Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 26, 2018 | Jun. 30, 2017 | |
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, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,035,944,934 | ||
Entity Common Stock, Shares Outstanding | 70,776,044 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Net revenues | $ 1,059,574 | $ 743,177 | $ 775,737 |
Operating expense: | |||
Cost of services and products (exclusive of depreciation and amortization) | 446,065 | 322,792 | 328,400 |
Selling, general and administrative expenses | 249,332 | 157,111 | 178,227 |
Acquisition and other transaction costs | 33,650 | 1,214 | 1,413 |
Loss on impairment | 610 | ||
Depreciation and amortization | 291,873 | 174,010 | 179,922 |
Income from operations | 38,654 | 87,440 | 87,775 |
Other income (expense): | |||
Interest expense, net of interest income | (129,786) | (76,826) | (79,618) |
Loss on extinguishment of debt | (6,559) | (41,242) | |
Investment income | 31,749 | 32,972 | 36,690 |
Other, net | (245) | 1,131 | (1,501) |
Income (loss) before income taxes | (59,628) | 38,158 | 2,104 |
Income tax expense (benefit) | (124,927) | 22,962 | 2,775 |
Net income (loss) | 65,299 | 15,196 | (671) |
Less: net income attributable to noncontrolling interest | 354 | 265 | 210 |
Net income (loss) attributable to common shareholders | $ 64,945 | $ 14,931 | $ (881) |
Net income (loss) per common share - basic and diluted | |||
Net income (loss) per basic and diluted common shares attributable to common shareholders (in dollars per share) | $ 1.07 | $ 0.29 | $ (0.02) |
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, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ 65,299 | $ 15,196 | $ (671) |
Pension and post-retirement obligations: | |||
Change in net actuarial loss and prior service credit, net of tax (benefit) of $(2,833), $(9,534) and $(3,533) in 2017, 2016 and 2015, respectively | (4,467) | (14,831) | (5,547) |
Amortization of actuarial losses and prior service credit to earnings, net of tax expense of $2,081, $1,738 and $1,098 in 2017, 2016 and 2015, respectively | 3,153 | 2,706 | 1,707 |
Derivative instruments designated as cash flow hedges: | |||
Change in fair value of derivatives, net of tax (benefit) of $(161), $(180) and $(672) in 2017, 2016 and 2015, respectively | (250) | (289) | (1,072) |
Reclassification of realized loss to earnings, net of tax expense of $488, $516 and $518 in 2017, 2016 and 2015, respectively | 758 | 836 | 853 |
Comprehensive income (loss) | 64,493 | 3,618 | (4,730) |
Less: comprehensive income attributable to noncontrolling interest | 354 | 265 | 210 |
Total comprehensive income (loss) attributable to common shareholders | $ 64,139 | $ 3,353 | $ (4,940) |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Change in net actuarial loss and prior service credit, tax (benefit) | $ (2,833) | $ (9,534) | $ (3,533) |
Amortization of actuarial losses and prior service credit to earnings, tax expense (benefit) | 2,081 | 1,738 | 1,098 |
Change in fair value of derivatives, net of tax (benefit) | (161) | (180) | (672) |
Reclassification of realized loss to earnings, tax expense | $ 488 | $ 516 | $ 518 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 15,657 | $ 27,077 |
Accounts receivable, net of allowance for doubtful accounts | 121,528 | 56,216 |
Income tax receivable | 21,846 | 21,616 |
Prepaid expenses and other current assets | 33,318 | 28,292 |
Assets held for sale | 21,310 | |
Total current assets | 213,659 | 133,201 |
Property, plant and equipment, net | 2,037,606 | 1,055,186 |
Investments | 108,858 | 106,221 |
Goodwill | 1,038,032 | 756,877 |
Other intangible assets | 306,783 | 31,612 |
Other assets | 14,188 | 9,661 |
Total assets | 3,719,126 | 2,092,758 |
Current liabilities: | ||
Accounts payable | 24,143 | 6,766 |
Advance billings and customer deposits | 42,526 | 26,438 |
Dividends payable | 27,418 | 19,605 |
Accrued compensation | 49,770 | 16,971 |
Accrued interest | 9,343 | 11,260 |
Accrued expense | 72,041 | 54,123 |
Current portion of long-term debt and capital lease obligations | 29,696 | 14,922 |
Liabilities held for sale | 1,003 | |
Total current liabilities | 255,940 | 150,085 |
Long-term debt and capital lease obligations | 2,311,514 | 1,376,754 |
Deferred income taxes | 209,720 | 244,298 |
Pension and other post-retirement obligations | 334,193 | 130,793 |
Other long-term liabilities | 33,817 | 14,573 |
Total liabilities | 3,145,184 | 1,916,503 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 70,777,354 and 50,612,362 shares outstanding as of December 31, 2017 and December 31, 2016, respectively | 708 | 506 |
Additional paid-in capital | 615,662 | 217,725 |
Accumulated other comprehensive loss, net | (48,083) | (47,277) |
Noncontrolling interest | 5,655 | 5,301 |
Total shareholders' equity | 573,942 | 176,255 |
Total liabilities and shareholders' equity | $ 3,719,126 | $ 2,092,758 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
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 | 70,777,354 | 50,612,362 |
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 (Deficit) | Accumulated Other Comprehensive Loss, net | Non-controlling Interest | Total |
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 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (34,764) | (67,187) | (101,951) | |||
Shares issued upon acquisition of FairPoint | $ 201 | 430,752 | 430,953 | |||
Shares issued upon the acquisition of FairPoint | 20,104 | |||||
Shares issued under employee plan, net of forfeitures | $ 1 | 104 | 105 | |||
Shares issued under employee plan, net of forfeitures (in shares) | 121 | |||||
Non-cash, stock-based compensation | 2,766 | 2,766 | ||||
Purchase and retirement of common stock | (571) | (571) | ||||
Purchase and retirement of common stock (in shares) | (60) | |||||
Other comprehensive income (loss) | (806) | (806) | ||||
Cumulative adjustment: unrecognized excess tax benefits | 2,242 | 2,242 | ||||
Other | (350) | (350) | ||||
Net income (loss) | $ 64,945 | 354 | 65,299 | |||
Balance at Dec. 31, 2017 | $ 708 | $ 615,662 | $ (48,083) | $ 5,655 | $ 573,942 | |
Balance (in shares) at Dec. 31, 2017 | 70,777 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 65,299 | $ 15,196 | $ (671) |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 291,873 | 174,010 | 179,922 |
Deferred income taxes | (126,127) | 20,863 | 5,828 |
Cash distributions from wireless partnerships in excess of/(less than) current earnings | (1,411) | (504) | 8,585 |
Stock-based compensation expense | 2,766 | 3,017 | 3,060 |
Amortization of deferred financing costs | 17,076 | 3,223 | 3,378 |
Loss on extinguishment of debt | 6,559 | 41,242 | |
Other, net | 3,208 | (920) | 506 |
Changes in operating assets and liabilities, net of acquired businesses: | |||
Accounts receivable, net | (2,607) | 5,353 | 8,688 |
Income tax receivable | 180 | 2,251 | (4,927) |
Prepaids and other assets | 1,059 | (14,282) | 163 |
Accounts payable | 4,968 | (1,067) | (2,701) |
Accrued expenses and other liabilities | (46,257) | 4,534 | (23,894) |
Net cash provided by operating activities | 210,027 | 218,233 | 219,179 |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (862,385) | (13,422) | |
Purchases of property, plant and equipment, net | (181,185) | (125,192) | (133,934) |
Proceeds from sale of assets | 859 | 208 | 13,548 |
Proceeds from business dispositions | 30,119 | ||
Proceeds from sale of investments | 846 | ||
Net cash provided by (used in) investing activities | (1,042,711) | (108,287) | (119,540) |
Cash flows from financing activities: | |||
Proceeds from bond offering | 294,780 | ||
Proceeds from issuance of long-term debt | 1,052,325 | 936,750 | 69,000 |
Payment of capital lease obligations | (7,933) | (2,885) | (1,107) |
Payment on long-term debt | (111,337) | (943,050) | (107,100) |
Redemption of senior notes | (261,874) | ||
Payment of financing costs | (16,732) | (9,912) | (4,805) |
Share repurchases for minimum tax withholding | (571) | (1,231) | (1,125) |
Dividends on common stock | (94,138) | (78,419) | (78,209) |
Other | (350) | ||
Net cash provided by (used in) financing activities | 821,264 | (98,747) | (90,440) |
Increase (decrease) in cash and cash equivalents | (11,420) | 11,199 | 9,199 |
Cash and cash equivalents at beginning of period | 27,077 | 15,878 | 6,679 |
Cash and cash equivalents at end of period | $ 15,657 | $ 27,077 | $ 15,878 |
BUSINESS DESCRIPTION AND SUMMAR
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BUSINESS DESCRIPTION AND 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 communication solutions to consumer, commercial and carrier customers across a 24-state service area. Leveraging our advanced fiber network spanning more than 36,000 fiber route miles, we offer residential Internet, video, phone and home security services as well as multi-service residential and small business bundles. Our business product suite includes data and Internet solutions, voice, data center services, security services, managed and IT Services, and an expanded suite of cloud services. As of December 31, 2017, we had approximately 972 thousand voice connections, 784 thousand data connections and 103 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), (iv) pension plan and other post-retirement costs and obligations (Notes 1 and 9) and (v) business combinations (Note 3). 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 On December 3, 2016, we entered into a definitive agreement and plan of merger (the “Merger Agreement”) with FairPoint Communications, Inc. (“FairPoint”) to acquire all the issued and outstanding shares of FairPoint in exchange for shares of our common stock. On July 3, 2017, the merger (the “Merger”) was completed and FairPoint became a wholly owned subsidiary of the Company. The financial results for FairPoint have been included in our consolidated financial statements as of the acquisition date. For a more complete discussion of the transaction, refer to Note 3. 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, 2017, 2016 and 2015: Year Ended December 31, (In thousands) 2017 2016 2015 Balance at beginning of year $ $ $ Provision charged to expense Write-offs, less recoveries Acquired allowance for doubtful accounts — — Balance at end of year $ $ $ 3,235 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, 2017 and 2016: December 31, December 31, Estimated (In thousands) 2017 2016 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 $263.8 million, $161.1 million and $167.1 million in 2017, 2016 and 2015, 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 2017 assessment, we evaluated the fair value of goodwill compared to the carrying value using the quantitative approach. 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, 2017 assessment, using the quantitative approach, we concluded that the fair value of the reporting unit exceeded the carrying value at November 30, 2017 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 2017, 2016 or 2015 as a result of the impairment test. At December 31, 2017 and 2016, the carrying value of goodwill was $1,038.0 million and $756.9 million, respectively. Goodwill increased $281.2 million during 2017 as a result of the acquisition of FairPoint, as described in Note 3. 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, 2017 and 2016. For the 2017 assessment, we used the quantitative approach to evaluate the fair value compared to the carrying value of the trade names. Based on our assessment, 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 using an accelerated amortization method or 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, 2017, 2016 or 2015. The components of finite-lived intangible assets are as follows: December 31, 2017 December 31, 2016 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships - years $ 516,561 $ (223,261) $ 216,261 $ (198,353) Trade names <1 - years 3,390 (3,390) 2,290 (2,290) Other intangible assets - years 7,380 (4,454) 5,600 (2,453) Total $ 527,331 $ (231,105) $ 224,151 $ (203,096) Amortization expense related to the finite-lived intangible assets for the years ended December 31, 2017, 2016 and 2015 was $28.0 million, $12.9 million and $12.8 million, respectively. Expected future amortization expense of finite-lived intangible assets is as follows: (In thousands) 2018 $ 66,341 2019 66,131 2020 50,441 2021 39,373 2022 30,850 Thereafter 43,090 Total $ 296,226 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 projected 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. See Note 9 for a more detailed discussion regarding our pension and other post-retirement benefits. 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. We determine expected long-term rate of return on plan assets by considering historical investment performance, plan asset allocation strategies and return forecasts for each asset class and input from its advisors. Projected returns by such advisors were based on broad equity and fixed income indices. The expected long-term rate of return is reviewed annually in conjunction with other plan assumptions, if considered necessary, revised to reflect changes in the financial markets and the investment strategy. Our plan assets are valued at fair value as of the measurement date. Our discount rate assumption is determined annually to reflect the rate at which the benefits could be effectively settled and approximate the timing of expected future payments based on current market determined interest rates for similar obligations. We use bond matching model BOND:Link comprising of high quality corporate bonds to match cash flows to the expected benefit payments. 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. Actuarial gains and losses that arise during the year are recognized as a component of comprehensive income (loss), net of applicable income taxes, and included in accumulated other comprehensive income (loss). These gains and losses are amortized over future years as a component of the net periodic benefit cost. 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 operating 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; 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. 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. 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 flows. We collect and remit Federal Universal Service contributions on a gross basis, which resulted in recorded revenue of approximately $11.7 million, $12.7 million and $13.2 million during the years ended December 31, 2017, 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 are expensed as incurred. Advertising expense was $10.9 million, $8.7 million and $8.3 million in 2017, 2016 and 2015, respectively. Statement of Cash Flows Information During 2017, 2016 and 2015, we made payments for interest and income taxes as follows: (In thousands) 2017 2016 2015 Interest, net of amounts capitalized ($1,246, $1,152 and $1,373 in 2017, 2016 and 2015, respectively) $ 106,499 $ 69,536 $ 76,823 Income taxes (received) paid, net $ 953 $ $ 1,835 Noncash investing and financing activities: In 2017, 2016 and 2015, we acquired equipment of $12.8 million, $12.2 million and $4.1 million, respectively, through capital lease agreements. In 2017, we issued 20.1 million shares of the Company’s common stock with a market value of $431.0 million in connection with the acquisition of FairPoint as described in Note 3. 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 pro |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
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) 2017 2016 2015 Net income (loss) $ 65,299 $ 15,196 $ (671) Less: net income attributable to noncontrolling interest 354 265 210 Income (loss) attributable to common shareholders before allocation of earnings to participating securities 64,945 14,931 (881) Less: earnings allocated to participating securities 362 524 — Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ 64,583 $ 14,407 $ (881) Weighted-average number of common shares outstanding 60,373 50,301 50,176 Net income (loss) per common share attributable to common shareholders - basic and diluted $ 1.07 $ 0.29 $ (0.02) Diluted earnings (loss) per common share attributable to common shareholders for each of the years ended December 31, 2017, 2016 and 2015 excludes 0.3 million shares that could be issued under our share-based compensation plan because the inclusion of the potential common shares would have an antidilutive effect. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 12 Months Ended |
Dec. 31, 2017 | |
ACQUISITIONS AND DIVESTITURES | |
ACQUISITIONS AND DIVESTITURES | 3. ACQUISITIONS AND DIVESTITURES Acquisitions FairPoint Communications, Inc. On July 3, 2017, we completed our merger with FairPoint and pursuant to the terms of a definitive agreement and the Merger Agreement acquired all the issued and outstanding shares of FairPoint in exchange for shares of our common stock. As a result, FairPoint became a wholly-owned subsidiary of the Company. 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 22,000 route miles of fiber, including 17,000 route miles of fiber in northern New England. The acquisition reflects our strategy to diversify revenue and cash flows amongst multiple products and to expand our network to new markets. 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 converted into and became 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 on the last complete trading day prior to the effective date of the Merger Agreement, the total value of the consideration to be exchanged was $431.0 million, exclusive of debt of approximately $919.3 million. On the date of the Merger, we issued an approximate aggregate total of 20.1 million shares of our common stock to the former FairPoint stockholders and we assumed approximately 2,615,153 outstanding warrants, each eligible to purchase one share of the Company’s common stock at an exercise price of $66.86 per share, subject to adjustment in accordance with the warrant agreement, and exercisable any time on or prior to January 24, 2018. On January 24, 2018, all of the warrants expired in accordance with their terms without being exercised. 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, was used to repay the existing indebtedness of FairPoint and pay the fees and expenses in connection with the Merger. The acquisition was accounted for in accordance with the acquisition method of accounting for business combinations. The tangible and intangible assets acquired and liabilities assumed were recorded at their estimated fair values as of the date of the acquisition. The preliminary estimated fair value of the tangible and intangible assets acquired and liabilities assumed are as follows: (In thousands) Cash and cash equivalents $ 56,980 Accounts receivable 62,805 Other current assets 22,012 Assets held for sale 21,417 Property, plant and equipment 1,053,562 Intangible assets 303,180 Other long-term assets 2,685 Total assets acquired 1,522,641 Current liabilities 123,034 Liabilities held for sale 1,016 Pension and other post-retirement obligations 219,298 Deferred income taxes 94,214 Other long-term liabilities 15,916 Total liabilities assumed 453,478 Net fair value of assets acquired 1,069,163 Goodwill 281,155 Total consideration transferred $ 1,350,318 The fair values of the assets acquired and liabilities assumed are based on a preliminary valuation, which is subject to change within the measurement period. Upon completion of the final fair value assessment, the fair values of the net assets acquired may differ materially from the preliminary assessment. We are in the process of finalizing the valuation of the net assets acquired, most notably, the valuation of property, plant and equipment, intangible assets, pension and other post-retirement obligations and deferred income taxes. The preliminary assessment does not include the fair value of potential contingent assets arising from a pre-acquisition gain contingency as we are in the process of assessing the outcome and value of the contingency as of the date of the acquisition. Any changes to the initial estimates of the fair value of the assets acquired and liabilities assumed will be recorded to those assets and liabilities and residual amounts will be allocated to goodwill. Goodwill recognized from the acquisition primarily relates to the expected contributions of the entity to the overall corporate strategy and the synergies expected to be realized from the acquisition. Amortization of goodwill is not deductible for income tax purposes. Based on the preliminary valuation analysis, the identifiable intangible assets acquired consisted of customer relationships of $300.3 million, tradenames of $1.1 million and non-compete agreements of $1.8 million. The customer relationships are being amortized using an accelerated amortization method over their preliminary estimated useful lives of seven to eleven years depending on the nature of the customer. The tradenames and non-compete agreements are amortized using the straight-line method over their preliminary estimated useful lives of six months and one year, respectively. During the quarter ended December 31, 2017, we made certain adjustments to the fair value of the identifiable assets acquired and liabilities assumed which resulted in an increase in property, plant and equipment of $8.1 million, intangible assets of $0.1 million, other long-term liabilities of $1.7 million and deferred income taxes of $5.1 million and a decrease in pension and other post-retirement obligations of $2.9 million. The net impact of the adjustments increased net assets acquired and reduced goodwill by $4.3 million. As discussed in the “Divestitures” section below, we have committed to a formal plan to sell certain assets of FairPoint and these assets have been classified as held for sale at the acquisition date. In connection with the classification as assets held for sale at the acquisition date, the carrying value of these assets was recorded at their estimated fair value of approximately $20.4 million, which was determined based on the estimated selling price less costs to sell. The results of operations of FairPoint have been reported in our consolidated financial statements as of the effective date of the acquisition. For the year ended December 31, 2017, FairPoint contributed operating revenues of $389.5 million and net income of $22.7 million, which included $12.3 million in acquisition related costs. Upon closing of the FairPoint acquisition or shortly thereafter, various triggering events occurred which resulted in payment of obligations arising with respect to various change in control agreements and other contingent payments to certain FairPoint employees. The estimated aggregate cash payments due in connection with these agreements is approximately $10.0 million of which $9.6 million was recognized in operating expenses during the year ended December 31, 2017 and $0.2 million is expected to be paid during 2018 with the remainder due in 2019. Unaudited Pro Forma Results The following unaudited pro forma information presents our results of operations as if the acquisition of FairPoint occurred on January 1, 2016. The adjustments to arrive at the pro forma information below included adjustments for depreciation and amortization on the acquired tangible and intangible assets acquired, interest expense on the debt incurred to finance the acquisition and to repay certain existing indebtedness of FairPoint, 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 the acquisition. (Unaudited; in thousands, except per share amounts) 2017 2016 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 $ 1.29 $ Transaction costs related to the acquisition of FairPoint were $33.0 million during the year ended December 31, 2017, 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 pro forma adjustments have been made to exclude these costs 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 periods 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. 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 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. Divestitures In August 2017, we committed to a formal plan to sell our subsidiaries Peoples Mutual Telephone Company and Peoples Mutual Long Distance Company, collectively (“Peoples”), which were acquired as part of the acquisition of FairPoint. Peoples operates as a local exchange carrier in Virginia and provides telecommunications services to residential and business customers. In November 2017, the Company entered into an agreement to sell all of the issued and outstanding stock of Peoples in exchange for cash of approximately $21.0 million, subject to certain contractual adjustments. The closing of the transaction is subject to certain regulatory approvals, which are expected to be completed in the first quarter of 2018. As of the acquisition date, the net assets to be sold have been classified as held for sale in the consolidated balance sheet. The expected sale of these assets has not been reported as discontinued operations in the consolidated statements of operations as the annual revenues of these operations is less than 1% of the consolidated operating revenues. The estimated fair value of the net assets held for sale was determined based on the estimated selling price less costs to sell and was classified as Level 2 within the fair value hierarchy at December 31, 2017. At December 31, 2017, the major classes of assets and liabilities to be sold consisted of the following: (In thousands) Current assets $ 227 Property, plant and equipment 4,254 Goodwill 16,829 Total assets $ 21,310 Current liabilities $ 701 Deferred taxes 302 Total liabilities $ 1,003 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 provides our business customers access to a broader suite of IT solutions, and also provides 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. On May 3, 2016, we entered into a definitive agreement to sell all of the issued and outstanding stock of our non-core, rural local exchange carrier 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. 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. See Note 10 for additional income tax related information regarding this transaction. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS Our investments are as follows: (In thousands) 2017 2016 Cash surrender value of life insurance policies $ 2,272 $ 2,156 Cost method investments: GTE Mobilnet of South Texas Limited Partnership (2.34% interest) 21,450 21,450 Pittsburgh SMSA Limited Partnership (3.60% interest) 22,950 22,950 CoBank, ACB Stock 9,105 8,138 Other 343 200 Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) 17,375 17,160 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,300 6,540 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 28,063 27,627 Totals $ 108,858 $ 106,221 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 2017, 2016 and 2015, we received cash distributions from these partnerships totaling $12.8 million, $12.9 million and $14.6 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 2017, 2016 and 2015, we received cash distributions from these partnerships totaling $17.2 million, $19.2 million and $30.7 million, respectively. The carrying value of the investments exceeds the underlying equity in net assets of the partnerships by $32.8 million as of December 31, 2017 and 2016. 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. The combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships are summarized below: (In thousands) 2017 2016 2015 Total revenues $ 350,611 $ 334,421 $ 348,595 Income from operations 104,973 97,075 105,495 Net income before taxes 103,497 95,473 104,568 Net income 103,497 95,473 104,568 Current assets $ 78,782 $ 64,083 $ 57,716 Non-current assets 95,959 89,651 96,197 Current liabilities 22,472 21,985 20,576 Non-current liabilities 51,463 51,836 52,414 Partnership equity 100,806 79,913 80,923 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 and 2016 were as follows: As of December 31, 2017 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 $ 1,256 $ — $ 1,256 $ — Current interest rate swap liabilities (27) — (27) — Long-term interest rate swap liabilities (1,761) — (1,761) — Total $ (532) $ — $ (532) $ — 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 $ 398 $ — $ 398 $ — Current interest rate swap liabilities (453) — (453) — Long-term interest rate swap liabilities (216) — (216) — Total $ (271) $ — $ (271) $ — 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, 2017 and 2016. As of December 31, 2017 As of December 31, 2016 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Investments, equity basis $ 52,738 n/a $ 51,327 n/a Investments, at cost $ 53,848 n/a $ 52,738 n/a Long-term debt, excluding capital leases $ 2,331,400 $ 2,253,545 $ 1,388,786 $ 1,390,773 Cost & Equity Method Investments Our investments at December 31, 2017 and 2016 accounted for under both the equity and cost methods consisted primarily of minority positions in various cellular telephone limited partnerships and our investment in CoBank. 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, 2017 | |
