Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 28, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2019 | |
Entity File Number | 000-51446 | |
Entity Registrant Name | CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 02-0636095 | |
Entity Central Index Key | 0001304421 | |
Entity Address, Address Line One | 121 South 17th Street | |
Entity Address, City or Town | Mattoon | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 61938-3987 | |
City Area Code | 217 | |
Local Phone Number | 235-3311 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Title of 12(b) Security | Common Stock - $0.01 par value | |
Trading Symbol | CNSL | |
Security Exchange Name | NASDAQ | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 72,074,401 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | Feb. 18, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
Net revenues | $ 333,326 | $ 348,064 | $ 1,005,507 | $ 1,054,324 | ||||||
Operating expense: | ||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 146,636 | 152,942 | 438,735 | 457,216 | ||||||
Selling, general and administrative expenses | 70,100 | 85,255 | 222,615 | 252,935 | ||||||
Depreciation and amortization | 93,048 | 109,119 | 289,595 | 328,759 | ||||||
Income from operations | 23,542 | 748 | 54,562 | 15,414 | ||||||
Other income (expense): | ||||||||||
Interest expense, net of interest income | (34,250) | (33,524) | (103,270) | (99,079) | ||||||
Gain on extinguishment of debt | 1,121 | 1,370 | ||||||||
Investment income | 11,254 | 8,675 | 30,605 | 28,999 | ||||||
Other, net | (74) | 293 | (3,095) | 843 | ||||||
Income (loss) before income taxes | 1,593 | (23,808) | (19,828) | (53,823) | ||||||
Income tax expense (benefit) | 1,204 | (8,993) | (5,719) | (17,250) | ||||||
Net income (loss) | 389 | $ (7,312) | $ (7,186) | (14,815) | $ (10,560) | $ (11,198) | (14,109) | (36,573) | ||
Less: net income attributable to noncontrolling interest | 132 | 99 | 286 | 282 | ||||||
Net income (loss) attributable to common shareholders | $ 257 | $ (14,914) | $ (14,395) | $ (36,855) | ||||||
Net loss per common share - basic and diluted | ||||||||||
Net income (loss) per basic and diluted common shares attributable to common shareholders | $ (0.21) | $ (0.21) | $ (0.53) | |||||||
Dividends declared per common share (in dollars per share) | $ 0.38738 | $ 0.39 | $ 0.39 | $ 1.16 | $ 0.38738 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ 389 | $ (14,815) | $ (14,109) | $ (36,573) |
Pension and post-retirement obligations: | ||||
Change in net actuarial loss and prior service credit, net of tax | 8,173 | 8,173 | ||
Amortization of actuarial losses and prior service credit to earnings, net of tax | 194 | 1,096 | 2,246 | 2,972 |
Derivative instruments designated as cash flow hedges: | ||||
Change in fair value of derivatives, net of tax | (2,110) | 4,975 | (20,945) | 13,596 |
Cumulative adjustment upon adoption of ASU 2017-12 | (576) | |||
Reclassification of realized (gain) loss to earnings, net of tax | 130 | 855 | (517) | 2,186 |
Comprehensive income (loss) | (1,397) | 284 | (33,901) | (9,646) |
Less: comprehensive income attributable to noncontrolling interest | 132 | 99 | 286 | 282 |
Total comprehensive income (loss) attributable to common shareholders | $ (1,529) | $ 185 | $ (34,187) | $ (9,928) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6,178 | $ 9,599 |
Accounts receivable, net of allowance for doubtful accounts | 125,908 | 133,136 |
Income tax receivable | 11,293 | 11,072 |
Prepaid expenses and other current assets | 42,070 | 44,336 |
Total current assets | 185,449 | 198,143 |
Property, plant and equipment, net | 1,861,033 | 1,927,126 |
Investments | 112,377 | 110,853 |
Goodwill | 1,035,274 | 1,035,274 |
Customer relationships, net | 180,378 | 228,959 |
Other intangible assets | 10,650 | 11,483 |
Other assets | 58,140 | 23,423 |
Total assets | 3,443,301 | 3,535,261 |
Current liabilities: | ||
Accounts payable | 32,241 | 32,502 |
Advance billings and customer deposits | 48,122 | 47,724 |
Dividends payable | 27,579 | |
Accrued compensation | 58,397 | 64,459 |
Accrued interest | 16,783 | 9,232 |
Accrued expense | 74,969 | 71,650 |
Current portion of long-term debt and finance lease obligations | 27,869 | 30,468 |
Total current liabilities | 258,381 | 283,614 |
Long-term debt and finance lease obligations | 2,285,177 | 2,303,585 |
Deferred income taxes | 175,021 | 188,129 |
Pension and other post-retirement obligations | 286,646 | 314,134 |
Other long-term liabilities | 78,372 | 30,145 |
Total liabilities | 3,083,597 | 3,119,607 |
Commitments and contingencies (Note 12) | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 72,076,069 and 71,187,301 shares outstanding as of September 30, 2019 and December 31, 2018, respectively | 721 | 712 |
Additional paid-in capital | 491,012 | 513,070 |
Accumulated deficit | (65,229) | (50,834) |
Accumulated other comprehensive loss, net | (73,004) | (53,212) |
Noncontrolling interest | 6,204 | 5,918 |
Total shareholders' equity | 359,704 | 415,654 |
Total liabilities and shareholders' equity | $ 3,443,301 | $ 3,535,261 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
CONDENSED 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 | 72,076,069 | 71,187,301 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED 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, 2017 | $ 708 | $ 615,662 | $ (48,083) | $ 5,655 | $ 573,942 | |
Balance (in shares) at Dec. 31, 2017 | 70,777 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (25,243) | $ (2,359) | (27,602) | |||
Shares issued under employee plan, net of forfeitures | $ 5 | (5) | ||||
Shares issued under employee plan, net of forfeitures (in shares) | 475 | |||||
Non-cash, share-based compensation | 678 | 678 | ||||
Other comprehensive income (loss) | 5,924 | 5,924 | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2014-09 | 2,359 | 2,359 | ||||
Net income (loss) | (11,298) | 100 | (11,198) | |||
Balance at Mar. 31, 2018 | $ 713 | 591,092 | (11,298) | (42,159) | 5,755 | 544,103 |
Balance (in shares) at Mar. 31, 2018 | 71,252 | |||||
Balance at Dec. 31, 2017 | $ 708 | 615,662 | (48,083) | 5,655 | 573,942 | |
Balance (in shares) at Dec. 31, 2017 | 70,777 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | (36,573) | |||||
Balance at Sep. 30, 2018 | $ 713 | 539,897 | (36,855) | (21,156) | 5,937 | 488,536 |
Balance (in shares) at Sep. 30, 2018 | 71,252 | |||||
Balance at Mar. 31, 2018 | $ 713 | 591,092 | (11,298) | (42,159) | 5,755 | 544,103 |
Balance (in shares) at Mar. 31, 2018 | 71,252 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (26,669) | (933) | (27,602) | |||
Non-cash, share-based compensation | 1,538 | 1,538 | ||||
Other comprehensive income (loss) | 5,904 | 5,904 | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2014-09 | 933 | 933 | ||||
Net income (loss) | (10,643) | 83 | (10,560) | |||
Balance at Jun. 30, 2018 | $ 713 | 565,961 | (21,941) | (36,255) | 5,838 | 514,316 |
Balance (in shares) at Jun. 30, 2018 | 71,252 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (27,602) | (27,602) | ||||
Non-cash, share-based compensation | 1,538 | 1,538 | ||||
Other comprehensive income (loss) | 15,099 | 15,099 | ||||
Net income (loss) | (14,914) | 99 | (14,815) | |||
Balance at Sep. 30, 2018 | $ 713 | 539,897 | (36,855) | (21,156) | 5,937 | 488,536 |
Balance (in shares) at Sep. 30, 2018 | 71,252 | |||||
Balance at Dec. 31, 2018 | $ 712 | 513,070 | (50,834) | (53,212) | 5,918 | 415,654 |
Balance (in shares) at Dec. 31, 2018 | 71,187 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (27,356) | (576) | (27,932) | |||
Shares issued under employee plan, net of forfeitures | $ 9 | (9) | ||||
Shares issued under employee plan, net of forfeitures (in shares) | 923 | |||||
Non-cash, share-based compensation | 1,498 | 1,498 | ||||
Other comprehensive income (loss) | (6,446) | (6,446) | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2017-12 | 576 | 576 | ||||
Net income (loss) | (7,265) | 79 | (7,186) | |||
Balance at Mar. 31, 2019 | $ 721 | 487,203 | (58,099) | (59,658) | 5,997 | 376,164 |
Balance (in shares) at Mar. 31, 2019 | 72,110 | |||||
Balance at Dec. 31, 2018 | $ 712 | 513,070 | (50,834) | (53,212) | 5,918 | 415,654 |
Balance (in shares) at Dec. 31, 2018 | 71,187 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Other comprehensive income (loss) | (19,792) | |||||
Net income (loss) | (14,109) | |||||
Balance at Sep. 30, 2019 | $ 721 | 491,012 | (65,229) | (73,004) | 6,204 | 359,704 |
Balance (in shares) at Sep. 30, 2019 | 72,076 | |||||
Balance at Mar. 31, 2019 | $ 721 | 487,203 | (58,099) | (59,658) | 5,997 | 376,164 |
Balance (in shares) at Mar. 31, 2019 | 72,110 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | 67 | 67 | ||||
Shares issued under employee plan, net of forfeitures (in shares) | (34) | |||||
Non-cash, share-based compensation | 1,814 | 1,814 | ||||
Other comprehensive income (loss) | (11,560) | (11,560) | ||||
Net income (loss) | (7,387) | 75 | (7,312) | |||
Balance at Jun. 30, 2019 | $ 721 | 489,084 | (65,486) | (71,218) | 6,072 | 359,173 |
Balance (in shares) at Jun. 30, 2019 | 72,076 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Non-cash, share-based compensation | 1,928 | 1,928 | ||||
Other comprehensive income (loss) | (1,786) | (1,786) | ||||
Net income (loss) | 257 | 132 | 389 | |||
Balance at Sep. 30, 2019 | $ 721 | $ 491,012 | $ (65,229) | $ (73,004) | $ 6,204 | $ 359,704 |
Balance (in shares) at Sep. 30, 2019 | 72,076 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net cash provided by operating activities | $ 248,637 | $ 264,036 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment, net | (184,343) | (186,765) |
Proceeds from sale of assets | 14,343 | 1,640 |
Proceeds from business dispositions | 20,999 | |
Distributions from investments | 329 | 233 |
Other | (450) | |
Net cash used in investing activities | (170,121) | (163,893) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 152,000 | 136,587 |
Payment of finance lease obligations | (9,743) | (9,590) |
Payment on long-term debt | (142,763) | (156,350) |
Repurchase of senior notes | (25,986) | |
Dividends on common stock | (55,445) | (82,621) |
Net cash used in financing activities | (81,937) | (111,974) |
Change in cash and cash equivalents | (3,421) | (11,831) |
Cash and cash equivalents at beginning of period | 9,599 | 15,657 |
Cash and cash equivalents at end of period | $ 6,178 | $ 3,826 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “our” or “us”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide communication solutions to consumer, commercial and carrier customers across a 23-state service area. Leveraging our advanced fiber network spanning more than 37,000 fiber route miles, we offer residential high-speed 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 September 30, 2019, we had approximately 854,000 voice connections, 784,000 data connections and 86,000 video connections. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2018 Annual Report on Form 10-K filed with the SEC. Divestitures On July 31, 2018, we completed the sale of all of the issued and outstanding stock of our subsidiaries Peoples Mutual Telephone Company and Peoples Mutual Long Distance Company (collectively, “Peoples”) for total cash proceeds of approximately $21.0 million, net of certain contractual and customary working capital adjustments. Peoples operates as a local exchange carrier in Virginia and provides telecommunications services to residential and business customers. The sale of Peoples has not been reported as discontinued operations in the condensed consolidated statements of operations as the annual revenue of these operations is less than 1% of the consolidated operating revenues. During the quarter and nine months ended September 30, 2018, we recognized a loss of $0.2 million on the sale, net of selling costs, which is included in selling, general and administrative expense in the condensed consolidated statements of operations. We recognized a taxable gain on the transaction resulting in current income tax expense of $0.8 during the quarter and nine months ended September 30, 2018 to reflect the tax impact of the divestiture. Goodwill Goodwill is evaluated for impairment annually as of November 30 of each year or more frequently if an event occurs or circumstances change that would indicate potential impairment. At September 30, 2019 and December 31, 2018, the carrying value of goodwill was $1,035.3 million. Subsequent to September 30, 2019, the price of our common stock sustained historically low trading prices. The decline in the market valuation of our common stock could impact the assumptions used in our annual evaluation of our indefinite-lived assets, including goodwill and trade names. We will continue to monitor revenue and expense trends impacting our expected cash flows, interest rates and other key inputs used to estimate the fair value of these assets, which will be incorporated into our annual impairment assessment in November 2019. The goodwill impairment test will be performed by comparing the fair value of the single reporting unit with its carrying value. An impairment of goodwill would be recognized if it is determined that the carrying value of the reporting unit exceeds its fair value. The fair value of the reporting unit could be adversely affected by the decline or further declines in the Company’s stock price or a significant deterioration of the operating results of the Company, which could result in a potential goodwill impairment charge during the fourth quarter of 2019 upon completion of our annual assessment. Recent Accounting Pronouncements Effective January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02”), Leases As part of the adoption, we elected the package of practical expedients permitted under the new lease standard, which among other things, allows us to carry forward the historical lease classification. As a result, there was no impact to opening retained earnings. We elected the practical expedient to combine lease and non-lease components, as well as the practical expedient related to land easements, which allows us to carry forward our accounting treatment for land easements in existing agreements. We also made an accounting policy election to not recognize right-of-use assets and lease liabilities on the balance sheet for leases with a term of 12 months or less and will recognize lease payments as an expense on a straight-line basis over the lease term. The adoption of the new lease standard resulted in the recognition of right-of-use assets and lease liabilities of approximately $30.9 million for historical operating leases, while our accounting for historical finance leases remained substantially unchanged. The adoption of the new lease standard did not have a material impact on our consolidated statements of operations, consolidated statements of cash flows or our debt-covenant compliance under our current agreements. For additional information on leases and the impact of the new lease standard, refer to Note 8. Effective January 1, 2019, we adopted ASU No. 2018-07 (“ASU 2018-07”), Improvements to Nonemployee Share-Based Payment Accounting Effective January 1, 2019, we adopted ASU No. 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Effective January 1, 2019, we adopted ASU No. 2017-12 (“ASU 2017-12”), Targeted Improvements to Accounting for Hedging Activities cumulative adjustment of $0.6 million, net of tax, from accumulated other comprehensive income (loss) to opening retained earnings. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements and related disclosures. In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-15 (“ASU 2018-15”), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract In August 2018, the FASB issued ASU No. 2018-14 (“ASU 2018-14”), Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments Reclassifications Certain amounts in our 2018 condensed consolidated financial statements have been reclassified to conform to the current year presentation. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE | |
