Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 24, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 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 | 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 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Amendment Flag | false | ||
Entity Public Float | $ 350,799,889 | ||
Entity Common Stock, Shares Outstanding | 71,953,447 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | Feb. 18, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
Net revenues | $ 331,035 | $ 333,326 | $ 333,532 | $ 338,649 | $ 344,750 | $ 348,064 | $ 350,221 | $ 356,039 | $ 1,336,542 | $ 1,399,074 | $ 1,059,574 | |
Operating expense: | ||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 574,936 | 611,872 | 445,998 | |||||||||
Selling, general and administrative expenses | 299,088 | 333,605 | 249,141 | |||||||||
Acquisition and other transaction costs | 1,960 | 33,650 | ||||||||||
Depreciation and amortization | 381,237 | 432,668 | 291,873 | |||||||||
Income from operations | 26,719 | 23,542 | 14,300 | 16,720 | 3,555 | 748 | 5,427 | 9,239 | 81,281 | 18,969 | 38,912 | |
Other income (expense): | ||||||||||||
Interest expense, net of interest income | (136,660) | (134,578) | (129,786) | |||||||||
Gain on extinguishment of debt | 4,510 | |||||||||||
Investment income | 38,088 | 39,596 | 31,749 | |||||||||
Other, net | (10,864) | 1,315 | (503) | |||||||||
Loss before income taxes | (23,645) | (74,698) | (59,628) | |||||||||
Income tax benefit | (3,714) | (24,127) | (124,927) | |||||||||
Net income (loss) | (19,931) | (50,571) | 65,299 | |||||||||
Less: net income attributable to noncontrolling interest | 452 | 263 | 354 | |||||||||
Net income (loss) attributable to common shareholders | $ (5,988) | $ 257 | $ (7,387) | $ (7,265) | $ (13,979) | $ (14,914) | $ (10,643) | $ (11,298) | $ (20,383) | $ (50,834) | $ 64,945 | |
Net loss per common share - basic and diluted | ||||||||||||
Net income (loss) per basic and diluted common shares attributable to common shareholders | $ (0.08) | $ (0.10) | $ (0.11) | $ (0.20) | $ (0.21) | $ (0.15) | $ (0.16) | $ (0.29) | $ (0.73) | $ 1.07 | ||
Dividends declared per common share (in dollars per share) | $ 0.38738 | $ 0.38738 | $ 0.38738 | $ 0.38738 | $ 0.38738 | $ 0.39 | $ 1.55 | $ 1.55 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ (19,931) | $ (50,571) | $ 65,299 |
Pension and post-retirement obligations: | |||
Change in net actuarial loss and prior service cost, net of tax of $(5,875), $(3,941) and $(2,833) | (16,738) | (10,835) | (4,467) |
Amortization of actuarial losses and prior service cost to earnings, net of tax of $2,842, $1,370 and $2,081 | 7,936 | 3,785 | 3,153 |
Derivative instruments designated as cash flow hedges: | |||
Change in fair value of derivatives, net of tax of $(6,776), $(244) and $(161) | (19,237) | (691) | (250) |
Cumulative adjustment upon adoption of ASU 2017-12, net of tax of $(203) | (576) | ||
Reclassification of realized loss to earnings, net of tax of $149, $855 and $488 | 959 | 2,612 | 758 |
Comprehensive income (loss) | (47,587) | (55,700) | 64,493 |
Less: comprehensive income attributable to noncontrolling interest | 452 | 263 | 354 |
Total comprehensive income (loss) attributable to common shareholders | $ (48,039) | $ (55,963) | $ 64,139 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||
Change in net actuarial loss and prior service credit, tax benefit | $ (5,875) | $ (3,941) | $ (2,833) |
Reclassification of actuarial losses and prior service credit to earnings, tax expense | 2,842 | 1,370 | 2,081 |
Change in fair value of derivatives, tax benefit | (6,776) | (244) | (161) |
Cumulative adjustment of ASU adoption, tax benefit | (203) | ||
Reclassification of realized loss to earnings, tax expense | $ 149 | $ 855 | $ 488 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 12,395 | $ 9,599 |
Accounts receivable, net of allowance for doubtful accounts | 120,016 | 133,136 |
Income tax receivable | 2,669 | 11,072 |
Prepaid expenses and other current assets | 41,787 | 44,336 |
Total current assets | 176,867 | 198,143 |
Property, plant and equipment, net | 1,835,878 | 1,927,126 |
Investments | 112,717 | 110,853 |
Goodwill | 1,035,274 | 1,035,274 |
Customer relationships, net | 164,069 | 228,959 |
Other intangible assets | 10,557 | 11,483 |
Other assets | 54,915 | 23,423 |
Total assets | 3,390,277 | 3,535,261 |
Current liabilities: | ||
Accounts payable | 30,936 | 32,502 |
Advance billings and customer deposits | 45,710 | 47,724 |
Dividends payable | 27,579 | |
Accrued compensation | 57,069 | 64,459 |
Accrued interest | 7,874 | 9,232 |
Accrued expense | 75,406 | 71,650 |
Current portion of long-term debt and finance lease obligations | 27,301 | 30,468 |
Total current liabilities | 244,296 | 283,614 |
Long-term debt and finance lease obligations | 2,250,677 | 2,303,585 |
Deferred income taxes | 173,027 | 188,129 |
Pension and other post-retirement obligations | 302,296 | 314,134 |
Other long-term liabilities | 72,730 | 30,145 |
Total liabilities | 3,043,026 | 3,119,607 |
Commitments and contingencies (Note 12) | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 71,961,045 and 71,187,301 shares outstanding as of December 31, 2019 and December 31, 2018, respectively | 720 | 712 |
Additional paid-in capital | 492,246 | 513,070 |
Accumulated deficit | (71,217) | (50,834) |
Accumulated other comprehensive loss, net | (80,868) | (53,212) |
Noncontrolling interest | 6,370 | 5,918 |
Total shareholders' equity | 347,251 | 415,654 |
Total liabilities and shareholders' equity | $ 3,390,277 | $ 3,535,261 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
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 | 71,961,045 | 71,187,301 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss, net | Non-controlling Interest | Total |
Balance at Dec. 31, 2016 | $ 506 | $ 217,725 | $ (47,277) | $ 5,301 | $ 176,255 | |
Balance (in shares) at Dec. 31, 2016 | 50,612 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (34,764) | $ (67,187) | (101,951) | |||
Shares issued upon acquisition of FairPoint | $ 201 | 430,752 | 430,953 | |||
Shares issued upon the acquisition of FairPoint (in shares) | 20,104 | |||||
Shares issued under employee plan, net of forfeitures | $ 1 | 104 | 105 | |||
Shares issued under employee plan, net of forfeitures (in shares) | 121 | |||||
Non-cash, share-based compensation | 2,766 | 2,766 | ||||
Purchase and retirement of common stock | (571) | (571) | ||||
Purchase and retirement of common stock (in shares) | (60) | |||||
Other comprehensive income (loss) | (806) | (806) | ||||
Other | (350) | (350) | ||||
Cumulative adjustment of new accounting standard adoption | 2,242 | 2,242 | ||||
Net income (loss) | 64,945 | 354 | 65,299 | |||
Balance at Dec. 31, 2017 | $ 708 | 615,662 | (48,083) | 5,655 | 573,942 | |
Balance (in shares) at Dec. 31, 2017 | 70,777 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (107,112) | (3,271) | (110,383) | |||
Shares issued under employee plan, net of forfeitures | $ 5 | (7) | (2) | |||
Shares issued under employee plan, net of forfeitures (in shares) | 460 | |||||
Non-cash, share-based compensation | 5,119 | 5,119 | ||||
Purchase and retirement of common stock | $ (1) | (592) | (593) | |||
Purchase and retirement of common stock (in shares) | (50) | |||||
Other comprehensive income (loss) | (5,129) | (5,129) | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2014-09 | 3,271 | 3,271 | ||||
Net income (loss) | (50,834) | 263 | (50,571) | |||
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 | (27,289) | (576) | (27,865) | |||
Shares issued under employee plan, net of forfeitures | $ 9 | (9) | ||||
Shares issued under employee plan, net of forfeitures (in shares) | 870 | |||||
Non-cash, share-based compensation | 6,836 | 6,836 | ||||
Purchase and retirement of common stock | $ (1) | (362) | (363) | |||
Purchase and retirement of common stock (in shares) | (96) | |||||
Other comprehensive income (loss) | (27,656) | (27,656) | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2017-12 | 576 | 576 | ||||
Net income (loss) | (20,383) | 452 | (19,931) | |||
Balance at Dec. 31, 2019 | $ 720 | $ 492,246 | $ (71,217) | $ (80,868) | $ 6,370 | $ 347,251 |
Balance (in shares) at Dec. 31, 2019 | 71,961 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (19,931) | $ (50,571) | $ 65,299 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 381,237 | 432,668 | 291,873 |
Deferred income taxes | (5,249) | (26,008) | (126,127) |
Cash distributions from wireless partnerships in less than current earnings | (1,901) | (194) | (1,411) |
Pension and post-retirement contributions in excess of expense | (24,507) | (30,361) | (15,200) |
Stock-based compensation expense | 6,836 | 5,119 | 2,766 |
Amortization of deferred financing costs | 4,932 | 4,721 | 17,076 |
Gain on extinguishment of debt | (4,510) | ||
Other, net | 1,487 | 6,066 | 3,208 |
Changes in operating assets and liabilities, net of acquired businesses: | |||
Accounts receivable, net | 13,120 | (2,044) | (2,607) |
Income tax receivable | 9,908 | 10,754 | 180 |
Prepaid expenses and other assets | (1,546) | (12,785) | 1,059 |
Accounts payable | (1,566) | 8,359 | 4,968 |
Accrued expenses and other liabilities | (19,214) | 11,597 | (31,057) |
Net cash provided by operating activities | 339,096 | 357,321 | 210,027 |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (862,385) | ||
Purchases of property, plant and equipment, net | (232,203) | (244,816) | (181,185) |
Proceeds from sale of assets | 14,718 | 2,125 | 859 |
Proceeds from business dispositions | 20,999 | ||
Distributions from investments | 329 | 233 | |
Other | (663) | ||
Net cash used in investing activities | (217,819) | (221,459) | (1,042,711) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 195,000 | 189,588 | 1,052,325 |
Payment of finance lease obligations | (12,519) | (12,755) | (7,933) |
Payment on long-term debt | (195,350) | (207,938) | (111,337) |
Repurchase of senior notes | (49,804) | ||
Payment of financing costs | (16,732) | ||
Share repurchases for minimum tax withholding | (363) | (593) | (571) |
Dividends on common stock | (55,445) | (110,222) | (94,138) |
Other | (350) | ||
Net cash used in financing activities | (118,481) | (141,920) | 821,264 |
Change in cash and cash equivalents | 2,796 | (6,058) | (11,420) |
Cash and cash equivalents at beginning of period | 9,599 | 15,657 | 27,077 |
Cash and cash equivalents at end of period | $ 12,395 | $ 9,599 | $ 15,657 |
BUSINESS DESCRIPTION AND SUMMAR
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2019 | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BUSINESS DESCRIPTION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “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 December 31, 2019, we had approximately 836,000 voice connections, 784,000 data connections and 84,000 video connections. Use of Estimates Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates. Our critical accounting estimates include (i) impairment evaluations associated with indefinite-lived intangible assets (Note 1), (ii) the determination of deferred tax asset and liability balances (Notes 1 and 12) and (iii) pension plan and other post-retirement costs and obligations (Notes 1 and 11). Principles of Consolidation Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries and subsidiaries in which we have a controlling financial interest. All significant intercompany transactions have been eliminated. Recent Business Developments On July 3, 2017, we completed our acquisition of FairPoint Communications, Inc. (“FairPoint”), pursuant to the terms of a definitive agreement and plan of merger (as amended, the “Merger Agreement”) and acquired all of the issued and outstanding shares of FairPoint in exchange for shares of our common stock (the “Merger”). As a result of the Merger, FairPoint became a wholly owned subsidiary of the Company. The financial results for FairPoint have been included in our consolidated financial statements as of the acquisition date. For a more complete discussion of the transaction, refer to Note 4. Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Our cash equivalents consist primarily of money market funds. The carrying amounts of our cash equivalents approximate their fair values. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for doubtful accounts for estimated losses that result from the inability of our customers to make required payments. The allowance for doubtful accounts is maintained based on customer payment levels, historical experience and management’s views on trends in the overall receivable agings. In addition, for larger accounts, we perform analyses of risks on a customer-specific basis. We perform ongoing credit evaluations of our customers’ financial condition and management believes that an adequate allowance for doubtful accounts has been provided. Uncollectible accounts are removed from accounts receivable and are charged against the allowance for doubtful accounts when internal collection efforts have been unsuccessful. The following table summarizes the activity in allowance for doubtful accounts for the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, (In thousands) 2019 2018 2017 Balance at beginning of year $ 4,421 $ 6,667 $ 2,813 Provision charged to expense 9,347 8,793 7,072 Write-offs, less recoveries (9,219) (11,039) (6,516) Acquired allowance for doubtful accounts — — 3,298 Balance at end of year $ 4,549 $ 4,421 $ 6,667 Investments Our investments are primarily accounted for under either the equity method or at cost. If we have the ability to exercise significant influence over the operations and financial policies of an affiliated company, the investment in the affiliated company is accounted for using the equity method. If we do not have control and also cannot exercise significant influence, we account for these investments at our initial cost less impairment because fair value is not readily available for these investments. We review our investment portfolio periodically to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value that is considered to be other than temporary. If we believe the decline is other than temporary, we evaluate the financial performance of the business and compare the carrying value of the investment to quoted market prices (if available) or the fair value of similar investments. If an investment is deemed to have experienced an impairment that is considered other-than temporary, the carrying amount of the investment is reduced to its quoted or estimated fair value, as applicable, and an impairment loss is recognized in other income (expense). Fair Value of Financial Instruments We account for certain assets and liabilities at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A financial asset or liability’s classification within a three-tiered value hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The hierarchy prioritizes the inputs to valuation techniques into three broad levels in order to maximize the use of observable inputs and minimize the use of unobservable inputs. The levels of the fair value hierarchy are as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs that reflect quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets and inputs other than quoted prices that are directly or indirectly observable in the marketplace. Level 3 – Unobservable inputs which are supported by little or no market activity. Property, Plant and Equipment Property, plant and equipment are recorded at cost. We capitalize additions and substantial improvements and expense repairs and maintenance costs as incurred. We capitalize the cost of internal-use network and non-network software which has a useful life in excess of one year. Subsequent additions, modifications or upgrades to internal-use network and non-network software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred. Also, we capitalize interest associated with the development of internal-use network and non-network software. Property, plant and equipment consisted of the following as of December 31, 2019 and 2018: December 31, December 31, Estimated (In thousands) 2019 2018 Useful Lives Land and buildings $ 270,443 $ 257,208 18 - 40 years Central office switching and transmission 1,363,533 1,234,687 3 - 25 years Outside plant cable, wire and fiber facilities 2,002,264 1,934,185 3 - 50 years Furniture, fixtures and equipment 287,711 285,102 3 - 15 years Assets under finance leases 51,324 63,016 1 - 20 years Total plant in service 3,975,275 3,774,198 Less: accumulated depreciation and amortization (2,228,481) (1,953,813) Plant in service 1,746,794 1,820,385 Construction in progress 59,624 68,325 Construction inventory 29,460 38,416 Totals $ 1,835,878 $ 1,927,126 Construction inventory, which is stated at weighted average cost, consists primarily of network construction materials and supplies that when issued are predominately capitalized as part of new customer installations and the construction of the network. We record depreciation using the straight-line method over estimated useful lives using either the group or unit method. