Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 23, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | Consolidated Communications Holdings, Inc. | ||
Entity Central Index Key | 1,304,421 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,313,079,194 | ||
Entity Common Stock, Shares Outstanding | 50,605,844 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net revenues | $ 743,177 | $ 775,737 | $ 635,738 |
Operating expenses: | |||
Cost of services and products (exclusive of depreciation and amortization) | 322,792 | 328,400 | 242,661 |
Selling, general and administrative expenses | 157,111 | 178,227 | 140,636 |
Acquisition and other transaction costs | 1,214 | 1,413 | 11,817 |
Loss on impairment | 610 | ||
Depreciation and amortization | 174,010 | 179,922 | 149,435 |
Income from operations | 87,440 | 87,775 | 91,189 |
Other income (expense): | |||
Interest expense, net of interest income | (76,826) | (79,618) | (82,537) |
Loss on extinguishment of debt | (6,559) | (41,242) | (13,785) |
Investment income | 32,972 | 36,690 | 34,516 |
Other, net | 1,131 | (1,501) | (968) |
Income before income taxes | 38,158 | 2,104 | 28,415 |
Income tax expense | 22,962 | 2,775 | 13,027 |
Net income (loss) | 15,196 | (671) | 15,388 |
Less: net income attributable to noncontrolling interest | 265 | 210 | 321 |
Net income (loss) attributable to common shareholders | $ 14,931 | $ (881) | $ 15,067 |
Net income (loss) per common share - basic and diluted | |||
Net income (loss) per basic and diluted common share attributable to common shareholders (in dollars per share) | $ 0.29 | $ (0.02) | $ 0.35 |
Dividends declared per common share (in dollars per share) | $ 1.55 | $ 1.55 | $ 1.55 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ 15,196 | $ (671) | $ 15,388 |
Pension and post-retirement obligations: | |||
Change in net actuarial loss and prior service credit, net of tax (benefit) of $(9,534), $(3,533) and $(20,039) in 2016, 2015 and 2014, respectively | (14,831) | (5,547) | (31,191) |
Amortization of actuarial losses (gains) and prior service credit to earnings, net of tax expense (benefit) of $1,738 $1,098 and $(400) in 2016, 2015 and 2014, respectively | 2,706 | 1,707 | (637) |
Derivative instruments designated as cash flow hedges: | |||
Change in fair value of derivatives, net of tax (benefit) of $(180), $(672) and $(51) in 2016, 2015 and 2014, respectively | (289) | (1,072) | (81) |
Reclassification of realized loss to earnings, net of tax expense of $516, $518 and $781 in 2016, 2015 and 2014, respectively | 836 | 853 | 1,269 |
Comprehensive income (loss) | 3,618 | (4,730) | (15,252) |
Less: comprehensive income attributable to noncontrolling interest | 265 | 210 | 321 |
Total comprehensive income (loss) attributable to common shareholders | $ 3,353 | $ (4,940) | $ (15,573) |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Change in net actuarial loss and prior service credit, tax (benefit) | $ (9,534) | $ (3,533) | $ (20,039) |
Amortization of actuarial losses (gains) and prior service credit to earnings, tax expense (benefit) | 1,738 | 1,098 | (400) |
Change in fair value of derivatives, net of tax (benefit) | (180) | (672) | (51) |
Reclassification of realized loss to earnings, tax expense | $ 516 | $ 518 | $ 781 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 27,077 | $ 15,878 |
Accounts receivable, net of allowance for doubtful accounts | 56,216 | 68,848 |
Income tax receivable | 21,616 | 23,867 |
Prepaid expenses and other current assets | 28,292 | 17,815 |
Total current assets | 133,201 | 126,408 |
Property, plant and equipment, net | 1,055,186 | 1,093,261 |
Investments | 106,221 | 105,543 |
Goodwill | 756,877 | 764,630 |
Other intangible assets | 31,612 | 43,497 |
Other assets | 9,661 | 5,187 |
Total assets | 2,092,758 | 2,138,526 |
Current liabilities: | ||
Accounts payable | 6,766 | 12,576 |
Advance billings and customer deposits | 26,438 | 27,616 |
Dividends payable | 19,605 | 19,551 |
Accrued compensation | 16,971 | 21,883 |
Accrued interest | 11,260 | 9,353 |
Accrued expense | 54,123 | 42,384 |
Current portion of long-term debt and capital lease obligations | 14,922 | 10,937 |
Total current liabilities | 150,085 | 144,300 |
Long-term debt and capital lease obligations | 1,376,754 | 1,377,892 |
Deferred income taxes | 244,298 | 236,529 |
Pension and other post-retirement obligations | 130,793 | 112,966 |
Other long-term liabilities | 14,573 | 16,140 |
Total liabilities | 1,916,503 | 1,887,827 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 50,612,362 and 50,470,096 shares outstanding as of December 31, 2016 and December 31, 2015, respectively | 506 | 505 |
Additional paid-in capital | 217,725 | 281,738 |
Retained earnings (deficit) | (881) | |
Accumulated other comprehensive loss, net | (47,277) | (35,699) |
Noncontrolling interest | 5,301 | 5,036 |
Total shareholders' equity | 176,255 | 250,699 |
Total liabilities and shareholders' equity | $ 2,092,758 | $ 2,138,526 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 50,612,362 | 50,470,096 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss, net | Non-controlling Interest | Total |
Balance at Dec. 31, 2013 | $ 401 | $ 148,433 | $ (1,000) | $ 4,505 | $ 152,339 | |
Balance (in shares) at Dec. 31, 2013 | 40,066 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (51,264) | $ (15,067) | (66,331) | |||
Shares issued upon acquisition of Enventis | $ 101 | 257,558 | 257,659 | |||
Shares issued upon the acquisition of Enventis (in shares) | 10,144 | |||||
Shares issued under employee plan, net of forfeitures | $ 2 | (2) | ||||
Shares issued under employee plan, net of forfeitures (in shares) | 224 | |||||
Non-cash, stock-based compensation | 3,622 | 3,622 | ||||
Purchase and retirement of common stock | (1,856) | (1,856) | ||||
Purchase and retirement of common stock (in shares) | (69) | |||||
Tax on restricted stock vesting | 879 | 879 | ||||
Other comprehensive income (loss) | (30,640) | (30,640) | ||||
Other | (231) | (231) | ||||
Net income (loss) | 15,067 | 321 | 15,388 | |||
Balance at Dec. 31, 2014 | $ 504 | 357,139 | (31,640) | 4,826 | 330,829 | |
Balance (in shares) at Dec. 31, 2014 | 50,365 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (78,250) | (78,250) | ||||
Shares issued under employee plan, net of forfeitures | $ 1 | 770 | 771 | |||
Shares issued under employee plan, net of forfeitures (in shares) | 161 | |||||
Non-cash, stock-based compensation | 2,994 | 2,994 | ||||
Purchase and retirement of common stock | (1,125) | (1,125) | ||||
Purchase and retirement of common stock (in shares) | (56) | |||||
Tax on restricted stock vesting | 210 | 210 | ||||
Other comprehensive income (loss) | (4,059) | (4,059) | ||||
Net income (loss) | (881) | 210 | (671) | |||
Balance at Dec. 31, 2015 | $ 505 | 281,738 | (881) | (35,699) | 5,036 | 250,699 |
Balance (in shares) at Dec. 31, 2015 | 50,470 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (64,423) | (14,050) | (78,473) | |||
Shares issued under employee plan, net of forfeitures | $ 1 | 94 | 95 | |||
Shares issued under employee plan, net of forfeitures (in shares) | 188 | |||||
Non-cash, stock-based compensation | 2,980 | 2,980 | ||||
Purchase and retirement of common stock | (1,231) | (1,231) | ||||
Purchase and retirement of common stock (in shares) | (46) | |||||
Tax on restricted stock vesting | (1,433) | (1,433) | ||||
Other comprehensive income (loss) | (11,578) | (11,578) | ||||
Net income (loss) | $ 14,931 | 265 | 15,196 | |||
Balance at Dec. 31, 2016 | $ 506 | $ 217,725 | $ (47,277) | $ 5,301 | $ 176,255 | |
Balance (in shares) at Dec. 31, 2016 | 50,612 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | |||
Net income (loss) | $ 15,196 | $ (671) | $ 15,388 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 174,010 | 179,922 | 149,435 |
Deferred income taxes | 20,863 | 5,828 | 10,244 |
Cash distributions from wireless partnerships in excess of/(less than) current earnings | (504) | 8,585 | 212 |
Stock-based compensation expense | 3,017 | 3,060 | 3,636 |
Amortization of deferred financing costs | 3,223 | 3,378 | 4,364 |
Loss on extinguishment of debt | 6,559 | 41,242 | 13,785 |
Other, net | (920) | 506 | 2,973 |
Changes in operating assets and liabilities, net of acquired businesses: | |||
Accounts receivable, net | 5,353 | 8,688 | 11,896 |
Income tax receivable | 2,251 | (4,927) | (3,406) |
Prepaids and other assets | (14,282) | 163 | 1,953 |
Accounts payable | (1,067) | (2,701) | (1,904) |
Accrued expenses and other liabilities | 4,534 | (23,894) | (20,791) |
Net cash provided by operating activities | 218,233 | 219,179 | 187,785 |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (13,422) | (139,558) | |
Purchases of property, plant and equipment, net | (125,192) | (133,934) | (108,998) |
Purchase of investments | (100) | ||
Proceeds from sale of assets | 208 | 13,548 | 1,795 |
Proceeds from business dispositions | 30,119 | ||
Proceeds from sale of investments | 846 | ||
Net cash used in investing activities | (108,287) | (119,540) | (246,861) |
Cash flows from financing activities: | |||
Proceeds from bond offering | 294,780 | 200,000 | |
Proceeds from the issuance of long-term debt | 936,750 | 69,000 | 80,000 |
Payment of capital lease obligations | (2,885) | (1,107) | (703) |
Payment on long-term debt | (943,050) | (107,100) | (63,100) |
Redemption of senior notes | (261,874) | (84,127) | |
Payment of financing costs | (9,912) | (4,805) | (7,438) |
Share repurchases for minimum tax withholding | (1,231) | (1,125) | (1,856) |
Dividends on common stock | (78,419) | (78,209) | (62,341) |
Other | (231) | ||
Net cash used in financing activities | (98,747) | (90,440) | 60,204 |
Increase in cash and cash equivalents | 11,199 | 9,199 | 1,128 |
Cash and cash equivalents at beginning of period | 15,878 | 6,679 | 5,551 |
Cash and cash equivalents at end of period | $ 27,077 | $ 15,878 | $ 6,679 |
BUSINESS DESCRIPTION & SUMMARY
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we” or “our”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide integrated communications services in consumer, commercial, and carrier channels in California, Illinois, Iowa, Kansas, Minnesota, Missouri, North Dakota, Pennsylvania, South Dakota, Texas and Wisconsin. We operate as both an Incumbent Local Exchange Carrier (“ILEC”) and a Competitive Local Exchange Carrier (“CLEC”), dependent upon the territory served. We provide a wide range of services and products that include local and long-distance service, high-speed broadband Internet access, video services, Voice over Internet Protocol (“VoIP”), private line services, carrier grade access services, network capacity services over our regional fiber optic networks, cloud data services, data center and managed services, directory publishing and equipment sales. As of December 31, 2016, we had approximately 457 thousand voice connections, 473 thousand data connections and 106 thousand video connections. Use of Estimates Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates. Our critical accounting estimates include (i) impairment evaluations associated with indefinite-lived intangible assets (Note 1), (ii) revenue recognition (Note 1), (iii) the determination of deferred tax asset and liability balances (Notes 1 and 10) and (iv) pension plan and other post-retirement costs and obligations (Notes 1 and 9). Principles of Consolidation Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries and subsidiaries in which we have a controlling financial interest. All significant intercompany transactions have been eliminated. Recent Business Developments Agreement and Plan of Merger with FairPoint On December 3, 2016, we entered into a definitive agreement and plan of merger with FairPoint to acquire all the issued and outstanding shares of FairPoint in exchange for shares of our common stock, as set forth in the Merger Agreement. FairPoint is an advanced communications provider to business, wholesale and residential customers within its service territory which spans across 17 states. FairPoint owns and operates a robust fiber-based network with more than 21,000 route miles of fiber, including 17,000 route miles of fiber in northern New England. In conjunction with the merger, we have secured committed debt financing, as described in Note 6, that will be used to repay the outstanding debt of FairPoint and pay fees and expenses associated with the merger. The merger is subject to standard closing conditions including the approval of our stockholders and FairPoint’s stockholders, the approval of the listing of additional shares of Consolidated common stock to be issued to FairPoint’s stockholders, required federal and state regulatory approvals and other customary closing conditions. We expect the merger to close by mid-2017. See Note 3 for a more detailed discussion of the merger. Restatement of Credit Agreement On October 5, 2016, the Company and certain of its subsidiaries entered into a Restatement Agreement to amend and restate our existing credit agreement through a Third Amended and Restated Credit Agreement (the “Restated Credit Agreement”). Under the terms of the Restated Credit Agreement, the Company issued initial term loans in the aggregate amount of $900.0 million, with a maturity date of October 5, 2023 (subject to an earlier maturity date on March 31, 2022, under certain conditions), and used the proceeds in part to pay off the outstanding term loan in the amount of $885.0 million. The Company also obtained a revolving loan facility of $110.0 million, with a maturity date of October 5, 2021, to replace the existing $75.0 million revolving credit facility scheduled to mature in December 2018. In connection with entering into the Restated Credit Agreement, we incurred a loss on the extinguishment of debt of $6.6 million during the year ended December 31, 2016. See Note 6 for additional information regarding this transaction. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Our cash equivalents consist primarily of money market funds. The carrying amounts of our cash equivalents approximate their fair value. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for doubtful accounts for estimated losses that result from the inability of our customers to make required payments. The allowance for doubtful accounts is maintained based on customer payment levels, historical experience and management’s views on trends in the overall receivable agings. In addition, for larger accounts, we perform analyses of risks on a customer-specific basis. We perform ongoing credit evaluations of our customers’ financial condition and management believes that an adequate allowance for doubtful accounts has been provided. Uncollectible accounts are removed from accounts receivable and are charged against the allowance for doubtful accounts when internal collection efforts have been unsuccessful. The following table summarizes the activity in allowance for doubtful accounts for the years ended December 31, 2016, 2015 and 2014: Year Ended December 31, (In thousands) 2016 2015 2014 Balance at beginning of year $ $ $ Provision charged to expense Write-offs, less recoveries Balance at end of year $ $ $ Investments Our investments are primarily accounted for under either the equity or cost method. If we have the ability to exercise significant influence over the operations and financial policies of an affiliated company, the investment in the affiliated company is accounted for using the equity method. If we do not have control and also cannot exercise significant influence, the investment in the affiliated company is accounted for using the cost method. We review our investment portfolio periodically to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value that is considered to be other than temporary. If we believe the decline is other than temporary, we evaluate the financial performance of the business and compare the carrying value of the investment to quoted market prices (if available) or the fair value of similar investments. If an investment is deemed to have experienced an impairment that is considered other-than temporary, the carrying amount of the investment is reduced to its quoted or estimated fair value, as applicable, and an impairment loss is recognized in other income (expense). Fair Value of Financial Instruments We account for certain assets and liabilities at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A financial asset or liability’s classification within a three-tiered value hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The hierarchy prioritizes the inputs to valuation techniques into three broad levels in order to maximize the use of observable inputs and minimize the use of unobservable inputs. The levels of the fair value hierarchy are as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs that reflect quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets and inputs other than quoted prices that are directly or indirectly observable in the marketplace. Level 3 – Unobservable inputs which are supported by little or no market activity. Property, Plant and Equipment Property, plant and equipment are recorded at cost. We capitalize additions and substantial improvements and expense repairs and maintenance costs as incurred. We capitalize the cost of internal-use network and non-network software which has a useful life in excess of one year. Subsequent additions, modifications or upgrades to internal-use network and non-network software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred. Also, we capitalize interest associated with the development of internal-use network and non-network software. Property, plant and equipment consisted of the following as of December 31, 2016 and 2015: December 31, December 31, Estimated (In thousands) 2016 2015 Useful Lives Land and buildings $ $ - years Central office switching and transmission - years Outside plant cable, wire and fiber facilities - years Furniture, fixtures and equipment - years Assets under capital lease - years Total plant in service Less: accumulated depreciation and amortization Plant in service Construction in progress Construction inventory Totals $ $ Construction inventory, which is stated at weighted average cost, consists primarily of network construction materials and supplies that when issued are predominately capitalized as part of new customer installations and the construction of the network. We record depreciation using the straight line method over estimated useful lives using either the group or unit method. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets, anticipated technological changes and the expected impact of our strategic operating plan on our network infrastructure. In addition, the ranges of estimated useful lives presented above are impacted by the accounting for business combinations as the lives assigned to these acquired assets are generally much shorter than that of a newly acquired asset. The group method is used for depreciable assets dedicated to providing regulated telecommunication services, including the majority of the network, outside plant facilities and certain support assets. A depreciation rate for each asset group is developed based on the average useful life of the group. The group method requires periodic revision of depreciation rates. When an individual asset is sold or retired, the difference between the proceeds, if any, and the cost of the asset is charged or credited to accumulated depreciation, without recognition of a gain or loss. The unit method is primarily used for buildings, furniture, fixtures and other support assets. Each asset is depreciated on the straight-line basis over its estimated useful life. When an individual asset is sold or retired, the cost basis of the asset and related accumulated depreciation are removed from the accounts and any associated gain or loss is recognized. Depreciation and amortization expense related to property, plant and equipment was $161.1 million, $167.1 million and $139.0 million in 2016, 2015 and 2014, respectively. Amortization of assets under capital leases is included in the depreciation and amortization expense in the consolidated statements of operations. We evaluate the recoverability of our property, plant and equipment whenever events or substantive changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the asset group. Intangible Assets Indefinite-Lived Intangibles Goodwill and tradenames are evaluated for impairment annually or more frequently when events or changes in circumstances indicate that the asset might be impaired. We evaluate the carrying value of goodwill and tradenames as of November 30 of each year. Goodwill Goodwill is the excess of the acquisition cost of a business over the fair value of the identifiable net assets acquired. Goodwill is not amortized but instead evaluated annually for impairment. The evaluation of goodwill may first include a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Events and circumstances integrated into the qualitative assessment process include a combination of macroeconomic conditions affecting equity and credit markets, significant changes to the cost structure, overall financial performance and other relevant events affecting the reporting unit. For the 2016 assessment, we evaluated the fair value of goodwill compared to the carrying value using the qualitative approach. The results of the qualitative approach concluded that it is more likely than not that the fair value of goodwill was greater than the carrying value as of the assessment date. When we use the quantitative approach to assess the goodwill carrying value and the fair value of our single reporting unit, the fair value of our reporting unit is compared to its carrying amount, including goodwill. The estimated fair value of the reporting unit is determined using a combination of market-based approaches and a discounted cash flow (“DCF”) model. The assumptions used in the estimate of fair value are based upon a combination of historical results and trends, new industry developments and future cash flow projections, as well as relevant comparable company earnings multiples for the market-based approaches. Such assumptions are subject to change as a result of changing economic and competitive conditions. We use a weighting of the results derived from the valuation approaches to estimate the fair value of the reporting unit. For the November 30, 2015 assessment, using the quantitative approach, we concluded that the fair value of the reporting unit exceeded the carrying value at December 31, 2015 and that there was no impairment of goodwill. In measuring the fair value of our reporting unit as previously described, we consider the fair value of our reporting unit in relation to our overall enterprise value, measured as the publicly traded stock price multiplied by the fully diluted shares outstanding plus the value of outstanding debt. Our reporting unit fair value models are consistent with a range in value indicated by both the preceding three month average stock price and the stock price on the valuation date, plus an estimated acquisition premium which is based on observable transactions of comparable companies, if applicable. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss. The second step compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill in a manner similar to a purchase price allocation. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of goodwill is greater than the implied fair value of that goodwill, then an impairment charge would be recorded equal to the difference between the implied fair value and the carrying value. We did not recognize any goodwill impairment in 2016, 2015 or 2014 as a result of the impairment test. At December 31, 2016 and 2015, the carrying value of goodwill was $756.9 million and $764.6 million, respectively. The following table summarizes the change in goodwill during the year ended December 31, 2016: (In thousands) Balance at December 31, 2015 $ Acquisition Divestiture of businesses Balance at December 31, 2016 $ Trade Names Our most valuable trade name is the federally registered mark CONSOLIDATED, a design of interlocking circles, which is used in association with our telephone communication services. The Company’s corporate branding strategy leverages a CONSOLIDATED naming structure. All of the Company’s business units and several of our products and services incorporate the CONSOLIDATED name. Trade names with indefinite useful lives are not amortized but are tested for impairment at least annually. If facts and circumstances change relating to a trade name’s continued use in the branding of our products and services, it may be treated as a finite-lived asset and begin to be amortized over its estimated remaining life. The carrying value of our trade names, excluding any finite lived trade names, was $10.6 million at December 31, 2016 and 2015. For the 2016 assessment, we used the qualitative approach to evaluate the fair value compared to the carrying value of the trade names. Based on the various qualitative indicators reviewed, we concluded that the fair value of the trade names continued to exceed the carrying value. When we use the quantitative approach to estimate the fair value of our trade names, we use DCFs based on a relief from royalty method. If the fair value of our trade names was less than the carrying amount, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the assets. We perform our impairment testing of our trade names as single units of accounting based on their use in our single reporting unit. Finite-Lived Intangible Assets Finite-lived intangible assets subject to amortization consist primarily of our customer lists of an established base of customers that subscribe to our services, trade names of acquired companies and other intangible assets. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. We evaluate the potential impairment of finite-lived intangible assets when impairment indicators exist. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment equal to the difference between the carrying amount and the fair value of the asset is recognized. We did not recognize any intangible impairment charges in the years ended December 31, 2016, 2015 or 2014. The components of finite-lived intangible assets are as follows: December 31, 2016 December 31, 2015 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships - years $ $ $ $ Trade names - years Other intangible assets years Total $ $ $ $ Amortization expense related to the finite-lived intangible assets for the years ended December 31, 2016, 2015 and 2014 was $12.9 million, $12.8 million and $10.4 million, respectively. Expected future amortization expense of finite-lived intangible assets is as follows: (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $ Derivative Financial Instruments We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. At the inception of a hedge transaction, we formally document the relationship between the hedging instruments including our objective and strategy for establishing the hedge. In addition, the effectiveness of the derivative instrument is assessed at inception and on an ongoing basis throughout the hedging period. Counterparties to derivative instruments expose us to credit-related losses in the event of nonperformance. We execute agreements only with financial institutions we believe to be creditworthy and regularly assess the credit worthiness of each of the counterparties. We do not use derivative instruments for trading or speculative purposes. Derivative financial instruments are recorded at fair value in our consolidated balance sheet. Fair value is determined based on publicly available interest rate yield curves and an estimate of our nonperformance risk or our counterparty’s nonperformance credit risk, as applicable. We do not anticipate any nonperformance by any counterparty. For derivative instruments designated as a cash flow hedge, the effective portion of the change in the fair value is recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and is recognized as an adjustment to earnings over the period in which the hedged item impacts earnings. When an interest rate swap agreement terminates, any resulting gain or loss is recognized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt obligation. The ineffective portion of the change in fair value of any hedging derivative is recognized immediately in earnings. If a derivative instrument is de-designated, the remaining gain or loss in AOCI on the date of de-designation is amortized to earnings over the remaining term of the hedging instrument. For derivative financial instruments that are not designated as a hedge, changes in fair value are recognized on a current basis in earnings. Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in our consolidated statement of cash flows. See Note 7 for further discussion of our derivative financial instruments. Share-based Compensation We recognize share-based compensation expense for all restricted stock awards (“RSAs”) and performance share awards (“PSAs”) (collectively, “stock awards”) based on the estimated fair value of the stock awards on the date of grant. We recognize the expense associated with RSAs and PSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four-year vesting period. See Note 8 for additional information regarding share-based compensation. Pension Plan and Other Post-Retirement Benefits We maintain noncontributory defined benefit pension plans and provide certain post-retirement health care and life insurance benefits to certain eligible employees. We also maintain two unfunded supplemental retirement plans to provide incremental pension payments to certain former employees. We recognize pension and post-retirement benefits expense during the current period in the consolidated statement of operations using certain assumptions, including the expected long-term rate of return on plan assets, interest cost implied by the discount rate, expected health care cost trend rate and the amortization of unrecognized gains and losses. Refer to Note 9 for further details regarding the determination of these assumptions. We recognize the overfunded or underfunded status of our defined benefit pension and post-retirement plans as either an asset or liability in the consolidated balance sheet. We recognize changes in the funded status in the year in which the changes occur in accumulated comprehensive income (loss), net of applicable income taxes, including unrecognized actuarial gains and losses and prior service costs and credits. Income Taxes Our estimates of income taxes and the significant items resulting in the recognition of deferred tax assets and liabilities are disclosed in Note 10 and reflect our assessment of future tax consequences of transactions that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss and tax credit loss carryforwards. We establish valuation allowances when necessary to reduce the carrying amount of deferred income tax assets to the amounts that we believe are more likely than not to be realized. We evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. As we operate in more than one state, changes in our state apportionment factors, based on operational results, may affect our future effective tax rates and the value of our deferred tax assets and liabilities. We record a change in tax rates in our consolidated financial statements in the period of enactment. Income tax consequences that arise in connection with a business combination include identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the appropriate tax basis that will be accepted by the various taxing authorities. We record unrecognized tax benefits as liabilities in accordance with Accounting Standard Codification (“ASC”) 740, Income Taxes, and adjust these liabilities in the appropriate period when our judgment changes as a result of the evaluation of new information. In certain instances, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of interest expense and general and administrative expense, respectively. See Note 10 for further discussion on income taxes. Revenue Recognition We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product to the customer has occurred or services have been rendered, the price to the customer is fixed or determinable and collectability of the sales price is reasonably assured. Services Revenue based on a flat fee, dedicated network access, data communications, digital TV, Internet access service and broadband service, or revenue derived principally from local telephone, is billed in advance and is recognized in subsequent periods when the services have been provided, with the exception of certain governmental accounts which are billed in arrears. Certain of our bundled service packages may include multiple deliverables. We offer a base service bundle which consists of voice services, including a phone line, calling features and long-distance. Customers may choose to add additional services, including high-speed Internet and digital/IP television services, to the base service bundle. Separate units of accounting within the bundled service package include voice services, high-speed Internet and digital/IP television services. Revenue for all services included in our bundled service package is recognized over the same period in which service is provided to the customer. Bundled service package discounts are recognized concurrently with the associated revenue and are allocated to the various services in the bundled service package based on the relative selling price of the services included in each bundle. Usage-based services, such as per-minute long-distance service and access charges billed to other telephone carriers for originating and terminating long-distance calls in our network, are billed in arrears. We recognize revenue from these services in the period in which service is provided to the customer. Revenue related to nonrefundable, upfront service activation and setup fees is deferred and recognized over the estimated customer life. Incremental direct costs of telecommunications service activation are expensed in the period incurred, except when we maintain ownership of wiring installed during the activation process. In such cases, the cost is capitalized and depreciated over the estimated useful life of the asset. Print advertising and publishing revenue is recognized ratably over the life of the related directory, which is generally 12 months. Equipment Revenue is generated from the sale of voice and data communications equipment; design, configuration and installation services related to voice and data equipment; the provision of Cisco maintenance support contracts; and the sale of professional support services for customer voice and data systems. Equipment revenue generated from retail channels is recognized when the equipment is sold. Equipment revenue generated from telecommunications systems and structured cabling projects is recognized when the project is completed. Maintenance services are provided on both a contract and time and material basis and are recognized in the period in which the service is provided. Equipment revenue generated from support services includes “24x7” support of a customer’s voice and data networks. The majority of these contracts are billed on a time and materials basis and revenue is recognized either in the period in which the services are provided or over the term of the contract. Support services also include professional support services, which are typically sold on a time and materials basis, but may be sold as a prepaid block of time, and the revenue is recognized in the period in which the services are provided. Multiple Deliverable Arrangements We often enter into arrangements which include multiple deliverables primarily relating to the sale of communications equipment, associated support contracts and professional services, which include design, configuration and installation consulting. When an equipment sale involves multiple deliverables, revenue is allocated to each respective deliverable if they are separately identifiable. Each separately identified deliverable is considered a separate unit of account. The arrangement consideration is allocated to the identified units of account based on their relative selling price on a stand-alone basis. Cisco equipment, maintenance contracts and professional services each qualify as separate units of accounting. We utilize best estimate of selling price for stand-alone value for our equipment and maintenance contracts, taking into consideration market conditions and entity-specific factors. We evaluate best estimate of selling price by reviewing historical data related to sales of our deliverables. Subsidies and Surcharges Subsidies consist of both federal and state subsidies, which are designed to promote widely available, quality telephone service at affordable prices in rural areas. These revenues are calculated by the administering government agency based on information we provide. Subsidies are recognized in the period in which the service is provided. There is a reasonable possibility that out-of-period subsidy adjustments may be recorded in the future, but they are expected to be immaterial to our results of operations, financial position and cash flow. We collect and remit Federal Universal Service contributions on a gross basis, which resulted in recorded revenue of approximately $12.7 million and $13.2 million during the years ended December 31, 2016 and 2015, respectively. We account for all other ta |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 2. EARNINGS PER SHARE Basic and diluted earnings (loss) per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends during the vesting term. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period. Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive. The potentially dilutive impact of the Company’s restricted stock awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with the proceeds of exercise used to repurchase common stock at the average market price for the period. Any incremental difference between the assumed number of shares issued and repurchased is included in the diluted share computation. The computation of basic and diluted earnings per share attributable to common shareholders computed using the two-class method is as follows: (In thousands, except per share amounts) 2016 2015 2014 Net income (loss) $ $ $ Less: net income attributable to noncontrolling interest Income (loss) attributable to common shareholders before allocation of earnings to participating securities Less: earnings allocated to participating securities — Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ $ $ Weighted-average number of common shares outstanding Net income (loss) per common share attributable to common shareholders - basic and diluted $ $ $ Diluted earnings (loss) per common share attributable to common shareholders for each of the years ended December 31, 2016 and 2015 excludes 0.3 million potential common shares that could be issued under our share-based compensation plan because the inclusion of the potential common shares would have an antidilutive effect. For the year ended December 31, 2014, diluted earnings (loss) per common share excludes 0.4 million potential common shares. |
ACQUISITION AND DISPOSITIONS
ACQUISITION AND DISPOSITIONS | 12 Months Ended |
Dec. 31, 2016 | |
ACQUISITION AND DISPOSITIONS | |
ACQUISITION AND DISPOSITIONS | 3. ACQUISITIONS AND DIVESTITURES Acquisitions FairPoint Communications, Inc. On December 3, 2016, we entered into a definitive agreement and plan of merger with FairPoint to acquire all the issued and outstanding shares of FairPoint in exchange for shares of our common stock. FairPoint is an advanced communications provider to business, wholesale and residential customers within its service territory which spans across 17 states. FairPoint owns and operates a robust fiber-based network with more than 21,000 route miles of fiber, including 17,000 route miles of fiber in northern New England. At the effective time of the merger, each share of common stock, par value of $0.01 per share, of FairPoint issued and outstanding immediately prior to the effective time of the merger will be converted into and become the right to receive 0.7300 shares of common stock, par value $0.01 per share, of Consolidated and cash in lieu of fractional shares, as set forth in the Merger Agreement. Based on the closing price of our common stock as of the date of the Merger Agreement, the total value of the consideration to be exchanged is approximately $585.3 million, exclusive of debt of approximately $917.6 million. In connection with the merger, we secured committed debt financing through a $935.0 million incremental term loan facility, as described in Note 6, that in addition to cash on hand and other sources of liquidity will be used to repay the existing indebtedness of FairPoint and pay the fees and expenses in connection with the merger. The merger is subject to standard closing conditions including the approval of our stockholders and FairPoint’s stockholders, the approval of the listing of additional shares of Consolidated common stock to be issued to FairPoint’s stockholders, required federal and state regulatory approvals and other customary closing conditions. We expect the merger to close by mid-2017. Champaign Telephone Company, Inc. On July 1, 2016, we acquired substantially all of the assets of Champaign Telephone Company, Inc. and its sister company, Big Broadband Services, LLC, a private business communications provider in the Champaign-Urbana, IL area. The aggregate purchase price, including customary working capital adjustments, consisted of cash consideration of $13.4 million, which was paid from our existing cash resources. The preliminary fair value of the acquired assets and liabilities assumed consisted primarily of property, plant and equipment of $6.9 million, intangible assets of $1.0 million, working capital of $0.8 million and goodwill of $4.7 million. Goodwill and other intangible assets are expected to be amortizable and deductible for income tax purposes. We are in the process of finalizing the preliminary purchase price and the valuation of the net assets acquired, most notably, the completion of various tax related matters for the acquisition. Upon completion of the final fair value assessment, the fair values of the net assets acquired may differ from the preliminary assessment. We expect to finalize the remaining tax items during the quarter ended March 31, 2017. Enventis Corporation On October 16, 2014, we completed our merger with Enventis Corporation (“Enventis”) and acquired all the issued and outstanding shares of Enventis in exchange for shares of our common stock. The results of operations of Enventis have been reported in our consolidated financial statements as of the effective date of the acquisition. For the period of October 16, 2014 through December 31, 2014, Enventis contributed operating revenues of $37.6 million and a net loss of $1.4 million, which included $5.7 million in acquisition related costs. The following unaudited pro forma information presents our results of operations for the year ended December 31, 2014 as if the acquisition of Enventis occurred on January 1, 2013. The adjustments to arrive at the pro forma information below included: additional depreciation and amortization expense for the fair value increases to property, plant and equipment and intangible assets acquired; increase in interest expense to reflect the additional debt entered into to finance a portion of the acquisition; and the exclusion of certain acquisition related costs. Shares used to calculate the basic and diluted earnings per share were adjusted to reflect the additional shares of common stock issued to fund a portion of the acquisition price. (Unaudited; in thousands, except per share amounts) 2014 Operating revenues $ Income from operations $ Net income $ Less: net income attributable to noncontrolling interest Net income attributable to common stockholders $ Net income per common share-basic and diluted $ Transaction costs related to the acquisition of Enventis were $11.5 million during the year ended December 31, 2014, which are included in acquisition and other transaction costs in the consolidated statements of operations. These costs are considered to be non-recurring in nature and therefore have been excluded from the pro forma results of operations. The pro forma information does not purport to present the actual results that would have resulted if the acquisition had in fact occurred at the beginning of the fiscal period presented, nor does the information project results for any future period. The pro forma information does not include the impact of any future cost savings or synergies that may be achieved as a result of the acquisition. Divestitures On December 6, 2016, we completed the sale of substantially all of the assets of the Company’s Enterprise Services equipment and IT Services business (“EIS”) to ePlus Technology inc. (“ePlus”) for cash proceeds of $9.2 million net of a customary working capital adjustment. As part of the transaction, we entered into a Co-Marketing Agreement with ePlus, a nationwide systems integrator of technology solutions, to cross-sell both broadband network services and IT services. The strategic partnership will provide our business customers access to a broader suite of IT solutions, and will also provide ePlus customers access to Consolidated’s business network services. During the year ended December 31, 2016, we recognized a gain of $0.6 million on the sale, net of selling costs, which is included in other, net in the consolidated statement of operations. The major classes of assets and liabilities sold consisted of the following: (In thousands) Current assets $ Property, plant and equipment Goodwill Other assets Total assets $ Current liabilities $ Other long-term liabilities Total liabilities $ On May 3, 2016, we entered into a definitive agreement to sell all of the issued and outstanding stock of our non-core, rural ILEC business located in northwest Iowa, Consolidated Communications of Iowa Company (“CCIC”), formerly Heartland Telecommunications Company of Iowa. CCIC provides telecommunications and data services to residential and business customers in 11 rural communities in northwest Iowa and surrounding areas. The sale was completed on September 1, 2016 for total cash proceeds of approximately $21.0 million, net of certain contractual and customary working capital adjustments. The major classes of assets and liabilities sold consisted of the following: (In thousands) Current assets $ Property, plant and equipment Goodwill Total assets $ Current liabilities $ Deferred taxes Other long-term liabilities Total liabilities $ In May 2016, in connection with the expected sale, the carrying value of CCIC was reduced to its estimated fair value and we recognized an impairment loss of $0.6 million during the year ended December 31, 2016. We recognized an additional loss on the sale of $0.3 million during the year ended December 31, 2016, which is included in other, net in the consolidated statement of operations, as a result of changes in estimated working capital. We recognized a taxable gain on the transaction resulting in current income tax expense of $7.2 million during the year ended December 31, 2016 to reflect the tax impact of the divestiture. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2016 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS Our investments are as follows: (In thousands) 2016 2015 Cash surrender value of life insurance policies $ $ Cost method investments: GTE Mobilnet of South Texas Limited Partnership (2.34% interest) Pittsburgh SMSA Limited Partnership (3.60% interest) CoBank, ACB Stock Other Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) Totals $ $ Cost Method We own 2.34% of GTE Mobilnet of South Texas Limited Partnership (the “Mobilnet South Partnership”). The principal activity of the Mobilnet South Partnership is providing cellular service in the Houston, Galveston, and Beaumont, Texas metropolitan areas. We also own 3.60% of Pittsburgh SMSA Limited Partnership (“Pittsburgh SMSA”), which provides cellular service in and around the Pittsburgh metropolitan area. Because of our limited influence over these partnerships, we use the cost method to account for both of these investments. It is not practicable to estimate fair value of these investments. We did not evaluate any of the investments for impairment as no factors indicating impairment existed during the year. In 2016, 2015 and 2014, we received cash distributions from these partnerships totaling $12.9 million, $14.6 million and $14.8 million, respectively. CoBank, ACB (“CoBank”) is a cooperative bank owned by its customers. Annually, CoBank distributes patronage in the form of cash and stock in the cooperative based on the Company’s outstanding loan balance with CoBank, which has traditionally been a significant lender in the Company’s credit facility. The investment in CoBank represents the accumulation of the equity patronage paid by CoBank to the Company. Equity Method We own 20.51% of GTE Mobilnet of Texas RSA #17 Limited Partnership (“RSA #17”), 16.67% of Pennsylvania RSA 6(I) Limited Partnership (“RSA 6(I)”) and 23.67% of Pennsylvania RSA 6(II) Limited Partnership (“RSA 6(II)”). RSA #17 provides cellular service to a limited rural area in Texas. RSA 6(I) and RSA 6(II) provide cellular service in and around our Pennsylvania service territory. Because we have significant influence over the operating and financial policies of these three entities, we account for the investments using the equity method. In 2016, 2015 and 2014, we received cash distributions from these partnerships totaling $19.2 million, $30.7 million and $19.8 million, respectively. The carrying value of the investments exceeds the underlying equity in net assets of the partnerships by $32.8 million. In 2015, we sold our 6.96% interest in Central Valley Independent Network, LLC (“CVIN”), a joint enterprise comprised of affiliates of several independent telephone companies located in central and northern California. CVIN provides network services and oversees a broadband infrastructure project designed to expand and improve the availability of network services to counties in central California. As a result of the sale, we recognized an other-than-temporary impairment loss of $0.8 million during the year ended December 31, 2015 to reduce the investment to its estimated fair value. The impairment charge is included in investment income within other income (expense) in the consolidated statements of operations. We did not receive any distributions from this partnership in 2015 or 2014. The combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships are summarized below: (In thousands) 2016 2015 2014 Total revenues $ $ $ Income from operations Net income before taxes Net income Current assets $ $ $ Non-current assets Current liabilities Non-current liabilities Partnership equity |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE MEASUREMENTS Financial Instruments Our derivative instruments related to interest rate swap agreements are required to be measured at fair value on a recurring basis. The fair values of the interest rate swaps are determined using valuation models and are categorized within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and observable market data of similar instruments. See Note 7 for further discussion regarding our interest rate swap agreements. Our interest rate swap liabilities measured at fair value on a recurring basis at December 31, 2016 and 2015 were as follows: As of December 31, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Long-term interest rate swap assets $ $ - $ $ - Current interest rate swap liabilities - - Long-term interest rate swap liabilities - - Total $ $ - $ $ - As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ $ - $ $ - Long-term interest rate swap liabilities - - Total $ $ - $ $ - We have not elected the fair value option for any of our financial assets or liabilities. The carrying value of other financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities or variable-rate nature of the respective balances. The following table presents the other financial instruments that are not carried at fair value but which require fair value disclosure as of December 31, 2016 and 2015. As of December 31, 2016 As of December 31, 2015 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Investments, equity basis $ n/a $ n/a Investments, at cost $ n/a $ n/a Long-term debt, excluding capital leases $ $ $ $ Cost & Equity Method Investments Our investments at December 31, 2016 and 2015 accounted for under both the equity and cost methods consists primarily of minority positions in various cellular telephone limited partnerships and our investment in CoBank. These investments are recorded using either the equity or cost methods. It is impracticable to determine fair value of these investments. Long-term Debt The fair value of our senior notes was based on quoted market prices, and the fair value of borrowings under our credit agreement was determined using current market rates for similar types of borrowing arrangements. We have categorized the long-term debt as Level 2 within the fair value hierarchy. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt outstanding, presented net of unamortized discounts, consisted of the following as of December 31, 2016 and 2015: (In thousands) 2016 2015 Senior secured credit facility: Term loan 5, net of discount of $4,662 at December 31, 2016 $ $ - Term loan 4, net of discount of $3,340 at December 31, 2015 - Revolving loan - 6.50% Senior notes due 2022, net of discount of $4,302 and $4,893 at December 31, 2016 and 2015, respectively Capital leases Less: current portion of long-term debt and capital leases Less: deferred debt issuance costs Total long-term debt $ $ Credit Agreement In October 2016, the Company, through certain of its wholly owned subsidiaries, entered into a Third Amended and Restated Credit Agreement with various financial institutions (the “Credit Agreement”) to replace the Company’s previously amended credit agreement. Under the terms of the new Credit Agreement, the Company issued initial term loans in the aggregate amount of $900.0 million (“Term 5”) and used the proceeds in part to repay the outstanding term loans from the previous agreement in its entirety. The Company also obtained a revolving loan facility of $110.0 million to replace the existing $75.0 million revolving credit facility scheduled to mature in December 2018. The Credit Agreement also includes an incremental term loan facility which provides the ability to request to borrow up to $300.0 million of incremental term loans subject to certain terms and conditions and borrow more than $300.0 million, provided that its senior secured leverage ratio would not exceed 3.00:1.00. Borrowings under the senior secured credit facility are secured by substantially all of the assets of the Company and its subsidiaries, with the exception of Consolidated Communications of Illinois Company (formerly Illinois Consolidated Telephone Company) and our majority-owned subsidiary, East Texas Fiber Line Incorporated. The Term 5 loan was issued in an original aggregate principal amount of $900.0 million with a maturity date of October 5, 2023, but is subject to earlier maturity on March 31, 2022 if the Company’s unsecured Senior Notes due in October 2022 are repaid in full or redeemed in full on or prior to March 31, 2022. The Term 5 loan contains an original issuance discount of 0.25%, which is being amortized over the term of the loan. The Term 5 loan requires quarterly principal payments of $2.25 million, which commenced December 31, 2016, and has an interest rate of 3.00% plus the London Interbank Offered Rate (“LIBOR”) subject to a 1.00% LIBOR floor. The revolving credit facility has a maturity date of October 5, 2021 and an applicable margin (at our election) of between 2.50% and 3.25% for LIBOR-based borrowings or between 1.50% and 2.25% for alternate base rate borrowings, depending on our leverage ratio. Based on our leverage ratio at December 31, 2016, the borrowing margin for the next three month period ending March 31, 2017 will be at a weighted-average margin of 3.00% for a LIBOR-based loan or 2.00% for an alternate base rate loan. The applicable borrowing margin for the revolving credit facility is adjusted quarterly to reflect the leverage ratio from the prior quarter-end. As of December 31, 2016, there were no outstanding borrowings under the revolving credit facility. At December 31 2015, borrowings of $10.0 million were outstanding under the revolving credit facility. A stand-by letter of credit of $1.6 million, issued in connection with the Company’s insurance coverage, was outstanding under our revolving credit facility as of December 31, 2016. The stand-by letter of credit is renewable annually and reduces the borrowing availability under the revolving credit facility. As of December 31, 2016, $108.4 million was available for borrowing under the revolving credit facility. The weighted-average interest rate on outstanding borrowings under our credit facility was 4.00% and 4.24% at December 31, 2016 and 2015, respectively. Interest is payable at least quarterly. Financing Costs In connection with entering into the restated credit agreement in October 2016, fees of $3.9 million were capitalized as deferred debt issuance costs. These capitalized costs are amortized over the term of the debt and are included as a component of interest expense in the consolidated statements of operations. We also incurred a loss on the extinguishment of debt of $6.6 million during the year ended December 31, 2016 related to the repayment of the outstanding term loan under the previous credit agreement which was scheduled to mature in December 2020. Credit Agreement Covenant Compliance The credit agreement contains various provisions and covenants, including, among other items, restrictions on the ability to pay dividends, incur additional indebtedness, and issue capital stock. We have agreed to maintain certain financial ratios, including interest coverage and total net leverage ratios, all as defined in the credit agreement. As of December 31, 2016, we were in compliance with the credit agreement covenants. In general, our credit agreement restricts our ability to pay dividends to the amount of our Available Cash as defined in our credit agreement. As of December 31, 2016, and including the $19.6 million dividend declared in October 2016 and paid on February 1, 2017, we had $269.3 million in dividend availability under the credit facility covenant. Under our credit agreement, if our total net leverage ratio, as defined in the credit agreement, as of the end of any fiscal quarter, is greater than 5.10:1.00, we will be required to suspend dividends on our common stock unless otherwise permitted by an exception for dividends that may be paid from the portion of proceeds of any sale of equity not used to fund acquisitions, or make other investments. During any dividend suspension period, we will be required to repay debt in an amount equal to 50.0% of any increase in Available Cash, among other things. In addition, we will not be permitted to pay dividends if an event of default under the credit agreement has occurred and is continuing. Among other things, it will be an event of default if our total net leverage ratio and interest coverage ratio as of the end of any fiscal quarter is greater than 5.25:1.00 and less than 2.25:1.00, respectively. As of December 31, 2016, our total net leverage ratio under the credit agreement was 4.49:1.00, and our interest coverage ratio was 3.97:1.00. Committed Financing In connection with the execution of the Merger Agreement, in December 2016, the Company entered into two amendments to its Credit Agreement to secure committed financing related to the acquisition of FairPoint. On December 14, 2016, we entered into Amendment No. 1 to the Credit Agreement, to increase the senior secured incremental term loan credit facility under the Credit Agreement from $865.0 million to an aggregate amount of $935.0 million. Fees of $2.5 million paid to the lenders in connection with Amendment No. 1 are reflected as an additional discount on the Term 5 loan and will be amortized over the term of the debt as interest expense. On December 21, 2016, the Company entered into Amendment No. 2 to the Credit Agreement in which a syndicate of lenders has agreed to provide an incremental term loan in an aggregate principal amount of up to $935.0 million under the Credit Agreement (the “Incremental Term Loan”), subject to the satisfaction of certain conditions. The proceeds of the Incremental Term Loan may be used, in part, to repay and redeem certain existing indebtedness of FairPoint and to pay certain fees and expenses in connection with the Merger and the related financing. The terms, conditions and covenants of the Incremental Term Loan are materially consistent with those in the existing Credit Agreement, as described above. The Incremental Term Loan included an original issue discount of 0.50% and has an interest rate of 3.00% plus LIBOR based on the one-month adjusted rate subject to a 1.00% LIBOR floor. Ticking fees will begin accruing on the Incremental Term Loan commitments on January 15, 2017 at the rate equal to the interest rate of the Incremental Term Loan. Senior Notes 6.50% Senior Notes due 2022 In September 2014, we completed an offering of $200.0 million aggregate principal amount of 6.50% Senior Notes due in October 2022 (the “Existing Notes”). The Existing Notes were priced at par, which resulted in total gross proceeds of $200.0 million. On June 8, 2015, we completed an additional offering of $300.0 million in aggregate principal amount of 6.50% Senior Notes due 2022 (the “New Notes” and together with the Existing Notes, the “Senior Notes”). The New Notes were issued as additional notes under the same indenture pursuant to which the Existing Notes were previously issued on in September 2014. The New Notes were priced at 98.26% of par with a yield to maturity of 6.80% and resulted in total gross proceeds of approximately $294.8 million, excluding accrued interest. The original issuance discount of $5.2 million and deferred debt issuance costs of $8.3 million incurred in connection with the issuance of the Senior Notes are being amortized using the effective interest method over the term of the notes. The Senior Notes mature on October 1, 2022 and interest is payable semi-annually on April 1 and October 1 of each year. Consolidated Communications, Inc. (“CCI”) is the primary obligor under the Senior Notes, and we and certain of our wholly‑owned subsidiaries have fully and unconditionally guaranteed the Senior Notes. The Senior Notes are senior unsecured obligations of the Company. The net proceeds from the issuance of the Senior Notes, together with cash on hand, were used, in part, to finance the acquisition of Enventis in 2014 including related fees and expenses, to repay the existing indebtedness of Enventis and to redeem our then outstanding $300.0 million aggregate principal amount of 10.875% Senior Notes due 2020 (the “2020 Notes”). In December 2014, we paid $84.1 million to redeem $72.8 million of the original aggregate principal amount of the 2020 Notes and recognized a loss of $13.8 million on the partial extinguishment of debt during the year ended December 31, 2014. In June 2015, we redeemed the remaining $227.2 million of the original aggregate principal amount of the 2020 Notes. In connection with the redemption of the 2020 Notes, we paid $261.9 million and recognized a loss on extinguishment of debt of $41.2 million during the year ended December 31, 2015. On October 16, 2015, we completed an exchange offer to register all of the Senior Notes under the Securities Act of 1933 (“Securities Act”). The terms of the registered Senior Notes are substantially identical to those of the Senior Notes prior to the exchange, except that the Senior Notes are now registered under the Securities Act and the transfer restrictions and registration rights previously applicable to the Senior Notes no longer apply to the registered Senior Notes. The exchange offer did not impact the aggregate principal amount or the remaining terms of the Senior Notes outstanding. Senior Notes Covenant Compliance Subject to certain exceptions and qualifications, the indenture governing the Senior Notes contains customary covenants that, among other things, limits CCI’s and its restricted subsidiaries’ ability to: incur additional debt or issue certain preferred stock; pay dividends or make other distributions on capital stock or prepay subordinated indebtedness; purchase or redeem any equity interests; make investments; create liens; sell assets; enter into agreements that restrict dividends or other payments by restricted subsidiaries; consolidate, merge or transfer all or substantially all of its assets; engage in transactions with its affiliates; or enter into any sale and leaseback transactions. The indenture also contains customary events of default. Among other matters, the Senior Notes indenture provides that CCI may not pay dividends or make other restricted payments, as defined in the indenture, if its total net leverage ratio is 4.75:1.00 or greater. This ratio is calculated differently than the comparable ratio under the Credit Agreement; among other differences, it takes into account, on a pro forma basis, synergies expected to be achieved as a result of certain acquisitions but not yet reflected in historical results. At December 31, 2016, this ratio was 4.53:1.00. If this ratio is met, dividends and other restricted payments may be made from cumulative consolidated cash flow since April 1, 2012, less 1.75 times fixed charges, less dividends and other restricted payments made since May 30, 2012. Dividends may be paid and other restricted payments may also be made from a “basket” of $50.0 million, none of which has been used to date, and pursuant to other exceptions identified in the indenture. Since dividends of $331.6 million have been paid since May 30, 2012, including the quarterly dividend declared in October 2016 and paid on February 1, 2017, there was $451.1 million of the $782.6 million of cumulative consolidated cash flow since May 30, 2012 available to pay dividends at December 31, 2016. At December 31, 2016, the Company was in compliance with all terms, conditions and covenants under the indenture governing the 2022 Notes. Future Maturities of Debt At December 31, 2016, the aggregate maturities of our long-term debt excluding capital leases were as follows: (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total maturities Less: Unamortized discount $ See Note 11 regarding the future maturities of our obligations for capital leases. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 7. DERIVATIVE FINANCIAL INSTRUMENTS We may utilize interest rate swap agreements to mitigate risk associated with fluctuations in interest rates related to our variable rate debt. Derivative financial instruments are recorded at fair value in our consolidated balance sheet. The following interest rate swaps were outstanding at December 31, 2016: Notional (In thousands) Amount 2016 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other assets $ Fixed to 1-month floating LIBOR (with floor) $ Accrued expense Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities Total Fair Values $ The following interest rate swaps were outstanding at December 31, 2015: Notional (In thousands) Amount 2015 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities $ De-designated Hedges: Fixed to 1-month floating LIBOR $ Accrued expense Fixed to 1-month floating LIBOR (with floor) $ Accrued expense Total Fair Values $ The counterparties to our various swaps are highly rated financial institutions. None of the swap agreements provide for either us or the counterparties to post collateral nor do the agreements include any covenants related to the financial condition of Consolidated or the counterparties. The swaps of any counterparty that is a lender, as defined in our credit facility, are secured along with the other creditors under the credit facility. Each of the swap agreements provides that in the event of a bankruptcy filing by either Consolidated or the counterparty, any amounts owed between the two parties would be offset in order to determine the net amount due between parties. This provision allows us to partially mitigate the risk of non-performance by a counterparty. For interest rate swaps designated as a cash flow hedge, the effective portion of the unrealized gain or loss in fair value is recorded in AOCI and reclassified into earnings when the underlying hedged item impacts earnings. The ineffective portion of the change in fair value of the cash flow hedge is recognized immediately in earnings. For derivative financial instruments that are not designated as a hedge, including those that have been de-designated changes in fair value are recognized in earnings as interest expense. In conjunction with the refinancing of our credit agreement in October 2016 as discussed in Note 6, the interest rate swaps were simultaneously de-designated and re-designated as cash flow hedges of future anticipated interest payments associated with our variable rate debt. The balance of the unrealized loss included in AOCI as of the date the swaps were de-designated will be amortized to earnings over the remaining term of the agreements. The interest rate swap agreements mature on various dates through September 2019. In 2013, interest rate swaps previously designated as cash flow hedges were de-designated as a result of amendments to our credit agreement. These interest rate swap agreements matured on various dates through September 2016. Prior to de-designation, the effective portion of the change in fair value of the interest rate swaps were recognized in AOCI. The balance of the unrealized loss included in AOCI as of the date the swaps were de-designated was amortized to earnings over the remaining term of the swap agreements. Changes in fair value of the de-designated swaps were immediately recognized in earnings as interest expense. During the years ended December 31, 2016, 2015 and 2014, gains of $0.2 million, $0.8 million and $1.6 million, respectively, were recognized as a reduction to interest expense for the change in fair value of the de-designated swaps. At December 31, 2016 and 2015, the pre-tax deferred losses related to our interest rate swap agreements included in AOCI were $0.2 million and $1.1 million, respectively. The estimated amount of losses included in AOCI as of December 31, 2016 that will be recognized in earnings in the next twelve months is approximately $2.1 million. The following table presents the effect of interest rate derivatives designated as cash flow hedges on AOCI and on the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014: (In thousands) 2016 2015 2014 Unrealized loss recognized in AOCI, pretax $ $ $ Deferred losses reclassified from AOCI to interest expense $ $ $ Gain recognized in interest expense from ineffectiveness $ $ — $ — |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
EQUITY | |
EQUITY | 8. EQUITY Share-based Compensation Our Board of Directors may grant share-based awards from our shareholder approved Amended and Restated Consolidated Communications Holdings, Inc. 2005 Long-term Incentive Plan (the “Plan”). The Plan permits the issuance of awards in the form of stock options, stock appreciation rights, stock grants, stock unit grants and other equity-based awards to eligible directors and employees at the discretion of the Compensation Committee of the Board of Directors. On May 4, 2015, the shareholders approved an amendment to the Plan to increase by 1,000,000 the number of shares of our common stock authorized for issuance under the Plan. Approximately 2,650,000 shares of our common stock are authorized for issuance under the Plan, provided that no more than 300,000 shares may be granted in the form of stock options or stock appreciation rights to any eligible employee or director in any calendar year. Unless terminated sooner, the Plan will continue to be in effect through May 5, 2019. We measure the fair value of RSAs based on the market price of the underlying common stock on the date of grant. We recognize the expense associated with RSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four year vesting period. We implemented an ongoing performance-based incentive program under the Plan. The performance-based incentive program provides for annual grants of PSAs. PSAs are restricted stock that are issued, to the extent earned, at the end of each performance cycle. Under the performance-based incentive program, each participant is given a target award expressed as a number of shares, with a payout opportunity ranging from 0% to 120% of the target, depending on performance relative to predetermined goals. An estimate of the number of PSAs that are expected to vest is made, and the fair value of the PSAs is expensed utilizing the fair value on the date of grant over the requisite service period. The following table summarizes grants of RSAs and PSAs under the Plan during the years ended December 31, 2016, 2015 and 2014: Year Ended December 31, Grant Date Grant Date Grant Date 2016 Fair Value 2015 Fair Value 2014 Fair Value RSAs Granted $ $ $ PSAs Granted $ $ $ Total The following table summarizes the RSA and PSA activity during the year ended December 31, 2016: RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - January 1, 2016 $ $ Shares granted $ $ Shares vested $ $ Shares forfeited, cancelled or retired $ $ Non-vested shares outstanding - December 31, 2016 $ $ The total fair value of the RSAs and PSAs that vested during the years ended December 31, 2016, 2015 and 2014 was $3.4 million, $3.9 million and $3.5 million, respectively. Share-based Compensation Expense The following table summarizes total compensation costs recognized for share-based payments during the years ended December 31, 2016, 2015 and 2014: Year Ended December 31, (In thousands) 2016 2015 2014 Restricted stock $ $ $ Performance shares Total $ $ $ Income tax benefits related to share-based compensation of approximately $1.2 million, $1.2 million and $1.3 million were recorded for the years ended December 31, 2016, 2015 and 2014, respectively. Share-based compensation expense is included in “selling, general and administrative expenses” in the accompanying consolidated statements of operations. As of December 31, 2016, total unrecognized compensation costs related to non-vested RSAs and PSAs was $2.7 million and will be recognized over a weighted-average period of approximately 1.6 years. Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component during 2016 and 2015: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2014 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income Net current period other comprehensive income Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive loss Net current period other comprehensive income Balance at December 31, 2016 $ $ $ The following table summarizes reclassifications from accumulated other comprehensive loss during 2016 and 2015: Amount Reclassified from AOCI Year Ended December 31, Affected Line Item in the (In thousands) 2016 2015 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ $ (a) Actuarial loss (a) Total before tax Tax benefit $ $ Net of tax Loss on cash flow hedges: Interest rate derivatives $ $ Interest expense Tax benefit $ $ Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and post-retirement benefit plans. See Note 9 for additional details. |
PENSION PLAN AND OTHER POST-RET
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2016 | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 9. PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS Defined Benefit Plans We sponsor a qualified defined benefit pension plan (“Retirement Plan”) that is non-contributory covering certain of our hourly employees under collective bargaining agreements who fulfill minimum age and service requirements. Certain salaried employees are also covered by the Retirement Plan, although these benefits have previously been frozen. The Retirement Plan is closed to all new entrants. Benefits for eligible participants under collective bargaining agreements are accrued based on a cash balance benefit plan. We also have two non-qualified supplemental retirement plans (“Supplemental Plans”). The Supplemental Plans provide supplemental retirement benefits to certain former employees by providing for incremental pension payments to partially offset the reduction of the amount that would have been payable under the qualified defined benefit pension plans if it were not for limitations imposed by federal income tax regulations. The Supplemental Plans have previously been frozen so that no person is eligible to become a new participant. These plans are unfunded and have no assets. The benefits paid under the Supplemental Plans are paid from the general operating funds of the Company. The following tables summarize the change in benefit obligation, plan assets and funded status of the Retirement Plan and Supplemental Plans (collectively the “Pension Plans”) as of December 31, 2016 and 2015. (In thousands) 2016 2015 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Actuarial loss (gain) Benefits paid Benefit obligation at the end of the year $ $ (In thousands) 2016 2015 Change in plan assets Fair value of plan assets at the beginning of the year $ $ Employer contributions Actual return on plan assets Benefits paid Fair value of plan assets at the end of the year $ $ Funded status at year end $ $ Amounts recognized in the consolidated balance sheets at December 31, 2016 and 2015 consisted of: ( In thousands) 2016 2015 Current liabilities $ $ Long-term liabilities $ $ Amounts recognized in accumulated other comprehensive loss for the years ended December 31, 2016 and 2015 consisted of: (In thousands) 2016 2015 Unamortized prior service credit $ $ Unamortized net actuarial loss $ $ The following table summarizes the components of net periodic pension cost recognized in the consolidated statements of operations for the plans for the years ended December 31, 2016, 2015 and 2014: (In thousands) 2016 2015 2014 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of: Net actuarial loss Prior service credit Net periodic pension cost (benefit) $ $ $ The following table summarizes other changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects, during 2016 and 2015. (In thousands) 2016 2015 Actuarial loss, net $ $ Recognized actuarial loss Recognized prior service credit Total amount recognized in other comprehensive loss, before tax effects $ $ The estimated net actuarial loss and net prior service credit for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss in net periodic benefit cost in 2017 are $6.8 million and $(0.5) million, respectively. The assumptions used to determine the projected benefit obligations and net periodic benefit cost for the years ended December 31, 2016, 2015 and 2014 were as follows: Discount rate - net periodic benefit cost % % % Discount rate - benefit obligation % % % Expected long-term rate of return on plan assets % % % Rate of compensation/salary increase % % % Other Non-qualified Deferred Compensation Agreements We also are liable for deferred compensation agreements with former members of the board of directors and certain other former employees of acquired companies. Depending on the plan, benefits are payable in monthly or annual installments for a period of time based on the terms of the agreement which range from five years up to the life of the participant or to the beneficiary upon death of the participant and may begin as early as age 55. Participants accrue no new benefits as these plans had previously been frozen. Payments related to the deferred compensation agreements totaled approximately $0.2 million and $0.3 million for the years ended December 31, 2016 and 2015, respectively. The net present value of the remaining obligations was approximately $2.0 million and $2.1 million at December 31, 2016 and 2015, respectively, and is included in pension and post-retirement benefit obligations in the accompanying balance sheets. We also maintain 25 life insurance policies on certain of the participating former directors and employees. We recognized $0.2 million in life insurance proceeds as other non-operating income in 2016. We did not recognize any insurance proceeds in 2015. The excess of the cash surrender value of the remaining life insurance policies over the notes payable balances related to these policies is determined by an independent consultant, and totaled $2.2 million and $2.1 million at December 31, 2016 and 2015, respectively. These amounts are included in investments in the accompanying consolidated balance sheets. Cash principal payments for the policies and any proceeds from the policies are classified as operating activities in the consolidated statements of cash flows. The aggregate death benefit payment payable under these policies totaled $6.8 million and $7.0 million as of December 31, 2016 and 2015, respectively. Post-retirement Benefit Obligations We sponsor various healthcare and life insurance plans (“Post-retirement Plans”) that provide post-retirement medical and life insurance benefits to certain groups of retired employees. Certain plans have previously been frozen so that no person is eligible to become a new participant. Retirees share in the cost of healthcare benefits, making contributions that are adjusted periodically—either based upon collective bargaining agreements or because total costs of the program have changed. Covered expenses for retiree health benefits are paid as they are incurred. Post-retirement life insurance benefits are fully insured. A majority of the healthcare plans are unfunded and have no assets, and benefits are paid from the general operating funds of the Company. However, a plan acquired in the purchase of another company is funded by assets that are separately designated within the Retirement Plan for the sole purpose of providing payments of the retiree medical benefits for this specific plan. The following tables summarize the change in benefit obligation, plan assets and funded status of the post-retirement benefit obligations as of December 31, 2016 and 2015. (In thousands) 2016 2015 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Plan participant contributions Actuarial loss (gain) Benefits paid Benefit obligation at the end of the year $ $ (In thousands) 2016 2015 Change in plan assets Fair value of plan assets at the beginning of the year $ $ Employer contributions Plan participant’s contributions Actual return on plan assets Benefits paid Fair value of plan assets at the end of the year $ $ Funded status at year end $ $ Amounts recognized in the consolidated balance sheets at December 31, 2016 and 2015 consist of: (In thousands) 2016 2015 Current liabilities $ $ Long-term liabilities $ $ Amounts recognized in accumulated other comprehensive loss for the years ended December 31, 2016 and 2015 consist of: (In thousands) 2016 2015 Unamortized prior service credit $ $ Unamortized net actuarial loss (gain) $ $ The following table summarizes the components of the net periodic costs for post-retirement benefits for the years ended December 31, 2016, 2015 and 2014: (In thousands) 2016 2015 2014 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of: Net actuarial gain — Prior service credit Net periodic postretirement benefit cost $ $ $ The following table summarizes other changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects, during 2016 and 2015: (In thousands) 2016 2015 Actuarial loss (gain), net $ $ Recognized actuarial gain — Recognized prior service credit Total amount recognized in other comprehensive loss, before tax effects $ $ The estimated net prior service credit that will be amortized from accumulated other comprehensive loss to net periodic postretirement cost in 2017 is approximately $0.5 million. In 2017, there is not expected to be any amortization of the unamortized net actuarial loss in net periodic postretirement cost. The discount rate assumptions utilized for the years ended December 31 were as follows: 2016 2015 2014 Net periodic benefit cost % % % Benefit obligation % % % For purposes of determining the cost and obligation for pre-Medicare post-retirement medical benefits, a 7.50% annual rate of increase in the per capita cost of covered benefits (i.e., healthcare trend rate) was assumed for the plan in 2016, declining to a rate of 5.00% in 2022. Assumed healthcare cost trend rates have a significant effect on the amounts reported for healthcare plans. A one percent change in the assumed healthcare cost trend rate would have had the following effects: (In thousands) 1% Increase 1% Decrease Effect on total of service and interest cost $ $ Effect on postretirement benefit obligation $ $ Plan Assets Our investment strategy is designed to provide a stable environment to earn a rate of return over time to satisfy the benefit obligations and minimize the reliance on contributions as a source of benefit security. The objectives are based on a long-term (5 to 15 year) investment horizon, so that interim fluctuations should be viewed with appropriate perspective. The assets of the fund are to be invested to achieve the greatest return for the pension plans consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by managed index funds, weighted in the proportions outlined by the asset class exposures identified in the pension plan’s strategic allocation. We update our long-term, strategic asset allocations every few years to ensure they are in line with our fund objectives. The target allocation of the Pension Plan assets is approximately 60% in equities with the remainder in fixed income funds and cash equivalents. Currently, we believe that there are no significant concentrations of risk associated with the pension plan assets. The following is a description of the valuation methodologies for assets measured at fair value utilizing the fair value hierarchy discussed in Note 1, which prioritizes the inputs used in the valuation methodologies in measuring fair value. The fair value measurements used to value our plan assets as of December 31, 2016 were generated by using market transactions involving identical or comparable assets. There were no changes in the valuation techniques used during 2016. In 2016, we retrospectively adopted ASU 2015-07, as discussed in Note 1, and as a result, we have removed investments that are measured using NAV per share as a practical expedient from the fair value hierarchy and restated prior period amounts accordingly. Common and Preferred Stocks: Includes domestic and international common and preferred stocks and are valued at the closing price as of the measurement date as reported on the active market on which the individual securities are traded. Mutual Funds: Valued at the daily closing NAV based on the closing price reported on the active market on which the funds are traded. U.S. Treasury and Government Agency Securities: Valued at the closing price reported on the active market on which the individual securities are traded (Level 1). Government issued mortgage-backed securities are valued based on external pricing indices ( Level 2). Corporate and Municipal Bonds: Valued based on yields currently available on comparable securities of issuers with similar credit ratings. Mortgage/Asset-backed Securities: Valued based on market prices from external pricing indices based on recent market activity. Common Collective Trusts and Commingled Funds: Units in the fund are valued based on the NAV of the funds, which is based on the fair value of the underlying investments held by the fund less its liabilities as reported by the issuer of the fund. The NAV per share is used as a practical expedient to estimate fair value. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported net asset value. These investments have no unfunded commitments, are redeemable daily or monthly and have redemption notice periods of up to 10 days. The fair values of our assets for our defined benefit pension plans at December 31, 2016 and 2015, by asset category were as follows: As of December 31, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: Stocks: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Other liabilities (3) Net plan assets $ As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: Stocks: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Other liabilities (3) Net plan assets $ (1) Certain investments that are measured at fair value using the NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include an investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper and U.S. Treasury bills with maturities less than one year. (3) Net amount due for securities purchased and sold. The fair values of our assets for our post-retirement benefit plans at December 31, 2016 and 2015 were as follows: As of December 31, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Benefit payments payable Other liabilities (3) Net plan assets $ As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Benefit payments payable Other liabilities (3) Net plan assets $ (1) Certain investments that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper and U.S. Treasury bills with maturities less than one year. (3) Net amount due for securities purchased and sold. Cash Flows Contributions Our funding policy is to contribute annually an actuarially determined amount necessary to meet the minimum funding requirements as set forth in employee benefit and tax laws. We expect to contribute approximately $2.9 million to our pension plans and $3.9 million to our other post-retirement plans in 2017. Estimated Future Benefit Payments As of December 31, 2016, benefit payments expected to be paid over the next ten years are outlined in the following table: Other Pension Post-retirement (In thousands) Plans Plans 2017 $ $ 2018 2019 2020 2021 2022 - 2026 Defined Contribution Plans We offer defined contribution 401(k) plans to substantially all of our employees. Contributions made under the defined contribution plans include a match, at the Company’s discretion, of employee contributions to the plans. We recognized expense with respect to these plans of $6.5 million, $6.9 million and $5.3 million in 2016, 2015 and 2014, respectively. The increase in 2015 is attributable to the acquisition of Enventis which accounted for $1.8 million of the total expense. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES Income tax expense (benefit) consists of the following components: For the Year Ended (In thousands) 2016 2015 2014 Current: Federal $ $ $ State Total current expense (benefit) Deferred: Federal State Total deferred expense Total income tax expense $ $ $ The following is a reconciliation of the federal statutory tax rate to the effective tax rate for the years ended December 31, 2016, 2015 and 2014: For the Year Ended (In percentages) 2016 2015 2014 Statutory federal income tax rate % % % State income taxes, net of federal benefit Transaction costs - - Other permanent differences Change in uncertain tax positions - - Change in deferred tax rate Valuation allowance Provision to return - Sale of stock in subsidiary - - Non deductible goodwill - - Other % % % Deferred Taxes In November 2015, the FASB issued the Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 requires that all deferred tax liabilities and tax assets, and any related valuation allowance, be classified as non-current in a classified balance sheet. The classification change simplifies the Company’s process as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. ASU 2015-17 is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted, and may be applied either prospectively or retrospectively. We early adopted this guidance prospectively as of December 31, 2015, and as a result, we have classified all net deferred tax liabilities as non-current in the consolidated balance sheet at December 31, 2016 and 2015. The components of the net deferred tax liability are as follows: Year Ended December 31, (In thousands) 2016 2015 Non-current deferred tax assets: Reserve for uncollectible accounts $ $ Accrued vacation pay deducted when paid Accrued expenses and deferred revenue Net operating loss carryforwards Pension and postretirement obligations Share-based compensation Derivative instruments Financing costs Tax credit carryforwards Other Valuation allowance Net non-current deferred tax assets Non-current deferred tax liabilities: Goodwill and other intangibles Basis in investment Partnership investments Property, plant and equipment Net non-current deferred taxes $ $ Deferred income taxes are provided for the temporary differences between assets and liabilities recognized for financial reporting purposes and assets and liabilities recognized for tax purposes. The ultimate realization of deferred tax assets depends upon taxable income during the future periods in which those temporary differences become deductible. To determine whether deferred tax assets can be realized, management assesses whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, taking into consideration the scheduled reversal of deferred tax liabilities, projected future taxable income and tax-planning strategies. Based upon historical taxable income, taxable temporary differences, available and prudent tax planning strategies and projections for future pre-tax book income over the periods that the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these temporary differences. However, management may reduce the amount of deferred tax assets it considers realizable in the near term if estimates of future taxable income during the carryforward period are reduced. Estimates of future taxable income are based on the estimated recognition of taxable temporary differences, available and prudent tax planning strategies and projections of future pre-tax book income. The amount of estimated future taxable income is expected to allow for the full utilization of the net operating loss (“NOL”) carryforward, partial utilization of the state NOL carryforwards and partial utilization of the state credit carryforwards, as described below. Consolidated and its wholly owned subsidiaries, which file a consolidated federal income tax return, estimates it has available federal NOL carryforwards as of December 31, 2016 of $20.7 million and related deferred tax assets of $7.2 million. The amount of federal NOL carryforwards and related deferred tax assets for which a benefit would be recorded in additional paid-in capital (“APIC”) when realized is $5.8 million and $2.0 million, respectively. The federal NOL carryforwards expire in 2035. ETFL, a nonconsolidated subsidiary for federal income tax return purposes, estimates it has available NOL carryforwards as of December 31, 2016 of $1.6 million and related deferred tax assets of $0.6 million. ETFL’s federal NOL carryforwards expire from 2021 to 2024. We estimate that we have available state NOL carryforwards as of December 31, 2016 of $154.9 million and related deferred tax assets of $7.5 million. The amount of state NOL carryforwards and related deferred tax assets for which a benefit would be recorded in APIC when realized is $9.4 million and less than $0.2 million, respectively. The state NOL carryforwards expire from 2017 to 2035. Management believes that it is more likely than not that we will not be able to realize state NOL carryforwards of $11.1 million and related deferred tax asset of $0.5 million and have placed a valuation allowance on this amount. The related NOL carryforwards expire from 2017 to 2035. If or when recognized, the tax benefits related to any reversal of the valuation allowance will be accounted for as a reduction of income tax expense. We estimate that we have available federal alternative minimum tax (“AMT”) credit carryforwards as of December 31, 2016 of $2.2 million and related deferred tax assets of $2.2 million. The AMT credits are available to offset future tax liabilities only to the extent that the Company has regular tax liabilities in excess of AMT tax liabilities. The federal AMT credit carryforward does not expire. We estimate that we have available state tax credit carryforwards as of December 31, 2016 of $5.0 million and related deferred tax assets of $3.3 million. The state tax credit carryforwards are limited annually and expire from 2017 to 2027. Management believes that it is more likely than not that we will not be able to realize state tax carryforwards of $2.0 million and related deferred tax asset of $1.3 million and has placed a valuation allowance on this amount. The related state tax credit carryforwards expires from 2017 to 2021. If or when recognized, the