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, 2017 and 2016: (In thousands) 2017 2016 Senior secured credit facility: Term loans, net of discounts of $8,344 and $4,662 at December 31, 2017 and 2016, respectively $ 1,813,069 $ 893,088 Revolving loan 22,000 — 6.50% Senior notes due 2022, net of discount of $3,669 and $4,302 at December 31, 2017 and 2016, respectively 496,331 495,698 Capital leases 23,890 16,857 2,355,290 1,405,643 Less: current portion of long-term debt and capital leases (29,696) (14,922) Less: deferred debt issuance costs (14,080) (13,967) Total long-term debt $ 2,311,514 $ 1,376,754 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 (as amended, the “Credit Agreement”). The Credit Agreement consists of a $110.0 million revolving credit facility, an initial term loan in the aggregate amount of $900.0 million (the “Initial Term Loan”) and an incremental term loan in the aggregate amount of $935.0 million (the “Incremental Term Loan”), collectively (the “Term Loans”). The Incremental Term Loan was issued on July 3, 2017 upon completion of the FairPoint Merger, as described below. The Credit Agreement also includes an incremental loan facility which provides the ability to borrow, subject to certain terms and conditions, incremental loans in an aggregate amount of up to the greater of (a) $300.0 million and (b) an amount which would cause its senior secured leverage ratio not to exceed 3.00:1.00 (the “Incremental Facility”). Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company and its subsidiaries, including certain of the FairPoint subsidiaries acquired in the Merger, with the exception of Consolidated Communications of Illinois Company and our majority-owned subsidiary, East Texas Fiber Line Incorporated. The Initial Term 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 not repaid in full or redeemed in full on or prior to March 31, 2022. The Initial Term Loan contains an original issuance discount of 0.25% or $2.3 million, which is being amortized over the term of the loan. The Initial Term Loan requires quarterly principal payments of $2.25 million and has an interest rate of 3.00% plus the London Interbank Offered Rate (“LIBOR“) subject to a 1.00% LIBOR floor. In connection with the execution of the Merger Agreement, in December 2016, the Company entered into two amendments to the 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 and on December 21, 2016, the Company entered into Amendment No. 2 to the Credit Agreement, pursuant to which a syndicate of lenders agreed to provide the Incremental Term Loan, subject to the satisfaction of certain conditions. The Incremental Term Loan was made pursuant to the Incremental Facility set forth in the Credit Agreement. Fees of $2.5 million paid to the lenders in connection with Amendment No. 1 are reflected as an additional discount on the Initial Term Loan and are being amortized over the term of the debt as interest expense. Ticking fees accrued on the incremental term loan commitments from January 15, 2017 through the July 3, 2017 Merger closing date at a rate of 3.00% plus LIBOR subject to a 1.00% LIBOR floor and became due and payable on the closing date. In connection with entering into the committed financing, commitment fees of $14.0 million were capitalized in December 2016 and were amortized to interest expense over the term of the commitment period through July 2017. On July 3, 2017, the Merger with FairPoint was completed and the net proceeds from the incurrence of the Incremental Term Loan were 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 Incremental Term Loan included an original issue discount of 0.50% and has the same maturity date and interest rate as the Initial Term Loan. The Incremental Term Loan requires quarterly principal payments of $2.34 million, which began in December 2017. In addition, effective contemporaneously with the Merger, the Company entered into Amendment No. 3 to the Credit Agreement, among other things, to increase the permitted amount of outstanding letters of credit from $15.0 million to $20.0 million and to provide that certain existing letters of credit of FairPoint be deemed to be letters of credit under the Credit Agreement. 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, 2017, the borrowing margin for the next three month period ending March 31, 2018 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, 2017, borrowings of $22.0 million were outstanding under the revolving credit facility, which consisted of LIBOR-based borrowings of $17.0 million and alternate base rate borrowings of $5.0 million. At December 31 2016, there were no outstanding borrowings under the revolving credit facility. Stand-by letters of credit of $18.3 million were outstanding under our revolving credit facility as of December 31, 2017. The stand-by letters of credit are renewable annually and reduce the borrowing availability under the revolving credit facility. As of December 31, 2017, $69.7 million was available for borrowing under the revolving credit facility. The weighted-average interest rate on outstanding borrowings under our credit facility was 4.58% and 4.00% at December 31, 2017 and 2016, respectively. Interest is payable at least quarterly. 2016 Amendment to the Credit Agreement 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, 2017, 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, 2017, and including the $27.4 million dividend declared in October 2017 and paid on February 1, 2018, we had $257.7 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, 2017, our total net leverage ratio under the Credit Agreement was 4.09:1.00, and our interest coverage ratio was 5.73:1.00. 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 discount is 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, including certain of the FairPoint 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 Corporation (“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, 2017, this ratio was 4.22:1.00. 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 $433.6 million have been paid since May 30, 2012, including the quarterly dividend declared in October 2017 and paid on February 1, 2018, there was $888.3 million of the $1,321.9 million of cumulative consolidated cash flow since May 30, 2012 available to pay dividends at December 31, 2017. At December 31, 2017, 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, 2017, the aggregate maturities of our long-term debt excluding capital leases were as follows: (In thousands) 2018 $ 18,350 2019 18,350 2020 18,350 2021 40,350 2022 518,350 Thereafter 1,729,663 Total maturities 2,343,413 Less: Unamortized discount $ 2,331,400 See Note 11 regarding the future maturities of our obligations for capital leases. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017: Notional (In thousands) Amount 2017 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 Forward starting fixed to 1-month floating LIBOR (with floor) $ Other assets Series of forward starting 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, 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 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. 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 connection with the acquisition of FairPoint, during the quarter ended June 30, 2017, we entered into a series of four deal contingent forward-starting interest rate swap agreements each with a term of one year which begin at various dates between July 2017 and July 2020 and mature between July 2018 and July 2021. The forward starting interest rate swap agreements have a notional value ranging from $450.0 million to $705.0 million. These interest rate swap agreements have been designated as cash flow hedges. 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 is being 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 and 2015, gains of $0.2 million and $0.8 million, respectively, were recognized as a reduction to interest expense for the change in fair value of the de-designated swaps. At December 31, 2017 and 2016, the pre-tax unrealized gains and (losses) related to our interest rate swap agreements included in AOCI were $0.6 million and $(0.2) million, respectively. The estimated amount of gains included in AOCI as of December 31, 2017 that will be recognized in earnings in the next twelve months is approximately $0.6 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, 2017, 2016 and 2015: (In thousands) 2017 2016 2015 Unrealized loss recognized in AOCI, pretax $ (411) $ (469) $ (1,744) Deferred losses reclassified from AOCI to interest expense $ $ $ (1,371) Gain (loss) recognized in interest expense from ineffectiveness $ $ 242 $ — |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017, 2016 and 2015: Year Ended December 31, Grant Date Grant Date Grant Date 2017 Fair Value 2016 Fair Value 2015 Fair Value RSAs Granted 124,100 $ 23.12 100,040 $ 23.95 83,571 $ 21.08 PSAs Granted 36,982 $ 23.27 94,066 $ 20.86 77,786 $ 19.74 Total 161,082 194,106 161,357 The following table summarizes the RSA and PSA activity during the year ended December 31, 2017: RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - January 1, 2017 93,662 $ 22.34 109,160 $ 20.12 Shares granted 124,100 $ 23.12 36,982 $ 23.27 Shares vested (100,230) $ 22.23 (59,306) $ 20.13 Shares forfeited, cancelled or retired (15,351) $ 22.86 (9,308) $ 21.40 Non-vested shares outstanding - December 31, 2017 102,181 $ 23.32 77,528 $ 21.46 The total fair value of the RSAs and PSAs that vested during the years ended December 31, 2017, 2016 and 2015 was $3.4 million, $3.4 million and $3.9 million, respectively. Share-based Compensation Expense The following table summarizes total compensation costs recognized for share-based payments during the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, (In thousands) 2017 2016 2015 Restricted stock $ 2.0 $ 2.1 $ 1.7 Performance shares 0.8 0.9 1.3 Total $ 2.8 $ 3.0 $ 3.0 Income tax benefits related to share-based compensation of approximately $1.1 million, $1.2 million and $1.2 million were recorded for the years ended December 31, 2017, 2016 and 2015, respectively. Share-based compensation expense is included in “selling, general and administrative expenses” in the accompanying consolidated statements of operations. As of December 31, 2017, total unrecognized compensation cost related to non-vested RSAs and PSAs was $3.0 million and will be recognized over a weighted-average period of approximately 1.7 years. Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component during 2017 and 2016: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2015 $ (35,025) $ (674) $ (35,699) Other comprehensive income before reclassifications (14,831) (289) (15,120) Amounts reclassified from accumulated other comprehensive income 2,706 836 3,542 Net current period other comprehensive income (12,125) 547 (11,578) Balance at December 31, 2016 $ (47,150) $ (127) $ (47,277) Other comprehensive income before reclassifications (4,467) (250) (4,717) Amounts reclassified from accumulated other comprehensive loss 3,153 758 3,911 Net current period other comprehensive income (1,314) 508 (806) Balance at December 31, 2017 $ (48,464) $ 381 $ (48,083) The following table summarizes reclassifications from accumulated other comprehensive loss during 2017 and 2016: Amount Reclassified from AOCI Year Ended December 31, Affected Line Item in the (In thousands) 2017 2016 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ 837 $ 979 (a) Actuarial loss (a) Total before tax 2,081 1,738 Tax benefit $ $ Net of tax Loss on cash flow hedges: Interest rate derivatives $ $ Interest expense 488 516 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-RET
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2017 | |
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. As part of our acquisition of FairPoint, we assumed sponsorship of its two non-contributory qualified defined benefit pension plans (together, the “Qualified Pension Plan”). The Qualified Pension Plan for certain non-management employees under collective bargaining agreements is closed to new participants and benefits have previously been frozen. For existing participants, benefit accruals are capped at 30 years of total credited service. The Qualified Pension Plan for certain management employees is frozen and all future benefit accruals for existing participants have ceased. We also have two non-qualified supplemental retirement plans (the “Supplemental Plans” and, together with the Retirement Plan and the Qualified Pension Plan, the “Pension 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 Pension Plans as of December 31, 2017 and 2016: (In thousands) 2017 2016 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Actuarial loss (gain) Benefits paid Acquisition — Plan curtailment — Plan settlement — Benefit obligation at the end of the year $ $ 350,392 (In thousands) 2017 2016 Change in plan assets Fair value of plan assets at the beginning of the year $ $ Employer contributions Actual return on plan assets Benefits paid Acquisition — Plan settlement — Fair value of plan assets at the end of the year $ $ 263,733 Funded status at year end $ $ Amounts recognized in the consolidated balance sheets at December 31, 2017 and 2016 consisted of: ( In thousands) 2017 2016 Current liabilities $ $ Long-term liabilities $ $ Amounts recognized in accumulated other comprehensive loss for the years ended December 31, 2017 and 2016 consisted of: (In thousands) 2017 2016 Unamortized prior service credit $ $ Unamortized net actuarial loss 85,984 83,367 $ 84,583 $ 80,313 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, 2017, 2016 and 2015: (In thousands) 2017 2016 2015 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of: Net actuarial loss Prior service credit Plan curtailment — — Plan settlement — — Net periodic pension cost (benefit) $ $ $ In May 2017, the Retirement Plan was amended to freeze benefit accruals under the cash balance benefit plan for certain participants under collective bargaining agreements effective as of June 30, 2017. As a result of this amendment, we recognized a pre-tax curtailment gain of $1.3 million as a component of net periodic pension cost during the year ended December 31, 2017. The following table summarizes other changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects, during 2017 and 2016: (In thousands) 2017 2016 Actuarial loss, net $ 8,906 $ Recognized actuarial loss Recognized prior service credit Plan curtailment — Plan settlement — Total amount recognized in other comprehensive loss, before tax effects $ 4,270 $ 11,785 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 pension cost in 2018 is $5.8 million and $(0.2) million, respectively. The weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost for the years ended December 31, 2017, 2016 and 2015 were as follows: Discount rate - net periodic benefit cost 4.02 % 4.76 % 4.27 % Discount rate - benefit obligation 3.75 % 4.27 % 4.76 % Expected long-term rate of return on plan assets 7.23 % 7.75 % % Rate of compensation/salary increase 2.39 % % % 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 for each of the years ended December 31, 2017 and 2016. The net present value of the remaining obligations was approximately $1.9 million and $2.0 million at December 31, 2017 and 2016, 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 2017. 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 $2.3 million and $2.2 million at December 31, 2017 and 2016, 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 $7.0 million and $6.8 million as of December 31, 2017 and 2016, 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. In connection with the acquisition of FairPoint, we have acquired its post-retirement benefit plan as of the date of acquisition. The post-retirement benefit plan provides medical, dental and life insurance benefits to certain eligible employees and in some instances, to their spouses and families. The post-retirement benefit plan is unfunded and the Company funds the benefits that are paid. The following tables summarize the change in benefit obligation, plan assets and funded status of the post-retirement benefit obligations as of December 31, 2017 and 2016: (In thousands) 2017 2016 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Plan participant contributions Actuarial loss (gain) Benefits paid (6,934) (4,152) Acquisition 76,413 — Benefit obligation at the end of the year $ 116,970 $ 46,318 (In thousands) 2017 2016 Change in plan assets Fair value of plan assets at the beginning of the year $ 2,286 $ 2,985 Employer contributions 6,478 3,608 Plan participant’s contributions 456 544 Actual return on plan assets 198 Benefits paid Fair value of plan assets at the end of the year $ 2,484 $ 2,286 Funded status at year end $ $ Amounts recognized in the consolidated balance sheets at December 31, 2017 and 2016 consist of: (In thousands) 2017 2016 Current liabilities $ $ Long-term liabilities $ $ Amounts recognized in accumulated other comprehensive loss for the years ended December 31, 2017 and 2016 consist of: (In thousands) 2017 2016 Unamortized prior service credit $ $ Unamortized net actuarial loss (gain) 956 $ $ The following table summarizes the components of the net periodic costs for post-retirement benefits for the years ended December 31, 2017, 2016 and 2015: (In thousands) 2017 2016 2015 Service cost $ 498 $ 602 $ 601 Interest cost 3,034 2,019 1,713 Expected return on plan assets (150) Amortization of: Net actuarial gain (173) — (134) Prior service credit (622) Net periodic postretirement benefit cost $ 2,725 $ 1,952 $ 1,408 The following table summarizes other changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects, during 2017 and 2016: (In thousands) 2017 2016 Actuarial loss (gain), net $ $ 7,614 Recognized actuarial gain 173 — Recognized prior service credit 521 521 Total amount recognized in other comprehensive loss, before tax effects $ $ 8,135 The estimated net actuarial gain and net prior service credit that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost in 2018 is approximately $(0.1) million and $(0.5) million, respectively. The weighted-average discount rate assumptions utilized for the years ended December 31 were as follows: 2017 2016 2015 Net periodic benefit cost 3.96 % 4.61 % 4.11 % Benefit obligation 3.67 % 4.12 % 4.61 % For purposes of determining the cost and obligation for post-retirement medical benefits, a 7.50% healthcare cost trend rate was assumed for the plan in 2017, declining to the ultimate trend 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 $ 179 $ Effect on postretirement benefit obligation $ 3,993 $ 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 weighted average target allocation of the Pension Plan assets is approximately 66% 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, 2017 were generated by using market transactions involving identical or comparable assets. There were no changes in the valuation techniques used during 2017. 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 net asset value (“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, 2017 and 2016, by asset category were as follows: As of December 31, 2017 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 $ $ 10,383 $ — $ — Equities: Stocks: U.S. common stocks 62,088 — — International stocks 12,310 — — Funds: U.S. small cap 5,874 — — U.S. mid cap 36,306 — — U.S. large cap 45,427 — — Emerging markets 18,736 — — International 104,403 — — Fixed Income: U.S. treasury and government agency securities 27,190 2 — Corporate and municipal bonds — 37,069 — Mortgage/asset-backed securities — 9,024 — Mutual funds 12,140 — — Total plan assets in the fair value hierarchy $ 334,857 $ 46,095 $ — 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 104,282 Total plan assets Other liabilities (3) Net plan assets $ 552,240 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 $ 671 $ 671 $ — $ — Equities: Stocks: U.S. common stocks 23,285 23,285 — — International stocks 8,756 8,756 — — Funds: U.S. mid cap 9,294 9,294 — — U.S. large cap 7,564 7,564 — — Emerging markets 14,382 14,382 — — International 47,784 47,784 — — Fixed Income: U.S. treasury and government agency securities 16,821 8,794 8,027 — Corporate and municipal bonds 6,712 — 6,712 — Mortgage/asset-backed securities 4,171 — 4,171 — Mutual funds 20,055 20,055 — — Total plan assets in the fair value hierarchy 159,495 $ 140,585 $ 18,910 $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 7,330 Equities: U.S. small cap 10,093 U.S. large cap 14,064 Emerging markets 7,865 International 15,434 Fixed Income 52,340 Total plan assets 266,621 Other liabilities (3) Net plan assets $ 263,733 (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, U.S. government obligations and variable rate securities 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, 2017 and 2016 were as follows: As of December 31, 2017 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 $ $ 4 $ — $ — Equities: U.S. common stocks 242 — — International stocks 76 — — Funds: U.S. mid cap 92 — U.S. large cap 73 — — Emerging markets 176 — — International 487 — — Total plan assets in the fair value hierarchy $ 1,150 $ — $ — 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 $ 2,484 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 $ 6 $ 6 $ — $ — Equities: U.S. common stocks 225 225 — — International stocks 84 84 — — Funds: U.S. mid cap 90 90 — — U.S. large cap 73 73 — — Emerging markets 139 139 — — International 462 462 — — Fixed Income: U.S. treasury and government agency securities 163 85 78 — Corporate and municipal bonds 65 — 65 — Mortgage/asset-backed securities 40 — 40 — Mutual funds 194 194 — — Total plan assets in the fair value hierarchy 1,541 $ 1,358 $ 183 $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 71 Equities: U.S. small cap 98 U.S. large cap 136 Emerging markets International 149 Fixed Income 506 Total plan assets 2,577 Benefit payments payable (263) Other liabilities (3) (28) Net plan assets $ 2,286 (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. government obligations 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 $26.9 million to our Pension Plans and $10.0 million to our other post-retirement plans in 2018. Estimated Future Benefit Payments As of December 31, 2017, 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 2018 $ 33,006 $ 10,013 2019 34,746 9,418 2020 35,598 9,238 2021 36,839 8,822 2022 37,727 8,295 2023 - 2027 203,525 35,131 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 $9.6 million, $6.5 million and $6.9 million in 2017, 2016 and 2015, respectively. The increase in 2017 is attributable to the acquisition of FairPoint which accounted for $3.8 million of the total expense. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES Income tax expense (benefit) consists of the following components: For the Year Ended (In thousands) 2017 2016 2015 Current: Federal $ 1,055 $ 1,390 $ (3,708) State 145 709 655 Total current expense (benefit) 1,200 2,099 (3,053) Deferred: Federal (141,726) 20,087 4,321 State 15,599 776 1,507 Total deferred expense (benefit) (126,127) 20,863 5,828 Total income tax expense (benefit) $ (124,927) $ 22,962 $ 2,775 The following is a reconciliation of the federal statutory tax rate to the effective tax rate for the years ended December 31, 2017, 2016 and 2015: For the Year Ended (In percentages) 2017 2016 2015 Statutory federal income tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 4.1 2.9 (37.9) Transaction costs (5.8) — — Other permanent differences 0.2 0.9 10.8 Change in uncertain tax positions — — (8.2) Change in deferred tax rate (9.1) (4.0) 91.9 Change in deferred tax rate - Federal Tax Reform 189.4 — — Valuation allowance (4.3) 1.6 43.4 Provision to return — 0.3 (1.5) Sale of stock in subsidiary — 19.1 — Non deductible goodwill — 3.8 — Other — 0.6 (1.6) 209.5 % 60.2 % 131.9 % Deferred Taxes The components of the net deferred tax liability are as follows: Year Ended December 31, (In thousands) 2017 2016 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 Other — Net non-current deferred taxes $ $ The Tax Cuts and Jobs Act of 2017 (the “Tax Act”), was signed into law on December 22, 2017, making significant changes to the U.S. tax law. The new tax legislation contains several key tax provisions including, but not limited to, a reduction of the corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017, as well as a variety of other changes including acceleration of expensing of certain business assets acquired and placed in service after September 27, 2017, limitation of the tax deductibility of interest expense, and reductions in the amount of executive pay that could qualify as a tax deduction. The Company has calculated the provisional amount of the impact of the Tax Act in its year end income tax provision in accordance with its understanding of the Tax Act and guidance available as of the date of this filing and as a result has recorded a non-cash tax benefit estimate of $112.9 million (corresponding federal and state impact is $(123.0) million and $10.1 million, respectively) as a reduction in income tax expense in the fourth quarter of 2017. This provisional income tax benefit reflects the impact of re-measurement of the Company’s deferred tax assets and liabilities to the enacted tax rate at which the balances are expected to reverse. In addition, we recorded valuation allowances of $0.9 million against state NOL and state tax credit carryforwards that we no longer expect to be able to realize based upon the Tax Act and new information evaluated in the fourth quarter of 2017. The provisional tax impact of the Tax Act is based on a preliminary review of the new law and is subject to revision based upon further analysis of the Tax Act. The Company’s re-measurement of deferred tax assets and liabilities is provisional along with the reversal of certain deferred tax balances including but not limited to fixed assets and stock compensation. We will continue to analyze information and evaluate aspects of the Tax Act and the impact to our deferred tax assets and liabilities. Additionally, there is currently uncertainty as to what portions, if any, of the Tax Act will be adopted by the U.S. state and local taxing authorities. The state tax implications of the Tax Act are provisional and are subject to further analysis as guidance is published by the states in response to the Tax Act. Additional time is needed to gather the information necessary to finalize the computations of the impact of the Tax Act. The changes included in the Tax Act are broad and complex. The impact of the Tax Act may differ from the above estimate due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, regulatory guidance that may be issued, or any updates or changes to estimates the Company has utilized to calculate the impacts. ASC 740 requires us to recognize the effect of the tax law changes in the period of enactment. However, on December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. SAB 118 will allow us to record provisional amounts during a measurement period which is similar to the measurement period used when accounting for business combinations. SAB 118 would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. Any subsequent adjustment to these amounts will be recorded to tax expense in 2018 when the analysis is complete. 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 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, 2017 of $296.5 million and related deferred tax assets of $62.3 million. The federal NOL carryforwards expire from 2018 to 2036. ETFL, a nonconsolidated subsidiary for federal income tax return purposes, estimates it has available NOL carryforwards as of December 31, 2017 of $1.4 million and related deferred tax assets of $0.3 million. ETFL’s federal NOL carryforwards expire from 2021 to 2024. We estimate that we have available state NOL carryforwards as of December 31, 2017 of $305.5 million and related deferred tax assets of $20.6 million. The state NOL carryforwards expire from 2018 to 2038. Management believes that it is more likely than not that we will not be able to realize state NOL carryforwards of $89.7 million and related deferred tax asset of $6.2 million and have placed a valuation allowance on this amount. The related NOL carryforwards expire from 2018 to 2036. 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, 2017 of $2.9 million and related deferred tax assets of $2.9 million. The newly enacted Tax Act repeals the AMT regime for tax years beginning after December 31, 2017. The remaining AMT credit carryforward will be fully refundable to the Company in future tax years based on the provisions of the Tax Act. We estimate that we have available state tax credit carryforwards as of December 31, 2017 of $9.9 million and related deferred tax assets of $7.2 million. The state tax credit carryforwards are limited annually and expire from 2018 to 2027. Management believes that it is more likely than not that we will not be able to realize state tax carryforwards of $2.7 million and related deferred tax asset of $1.9 million and has placed a valuation allowance on this amount. The related state tax credit carryforwards expire from 2018 to 2022. 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, 2017 and 2016 were $4.3 million and $0.1 million, respectively. The net increase of $4.3 million to unrecognized tax benefits in 2017 was primarily due to the acquisition of FairPoint and was recorded in purchase accounting. There were no material effects on the Company’s effective tax rate. The net amount of unrecognized benefits that, if recognized, would result in an impact to the effective rate is $4.1 million compared to less than $0.1 million in 2016. Our practice is to recognize interest and penalties related to income tax matters in interest expense and general and administrative expense, respectively. During 2017 and 2016, 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 2014 through 2016. The periods subject to examination for our state returns are years 2013 through 2016. In addition, prior tax years may be subject to examination by federal or state taxing authorities if the Company's NOL carryovers from those prior years are utilized in the future. We are currently under examination by a state taxing authority. We do not expect any settlement or payment that may result from the examination to have a material effect on our results or cash flows. 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. The net increase of $4.3 million to unrecognized tax benefits in 2017 was primarily due to the acquisition of FairPoint. 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, 2017 and 2016: Liability for Unrecognized Tax Benefits (In thousands) 2017 2016 Balance at January 1 $ 64 $ 66 Additions for tax positions related to FairPoint acquisition 4,296 — Reduction for tax positions of prior years (64) — Reduction for lapse of state statute of limitations — (2) Balance at December 31 $ 4,296 $ 64 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
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. As of December 31, 2017, 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) 2018 2019 2020 2021 2022 Thereafter Total Operating lease agreements $ $ $ $ $ $ $ Capital lease agreements — Capital expenditures (1) 1,371 2,225 1,226 — — Service and support agreements (2) Transport and data connectivity 6,817 6,097 5,733 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 $18.0 million, $12.7 million and $12.1 million for the years ended December 31, 2017, 2016, and 2015, respectively. Capital Leases We lease certain facilities and equipment under various capital lease arrangements, all of which expire between 2018 and 2022. As of December 31, 2017, the present value of the minimum remaining lease commitments, net of imputed interest of $2.2 million, was approximately $23.9 million, of which $11.3 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 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 certain entities of the Company including FairPoint, and many other Local Exchange Carriers (collectively, “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 devices that are routed to or from these LECs 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 $4.8 million and cover periods dating back as far as 2006. CenturyLink, Inc. and its LEC subsidiaries (collectively “CenturyLink”), 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 “U.S. District Court”). On November 17, 2015, the U.S. District 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, among other things, a Joint Motion to Dismiss them, which the U.S. District Court granted on May 3, 2017. Relatedly, in 2016, numerous LECs across the country, including a number of our LEC entities and FairPoint, 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 of the Company’s LEC entities including FairPoint, seek from Level 3 in this proceeding is at least approximately $1.6 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 U.S. District Court. Level 3 filed a Motion to Dismiss these complaints that, in part, repeated arguments the November 2015 Order rejected. On March 22, 2017, the U.S. District Court denied Level 3’s Motion to Dismiss (“March 2017 Order”). The U.S. District Court has adopted scheduling orders in the consolidated cases on how the claims at issue (“intraMTA claims”) would be addressed in upcoming aspects of the proceeding. While the parties are seeking the Court’s assistance to address certain open issues during this phase of the proceeding, o nce the proceeding before the U.S. District Court on the intraMTA claims becomes final, including resolution of any related counterclaims, Sprint, Verizon, and Level 3 are expected to appeal the U.S. District Court’s November 2015 and March 2017 Orders. Absent a decision by an appellate court that overturns these orders, it could be difficult for Sprint or Verizon to succeed on its 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 a material adverse 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 2016. 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 reconsideration was sought, the Verizon Pennsylvania case is now final. For our CCES and CCPA subsidiaries, the total additional tax liability calculated by the DOR auditors for the calendar years 2008 through 2013, including interest, is approximately $4.3 million and $5.1 million, respectively. In May 2016, the Commonwealth of Pennsylvania Board of Finance and Revenue reviewed our appeals of the 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, captioned as Consolidated Communications Enterprise Services, Inc. v. Commonwealth of Pennsylvania , Nos. 400 through 411 FR 2016 and Consolidated Communications of Pennsylvania Company, LLC v. Commonwealth of Pennsylvania , Nos. 422 through 432 FR 2016. These appeals are presently in the fact development stage, with further joint status reports to be filed with the Commonwealth Court in March 2018. In October and December 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, including interest, is approximately $0.8 million and $0.9 million, respectively. We filed Petitions for Reassessment with the DOR’s Board of Appeals in January 2017 for CCPA and in March 2017 for CCES, contesting these audit assessments. By Interlocutory Orders issued in April 2017, the Board stayed the matters pending final action of the Commonwealth Court in litigation involving the same issues related to CCPA’s and CCES’s 2008 through 2013 tax periods. In May and September 2017, CCES and CCPA received Audit Assessment Notices from the DOR increasing the amounts owed for Pennsylvania Gross Receipts Tax for the 2015 tax year. The total additional tax liability calculated by the DOR auditors for CCES and CCPA for 2015, including interest, is approximately $0.7 million for each subsidiary. We filed Petitions for Reassessment with the DOR’s Board of Appeals in May 2017 for CCES and in November 2017 for CCPA, contesting these audit assessments. By Interlocutory Orders issued in August 2017 and November 2017, the Board stayed the CCES and CCPA matters pending final action of the Commonwealth Court in litigation involving the same issues related to CCES’s and CCPA’s 2008 through 2013 tax periods. In December 2017, CCES and CCPA received audit schedules from the DOR increasing the amounts owed for Pennsylvania Gross Receipts Tax for the 2016 tax year. The total additional tax liability calculated by the DOR auditors for CCES and CCPA for 2016, including interest, is approximately $0.5 million and $0.7 million, respectively. We expect to appeal the audit findings for each subsidiary when the respective Audit Assessment Notices are issued. In May 2017, we entered into an agreement to guarantee any potential liability to the DOR up to $5.0 million. However, we believe that certain of the DOR’s findings regarding the Company’s additional tax liability for the calendar years 2008 through 2015, for which we have filed appeals, continue to lack merit. Nevertheless, in light of the Supreme Court of Pennsylvania’s Verizon Pennsylvania decision, we have accrued $1.6 million and $1.4 million, including interest, for our CCES and CCPA subsidiaries, respectively. These accruals also include the Company’s best estimate of the potential 2016 and 2017 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. In January 2018, CCES and CCPA submitted initial settlement offers to the Pennsylvania Office of Attorney General proposing to settle the intrastate and interstate cases at a reduced tax liability of the total assessed tax liability under dispute for the calendar years 2008 through 2013. The settlement offers are currently under review and consideration by the Commonwealth Court. We expect to receive responses to our offers during the second quarter of 2018. While we continue to believe a settlement of all disputed claims is possible, we cannot anticipate at this time what the ultimate resolution of these cases will be, nor can we evaluate the likelihood of a favorable or unfavorable outcome or the potential losses (or gains) should such an outcome occur. 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, 2017 | |
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% of Agracel, Inc. (“Agracel”), a real estate investment company, at December 31, 2017 and 2016. 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% beneficial ownership of LATEL at December 31, 2017 and 2016. As of December 31, 2017, 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, 2017 and 2016 was approximately $2.2 million and $2.7 million, respectively. We recognized $0.3 million in interest expense in 2017 and $0.4 million in interest expense in each of 2016 and 2015 and amortization expense of $0.4 million in 2017, 2016 and 2015 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 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 of 2017 and 2016 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 in each of 2017 and 2016 and $0.8 million in 2015 for these services. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarter Ended 2017 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 169,935 $ 169,950 $ 363,329 $ 356,360 Operating income (loss) $ 18,587 $ 21,578 $ (7,998) $ 6,487 Net income (loss) attributable to common stockholders $ (3,685) $ (2,728) $ (28,448) $ 99,806 Basic and diluted earnings (loss) per share $ (0.07) $ (0.06) $ (0.41) $ 1.41 Quarter Ended 2016 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 188,846 $ 186,871 $ 191,541 $ 175,919 Operating income $ 24,310 $ 22,954 $ 22,736 $ 17,440 Net income (loss) attributable to common stockholders $ 7,849 $ 76 $ 7,012 $ (6) Basic and diluted earnings (loss) per share $ 0.15 $ — $ 0.14 $ — On December 22, 2017, the Tax Act was enacted as discussed in Note 10 and, as a result, we recorded a non-cash tax benefit estimate of $112.9 million as a reduction in income tax expense in the fourth quarter of 2017. During the third quarter of 2017, we acquired all the issued and outstanding shares of FairPoint in exchange for shares of our common stock. FairPoint’s results of operations have been included in our consolidated financial statements as of the acquisition date of July 3, 2017. As result of the FairPoint acquisition, we incurred transaction costs of $1.5 million, $1.7 million, $27.0 million and $2.8 million during the quarters ended March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, respectively. In December 2016, in connection with the acquisition of FairPoint, we secured committed debt financing through a $935.0 million incremental term loan facility, as described in Note 6. In connection with entering into the committed financing, we incurred ticking fees and the amortization of commitment fees of $1.2 million, $11.4 million, $13.3 million and $6.2 million during quarters ended December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, respectively. 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 Third 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. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
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, including our FairPoint subsidiaries, 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, 2017 and 2016, and condensed consolidating statements of operations and cash flows for the years ended December 31, 2017, 2016 and 2015 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, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 8,919 $ 6,738 $ — $ — $ 15,657 Accounts receivable, net — — 114,303 7,701 (476) 121,528 Income taxes receivable 20,275 — 1,571 — — 21,846 Prepaid expenses and other current assets — — 33,188 130 — 33,318 Assets held for sale — — — 21,310 — 21,310 Total current assets 20,275 8,919 155,800 29,141 (476) 213,659 Property, plant and equipment, net — — 1,972,190 65,416 — 2,037,606 Intangibles and other assets: Investments — 8,495 100,363 — — 108,858 Investments in subsidiaries 3,643,930 2,133,049 35,374 — (5,812,353) — Goodwill — 971,851 66,181 — 1,038,032 Other intangible assets — 297,696 9,087 — 306,783 Advances due to/from affiliates, net — 2,441,690 555,332 92,615 (3,089,637) — Deferred income taxes 21,244 — — — (21,244) — Other assets — 1,307 12,844 37 — 14,188 Total assets $ 3,685,449 $ 4,593,460 $ 4,101,450 $ 262,477 $ (8,923,710) $ 3,719,126 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 24,143 $ — $ — $ 24,143 Advance billings and customer deposits — — 41,026 1,500 — 42,526 Dividends payable 27,418 — — — — 27,418 Accrued compensation — — 48,795 975 — 49,770 Accrued interest — 8,824 519 — — 9,343 Accrued expense 107 504 70,976 930 (476) 72,041 Current portion of long term debt and capital lease obligations — 18,350 11,150 196 — 29,696 Liabilities held for sale — — — 1,003 — 1,003 Total current liabilities 27,525 27,678 196,609 4,604 (476) 255,940 Long-term debt and capital lease obligations — 2,298,970 12,139 405 — 2,311,514 Advances due to/from affiliates, net 3,089,637 — — — (3,089,637) — Deferred income taxes — 750 209,116 21,098 (21,244) 209,720 Pension and postretirement benefit obligations — — 315,129 19,064 — 334,193 Other long-term liabilities — 1,761 31,030 1,026 — 33,817 Total liabilities 3,117,162 2,329,159 764,023 46,197 (3,111,357) 3,145,184 Shareholders’ equity: Common Stock 708 — 17,411 30,000 (47,411) 708 Other shareholders’ equity 567,579 2,264,301 3,314,361 186,280 (5,764,942) 567,579 Total Consolidated Communications Holdings, Inc. shareholders’ equity 568,287 2,264,301 3,331,772 216,280 (5,812,353) 568,287 Noncontrolling interest — — 5,655 — — 5,655 Total shareholders’ equity 568,287 2,264,301 3,337,427 216,280 (5,812,353) 573,942 Total liabilities and shareholders’ equity $ 3,685,449 $ 4,593,460 $ 4,101,450 $ 262,477 $ (8,923,710) $ 3,719,126 December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 27,064 $ 13 $ — $ — $ 27,077 Accounts receivable, net — — 48,911 7,347 (42) 56,216 Income taxes receivable 20,756 — 885 (25) — 21,616 Prepaid expenses and other current assets — 12,856 15,310 126 — 28,292 Total current assets 20,756 39,920 65,119 7,448 (42) 133,201 Property, plant and equipment, net — — 999,416 55,770 — 1,055,186 Intangibles and other assets: Investments — 8,338 97,883 — — 106,221 Investments in subsidiaries 2,192,556 2,019,692 14,279 — (4,226,527) — Goodwill — — 690,696 66,181 — 756,877 Other intangible assets — — 22,525 9,087 — 31,612 Advances due to/from affiliates, net — 1,524,906 427,720 87,171 (2,039,797) — Deferred income taxes 17,150 — — — (17,150) — Other assets — 1,562 8,058 41 — 9,661 Total assets $ 2,230,462 $ 3,594,418 $ 2,325,696 $ 225,698 $ (6,283,516) $ 2,092,758 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 6,766 $ — $ — $ 6,766 Advance billings and customer deposits — — 24,981 1,457 — 26,438 Dividends payable 19,605 — — — — 19,605 Accrued compensation — — 16,002 969 — 16,971 Accrued interest — 10,824 436 — — 11,260 Accrued expense 36 15,057 38,192 880 (42) 54,123 Current portion of long term debt and capital lease obligations — 9,000 5,735 187 — 14,922 Total current liabilities 19,641 34,881 92,112 3,493 (42) 150,085 Long-term debt and capital lease obligations — 1,365,820 10,332 602 — 1,376,754 Advances due to/from affiliates, net 2,039,797 — — — (2,039,797) — Deferred income taxes — 984 232,668 27,796 (17,150) 244,298 Pension and postretirement benefit obligations — — 109,185 21,608 — 130,793 Other long-term liabilities 70 216 13,807 480 — 14,573 Total liabilities 2,059,508 1,401,901 458,104 53,979 (2,056,989) 1,916,503 Shareholders’ equity: Common Stock 506 — 17,411 30,000 (47,411) 506 Other shareholders’ equity 170,448 2,192,517 1,844,880 141,719 (4,179,116) 170,448 Total Consolidated Communications Holdings, Inc. shareholders’ equity 170,954 2,192,517 1,862,291 171,719 (4,226,527) 170,954 Noncontrolling interest — — 5,301 — — 5,301 Total shareholders’ equity 170,954 2,192,517 1,867,592 171,719 (4,226,527) 176,255 Total liabilities and shareholders’ equity $ 2,230,462 $ 3,594,418 $ 2,325,696 $ 225,698 $ (6,283,516) $ 2,092,758 Condensed Consolidating Statements of Operations (amounts in thousands) Year Ended December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,013,505 $ 58,776 $ (12,707) $ 1,059,574 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 447,247 11,094 (12,276) 446,065 Selling, general and administrative expenses 1,924 30 234,438 13,371 (431) 249,332 Acquisition and other transaction costs 33,650 — — — — 33,650 Depreciation and amortization — — 280,843 11,030 — 291,873 Operating income (loss) (35,574) (30) 50,977 23,281 — 38,654 Other income (expense): Interest expense, net of interest income (12) (128,737) (1,183) 146 — (129,786) Intercompany interest income (expense) — 58,909 (58,827) (82) — — Investment income — 157 31,592 — — 31,749 Equity in earnings of subsidiaries, net 101,863 109,015 1,918 — (212,796) — Other, net — 3 (236) (12) — (245) Income (loss) before income taxes 66,277 39,317 24,241 23,333 (212,796) (59,628) Income tax expense (benefit) 1,332 (27,610) (97,667) (982) — (124,927) Net income (loss) 64,945 66,927 121,908 24,315 (212,796) 65,299 Less: net income attributable to noncontrolling interest — — 354 — — 354 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 64,945 $ 66,927 $ 121,554 $ 24,315 $ (212,796) $ 64,945 Total comprehensive income (loss) attributable to common shareholders $ 64,139 $ 71,746 $ 119,174 $ 25,381 $ $ 64,139 Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ (15) $ 697,557 $ 58,785 $ (13,150) $ 743,177 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 323,112 12,401 (12,721) 322,792 Selling, general and administrative expenses 3,331 7 141,533 12,669 (429) 157,111 Acquisition and other transaction costs 1,214 — — — — 1,214 Loss on impairment — — 610 — — 610 Depreciation and amortization — — 164,577 9,433 — 174,010 Operating income (loss) (4,545) (22) 67,725 24,282 — 87,440 Other income (expense): Interest expense, net of interest income 46 (76,213) (694) 35 — (76,826) Intercompany