REVENUE | 2. REVENUE Nature of Contracts with Customers Our revenue contracts with customers may include a promise or promises to deliver goods such as equipment and/or services such as broadband, video or voice services. Promised goods and services are considered distinct as the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer and the Company’s promise to transfer a good or service to the customer is separately identifiable from other promises in the contract. The Company accounts for goods and services as separate performance obligations. Each service is considered a single performance obligation as it is providing a series of distinct services that are substantially the same and have the same pattern of transfer. The transaction price is determined at contract inception and reflects the amount of consideration to which we expect to be entitled in exchange for transferring a good or service to the customer. This amount is generally equal to the market price of the goods and/or services promised in the contract and may include promotional discounts. The transaction price excludes amounts collected on behalf of third parties such as sales taxes and regulatory fees. Conversely, nonrefundable upfront fees, such as service activation and set-up fees, are included in the transaction price. In determining the transaction price, we consider our enforceable rights and obligations within the contract. We do not consider the possibility of a contract being cancelled, renewed or modified. The transaction price is allocated to each performance obligation based on the standalone selling price of the good or service, net of the related discount, as applicable. Revenue is recognized when or as performance obligations are satisfied by transferring control of the good or service to the customer as described below. Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the quarters and nine months ended September 30, 2019 and 2018: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Operating Revenues Commercial and carrier: Data and transport services (includes VoIP) $ 88,756 $ 87,633 $ 265,420 $ 261,261 Voice services 46,606 50,091 141,812 153,574 Other 11,828 13,906 40,394 40,006 147,190 151,630 447,626 454,841 Consumer: Broadband (VoIP and Data) 65,456 63,865 192,609 189,521 Video services 20,463 21,790 61,540 66,689 Voice services 45,487 50,757 136,601 154,435 131,406 136,412 390,750 410,645 Subsidies 18,025 19,189 54,318 65,423 Network access 34,211 38,147 105,000 115,200 Other products and services 2,494 2,686 7,813 8,215 Total operating revenues $ 333,326 $ 348,064 $ 1,005,507 $ 1,054,324 Services Services revenues, with the exception of usage-based revenues, are generally billed in advance and recognized in subsequent periods when or as services are transferred to the customer. We offer bundled service packages that consists of high-speed Internet, video and voice services including local and long distance calling, voicemail and calling features. Each service is considered distinct and therefore accounted for as a separate performance obligation. Service revenue is recognized over time, consistent with the transfer of service, as the customer simultaneously receives and consumes the benefits provided by the Company’s performance as the Company performs. 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 when or as services are transferred to the customer. Revenue related to nonrefundable upfront fees, such as service activation and set-up fees are deferred and amortized over the expected customer life as discussed below. Equipment Equipment revenue is generated from the sale of voice and data communications equipment as well as design, configuration, installation and professional support services related to such equipment. Equipment revenue generated from telecommunications systems and structured cabling projects is recognized when or as the project is completed. Maintenance services are provided on both a contract and time and material basis and are recognized when or as services are transferred. 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 recognize Federal Universal Service contributions on a gross basis. We account for all other taxes collected from customers and remitted to the respective government agencies on a net basis. Contract Assets and Liabilities The following table provides information about receivables, contract assets and contract liabilities from our revenue contracts with customers: Quarter Ended September 30, (In thousands) 2019 2018 Accounts receivable, net $ 125,908 $ 143,077 Contract assets 17,578 9,912 Contract liabilities 52,709 54,584 Contract assets include costs that are incremental to the acquisition of a contract. Incremental costs are those that result directly from obtaining a contract or costs that would not have been incurred if the contract had not been obtained, which primarily relate to sales commissions. These costs are deferred and amortized over the expected customer life. We determined that the expected customer life is the expected period of benefit as the commission on the renewal contract is not commensurate with the commission on the initial contract. During the quarters ended September 30, 2019 and 2018, the Company recognized expense of $1.7 million and $0.8 million, respectively, related to deferred contract acquisition costs. During the nine months ended September 30, 2019 and 2018, the Company recognized expense of $4.4 million and $1.8 million, respectively, related to deferred contract acquisition costs. Contract liabilities include deferred revenues related to advanced payments for services and nonrefundable, upfront service activation and set-up fees, which under the new standard are generally deferred and amortized over the expected customer life as the option to renew without paying an upfront fee provides the customer with a material right. During the quarters ended September 30, 2019 and 2018, the Company deferred and recognized revenues of $98.8 million and $92.2 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company deferred and recognized revenues of $285.4 million and $263.3 million, respectively. A receivable is recognized in the period the Company provides goods or services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are generally 30 to 60 days. Performance Obligations ASU No. 2014-09 (also known as ASC 606), Revenue from Contracts with Customers 1. The performance obligation is part of a contract that has an original expected duration of one year or less. 2. Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer in accordance with ASC 606-10-55-18. The Company has elected these practical expedients. As mentioned above, performance obligations related to our service revenue contracts are generally recognized over time. For services transferred over time, revenue is recognized based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract. As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | 3. EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per common share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for each class of common stock and participating securities considering dividends declared and participation rights in undistributed earnings. Certain of the Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends, if declared, during the vesting term. The potentially dilutive impact of the Company’s restricted stock awards is determined using the treasury stock method. Under the treasury stock method, if the average market price during the period exceeds the exercise price, these instruments are treated as if they had been exercised with the proceeds of exercise used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and repurchased is included in the diluted share computation. 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 computation of basic and diluted EPS attributable to common shareholders computed using the two-class method is as follows: Quarter Ended Nine Months Ended September 30, September 30, (In thousands, except per share amounts) 2019 2018 2019 2018 Net income (loss) $ 389 $ (14,815) $ (14,109) $ (36,573) Less: net income attributable to noncontrolling interest 132 99 286 282 Income (loss) attributable to common shareholders before allocation of earnings to participating securities 257 (14,914) (14,395) (36,855) Less: earnings allocated to participating securities 5 221 462 663 Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ 252 $ (15,135) $ (14,857) $ (37,518) Weighted-average number of common shares outstanding 70,813 70,598 70,813 70,598 Net income (loss) per common share attributable to common shareholders - basic and diluted $ — $ (0.21) $ (0.21) $ (0.53) Diluted EPS attributable to common shareholders for the quarters ended September 30, 2019 and 2018 excludes 1.3 million and 0.7 million potential common shares, respectively, that could be issued under our share-based compensation plan, because the inclusion of the potential common shares would have an antidilutive effect. For the nine months ended September 30, 2019 and 2018, diluted EPS attributable to common shareholders excludes 1.1 million and 0.5 million potential common shares, respectively. |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2019 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS Our investments are as follows: September 30, December 31, (In thousands) 2019 2018 Cash surrender value of life insurance policies $ 2,474 $ 2,371 Investments at cost: 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 8,910 9,051 Other 298 298 Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) 19,511 17,800 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,689 7,786 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 29,095 29,147 Totals $ 112,377 $ 110,853 Investments at Cost 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, which provides cellular service in and around the Pittsburgh metropolitan area. Because of our limited influence over these partnerships, we account for these investments at our initial cost less any impairment because fair value is not readily available for these investments. No indictors of impairment existed for any of the investments during the quarters ended September 30, 2019 or 2018. For these investments, we adjust the carrying value for any purchases or sales of our ownership interests. We record distributions received from these investments as investment income in non-operating income (expense). For the quarters ended September 30, 2019 and 2018, we received cash distributions from these partnerships totaling $6.1 million and $3.1 million, respectively. For the nine months ended September 30, 2019 and 2018, we received cash distributions from these partnerships totaling $14.4 million and $12.2 million, respectively. CoBank, ACB (“CoBank”) is a cooperative bank owned by its customers. On an annual basis, 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 connection with the adoption of ASC 606 by our equity method partnerships, the value of our combined partnership interests increased $1.8 million, which is reflected in the cumulative effect adjustment to retained earnings during the nine months ended September 30, 2018. For the quarters ended September 30, 2019 and 2018, we received cash distributions from these partnerships totaling $4.8 million and $5.0 million, respectively. For the nine months ended September 30, 2019 and 2018, we received cash distributions from these partnerships totaling $14.4 million and $16.6 million, respectively. The combined unaudited results of operations of our three equity investments in the cellular limited partnerships are summarized below: Nine Months Ended September 30, (In thousands) 2019 2018 Total revenues $ 256,822 $ 255,161 Income from operations 75,258 75,191 Net income before taxes 74,517 74,280 Net income 74,517 74,280 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE MEASUREMENTS 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 agreements measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018 were as follows: As of September 30, 2019 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ (3,352) $ — $ (3,352) $ — Long-term interest rate swap liabilities (28,470) — (28,470) — Total $ (31,822) $ — $ (31,822) $ — As of December 31, 2018 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap assets $ 2,465 $ — $ 2,465 $ — Long-term interest rate swap assets 1,524 — 1,524 — Long-term interest rate swap liabilities (6,647) — (6,647) — Total $ (2,658) $ — $ (2,658) $ — We have not elected the fair value option for any of our other 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. The following table presents the other financial instruments that are not carried at fair value but which require fair value disclosure as of September 30, 2019 and December 31, 2018. As of September 30, 2019 As of December 31, 2018 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,298,319 $ 2,176,254 $ 2,315,077 $ 2,155,127 Cost & Equity Method Investments Our investments as of September 30, 2019 and December 31, 2018 accounted for at cost and under the equity method consisted primarily of minority positions in various cellular telephone limited partnerships and our investment in CoBank. It is impracticable to determine the 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 facility 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 | 9 Months Ended |
Sep. 30, 2019 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt, presented net of unamortized discounts, consisted of the following: September 30, December 31, (In thousands) 2019 2018 Senior secured credit facility: Term loans, net of discounts of $5,955 and $6,994 at September 30, 2019 and December 31, 2018, respectively $ 1,783,345 $ 1,796,068 Revolving loan 45,000 22,000 6.50% Senior notes due 2022, net of discount of $2,312 and $2,991 at September 30, 2019 and December 31, 2018, respectively 469,974 497,009 2,298,319 2,315,077 Less: current portion of long-term debt (18,350) (18,350) Less: deferred debt issuance costs (9,068) (11,386) Total long-term debt $ 2,270,901 $ 2,285,341 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 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, 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. The Incremental Term Loan was issued in an original aggregate principal amount of $935.0 million and included an original issue discount of 0.50%, which is being amortized over the term of the loan. The Incremental Term Loan has the same maturity date and interest rate as the Initial Term Loan and requires quarterly principal payments of $2.34 million. Our 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, in each case depending on our total net leverage ratio. Based on our leverage ratio as of September 30, 2019, the borrowing margin for the three month period ending December 31, 2019 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 September 30, 2019, borrowings of $45.0 million were outstanding under the revolving credit facility, which consisted of LIBOR-based borrowings of $29.0 million and alternate base rate borrowings of $16.0 million. At December 31, 2018, there were borrowings of $22.0 million outstanding under the revolving credit facility, which consisted of LIBOR-based borrowings of $10.0 million and alternate base rate borrowings of $12.0 million. Stand-by letters of credit of $16.0 million were outstanding under our revolving credit facility as of September 30, 2019. The stand-by letters of credit are renewable annually and reduce the borrowing availability under the revolving credit facility. As of September 30, 2019, $49.0 million was available for borrowing under the revolving credit facility. The weighted-average interest rate on outstanding borrowings under our credit facility was 5.10% and 5.54% as of September 30, 2019 and December 31, 2018, respectively. Interest is payable at least quarterly. 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 certain 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. Among other things, it will be an event of default if our total net leverage ratio or interest coverage ratio as of the end of any fiscal quarter is greater than 5.25:1.00 or less than 2.25:1.00, respectively. As of September 30, 2019, our total net leverage ratio under the Credit Agreement was 4.45:1.00 and our interest coverage ratio was 3.69:1.00. As of September 30, 2019, we were in compliance with the Credit Agreement covenants. 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 the majority of our wholly-owned subsidiaries have fully and unconditionally guaranteed the Senior Notes. The Senior Notes are senior unsecured obligations of the Company. During the quarter and nine months ended September 30, 2019, we repurchased $23.1 million and $27.7 million, respectively, of the aggregate principal amount of the Senior Notes. In connection with the partial repurchase of the Senior Notes, we paid $21.7 million and $26.0 million and recognized a gain on extinguishment of debt of $1.1 million and $1.4 million during the quarter and nine months ended September 30, 2019, respectively. 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. As of September 30, 2019, the Company was in compliance with all terms, conditions and covenants under the indenture governing the Senior Notes. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 7. 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. Derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets. We may designate certain of our interest rate swaps as cash flow hedges of our expected future interest payments. For derivative instruments designated as a cash flow hedge, 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. 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, including those that have been de-designated, 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 condensed consolidated statements of cash flows. The following interest rate swaps were outstanding as of September 30, 2019: Notional (In thousands) Amount 2019 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 705,000 Accrued expense $ (3,352) Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (21,302) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (7,168) Total Fair Values $ (31,822) Our interest rate swap agreements mature on various dates between July 2020 and July 2023. The forward-starting interest rate swap agreement has a term of one year and becomes effective in July 2020. The following interest rate swaps were outstanding as of December 31, 2018: Notional (In thousands) Amount 2018 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 650,000 Prepaid expenses and other current assets $ 2,465 Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other assets 1,524 Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (5,698) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (949) Total Fair Values $ (2,658) 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. During the quarter ended March 31, 2018, we entered into an interest rate swap agreement with a notional value of $500.0 million and a term of five years. The interest rate swap agreement was designated as a cash flow hedge. On March 12, 2018, we completed a syndication of a portion of the $500.0 million interest rate swap agreement with five new counterparties. On the date of the syndication, the interest rate swap agreements were de-designated due to changes in critical terms as a result of the syndication. Prior to de-designation, the change in fair value of the interest rate swap was recognized in AOCI. 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 interest rate swap agreements. Changes in fair value of the de-designated swaps were immediately recognized in earnings as interest expense prior to the re-designation date. During the quarter ended June 30, 2018, the interest rate swap agreements were re-designated as a cash flow hedge. During the nine months ended September 30, 2018, a loss of $2.5 million was recognized in interest expense for the change in fair value of the de-designated swaps. As of September 30, 2019 and December 31, 2018, the total pre-tax unrealized gain (loss) related to our interest rate swap agreements included in AOCI was $(26.7) million and $3.2 million, respectively. From the balance in AOCI as of September 30, 2019, we expect to recognize a loss of approximately $6.5 million in earnings in the next twelve months. Information regarding our cash flow hedge transactions is as follows: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2019 Unrealized loss recognized in AOCI, pretax $ (2,856) $ (28,349) Deferred gain (loss) reclassified from AOCI to interest expense $ (176) $ 700 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
