24NEWS as the impact was deemed immaterial.

Non-GAAP Financial Measures

We define Adjusted EBITDA, which is a non-GAAP financial measure, as net income (loss) excluding income taxes, income (loss) from discontinued operations, ~~other~~ non-operating income or expenses, loss on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments and sale of affiliate interests, net, interest expense (including cash interest expense), interest income, depreciation and amortization (including impairments), share-based compensation expense or benefit, restructuring expense or credits and transaction expenses. We believe Adjusted EBITDA is an appropriate measure for evaluating the operating performance of the Company. Adjusted EBITDA and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use revenue and Adjusted EBITDA measures as important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. We believe Adjusted EBITDA provides management and investors a useful measure for period-to-period comparisons of our core business and operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operating results. Adjusted EBITDA should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with GAAP. Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

Results of Operations - Altice USA


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019				2018
Revenue:
Residential:
Pay TV	$	1,054,667		$	1,069,946		$	3,122,779		$	3,224,987
Video													$	1,017,330			$	1,033,708
Broadband	729,907			658,278			2,143,730			1,926,816			775,573			��	701,621
Telephony	161,351			172,479			490,888			531,701			154,464				166,038
Business services and wholesale	344,193			324,642			1,014,671			967,703			350,689				333,090
Advertising	123,066			89,292			320,546			270,154			93,545				87,582
Other	4,617			7,884			19,054			25,781			4,966				7,675
Total revenue	2,417,801			2,322,521			7,111,668			6,947,142			2,396,567				2,329,714
Operating expenses:
Programming and other direct costs	790,533			755,101			2,373,021			2,272,147			812,985				787,361
Other operating expenses	569,070			570,111			1,727,842			1,769,477			564,432				583,023
Restructuring and other expense	16,587			53,448			29,865			142,765			15,244				3,587
Depreciation and amortization (including impairments)	536,053			823,286			1,827,285			2,138,800			561,428				642,705
Operating income	505,558			120,575			1,153,655			623,953			442,478				313,038
Other income (expense):
Interest expense, net	(388,167		)	(378,105		)	(1,147,552		)	(1,231,357		)	(386,464		)		(374,155		)
Gain (loss) on investments and sale of affiliate interests, net	111,684			(18,900		)	(182,031		)	169,888			254,725				(248,602		)
Gain (loss) on derivative contracts, net	(79,628		)	(16,763		)	130,883			(154,270		)	(177,029		)		168,352
Gain (loss) on interest rate swap contracts	(19,554		)	1,051			(64,405		)	12,539
Loss on interest rate swap contracts													(23,672		)		(31,922		)
Loss on extinguishment of debt and write-off of deferred financing costs	—			(38,858		)	(41,616		)	(600,240		)	(157,902		)		(4,705		)
Other expense, net	(186		)	(2,984		)	(12,473		)	(9,019		)
Income (loss) before income taxes	129,707			(333,984		)	(163,539		)	(1,188,506		)
Income tax benefit (expense)	(95,968		)	141,550			(29,675		)	439,945
Net income (loss)	33,739			(192,434		)	(193,214		)	(748,561		)
Net income attributable to noncontrolling interests	(1,186		)	(135		)	(1,039		)	(737		)
Net income (loss) attributable to Altice USA stockholders	$	32,553		$	(192,569	)	$	(194,253	)	$	(749,298	)
Other income (expense), net													80				(11,658		)
Loss before income taxes													(47,784		)		(189,652		)
Income tax benefit													22,586				60,703
Net loss													(25,198		)		(128,949		)
Net loss (income) attributable to noncontrolling interests													199				(2		)
Net loss attributable to Altice USA, Inc. stockholders													$	(24,999	)		$	(128,951	)

The following is a reconciliation of net loss to Adjusted EBITDA:


	Altice USA												Three Months Ended March 31,
	Three Months Ended September 30,						Nine Months Ended September 30,						2019			2018
	2018			2017			2018			2017
Net income (loss)	$	33,739		$	(192,434	)	$	(193,214	)	$	(748,561	)
Income tax expense (benefit)	95,968			(141,550		)	29,675			(439,945		)
Other expense, net	186			2,984			12,473			9,019
Loss (gain) on interest rate swap contracts	19,554			(1,051		)	64,405			(12,539		)
Net loss													$	(25,198	)	$	(128,949	)
Income tax benefit													(22,586		)	(60,703		)
Other expense (income), net (a)													(80		)	11,658
Loss on interest rate swap contracts													23,672			31,922
Loss (gain) on derivative contracts, net	79,628			16,763			(130,883		)	154,270			177,029			(168,352		)
Loss (gain) on investments and sale of affiliate interests, net	(111,684		)	18,900			182,031			(169,888		)
Loss (gain) on investments and sales of affiliate interests, net													(254,725		)	248,602
Loss on extinguishment of debt and write-off of deferred financing costs	—			38,858			41,616			600,240			157,902			4,705
Interest expense, net	388,167			378,105			1,147,552			1,231,357			386,464			374,155
Depreciation and amortization	536,053			823,286			1,827,285			2,138,800			561,428			642,705
Restructuring and other expense	16,587			53,448			29,865			142,765			15,244			3,587
Share-based compensation	12,327			15,005			46,176			40,932			13,790			21,623
Adjusted EBITDA	$	1,070,525		$	1,012,314		$	3,056,981		$	2,946,450		$	1,032,940		$	980,953


(a)	Includes the non-service cost components of the Company's pension expense, net of dividends received on Comcast common stock owned by the Company.

The following table sets forth certain customer metrics ~~by segment~~for the Company (unaudited):


	September 30, 2018									June 30, 2018									September 30, 2017
	Cablevision			Cequel			Total			Cablevision			Cequel			Total			Cablevision			Cequel			Total			As of March 31, 2019			As of December 31, 2018			As of March 31, 2018
	(in thousands, except per customer amounts)
Homes passed (a)	5,197.3			3,504.4			8,701.7			5,187.3			3,483.7			8,671.0			5,134.4			3,442.8			8,577.2			8,761.9			8,737.3			8,642.0
Total customer relationships (b)(c)	3,145.9			1,765.3			4,911.2			3,153.5			1,761.6			4,915.1			3,148.9			1,749.2			4,898.1			4,942.1			4,919.6			4,916.6
Residential	2,882.8			1,652.1			4,534.9			2,889.7			1,650.1			4,539.8			2,887.0			1,642.0			4,529.0			4,563.7			4,542.1			4,543.4
SMB	263.1			113.2			376.3			263.8			111.5			375.3			261.9			107.2			369.1			378.4			377.5			373.2
Residential customers:
Pay TV	2,306.6			1,016.2			3,322.8			2,327.3			1,023.6			3,350.9			2,382.2			1,048.0			3,430.2
Video																												3,297.3			3,307.5			3,375.1
Broadband	2,682.9			1,413.4			4,096.3			2,681.3			1,400.8			4,082.1			2,653.1			1,367.8			4,020.9			4,155.0			4,118.1			4,072.6
Telephony	1,942.8			590.7			2,533.5			1,949.4			596.1			2,545.6			1,958.8			588.4			2,547.2			2,511.1			2,531.2			2,549.7
Residential triple product customer penetration (d):	63.4		%	25.6		%	49.6		%	63.5		%	25.8		%	49.8		%	64.3		%	25.4		%	50.2		%
Penetration of homes passed (e):	60.5		%	50.4		%	56.4		%	60.8		%	50.6		%	56.7		%	61.3		%	50.8		%	57.1		%
Residential triple product customer penetration (d)																												48.9		%	49.5		%	49.9		%
Penetration of homes passed (e)																												56.4		%	56.3		%	56.9		%
ARPU(f)	$	158.39		$	115.98		$	142.96		$	155.69		$	113.10		$	140.19		$	156.55		$	110.30		$	139.77		$	142.57		$	142.44		$	139.63

(a)

Represents the estimated number of single residence homes, apartments and condominium units passed by the cable distribution network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our cable distribution network. For Cequel, broadband services were not available to approximately 100 homes passed and telephony services were not available to approximately ~~500~~600 homes passed.


(b)	Represents number of households/businesses that receive at least one of the Company's services.

(c)

Customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets. In calculating the number of customers, we count all customers other than inactive/disconnected customers. Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group. Most of these accounts are also not entirely free, as they typically generate revenue through pay-per-view or other pay services and certain equipment fees. Free status is not granted to regular customers as a promotion. In counting bulk residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master ~~account for the entire building as a customer. We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.~~

account for the entire building as a customer. We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.


(d)	Represents the number of customers that subscribe to three of our services divided by total residential customer relationships.


(e)	Represents the number of total customer relationships divided by homes passed.


(f)	Calculated by dividing the average monthly revenue for the respective quarter (fourth quarter for annual periods) derived from the sale of broadband, ~~pay television~~video and telephony services to residential customers for the respective quarter by the average number of total residential customers for the same period.

Segment Results
Three Months Ended September 30,
2018 2017
Cablevision Cequel Eliminations Total Cablevision Cequel Eliminations Total
Revenue:
Residential:
Pay TV $ 783,252
$ 271,415
$ —
$ 1,054,667
$ 798,583
$ 271,363
$ —
$ 1,069,946
Broadband 457,709
272,198
—
729,907
416,972
241,306
—
658,278
Telephony 130,494
30,857
—
161,351
140,830
31,649
—
172,479
Business services and wholesale 242,305
101,888
—
344,193
230,200
94,442
—
324,642
Advertising 105,719
18,107
(760 ) 123,066
72,316
17,456
(480 ) 89,292
Other 2,209
2,408
—
4,617
2,458
5,426
—
7,884
Total revenue 1,721,688
696,873
(760 ) 2,417,801
1,661,359
661,642
(480 ) 2,322,521
Operating expenses:
Programming and other direct costs 585,117
206,120
(704 ) 790,533
570,995
184,283
(177 ) 755,101
Other operating expenses 403,445
165,681
(56 ) 569,070
401,981
168,433
(303 ) 570,111
Restructuring and other expense 14,122
2,465
—
16,587
35,364
18,084
—
53,448
Depreciation and amortization 378,549
157,504
—
536,053
656,122
167,164
—
823,286
Operating income (loss) $ 340,455
$ 165,103
$ —
$ 505,558
$ (3,103 ) $ 123,678
$ —
$ 120,575

Segment Results
Nine Months Ended September 30,
2018 2017
Cablevision Cequel Eliminations Total Cablevision Cequel Eliminations Total
Revenue:
Residential:
Pay TV $ 2,313,229
$ 809,550
$ —
$ 3,122,779
$ 2,397,233
$ 827,754
$ —
$ 3,224,987
Broadband 1,347,486
796,244
—
2,143,730
1,218,504
708,312
—
1,926,816
Telephony 399,714
91,174
—
490,888
432,710
98,991
—
531,701
Business services and wholesale 713,240
301,431
—
1,014,671
689,708
277,995
—
967,703
Advertising 276,343
53,541
(9,338 ) 320,546
216,250
54,384
(480 ) 270,154
Other 8,697
10,357
—
19,054
8,467
17,314
—
25,781
Total revenue 5,058,709
2,062,297
(9,338 ) 7,111,668
4,962,872
1,984,750
(480 ) 6,947,142
Operating expenses:
Programming and other direct costs 1,765,544
616,047
(8,570 ) 2,373,021
1,710,245
562,079
(177 ) 2,272,147
Other operating expenses 1,215,981
512,629
(768 ) 1,727,842
1,277,204
492,576
(303 ) 1,769,477
Restructuring and other expense 25,720
4,145
—
29,865
105,182
37,583
—
142,765
Depreciation and amortization 1,337,051
490,234
—
1,827,285
1,641,501
497,299
—
2,138,800
Operating income $ 714,413
$ 439,242
$ —
$ 1,153,655
$ 228,740
$ 395,213
$ —
$ 623,953

Altice USA - Comparison of Results for the Three ~~and Nine~~ Months Ended ~~September 30, 2018~~March 31, 2019 compared to the Three ~~and Nine~~ Months Ended ~~September 30, 2017.~~March 31, 2018

~~Pay Television~~Video Revenue

~~Pay television~~Video revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 was ~~$1,054,667~~$1,017,330 and $3,122,779, respectively, of which $783,252 and $2,313,229 was derived from the Cablevision segment and $271,415 and $809,550 relates to our Cequel segment. Pay television revenue for the three and nine months ended September 30, 2017 was $1,069,946 and $3,224,987, respectively, of which $798,583 and $2,397,233 was derived from the Cablevision segment and $271,363 and $827,754 relates to our Cequel segment. Pay television$1,033,708, respectively. Video revenue is derived principally through monthly charges to residential customers of our ~~pay television~~video services. Revenue is impacted by rate increases, changes in the number of customers, including additional services sold to our existing customers, and changes in programming packages.