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets, anticipated technological changes and the expected impact of our strategic operating plan on our network infrastructure. In addition, the ranges of estimated useful lives presented above are impacted by the accounting for business combinations as the lives assigned to these acquired assets are generally much shorter than that of a newly acquired asset. The group method is used for depreciable assets dedicated to providing regulated telecommunication services, including the majority of the network, outside plant facilities and certain support assets. A depreciation rate for each asset group is developed based on the average useful life of the group. The group method requires periodic revision of depreciation rates. When an individual asset is sold or retired, the difference between the proceeds, if any, and the cost of the asset is charged or credited to accumulated depreciation, without recognition of a gain or loss. The unit method is primarily used for buildings, furniture, fixtures and other support assets. Each asset is depreciated on the straight-line basis over its estimated useful life. When an individual asset is sold or retired, the cost basis of the asset and related accumulated depreciation are removed from the accounts and any associated gain or loss is recognized. Depreciation and amortization expense related to property, plant and equipment was $315.0 million, $366.3 million and $263.8 million in 2019, 2018 and 2017, respectively. Amortization of assets under capital leases is included in the depreciation and amortization expense in the consolidated statements of operations. We evaluate the recoverability of our property, plant and equipment whenever events or substantive changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the asset group. Intangible Assets Indefinite-Lived Intangibles Goodwill and tradenames are evaluated for impairment annually or more frequently when events or changes in circumstances indicate that the asset might be impaired. We evaluate the carrying value of goodwill and tradenames as of November 30 of each year. Goodwill Goodwill is the excess of the acquisition cost of a business over the fair value of the identifiable net assets acquired. Goodwill is not amortized but instead evaluated annually for impairment. The evaluation of goodwill may first include a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Events and circumstances integrated into the qualitative assessment process include a combination of macroeconomic conditions affecting equity and credit markets, significant changes to the cost structure, overall financial performance and other relevant events affecting the reporting unit. For the 2019 assessment, we evaluated the fair value of goodwill compared to the carrying value using the quantitative approach. When we use the quantitative approach to assess the goodwill carrying value and the fair value of our single reporting unit, the fair value of our reporting unit is compared to its carrying amount, including goodwill. The estimated fair value of the reporting unit is determined using a combination of market-based approaches and a discounted cash flow (“DCF”) model. The assumptions used in the estimate of fair value are based upon a combination of historical results and trends, new industry developments and future cash flow projections, as well as relevant comparable company earnings multiples for the market-based approaches. Such assumptions are subject to change as a result of changing economic and competitive conditions. We use a weighting of the results derived from the valuation approaches to estimate the fair value of the reporting unit. For the 2019 assessment, using the quantitative approach, we concluded that the fair value of the reporting unit exceeded the carrying value at November 30, 2019 and that there was no In measuring the fair value of our single reporting unit as described, we consider the fair value of our reporting unit in relation to our overall enterprise value, measured as the publicly traded stock price multiplied by the fully diluted shares outstanding plus the fair value of outstanding debt. Our reporting unit fair value models are consistent with a range in value indicated by both the preceding three month average stock price and the stock price on the valuation date, plus an estimated acquisition premium which is based on observable transactions of comparable companies, if applicable. If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment is recorded for the difference in the carrying value and fair value. We did not At December 31, 2019 and 2018, the carrying value of goodwill was $1,035.3 million. Trade Name Our trade name is the federally registered mark CONSOLIDATED, a design of interlocking circles, which is used in association with our communication services. The Company’s corporate branding strategy leverages a CONSOLIDATED naming structure. All of the Company’s business units and several of our products and services incorporate the CONSOLIDATED name. Trade names with indefinite useful lives are not amortized but are tested for impairment at least annually. If facts and circumstances change relating to a trade name’s continued use in the branding of our products and services, it may be treated as a finite-lived asset and begin to be amortized over its estimated remaining life. The carrying value of our trade names, excluding any finite lived trade names, was $10.6 million at December 31, 2019 and 2018. For the 2019 assessment, we used the quantitative approach to evaluate the fair value compared to the carrying value of the trade name. Based on our assessment, we concluded that the fair value of the trade names continued to exceed the carrying value. When we use the quantitative approach to estimate the fair value of our trade names, we use DCFs based on a relief from royalty method. If the fair value of our trade names was less than the carrying amount, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the assets. We perform our impairment testing of our trade names as single units of accounting based on their use in our single reporting unit. Finite-Lived Intangible Assets Finite-lived intangible assets subject to amortization consist primarily of our customer lists of an established base of customers that subscribe to our services, trade names of acquired companies and other intangible assets. Finite-lived intangible assets are amortized using an accelerated amortization method or on a straight-line basis over their estimated useful lives. We evaluate the potential impairment of finite-lived intangible assets when impairment indicators exist. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment equal to the difference between the carrying amount and the fair value of the asset is recognized. We did not recognize any intangible impairment charges in the years ended December 31, 2019, 2018 or 2017. The components of finite-lived intangible assets are as follows: December 31, 2019 December 31, 2018 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships 3 - 13 years $ 321,333 $ (157,264) $ 516,561 $ (287,602) Trade names 1 - 2 years — — 2,290 (2,290) Other intangible assets 5 years — — 5,600 (4,674) Total $ 321,333 $ (157,264) $ 524,451 $ (294,566) Amortization expense related to the finite-lived intangible assets for the years ended December 31, 2019, 2018 and 2017 was $66.2 million, $66.3 million and $28.0 million, respectively. Expected future amortization expense of finite-lived intangible assets is as follows: (In thousands) 2020 $ 50,652 2021 39,479 2022 30,850 2023 23,963 2024 10,617 Thereafter 8,508 Total $ 164,069 Derivative Financial Instruments We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. At the inception of a hedge transaction, we formally document the relationship between the hedging instruments including our objective and strategy for establishing the hedge. In addition, the effectiveness of the derivative instrument is assessed at inception and on an ongoing basis throughout the hedging period. Counterparties to derivative instruments expose us to credit-related losses in the event of nonperformance. We execute agreements only with financial institutions we believe to be creditworthy and regularly assess the credit worthiness of each of the counterparties. We do not use derivative instruments for trading or speculative purposes. Derivative financial instruments are recorded at fair value in our consolidated balance sheets. Fair value is determined based on projected interest rate yield curves and an estimate of our nonperformance risk or our counterparty’s nonperformance credit risk, as applicable. We do not anticipate any nonperformance by any counterparty. For derivative instruments designated as a cash flow hedge, the 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 consolidated statement of cash flows. See Note 8 for further discussion of our derivative financial instruments. Share-based Compensation We recognize share-based compensation expense for all restricted stock awards (“RSAs”) and performance share awards (“PSAs”) (collectively, “stock awards”) based on the estimated fair value of the stock awards on the date of grant. We recognize the expense associated with RSAs and PSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four-year vesting period, and account for forfeitures as they occur. See Note 10 for additional information regarding share-based compensation. Pension Plan and Other Post-Retirement Benefits We maintain noncontributory defined benefit pension plans and provide certain post-retirement health care and life insurance benefits to certain eligible employees. We also maintain two unfunded supplemental retirement plans to provide incremental pension payments to certain former employees. See Note 11 for a more detailed discussion regarding our pension and other post-retirement benefits. We recognize pension and post-retirement benefits expense during the current period in the consolidated statement of operations using certain assumptions, including the expected long-term rate of return on plan assets, interest cost implied by the discount rate, expected health care cost trend rate and the amortization of unrecognized gains and losses. We determine expected long-term rate of return on plan assets by considering historical investment performance, plan asset allocation strategies and return forecasts for each asset class and input from its advisors. Projected returns by such advisors were based on broad equity and fixed income indices. The expected long-term rate of return is reviewed annually in conjunction with other plan assumptions and revised, if considered necessary, to reflect changes in the financial markets and the investment strategy. Our plan assets are valued at fair value as of the measurement date. Our discount rate assumption is determined annually to reflect the rate at which the benefits could be effectively settled and approximate the timing of expected future payments based on current market determined interest rates for similar obligations. We use bond matching model BOND:Link comprising of high quality corporate bonds to match cash flows to the expected benefit payments. We recognize the overfunded or underfunded status of our defined benefit pension and post-retirement plans as either an asset or liability in the consolidated balance sheet. Actuarial gains and losses that arise during the year are recognized as a component of comprehensive income (loss), net of applicable income taxes, and included in accumulated other comprehensive income (loss). These gains and losses are amortized over future years as a component of the net periodic benefit cost when the net gains and losses exceed 10% of the greater of the market-related value of the plan assets or the projected benefit obligation at the beginning of the year. The amount in excess of the corridor is amortized over the average remaining service period of participating employees expected to receive benefits under the plans. Income Taxes Our estimates of income taxes and the significant items resulting in the recognition of deferred tax assets and liabilities are disclosed in Note 12 and reflect our assessment of future tax consequences of transactions that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss and tax credit loss carryforwards. We establish valuation allowances when necessary to reduce the carrying amount of deferred income tax assets to the amounts that we believe are more likely than not to be realized. We evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change when the tax law change is enacted, based on the years in which the temporary differences are expected to reverse. As we operate in more than one state, changes in our state apportionment factors, based on operating results, may affect our future effective tax rates and the value of our deferred tax assets and liabilities. We record a change in tax rates in our consolidated financial statements in the period of enactment. Income tax consequences that arise in connection with a business combination include identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the appropriate tax basis that will be accepted by the various taxing authorities. We record unrecognized tax benefits as liabilities in accordance with Accounting Standard Codification (“ASC”) 740, Income Taxes, evaluation of new information. In certain instances, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of interest expense and general and administrative expense, respectively. See Note 12 for further discussion on income taxes. Revenue Recognition Revenue is recognized when or as performance obligations are satisfied by transferring control of the good or service to the customer. 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. 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. Advertising Costs Advertising costs are expensed as incurred. Advertising expense was $11.5 million, $11.4 million and $10.9 million in 2019, 2018 and 2017, respectively. Statement of Cash Flows Information During 2019, 2018 and 2017, we made payments for interest and income taxes as follows: (In thousands) 2019 2018 2017 Interest, net of amounts capitalized ($3,737, $5,659 and $1,246 in 2019, 2018 and 2017, respectively) $ 129,508 $ 122,422 $ 106,499 Income taxes (received) paid, net $ (8,374) $ (9,060) $ 953 In 2019, 2018 and 2017, we acquired equipment of $6.2 million, $19.2 million and $12.8 million, respectively, through finance or capital lease agreements. In 2017, we issued 20.1 million shares of the Company’s common stock with a market value of $431.0 million in connection with the acquisition of FairPoint as described in Note 4. Noncontrolling Interest We have a majority-owned subsidiary, East Texas Fiber Line Incorporated (“ETFL”), which is a joint venture owned 63% by the Company and 37% by Eastex Telecom Investments, LLC. ETFL provides connectivity over a fiber optic transport network to certain customers residing in Texas. Recent Accounting Pronouncements Effective January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02” or “ASC 842”), 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 9 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 on our consolidated financial statements and related disclosures as we did not make the optional election for reclassification of stranded tax effects from accumulated other comprehensive income (loss) to retained earnings. Effective January 1, 2019, we adopted ASU No. 2017-12 (“ASU 2017-12”), Targeted Improvements to Accounting for Hedging Activities In November 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12 (“ASU 2019-12”), Income Taxes Income Taxes. In August 2018, the 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 |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 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. Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the years ended December 31, 2019, 2018 and 2017: (In thousands) 2019 2018 2017 Operating Revenues Commercial and carrier: Data and transport services (includes VoIP) $ 355,325 $ 349,413 $ 274,221 Voice services 188,322 202,875 152,632 Other 52,894 56,395 33,908 596,541 608,683 460,761 Consumer: Broadband (VoIP and Data) 257,083 253,119 183,634 Video services 81,378 88,338 91,406 Voice services 180,839 202,032 137,696 519,300 543,489 412,736 Subsidies 72,440 83,371 62,272 Network access 138,056 152,582 110,196 Other products and services 10,205 10,949 13,609 Total operating revenues $ 1,336,542 $ 1,399,074 $ 1,059,574 Contract Assets and Liabilities The following table provides information about receivables, contract assets and contract liabilities from our revenue contracts with customers: Year Ended December 31, (In thousands) 2019 2018 Accounts receivable, net $ 120,016 $ 133,136 Contract assets 18,804 12,128 Contract liabilities 50,974 52,966 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 years ended December 31, 2019 and 2018, the Company recognized expense of $6.3 million and $2.9 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 years ended December 31, 2019 and 2018, the Company deferred and recognized revenues of $397.5 million and $354.2 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 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. Performance obligations related to our service revenue contracts are generally satisfied 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 PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 3. EARNINGS 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: (In thousands, except per share amounts) 2019 2018 2017 Net income (loss) $ (19,931) $ (50,571) $ 65,299 Less: net income attributable to noncontrolling interest 452 263 354 Income (loss) attributable to common shareholders before allocation of earnings to participating securities (20,383) (50,834) 64,945 Less: earnings allocated to participating securities 462 810 362 Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ (20,845) $ (51,644) $ 64,583 Weighted-average number of common shares outstanding 70,837 70,613 60,373 Net income (loss) per common share attributable to common shareholders - basic and diluted $ (0.29) $ (0.73) $ 1.07 Diluted EPS attributable to common shareholders for the years ended December 31, 2019, 2018 and 2017 excludes 1.1 million, 0.5 million and 0.3 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. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 12 Months Ended |