LEASES | 8. LEASES We have entered into various leases for certain facilities, land, underground conduit, colocations, and equipment used in our operations. For leases with a term greater than 12 months, we recognize a right-to-use asset and a lease liability based on the present value of lease payments over the lease term. The leases have remaining lease terms of one year to 90 years and may include one or more options to renew, which can extend the lease term from one to five years or more. Operating lease expense is recognized on a straight-line basis over the lease term. As most of our leases do not provide a readily determinable implicit rate, we use our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. We use the implicit rate when a rate is readily determinable. Our leases may also include scheduled rent increases and options to extend or terminate the lease which is included in the determination of lease payments when it is reasonably certain that we will exercise that option. For all asset classes, we do not separate lease and nonlease components, as such we account for the components as a single lease component. Leases with an initial term of 12 months or less are not recognized on the balance sheet and the expense for these short-term leases is recognized on a straight-line basis over the lease term. Short-term lease expense, which is recognized in cost of services and products, was not material to the condensed consolidated statements of operations for the quarter and nine months ended September 30, 2019. Variable lease payments are expensed as incurred. The following table summarizes the components of our lease right-of use assets and liabilities at September 30, 2019: (In thousands) Balance Sheet Classification September 30, 2019 Operating leases Operating lease right-of-use assets Other assets $ 27,586 Current lease liabilities Accrued expense $ (6,454) Noncurrent lease liabilities Other long-term liabilities $ (21,276) Finance leases Finance lease right-of-use assets, net of accumulated depreciation of $44,582 Property, plant and equipment, net $ 21,826 Current lease liabilities Current portion of long-term debt and finance lease obligations $ (9,519) Noncurrent lease liabilities Long-term debt and finance lease obligations $ (14,276) Weighted-average remaining lease term Operating leases 7.4 years Finance leases 4.3 years Weighted-average discount rate Operating leases 7.20 % Finance leases 7.30 % The components of lease expense for the quarter and nine months ended September 30, 2019 consisted of the following: Quarter Ended Nine Months Ended (In thousands) September 30, 2019 September 30, 2019 Finance lease cost: Amortization of right-of-use assets $ 2,533 $ 9,563 Interest on lease liabilities 541 1,601 Operating lease cost 1,236 5,661 Variable lease cost 518 1,894 Total lease cost $ 4,828 $ 18,719 The following table presents supplemental cash flow information related to leases for the nine-month period ended September 30, 2019: Nine Months Ended (In thousands) September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 6,550 Operating cash flows for finance leases 1,601 Financing cash flows for finance leases 9,743 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 1,786 Finance leases 3,176 At September 30, 2019, the aggregate maturities of our lease liabilities were as follows: (In thousands) Operating Leases Finance Leases 2019 $ 2,135 $ 3,153 2020 7,887 9,626 2021 5,726 4,878 2022 4,992 2,917 2023 3,329 1,489 Thereafter 12,329 6,405 Total lease payments 36,398 28,468 Less: Interest (8,668) (4,673) $ 27,730 $ 23,795 Lessor We have various arrangements for use of our network assets including tower space, certain colocation and dark fiber arrangements for which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these types of leases is not material. Occasionally, we enter into dark fiber arrangements where the term may be for a major part of the asset’s remaining economic life, which meet the criteria for sales-type lease classification. During the nine months ended September 30, 2019, we entered into a dark fiber indefeasible right of use arrangement for exclusive access to and unrestricted use of specific dark fibers. The arrangement was classified as a sales-type lease as the term of the arrangement is for a major part of the assets’ remaining economic life. During the nine months ended September 30, 2019, we recognized revenue of $0.6 million and a gain of $0.4 million related to this arrangement. As part of the adoption of ASU 2016-02, we elected the practical expedient to combine lease and non-lease components in our lessor arrangements. We have arrangements where the non-lease component associated with the lease component is the predominant component in the contract, such as in revenue contracts that involve the customer leasing equipment from us. In such cases, we account for the combined component in accordance with ASC 606 as the service component is the predominant component in the contract. |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2019 | |
EQUITY | |
EQUITY | 9. EQUITY Dividends Our Board of Directors declared quarterly dividends of approximately $0.38738 per share during 2018. On February 18, 2019, the Board of Directors declared a dividend of approximately $0.38738 per share, paid on May 1, 2019 to stockholders of record on April 15, 2019. On April 25, 2019, we announced the elimination of the payment of quarterly dividends on our stock beginning in the second quarter of 2019. Future dividend payments, if any, are at the discretion of our Board of Directors. Changes in our dividend program will depend on our earnings, capital requirements, financial condition, debt covenant compliance, expected cash needs and other factors considered relevant by our Board of Directors. 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 April 30, 2018, the shareholders approved an amendment to the Plan to increase by 2,000,000 the number of shares of our common stock authorized for issuance under the Plan and extend the term of the Plan through April 30, 2028. With the amendment, approximately 4,650,000 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 in effect until April 30, 2028. The following table summarizes total compensation costs recognized for share-based payments during the quarters and nine-month periods ended September 30, 2019 and 2018: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Restricted stock $ 1,094 $ 979 $ 3,077 $ 2,393 Performance shares 834 559 2,163 1,361 Total $ 1,928 $ 1,538 $ 5,240 $ 3,754 Share-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. As of September 30, 2019, total unrecognized compensation cost related to non-vested Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”) was $12.6 million and will be recognized over a weighted-average period of approximately 1.7 years. The following table summarizes the RSA and PSA activity for the nine-month period ended September 30, 2019: RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - December 31, 2018 338,771 $ 14.31 35,626 $ 21.97 Shares granted 551,214 $ 9.87 371,672 $ 9.86 Shares forfeited, cancelled or retired (25,363) $ 10.76 (8,755) $ 12.95 Non-vested shares outstanding - September 30, 2019 864,622 $ 11.58 398,543 $ 13.29 Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component for the nine-month period ended September 30, 2019: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2018 $ (55,514) $ 2,302 $ (53,212) Other comprehensive loss before reclassifications — (20,945) (20,945) Cumulative adjustment upon adoption of ASU 2017-12 — (576) (576) Amounts reclassified from accumulated other comprehensive loss 2,246 (517) 1,729 Net current period other comprehensive income (loss) 2,246 (22,038) (19,792) Balance at September 30, 2019 $ (53,268) $ (19,736) $ (73,004) The following table summarizes reclassifications from accumulated other comprehensive loss for the quarters and nine-month periods ended September 30, 2019 and 2018: Quarter Ended September 30, Nine Months Ended September 30, Affected Line Item in the (In thousands) 2019 2018 2019 2018 Statement of Income Amortization of pension and post-retirement items: Prior service (cost) credit $ (799) $ 132 $ (2,396) $ 530 (a) Actuarial gain (loss) 549 (1,623) (642) (4,526) (a) Settlement loss — — — (46) (a) (250) (1,491) (3,038) (4,042) Total before tax 56 395 792 1,070 Tax benefit $ (194) $ (1,096) $ (2,246) $ (2,972) Net of tax Gain (Loss) on cash flow hedges: Interest rate derivatives $ (176) $ (1,159) $ 700 $ (2,961) Interest expense 46 304 (183) 775 Tax (expense) benefit $ (130) $ (855) $ 517 $ (2,186) Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and other post-retirement benefit plans. See Note 10 for further discussion regarding our pension and other post-retirement benefit plans. |
PENSION PLAN AND OTHER POST-RET
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 9 Months Ended |
Sep. 30, 2019 | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 10. PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS Defined Benefit Plans We sponsor three qualified defined benefit pension plans that are non-contributory covering substantially all of our hourly employees under collective bargaining agreements who fulfill minimum age and service requirements and certain salaried employees. The defined benefit pension plans are closed to all new entrants. In November 2018, a defined benefit pension plan was amended to freeze benefit accruals under the cash balance benefit plan for certain participants under collective bargaining agreements effective as of March 31, 2019. Consequently, as of April 1, 2019 all of our defined benefit pension plans are now frozen to all current employees, and no additional monthly pension benefits will accrue under those plans. We also have two non-qualified supplemental retirement plans (the “Supplemental Plans” and, together with the defined benefit pension plans, 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 are 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 table summarizes the components of net periodic pension cost for our Pension Plans for the quarters and nine-month periods ended September 30, 2019 and 2018: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Service cost $ 14 $ 1,412 $ 37 $ 4,482 Interest cost 7,520 7,223 22,842 21,509 Expected return on plan assets (8,604) (9,639) (25,947) (28,943) Net amortization loss 761 1,637 2,167 4,582 Net prior service cost (credit) amortization 31 (51) 92 (173) Settlement loss — — — 46 Net periodic pension (benefit) cost $ (278) $ 582 $ (809) $ 1,503 The components of net periodic pension cost other than the service cost component are included in other, net within other income (expense) in the condensed consolidated statements of operations. Other Non-qualified Deferred Compensation Agreements We are also 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 the 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 $0.3 million and $0.2 million for the nine-month periods ended September 30, 2019 and 2018, respectively. No payments were made during the quarters ended September 30, 2019 and 2018. The net present value of the remaining obligations was approximately $1.4 million and $1.6 million as of September 30, 2019 and December 31, 2018, respectively, and is included in pension and other post-retirement benefit obligations in the accompanying condensed consolidated balance sheets. We also maintain 25 life insurance policies on certain of the participating former directors and employees. We did not recognize any life insurance proceeds during the quarters and nine-month periods ended September 30, 2019 and 2018. The excess of the cash surrender value of the remaining life insurance policies over the notes payable balances related to these policies totaled $2.5 and $2.4 million as of September 30, 2019 and December 31, 2018, respectively. These amounts are included in investments in the accompanying condensed consolidated balance sheets. Cash principal payments for the policies and any proceeds from the policies are classified as operating activities in the condensed consolidated statements of cash flows. 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 are 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 Pension Plans for the sole purpose of providing payments of retiree medical benefits for this specific plan. The following table summarizes the components of the net periodic cost for our Post-retirement Plans for the quarters and nine-month periods ended September 30, 2019 and 2018: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Service cost $ 484 $ 31 $ 717 $ 285 Interest cost 884 996 3,173 3,053 Expected return on plan assets (47) (36) (134) (107) Net amortization gain (1,310) (14) (1,525) (56) Net prior service cost (credit) amortization 768 (81) 2,304 (357) Net periodic post-retirement benefit cost $ 779 $ 896 $ 4,535 $ 2,818 The components of net periodic post-retirement benefit cost other than the service cost component are included in other, net within other income (expense) in the condensed consolidated statements of operations. Contributions We expect to contribute approximately $27.5 million to our Pension Plans and $9.5 million to our Post-retirement Plans in 2019. As of September 30, 2019, we have contributed $21.7 million and $6.3 million of the annual contribution to the Pension Plans and Post-retirement Plans, respectively. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | 11. INCOME TAXES Our unrecognized tax benefits as of each of September 30, 2019 and December 31, 2018 were $4.9 million. The net amount of unrecognized tax benefits that, if recognized, would result in an impact to the effective tax rate is $4.7 million as of September 30, 2019 and December 31, 2018. We do not expect any material change in our unrecognized tax benefits during the remainder of 2019. Our practice is to recognize interest and penalties related to income tax matters in interest expense and selling, general and administrative expenses, respectively. As of September 30, 2019, 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 2016 through 2018. The periods subject to examination for our state returns are years 2015 through 2018. In addition, prior tax years may be subject to examination by federal or state taxing authorities if the Company’s net operating loss carryovers from those prior years are utilized in the future. We are currently under audit by state taxing authorities. 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. Our effective tax rate was 75.6% and 37.8% for the quarters ended September 30, 2019 and 2018, respectively and 28.8% and 32.1% for the nine-month periods ended September 30, 2019 and 2018, respectively. During the quarter ended September 30, 2019, we settled a state examination and recorded an increase of $0.6 million in state expense. During the quarter ended September 30, 2018, adjustments were made to the provisional estimates that were disclosed as of December 31, 2017 under Staff Accounting Bulletin No. 118 for the Tax Cuts and Jobs Act of 2017 that resulted in a $4.4 million decrease to our tax provision. The Company recorded additional purchase accounting tax adjustments outside the measurement period related to the acquisition of FairPoint Communications, Inc., which we acquired in July 2017 (“FairPoint”), that resulted in a $1.1 million increase to our tax provision. On July 31, 2018, we completed the sale of all the issued and outstanding stock of Peoples in a taxable transaction. We recorded an increase in income tax expense of $0.8 million to reflect the difference in the reported investment and the underlying tax basis. In addition, for the quarter and nine-month periods ended September 30, 2019 and 2018, the effective tax rate differed from the federal and state statutory rates due to various permanent income tax differences and differences in allocable income for the Company’s state tax filings. Exclusive of these adjustments, our effective tax rate for the quarters and nine-month periods ended September 30, 2019 and 2018 would have been approximately 35.4% and 26.8% and approximately 32.1% and 27.2%, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Litigation, Regulatory Proceedings and Other Contingencies Local Switching Support In 2015, our subsidiary, FairPoint, filed a petition (the “Petition”) with the Federal Communications Commission (“FCC”) asking the FCC to direct National Exchange Carrier Association (“NECA”) to stop subtracting frozen Local Switching Support (“LSS”) from FairPoint’s intercarrier compensation (“ICC”) Eligible Recovery for FairPoint’s rate of return Incumbent Local Exchange Carriers (“ILECs”) that participate in the NECA pooling process. This issue is unique to rate of return affiliates of price cap carriers because such companies are considered price cap carriers for the FCC’s Connect America Fund (“CAF”) funding, but remain rate of return for ICC purposes. Effective January 1, 2012, FairPoint rate of return ILECs were placed under the price cap CAF Phase I interim support mechanism, whereby the ILECs continued to receive frozen Universal Service Fund (“USF”) support for all forms of USF support received during 2011, including LSS. The rate of return rules for ICC included LSS support in that mechanism as well; therefore, NECA subtracted the frozen LSS support from the ICC Eligible Recovery amounts in accordance with FCC rules prohibiting duplicate recovery. When FairPoint accepted CAF Phase II support effective January 1, 2015, there was no longer any duplicate support and FairPoint requested NECA to stop subtracting LSS from FairPoint’s ICC Eligible Recovery. NECA declined to make that change, which led to FairPoint filing the Petition with the FCC asking the FCC to direct NECA to comply with FCC rules on ICC Eligible Recovery for rate of return ILECs. This issue also applies to Consolidated’s operations in Minnesota, which are also rate of return ILECs associated with a price cap company. The combined LSS support for the period from January 1, 2015 through December 31, 2017 was approximately $12.3 million. Our ongoing ICC Eligible Recovery support for 2018 increased by approximately $3.6 million, and thereafter, is expected to decline by 5% per year through 2021. On March 31, 2018, we obtained the required votes necessary for an approved order and on April 19, 2018, the FCC issued its order approving our Petition. As a result, during the nine months ended September 30, 2018, we recognized subsidies revenue of $5.4 million and a contingent asset of $8.7 million as a pre-acquisition gain contingency for the FairPoint LSS revenue prior to the acquisition date. 