tax benefits related to any reversal of the valuation allowance will be accounted for as a reduction of income tax expense. Unrecognized Tax Benefits Under the accounting guidance applicable to uncertainty in income taxes, we have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns as well as all open tax years in these jurisdictions. This accounting guidance clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements; prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return; and provides guidance on description, classification, interest and penalties, accounting in interim periods, disclosure and transition. Our unrecognized tax benefits as of December 31, 2016 and 2015 were $0.1 million. The net amount of unrecognized benefits that, if recognized, would result in an impact to the effective rate is less than $0.1 million. Our practice is to recognize interest and penalties related to income tax matters in interest expense and general and administrative expense, respectively. During 2016 and 2015, we did not have a material liability for interest or penalties and had no material interest or penalty expense. The periods subject to examination for our federal return are years 2013 through 2015. The periods subject to examination for our state returns are years 2012 through 2015. We are not currently under examination by federal or state taxing authorities. We do not expect that the total unrecognized tax benefits and related accrued interest will significantly change due to the settlement of audits or the expiration of statute of limitations in the next twelve months. There were no material changes to these amounts during 2016 and there were no material effects on the Company’s effective tax rate. The following is a reconciliation of the unrecognized tax benefits for the years ended December 31, 2016 and 2015: Liability for Unrecognized Tax Benefits (In thousands) 2016 2015 Balance at January 1 $ $ Additions for tax positions in the current year - Reduction for tax positions of prior years - Reduction for lapse of state statute of limitations Balance at December 31 $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES We have certain other obligations for various contractual agreements to secure future rights to goods and services to be used in the normal course of our operations. These include purchase commitments for planned capital expenditures, agreements securing dedicated access and transport services, and service and support agreements. Additionally, we have procured transport resale arrangements with several interexchange carriers for our long distance services. As of December 31, 2016, future minimum contractual obligations, including capital and operating leases, and the estimated timing and effect the obligations will have on our liquidity and cash flows in future periods are as follows: Minimum Annual Contractual Obligations (in thousands) 2017 2018 2019 2020 2021 Thereafter Total Operating lease agreements $ $ $ $ $ $ $ Capital lease agreements — Capital expenditures (1) — — — — — Service and support agreements (2) Transport and data connectivity Total $ $ $ $ $ $ $ (1) We have binding commitments with numerous suppliers for future capital expenditures. (2) We have entered into service and maintenance agreements to support various computer hardware and software applications and certain equipment. Leases Operating We have entered into various non-cancelable operating leases with terms greater than one year for certain facilities and equipment used in our operations. The facility leases generally require us to pay operating costs, including property taxes, insurance and maintenance, and certain of them contain scheduled rent increases and renewal options. Leasehold improvements are amortized over their estimated useful lives or lease period, whichever is shorter. We recognize rent expense on a straight-line basis over the term of each lease. We incurred rent expense of $12.7 million, $12.1 million and $7.5 million for the years ended December 31, 2016, 2015, and 2014, respectively. Capital Leases We lease certain facilities and equipment under various capital lease arrangements, all of which expire between 2017 and 2021. As of December 31, 2016, the present value of the minimum remaining lease commitments, net of imputed interest of $2.0 million, was approximately $16.9 million, of which $5.9 million was due and payable within the next twelve months. See Note 12 for information regarding the capital leases we have entered into with related parties. Litigation, Regulatory Proceedings and Other Contingencies FairPoint On February 7, 2017, an alleged class action complaint was filed by a purported stockholder of FairPoint in the United States District Court for the Western District of North Carolina (Case No. 3:17-cv-51) against us, FairPoint and its directors. Among other things, the complaint alleges that the disclosures in our Form S-4 Registration Statement filed with the SEC on January 26, 2017, in connection with the Merger Agreement, are materially incomplete and misleading in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended. The plaintiff seeks to enjoin us from consummating the merger with FairPoint on the agreed-upon terms or, alternatively, to rescind the merger in the event that we consummate the merger, in addition to damages and attorney fees and costs. We believe the allegations made in this complaint are without merit. We have not yet filed an answer or other responsive pleading to the complaint. Access Charges In 2014, Sprint Communications Company L.P. (“Sprint”) along with MCI Communications Services, Inc. and Verizon Select Services Inc. (collectively, “Verizon”) filed lawsuits against us and many other Local Exchange Carriers (“LECs”) throughout the country challenging the switched access charges LECs assessed Sprint and Verizon, as interexchange carriers (“IXCs”), for certain calls originating from or terminating to mobile and wireline devices that are routed to us through these IXCs. The plaintiffs’ position is based on their interpretation of federal law, among other things, and they are seeking refunds of past access charges paid for such calls. The disputed amounts total $2.4 million and cover periods dating back to 2006. CenturyLink, Inc., which is a defendant in both groups of cases, requested that the U.S. Judicial Panel on Multidistrict Litigation (the “Panel”), which has the authority to transfer the pretrial proceedings to a single court for multiple civil cases involving common questions of fact, transfer and consolidate these cases in one court. The Panel granted CenturyLink’s request and ordered that these cases be transferred to and centralized in the U.S. District Court for the Northern District of Texas (the “Court”). On November 17, 2015, the Court dismissed these complaints based on its interpretation of federal law and held that LECs could assess switched access charges for the calls at issue (the “November 2015 Order”). The November 2015 Order also allowed the plaintiffs to amend their complaints to assert claims that arise under state laws independent of the dismissed claims asserted under federal law. While Verizon did not make such a filing, on May 16, 2016, Sprint filed amended complaints and on June 30, 2016, the LEC defendants named in such complaints filed a Joint Motion to Strike or Dismiss them. Briefing on this Joint Motion concluded in August 2016 and the Court has yet to issue a decision on it. Relatedly, in 2015, numerous LECs across the country, including a number of our LEC entities, filed complaints in various U.S. district courts against Level 3 Communications, LLC and certain of its affiliates (collectively, “Level 3”) for its failure to pay access charges for certain calls that the November 2015 Order held could be assessed by LECs. The total amount our LEC entities seek from Level 3 in this proceeding is at least approximately $0.3 million, excluding late payment charges/penalties and attorneys’ fees. These complaint cases were transferred to and included in the above-referenced consolidated proceeding before the Court. On May 31, 2016, Level 3 filed a Motion to Dismiss these complaints that largely repeated arguments the November 2015 Order rejected. Briefing on Level 3’s Motion has concluded and an oral argument on it is scheduled for February 15, 2017. After that, it will likely be a few months before the Court issues a decision on this Motion. While the Court adopted a Scheduling Order on July 19, 2016 for the remaining proceedings in the consolidated cases (including, among other things, dates for the parties to informally resolve damage claims, i.e., the amounts in dispute and late payment charges), that Order was recently stayed. However, twenty days after the Court issues decisions on Level 3's Motion to Dismiss and the LECs’ Joint Motion to Dismiss, the parties are required to submit a joint status report proposing the appropriate procedures and deadlines for the case. Once the proceedings before the Court become final, Sprint, Verizon, and Level 3 are expected to appeal the November 2015 Order along with any order that may, for similar reasons, deny Level 3’s May 31, 2016 Motion to Dismiss. We have interconnection agreements in place with all wireless carriers and the applicable traffic is being billed at current access rates. Absent a decision by an appellate court that overturns the November 2015 Order or a decision granting Level 3’s Motion to Dismiss, it will be difficult for Sprint and Verizon to succeed on any claims against us or for Level 3 to avoid paying the access charges it disputes in this litigation. Therefore, we do not expect any potential settlement or judgment to have an adverse material impact on our financial results or cash flows. Gross Receipts Tax Two of our subsidiaries, Consolidated Communications of Pennsylvania Company LLC (“CCPA”) and Consolidated Communications Enterprise Services Inc. (“CCES”), have, at various times, received assessment notices from the Commonwealth of Pennsylvania Department of Revenue (“DOR”) increasing the amounts owed for Pennsylvania Gross Receipts Tax, and/or have had audits performed for the tax years of 2008 through 2013. In addition, a re-audit was performed on CCPA for the 2010 calendar year. Pennsylvania generally imposes tax on the gross receipts received from telephone messages transmitted wholly within the state and telephone messages transmitted in interstate commerce where such messages originate or terminate in Pennsylvania, and the charges for such messages are billed to a service address in the state. In a 2013 decision involving Verizon Pennsylvania, Inc. (“Verizon Pennsylvania”), the Commonwealth Court of Pennsylvania held that the gross receipts tax applies to Verizon Pennsylvania’s installation of private phone lines because the sole purpose of private lines is to transmit messages. Similarly, the court held that directory assistance is subject to the gross receipts tax because it makes the transmission of messages more effective and satisfactory. However, the court did not find Verizon Pennsylvania’s nonrecurring charges for the installation of telephone lines, moves of and changes to telephone lines and services and repairs of telephone lines to be subject to the gross receipts tax as no telephone messages are transmitted when Verizon Pennsylvania performs these nonrecurring services. In November 2015, on appeal, the Supreme Court of Pennsylvania held in Verizon Pennsylvania, Inc. v. Commonwealth of Pennsylvania , 127 A.3d 745 (Pa. 2015), that charges for the installation of private phone lines, charges for directory assistance and certain nonrecurring charges were all subject to the state’s gross receipt tax. The Supreme Court of Pennsylvania found that all of the services, including those related to nonrecurring charges, in some way made transmission more effective or communication more satisfactory even though such services did not involve actual transmission. This is a partial reversal of the 2013 Commonwealth Court of Pennsylvania decision described above, which had ruled that while the charges for the installation of private phone lines and directory assistance were subject to the state’s gross receipts tax, the nonrecurring charges in question were not. As neither reargument nor for reconsideration was sought, the case is now final. For the CCES subsidiary, the total additional tax liability calculated by the auditors for the calendar years 2008 through 2013 is approximately $4.1 million. In May 2016, the Commonwealth of Pennsylvania Board of Finance and Revenue reviewed our appeals of cases for the audits in calendar years 2008 through 2013 and held that the charges in question were subject to the state’s gross receipts tax. In June 2016, we filed appeals with the Pennsylvania Commonwealth Court for the audits in calendar years 2008 through 2013. These appeals are presently awaiting fact development, and no action is expected to occur until second quarter 2017. For the CCPA subsidiary, the total additional tax liability calculated by the DOR auditors for the calendar years 2008 through 2013 (using the re-audited 2010 number) is approximately $5.0 million. In May 2016, the Commonwealth of Pennsylvania Board of Finance and Revenue reviewed our appeals of cases for the audits in calendar years 2008 through 2013 and held that the charges in question were subject to the state’s gross receipts tax. In June 2016, we filed appeals with the Pennsylvania Commonwealth Court for the audits in calendar years 2008 through 2013. These appeals are presently awaiting fact development, and no action is expected to occur until second quarter 2017. In October 2016, CCPA and CCES received Audit Assessment Notices from the DOR increasing the amounts owed for Pennsylvania Gross Receipts Tax for the 2014 tax year. The total additional tax liability calculated by the DOR auditors for CCPA and CCES for 2014 is approximately $0.7 million and $0.9 million, respectively. In January 2017, we filed Petitions for Reassessment with the DOR’s Board of Appeals, contesting the audit assessments. The Petitions request that the matters be stayed pending final action of the Commonwealth Court in litigation involving the same issues related to CCPA’s 2008 through 2013 tax periods. We believe that certain of the DOR’s findings regarding the Company’s additional tax liability for the calendar years 2008 through 2014, for which we have filed appeals, continue to lack merit. However, in light of the Supreme Court of Pennsylvania’s decision, we have accrued $1.4 million and $1.2 million for our CCES and CCPA subsidiaries, respectively. These accruals also include the Company’s best estimate of the potential 2014 and 2015 additional tax liabilities. We do not believe that the outcome of these claims will have a material adverse impact on our financial results or cash flows. Other On April 14, 2008, Salsgiver Inc., a Pennsylvania-based telecommunications company, and certain of its affiliates (“Salsgiver”) filed a lawsuit against us and our former subsidiaries North Pittsburgh Telephone Company and North Pittsburgh Systems Inc. in the Court of Common Pleas of Allegheny County, Pennsylvania alleging that we had prevented Salsgiver from connecting their fiber optic cables to our utility poles. Salsgiver sought compensatory and punitive damages as the result of alleged lost projected profits, damage to its business reputation and other costs. Salsgiver originally claimed to have sustained losses of approximately $125.0 million. We believed that these claims were without merit and that the alleged damages were completely unfounded. We had previously recorded $0.4 million in 2011 and $0.9 million in 2013 in anticipation of the settlement of this case, which included estimated legal fees. A jury trial concluded on May 14, 2015 with the jury ruling in our favor. Salsgiver subsequently filed a post-trial motion asking the judge to overturn the jury verdict. That motion was denied. On June 17, 2015, Salsgiver filed an appeal in the Pennsylvania Superior Court. Salsgiver’s brief was filed with the Superior Court on December 4, 2015, and the Company filed its response on January 18, 2016. The Pennsylvania Superior Court held oral arguments on May 17, 2016. On November 10, 2016, the Pennsylvania Superior Court entered an order affirming the judgment in our favor. Salsgiver did not attempt to take an appeal to the Pennsylvania Superior Court. This case is now concluded. During the year ended December 31, 2016, we reversed the reserve of approximately $1.3 million related to the potential settlement previously recognized in 2011 and 2013. From time to time, we may be involved in litigation that we believe is of the type common to companies in our industry, including regulatory issues. While the outcome of these claims cannot be predicted with certainty, we do not believe that the outcome of any of these legal matters will have a material adverse impact on our business, results of operations, financial condition or cash flows. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS Capital Leases Richard A. Lumpkin, a member of our Board of Directors, together with his family, beneficially owned 37.0% and 33.5% of Agracel, Inc. (“Agracel”), a real estate investment company, at December 31, 2016 and 2015, respectively. Mr. Lumpkin also is a director of Agracel. Agracel is the sole managing member and 50% owner of LATEL LLC (“LATEL”). Mr. Lumpkin and his immediate family had a 68.5% and 66.7% beneficial ownership of LATEL at December 31, 2016 and 2015, respectively. As of December 31, 2016, we had three capital lease agreements with LATEL for the occupancy of three buildings on a triple net lease basis. In accordance with the Company’s related person transactions policy, these leases were approved by our Audit Committee and Board of Directors (“BOD”). We have accounted for these leases as capital leases in accordance with ASC Topic 840, Leases , and have capitalized the lower of the present value of the future minimum lease payments or their fair value. The capital lease agreements require us to pay substantially all expenses associated with general maintenance and repair, utilities, insurance and taxes. Each of the three lease agreements have a maturity date of May 31, 2021 and each have two five-year options to extend the terms of the lease after the initial expiration date. We are required to pay LATEL approximately $7.9 million over the terms of the lease agreements. The carrying value of the capital leases at December 31, 2016 and 2015 was approximately $2.7 million and $3.0 million, respectively. We recognized $0.4 million in interest expense in each 2016 and 2015 and $0.5 million in interest expense in 2014 and amortization expense of $0.4 million in 2016, 2015 and 2014 related to the capitalized leases. Long-Term Debt A portion of the 2020 Notes was sold to accredited investors consisting of certain members of the Company’s Board of Directors or a trust of which a director is the beneficiary (“related parties”). In May 2012, the related parties purchased $10.8 million of the 2020 Notes on the same terms available to other investors, except that the related parties were not entitled to registration rights. In 2015, the 2020 Notes were fully redeemed and we paid an early redemption premium of $1.5 million and recognized approximately $0.7 million and $1.3 million in 2015 and 2014, respectively, in interest expense in the aggregate for the 2020 Notes purchased by related parties. In September 2014, $5.0 million of the 2022 Notes were sold to a trust, the beneficiary of which is a member of the Company’s Board of Directors and we recognized approximately $0.3 million in each 2016 and 2015 in interest expense for the 2022 Notes purchased by the related party. Other Services Mr. Lumpkin also has a minority ownership interest in First Mid-Illinois Bancshares, Inc. (“First Mid-Illinois”). We provide telecommunication products and services to First Mid-Illinois and we received approximately $0.7 million, $0.8 million and $0.5 million in 2016, 2015 and 2014, respectively, for these services. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarter Ended 2016 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ $ $ $ Operating income $ $ $ $ Net income (loss) attributable to common stockholders $ $ $ $ Basic and diluted earnings (loss) per share $ $ — $ $ — Quarter Ended 2015 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ $ $ $ Operating income $ $ $ $ Net income (loss) attributable to common stockholders $ $ $ $ Basic and diluted earnings (loss) per share $ $ $ $ In October 2016, we amended our Credit Agreement to restate and amend our term loan credit facilities as described in Note 6. In connection with entering into the amended and restated credit agreement, we incurred a loss on the extinguishment of debt of $6.6 million during the quarter ended December 31, 2016. In connection with the redemption of the 2020 Notes, as described in Note 6, we recognized a loss on extinguishment of debt of $41.2 million during the quarter ended June 30, 2015. As part of the Company’s continued integration efforts, an early retirement program was initiated during the quarter ended September 30, 2015 to a group of select employees who were 55 years of age or older and who have provided 15 or more years of service. The employees were primarily in non-customer facing positions or positions in which the Company believed the retiree’s workload could be absorbed internally as part of the Company’s continuing cost saving initiatives. The early retirement package was accepted by approximately 60 employees and, as a result, one-time severance costs of $7.2 million were incurred during the quarter ended September 30, 2015. The Company expects approximately $4.8 million in future annual savings as a result of the early retirement program. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION Consolidated Communications, Inc. is the primary obligor under the unsecured Senior Notes. We and substantially all of our subsidiaries, excluding Consolidated Communications of Illinois Company (formerly Illinois Consolidated Telephone Company), have jointly and severally guaranteed the Senior Notes. All of the subsidiary guarantors are 100% direct or indirect wholly owned subsidiaries of the parent, and all guarantees are full, unconditional and joint and several with respect to principal, interest and liquidated damages, if any. As such, we present condensed consolidating balance sheets as of December 31, 2016 and 2015, and condensed consolidating statements of operations and cash flows for the years ended December 31, 2016, 2015 and 2014 for each of Consolidated Communications Holdings, Inc. (Parent), Consolidated Communications, Inc. (Subsidiary Issuer), guarantor subsidiaries and other non-guarantor subsidiaries with any consolidating adjustments. See Note 6 for more information regarding our Senior Notes. Condensed Consolidating Balance Sheets (amounts in thousands) December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ — $ — $ Accounts receivable, net — — Income taxes receivable — — Prepaid expenses and other current assets — — Total current assets Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Advances due to/from affiliates, net — — Deferred income taxes — — — — Other assets — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — — Accrued expense Current portion of long term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — Total liabilities Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ $ — $ Accounts receivable, net — — — Income taxes receivable — — Prepaid expenses and other current assets — — — Total current assets — Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Advances due to/from affiliates, net — — Deferred income taxes — — — — Other assets — — — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — Accrued expense — Current portion of long term debt and capital lease obligations — — Total current liabilities — Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — — Total liabilities Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ Condensed Consolidating Statements of Operations (amounts in thousands) Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Acquisition and other transaction costs — — — — Loss on impairment — — — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Year Ended December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Acquisition and other transaction costs — — — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Year Ended December 31, 2014 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Acquisition and other transaction costs — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Condensed Consolidating Statements of Cash Flows (amounts in thousands) Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Business acquisition, net of cash acquired — — — Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from business dispositions — — — Net cash provided by (used in) investing activities — Cash flows from financing activities: Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ — $ Year Ended December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from sale of investments — — — Net cash used in investing activities — — Cash flows from financing activities: Proceeds from bond offering — — — Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Redemption of senior notes — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ $ Year Ended December 31, 2014 Subsidiary Parent Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Business acquisition, net of cash acquired — — — Purchases of property, plant and equipment — — Purchase of investments — — — Proceeds from sale of assets — — Net cash used in investing activities — Cash flows from financing activities: Proceeds from bond offering — — — Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Partial redemption of senior notes — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Other — — — Net cash provided by (used in) financing activities (Decrease) increase in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ $ |
BUSINESS DESCRIPTION & SUMMAR23
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Accounting | Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we” or “our”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide integrated communications services in consumer, commercial, and carrier channels in California, Illinois, Iowa, Kansas, Minnesota, Missouri, North Dakota, Pennsylvania, South Dakota, Texas and Wisconsin. We operate as both an Incumbent Local Exchange Carrier (“ILEC”) and a Competitive Local Exchange Carrier (“CLEC”), dependent upon the territory served. We provide a wide range of services and products that include local and long-distance service, high-speed broadband Internet access, video services, Voice over Internet Protocol (“VoIP”), private line services, carrier grade access services, network capacity services over our regional fiber optic networks, cloud data services, data center and managed services, directory publishing and equipment sales. As of December 31, 2016, we had approximately 457 thousand voice connections, 473 thousand data connections and 106 thousand video connections. |
Use of Estimates | Use of Estimates Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates. Our critical accounting estimates include (i) impairment evaluations associated with indefinite-lived intangible assets (Note 1), (ii) revenue recognition (Note 1), (iii) the determination of deferred tax asset and liability balances (Notes 1 and 10) and (iv) pension plan and other post-retirement costs and obligations (Notes 1 and 9). |
Principles of Consolidation | Principles of Consolidation Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries and subsidiaries in which we have a controlling financial interest. All significant intercompany transactions have been eliminated. |
Recent Business Developments | Recent Business Developments Agreement and Plan of Merger with FairPoint On December 3, 2016, we entered into a definitive agreement and plan of merger with FairPoint to acquire all the issued and outstanding shares of FairPoint in exchange for shares of our common stock, as set forth in the Merger Agreement. FairPoint is an advanced communications provider to business, wholesale and residential customers within its service territory which spans across 17 states. FairPoint owns and operates a robust fiber-based network with more than 21,000 route miles of fiber, including 17,000 route miles of fiber in northern New England. In conjunction with the merger, we have secured committed debt financing, as described in Note 6, that will be used to repay the outstanding debt of FairPoint and pay fees and expenses associated with the merger. The merger is subject to standard closing conditions including the approval of our stockholders and FairPoint’s stockholders, the approval of the listing of additional shares of Consolidated common stock to be issued to FairPoint’s stockholders, required federal and state regulatory approvals and other customary closing conditions. We expect the merger to close by mid-2017. See Note 3 for a more detailed discussion of the merger. Restatement of Credit Agreement On October 5, 2016, the Company and certain of its subsidiaries entered into a Restatement Agreement to amend and restate our existing credit agreement through a Third Amended and Restated Credit Agreement (the “Restated Credit Agreement”). Under the terms of the Restated Credit Agreement, the Company issued initial term loans in the aggregate amount of $900.0 million, with a maturity date of October 5, 2023 (subject to an earlier maturity date on March 31, 2022, under certain conditions), and used the proceeds in part to pay off the outstanding term loan in the amount of $885.0 million. The Company also obtained a revolving loan facility of $110.0 million, with a maturity date of October 5, 2021, to replace the existing $75.0 million revolving credit facility scheduled to mature in December 2018. In connection with entering into the Restated Credit Agreement, we incurred a loss on the extinguishment of debt of $6.6 million during the year ended December 31, 2016. See Note 6 for additional information regarding this transaction. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Our cash equivalents consist primarily of money market funds. The carrying amounts of our cash equivalents approximate their fair value. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for doubtful accounts for estimated losses that result from the inability of our customers to make required payments. The allowance for doubtful accounts is maintained based on customer payment levels, historical experience and management’s views on trends in the overall receivable agings. In addition, for larger accounts, we perform analyses of risks on a customer-specific basis. We perform ongoing credit evaluations of our customers’ financial condition and management believes that an adequate allowance for doubtful accounts has been provided. Uncollectible accounts are removed from accounts receivable and are charged against the allowance for doubtful accounts when internal collection efforts have been unsuccessful. The following table summarizes the activity in allowance for doubtful accounts for the years ended December 31, 2016, 2015 and 2014: Year Ended December 31, (In thousands) 2016 2015 2014 Balance at beginning of year $ $ $ Provision charged to expense Write-offs, less recoveries Balance at end of year $ $ $ |