Dec. 31, 2019 | |
ACQUISITIONS AND DIVESTITURES | |
ACQUISITIONS AND DIVESTITURES | 4. ACQUISITIONS AND DIVESTITURES Acquisitions FairPoint Communications, Inc. On July 3, 2017, we completed the Merger with FairPoint and acquired all the issued and outstanding shares of FairPoint in exchange for shares of our common stock. As a result, FairPoint became a wholly-owned subsidiary of the Company. FairPoint is an advanced communications provider to business, wholesale and residential customers within its service territory. FairPoint owns and operates a robust fiber-based network with more than 22,000 route miles of fiber, including 17,000 route miles of fiber in northern New England. The acquisition reflects our strategy to diversify revenue and cash flows amongst multiple products and to expand our network to new markets. The results of operations of FairPoint have been reported in our consolidated financial statements as of the effective date of the acquisition. For the year ended December 31, 2017, FairPoint contributed operating revenues of $389.5 million and net income of $22.7 million, which included $12.3 million in acquisition related costs. Unaudited Pro Forma Results The following unaudited pro forma information presents our results of operations as if the acquisition of FairPoint occurred on January 1, 2016. The adjustments to arrive at the pro forma information below included adjustments for depreciation and amortization on the acquired tangible and intangible assets acquired, interest expense on the debt incurred to finance the acquisition and to repay certain existing indebtedness of FairPoint, and the exclusion of certain acquisition related costs. Shares used to calculate the basic and diluted earnings per share were adjusted to reflect the additional shares of common stock issued to fund the acquisition. Year Ended December 31, (Unaudited; in thousands, except per share amounts) 2017 Operating revenues $ 1,460,620 Income from operations $ 60,926 Net income $ 91,131 Less: net income attributable to noncontrolling interest 354 Net income attributable to common stockholders $ 90,777 Net income per common share-basic and diluted $ 1.29 Transaction costs related to the acquisition of FairPoint were $33.0 million during the year ended December 31, 2017, which are included in acquisition and other transaction costs in the consolidated statements of operations. These costs are considered to be non-recurring in nature and therefore pro forma adjustments have been made to exclude these costs from the pro forma results of operations. The pro forma information does not purport to present the actual results that would have resulted if the acquisition had in fact occurred at the beginning of the fiscal period presented, nor does the information project results for any future period. The pro forma information does not include the impact of any future cost savings or synergies that may be achieved as a result of the acquisition. Divestitures On 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 consolidated statements of operations as the annual revenue of these operations is less than 1% of the consolidated operating revenues. During the year ended December 31, 2018, we recognized a loss of $0.2 |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS | |
INVESTMENTS | 5. INVESTMENTS Our investments are as follows: (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) 20,162 17,800 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,658 7,786 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 28,815 29,147 Totals $ 112,717 $ 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 (“Pittsburgh SMSA”), 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. We did not evaluate any of the investments for impairment as no factors indicating impairment existed during the year. For these investments, we adjust the carrying value for any purchases or sales of our ownership interests, if any (there were none during the periods presented). We record distributions received from these investments as investment income in non-operating income (expense). In 2019, 2018 and 2017, we received cash distributions from these partnerships totaling $16.8 million, $17.3 million and $12.8 million, respectively. CoBank, ACB (“CoBank”) is a cooperative bank owned by its customers. Annually, CoBank distributes patronage in the form of cash and stock in the cooperative based on the Company’s outstanding loan balance with CoBank, which has traditionally been a significant lender in the Company’s credit facility. The investment in CoBank represents the accumulation of the equity patronage paid by CoBank to the Company. Equity Method We own 20.51%of GTE Mobilnet of Texas RSA #17 Limited Partnership (“RSA #17”), 16.67% of Pennsylvania RSA 6(I) Limited Partnership (“RSA 6(I)”) and 23.67% of Pennsylvania RSA 6(II) Limited Partnership (“RSA 6(II)”). RSA #17 provides cellular service to a limited rural area in Texas. RSA 6(I) and RSA 6(II) provide cellular service in and around our Pennsylvania service territory. Because we have significant influence over the operating and financial policies of these three entities, we account for the investments using the equity method. In 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 year ended December 31, 2018. In 2019, 2018 and 2017, we received cash distributions from these partnerships totaling $19.0 million, $21.8 million and $17.2 million, respectively. The carrying value of the investments exceeds the underlying equity in net assets of the partnerships by $32.8 million as of December 31, 2019 and 2018. The combined results of operations and financial position of our three equity investments in the cellular limited partnerships are summarized below: (In thousands) 2019 2018 2017 Total revenues $ 349,640 $ 346,251 $ 350,611 Income from operations 100,182 100,571 104,973 Net income before taxes 99,146 99,408 103,497 Net income 99,146 99,408 103,497 Current assets $ 80,655 $ 75,040 $ 78,782 Non-current assets 156,672 103,996 95,959 Current liabilities 33,292 24,719 22,472 Non-current liabilities 92,477 51,840 51,463 Partnership equity 111,558 102,478 100,806 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 6. FAIR VALUE MEASUREMENTS Financial Instruments Our derivative instruments related to interest rate swap agreements are required to be measured at fair value on a recurring basis. The fair values of the interest rate swaps are determined using valuation models and are categorized within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and observable market data of similar instruments. See Note 8 for further discussion regarding our interest rate swap agreements. Our interest rate swap agreements measured at fair value on a recurring basis at December 31, 2019 and 2018 were as follows: As of December 31, 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 $ (2,565) $ — $ (2,565) $ — Long-term interest rate swap liabilities (24,960) — (24,960) — Total $ (27,525) $ — $ (27,525) $ — 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 December 31, 2019 and 2018. As of December 31, 2019 As of December 31, 2018 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,262,111 $ 2,125,497 $ 2,315,077 $ 2,155,127 Cost & Equity Method Investments Our investments at December 31, 2019 and 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 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 | 12 Months Ended |
Dec. 31, 2019 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 7. LONG-TERM DEBT Long-term debt outstanding, presented net of unamortized discounts, consisted of the following as of December 31, 2019 and 2018: (In thousands) 2019 2018 Senior secured credit facility: Term loans, net of discounts of $5,604 and $6,994 at December 31, 2019 and 2018, respectively $ 1,779,109 $ 1,796,068 Revolving loan 40,000 22,000 6.50% Senior notes due 2022, net of discount of $1,998 and $2,991 at December 31, 2019 and 2018, respectively 443,002 497,009 2,262,111 2,315,077 Less: current portion of long-term debt (18,350) (18,350) Less: deferred debt issuance costs (8,152) (11,386) Total long-term debt $ 2,235,609 $ 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 on July 3, 2017 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, depending on our leverage ratio. Based on our leverage ratio at December 31, 2019, the borrowing margin for the next three month period ending March 31, 2020 will be at a weighted-average margin of 3.00% for a LIBOR-based loan or 2.00% for an alternate base rate loan. The applicable borrowing margin for the revolving credit facility is adjusted quarterly to reflect the leverage ratio from the prior quarter-end. As of December 31, 2019, borrowings of $40.0 million were outstanding under the revolving credit facility, which consisted of LIBOR-based borrowings of $30.0 million and alternate base rate borrowings of $10.0 million. At December 31, 2018, borrowings of $22.0 million were 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 $17.1 million were outstanding under our revolving credit facility as of December 31, 2019. The stand-by letters of credit are renewable annually and reduce the borrowing availability under the revolving credit facility. As of December 31, 2019, $52.9 million was available for borrowing under the revolving credit facility. The weighted-average interest rate on outstanding borrowings under our credit facility was 4.80% and 5.54% at December 31, 2019 and 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 and interest coverage ratio as of the end of any fiscal quarter is greater than 5.25:1.00 and less than 2.25:1.00, respectively. As of December 31, 2019, our total net leverage ratio under the Credit Agreement was 4.38:1.00, and our interest coverage ratio was 3.69:1.00. As of December 31, 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 year ended December 31, 2019, we repurchased $55.0 million of the aggregate principal amount of the Senior Notes. In connection with the partial repurchase of the Senior Notes, we paid $49.8 million and recognized a gain on extinguishment of debt of $4.5 million during the year ended December 31, 2019. 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. At December 31, 2019, the Company was in compliance with all terms, conditions and covenants under the indenture governing the Senior Notes. Future Maturities of Debt At December 31, 2019, the aggregate maturities of our long-term debt excluding finance leases were as follows: (In thousands) 2020 $ 18,350 2021 58,350 2022 463,350 2023 1,729,663 Total maturities 2,269,713 Less: Unamortized discount (7,602) $ 2,262,111 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 8. DERIVATIVE FINANCIAL INSTRUMENTS We may utilize interest rate swap agreements to mitigate risk associated with fluctuations in interest rates related to our variable rate debt obligations under the Credit Agreement. Derivative financial instruments are recorded at fair value in our consolidated balance sheet. The following interest rate swaps were outstanding at December 31, 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 $ (2,565) Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (18,303) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (6,657) Total Fair Values $ (27,525) 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 at 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. In 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 at inception. 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. In April 2018, the interest rate swap agreements were re-designated as a cash flow hedge. 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 year ended December 31, 2018, a loss of $2.5 million was recognized in interest expense for the change in fair value of the de-designated swaps. At December 31, 2019 and 2018, the total pre-tax unrealized gain (loss) related to our interest rate swap agreements included in AOCI was $(22.5) million and $3.2 million, respectively. From the balance in AOCI as of December 31, 2019, we expect to recognize a loss of approximately $10.8 million in earnings as interest expense in the next twelve months. Information regarding our cash flow hedge transactions is as follows: Year Ended December 31, (In thousands) 2019 Unrealized loss recognized in AOCI, pretax $ (26,013) Deferred loss reclassified from AOCI to interest expense $ (1,108) |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | 9. 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 89 years and may include one or more options to renew, which can extend the lease term from one 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 consolidated statements of operations for the year ended December 31, 2019. Variable lease payments are expensed as incurred. The following table summarizes the components of our lease right-of use assets and liabilities at December 31, 2019: (In thousands) Balance Sheet Classification December 31, 2019 Operating leases Operating lease right-of-use assets Other assets $ 26,239 Current lease liabilities Accrued expense $ (6,173) Noncurrent lease liabilities Other long-term liabilities $ (20,235) Finance leases Finance lease right-of-use assets, net of accumulated depreciation of $28,909 Property, plant and equipment, net $ 22,414 Current lease liabilities Current portion of long-term debt and finance lease obligations $ (8,951) Noncurrent lease liabilities Long-term debt and finance lease obligations $ (15,068) Weighted-average remaining lease term Operating leases 7.6 years Finance leases 5.6 years Weighted-average discount rate Operating leases 7.20 % Finance leases 7.15 % The components of lease expense for the year ended December 31, 2019 consisted of the following: Year Ended (In thousands) December 31, 2019 Finance lease cost: Amortization of right-of-use assets $ 12,031 Interest on lease liabilities 1,993 Operating lease cost 8,902 Variable lease cost 2,392 Total lease cost $ 25,318 The following table presents supplemental cash flow information related to leases for the year ended December 31, 2019: Year Ended (In thousands) December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 8,701 Operating cash flows for finance leases 1,993 Financing cash flows for finance leases 12,519 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 2,269 Finance leases 6,227 At December 31, 2019, the aggregate maturities of our lease liabilities were as follows: (In thousands) Operating Leases Finance Leases 2020 $ 7,860 $ 10,280 2021 5,716 5,095 2022 5,035 3,190 2023 3,374 1,739 2024 2,286 1,665 Thereafter 10,691 6,604 Total lease payments 34,962 28,573 Less: Interest (8,554) (4,554) $ 26,408 $ 24,019 Future minimum lease payments for operating and capital leases under ASC Topic 840, Leases (In thousands) Operating Leases Capital Leases 2019 $ 11,663 $ 13,798 2020 8,640 8,303 2021 5,675 3,471 2022 3,821 2,582 2023 2,282 1,489 Thereafter 8,268 6,405 Total lease payments $ 40,349 36,048 Less: Interest (5,686) $ 30,362 Lessor We have various arrangements for use of our network assets for which we are the lessor, including tower space, certain colocation, conduit and dark fiber arrangements. These leases meet the criteria for operating lease classification. Lease income associated with these types of leases is not material. Occasionally, we enter into arrangements where the term may be for a major part of the asset’s remaining economic life such as in indefeasible right of use (“IRU”) arrangements for dark fiber or conduit, which meet the criteria for sales-type lease classification. During the year ended December 31, 2019, we entered into IRU arrangements for exclusive access to and unrestricted use of specific assets. The arrangements were recognized as sales-type leases as the term of each of the arrangements is for a major part of the asset’s remaining economic life. During the year ended December 31, 2019, we recognized revenue of $2.0 million and a gain of $1.6 million related to these arrangements. 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 | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY | |
EQUITY | 10. 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. We measure the fair value of RSAs based on the market price of the underlying common stock on the date of grant. We recognize the expense associated with RSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four year vesting period. We implemented an ongoing performance-based incentive program under the Plan. The performance-based incentive program provides for annual grants of PSAs. PSAs are restricted stock that are issued, to the extent earned, at the end of each performance cycle. Under the performance-based incentive program, each participant is given a target award expressed as a number of shares, with a payout opportunity ranging from 0% to 120% of the target, depending on performance relative to predetermined goals. An estimate of the number of PSAs that are expected to vest is made, and the fair value of the PSAs is expensed utilizing the fair value on the date of grant over the requisite service period. The following table summarizes grants of RSAs and PSAs under the Plan during the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, Grant Date Grant Date Grant Date 2019 Fair Value 2018 Fair Value 2017 Fair Value RSAs Granted 551,214 $ 9.87 478,210 $ 12.45 124,100 $ 23.12 PSAs Granted 371,672 $ 12.45 — $ — 36,982 $ 23.27 Total 922,886 478,210 161,082 The following table summarizes the RSA and PSA activity during the year ended December 31, 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 $ 12.45 Shares vested (318,891) $ 12.14 (116,323) $ 14.57 Shares forfeited, cancelled or retired (38,649) $ 10.77 (14,980) $ 12.74 Non-vested shares outstanding - December 31, 2019 532,445 $ 11.58 275,995 $ 13.29 The total fair value of the RSAs and PSAs that vested during the years ended December 31, 2019, 2018 and 2017 was $5.6 million, $4.1 million and $3.4 million, respectively. Share-based Compensation Expense The following table summarizes total compensation costs recognized for share-based payments during the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, (In thousands) 2019 2018 2017 Restricted stock $ 4,013 $ 3,249 $ 1,986 Performance shares 2,823 1,870 780 Total $ 6,836 $ 5,119 $ 2,766 Income tax benefits related to share-based compensation of approximately $1.8 million, $1.3 million and $1.1 million were recorded for the years ended December 31, 2019, 2018 and 2017, respectively. Share-based compensation expense is included in “selling, general and administrative expenses” in the accompanying consolidated statements of operations. As of December 31, 2019, total unrecognized compensation cost related to non-vested RSAs and PSAs was $10.6 million and will be recognized over a weighted-average period of approximately 1.7 years. Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss), net of tax, by component during 2019 and 2018: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2017 $ (48,464) $ 381 $ (48,083) Other comprehensive loss before reclassifications (10,835) (691) (11,526) Amounts reclassified from accumulated other comprehensive loss 3,785 2,612 6,397 Net current period other comprehensive income (loss) (7,050) 1,921 (5,129) Balance at December 31, 2018 $ (55,514) $ 2,302 $ (53,212) Other comprehensive loss before reclassifications (16,738) (19,237) (35,975) Cumulative adjustment upon adoption of ASU 2017-12 — (576) (576) Amounts reclassified from accumulated other comprehensive loss 7,936 959 8,895 Net current period other comprehensive loss (8,802) (18,854) (27,656) Balance at December 31, 2019 $ (64,316) $ (16,552) $ (80,868) The following table summarizes reclassifications from accumulated other comprehensive loss during 2019 and 2018: Amount Reclassified from AOCI Year Ended December 31, Affected Line Item in the (In thousands) 2019 2018 Statement of Income Amortization of pension and post-retirement items: Prior service cost $ (857) $ (163) (a) Actuarial loss (3,195) (6,054) (a) Plan curtailment — 1,156 (a) Settlement loss (6,726) (94) (a) (10,778) (5,155) Total before tax 2,842 1,370 Tax benefit $ (7,936) $ (3,785) Net of tax Gain (Loss) on cash flow hedges: Interest rate derivatives $ (1,108) $ (3,467) Interest expense 149 855 Tax benefit $ (959) $ (2,612) Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and post-retirement benefit plans. See Note 11 for additional details. |
PENSION PLANS AND OTHER POST-RE
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | 12 Months Ended |
Dec. 31, 2019 | |
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | |
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | 11. PENSION PLANS 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 tables summarize the change in benefit obligation, plan assets and funded status of the Pension Plans as of December 31, 2019 and 2018: (In thousands) 2019 2018 Change in benefit obligation Benefit obligation at the beginning of the year $ 712,174 $ 777,987 Service cost 50 5,809 Interest cost 30,327 28,870 Actuarial loss (gain) 80,023 (67,558) Benefits paid (31,581) (30,870) Plan amendments — 1,216 Plan curtailment — (1) Plan settlement (31,172) (3,279) Benefit obligation at the end of the year $ 759,821 $ 712,174 (In thousands) 2019 2018 Change in plan assets Fair value of plan assets at the beginning of the year $ 499,791 $ 552,240 Employer contributions 27,516 26,200 Actual return on plan assets 92,413 (44,500) Benefits paid (31,581) (30,870) Plan settlement (31,172) (3,279) Fair value of plan assets at the end of the year $ 556,967 $ 499,791 Funded status at year end $ (202,854) $ (212,383) Amounts recognized in the consolidated balance sheets at December 31, 2019 and 2018 consisted of: ( In thousands) 2019 2018 Current liabilities $ (243) $ (243) Long-term liabilities $ (202,611) $ (212,140) Amounts recognized in accumulated other comprehensive loss for the years ended December 31, 2019 and 2018 consisted of: (In thousands) 2019 2018 Unamortized prior service cost $ 1,052 $ 1,175 Unamortized net actuarial loss 107,982 95,362 $ 109,034 $ 96,537 The following table summarizes the components of net periodic pension cost recognized in the consolidated statements of operations for the plans for the years ended December 31, 2019, 2018 and 2017: (In thousands) 2019 2018 2017 Service cost $ 50 $ 5,809 $ 3,055 Interest cost 30,327 28,870 21,882 Expected return on plan assets (34,627) (38,640) (28,459) Amortization of: Net actuarial loss 2,890 6,110 6,244 Prior service cost (credit) 123 (204) (316) Plan curtailment — (1,156) (1,337) Plan settlement 6,726 94 17 Net periodic pension cost $ 5,489 $ 883 $ 1,086 The components of net periodic pension cost other than the service cost component are included in other, net within other income (expense) in the consolidated statements of operations. In 2019, we purchased a group annuity contract to transfer the pension benefit obligations and annuity administration for a select group of retirees or their beneficiaries to an annuity provider. Upon issuance of the group annuity contract, the pension benefit obligation of $24.4 million for approximately 500 participants was irrevocably transferred to the annuity provider. The purchase of the group annuity was funded directly by the assets of the Pension Plans. During the year ended December 31, 2019, we recognized a pension settlement charge of $6.7 million as a result of the transfer of the pension liability to the annuity provider and other lump sum payments made during the year. In 2018 and 2017, the Retirement Plan was amended to freeze benefit accruals under the cash balance benefit plan for certain participants under collective bargaining agreements. As a result of these amendments, we recognized a pre-tax curtailment gain of $1.2 million and $1.3 million as a component of net periodic pension cost during the years ended December 31, 2018 and 2017, respectively. The following table summarizes other changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects, during 2019 and 2018: (In thousands) 2019 2018 Actuarial loss, net $ 22,236 $ 15,583 Recognized actuarial loss (2,890) (6,111) Prior service cost (credit) (123) 1,216 Recognized prior service credit — 204 Plan curtailment — 1,156 Plan settlement (6,726) (94) Total amount recognized in other comprehensive loss, before tax effects $ 12,497 $ 11,954 The estimated net actuarial loss and net prior service cost for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss in net periodic pension cost in 2020 is $0.1 million and $2.0 million, respectively. The weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost for the years ended December 31, 2019, 2018 and 2017 were as follows: 2019 2018 2017 Discount rate - net periodic benefit cost 4.36 % 3.75 % 4.02 % Discount rate - benefit obligation 3.51 % 4.39 % 3.75 % Expected long-term rate of return on plan assets 6.97 % 7.03 % 7.23 % Rate of compensation/salary increase 2.50 % 2.50 % 2.39 % Other Non-qualified Deferred Compensation Agreements We also are liable for deferred compensation agreements with former members of the board of directors and certain other former employees of acquired companies. Depending on the plan, benefits are payable in monthly or annual installments for a period of time based on the terms of the agreement which range from five years up to the life of the participant or to the beneficiary upon death of the participant and may begin as early as age 55. Participants accrue no new benefits as these plans had previously been frozen. Payments related to the deferred compensation agreements totaled approximately $0.3 million for each of the years ended December 31, 2019 and 2018. The net present value of the remaining obligations was approximately $1.4 million and $1.6 million at December 31, 2019 and 2018, respectively, and is included in pension and post-retirement benefit obligations in the accompanying balance sheets. We also maintain 25 life insurance policies on certain of the participating former directors and employees. The excess of the cash surrender value of the remaining life insurance policies over the notes payable balances related to these policies is determined by an independent consultant, and totaled $2.5 million and $2.4 million at December 31, 2019 and 2018, respectively. These amounts are included in investments in the accompanying consolidated balance sheets. Cash principal payments for the policies and any proceeds from the policies are classified as operating activities in the consolidated statements of cash flows. The aggregate death benefit payment payable under these policies totaled $7.1 million and $7.0 million as of December 31, 2019 and 2018, respectively. Post-retirement Benefit Obligations We sponsor various healthcare and life insurance plans (“Post-retirement Plans”) that provide post-retirement medical and life insurance benefits to certain groups of retired employees. Certain plans 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 certain healthcare plan 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 tables summarize the change in benefit obligation, plan assets and funded status of the post-retirement benefit obligations as of December 31, 2019 and 2018: (In thousands) 2019 2018 Change in benefit obligation Benefit obligation at the beginning of the year $ 109,902 $ 116,970 Service cost 957 405 Interest cost 4,231 4,128 Plan participant contributions 269 384 Actuarial gain 570 (8,517) Benefits paid (8,797) (10,130) Plan amendments — 6,662 Benefit obligation at the end of the year $ 107,132 $ 109,902 (In thousands) 2019 2018 Change in plan assets Fair value of plan assets at the beginning of the year $ 2,791 $ 2,484 Employer contributions 8,527 9,746 Plan participant’s contributions 269 384 Actual return on plan assets 374 307 Benefits paid (8,797) (10,130) Fair value of plan assets at the end of the year $ 3,164 $ 2,791 Funded status at year end $ (103,968) $ (107,111) Amounts recognized in the consolidated balance sheets at December 31, 2019 and 2018 consist of: (In thousands) 2019 2018 Current liabilities $ (5,619) $ (6,594) Long-term liabilities $ (98,349) $ (100,517) Amounts recognized in accumulated other comprehensive loss for the years ended December 31, 2019 and 2018 consist of: (In thousands) 2019 2018 Unamortized prior service cost (credit) $ (872) $ 2,200 Unamortized net actuarial gain (7,987) (10,396) $ (8,859) $ (8,196) The following table summarizes the components of the net periodic costs for post-retirement benefits for the years ended December 31, 2019, 2018 and 2017: (In thousands) 2019 2018 2017 Service cost $ 957 $ 405 $ 498 Interest cost 4,231 4,128 3,034 Expected return on plan assets (180) (142) (113) Amortization of: Net actuarial gain (2,033) (56) (173) Prior service cost (credit) 3,072 367 (521) Net periodic postretirement benefit cost $ 6,047 $ 4,702 $ 2,725 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 consolidated statements of operations. Our Post-retirement Plans were amended as a result of new collective bargaining agreements ratified in 2018, which resulted in an increase in net periodic post-retirement benefit cost of approximately $1.4 million during the year ended December 31, 2018. The following table summarizes other changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects, during 2019 and 2018: (In thousands) 2019 2018 Actuarial gain, net $ 376 $ (8,682) Recognized actuarial gain 2,033 56 Prior service cost — 6,662 Recognized prior service cost (3,072) (367) Total amount recognized in other comprehensive loss, before tax effects $ (663) $ (2,331) The estimated net actuarial gain and net prior service cost that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost in 2020 is approximately $(1.9) million and $1.6 million, respectively. The weighted-average discount rate assumptions utilized for the years ended December 31 were as follows: 2019 2018 2017 Net periodic benefit cost 4.35 % 3.62 % 3.96 % Benefit obligation 3.34 % 4.35 % 3.67 % For purposes of determining the cost and obligation for post-retirement medical benefits, a 6.50% healthcare cost trend rate was assumed for the plan in 2019, declining to the ultimate trend rate of 5.00% in 2026. Assumed healthcare cost trend rates have a significant effect on the amounts reported for healthcare plans. A one percent change in the assumed healthcare cost trend rate would have had the following effects: (In thousands) 1% Increase 1% Decrease Effect on total of service and interest cost $ 293 $ (277) Effect on postretirement benefit obligation $ 4,586 $ (4,634) Plan Assets Our investment strategy is designed to provide a stable environment to earn a rate of return over time to satisfy the benefit obligations and minimize the reliance on contributions as a source of benefit security. The objectives are based on a long-term ( 5 The asset return objective is to achieve, as a minimum over time, the passively managed return earned by managed index funds, weighted in the proportions outlined by the asset class exposures identified in the pension plan’s strategic allocation. We update our long-term, strategic asset allocations every few years to ensure they are in line with our fund objectives. At December 31, 2019, the target allocation of the Pension Plan assets is approximately 60 - 80% in return seeking assets consisting primarily of equity funds with the remainder in fixed income funds and cash equivalents. Our investment policy allows the use of derivative instruments when appropriate to reduce anticipated asset volatility or to gain desired exposure to various markets and return drivers. Currently, we believe that there are no significant concentrations of risk associated with the Pension Plan assets. The following is a description of the valuation methodologies for assets measured at fair value utilizing the fair value hierarchy discussed in Note 1, which prioritizes the