interest income (expense) (63,773) 97,102 (34,846) 1,517 — — Loss on extinguishment of debt — (6,559) — — — (6,559) Investment income — 166 32,806 — — 32,972 Equity in earnings of subsidiaries, net 58,208 56,600 711 — (115,519) — Other, net — (328) 1,478 (19) — 1,131 Income (loss) before income taxes (10,064) 70,746 67,180 25,815 (115,519) 38,158 Income tax expense (benefit) (24,995) 12,538 25,807 9,612 — 22,962 Net income (loss) 14,931 58,208 41,373 16,203 (115,519) 15,196 Less: net income attributable to noncontrolling interest — — 265 — — 265 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 14,931 $ 58,208 $ 41,108 $ 16,203 $ (115,519) $ 14,931 Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Year Ended December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ 121 $ 728,910 $ 60,094 $ (13,388) $ 775,737 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 328,714 12,567 (12,881) 328,400 Selling, general and administrative expenses 3,160 150 156,380 19,044 (507) 178,227 Acquisition and other transaction costs 1,413 — — — — 1,413 Depreciation and amortization — — 171,232 8,690 — 179,922 Operating income (loss) (4,573) (29) 72,584 19,793 — 87,775 Other income (expense): Interest expense, net of interest income (104) (79,680) 154 12 — (79,618) Intercompany interest income (expense) (153,713) 166,838 (15,917) 2,792 — — Loss on extinguishment of debt — (41,242) — — — (41,242) Investment income — 326 36,364 — — 36,690 Equity in earnings of subsidiaries, net 93,391 64,812 567 — (158,770) — Other, net — (26) (1,346) (129) — (1,501) Income (loss) before income taxes (64,999) 110,999 92,406 22,468 (158,770) 2,104 Income tax expense (benefit) (64,118) 17,608 40,346 8,939 — 2,775 Net income (loss) (881) 93,391 52,060 13,529 (158,770) (671) Less: net income attributable to noncontrolling interest — — 210 — — 210 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (881) $ 93,391 $ 51,850 $ 13,529 $ (158,770) $ (881) Total comprehensive income (loss) attributable to common shareholders $ $ 89,332 $ 48,434 $ 13,105 $ $ Condensed Consolidating Statements of Cash Flows (amounts in thousands) Year Ended December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (23,237) $ (25,625) $ 235,810 $ 23,079 $ 210,027 Cash flows from investing activities: Business acquisition, net of cash acquired (862,385) — — — (862,385) Purchases of property, plant and equipment — — (167,187) (13,998) (181,185) Proceeds from sale of assets — — 829 30 859 Net cash used in investing activities (862,385) — (166,358) (13,968) (1,042,711) Cash flows from financing activities: Proceeds from issuance of long-term debt — 1,052,325 — — 1,052,325 Payment of capital lease obligation — — (7,746) (187) (7,933) Payment on long-term debt — (111,337) — — (111,337) Payment of financing costs — (16,732) — — (16,732) Share repurchases for minimum tax withholding (571) — — — (571) Dividends on common stock (94,138) — — — (94,138) Transactions with affiliates, net 980,681 (916,776) (54,981) (8,924) — Other (350) — — — (350) Net cash provided by (used in) financing activities 885,622 7,480 (62,727) (9,111) 821,264 Increase (decrease) in cash and cash equivalents — (18,145) 6,725 — (11,420) Cash and cash equivalents at beginning of period — 27,064 13 — 27,077 Cash and cash equivalents at end of period $ — $ 8,919 $ 6,738 $ — $ 15,657 Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (23,634) $ 13,315 $ 200,098 $ 28,454 $ 218,233 Cash flows from investing activities: Business acquisition, net of cash acquired (13,422) — — — (13,422) Purchases of property, plant and equipment — — (111,389) (13,803) (125,192) Proceeds from sale of assets — — 198 10 208 Proceeds from business disposition 30,119 — — — 30,119 Net cash provided by (used in) investing activities 16,697 — (111,191) (13,793) (108,287) Cash flows from financing activities: Proceeds from issuance of long-term debt — 936,750 — — 936,750 Payment of capital lease obligation — — (2,743) (142) (2,885) Payment on long-term debt — (943,050) — — (943,050) Payment of financing costs — (9,912) — — (9,912) Share repurchases for minimum tax withholding (1,231) — — — (1,231) Dividends on common stock (78,419) — — — (78,419) Transactions with affiliates, net 86,587 24,084 (93,780) (16,891) — Net cash provided by (used in) financing activities 6,937 7,872 (96,523) (17,033) (98,747) Increase (decrease) in cash and cash equivalents — 21,187 (7,616) (2,372) 11,199 Cash and cash equivalents at beginning of period — 5,877 7,629 2,372 15,878 Cash and cash equivalents at end of period $ — $ 27,064 $ 13 $ — $ 27,077 Year Ended December 31, 2015 Subsidiary Parent Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (119,472) $ 76,962 $ 240,372 $ 21,317 $ 219,179 Cash flows from investing activities: Purchases of property, plant and equipment — — (126,168) (7,766) (133,934) Proceeds from sale of assets — — 13,535 13 13,548 Proceeds from sale of investments — — 846 — 846 Net cash used in investing activities — — (111,787) (7,753) (119,540) Cash flows from financing activities: Proceeds from bond offering — 294,780 — — 294,780 Proceeds from issuance of long-term debt — 69,000 — — 69,000 Payment of capital lease obligation — — (1,029) (78) (1,107) Payment on long-term debt — (107,100) — — (107,100) Redemption of senior notes — (261,874) — — (261,874) Payment of financing costs — (4,805) — — (4,805) Share repurchases for minimum tax withholding (1,125) — — — (1,125) Dividends on common stock (78,209) — — — (78,209) Transactions with affiliates, net 198,806 (66,026) (120,747) (12,033) — Net cash provided by (used in) financing activities 119,472 (76,025) (121,776) (12,111) (90,440) Increase in cash and cash equivalents — 937 6,809 1,453 9,199 Cash and cash equivalents at beginning of period — 4,940 820 919 6,679 Cash and cash equivalents at end of period $ — $ 5,877 $ 7,629 $ 2,372 $ 15,878 |
BUSINESS DESCRIPTION AND SUMM23
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS DESCRIPTION AND 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 communication solutions to consumer, commercial and carrier customers across a 24-state service area. Leveraging our advanced fiber network spanning more than 36,000 fiber route miles, we offer residential Internet, video, phone and home security services as well as multi-service residential and small business bundles. Our business product suite includes data and Internet solutions, voice, data center services, security services, managed and IT Services, and an expanded suite of cloud services. As of December 31, 2017, we had approximately 972 thousand voice connections, 784 thousand data connections and 103 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), (iv) pension plan and other post-retirement costs and obligations (Notes 1 and 9) and (v) business combinations (Note 3). |
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 On December 3, 2016, we entered into a definitive agreement and plan of merger (the “Merger Agreement”) with FairPoint Communications, Inc. (“FairPoint”) to acquire all the issued and outstanding shares of FairPoint in exchange for shares of our common stock. On July 3, 2017, the merger (the “Merger”) was completed and FairPoint became a wholly owned subsidiary of the Company. The financial results for FairPoint have been included in our consolidated financial statements as of the acquisition date. For a more complete discussion of the transaction, refer to Note 3. |
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, 2017, 2016 and 2015: Year Ended December 31, (In thousands) 2017 2016 2015 Balance at beginning of year $ $ $ Provision charged to expense Write-offs, less recoveries Acquired allowance for doubtful accounts — — Balance at end of year $ $ $ 3,235 |
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, 2017 and 2016: December 31, December 31, Estimated (In thousands) 2017 2016 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 $263.8 million, $161.1 million and $167.1 million in 2017, 2016 and 2015, 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 2017 assessment, we evaluated the fair value of goodwill compared to the carrying value using the quantitative approach. 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, 2017 assessment, using the quantitative approach, we concluded that the fair value of the reporting unit exceeded the carrying value at November 30, 2017 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 2017, 2016 or 2015 as a result of the impairment test. At December 31, 2017 and 2016, the carrying value of goodwill was $1,038.0 million and $756.9 million, respectively. Goodwill increased $281.2 million during 2017 as a result of the acquisition of FairPoint, as described in Note 3. 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, 2017 and 2016. For the 2017 assessment, we used the quantitative approach to evaluate the fair value compared to the carrying value of the trade names. Based on our assessment, 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 using an accelerated amortization method or 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, 2017, 2016 or 2015. The components of finite-lived intangible assets are as follows: December 31, 2017 December 31, 2016 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships - years $ 516,561 $ (223,261) $ 216,261 $ (198,353) Trade names <1 - years 3,390 (3,390) 2,290 (2,290) Other intangible assets - years 7,380 (4,454) 5,600 (2,453) Total $ 527,331 $ (231,105) $ 224,151 $ (203,096) Amortization expense related to the finite-lived intangible assets for the years ended December 31, 2017, 2016 and 2015 was $28.0 million, $12.9 million and $12.8 million, respectively. Expected future amortization expense of finite-lived intangible assets is as follows: (In thousands) 2018 $ 66,341 2019 66,131 2020 50,441 2021 39,373 2022 30,850 Thereafter 43,090 Total $ 296,226 |
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 projected 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. See Note 9 for a more detailed discussion regarding our pension and other post-retirement benefits. 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. We determine expected long-term rate of return on plan assets by considering historical investment performance, plan asset allocation strategies and return forecasts for each asset class and input from its advisors. Projected returns by such advisors were based on broad equity and fixed income indices. The expected long-term rate of return is reviewed annually in conjunction with other plan assumptions, if considered necessary, revised to reflect changes in the financial markets and the investment strategy. Our plan assets are valued at fair value as of the measurement date. Our discount rate assumption is determined annually to reflect the rate at which the benefits could be effectively settled and approximate the timing of expected future payments based on current market determined interest rates for similar obligations. We use bond matching model BOND:Link comprising of high quality corporate bonds to match cash flows to the expected benefit payments. 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. Actuarial gains and losses that arise during the year are recognized as a component of comprehensive income (loss), net of applicable income taxes, and included in accumulated other comprehensive income (loss). These gains and losses are amortized over future years as a component of the net periodic benefit cost. |
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 operating 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; 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. 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. 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 flows. We collect and remit Federal Universal Service contributions on a gross basis, which resulted in recorded revenue of approximately $11.7 million, $12.7 million and $13.2 million during the years ended December 31, 2017, 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 $10.9 million, $8.7 million and $8.3 million in 2017, 2016 and 2015, respectively. |
Statement of Cash Flows Information | Statement of Cash Flows Information During 2017, 2016 and 2015, we made payments for interest and income taxes as follows: (In thousands) 2017 2016 2015 Interest, net of amounts capitalized ($1,246, $1,152 and $1,373 in 2017, 2016 and 2015, respectively) $ 106,499 $ 69,536 $ 76,823 Income taxes (received) paid, net $ 953 $ $ 1,835 Noncash investing and financing activities: In 2017, 2016 and 2015, we acquired equipment of $12.8 million, $12.2 million and $4.1 million, respectively, through capital lease agreements. In 2017, we issued 20.1 million shares of the Company’s common stock with a market value of $431.0 million in connection with the acquisition of FairPoint 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 Effective January 1, 2017, we adopted the Accounting Standards Update (“ASU”) No. 2016-09 (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 amends several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, calculation of compensation expense and classification on the statement of cash flows. ASU 2016-09 requires excess tax benefits and deficiencies resulting from stock-based compensation awards vesting to be recognized as income tax expense or benefit in the income statement on a prospective basis. Previously, these amounts were recognized in additional paid-in capital (“APIC”). The impact of this change was not material for the year ended December 31, 2017. In addition, ASU 2016-09 requires excess tax benefits and deficiencies to be excluded from the assumed proceeds in the calculation of diluted shares when using the treasury stock method. This requirement did not have a material impact on diluted earnings per share for the year ended December 31, 2017. ASU 2016-09 removed the requirement to delay recognition of excess tax benefits until it reduces current income taxes payable. This update is required to be applied on a modified retrospective basis, which resulted in a cumulative effect adjustment of $2.2 million as of January 1, 2017 to increase opening retained earnings for the cumulative impact of excess tax benefits related to our net operating loss (“NOL”) carryforwards. This amount was subsequently transferred into APIC at March 31, 2017. ASU 2016-09 permits the election of an accounting policy for forfeitures of share-based payment awards, either to recognize forfeitures as they occur or estimate forfeitures over the vesting period of the award. We have elected to recognize forfeitures as they occur and the cumulative impact of this change was not material to our consolidated financial statements and related disclosures. In May 2014, the Financial Accounting Standards Board (“FASB”) issued the ASU No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606), which replaces the current revenue recognition requirements in US 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 ASU 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. We adopted ASU 2014-09 as of January 1, 2018 using the modified retrospective method for open contracts. Under this transition method, the accounting change is applied to the current period with a cumulative effect adjustment recorded to opening retained earnings. Previously reported results will not be restated under this transition method. The adoption of this new standard will result in the deferral of contract acquisition costs over the contract performance period instead of expensed as incurred. The adoption will also result in additional disclosures around the nature and timing of the Company’s performance obligations, deferred revenue contract liabilities, deferred contract cost assets, as well as significant judgments and practical expedients used by the Company in applying the new five-step revenue model. The Company has implemented new processes and internal controls to enable the preparation of financial information upon adoption. During the first quarter of 2018, we will record a cumulative effect adjustment to opening retained earnings related to the adoption. Based on information currently available to us, we estimate the adoption will result in an increase to opening retained earnings of approximately $2.0 million to $4.0 million. In May 2017, the FASB issued the ASU No. 2017-09 (“ASU 2017-09”), Scope of Modification Accounting . ASU 2017-09 clarifies the modification accounting guidance for stock compensation included in Topic 718, Compensation – Stock Compensation . ASU 2017-09 provides guidance about which changes to the terms or conditions of a share-based payment award must be accounted for as a modification under Topic 718. The new guidance is effective prospectively for annual and interim periods beginning after December 15, 2017. We adopted this update as of January 1, 2018 and will apply this guidance to applicable transactions after the adoption date. In March 2017, the FASB issued the ASU No. 2017-07 (“ASU 2017-07”), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . ASU 2017-07 requires presentation of the service cost component of net periodic benefit cost within the same income statement line item as other compensation costs arising from services rendered by relevant employees during the period, and presentation of the other cost components of net periodic benefit cost separately and outside of the income from operations subtotal. In addition, only the service cost component is eligible for capitalization. The new guidance is effective for annual and interim periods beginning after December 15, 2017 and should be applied retrospectively for the presentation of the service cost and prospectively for the capitalization of the service cost component in assets. We adopted ASU 2017-07 as of January 1, 2018 and will present other cost components of net periodic benefit cost separately within non-operating income (expense) on the statement of operations beginning in the first quarter of 2018. We do not expect a change in the capitalization requirement to have a material impact on our consolidated financial statements. See Note 9 for the amount of each component of net periodic pension and post-retirement benefit costs. In February 2017, the FASB issued the ASU No. 2017-05 (“ASU 2017-05”), Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets . ASU 2017-05 provides additional guidance to (i) clarify the scope for recognizing gains and losses from the transfer of nonfinancial assets and in substance nonfinancial assets in contracts with non-customers, and (ii) clarify the accounting for partial sales of nonfinancial assets. ASU 2017-05 is effective for annual and interim periods beginning after December 15, 2017 and can be applied using the retrospective or modified retrospective method. We adopted ASU 2017-05 as of January 1, 2018 and do not expect it to have a material impact on our consolidated financial statements and related disclosures. In January 2017, FASB issued the ASU No. 2017-04 (“ASU 2017-04”), Simplifying the Accounting for Goodwill Impairment . ASU 2017-04 eliminates Step 2 from the goodwill impairment test. Under the updated guidance, the goodwill impairment test will be performed by comparing the fair value of a reporting unit with its carrying amount and an impairment charge will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new guidance is effective for annual and interim goodwill tests in fiscal years beginning after December 15, 2019 and should be applied prospectively. Early adoption is permitted for annual and interim goodwill impairment testing performed after January 1, 2017. We adopted ASU 2017-04 as of January 1, 2018 and do not expect it to have a material impact on our testing of goodwill. In January 2017, the FASB issued the ASU 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. We adopted this update as of January 1, 2018 and do not expect it to have a material impact on our consolidated financial statements and related disclosures. In October 2016, the FASB issued the ASU 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 adopted this update as of January 1, 2018 and do not expect it to have a material impact on our consolidated financial statements and related disclosures. In August 2016, the FASB issued the ASU 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. We adopted this update as of January 1, 2018 and do not expect it to have a material impact on our consolidated financial statements and related disclosures. In February 2018, the FASB issued the ASU No. 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . ASU 2018-02 provides an option to allow reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The new guidance is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and related disclosures. In August 2017, the FASB issued the ASU Update No. 2017-12 (“ASU 2017-12”), Targeted Improvements to Accounting for Hedging Activities . ASU 2017-12 amends current guidance on accounting for hedges mainly to align more closely an entity’s risk management activities and financial reporting relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. In addition, amendments in ASU 2017-12 simplify the application of hedge accounting by allowing more time to prepare hedge documentation and allowing effectiveness assessments to be performed on a qualitative basis after hedge inception. The new guidance is effective for annual and interim periods beginning after December 15, 2018 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 ASU 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 on a modified retrospective basis 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 have not yet made a decision on the timing of adoption and are currently evaluating the impact this update will have on our consolidated financial statements and related disclosures. In February 2016, the FASB issued the ASU 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 on a modified retrospective basis 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 plan to adopt this update effective January 1, 2019 and are continuing to assess the potential impact of this update on our consolidated financial statements and related disclosures. |
BUSINESS DESCRIPTION AND SUMM24
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of activity in the entity's accounts receivable allowance account | Year Ended December 31, (In thousands) 2017 2016 2015 Balance at beginning of year $ $ $ Provision charged to expense Write-offs, less recoveries Acquired allowance for doubtful accounts — — Balance at end of year $ $ $ 3,235 |
Schedule of property, plant and equipment | December 31, December 31, Estimated (In thousands) 2017 2016 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 carrying amount of finite-lived intangible assets | December 31, 2017 December 31, 2016 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships - years $ 516,561 $ (223,261) $ 216,261 $ (198,353) Trade names <1 - years 3,390 (3,390) 2,290 (2,290) Other intangible assets - years 7,380 (4,454) 5,600 (2,453) Total $ 527,331 $ (231,105) $ 224,151 $ (203,096) |
Schedule of expected amortization expense | (In thousands) 2018 $ 66,341 2019 66,131 2020 50,441 2021 39,373 2022 30,850 Thereafter 43,090 Total $ 296,226 |
Schedule of supplemental cash flow information | (In thousands) 2017 2016 2015 Interest, net of amounts capitalized ($1,246, $1,152 and $1,373 in 2017, 2016 and 2015, respectively) $ 106,499 $ 69,536 $ 76,823 Income taxes (received) paid, net $ 953 $ $ 1,835 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
Schedule of basic and diluted EPS | (In thousands, except per share amounts) 2017 2016 2015 Net income (loss) $ 65,299 $ 15,196 $ (671) Less: net income attributable to noncontrolling interest 354 265 210 Income (loss) attributable to common shareholders before allocation of earnings to participating securities 64,945 14,931 (881) Less: earnings allocated to participating securities 362 524 — Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ 64,583 $ 14,407 $ (881) Weighted-average number of common shares outstanding 60,373 50,301 50,176 Net income (loss) per common share attributable to common shareholders - basic and diluted $ 1.07 $ 0.29 $ (0.02) |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FairPoint Communications, Inc | |
Summary of purchase price allocation | (In thousands) Cash and cash equivalents $ 56,980 Accounts receivable 62,805 Other current assets 22,012 Assets held for sale 21,417 Property, plant and equipment 1,053,562 Intangible assets 303,180 Other long-term assets 2,685 Total assets acquired 1,522,641 Current liabilities 123,034 Liabilities held for sale 1,016 Pension and other post-retirement obligations 219,298 Deferred income taxes 94,214 Other long-term liabilities 15,916 Total liabilities assumed 453,478 Net fair value of assets acquired 1,069,163 Goodwill 281,155 Total consideration transferred $ 1,350,318 |
Schedule of unaudited pro forma results | (Unaudited; in thousands, except per share amounts) 2017 2016 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 $ 1.29 $ |
Peoples | |
Summary of assets and liabilities sold | (In thousands) Current assets $ 227 Property, plant and equipment 4,254 Goodwill 16,829 Total assets $ 21,310 Current liabilities $ 701 Deferred taxes 302 Total liabilities $ 1,003 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INVESTMENTS | |
Schedule of investments | (In thousands) 2017 2016 Cash surrender value of life insurance policies $ 2,272 $ 2,156 Cost method investments: GTE Mobilnet of South Texas Limited Partnership (2.34% interest) 21,450 21,450 Pittsburgh SMSA Limited Partnership (3.60% interest) 22,950 22,950 CoBank, ACB Stock 9,105 8,138 Other 343 200 Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) 17,375 17,160 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,300 6,540 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 28,063 27,627 Totals $ 108,858 $ 106,221 |