Investments | Investments Our investments are primarily accounted for under either the equity or cost method. If we have the ability to exercise significant influence over the operations and financial policies of an affiliated company, the investment in the affiliated company is accounted for using the equity method. If we do not have control and also cannot exercise significant influence, the investment in the affiliated company is accounted for using the cost method. We review our investment portfolio periodically to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value that is considered to be other than temporary. If we believe the decline is other than temporary, we evaluate the financial performance of the business and compare the carrying value of the investment to quoted market prices (if available) or the fair value of similar investments. If an investment is deemed to have experienced an impairment that is considered other-than temporary, the carrying amount of the investment is reduced to its quoted or estimated fair value, as applicable, and an impairment loss is recognized in other income (expense). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We account for certain assets and liabilities at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A financial asset or liability’s classification within a three-tiered value hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The hierarchy prioritizes the inputs to valuation techniques into three broad levels in order to maximize the use of observable inputs and minimize the use of unobservable inputs. The levels of the fair value hierarchy are as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs that reflect quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets and inputs other than quoted prices that are directly or indirectly observable in the marketplace. Level 3 – Unobservable inputs which are supported by little or no market activity. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost. We capitalize additions and substantial improvements and expense repairs and maintenance costs as incurred. We capitalize the cost of internal-use network and non-network software which has a useful life in excess of one year. Subsequent additions, modifications or upgrades to internal-use network and non-network software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred. Also, we capitalize interest associated with the development of internal-use network and non-network software. Property, plant and equipment consisted of the following as of December 31, 2016 and 2015: December 31, December 31, Estimated (In thousands) 2016 2015 Useful Lives Land and buildings $ $ - years Central office switching and transmission - years Outside plant cable, wire and fiber facilities - years Furniture, fixtures and equipment - years Assets under capital lease - years Total plant in service Less: accumulated depreciation and amortization Plant in service Construction in progress Construction inventory Totals $ $ Construction inventory, which is stated at weighted average cost, consists primarily of network construction materials and supplies that when issued are predominately capitalized as part of new customer installations and the construction of the network. We record depreciation using the straight line method over estimated useful lives using either the group or unit method. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets, anticipated technological changes and the expected impact of our strategic operating plan on our network infrastructure. In addition, the ranges of estimated useful lives presented above are impacted by the accounting for business combinations as the lives assigned to these acquired assets are generally much shorter than that of a newly acquired asset. The group method is used for depreciable assets dedicated to providing regulated telecommunication services, including the majority of the network, outside plant facilities and certain support assets. A depreciation rate for each asset group is developed based on the average useful life of the group. The group method requires periodic revision of depreciation rates. When an individual asset is sold or retired, the difference between the proceeds, if any, and the cost of the asset is charged or credited to accumulated depreciation, without recognition of a gain or loss. The unit method is primarily used for buildings, furniture, fixtures and other support assets. Each asset is depreciated on the straight-line basis over its estimated useful life. When an individual asset is sold or retired, the cost basis of the asset and related accumulated depreciation are removed from the accounts and any associated gain or loss is recognized. Depreciation and amortization expense related to property, plant and equipment was $161.1 million, $167.1 million and $139.0 million in 2016, 2015 and 2014, respectively. Amortization of assets under capital leases is included in the depreciation and amortization expense in the consolidated statements of operations. We evaluate the recoverability of our property, plant and equipment whenever events or substantive changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the asset group. |
Intangible Assets | Intangible Assets Indefinite-Lived Intangibles Goodwill and tradenames are evaluated for impairment annually or more frequently when events or changes in circumstances indicate that the asset might be impaired. We evaluate the carrying value of goodwill and tradenames as of November 30 of each year. Goodwill Goodwill is the excess of the acquisition cost of a business over the fair value of the identifiable net assets acquired. Goodwill is not amortized but instead evaluated annually for impairment. The evaluation of goodwill may first include a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Events and circumstances integrated into the qualitative assessment process include a combination of macroeconomic conditions affecting equity and credit markets, significant changes to the cost structure, overall financial performance and other relevant events affecting the reporting unit. For the 2016 assessment, we evaluated the fair value of goodwill compared to the carrying value using the qualitative approach. The results of the qualitative approach concluded that it is more likely than not that the fair value of goodwill was greater than the carrying value as of the assessment date. When we use the quantitative approach to assess the goodwill carrying value and the fair value of our single reporting unit, the fair value of our reporting unit is compared to its carrying amount, including goodwill. The estimated fair value of the reporting unit is determined using a combination of market-based approaches and a discounted cash flow (“DCF”) model. The assumptions used in the estimate of fair value are based upon a combination of historical results and trends, new industry developments and future cash flow projections, as well as relevant comparable company earnings multiples for the market-based approaches. Such assumptions are subject to change as a result of changing economic and competitive conditions. We use a weighting of the results derived from the valuation approaches to estimate the fair value of the reporting unit. For the November 30, 2015 assessment, using the quantitative approach, we concluded that the fair value of the reporting unit exceeded the carrying value at December 31, 2015 and that there was no impairment of goodwill. In measuring the fair value of our reporting unit as previously described, we consider the fair value of our reporting unit in relation to our overall enterprise value, measured as the publicly traded stock price multiplied by the fully diluted shares outstanding plus the value of outstanding debt. Our reporting unit fair value models are consistent with a range in value indicated by both the preceding three month average stock price and the stock price on the valuation date, plus an estimated acquisition premium which is based on observable transactions of comparable companies, if applicable. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss. The second step compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities other than goodwill in a manner similar to a purchase price allocation. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of goodwill is greater than the implied fair value of that goodwill, then an impairment charge would be recorded equal to the difference between the implied fair value and the carrying value. We did not recognize any goodwill impairment in 2016, 2015 or 2014 as a result of the impairment test. At December 31, 2016 and 2015, the carrying value of goodwill was $756.9 million and $764.6 million, respectively. The following table summarizes the change in goodwill during the year ended December 31, 2016: (In thousands) Balance at December 31, 2015 $ Acquisition Divestiture of businesses Balance at December 31, 2016 $ Trade Names Our most valuable trade name is the federally registered mark CONSOLIDATED, a design of interlocking circles, which is used in association with our telephone communication services. The Company’s corporate branding strategy leverages a CONSOLIDATED naming structure. All of the Company’s business units and several of our products and services incorporate the CONSOLIDATED name. Trade names with indefinite useful lives are not amortized but are tested for impairment at least annually. If facts and circumstances change relating to a trade name’s continued use in the branding of our products and services, it may be treated as a finite-lived asset and begin to be amortized over its estimated remaining life. The carrying value of our trade names, excluding any finite lived trade names, was $10.6 million at December 31, 2016 and 2015. For the 2016 assessment, we used the qualitative approach to evaluate the fair value compared to the carrying value of the trade names. Based on the various qualitative indicators reviewed, we concluded that the fair value of the trade names continued to exceed the carrying value. When we use the quantitative approach to estimate the fair value of our trade names, we use DCFs based on a relief from royalty method. If the fair value of our trade names was less than the carrying amount, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the assets. We perform our impairment testing of our trade names as single units of accounting based on their use in our single reporting unit. Finite-Lived Intangible Assets Finite-lived intangible assets subject to amortization consist primarily of our customer lists of an established base of customers that subscribe to our services, trade names of acquired companies and other intangible assets. Finite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives. We evaluate the potential impairment of finite-lived intangible assets when impairment indicators exist. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment equal to the difference between the carrying amount and the fair value of the asset is recognized. We did not recognize any intangible impairment charges in the years ended December 31, 2016, 2015 or 2014. The components of finite-lived intangible assets are as follows: December 31, 2016 December 31, 2015 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships - years $ $ $ $ Trade names - years Other intangible assets years Total $ $ $ $ Amortization expense related to the finite-lived intangible assets for the years ended December 31, 2016, 2015 and 2014 was $12.9 million, $12.8 million and $10.4 million, respectively. Expected future amortization expense of finite-lived intangible assets is as follows: (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
Derivative Financial Instruments | Derivative Financial Instruments We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. At the inception of a hedge transaction, we formally document the relationship between the hedging instruments including our objective and strategy for establishing the hedge. In addition, the effectiveness of the derivative instrument is assessed at inception and on an ongoing basis throughout the hedging period. Counterparties to derivative instruments expose us to credit-related losses in the event of nonperformance. We execute agreements only with financial institutions we believe to be creditworthy and regularly assess the credit worthiness of each of the counterparties. We do not use derivative instruments for trading or speculative purposes. Derivative financial instruments are recorded at fair value in our consolidated balance sheet. Fair value is determined based on publicly available interest rate yield curves and an estimate of our nonperformance risk or our counterparty’s nonperformance credit risk, as applicable. We do not anticipate any nonperformance by any counterparty. For derivative instruments designated as a cash flow hedge, the effective portion of the change in the fair value is recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and is recognized as an adjustment to earnings over the period in which the hedged item impacts earnings. When an interest rate swap agreement terminates, any resulting gain or loss is recognized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt obligation. The ineffective portion of the change in fair value of any hedging derivative is recognized immediately in earnings. If a derivative instrument is de-designated, the remaining gain or loss in AOCI on the date of de-designation is amortized to earnings over the remaining term of the hedging instrument. For derivative financial instruments that are not designated as a hedge, changes in fair value are recognized on a current basis in earnings. Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in our consolidated statement of cash flows. See Note 7 for further discussion of our derivative financial instruments. |
Share-based Compensation | Share-based Compensation We recognize share-based compensation expense for all restricted stock awards (“RSAs”) and performance share awards (“PSAs”) (collectively, “stock awards”) based on the estimated fair value of the stock awards on the date of grant. We recognize the expense associated with RSAs and PSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four-year vesting period. See Note 8 for additional information regarding share-based compensation. |
Pension Plan and Other Post-Retirement Benefits | Pension Plan and Other Post-Retirement Benefits We maintain noncontributory defined benefit pension plans and provide certain post-retirement health care and life insurance benefits to certain eligible employees. We also maintain two unfunded supplemental retirement plans to provide incremental pension payments to certain former employees. We recognize pension and post-retirement benefits expense during the current period in the consolidated statement of operations using certain assumptions, including the expected long-term rate of return on plan assets, interest cost implied by the discount rate, expected health care cost trend rate and the amortization of unrecognized gains and losses. Refer to Note 9 for further details regarding the determination of these assumptions. We recognize the overfunded or underfunded status of our defined benefit pension and post-retirement plans as either an asset or liability in the consolidated balance sheet. We recognize changes in the funded status in the year in which the changes occur in accumulated comprehensive income (loss), net of applicable income taxes, including unrecognized actuarial gains and losses and prior service costs and credits. |
Income Taxes | Income Taxes Our estimates of income taxes and the significant items resulting in the recognition of deferred tax assets and liabilities are disclosed in Note 10 and reflect our assessment of future tax consequences of transactions that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss and tax credit loss carryforwards. We establish valuation allowances when necessary to reduce the carrying amount of deferred income tax assets to the amounts that we believe are more likely than not to be realized. We evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change based on the years in which the temporary differences are expected to reverse. As we operate in more than one state, changes in our state apportionment factors, based on operational results, may affect our future effective tax rates and the value of our deferred tax assets and liabilities. We record a change in tax rates in our consolidated financial statements in the period of enactment. Income tax consequences that arise in connection with a business combination include identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the appropriate tax basis that will be accepted by the various taxing authorities. We record unrecognized tax benefits as liabilities in accordance with Accounting Standard Codification (“ASC”) 740, Income Taxes, and adjust these liabilities in the appropriate period when our judgment changes as a result of the evaluation of new information. In certain instances, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of interest expense and general and administrative expense, respectively. See Note 10 for further discussion on income taxes. |
Revenue Recognition | Revenue Recognition We recognize revenue when persuasive evidence of an arrangement exists, delivery of the product to the customer has occurred or services have been rendered, the price to the customer is fixed or determinable and collectability of the sales price is reasonably assured. Services Revenue based on a flat fee, dedicated network access, data communications, digital TV, Internet access service and broadband service, or revenue derived principally from local telephone, is billed in advance and is recognized in subsequent periods when the services have been provided, with the exception of certain governmental accounts which are billed in arrears. Certain of our bundled service packages may include multiple deliverables. We offer a base service bundle which consists of voice services, including a phone line, calling features and long-distance. Customers may choose to add additional services, including high-speed Internet and digital/IP television services, to the base service bundle. Separate units of accounting within the bundled service package include voice services, high-speed Internet and digital/IP television services. Revenue for all services included in our bundled service package is recognized over the same period in which service is provided to the customer. Bundled service package discounts are recognized concurrently with the associated revenue and are allocated to the various services in the bundled service package based on the relative selling price of the services included in each bundle. Usage-based services, such as per-minute long-distance service and access charges billed to other telephone carriers for originating and terminating long-distance calls in our network, are billed in arrears. We recognize revenue from these services in the period in which service is provided to the customer. Revenue related to nonrefundable, upfront service activation and setup fees is deferred and recognized over the estimated customer life. Incremental direct costs of telecommunications service activation are expensed in the period incurred, except when we maintain ownership of wiring installed during the activation process. In such cases, the cost is capitalized and depreciated over the estimated useful life of the asset. Print advertising and publishing revenue is recognized ratably over the life of the related directory, which is generally 12 months. Equipment Revenue is generated from the sale of voice and data communications equipment; design, configuration and installation services related to voice and data equipment; the provision of Cisco maintenance support contracts; and the sale of professional support services for customer voice and data systems. Equipment revenue generated from retail channels is recognized when the equipment is sold. Equipment revenue generated from telecommunications systems and structured cabling projects is recognized when the project is completed. Maintenance services are provided on both a contract and time and material basis and are recognized in the period in which the service is provided. Equipment revenue generated from support services includes “24x7” support of a customer’s voice and data networks. The majority of these contracts are billed on a time and materials basis and revenue is recognized either in the period in which the services are provided or over the term of the contract. Support services also include professional support services, which are typically sold on a time and materials basis, but may be sold as a prepaid block of time, and the revenue is recognized in the period in which the services are provided. Multiple Deliverable Arrangements We often enter into arrangements which include multiple deliverables primarily relating to the sale of communications equipment, associated support contracts and professional services, which include design, configuration and installation consulting. When an equipment sale involves multiple deliverables, revenue is allocated to each respective deliverable if they are separately identifiable. Each separately identified deliverable is considered a separate unit of account. The arrangement consideration is allocated to the identified units of account based on their relative selling price on a stand-alone basis. Cisco equipment, maintenance contracts and professional services each qualify as separate units of accounting. We utilize best estimate of selling price for stand-alone value for our equipment and maintenance contracts, taking into consideration market conditions and entity-specific factors. We evaluate best estimate of selling price by reviewing historical data related to sales of our deliverables. Subsidies and Surcharges Subsidies consist of both federal and state subsidies, which are designed to promote widely available, quality telephone service at affordable prices in rural areas. These revenues are calculated by the administering government agency based on information we provide. Subsidies are recognized in the period in which the service is provided. There is a reasonable possibility that out-of-period subsidy adjustments may be recorded in the future, but they are expected to be immaterial to our results of operations, financial position and cash flow. We collect and remit Federal Universal Service contributions on a gross basis, which resulted in recorded revenue of approximately $12.7 million and $13.2 million during the years ended December 31, 2016 and 2015, respectively. We account for all other taxes collected from customers and remitted to the respective government agencies on a net basis. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising expense was $8.7 million, $8.3 million and $8.2 million in 2016, 2015 and 2014, respectively. |
Statement of Cash Flows Information | Statement of Cash Flows Information During 2016, 2015 and 2014, we made payments for interest and income taxes as follows: (In thousands) 2016 2015 2014 Interest, net of amounts capitalized ($1,152, $1,373 and $1,437 in 2016, 2015 and 2014, respectively) $ $ $ Income taxes (received) paid, net $ $ $ Noncash investing and financing activities: In 2016 and 2015, we acquired equipment of $12.2 million and $4.1 million, respectively, through capital lease agreements. In 2014, we issued 10.1 million shares of the Company’s common stock with a market value of $257.7 million in connection with the acquisition of Enventis as described in Note 3. |
Noncontrolling Interest | Noncontrolling Interest We have a majority-owned subsidiary, East Texas Fiber Line Incorporated (“ETFL”) which is a joint venture owned 63% by the Company and 37% by Eastex Telecom Investments, LLC. ETFL provides connectivity over a fiber optic transport network to certain customers residing in Texas. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update No. 2017-01 (“ASU 2017-01”), Clarifying the Definition of a Business . ASU 2017-01 clarifies the definition of a business and establishes a screening process to determine whether an integrated set of assets and activities acquired is deemed the acquisition of a business or the acquisition of assets. ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017 and should be applied prospectively, with early adoption permitted. We do not expect that adoption of ASU 2017-01 will have a material impact on our consolidated financial statements and related disclosures. In October 2016, the FASB issued the Accounting Standards Update No. 2016-16 (“ASU 2016-16”), Intra-Entity Transfers of Assets Other Than Inventory . ASU 2016-16 eliminates the existing exception prohibiting the recognition of the income tax consequences for intra-entity asset transfers until the asset has been sold to an outside party. Under ASU 2016-16, entities will be required to recognize the income tax consequences of intra-entity asset transfers other than inventory when the transfer occurs. ASU 2016-16 is effective on a modified retrospective basis for annual and interim periods beginning after December 15, 2017, with early adoption permitted. We currently anticipate adoption of this update effective January 1, 2018 and do not expect a material impact on our consolidated financial statements and related disclosures. In August 2016, the FASB issued the Accounting Standards Update No. 2016-15 (“ASU 2016-15”), Classification of Certain Cash Receipts and Cash Payments . ASU 2016-15 provides guidance concerning the classification of certain cash receipts and cash payments in the statement of cash flows. The new guidance is effective for annual and interim periods beginning after December 15, 2017 and should be applied retrospectively, with early adoption permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and related disclosures. In June 2016, the FASB issued the Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments . ASU 2016-13 establishes the new “current expected credit loss” model for measuring and recognizing credit losses on financial assets based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts. The new guidance is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this update will have on our consolidated financial statements and related disclosures. In March 2016, the FASB issued the Accounting Standards Update No. 2016-09 (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 simplifies various aspects of accounting for share-based payment arrangements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective on a modified retrospective basis for annual and interim periods beginning after December 15, 2016, with early adoption permitted. We adopted ASU 2016-09 as of January 1, 2017 and it did not have a material impact on our consolidated financial statements and related disclosures immediately upon adoption. However, we are unable to estimate the prospective impact on our consolidated financial statements and related disclosures as it is dependent upon future stock exercises, which cannot be predicted. In February 2016, the FASB issued the Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases . ASU 2016-02 establishes a new lease accounting model for leases. Lessees will be required to recognize most leases on their balance sheets but lease expense will be recognized on the income statement in a manner similar to existing requirements. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the population of our leases and anticipate that most of our operating lease commitments will be recognized on our consolidated balance sheets. We have not yet made a decision on the timing and method of adoption and are continuing to assess all potential impacts of this update on our consolidated financial statements and related disclosures. Effective January 1, 2016, we adopted Accounting Standards Update No. 2015-07 (“ASU 2015-07”), Disclosures for Investment in Certain Entities That Calculate Net Asset Value Per Share (or Its Equivalent) . ASU 2015-07 removes the requirement to categorize within the fair value hierarchy those investments measured using the net asset value (“NAV”) per share practical expedient and amends certain disclosure requirements for such investments. We adopted ASU 2015-07 retrospectively and restated our prior period investments in Note 9. As a result, we removed $111.0 million and $1.3 million of pension and other post-retirement benefits investments, respectively, from the fair value hierarchy on December 31, 2015. Effective January 1, 2016, we adopted Accounting Standards Update No. 2015-16 (“ASU 2015-16”), Simplifying the Accounting for Measurement-Period Adjustments . ASU 2015-16 requires that the acquiring company in a business combination recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are determined and record in the reporting period in which the adjustments are determined the effect on earnings of changes in depreciation, amortization and other items resulting from the change to the provisional amounts. The adoption of this update did not have any impact on our consolidated financial statements and related disclosures. Effective December 31, 2016, we adopted the Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . ASU 2014-15 requires management to evaluate for each annual and interim reporting period whether conditions or events give rise to substantial doubt that an entity has the ability to continue as a going concern within one year following issuance of the financial statements and requires specific disclosures regarding the conditions or events leading to substantial doubt. The adoption of this update did not have any impact on our financial position, results of operations or in disclosures in the current period. In May 2014, FASB issued the Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) , which will replace the current revenue recognition requirements in U.S. GAAP. The core principle of ASU 2014-09 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 requires disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Two transition methods are permitted under ASU 2014-09, the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. In August 2015, the FASB issued the Accounting Standards Update No. 2015-14 (“ASU 2015-14”), Deferral of the Effective Date , which deferred the effective date of ASU 2014-09 for all entities by one year. Accordingly, ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2017, at which point we plan to adopt the standard . In 2016, we established a cross-functional implementation team consisting of representatives from across all of our functional areas. We are using a bottoms-up approach to assess the impact of ASU 2014-09 on our revenue contracts by reviewing our current accounting policies and practices to identify potential differences that would result from applying the requirements of this update. While we are continuing to assess all potential impacts of this update, we currently believe that the most significant impact relates to the deferral of contract acquisition costs, which we currently expense as incurred but under ASU 2014-09 will generally be capitalized and amortized over the contract performance period. Currently, we anticipate adopting this update using the full retrospective method to restate each prior reporting period presented |
BUSINESS DESCRIPTION & SUMMAR24
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of activity in the entity's accounts receivable allowance account | Year Ended December 31, (In thousands) 2016 2015 2014 Balance at beginning of year $ $ $ Provision charged to expense Write-offs, less recoveries Balance at end of year $ $ $ |
Schedule of property, plant and equipment | December 31, December 31, Estimated (In thousands) 2016 2015 Useful Lives Land and buildings $ $ - years Central office switching and transmission - years Outside plant cable, wire and fiber facilities - years Furniture, fixtures and equipment - years Assets under capital lease - years Total plant in service Less: accumulated depreciation and amortization Plant in service Construction in progress Construction inventory Totals $ $ |
Schedule of goodwill | (In thousands) Balance at December 31, 2015 $ Acquisition Divestiture of businesses Balance at December 31, 2016 $ |
Schedule of carrying amount of finite-lived intangible assets | December 31, 2016 December 31, 2015 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships - years $ $ $ $ Trade names - years Other intangible assets years Total $ $ $ $ |
Schedule of expected amortization expense | (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total $ |
Schedule of supplemental cash flow information | (In thousands) 2016 2015 2014 Interest, net of amounts capitalized ($1,152, $1,373 and $1,437 in 2016, 2015 and 2014, respectively) $ $ $ Income taxes (received) paid, net $ $ $ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