inputs used in the valuation methodologies in measuring fair value. The fair value measurements used to value our plan assets as of December 31, 2019 were generated by using market transactions involving identical or comparable assets. There were no changes in the valuation techniques used during 2019. Common and Preferred Stocks: Mutual Funds: U.S. Treasury and Government Agency Securities: Corporate and Municipal Bonds: Mortgage/Asset-backed Securities: Common Collective Trusts and Commingled Funds: The fair values of our assets for our defined benefit pension plans at December 31, 2019 and 2018, by asset category were as follows: As of December 31, 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) Cash and cash equivalents $ 21 $ 21 $ — $ — Equities: Stocks: U.S. common stocks 15 15 — — International stocks 4 4 — — Total plan assets in the fair value hierarchy 40 $ 40 $ — $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 9,201 Equities: Global 220,453 Real estate 83,433 Fixed Income 243,840 Total plan assets $ 556,967 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) Cash and cash equivalents $ 15,107 $ 15,107 $ — $ — Equities: Stocks: U.S. common stocks 46,830 46,830 — — International stocks 9,656 9,656 — — Funds: U.S. small cap 7,222 7,222 — — U.S. mid cap 30,752 30,752 — — U.S. large cap 51,847 51,847 — — Emerging markets 15,954 15,954 — — International 81,398 81,398 — — Fixed Income: U.S. treasury and government agency securities 25,616 25,616 — — Corporate and municipal bonds 36,700 — 36,700 — Mortgage/asset-backed securities 8,733 — 8,733 — Mutual funds 10,763 10,763 — — Total plan assets in the fair value hierarchy 340,578 $ 295,145 $ 45,433 $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 10,275 Equities: U.S. small cap 10,391 U.S. large cap 11,268 Emerging markets 8,739 International 15,361 Fixed Income 103,345 Total plan assets 499,957 Other liabilities (3) (166) Net plan assets $ 499,791 (1) Certain investments that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include an investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper, U.S. government obligations and variable rate securities with maturities less than one year. (3) Net amount due for securities purchased and sold. The fair values of our assets for our post-retirement benefit plans at December 31, 2019 and 2018 were as follows: As of December 31, (In thousands) 2019 Common Collective Trusts measured at NAV: (1) Short-term investments (2) $ 53 Equities: Global 1,252 Real estate 474 Fixed Income 1,385 Total plan assets $ 3,164 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) Cash and cash equivalents $ 4 $ 4 $ — $ — Equities: U.S. common stocks 240 240 — — International stocks 83 83 — — Funds: U.S. mid cap 75 75 — — U.S. large cap 74 74 — — Emerging markets 188 188 — — International 449 449 — — Total plan assets in the fair value hierarchy 1,113 $ 1,113 $ — $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 61 Equities: U.S. small cap 123 U.S. large cap 133 Emerging markets 103 International 181 Fixed Income 1,220 Total plan assets 2,934 Benefit payments payable (141) Other liabilities (3) (2) Net plan assets $ 2,791 (1) Certain investments that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper and U.S. government obligations with maturities less than one year. (3) Net amount due for securities purchased and sold. Cash Flows Contributions Our funding policy is to contribute annually an actuarially determined amount necessary to meet the minimum funding requirements as set forth in employee benefit and tax laws. We expect to contribute approximately $25.0 million to our Pension Plans and $8.9 million to our other post-retirement plans in 2020. Estimated Future Benefit Payments As of December 31, 2019, benefit payments expected to be paid over the next ten years are outlined in the following table: Other Pension Post-retirement (In thousands) Plans Plans 2020 $ 33,725 $ 8,870 2021 34,797 8,734 2022 35,775 8,203 2023 36,577 7,735 2024 37,741 7,277 2025 - 2029 197,690 31,173 Defined Contribution Plans We offer defined contribution 401(k) plans to substantially all of our employees. Contributions made under the defined contribution plans include a match, at the Company’s discretion, of employee contributions to the plans. We recognized expense with respect to these plans of $15.8 million, $13.7 million and $9.6 million in 2019, 2018 and 2017, respectively. The increase in expense in 2018 as compared to 2017 is attributable to the acquisition of FairPoint in July 2017. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
INCOME TAXES | 12. INCOME TAXES Income tax expense (benefit) consists of the following components: For the Year Ended (In thousands) 2019 2018 2017 Current: Federal $ 143 $ 247 $ 1,055 State 1,392 1,634 145 Total current expense 1,535 1,881 1,200 Deferred: Federal (4,339) (17,248) (141,726) State (910) (8,760) 15,599 Total deferred benefit (5,249) (26,008) (126,127) Total income tax benefit $ (3,714) $ (24,127) $ (124,927) The following is a reconciliation of the federal statutory tax rate to the effective tax rate for the years ended December 31, 2019, 2018 and 2017: For the Year Ended (In percentages) 2019 2018 2017 Statutory federal income tax rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal benefit 10.6 5.2 4.1 Transaction costs — — (5.8) Other permanent differences (4.5) (0.9) 0.2 Change in deferred tax rate (2.9) 3.7 (9.1) Change in deferred tax rate - Federal Tax Reform — 6.9 189.4 Valuation allowance (4.7) (2.3) (4.3) Provision to return (0.5) 0.5 — Sale of stock in subsidiary — (1.0) — State audit settlement (3.2) — — Acquisition related — (1.3) — Other (0.1) 0.5 — 15.7 % 32.3 % 209.5 % Deferred Taxes The components of the net deferred tax liability are as follows: Year Ended December 31, (In thousands) 2019 2018 Non-current deferred tax assets: Reserve for uncollectible accounts $ 1,194 $ 1,164 Accrued vacation pay deducted when paid 4,152 4,371 Accrued expenses and deferred revenue 9,839 12,848 Net operating loss carryforwards 86,535 76,659 Pension and postretirement obligations 80,245 84,786 Share-based compensation 693 9 Derivative instruments 5,868 (825) Financing costs 176 189 Tax credit carryforwards 6,077 6,411 194,779 185,612 Valuation allowance (6,680) (9,158) Net non-current deferred tax assets 188,099 176,454 Non-current deferred tax liabilities: Goodwill and other intangibles (66,271) (82,992) Basis in investment (5) (12) Partnership investments (16,138) (14,425) Property, plant and equipment (278,712) (267,154) (361,126) (364,583) Net non-current deferred taxes $ (173,027) $ (188,129) Deferred income taxes are provided for the temporary differences between assets and liabilities recognized for financial reporting purposes and assets and liabilities recognized for tax purposes. The ultimate realization of deferred tax assets depends upon taxable income during the future periods in which those temporary differences become deductible. To determine whether deferred tax assets can be realized, management assesses whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, taking into consideration the scheduled reversal of deferred tax liabilities, projected future taxable income and tax-planning strategies. Consolidated and its wholly owned subsidiaries, which file a consolidated federal income tax return, estimates it has available federal NOL carryforwards as of December 31, 2019 of $349.5 million and related deferred tax assets of $73.4 million. The federal NOL carryforwards for tax years beginning after December 31, 2017 of $60.7 million and related deferred tax assets of $12.8 million can be carried forward indefinitely. The federal NOL carryforwards for the tax years prior to December 31, 2017 of $288.8 million and related deferred tax assets of $60.6 million expire in 2026 to 2035. ETFL, a nonconsolidated subsidiary for federal income tax return purposes, estimates it has available NOL carryforwards as of December 31, 2019 of $1.0 million and related deferred tax assets of $0.2 million. ETFL’s federal NOL carryforwards are for the tax years prior to December 31, 2017 and expire in 2021 to 2024. We estimate that we have available state NOL carryforwards as of December 31, 2019 of $758.5 million and related deferred tax assets of $16.7 million. The state NOL carryforwards expire from 2020 to 2039. Management believes that it is more likely than not that we will not be able to realize state NOL carryforwards of $80.3 million and related deferred tax asset of $5.2 million and has placed a valuation allowance on this amount. The related NOL carryforwards expire from 2020 to 2037. If or when recognized, the tax benefits related to any reversal of the valuation allowance will be accounted for as a reduction of income tax expense. The enacted Tax Act repeals the federal alternative minimum tax (“AMT”) regime for tax years beginning after December 31, 2017. We have available AMT credit carryforwards as of December 31, 2019 of $1.5 million, which will be fully refundable with the filing of the 2019 federal income tax return in 2020. We estimate that we have available state tax credit carryforwards as of December 31, 2019 of $7.7 million and related deferred tax assets of $6.1 million. The state tax credit carryforwards are limited annually and expire from 2020 to 2029. Management believes that it is more likely than not that we will not be able to realize state tax carryforwards of $1.8 million and related deferred tax asset of $1.5 million and has placed a valuation allowance on this amount. The related state tax credit carryforwards expire from 2020 to 2024. If or when recognized, the tax benefits related to any reversal of the valuation allowance will be accounted for as a reduction of income tax expense. Unrecognized Tax Benefits Under the accounting guidance applicable to uncertainty in income taxes, we have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns as well as all open tax years in these jurisdictions. Our unrecognized tax benefits as of December 31, 2019 and 2018 were $4.9 million. There were no material effects on the Company’s effective tax rate. The net amount of unrecognized benefits that, if recognized, would result in an impact to the effective rate is $4.7 million for each of the years ended December 31, 2019 and 2018. 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 December 31, 2019 and 2018, 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 NOL carryovers from those prior years are utilized in the future. We are currently under examination 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. We do not expect that the total unrecognized tax benefits and related accrued interest will significantly change due to the settlement of audits or the expiration of statute of limitations in the next twelve months. There were no material effects on the Company’s effective tax rate. The following is a reconciliation of the unrecognized tax benefits for the years ended December 31, 2019 and 2018: Liability for Unrecognized Tax Benefits (In thousands) 2019 2018 Balance at January 1 $ 4,933 $ 4,296 Additions for tax positions related to FairPoint acquisition — 637 Balance at December 31 $ 4,933 $ 4,933 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES We have certain other obligations for various contractual agreements to secure future rights to goods and services to be used in the normal course of our operations. These include purchase commitments for planned capital expenditures, agreements securing dedicated access and transport services, and service and support agreements. As of December 31, 2019, future minimum contractual obligations and the estimated timing and effect the obligations will have on our liquidity and cash flows in future periods are as follows: Minimum Annual Contractual Obligations (in thousands) 2020 2021 2022 2023 2024 Thereafter Total Service and support agreements (1) $ 19,455 $ 10,429 $ 8,112 $ 6,751 $ 339 $ 305 $ 45,391 Transport and data connectivity 9,787 7,964 6,850 5,256 5,242 151 35,250 Capital expenditures (2) 3,945 — — — — — 3,945 Other operating agreements (3) 3,301 2,458 2,017 1,983 383 915 11,057 Total $ 36,488 $ 20,851 $ 16,979 $ 13,990 $ 5,964 $ 1,371 $ 95,643 (1) We have entered into service and maintenance agreements to support various computer hardware and software applications and certain equipment. (2) We have binding commitments with numerous suppliers for future capital expenditures. (3) We have entered into various non-cancelable rental agreements for certain facilities and equipment used in our operations. Litigation, Regulatory Proceedings and Other Contingencies Local Switching Support In 2015, our subsidiary, FairPoint filed a petition (the “Petition”) with the FCC asking the FCC to direct National Exchange Carrier Association (“NECA”) to stop subtracting frozen Local Switching Support (“LSS”) from FairPoint’s 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 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 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 year ended December 31, 2018, we recognized subsidies revenue of $7.2 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 imposed a deadline in December 2019 for the parties to finalize their agreement and file stipulations for judgment. Stipulations for judgment and directions to satisfy for the 2008 through 2013 tax years, except for the 2010 CCPA appeals, were filed in December 2019, bringing the appeals to a conclusion. The settlement resulted in a payment from us to the DOR of $2.1 million, which the Company previously reserved for. While we continue to believe a settlement of all remaining 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 2010 (CCPA) and 2014 through 2018 (CCPA and CCES), we have reserved $1.5 million and $0.7 million, including interest, for our CCES and CCPA subsidiaries, respectively. 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. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS Richard A. Lumpkin, who was a member of our Board of Directors until April 4, 2019, had significant related party transactions. The following speaks to the related party transactions involving Mr. Lumpkin through April 4, 2019. As of December 31, 2019, there were no other significant related party transactions. Finance Leases Mr. Lumpkin, together with his family, beneficially owned 37.0%of Agracel, Inc. (“Agracel”), a real estate investment company, at April 4, 2019 and December 31, 2018. Mr. Lumpkin was also a director of Agracel. Agracel was the sole managing member and 50% owner of LATEL LLC (“LATEL”). Mr. Lumpkin and his immediate family had a 68.5% beneficial ownership of LATEL at April 4, 2019 and December 31, 2018. We had three finance lease agreements with LATEL for the occupancy of three buildings on a triple net lease basis. In accordance with the Company’s related person transactions policy, these leases were approved by our Audit Committee and Board of Directors (“BOD”). We accounted for these leases as finance leases in accordance with ASC 842, Leases Long-Term Debt A trust, for which Mr. Lumpkin was the beneficiary of, owned $5.0 million of the Senior Notes. We recognized approximately $0.1 million through April 4, 2019 and $0.3 million in each of 2018 and 2017 in interest expense for the Senior Notes owned by the related party. Other Services Mr. Lumpkin also had a minority ownership interest in First Mid Bank & Trust (“First Mid”). We provided telecommunications products and services to First Mid and in return received approximately $0.2 million through April 4, 2019, $0.9 million in 2018 and $0.7 million in 2017 for these services. |
QUARTERLY FINANCIAL INFORMATION
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | 15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) Quarter Ended 2019 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 338,649 $ 333,532 $ 333,326 $ 331,035 Operating income $ 16,720 $ 14,300 $ 23,542 $ 26,719 Net income (loss) attributable to common stockholders $ (7,265) $ (7,387) $ 257 $ (5,988) Basic and diluted earnings (loss) per share $ (0.11) $ (0.10) $ — $ (0.08) Quarter Ended 2018 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 356,039 $ 350,221 $ 348,064 $ 344,750 Operating income $ 9,239 $ 5,427 $ 748 $ 3,555 Net loss attributable to common stockholders $ (11,298) $ (10,643) $ (14,914) $ (13,979) Basic and diluted loss per share $ (0.16) $ (0.15) $ (0.21) $ (0.20) During the quarter ended December 31, 2019, we purchased a group annuity contract to transfer the pension benefit obligations and annuity administration for a select group of retirees or their beneficiaries to an annuity provider. As a result of the transfer of the pension liability to the annuity provider and other lump sum payments to participants of the Pension Plans, we recognized a non-cash pension settlement charge of $6.7 million during the quarter ended December 31, 2019. In 2019, we recognized a gain on extinguishment of debt from the partial repurchase of our Senior Notes of $0.3 million, $1.1 million and $3.1 million during the quarters ended June 30, 2019, September 30, 2019, and December 31, 2019, respectively. As part of our integration efforts of FairPoint and continued cost saving initiatives, we incurred severance costs of $8.7 million during the quarter ended December 31, 2019. The quarters ended September 30, 2018 and December 31, 2018 included severance costs of $4.0 million and $5.7 million, respectively. During the quarter ended March 31, 2018, we recognized subsidies revenue of $4.9 million related to a settlement for frozen LSS, as described in Note 13. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 12 Months Ended |