~~Pay television~~Video revenue ~~for our Cablevision segment~~ decreased ~~$15,331~~$16,378 (2%) ~~and $84,004 (4%) for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017, respectively. The decrease~~ for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the three months ended March 31, 2018. The decrease was due primarily to a decline in ~~pay television~~video customers, partially offset by higher average revenue per ~~pay television customer. The decrease for the nine months ended September 30, 2018 was~~video customer primarily due ~~primarily~~ to ~~a decline in pay television customers and lower average revenue per pay television customer.~~

Pay television revenue for our Cequel segment increased $52 and decreased $18,204 (2%) for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017, respectively. The increase for the three months ended September 30, 2018 was due primarily from higher average revenue per pay television customer,

offset by a decline in pay television customers. The decrease for the nine months ended September 30, 2018 was due primarily to a decline in pay television customers, partially offset by higher average revenue per pay television customer.rate increases.

We believe our ~~pay television~~video customer declines noted in the table above are largely attributable to competition, particularly from Verizon in our ~~Cablevision~~Optimum footprint and DBS providers in our ~~Cequel~~Suddenlink footprint, as well as competition from companies that deliver video content over the Internet directly to customers. These factors are expected to continue to impact our ability to maintain or increase our existing customers and revenue in the future.

Broadband Revenue

Broadband revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 was ~~$729,907~~$775,573 and $2,143,730, respectively, of which $457,709 and $1,347,486 was derived from our Cablevision segment and $272,198 and $796,244 was derived from our Cequel segment. Broadband revenue for the three and nine months ended September 30, 2017 was $658,278 and $1,926,816, respectively, of which $416,972 and $1,218,504 was derived from our Cablevision segment and $241,306 and $708,312 was derived from our Cequel segment.$701,621, respectively. Broadband revenue is derived principally through monthly charges to residential subscribers of our broadband services. Revenue is impacted by rate increases, changes in the number of customers, including additional services sold to our existing subscribers, and changes in speed tiers.

Broadband revenue ~~for our Cablevision segment~~ increased ~~$40,737 (10%) and $128,982~~$73,952 (11%) for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 compared to the three ~~and nine~~ months ended September 30, 2017, respectively. The increases were due primarily to higher average recurring broadband revenue per broadband customer, primarily driven by certain rate increases and service level changes, and an increase in broadband customers.

Broadband revenue for our Cequel segment increased $30,892 (13%) and $87,932 (12%) for the three and nine months ended September 30, 2018, respectively, as compared to the same periods in the prior year.March 31, 2018. The increases were due primarily to higher average recurring broadband revenue per broadband customer, primarily driven by certain rate increases and service level changes, and an increase in broadband customers.

Telephony Revenue

Telephony revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 was ~~$161,351~~$154,464 and $490,888 of which $130,494 and $399,714 was derived from the Cablevision segment and $30,857 and $91,174 was derived from our Cequel segment. Telephony revenue for the three and nine months ended September 30, 2017 was $172,479 and $531,701 of which $140,830 and $432,710 was derived from the Cablevision segment and $31,649 and $98,991 was derived from our Cequel segment.$166,038, respectively. Telephony revenue is derived principally through monthly charges to residential customers of our telephony services. Revenue is impacted by changes in rates for services, changes in the number of customers, and additional services sold to our existing customers.

Telephony revenue ~~for our Cablevision segment~~ decreased ~~$10,336~~$11,574 (7%~~) and $32,996 (8%~~) for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 compared to the three ~~and nine~~ months ended ~~September 30, 2017, respectively.~~March 31, 2018. The ~~decreases were~~decrease is due ~~primarily~~ to lower average revenue per telephony ~~customer.~~

~~Telephony revenue for our Cequel segment decreased $792 (3%)~~customer and $7,817 (8%) for the three and nine months ended September 30, 2018 compared to the three and nine months ended September 30, 2017, respectively. The decreases were due primarily to lower average revenue pera decline in telephony ~~customer.~~customers.

Business Services and Wholesale Revenue

Business services and wholesale revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 was ~~$344,193~~$350,689 and $1,014,671, respectively of which $242,305 and $713,240 was derived from the Cablevision segment and $101,888 and $301,431 was derived from our Cequel segment. Business services and wholesale revenue for the three and nine months ended September 30, 2017 was $324,642 and $967,703, respectively of which $230,200 and $689,708 was derived from the Cablevision segment and $94,442 and $277,995 was derived from our Cequel segment.$333,090, respectively. Business services and wholesale revenue is derived primarily from the sale of fiber based telecommunications services to the business market, and the sale of broadband, ~~pay television~~video and telephony services to ~~small and medium sized business ("SMB")~~SMB customers.

Business services and wholesale revenue ~~for our Cablevision segment~~ increased ~~$12,105~~$17,599 (5%~~) and $23,532 (3%~~) for the three ~~and nine~~ months ended ~~September 30, 2018 as~~March 31, 2019 compared to the three ~~and nine~~ months ended ~~September 30, 2017, respectively.~~March 31, 2018. The ~~increases were~~increase was primarily due to higher average recurring broadband revenue per SMB customer, ~~higher Ethernet~~primarily driven by certain rate increases and ~~managed services revenue~~service level changes, and an increase in the ~~number~~revenue from the backhaul of ~~customers, partially offset by reduced traditional voice and data services for commercial customers.~~

Business services and wholesale revenue for our Cequel segment increased $7,446 (8%) and $23,436 (8%) for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017, respectively.carrier data.

~~The increases were primarily due to an increase in customers and higher commercial rates for broadband services and increases in wholesale data and telephony services.~~

Advertising Revenue

Advertising revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, net of inter-segment revenue, was ~~$123,066~~$93,545 and $320,546, respectively, of which $105,719 and $276,343 was derived from our Cablevision segment and $18,107 and $53,541 was derived from our Cequel segment. Advertising revenue for the three and nine months ended September 30, 2017, net of inter-segment revenue, was $89,292 and $270,154, respectively, of which $72,316 and $216,250 was derived from our Cablevision segment and $17,456 and $54,384 was derived from our Cequel segment.$87,582, respectively. Advertising revenue is primarily derived from the sale of advertising time available on the programming carried on our cable television systems, digital advertising and data analytics revenue.

Advertising revenue ~~for our Cablevision segment~~ increased ~~$33,403 (46%) and $60,093 (28%~~$5,963 (7%) for the three ~~and nine~~ months ended ~~September 30, 2018 as~~March 31, 2019 compared to the three ~~and nine~~ months ended ~~September 30, 2017, respectively.~~March 31, 2018. The ~~increases were~~increase was primarily due to an increase in digital and linear ~~advertising and data analytics revenue.~~

Advertising revenue for our Cequel segment increased $651 (4%) and decreased $843 (2%) for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017, respectively.advertising.

Other Revenue

Other revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 was ~~$4,617~~$4,966 and $19,054, respectively, of which $2,209 and $8,697 was derived from our Cablevision segment and $2,408 and $10,357 was derived from our Cequel segment. Other revenue for the three and nine months ended September 30, 2017 was $7,884 and $25,781, respectively, of which $2,458 and $8,467 was derived from our Cablevision segment and $5,426 and $17,314 was derived from our Cequel segment.$7,675, respectively. Other revenue includes other miscellaneous revenue streams.

Programming and Other Direct Costs

Programming and other direct costs for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 amounted to ~~$790,533~~$812,985 and $2,373,021, respectively, of which $585,117 and $1,765,544 relate to our Cablevision segment and $206,120 and $616,047 relate to our Cequel segment. Programming and other direct costs for the three and nine months ended September 30, 2017 amounted to $755,101 and $2,272,147, respectively, of which $570,995 and $1,710,245 relate to our Cablevision segment and $184,283 and $562,079 relate to our Cequel segment.$787,361, respectively. Programming and other direct costs include cable programming costs, which are costs paid to programmers (net of amortization of any incentives received from programmers for carriage) for cable content (including costs of VOD and pay-per-view) and are generally paid on a ~~per‑customer~~per-customer basis. These costs typically rise due to increases in contractual rates and new channel launches and are also impacted by changes in the number of customers receiving certain programming services. These costs also include interconnection, call completion, circuit and transport fees paid to other telecommunication companies for the transport and termination of voice and data services, which typically vary based on rate changes and the level of usage by our customers. These costs also include franchise fees which are payable to the state governments and local municipalities where we operate and are primarily based on a percentage of certain categories of revenue derived from the provision of ~~pay television~~video service over our cable systems, which vary by state and municipality. These costs change in relation to changes in such categories of revenues or rate changes.

The ~~increases~~increase of ~~$35,432 (5%~~$25,624 (3%) ~~and $100,874 (4%) in programming and other direct costs~~ for the three ~~and nine~~ months ended ~~September 30, 2018, net of inter-segment eliminations,~~March 31, 2019, as compared to the ~~prior year periods are~~three months ended March 31, 2018 is primarily attributable to the following:

Cablevision segment: Three Months Nine Months
Increase primarily in costs of digital media and linear advertising spots for resale $ 10,388
$ 32,881
Increase in programming costs due primarily to contractual rate increases, partially offset by lower pay television customers and lower video-on-demand and pay-per-view costs 2,306
16,863
Other net increases (including an increase of $1,400 and $2,666 in costs related to i24NEWS for the three and nine months, respectively) 1,428
5,555
14,122
55,299

Cequel segment:
Increase in programming costs due primarily to contractual rate increases and new channel launches, partially offset by lower pay television customers and lower video-on-demand and pay-per-view costs 21,965
52,187
Other net increases (decreases) (128 ) 1,781
21,837
53,968
Inter-segment eliminations (527 ) (8,393 )
$ 35,432
$ 100,874



Increase in programming costs due primarily to contractual rate increases, partially offset by lower video customers	$	29,981
Increase primarily in costs of digital media and linear advertising spots for resale	2,107
Decrease in call completion and transport costs primarily due to lower level of activity	(3,601		)
Other net decreases (net of an increase in costs related to i24NEWS of $1,493)	(2,863		)
	$	25,624

Programming costs

Programming costs aggregated ~~$654,104~~$682,409 and ~~$1,967,150~~$652,428 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~respectively, and $629,833 and $1,898,100 for the three and nine months ended September 30, 2017,~~ respectively. Our programming costs in ~~2018~~2019 will continue to be impacted by changes in programming rates, which we expect to increase by high single digits, and by changes in the number of ~~pay television~~video customers.

Other Operating Expenses

Other operating expenses for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 amounted to ~~$569,070,~~$564,432 and $1,727,842, respectively, of which $403,445 and $1,215,981 relate to our Cablevision segment and $165,681 and $512,629 relate to our Cequel segment. Other operating expenses for the three and nine months ended September 30, 2017 amounted to $570,111, and $1,769,477, respectively, of which $401,981 and $1,277,204 relate to our Cablevision segment and $168,433 and $492,576 relate to our Cequel segment.$583,023, respectively. Other operating expenses include staff costs and employee benefits including salaries of company employees and related taxes, benefits and other employee related expenses, as well as ~~third party~~third-party labor costs. Other operating expenses also include network management and field service costs, which represent costs associated with the maintenance of our broadband network, including costs of certain customer connections and other costs associated with providing and maintaining services to our customers.

Customer installation and repair and maintenance costs may fluctuate as a result of changes in the level of activities and the utilization of contractors as compared to employees. Also, customer installation costs fluctuate as the portion of our expenses that we are able to capitalize changes. Costs associated with the initial deployment of new customer premise equipment necessary to provide broadband, ~~pay television~~video and telephony services are capitalized (asset-based). The redeployment

of customer premise equipment is expensed as incurred. Network repair and maintenance and utility costs also fluctuate as capitalizable network upgrade and enhancement activity changes.