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 subsidiaries 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. Certain of our FairPoint LEC entities filed counterclaims against Sprint and Verizon. Relatedly, in 2016, numerous LECs across the country, including a number of our legacy Consolidated and FairPoint LEC entities, filed complaints in various U.S. district courts against Level 3 Communications, LLC and certain of its affiliates (collectively, “Level 3”) for its failure to pay access charges for certain calls that the November 2015 Order held could be assessed by LECs. The Company’s LEC entities, including FairPoint, sought from Level 3 a total amount of at least $2.3 million, excluding 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, which the November 2015 Order rejected. On March 22, 2017, the U.S. District Court denied Level 3’s Motion to Dismiss. On March 12, 2018, a motion for summary judgment was filed by various LECs with counterclaims against Verizon and Sprint. On March 26, 2018, a motion for summary judgment was filed by various LECs with claims against Level 3. On May 15, 2018, the U.S. District Court granted all pending motions for summary judgment against Sprint, Verizon, and Level 3, and directed the entry of formal judgments in these cases. On July 17, 2018, the U.S. District Court entered a judgment of $0.7 million in favor of our legacy Consolidated LEC entities and against Level 3. Level 3 filed a notice of appeal of this judgment with the U.S. Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) on July 24, 2018. On August 15, 2018, the U.S. District Court entered a judgment of over $1.2 million in favor of our FairPoint LEC entities and against Level 3. Level 3 filed a notice of appeal of this judgment with the Fifth Circuit on August 20, 2018. On September 21, 2018, all of our LECs entered into a settlement agreement with Level 3 to resolve the dispute with respect to all past-due amounts at issue in the litigation. The settlement did not result in a material impact to our financial statements. As part of the settlement, the parties filed on October 18, 2018 joint stipulations to dismiss with prejudice the related complaints by our LECs against Level 3 with the U.S. District Court and a joint motion to voluntarily dismiss the Level 3 appeal against our LECs with the Fifth Circuit. The Fifth Circuit granted this motion on October 25, 2018 by dismissing the Level 3 appeal. Formal judgments were entered in the Verizon and Sprint cases on June 7, 2018. Verizon and Sprint filed notices of appeal of these judgments with the Fifth Circuit on June 28 and June 29, 2018, respectively. Those appeals remain pending. 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. 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 and/or Audit Assessment Notices from the Commonwealth of Pennsylvania Department of Revenue (“DOR”) increasing the amounts owed for the Pennsylvania Gross Receipts Tax, and have had audits performed for the tax years 2008 through 2016. For our CCES and CCPA subsidiaries, the total additional tax liabilities calculated by the DOR auditors for the tax years 2008 through 2016, including interest, are approximately $6.1 million and $7.4 million, respectively. We filed Petitions for Reassessment with the DOR’s Board of Appeals for the tax years 2008 through 2016, contesting these audit assessments. These cases remain pending and are in various stages of appeal. In May 2017, we entered into an agreement to guarantee any potential liabilities to the DOR up to $5.0 million. We believe that certain of the DOR’s findings regarding CCPA’s and CCES’s additional tax liabilities for the tax years 2008 through 2016, for which we have filed appeals, continue to lack merit. However, 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 reduced tax liabilities for the tax years 2008 through 2013. The settlement offers were subject to negotiation with the Commonwealth of Pennsylvania, with final approvals required from the Pennsylvania Office of Attorney General and DOR. The approvals have been obtained and the necessary settlement documents drafted for our review. The Commonwealth Court of Pennsylvania has imposed a deadline in December 2019 for the parties to finalize their agreement and file stipulations for judgment. 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. Based on the initial settlement offers for the tax years 2008 through 2013 and the Company’s best estimate of the potential additional tax liabilities for the tax years 2014 through 2018, we have reserved $3.8 million and $1.8 million, including interest, for our CCES and CCPA subsidiaries, respectively. We expect a settlement with the DOR to be filed in November 2019 finalizing the filings for the tax years 2008 through 2013. We expect the filings for the tax years 2014 through 2018 to be settled at a later date similar to the initial settlement. We do not believe that the outcome of these claims will have a material adverse impact on our financial results or cash flows. 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. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2019 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 13. 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 September 30, 2019 and December 31, 2018, condensed consolidating statements of operations for the quarters and nine-month periods ended September 30, 2019 and 2018 and condensed consolidating statements of cash flows for the nine-month periods ended September 30, 2019 and 2018 for each of the Company (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 (In thousands) September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 6,167 $ 10 $ 1 $ — $ 6,178 Accounts receivable, net — — 117,070 8,936 (98) 125,908 Income taxes receivable 5,737 17,647 — — (12,091) 11,293 Prepaid expenses and other current assets — — 41,939 131 — 42,070 Total current assets 5,737 23,814 159,019 9,068 (12,189) 185,449 Property, plant and equipment, net — — 1,794,830 66,203 — 1,861,033 Intangibles and other assets: Investments — 8,863 103,514 — — 112,377 Investments in subsidiaries 3,558,290 3,516,368 16,724 — (7,091,382) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 180,378 — — 180,378 Other intangible assets — — 1,563 9,087 — 10,650 Advances due to/from affiliates, net — 2,339,203 849,545 104,831 (3,293,579) — Deferred income taxes 80,325 7,150 — — (87,475) — Other assets 3,011 — 54,562 567 — 58,140 Total assets $ 3,647,363 $ 5,895,398 $ 4,129,228 $ 255,937 $ (10,484,625) $ 3,443,301 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 32,241 $ — $ — $ 32,241 Advance billings and customer deposits — — 46,803 1,319 — 48,122 Accrued compensation — — 57,552 845 — 58,397 Accrued interest — 15,643 1,140 — — 16,783 Accrued expense 284 3,450 70,580 753 (98) 74,969 Current portion of long term debt and finance lease obligations — 18,350 9,351 168 — 27,869 Income tax payable — — 8,674 3,417 (12,091) — Total current liabilities 284 37,443 226,341 6,502 (12,189) 258,381 Long-term debt and finance lease obligations — 2,270,901 14,149 127 — 2,285,177 Advances due to/from affiliates, net 3,293,579 — — — (3,293,579) — Deferred income taxes — — 240,548 21,948 (87,475) 175,021 Pension and postretirement benefit obligations — — 273,755 12,891 — 286,646 Other long-term liabilities — 28,765 48,751 856 — 78,372 Total liabilities 3,293,863 2,337,109 803,544 42,324 (3,393,243) 3,083,597 Shareholders’ equity: Common Stock 721 — 17,411 30,000 (47,411) 721 Other shareholders’ equity 352,779 3,558,289 3,302,069 183,613 (7,043,971) 352,779 Total Consolidated Communications Holdings, Inc. shareholders’ equity 353,500 3,558,289 3,319,480 213,613 (7,091,382) 353,500 Noncontrolling interest — — 6,204 — — 6,204 Total shareholders’ equity 353,500 3,558,289 3,325,684 213,613 (7,091,382) 359,704 Total liabilities and shareholders’ equity $ 3,647,363 $ 5,895,398 $ 4,129,228 $ 255,937 $ (10,484,625) $ 3,443,301 Condensed Consolidating Balance Sheet (In thousands) December 31, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 9,616 $ — $ 1 $ (18) $ 9,599 Accounts receivable, net — — 122,743 10,430 (37) 133,136 Income taxes receivable 10,272 — 790 10 — 11,072 Prepaid expenses and other current assets — 2,465 41,547 324 — 44,336 Total current assets 10,272 12,081 165,080 10,765 (55) 198,143 Property, plant and equipment, net — — 1,861,009 66,117 — 1,927,126 Intangibles and other assets: Investments — 8,673 102,180 — — 110,853 Investments in subsidiaries 3,587,612 3,505,477 15,949 — (7,109,038) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 228,959 — — 228,959 Other intangible assets — — 2,396 9,087 — 11,483 Advances due to/from affiliates, net — 2,379,079 760,310 97,898 (3,237,287) — Deferred income taxes 76,758 — — — (76,758) — Other assets — 1,524 18,237 651 3,011 23,423 Total assets $ 3,674,642 $ 5,906,834 $ 4,123,213 $ 250,699 $ (10,420,127) $ 3,535,261 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 32,502 $ — $ — $ 32,502 Advance billings and customer deposits — — 46,316 1,408 — 47,724 Dividends payable 27,579 — — — — 27,579 Accrued compensation — — 63,688 771 — 64,459 Accrued interest — 8,430 802 — — 9,232 Accrued expense 40 37 70,365 1,263 (55) 71,650 Current portion of long term debt and finance lease obligations — 18,350 11,968 150 — 30,468 Total current liabilities 27,619 26,817 225,641 3,592 (55) 283,614 Long-term debt and finance lease obligations — 2,285,341 17,988 256 — 2,303,585 Advances due to/from affiliates, net 3,237,287 — — — (3,237,287) — Deferred income taxes — 122 239,880 21,874 (73,747) 188,129 Pension and postretirement benefit obligations — — 295,815 18,319 — 314,134 Other long-term liabilities — 6,942 22,305 898 — 30,145 Total liabilities 3,264,906 2,319,222 801,629 44,939 (3,311,089) 3,119,607 Shareholders’ equity: Common Stock 712 — 17,411 30,000 (47,411) 712 Other shareholders’ equity 409,024 3,587,612 3,298,255 175,760 (7,061,627) 409,024 Total Consolidated Communications Holdings, Inc. shareholders’ equity 409,736 3,587,612 3,315,666 205,760 (7,109,038) 409,736 Noncontrolling interest — — 5,918 — — 5,918 Total shareholders’ equity 409,736 3,587,612 3,321,584 205,760 (7,109,038) 415,654 Total liabilities and shareholders’ equity $ 3,674,642 $ 5,906,834 $ 4,123,213 $ 250,699 $ (10,420,127) $ 3,535,261 Condensed Consolidating Statements of Operations (In thousands) Quarter Ended September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 324,546 $ 11,899 $ (3,119) $ 333,326 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 145,888 3,754 (3,006) 146,636 Selling, general and administrative expenses 2,115 — 65,975 2,123 (113) 70,100 Depreciation and amortization — — 90,690 2,358 — 93,048 Operating income (loss) (2,115) — 21,993 3,664 — 23,542 Other income (expense): Interest expense, net of interest income (52) (34,268) 42 28 — (34,250) Intercompany interest income (expense) — 14,727 (14,705) (22) — — Gain on extinguishment of debt — 1,121 — — — 1,121 Investment income — — 11,254 — — 11,254 Equity in earnings of subsidiaries, net 1,982 14,801 357 — (17,140) — Other, net — 8 (53) (29) — (74) Income (loss) before income taxes (185) (3,611) 18,888 3,641 (17,140) 1,593 Income tax expense (benefit) (442) (5,593) 6,134 1,105 — 1,204 Net income (loss) 257 1,982 12,754 2,536 (17,140) 389 Less: net income attributable to noncontrolling interest — — 132 — — 132 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 257 $ 1,982 $ 12,622 $ 2,536 $ (17,140) $ 257 Total comprehensive income (loss) attributable to common shareholders $ (1,529) $ 196 $ 12,741 $ 2,611 $ (15,548) $ (1,529) Quarter Ended September 30, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 337,963 $ 13,233 $ (3,132) $ 348,064 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 152,162 3,795 (3,015) 152,942 Selling, general and administrative expenses 1,702 — 80,661 3,009 (117) 85,255 Depreciation and amortization — — 106,625 2,494 — 109,119 Operating income (loss) (1,702) — (1,485) 3,935 — 748 Other income (expense): Interest expense, net of interest income (28) (34,199) 684 19 — (33,524) Intercompany interest income (expense) — 14,727 (14,710) (17) — — Investment income — — 8,675 — — 8,675 Equity in earnings of subsidiaries, net (13,645) 865 377 — 12,403 — Other, net — — 255 38 — 293 Income (loss) before income taxes (15,375) (18,607) (6,204) 3,975 12,403 (23,808) Income tax expense (benefit) (461) (4,962) (4,292) 722 — (8,993) Net income (loss) (14,914) (13,645) (1,912) 3,253 12,403 (14,815) Less: net income attributable to noncontrolling interest — — 99 — — 99 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (14,914) $ (13,645) $ (2,011) $ 3,253 $ 12,403 $ (14,914) Total comprehensive income (loss) attributable to common shareholders $ 185 $ 1,454 $ 7,090 $ 3,422 $ (11,966) $ 185 Nine Months Ended September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 978,534 $ 36,350 $ (9,377) $ 1,005,507 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 436,972 10,801 (9,038) 438,735 Selling, general and administrative expenses 5,782 (193) 210,282 7,083 (339) 222,615 Depreciation and amortization — — 282,282 7,313 — 289,595 Operating income (loss) (5,782) 193 48,998 11,153 — 54,562 Other income (expense): Interest expense, net of interest income (107) (102,984) (215) 36 — (103,270) Intercompany interest income (expense) — 44,181 (44,120) (61) — — Gain on extinguishment of debt — 1,370 — — — 1,370 Investment income — 190 30,415 — — 30,605 Equity in earnings of subsidiaries, net (10,109) 29,245 775 — (19,911) — Other, net 1 50 (3,086) (60) — (3,095) Income (loss) before income taxes (15,997) (27,755) 32,767 11,068 (19,911) (19,828) Income tax expense (benefit) (1,602) (17,646) 10,105 3,424 — (5,719) Net income (loss) (14,395) (10,109) 22,662 7,644 (19,911) (14,109) Less: net income attributable to noncontrolling interest — — 286 — — 286 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (14,395) $ (10,109) $ 22,376 $ 7,644 $ (19,911) $ (14,395) Total comprehensive income (loss) attributable to common shareholders $ (34,187) $ (29,901) $ 24,411 $ 7,855 $ (2,365) $ (34,187) Nine Months Ended September 30, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,021,141 $ 42,610 $ (9,427) $ 1,054,324 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 454,261 12,050 (9,095) 457,216 Selling, general and administrative expenses 4,570 — 239,236 9,461 (332) 252,935 Depreciation and amortization — — 321,246 7,513 — 328,759 Operating income (loss) (4,570) — 6,398 13,586 — 15,414 Other income (expense): Interest expense, net of interest income (81) (100,507) 1,397 112 — (99,079) Intercompany interest income (expense) — 44,181 (44,128) (53) — — Investment income — 178 28,821 — — 28,999 Equity in earnings of subsidiaries, net (33,396) 8,188 5,147 — 20,061 — Other, net — — 765 78 — 843 Income (loss) before income taxes (38,047) (47,960) (1,600) 13,723 20,061 (53,823) Income tax expense (benefit) (1,192) (14,564) (4,769) 3,275 — (17,250) Net income (loss) (36,855) (33,396) 3,169 10,448 20,061 (36,573) Less: net income attributable to noncontrolling interest — — 282 — — 282 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (36,855) $ (33,396) $ 2,887 $ 10,448 $ 20,061 $ (36,855) Total comprehensive income (loss) attributable to common shareholders $ (9,928) $ (6,469) $ 13,523 $ 10,957 $ (18,011) $ (9,928) Condensed Consolidating Statements of Cash Flows (In thousands) Nine Months Ended September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (847) $ (47,687) $ 283,255 $ 13,916 $ 248,637 Cash flows from investing activities: Purchases of property, plant and equipment — — (177,459) (6,884) (184,343) Proceeds from sale of assets — — 14,332 11 14,343 Distributions from investments — — 329 — 329 Other — — (450) — (450) Net cash used in investing activities — — (163,248) (6,873) (170,121) Cash flows from financing activities: Proceeds from issuance of long-term debt — 152,000 — — 152,000 Payment of finance lease obligation — — (9,632) (111) (9,743) Payment on long-term debt — (142,763) — — (142,763) Repurchase of senior notes — (25,986) — — (25,986) Dividends on common stock (55,445) — — — (55,445) Transactions with affiliates, net 56,292 60,987 (110,347) (6,932) — Net cash provided by (used in) financing activities 847 44,238 (119,979) (7,043) (81,937) Increase (decrease) in cash and cash equivalents — (3,449) 28 — (3,421) Cash and cash equivalents at beginning of period — 9,616 (18) 1 9,599 Cash and cash equivalents at end of period $ — $ 6,167 $ 10 $ 1 $ 6,178 Nine Months Ended September 30, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ 8,584 $ (41,559) $ 285,975 $ 11,036 $ 264,036 Cash flows from investing activities: Purchases of property, plant and equipment — — (178,774) (7,991) (186,765) Proceeds from sale of assets — — 1,636 4 1,640 Proceeds from business dispositions 20,999 — — — 20,999 Distributions from investments — — 233 — 233 Net cash used in investing activities 20,999 — (176,905) (7,987) (163,893) Cash flows from financing activities: Proceeds from issuance of long-term debt — 136,587 — — 136,587 Payment of finance lease obligation — — (9,434) (156) (9,590) Payment on long-term debt — (156,350) — — (156,350) Dividends on common stock (82,621) — — — (82,621) Transactions with affiliates, net 53,038 54,463 (104,609) (2,892) — Net cash provided by (used in) financing activities (29,583) 34,700 (114,043) (3,048) (111,974) Increase (decrease) in cash and cash equivalents — (6,859) (4,973) 1 (11,831) Cash and cash equivalents at beginning of period — 8,919 6,738 — 15,657 Cash and cash equivalents at end of period $ — $ 2,060 $ 1,765 $ 1 $ 3,826 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Accounting | Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “our” or “us”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide communication solutions to consumer, commercial and carrier customers across a 23-state service area. Leveraging our advanced fiber network spanning more than 37,000 fiber route miles, we offer residential high-speed 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 September 30, 2019, we had approximately 854,000 voice connections, 784,000 data connections and 86,000 video connections. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2018 Annual Report on Form 10-K filed with the SEC. |