Dec. 31, 2019 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 16. CONDENSED CONSOLIDATING FINANCIAL INFORMATION Consolidated Communications, Inc. is the primary obligor under the unsecured Senior Notes. We and substantially all of our subsidiaries, including our FairPoint subsidiaries, have jointly and severally guaranteed the Senior Notes. All of the subsidiary guarantors are 100% direct or indirect wholly owned subsidiaries of the parent, and all guarantees are full, unconditional and joint and several with respect to principal, interest and liquidated damages, if any. As such, we present condensed consolidating balance sheets as of December 31, 2019 and 2018, and condensed consolidating statements of operations and cash flows for the years ended December 31, 2019, 2018 and 2017 for each of Consolidated Communications Holdings, Inc. (Parent), Consolidated Communications, Inc. (Subsidiary Issuer), guarantor subsidiaries and other non-guarantor subsidiaries with any consolidating adjustments. See Note 7 for more information regarding our Senior Notes. Condensed Consolidating Balance Sheets (amounts in thousands) December 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 12,387 $ 8 $ — $ — $ 12,395 Accounts receivable, net — 78 112,415 7,523 — 120,016 Income taxes receivable 1,812 — 791 66 — 2,669 Prepaid expenses and other current assets — — 41,431 356 — 41,787 Total current assets 1,812 12,465 154,645 7,945 — 176,867 Property, plant and equipment, net — — 1,770,187 65,691 — 1,835,878 Intangibles and other assets: Investments — 8,863 103,854 — — 112,717 Investments in subsidiaries 3,547,466 3,520,346 17,165 — (7,084,977) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 164,069 — — 164,069 Other intangible assets — — 1,470 9,087 — 10,557 Advances due to/from affiliates, net — 2,289,433 893,394 113,473 (3,296,300) — Deferred income taxes 86,447 5,661 — — (92,108) — Other assets 1,506 — 52,887 522 — 54,915 Total assets $ 3,637,231 $ 5,836,768 $ 4,126,764 $ 262,899 $ (10,473,385) $ 3,390,277 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 30,936 $ — $ — $ 30,936 Advance billings and customer deposits — — 44,436 1,274 — 45,710 Accrued compensation — — 56,356 713 — 57,069 Accrued interest — 7,523 351 — — 7,874 Accrued expense 50 2,565 71,659 1,132 — 75,406 Current portion of long term debt and finance lease obligations — 18,350 8,808 143 — 27,301 Total current liabilities 50 28,438 212,546 3,262 — 244,296 Long-term debt and finance lease obligations — 2,235,609 15,001 67 — 2,250,677 Advances due to/from affiliates, net 3,296,300 — — — (3,296,300) — Deferred income taxes — — 240,983 24,152 (92,108) 173,027 Pension and postretirement benefit obligations — — 285,832 16,464 — 302,296 Other long-term liabilities — 25,255 46,656 819 — 72,730 Total liabilities 3,296,350 2,289,302 801,018 44,764 (3,388,408) 3,043,026 Shareholders’ equity: Common Stock 720 — 17,411 30,000 (47,411) 720 Other shareholders’ equity 340,161 3,547,466 3,301,965 188,135 (7,037,566) 340,161 Total Consolidated Communications Holdings, Inc. shareholders’ equity 340,881 3,547,466 3,319,376 218,135 (7,084,977) 340,881 Noncontrolling interest — — 6,370 — — 6,370 Total shareholders’ equity 340,881 3,547,466 3,325,746 218,135 (7,084,977) 347,251 Total liabilities and shareholders’ equity $ 3,637,231 $ 5,836,768 $ 4,126,764 $ 262,899 $ (10,473,385) $ 3,390,277 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 (amounts in thousands) Year Ended December 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ 193 $ 1,300,835 $ 48,142 $ (12,628) $ 1,336,542 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 572,661 14,261 (11,986) 574,936 Selling, general and administrative expenses 7,565 — 282,586 9,579 (642) 299,088 Depreciation and amortization — — 371,572 9,665 — 381,237 Operating income (loss) (7,565) 193 74,016 14,637 — 81,281 Other income (expense): Interest expense, net of interest income 60 (136,696) (86) 62 — (136,660) Intercompany interest income (expense) — 58,908 (58,831) (77) — — Gain on extinguishment of debt — 4,510 — — — 4,510 Investment income — 190 37,898 — — 38,088 Equity in earnings of subsidiaries, net (13,067) 44,271 775 — (31,979) — Other, net 1 47 (10,042) (870) — (10,864) Income (loss) before income taxes (20,571) (28,577) 43,730 13,752 (31,979) (23,645) Income tax expense (benefit) (188) (15,510) 9,338 2,646 — (3,714) Net income (loss) (20,383) (13,067) 34,392 11,106 (31,979) (19,931) Less: net income attributable to noncontrolling interest — — 452 — — 452 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (20,383) $ (13,067) $ 33,940 $ 11,106 $ (31,979) $ (20,383) Total comprehensive income (loss) attributable to common shareholders $ (48,039) $ (40,723) $ 23,867 $ 12,377 $ 4,479 $ (48,039) Year Ended December 31, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,356,074 $ 55,541 $ (12,541) $ 1,399,074 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 607,582 16,386 (12,096) 611,872 Selling, general and administrative expenses 4,087 — 317,289 12,674 (445) 333,605 Acquisition and other transaction costs 1,960 — — — — 1,960 Depreciation and amortization — — 422,704 9,964 — 432,668 Operating income (loss) (6,047) — 8,499 16,517 — 18,969 Other income (expense): Interest expense, net of interest income (103) (136,378) 1,785 118 — (134,578) Intercompany interest income (expense) — 58,908 (58,844) (64) — — Investment income — 178 39,418 — — 39,596 Equity in earnings of subsidiaries, net (42,181) 8,858 5,133 — 28,190 — Other, net 7 — 1,067 241 — 1,315 Income (loss) before income taxes (48,324) (68,434) (2,942) 16,812 28,190 (74,698) Income tax expense (benefit) 2,510 (26,253) (5,784) 5,400 — (24,127) Net income (loss) (50,834) (42,181) 2,842 11,412 28,190 (50,571) Less: net income attributable to noncontrolling interest — — 263 — — 263 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (50,834) $ (42,181) $ 2,579 $ 11,412 $ 28,190 $ (50,834) Total comprehensive income (loss) attributable to common shareholders $ (55,963) $ (47,310) $ (3,545) $ 10,486 $ 40,369 $ (55,963) Year Ended December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,013,505 $ 58,776 $ (12,707) $ 1,059,574 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 447,029 11,245 (12,276) 445,998 Selling, general and administrative expenses 1,924 30 234,198 13,420 (431) 249,141 Acquisition and other transaction costs 33,650 — — — — 33,650 Depreciation and amortization — — 280,843 11,030 — 291,873 Operating income (loss) (35,574) (30) 51,435 23,081 — 38,912 Other income (expense): Interest expense, net of interest income (12) (128,737) (1,183) 146 — (129,786) Intercompany interest income (expense) — 58,909 (58,827) (82) — — Investment income — 157 31,592 — — 31,749 Equity in earnings of subsidiaries, net 101,863 109,015 1,918 — (212,796) — Other, net — 3 (694) 188 — (503) Income (loss) before income taxes 66,277 39,317 24,241 23,333 (212,796) (59,628) Income tax expense (benefit) 1,332 (27,610) (97,667) (982) — (124,927) Net income (loss) 64,945 66,927 121,908 24,315 (212,796) 65,299 Less: net income attributable to noncontrolling interest — — 354 — — 354 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 64,945 $ 66,927 $ 121,554 $ 24,315 $ (212,796) $ 64,945 Total comprehensive income (loss) attributable to common shareholders $ 64,139 $ 71,746 $ 119,174 $ 25,381 $ (216,301) $ 64,139 Condensed Consolidating Statements of Cash Flows (amounts in thousands) Year Ended December 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (3,205) $ (57,831) $ 381,366 $ 18,766 $ 339,096 Cash flows from investing activities: Purchases of property, plant and equipment — — (223,715) (8,488) (232,203) Proceeds from sale of assets — — 14,707 11 14,718 Distributions from investments — — 329 — 329 Other — — (663) — (663) Net cash used in investing activities — — (209,342) (8,477) (217,819) Cash flows from financing activities: Proceeds from issuance of long-term debt — 195,000 — — 195,000 Payment of finance lease obligation — — (12,322) (197) (12,519) Payment on long-term debt — (195,350) — — (195,350) Repurchase of senior notes — (49,804) — — (49,804) Share repurchases for minimum tax withholding (363) — — — (363) Dividends on common stock (55,445) — — — (55,445) Transactions with affiliates, net 59,013 110,756 (159,676) (10,093) — Net cash provided by (used in) financing activities 3,205 60,602 (171,998) (10,290) (118,481) Increase (decrease) in cash and cash equivalents — 2,771 26 (1) 2,796 Cash and cash equivalents at beginning of period — 9,616 (18) 1 9,599 Cash and cash equivalents at end of period $ — $ 12,387 $ 8 $ — $ 12,395 Year Ended December 31, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ 2,323 $ (43,781) $ 388,930 $ 9,849 $ 357,321 Cash flows from investing activities: Purchases of property, plant and equipment — — (235,147) (9,669) (244,816) Proceeds from sale of assets — — 1,688 437 2,125 Proceeds from business dispositions 20,999 — — — 20,999 Distributions from investments — — 233 — 233 Net cash used in investing activities 20,999 — (233,226) (9,232) (221,459) Cash flows from financing activities: Proceeds from issuance of long-term debt — 189,588 — — 189,588 Payment of finance lease obligation — — (12,559) (196) (12,755) Payment on long-term debt — (207,938) — — (207,938) Share repurchases for minimum tax withholding (593) — — — (593) Dividends on common stock (110,222) — — — (110,222) Transactions with affiliates, net 87,493 62,828 (149,901) (420) — Net cash provided by (used in) financing activities (23,322) 44,478 (162,460) (616) (141,920) Increase (decrease) in cash and cash equivalents — 697 (6,756) 1 (6,058) Cash and cash equivalents at beginning of period — 8,919 6,738 — 15,657 Cash and cash equivalents at end of period $ — $ 9,616 $ (18) $ 1 $ 9,599 Year Ended December 31, 2017 Subsidiary Parent Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (23,237) $ (25,625) $ 235,810 $ 23,079 $ 210,027 Cash flows from investing activities: Business acquisition, net of cash acquired (862,385) — — — (862,385) Purchases of property, plant and equipment — — (167,187) (13,998) (181,185) Proceeds from sale of assets — — 829 30 859 Net cash provided by (used in) investing activities (862,385) — (166,358) (13,968) (1,042,711) Cash flows from financing activities: Proceeds from issuance of long-term debt — 1,052,325 — — 1,052,325 Payment of finance lease obligation — — (7,746) (187) (7,933) Payment on long-term debt — (111,337) — — (111,337) Payment of financing costs — (16,732) — — (16,732) Share repurchases for minimum tax withholding (571) — — — (571) Dividends on common stock (94,138) — — — (94,138) Transactions with affiliates, net 980,681 (916,776) (54,981) (8,924) — Other (350) — — — (350) Net cash provided by (used in) financing activities 885,622 7,480 (62,727) (9,111) 821,264 Increase in cash and cash equivalents — (18,145) 6,725 — (11,420) Cash and cash equivalents at beginning of period — 27,064 13 — 27,077 Cash and cash equivalents at end of period $ — $ 8,919 $ 6,738 $ — $ 15,657 |
BUSINESS DESCRIPTION AND SUMM_2
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Accounting | Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “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 December 31, 2019, we had approximately 836,000 voice connections, 784,000 data connections and 84,000 video connections. |
Use of Estimates | Use of Estimates Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ materially from those estimates. Our critical accounting estimates include (i) impairment evaluations associated with indefinite-lived intangible assets (Note 1), (ii) the determination of deferred tax asset and liability balances (Notes 1 and 12) and (iii) pension plan and other post-retirement costs and obligations (Notes 1 and 11). |
Principles of Consolidation | Principles of Consolidation Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries and subsidiaries in which we have a controlling financial interest. All significant intercompany transactions have been eliminated. |
Recent Business Developments | Recent Business Developments On July 3, 2017, we completed our acquisition of FairPoint Communications, Inc. (“FairPoint”), pursuant to the terms of a definitive agreement and plan of merger (as amended, the “Merger Agreement”) and acquired all of the issued and outstanding shares of FairPoint in exchange for shares of our common stock (the “Merger”). As a result of the Merger, FairPoint became a wholly owned subsidiary of the Company. The financial results for FairPoint have been included in our consolidated financial statements as of the acquisition date. For a more complete discussion of the transaction, refer to Note 4. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Our cash equivalents consist primarily of money market funds. The carrying amounts of our cash equivalents approximate their fair values. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for doubtful accounts for estimated losses that result from the inability of our customers to make required payments. The allowance for doubtful accounts is maintained based on customer payment levels, historical experience and management’s views on trends in the overall receivable agings. In addition, for larger accounts, we perform analyses of risks on a customer-specific basis. We perform ongoing credit evaluations of our customers’ financial condition and management believes that an adequate allowance for doubtful accounts has been provided. Uncollectible accounts are removed from accounts receivable and are charged against the allowance for doubtful accounts when internal collection efforts have been unsuccessful. The following table summarizes the activity in allowance for doubtful accounts for the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, (In thousands) 2019 2018 2017 Balance at beginning of year $ 4,421 $ 6,667 $ 2,813 Provision charged to expense 9,347 8,793 7,072 Write-offs, less recoveries (9,219) (11,039) (6,516) Acquired allowance for doubtful accounts — — 3,298 Balance at end of year $ 4,549 $ 4,421 $ 6,667 |