Other operating expenses also include costs related to the operation and maintenance of our call center facilities that handle customer inquiries and billing and collection activities and sales and marketing costs, which include advertising production and placement costs associated with acquiring and retaining customers. These costs vary period to period and certain of these costs, such as sales and marketing, may increase with intense competition. Additionally, other operating expenses include various other administrative costs, including legal fees, and product development costs.

The ~~decreases of $1,041 and $41,635 (2%)~~decrease in other operating expenses of $18,591 (3%) for the three ~~and nine~~ months ended ~~September 30, 2018, net of inter-segment eliminations,~~March 31, 2019 as compared to the ~~prior year periods, including the impact of a net increase related to i24NEWS of $9,285 and $19,408 for the~~ three ~~and nine month periods, are~~months ended March 31, 2018 is attributable to the following:

Cablevision segment: Three Months Nine Months
Increase in labor costs and benefits (including costs related to i24NEWS of $6,197), partially offset by an increase in capitalizable activity for the three month period. Decrease in labor costs and benefits, net of costs of $12,609 related to i24NEWS, and an increase in capitalizable activity for the nine month period. $ 11,219
$ (67,413 )
Decrease in insurance costs (419 ) (8,351 )
Decrease in management fee relating to certain executive, administrative and managerial services provided to Cablevision from Altice N.V. prior to separation in June 2018 (5,000 ) (6,104 )
Increase in marketing costs 2,796
8,673
Increase (decrease) in share-based compensation and long-term incentive plan awards expense (2,059 ) 5,627
Increase in commissions in connection with the New York Interconnect business 3,868
4,620
Increase (decrease) in repairs and maintenance costs relating to our operations (594 ) 4,221
Other net decrease (8,347 ) (2,496 )
1,464
(61,223 )
Cequel segment:
Decrease primarily in labor costs, partially offset by lower capitalizable activity (2,417 ) (10,823 )
Decrease in share-based compensation and long-term incentive plan awards expense (885 ) (4,330 )
Decrease in management fee relating to certain executive, administrative and managerial services provided to Cequel from Altice N.V. prior to separation in June 2018 (2,500 ) (3,146 )
Increase in marketing costs 2,382
19,090
Increase (decrease) in repairs and maintenance costs relating to our operations (2,549 ) 2,691
Other net increase 3,217
16,571
(2,752 ) 20,053
Inter-segment eliminations 247
(465 )
$ (1,041 ) $ (41,635 )



Decrease in share-based compensation and long-term incentive plan awards expense	$	(7,996	)
Decrease in management fee relating to certain executive, administrative and managerial services provided to the Company from Altice Europe prior to separation in June 2018	(7,500		)
Decrease in marketing costs (net of an increase in costs related to i24NEWS of $431)	(5,231		)
Decrease in labor costs and benefits (net of an increase in costs related to i24NEWS of $6,425) and an increase in capitalizable activity	(1,602		)
Other net increases (includes an increase in costs related to i24NEWS of $3,027)	3,738
	$	(18,591	)

Restructuring and Other Expense

Restructuring and other expense for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 amounted to ~~$16,587 and $29,865, respectively, ($14,122 and $25,720 for our Cablevision segment and $2,465 and $4,145 for our Cequel segment)~~$15,244 as compared to ~~$53,448 and $142,765~~$3,587 for the three ~~and nine~~ months ended ~~September 30, 2017, respectively, ($35,364 and $105,182 for our Cablevision segment and $18,084 and $37,583 for our Cequel segment).~~March 31, 2018. These amounts primarily relate to facility realignment costs ~~incurred in connection with~~and impairments of certain ROU assets, severance and other employee related costs resulting from headcount reductions related to initiatives which commenced in 2016 that are intended to simplify the Company's organizational structure. We currently anticipate that additional restructuring expenses will be recognized as we continue to analyze our organizational structure.

Depreciation and Amortization

Depreciation and amortization for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 amounted to ~~$536,053~~$561,428 and ~~$1,827,285, respectively, of which $378,549 and $1,337,051 relates to our Cablevision segment and $157,504 and $490,234 relates to our Cequel segment. Depreciation~~$642,705, respectively.

The decrease in depreciation and amortization ~~for the three and nine months ended September 30, 2017 amounted to $823,286 and $2,138,800, respectively,~~ of ~~which $656,122 and $1,641,501 relates to our Cablevision segment and $167,164 and $497,299 relates to our Cequel segment.~~

~~Depreciation and amortization for our Cablevision segment decreased $277,573 (42%) and $304,450 (19%~~$81,277 (13%) for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 as compared to the three ~~and nine~~ months ended ~~September 30, 2017, respectively. The decreases are~~March 31, 2018 is due primarily to certain fixed assets and intangible assets becoming fully depreciated or amortized. These decreases were partially offset by depreciation of new asset additions.

Depreciation and amortization for our Cequel segment decreased $9,660 (6%) and $7,065 (1%) for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017, respectively. The decreases are due primarily to certain fixed assets and intangible assets becoming fully depreciated or amortized. These decreases were partially offset by depreciation of new asset additions.

Adjusted EBITDA

Adjusted EBITDA amounted to ~~$1,070,525~~$1,032,940 and ~~$3,056,981~~$980,953 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, respectively, of which $742,164 and $2,112,751 relates to our Cablevision segment and $328,361 and $944,230 relates to our Cequel segment. Adjusted EBITDA amounted to $1,012,314 and $2,946,450 for the three and nine months ended September 30, 2017, respectively, of which $699,938 and $2,004,020 relates to our Cablevision segment and $312,376 and $942,430 relates to our Cequel segment.respectively.

Adjusted EBITDA is a non-GAAP measure that is defined as net income (loss) excluding income taxes, income (loss) from discontinued operations, non-operating income or expenses, loss on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments and sale of affiliate interests, net, interest expense (including cash interest expense), interest income, depreciation and amortization (including impairments), share-based compensation expense or benefit, restructuring expense or credits and transaction expenses. See reconciliation of net ~~loss~~income (loss) to adjusted EBITDA above.

The ~~increases~~increase in adjusted EBITDA ~~of our Cablevision segment~~ for the three months ended ~~September 30, 2018~~March 31, 2019 as compared to the ~~prior year period~~three months ended March 31, 2018 was due to ~~an increase~~the increases in revenue ~~partially~~which more than offset ~~by an~~the increase in operating expenses (excluding depreciation and amortization, restructuring and other expense ~~restructuring expense, share-based compensation~~ and transaction expenses) as discussed above. The increases in adjusted EBITDA of our Cablevision segment for the nine months ended September 30, 2018 as compared to the prior year period was due to an increase in revenue and a decrease in operating expenses (excluding depreciation and amortization expense, restructuring expense, share-based compensation and transaction expenses).

The increases in adjusted EBITDA of our Cequel segment for the three and nine months ended September 30, 2018 as compared to the prior year periods were due primarily to an increase in revenue, partially offset by an increase in operating expenses (excluding depreciation and amortization expense, restructuring expense, share-based compensation and transaction expenses)share‑based compensation), as discussed above.

Interest Expense, net

Interest expense, net was ~~$388,167~~$386,464 and ~~$378,105,~~$374,155, for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, and $1,147,552 and $1,231,357, for the nine months ended September 30, 2018 and 2017,~~ respectively. The increase of ~~$10,062 (3%) and decrease of $83,805 (7%)~~$12,309 for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 as compared to the ~~prior year periods are~~three months ended March 31, 2018 is attributable to the following:

Three Months Nine Months

Decrease due to changes in average debt balances and interest rates on our indebtedness and collateralized debt $ (808 ) $ (114,205 )
Higher interest income (466 ) (8,470 )
Other net increases, primarily amortization of deferred financing costs and original issue discounts 11,336
38,870
$ 10,062
$ (83,805 )

~~See "Liquidity and Capital Resources" discussion below for a detail of our borrower groups.~~



Decrease due to changes in average debt balances and interest rates on our indebtedness and collateralized debt	$	(48	)
Lower interest income	1,284
Other net increases, primarily amortization of deferred financing costs and original issue discounts	11,073
	$	12,309

Gain (Loss) on Investments and Sale of Affiliate Interests, net

Gain (loss) on investments, net for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, of ~~$111,684~~$254,725 and ~~$(182,031), respectively, and $(18,900) and $169,888 for the three and nine months ended September 30, 2017~~$(248,602) consists primarily of the increase (decrease) in the fair value of Comcast common stock owned by the Company for the periods. The effects of these gains ~~or losses~~(losses) are partially offset by the losses ~~and gains~~(gains) on the related equity derivative contracts, net described below. ~~The amount for the nine months ended September 30, 2018 includes a net gain of $17,281 related to the sale of investments and affiliate interests.~~

Gain (Loss) on Derivative Contracts, net

Gain (loss) on derivative contracts, net for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 amounted to ~~$(79,628) and $130,883, respectively and~~$(177,029) compared to $168,352 for the three ~~and nine~~ months ended ~~September 30, 2017 amounted to $(16,763)~~March 31, 2018, and ~~$(154,270), respectively, and include~~includes realized and unrealized gains or losses due to the change in fair value of equity derivative contracts relating to the Comcast common stock owned by the Company. The effects of these gains ~~or losses~~(losses) are offset by ~~gains and~~ losses (gains) on investment securities pledged as collateral, which are included in gain (loss) on investments, net discussed above. The loss for the three and nine months ended September 30, 2017 also includes the realized loss on the settlement of certain put-call options, as well as the loss resulting from the change in the fair value on the put-call contracts aggregating $72,365.

~~Gain (Loss)~~Loss on Interest Rate Swap Contracts

~~Gain (loss)~~Loss on interest rate swap contracts was ~~$(19,554)~~$23,672 and ~~$(64,405)~~$31,922 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~respectively, and $1,051 and $12,539 for the three and nine months ended September 30, 2017,~~ respectively. These amounts represent primarily the ~~increase or~~ decrease in fair value of interest rate swaps. These swap contracts are not designated as hedges for accounting purposes.

Loss on Extinguishment of Debt and Write-off of Deferred Financing Costs

Loss on extinguishment of debt and write-off of deferred financing costs amounted to ~~$41,616~~$157,902 and $4,705 for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and includes~~respectively. The 2019 amount primarily relates to the write-off of unamortized ~~discount~~premium and deferred financing costs, ~~and~~as well as the premium paid in connection with the early redemption of the ~~Cequel 2020 Notes~~$1,800,000 10.125% CSC Holdings senior notes that were due in ~~the second quarter of~~January 2023. The 2018 ~~and~~amount includes the write-off of unamortized premium and deferred financing costs and the premium paid in connection with the early redemption of the $750,000 7.75% Cablevision senior notes that were due in April ~~2018 in the first quarter of~~ 2018.

~~Loss on extinguishment of debt and write-off of deferred financing costs~~Other Income (Expense), Net

Other income (loss), net amounted to ~~$38,858~~$80 and $600,240 for the three and nine months ended September 30, 2017 and includes the premium of $513,723 related to the notes payable to affiliates and related parties that were converted into shares of the Company’s common stock, $18,976 related to the CSC Holdings credit facility extension amendment and the redemption of senior notes, and $28,684 related to the Cequel credit facility extension amendment and the redemption of senior notes and $38,858 related primarily to a premium paid from the prepayment of principal on certain senior notes outstanding.

~~Income Tax Benefit/Expense~~

The Company recorded income tax expense of $95,968 and $29,675 for the three and nine months ended September 30, 2018, respectively. Included in the income tax expense for each period was an expense of $49,052 as a result of the revaluation of the Company's deferred tax liability in connection with tax law changes in the State of New Jersey. Absent this item, the effective tax rate$(11,658), for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~would have been 36%.~~ respectively. These amounts include the non-service cost components of the Company's pension expense, net of dividends received on Comcast common stock owned by the Company. The 2018 amount also includes the equity in the net losses of Newsday and i24NEWS.