Divestitures | Divestitures On July 31, 2018, we completed the sale of all of the issued and outstanding stock of our subsidiaries Peoples Mutual Telephone Company and Peoples Mutual Long Distance Company (collectively, “Peoples”) for total cash proceeds of approximately $21.0 million, net of certain contractual and customary working capital adjustments. Peoples operates as a local exchange carrier in Virginia and provides telecommunications services to residential and business customers. The sale of Peoples has not been reported as discontinued operations in the condensed consolidated statements of operations as the annual revenue of these operations is less than 1% of the consolidated operating revenues. During the quarter and nine months ended September 30, 2018, we recognized a loss of $0.2 million on the sale, net of selling costs, which is included in selling, general and administrative expense in the condensed consolidated statements of operations. We recognized a taxable gain on the transaction resulting in current income tax expense of $0.8 during the quarter and nine months ended September 30, 2018 to reflect the tax impact of the divestiture. |
Goodwill | Goodwill Goodwill is evaluated for impairment annually as of November 30 of each year or more frequently if an event occurs or circumstances change that would indicate potential impairment. At September 30, 2019 and December 31, 2018, the carrying value of goodwill was $1,035.3 million. Subsequent to September 30, 2019, the price of our common stock sustained historically low trading prices. The decline in the market valuation of our common stock could impact the assumptions used in our annual evaluation of our indefinite-lived assets, including goodwill and trade names. We will continue to monitor revenue and expense trends impacting our expected cash flows, interest rates and other key inputs used to estimate the fair value of these assets, which will be incorporated into our annual impairment assessment in November 2019. The goodwill impairment test will be performed by comparing the fair value of the single reporting unit with its carrying value. An impairment of goodwill would be recognized if it is determined that the carrying value of the reporting unit exceeds its fair value. The fair value of the reporting unit could be adversely affected by the decline or further declines in the Company’s stock price or a significant deterioration of the operating results of the Company, which could result in a potential goodwill impairment charge during the fourth quarter of 2019 upon completion of our annual assessment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02”), Leases As part of the adoption, we elected the package of practical expedients permitted under the new lease standard, which among other things, allows us to carry forward the historical lease classification. As a result, there was no impact to opening retained earnings. We elected the practical expedient to combine lease and non-lease components, as well as the practical expedient related to land easements, which allows us to carry forward our accounting treatment for land easements in existing agreements. We also made an accounting policy election to not recognize right-of-use assets and lease liabilities on the balance sheet for leases with a term of 12 months or less and will recognize lease payments as an expense on a straight-line basis over the lease term. The adoption of the new lease standard resulted in the recognition of right-of-use assets and lease liabilities of approximately $30.9 million for historical operating leases, while our accounting for historical finance leases remained substantially unchanged. The adoption of the new lease standard did not have a material impact on our consolidated statements of operations, consolidated statements of cash flows or our debt-covenant compliance under our current agreements. For additional information on leases and the impact of the new lease standard, refer to Note 8. Effective January 1, 2019, we adopted ASU No. 2018-07 (“ASU 2018-07”), Improvements to Nonemployee Share-Based Payment Accounting Effective January 1, 2019, we adopted ASU No. 2018-02 (“ASU 2018-02”), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Effective January 1, 2019, we adopted ASU No. 2017-12 (“ASU 2017-12”), Targeted Improvements to Accounting for Hedging Activities cumulative adjustment of $0.6 million, net of tax, from accumulated other comprehensive income (loss) to opening retained earnings. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements and related disclosures. In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-15 (“ASU 2018-15”), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract In August 2018, the FASB issued ASU No. 2018-14 (“ASU 2018-14”), Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans In June 2016, the FASB issued ASU No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments |
Reclassifications | Reclassifications Certain amounts in our 2018 condensed consolidated financial statements have been reclassified to conform to the current year presentation. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
REVENUE | |
Schedule of disaggregation of revenue | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Operating Revenues Commercial and carrier: Data and transport services (includes VoIP) $ 88,756 $ 87,633 $ 265,420 $ 261,261 Voice services 46,606 50,091 141,812 153,574 Other 11,828 13,906 40,394 40,006 147,190 151,630 447,626 454,841 Consumer: Broadband (VoIP and Data) 65,456 63,865 192,609 189,521 Video services 20,463 21,790 61,540 66,689 Voice services 45,487 50,757 136,601 154,435 131,406 136,412 390,750 410,645 Subsidies 18,025 19,189 54,318 65,423 Network access 34,211 38,147 105,000 115,200 Other products and services 2,494 2,686 7,813 8,215 Total operating revenues $ 333,326 $ 348,064 $ 1,005,507 $ 1,054,324 |
Schedule of receivables, contract assets and contract liabilities | Quarter Ended September 30, (In thousands) 2019 2018 Accounts receivable, net $ 125,908 $ 143,077 Contract assets 17,578 9,912 Contract liabilities 52,709 54,584 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of basic and diluted EPS | Quarter Ended Nine Months Ended September 30, September 30, (In thousands, except per share amounts) 2019 2018 2019 2018 Net income (loss) $ 389 $ (14,815) $ (14,109) $ (36,573) Less: net income attributable to noncontrolling interest 132 99 286 282 Income (loss) attributable to common shareholders before allocation of earnings to participating securities 257 (14,914) (14,395) (36,855) Less: earnings allocated to participating securities 5 221 462 663 Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ 252 $ (15,135) $ (14,857) $ (37,518) Weighted-average number of common shares outstanding 70,813 70,598 70,813 70,598 Net income (loss) per common share attributable to common shareholders - basic and diluted $ — $ (0.21) $ (0.21) $ (0.53) |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
INVESTMENTS | |
Schedule of investments | September 30, December 31, (In thousands) 2019 2018 Cash surrender value of life insurance policies $ 2,474 $ 2,371 Investments at cost: 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 8,910 9,051 Other 298 298 Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) 19,511 17,800 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,689 7,786 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 29,095 29,147 Totals $ 112,377 $ 110,853 |
Summary of combined unaudited results of operations and financial position of equity investments | The combined unaudited results of operations of our three equity investments in the cellular limited partnerships are summarized below: Nine Months Ended September 30, (In thousands) 2019 2018 Total revenues $ 256,822 $ 255,161 Income from operations 75,258 75,191 Net income before taxes 74,517 74,280 Net income 74,517 74,280 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap assets and liabilities measured at fair value on a recurring basis | As of September 30, 2019 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ (3,352) $ — $ (3,352) $ — Long-term interest rate swap liabilities (28,470) — (28,470) — Total $ (31,822) $ — $ (31,822) $ — As of December 31, 2018 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap assets $ 2,465 $ — $ 2,465 $ — Long-term interest rate swap assets 1,524 — 1,524 — Long-term interest rate swap liabilities (6,647) — (6,647) — Total $ (2,658) $ — $ (2,658) $ — |
Schedule of other financial instruments that are not carried at fair value but which require fair value disclosure | As of September 30, 2019 As of December 31, 2018 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,298,319 $ 2,176,254 $ 2,315,077 $ 2,155,127 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | September 30, December 31, (In thousands) 2019 2018 Senior secured credit facility: Term loans, net of discounts of $5,955 and $6,994 at September 30, 2019 and December 31, 2018, respectively $ 1,783,345 $ 1,796,068 Revolving loan 45,000 22,000 6.50% Senior notes due 2022, net of discount of $2,312 and $2,991 at September 30, 2019 and December 31, 2018, respectively 469,974 497,009 2,298,319 2,315,077 Less: current portion of long-term debt (18,350) (18,350) Less: deferred debt issuance costs (9,068) (11,386) Total long-term debt $ 2,270,901 $ 2,285,341 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | The following interest rate swaps were outstanding as of September 30, 2019: Notional (In thousands) Amount 2019 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 705,000 Accrued expense $ (3,352) Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (21,302) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (7,168) Total Fair Values $ (31,822) Our interest rate swap agreements mature on various dates between July 2020 and July 2023. The forward-starting interest rate swap agreement has a term of one year and becomes effective in July 2020. The following interest rate swaps were outstanding as of December 31, 2018: Notional (In thousands) Amount 2018 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 650,000 Prepaid expenses and other current assets $ 2,465 Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other assets 1,524 Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (5,698) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (949) Total Fair Values $ (2,658) |
Schedule of gains and losses on cash flow hedge transactions | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2019 Unrealized loss recognized in AOCI, pretax $ (2,856) $ (28,349) Deferred gain (loss) reclassified from AOCI to interest expense $ (176) $ 700 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
LEASES | |
Summary of components of lease right-of-use assets and liabilities | (In thousands) Balance Sheet Classification September 30, 2019 Operating leases Operating lease right-of-use assets Other assets $ 27,586 Current lease liabilities Accrued expense $ (6,454) Noncurrent lease liabilities Other long-term liabilities $ (21,276) Finance leases Finance lease right-of-use assets, net of accumulated depreciation of $44,582 Property, plant and equipment, net $ 21,826 Current lease liabilities Current portion of long-term debt and finance lease obligations $ (9,519) Noncurrent lease liabilities Long-term debt and finance lease obligations $ (14,276) Weighted-average remaining lease term Operating leases 7.4 years Finance leases 4.3 years Weighted-average discount rate Operating leases 7.20 % Finance leases 7.30 % |
Summary of components of lease expense | Quarter Ended Nine Months Ended (In thousands) September 30, 2019 September 30, 2019 Finance lease cost: Amortization of right-of-use assets $ 2,533 $ 9,563 Interest on lease liabilities 541 1,601 Operating lease cost 1,236 5,661 Variable lease cost 518 1,894 Total lease cost $ 4,828 $ 18,719 |
Schedule of supplemental cash flow information related to leases | Nine Months Ended (In thousands) September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 6,550 Operating cash flows for finance leases 1,601 Financing cash flows for finance leases 9,743 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 1,786 Finance leases 3,176 |
Schedule of maturities for operating leases | (In thousands) Operating Leases Finance Leases 2019 $ 2,135 $ 3,153 2020 7,887 9,626 2021 5,726 4,878 2022 4,992 2,917 2023 3,329 1,489 Thereafter 12,329 6,405 Total lease payments 36,398 28,468 Less: Interest (8,668) (4,673) $ 27,730 $ 23,795 |
Schedule of maturities for finance leases | (In thousands) Operating Leases Finance Leases 2019 $ 2,135 $ 3,153 2020 7,887 9,626 2021 5,726 4,878 2022 4,992 2,917 2023 3,329 1,489 Thereafter 12,329 6,405 Total lease payments 36,398 28,468 Less: Interest (8,668) (4,673) $ 27,730 $ 23,795 |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
EQUITY | |
Summary of total compensation costs recognized for share-based payments | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Restricted stock $ 1,094 $ 979 $ 3,077 $ 2,393 Performance shares 834 559 2,163 1,361 Total $ 1,928 $ 1,538 $ 5,240 $ 3,754 |
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 - December 31, 2018 338,771 $ 14.31 35,626 $ 21.97 Shares granted 551,214 $ 9.87 371,672 $ 9.86 Shares forfeited, cancelled or retired (25,363) $ 10.76 (8,755) $ 12.95 Non-vested shares outstanding - September 30, 2019 864,622 $ 11.58 398,543 $ 13.29 |
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, 2018 $ (55,514) $ 2,302 $ (53,212) Other comprehensive loss before reclassifications — (20,945) (20,945) Cumulative adjustment upon adoption of ASU 2017-12 — (576) (576) Amounts reclassified from accumulated other comprehensive loss 2,246 (517) 1,729 Net current period other comprehensive income (loss) 2,246 (22,038) (19,792) Balance at September 30, 2019 $ (53,268) $ (19,736) $ (73,004) |
Summary of reclassifications from accumulated other comprehensive loss | |
PENSION PLAN AND OTHER POST-R_2
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Service cost $ 14 $ 1,412 $ 37 $ 4,482 Interest cost 7,520 7,223 22,842 21,509 Expected return on plan assets (8,604) (9,639) (25,947) (28,943) Net amortization loss 761 1,637 2,167 4,582 Net prior service cost (credit) amortization 31 (51) 92 (173) Settlement loss — — — 46 Net periodic pension (benefit) cost $ (278) $ 582 $ (809) $ 1,503 |
Post-retirement Benefit Obligations | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2019 2018 2019 2018 Service cost $ 484 $ 31 $ 717 $ 285 Interest cost 884 996 3,173 3,053 Expected return on plan assets (47) (36) (134) (107) Net amortization gain (1,310) (14) (1,525) (56) Net prior service cost (credit) amortization 768 (81) 2,304 (357) Net periodic post-retirement benefit cost $ 779 $ 896 $ 4,535 $ 2,818 |
CONDENSED CONSOLIDATING FINAN_2
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (In thousands) September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 6,167 $ 10 $ 1 $ — $ 6,178 Accounts receivable, net — — 117,070 8,936 (98) 125,908 Income taxes receivable 5,737 17,647 — — (12,091) 11,293 Prepaid expenses and other current assets — — 41,939 131 — 42,070 Total current assets 5,737 23,814 159,019 9,068 (12,189) 185,449 Property, plant and equipment, net — — 1,794,830 66,203 — 1,861,033 Intangibles and other assets: Investments — 8,863 103,514 — — 112,377 Investments in subsidiaries 3,558,290 3,516,368 16,724 — (7,091,382) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 180,378 — — 180,378 Other intangible assets — — 1,563 9,087 — 10,650 Advances due to/from affiliates, net — 2,339,203 849,545 104,831 (3,293,579) — Deferred income taxes 80,325 7,150 — — (87,475) — Other assets 3,011 — 54,562 567 — 58,140 Total assets $ 3,647,363 $ 5,895,398 $ 4,129,228 $ 255,937 $ (10,484,625) $ 3,443,301 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 32,241 $ — $ — $ 32,241 Advance billings and customer deposits — — 46,803 1,319 — 48,122 Accrued compensation — — 57,552 845 — 58,397 Accrued interest — 15,643 1,140 — — 16,783 Accrued expense 284 3,450 70,580 753 (98) 74,969 Current portion of long term debt and finance lease obligations — 18,350 9,351 168 — 27,869 Income tax payable — — 8,674 3,417 (12,091) — Total current liabilities 284 37,443 226,341 6,502 (12,189) 258,381 Long-term debt and finance lease obligations — 2,270,901 14,149 127 — 2,285,177 Advances due to/from affiliates, net 3,293,579 — — — (3,293,579) — Deferred income taxes — — 240,548 21,948 (87,475) 175,021 Pension and postretirement benefit obligations — — 273,755 12,891 — 286,646 Other long-term liabilities — 28,765 48,751 856 — 78,372 Total liabilities 3,293,863 2,337,109 803,544 42,324 (3,393,243) 3,083,597 Shareholders’ equity: Common Stock 721 — 17,411 30,000 (47,411) 721 Other shareholders’ equity 352,779 3,558,289 3,302,069 183,613 (7,043,971) 352,779 Total Consolidated Communications Holdings, Inc. shareholders’ equity 353,500 3,558,289 3,319,480 213,613 (7,091,382) 353,500 Noncontrolling interest — — 6,204 — — 6,204 Total shareholders’ equity 353,500 3,558,289 3,325,684 213,613 (7,091,382) 359,704 Total liabilities and shareholders’ equity $ 3,647,363 $ 5,895,398 $ 4,129,228 $ 255,937 $ (10,484,625) $ 3,443,301 Condensed Consolidating Balance Sheet (In thousands) December 31, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 9,616 $ — $ 1 $ (18) $ 9,599 Accounts receivable, net — — 122,743 10,430 (37) 133,136 Income taxes receivable 10,272 — 790 10 — 11,072 Prepaid expenses and other current assets — 2,465 41,547 324 — 44,336 Total current assets 10,272 12,081 165,080 10,765 (55) 198,143 Property, plant and equipment, net — — 1,861,009 66,117 — 1,927,126 Intangibles and other assets: Investments — 8,673 102,180 — — 110,853 Investments in subsidiaries 3,587,612 3,505,477 15,949 — (7,109,038) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 228,959 — — 228,959 Other intangible assets — — 2,396 9,087 — 11,483 Advances due to/from affiliates, net — 2,379,079 760,310 97,898 (3,237,287) — Deferred income taxes 76,758 — — — (76,758) — Other assets — 1,524 18,237 651 3,011 23,423 Total assets $ 3,674,642 $ 5,906,834 $ 4,123,213 $ 250,699 $ (10,420,127) $ 3,535,261 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 32,502 $ — $ — $ 32,502 Advance billings and customer deposits — — 46,316 1,408 — 47,724 Dividends payable 27,579 — — — — 27,579 Accrued compensation — — 63,688 771 — 64,459 Accrued interest — 8,430 802 — — 9,232 Accrued expense 40 37 70,365 1,263 (55) 71,650 Current portion of long term debt and finance lease obligations — 18,350 11,968 150 — 30,468 Total current liabilities 27,619 26,817 225,641 3,592 (55) 283,614 Long-term debt and finance lease obligations — 2,285,341 17,988 256 — 2,303,585 Advances due to/from affiliates, net 3,237,287 — — — (3,237,287) — Deferred income taxes — 122 239,880 21,874 (73,747) 188,129 Pension and postretirement benefit obligations — — 295,815 18,319 — 314,134 Other long-term liabilities — 6,942 22,305 898 — 30,145 Total liabilities 3,264,906 2,319,222 801,629 44,939 (3,311,089) 3,119,607 Shareholders’ equity: Common Stock 712 — 17,411 30,000 (47,411) 712 Other shareholders’ equity 409,024 3,587,612 3,298,255 175,760 (7,061,627) 409,024 Total Consolidated Communications Holdings, Inc. shareholders’ equity 409,736 3,587,612 3,315,666 205,760 (7,109,038) 409,736 Noncontrolling interest — — 5,918 — — 5,918 Total shareholders’ equity 409,736 3,587,612 3,321,584 205,760 (7,109,038) 415,654 Total liabilities and shareholders’ equity $ 3,674,642 $ 5,906,834 $ 4,123,213 $ 250,699 $ (10,420,127) $ 3,535,261 |