Investments | Investments Our investments are primarily accounted for under either the equity method or at cost. If we have the ability to exercise significant influence over the operations and financial policies of an affiliated company, the investment in the affiliated company is accounted for using the equity method. If we do not have control and also cannot exercise significant influence, we account for these investments at our initial cost less impairment because fair value is not readily available for these investments. We review our investment portfolio periodically to determine whether there are identified events or circumstances that would indicate there is a decline in the fair value that is considered to be other than temporary. If we believe the decline is other than temporary, we evaluate the financial performance of the business and compare the carrying value of the investment to quoted market prices (if available) or the fair value of similar investments. If an investment is deemed to have experienced an impairment that is considered other-than temporary, the carrying amount of the investment is reduced to its quoted or estimated fair value, as applicable, and an impairment loss is recognized in other income (expense). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We account for certain assets and liabilities at fair value. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A financial asset or liability’s classification within a three-tiered value hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The hierarchy prioritizes the inputs to valuation techniques into three broad levels in order to maximize the use of observable inputs and minimize the use of unobservable inputs. The levels of the fair value hierarchy are as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs that reflect quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets and inputs other than quoted prices that are directly or indirectly observable in the marketplace. Level 3 – Unobservable inputs which are supported by little or no market activity. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost. We capitalize additions and substantial improvements and expense repairs and maintenance costs as incurred. We capitalize the cost of internal-use network and non-network software which has a useful life in excess of one year. Subsequent additions, modifications or upgrades to internal-use network and non-network software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred. Also, we capitalize interest associated with the development of internal-use network and non-network software. Property, plant and equipment consisted of the following as of December 31, 2019 and 2018: December 31, December 31, Estimated (In thousands) 2019 2018 Useful Lives Land and buildings $ 270,443 $ 257,208 18 - 40 years Central office switching and transmission 1,363,533 1,234,687 3 - 25 years Outside plant cable, wire and fiber facilities 2,002,264 1,934,185 3 - 50 years Furniture, fixtures and equipment 287,711 285,102 3 - 15 years Assets under finance leases 51,324 63,016 1 - 20 years Total plant in service 3,975,275 3,774,198 Less: accumulated depreciation and amortization (2,228,481) (1,953,813) Plant in service 1,746,794 1,820,385 Construction in progress 59,624 68,325 Construction inventory 29,460 38,416 Totals $ 1,835,878 $ 1,927,126 Construction inventory, which is stated at weighted average cost, consists primarily of network construction materials and supplies that when issued are predominately capitalized as part of new customer installations and the construction of the network. We record depreciation using the straight-line method over estimated useful lives using either the group or unit method. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets, anticipated technological changes and the expected impact of our strategic operating plan on our network infrastructure. In addition, the ranges of estimated useful lives presented above are impacted by the accounting for business combinations as the lives assigned to these acquired assets are generally much shorter than that of a newly acquired asset. The group method is used for depreciable assets dedicated to providing regulated telecommunication services, including the majority of the network, outside plant facilities and certain support assets. A depreciation rate for each asset group is developed based on the average useful life of the group. The group method requires periodic revision of depreciation rates. When an individual asset is sold or retired, the difference between the proceeds, if any, and the cost of the asset is charged or credited to accumulated depreciation, without recognition of a gain or loss. The unit method is primarily used for buildings, furniture, fixtures and other support assets. Each asset is depreciated on the straight-line basis over its estimated useful life. When an individual asset is sold or retired, the cost basis of the asset and related accumulated depreciation are removed from the accounts and any associated gain or loss is recognized. Depreciation and amortization expense related to property, plant and equipment was $315.0 million, $366.3 million and $263.8 million in 2019, 2018 and 2017, respectively. Amortization of assets under capital leases is included in the depreciation and amortization expense in the consolidated statements of operations. We evaluate the recoverability of our property, plant and equipment whenever events or substantive changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the total of the expected future undiscounted cash flows were less than the carrying amount of the asset group, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the asset group. |
Intangible Assets | Intangible Assets Indefinite-Lived Intangibles Goodwill and tradenames are evaluated for impairment annually or more frequently when events or changes in circumstances indicate that the asset might be impaired. We evaluate the carrying value of goodwill and tradenames as of November 30 of each year. Goodwill Goodwill is the excess of the acquisition cost of a business over the fair value of the identifiable net assets acquired. Goodwill is not amortized but instead evaluated annually for impairment. The evaluation of goodwill may first include a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Events and circumstances integrated into the qualitative assessment process include a combination of macroeconomic conditions affecting equity and credit markets, significant changes to the cost structure, overall financial performance and other relevant events affecting the reporting unit. For the 2019 assessment, we evaluated the fair value of goodwill compared to the carrying value using the quantitative approach. When we use the quantitative approach to assess the goodwill carrying value and the fair value of our single reporting unit, the fair value of our reporting unit is compared to its carrying amount, including goodwill. The estimated fair value of the reporting unit is determined using a combination of market-based approaches and a discounted cash flow (“DCF”) model. The assumptions used in the estimate of fair value are based upon a combination of historical results and trends, new industry developments and future cash flow projections, as well as relevant comparable company earnings multiples for the market-based approaches. Such assumptions are subject to change as a result of changing economic and competitive conditions. We use a weighting of the results derived from the valuation approaches to estimate the fair value of the reporting unit. For the 2019 assessment, using the quantitative approach, we concluded that the fair value of the reporting unit exceeded the carrying value at November 30, 2019 and that there was no In measuring the fair value of our single reporting unit as described, we consider the fair value of our reporting unit in relation to our overall enterprise value, measured as the publicly traded stock price multiplied by the fully diluted shares outstanding plus the fair value of outstanding debt. Our reporting unit fair value models are consistent with a range in value indicated by both the preceding three month average stock price and the stock price on the valuation date, plus an estimated acquisition premium which is based on observable transactions of comparable companies, if applicable. If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment is recorded for the difference in the carrying value and fair value. We did not At December 31, 2019 and 2018, the carrying value of goodwill was $1,035.3 million. Trade Name Our trade name is the federally registered mark CONSOLIDATED, a design of interlocking circles, which is used in association with our communication services. The Company’s corporate branding strategy leverages a CONSOLIDATED naming structure. All of the Company’s business units and several of our products and services incorporate the CONSOLIDATED name. Trade names with indefinite useful lives are not amortized but are tested for impairment at least annually. If facts and circumstances change relating to a trade name’s continued use in the branding of our products and services, it may be treated as a finite-lived asset and begin to be amortized over its estimated remaining life. The carrying value of our trade names, excluding any finite lived trade names, was $10.6 million at December 31, 2019 and 2018. For the 2019 assessment, we used the quantitative approach to evaluate the fair value compared to the carrying value of the trade name. Based on our assessment, we concluded that the fair value of the trade names continued to exceed the carrying value. When we use the quantitative approach to estimate the fair value of our trade names, we use DCFs based on a relief from royalty method. If the fair value of our trade names was less than the carrying amount, we would recognize an impairment charge for the difference between the estimated fair value and the carrying value of the assets. We perform our impairment testing of our trade names as single units of accounting based on their use in our single reporting unit. Finite-Lived Intangible Assets Finite-lived intangible assets subject to amortization consist primarily of our customer lists of an established base of customers that subscribe to our services, trade names of acquired companies and other intangible assets. Finite-lived intangible assets are amortized using an accelerated amortization method or on a straight-line basis over their estimated useful lives. We evaluate the potential impairment of finite-lived intangible assets when impairment indicators exist. If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment equal to the difference between the carrying amount and the fair value of the asset is recognized. We did not recognize any intangible impairment charges in the years ended December 31, 2019, 2018 or 2017. The components of finite-lived intangible assets are as follows: December 31, 2019 December 31, 2018 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships 3 - 13 years $ 321,333 $ (157,264) $ 516,561 $ (287,602) Trade names 1 - 2 years — — 2,290 (2,290) Other intangible assets 5 years — — 5,600 (4,674) Total $ 321,333 $ (157,264) $ 524,451 $ (294,566) Amortization expense related to the finite-lived intangible assets for the years ended December 31, 2019, 2018 and 2017 was $66.2 million, $66.3 million and $28.0 million, respectively. Expected future amortization expense of finite-lived intangible assets is as follows: (In thousands) 2020 $ 50,652 2021 39,479 2022 30,850 2023 23,963 2024 10,617 Thereafter 8,508 Total $ 164,069 |
Derivative Financial Instruments | Derivative Financial Instruments We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. At the inception of a hedge transaction, we formally document the relationship between the hedging instruments including our objective and strategy for establishing the hedge. In addition, the effectiveness of the derivative instrument is assessed at inception and on an ongoing basis throughout the hedging period. Counterparties to derivative instruments expose us to credit-related losses in the event of nonperformance. We execute agreements only with financial institutions we believe to be creditworthy and regularly assess the credit worthiness of each of the counterparties. We do not use derivative instruments for trading or speculative purposes. Derivative financial instruments are recorded at fair value in our consolidated balance sheets. Fair value is determined based on projected interest rate yield curves and an estimate of our nonperformance risk or our counterparty’s nonperformance credit risk, as applicable. We do not anticipate any nonperformance by any counterparty. For derivative instruments designated as a cash flow hedge, the 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 consolidated statement of cash flows. See Note 8 for further discussion of our derivative financial instruments. |
Share-based Compensation | Share-based Compensation We recognize share-based compensation expense for all restricted stock awards (“RSAs”) and performance share awards (“PSAs”) (collectively, “stock awards”) based on the estimated fair value of the stock awards on the date of grant. We recognize the expense associated with RSAs and PSAs on a straight-line basis over the requisite service period, which generally ranges from immediate vesting to a four-year vesting period, and account for forfeitures as they occur. See Note 10 for additional information regarding share-based compensation. |
Income Taxes | Income Taxes Our estimates of income taxes and the significant items resulting in the recognition of deferred tax assets and liabilities are disclosed in Note 12 and reflect our assessment of future tax consequences of transactions that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. We base our provision for income taxes on our current period income, changes in our deferred income tax assets and liabilities, income tax rates, changes in estimates of our uncertain tax positions and tax planning opportunities available in the jurisdictions in which we operate. We recognize deferred tax assets and liabilities when there are temporary differences between the financial reporting basis and tax basis of our assets and liabilities and for the expected benefits of using net operating loss and tax credit loss carryforwards. We establish valuation allowances when necessary to reduce the carrying amount of deferred income tax assets to the amounts that we believe are more likely than not to be realized. We evaluate the need to retain all or a portion of the valuation allowance on our deferred tax assets. When a change in the tax rate or tax law has an impact on deferred taxes, we apply the change when the tax law change is enacted, based on the years in which the temporary differences are expected to reverse. As we operate in more than one state, changes in our state apportionment factors, based on operating results, may affect our future effective tax rates and the value of our deferred tax assets and liabilities. We record a change in tax rates in our consolidated financial statements in the period of enactment. Income tax consequences that arise in connection with a business combination include identifying the tax basis of assets and liabilities acquired and any contingencies associated with uncertain tax positions assumed or resulting from the business combination. Deferred tax assets and liabilities related to temporary differences of an acquired entity are recorded as of the date of the business combination and are based on our estimate of the appropriate tax basis that will be accepted by the various taxing authorities. We record unrecognized tax benefits as liabilities in accordance with Accounting Standard Codification (“ASC”) 740, Income Taxes, evaluation of new information. In certain instances, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. We classify interest and penalties, if any, associated with our uncertain tax positions as a component of interest expense and general and administrative expense, respectively. See Note 12 for further discussion on income taxes. |
Revenue Recognition | Revenue Recognition Revenue is recognized when or as performance obligations are satisfied by transferring control of the good or service to the customer. 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. 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. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. Advertising expense was $11.5 million, $11.4 million and $10.9 million in 2019, 2018 and 2017, respectively. |
Statement of Cash Flows Information | Statement of Cash Flows Information During 2019, 2018 and 2017, we made payments for interest and income taxes as follows: (In thousands) 2019 2018 2017 Interest, net of amounts capitalized ($3,737, $5,659 and $1,246 in 2019, 2018 and 2017, respectively) $ 129,508 $ 122,422 $ 106,499 Income taxes (received) paid, net $ (8,374) $ (9,060) $ 953 In 2019, 2018 and 2017, we acquired equipment of $6.2 million, $19.2 million and $12.8 million, respectively, through finance or capital lease agreements. In 2017, we issued 20.1 million shares of the Company’s common stock with a market value of $431.0 million in connection with the acquisition of FairPoint as described in Note 4. |
Noncontrolling Interest | Noncontrolling Interest We have a majority-owned subsidiary, East Texas Fiber Line Incorporated (“ETFL”), which is a joint venture owned 63% by the Company and 37% by Eastex Telecom Investments, LLC. ETFL provides connectivity over a fiber optic transport network to certain customers residing in Texas. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective January 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02 (“ASU 2016-02” or “ASC 842”), 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 9 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 on our consolidated financial statements and related disclosures as we did not make the optional election for reclassification of stranded tax effects from accumulated other comprehensive income (loss) to retained earnings. Effective January 1, 2019, we adopted ASU No. 2017-12 (“ASU 2017-12”), Targeted Improvements to Accounting for Hedging Activities In November 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12 (“ASU 2019-12”), Income Taxes Income Taxes. In August 2018, the 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 | |
BUSINESS DESCRIPTION AND SUMM_3
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of activity in the entity's accounts receivable allowance account | Year Ended December 31, (In thousands) 2019 2018 2017 Balance at beginning of year $ 4,421 $ 6,667 $ 2,813 Provision charged to expense 9,347 8,793 7,072 Write-offs, less recoveries (9,219) (11,039) (6,516) Acquired allowance for doubtful accounts — — 3,298 Balance at end of year $ 4,549 $ 4,421 $ 6,667 |