Schedule of basic and diluted EPS | (In thousands, except per share amounts) 2016 2015 2014 Net income (loss) $ $ $ Less: net income attributable to noncontrolling interest Income (loss) attributable to common shareholders before allocation of earnings to participating securities Less: earnings allocated to participating securities — Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ $ $ Weighted-average number of common shares outstanding Net income (loss) per common share attributable to common shareholders - basic and diluted $ $ $ |
ACQUISITION AND DISPOSITIONS (T
ACQUISITION AND DISPOSITIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Enventis | |
Schedule of unaudited pro forma results | (Unaudited; in thousands, except per share amounts) 2014 Operating revenues $ Income from operations $ Net income $ Less: net income attributable to noncontrolling interest Net income attributable to common stockholders $ Net income per common share-basic and diluted $ |
CCIC | |
Summary of assets and liabilities sold | (In thousands) Current assets $ Property, plant and equipment Goodwill Total assets $ Current liabilities $ Deferred taxes Other long-term liabilities Total liabilities $ |
ePlus Technology inc. | |
Summary of assets and liabilities sold | (In thousands) Current assets $ Property, plant and equipment Goodwill Other assets Total assets $ Current liabilities $ Other long-term liabilities Total liabilities $ |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVESTMENTS | |
Schedule of investments | (In thousands) 2016 2015 Cash surrender value of life insurance policies $ $ Cost method investments: GTE Mobilnet of South Texas Limited Partnership (2.34% interest) Pittsburgh SMSA Limited Partnership (3.60% interest) CoBank, ACB Stock Other Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) Totals $ $ |
Summary of combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships | (In thousands) 2016 2015 2014 Total revenues $ $ $ Income from operations Net income before taxes Net income Current assets $ $ $ Non-current assets Current liabilities Non-current liabilities Partnership equity |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap liabilities measured at fair value on a recurring basis | As of December 31, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Long-term interest rate swap assets $ $ - $ $ - Current interest rate swap liabilities - - Long-term interest rate swap liabilities - - Total $ $ - $ $ - As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ $ - $ $ - Long-term interest rate swap liabilities - - Total $ $ - $ $ - |
Schedule of other financial instruments that are not carried at fair value but which require fair value disclosure | As of December 31, 2016 As of December 31, 2015 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Investments, equity basis $ n/a $ n/a Investments, at cost $ n/a $ n/a Long-term debt, excluding capital leases $ $ $ $ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | (In thousands) 2016 2015 Senior secured credit facility: Term loan 5, net of discount of $4,662 at December 31, 2016 $ $ - Term loan 4, net of discount of $3,340 at December 31, 2015 - Revolving loan - 6.50% Senior notes due 2022, net of discount of $4,302 and $4,893 at December 31, 2016 and 2015, respectively Capital leases Less: current portion of long-term debt and capital leases Less: deferred debt issuance costs Total long-term debt $ $ |
Schedule of aggregate maturities of long-term debt | At December 31, 2016, the aggregate maturities of our long-term debt excluding capital leases were as follows: (In thousands) 2017 $ 2018 2019 2020 2021 Thereafter Total maturities Less: Unamortized discount $ |
DERIVATIVE FINANCIAL INSTRUME30
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | The following interest rate swaps were outstanding at December 31, 2016: Notional (In thousands) Amount 2016 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other assets $ Fixed to 1-month floating LIBOR (with floor) $ Accrued expense Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities Total Fair Values $ The following interest rate swaps were outstanding at December 31, 2015: Notional (In thousands) Amount 2015 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities $ De-designated Hedges: Fixed to 1-month floating LIBOR $ Accrued expense Fixed to 1-month floating LIBOR (with floor) $ Accrued expense Total Fair Values $ |
Schedule of effect of interest rate derivatives designated as cash flow hedges on AOCI and on the consolidated statements of income | (In thousands) 2016 2015 2014 Unrealized loss recognized in AOCI, pretax $ $ $ Deferred losses reclassified from AOCI to interest expense $ $ $ Gain recognized in interest expense from ineffectiveness $ $ — $ — |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EQUITY | |
Summary of the grants of RSAs and PSAs under the Plan | Year Ended December 31, Grant Date Grant Date Grant Date 2016 Fair Value 2015 Fair Value 2014 Fair Value RSAs Granted $ $ $ PSAs Granted $ $ $ Total |
Summary of RSA and PSA activity | RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - January 1, 2016 $ $ Shares granted $ $ Shares vested $ $ Shares forfeited, cancelled or retired $ $ Non-vested shares outstanding - December 31, 2016 $ $ |
Summary of total compensation costs recognized for share-based payments | Year Ended December 31, (In thousands) 2016 2015 2014 Restricted stock $ $ $ Performance shares Total $ $ $ |
Schedule of changes in accumulated other comprehensive loss, net of tax, by component | Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2014 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income Net current period other comprehensive income Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive loss Net current period other comprehensive income Balance at December 31, 2016 $ $ $ |
Summary of reclassifications from accumulated other comprehensive loss | Amount Reclassified from AOCI Year Ended December 31, Affected Line Item in the (In thousands) 2016 2015 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ $ (a) Actuarial loss (a) Total before tax Tax benefit $ $ Net of tax Loss on cash flow hedges: Interest rate derivatives $ $ Interest expense Tax benefit $ $ Net of tax These items are included in the components of net periodic benefit cost for our pension and post-retirement benefit plans. See Note 9 for additional details. |
PENSION PLAN AND OTHER POST-R32
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Post-retirement benefit obligation | |
Schedule of expected benefit payments | Other Pension Post-retirement (In thousands) Plans Plans 2017 $ $ 2018 2019 2020 2021 2022 - 2026 |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost recognized in the consolidated statements of income | (In thousands) 2016 2015 2014 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of: Net actuarial loss Prior service credit Net periodic pension cost (benefit) $ $ $ |
Summary of change in benefit obligation, plan assets and funded status of the Retirement Plan, SureWest Plan and Supplemental Plans | (In thousands) 2016 2015 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Actuarial loss (gain) Benefits paid Benefit obligation at the end of the year $ $ (In thousands) 2016 2015 Change in plan assets Fair value of plan assets at the beginning of the year $ $ Employer contributions Actual return on plan assets Benefits paid Fair value of plan assets at the end of the year $ $ Funded status at year end $ $ |
Schedule of amounts recognized in the consolidated balance sheets | ( In thousands) 2016 2015 Current liabilities $ $ Long-term liabilities $ $ |
Schedule of amounts recognized in accumulated other comprehensive loss | (In thousands) 2016 2015 Unamortized prior service credit $ $ Unamortized net actuarial loss $ $ |
Summary of changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects | (In thousands) 2016 2015 Actuarial loss, net $ $ Recognized actuarial loss Recognized prior service credit Total amount recognized in other comprehensive loss, before tax effects $ $ |
Schedule of weighted-average discount rate assumptions used to determine benefit obligations and net periodic pension benefit cost | Discount rate - net periodic benefit cost % % % Discount rate - benefit obligation % % % Expected long-term rate of return on plan assets % % % Rate of compensation/salary increase % % % |
Schedule of fair values of assets for the entity's defined benefit pension plans | As of December 31, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: Stocks: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Other liabilities (3) Net plan assets $ As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: Stocks: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Other liabilities (3) Net plan assets $ (1) Certain investments that are measured at fair value using the NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include an investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper and U.S. Treasury bills with maturities less than one year. Net amount due for securities purchased and sold. |
Post-retirement Benefit Obligations | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost recognized in the consolidated statements of income | (In thousands) 2016 2015 2014 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of: Net actuarial gain — Prior service credit Net periodic postretirement benefit cost $ $ $ |
Summary of change in benefit obligation, plan assets and funded status of the Retirement Plan, SureWest Plan and Supplemental Plans | (In thousands) 2016 2015 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Plan participant contributions Actuarial loss (gain) Benefits paid Benefit obligation at the end of the year $ $ (In thousands) 2016 2015 Change in plan assets Fair value of plan assets at the beginning of the year $ $ Employer contributions Plan participant’s contributions Actual return on plan assets Benefits paid Fair value of plan assets at the end of the year $ $ Funded status at year end $ $ |
Schedule of amounts recognized in the consolidated balance sheets | (In thousands) 2016 2015 Current liabilities $ $ Long-term liabilities $ $ |
Schedule of amounts recognized in accumulated other comprehensive loss | (In thousands) 2016 2015 Unamortized prior service credit $ $ Unamortized net actuarial loss (gain) $ $ |
Summary of changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects | (In thousands) 2016 2015 Actuarial loss (gain), net $ $ Recognized actuarial gain — Recognized prior service credit Total amount recognized in other comprehensive loss, before tax effects $ $ |
Schedule of weighted-average discount rate assumptions used to determine benefit obligations and net periodic pension benefit cost | 2016 2015 2014 Net periodic benefit cost % % % Benefit obligation % % % |
Schedule of a one percent change in the assumed healthcare cost trend rate | (In thousands) 1% Increase 1% Decrease Effect on total of service and interest cost $ $ Effect on postretirement benefit obligation $ $ |
Schedule of fair values of assets for the entity's defined benefit pension plans | As of December 31, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Benefit payments payable Other liabilities (3) Net plan assets $ As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ $ $ — $ — Equities: U.S. common stocks — — International stocks — — Funds: U.S. mid cap — — U.S. large cap — — Emerging markets — — International — — Fixed Income: U.S. treasury and government agency securities — Corporate and municipal bonds — — Mortgage/asset-backed securities — — Mutual funds — — Total plan assets in the fair value hierarchy $ $ $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) Equities: U.S. small cap U.S. large cap Emerging markets International Fixed Income Total plan assets Benefit payments payable Other liabilities (3) Net plan assets $ (1) Certain investments that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper and U.S. Treasury bills with maturities less than one year. Net amount due for securities purchased and sold. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of components of income tax expense | For the Year Ended (In thousands) 2016 2015 2014 Current: Federal $ $ $ State Total current expense (benefit) Deferred: Federal State Total deferred expense Total income tax expense $ $ $ |
Schedule of reconciliation of the federal statutory tax rate to the effective tax rate | For the Year Ended (In percentages) 2016 2015 2014 Statutory federal income tax rate % % % State income taxes, net of federal benefit Transaction costs - - Other permanent differences Change in uncertain tax positions - - Change in deferred tax rate Valuation allowance Provision to return - Sale of stock in subsidiary - - Non deductible goodwill - - Other % % % |
Schedule of components of the net deferred tax liability | Year Ended December 31, (In thousands) 2016 2015 Non-current deferred tax assets: Reserve for uncollectible accounts $ $ Accrued vacation pay deducted when paid Accrued expenses and deferred revenue Net operating loss carryforwards Pension and postretirement obligations Share-based compensation Derivative instruments Financing costs Tax credit carryforwards Other Valuation allowance Net non-current deferred tax assets Non-current deferred tax liabilities: Goodwill and other intangibles Basis in investment Partnership investments Property, plant and equipment Net non-current deferred taxes $ $ |
Schedule of reconciliation of the unrecognized tax benefits | Liability for Unrecognized Tax Benefits (In thousands) 2016 2015 Balance at January 1 $ $ Additions for tax positions in the current year - Reduction for tax positions of prior years - Reduction for lapse of state statute of limitations Balance at December 31 $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of minimum annual contractual obligations and the estimated timing and effect the obligations will have on liquidity and cash flows | As of December 31, 2016, future minimum contractual obligations, including capital and operating leases, and the estimated timing and effect the obligations will have on our liquidity and cash flows in future periods are as follows: Minimum Annual Contractual Obligations (in thousands) 2017 2018 2019 2020 2021 Thereafter Total Operating lease agreements $ $ $ $ $ $ $ Capital lease agreements — Capital expenditures (1) — — — — — Service and support agreements (2) Transport and data connectivity Total $ $ $ $ $ $ $ (1) We have binding commitments with numerous suppliers for future capital expenditures. We have entered into service and maintenance agreements to support various computer hardware and software applications and certain equipment. |
QUARTERLY FINANCIAL INFORMATI35
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
Schedule of unaudited quarterly financial information | Quarter Ended 2016 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ $ $ $ Operating income $ $ $ $ Net income (loss) attributable to common stockholders $ $ $ $ Basic and diluted earnings (loss) per share $ $ — $ $ — Quarter Ended 2015 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ $ $ $ Operating income $ $ $ $ Net income (loss) attributable to common stockholders $ $ $ $ Basic and diluted earnings (loss) per share $ $ $ $ |
CONDENSED CONSOLIDATING FINAN36
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (amounts in thousands) December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ — $ — $ Accounts receivable, net — — Income taxes receivable — — Prepaid expenses and other current assets — — Total current assets Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Advances due to/from affiliates, net — — Deferred income taxes — — — — Other assets — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — — Accrued expense Current portion of long term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — Total liabilities Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ $ — $ Accounts receivable, net — — — Income taxes receivable — — Prepaid expenses and other current assets — — — Total current assets — Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Advances due to/from affiliates, net — — Deferred income taxes — — — — Other assets — — — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — Accrued expense — Current portion of long term debt and capital lease obligations — — Total current liabilities — Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — — Total liabilities Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ |
Schedule of condensed consolidating statements of operations | Condensed Consolidating Statements of Operations (amounts in thousands) Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Acquisition and other transaction costs — — — — Loss on impairment — — — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Year Ended December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Acquisition and other transaction costs — — — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Year Ended December 31, 2014 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Acquisition and other transaction costs — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (amounts in thousands) Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Business acquisition, net of cash acquired — — — Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from business dispositions — — — Net cash provided by (used in) investing activities — Cash flows from financing activities: Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ — $ Year Ended December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from sale of investments — — — Net cash used in investing activities — — Cash flows from financing activities: Proceeds from bond offering — — — Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Redemption of senior notes — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ $ Year Ended December 31, 2014 Subsidiary Parent Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Business acquisition, net of cash acquired — — — Purchases of property, plant and equipment — — Purchase of investments — — — Proceeds from sale of assets — — Net cash used in investing activities — Cash flows from financing activities: Proceeds from bond offering — — — Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Partial redemption of senior notes — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Other — — — Net cash provided by (used in) financing activities (Decrease) increase in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ $ |
BUSINESS DESCRIPTION & SUMMAR37
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) item in Thousands | Dec. 31, 2016item |
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of voice connections | 457 |
Number of data connections | 473 |
Number of video connections | 106 |
BUSINESS DESCRIPTION & SUMMAR38
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Business Developments (Details) $ in Thousands | Oct. 05, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 03, 2016statemi | Oct. 31, 2016USD ($) | Dec. 31, 2013USD ($) |
Recent Business Developments | ||||||||
Loan paid | $ 943,050 | $ 107,100 | $ 63,100 | |||||
Loss on extinguishment of debt | $ 6,600 | 6,559 | $ 41,242 | $ 13,785 | ||||
Term loan 5 | ||||||||
Recent Business Developments | ||||||||
Aggregate principal amount | $ 900,000 | $ 900,000 | ||||||
Term loan 4 | ||||||||
Recent Business Developments | ||||||||
Loan paid | 885,000 | |||||||
Loss on extinguishment of debt | $ 6,600 | |||||||
Senior secured credit facility - revolving loan | ||||||||
Recent Business Developments | ||||||||
Maximum borrowing capacity of credit facility | $ 110,000 | $ 110,000 | $ 75,000 | |||||
FairPoint Communications, Inc | ||||||||
Recent Business Developments | ||||||||
Number of states | state | 17 | |||||||
Number of route miles of fiber network in New England | mi | 17,000 | |||||||
FairPoint Communications, Inc | Maximum | ||||||||
Recent Business Developments | ||||||||
Number of route miles of fiber network | mi | 21,000 |
BUSINESS DESCRIPTION & SUMMAR39
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Activity in the entity's accounts receivable allowance | |||
Balance at beginning of year | $ 3,235 | $ 2,752 | $ 1,598 |
Provision charged to expense | 2,798 | 3,525 | 3,320 |
Write-offs, less recoveries | (3,220) | (3,042) | (2,166) |
Balance at end of year | $ 2,813 | $ 3,235 | $ 2,752 |
BUSINESS DESCRIPTION & SUMMAR40
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property, plant and equipment | |||
Total plant in service | $ 2,364,053 | $ 2,241,972 | |
Less: accumulated depreciation and amortization | (1,345,551) | (1,185,054) | |
Plant in service | 1,018,502 | 1,056,918 | |
Totals | 1,055,186 | 1,093,261 | |
Depreciation and amortization expense | $ 161,100 | 167,100 | $ 139,000 |
Internal use network and non-network software | Maximum | |||
Property, plant and equipment | |||
Period after which property plan and equipment capitalized | 1 year | ||
Land and buildings | |||
Property, plant and equipment | |||
Total plant in service | $ 105,923 | 105,728 | |
Land and buildings | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 18 years | ||
Land and buildings | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 40 years | ||
Central office switching and transmission | |||
Property, plant and equipment | |||
Total plant in service | $ 861,608 | 791,719 | |
Central office switching and transmission | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Central office switching and transmission | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 25 years | ||
Outside plant cable, wire and fiber facilities | |||
Property, plant and equipment | |||
Total plant in service | $ 1,201,042 | 1,174,777 | |
Outside plant cable, wire and fiber facilities | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Outside plant cable, wire and fiber facilities | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 50 years | ||
Furniture, fixtures and equipment | |||
Property, plant and equipment | |||
Total plant in service | $ 167,125 | 154,049 | |
Furniture, fixtures and equipment | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Furniture, fixtures and equipment | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 15 years | ||
Assets under capital lease | |||
Property, plant and equipment | |||
Total plant in service | $ 28,355 | 15,699 | |
Assets under capital lease | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Assets under capital lease | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 11 years | ||
Construction in progress | |||
Property, plant and equipment | |||
Total plant in service | $ 21,956 | 21,283 | |
Construction inventory | |||
Property, plant and equipment | |||
Total plant in service | $ 14,728 | $ 15,060 |
BUSINESS DESCRIPTION & SUMMAR41
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Goodwill, Beginning Balance | $ 764,630 |
Acquisition | 4,700 |
Divestiture of businesses | (12,453) |
Goodwill, Ending Balance | $ 756,877 |
BUSINESS DESCRIPTION & SUMMAR42
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finite lived intangible assets | |||
Impairment charge for goodwill | $ 0 | ||
Goodwill | $ 756,877 | $ 764,630 | |
Preceding period of average stock price used to calculate impairment of reporting unit under the fair value model | 3 months | ||
Gross Carrying Amount | $ 224,151 | 223,151 | |
Accumulated Amortization | (203,096) | (190,211) | |
Amortization of intangible assets | 12,900 | 12,800 | $ 10,400 |
Expected amortization expense | |||
2,017 | 6,197 | ||
2,018 | 3,591 | ||
2,019 | 3,326 | ||
2,020 | 2,002 | ||
2,021 | 2,002 | ||
Thereafter | 3,937 | ||
Net carrying amount | 21,055 | ||
Customer Relationships | |||
Finite lived intangible assets | |||
Gross Carrying Amount | 216,261 | 215,261 | |
Accumulated Amortization | $ (198,353) | (187,146) | |
Customer Relationships | Minimum | |||
Finite lived intangible assets | |||
Useful Lives | 3 years | ||
Customer Relationships | Maximum | |||
Finite lived intangible assets | |||
Useful Lives | 13 years | ||
Tradenames | |||
Finite lived intangible assets | |||
Indefinitely renewable tradenames | $ 10,600 | 10,600 | |
Gross Carrying Amount | 2,290 | 2,290 | |
Accumulated Amortization | $ (2,290) | (1,723) | |
Tradenames | Minimum | |||
Finite lived intangible assets | |||
Useful Lives | 1 year | ||
Tradenames | Maximum | |||
Finite lived intangible assets | |||
Useful Lives | 2 years | ||
Other Intangible Assets | |||
Finite lived intangible assets | |||
Useful Lives | 5 years | ||
Gross Carrying Amount | $ 5,600 | 5,600 | |
Accumulated Amortization | $ (2,453) | $ (1,342) |
BUSINESS DESCRIPTION & SUMMAR43
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-based , Pension Plan, Revenue, Income Taxes, Cash Flow (Details) $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)shares | |
Share-based Compensation | |||
Vesting period over which the cost of RSAs and PSAs is recognized | 4 years | ||
Pension Plan and Other Post-Retirement Benefits | |||
Number of non-qualified plans | item | 2 | ||
Income Taxes | |||
Minimum number of states in which entity operates | item | 1 | ||
Revenue Recognition | |||
Period over which print advertising and publishing revenues recognized based on life of related directory | 12 months | ||
Subsidies revenue | $ 12,700 | $ 13,200 | |
Advertising costs | |||
Advertising expense | 8,700 | 8,300 | $ 8,200 |
Statement of Cash Flows Information | |||
Interest, net of amounts capitalized | 69,536 | 76,823 | 73,400 |
Interest capitalized | 1,152 | 1,373 | 1,437 |
Income taxes (received) paid, net | (183) | 1,835 | $ 5,311 |
Noncash investing and financing activities: | |||
Equipment acquired under capital lease | $ 12,200 | $ 4,100 | |
Enventis | |||
Noncash investing and financing activities: | |||
Number of shares issued on date of merger | shares | 10.1 | ||
Value of shares issued in connection with the merger | $ 257,700 |
BUSINESS DESCRIPTION & SUMMAR44
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Noncontrolling Interest (Details) - ETFL | Dec. 31, 2016 |
Noncontrolling Interest | |
Ownership interest (as a percent) | 63.00% |
Eastex Telecom Investments, LLC | |
Noncontrolling Interest | |
Minority interest holding percentage | 37.00% |
BUSINESS DESCRIPTION & SUMMAR45
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Defined Benefit Plans | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fair value of assets | $ 263,733 | $ 278,038 | $ 297,118 |
Post-retirement Benefit Obligations | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fair value of assets | $ 2,286 | 2,985 | $ 3,329 |
Accounting Standards Update 2015-07 | Defined Benefit Plans | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fair value of assets | (111,000) | ||
Accounting Standards Update 2015-07 | Post-retirement Benefit Obligations | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Fair value of assets | $ (1,300) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic and diluted earnings per share attributable to common shareholders | |||||||||
Net income (loss) | $ 15,196 | $ (671) | $ 15,388 | ||||||
Less: net income attributable to noncontrolling interest | 265 | 210 | 321 | ||||||
Income (loss) attributable to common shareholders before allocation of earnings to participating securities | 14,931 | (881) | 15,067 | ||||||
Less: earnings allocated to participating securities | 524 | 546 | |||||||
Net income (loss) attributable to common shareholders, after earnings allocated to participating securities | $ 14,407 | $ (881) | $ 14,521 | ||||||
Weighted-average number of common shares outstanding | 50,301 | 50,176 | 41,998 | ||||||
Basic and diluted earnings (loss) per common share: | |||||||||
Net income (loss) per basic and diluted common share attributable to common shareholders (in dollars per share) | $ 0.14 | $ 0.15 | $ 0.09 | $ 0.05 | $ (0.32) | $ 0.15 | $ 0.29 | $ (0.02) | $ 0.35 |
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 300 | 300 | 400 |
ACQUISITION AND DIPOSITIONS (De
ACQUISITION AND DIPOSITIONS (Details) $ / shares in Units, $ in Thousands | Dec. 03, 2016USD ($)statemi$ / shares | Jul. 01, 2016USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / shares | Dec. 21, 2016USD ($) | Dec. 14, 2016USD ($) | Dec. 13, 2016USD ($) |
Agreement and Plan of Merger | |||||||||
Common stock, no par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Goodwill | $ 756,877 | $ 764,630 | |||||||
Transaction costs | $ 1,214 | $ 1,413 | $ 11,817 | ||||||
Incremental Term Loan Facility | |||||||||
Agreement and Plan of Merger | |||||||||
Aggregate principal amount | $ 935,000 | $ 865,000 | |||||||
Maximum | Incremental Term Loan Facility | |||||||||
Agreement and Plan of Merger | |||||||||
Aggregate principal amount | $ 935,000 | ||||||||
FairPoint Communications, Inc | |||||||||
Agreement and Plan of Merger | |||||||||
Number of states | state | 17 | ||||||||
Number of route miles of fiber network in New England | mi | 17,000 | ||||||||
Common stock, no par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||
Business combination exchange ratio | 0.7300 | ||||||||
Purchase consideration at acquisition | $ 585,300 | ||||||||
Assumption of debt at acquisition | 917,600 | ||||||||
Aggregate price of acquisition | 585,300 | ||||||||
FairPoint Communications, Inc | Incremental Term Loan Facility | |||||||||
Agreement and Plan of Merger | |||||||||
Aggregate principal amount | $ 935,000 | ||||||||
FairPoint Communications, Inc | Minimum | |||||||||
Agreement and Plan of Merger | |||||||||
Number of route miles of fiber network | mi | 21,000 | ||||||||
FairPoint Communications, Inc | Maximum | |||||||||
Agreement and Plan of Merger | |||||||||
Number of route miles of fiber network | mi | 21,000 | ||||||||
Champaign Telephone Company And Big Broadband Services | |||||||||
Agreement and Plan of Merger | |||||||||
Property, plant and equipment | $ 6,900 | ||||||||
Intangible assets | 1,000 | ||||||||
Working capital | 800 | ||||||||
Goodwill | 4,700 | ||||||||
Cash paid on acquisition | $ 13,400 | ||||||||
Enventis | |||||||||
Agreement and Plan of Merger | |||||||||
Net revenues | $ 37,600 | ||||||||
Net loss | (1,400) | ||||||||
Acquisition related costs | $ 5,700 | 5,700 | |||||||
Transaction costs | 11,500 | ||||||||
Unaudited Pro Forma Results | |||||||||
Operating revenues | 790,745 | ||||||||
Income from operations | 104,674 | ||||||||
Net income | 18,648 | ||||||||
Less: income attributable to noncontrolling interest | 321 | ||||||||
Net income attributable to common shareholders | $ 18,327 | ||||||||
Net income per common share - basic and diluted | |||||||||
Net income per basic and diluted common share attributable to common shareholders (in dollars per share) | $ / shares | $ 0.37 |
ACQUISITION AND DISPOSITIONS -
ACQUISITION AND DISPOSITIONS - Divestiture (Details) $ in Thousands | Dec. 05, 2016USD ($) | Sep. 01, 2016USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Acquisitions | |||||
Proceeds from business dispositions | $ 30,119 | ||||
Loss on impairment | 610 | ||||
Income tax expense | $ 22,962 | $ 2,775 | $ 13,027 | ||
CCIC | Discontinued Operations, Disposed of by Sale | |||||
Acquisitions | |||||
Proceeds from business dispositions | $ 21,000 | ||||
Current assets | 567 | ||||
Property, plant, and equipment | 20,348 | ||||
Goodwill | 7,647 | ||||
Total assets | 28,562 | ||||
Current liabilities | 255 | ||||
Deferred taxes | 7,041 | ||||
Other long-term liabilities | 21 | ||||
Total liabilities | 7,317 | ||||
Rural communities | item | 11 | ||||
Additional gain (loss) on sale | $ (300) | ||||
Income tax expense | 7,200 | ||||
ePlus Technology inc. | Discontinued Operations, Disposed of by Sale | |||||
Acquisitions | |||||
Proceeds from business dispositions | $ 9,200 | ||||
Current assets | 7,420 | ||||
Property, plant, and equipment | 1,639 | ||||
Goodwill | 4,196 | ||||
Other assets | 90 | ||||
Total assets | 13,345 | ||||
Current liabilities | 6,351 | ||||
Other long-term liabilities | 62 | ||||
Total liabilities | $ 6,413 | ||||
Additional gain (loss) on sale | $ 600 |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Investments | |||
Cash distributions received from partnerships treated as cost method investees | $ 12,900 | $ 14,600 | $ 14,800 |
Number of entity's investments which is accounted for using equity method | item | 3 | ||
Cash distributions received from partnerships treated as equity method investees | $ 19,200 | 30,700 | $ 19,800 |
Carrying value of investments in excess of underlying equity | 32,800 | ||
Investments | |||
Cash surrender value of life insurance policies | 2,156 | 2,149 | |