Income Tax Benefit

For the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company recorded a tax benefit ~~was more than offset by the $49,052 expense recorded~~of $22,586 on pre-tax loss of $47,784, resulting in ~~the period. The tax expense was calculated based upon the actual~~an effective tax rate ~~for~~that was higher than the ~~year-to-date period.~~U.S. statutory tax rate. The higher tax rate was primarily due to revaluation of state taxes primarily due to certain changes to the state tax rates used to measure the Company’s deferred tax liabilities and certain non-deductible expenses.

For the three months ended March 31, 2018 the Company ~~determined this to represent the best estimate~~recorded a tax benefit of ~~the annual~~$60,703 on pre-tax loss of $189,652 resulting in an effective tax rate ~~in light of~~that was higher than the ~~magnitude of the expected income and the significant permanent differences.~~

~~The Company recorded income tax benefit of $141,550~~state taxes and ~~$439,945 for the three and nine months ended September 30, 2017, reflecting the estimated annual effective tax rate of approximately 42% and 37%, respectively.~~non-deductible expenses.

~~Liquidity and Capital Resources~~LIQUIDITY AND CAPITAL RESOURCES

Altice USA has no operations independent of its ~~subsidiaries, Cablevision and Cequel.~~subsidiaries. Funding for our subsidiaries has generally been provided by cash flow from their respective operations, cash on hand and borrowings under their revolving credit facilities and the proceeds from the issuance of securities and borrowings under syndicated term loans in the capital markets. Our decision as to the use of cash generated from operating activities, cash on hand, borrowings under the revolving credit ~~facilities~~facility or accessing the capital markets has been based upon an ongoing review of the funding needs of the business,

the optimal allocation of cash resources, the timing of cash flow generation and the cost of borrowing under the revolving credit ~~facilities,~~facility, debt securities and syndicated term loans. We manage our business to a ~~long-term net~~year-end leverage ~~ratio~~ target of 4.5x to 5.0x. We calculate our consolidated net leverage ratio as net debt to L2QA EBITDA (Adjusted EBITDA for the two most recent consecutive fiscal quarters multiplied by 2.0).

We expect to utilize free cash flow and availability under the revolving credit ~~facilities,~~facility, as well as future refinancing transactions, to further extend the maturities of, or reduce the principal on, our debt obligations. The timing and terms of any refinancing transactions will be subject to, among other factors, market conditions. Additionally, we may, from time to time, depending on market conditions and other factors, use cash on hand and the proceeds from other borrowings to repay the outstanding debt securities through open market purchases, privately negotiated purchases, tender offers, or redemptions.

We believe existing cash balances, operating cash flows and availability under our revolving credit ~~facilities~~facility will provide adequate funds to support our current operating plan, make planned capital expenditures and fulfill our debt service

requirements for the next twelve months. However, our ability to fund our operations, make planned capital expenditures, make scheduled payments on our indebtedness and repay our indebtedness depends on our future operating performance and cash flows and our ability to access the capital markets, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. However, competition, market disruptions or a deterioration in economic conditions could lead to lower demand for our products, as well as lower levels of advertising, and increased incidence of customers' inability to pay for the services we provide. These events would adversely impact our results of operations, cash flows and financial position. Although we currently believe that amounts available under the revolving credit ~~facilities~~facility will be available when, and if, needed, we can provide no assurance that access to such funds will not be impacted by adverse conditions in the financial markets or other conditions. The obligations of the financial institutions under the revolving credit ~~facilities~~facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.

In the longer term, we domay not ~~expect to~~ be able to generate sufficient cash from operations to fund anticipated capital expenditures, meet all existing future contractual payment obligations and repay our debt at maturity. As a result, we ~~will~~could be dependent upon our continued access to the capital and credit markets to issue additional debt or equity or refinance existing debt obligations. We intend to raise significant amounts of funding over the next several years to fund capital expenditures, repay existing obligations and meet other obligations, and the failure to do so successfully could adversely affect our business. If we are unable to do so, we will need to take other actions including deferring capital expenditures, selling assets, seeking strategic investments from third parties or reducing or eliminating stock repurchases orand discretionary uses of cash.

Debt Outstanding

The following tables summarize the carrying value of our outstanding debt, net of ~~eliminations,~~unamortized deferred financing costs, discounts and premiums (excluding accrued interest), as well as interest expense.

As of September 30, 2018
Cablevision Cequel Total
Debt outstanding:
Credit facility debt $ 4,980,221
$ 1,241,272
$ 6,221,493
Senior guaranteed notes 3,284,419
—
3,284,419
Senior secured notes —
2,573,423
2,573,423
Senior notes and debentures 6,686,729
2,811,167
9,497,896
Subtotal 14,951,369
6,625,862
21,577,231
Capital lease obligations 20,057
1,394
21,451
Notes payable 42,810
34,281
77,091
Subtotal 15,014,236
6,661,537
21,675,773
Collateralized indebtedness relating to stock monetizations (a) 1,400,398
—
1,400,398
Total debt $ 16,414,634
$ 6,661,537
$ 23,076,171

Interest expense: Nine Months Ended September 30, 2018
Credit facility debt, senior notes, capital leases and notes payable $ 792,319
$ 317,218
$ 1,109,537
Collateralized indebtedness relating to stock monetizations (a) 47,858
—
47,858
Total interest expense $ 840,177
$ 317,218
$ 1,157,395



	As of March 31, 2019
	CSC Holdings		Cablevision		Total
Debt outstanding:
Credit facility debt	$	6,945,301	$	—	$	6,945,301
Senior guaranteed notes	7,596,446		—		7,596,446
Senior notes and debentures	6,120,069		1,099,681		7,219,750
Subtotal	20,661,816		1,099,681		21,761,497
Finance lease obligations	27,304		—		27,304
Notes payable	61,131		—		61,131
Subtotal	20,750,251		1,099,681		21,849,932
Collateralized indebtedness relating to stock monetizations (a)	1,411,869		—		1,411,869
Total debt	$	22,162,120	$	1,099,681	$	23,261,801
Interest expense:
Credit facility debt, senior notes, finance leases and notes payable	$	348,710	$	24,244	$	372,954
Collateralized indebtedness and notes payable relating to stock monetizations (a)	15,329		—		15,329
Total interest expense	$	364,039	$	24,244	$	388,283


(a)	This indebtedness is collateralized by shares of Comcast common stock. We intend to settle this debt by (i) delivering shares of Comcast common stock and the related equity contracts, or (ii) delivering cash from the net proceeds on new monetization contracts.

The following table provides details of our outstanding credit facility debt, net of unamortized discounts and deferred financing costs as of ~~September 30, 2018:~~March 31, 2019:

Maturity Date Interest Rate Principal Carrying Value (a)
Cablevision:
CSC Holdings Revolving Credit Facility (b) $20,000 on October 9, 2020, remaining balance on November 30, 2021 5.40% $ 575,000
$ 554,908
CSC Holdings Term Loan Facility July 17, 2025 4.41% 2,962,500
2,946,318
CSC Holdings Incremental Term Loan Facility January 25, 2026 4.66% 1,496,250
1,478,995
Cequel:
Revolving Credit Facility (c) $65,000 on November 30, 2021, and remaining balance on April 5, 2023 —% —
—
Term Loan Facility July 28, 2025 4.49% 1,249,188
1,241,272
$ 6,282,938
$ 6,221,493



	Maturity Date	Interest Rate	Principal		Carrying Value

CSC Holdings Revolving Credit Facility (a)	$350,000 on November 30, 2021, remaining balance of $2,212,500 on January 31, 2024	4.879%	$	300,000	$	284,969
CSC Holdings Term Loan B	July 17, 2025	4.734%	2,947,500		2,932,491
CSC Holdings Incremental Term Loan B-2	January 25, 2026	4.984%	1,488,750		1,472,554
CSC Holdings Incremental Term Loan B-3	January 15, 2026	4.734%	1,275,000		1,269,135
CSC Holdings Incremental Term Loan B-4	April 15, 2027	5.591%	1,000,000		986,152
			$	7,011,250	$	6,945,301


(a)	~~Carrying amounts are net of unamortized discounts and deferred financing costs.~~


~~(b)~~	At ~~September 30, 2018, $139,929~~March 31, 2019, $163,014 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and ~~$1,585,071 of the facility was undrawn and available, subject to covenant limitations.~~


~~(c)~~	~~At September 30, 2018, $7,636 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $342,364~~$2,099,486 of the facility was undrawn and available, subject to covenant limitations.

Payment Obligations Related to Debt

As of ~~September 30, 2018,~~March 31, 2019, total amounts payable by us in connection with our outstanding obligations, including related interest, as well as ~~capital lease obligations,~~ notes payable, and the value deliverable at maturity under monetization contracts, but excluding financing lease obligations (see Note 8) are as follows:

Cablevision (a) Cequel Total

2018 $ 207,754
$ 139,353
$ 347,107
2019 1,631,374
447,062
2,078,436
2020 1,538,521
414,523
1,953,044
2021 4,036,257
1,663,689
5,699,946
2022 1,525,348
349,050
1,874,398
Thereafter 13,960,675
6,575,521
20,536,196
Total $ 22,899,929
$ 9,589,198
$ 32,489,127



	Total
2019	$	1,083,313
2020	1,961,789
2021 (a)	5,121,655
2022	1,904,245
2023	2,318,112
Thereafter	20,527,573
Total	$	32,916,687


(a)	Includes ~~$1,550,609~~$1,459,638 related to the Company's collateralized indebtedness (including related interest). This indebtedness is collateralized by shares of Comcast common stock. We intend to settle this debt by (i) delivering shares of Comcast common stock and the related equity contracts or (ii) delivering cash from the net proceeds on new monetization contracts.

CSC Holdings Restricted Group

CSC Holdings and those of its subsidiaries which conduct ~~its~~our broadband, ~~pay television~~video and telephony services operations, as well as Lightpath, which provides Ethernet-based data, Internet, voice and video transport and managed services to the business market, comprise the "Restricted Group" as they are subject to the covenants and restrictions of the credit facility and indentures governing the notes and debentures issued by CSC Holdings. In addition, the Restricted Group is also subject to the covenants of the debt issued by Cablevision.

Sources of cash for the Restricted Group include primarily cash flow from the operations of the businesses in the Restricted Group, borrowings under its credit facility and issuance of securities in the capital markets, contributions from its parent, and, from time to time, distributions or loans from its subsidiaries. The Restricted Group's principal uses of cash include:

capital spending, in particular, the capital requirements associated with the upgrade of its digital broadband, ~~pay television~~video and telephony services, including costs to build a FTTH network and enhancements to its service offerings such as ~~a broadband wireless network (WiFi);~~Wi-Fi; debt service, including distributions made to Cablevision to service interest expense and principal repayments on its debt securities; other corporate expenses and changes in working capital; and investments that it may fund from time to time.

~~Cablevision~~CSC Holdings Credit ~~Facilities~~Facility

On October 9, 2015, Finco, which merged with and into CSC Holdings on June 21, 2016, entered into a senior secured credit facility, which ~~currently~~ provides U.S. dollar term loans currently in an aggregate principal amount of $3,000,000 ($~~2,962,500~~2,932,491 outstanding at ~~September 30, 2018)~~March 31, 2019) (the ~~“CVC~~“CSC Term Loan Facility”, and the term loans extended under the ~~CVC~~CSC Term Loan Facility, the ~~“CVC~~“CSC Term Loans”) and U.S. dollar revolving loan commitments currently in an aggregate principal amount of ~~$2,300,000~~$2,562,500 (the ~~“CVC~~“CSC Revolving Credit Facility” and, together with the ~~CVC~~CSC Term Loan Facility, the ~~“CVC~~“CSC Credit Facilities”), which are governed by a credit facilities agreement entered into by, inter alios, CSC Holdings certain lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent and security agent (as amended, restated, supplemented or otherwise modified on June 20, 2016, June 21, 2016, July 21, 2016, September 9, 2016, December 9, 2016, March 15, 2017, ~~and~~ January 12, 2018, October 15, 2018, January 24, 2019, and February 7, 2019, respectively, and as further amended, restated, supplemented or otherwise modified from time to time, the ~~“CVC~~“CSC Credit Facilities Agreement”). The January 24, 2019 amendment increased the total size of the revolving credit facility to $2,562,500 and extended the maturity of $2,212,500 to January 2024, and reduced the interest rate to LIBOR plus 2.25%. The remaining $350,000 matures in November 2021.