Summary of combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships | (In thousands) 2017 2016 2015 Total revenues $ 350,611 $ 334,421 $ 348,595 Income from operations 104,973 97,075 105,495 Net income before taxes 103,497 95,473 104,568 Net income 103,497 95,473 104,568 Current assets $ 78,782 $ 64,083 $ 57,716 Non-current assets 95,959 89,651 96,197 Current liabilities 22,472 21,985 20,576 Non-current liabilities 51,463 51,836 52,414 Partnership equity 100,806 79,913 80,923 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap assets and liabilities measured at fair value on a recurring basis | As of December 31, 2017 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 $ 1,256 $ — $ 1,256 $ — Current interest rate swap liabilities (27) — (27) — Long-term interest rate swap liabilities (1,761) — (1,761) — Total $ (532) $ — $ (532) $ — 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 $ 398 $ — $ 398 $ — Current interest rate swap liabilities (453) — (453) — Long-term interest rate swap liabilities (216) — (216) — Total $ (271) $ — $ (271) $ — |
Schedule of other financial instruments that are not carried at fair value but which require fair value disclosure | As of December 31, 2017 As of December 31, 2016 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Investments, equity basis $ 52,738 n/a $ 51,327 n/a Investments, at cost $ 53,848 n/a $ 52,738 n/a Long-term debt, excluding capital leases $ 2,331,400 $ 2,253,545 $ 1,388,786 $ 1,390,773 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | (In thousands) 2017 2016 Senior secured credit facility: Term loans, net of discounts of $8,344 and $4,662 at December 31, 2017 and 2016, respectively $ 1,813,069 $ 893,088 Revolving loan 22,000 — 6.50% Senior notes due 2022, net of discount of $3,669 and $4,302 at December 31, 2017 and 2016, respectively 496,331 495,698 Capital leases 23,890 16,857 2,355,290 1,405,643 Less: current portion of long-term debt and capital leases (29,696) (14,922) Less: deferred debt issuance costs (14,080) (13,967) Total long-term debt $ 2,311,514 $ 1,376,754 |
Schedule of aggregate maturities of long-term debt | At December 31, 2017, the aggregate maturities of our long-term debt excluding capital leases were as follows: (In thousands) 2018 $ 18,350 2019 18,350 2020 18,350 2021 40,350 2022 518,350 Thereafter 1,729,663 Total maturities 2,343,413 Less: Unamortized discount $ 2,331,400 |
DERIVATIVE FINANCIAL INSTRUME30
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | The following interest rate swaps were outstanding at December 31, 2017: Notional (In thousands) Amount 2017 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 Forward starting fixed to 1-month floating LIBOR (with floor) $ Other assets Series of forward starting 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, 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 $ |
Schedule of effect of interest rate derivatives designated as cash flow hedges on AOCI and on the consolidated statements of income | (In thousands) 2017 2016 2015 Unrealized loss recognized in AOCI, pretax $ (411) $ (469) $ (1,744) Deferred losses reclassified from AOCI to interest expense $ $ $ (1,371) Gain (loss) recognized in interest expense from ineffectiveness $ $ 242 $ — |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
EQUITY | |
Summary of the grants of RSAs and PSAs under the Plan | Year Ended December 31, Grant Date Grant Date Grant Date 2017 Fair Value 2016 Fair Value 2015 Fair Value RSAs Granted 124,100 $ 23.12 100,040 $ 23.95 83,571 $ 21.08 PSAs Granted 36,982 $ 23.27 94,066 $ 20.86 77,786 $ 19.74 Total 161,082 194,106 161,357 |
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, 2017 93,662 $ 22.34 109,160 $ 20.12 Shares granted 124,100 $ 23.12 36,982 $ 23.27 Shares vested (100,230) $ 22.23 (59,306) $ 20.13 Shares forfeited, cancelled or retired (15,351) $ 22.86 (9,308) $ 21.40 Non-vested shares outstanding - December 31, 2017 102,181 $ 23.32 77,528 $ 21.46 |
Summary of total compensation costs recognized for share-based payments | Year Ended December 31, (In thousands) 2017 2016 2015 Restricted stock $ 2.0 $ 2.1 $ 1.7 Performance shares 0.8 0.9 1.3 Total $ 2.8 $ 3.0 $ 3.0 |
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, 2015 $ (35,025) $ (674) $ (35,699) Other comprehensive income before reclassifications (14,831) (289) (15,120) Amounts reclassified from accumulated other comprehensive income 2,706 836 3,542 Net current period other comprehensive income (12,125) 547 (11,578) Balance at December 31, 2016 $ (47,150) $ (127) $ (47,277) Other comprehensive income before reclassifications (4,467) (250) (4,717) Amounts reclassified from accumulated other comprehensive loss 3,153 758 3,911 Net current period other comprehensive income (1,314) 508 (806) Balance at December 31, 2017 $ (48,464) $ 381 $ (48,083) |
Summary of reclassifications from accumulated other comprehensive loss | Amount Reclassified from AOCI Year Ended December 31, Affected Line Item in the (In thousands) 2017 2016 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ 837 $ 979 (a) Actuarial loss (a) Total before tax 2,081 1,738 Tax benefit $ $ Net of tax Loss on cash flow hedges: Interest rate derivatives $ $ Interest expense 488 516 Tax benefit $ $ Net of tax |
PENSION PLAN AND OTHER POST-R32
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Post-retirement benefit obligation | |
Schedule of expected benefit payments | Other Pension Post-retirement (In thousands) Plans Plans 2018 $ 33,006 $ 10,013 2019 34,746 9,418 2020 35,598 9,238 2021 36,839 8,822 2022 37,727 8,295 2023 - 2027 203,525 35,131 |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | (In thousands) 2017 2016 2015 Service cost $ $ $ Interest cost Expected return on plan assets Amortization of: Net actuarial loss Prior service credit Plan curtailment — — Plan settlement — — Net periodic pension cost (benefit) $ $ $ |
Summary of change in benefit obligation, plan assets and funded status of the Pension Plans | (In thousands) 2017 2016 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Actuarial loss (gain) Benefits paid Acquisition — Plan curtailment — Plan settlement — Benefit obligation at the end of the year $ $ 350,392 (In thousands) 2017 2016 Change in plan assets Fair value of plan assets at the beginning of the year $ $ Employer contributions Actual return on plan assets Benefits paid Acquisition — Plan settlement — Fair value of plan assets at the end of the year $ $ 263,733 Funded status at year end $ $ |
Schedule of amounts recognized in the consolidated balance sheets | ( In thousands) 2017 2016 Current liabilities $ $ Long-term liabilities $ $ |
Schedule of amounts recognized in accumulated other comprehensive loss | (In thousands) 2017 2016 Unamortized prior service credit $ $ Unamortized net actuarial loss 85,984 83,367 $ 84,583 $ 80,313 |
Summary of changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects | (In thousands) 2017 2016 Actuarial loss, net $ 8,906 $ Recognized actuarial loss Recognized prior service credit Plan curtailment — Plan settlement — Total amount recognized in other comprehensive loss, before tax effects $ 4,270 $ 11,785 |
Schedule of weighted-average discount rate assumptions used to determine benefit obligations and net periodic pension benefit cost | Discount rate - net periodic benefit cost 4.02 % 4.76 % 4.27 % Discount rate - benefit obligation 3.75 % 4.27 % 4.76 % Expected long-term rate of return on plan assets 7.23 % 7.75 % % Rate of compensation/salary increase 2.39 % % % |
Schedule of fair values of assets for the entity's defined benefit pension plans | As of December 31, 2017 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 $ $ 10,383 $ — $ — Equities: Stocks: U.S. common stocks 62,088 — — International stocks 12,310 — — Funds: U.S. small cap 5,874 — — U.S. mid cap 36,306 — — U.S. large cap 45,427 — — Emerging markets 18,736 — — International 104,403 — — Fixed Income: U.S. treasury and government agency securities 27,190 2 — Corporate and municipal bonds — 37,069 — Mortgage/asset-backed securities — 9,024 — Mutual funds 12,140 — — Total plan assets in the fair value hierarchy $ 334,857 $ 46,095 $ — 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 104,282 Total plan assets Other liabilities (3) Net plan assets $ 552,240 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 $ 671 $ 671 $ — $ — Equities: Stocks: U.S. common stocks 23,285 23,285 — — International stocks 8,756 8,756 — — Funds: U.S. mid cap 9,294 9,294 — — U.S. large cap 7,564 7,564 — — Emerging markets 14,382 14,382 — — International 47,784 47,784 — — Fixed Income: U.S. treasury and government agency securities 16,821 8,794 8,027 — Corporate and municipal bonds 6,712 — 6,712 — Mortgage/asset-backed securities 4,171 — 4,171 — Mutual funds 20,055 20,055 — — Total plan assets in the fair value hierarchy 159,495 $ 140,585 $ 18,910 $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 7,330 Equities: U.S. small cap 10,093 U.S. large cap 14,064 Emerging markets 7,865 International 15,434 Fixed Income 52,340 Total plan assets 266,621 Other liabilities (3) Net plan assets $ 263,733 (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, U.S. government obligations and variable rate securities with maturities less than one year. (3) 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 | (In thousands) 2017 2016 2015 Service cost $ 498 $ 602 $ 601 Interest cost 3,034 2,019 1,713 Expected return on plan assets (150) Amortization of: Net actuarial gain (173) — (134) Prior service credit (622) Net periodic postretirement benefit cost $ 2,725 $ 1,952 $ 1,408 |
Summary of change in benefit obligation, plan assets and funded status of the Pension Plans | (In thousands) 2017 2016 Change in benefit obligation Benefit obligation at the beginning of the year $ $ Service cost Interest cost Plan participant contributions Actuarial loss (gain) Benefits paid (6,934) (4,152) Acquisition 76,413 — Benefit obligation at the end of the year $ 116,970 $ 46,318 (In thousands) 2017 2016 Change in plan assets Fair value of plan assets at the beginning of the year $ 2,286 $ 2,985 Employer contributions 6,478 3,608 Plan participant’s contributions 456 544 Actual return on plan assets 198 Benefits paid Fair value of plan assets at the end of the year $ 2,484 $ 2,286 Funded status at year end $ $ |
Schedule of amounts recognized in the consolidated balance sheets | (In thousands) 2017 2016 Current liabilities $ $ Long-term liabilities $ $ |
Schedule of amounts recognized in accumulated other comprehensive loss | (In thousands) 2017 2016 Unamortized prior service credit $ $ Unamortized net actuarial loss (gain) 956 $ $ |
Summary of changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects | (In thousands) 2017 2016 Actuarial loss (gain), net $ $ 7,614 Recognized actuarial gain 173 — Recognized prior service credit 521 521 Total amount recognized in other comprehensive loss, before tax effects $ $ 8,135 |
Schedule of weighted-average discount rate assumptions used to determine benefit obligations and net periodic pension benefit cost | 2017 2016 2015 Net periodic benefit cost 3.96 % 4.61 % 4.11 % Benefit obligation 3.67 % 4.12 % 4.61 % |
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 $ 179 $ Effect on postretirement benefit obligation $ 3,993 $ |
Schedule of fair values of assets for the entity's defined benefit pension plans | As of December 31, 2017 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 $ $ 4 $ — $ — Equities: U.S. common stocks 242 — — International stocks 76 — — Funds: U.S. mid cap 92 — U.S. large cap 73 — — Emerging markets 176 — — International 487 — — Total plan assets in the fair value hierarchy $ 1,150 $ — $ — 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 $ 2,484 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 $ 6 $ 6 $ — $ — Equities: U.S. common stocks 225 225 — — International stocks 84 84 — — Funds: U.S. mid cap 90 90 — — U.S. large cap 73 73 — — Emerging markets 139 139 — — International 462 462 — — Fixed Income: U.S. treasury and government agency securities 163 85 78 — Corporate and municipal bonds 65 — 65 — Mortgage/asset-backed securities 40 — 40 — Mutual funds 194 194 — — Total plan assets in the fair value hierarchy 1,541 $ 1,358 $ 183 $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 71 Equities: U.S. small cap 98 U.S. large cap 136 Emerging markets International 149 Fixed Income 506 Total plan assets 2,577 Benefit payments payable (263) Other liabilities (3) (28) Net plan assets $ 2,286 (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. government obligations with maturities less than one year. (3) Net amount due for securities purchased and sold. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
Schedule of components of income tax expense (benefit) | For the Year Ended (In thousands) 2017 2016 2015 Current: Federal $ 1,055 $ 1,390 $ (3,708) State 145 709 655 Total current expense (benefit) 1,200 2,099 (3,053) Deferred: Federal (141,726) 20,087 4,321 State 15,599 776 1,507 Total deferred expense (benefit) (126,127) 20,863 5,828 Total income tax expense (benefit) $ (124,927) $ 22,962 $ 2,775 |
Schedule of reconciliation of the federal statutory tax rate to the effective tax rate | For the Year Ended (In percentages) 2017 2016 2015 Statutory federal income tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 4.1 2.9 (37.9) Transaction costs (5.8) — — Other permanent differences 0.2 0.9 10.8 Change in uncertain tax positions — — (8.2) Change in deferred tax rate (9.1) (4.0) 91.9 Change in deferred tax rate - Federal Tax Reform 189.4 — — Valuation allowance (4.3) 1.6 43.4 Provision to return — 0.3 (1.5) Sale of stock in subsidiary — 19.1 — Non deductible goodwill — 3.8 — Other — 0.6 (1.6) 209.5 % 60.2 % 131.9 % |
Schedule of components of the net deferred tax liability | Year Ended December 31, (In thousands) 2017 2016 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 Other — Net non-current deferred taxes $ $ |
Schedule of reconciliation of the unrecognized tax benefits | Liability for Unrecognized Tax Benefits (In thousands) 2017 2016 Balance at January 1 $ 64 $ 66 Additions for tax positions related to FairPoint acquisition 4,296 — Reduction for tax positions of prior years (64) — Reduction for lapse of state statute of limitations — (2) Balance at December 31 $ 4,296 $ 64 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of minimum annual contractual obligations and the estimated timing and effect the obligations will have on liquidity and cash flows | Minimum Annual Contractual Obligations (in thousands) 2018 2019 2020 2021 2022 Thereafter Total Operating lease agreements $ $ $ $ $ $ $ Capital lease agreements — Capital expenditures (1) 1,371 2,225 1,226 — — Service and support agreements (2) Transport and data connectivity 6,817 6,097 5,733 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. |
QUARTERLY FINANCIAL INFORMATI35
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
Schedule of unaudited quarterly financial information | Quarter Ended 2017 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 169,935 $ 169,950 $ 363,329 $ 356,360 Operating income (loss) $ 18,587 $ 21,578 $ (7,998) $ 6,487 Net income (loss) attributable to common stockholders $ (3,685) $ (2,728) $ (28,448) $ 99,806 Basic and diluted earnings (loss) per share $ (0.07) $ (0.06) $ (0.41) $ 1.41 Quarter Ended 2016 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 188,846 $ 186,871 $ 191,541 $ 175,919 Operating income $ 24,310 $ 22,954 $ 22,736 $ 17,440 Net income (loss) attributable to common stockholders $ 7,849 $ 76 $ 7,012 $ (6) Basic and diluted earnings (loss) per share $ 0.15 $ — $ 0.14 $ — |
CONDENSED CONSOLIDATING FINAN36
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (amounts in thousands) December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 8,919 $ 6,738 $ — $ — $ 15,657 Accounts receivable, net — — 114,303 7,701 (476) 121,528 Income taxes receivable 20,275 — 1,571 — — 21,846 Prepaid expenses and other current assets — — 33,188 130 — 33,318 Assets held for sale — — — 21,310 — 21,310 Total current assets 20,275 8,919 155,800 29,141 (476) 213,659 Property, plant and equipment, net — — 1,972,190 65,416 — 2,037,606 Intangibles and other assets: Investments — 8,495 100,363 — — 108,858 Investments in subsidiaries 3,643,930 2,133,049 35,374 — (5,812,353) — Goodwill — 971,851 66,181 — 1,038,032 Other intangible assets — 297,696 9,087 — 306,783 Advances due to/from affiliates, net — 2,441,690 555,332 92,615 (3,089,637) — Deferred income taxes 21,244 — — — (21,244) — Other assets — 1,307 12,844 37 — 14,188 Total assets $ 3,685,449 $ 4,593,460 $ 4,101,450 $ 262,477 $ (8,923,710) $ 3,719,126 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 24,143 $ — $ — $ 24,143 Advance billings and customer deposits — — 41,026 1,500 — 42,526 Dividends payable 27,418 — — — — 27,418 Accrued compensation — — 48,795 975 — 49,770 Accrued interest — 8,824 519 — — 9,343 Accrued expense 107 504 70,976 930 (476) 72,041 Current portion of long term debt and capital lease obligations — 18,350 11,150 196 — 29,696 Liabilities held for sale — — — 1,003 — 1,003 Total current liabilities 27,525 27,678 196,609 4,604 (476) 255,940 Long-term debt and capital lease obligations — 2,298,970 12,139 405 — 2,311,514 Advances due to/from affiliates, net 3,089,637 — — — (3,089,637) — Deferred income taxes — 750 209,116 21,098 (21,244) 209,720 Pension and postretirement benefit obligations — — 315,129 19,064 — 334,193 Other long-term liabilities — 1,761 31,030 1,026 — 33,817 Total liabilities 3,117,162 2,329,159 764,023 46,197 (3,111,357) 3,145,184 Shareholders’ equity: Common Stock 708 — 17,411 30,000 (47,411) 708 Other shareholders’ equity 567,579 2,264,301 3,314,361 186,280 (5,764,942) 567,579 Total Consolidated Communications Holdings, Inc. shareholders’ equity 568,287 2,264,301 3,331,772 216,280 (5,812,353) 568,287 Noncontrolling interest — — 5,655 — — 5,655 Total shareholders’ equity 568,287 2,264,301 3,337,427 216,280 (5,812,353) 573,942 Total liabilities and shareholders’ equity $ 3,685,449 $ 4,593,460 $ 4,101,450 $ 262,477 $ (8,923,710) $ 3,719,126 December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 27,064 $ 13 $ — $ — $ 27,077 Accounts receivable, net — — 48,911 7,347 (42) 56,216 Income taxes receivable 20,756 — 885 (25) — 21,616 Prepaid expenses and other current assets — 12,856 15,310 126 — 28,292 Total current assets 20,756 39,920 65,119 7,448 (42) 133,201 Property, plant and equipment, net — — 999,416 55,770 — 1,055,186 Intangibles and other assets: Investments — 8,338 97,883 — — 106,221 Investments in subsidiaries 2,192,556 2,019,692 14,279 — (4,226,527) — Goodwill — — 690,696 66,181 — 756,877 Other intangible assets — — 22,525 9,087 — 31,612 Advances due to/from affiliates, net — 1,524,906 427,720 87,171 (2,039,797) — Deferred income taxes 17,150 — — — (17,150) — Other assets — 1,562 8,058 41 — 9,661 Total assets $ 2,230,462 $ 3,594,418 $ 2,325,696 $ 225,698 $ (6,283,516) $ 2,092,758 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 6,766 $ — $ — $ 6,766 Advance billings and customer deposits — — 24,981 1,457 — 26,438 Dividends payable 19,605 — — — — 19,605 Accrued compensation — — 16,002 969 — 16,971 Accrued interest — 10,824 436 — — 11,260 Accrued expense 36 15,057 38,192 880 (42) 54,123 Current portion of long term debt and capital lease obligations — 9,000 5,735 187 — 14,922 Total current liabilities 19,641 34,881 92,112 3,493 (42) 150,085 Long-term debt and capital lease obligations — 1,365,820 10,332 602 — 1,376,754 Advances due to/from affiliates, net 2,039,797 — — — (2,039,797) — Deferred income taxes — 984 232,668 27,796 (17,150) 244,298 Pension and postretirement benefit obligations — — 109,185 21,608 — 130,793 Other long-term liabilities 70 216 13,807 480 — 14,573 Total liabilities 2,059,508 1,401,901 458,104 53,979 (2,056,989) 1,916,503 Shareholders’ equity: Common Stock 506 — 17,411 30,000 (47,411) 506 Other shareholders’ equity 170,448 2,192,517 1,844,880 141,719 (4,179,116) 170,448 Total Consolidated Communications Holdings, Inc. shareholders’ equity 170,954 2,192,517 1,862,291 171,719 (4,226,527) 170,954 Noncontrolling interest — — 5,301 — — 5,301 Total shareholders’ equity 170,954 2,192,517 1,867,592 171,719 (4,226,527) 176,255 Total liabilities and shareholders’ equity $ 2,230,462 $ 3,594,418 $ 2,325,696 $ 225,698 $ (6,283,516) $ 2,092,758 |
Schedule of condensed consolidating statements of operations | Condensed Consolidating Statements of Operations (amounts in thousands) Year Ended December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,013,505 $ 58,776 $ (12,707) $ 1,059,574 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 447,247 11,094 (12,276) 446,065 Selling, general and administrative expenses 1,924 30 234,438 13,371 (431) 249,332 Acquisition and other transaction costs 33,650 — — — — 33,650 Depreciation and amortization — — 280,843 11,030 — 291,873 Operating income (loss) (35,574) (30) 50,977 23,281 — 38,654 Other income (expense): Interest expense, net of interest income (12) (128,737) (1,183) 146 — (129,786) Intercompany interest income (expense) — 58,909 (58,827) (82) — — Investment income — 157 31,592 — — 31,749 Equity in earnings of subsidiaries, net 101,863 109,015 1,918 — (212,796) — Other, net — 3 (236) (12) — (245) Income (loss) before income taxes 66,277 39,317 24,241 23,333 (212,796) (59,628) Income tax expense (benefit) 1,332 (27,610) (97,667) (982) — (124,927) Net income (loss) 64,945 66,927 121,908 24,315 (212,796) 65,299 Less: net income attributable to noncontrolling interest — — 354 — — 354 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 64,945 $ 66,927 $ 121,554 $ 24,315 $ (212,796) $ 64,945 Total comprehensive income (loss) attributable to common shareholders $ 64,139 $ 71,746 $ 119,174 $ 25,381 $ $ 64,139 Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ (15) $ 697,557 $ 58,785 $ (13,150) $ 743,177 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 323,112 12,401 (12,721) 322,792 Selling, general and administrative expenses 3,331 7 141,533 12,669 (429) 157,111 Acquisition and other transaction costs 1,214 — — — — 1,214 Loss on impairment — — 610 — — 610 Depreciation and amortization — — 164,577 9,433 — 174,010 Operating income (loss) (4,545) (22) 67,725 24,282 — 87,440 Other income (expense): Interest expense, net of interest income 46 (76,213) (694) 35 — (76,826) Intercompany interest income (expense) (63,773) 97,102 (34,846) 1,517 — — Loss on extinguishment of debt — (6,559) — — — (6,559) Investment income — 166 32,806 — — 32,972 Equity in earnings of subsidiaries, net 58,208 56,600 711 — (115,519) — Other, net — (328) 1,478 (19) — 1,131 Income (loss) before income taxes (10,064) 70,746 67,180 25,815 (115,519) 38,158 Income tax expense (benefit) (24,995) 12,538 25,807 9,612 — 22,962 Net income (loss) 14,931 58,208 41,373 16,203 (115,519) 15,196 Less: net income attributable to noncontrolling interest — — 265 — — 265 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 14,931 $ 58,208 $ 41,108 $ 16,203 $ (115,519) $ 14,931 Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Year Ended December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ 121 $ 728,910 $ 60,094 $ (13,388) $ 775,737 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 328,714 12,567 (12,881) 328,400 Selling, general and administrative expenses 3,160 150 156,380 19,044 (507) 178,227 Acquisition and other transaction costs 1,413 — — — — 1,413 Depreciation and amortization — — 171,232 8,690 — 179,922 Operating income (loss) (4,573) (29) 72,584 19,793 — 87,775 Other income (expense): Interest expense, net of interest income (104) (79,680) 154 12 — (79,618) Intercompany interest income (expense) (153,713) 166,838 (15,917) 2,792 — — Loss on extinguishment of debt — (41,242) — — — (41,242) Investment income — 326 36,364 — — 36,690 Equity in earnings of subsidiaries, net 93,391 64,812 567 — (158,770) — Other, net — (26) (1,346) (129) — (1,501) Income (loss) before income taxes (64,999) 110,999 92,406 22,468 (158,770) 2,104 Income tax expense (benefit) (64,118) 17,608 40,346 8,939 — 2,775 Net income (loss) (881) 93,391 52,060 13,529 (158,770) (671) Less: net income attributable to noncontrolling interest — — 210 — — 210 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (881) $ 93,391 $ 51,850 $ 13,529 $ (158,770) $ (881) Total comprehensive income (loss) attributable to common shareholders $ $ 89,332 $ 48,434 $ 13,105 $ $ |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (amounts in thousands) Year Ended December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (23,237) $ (25,625) $ 235,810 $ 23,079 $ 210,027 Cash flows from investing activities: Business acquisition, net of cash acquired (862,385) — — — (862,385) Purchases of property, plant and equipment — — (167,187) (13,998) (181,185) Proceeds from sale of assets — — 829 30 859 Net cash used in investing activities (862,385) — (166,358) (13,968) (1,042,711) Cash flows from financing activities: Proceeds from issuance of long-term debt — 1,052,325 — — 1,052,325 Payment of capital lease obligation — — (7,746) (187) (7,933) Payment on long-term debt — (111,337) — — (111,337) Payment of financing costs — (16,732) — — (16,732) Share repurchases for minimum tax withholding (571) — — — (571) Dividends on common stock (94,138) — — — (94,138) Transactions with affiliates, net 980,681 (916,776) (54,981) (8,924) — Other (350) — — — (350) Net cash provided by (used in) financing activities 885,622 7,480 (62,727) (9,111) 821,264 Increase (decrease) in cash and cash equivalents — (18,145) 6,725 — (11,420) Cash and cash equivalents at beginning of period — 27,064 13 — 27,077 Cash and cash equivalents at end of period $ — $ 8,919 $ 6,738 $ — $ 15,657 Year Ended December 31, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (23,634) $ 13,315 $ 200,098 $ 28,454 $ 218,233 Cash flows from investing activities: Business acquisition, net of cash acquired (13,422) — — — (13,422) Purchases of property, plant and equipment — — (111,389) (13,803) (125,192) Proceeds from sale of assets — — 198 10 208 Proceeds from business disposition 30,119 — — — 30,119 Net cash provided by (used in) investing activities 16,697 — (111,191) (13,793) (108,287) Cash flows from financing activities: Proceeds from issuance of long-term debt — 936,750 — — 936,750 Payment of capital lease obligation — — (2,743) (142) (2,885) Payment on long-term debt — (943,050) — — (943,050) Payment of financing costs — (9,912) — — (9,912) Share repurchases for minimum tax withholding (1,231) — — — (1,231) Dividends on common stock (78,419) — — — (78,419) Transactions with affiliates, net 86,587 24,084 (93,780) (16,891) — Net cash provided by (used in) financing activities 6,937 7,872 (96,523) (17,033) (98,747) Increase (decrease) in cash and cash equivalents — 21,187 (7,616) (2,372) 11,199 Cash and cash equivalents at beginning of period — 5,877 7,629 2,372 15,878 Cash and cash equivalents at end of period $ — $ 27,064 $ 13 $ — $ 27,077 Year Ended December 31, 2015 Subsidiary Parent Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (119,472) $ 76,962 $ 240,372 $ 21,317 $ 219,179 Cash flows from investing activities: Purchases of property, plant and equipment — — (126,168) (7,766) (133,934) Proceeds from sale of assets — — 13,535 13 13,548 Proceeds from sale of investments — — 846 — 846 Net cash used in investing activities — — (111,787) (7,753) (119,540) Cash flows from financing activities: Proceeds from bond offering — 294,780 — — 294,780 Proceeds from issuance of long-term debt — 69,000 — — 69,000 Payment of capital lease obligation — — (1,029) (78) (1,107) Payment on long-term debt — (107,100) — — (107,100) Redemption of senior notes — (261,874) — — (261,874) Payment of financing costs — (4,805) — — (4,805) Share repurchases for minimum tax withholding (1,125) — — — (1,125) Dividends on common stock (78,209) — — — (78,209) Transactions with affiliates, net 198,806 (66,026) (120,747) (12,033) — Net cash provided by (used in) financing activities 119,472 (76,025) (121,776) (12,111) (90,440) Increase in cash and cash equivalents — 937 6,809 1,453 9,199 Cash and cash equivalents at beginning of period — 4,940 820 919 6,679 Cash and cash equivalents at end of period $ — $ 5,877 $ 7,629 $ 2,372 $ 15,878 |