Schedule of condensed consolidating statements of operations | Condensed Consolidating Statements of Operations (In thousands) Quarter Ended September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 324,546 $ 11,899 $ (3,119) $ 333,326 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 145,888 3,754 (3,006) 146,636 Selling, general and administrative expenses 2,115 — 65,975 2,123 (113) 70,100 Depreciation and amortization — — 90,690 2,358 — 93,048 Operating income (loss) (2,115) — 21,993 3,664 — 23,542 Other income (expense): Interest expense, net of interest income (52) (34,268) 42 28 — (34,250) Intercompany interest income (expense) — 14,727 (14,705) (22) — — Gain on extinguishment of debt — 1,121 — — — 1,121 Investment income — — 11,254 — — 11,254 Equity in earnings of subsidiaries, net 1,982 14,801 357 — (17,140) — Other, net — 8 (53) (29) — (74) Income (loss) before income taxes (185) (3,611) 18,888 3,641 (17,140) 1,593 Income tax expense (benefit) (442) (5,593) 6,134 1,105 — 1,204 Net income (loss) 257 1,982 12,754 2,536 (17,140) 389 Less: net income attributable to noncontrolling interest — — 132 — — 132 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 257 $ 1,982 $ 12,622 $ 2,536 $ (17,140) $ 257 Total comprehensive income (loss) attributable to common shareholders $ (1,529) $ 196 $ 12,741 $ 2,611 $ (15,548) $ (1,529) Quarter Ended September 30, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 337,963 $ 13,233 $ (3,132) $ 348,064 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 152,162 3,795 (3,015) 152,942 Selling, general and administrative expenses 1,702 — 80,661 3,009 (117) 85,255 Depreciation and amortization — — 106,625 2,494 — 109,119 Operating income (loss) (1,702) — (1,485) 3,935 — 748 Other income (expense): Interest expense, net of interest income (28) (34,199) 684 19 — (33,524) Intercompany interest income (expense) — 14,727 (14,710) (17) — — Investment income — — 8,675 — — 8,675 Equity in earnings of subsidiaries, net (13,645) 865 377 — 12,403 — Other, net — — 255 38 — 293 Income (loss) before income taxes (15,375) (18,607) (6,204) 3,975 12,403 (23,808) Income tax expense (benefit) (461) (4,962) (4,292) 722 — (8,993) Net income (loss) (14,914) (13,645) (1,912) 3,253 12,403 (14,815) Less: net income attributable to noncontrolling interest — — 99 — — 99 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (14,914) $ (13,645) $ (2,011) $ 3,253 $ 12,403 $ (14,914) Total comprehensive income (loss) attributable to common shareholders $ 185 $ 1,454 $ 7,090 $ 3,422 $ (11,966) $ 185 Nine Months Ended September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 978,534 $ 36,350 $ (9,377) $ 1,005,507 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 436,972 10,801 (9,038) 438,735 Selling, general and administrative expenses 5,782 (193) 210,282 7,083 (339) 222,615 Depreciation and amortization — — 282,282 7,313 — 289,595 Operating income (loss) (5,782) 193 48,998 11,153 — 54,562 Other income (expense): Interest expense, net of interest income (107) (102,984) (215) 36 — (103,270) Intercompany interest income (expense) — 44,181 (44,120) (61) — — Gain on extinguishment of debt — 1,370 — — — 1,370 Investment income — 190 30,415 — — 30,605 Equity in earnings of subsidiaries, net (10,109) 29,245 775 — (19,911) — Other, net 1 50 (3,086) (60) — (3,095) Income (loss) before income taxes (15,997) (27,755) 32,767 11,068 (19,911) (19,828) Income tax expense (benefit) (1,602) (17,646) 10,105 3,424 — (5,719) Net income (loss) (14,395) (10,109) 22,662 7,644 (19,911) (14,109) Less: net income attributable to noncontrolling interest — — 286 — — 286 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (14,395) $ (10,109) $ 22,376 $ 7,644 $ (19,911) $ (14,395) Total comprehensive income (loss) attributable to common shareholders $ (34,187) $ (29,901) $ 24,411 $ 7,855 $ (2,365) $ (34,187) Nine Months Ended September 30, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,021,141 $ 42,610 $ (9,427) $ 1,054,324 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 454,261 12,050 (9,095) 457,216 Selling, general and administrative expenses 4,570 — 239,236 9,461 (332) 252,935 Depreciation and amortization — — 321,246 7,513 — 328,759 Operating income (loss) (4,570) — 6,398 13,586 — 15,414 Other income (expense): Interest expense, net of interest income (81) (100,507) 1,397 112 — (99,079) Intercompany interest income (expense) — 44,181 (44,128) (53) — — Investment income — 178 28,821 — — 28,999 Equity in earnings of subsidiaries, net (33,396) 8,188 5,147 — 20,061 — Other, net — — 765 78 — 843 Income (loss) before income taxes (38,047) (47,960) (1,600) 13,723 20,061 (53,823) Income tax expense (benefit) (1,192) (14,564) (4,769) 3,275 — (17,250) Net income (loss) (36,855) (33,396) 3,169 10,448 20,061 (36,573) Less: net income attributable to noncontrolling interest — — 282 — — 282 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (36,855) $ (33,396) $ 2,887 $ 10,448 $ 20,061 $ (36,855) Total comprehensive income (loss) attributable to common shareholders $ (9,928) $ (6,469) $ 13,523 $ 10,957 $ (18,011) $ (9,928) |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (In thousands) Nine Months Ended September 30, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (847) $ (47,687) $ 283,255 $ 13,916 $ 248,637 Cash flows from investing activities: Purchases of property, plant and equipment — — (177,459) (6,884) (184,343) Proceeds from sale of assets — — 14,332 11 14,343 Distributions from investments — — 329 — 329 Other — — (450) — (450) Net cash used in investing activities — — (163,248) (6,873) (170,121) Cash flows from financing activities: Proceeds from issuance of long-term debt — 152,000 — — 152,000 Payment of finance lease obligation — — (9,632) (111) (9,743) Payment on long-term debt — (142,763) — — (142,763) Repurchase of senior notes — (25,986) — — (25,986) Dividends on common stock (55,445) — — — (55,445) Transactions with affiliates, net 56,292 60,987 (110,347) (6,932) — Net cash provided by (used in) financing activities 847 44,238 (119,979) (7,043) (81,937) Increase (decrease) in cash and cash equivalents — (3,449) 28 — (3,421) Cash and cash equivalents at beginning of period — 9,616 (18) 1 9,599 Cash and cash equivalents at end of period $ — $ 6,167 $ 10 $ 1 $ 6,178 Nine Months Ended September 30, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ 8,584 $ (41,559) $ 285,975 $ 11,036 $ 264,036 Cash flows from investing activities: Purchases of property, plant and equipment — — (178,774) (7,991) (186,765) Proceeds from sale of assets — — 1,636 4 1,640 Proceeds from business dispositions 20,999 — — — 20,999 Distributions from investments — — 233 — 233 Net cash used in investing activities 20,999 — (176,905) (7,987) (163,893) Cash flows from financing activities: Proceeds from issuance of long-term debt — 136,587 — — 136,587 Payment of finance lease obligation — — (9,434) (156) (9,590) Payment on long-term debt — (156,350) — — (156,350) Dividends on common stock (82,621) — — — (82,621) Transactions with affiliates, net 53,038 54,463 (104,609) (2,892) — Net cash provided by (used in) financing activities (29,583) 34,700 (114,043) (3,048) (111,974) Increase (decrease) in cash and cash equivalents — (6,859) (4,973) 1 (11,831) Cash and cash equivalents at beginning of period — 8,919 6,738 — 15,657 Cash and cash equivalents at end of period $ — $ 2,060 $ 1,765 $ 1 $ 3,826 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) | Sep. 30, 2019stateitemmi |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of states | state | 23 |
Number of fiber route miles | mi | 37,000 |
Number of voice connections | 854,000 |
Number of data connections | 784,000 |
Number of video connections | 86,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Divestiture (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2018 |
Divestitures | |||
Proceeds from business dispositions | $ 20,999 | ||
Peoples | |||
Divestitures | |||
Income tax expense from divestiture | 800 | ||
Peoples | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Divestitures | |||
Loss on disposal | $ 200 | $ 200 | |
Loss on Disposal, Statements of Operations Location | us-gaap:SellingGeneralAndAdministrativeExpensesMember | us-gaap:SellingGeneralAndAdministrativeExpensesMember | |
Annual revenue from divestitures (as a percentage) | 1.00% | ||
Proceeds from business dispositions | $ 21,000 | ||
Income tax expense from divestiture | $ 800 | $ 800 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Goodwill (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Goodwill | $ 1,035,274 | $ 1,035,274 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Sep. 30, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment to retained earnings | $ (576) | |
Lease liabilities | 27,730 | |
ROU assets | $ 27,586 | |
ASU 2017-12 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment to retained earnings | $ (600) | |
ASU 2016-02 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease liabilities | 30,900 | |
ROU assets | $ 30,900 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 333,326 | $ 348,064 | $ 1,005,507 | $ 1,054,324 |
Receivables, contract assets and contract liabilities | ||||
Accounts receivable, net | 125,908 | 143,077 | 125,908 | 143,077 |
Contract assets | 17,578 | 9,912 | 17,578 | 9,912 |
Contract liabilities | 52,709 | 54,584 | 52,709 | 54,584 |
Recognized expenses related to deferred contract acquisition costs. | 1,700 | 800 | 4,400 | 1,800 |
Recognized revenue related to deferred revenue | 98,800 | 92,200 | $ 285,400 | 263,300 |
Revenue, Practical Expedient, Remaining Performance Obligation | true | |||
Minimum | ||||
Receivables, contract assets and contract liabilities | ||||
Payment term | 30 days | |||
Maximum | ||||
Receivables, contract assets and contract liabilities | ||||
Payment term | 60 days | |||
Commercial and carrier | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 147,190 | 151,630 | $ 447,626 | 454,841 |
Commercial and carrier - Data and transport services (including VoIP) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 88,756 | 87,633 | 265,420 | 261,261 |
Commercial and carrier - Voice services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 46,606 | 50,091 | 141,812 | 153,574 |
Commercial and carrier - Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 11,828 | 13,906 | 40,394 | 40,006 |
Subsidies | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 18,025 | 19,189 | 54,318 | 65,423 |
Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 131,406 | 136,412 | 390,750 | 410,645 |
Consumer - Broadband (VoIP and Data) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 65,456 | 63,865 | 192,609 | 189,521 |
Consumer - Video services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 20,463 | 21,790 | 61,540 | 66,689 |
Consumer - Voice services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 45,487 | 50,757 | 136,601 | 154,435 |
Network access | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 34,211 | 38,147 | 105,000 | 115,200 |
Other products and services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 2,494 | $ 2,686 | $ 7,813 | $ 8,215 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Basic and diluted earnings per share attributable to common shareholders | ||||||||
Net income (loss) | $ 389 | $ (7,312) | $ (7,186) | $ (14,815) | $ (10,560) | $ (11,198) | $ (14,109) | $ (36,573) |
Less: net income attributable to noncontrolling interest | 132 | 99 | 286 | 282 | ||||
Net income (loss) attributable to common shareholders | 257 | (14,914) | (14,395) | (36,855) | ||||
Less: earnings allocated to participating securities | 5 | 221 | 462 | 663 | ||||
Net income (loss) attributable to common shareholders, after earnings allocated to participating securities | $ 252 | $ (15,135) | $ (14,857) | $ (37,518) | ||||
Weighted-average number of common shares outstanding | 70,813 | 70,598 | 70,813 | 70,598 | ||||
Basic and diluted earnings (loss) per common share: | ||||||||
Net income (loss) per common share attributable to common shareholders - basic and diluted | $ (0.21) | $ (0.21) | $ (0.53) | |||||
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 1,300 | 700 | 1,100 | 500 |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Investments | |||||
Cash distributions received from partnerships treated as investments at cost | $ 6,100 | $ 3,100 | $ 14,400 | $ 12,200 | |
Investments | |||||
Cash surrender value of life insurance policies | 2,474 | 2,474 | $ 2,371 | ||
Total | $ 112,377 | $ 112,377 | $ 110,853 | ||
GTE Mobilnet of South Texas Limited Partnership | |||||
Investments | |||||
Ownership percentage of investments at cost | 2.34% | 2.34% | 2.34% | ||
Investments | |||||
Investments at cost | $ 21,450 | $ 21,450 | $ 21,450 | ||
Pittsburgh SMSA Limited Partnership | |||||
Investments | |||||
Ownership percentage of investments at cost | 3.60% | 3.60% | 3.60% | ||
Investments | |||||
Investments at cost | $ 22,950 | $ 22,950 | $ 22,950 | ||
CoBank, ACB Stock | |||||
Investments | |||||
Investments at cost | 8,910 | 8,910 | 9,051 | ||
Other | |||||
Investments | |||||
Investments at cost | $ 298 | $ 298 | $ 298 | ||
GTE Mobilnet of Texas RSA #17 Limited Partnership | |||||
Investments | |||||
Ownership percentage of equity method investee | 20.51% | 20.51% | 20.51% | ||
Investments | |||||
Equity method investments | $ 19,511 | $ 19,511 | $ 17,800 | ||
Pennsylvania RSA 6(I) Limited Partnership | |||||
Investments | |||||
Ownership percentage of equity method investee | 16.67% | 16.67% | 16.67% | ||
Investments | |||||
Equity method investments | $ 7,689 | $ 7,689 | $ 7,786 | ||
Pennsylvania RSA 6(II) Limited Partnership | |||||
Investments | |||||
Ownership percentage of equity method investee | 23.67% | 23.67% | 23.67% | ||
Investments | |||||
Equity method investments | $ 29,095 | $ 29,095 | $ 29,147 |
INVESTMENTS - Equity Method (De
INVESTMENTS - Equity Method (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018item | |
Investments | |||||
Number of entity's investments which is accounted for using equity method | item | 3 | 3 | 3 | ||
Cash distributions received from partnerships treated as equity method investees | $ 4,800 | $ 5,000 | $ 14,400 | $ 16,600 | |
Summary of unaudited summarized income statement information | |||||
Total revenues | 256,822 | 255,161 | |||
Income from operations | 75,258 | 75,191 | |||
Net income before taxes | 74,517 | 74,280 | |||
Net income | $ 74,517 | 74,280 | |||
ASC 606 Adjustments | ASU 2014-09 | |||||
Investments | |||||
Adjustment of partnership interests | $ 1,800 | $ 1,800 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value Measurements | ||
Current interest rate swap assets | $ 2,465 | |
Long-term interest rate swap assets | 1,524 | |
Current interest rate swap liabilities | $ (3,352) | |
Long-term interest rate swap liabilities | (28,470) | (6,647) |
Total | (31,822) | (2,658) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Current interest rate swap assets | 2,465 | |
Long-term interest rate swap assets | 1,524 | |
Current interest rate swap liabilities | (3,352) | |
Long-term interest rate swap liabilities | (28,470) | (6,647) |
Total | $ (31,822) | $ (2,658) |
FAIR VALUE MEASUREMENTS - Fin_2
FAIR VALUE MEASUREMENTS - Financial Instruments Not Carried at FV (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Fair Value Measurements | ||
Long-term debt | $ 2,298,319 | $ 2,315,077 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt | $ 2,176,254 | $ 2,155,127 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Dec. 21, 2016 | Jun. 08, 2015USD ($) | Dec. 31, 2017USD ($) | Oct. 31, 2016USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2019 | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Debt | |||||||||||||
Total long-term debt | $ 2,298,319 | $ 2,298,319 | $ 2,315,077 | ||||||||||
Less: current portion of long-term debt | (18,350) | (18,350) | (18,350) | ||||||||||
Less: deferred debt issuance costs | (9,068) | (9,068) | (11,386) | ||||||||||
Total long-term debt | $ 2,270,901 | $ 2,270,901 | 2,285,341 | ||||||||||
Leverage ratio | 3 | 4.45 | 4.45 | ||||||||||
Deferred debt issuance costs | $ 9,068 | $ 9,068 | 11,386 | ||||||||||
Dividend declared | $ 27,932 | $ 27,602 | $ 27,602 | $ 27,602 | |||||||||
Interest coverage ratio | 3.69 | 3.69 | |||||||||||
Repayments of senior notes | $ 21,700 | $ 25,986 | |||||||||||
Gain (loss) on extinguishment of debt | $ 1,121 | $ 1,370 | |||||||||||
Minimum | |||||||||||||
Debt | |||||||||||||
Interest coverage ratio | 2.25 | 2.25 | |||||||||||
Maximum | |||||||||||||
Debt | |||||||||||||
Leverage ratio for an event of default | 5.25 | 5.25 | |||||||||||
Senior Notes 6.50 Percent Due 2022 | |||||||||||||
Debt | |||||||||||||
Total long-term debt | $ 469,974 | $ 469,974 | 497,009 | ||||||||||
Unamortized discount | $ 2,312 | $ 2,312 | $ 2,991 | ||||||||||
Aggregate principal amount | $ 300,000 | $ 200,000 | |||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | |||||||||
Issue price as a percentage of par | 98.26% | ||||||||||||
Yield to maturity (as a percent) | 6.80% | ||||||||||||
Gross proceeds | $ 294,800 | $ 200,000 | |||||||||||
Repayments of senior notes | $ 23,100 | $ 27,700 | |||||||||||
Senior Secured Credit Facility | Weighted average | |||||||||||||
Debt | |||||||||||||
Weighted average interest rate (as a percent) | 5.10% | 5.54% | |||||||||||
Term Loan | |||||||||||||
Debt | |||||||||||||
Total long-term debt | 1,783,345 | $ 1,783,345 | $ 1,796,068 | ||||||||||
Unamortized discount | $ 2,300 | 5,955 | 5,955 | 6,994 | |||||||||
Aggregate principal amount | $ 900,000 | ||||||||||||
Quarterly principal payments required | $ 2,250 | ||||||||||||