In January 2018, CSC Holdings ~~borrowed $150,000 under its revolving credit facility and~~ entered into a ~~new~~ $1,500,000 incremental term loan facility (the "Incremental Term ~~Loan"~~Loan B-2") under its existing ~~CVC Credit Facilities Agreement.~~credit facilities agreement. The Incremental Term Loan B-2 was priced at ~~99.50%~~99.5% and will mature on January 25, 2026. The Incremental Term Loan B-2 is comprised of eurodollar borrowings or alternate base rate borrowings, and bears interest at a rate per annum equal to the adjusted ~~LIBO rate~~LIBOR or the alternate base rate, as applicable, plus the applicable margin, where the applicable margin is (i) with respect to any alternate base rate loan, 1.50% per annum and (ii) with respect to any eurodollar loan, 2.50% per annum. ~~See discussion below regarding use~~The Company is required to make scheduled

quarterly payments equal to 0.25% (or $3,750) of ~~proceeds from~~the principal amount of the Incremental Term ~~Loan.~~ Loan B-2, beginning with the fiscal quarter ended September 30, 2018, with the remaining balance scheduled to be paid on January 25, 2026.

~~The Company made a voluntary repayment of $600,000 under the~~In November 2018, CSC Holdings ~~revolving credit facility in January 2018.~~

~~The Company was in compliance with all of its financial covenants under the CVC Credit Facilities Agreement as of September 30, 2018.~~

See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 and our current report on Form 8-K as of May 21, 2018 for further information regarding the CVC Credit Facilities Agreement.

~~Incremental CSC Holdings Term Loan Facility~~

In October 2018, in connection with its intention to combine the Suddenlink and Cablevision businesses under a single credit silo, the Company commenced an exchange of senior and senior secured notes (see below) and successfully entered into a ~~new~~ $1,275,000 7-year ~~senior secured~~incremental term loan maturing January 2026 (the ~~“Senior Secured~~“Incremental Term Loan B”B-3”)~~, providing for~~. The proceeds from the ~~refinancing of~~Incremental Term Loan B-3 were used to repay the entire principal amount of loans under Cequel’s then existing Term Loan Facility and ~~other~~certain transaction ~~costs related to the credit silo combination.~~costs. The ~~new Senior Secured~~Incremental Term Loan ~~B will have~~B-3 has a margin of 2.25% over LIBOR and was issued with an original issue discount of 25 basis points. The Company is required to make scheduled quarterly payments equal to 0.25% (or $3,188) of the principal amount of the Incremental Term Loan B-3, beginning with the fiscal quarter ended June 30, 2019, with the remaining balance scheduled to be paid on January 15, 2026.

~~On October 15, 2018,~~In February 2019, CSC Holdings ~~made~~entered into a ~~voluntary repayment~~$1,000,000 senior secured Term Loan B ("Incremental Term Loan B-4") maturing on April 15, 2027, the proceeds of which were used to redeem $894,700 in aggregate principal amount of CSC Holdings’ 10.125% senior notes due 2023, representing the entire aggregate principal amount outstanding, and paying related fees, costs and expenses. The Incremental Term Loan B-4 bears interest at a rate per annum equal to LIBOR plus 3.0% and was issued with an original issue discount of 1.0%. The Company is required to make scheduled quarterly payments equal to 0.25% (or $2,500) of the principal amount of the Incremental Term Loan B-4, beginning with the fiscal quarter ended September 30, 2019, with the remaining balance scheduled to be paid on April 15, 2027.

During the three months ended March 31, 2019, CSC Holdings borrowed $400,000 under its revolving credit facility and repaid $350,000 of ~~$125,000.~~

~~Cequel Credit Facilities~~

~~On June 12, 2015, Altice US Finance I Corporation, a wholly-owned subsidiary of Cequel, entered into a senior secured~~amounts outstanding under the revolving credit facility, a portion of which ~~currently provides U.S. dollar term loans in~~was funded from the proceeds of the issuance of an ~~aggregate~~additional $250,000 principal amount of ~~$1,265,000 ($1,249,188 outstanding at September 30, 2018) (the “Cequel Term Loan Facility”~~CSC Holdings 2029 Guaranteed Notes.

In April 2019, CSC Holdings borrowed $150,000 and ~~the term loans extended~~repaid $100,000 under ~~the Cequel Term Loan Facility, the “Cequel Term Loans”) and U.S. dollar~~its revolving loan commitments in an aggregate principal amount of $350,000 (the “Cequel Revolving Credit Facility” and, together with the Cequel Term Loan Facility, the “Cequel Credit Facilities”) which are governed by a credit ~~facilities agreement entered into by, inter alios, Altice US~~

Finance I Corporation, certain lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent and security agent (as amended, restated, supplemented or otherwise modified on October 25, 2016, December 9, 2016, March 15, 2017, and March 22, 2018 and as further amended, restated, supplemented or modified from time to time, the “Cequel Credit Facilities Agreement”).facility.

The Company was in compliance with all of its financial covenants under the ~~Cequel~~CSC Credit Facilities Agreement as of ~~September 30, 2018.~~March 31, 2019.

See Note 910 to our consolidated financial statements ~~included in our Annual Report on Form 10-K for the year ended December 31, 2017 and our current report on Form 8-K as of May 21, 2018~~ for further information regarding the ~~Cequel~~CSC Credit Facilities Agreement.

Senior Guaranteed Notes and Senior Notes

~~Cablevision Notes~~

~~On April 15, 2010, Cablevision~~In January 2019, CSC Holdings issued ~~$750,000~~$1,500,000 in aggregate principal amount of ~~its 7 3/4% Senior Notes~~senior guaranteed notes due ~~2018 (the "CVC 2018~~2029 ("CSC Holdings 2029 Guaranteed Notes"). The notes bear interest at a rate of 6.5% and ~~$500,000~~will mature on February 1, 2029. The net proceeds from the sale of the notes was used to repay certain indebtedness, including to repay at maturity $526,000 aggregate principal amount of ~~its 8% Senior Notes~~CSC Holdings' 8.625% senior notes due ~~2020. On September 27, 2012, Cablevision issued $750,000~~February 2019, redeem approximately $905,300 of the aggregate ~~principal~~outstanding amount of ~~its 5 7/8% Senior~~CSC Holdings' 10.125% senior notes due 2023 at a redemption price of 107.594% plus accrued interest, and paid fees and expenses associated with the transactions.

In February 2019, CSC Holdings issued an additional $250,000 CSC Holdings 2029 Guaranteed Notes ~~due 2022 ($649,024~~at a price of 101.75% of the principal value. The proceeds of these notes were to repay the outstanding ~~at September 30, 2018). The CVC 2018 Notes were repaid in February 2018.~~balance on the CSC Revolving Credit Facility.

As of ~~September 30, 2018, Cablevision~~March 31, 2019, the Company was in compliance with all of its financial covenants under the indentures under which ~~the Cablevision Notes were issued.~~

~~CSC Holdings Notes~~

~~CSC Holdings Senior Guaranteed Notes~~

On October 9, 2015, Finco issued $1,000,000 aggregate principal amount of its 6 5/8% Senior Guaranteed Notes due 2025 (the "CSC 2025 Senior Guaranteed Notes"). CSC Holdings assumed the obligations as issuer of the CSC 2025 Senior Guaranteed Notes upon the merger of Finco and CSC Holdings on June 21, 2016. On September 23, 2016, CSC Holdings issued $1,310,000 aggregate principal amount of its 5 1/2% Senior Guaranteed Notes due 2027.

~~In January 2018, CSC Holdings issued $1,000,000 aggregate principal amount of 5 3/8%~~our senior guaranteed notes ~~due February 1, 2028 (the "2028 Guaranteed Notes"). The 2028 Guaranteed Notes are~~and senior unsecured obligations and rank pari passu in right of payment with all of the existing and future senior indebtedness, including the existing senior notes and the Credit Facilities and rank senior in right of payment to all of existing and future subordinated indebtedness.

The proceeds from the 2028 Guaranteed Notes, together with proceeds from the Incremental Term Loan (discussed above), borrowings under the CVC revolving credit facility and cash on hand, were used in February 2018 to repay $300,000 principal amount of CSC Holdings' senior notes due in February 2018 and $750,000 principal amount of Cablevision senior notes due in April 2018 and a portion was used to fund the dividend of $1,499,935 to the Company's stockholders on June 6, 2018.

~~As of September 30, 2018, CSC Holdings was in compliance with all of its financial covenants under the indentures under which the CSC Holdings senior guaranteed~~ notes were issued.

~~CSC Holdings Senior Notes~~

~~On February 6, 1998, CSC Holdings issued $300,000 aggregate principal amount~~See Note 10 of its 7 7/8% Senior Debentures which matured and were repaid in February 2018. On July 21, 1998, CSC Holdings issued $500,000 aggregate principal amount of its 7 5/8% Senior Debentures which matured and were repaid in July 2018. On February 12, 2009, CSC Holdings issued $526,000 aggregate principal amount of its 8 5/8% Senior Notes due 2019 and 8 5/8% Series B Senior Notes due 2019. On November 15, 2011, CSC Holdings issued $1,000,000 aggregate principal amount of its 6 3/4% Senior Notes due 2021 and 6 3/4% Series B Senior Notes due 2021. On May 23, 2014, CSC Holdings issued $750,000 aggregate principal amount of its 5 1/4% Senior Notes due 2024 and 5 1/4% Series B Senior Notes due 2024.

On October 9, 2015, Finco issued $1,800,000 aggregate principal amount of its 10 1/8% Senior Notes due 2023 (the "CSC 2023 Senior Notes") and $2,000,000 ($1,684,221 principal amount outstanding at September 30, 2018) of its 10 7/8% Senior Notes due 2025 (the "CSC 2025 Senior Notes). CSC Holdings assumed the obligations as issuerour consolidated financial statements for further details of the ~~CSC 2023 Senior Notes~~Company’s outstanding senior guaranteed notes and senior notes.

Recent Event

In April 2019, the ~~CSC 2025 Senior Notes upon~~Company reached an agreement to acquire Cheddar, a digital-first news company, for $200,000, subject to certain closing adjustments as set forth in the merger agreement. The transaction is expected to close upon receipt of ~~Finco and CSC Holdings on June 21, 2016.~~regulatory approval.

~~As of September 30, 2018, CSC Holdings was in compliance with all of its financial covenants under the indentures under which the CSC Holdings senior notes were issued.~~

~~Cequel Notes~~

~~Cequel Senior Secured Notes~~

On June 12, 2015, Altice US Finance I Corporation issued $1,100,000 aggregate principal amount of its 5 3/8% Senior Secured Notes due 2023. On April 26, 2016, Altice US Finance I Corporation issued $1,500,000 aggregate principal amount of its 5 1/2% Senior Secured Notes due 2026.

~~As of September 30, 2018, Cequel was in compliance with all of its financial covenants under the indentures under which the Cequel senior secured notes were issued.~~

~~Cequel Senior Notes~~

On October 25, 2012, Cequel Capital Corporation and Cequel Communications Holdings I, LLC (collectively, the "Cequel Senior Notes Co-Issuers") issued $500,000 aggregate principal amount of their 6 3/8% Senior Notes due 2020 (the "Cequel 2020 Senior Notes"). On December 28, 2012, the Cequel Senior Notes Issuers issued an additional $1,000,000 aggregate principal amount of their Cequel 2020 Senior Notes. In April 2017, the Company redeemed $450,000 of the Cequel 2020 Senior Notes from proceeds of the Cequel Term Loan pursuant to the March 15, 2017 amendment. In April 2018, the remaining principal amount of the notes outstanding of $1,050,000 were repaid from proceeds of new senior notes issued (see discussion below).

On May 16, 2013, the Cequel Senior Notes Co-Issuers issued $750,000 aggregate principal amount of their 5 1/8% Senior Notes due 2021. On September 9, 2014, the Cequel Senior Notes Co-Issuers issued $500,000 aggregate principal amount of their 5 1/8% Senior Notes due 2021.