BUSINESS DESCRIPTION & SUMMARY
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) item in Thousands | Dec. 31, 2017stateitemmi |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of states | state | 24 |
Number of fiber route miles | mi | 36,000 |
Number of voice connections | 972 |
Number of data connections | 784 |
Number of video connections | 103 |
BUSINESS DESCRIPTION & SUMMAR38
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Activity in the entity's accounts receivable allowance | |||
Balance at beginning of year | $ 2,813 | $ 3,235 | $ 2,752 |
Provision charged to expense | 7,072 | 2,798 | 3,525 |
Write-offs, less recoveries | (6,516) | (3,220) | (3,042) |
Acquired allowance for doubtful accounts | 3,298 | ||
Balance at end of year | $ 6,667 | $ 2,813 | $ 3,235 |
BUSINESS DESCRIPTION & SUMMAR39
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, plant and equipment | |||
Total plant in service | $ 3,506,393 | $ 2,364,053 | |
Less: accumulated depreciation and amortization | (1,598,093) | (1,345,551) | |
Plant in service | 1,908,300 | 1,018,502 | |
Totals | 2,037,606 | 1,055,186 | |
Depreciation and amortization expense | $ 263,800 | 161,100 | $ 167,100 |
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 | $ 252,369 | 105,923 | |
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 | $ 1,099,948 | 861,608 | |
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 | $ 1,843,896 | 1,201,042 | |
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 | $ 265,045 | 167,125 | |
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 | $ 45,135 | 28,355 | |
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 | $ 89,144 | 21,956 | |
Construction inventory | |||
Property, plant and equipment | |||
Total plant in service | $ 40,162 | $ 14,728 |
BUSINESS DESCRIPTION & SUMMAR40
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) - USD ($) $ in Thousands | Nov. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Finite lived intangible assets | ||||
Goodwill increased | $ 281,200 | |||
Impairment charge for goodwill | $ 0 | |||
Goodwill | $ 1,038,032 | $ 756,877 | ||
Preceding period of average stock price used to calculate impairment of reporting unit under the fair value model | 3 months | |||
Gross Carrying Amount | $ 527,331 | 224,151 | ||
Accumulated Amortization | (231,105) | (203,096) | ||
Amortization of intangible assets | 28,000 | 12,900 | $ 12,800 | |
Expected amortization expense | ||||
2,018 | 66,341 | |||
2,019 | 66,131 | |||
2,020 | 50,441 | |||
2,021 | 39,373 | |||
2,022 | 30,850 | |||
Thereafter | 43,090 | |||
Net carrying amount | 296,226 | |||
Customer Relationships | ||||
Finite lived intangible assets | ||||
Gross Carrying Amount | 516,561 | 216,261 | ||
Accumulated Amortization | $ (223,261) | (198,353) | ||
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 | 3,390 | 2,290 | ||
Accumulated Amortization | $ (3,390) | (2,290) | ||
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 | ||||
Gross Carrying Amount | $ 7,380 | 5,600 | ||
Accumulated Amortization | $ (4,454) | $ (2,453) | ||
Other Intangible Assets | Minimum | ||||
Finite lived intangible assets | ||||
Useful Lives | 1 year | |||
Other Intangible Assets | Maximum | ||||
Finite lived intangible assets | ||||
Useful Lives | 5 years |
BUSINESS DESCRIPTION & SUMMAR41
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-based , Pension Plan, Revenue, Income Taxes, Cash Flow (Details) $ in Thousands, shares in Millions | Jul. 03, 2017shares | Dec. 31, 2017USD ($)itemshares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
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 | $ 11,700 | $ 12,700 | $ 13,200 | |
Advertising costs | ||||
Advertising expense | 10,900 | 8,700 | 8,300 | |
Statement of Cash Flows Information | ||||
Interest, net of amounts capitalized | 106,499 | 69,536 | 76,823 | |
Interest capitalized | 1,246 | 1,152 | 1,373 | |
Income taxes (received) paid, net | 953 | (183) | 1,835 | |
Noncash investing and financing activities: | ||||
Equipment acquired under capital lease | $ 12,800 | $ 12,200 | $ 4,100 | |
FairPoint Communications, Inc | ||||
Noncash investing and financing activities: | ||||
Number of shares issued on date of merger | shares | 20.1 | 20.1 | ||
Value of shares issued in connection with the merger | $ 431,000 |
BUSINESS DESCRIPTION & SUMMAR42
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Noncontrolling Interest (Details) - ETFL | Dec. 31, 2017 |
Noncontrolling Interest | |
Ownership interest (as a percent) | 63.00% |
Eastex Telecom Investments, LLC | |
Noncontrolling Interest | |
Minority interest holding percentage | 37.00% |
BUSINESS DESCRIPTION & SUMMAR43
BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment: unrecognized excess tax benefits | $ 2,242 | |
Accounting Standards Update 2014-09 | Minimum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect adjustment | $ 2,000 | |
Accounting Standards Update 2014-09 | Maximum | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative effect adjustment | $ 4,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic and diluted earnings per share attributable to common shareholders | |||||||||
Net income (loss) | $ 65,299 | $ 15,196 | $ (671) | ||||||
Less: net income attributable to noncontrolling interest | 354 | 265 | 210 | ||||||
Income (loss) attributable to common shareholders before allocation of earnings to participating securities | 64,945 | 14,931 | (881) | ||||||
Less: earnings allocated to participating securities | 362 | 524 | |||||||
Net income (loss) attributable to common shareholders, after earnings allocated to participating securities | $ 64,583 | $ 14,407 | $ (881) | ||||||
Weighted-average number of common shares outstanding | 60,373 | 50,301 | 50,176 | ||||||
Basic and diluted earnings (loss) per common share: | |||||||||
Net income (loss) per basic and diluted common shares attributable to common shareholders (in dollars per share) | $ 1.41 | $ (0.41) | $ (0.06) | $ (0.07) | $ 0.14 | $ 0.15 | $ 1.07 | $ 0.29 | $ (0.02) |
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 300 | 300 | 300 |
ACQUISITION AND DIPOSITIONS - (
ACQUISITION AND DIPOSITIONS - (Details) $ / shares in Units, $ in Thousands | Jul. 03, 2017USD ($)statemi$ / sharesshares | Jul. 01, 2016USD ($) | Dec. 31, 2017USD ($)statemi$ / shares | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($)statemi$ / sharesshares | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($) | Dec. 31, 2018USD ($) | Oct. 31, 2016USD ($) |
Unaudited Pro Forma Results | |||||||||||
Number of states | state | 24 | 24 | |||||||||
Number of fiber route miles | mi | 36,000 | 36,000 | |||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||||
Transaction costs | $ 33,650 | $ 1,214 | $ 1,413 | ||||||||
Measurement period adjustments | |||||||||||
Increase in property, plant and equipment | $ 8,100 | ||||||||||
Increase in intangible assets | 100 | ||||||||||
Increase in other long-term liabilities | 1,700 | ||||||||||
Increase in deferred income taxes | 5,100 | ||||||||||
Decrease in pension and other post-retirement obligations | (2,900) | ||||||||||
Increase in net assets acquired | 4,300 | ||||||||||
Reduction in goodwill | (4,300) | ||||||||||
Estimated purchase price allocation | |||||||||||
Goodwill | 1,038,032 | 1,038,032 | 756,877 | ||||||||
Incremental Term Loan Facility | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Aggregate principal amount | $ 935,000 | ||||||||||
FairPoint Communications, Inc | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Operating revenues | 1,460,620 | 1,567,620 | |||||||||
Income from operations | 57,980 | 288,482 | |||||||||
Net income | 91,131 | 111,723 | |||||||||
Less: income attributable to noncontrolling interest | 354 | 265 | |||||||||
Net income (loss) attributable to common stockholders | $ 90,777 | $ 111,458 | |||||||||
Net income (loss) per common share-basic and diluted (in dollars per share) | $ / shares | $ 1.29 | $ 1.58 | |||||||||
Number of states | state | 17 | ||||||||||
Number of fiber route miles | mi | 22,000 | ||||||||||
Number of route miles of fiber network in New England | mi | 17,000 | ||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||||
Business combination exchange ratio | 0.7300 | ||||||||||
Purchase consideration at acquisition | $ 431,000 | ||||||||||
Assumption of debt at acquisition | $ 919,300 | ||||||||||
Number of shares issued on date of merger | shares | 20,100,000 | 20,100,000 | |||||||||
Warrants outstanding | shares | 2,615,153 | ||||||||||
Number of shares eligible for each warrant | shares | 1 | ||||||||||
Exercise price of warrants | $ / shares | $ 66.86 | ||||||||||
Estimated cash payable to employees | $ 10,000 | 9,600 | $ 9,600 | ||||||||
Transaction costs | $ 2,800 | $ 27,000 | $ 1,700 | $ 1,500 | 33,000 | ||||||
Net carrying value of assets held for sale | 20,400 | ||||||||||
Estimated purchase price allocation | |||||||||||
Cash and cash equivalents | 56,980 | ||||||||||
Accounts receivable | 62,805 | ||||||||||
Other current assets | 22,012 | ||||||||||
Assets held for sale | 21,417 | ||||||||||
Property, plant and equipment | 1,053,562 | ||||||||||
Intangible assets | 303,180 | ||||||||||
Other long-term assets | 2,685 | ||||||||||
Total assets acquired | 1,522,641 | ||||||||||
Current liabilities | 123,034 | ||||||||||
Liabilities held for sale | 1,016 | ||||||||||
Pension and other post-retirement obligations | 219,298 | ||||||||||
Deferred income taxes | 94,214 | ||||||||||
Other long-term liabilities | 15,916 | ||||||||||
Total liabilities assumed | 453,478 | ||||||||||
Net fair value assets acquired | 1,069,163 | ||||||||||
Goodwill | 281,155 | ||||||||||
Total consideration transferred | 1,350,318 | ||||||||||
FairPoint Communications, Inc | Acquisition-related Costs | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Net revenues | 389,500 | ||||||||||
Net loss | (22,700) | ||||||||||
Transaction costs | $ 12,300 | ||||||||||
FairPoint Communications, Inc | Customer Relationships | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Identifiable intangible assets acquired | 300,300 | ||||||||||
FairPoint Communications, Inc | Customer Relationships | Minimum | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Estimated useful life | 7 years | ||||||||||
FairPoint Communications, Inc | Customer Relationships | Maximum | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Estimated useful life | 11 years | ||||||||||
FairPoint Communications, Inc | Tradenames | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Identifiable intangible assets acquired | 1,100 | ||||||||||
Estimated useful life | 6 months | ||||||||||
FairPoint Communications, Inc | Non-compete agreements | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Identifiable intangible assets acquired | $ 1,800 | ||||||||||
Estimated useful life | 1 year | ||||||||||
FairPoint Communications, Inc | Forecast | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Estimated cash payable to employees | $ 200 | ||||||||||
FairPoint Communications, Inc | Incremental Term Loan Facility | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Aggregate principal amount | $ 935,000 | ||||||||||
Champaign Telephone Company And Big Broadband Services | |||||||||||
Unaudited Pro Forma Results | |||||||||||
Cash paid on acquisition | $ 13,400 | ||||||||||
Working capital | 800 | ||||||||||
Estimated purchase price allocation | |||||||||||
Property, plant and equipment | 6,900 | ||||||||||
Intangible assets | 1,000 | ||||||||||
Goodwill | $ 4,700 |
ACQUISITION AND DISPOSITIONS -
ACQUISITION AND DISPOSITIONS - Divestiture (Details) $ in Thousands | Dec. 06, 2016USD ($) | Sep. 01, 2016USD ($) | May 03, 2016item | Nov. 30, 2017USD ($) | Aug. 31, 2017 | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Divestitures | ||||||||
Current assets | $ 21,310 | |||||||
Current liabilities | 1,003 | |||||||
Proceeds from business dispositions | $ 30,119 | |||||||
Loss on impairment | 610 | |||||||
Income tax expense (benefit) | (124,927) | 22,962 | $ 2,775 | |||||
CCIC | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||||
Divestitures | ||||||||
Proceeds from business dispositions | $ 21,000 | |||||||
Rural communities | item | 11 | |||||||
Income tax expense (benefit) | 7,200 | |||||||
Peoples | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||||
Divestitures | ||||||||
Current assets | 227 | |||||||
Property, plant, and equipment | 4,254 | |||||||
Goodwill | 16,829 | |||||||
Total assets | 21,310 | |||||||
Current liabilities | 701 | |||||||
Deferred taxes | 302 | |||||||
Total liabilities | $ 1,003 | |||||||
Proceeds from business dispositions | $ 21,000 | |||||||
Peoples | Disposal Group, Held-for-sale, Not Discontinued Operations | ||||||||
Divestitures | ||||||||
Annual revenue from divestitures (as a percentage) | 1.00% | |||||||
ePlus Technology inc. | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||||
Divestitures | ||||||||
Proceeds from business dispositions | $ 9,200 | |||||||
Additional gain (loss) on sale | 600 | |||||||
Parent | ||||||||
Divestitures | ||||||||
Proceeds from business dispositions | 30,119 | |||||||
Other, net | CCIC | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||||
Divestitures | ||||||||
Additional gain (loss) on sale | $ (300) |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Investments | |||
Cash distributions received from partnerships treated as cost method investees | $ 12,800 | $ 12,900 | $ 14,600 |
Number of entity's investments which is accounted for using equity method | item | 3 | ||
Cash distributions received from partnerships treated as equity method investees | $ 17,200 | 19,200 | $ 30,700 |
Carrying value of investments in excess of underlying equity | 32,800 | 32,800 | |
Investments | |||
Cash surrender value of life insurance policies | 2,272 | 2,156 | |
Total | $ 108,858 | $ 106,221 | |
GTE Mobilnet of South Texas Limited Partnership | |||
Investments | |||
Ownership percentage of cost method investee | 2.34% | 2.34% | |
Investments | |||
Cost method investments: | $ 21,450 | $ 21,450 | |
Pittsburgh SMSA Limited Partnership | |||
Investments | |||
Ownership percentage of cost method investee | 3.60% | 3.60% | |
Investments | |||
Cost method investments: | $ 22,950 | $ 22,950 | |
CoBank, ACB Stock | |||
Investments | |||
Cost method investments: | 9,105 | 8,138 | |
Other | |||
Investments | |||
Cost method investments: | $ 343 | $ 200 | |
GTE Mobilnet of Texas RSA #17 Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 20.51% | 20.51% | |
Investments | |||
Equity method investments: | $ 17,375 | $ 17,160 | |
Pennsylvania RSA 6(I) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 16.67% | 16.67% | |
Investments | |||
Equity method investments: | $ 7,300 | $ 6,540 | |
Pennsylvania RSA 6(II) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 23.67% | 23.67% | |
Investments | |||
Equity method investments: | $ 28,063 | $ 27,627 | |
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, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of unaudited summarized income statement information | |||
Total revenues | $ 350,611 | $ 334,421 | $ 348,595 |
Income from operations | 104,973 | 97,075 | 105,495 |
Net income before taxes | 103,497 | 95,473 | 104,568 |
Net income | 103,497 | 95,473 | 104,568 |
Summary of unaudited summarized balance sheet information | |||
Current assets | 78,782 | 64,083 | 57,716 |
Non-current assets | 95,959 | 89,651 | 96,197 |
Current liabilities | 22,472 | 21,985 | 20,576 |
Non-current liabilities | 51,463 | 51,836 | 52,414 |
Partnership equity | $ 100,806 | $ 79,913 | $ 80,923 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value Measurements | ||
Long-term interest rate swap assets | $ 1,256 | $ 398 |
Current interest rate swap liabilities | (27) | (453) |
Long-term interest rate swap liabilities | (1,761) | (216) |
Total Fair Value | (532) | (271) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Long-term interest rate swap assets | 1,256 | 398 |
Current interest rate swap liabilities | (27) | (453) |
Long-term interest rate swap liabilities | (1,761) | (216) |
Total Fair Value | $ (532) | $ (271) |
FAIR VALUE MEASUREMENTS - Fin50
FAIR VALUE MEASUREMENTS - Financial Instuments Not Carried at FV (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Carrying Value | ||
Fair Value Measurements | ||
Investments, equity basis | $ 52,738 | $ 51,327 |
Investments, at cost | 53,848 | 52,738 |
Long-term debt | 2,331,400 | 1,388,786 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt | $ 2,253,545 | $ 1,390,773 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Feb. 01, 2018USD ($) | Jul. 03, 2017USD ($) | Dec. 21, 2016 | Jun. 08, 2015USD ($) | Sep. 18, 2014USD ($) | Dec. 31, 2017USD ($) | Oct. 31, 2017USD ($) | Dec. 31, 2016USD ($)item | Oct. 31, 2016USD ($) | Mar. 31, 2018 | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Jan. 31, 2018USD ($) | Jul. 02, 2017USD ($) | Dec. 14, 2016USD ($) |
Debt | ||||||||||||||||||
Total long-term debt | $ 2,355,290 | $ 1,405,643 | $ 1,405,643 | $ 2,355,290 | $ 1,405,643 | |||||||||||||
Less: current portion of long-term debt and capital leases | (29,696) | (14,922) | (14,922) | (29,696) | (14,922) | |||||||||||||
Less: deferred debt issuance costs | (14,080) | (13,967) | (13,967) | (14,080) | (13,967) | |||||||||||||
Total long-term debt | 2,311,514 | 1,376,754 | 1,376,754 | 2,311,514 | 1,376,754 | |||||||||||||
Unamortized discount | $ 12,013 | $ 12,013 | ||||||||||||||||
Leverage ratio | 4.09 | 3 | 4.09 | |||||||||||||||
Deferred debt issuance costs | $ 14,080 | $ 13,967 | 13,967 | $ 14,080 | 13,967 | |||||||||||||
Loss on extinguishment of debt | 6,600 | 6,559 | $ 41,242 | |||||||||||||||
Dividend declared | $ 27,400 | 101,951 | 78,473 | 78,250 | ||||||||||||||
Dividends available for distribution | $ 257,700 | $ 257,700 | ||||||||||||||||
Percentage of increase in available cash used in repayment of debt during dividend suspension period | 50.00% | |||||||||||||||||
Interest coverage ratio | 5.73 | 5.73 | ||||||||||||||||
Number of amendments | item | 2 | |||||||||||||||||
Remaining consolidated cash available for dividends and other restricted payments | $ 888,300 | $ 888,300 | ||||||||||||||||
Cumulative consolidated cash available to pay dividends and other restricted payments | $ 1,321,900 | $ 1,321,900 | ||||||||||||||||
Repayments of senior notes | 261,874 | |||||||||||||||||
Forecast | ||||||||||||||||||
Debt | ||||||||||||||||||
Dividend paid | $ 27,400 | $ 433,600 | ||||||||||||||||
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 | $ 496,331 | $ 495,698 | 495,698 | $ 496,331 | 495,698 | |||||||||||||
Unamortized discount | $ 3,669 | $ 4,302 | $ 4,302 | $ 3,669 | $ 4,302 | |||||||||||||
Aggregate principal amount | $ 300,000 | $ 200,000 | ||||||||||||||||
Leverage ratio | 4.22 | 4.22 | ||||||||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | 6.50% | |||||||||||
Dividends available for distribution | $ 50,000 | $ 50,000 | ||||||||||||||||
Issue price as a percentage of par | 98.26% | |||||||||||||||||
Yield to maturity (as a percent) | 6.80% | |||||||||||||||||
Gross proceeds | $ 294,800 | $ 200,000 | ||||||||||||||||
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 | ||||||||||||||||||
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 | $ 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) | 4.58% | 4.00% | ||||||||||||||||
Senior secured credit facility - revolving loan | ||||||||||||||||||
Debt | ||||||||||||||||||
Total long-term debt | $ 22,000 | $ 22,000 | ||||||||||||||||
Maximum borrowing capacity of credit facility | $ 110,000 | |||||||||||||||||
Amounts outstanding | 22,000 | $ 0 | $ 0 | 22,000 | $ 0 | |||||||||||||
Stand-by letter of credit outstanding | 18,300 | 18,300 | ||||||||||||||||
Available borrowing capacity | 69,700 | 69,700 | ||||||||||||||||
Senior secured credit facility - revolving loan | Maximum | ||||||||||||||||||
Debt | ||||||||||||||||||
Stand-by letter of credit outstanding | $ 20,000 | $ 15,000 | ||||||||||||||||
Senior secured credit facility - revolving loan | LIBOR | ||||||||||||||||||
Debt | ||||||||||||||||||
Amounts outstanding | 17,000 | $ 17,000 | ||||||||||||||||
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 | ||||||||||||||||||
Debt | ||||||||||||||||||
Amounts outstanding | 5,000 | $ 5,000 | ||||||||||||||||
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 | ||||||||||||||||||
Debt | ||||||||||||||||||
Total long-term debt | 1,813,069 | 893,088 | 893,088 | $ 1,813,069 | 893,088 | |||||||||||||
Less: deferred debt issuance costs | (3,900) | $ (2,500) | ||||||||||||||||
Unamortized discount | $ 8,344 | 4,662 | 2,300 | 4,662 | $ 8,344 | 4,662 | ||||||||||||
Aggregate principal amount | 900,000 | |||||||||||||||||
Quarterly principal payments required | 2,250 | |||||||||||||||||
Deferred debt issuance costs | $ 3,900 | $ 2,500 | ||||||||||||||||
Issue discount (as a percentage) | 0.25% | |||||||||||||||||
Term Loan | LIBOR | ||||||||||||||||||
Debt | ||||||||||||||||||
Interest rate (as a percent) | 3.00% | 3.00% | ||||||||||||||||
Term Loan | LIBOR | Minimum | ||||||||||||||||||
Debt | ||||||||||||||||||
Margin (as a percent) | 1.00% | |||||||||||||||||
Incremental Term Loan Facility | ||||||||||||||||||
Debt | ||||||||||||||||||
Aggregate principal amount | $ 935,000 | |||||||||||||||||
Quarterly principal payments required | $ 2,340 | |||||||||||||||||
Issue discount (as a percentage) | 0.50% | |||||||||||||||||
Commitment fees amortized over commitment period | 14,000 | |||||||||||||||||
Incremental Term Loan Facility | Maximum | ||||||||||||||||||
Debt | ||||||||||||||||||
Additional borrowing capacity | $ 300,000 | |||||||||||||||||
Incremental Term Loan Facility | FairPoint Communications, Inc | ||||||||||||||||||
Debt | ||||||||||||||||||
Aggregate principal amount | 935,000 | 935,000 | 935,000 | |||||||||||||||
Incremental Term Loan Facility | LIBOR | Minimum | ||||||||||||||||||
Debt | ||||||||||||||||||
Margin (as a percent) | 1.00% | |||||||||||||||||
Incremental Term Loan Facility | LIBOR | Maximum | ||||||||||||||||||
Debt | ||||||||||||||||||
Margin (as a percent) | 3.00% | |||||||||||||||||
Capital lease agreements | ||||||||||||||||||
Debt | ||||||||||||||||||
Total long-term debt | $ 23,890 | $ 16,857 | $ 16,857 | $ 23,890 | $ 16,857 |
LONG-TERM DEBT - Future Maturit
LONG-TERM DEBT - Future Maturities (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Aggregate maturities of our long-term debt | |
2,018 | $ 18,350 |
2,019 | 18,350 |
2,020 | 18,350 |
2,021 | 40,350 |
2,022 | 518,350 |
Thereafter | 1,729,663 |
Total maturities | 2,343,413 |
Unamortized discount | (12,013) |
Long-term debt excluding capital leases | $ 2,331,400 |
DERIVATIVE FINANCIAL INSTRUME53
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2017agreement | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($)item | |
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 | $ (271) | $ (532) | ||
Cash flow hedges | Interest rate swaps | ||||