Total | $ 106,221 | 105,543 | |
GTE Mobilnet of South Texas Limited Partnership | |||
Investments | |||
Ownership percentage of cost method investee | 2.34% | ||
Investments | |||
Cost method investments: | $ 21,450 | 21,450 | |
Pittsburgh SMSA Limited Partnership | |||
Investments | |||
Ownership percentage of cost method investee | 3.60% | ||
Investments | |||
Cost method investments: | $ 22,950 | 22,950 | |
CoBank, ACB Stock | |||
Investments | |||
Cost method investments: | 8,138 | 7,971 | |
Other | |||
Investments | |||
Cost method investments: | $ 200 | 200 | |
GTE Mobilnet of Texas RSA #17 Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 20.51% | ||
Investments | |||
Equity method investments: | $ 17,160 | 18,099 | |
Pennsylvania RSA 6(I) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 16.67% | ||
Investments | |||
Equity method investments: | $ 6,540 | 6,167 | |
Pennsylvania RSA 6(II) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 23.67% | ||
Investments | |||
Equity method investments: | $ 27,627 | $ 26,557 | |
CVIN, LLC | |||
Investments | |||
Ownership percentage of equity method investee | 6.96% | ||
CVIN, LLC | Investment expense | |||
Investments | |||
Impairment loss | $ 800 |
INVESTMENTS - Equity Method (De
INVESTMENTS - Equity Method (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of unaudited summarized income statement information | |||
Total revenues | $ 334,421 | $ 348,595 | $ 338,575 |
Income from operations | 97,075 | 105,495 | 96,606 |
Net income before taxes | 95,473 | 104,568 | 96,763 |
Net income | 95,473 | 104,568 | 96,763 |
Summary of unaudited summarized balance sheet information | |||
Current assets | 64,083 | 57,716 | 52,866 |
Non-current assets | 89,651 | 96,197 | 93,771 |
Current liabilities | 21,985 | 20,576 | 16,253 |
Non-current liabilities | 51,836 | 52,414 | 3,225 |
Partnership equity | $ 79,913 | $ 80,923 | $ 127,159 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair Value Measurements | ||
Long-term interest rate swap assets | $ 398 | |
Current interest rate swap liabilities | (453) | $ (190) |
Long-term interest rate swap liabilities | (216) | (1,084) |
Total Fair Value | (271) | (1,274) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Long-term interest rate swap assets | 398 | |
Current interest rate swap liabilities | (453) | (190) |
Long-term interest rate swap liabilities | (216) | (1,084) |
Total Fair Value | $ (271) | $ (1,274) |
FAIR VALUE MEASUREMENTS - Fin52
FAIR VALUE MEASUREMENTS - Financial Instuments Not Carried at FV (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Carrying Value | ||
Fair Value Measurements | ||
Investments, equity basis | $ 51,327 | $ 50,823 |
Investments, at cost | 52,738 | 52,571 |
Long-term debt | 1,388,786 | 1,393,567 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt | $ 1,390,773 | $ 1,312,383 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Feb. 01, 2017USD ($) | Oct. 05, 2016USD ($) | Jun. 08, 2015USD ($) | Sep. 18, 2014USD ($) | Oct. 31, 2016USD ($) | Mar. 31, 2017 | Dec. 31, 2016USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2017USD ($) | Dec. 21, 2016USD ($) | Dec. 14, 2016USD ($) | Dec. 13, 2016USD ($) | Dec. 31, 2013USD ($) |
Debt | ||||||||||||||||
Total long-term debt | $ 1,405,643 | $ 1,405,643 | $ 1,401,147 | |||||||||||||
Less: current portion of long-term debt and capital leases | (14,922) | (14,922) | (10,937) | |||||||||||||
Less: deferred debt issuance costs | (13,967) | (13,967) | (12,318) | |||||||||||||
Total long-term debt | 1,376,754 | 1,376,754 | 1,377,892 | |||||||||||||
Unamortized discount | $ 8,964 | $ 8,964 | ||||||||||||||
Leverage ratio | 3 | 4.49 | 4.49 | |||||||||||||
Deferred debt issuance costs | $ 13,967 | $ 13,967 | 12,318 | |||||||||||||
Loss on extinguishment of debt | 6,600 | 6,559 | 41,242 | $ 13,785 | ||||||||||||
Dividend declared | $ 19,600 | 78,473 | 78,250 | 66,331 | ||||||||||||
Dividend paid | $ 331,600 | |||||||||||||||
Dividends available for distribution | $ 269,300 | $ 269,300 | ||||||||||||||
Percentage of increase in available cash used in repayment of debt during dividend suspension period | 50.00% | |||||||||||||||
Interest coverage ratio | 3.97 | 3.97 | ||||||||||||||
Loan paid | $ 943,050 | 107,100 | 63,100 | |||||||||||||
Proceeds from business dispositions | 30,119 | |||||||||||||||
Remaining consolidated cash available for dividends and other restricted payments | $ 451,100 | 451,100 | ||||||||||||||
Cumulative consolidated cash available to pay dividends and other restricted payments | $ 782,600 | $ 782,600 | ||||||||||||||
Repayments of senior notes | 261,874 | 84,127 | ||||||||||||||
Forecast | ||||||||||||||||
Debt | ||||||||||||||||
Dividend paid | $ 19,600 | |||||||||||||||
Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Interest coverage ratio | 2.25 | 2.25 | ||||||||||||||
Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Leverage ratio | 5.10 | 5.10 | ||||||||||||||
Leverage ratio for an event of default | 5.25 | 5.25 | ||||||||||||||
Senior Notes 6.50 Percent Due 2022 | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term debt | $ 495,698 | $ 495,698 | 495,107 | |||||||||||||
Less: deferred debt issuance costs | $ (8,300) | |||||||||||||||
Unamortized discount | $ 4,302 | $ 4,302 | $ 4,893 | |||||||||||||
Aggregate principal amount | $ 300,000 | $ 200,000 | ||||||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | |||||||||||
Deferred debt issuance costs | $ 8,300 | |||||||||||||||
Original issuance discount | $ 5,200 | |||||||||||||||
Issue price as a percentage of par | 98.26% | |||||||||||||||
Yield to maturity (as a percent) | 6.80% | |||||||||||||||
Gross proceeds | $ 294,800 | $ 200,000 | ||||||||||||||
Dividends available for distribution | $ 50,000 | $ 50,000 | ||||||||||||||
Number of times to be applied to fixed charges for calculating the deduction from cumulative consolidated net cash | 1.75 | 1.75 | ||||||||||||||
Senior Notes 6.50 Percent Due 2022 | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Net leverage ratio | 4.75 | 4.75 | ||||||||||||||
Senior Notes 10.875 Percent Due 2020 | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount | $ 300,000 | |||||||||||||||
Interest rate (as a percent) | 10.875% | |||||||||||||||
Loss on extinguishment of debt | $ 41,200 | $ 41,200 | 13,800 | |||||||||||||
Debt amount redeemed | 72,800 | |||||||||||||||
Amount of debt redeemed | 227,200 | |||||||||||||||
Repayments of senior notes | $ 261,900 | $ 84,100 | ||||||||||||||
Senior Secured Credit Facility | Weighted average | ||||||||||||||||
Debt | ||||||||||||||||
Weighted average interest rate (as a percent) | 4.00% | 4.24% | ||||||||||||||
Senior secured credit facility - revolving loan | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term debt | $ 10,000 | |||||||||||||||
Maximum borrowing capacity of credit facility | $ 110,000 | 110,000 | $ 75,000 | |||||||||||||
Amounts outstanding | 10,000 | |||||||||||||||
Stand-by letter of credit outstanding | $ 1,600 | $ 1,600 | ||||||||||||||
Available borrowing capacity | 108,400 | $ 108,400 | ||||||||||||||
Senior secured credit facility - revolving loan | LIBOR | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 2.50% | |||||||||||||||
Senior secured credit facility - revolving loan | LIBOR | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 3.25% | |||||||||||||||
Senior secured credit facility - revolving loan | LIBOR | Weighted average | Forecast | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 3.00% | |||||||||||||||
Senior secured credit facility - revolving loan | Alternate base rate | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 1.50% | |||||||||||||||
Senior secured credit facility - revolving loan | Alternate base rate | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 2.25% | |||||||||||||||
Senior secured credit facility - revolving loan | Alternate base rate | Weighted average | Forecast | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 2.00% | |||||||||||||||
Term loan 5 | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term debt | 893,088 | $ 893,088 | ||||||||||||||
Less: deferred debt issuance costs | (3,900) | $ (2,500) | ||||||||||||||
Unamortized discount | 4,662 | 4,662 | ||||||||||||||
Aggregate principal amount | $ 900,000 | 900,000 | ||||||||||||||
Quarterly principal payments required | $ 2,250 | |||||||||||||||
Margin (as a percent) | 3.00% | |||||||||||||||
Deferred debt issuance costs | 3,900 | 2,500 | ||||||||||||||
Issue discount (as a percentage) | 0.25% | |||||||||||||||
Term loan 5 | LIBOR | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 1.00% | |||||||||||||||
Term loan 4 | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term debt | 888,460 | |||||||||||||||
Unamortized discount | 3,340 | |||||||||||||||
Loss on extinguishment of debt | $ 6,600 | |||||||||||||||
Loan paid | $ 885,000 | |||||||||||||||
Incremental Term Loan Facility | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount | $ 935,000 | $ 865,000 | ||||||||||||||
Additional borrowing capacity | $ 300,000 | |||||||||||||||
Issue discount (as a percentage) | 0.50% | |||||||||||||||
Incremental Term Loan Facility | Maximum | ||||||||||||||||
Debt | ||||||||||||||||
Aggregate principal amount | $ 935,000 | |||||||||||||||
Additional borrowing capacity | $ 300,000 | |||||||||||||||
Incremental Term Loan Facility | LIBOR | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 3.00% | |||||||||||||||
Incremental Term Loan Facility | LIBOR | Minimum | ||||||||||||||||
Debt | ||||||||||||||||
Margin (as a percent) | 1.00% | |||||||||||||||
Capital lease agreements | ||||||||||||||||
Debt | ||||||||||||||||
Total long-term debt | $ 16,857 | $ 16,857 | $ 7,580 |
LONG-TERM DEBT - Future Maturit
LONG-TERM DEBT - Future Maturities (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Aggregate maturities of our long-term debt | |
2,017 | $ 9,000 |
2,018 | 9,000 |
2,019 | 9,000 |
2,020 | 9,000 |
2,021 | 9,000 |
Thereafter | 1,352,750 |
Total maturities | 1,397,750 |
Unamortized discount | (8,964) |
Long-term debt excluding capital leases | $ 1,388,786 |
DERIVATIVE FINANCIAL INSTRUME55
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Derivatives | |||
Number of swap agreements that provide for the entity or the counterparties to post collateral | item | 0 | ||
Interest rate swaps | |||
Derivatives | |||
Total Fair Value | $ (1,274) | ||
Cash flow hedges | Interest rate swaps | |||
Derivatives | |||
Total Fair Value | $ (271) | ||
Other Assets. | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 100,000 | ||
Other assets | 398 | ||
Accrued Expense | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 100,000 | ||
Accrued expense | (453) | ||
Other Liabilities | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 50,000 | 150,000 | |
Fair Value, Other long-term liabilities | (216) | (1,084) | |
De-designated Hedges | Interest rate swaps | |||
Derivatives | |||
Gain recognized as a reduction to interest expense | $ 200 | 800 | $ 1,600 |
De-designated Hedges | Accrued Expense | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 50,000 | ||
Accrued expense | (110) | ||
De-designated Hedges | Accrued Expense | Fixed to 1-month floating LIBOR, two | |||
Derivatives | |||
Notional amount | 50,000 | ||
Accrued expense | $ (80) |
DERIVATIVE FINANCIAL INSTRUME56
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative Instruments | |||
Derivatives | |||
Deferred losses included in AOCI (pretax) | $ (200) | $ (1,100) | |
Cash flow hedges | |||
Derivatives | |||
Unrealize loss recognized in AOCI, pretax | (469) | (1,744) | $ (132) |
Deferred losses reclassified from AOCI to interest expense | (1,352) | $ (1,371) | $ (2,050) |
Gain arising from ineffectiveness reducing interest expense | 242 | ||
Losses included in AOCI to be recognized in the next 12 months | $ (2,100) |
EQUITY - Share-based Compensati
EQUITY - Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | May 04, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Stock-based compensation plans | ||||
Shares of common stock authorized for issuance | 2,650,000 | |||
Vesting period | 4 years | |||
Shares | ||||
Shares granted | 194,106 | 161,357 | 223,908 | |
Total fair value of the awards vested | $ 3.4 | $ 3.9 | $ 3.5 | |
Weighted Average Grant Date Fair Value | ||||
Pretax stock-based compensation expense | 3 | 3 | 3.6 | |
Income tax benefits related to stock-based compensation | 1.2 | $ 1.2 | 1.3 | |
Unrecognized share-based compensation | ||||
Unrecognized compensation costs | $ 2.7 | |||
Weighted-average period of recognition | 1 year 7 months 6 days | |||
Maximum | ||||
Stock-based compensation plans | ||||
Shares that may be granted in the form of stock options or stock appreciation rights to any eligible employee or director in any calendar year | 300,000 | |||
Payout opportunity as a percentage of the target | 120.00% | |||
Minimum | ||||
Stock-based compensation plans | ||||
Payout opportunity as a percentage of the target | 0.00% | |||
Plan | ||||
Stock-based compensation plans | ||||
Additional shares of common stock authorized | 1,000,000 | |||
Restricted stock | ||||
Stock-based compensation plans | ||||
Vesting period | 4 years | |||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 99,360 | |||
Shares granted | 100,040 | |||
Shares vested | (103,671) | |||
Shares forfeited, cancelled or retired | (2,067) | |||
Non-vested shares outstanding at the end of the period | 93,662 | 99,360 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 19.40 | |||
Shares granted (in dollars per share) | 23.95 | |||
Shares vested (in dollars per share) | 21.13 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 19.74 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 22.34 | $ 19.40 | ||
Pretax stock-based compensation expense | $ 2.1 | $ 1.7 | $ 2.1 | |
Restricted stock | Plan | ||||
Shares | ||||
Shares granted | 100,040 | 83,571 | 132,781 | |
Weighted Average Grant Date Fair Value | ||||
Shares granted (in dollars per share) | $ 23.95 | $ 21.08 | $ 19.74 | |
Performance shares | ||||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 83,224 | |||
Shares granted | 94,066 | |||
Shares vested | (64,018) | |||
Shares forfeited, cancelled or retired | (4,112) | |||
Non-vested shares outstanding at the end of the period | 109,160 | 83,224 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 18.75 | |||
Shares granted (in dollars per share) | 20.86 | |||
Shares vested (in dollars per share) | 19.44 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 19.81 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 20.12 | $ 18.75 | ||
Pretax stock-based compensation expense | $ 0.9 | $ 1.3 | $ 1.5 | |
Performance shares | Plan | ||||
Shares | ||||
Shares granted | 94,066 | 77,786 | 91,127 | |
Weighted Average Grant Date Fair Value | ||||
Shares granted (in dollars per share) | $ 20.86 | $ 19.74 | $ 17.13 |
EQUITY - Changes in AOCI (Detai
EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | $ (35,699) | $ (31,640) | |
Other comprehensive income before reclassifications | (15,120) | (6,619) | |
Amounts reclassified from accumulated other comprehensive loss | 3,542 | 2,560 | |
Net current period other comprehensive income | (11,578) | (4,059) | $ (30,640) |
Balance at the end of the period | (47,277) | (35,699) | (31,640) |
Pension and Post-Retirement Obligations | |||
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | (35,025) | (31,185) | |
Other comprehensive income before reclassifications | (14,831) | (5,547) | |
Amounts reclassified from accumulated other comprehensive loss | 2,706 | 1,707 | |
Net current period other comprehensive income | (12,125) | (3,840) | |
Balance at the end of the period | (47,150) | (35,025) | (31,185) |
Derivative Instruments | |||
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | (674) | (455) | |
Other comprehensive income before reclassifications | (289) | (1,072) | |
Amounts reclassified from accumulated other comprehensive loss | 836 | 853 | |
Net current period other comprehensive income | 547 | (219) | |
Balance at the end of the period | $ (127) | $ (674) | $ (455) |
EQUITY - Reclassification from
EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
EQUITY | |||
Income before income taxes | $ 38,158 | $ 2,104 | $ 28,415 |
Interest expense | (76,826) | (79,618) | (82,537) |
Tax benefit (expense) | (22,962) | (2,775) | (13,027) |
Net income (loss) | 15,196 | (671) | $ 15,388 |
Pension and Post-Retirement Obligations | Amount Reclassified from AOCI | |||
EQUITY | |||
Prior service credit | 979 | 1,079 | |
Actuarial loss | (5,423) | (3,884) | |
Income before income taxes | (4,444) | (2,805) | |
Tax benefit (expense) | 1,738 | 1,098 | |
Net income (loss) | (2,706) | (1,707) | |
Derivative Instruments | Amount Reclassified from AOCI | |||
EQUITY | |||
Interest expense | (1,352) | (1,371) | |
Tax benefit (expense) | 516 | 518 | |
Net income (loss) | $ (836) | $ (853) |
PENSION PLANS AND OTHER POST-RE
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Defined Benefit Plans (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Amounts recognized in the consolidated balance sheets | |||
Long-term liabilities | $ (130,793) | $ (112,966) | |
Defined Benefit Plans | |||
Change in benefit obligation | |||
Benefit obligation at the beginning of the year | 352,206 | 381,188 | |
Service costs | 343 | 410 | $ 560 |
Interest costs | 16,291 | 15,788 | 16,295 |
Actuarial loss (gain) | 12,935 | (22,951) | |
Benefits paid | (31,383) | (22,229) | |
Benefit obligation at the end of the year | 350,392 | 352,206 | 381,188 |
Change in plan assets | |||
Fair value of plan assets at the beginning of the year | 278,038 | 297,118 | |
Employer contributions | 258 | 12,224 | |
Actual return on plan assets | 16,820 | (9,075) | |
Benefits paid | (31,383) | (22,229) | |
Fair value of plan assets at the end of the year | 263,733 | 278,038 | 297,118 |
Funded status at year end | (86,659) | (74,168) | |
Amounts recognized in the consolidated balance sheets | |||
Current liabilities | (245) | (245) | |
Long-term liabilities | (86,414) | (73,923) | |
Amounts recognized in accumulated other comprehensive income | |||
Unamortized prior service credit | (3,054) | (3,512) | |
Unamortized net actuarial loss | 83,367 | 72,040 | |
Total | 80,313 | 68,528 | |
Components of net periodic pension costs | |||
Service costs | 343 | 410 | 560 |
Interest costs | 16,291 | 15,788 | 16,295 |
Expected return on plan assets | (20,635) | (23,372) | (23,106) |
Net amortization loss (gain) | 5,423 | 4,018 | 20 |
Prior service credit amortization | (458) | (457) | (457) |
Net periodic pension cost (benefit) | 964 | (3,613) | $ (6,688) |
Changes in plan assets and benefit obligations recognized in other comprehensive income, before tax effects | |||
Actuarial loss (gain), net | 16,750 | 9,497 | |
Recognized actuarial (loss) | (5,423) | (4,018) | |
Recognized prior service credit | 458 | 457 | |
Total amount recognized in other comprehensive income, before tax effects | 11,785 | $ 5,936 | |
Amount to be amortized from accumulated other comprehensive income in net periodic benefit cost in the next fiscal year | |||
Net loss | 6,800 | ||
Net prior service cost (credit) | $ (500) | ||
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | |||
Discount rate - net periodic benefit cost (as a percent) | 4.76% | 4.27% | 4.97% |
Discount rate - benefit obligation (as a percent) | 4.27% | 4.76% | 4.27% |
Expected long-term rate of return on plan assets (as a percent) | 7.75% | 8.00% | 8.00% |
Rate of compensation/salary increase for net periodic benefit cost (as a percent) | 1.75% | 1.75% | 1.75% |
Post-retirement Benefit Obligations | |||
Defined benefit plans | |||
Number of persons eligible to become a new participant | item | 0 | ||
Plan unfunded status | $ 0 | ||
Change in benefit obligation | |||
Benefit obligation at the beginning of the year | 40,538 | $ 42,135 | |
Service costs | 602 | 601 | $ 479 |
Interest costs | 2,019 | 1,713 | 1,565 |
Plan participant contributions | 544 | 657 | |
Actuarial loss (gain) | 6,767 | (910) | |
Benefits paid | (4,152) | (3,658) | |
Benefit obligation at the end of the year | 46,318 | 40,538 | 42,135 |
Change in plan assets | |||
Fair value of plan assets at the beginning of the year | 2,985 | 3,329 | |
Employer contributions | 3,608 | 3,001 | |
Plan participant contributions | 544 | 657 | |
Actual return on plan assets | (699) | (344) | |
Benefits paid | (4,152) | (3,658) | |
Fair value of plan assets at the end of the year | 2,286 | 2,985 | 3,329 |
Funded status at year end | (44,032) | (37,553) | |
Amounts recognized in the consolidated balance sheets | |||
Current liabilities | (1,555) | (566) | |
Long-term liabilities | (42,477) | (36,987) | |
Amounts recognized in accumulated other comprehensive income | |||
Unamortized prior service credit | (4,616) | (5,137) | |
Unamortized net actuarial loss | 956 | (6,658) | |
Total | (3,660) | (11,795) | |
Components of net periodic pension costs | |||
Service costs | 602 | 601 | 479 |
Interest costs | 2,019 | 1,713 | 1,565 |
Expected return on plan assets | (148) | (150) | (223) |
Net amortization loss (gain) | (134) | (563) | |
Prior service credit amortization | (521) | (622) | (37) |
Net periodic pension cost (benefit) | 1,952 | 1,408 | $ 1,221 |
Changes in plan assets and benefit obligations recognized in other comprehensive income, before tax effects | |||
Actuarial loss (gain), net | 7,614 | (417) | |
Recognized actuarial (loss) | 134 | ||
Recognized prior service credit | 521 | 622 | |
Total amount recognized in other comprehensive income, before tax effects | $ 8,135 | $ 339 | |
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | |||
Discount rate - net periodic benefit cost (as a percent) | 4.61% | 4.11% | 4.55% |
Discount rate - benefit obligation (as a percent) | 4.12% | 4.61% | 4.11% |
Estimated net prior service credit that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ (500) | ||
Supplemental Plans | |||
Defined benefit plans | |||
Number of non-qualified plans | item | 2 | ||
Number of persons eligible to become a new participant | item | 0 | ||
Pension and SERP Plans | |||
Defined benefit plans | |||
Plan unfunded status | $ 0 |
PENSION PLANS AND OTHER POST-61
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Non-qualified Deferred Comp Agreements (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Other Non-qualified Deferred Compensation Agreements | ||
Minimum number of years benefits are payable | 5 years | |
Minimum age at which payments under deferred compensation agreements may begin | 55 years | |
Payment related to deferred compensation agreements | $ 0.2 | $ 0.3 |
Net present value of the remaining obligations | $ 2 | 2.1 |
Number of life insurance policies | item | 25 | |
Excess of cash surrender value of remaining life insurance policies over notes payable | $ 2.2 | 2.1 |
Proceeds from Life Insurance Policies | 0.2 | 0 |
Aggregate death benefit payment payable under the life insurance policies | $ 6.8 | $ 7 |
PENSION PLANS AND OTHER POST-62
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Assumptions (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014 | |
Defined Benefit Plans | |||
Defined benefit plans | |||
Employer contributions | $ 258 | $ 12,224 | |
Amount to be amortized from accumulated other comprehensive income in net periodic benefit cost in the next fiscal year | |||
Net loss | 6,800 | ||
Net prior service cost (credit) | $ (500) | ||
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | |||
Discount rate - net periodic benefit cost (as a percent) | 4.76% | 4.27% | 4.97% |
Discount rate - benefit obligation (as a percent) | 4.27% | 4.76% | 4.27% |
Expected long-term rate of return on plan assets (as a percent) | 7.75% | 8.00% | 8.00% |
Rate of compensation/salary increase for net periodic benefit cost (as a percent) | 1.75% | 1.75% | 1.75% |
Post-retirement Benefit Obligations | |||
Defined benefit plans | |||
Number of persons eligible to become a new participant | item | 0 | ||
Plan unfunded status | $ 0 | ||
Employer contributions | $ 3,608 | $ 3,001 | |
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | |||
Discount rate - net periodic benefit cost (as a percent) | 4.61% | 4.11% | 4.55% |
Discount rate - benefit obligation (as a percent) | 4.12% | 4.61% | 4.11% |
Effect of one percent increase on total of service and interest cost | $ 185 | ||
Effect of one percent increase on postretirement benefit obligation | 2,429 | ||
Effect of one percent decrease on postretirement benefit obligation | (2,157) | ||
Effect of one percent decrease on total of service and interest cost | $ (160) | ||
Health care trend rate assumed for the next fiscal year (as a percent) | 7.50% | ||
Ultimate health care cost trend rate (as a percent) | 5.00% | ||
Supplemental Plans | |||
Defined benefit plans | |||
Number of non-qualified plans | item | 2 | ||
Number of persons eligible to become a new participant | item | 0 | ||
Pension and SERP Plans | |||
Defined benefit plans | |||
Plan unfunded status | $ 0 |
PENSION PLANS AND OTHER POST-63
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Plan Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Minimum | |||
Post-retirement benefit obligation | |||
Long-term investment horizon | 5 years | ||
Maximum | |||
Post-retirement benefit obligation | |||
Long-term investment horizon | 15 years | ||
Maximum | Equity mutual fund | |||
Post-retirement benefit obligation | |||
Target allocation (as a percent) | 60.00% | ||
Defined Benefit Plans | |||
Post-retirement benefit obligation | |||
Fair value of assets | $ 266,621 | $ 280,312 | |
Other liabilities | (2,888) | (2,274) | |
Fair value of assets | 263,733 | 278,038 | $ 297,118 |
Expected contribution in the next fiscal year | 2,900 | ||
Benefit payments expected to be paid | |||
2,017 | 23,667 | ||
2,018 | 23,594 | ||
2,019 | 23,590 | ||
2,020 | 23,565 | ||
2,021 | 23,409 | ||
2022-2026 | 113,431 | ||
Defined Benefit Plans | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 159,495 | 169,278 | |
Defined Benefit Plans | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 140,585 | 148,864 | |
Defined Benefit Plans | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 18,910 | 20,414 | |
Defined Benefit Plans | Cash and Cash Equivalents [Member] | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 671 | 1,692 | |
Defined Benefit Plans | Cash and Cash Equivalents [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 671 | 1,692 | |
Defined Benefit Plans | U.S. common stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 23,285 | 27,192 | |
Defined Benefit Plans | U.S. common stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 23,285 | 27,192 | |
Defined Benefit Plans | International stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,756 | 9,173 | |
Defined Benefit Plans | International stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,756 | 9,173 | |
Defined Benefit Plans | U.S. small cap equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 10,093 | 11,018 | |
Defined Benefit Plans | US mid cap funds Member | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 9,294 | 7,956 | |
Defined Benefit Plans | US mid cap funds Member | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 9,294 | 7,956 | |
Defined Benefit Plans | U.S. large cap funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 7,564 | 8,297 | |
Defined Benefit Plans | U.S. large cap funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 7,564 | 8,297 | |
Defined Benefit Plans | U.S. large cap equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 14,064 | 13,822 | |
Defined Benefit Plans | Emerging markets funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 14,382 | 12,822 | |
Defined Benefit Plans | Emerging markets funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 14,382 | 12,822 | |
Defined Benefit Plans | Emerging markets equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 7,865 | 6,588 | |
Defined Benefit Plans | International equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 15,434 | 15,696 | |
Defined Benefit Plans | International funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 47,784 | 47,966 | |
Defined Benefit Plans | International funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 47,784 | 47,966 | |
Defined Benefit Plans | U.S. treasury and government agency securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 16,821 | 16,859 | |
Defined Benefit Plans | U.S. treasury and government agency securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,794 | 8,895 | |
Defined Benefit Plans | U.S. treasury and government agency securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,027 | 7,964 | |
Defined Benefit Plans | Corporate and municipal bonds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 6,712 | 6,540 | |
Defined Benefit Plans | Corporate and municipal bonds | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 6,712 | 6,540 | |
Defined Benefit Plans | Mortgage/asset-backed securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4,171 | 5,910 | |
Defined Benefit Plans | Mortgage/asset-backed securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4,171 | 5,910 | |
Defined Benefit Plans | Fixed Income mutual funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 20,055 | 24,871 | |
Defined Benefit Plans | Fixed Income mutual funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 20,055 | 24,871 | |
Defined Benefit Plans | Fixed Income mutual funds | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 52,340 | 58,882 | |
Defined Benefit Plans | Short-term investments | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 7,330 | 5,028 | |
Post-retirement Benefit Obligations | |||
Post-retirement benefit obligation | |||
Fair value of assets | 2,577 | 3,242 | |
Other liabilities | (28) | (27) | |
Benefit payments payable | (263) | (230) | |
Fair value of assets | 2,286 | 2,985 | $ 3,329 |
Expected contribution in the next fiscal year | 3,900 | ||
Benefit payments expected to be paid | |||
2,017 | 3,872 | ||
2,018 | 4,016 | ||
2,019 | 4,077 | ||
2,020 | 4,058 | ||
2,021 | 3,886 | ||
2022-2026 | 16,111 | ||
Post-retirement Benefit Obligations | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,541 | 1,959 | |
Post-retirement Benefit Obligations | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,358 | 1,723 | |
Post-retirement Benefit Obligations | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 183 | 236 | |
Post-retirement Benefit Obligations | Cash and Cash Equivalents [Member] | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 6 | 20 | |
Post-retirement Benefit Obligations | Cash and Cash Equivalents [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 6 | 20 | |
Post-retirement Benefit Obligations | U.S. common stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 225 | 315 | |
Post-retirement Benefit Obligations | U.S. common stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 225 | 315 | |
Post-retirement Benefit Obligations | International stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 84 | 106 | |
Post-retirement Benefit Obligations | International stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 84 | 106 | |
Post-retirement Benefit Obligations | U.S. small cap equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 98 | 127 | |
Post-retirement Benefit Obligations | US mid cap funds Member | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 90 | 92 | |
Post-retirement Benefit Obligations | US mid cap funds Member | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 90 | 92 | |
Post-retirement Benefit Obligations | U.S. large cap funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 73 | 96 | |
Post-retirement Benefit Obligations | U.S. large cap funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 73 | 96 | |
Post-retirement Benefit Obligations | U.S. large cap equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 136 | 160 | |
Post-retirement Benefit Obligations | Emerging markets funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 139 | 148 | |
Post-retirement Benefit Obligations | Emerging markets funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 139 | 148 | |
Post-retirement Benefit Obligations | Emerging markets equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 76 | 76 | |
Post-retirement Benefit Obligations | International equity | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 149 | 181 | |