On June 12, 2015, Altice US Finance II Corporation issued $300,000 aggregate principal amount of its 7 3/4% Senior Notes due 2025 (the "Cequel 2025 Senior Notes"). Following the Cequel Acquisition, Altice US Finance II Corporation was merged into Cequel and the Cequel 2025 Senior Notes became the obligation of the Cequel Senior Notes Co-Issuers.

Also on June 12, 2015, Altice US Finance S.A., an indirect subsidiary of Altice, issued $320,000 principal amount of 7 3/4% Senior Notes due 2025 (the "Cequel Holdco Notes"), the proceeds from which were placed in escrow, to finance a portion of the purchase price for the Cequel Acquisition. The Cequel Holdco Notes were automatically exchanged into an equal aggregate principal amount of Cequel 2025 Senior Notes during the second quarter of 2016.

In April 2018, Cequel Communications Holdings I, LLC and Cequel Capital Corporation, each an indirect, wholly-owned subsidiary of the Company, issued $1,050,000 aggregate principal amount of 7 1/2% senior notes due April 1, 2028. The proceeds of these notes were used in April 2018 to redeem the $1,050,000 aggregate principal amount of 6 3/8% senior notes due September 15, 2020.

~~As of September 30, 2018, Cequel was in compliance with all of its financial covenants under the indentures under which the Cequel senior notes were issued.~~

~~Senior Notes Exchange~~

Additionally, in connection with the Exchange Offers, the Issuers solicited consents to amend each of the Original Notes, except the 5.125% Notes due 2021, and the indentures governing such notes. The proposed amendments, which require the consent of a majority in outstanding aggregate principal amount of each series of relevant Original Notes, respectively, will eliminate or waive substantially all of the restrictive covenants, eliminate certain events of default, and modify or eliminate certain other provisions. Each of the Exchange Offers is subject to the condition that there have been validly

tendered and not validly withdrawn a majority of the outstanding aggregate principal amount of each of the 5.375% Secured Notes due 2023 and 5.500% Secured Notes due 2026 (the “Minimum Tender Condition”).

Capital Expenditures

~~The following tables provide details of the Company's capital expenditures:~~

Three Months Ended September 30,
2018 2017
Cablevision Cequel Total Cablevision Cequel Total
Customer premise equipment $ 72,970
$ 39,598
$ 112,568
$ 61,599
$ 26,552
$ 88,151
Network infrastructure 87,492
42,304
129,796
50,534
21,391
71,925
Support and other 40,447
14,362
54,809
35,501
17,810
53,311
Business services 16,417
20,937
37,354
32,653
9,289
41,942
Capital purchases (cash basis) $ 217,326
$ 117,201
$ 334,527
$ 180,287
$ 75,042
$ 255,329
Capital purchases (including accrued not paid) $ 262,095
$ 130,403
$ 392,498
$ 192,391
$ 90,656
$ 283,047


	Nine Months Ended September 30,
	2018						2017						Three Months Ended March 31,
	Cablevision		Cequel		Total		Cablevision		Cequel		Total		2019		2018
Customer premise equipment	$	192,791	$	81,179	$	273,970	$	161,440	$	78,885	$	240,325	$	74,937	$	80,727
Network infrastructure	180,931		103,748		284,679		164,213		67,375		231,588		139,978		72,841
Support and other	107,507		46,815		154,322		102,553		39,882		142,435		93,777		62,842
Business services	73,254		46,599		119,853		77,646		26,925		104,571		31,694		41,205
Capital purchases (cash basis)	$	554,483	$	278,341	$	832,824	$	505,852	$	213,067	$	718,919	$	340,386	$	257,615
Capital purchases (including accrued not paid)	$	582,628	$	303,577	$	886,205	$	466,760	$	211,230	$	677,990
Capital purchases (including accrued not paid and financed capital)													$	305,650	$	216,665

Customer premise equipment includes expenditures for set-top boxes, cable modems, routers and other equipment that is placed in a customer's home, as well as installation costs for placing ~~the~~ assets into service. Network infrastructure includes: (i) scalable infrastructure, such as headend equipment, (ii) line extensions, such as fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering, and (iii) upgrade and rebuild, including costs to modify or replace existing fiber/coaxial cable networks, including enhancements. Support and other capital expenditures includes costs associated with the replacement or enhancement of non-network assets, such as office equipment, buildings and vehicles. Business services capital expenditures include primarily equipment, installation, support, and other costs related to our fiber based telecommunications business.

Cash Flow Discussion

Operating Activities

Net cash provided by operating activities amounted to ~~$1,770,262~~$503,994 for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 compared to ~~$1,282,432~~$430,952 for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~2018~~2019 cash provided by operating activities resulted from ~~$1,910,357~~$651,636 of income before depreciation and amortization and non-cash items, a decrease in accounts receivable of $28,278, an increase in liabilities related to interest rate swap contracts of ~~$62,549,~~$25,120, an increase in deferred revenue of ~~$56,326,~~$8,915, partially offset by a decrease in accounts payable and accrued expenses of $201,480 an increase in current and other assets of $4,452, and a net ~~increase~~decrease in amounts due to affiliates of ~~$7,203,~~$4,023.

The 2018 cash provided by operating activities resulted from $595,999 of income before depreciation and amortization and non-cash items and a decrease in accounts receivable of $25,207, an increase in liabilities related to interest rate swap contracts of $31,922, and an increase in deferred revenue of $11,929, partially offset by a net decrease in accounts payable and accrued liabilities of ~~$112,699, an increase in accounts receivable of $111,446~~$213,490 and an increase in other assets of ~~$42,028.~~$20,615.

The 2017 cash provided by operating activities resulted from $1,625,070 of income before depreciation and amortization and non-cash items, an increase in deferred revenue of $9,382, partially offset by $250,284 resulting from a decrease in accounts payable and accrued expenses, a net decrease of $40,355 in amounts due to affiliates, a decrease in the liability related to interest rate swap contracts of $9,552, and an increase in current and other assets of $51,829.

Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$842,396~~$339,907 compared to ~~$789,668~~$262,687 for the ~~nine~~three months ended ~~September 30, 2017.~~ March 31, 2018. The 2019 investing activities consisted primarily of capital expenditures of $340,386, partially offset by other net cash receipts of $479.

The 2018 investing activities consisted primarily of capital expenditures of ~~$832,824,~~$257,615, payments for acquisitions and $5,072 in other net cash ~~payments of $9,572.~~payments.

~~The 2017 investing activities consisted primarily of capital expenditures of $718,919, payments for acquisitions, net of cash acquired of $43,608, and $27,141 in other cash payments.~~

Financing Activities

Net cash used in financing activities amounted to ~~$771,881~~$339,615 for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019, compared to ~~$320,320~~net cash provided by financing activities of $929,539 for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. In ~~2018,~~2019, the Company's financing activities consisted primarily of ~~the~~ redemption and repurchase of senior notes, including ~~premiums and~~premium fees of ~~$2,623,756, dividends to stockholders of $1,499,935,~~$2,462,692, the ~~purchase~~repurchase of common stock pursuant to a share repurchase program of ~~$226,803, the repayment~~$586,759, repayments of credit facility debt of ~~$635,738, payments~~$361,250, repayment of ~~collateralized indebtedness and related derivatives~~notes payable of ~~$516,513, contingent payment for acquisition of $30,000,~~$58,500, additions to deferred financing costs of ~~$21,570,~~$11,678, principal payments on finance lease obligations of $1,611 and other net cash payments of ~~$9,440,~~$1,500, partially offset by ~~proceeds from credit facility debt of $2,217,500,~~ proceeds from the issuance of senior notes of ~~$2,050,000,~~$1,754,375 and proceeds from ~~collateralized indebtedness~~credit facility debt of ~~$516,513, contributions from noncontrolling interests of $5,995 and net proceeds from notes payable of $1,866.~~$1,390,000.

In ~~2017,~~2018, the Company's financing activities consisted primarily of proceeds from credit facility debt of ~~$5,602,425 and collateralized indebtedness of $662,724, proceeds from IPO, net of fees of $348,460, contributions from noncontrolling interests of $50,800, and~~$1,642,500, proceeds from the issuance of senior notes ~~payable~~ of ~~$24,649,~~$1,000,000 and other net cash receipts of $6,812, partially offset by ~~repayments of credit facility debt of $3,684,668,~~the redemption and repurchase of senior notes, including premiums and fees of ~~$1,729,400, dividends to stockholders~~$1,057,019, the repayment of ~~$919,317, repayments~~credit facility debt of ~~collateralized indebtedness and related derivative contracts~~$610,663, contingent payment for acquisition of ~~$654,989, principal payments on capital lease obligations of $11,518 and~~$28,940, additions to deferred financing costs of ~~$9,486.~~

~~Settlements~~$19,225, principal payments on finance lease obligations of ~~Collateralized Indebtedness~~

~~The following table summarizes the settlement~~$3,067, and other cash payments of the Company's collateralized indebtedness relating to Comcast shares that were settled by delivering cash equal to the collateralized loan value, net of the value of the related equity derivative contracts during the nine months ended September 30, 2018:

Number of shares (a) 16,139,868
Collateralized indebtedness settled $ (516,537 )
Derivatives contracts settled 24
(516,513 )
Proceeds from new monetization contracts 516,513
Net cash proceeds $ —

In April 2017, the Company entered into new monetization contracts related to 32,153,118 shares of Comcast common stock held by Cablevision, which synthetically reversed the then existing contracts related to these shares (the "Synthetic Monetization Closeout"). As the then existing collateralized debt matured, the Company settled the contracts with proceeds received from the new monetization contracts. The new monetization contracts mature on April 28, 2021. The new monetization contracts provide the Company with downside protection below the hedge price of $35.47 and upside benefit of stock price appreciation up to $44.72 per share.$859.

Commitments and Contingencies

As of ~~September 30, 2018,~~March 31, 2019, the Company's commitments and contingencies not reflected in the Company's balance sheet decreased to approximately ~~$7,465,000~~$8,904,000 as compared to approximately ~~$9,069,000~~$9,460,000 at December 31, ~~2017.~~2018. This decrease relates primarily to payments made pursuant to programming commitments and the adoption of ASC 842, partially offset by renewed multi-year programming agreements entered into during the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.

Common Stock Repurchase

On June 8, 2018, the Company's Board of Directors authorized the repurchase of up to $2.0 billion of Altice USA Class A common stock. Under the repurchase program, shares of Altice USA Class A common stock may be purchased from time to time in the open market and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. Size and timing of these purchases will be determined based on market conditions and other factors. Funding for the repurchase program will be met with cash on hand and/or borrowings under the Company's revolving credit facilities. ~~Through September 30, 2018,~~During the three months ended March 31, 2019, the Company repurchased ~~an aggregate of 13,219,909~~29,255,674 shares for a total purchase price of ~~$240,799.~~approximately $600,000. From the inception of the repurchase program, the Company acquired 57,284,354 for a total purchase price of approximately $1,100,000. These acquired shares have been retired and the associated cost was recorded in paid-in capital in the Company’s ~~condensed~~ consolidated balance sheet.

Recently Issued But Not Yet Adopted Accounting Pronouncements

~~In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-14, Changes~~See Note 3 to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to clarify certain disclosure requirements related to defined benefit pension and other postretirement plans. ASU 2018-14 becomes effective for the Company on January 1, 2022, although early adoption is permitted. The Company does not expect the adoption of ASU 2017-14 to have a material impact on its consolidated financial statements.