Derivatives | ||||
Duration of hedge | 1 year | |||
Number of new agreements | agreement | 4 | |||
Maximum | Cash flow hedges | Interest rate swaps | ||||
Derivatives | ||||
Notional amount | 705,000 | |||
Minimum | Cash flow hedges | Interest rate swaps | ||||
Derivatives | ||||
Notional amount | 450,000 | |||
Other Assets. | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 100,000 | 600,000 | ||
Other assets | 398 | 873 | ||
Other Assets. | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 600,000 | |||
Other assets | 383 | |||
Accrued Expense | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 100,000 | 150,000 | ||
Accrued expense | (453) | (27) | ||
Other long-term liabilities | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 50,000 | |||
Other long-term liabilities | (216) | |||
Other long-term liabilities | Cash flow hedges | Series of forward starting fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 1,410,000 | |||
Other long-term liabilities | $ (1,761) | |||
De-designated Hedges | Interest rate swaps | ||||
Derivatives | ||||
Gain recognized as a reduction to interest expense | $ 200 | $ 800 |
DERIVATIVE FINANCIAL INSTRUME54
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Derivative Instruments | |||
Derivatives | |||
Deferred gain (losses) included in AOCI (pretax) | $ 600 | $ (200) | |
Gain included in AOCI to be recognized in the next 12 months | 600 | ||
Cash flow hedges | |||
Derivatives | |||
Unrealized loss recognized in AOCI, pretax | (411) | (469) | $ (1,744) |
Deferred losses reclassified from AOCI to interest expense | (1,246) | (1,352) | $ (1,371) |
Gain (loss) recognized in interest expense from ineffectiveness | $ (121) | $ 242 |
EQUITY - Share-based Compensati
EQUITY - Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | May 04, 2015 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stock-based compensation plans | ||||
Additional shares of common stock authorized | 1,000,000 | |||
Shares of common stock authorized for issuance | 2,650,000 | |||
Vesting period | 4 years | |||
Shares | ||||
Shares granted | 161,082 | 194,106 | 161,357 | |
Total fair value of the awards vested | $ 3.4 | $ 3.4 | $ 3.9 | |
Weighted Average Grant Date Fair Value | ||||
Pretax stock-based compensation expense | 2.8 | 3 | 3 | |
Income tax benefits related to stock-based compensation | 1.1 | $ 1.2 | $ 1.2 | |
Unrecognized share-based compensation | ||||
Unrecognized compensation cost | $ 3 | |||
Weighted-average period of recognition | 1 year 8 months 12 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% | |||
Restricted stock | ||||
Stock-based compensation plans | ||||
Vesting period | 4 years | |||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 93,662 | |||
Shares granted | 124,100 | 100,040 | 83,571 | |
Shares vested | (100,230) | |||
Shares forfeited, cancelled or retired | (15,351) | |||
Non-vested shares outstanding at the end of the period | 102,181 | 93,662 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 22.34 | |||
Shares granted (in dollars per share) | 23.12 | $ 23.95 | $ 21.08 | |
Shares vested (in dollars per share) | 22.23 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 22.86 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 23.32 | $ 22.34 | ||
Pretax stock-based compensation expense | $ 2 | $ 2.1 | $ 1.7 | |
Performance shares | ||||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 109,160 | |||
Shares granted | 36,982 | 94,066 | 77,786 | |
Shares vested | (59,306) | |||
Shares forfeited, cancelled or retired | (9,308) | |||
Non-vested shares outstanding at the end of the period | 77,528 | 109,160 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 20.12 | |||
Shares granted (in dollars per share) | 23.27 | $ 20.86 | $ 19.74 | |
Shares vested (in dollars per share) | 20.13 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 21.40 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 21.46 | $ 20.12 | ||
Pretax stock-based compensation expense | $ 0.8 | $ 0.9 | $ 1.3 |
EQUITY - Changes in AOCI (Detai
EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | $ (47,277) | $ (35,699) | |
Other comprehensive income before reclassifications | (4,717) | (15,120) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 3,911 | 3,542 | |
Net current period other comprehensive income | (806) | (11,578) | $ (4,059) |
Balance at the end of the period | (48,083) | (47,277) | (35,699) |
Pension and Post-Retirement Obligations | |||
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | (47,150) | (35,025) | |
Other comprehensive income before reclassifications | (4,467) | (14,831) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 3,153 | 2,706 | |
Net current period other comprehensive income | (1,314) | (12,125) | |
Balance at the end of the period | (48,464) | (47,150) | (35,025) |
Derivative Instruments | |||
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | (127) | (674) | |
Other comprehensive income before reclassifications | (250) | (289) | |
Amounts reclassified from accumulated other comprehensive income (loss) | 758 | 836 | |
Net current period other comprehensive income | 508 | 547 | |
Balance at the end of the period | $ 381 | $ (127) | $ (674) |
EQUITY - Reclassification from
EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
EQUITY | |||
Income (loss) before income taxes | $ (59,628) | $ 38,158 | $ 2,104 |
Interest expense | (129,786) | (76,826) | (79,618) |
Tax benefit | 124,927 | (22,962) | (2,775) |
Net income (loss) | 65,299 | 15,196 | $ (671) |
Pension and Post-Retirement Obligations | Amount Reclassified from AOCI | |||
EQUITY | |||
Prior service credit | 837 | 979 | |
Actuarial loss | (6,071) | (5,423) | |
Income (loss) before income taxes | (5,234) | (4,444) | |
Tax benefit | 2,081 | 1,738 | |
Net income (loss) | (3,153) | (2,706) | |
Derivative Instruments | Amount Reclassified from AOCI | |||
EQUITY | |||
Interest expense | (1,246) | (1,352) | |
Tax benefit | 488 | 516 | |
Net income (loss) | $ (758) | $ (836) |
PENSION PLANS AND OTHER POST-RE
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Defined Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amounts recognized in the consolidated balance sheets | |||
Long-term liabilities | $ (334,193) | $ (130,793) | |
Defined Benefit Plans | |||
Change in benefit obligation | |||
Benefit obligation at the beginning of the year | 350,392 | 352,206 | |
Service cost | 3,055 | 343 | $ 410 |
Interest cost | 21,882 | 16,291 | 15,788 |
Actuarial loss (gain) | 41,232 | 12,935 | |
Benefits paid | (26,099) | (31,383) | |
Acquisition | 390,269 | ||
Plan curtailment | (27) | ||
Plan settlement | (2,717) | ||
Benefit obligation at the end of the year | 777,987 | 350,392 | 352,206 |
Change in plan assets | |||
Fair value of plan assets at the beginning of the year | 263,733 | 278,038 | |
Employer contributions | 12,533 | 258 | |
Actual return on plan assets | 60,785 | 16,820 | |
Benefits paid | (26,099) | (31,383) | |
Acquisition | 244,005 | ||
Plan settlement | (2,717) | ||
Fair value of plan assets at the end of the year | 552,240 | 263,733 | 278,038 |
Funded status at year end | (225,747) | (86,659) | |
Amounts recognized in the consolidated balance sheets | |||
Current liabilities | (243) | (245) | |
Long-term liabilities | (225,504) | (86,414) | |
Amounts recognized in accumulated other comprehensive income | |||
Unamortized prior service credit | (1,401) | (3,054) | |
Unamortized net actuarial (loss) gain | 85,984 | 83,367 | |
Total | 84,583 | 80,313 | |
Components of net periodic pension costs | |||
Service cost | 3,055 | 343 | 410 |
Interest cost | 21,882 | 16,291 | 15,788 |
Expected return on plan assets | (28,459) | (20,635) | (23,372) |
Net amortization actuarial loss (gain) | 6,244 | 5,423 | 4,018 |
Net amortization prior service credit | (316) | (458) | (457) |
Plan curtailment | (1,337) | ||
Plan settlement | 17 | ||
Net periodic pension cost (benefit) | 1,086 | 964 | $ (3,613) |
Changes in plan assets and benefit obligations recognized in other comprehensive income, before tax effects | |||
Actuarial loss (gain), net | 8,906 | 16,750 | |
Recognized actuarial (loss) gain | (6,272) | (5,423) | |
Recognized prior service credit | 316 | 458 | |
Plan curtailment | 1,337 | ||
Plan settlement | (17) | ||
Total amount recognized in other comprehensive income, before tax effects | 4,270 | $ 11,785 | |
Amount to be amortized from accumulated other comprehensive income in net periodic benefit cost in the next fiscal year | |||
Net loss | 5,800 | ||
Net prior service cost (credit) | $ (200) | ||
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | |||
Discount rate - net periodic benefit cost (as a percent) | 4.02% | 4.76% | 4.27% |
Discount rate - benefit obligation (as a percent) | 3.75% | 4.27% | 4.76% |
Expected long-term rate of return on plan assets (as a percent) | 7.23% | 7.75% | 8.00% |
Rate of compensation/salary increase for net periodic benefit cost (as a percent) | 2.39% | 1.75% | 1.75% |
Post-retirement Benefit Obligations | |||
Change in benefit obligation | |||
Benefit obligation at the beginning of the year | $ 46,318 | $ 40,538 | |
Service cost | 498 | 602 | $ 601 |
Interest cost | 3,034 | 2,019 | 1,713 |
Plan participant contributions | 456 | 544 | |
Actuarial loss (gain) | (2,815) | 6,767 | |
Benefits paid | (6,934) | (4,152) | |
Acquisition | 76,413 | ||
Benefit obligation at the end of the year | 116,970 | 46,318 | 40,538 |
Change in plan assets | |||
Fair value of plan assets at the beginning of the year | 2,286 | 2,985 | |
Employer contributions | 6,478 | 3,608 | |
Plan participant contributions | 456 | 544 | |
Actual return on plan assets | 198 | (699) | |
Benefits paid | (6,934) | (4,152) | |
Fair value of plan assets at the end of the year | 2,484 | 2,286 | 2,985 |
Funded status at year end | (114,486) | (44,032) | |
Amounts recognized in the consolidated balance sheets | |||
Current liabilities | (7,515) | (1,555) | |
Long-term liabilities | (106,971) | (42,477) | |
Amounts recognized in accumulated other comprehensive income | |||
Unamortized prior service credit | (4,095) | (4,616) | |
Unamortized net actuarial (loss) gain | (1,770) | 956 | |
Total | (5,865) | (3,660) | |
Components of net periodic pension costs | |||
Service cost | 498 | 602 | 601 |
Interest cost | 3,034 | 2,019 | 1,713 |
Expected return on plan assets | (113) | (148) | (150) |
Net amortization actuarial loss (gain) | (173) | (134) | |
Net amortization prior service credit | (521) | (521) | (622) |
Net periodic pension cost (benefit) | 2,725 | 1,952 | $ 1,408 |
Changes in plan assets and benefit obligations recognized in other comprehensive income, before tax effects | |||
Actuarial loss (gain), net | (2,899) | 7,614 | |
Recognized actuarial (loss) gain | 173 | ||
Recognized prior service credit | 521 | 521 | |
Total amount recognized in other comprehensive income, before tax effects | $ (2,205) | $ 8,135 | |
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | |||
Discount rate - net periodic benefit cost (as a percent) | 3.96% | 4.61% | 4.11% |
Discount rate - benefit obligation (as a percent) | 3.67% | 4.12% | 4.61% |
Estimated net prior service credit that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ (500) | ||
Estimated net actuarial gain that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ (100) |
PENSION PLANS AND OTHER POST-59
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Non-qualified Deferred Comp Agreements (Details) | 12 Months Ended | |
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | |
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 | $ 200,000 | $ 200,000 |
Net present value of the remaining obligations | $ 1,900,000 | 2,000,000 |
Number of life insurance policies | item | 25 | |
Excess of cash surrender value of remaining life insurance policies over notes payable | $ 2,300,000 | 2,200,000 |
Proceeds from life insurance policies | 200,000 | |
Death benefit payable | 7,000,000 | $ 6,800,000 |
New benefits accrued | $ 0 |
PENSION PLANS AND OTHER POST-60
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Assumptions (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | |
FairPoint Communications, Inc | ||
Defined benefit plans | ||
Number of non-contributory qualified defined benefit pension plans | item | 2 | |
Capped number of years for benefit accruals | 30 years | |
Defined Benefit Plans | ||
Defined benefit plans | ||
Employer contributions | $ 12,533 | $ 258 |
Amount to be amortized from accumulated other comprehensive income in net periodic benefit cost in the next fiscal year | ||
Net loss | 5,800 | |
Net prior service cost (credit) | $ (200) | |
Post-retirement Benefit Obligations | ||
Defined benefit plans | ||
Number of persons eligible to become a new participant | item | 0 | |
Plan unfunded status | $ 0 | |
Employer contributions | 6,478 | $ 3,608 |
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | ||
Effect of one percent increase on total of service and interest cost | 179 | |
Effect of one percent increase on postretirement benefit obligation | 3,993 | |
Effect of one percent decrease on postretirement benefit obligation | (3,843) | |
Effect of one percent decrease on total of service and interest cost | $ (162) | |
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-61
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Plan Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common collective trust | |||
Post-retirement benefit obligation | |||
Unfunded commitments | $ 0 | ||
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) | 66.00% | ||
Maximum | Common collective trust | |||
Post-retirement benefit obligation | |||
Redemption notice period | 10 days | ||
Defined Benefit Plans | |||
Post-retirement benefit obligation | |||
Fair value of assets | $ 552,408 | $ 266,621 | |
Other liabilities | (168) | (2,888) | |
Net plan assets | 552,240 | 263,733 | $ 278,038 |
Expected contribution in the next fiscal year | 26,900 | ||
Benefit payments expected to be paid | |||
2,018 | 33,006 | ||
2,019 | 34,746 | ||
2,020 | 35,598 | ||
2,021 | 36,839 | ||
2,022 | 37,727 | ||
2023-2027 | 203,525 | ||
Defined Benefit Plans | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 380,952 | 159,495 | |
Defined Benefit Plans | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 334,857 | 140,585 | |
Defined Benefit Plans | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 46,095 | 18,910 | |
Defined Benefit Plans | Cash and Cash Equivalents [Member] | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 10,383 | 671 | |
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 | 10,383 | 671 | |
Defined Benefit Plans | U.S. common stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 62,088 | 23,285 | |
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 | 62,088 | 23,285 | |
Defined Benefit Plans | International stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 12,310 | 8,756 | |
Defined Benefit Plans | International stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 12,310 | 8,756 | |
Defined Benefit Plans | U.S. small cap equity | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 5,874 | ||
Defined Benefit Plans | U.S. small cap equity | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 5,874 | ||
Defined Benefit Plans | U.S. small cap equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 11,862 | 10,093 | |
Defined Benefit Plans | US mid cap funds Member | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 36,306 | 9,294 | |
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 | 36,306 | 9,294 | |
Defined Benefit Plans | U.S. large cap funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 45,427 | 7,564 | |
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 | 45,427 | 7,564 | |
Defined Benefit Plans | U.S. large cap equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 14,126 | 14,064 | |
Defined Benefit Plans | Emerging markets funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 18,736 | 14,382 | |
Defined Benefit Plans | Emerging markets funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 18,736 | 14,382 | |
Defined Benefit Plans | Emerging markets equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 10,669 | 7,865 | |
Defined Benefit Plans | International equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 19,480 | 15,434 | |
Defined Benefit Plans | International funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 104,403 | 47,784 | |
Defined Benefit Plans | International funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 104,403 | 47,784 | |
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 | 27,192 | 16,821 | |
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 | 27,190 | 8,794 | |
Defined Benefit Plans | U.S. treasury and government agency securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 2 | 8,027 | |
Defined Benefit Plans | Corporate and municipal bonds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 37,069 | 6,712 | |
Defined Benefit Plans | Corporate and municipal bonds | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 37,069 | 6,712 | |
Defined Benefit Plans | Mortgage/asset-backed securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 9,024 | 4,171 | |
Defined Benefit Plans | Mortgage/asset-backed securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 9,024 | 4,171 | |
Defined Benefit Plans | Fixed Income mutual funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 12,140 | 20,055 | |
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 | 12,140 | 20,055 | |
Defined Benefit Plans | Fixed Income mutual funds | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 104,282 | 52,340 | |
Defined Benefit Plans | Short-term investments | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 11,037 | 7,330 | |
Post-retirement Benefit Obligations | |||
Post-retirement benefit obligation | |||
Fair value of assets | 2,710 | 2,577 | |
Other liabilities | (1) | (28) | |
Benefit payments payable | (225) | (263) | |
Net plan assets | 2,484 | 2,286 | $ 2,985 |
Expected contribution in the next fiscal year | 10,000 | ||
Benefit payments expected to be paid | |||
2,018 | 10,013 | ||
2,019 | 9,418 | ||
2,020 | 9,238 | ||
2,021 | 8,822 | ||
2,022 | 8,295 | ||
2023-2027 | 35,131 | ||
Post-retirement Benefit Obligations | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,150 | 1,541 | |
Post-retirement Benefit Obligations | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,150 | 1,358 | |
Post-retirement Benefit Obligations | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 183 | ||
Post-retirement Benefit Obligations | Cash and Cash Equivalents [Member] | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4 | 6 | |
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 | 4 | 6 | |
Post-retirement Benefit Obligations | U.S. common stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 242 | 225 | |
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 | 242 | 225 | |
Post-retirement Benefit Obligations | International stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 76 | 84 | |
Post-retirement Benefit Obligations | International stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 76 | 84 | |
Post-retirement Benefit Obligations | U.S. small cap equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 111 | 98 | |
Post-retirement Benefit Obligations | US mid cap funds Member | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 92 | 90 | |
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 | 92 | 90 | |
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 | 73 | |
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 | 73 | |
Post-retirement Benefit Obligations | U.S. large cap equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 132 | 136 | |
Post-retirement Benefit Obligations | Emerging markets funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 176 | 139 | |
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 | 176 | 139 | |
Post-retirement Benefit Obligations | Emerging markets equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 100 | 76 | |
Post-retirement Benefit Obligations | International equity | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 183 | 149 | |
Post-retirement Benefit Obligations | International funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 487 | 462 | |
Post-retirement Benefit Obligations | International funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 487 | 462 | |
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 | ||
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 | ||
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 | ||
Post-retirement Benefit Obligations | Corporate and municipal bonds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 65 | ||
Post-retirement Benefit Obligations | Corporate and municipal bonds | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 65 | ||
Post-retirement Benefit Obligations | Mortgage/asset-backed securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 40 | ||
Post-retirement Benefit Obligations | Mortgage/asset-backed securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 40 | ||
Post-retirement Benefit Obligations | Fixed Income mutual funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 194 | ||
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 | ||
Post-retirement Benefit Obligations | Fixed Income mutual funds | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 978 | 506 | |
Post-retirement Benefit Obligations | Short-term investments | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | $ 56 | $ 71 |
PENSION PLANS AND OTHER POST-62
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Expense with respect to 401(k) plans | $ 9.6 | $ 6.5 | $ 6.9 |
FairPoint Communications, Inc | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Expense with respect to 401(k) plans | $ 3.8 |
INCOME TAXES - Income tax expen
INCOME TAXES - Income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ 1,055 | $ 1,390 | $ (3,708) |
State | 145 | 709 | 655 |
Total current expense (benefit) | 1,200 | 2,099 | (3,053) |
Deferred: | |||
Federal | (141,726) | 20,087 | 4,321 |
State | 15,599 | 776 | 1,507 |
Total deferred expense (benefit) | (126,127) | 20,863 | 5,828 |
Total income tax expense (benefit) | $ (124,927) | $ 22,962 | $ 2,775 |
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) | 4.10% | 2.90% | (37.90%) |
Transaction costs (as a percent) | (5.80%) | ||
Other permanent differences (as a percent) | 0.20% | 0.90% | 10.80% |
Change in uncertain tax positions (as a percent) | (8.20%) | ||
Change in deferred tax rate (as a percent) | (9.10%) | (4.00%) | 91.90% |
Change in deferred tax rate - Federal Tax Reform | 189.40% | ||
Valuation allowance (as a percent) | (4.30%) | 1.60% | 43.40% |
Provision to return (as a percent) | 0.30% | (1.50%) | |
Sale of stock in subsidiary (as a percent) | 19.10% | ||
Non deductible goodwill (as a percent) | 3.80% | ||
Other (as a percent) | 0.60% | (1.60%) | |
Total (as a percent) | 209.50% | 60.20% | 131.90% |
Non-current deferred tax assets: | |||
Reserve for uncollectible accounts | $ 1,757 | $ 1,090 | |
Accrued vacation pay deducted when paid | 4,594 | 2,286 | |
Accrued expenses and deferred revenue | 12,256 | 7,687 | |
Net operating loss carryforwards | 83,278 | 13,068 | |
Pension and postretirement obligations | 91,311 | 50,353 | |
Stock-based compensation | 189 | ||
Derivative instruments | 80 | ||
Derivative instruments | (164) | ||
Financing costs | 199 | 492 | |
Tax credit carryforwards | 10,112 | 5,383 | |
Other | 22 | ||
Deferred Tax Assets, Gross, Noncurrent | 203,343 | 80,650 | |
Valuation allowance | (8,103) | (1,775) | |
Net non-current deferred tax assets | 195,240 | 78,875 | |
Non-current deferred tax liabilities: | |||
Goodwill and other intangibles | (99,460) | (36,558) | |
Basis in investment | 140 | (38) | |
Partnership investments | (14,645) | (22,360) | |
Property, plant and equipment | (285,996) | (264,217) | |
Other | (4,999) | ||
Total | (404,960) | (323,173) | |
Net non-current deferred taxes | $ (209,720) | $ (244,298) |
INCOME TAXES - Carryforwards (D
INCOME TAXES - Carryforwards (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income taxes | |||||
Corporate income tax rate | 35.00% | 35.00% | 35.00% | ||
Non-cash tax benefit estimate | $ (112,900) | ||||
Deferred tax assets related to net operating loss carryforwards | 83,278 | $ 83,278 | $ 13,068 | ||
Unrecognized tax benefits that would impact effective tax rate | 4,100 | 4,100 | 100 | ||
Reconciliation of the unrecognized tax benefits | |||||
Balance at the beginning of the period | $ 4,296 | 64 | 66 | ||
Additions for tax positions related to FairPoint acquisition | 4,296 | ||||
Reduction for tax positions of prior years | (64) | ||||
Balance at the end of the period | 4,296 | 4,296 | 64 | $ 66 | |
Forecast | |||||
Income taxes | |||||
Corporate income tax rate | 21.00% | ||||
FairPoint Communications, Inc | |||||
Income taxes | |||||
Increase in unrecognized tax benefits due to acquisition | 4,300 | ||||
State | |||||
Income taxes | |||||
Non-cash tax benefit estimate | 10,100 | ||||
Valuation allowances against state NOL and state tax credit carryforwards that we no longer expect to be able to realize based upon the new tax law | 900 | ||||
Net operating loss carryforwards | 305,500 | 305,500 | |||
Deferred tax assets related to net operating loss carryforwards | 20,600 | 20,600 | |||
Utilization of net operating loss carryforwards subject to Separate Return Limitation Year | 89,700 | 89,700 | |||
Deferred tax assets related to utilization of net operating loss carryforwards subject to Separate Return Limitation Year | 6,200 | 6,200 | |||
Utilization of tax credit carryforwards subject to Separate Return Limitation Year | 2,700 | 2,700 | |||