Issue discount (as a percentage) | 0.25% | ||||||||||||
Term Loan | LIBOR | |||||||||||||
Debt | |||||||||||||
Margin (as a percent) | 3.00% | ||||||||||||
Term Loan | LIBOR | Minimum | |||||||||||||
Debt | |||||||||||||
Margin (as a percent) | 1.00% | ||||||||||||
Senior secured credit facility - revolving loan | |||||||||||||
Debt | |||||||||||||
Total long-term debt | 45,000 | $ 45,000 | 22,000 | ||||||||||
Maximum borrowing capacity of credit facility | $ 110,000 | ||||||||||||
Amounts outstanding | 45,000 | 45,000 | 22,000 | ||||||||||
Stand-by letter of credit outstanding | 16,000 | 16,000 | |||||||||||
Available borrowing capacity | 49,000 | 49,000 | |||||||||||
Senior secured credit facility - revolving loan | LIBOR | |||||||||||||
Debt | |||||||||||||
Amounts outstanding | 29,000 | $ 29,000 | 10,000 | ||||||||||
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 | $ 16,000 | $ 16,000 | $ 12,000 | ||||||||||
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% | ||||||||||||
Incremental Term Loan Facility | |||||||||||||
Debt | |||||||||||||
Aggregate principal amount | 935,000 | ||||||||||||
Quarterly principal payments required | $ 2,340 | ||||||||||||
Issue discount (as a percentage) | 0.50% | ||||||||||||
Incremental Term Loan Facility | Maximum | |||||||||||||
Debt | |||||||||||||
Additional borrowing capacity | $ 300,000 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2018USD ($)item | Sep. 30, 2018USD ($) | Jun. 30, 2020 | Sep. 30, 2019USD ($)item | Dec. 31, 2018USD ($) | Mar. 12, 2018USD ($) | |
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, derivative asset (liability) | $ (31,822) | $ (2,658) | ||||
Cash flow hedges | Interest rate swaps | ||||||
Derivatives | ||||||
Notional amount | $ 500,000 | $ 500,000 | ||||
Term of derivative contract | 5 years | |||||
Number of new counterparties | item | 5 | |||||
De-designated Hedges | Interest rate swaps | ||||||
Derivatives | ||||||
Loss recognized as an increase to interest expense | $ 2,500 | |||||
Prepaid expense and other current assets | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||||
Derivatives | ||||||
Notional amount | 650,000 | |||||
Prepaid expenses and other current assets | 2,465 | |||||
Other Assets. | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | ||||||
Derivatives | ||||||
Notional amount | 705,000 | |||||
Other assets | 1,524 | |||||
Accrued Expense | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||||
Derivatives | ||||||
Notional amount | 705,000 | |||||
Accrued expense | (3,352) | |||||
Other long-term liabilities | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||||
Derivatives | ||||||
Notional amount | 500,000 | 500,000 | ||||
Other long-term liabilities | (21,302) | (5,698) | ||||
Other long-term liabilities | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | ||||||
Derivatives | ||||||
Notional amount | 705,000 | 705,000 | ||||
Other long-term liabilities | $ (7,168) | $ (949) | ||||
Forecast | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | ||||||
Derivatives | ||||||
Term of derivative contract | 1 year |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Derivative Instruments | |||
Derivatives | |||
Deferred gain (losses) included in AOCI (pretax) | $ (26,700) | $ (26,700) | $ 3,200 |
Loss included in AOCI to be recognized in the next 12 months | (6,500) | ||
Cash flow hedges | |||
Derivatives | |||
Unrealized loss recognized in AOCI, pretax | (2,856) | (28,349) | |
Deferred gain (loss) reclassified from AOCI to interest expense | $ (176) | $ 700 |
LEASES (Details)
LEASES (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating lease right-of-use assets | $ 27,586 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets [Member] |
Current lease liabilities | $ (6,454) |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesMember |
Noncurrent lease liabilities | $ (21,276) |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | cnsl:OtherLongTermLiabilitiesMember |
Finance lease right-of-use assets, net of accumulated depreciation of $42,050 | $ 21,826 |
Finance Lease, Right-of-Use Asset, Accumulated Depreciation | $ 44,582 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentMember |
Current lease liabilities | $ (9,519) |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | cnsl:CurrentPortionOfLlongTermDebtAndFinanceLeaseObligationsMember |
Noncurrent lease liabilities | $ (14,276) |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | cnsl:LongTermDebtAndFinanceleaseObligations |
Operating leases, Weighted-average remaining lease term | 7 years 4 months 24 days |
Finance leases, Weighted-average remaining lease term | 4 years 3 months 18 days |
Operating leases, Weighted-average discount rate | 7.20% |
Finance leases, Weighted-average discount rate | 7.30% |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Operating Lease, Remaining Term of Contract | 1 year |
Operating Lease, Renewal Term | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Operating Lease, Remaining Term of Contract | 90 years |
Operating Lease, Renewal Term | 5 years |
LEASES - Components of lease ex
LEASES - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
LEASES | ||
Amortization of right-of-use assets | $ 2,533 | $ 9,563 |
Interest on lease liabilities | 541 | 1,601 |
Operating lease cost | 1,236 | 5,661 |
Variable lease cost | 518 | 1,894 |
Total lease cost | $ 4,828 | $ 18,719 |
LEASES - Supplemental cash info
LEASES - Supplemental cash information (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
LEASES | ||
Operating cash flows for operating leases | $ 6,550 | |
Operating cash flows for finance leases | 1,601 | |
Financing cash flows for finance leases | 9,743 | $ 9,590 |
Right-of-use assets obtained in exchange for new lease liabilities: Operating leases | 1,786 | |
Right-of-use assets obtained in exchange for new lease liabilities: Finance leases | $ 3,176 |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Operating Leases | |
2019 | $ 2,135 |
2020 | 7,887 |
2021 | 5,726 |
2022 | 4,992 |
2023 | 3,329 |
Thereafter | 12,329 |
Total lease payments | 36,398 |
Less: Interest | (8,668) |
Operating lease liabilities | 27,730 |
Finance Leases | |
2019 | 3,153 |
2020 | 9,626 |
2021 | 4,878 |
2022 | 2,917 |
2023 | 1,489 |
Thereafter | 6,405 |
Total lease payments | 28,468 |
Less: Interest | (4,673) |
Finance lease liabilities | $ 23,795 |
LEASES - Lessor (Details)
LEASES - Lessor (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Sales-type Lease, Lease Income [Abstract] | |
Lessor, revenue recognized | $ 0.6 |
Lessor gain | $ 0.4 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 18, 2019 | Apr. 30, 2018 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 |
Stock-based compensation plans | ||||||
Dividends declared per common share (in dollars per share) | $ 0.38738 | $ 0.39 | $ 0.39 | $ 1.16 | $ 0.38738 | |
Additional shares of common stock authorized | 2,000,000 | |||||
Shares of common stock authorized for issuance | 4,650,000 | |||||
Unrecognized share-based compensation | ||||||
Unrecognized compensation cost | $ 12.6 | |||||
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 | |||||
Restricted stock | ||||||
Shares | ||||||
Non-vested shares outstanding at the beginning of the period | 338,771 | |||||
Shares granted | 551,214 | |||||
Shares forfeited, cancelled or retired | (25,363) | |||||
Non-vested shares outstanding at the end of the period | 864,622 | 338,771 | ||||
Weighted Average Grant Date Fair Value | ||||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 14.31 | |||||
Shares granted (in dollars per share) | 9.87 | |||||
Shares forfeited, cancelled or retired (in dollars per share) | 10.76 | |||||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 11.58 | $ 14.31 | ||||
Performance shares | ||||||
Shares | ||||||
Non-vested shares outstanding at the beginning of the period | 35,626 | |||||
Shares granted | 371,672 | |||||
Shares forfeited, cancelled or retired | (8,755) | |||||
Non-vested shares outstanding at the end of the period | 398,543 | 35,626 | ||||
Weighted Average Grant Date Fair Value | ||||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 21.97 | |||||
Shares granted (in dollars per share) | 9.86 | |||||
Shares forfeited, cancelled or retired (in dollars per share) | 12.95 | |||||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 13.29 | $ 21.97 |
EQUITY - Compensation costs (De
EQUITY - Compensation costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Stock-based compensation plans | ||||
Stock-based compensation expense | $ 1,928 | $ 1,538 | $ 5,240 | $ 3,754 |
Restricted stock | ||||
Stock-based compensation plans | ||||
Stock-based compensation expense | 1,094 | 979 | 3,077 | 2,393 |
Performance shares | ||||
Stock-based compensation plans | ||||
Stock-based compensation expense | $ 834 | $ 559 | $ 2,163 | $ 1,361 |
EQUITY - Changes in AOCI (Detai
EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | |
Accumulated other comprehensive loss, net of tax, by component | |||||||
Balance at the beginning of the period | $ (53,212) | $ (53,212) | |||||
Other comprehensive loss before reclassifications | (20,945) | ||||||
Cumulative adjustment upon adoption of ASU 2017-12 | (576) | ||||||
Amounts reclassified from accumulated other comprehensive loss | 1,729 | ||||||
Net current period other comprehensive income (loss) | $ (1,786) | $ (11,560) | (6,446) | $ 15,099 | $ 5,904 | $ 5,924 | (19,792) |
Balance at the end of the period | (73,004) | (73,004) | |||||
Pension and Post-Retirement Obligations | |||||||
Accumulated other comprehensive loss, net of tax, by component | |||||||
Balance at the beginning of the period | (55,514) | (55,514) | |||||
Amounts reclassified from accumulated other comprehensive loss | 2,246 | ||||||
Net current period other comprehensive income (loss) | 2,246 | ||||||
Balance at the end of the period | (53,268) | (53,268) | |||||
Derivative Instruments | |||||||
Accumulated other comprehensive loss, net of tax, by component | |||||||
Balance at the beginning of the period | $ 2,302 | 2,302 | |||||
Other comprehensive loss before reclassifications | (20,945) | ||||||
Cumulative adjustment upon adoption of ASU 2017-12 | (576) | ||||||
Amounts reclassified from accumulated other comprehensive loss | (517) | ||||||
Net current period other comprehensive income (loss) | (22,038) | ||||||
Balance at the end of the period | $ (19,736) | $ (19,736) |
EQUITY - Reclassification from
EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
EQUITY | ||||||||
Income (loss) before income taxes | $ 1,593 | $ (23,808) | $ (19,828) | $ (53,823) | ||||
Interest expense | (34,250) | (33,524) | (103,270) | (99,079) | ||||
Tax benefit | (1,204) | 8,993 | 5,719 | 17,250 | ||||
Net income (loss) | 389 | $ (7,312) | $ (7,186) | (14,815) | $ (10,560) | $ (11,198) | (14,109) | (36,573) |
Pension and Post-Retirement Obligations | ||||||||
EQUITY | ||||||||
Prior service (cost) credit | (799) | 132 | (2,396) | 530 | ||||
Actuarial gain (loss) | 549 | (1,623) | (642) | (4,526) | ||||
Settlement loss | (46) | |||||||
Income (loss) before income taxes | (250) | (1,491) | (3,038) | (4,042) | ||||
Tax benefit | 56 | 395 | 792 | 1,070 | ||||
Net income (loss) | (194) | (1,096) | (2,246) | (2,972) | ||||
Derivative Instruments | ||||||||
EQUITY | ||||||||
Interest expense | (176) | (1,159) | 700 | (2,961) | ||||
Tax benefit | 46 | 304 | (183) | 775 | ||||
Net income (loss) | $ (130) | $ (855) | $ 517 | $ (2,186) |
PENSION PLANS AND OTHER POST-RE
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of net periodic pension cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Defined Benefit Plans | ||||
Components of net periodic pension costs | ||||
Service cost | $ 14 | $ 1,412 | $ 37 | $ 4,482 |
Interest cost | 7,520 | 7,223 | 22,842 | 21,509 |
Expected return on plan assets | (8,604) | (9,639) | (25,947) | (28,943) |
Net amortization loss (gain) | 761 | 1,637 | 2,167 | 4,582 |
Net prior service cost (credit) amortization | 31 | (51) | 92 | (173) |
Settlement loss | 46 | |||
Net periodic pension cost (benefit) | (278) | 582 | (809) | 1,503 |
Post-retirement Benefit Obligations | ||||
Components of net periodic pension costs | ||||
Service cost | 484 | 31 | 717 | 285 |
Interest cost | 884 | 996 | 3,173 | 3,053 |
Expected return on plan assets | (47) | (36) | (134) | (107) |
Net amortization loss (gain) | (1,310) | (14) | (1,525) | (56) |
Net prior service cost (credit) amortization | 768 | (81) | 2,304 | (357) |
Net periodic pension cost (benefit) | $ 779 | $ 896 | $ 4,535 | $ 2,818 |
PENSION PLANS AND OTHER POST-_2
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Non-qualified Deferred Comp Agreements (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)item | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Other Non-qualified Deferred Compensation Agreements | |||||
Minimum number of years benefits are payable | 5 years | ||||
Minimum age at which payments under deferred compensation agreements may begin | 55 years | ||||
Payment related to deferred compensation agreements | $ 0 | $ 0 | $ 300,000 | $ 200,000 | |
Net present value of the remaining obligations | 1,400,000 | $ 1,400,000 | $ 1,600,000 | ||
Number of life insurance policies | item | 25 | ||||
Excess of cash surrender value of remaining life insurance policies over notes payable | 2,500,000 | $ 2,500,000 | $ 2,400,000 | ||
Proceeds from life insurance policies | 0 | $ 0 | 0 | $ 0 | |
New benefits accrued | $ 0 | $ 0 |
PENSION PLANS AND OTHER POST-_3
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Contributions (Details) | 9 Months Ended |
Sep. 30, 2019USD ($)employeeitem | |
Defined benefit plans | |
Number of non-contributory qualified defined benefit pension plans | item | 3 |
New benefits accrued | $ 0 |
Defined Benefit Plans | |
Defined benefit plans | |
New benefits accrued | 0 |
Expected contribution to pension plan | 27,500,000 |
Employer contributions | $ 21,700,000 |
Post-retirement Benefit Obligations | |
Defined benefit plans | |
Number of persons eligible to become a new participant | employee | 0 |
Assets in unfunded plans | $ 0 |
Expected contribution to pension plan | 9,500,000 |
Employer contributions | $ 6,300,000 |
Supplemental Plans | |
Defined benefit plans | |
Number of non-qualified plans | item | 2 |
Number of persons eligible to become a new participant | item | 0 |
Assets in unfunded plans | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Unrecognized tax benefits | $ 4.9 | $ 4.9 | $ 4.9 | ||
Unrecognized tax benefits that would impact effective tax rate | $ 4.7 | $ 4.7 | $ 4.7 | ||
Decrease to tax provision | $ 4.4 | ||||
Effective tax rate (as a percent) | 75.60% | 37.80% | 28.80% | 32.10% | |
Corporate tax rate (as a percent) | 35.40% | 26.80% | 32.10% | 27.20% | |
Peoples | |||||
Income tax expense from divestiture | $ 0.8 | ||||
Peoples | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||||
Income tax expense from divestiture | $ 0.8 | $ 0.8 | |||
State | |||||
Increase state expense | $ 0.6 | ||||
FairPoint Communications, Inc | |||||
Increase tax provision due to acquisition | $ 1.1 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Litigation (Details) $ in Thousands | Aug. 15, 2018USD ($) | Jul. 17, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)subsidiaryitem | Sep. 30, 2018USD ($) | Dec. 31, 2019 | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2019USD ($) | May 31, 2017USD ($) |
Litigation and Contingencies | |||||||||||||
Revenue recorded | $ 333,326 | $ 348,064 | $ 1,005,507 | $ 1,054,324 | |||||||||
Revenue, Product and Service [Extensible List] | Subsidies | ||||||||||||
Number of subsidiaries that received assessment notice | subsidiary | 2 | ||||||||||||
Consolidated Communications Enterprise Services Inc. (CCES) | |||||||||||||
Litigation and Contingencies | |||||||||||||
Litigation amount accrued | 3,800 | $ 3,800 | $ 3,800 | ||||||||||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | |||||||||||||
Litigation and Contingencies | |||||||||||||
Litigation amount accrued | 1,800 | $ 1,800 | 1,800 | ||||||||||
Sprint, MCI Communication Services, and Verizon | |||||||||||||
Litigation and Contingencies | |||||||||||||
Disputed amount | $ 4,800 | ||||||||||||
Number of courts | item | 1 | ||||||||||||
Level 3 Communications | |||||||||||||
Litigation and Contingencies | |||||||||||||
Disputed amount | $ 2,300 | ||||||||||||
Amount awarded | $ 700 | ||||||||||||
Local Switching Support | |||||||||||||
Litigation and Contingencies | |||||||||||||
Combined LSS support and settlement of revenues | $ 12,300 | ||||||||||||
Increase in ICC Eligible Recovery support | $ 3,600 | ||||||||||||
Revenue recorded | $ 5,400 | ||||||||||||
Contingent asset | 8,700 | 8,700 | |||||||||||
FairPoint Communications, Inc | Level 3 Communications | |||||||||||||
Litigation and Contingencies | |||||||||||||
Amount awarded | $ 1,200 | ||||||||||||
Subsidies | |||||||||||||
Litigation and Contingencies | |||||||||||||
Revenue recorded | $ 18,025 | $ 19,189 | $ 54,318 | $ 65,423 | |||||||||
Forecast | Local Switching Support | |||||||||||||
Litigation and Contingencies | |||||||||||||
Decline in ICC support (as a percent) | 5.00% | ||||||||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Maximum | |||||||||||||
Litigation and Contingencies | |||||||||||||
Potential liability amount guaranteed | $ 5,000 | ||||||||||||
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 | $ 6,100 | ||||||||||||
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 | $ 7,400 |
CONDENSED CONSOLIDATING FINAN_3
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands | 9 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Current assets: | ||||||||
Cash and cash equivalents | $ 6,178 | $ 9,599 | ||||||
Accounts receivable, net | 125,908 | 133,136 | ||||||
Income taxes receivable | 11,293 | 11,072 | ||||||
Prepaid expenses and other current assets | 42,070 | 44,336 | ||||||
Total current assets | 185,449 | 198,143 | ||||||
Property, plant and equipment, net | 1,861,033 | 1,927,126 | ||||||
Intangibles and other assets: | ||||||||
Investments | 112,377 | 110,853 | ||||||
Goodwill | 1,035,274 | 1,035,274 | ||||||
Customer relationships, net | 180,378 | 228,959 | ||||||
Other intangible assets | 10,650 | 11,483 | ||||||
Other assets | 58,140 | 23,423 | ||||||
Total assets | 3,443,301 | 3,535,261 | ||||||
Current liabilities: | ||||||||
Accounts payable | 32,241 | 32,502 | ||||||
Advance billings and customer deposits | 48,122 | 47,724 | ||||||
Dividends payable | 27,579 | |||||||