Also in August 2018, the FASB issued ASU No. 2018-15, Customer’s Accounting for Implementation Costs in a Cloud Computing Arrangement That Is a Service Contract, which requires upfront implementation costs incurred in a cloud computing arrangement (or hosting arrangement) that is a service contract to be amortized to hosting expense over the term of the arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. ASU 2018-14 becomes effective for the Company on January 1, 2020, although early adoption is permitted. . The Company is currently in the process of evaluating the impact that the adoption of ASU No. 2018-15 will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017‑04, Intangibles-Goodwill and Other (Topic 350). ASU No. 2017‑04 simplifies the subsequent measurement of goodwill by removing the second step of the two‑step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU No. 2017‑04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which increases transparency and comparability by recognizing a lessee’s rights and obligations resulting from leases by recording them on the balance sheet as lease assets and lease liabilities. The new guidance becomes effective for the Company on January 1, 2019. Although the Company has not yet completed its evaluation of the guidance, or quantified its impact, the Company believes the most significant impact will be the recognition of right of use assets and liabilities on its consolidated balance sheet. The Company expects its lease obligations designated as operating leases (as disclosed in Note 8 to the auditedaccompanying consolidated financial statements contained in ~~its most recent Annual Report on Form 10-K) will be reported on the consolidated balance sheets upon adoption. The Company is also evaluating other potential lease arrangements~~"Part I" for a discussion of the business, including arrangements that have been previously disclosed as a contractual commitment. The Company has established a team to implement the standard and is currently in the process of collecting and validating lease data and implementing a software solution. In addition, the Company is assessing practical expedients and policy elections offered by the standard, and is evaluating its processes and internal controls to meet the guidance’srecently issued accounting ~~reporting and disclosure requirements.~~standards.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

All dollar amounts, except per share data, included in the following discussion are presented in thousands.

Equity Price Risk

We are exposed to market risks from changes in certain equity security prices. Our exposure to changes in equity security prices stems primarily from the shares of Comcast common stock we hold. We have entered into equity derivative contracts consisting of a collateralized loan and an equity collar to hedge our equity price risk and to monetize the value of these securities. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing us to retain upside appreciation from the hedge price per share to the relevant cap price. The contracts' actual hedge prices per share vary depending on average stock prices in effect at the time the contracts were executed. The contracts' actual cap prices vary depending on the maturity and terms of each contract, among other factors. If any one of these contracts is terminated prior to its scheduled maturity date due to the occurrence of an event specified in the contract, we would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date. As of ~~September 30, 2018,~~March 31, 2019, we did not have an early termination shortfall relating to any of these contracts.

The underlying stock and the equity collars are carried at fair value on our ~~condensed~~ consolidated balance sheet and the collateralized indebtedness is carried at its principal value, net of discounts, and ~~as of December 31, 2017,~~ the unamortized fair value adjustment for contracts that existed at the date of the Cablevision Acquisition. The fair value adjustment is being amortized over the term of the related indebtedness. The carrying value of our collateralized indebtedness amounted to ~~$1,400,398~~$1,411,869 at ~~September 30, 2018.~~March 31, 2019. At maturity, the contracts provide for the option to deliver cash or shares of Comcast common stock, with a value determined by reference to the applicable stock price at maturity.

As of ~~September 30, 2018,~~March 31, 2019, the fair value and the carrying value of our holdings of Comcast common stock aggregated ~~$1,521,045.~~$1,717,350. Assuming a 10% change in price, the potential change in the fair value of these investments would be approximately ~~$152,105.~~$171,735. As of ~~September 30, 2018,~~March 31, 2019, the net fair value and the carrying value of the equity collar component

of the equity derivative contracts entered into to partially hedge the equity price risk of our holdings of

Comcast common stock aggregated ~~$21,379,~~$67,685, a net ~~asset~~liability position. For the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, we recorded a net ~~gain (loss)~~loss of ~~$(79,628) and $130,883, respectively,~~$177,029 related to our outstanding equity derivative contracts and recorded an unrealized gain ~~(loss)~~ of ~~$111,684 and $(199,312), respectively,~~$254,725 related to the Comcast common stock that we held.


Fair Value of Equity Derivative Contracts
Fair value as of December 31, 2017, net liability position	$	(109,504	)

Fair value as of December 31, 2018, net asset position				$	109,344
Change in fair value, net	130,883			(177,029		)
Fair value as of September 30, 2018, net asset position	$	21,379
Fair value as of March 31, 2019, net liability position				$	(67,685	)

The maturity, number of shares deliverable at the relevant maturity, hedge price per share, and the lowest and highest cap prices received for the Comcast common stock monetized via an equity derivative prepaid forward contract are summarized in the following table:


		Hedge Price	Cap Price (b)					Hedge Price	Cap Price (b)
# of Shares Deliverable(a)	Maturity	per Share (a)	Low		High		Maturity	per Share (a)	Low		High

42,955,236	2021	$29.25- $35.47	$	43.88	$	44.80	2021	$29.25- $35.47	$	43.88	$	44.80


(a)	Represents the price below which we are provided with downside protection and above which we retain upside appreciation. Also represents the price used in determining the cash proceeds payable to us at inception of the contracts.


(b)	Represents the price up to which we receive the benefit of stock price appreciation.

Fair Value of Debt

At ~~September 30, 2018,~~March 31, 2019, the fair value of our fixed rate debt of ~~$17,776,233~~$17,407,292 was higher than its carrying value of ~~$16,833,227~~$16,289,196 by ~~$943,006.~~$1,118,096. The fair value of these financial instruments is estimated based on reference to quoted market prices for these or comparable securities. Our floating rate borrowings bear interest in reference to current LIBOR-based market rates and thus their principal values approximate fair value. The effect of a hypothetical 100 basis point decrease in interest rates prevailing at ~~September 30, 2018~~March 31, 2019 would increase the estimated fair value of our fixed rate debt by ~~$571,987~~$889,918 to ~~$18,348,220.~~$18,297,210. This estimate is based on the assumption of an immediate and parallel shift in interest rates across all maturities.

Interest Rate Risk

~~In May 2018, the Company~~To manage interest rate risk, we have from time to time entered into ~~two~~ interest rate swap contracts whereby one contract converts the interest rate on $2,970,000 of the CSC Holdings Term Loan Facility from a one-month LIBO rate to a three-month LIBO rate minus 0.226% and the second contract converts the interest rate on $1,496,250 of the CSC Holdings Incremental Term Loan from a one month LIBO rate to a three-month LIBO rate minus 0.226%. The objective of these swaps is to potentially pay a lower interest rate than what the Company can elect under the terms of the CSC Holdings Credit Facilities Agreement.

In April 2018, the Company entered into an interest rate swap contract which converts the interest rate on $1,255,513 of the Cequel Term Loan B from a one month LIBO rate to a three-month LIBO rate minus 0.225%. The objective of this swap is to potentially pay a lower interest rate than what the Company can elect under the terms of the Cequel Credit Facilities Agreement.

In June 2016, a subsidiary of Cequel entered into two fixed to floating interest rate swaps. One fixed to floating interest rate swap is converting $750,000 from a fixed rate of 1.6655% to six-month LIBOR and a second tranche of $750,000 from a fixed rate of 1.68% to six-month LIBOR. The objective of these swaps is to adjust the proportion of total debt that is subject to ~~fixed~~variable and ~~variable~~fixed interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or effectively convert fixed rate borrowings to variable rates to permit the Company to realize lower interest expense in a declining interest rate environment. We monitor the financial institutions that are counterparties to our interest rate swap contracts and we only enter into interest rate swap contracts with financial institutions that are rated investment grade. All such contracts are carried at their fair market values on our consolidated balance sheet, with changes in fair value reflected in the consolidated statement of operations.

The following is a summary of interest rate swap contracts outstanding at March 31, 2019:



Trade Date	Maturity Date	Notional Amount		Company Pays	Company Receives
May 2016	May 2026	$	750,000	Six- month LIBOR	Fixed rate of 1.665%
June 2016	May 2026	750,000		Six- month LIBOR	Fixed rate of 1.68%
May 2018	April 2019	2,970,000		Three- month LIBOR	One- month LIBOR plus 0.226%
May 2018	April 2019	1,496,250		Three- month LIBOR	One- month LIBOR plus 0.226%
April 2018	April 2019	1,255,513		Three- month LIBOR minus 0.225%	One- month LIBOR
December 2018	January 2022	500,000		Fixed rate of 2.7177%	Three-month LIBOR
December 2018	January 2022	500,000		Fixed rate of 2.733%	Three-month LIBOR
December 2018	January 2022	500,000		Fixed rate of 2.722%	Three-month LIBOR
December 2018	December 2026	750,000		Fixed rate of 2.9155%	Three-month LIBOR
December 2018	December 2026	750,000		Fixed rate of 2.9025%	Three-month LIBOR

These swap contracts are not designated as hedges for accounting purposes. Accordingly, the changes in the fair value of these interest rate swap contracts are recorded through the statement of operations. For the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, the Company recorded a loss on interest rate swap contracts of ~~$19,554 and $64,405, respectively.~~

$23,672.

As of ~~September 30, 2018,~~March 31, 2019, our outstanding interest rate swap contracts in a liability position had an aggregate fair value and carrying value of ~~$143,719~~$155,369 reflected in “Liabilities under derivative ~~contracts”~~contracts, long-term” and $754 reflected in "Other current liabilities" on our condensed consolidated balance sheet. Our outstanding interest rate swap contracts in an asset position had an aggregate fair value and carrying value of $3,269 reflected in “Derivative contracts” in our condensed consolidated balance sheet.

~~We do~~As of March 31, 2019, we did not hold ~~or issue~~and have not issued derivative instruments for trading or speculative purposes.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of Altice USA's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under SEC rules). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of ~~September 30, 2018.~~March 31, 2019.

Changes in Internal Control

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, there were no changes in the Company's internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

~~The~~In 2019, the Company plans to migrate ~~Cequel’s customer billing system~~certain Cequel customers to the Cablevision billing system platform ~~in a phased approach beginning in the fourth quarter of 2018. Additionally, the Company~~and plans to ~~implement and~~ upgrade a billing system for certain ~~other customer billing systems.~~advertising customers.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 1516 to our ~~condensed~~ consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of our legal proceedings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



(a)	Sales of Unregistered Securities

Set forth below is information related to transactions under the Company's share repurchase program for the quarter ended ~~September 30, 2018.~~March 31, 2019.

(a)
Total Number of Shares (or Units) Purchased

(b)
Average Price Paid per Share (or Unit)

(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)(2)

(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)

August 1 - August 31 6,307,121
$ 17.80
6,307,121
$ 1,887,712,634
September 1 - September 30 6,912,788
18.59
13,219,909
1,759,200,809



	(a) Total Number of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (1)(2)	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (1)

January 1 - January 31	7,282,048	$	18.27	35,310,728	$	1,366,926,425
February 1 - February 28	4,995,475	20.88		40,306,203	1,262,617,139
March 1 - March 31	16,978,151	21.36		57,284,354	900,000,404


(1)	On June 8, 2018, the Company's Board of Directors authorized the repurchase of up to $2.0 billion of Altice USA Class A common stock. Under the repurchase program, shares of Altice USA Class A common stock may be purchased from time to time in the open market. The program does not have an expiration date and may be suspended at any time at the discretion of the Board of Directors.


(2)	This column reflects the cumulative number of shares acquired pursuant to the repurchase program at the end of the respective period.

Item 5. Other Information

Submission of Matters to a Vote of Security Holders

On April 30, 2019, Altice USA, Inc. held its Annual Meeting at which (i) the Class A and Class B stockholders voted together as a single class, upon the election of Patrick Drahi, Dexter Goei, Dennis Okhuijsen, Raymond Svider, Mark Mullen, Manon Brouillette, Charles Stewart, Gerrit Jan Bakker and David Drahi to Altice USA’s Board of Directors (“Board”) for one-year terms; and (ii) voted upon (a) the ratification of the appointment of KPMG LLP as Altice USA’s independent registered public accounting firm for the 2019 fiscal year; (b) the non-binding advisory vote on executive compensation and (c) the non-binding advisory vote on frequency of the stockholder vote on executive compensation.

The Class A and Class B stockholders elected all nine director nominees on which they voted, approved the ratification of the appointment of KPMG LLP as Altice USA’s independent registered public accounting firm for the 2019 fiscal year, approved, on a non-binding advisory basis, the compensation of Altice USA's named executive officers, and approved, on a non-binding advisory basis, the frequency of executive compensation votes every 3 years.

The number of votes cast for, withheld or against and the number of abstentions and broker non-votes with respect to each matter voted upon, as applicable, are set forth below. In accordance with Altice USA’s Amended and Restated Certificate of Incorporation, Class A stockholders have one vote per share and Class B stockholders have twenty-five votes per share.