Post-retirement Benefit Obligations | International funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 462 | 555 | |
Post-retirement Benefit Obligations | International funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 462 | 555 | |
Post-retirement Benefit Obligations | U.S. treasury and government agency securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 163 | 195 | |
Post-retirement Benefit Obligations | U.S. treasury and government agency securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 85 | 103 | |
Post-retirement Benefit Obligations | U.S. treasury and government agency securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 78 | 92 | |
Post-retirement Benefit Obligations | Corporate and municipal bonds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 65 | 75 | |
Post-retirement Benefit Obligations | Corporate and municipal bonds | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 65 | 75 | |
Post-retirement Benefit Obligations | Mortgage/asset-backed securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 40 | 69 | |
Post-retirement Benefit Obligations | Mortgage/asset-backed securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 40 | 69 | |
Post-retirement Benefit Obligations | Fixed Income mutual funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 194 | 288 | |
Post-retirement Benefit Obligations | Fixed Income mutual funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 194 | 288 | |
Post-retirement Benefit Obligations | Fixed Income mutual funds | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 506 | 681 | |
Post-retirement Benefit Obligations | Short-term investments | Investments Net Asset Value [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | $ 71 | $ 58 |
PENSION PLANS AND OTHER POST-64
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Expense with respect to 401(k) plans | $ 6.5 | $ 6.9 | $ 5.3 |
Enventis | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Expense with respect to 401(k) plans | $ 1.8 |
INCOME TAXES - Income tax expen
INCOME TAXES - Income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | |||
Federal | $ 1,390 | $ (3,708) | $ 1,769 |
State | 709 | 655 | 1,014 |
Total current expense (benefit) | 2,099 | (3,053) | 2,783 |
Deferred: | |||
Federal | 20,087 | 4,321 | 8,136 |
State | 776 | 1,507 | 2,108 |
Total deferred expense (benefit) | 20,863 | 5,828 | 10,244 |
Total income tax expense | $ 22,962 | $ 2,775 | $ 13,027 |
Reconciliation of the provision for income taxes computed at federal statutory rates to the effective rates | |||
Statutory federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit (as a percent) | 2.90% | (37.90%) | 1.20% |
Transaction costs (as a percent) | 2.60% | ||
Other permanent differences (as a percent) | (0.90%) | (10.80%) | (0.40%) |
Change in uncertain tax positions (as a percent) | (8.20%) | ||
Valuation allowance (as a percent) | 1.60% | 43.40% | (0.70%) |
Change in deferred tax rate (as a percent) | (4.00%) | 91.90% | 7.40% |
Provision to return | 0.30% | (1.50%) | |
Sale of stock in subsidiary | 19.10% | ||
Non deductible goodwill | 3.80% | ||
Other (as a percent) | 0.60% | (1.60%) | (0.10%) |
Total (as a percent) | 60.20% | 131.90% | 45.80% |
Non-current deferred tax assets: | |||
Reserve for uncollectible accounts | $ 1,090 | $ 1,268 | |
Accrued vacation pay deducted when paid | 2,286 | 2,112 | |
Accrued expenses and deferred revenue | 7,687 | 9,051 | |
Net operating loss carryforwards | 13,068 | 31,695 | |
Pension and postretirement obligations | 50,353 | 44,266 | |
Stock-based compensation | 189 | 268 | |
Derivative instruments | 80 | 421 | |
Financing costs | 492 | 310 | |
Tax credit carryforwards | 5,383 | 3,973 | |
Other | 22 | 23 | |
Deferred Tax Assets, Gross, Noncurrent | 80,650 | 93,387 | |
Deferred Tax Assets, Valuation Allowance, Noncurrent | 1,775 | 2,652 | |
Net non-current deferred tax assets | 78,875 | 90,735 | |
Non-current deferred tax liabilities: | |||
Goodwill and other intangibles | (36,558) | (38,658) | |
Basis in investment | (38) | (39) | |
Partnership investments | (22,360) | (22,058) | |
Property, plant and equipment | (264,217) | (266,509) | |
Total | (323,173) | (327,264) | |
Net non-current deferred taxes | (244,298) | $ (236,529) | |
State | |||
Non-current deferred tax assets: | |||
Net operating loss carryforwards | $ 7,500 |
INCOME TAXES - Carryforwards (D
INCOME TAXES - Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income taxes | ||||
Deferred tax assets related to net operating loss carryforwards | $ 13,068 | $ 31,695 | ||
Deferred tax assets related to State tax credit carryforwards | 5,383 | 3,973 | ||
Unrecognized tax benefits | $ 66 | $ 238 | 64 | $ 66 |
Decrease in liability for unrecognized tax benefits | 158 | |||
Reconciliation of the unrecognized tax benefits | ||||
Balance at the beginning of the period | 66 | 238 | ||
Additions for tax positions in the current year | 1 | |||
Reduction for tax positions of prior years | (158) | |||
Balance at the end of the period | 64 | 66 | ||
State | ||||
Income taxes | ||||
Net operating loss carryforwards | 154,900 | |||
NOL carryforward would have recorded benefit to APIC | 9,400 | |||
Deferred tax assets related to net operating loss carryforwards | 7,500 | |||
Deferred tax asset would have been recorded in APIC | 200 | |||
Utilization of net operating loss carryforwards subject to Separate Return Limitation Year | 11,100 | |||
Deferred tax assets related to utilization of net operating loss carryforwards subject to Separate Return Limitation Year | 500 | |||
Utilization of tax credit carryforwards subject to Separate Return Limitation Year | 2,000 | |||
Deferred tax assets related to utilization of tax credit carryforwards subject to Separate Return Limitation Year | 1,300 | |||
Tax credit carryforwards | 5,000 | |||
Deferred tax assets related to State tax credit carryforwards | 3,300 | |||
Decrease in tax expense due to expiration of state statute of limitations | 100 | |||
Reconciliation of the unrecognized tax benefits | ||||
Reduction for lapse of statute of limitations | $ (2) | $ (15) | ||
Federal | ||||
Income taxes | ||||
Net operating loss carryforwards | 20,700 | |||
NOL carryforward would have recorded benefit to APIC | 5,800 | |||
Deferred tax assets related to net operating loss carryforwards | 7,200 | |||
Deferred tax asset would have been recorded in APIC | 2,000 | |||
Tax credit carryforwards | 2,200 | |||
Deferred tax assets related to State tax credit carryforwards | 2,200 | |||
Federal | ETFL | ||||
Income taxes | ||||
Net operating loss carryforwards | 1,600 | |||
Deferred tax assets related to net operating loss carryforwards | $ 600 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies | |||
2,017 | $ 47,971 | ||
2,018 | 28,697 | ||
2,019 | 21,105 | ||
2,020 | 15,500 | ||
2,021 | 11,718 | ||
Thereafter | 19,711 | ||
Total | 144,702 | ||
Operating Leases | |||
Rent expense | 12,700 | $ 12,100 | $ 7,500 |
Capital Leases | |||
Present value of the minimum remaining lease commitments | 16,900 | ||
Capital lease commitments due and payable within the next 12 months | 5,900 | ||
Imputed interest | 2,000 | ||
Operating lease agreements | |||
Commitments and Contingencies | |||
2,017 | 11,304 | ||
2,018 | 10,000 | ||
2,019 | 8,838 | ||
2,020 | 7,069 | ||
2,021 | 4,287 | ||
Thereafter | 12,605 | ||
Total | 54,103 | ||
Capital lease agreements | |||
Commitments and Contingencies | |||
2,017 | 5,922 | ||
2,018 | 6,187 | ||
2,019 | 3,486 | ||
2,020 | 889 | ||
2,021 | 373 | ||
Total | 16,857 | ||
Capital expenditures | |||
Commitments and Contingencies | |||
2,017 | 3,151 | ||
Total | 3,151 | ||
Service and support agreements | |||
Commitments and Contingencies | |||
2,017 | 6,724 | ||
2,018 | 3,378 | ||
2,019 | 1,266 | ||
2,020 | 725 | ||
2,021 | 236 | ||
Thereafter | 354 | ||
Total | 12,683 | ||
Transport and data connectivity | |||
Commitments and Contingencies | |||
2,017 | 20,870 | ||
2,018 | 9,132 | ||
2,019 | 7,515 | ||
2,020 | 6,817 | ||
2,021 | 6,822 | ||
Thereafter | 6,752 | ||
Total | $ 57,908 |
COMMITMENTS AND CONTINGENCIES68
COMMITMENTS AND CONTINGENCIES - Litigation (Details) $ in Millions | Apr. 14, 2008USD ($) | Dec. 31, 2016USD ($)subsidiary | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2011USD ($) |
Litigation and Contingencies | |||||||
Number of subsidiaries that received assessment notice | subsidiary | 2 | ||||||
Consolidated Communications Enterprise Services Inc. (CCES) | |||||||
Litigation and Contingencies | |||||||
Litigation amount accrued | $ 1.4 | $ 1.4 | $ 1.4 | ||||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | |||||||
Litigation and Contingencies | |||||||
Litigation amount accrued | 1.2 | 1.2 | 1.2 | ||||
Sprint, MCI Communication Services, and Verizon | |||||||
Litigation and Contingencies | |||||||
Disputed amount | 2.4 | ||||||
Salsgiver Inc. | |||||||
Litigation and Contingencies | |||||||
Original amount of sustained losses claimed by plaintiff | $ 125 | ||||||
Litigation amount accrued | $ 0.9 | $ 0.4 | |||||
Litigation accrual reversal | $ 1.3 | 1.3 | $ 1.3 | ||||
Level 3 Communications | |||||||
Litigation and Contingencies | |||||||
Disputed amount | $ 0.3 | ||||||
Number of days after Court decisions parties are required to submit joint report | 20 days | ||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Consolidated Communications Enterprise Services Inc. (CCES) | |||||||
Litigation and Contingencies | |||||||
Total additional tax liability calculated by the auditors | $ 0.9 | 4.1 | |||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Consolidated Communications of Pennsylvania Company LLC (CCPA) | |||||||
Litigation and Contingencies | |||||||
Total additional tax liability calculated by the auditors | $ 0.7 | $ 5 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)leasebuildingitem | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
LATEL | |||
Related party transactions | |||
Number of capital leases | lease | 3 | ||
Number of buildings leased under capital leases | building | 3 | ||
Number of options to extend term of capital lease | item | 2 | ||
Extended period of capital leases | 5 years | ||
Rental payments to be made over the terms of capital leases | $ 7.9 | ||
Capital leases, carrying value | 2.7 | $ 3 | |
Interest expense related to capital leases | 0.4 | 0.4 | $ 0.5 |
Amortization expense related to capitalized leases | $ 0.4 | $ 0.4 | $ 0.4 |
Agracel | LATEL | |||
Related party transactions | |||
Ownership percentage | 50.00% | ||
Richard A. Lumpkin | LATEL | |||
Related party transactions | |||
Percentage of beneficial ownership | 68.50% | 66.70% | |
Richard A. Lumpkin | Agracel | |||
Related party transactions | |||
Percentage of beneficial ownership | 37.00% | 33.50% |
RELATED PARTY TRANSACTIONS - Lo
RELATED PARTY TRANSACTIONS - Long Term Debt (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | May 31, 2012 | |
First Mid Illinois | |||||
Related party transactions | |||||
Revenue | $ 0.7 | $ 0.8 | $ 0.5 | ||
Related parties | Senior Notes 10.875 Percent Due 2020 | |||||
Related party transactions | |||||
Notes payable from related parties | $ 10.8 | ||||
Early redemption payment to related parties | 1.5 | ||||
Interest paid to related parties | 0.7 | $ 1.3 | |||
Related parties | Senior Notes 6.50 Percent Due 2022 | |||||
Related party transactions | |||||
Notes payable from related parties | $ 5 | ||||
Interest paid to related parties | $ 0.3 | $ 0.3 |
QUARTERLY FINANCIAL INFORMATI71
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) $ / shares in Units, $ in Thousands | Jun. 08, 2015USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($)$ / shares | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)employee$ / shares | Jun. 30, 2015USD ($)$ / shares | Mar. 31, 2015USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / shares |
Net revenues | $ 175,919 | $ 191,541 | $ 186,871 | $ 188,846 | $ 188,191 | $ 193,958 | $ 201,010 | $ 192,578 | $ 743,177 | $ 775,737 | $ 635,738 | |
Operating income | 17,440 | 22,736 | 22,954 | 24,310 | 19,707 | 13,648 | 27,675 | 26,745 | 87,440 | 87,775 | 91,189 | |
Net income (loss) attributable to common stockholders | (6) | $ 7,012 | $ 76 | $ 7,849 | $ 4,682 | $ 2,595 | $ (15,968) | $ 7,810 | $ 14,931 | $ (881) | $ 15,067 | |
Basic and diluted earnings per share (in dollars per share) | $ / shares | $ 0.14 | $ 0.15 | $ 0.09 | $ 0.05 | $ (0.32) | $ 0.15 | $ 0.29 | $ (0.02) | $ 0.35 | |||
Minimum age required to offer early retirement package | 55 years | |||||||||||
Minimum period of service required to offer early retirement package | 15 years | |||||||||||
Number of employees who accepted early retirement package | employee | 60 | |||||||||||
One-time severance costs | $ 7,200 | |||||||||||
Estimated annual savings from early retirement package | $ 4,800 | |||||||||||
Business acquisition | ||||||||||||
Loss on extinguishment of debt | $ (6,600) | $ (6,559) | $ (41,242) | $ (13,785) | ||||||||
Senior Notes 10.875 Percent Due 2020 | ||||||||||||
Business acquisition | ||||||||||||
Loss on extinguishment of debt | $ (41,200) | $ (41,200) | $ (13,800) |
CONDENSED CONSOLIDATING FINAN72
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current assets: | ||||
Cash and cash equivalents | $ 27,077 | $ 15,878 | $ 6,679 | $ 5,551 |
Accounts receivable, net | 56,216 | 68,848 | ||
Income taxes receivable | 21,616 | 23,867 | ||
Prepaid expenses and other current assets | 28,292 | 17,815 | ||
Total current assets | 133,201 | 126,408 | ||
Property, plant and equipment, net | 1,055,186 | 1,093,261 | ||
Intangibles and other assets: | ||||
Investments | 106,221 | 105,543 | ||
Goodwill | 756,877 | 764,630 | ||
Other intangible assets | 31,612 | 43,497 | ||
Other assets | 9,661 | 5,187 | ||
Total assets | 2,092,758 | 2,138,526 | ||
Current liabilities: | ||||
Accounts payable | 6,766 | 12,576 | ||
Advance billings and customer deposits | 26,438 | 27,616 | ||
Dividends payable | 19,605 | 19,551 | ||
Accrued compensation | 16,971 | 21,883 | ||
Accrued interest | 11,260 | 9,353 | ||
Accrued expense | 54,123 | 42,384 | ||
Current portion of long term debt and capital lease obligations | 14,922 | 10,937 | ||
Total current liabilities | 150,085 | 144,300 | ||
Long-term debt and capital lease obligations | 1,376,754 | 1,377,892 | ||
Deferred income taxes | 244,298 | 236,529 | ||
Pension and postretirement benefit obligations | 130,793 | 112,966 | ||
Other long-term liabilities | 14,573 | 16,140 | ||
Total liabilities | 1,916,503 | 1,887,827 | ||
Shareholders' equity: | ||||
Common Stock | 506 | 505 | ||
Other shareholders' equity | 170,448 | 245,158 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 170,954 | 245,663 | ||
Noncontrolling interest | 5,301 | 5,036 | ||
Total shareholders' equity | 176,255 | 250,699 | 330,829 | 152,339 |
Total liabilities and shareholders' equity | 2,092,758 | 2,138,526 | ||
Eliminations | ||||
Current assets: | ||||
Accounts receivable, net | (42) | |||
Total current assets | (42) | |||
Intangibles and other assets: | ||||
Investments in subsidiaries | (4,226,527) | (4,221,181) | ||
Advances due to/from affiliates, net | (2,039,797) | (1,979,788) | ||
Deferred income taxes | (17,150) | (32,641) | ||
Total assets | (6,283,516) | (6,233,610) | ||
Current liabilities: | ||||
Accrued expense | (42) | |||
Total current liabilities | (42) | |||
Advances due to/from affiliates, net | (2,039,797) | (1,979,788) | ||
Deferred income taxes | (17,150) | (32,641) | ||
Total liabilities | (2,056,989) | (2,012,429) | ||
Shareholders' equity: | ||||
Common Stock | (47,411) | (47,411) | ||
Other shareholders' equity | (4,179,116) | (4,173,770) | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | (4,226,527) | (4,221,181) | ||
Total shareholders' equity | (4,226,527) | (4,221,181) | ||
Total liabilities and shareholders' equity | (6,283,516) | (6,233,610) | ||
Parent | Reportable legal entity | ||||
Current assets: | ||||
Income taxes receivable | 20,756 | 23,390 | ||
Total current assets | 20,756 | 23,390 | ||
Intangibles and other assets: | ||||
Investments in subsidiaries | 2,192,556 | 2,189,142 | ||
Deferred income taxes | 17,150 | 32,641 | ||
Total assets | 2,230,462 | 2,245,173 | ||
Current liabilities: | ||||
Dividends payable | 19,605 | 19,551 | ||
Accrued interest | 136 | |||
Accrued expense | 36 | 35 | ||
Total current liabilities | 19,641 | 19,722 | ||
Advances due to/from affiliates, net | 2,039,797 | 1,979,788 | ||
Other long-term liabilities | 70 | |||
Total liabilities | 2,059,508 | 1,999,510 | ||
Shareholders' equity: | ||||
Common Stock | 506 | 505 | ||
Other shareholders' equity | 170,448 | 245,158 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 170,954 | 245,663 | ||
Total shareholders' equity | 170,954 | 245,663 | ||
Total liabilities and shareholders' equity | 2,230,462 | 2,245,173 | ||
Subsidiary Issuer | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 27,064 | 5,877 | 4,940 | 86 |
Prepaid expenses and other current assets | 12,856 | |||
Total current assets | 39,920 | 5,877 | ||
Intangibles and other assets: | ||||
Investments | 8,338 | 8,171 | ||
Investments in subsidiaries | 2,019,692 | 2,018,472 | ||
Advances due to/from affiliates, net | 1,524,906 | 1,548,990 | ||
Other assets | 1,562 | |||
Total assets | 3,594,418 | 3,581,510 | ||
Current liabilities: | ||||
Accrued interest | 10,824 | 9,084 | ||
Accrued expense | 15,057 | 190 | ||
Current portion of long term debt and capital lease obligations | 9,000 | 9,100 | ||
Total current liabilities | 34,881 | 18,374 | ||
Long-term debt and capital lease obligations | 1,365,820 | 1,372,149 | ||
Deferred income taxes | 984 | 762 | ||
Other long-term liabilities | 216 | 1,084 | ||
Total liabilities | 1,401,901 | 1,392,369 | ||
Shareholders' equity: | ||||
Other shareholders' equity | 2,192,517 | 2,189,141 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 2,192,517 | 2,189,141 | ||
Total shareholders' equity | 2,192,517 | 2,189,141 | ||
Total liabilities and shareholders' equity | $ 3,594,418 | 3,581,510 | ||
Guarantors | ||||
Condensed Consolidating Balance Sheet | ||||
Ownership interest (as a percent) | 100.00% | |||
Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | $ 13 | 7,629 | 820 | 2,366 |
Accounts receivable, net | 48,911 | 62,460 | ||
Income taxes receivable | 885 | 352 | ||
Prepaid expenses and other current assets | 15,310 | 17,456 | ||
Total current assets | 65,119 | 87,897 | ||
Property, plant and equipment, net | 999,416 | 1,043,594 | ||
Intangibles and other assets: | ||||
Investments | 97,883 | 97,372 | ||
Investments in subsidiaries | 14,279 | 13,567 | ||
Goodwill | 690,696 | 698,449 | ||
Other intangible assets | 22,525 | 34,410 | ||
Advances due to/from affiliates, net | 427,720 | 360,715 | ||
Other assets | 8,058 | 5,187 | ||
Total assets | 2,325,696 | 2,341,191 | ||
Current liabilities: | ||||
Accounts payable | 6,766 | 12,576 | ||
Advance billings and customer deposits | 24,981 | 26,023 | ||
Accrued compensation | 16,002 | 21,094 | ||
Accrued interest | 436 | 133 | ||
Accrued expense | 38,192 | 41,201 | ||
Current portion of long term debt and capital lease obligations | 5,735 | 1,745 | ||
Total current liabilities | 92,112 | 102,772 | ||
Long-term debt and capital lease obligations | 10,332 | 5,101 | ||
Deferred income taxes | 232,668 | 245,579 | ||
Pension and postretirement benefit obligations | 109,185 | 93,097 | ||
Other long-term liabilities | 13,807 | 14,540 | ||
Total liabilities | 458,104 | 461,089 | ||
Shareholders' equity: | ||||
Common Stock | 17,411 | 17,411 | ||
Other shareholders' equity | 1,844,880 | 1,857,655 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 1,862,291 | 1,875,066 | ||
Noncontrolling interest | 5,301 | 5,036 | ||
Total shareholders' equity | 1,867,592 | 1,880,102 | ||
Total liabilities and shareholders' equity | 2,325,696 | 2,341,191 | ||
Non-Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 2,372 | $ 919 | $ 3,099 | |
Accounts receivable, net | 7,347 | 6,388 | ||
Income taxes receivable | (25) | 125 | ||
Prepaid expenses and other current assets | 126 | 359 | ||
Total current assets | 7,448 | 9,244 | ||
Property, plant and equipment, net | 55,770 | 49,667 | ||
Intangibles and other assets: | ||||
Goodwill | 66,181 | 66,181 | ||
Other intangible assets | 9,087 | 9,087 | ||
Advances due to/from affiliates, net | 87,171 | 70,083 | ||
Other assets | 41 | |||
Total assets | 225,698 | 204,262 | ||
Current liabilities: | ||||
Advance billings and customer deposits | 1,457 | 1,593 | ||
Accrued compensation | 969 | 789 | ||
Accrued expense | 880 | 958 | ||
Current portion of long term debt and capital lease obligations | 187 | 92 | ||
Total current liabilities | 3,493 | 3,432 | ||
Long-term debt and capital lease obligations | 602 | 642 | ||
Deferred income taxes | 27,796 | 22,829 | ||
Pension and postretirement benefit obligations | 21,608 | 19,869 | ||
Other long-term liabilities | 480 | 516 | ||
Total liabilities | 53,979 | 47,288 | ||
Shareholders' equity: | ||||
Common Stock | 30,000 | 30,000 | ||
Other shareholders' equity | 141,719 | 126,974 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 171,719 | 156,974 | ||
Total shareholders' equity | 171,719 | 156,974 | ||
Total liabilities and shareholders' equity | $ 225,698 | $ 204,262 |
CONDENSED CONSOLIDATING FINAN73
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | $ 175,919 | $ 191,541 | $ 186,871 | $ 188,846 | $ 188,191 | $ 193,958 | $ 201,010 | $ 192,578 | $ 743,177 | $ 775,737 | $ 635,738 |
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 322,792 | 328,400 | 242,661 | ||||||||
Selling, general and administrative expenses | 157,111 | 178,227 | 140,636 | ||||||||
Acquisition and other transaction costs | 1,214 | 1,413 | 11,817 | ||||||||
Loss on impairment | 610 | ||||||||||
Depreciation and amortization | 174,010 | 179,922 | 149,435 | ||||||||
Income from operations | 17,440 | 22,736 | 22,954 | 24,310 | 19,707 | 13,648 | 27,675 | 26,745 | 87,440 | 87,775 | 91,189 |
Other income (expense): | |||||||||||
Interest expense, net of interest income | (76,826) | (79,618) | (82,537) | ||||||||
Loss on extinguishment of debt | (6,600) | (6,559) | (41,242) | (13,785) | |||||||
Investment income | 32,972 | 36,690 | 34,516 | ||||||||
Other, net | 1,131 | (1,501) | (968) | ||||||||
Income before income taxes | 38,158 | 2,104 | 28,415 | ||||||||
Income tax expense (benefit) | 22,962 | 2,775 | 13,027 | ||||||||
Net income (loss) | 15,196 | (671) | 15,388 | ||||||||
Less: net income attributable to noncontrolling interest | 265 | 210 | 321 | ||||||||
Net income (loss) attributable to common shareholders | $ (6) | $ 7,012 | $ 76 | $ 7,849 | $ 4,682 | $ 2,595 | $ (15,968) | $ 7,810 | 14,931 | (881) | 15,067 |
Total comprehensive income (loss) attributable to common shareholders | 3,353 | (4,940) | (15,573) | ||||||||
Eliminations | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | (13,150) | (13,388) | (13,783) | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | (12,721) | (12,881) | (13,084) | ||||||||
Selling, general and administrative expenses | (429) | (507) | (699) | ||||||||
Other income (expense): | |||||||||||
Equity in earnings of subsidiaries, net | (115,519) | (158,770) | (172,484) | ||||||||
Income before income taxes | (115,519) | (158,770) | (172,484) | ||||||||
Net income (loss) | (115,519) | (158,770) | (172,484) | ||||||||
Net income (loss) attributable to common shareholders | (115,519) | (158,770) | (172,484) | ||||||||
Total comprehensive income (loss) attributable to common shareholders | (91,816) | (150,871) | (110,016) | ||||||||
Parent | Reportable legal entity | |||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 3,331 | 3,160 | 3,975 | ||||||||
Acquisition and other transaction costs | 1,214 | 1,413 | 10,808 | ||||||||
Income from operations | (4,545) | (4,573) | (14,783) | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | 46 | (104) | 36 | ||||||||
Intercompany interest income (expense) | (63,773) | (153,713) | (108,366) | ||||||||
Equity in earnings of subsidiaries, net | 58,208 | 93,391 | 94,458 | ||||||||
Other, net | 53 | ||||||||||
Income before income taxes | (10,064) | (64,999) | (28,602) | ||||||||
Income tax expense (benefit) | (24,995) | (64,118) | (43,669) | ||||||||
Net income (loss) | 14,931 | (881) | 15,067 | ||||||||
Net income (loss) attributable to common shareholders | 14,931 | (881) | 15,067 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 3,353 | (4,940) | (15,573) | ||||||||
Subsidiary Issuer | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | (15) | 121 | (7) | ||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 7 | 150 | 126 | ||||||||
Acquisition and other transaction costs | 581 | ||||||||||
Income from operations | (22) | (29) | (714) | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (76,213) | (79,680) | (82,617) | ||||||||
Intercompany interest income (expense) | 97,102 | 166,838 | 125,932 | ||||||||
Loss on extinguishment of debt | (6,559) | (41,242) | (13,785) | ||||||||
Investment income | 166 | 326 | (5) | ||||||||
Equity in earnings of subsidiaries, net | 56,600 | 64,812 | 77,156 | ||||||||
Other, net | (328) | (26) | (553) | ||||||||
Income before income taxes | 70,746 | 110,999 | 105,414 | ||||||||
Income tax expense (benefit) | 12,538 | 17,608 | 10,956 | ||||||||
Net income (loss) | 58,208 | 93,391 | 94,458 | ||||||||
Net income (loss) attributable to common shareholders | 58,208 | 93,391 | 94,458 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 46,630 | 89,332 | 63,818 | ||||||||
Guarantors | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 697,557 | 728,910 | 585,148 | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 323,112 | 328,714 | 242,354 | ||||||||
Selling, general and administrative expenses | 141,533 | 156,380 | 119,649 | ||||||||
Acquisition and other transaction costs | 428 | ||||||||||
Loss on impairment | 610 | ||||||||||
Depreciation and amortization | 164,577 | 171,232 | 141,673 | ||||||||
Income from operations | 67,725 | 72,584 | 81,044 | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (694) | 154 | 55 | ||||||||
Intercompany interest income (expense) | (34,846) | (15,917) | (19,677) | ||||||||
Investment income | 32,806 | 36,364 | 34,521 | ||||||||
Equity in earnings of subsidiaries, net | 711 | 567 | 870 | ||||||||
Other, net | 1,478 | (1,346) | (236) | ||||||||
Income before income taxes | 67,180 | 92,406 | 96,577 | ||||||||
Income tax expense (benefit) | 25,807 | 40,346 | 35,022 | ||||||||
Net income (loss) | 41,373 | 52,060 | 61,555 | ||||||||
Less: net income attributable to noncontrolling interest | 265 | 210 | 321 | ||||||||
Net income (loss) attributable to common shareholders | 41,108 | 51,850 | 61,234 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 30,442 | 48,434 | 43,418 | ||||||||
Non-Guarantors | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 58,785 | 60,094 | 64,380 | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 12,401 | 12,567 | 13,391 | ||||||||
Selling, general and administrative expenses | 12,669 | 19,044 | 17,585 | ||||||||
Depreciation and amortization | 9,433 | 8,690 | 7,762 | ||||||||
Income from operations | 24,282 | 19,793 | 25,642 | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | 35 | 12 | (11) | ||||||||
Intercompany interest income (expense) | 1,517 | 2,792 | 2,111 | ||||||||
Other, net | (19) | (129) | (232) | ||||||||
Income before income taxes | 25,815 | 22,468 | 27,510 | ||||||||
Income tax expense (benefit) | 9,612 | 8,939 | 10,718 | ||||||||
Net income (loss) | 16,203 | 13,529 | 16,792 | ||||||||
Net income (loss) attributable to common shareholders | 16,203 | 13,529 | 16,792 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | $ 14,744 | $ 13,105 | $ 2,780 |
CONDENSED CONSOLIDATING FINAN74
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | |||
Net Cash Provided by (Used in) Operating Activities | $ 218,233 | $ 219,179 | $ 187,785 |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (13,422) | (139,558) | |
Purchases of property, plant and equipment | (125,192) | (133,934) | (108,998) |
Purchase of investments | (100) | ||
Proceeds from sale of assets | 208 | 13,548 | 1,795 |
Proceeds from business dispositions | 30,119 | ||
Proceeds from sale of investments | 846 | ||
Net cash used in investing activities | (108,287) | (119,540) | (246,861) |
Cash flows from financing activities: | |||
Proceeds from bond offering | 294,780 | 200,000 | |
Proceeds from issuance of long-term debt | 936,750 | 69,000 | 80,000 |
Payment of capital lease obligations | (2,885) | (1,107) | (703) |
Payment on long-term debt | (943,050) | (107,100) | (63,100) |
Redemption of senior notes | (261,874) | (84,127) | |
Payment of financing costs | (9,912) | (4,805) | (7,438) |
Share repurchases for minimum tax withholding | (1,231) | (1,125) | (1,856) |
Dividends on common stock | (78,419) | (78,209) | (62,341) |
Other | (231) | ||
Net Cash Provided by (Used in) Financing Activities | (98,747) | (90,440) | 60,204 |
Increase in cash and cash equivalents | 11,199 | 9,199 | 1,128 |
Cash and cash equivalents at beginning of period | 15,878 | 6,679 | 5,551 |
Cash and cash equivalents at end of period | 27,077 | 15,878 | 6,679 |
Parent | Reportable legal entity | |||
Cash flows from operating activities | |||
Net Cash Provided by (Used in) Operating Activities | (23,634) | (119,472) | (71,646) |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (13,422) | (139,558) | |
Proceeds from business dispositions | 30,119 | ||
Net cash used in investing activities | 16,697 | (139,558) | |
Cash flows from financing activities: | |||
Share repurchases for minimum tax withholding | (1,231) | (1,125) | (1,856) |
Dividends on common stock | (78,419) | (78,209) | (62,341) |
Other | (231) | ||
Transactions with affiliates, net | 86,587 | 198,806 | 275,632 |
Net Cash Provided by (Used in) Financing Activities | 6,937 | 119,472 | 211,204 |
Subsidiary Issuer | Reportable legal entity | |||
Cash flows from operating activities | |||
Net Cash Provided by (Used in) Operating Activities | 13,315 | 76,962 | 37,972 |
Cash flows from financing activities: | |||
Proceeds from bond offering | 294,780 | 200,000 | |
Proceeds from issuance of long-term debt | 936,750 | 69,000 | 80,000 |
Payment on long-term debt | (943,050) | (107,100) | (63,100) |
Redemption of senior notes | (261,874) | (84,127) | |
Payment of financing costs | (9,912) | (4,805) | (7,438) |
Transactions with affiliates, net | 24,084 | (66,026) | (158,453) |
Net Cash Provided by (Used in) Financing Activities | 7,872 | (76,025) | (33,118) |
Increase in cash and cash equivalents | 21,187 | 937 | 4,854 |
Cash and cash equivalents at beginning of period | 5,877 | 4,940 | 86 |
Cash and cash equivalents at end of period | 27,064 | 5,877 | 4,940 |
Guarantors | Reportable legal entity | |||
Cash flows from operating activities | |||
Net Cash Provided by (Used in) Operating Activities | 200,098 | 240,372 | 196,186 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (111,389) | (126,168) | (103,509) |
Purchase of investments | (100) | ||
Proceeds from sale of assets | 198 | 13,535 | 1,740 |
Proceeds from sale of investments | 846 | ||
Net cash used in investing activities | (111,191) | (111,787) | (101,869) |
Cash flows from financing activities: | |||
Payment of capital lease obligations | (2,743) | (1,029) | (638) |
Transactions with affiliates, net | (93,780) | (120,747) | (95,225) |
Net Cash Provided by (Used in) Financing Activities | (96,523) | (121,776) | (95,863) |
Increase in cash and cash equivalents | (7,616) | 6,809 | (1,546) |
Cash and cash equivalents at beginning of period | 7,629 | 820 | 2,366 |
Cash and cash equivalents at end of period | 13 | 7,629 | 820 |
Non-Guarantors | Reportable legal entity | |||
Cash flows from operating activities | |||
Net Cash Provided by (Used in) Operating Activities | 28,454 | 21,317 | 25,273 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (13,803) | (7,766) | (5,489) |
Proceeds from sale of assets | 10 | 13 | 55 |
Net cash used in investing activities | (13,793) | (7,753) | (5,434) |
Cash flows from financing activities: | |||
Payment of capital lease obligations | (142) | (78) | (65) |
Transactions with affiliates, net | (16,891) | (12,033) | (21,954) |
Net Cash Provided by (Used in) Financing Activities | (17,033) | (12,111) | (22,019) |
Increase in cash and cash equivalents | (2,372) | 1,453 | (2,180) |
Cash and cash equivalents at beginning of period | $ 2,372 | 919 | 3,099 |
Cash and cash equivalents at end of period | $ 2,372 | $ 919 |