Accrued compensation | 58,397 | 64,459 | ||||||
Accrued interest | 16,783 | 9,232 | ||||||
Accrued expense | 74,969 | 71,650 | ||||||
Current portion of long term debt and finance lease obligations | 27,869 | 30,468 | ||||||
Total current liabilities | 258,381 | 283,614 | ||||||
Long-term debt and finance lease obligations | 2,285,177 | 2,303,585 | ||||||
Deferred income taxes | 175,021 | 188,129 | ||||||
Pension and postretirement benefit obligations | 286,646 | 314,134 | ||||||
Other long-term liabilities | 78,372 | 30,145 | ||||||
Total liabilities | 3,083,597 | 3,119,607 | ||||||
Shareholders' equity: | ||||||||
Common Stock | 721 | 712 | ||||||
Other shareholders' equity | 352,779 | 409,024 | ||||||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 353,500 | 409,736 | ||||||
Noncontrolling interest | 6,204 | 5,918 | ||||||
Total shareholders' equity | 359,704 | $ 359,173 | $ 376,164 | 415,654 | $ 488,536 | $ 514,316 | $ 544,103 | $ 573,942 |
Total liabilities and shareholders' equity | 3,443,301 | 3,535,261 | ||||||
Eliminations | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | (18) | |||||||
Accounts receivable, net | (98) | (37) | ||||||
Income taxes receivable | (12,091) | |||||||
Total current assets | (12,189) | (55) | ||||||
Intangibles and other assets: | ||||||||
Investments in subsidiaries | (7,091,382) | (7,109,038) | ||||||
Advances due to/from affiliates, net | (3,293,579) | (3,237,287) | ||||||
Deferred income taxes | (87,475) | (76,758) | ||||||
Other assets | 3,011 | |||||||
Total assets | (10,484,625) | (10,420,127) | ||||||
Current liabilities: | ||||||||
Accrued expense | (98) | (55) | ||||||
Income tax payable | (12,091) | |||||||
Total current liabilities | (12,189) | (55) | ||||||
Advances due to/from affiliates, net | (3,293,579) | (3,237,287) | ||||||
Deferred income taxes | (87,475) | (73,747) | ||||||
Total liabilities | (3,393,243) | (3,311,089) | ||||||
Shareholders' equity: | ||||||||
Common Stock | (47,411) | (47,411) | ||||||
Other shareholders' equity | (7,043,971) | (7,061,627) | ||||||
Total Consolidated Communications Holdings, Inc. shareholders' equity | (7,091,382) | (7,109,038) | ||||||
Total shareholders' equity | (7,091,382) | (7,109,038) | ||||||
Total liabilities and shareholders' equity | (10,484,625) | (10,420,127) | ||||||
Parent | Reportable legal entity | ||||||||
Current assets: | ||||||||
Income taxes receivable | 5,737 | 10,272 | ||||||
Total current assets | 5,737 | 10,272 | ||||||
Intangibles and other assets: | ||||||||
Investments in subsidiaries | 3,558,290 | 3,587,612 | ||||||
Deferred income taxes | 80,325 | 76,758 | ||||||
Other assets | 3,011 | |||||||
Total assets | 3,647,363 | 3,674,642 | ||||||
Current liabilities: | ||||||||
Dividends payable | 27,579 | |||||||
Accrued expense | 284 | 40 | ||||||
Total current liabilities | 284 | 27,619 | ||||||
Advances due to/from affiliates, net | 3,293,579 | 3,237,287 | ||||||
Total liabilities | 3,293,863 | 3,264,906 | ||||||
Shareholders' equity: | ||||||||
Common Stock | 721 | 712 | ||||||
Other shareholders' equity | 352,779 | 409,024 | ||||||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 353,500 | 409,736 | ||||||
Total shareholders' equity | 353,500 | 409,736 | ||||||
Total liabilities and shareholders' equity | 3,647,363 | 3,674,642 | ||||||
Subsidiary Issuer | Reportable legal entity | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 6,167 | 9,616 | ||||||
Income taxes receivable | 17,647 | |||||||
Prepaid expenses and other current assets | 2,465 | |||||||
Total current assets | 23,814 | 12,081 | ||||||
Intangibles and other assets: | ||||||||
Investments | 8,863 | 8,673 | ||||||
Investments in subsidiaries | 3,516,368 | 3,505,477 | ||||||
Advances due to/from affiliates, net | 2,339,203 | 2,379,079 | ||||||
Deferred income taxes | 7,150 | |||||||
Other assets | 1,524 | |||||||
Total assets | 5,895,398 | 5,906,834 | ||||||
Current liabilities: | ||||||||
Accrued interest | 15,643 | 8,430 | ||||||
Accrued expense | 3,450 | 37 | ||||||
Current portion of long term debt and finance lease obligations | 18,350 | 18,350 | ||||||
Total current liabilities | 37,443 | 26,817 | ||||||
Long-term debt and finance lease obligations | 2,270,901 | 2,285,341 | ||||||
Deferred income taxes | 122 | |||||||
Other long-term liabilities | 28,765 | 6,942 | ||||||
Total liabilities | 2,337,109 | 2,319,222 | ||||||
Shareholders' equity: | ||||||||
Other shareholders' equity | 3,558,289 | 3,587,612 | ||||||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,558,289 | 3,587,612 | ||||||
Total shareholders' equity | 3,558,289 | 3,587,612 | ||||||
Total liabilities and shareholders' equity | $ 5,895,398 | 5,906,834 | ||||||
Guarantors | ||||||||
Condensed Consolidating Balance Sheet | ||||||||
Ownership interest (as a percent) | 100.00% | |||||||
Guarantors | Reportable legal entity | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ 10 | |||||||
Accounts receivable, net | 117,070 | 122,743 | ||||||
Income taxes receivable | 790 | |||||||
Prepaid expenses and other current assets | 41,939 | 41,547 | ||||||
Total current assets | 159,019 | 165,080 | ||||||
Property, plant and equipment, net | 1,794,830 | 1,861,009 | ||||||
Intangibles and other assets: | ||||||||
Investments | 103,514 | 102,180 | ||||||
Investments in subsidiaries | 16,724 | 15,949 | ||||||
Goodwill | 969,093 | 969,093 | ||||||
Customer relationships, net | 180,378 | 228,959 | ||||||
Other intangible assets | 1,563 | 2,396 | ||||||
Advances due to/from affiliates, net | 849,545 | 760,310 | ||||||
Other assets | 54,562 | 18,237 | ||||||
Total assets | 4,129,228 | 4,123,213 | ||||||
Current liabilities: | ||||||||
Accounts payable | 32,241 | 32,502 | ||||||
Advance billings and customer deposits | 46,803 | 46,316 | ||||||
Accrued compensation | 57,552 | 63,688 | ||||||
Accrued interest | 1,140 | 802 | ||||||
Accrued expense | 70,580 | 70,365 | ||||||
Current portion of long term debt and finance lease obligations | 9,351 | 11,968 | ||||||
Income tax payable | 8,674 | |||||||
Total current liabilities | 226,341 | 225,641 | ||||||
Long-term debt and finance lease obligations | 14,149 | 17,988 | ||||||
Deferred income taxes | 240,548 | 239,880 | ||||||
Pension and postretirement benefit obligations | 273,755 | 295,815 | ||||||
Other long-term liabilities | 48,751 | 22,305 | ||||||
Total liabilities | 803,544 | 801,629 | ||||||
Shareholders' equity: | ||||||||
Common Stock | 17,411 | 17,411 | ||||||
Other shareholders' equity | 3,302,069 | 3,298,255 | ||||||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,319,480 | 3,315,666 | ||||||
Noncontrolling interest | 6,204 | 5,918 | ||||||
Total shareholders' equity | 3,325,684 | 3,321,584 | ||||||
Total liabilities and shareholders' equity | 4,129,228 | 4,123,213 | ||||||
Non-Guarantors | Reportable legal entity | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 1 | 1 | ||||||
Accounts receivable, net | 8,936 | 10,430 | ||||||
Income taxes receivable | 10 | |||||||
Prepaid expenses and other current assets | 131 | 324 | ||||||
Total current assets | 9,068 | 10,765 | ||||||
Property, plant and equipment, net | 66,203 | 66,117 | ||||||
Intangibles and other assets: | ||||||||
Goodwill | 66,181 | 66,181 | ||||||
Other intangible assets | 9,087 | 9,087 | ||||||
Advances due to/from affiliates, net | 104,831 | 97,898 | ||||||
Other assets | 567 | 651 | ||||||
Total assets | 255,937 | 250,699 | ||||||
Current liabilities: | ||||||||
Advance billings and customer deposits | 1,319 | 1,408 | ||||||
Accrued compensation | 845 | 771 | ||||||
Accrued expense | 753 | 1,263 | ||||||
Current portion of long term debt and finance lease obligations | 168 | 150 | ||||||
Income tax payable | 3,417 | |||||||
Total current liabilities | 6,502 | 3,592 | ||||||
Long-term debt and finance lease obligations | 127 | 256 | ||||||
Deferred income taxes | 21,948 | 21,874 | ||||||
Pension and postretirement benefit obligations | 12,891 | 18,319 | ||||||
Other long-term liabilities | 856 | 898 | ||||||
Total liabilities | 42,324 | 44,939 | ||||||
Shareholders' equity: | ||||||||
Common Stock | 30,000 | 30,000 | ||||||
Other shareholders' equity | 183,613 | 175,760 | ||||||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 213,613 | 205,760 | ||||||
Total shareholders' equity | 213,613 | 205,760 | ||||||
Total liabilities and shareholders' equity | $ 255,937 | $ 250,699 |
CONDENSED CONSOLIDATING FINAN_4
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||||||
Net revenues | $ 333,326 | $ 348,064 | $ 1,005,507 | $ 1,054,324 | ||||
Operating expenses: | ||||||||
Cost of services and products (exclusive of depreciation and amortization) | 146,636 | 152,942 | 438,735 | 457,216 | ||||
Selling, general and administrative expenses | 70,100 | 85,255 | 222,615 | 252,935 | ||||
Depreciation and amortization | 93,048 | 109,119 | 289,595 | 328,759 | ||||
Income from operations | 23,542 | 748 | 54,562 | 15,414 | ||||
Other income (expense): | ||||||||
Interest expense, net of interest income | (34,250) | (33,524) | (103,270) | (99,079) | ||||
Gain (loss) on extinguishment of debt | 1,121 | 1,370 | ||||||
Investment income | 11,254 | 8,675 | 30,605 | 28,999 | ||||
Other, net | (74) | 293 | (3,095) | 843 | ||||
Income (loss) before income taxes | 1,593 | (23,808) | (19,828) | (53,823) | ||||
Income tax expense (benefit) | 1,204 | (8,993) | (5,719) | (17,250) | ||||
Net income (loss) | 389 | $ (7,312) | $ (7,186) | (14,815) | $ (10,560) | $ (11,198) | (14,109) | (36,573) |
Less: net income (loss) attributable to noncontrolling interest | 132 | 99 | 286 | 282 | ||||
Net income (loss) attributable to common shareholders | 257 | (14,914) | (14,395) | (36,855) | ||||
Total comprehensive income (loss) attributable to common shareholders | (1,529) | 185 | (34,187) | (9,928) | ||||
Eliminations | ||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||||||
Net revenues | (3,119) | (3,132) | (9,377) | (9,427) | ||||
Operating expenses: | ||||||||
Cost of services and products (exclusive of depreciation and amortization) | (3,006) | (3,015) | (9,038) | (9,095) | ||||
Selling, general and administrative expenses | (113) | (117) | (339) | (332) | ||||
Other income (expense): | ||||||||
Equity in earnings of subsidiaries, net | (17,140) | 12,403 | (19,911) | 20,061 | ||||
Income (loss) before income taxes | (17,140) | 12,403 | (19,911) | 20,061 | ||||
Net income (loss) | (17,140) | 12,403 | (19,911) | 20,061 | ||||
Net income (loss) attributable to common shareholders | (17,140) | 12,403 | (19,911) | 20,061 | ||||
Total comprehensive income (loss) attributable to common shareholders | (15,548) | (11,966) | (2,365) | (18,011) | ||||
Parent | Reportable legal entity | ||||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | 2,115 | 1,702 | 5,782 | 4,570 | ||||
Income from operations | (2,115) | (1,702) | (5,782) | (4,570) | ||||
Other income (expense): | ||||||||
Interest expense, net of interest income | (52) | (28) | (107) | (81) | ||||
Equity in earnings of subsidiaries, net | 1,982 | (13,645) | (10,109) | (33,396) | ||||
Other, net | 1 | |||||||
Income (loss) before income taxes | (185) | (15,375) | (15,997) | (38,047) | ||||
Income tax expense (benefit) | (442) | (461) | (1,602) | (1,192) | ||||
Net income (loss) | 257 | (14,914) | (14,395) | (36,855) | ||||
Net income (loss) attributable to common shareholders | 257 | (14,914) | (14,395) | (36,855) | ||||
Total comprehensive income (loss) attributable to common shareholders | (1,529) | 185 | (34,187) | (9,928) | ||||
Subsidiary Issuer | Reportable legal entity | ||||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | (193) | |||||||
Income from operations | 193 | |||||||
Other income (expense): | ||||||||
Interest expense, net of interest income | (34,268) | (34,199) | (102,984) | (100,507) | ||||
Intercompany interest income (expense) | 14,727 | 14,727 | 44,181 | 44,181 | ||||
Gain (loss) on extinguishment of debt | 1,121 | 1,370 | ||||||
Investment income | 190 | 178 | ||||||
Equity in earnings of subsidiaries, net | 14,801 | 865 | 29,245 | 8,188 | ||||
Other, net | 8 | 50 | ||||||
Income (loss) before income taxes | (3,611) | (18,607) | (27,755) | (47,960) | ||||
Income tax expense (benefit) | (5,593) | (4,962) | (17,646) | (14,564) | ||||
Net income (loss) | 1,982 | (13,645) | (10,109) | (33,396) | ||||
Net income (loss) attributable to common shareholders | 1,982 | (13,645) | (10,109) | (33,396) | ||||
Total comprehensive income (loss) attributable to common shareholders | 196 | 1,454 | (29,901) | (6,469) | ||||
Guarantors | Reportable legal entity | ||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||||||
Net revenues | 324,546 | 337,963 | 978,534 | 1,021,141 | ||||
Operating expenses: | ||||||||
Cost of services and products (exclusive of depreciation and amortization) | 145,888 | 152,162 | 436,972 | 454,261 | ||||
Selling, general and administrative expenses | 65,975 | 80,661 | 210,282 | 239,236 | ||||
Depreciation and amortization | 90,690 | 106,625 | 282,282 | 321,246 | ||||
Income from operations | 21,993 | (1,485) | 48,998 | 6,398 | ||||
Other income (expense): | ||||||||
Interest expense, net of interest income | 42 | 684 | (215) | 1,397 | ||||
Intercompany interest income (expense) | (14,705) | (14,710) | (44,120) | (44,128) | ||||
Investment income | 11,254 | 8,675 | 30,415 | 28,821 | ||||
Equity in earnings of subsidiaries, net | 357 | 377 | 775 | 5,147 | ||||
Other, net | (53) | 255 | (3,086) | 765 | ||||
Income (loss) before income taxes | 18,888 | (6,204) | 32,767 | (1,600) | ||||
Income tax expense (benefit) | 6,134 | (4,292) | 10,105 | (4,769) | ||||
Net income (loss) | 12,754 | (1,912) | 22,662 | 3,169 | ||||
Less: net income (loss) attributable to noncontrolling interest | 132 | 99 | 286 | 282 | ||||
Net income (loss) attributable to common shareholders | 12,622 | (2,011) | 22,376 | 2,887 | ||||
Total comprehensive income (loss) attributable to common shareholders | 12,741 | 7,090 | 24,411 | 13,523 | ||||
Non-Guarantors | Reportable legal entity | ||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||||||
Net revenues | 11,899 | 13,233 | 36,350 | 42,610 | ||||
Operating expenses: | ||||||||
Cost of services and products (exclusive of depreciation and amortization) | 3,754 | 3,795 | 10,801 | 12,050 | ||||
Selling, general and administrative expenses | 2,123 | 3,009 | 7,083 | 9,461 | ||||
Depreciation and amortization | 2,358 | 2,494 | 7,313 | 7,513 | ||||
Income from operations | 3,664 | 3,935 | 11,153 | 13,586 | ||||
Other income (expense): | ||||||||
Interest expense, net of interest income | 28 | 19 | 36 | 112 | ||||
Intercompany interest income (expense) | (22) | (17) | (61) | (53) | ||||
Other, net | (29) | 38 | (60) | 78 | ||||
Income (loss) before income taxes | 3,641 | 3,975 | 11,068 | 13,723 | ||||
Income tax expense (benefit) | 1,105 | 722 | 3,424 | 3,275 | ||||
Net income (loss) | 2,536 | 3,253 | 7,644 | 10,448 | ||||
Net income (loss) attributable to common shareholders | 2,536 | 3,253 | 7,644 | 10,448 | ||||
Total comprehensive income (loss) attributable to common shareholders | $ 2,611 | $ 3,422 | $ 7,855 | $ 10,957 |
CONDENSED CONSOLIDATING FINAN_5
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | $ 248,637 | $ 264,036 | |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (184,343) | (186,765) | |
Proceeds from sale of assets | 14,343 | 1,640 | |
Proceeds from business dispositions | 20,999 | ||
Distributions from investments | 329 | 233 | |
Other | (450) | ||
Net cash used in investing activities | (170,121) | (163,893) | |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 152,000 | 136,587 | |
Payment of finance lease obligations | (9,743) | (9,590) | |
Payment on long-term debt | (142,763) | (156,350) | |
Repurchase of senior notes | $ (21,700) | (25,986) | |
Dividends on common stock | (55,445) | (82,621) | |
Net cash used in financing activities | (81,937) | (111,974) | |
Change in cash and cash equivalents | (3,421) | (11,831) | |
Cash and cash equivalents at beginning of period | 9,599 | 15,657 | |
Cash and cash equivalents at end of period | 6,178 | 6,178 | 3,826 |
Parent | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | (847) | 8,584 | |
Cash flows from investing activities: | |||
Proceeds from business dispositions | 20,999 | ||
Net cash used in investing activities | 20,999 | ||
Cash flows from financing activities: | |||
Dividends on common stock | (55,445) | (82,621) | |
Transactions with affiliates, net | 56,292 | 53,038 | |
Net cash used in financing activities | 847 | (29,583) | |
Subsidiary Issuer | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | (47,687) | (41,559) | |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 152,000 | 136,587 | |
Payment on long-term debt | (142,763) | (156,350) | |
Repurchase of senior notes | (25,986) | ||
Transactions with affiliates, net | 60,987 | 54,463 | |
Net cash used in financing activities | 44,238 | 34,700 | |
Change in cash and cash equivalents | (3,449) | (6,859) | |
Cash and cash equivalents at beginning of period | 9,616 | 8,919 | |
Cash and cash equivalents at end of period | 6,167 | 6,167 | 2,060 |
Guarantors | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | 283,255 | 285,975 | |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (177,459) | (178,774) | |
Proceeds from sale of assets | 14,332 | 1,636 | |
Distributions from investments | 329 | 233 | |
Other | (450) | ||
Net cash used in investing activities | (163,248) | (176,905) | |
Cash flows from financing activities: | |||
Payment of finance lease obligations | (9,632) | (9,434) | |
Transactions with affiliates, net | (110,347) | (104,609) | |
Net cash used in financing activities | (119,979) | (114,043) | |
Change in cash and cash equivalents | 28 | (4,973) | |
Cash and cash equivalents at beginning of period | (18) | 6,738 | |
Cash and cash equivalents at end of period | 10 | 10 | 1,765 |
Non-Guarantors | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | 13,916 | 11,036 | |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (6,884) | (7,991) | |
Proceeds from sale of assets | 11 | 4 | |
Net cash used in investing activities | (6,873) | (7,987) | |
Cash flows from financing activities: | |||
Payment of finance lease obligations | (111) | (156) | |
Transactions with affiliates, net | (6,932) | (2,892) | |
Net cash used in financing activities | (7,043) | (3,048) | |
Change in cash and cash equivalents | 1 | ||
Cash and cash equivalents at beginning of period | 1 | ||
Cash and cash equivalents at end of period | $ 1 | $ 1 | $ 1 |