Proposal 1: ELECTION OF DIRECTORS



	For	Against	Abstain	Broker Non-Votes
Patrick Drahi	4,848,037,126	73,682,359	39,248	31,214,006
Dexter Goei	4,850,103,786	71,617,973	36,974	31,214,006
Dennis Okhuijsen	4,846,330,669	75,389,139	38,925	31,214,006
Raymond Svider	4,874,976,391	46,726,922	43,320	31,214,006
Mark Mullen	4,873,303,641	48,404,695	50,397	31,214,006
Manon Brouillette	4,873,292,483	48,410,130	56,120	31,214,006
Charles Stewart	4,837,619,478	84,089,610	49,645	31,214,006
Gerrit Jan Bakker	4,846,399,017	75,308,219	51,497	31,214,006
David Drahi	4,833,712,466	87,997,123	49,144	31,214,006


Proposal 2:	RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



For:	4,952,113,786
Against:	793,109
Abstain:	65,844

Proposal 3: NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION



For:	4,894,570,391
Against:	27,048,015
Abstain:	140,327
Broker Non-Votes:	31,214,006


Proposal 4:	NON-BINDING ADVISORY VOTE ON FREQUENCY OF THE STOCKHOLDER VOTE ON EXECUTIVE COMPENSATION



One year:	198,779,225
Two years:	27,110
Three years:	4,722,830,060
Abstain:	122,338
Broker Non-Votes:	31,214,006

No other matters were considered and voted on by the stockholders at the annual meeting.

Item 6. Exhibits



EXHIBIT NO.		DESCRIPTION
31.1		Section 302 Certification of the CEO.
31.2		Section 302 Certification of the CFO.
32		Section 906 Certifications of the CEO and CFO.
101		The following financial statements from Altice USA's Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2018~~March 31, 2019 filed with the Securities and Exchange Commission on ~~November 6, 2018,~~May 2, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) the ~~Condensed~~ Consolidated Balance Sheets; (ii) the ~~Condensed~~ Consolidated Statements of Operations; (iii) the ~~Condensed~~ Consolidated Statements of Comprehensive ~~Income (Loss);~~Loss; (iv) the ~~Condensed~~ Consolidated Statement of Stockholders' Equity; (v) the ~~Condensed~~ Consolidated Statements of Cash Flows; and (vi) the Notes to ~~Condensed~~ Consolidated Financial Statements.

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.



		ALTICE USA, INC.
Date:	~~November 6, 2018~~May 2, 2019		/s/ Charles Stewart
		By:	Charles Stewart as Co-President and Chief Financial Officer



	December 31, 2017
	As Reported		Impact of ASC 606		Impact of ATS Acquisition			As Adjusted
Cash and cash equivalents	$	273,329	$	—	$	56,519		$	329,848
Other current assets	580,231		14,068		(20,548		)	573,751
Property, plant and equipment, net	6,063,829		—		(40,003		)	6,023,826
Goodwill	7,996,760		—		23,101			8,019,861
Other assets, long-term	19,861,076		10,261		(6,541		)	19,864,796
Total assets	$	34,775,225	$	24,329	$	12,528		$	34,812,082
Current liabilities	$	2,492,983	$	6,978	$	20,401		$	2,520,362
Deferred tax liability, long-term	4,775,115		4,685		(10,514		)	4,769,286
Liabilities, long-term	21,779,997		—		6,394			21,786,391
Total liabilities	29,048,095		11,663		16,281			29,076,039
Redeemable equity	231,290		—		—			231,290
Paid-in capital	4,642,128		—		23,101			4,665,229
Retained earnings	854,824		12,666		(26,854		)	840,636
Total stockholders' equity	5,495,840		12,666		(3,753		)	5,504,753
Total liabilities and stockholders' equity	$	34,775,225	$	24,329	$	12,528		$	34,812,082



	Three Months Ended September 30, 2017
	As Reported			Impact of ASC 606			Impact of ASU No. 2017-07			Impact of ATS Acquisition			As Adjusted
Residential:
Pay TV	$	1,054,392		$	15,807		$	—		$	(253	)	$	1,069,946
Broadband	646,094			12,372			—			(188		)	658,278
Telephony	204,753			(32,155		)	—			(119		)	172,479
Business services and wholesale	324,760			(118		)	—			—			324,642
Advertising	89,292			—			—			—			89,292
Other	7,884			—			—			—			7,884
Total revenue	2,327,175			(4,094		)	—			(560		)	2,322,521

Programming and other direct costs	755,101			—			—			—			755,101
Other operating expenses	560,497			(4,094		)	(2,921		)	16,629			570,111
Restructuring and other expense	53,448			—			—			—			53,448
Depreciation and amortization	823,265			—			—			21			823,286
Operating income	134,864			—			2,921			(17,210		)	120,575
Other expense, net	(451,638		)	—			(2,921		)	—			(454,559		)
Loss before income taxes	(316,774		)	—			—			(17,210		)	(333,984		)
Income tax benefit	134,688			—			—			6,862			141,550
Net loss	$	(182,086	)	$	—		$	—		$	(10,348	)	$	(192,434	)



	Nine Months Ended September 30, 2017
	As Reported			Impact of ASC 606			Impact of ASU No. 2017-07			Impact of ATS Acquisition			As Adjusted
Residential:
Pay TV	$	3,185,610		$	39,630		$	—		$	(253	)	$	3,224,987
Broadband	1,887,279			39,725			—			(188		)	1,926,816
Telephony	624,077			(92,257		)	—			(119		)	531,701
Business services and wholesale	968,291			(588		)	—			—			967,703
Advertising	270,154			—			—			—			270,154
Other	25,781			—			—			—			25,781
Total revenue	6,961,192			(13,490		)	—			(560		)	6,947,142

Programming and other direct costs	2,272,147			—			—			—			2,272,147
Other operating expenses	1,767,624			(13,490		)	(9,852		)	25,195			1,769,477
Restructuring and other expense	142,765			—			—			—			142,765
Depreciation and amortization	2,138,776			—			—			24			2,138,800
Operating income	639,880			—			9,852			(25,779		)	623,953
Other expense, net	(1,802,608		)	—			(9,852		)	1			(1,812,459		)
Loss before income taxes	(1,162,728		)	—			—			(25,778		)	(1,188,506		)
Income tax benefit	429,664			—			—			10,281			439,945
Net loss	$	(733,064	)	$	—		$	—		$	(15,497	)	$	(748,561	)



Gross goodwill as of December 31, 2017, as reported	$	7,996,760
ATS goodwill included in Cablevision segment (See Note 3 for further details)	23,101
Gross goodwill as of December 31, 2017, as adjusted	8,019,861
Goodwill recorded in Cablevision segment in connection with an acquisition during the third quarter of 2018	7,608
Adjustment to Cablevision segment purchase accounting relating to business acquired in fourth quarter of 2017	(12		)
Reclassification of Cequel segment goodwill to property, plant and equipment	(15,041		)
Net goodwill as of September 30, 2018	$	8,012,416



Number of shares	16,139,868
Collateralized indebtedness settled	$	(516,537	)
Derivatives contracts settled	24
	(516,513		)
Proceeds from new monetization contracts	516,513
Net cash proceeds	$	—



	Three Months Ended September 30, 2018						Three Months Ended September 30, 2017
	Cablevision		Cequel		Total		Cablevision			Cequel		Total
Operating income (loss)	$	340,455	$	165,103	$	505,558	$	(3,103	)	$	123,678	$	120,575
Share-based compensation	9,038		3,289		12,327		11,555			3,450		15,005
Restructuring and other expense	14,122		2,465		16,587		35,364			18,084		53,448
Depreciation and amortization (including impairments)	378,549		157,504		536,053		656,122			167,164		823,286
Adjusted EBITDA	$	742,164	$	328,361	$	1,070,525	$	699,938		$	312,376	$	1,012,314



	Nine Months Ended September 30, 2018						Nine Months Ended September 30, 2017
	Cablevision		Cequel		Total		Cablevision		Cequel		Total
Operating income	$	714,413	$	439,242	$	1,153,655	$	228,740	$	395,213	$	623,953
Share-based compensation	35,567		10,609		46,176		28,597		12,335		40,932
Restructuring and other expense	25,720		4,145		29,865		105,182		37,583		142,765
Depreciation and amortization (including impairments)	1,337,051		490,234		1,827,285		1,641,501		497,299		2,138,800
Adjusted EBITDA	$	2,112,751	$	944,230	$	3,056,981	$	2,004,020	$	942,430	$	2,946,450



	Segment Results
	Three Months Ended September 30,
	2018									2017
	Cablevision		Cequel		Eliminations			Total		Cablevision			Cequel		Eliminations			Total
Revenue:
Residential:
Pay TV	$	783,252	$	271,415	$	—		$	1,054,667	$	798,583		$	271,363	$	—		$	1,069,946
Broadband	457,709		272,198		—			729,907		416,972			241,306		—			658,278
Telephony	130,494		30,857		—			161,351		140,830			31,649		—			172,479
Business services and wholesale	242,305		101,888		—			344,193		230,200			94,442		—			324,642
Advertising	105,719		18,107		(760		)	123,066		72,316			17,456		(480		)	89,292
Other	2,209		2,408		—			4,617		2,458			5,426		—			7,884
Total revenue	1,721,688		696,873		(760		)	2,417,801		1,661,359			661,642		(480		)	2,322,521
Operating expenses:
Programming and other direct costs	585,117		206,120		(704		)	790,533		570,995			184,283		(177		)	755,101
Other operating expenses	403,445		165,681		(56		)	569,070		401,981			168,433		(303		)	570,111
Restructuring and other expense	14,122		2,465		—			16,587		35,364			18,084		—			53,448
Depreciation and amortization	378,549		157,504		—			536,053		656,122			167,164		—			823,286
Operating income (loss)	$	340,455	$	165,103	$	—		$	505,558	$	(3,103	)	$	123,678	$	—		$	120,575



Cablevision segment:	Three Months		Nine Months
Increase primarily in costs of digital media and linear advertising spots for resale	$	10,388	$	32,881
Increase in programming costs due primarily to contractual rate increases, partially offset by lower pay television customers and lower video-on-demand and pay-per-view costs	2,306		16,863
Other net increases (including an increase of $1,400 and $2,666 in costs related to i24NEWS for the three and nine months, respectively)	1,428		5,555
	14,122		55,299



Cequel segment:
Increase in programming costs due primarily to contractual rate increases and new channel launches, partially offset by lower pay television customers and lower video-on-demand and pay-per-view costs	21,965			52,187
Other net increases (decreases)	(128		)	1,781
	21,837			53,968
Inter-segment eliminations	(527		)	(8,393		)
	$	35,432		$	100,874



	As of September 30, 2018
	Cablevision		Cequel		Total
Debt outstanding:
Credit facility debt	$	4,980,221	$	1,241,272	$	6,221,493
Senior guaranteed notes	3,284,419		—		3,284,419
Senior secured notes	—		2,573,423		2,573,423
Senior notes and debentures	6,686,729		2,811,167		9,497,896
Subtotal	14,951,369		6,625,862		21,577,231
Capital lease obligations	20,057		1,394		21,451
Notes payable	42,810		34,281		77,091
Subtotal	15,014,236		6,661,537		21,675,773
Collateralized indebtedness relating to stock monetizations (a)	1,400,398		—		1,400,398
Total debt	$	16,414,634	$	6,661,537	$	23,076,171

Interest expense:	Nine Months Ended September 30, 2018
Credit facility debt, senior notes, capital leases and notes payable	$	792,319	$	317,218	$	1,109,537
Collateralized indebtedness relating to stock monetizations (a)	47,858		—		47,858
Total interest expense	$	840,177	$	317,218	$	1,157,395



	Cablevision (a)		Cequel		Total

2018	$	207,754	$	139,353	$	347,107
2019	1,631,374		447,062		2,078,436
2020	1,538,521		414,523		1,953,044
2021	4,036,257		1,663,689		5,699,946
2022	1,525,348		349,050		1,874,398
Thereafter	13,960,675		6,575,521		20,536,196
Total	$	22,899,929	$	9,589,198	$	32,489,127



Number of shares (a)	16,139,868
Collateralized indebtedness settled	$	(516,537	)
Derivatives contracts settled	24
	(516,513		)
Proceeds from new monetization contracts	516,513
Net cash proceeds	$	—