Deferred tax assets related to utilization of tax credit carryforwards subject to Separate Return Limitation Year | 1,900 | 1,900 | |||
Tax credit carryforwards | 9,900 | 9,900 | |||
Deferred tax assets related to tax credit carryforwards | 7,200 | 7,200 | |||
Reconciliation of the unrecognized tax benefits | |||||
Reduction for lapse of statute of limitations | $ (2) | ||||
Federal | |||||
Income taxes | |||||
Non-cash tax benefit estimate | (123,000) | ||||
Net operating loss carryforwards | 296,500 | 296,500 | |||
Deferred tax assets related to net operating loss carryforwards | 62,300 | 62,300 | |||
Tax credit carryforwards | 2,900 | 2,900 | |||
Deferred tax assets related to tax credit carryforwards | 2,900 | 2,900 | |||
Federal | ETFL | |||||
Income taxes | |||||
Net operating loss carryforwards | 1,400 | 1,400 | |||
Deferred tax assets related to net operating loss carryforwards | $ 300 | $ 300 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies | |||
2,018 | $ 85,410 | ||
2,019 | 57,296 | ||
2,020 | 38,057 | ||
2,021 | 16,458 | ||
2,022 | 9,397 | ||
Thereafter | 14,914 | ||
Total | 221,532 | ||
Operating Leases | |||
Rent expense | 18,000 | $ 12,700 | $ 12,100 |
Capital Leases | |||
Present value of the minimum remaining lease commitments | 23,900 | ||
Capital lease commitments due and payable within the next 12 months | 11,300 | ||
Imputed interest | 2,200 | ||
Operating lease agreements | |||
Commitments and Contingencies | |||
2,018 | 15,151 | ||
2,019 | 12,025 | ||
2,020 | 9,144 | ||
2,021 | 5,377 | ||
2,022 | 3,088 | ||
Thereafter | 8,641 | ||
Total | 53,426 | ||
Capital lease agreements | |||
Commitments and Contingencies | |||
2,018 | 11,346 | ||
2,019 | 8,636 | ||
2,020 | 3,416 | ||
2,021 | 468 | ||
2,022 | 24 | ||
Total | 23,890 | ||
Capital expenditures | |||
Commitments and Contingencies | |||
2,018 | 13,081 | ||
2,019 | 1,371 | ||
2,020 | 2,225 | ||
2,021 | 1,226 | ||
Total | 17,903 | ||
Service and support agreements | |||
Commitments and Contingencies | |||
2,018 | 32,229 | ||
2,019 | 22,604 | ||
2,020 | 14,404 | ||
2,021 | 2,570 | ||
2,022 | 188 | ||
Thereafter | 540 | ||
Total | 72,535 | ||
Transport and data connectivity | |||
Commitments and Contingencies | |||
2,018 | 13,603 | ||
2,019 | 12,660 | ||
2,020 | 8,868 | ||
2,021 | 6,817 | ||
2,022 | 6,097 | ||
Thereafter | 5,733 | ||
Total | $ 53,778 |
COMMITMENTS AND CONTINGENCIES66
COMMITMENTS AND CONTINGENCIES - Litigation (Details) $ in Millions | 12 Months Ended | 36 Months Ended | 72 Months Ended | 144 Months Ended | ||||
Dec. 31, 2017USD ($)subsidiaryitem | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2017USD ($) | May 31, 2017USD ($) | |
Litigation and Contingencies | ||||||||
Number of subsidiaries that received assessment notice | subsidiary | 2 | |||||||
Consolidated Communications Enterprise Services Inc. (CCES) | ||||||||
Litigation and Contingencies | ||||||||
Litigation amount accrued | $ 1.6 | $ 1.6 | $ 1.6 | |||||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | ||||||||
Litigation and Contingencies | ||||||||
Litigation amount accrued | $ 1.4 | 1.4 | 1.4 | |||||
Sprint, MCI Communication Services, and Verizon | ||||||||
Litigation and Contingencies | ||||||||
Disputed amount | $ 4.8 | |||||||
Number of courts | item | 1 | |||||||
Level 3 Communications | ||||||||
Litigation and Contingencies | ||||||||
Disputed amount | $ 1.6 | |||||||
Verizon Pennsylvania | ||||||||
Litigation and Contingencies | ||||||||
Telephone Messages Transmitted | item | 0 | |||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Maximum | ||||||||
Litigation and Contingencies | ||||||||
Potential liability amount guaranteed | $ 5 | |||||||
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 | $ 0.5 | $ 0.7 | $ 0.9 | $ 4.3 | ||||
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 | $ 0.7 | $ 0.8 | $ 5.1 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017USD ($)leasebuildingitem | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
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 | 2.2 | $ 2.7 | |
Interest expense related to capital leases | 0.3 | 0.4 | $ 0.4 |
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% | 68.50% | |
Richard A. Lumpkin | Agracel | |||
Related party transactions | |||
Percentage of beneficial ownership | 37.00% | 37.00% |
RELATED PARTY TRANSACTIONS - Lo
RELATED PARTY TRANSACTIONS - Long Term Debt (Details) - USD ($) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2014 | May 31, 2012 | |
First Mid Illinois | |||||
Related party transactions | |||||
Revenue | $ 0.7 | $ 0.7 | $ 0.8 | ||
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 | ||||
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 INFORMATI69
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Oct. 31, 2016 | |
Net revenues | $ 356,360 | $ 363,329 | $ 169,950 | $ 169,935 | $ 175,919 | $ 191,541 | $ 186,871 | $ 188,846 | $ 1,059,574 | $ 743,177 | $ 775,737 | |
Operating income (loss) | 6,487 | (7,998) | 21,578 | 18,587 | 17,440 | 22,736 | 22,954 | 24,310 | 38,654 | 87,440 | 87,775 | |
Net income (loss) attributable to common stockholders | $ 99,806 | $ (28,448) | $ (2,728) | $ (3,685) | (6) | $ 7,012 | $ 76 | $ 7,849 | $ 64,945 | $ 14,931 | $ (881) | |
Basic and diluted earnings (loss) per share (in dollars per share) | $ 1.41 | $ (0.41) | $ (0.06) | $ (0.07) | $ 0.14 | $ 0.15 | $ 1.07 | $ 0.29 | $ (0.02) | |||
Non-cash tax benefit estimate | $ (112,900) | |||||||||||
Transaction costs | $ 33,650 | $ 1,214 | $ 1,413 | |||||||||
Loss on extinguishment of debt | (6,600) | (6,559) | $ (41,242) | |||||||||
Incremental Term Loan Facility | ||||||||||||
Aggregate principal amount | $ 935,000 | |||||||||||
Ticking fees and the amortization of commitment fees | $ 6,200 | $ 13,300 | $ 11,400 | 1,200 | ||||||||
FairPoint Communications, Inc | ||||||||||||
Transaction costs | $ 2,800 | $ 27,000 | $ 1,700 | $ 1,500 | $ 33,000 | |||||||
FairPoint Communications, Inc | Incremental Term Loan Facility | ||||||||||||
Aggregate principal amount | $ 935,000 | $ 935,000 |
CONDENSED CONSOLIDATING FINAN70
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current assets: | ||||
Cash and cash equivalents | $ 15,657 | $ 27,077 | $ 15,878 | $ 6,679 |
Accounts receivable, net | 121,528 | 56,216 | ||
Income taxes receivable | 21,846 | 21,616 | ||
Prepaid expenses and other current assets | 33,318 | 28,292 | ||
Assets held for sale | 21,310 | |||
Total current assets | 213,659 | 133,201 | ||
Property, plant and equipment, net | 2,037,606 | 1,055,186 | ||
Intangibles and other assets: | ||||
Investments | 108,858 | 106,221 | ||
Goodwill | 1,038,032 | 756,877 | ||
Other intangible assets | 306,783 | 31,612 | ||
Other assets | 14,188 | 9,661 | ||
Total assets | 3,719,126 | 2,092,758 | ||
Current liabilities: | ||||
Accounts payable | 24,143 | 6,766 | ||
Advance billings and customer deposits | 42,526 | 26,438 | ||
Dividends payable | 27,418 | 19,605 | ||
Accrued compensation | 49,770 | 16,971 | ||
Accrued interest | 9,343 | 11,260 | ||
Accrued expense | 72,041 | 54,123 | ||
Current portion of long term debt and capital lease obligations | 29,696 | 14,922 | ||
Liabilities held for sale | 1,003 | |||
Total current liabilities | 255,940 | 150,085 | ||
Long-term debt and capital lease obligations | 2,311,514 | 1,376,754 | ||
Deferred income taxes | 209,720 | 244,298 | ||
Pension and postretirement benefit obligations | 334,193 | 130,793 | ||
Other long-term liabilities | 33,817 | 14,573 | ||
Total liabilities | 3,145,184 | 1,916,503 | ||
Shareholders' equity: | ||||
Common Stock | 708 | 506 | ||
Other shareholders' equity | 567,579 | 170,448 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 568,287 | 170,954 | ||
Noncontrolling interest | 5,655 | 5,301 | ||
Total shareholders' equity | 573,942 | 176,255 | 250,699 | 330,829 |
Total liabilities and shareholders' equity | 3,719,126 | 2,092,758 | ||
Eliminations | ||||
Current assets: | ||||
Accounts receivable, net | (476) | (42) | ||
Total current assets | (476) | (42) | ||
Intangibles and other assets: | ||||
Investments in subsidiaries | (5,812,353) | (4,226,527) | ||
Advances due to/from affiliates, net | (3,089,637) | (2,039,797) | ||
Deferred income taxes | (21,244) | (17,150) | ||
Total assets | (8,923,710) | (6,283,516) | ||
Current liabilities: | ||||
Accrued expense | (476) | (42) | ||
Total current liabilities | (476) | (42) | ||
Advances due to/from affiliates, net | (3,089,637) | (2,039,797) | ||
Deferred income taxes | (21,244) | (17,150) | ||
Total liabilities | (3,111,357) | (2,056,989) | ||
Shareholders' equity: | ||||
Common Stock | (47,411) | (47,411) | ||
Other shareholders' equity | (5,764,942) | (4,179,116) | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | (5,812,353) | (4,226,527) | ||
Total shareholders' equity | (5,812,353) | (4,226,527) | ||
Total liabilities and shareholders' equity | (8,923,710) | (6,283,516) | ||
Parent | Reportable legal entity | ||||
Current assets: | ||||
Income taxes receivable | 20,275 | 20,756 | ||
Total current assets | 20,275 | 20,756 | ||
Intangibles and other assets: | ||||
Investments in subsidiaries | 3,643,930 | 2,192,556 | ||
Deferred income taxes | 21,244 | 17,150 | ||
Total assets | 3,685,449 | 2,230,462 | ||
Current liabilities: | ||||
Dividends payable | 27,418 | 19,605 | ||
Accrued expense | 107 | 36 | ||
Total current liabilities | 27,525 | 19,641 | ||
Advances due to/from affiliates, net | 3,089,637 | 2,039,797 | ||
Other long-term liabilities | 70 | |||
Total liabilities | 3,117,162 | 2,059,508 | ||
Shareholders' equity: | ||||
Common Stock | 708 | 506 | ||
Other shareholders' equity | 567,579 | 170,448 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 568,287 | 170,954 | ||
Total shareholders' equity | 568,287 | 170,954 | ||
Total liabilities and shareholders' equity | 3,685,449 | 2,230,462 | ||
Subsidiary Issuer | ||||
Current assets: | ||||
Cash and cash equivalents | 8,919 | 27,064 | 5,877 | 4,940 |
Subsidiary Issuer | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 8,919 | 27,064 | ||
Prepaid expenses and other current assets | 12,856 | |||
Total current assets | 8,919 | 39,920 | ||
Intangibles and other assets: | ||||
Investments | 8,495 | 8,338 | ||
Investments in subsidiaries | 2,133,049 | 2,019,692 | ||
Advances due to/from affiliates, net | 2,441,690 | 1,524,906 | ||
Other assets | 1,307 | 1,562 | ||
Total assets | 4,593,460 | 3,594,418 | ||
Current liabilities: | ||||
Accrued interest | 8,824 | 10,824 | ||
Accrued expense | 504 | 15,057 | ||
Current portion of long term debt and capital lease obligations | 18,350 | 9,000 | ||
Total current liabilities | 27,678 | 34,881 | ||
Long-term debt and capital lease obligations | 2,298,970 | 1,365,820 | ||
Deferred income taxes | 750 | 984 | ||
Other long-term liabilities | 1,761 | 216 | ||
Total liabilities | 2,329,159 | 1,401,901 | ||
Shareholders' equity: | ||||
Other shareholders' equity | 2,264,301 | 2,192,517 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 2,264,301 | 2,192,517 | ||
Total shareholders' equity | 2,264,301 | 2,192,517 | ||
Total liabilities and shareholders' equity | $ 4,593,460 | 3,594,418 | ||
Guarantors | ||||
Condensed Consolidating Balance Sheet | ||||
Ownership interest (as a percent) | 100.00% | |||
Current assets: | ||||
Cash and cash equivalents | $ 6,738 | 13 | 7,629 | 820 |
Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 6,738 | 13 | ||
Accounts receivable, net | 114,303 | 48,911 | ||
Income taxes receivable | 1,571 | 885 | ||
Prepaid expenses and other current assets | 33,188 | 15,310 | ||
Total current assets | 155,800 | 65,119 | ||
Property, plant and equipment, net | 1,972,190 | 999,416 | ||
Intangibles and other assets: | ||||
Investments | 100,363 | 97,883 | ||
Investments in subsidiaries | 35,374 | 14,279 | ||
Goodwill | 971,851 | 690,696 | ||
Other intangible assets | 297,696 | 22,525 | ||
Advances due to/from affiliates, net | 555,332 | 427,720 | ||
Other assets | 12,844 | 8,058 | ||
Total assets | 4,101,450 | 2,325,696 | ||
Current liabilities: | ||||
Accounts payable | 24,143 | 6,766 | ||
Advance billings and customer deposits | 41,026 | 24,981 | ||
Accrued compensation | 48,795 | 16,002 | ||
Accrued interest | 519 | 436 | ||
Accrued expense | 70,976 | 38,192 | ||
Current portion of long term debt and capital lease obligations | 11,150 | 5,735 | ||
Total current liabilities | 196,609 | 92,112 | ||
Long-term debt and capital lease obligations | 12,139 | 10,332 | ||
Deferred income taxes | 209,116 | 232,668 | ||
Pension and postretirement benefit obligations | 315,129 | 109,185 | ||
Other long-term liabilities | 31,030 | 13,807 | ||
Total liabilities | 764,023 | 458,104 | ||
Shareholders' equity: | ||||
Common Stock | 17,411 | 17,411 | ||
Other shareholders' equity | 3,314,361 | 1,844,880 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,331,772 | 1,862,291 | ||
Noncontrolling interest | 5,655 | 5,301 | ||
Total shareholders' equity | 3,337,427 | 1,867,592 | ||
Total liabilities and shareholders' equity | 4,101,450 | 2,325,696 | ||
Non-Guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | $ 2,372 | $ 919 | ||
Non-Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Accounts receivable, net | 7,701 | 7,347 | ||
Income taxes receivable | (25) | |||
Prepaid expenses and other current assets | 130 | 126 | ||
Assets held for sale | 21,310 | |||
Total current assets | 29,141 | 7,448 | ||
Property, plant and equipment, net | 65,416 | 55,770 | ||
Intangibles and other assets: | ||||
Goodwill | 66,181 | 66,181 | ||
Other intangible assets | 9,087 | 9,087 | ||
Advances due to/from affiliates, net | 92,615 | 87,171 | ||
Other assets | 37 | 41 | ||
Total assets | 262,477 | 225,698 | ||
Current liabilities: | ||||
Advance billings and customer deposits | 1,500 | 1,457 | ||
Accrued compensation | 975 | 969 | ||
Accrued expense | 930 | 880 | ||
Current portion of long term debt and capital lease obligations | 196 | 187 | ||
Liabilities held for sale | 1,003 | |||
Total current liabilities | 4,604 | 3,493 | ||
Long-term debt and capital lease obligations | 405 | 602 | ||
Deferred income taxes | 21,098 | 27,796 | ||
Pension and postretirement benefit obligations | 19,064 | 21,608 | ||
Other long-term liabilities | 1,026 | 480 | ||
Total liabilities | 46,197 | 53,979 | ||
Shareholders' equity: | ||||
Common Stock | 30,000 | 30,000 | ||
Other shareholders' equity | 186,280 | 141,719 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 216,280 | 171,719 | ||
Total shareholders' equity | 216,280 | 171,719 | ||
Total liabilities and shareholders' equity | $ 262,477 | $ 225,698 |
CONDENSED CONSOLIDATING FINAN71
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | $ 356,360 | $ 363,329 | $ 169,950 | $ 169,935 | $ 175,919 | $ 191,541 | $ 186,871 | $ 188,846 | $ 1,059,574 | $ 743,177 | $ 775,737 |
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 446,065 | 322,792 | 328,400 | ||||||||
Selling, general and administrative expenses | 249,332 | 157,111 | 178,227 | ||||||||
Acquisition and other transaction costs | 33,650 | 1,214 | 1,413 | ||||||||
Loss on impairment | 610 | ||||||||||
Depreciation and amortization | 291,873 | 174,010 | 179,922 | ||||||||
Income from operations | 6,487 | (7,998) | 21,578 | 18,587 | 17,440 | 22,736 | 22,954 | 24,310 | 38,654 | 87,440 | 87,775 |
Other income (expense): | |||||||||||
Interest expense, net of interest income | (129,786) | (76,826) | (79,618) | ||||||||
Loss on extinguishment of debt | (6,600) | (6,559) | (41,242) | ||||||||
Investment income | 31,749 | 32,972 | 36,690 | ||||||||
Other, net | (245) | 1,131 | (1,501) | ||||||||
Income (loss) before income taxes | (59,628) | 38,158 | 2,104 | ||||||||
Income tax expense (benefit) | (124,927) | 22,962 | 2,775 | ||||||||
Net income (loss) | 65,299 | 15,196 | (671) | ||||||||
Less: net income (loss) attributable to noncontrolling interest | 354 | 265 | 210 | ||||||||
Net income (loss) attributable to common shareholders | $ 99,806 | $ (28,448) | $ (2,728) | $ (3,685) | $ (6) | $ 7,012 | $ 76 | $ 7,849 | 64,945 | 14,931 | (881) |
Total comprehensive income (loss) attributable to common shareholders | 64,139 | 3,353 | (4,940) | ||||||||
Eliminations | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | (12,707) | (13,150) | (13,388) | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | (12,276) | (12,721) | (12,881) | ||||||||
Selling, general and administrative expenses | (431) | (429) | (507) | ||||||||
Other income (expense): | |||||||||||
Equity in earnings of subsidiaries, net | (212,796) | (115,519) | (158,770) | ||||||||
Income (loss) before income taxes | (212,796) | (115,519) | (158,770) | ||||||||
Net income (loss) | (212,796) | (115,519) | (158,770) | ||||||||
Net income (loss) attributable to common shareholders | (212,796) | (115,519) | (158,770) | ||||||||
Total comprehensive income (loss) attributable to common shareholders | (216,301) | (91,816) | (150,871) | ||||||||
Parent | Reportable legal entity | |||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 1,924 | 3,331 | 3,160 | ||||||||
Acquisition and other transaction costs | 33,650 | 1,214 | 1,413 | ||||||||
Income from operations | (35,574) | (4,545) | (4,573) | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (12) | 46 | (104) | ||||||||
Intercompany interest income (expense) | (63,773) | (153,713) | |||||||||
Equity in earnings of subsidiaries, net | 101,863 | 58,208 | 93,391 | ||||||||
Income (loss) before income taxes | 66,277 | (10,064) | (64,999) | ||||||||
Income tax expense (benefit) | 1,332 | (24,995) | (64,118) | ||||||||
Net income (loss) | 64,945 | 14,931 | (881) | ||||||||
Net income (loss) attributable to common shareholders | 64,945 | 14,931 | (881) | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 64,139 | 3,353 | (4,940) | ||||||||
Subsidiary Issuer | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | (15) | 121 | |||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 30 | 7 | 150 | ||||||||
Income from operations | (30) | (22) | (29) | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (128,737) | (76,213) | (79,680) | ||||||||
Intercompany interest income (expense) | 58,909 | 97,102 | 166,838 | ||||||||
Loss on extinguishment of debt | (6,559) | (41,242) | |||||||||
Investment income | 157 | 166 | 326 | ||||||||
Equity in earnings of subsidiaries, net | 109,015 | 56,600 | 64,812 | ||||||||
Other, net | 3 | (328) | (26) | ||||||||
Income (loss) before income taxes | 39,317 | 70,746 | 110,999 | ||||||||
Income tax expense (benefit) | (27,610) | 12,538 | 17,608 | ||||||||
Net income (loss) | 66,927 | 58,208 | 93,391 | ||||||||
Net income (loss) attributable to common shareholders | 66,927 | 58,208 | 93,391 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 71,746 | 46,630 | 89,332 | ||||||||
Guarantors | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 1,013,505 | 697,557 | 728,910 | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 447,247 | 323,112 | 328,714 | ||||||||
Selling, general and administrative expenses | 234,438 | 141,533 | 156,380 | ||||||||
Loss on impairment | 610 | ||||||||||
Depreciation and amortization | 280,843 | 164,577 | 171,232 | ||||||||
Income from operations | 50,977 | 67,725 | 72,584 | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (1,183) | (694) | 154 | ||||||||
Intercompany interest income (expense) | (58,827) | (34,846) | (15,917) | ||||||||
Investment income | 31,592 | 32,806 | 36,364 | ||||||||
Equity in earnings of subsidiaries, net | 1,918 | 711 | 567 | ||||||||
Other, net | (236) | 1,478 | (1,346) | ||||||||
Income (loss) before income taxes | 24,241 | 67,180 | 92,406 | ||||||||
Income tax expense (benefit) | (97,667) | 25,807 | 40,346 | ||||||||
Net income (loss) | 121,908 | 41,373 | 52,060 | ||||||||
Less: net income (loss) attributable to noncontrolling interest | 354 | 265 | 210 | ||||||||
Net income (loss) attributable to common shareholders | 121,554 | 41,108 | 51,850 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 119,174 | 30,442 | 48,434 | ||||||||
Non-Guarantors | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 58,776 | 58,785 | 60,094 | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 11,094 | 12,401 | 12,567 | ||||||||
Selling, general and administrative expenses | 13,371 | 12,669 | 19,044 | ||||||||
Depreciation and amortization | 11,030 | 9,433 | 8,690 | ||||||||
Income from operations | 23,281 | 24,282 | 19,793 | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | 146 | 35 | 12 | ||||||||
Intercompany interest income (expense) | (82) | 1,517 | 2,792 | ||||||||
Other, net | (12) | (19) | (129) | ||||||||
Income (loss) before income taxes | 23,333 | 25,815 | 22,468 | ||||||||
Income tax expense (benefit) | (982) | 9,612 | 8,939 | ||||||||
Net income (loss) | 24,315 | 16,203 | 13,529 | ||||||||
Net income (loss) attributable to common shareholders | 24,315 | 16,203 | 13,529 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | $ 25,381 | $ 14,744 | $ 13,105 |
CONDENSED CONSOLIDATING FINAN72
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | $ 210,027 | $ 218,233 | $ 219,179 |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (862,385) | (13,422) | |
Purchases of property, plant and equipment | (181,185) | (125,192) | (133,934) |
Proceeds from sale of assets | 859 | 208 | 13,548 |
Proceeds from business dispositions | 30,119 | ||
Proceeds from sale of investments | 846 | ||
Net cash provided by (used in) investing activities | (1,042,711) | (108,287) | (119,540) |
Cash flows from financing activities: | |||
Proceeds from bond offering | 294,780 | ||
Proceeds from issuance of long-term debt | 1,052,325 | 936,750 | 69,000 |
Payment of capital lease obligations | (7,933) | (2,885) | (1,107) |
Payment on long-term debt | (111,337) | (943,050) | (107,100) |
Payment of financing costs | (16,732) | (9,912) | (4,805) |
Redemption of senior notes | (261,874) | ||
Share repurchases for minimum tax withholding | (571) | (1,231) | (1,125) |
Dividends on common stock | (94,138) | (78,419) | (78,209) |
Other | (350) | ||
Net cash provided by (used in) financing activities | 821,264 | (98,747) | (90,440) |
Increase (decrease) in cash and cash equivalents | (11,420) | 11,199 | 9,199 |
Cash and cash equivalents at beginning of period | 27,077 | 15,878 | 6,679 |
Cash and cash equivalents at end of period | 15,657 | 27,077 | 15,878 |
Parent | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | (23,237) | (23,634) | (119,472) |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (862,385) | (13,422) | |
Proceeds from business dispositions | 30,119 | ||
Net cash provided by (used in) investing activities | (862,385) | 16,697 | |
Cash flows from financing activities: | |||
Share repurchases for minimum tax withholding | (571) | (1,231) | (1,125) |
Dividends on common stock | (94,138) | (78,419) | (78,209) |
Transactions with affiliates, net | 980,681 | 86,587 | 198,806 |
Other | (350) | ||
Net cash provided by (used in) financing activities | 885,622 | 6,937 | 119,472 |
Subsidiary Issuer | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | (25,625) | 13,315 | 76,962 |
Cash flows from financing activities: | |||
Proceeds from bond offering | 294,780 | ||
Proceeds from issuance of long-term debt | 1,052,325 | 936,750 | 69,000 |
Payment on long-term debt | (111,337) | (943,050) | (107,100) |
Payment of financing costs | (16,732) | (9,912) | (4,805) |
Redemption of senior notes | (261,874) | ||
Transactions with affiliates, net | (916,776) | 24,084 | (66,026) |
Net cash provided by (used in) financing activities | 7,480 | 7,872 | (76,025) |
Increase (decrease) in cash and cash equivalents | (18,145) | 21,187 | 937 |
Cash and cash equivalents at beginning of period | 27,064 | 5,877 | 4,940 |
Cash and cash equivalents at end of period | 8,919 | 27,064 | 5,877 |
Subsidiary Issuer | Reportable legal entity | |||
Cash flows from financing activities: | |||
Cash and cash equivalents at beginning of period | 27,064 | ||
Cash and cash equivalents at end of period | 8,919 | 27,064 | |
Guarantors | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | 235,810 | 200,098 | 240,372 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (167,187) | (111,389) | (126,168) |
Proceeds from sale of assets | 829 | 198 | 13,535 |
Proceeds from sale of investments | 846 | ||
Net cash provided by (used in) investing activities | (166,358) | (111,191) | (111,787) |
Cash flows from financing activities: | |||
Payment of capital lease obligations | (7,746) | (2,743) | (1,029) |
Transactions with affiliates, net | (54,981) | (93,780) | (120,747) |
Net cash provided by (used in) financing activities | (62,727) | (96,523) | (121,776) |
Increase (decrease) in cash and cash equivalents | 6,725 | (7,616) | 6,809 |
Cash and cash equivalents at beginning of period | 13 | 7,629 | 820 |
Cash and cash equivalents at end of period | 6,738 | 13 | 7,629 |
Guarantors | Reportable legal entity | |||
Cash flows from financing activities: | |||
Cash and cash equivalents at beginning of period | 13 | ||
Cash and cash equivalents at end of period | 6,738 | 13 | |
Non-Guarantors | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | 23,079 | 28,454 | 21,317 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (13,998) | (13,803) | (7,766) |
Proceeds from sale of assets | 30 | 10 | 13 |
Net cash provided by (used in) investing activities | (13,968) | (13,793) | (7,753) |
Cash flows from financing activities: | |||
Payment of capital lease obligations | (187) | (142) | (78) |
Transactions with affiliates, net | (8,924) | (16,891) | (12,033) |
Net cash provided by (used in) financing activities | $ (9,111) | (17,033) | (12,111) |
Increase (decrease) in cash and cash equivalents | (2,372) | 1,453 | |
Cash and cash equivalents at beginning of period | $ 2,372 | 919 | |
Cash and cash equivalents at end of period | $ 2,372 |