Schedule of property, plant and equipment | December 31, December 31, Estimated (In thousands) 2019 2018 Useful Lives Land and buildings $ 270,443 $ 257,208 18 - 40 years Central office switching and transmission 1,363,533 1,234,687 3 - 25 years Outside plant cable, wire and fiber facilities 2,002,264 1,934,185 3 - 50 years Furniture, fixtures and equipment 287,711 285,102 3 - 15 years Assets under finance leases 51,324 63,016 1 - 20 years Total plant in service 3,975,275 3,774,198 Less: accumulated depreciation and amortization (2,228,481) (1,953,813) Plant in service 1,746,794 1,820,385 Construction in progress 59,624 68,325 Construction inventory 29,460 38,416 Totals $ 1,835,878 $ 1,927,126 |
Schedule of carrying amount of finite-lived intangible assets | December 31, 2019 December 31, 2018 Gross Carrying Accumulated Gross Carrying Accumulated (In thousands) Useful Lives Amount Amortization Amount Amortization Customer relationships 3 - 13 years $ 321,333 $ (157,264) $ 516,561 $ (287,602) Trade names 1 - 2 years — — 2,290 (2,290) Other intangible assets 5 years — — 5,600 (4,674) Total $ 321,333 $ (157,264) $ 524,451 $ (294,566) |
Schedule of expected amortization expense | (In thousands) 2020 $ 50,652 2021 39,479 2022 30,850 2023 23,963 2024 10,617 Thereafter 8,508 Total $ 164,069 |
Schedule of supplemental cash flow information | (In thousands) 2019 2018 2017 Interest, net of amounts capitalized ($3,737, $5,659 and $1,246 in 2019, 2018 and 2017, respectively) $ 129,508 $ 122,422 $ 106,499 Income taxes (received) paid, net $ (8,374) $ (9,060) $ 953 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REVENUE | |
Schedule of disaggregation of revenue | (In thousands) 2019 2018 2017 Operating Revenues Commercial and carrier: Data and transport services (includes VoIP) $ 355,325 $ 349,413 $ 274,221 Voice services 188,322 202,875 152,632 Other 52,894 56,395 33,908 596,541 608,683 460,761 Consumer: Broadband (VoIP and Data) 257,083 253,119 183,634 Video services 81,378 88,338 91,406 Voice services 180,839 202,032 137,696 519,300 543,489 412,736 Subsidies 72,440 83,371 62,272 Network access 138,056 152,582 110,196 Other products and services 10,205 10,949 13,609 Total operating revenues $ 1,336,542 $ 1,399,074 $ 1,059,574 |
Schedule of receivables, contract assets and contract liabilities | Year Ended December 31, (In thousands) 2019 2018 Accounts receivable, net $ 120,016 $ 133,136 Contract assets 18,804 12,128 Contract liabilities 50,974 52,966 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
Schedule of basic and diluted EPS | (In thousands, except per share amounts) 2019 2018 2017 Net income (loss) $ (19,931) $ (50,571) $ 65,299 Less: net income attributable to noncontrolling interest 452 263 354 Income (loss) attributable to common shareholders before allocation of earnings to participating securities (20,383) (50,834) 64,945 Less: earnings allocated to participating securities 462 810 362 Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ (20,845) $ (51,644) $ 64,583 Weighted-average number of common shares outstanding 70,837 70,613 60,373 Net income (loss) per common share attributable to common shareholders - basic and diluted $ (0.29) $ (0.73) $ 1.07 |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FairPoint acquisition | |
Schedule of unaudited pro forma results | Year Ended December 31, (Unaudited; in thousands, except per share amounts) 2017 Operating revenues $ 1,460,620 Income from operations $ 60,926 Net income $ 91,131 Less: net income attributable to noncontrolling interest 354 Net income attributable to common stockholders $ 90,777 Net income per common share-basic and diluted $ 1.29 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INVESTMENTS | |
Schedule of investments | (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) 20,162 17,800 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,658 7,786 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 28,815 29,147 Totals $ 112,717 $ 110,853 |
Summary of combined results of operations and financial position of equity investments | (In thousands) 2019 2018 2017 Total revenues $ 349,640 $ 346,251 $ 350,611 Income from operations 100,182 100,571 104,973 Net income before taxes 99,146 99,408 103,497 Net income 99,146 99,408 103,497 Current assets $ 80,655 $ 75,040 $ 78,782 Non-current assets 156,672 103,996 95,959 Current liabilities 33,292 24,719 22,472 Non-current liabilities 92,477 51,840 51,463 Partnership equity 111,558 102,478 100,806 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap assets and liabilities measured at fair value on a recurring basis | As of December 31, 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 $ (2,565) $ — $ (2,565) $ — Long-term interest rate swap liabilities (24,960) — (24,960) — Total $ (27,525) $ — $ (27,525) $ — 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 December 31, 2019 As of December 31, 2018 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,262,111 $ 2,125,497 $ 2,315,077 $ 2,155,127 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | (In thousands) 2019 2018 Senior secured credit facility: Term loans, net of discounts of $5,604 and $6,994 at December 31, 2019 and 2018, respectively $ 1,779,109 $ 1,796,068 Revolving loan 40,000 22,000 6.50% Senior notes due 2022, net of discount of $1,998 and $2,991 at December 31, 2019 and 2018, respectively 443,002 497,009 2,262,111 2,315,077 Less: current portion of long-term debt (18,350) (18,350) Less: deferred debt issuance costs (8,152) (11,386) Total long-term debt $ 2,235,609 $ 2,285,341 |
Schedule of aggregate maturities of long-term debt | At December 31, 2019, the aggregate maturities of our long-term debt excluding finance leases were as follows: (In thousands) 2020 $ 18,350 2021 58,350 2022 463,350 2023 1,729,663 Total maturities 2,269,713 Less: Unamortized discount (7,602) $ 2,262,111 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | The following interest rate swaps were outstanding at December 31, 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 $ (2,565) Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (18,303) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (6,657) Total Fair Values $ (27,525) 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 at 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 effect of interest rate derivatives designated as cash flow hedges on AOCI and on the consolidated statements of operations | Year Ended December 31, (In thousands) 2019 Unrealized loss recognized in AOCI, pretax $ (26,013) Deferred loss reclassified from AOCI to interest expense $ (1,108) |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Summary of components of lease right-of-use assets and liabilities | (In thousands) Balance Sheet Classification December 31, 2019 Operating leases Operating lease right-of-use assets Other assets $ 26,239 Current lease liabilities Accrued expense $ (6,173) Noncurrent lease liabilities Other long-term liabilities $ (20,235) Finance leases Finance lease right-of-use assets, net of accumulated depreciation of $28,909 Property, plant and equipment, net $ 22,414 Current lease liabilities Current portion of long-term debt and finance lease obligations $ (8,951) Noncurrent lease liabilities Long-term debt and finance lease obligations $ (15,068) Weighted-average remaining lease term Operating leases 7.6 years Finance leases 5.6 years Weighted-average discount rate Operating leases 7.20 % Finance leases 7.15 % |
Summary of components of lease expense | Year Ended (In thousands) December 31, 2019 Finance lease cost: Amortization of right-of-use assets $ 12,031 Interest on lease liabilities 1,993 Operating lease cost 8,902 Variable lease cost 2,392 Total lease cost $ 25,318 |
Schedule of supplemental cash flow information related to leases | Year Ended (In thousands) December 31, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 8,701 Operating cash flows for finance leases 1,993 Financing cash flows for finance leases 12,519 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases 2,269 Finance leases 6,227 |
Schedule of maturities for operating leases | At December 31, 2019, the aggregate maturities of our lease liabilities were as follows: (In thousands) Operating Leases Finance Leases 2020 $ 7,860 $ 10,280 2021 5,716 5,095 2022 5,035 3,190 2023 3,374 1,739 2024 2,286 1,665 Thereafter 10,691 6,604 Total lease payments 34,962 28,573 Less: Interest (8,554) (4,554) $ 26,408 $ 24,019 |
Schedule of maturities for finance leases | (In thousands) Operating Leases Finance Leases 2020 $ 7,860 $ 10,280 2021 5,716 5,095 2022 5,035 3,190 2023 3,374 1,739 2024 2,286 1,665 Thereafter 10,691 6,604 Total lease payments 34,962 28,573 Less: Interest (8,554) (4,554) $ 26,408 $ 24,019 |
Schedule of future minimum lease payments for operating leases | Future minimum lease payments for operating and capital leases under ASC Topic 840, Leases (In thousands) Operating Leases Capital Leases 2019 $ 11,663 $ 13,798 2020 8,640 8,303 2021 5,675 3,471 2022 3,821 2,582 2023 2,282 1,489 Thereafter 8,268 6,405 Total lease payments $ 40,349 36,048 Less: Interest (5,686) $ 30,362 |
Schedule of future minimum lease payments for capital leases | (In thousands) Operating Leases Capital Leases 2019 $ 11,663 $ 13,798 2020 8,640 8,303 2021 5,675 3,471 2022 3,821 2,582 2023 2,282 1,489 Thereafter 8,268 6,405 Total lease payments $ 40,349 36,048 Less: Interest (5,686) $ 30,362 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EQUITY | |
Summary of the grants of RSAs and PSAs under the Plan | Year Ended December 31, Grant Date Grant Date Grant Date 2019 Fair Value 2018 Fair Value 2017 Fair Value RSAs Granted 551,214 $ 9.87 478,210 $ 12.45 124,100 $ 23.12 PSAs Granted 371,672 $ 12.45 — $ — 36,982 $ 23.27 Total 922,886 478,210 161,082 |
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 $ 12.45 Shares vested (318,891) $ 12.14 (116,323) $ 14.57 Shares forfeited, cancelled or retired (38,649) $ 10.77 (14,980) $ 12.74 Non-vested shares outstanding - December 31, 2019 532,445 $ 11.58 275,995 $ 13.29 |
Summary of total compensation costs recognized for share-based payments | Year Ended December 31, (In thousands) 2019 2018 2017 Restricted stock $ 4,013 $ 3,249 $ 1,986 Performance shares 2,823 1,870 780 Total $ 6,836 $ 5,119 $ 2,766 |
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, 2017 $ (48,464) $ 381 $ (48,083) Other comprehensive loss before reclassifications (10,835) (691) (11,526) Amounts reclassified from accumulated other comprehensive loss 3,785 2,612 6,397 Net current period other comprehensive income (loss) (7,050) 1,921 (5,129) Balance at December 31, 2018 $ (55,514) $ 2,302 $ (53,212) Other comprehensive loss before reclassifications (16,738) (19,237) (35,975) Cumulative adjustment upon adoption of ASU 2017-12 — (576) (576) Amounts reclassified from accumulated other comprehensive loss 7,936 959 8,895 Net current period other comprehensive loss (8,802) (18,854) (27,656) Balance at December 31, 2019 $ (64,316) $ (16,552) $ (80,868) |
Summary of reclassifications from accumulated other comprehensive loss | Amount Reclassified from AOCI Year Ended December 31, Affected Line Item in the (In thousands) 2019 2018 Statement of Income Amortization of pension and post-retirement items: Prior service cost $ (857) $ (163) (a) Actuarial loss (3,195) (6,054) (a) Plan curtailment — 1,156 (a) Settlement loss (6,726) (94) (a) (10,778) (5,155) Total before tax 2,842 1,370 Tax benefit $ (7,936) $ (3,785) Net of tax Gain (Loss) on cash flow hedges: Interest rate derivatives $ (1,108) $ (3,467) Interest expense 149 855 Tax benefit $ (959) $ (2,612) Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and post-retirement benefit plans. See Note 11 for additional details. |
PENSION PLANS AND OTHER POST-_2
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Post-retirement benefit obligation | |
Schedule of expected benefit payments | Other Pension Post-retirement (In thousands) Plans Plans 2020 $ 33,725 $ 8,870 2021 34,797 8,734 2022 35,775 8,203 2023 36,577 7,735 2024 37,741 7,277 2025 - 2029 197,690 31,173 |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Summary of change in benefit obligation, plan assets and funded status of the Pension Plans | (In thousands) 2019 2018 Change in benefit obligation Benefit obligation at the beginning of the year $ 712,174 $ 777,987 Service cost 50 5,809 Interest cost 30,327 28,870 Actuarial loss (gain) 80,023 (67,558) Benefits paid (31,581) (30,870) Plan amendments — 1,216 Plan curtailment — (1) Plan settlement (31,172) (3,279) Benefit obligation at the end of the year $ 759,821 $ 712,174 (In thousands) 2019 2018 Change in plan assets Fair value of plan assets at the beginning of the year $ 499,791 $ 552,240 Employer contributions 27,516 26,200 Actual return on plan assets 92,413 (44,500) Benefits paid (31,581) (30,870) Plan settlement (31,172) (3,279) Fair value of plan assets at the end of the year $ 556,967 $ 499,791 Funded status at year end $ (202,854) $ (212,383) |
Schedule of amounts recognized in the consolidated balance sheets | ( In thousands) 2019 2018 Current liabilities $ (243) $ (243) Long-term liabilities $ (202,611) $ (212,140) |
Schedule of amounts recognized in accumulated other comprehensive loss | (In thousands) 2019 2018 Unamortized prior service cost $ 1,052 $ 1,175 Unamortized net actuarial loss 107,982 95,362 $ 109,034 $ 96,537 |
Schedule of the components of net periodic pension cost | (In thousands) 2019 2018 2017 Service cost $ 50 $ 5,809 $ 3,055 Interest cost 30,327 28,870 21,882 Expected return on plan assets (34,627) (38,640) (28,459) Amortization of: Net actuarial loss 2,890 6,110 6,244 Prior service cost (credit) 123 (204) (316) Plan curtailment — (1,156) (1,337) Plan settlement 6,726 94 17 Net periodic pension cost $ 5,489 $ 883 $ 1,086 |
Summary of changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects | (In thousands) 2019 2018 Actuarial loss, net $ 22,236 $ 15,583 Recognized actuarial loss (2,890) (6,111) Prior service cost (credit) (123) 1,216 Recognized prior service credit — 204 Plan curtailment — 1,156 Plan settlement (6,726) (94) Total amount recognized in other comprehensive loss, before tax effects $ 12,497 $ 11,954 |
Schedule of weighted-average discount rate assumptions used to determine benefit obligations and net periodic pension benefit cost | 2019 2018 2017 Discount rate - net periodic benefit cost 4.36 % 3.75 % 4.02 % Discount rate - benefit obligation 3.51 % 4.39 % 3.75 % Expected long-term rate of return on plan assets 6.97 % 7.03 % 7.23 % Rate of compensation/salary increase 2.50 % 2.50 % 2.39 % |
Schedule of fair values of assets for the entity's defined benefit pension plans | As of December 31, 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) Cash and cash equivalents $ 21 $ 21 $ — $ — Equities: Stocks: U.S. common stocks 15 15 — — International stocks 4 4 — — Total plan assets in the fair value hierarchy 40 $ 40 $ — $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 9,201 Equities: Global 220,453 Real estate 83,433 Fixed Income 243,840 Total plan assets $ 556,967 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) Cash and cash equivalents $ 15,107 $ 15,107 $ — $ — Equities: Stocks: U.S. common stocks 46,830 46,830 — — International stocks 9,656 9,656 — — Funds: U.S. small cap 7,222 7,222 — — U.S. mid cap 30,752 30,752 — — U.S. large cap 51,847 51,847 — — Emerging markets 15,954 15,954 — — International 81,398 81,398 — — Fixed Income: U.S. treasury and government agency securities 25,616 25,616 — — Corporate and municipal bonds 36,700 — 36,700 — Mortgage/asset-backed securities 8,733 — 8,733 — Mutual funds 10,763 10,763 — — Total plan assets in the fair value hierarchy 340,578 $ 295,145 $ 45,433 $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 10,275 Equities: U.S. small cap 10,391 U.S. large cap 11,268 Emerging markets 8,739 International 15,361 Fixed Income 103,345 Total plan assets 499,957 Other liabilities (3) (166) Net plan assets $ 499,791 (1) Certain investments that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include an investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper, U.S. government obligations and variable rate securities with maturities less than one year. (3) Net amount due for securities purchased and sold. |
Post-retirement Benefit Obligations | |
Post-retirement benefit obligation | |
Summary of change in benefit obligation, plan assets and funded status of the Pension Plans | (In thousands) 2019 2018 Change in benefit obligation Benefit obligation at the beginning of the year $ 109,902 $ 116,970 Service cost 957 405 Interest cost 4,231 4,128 Plan participant contributions 269 384 Actuarial gain 570 (8,517) Benefits paid (8,797) (10,130) Plan amendments — 6,662 Benefit obligation at the end of the year $ 107,132 $ 109,902 (In thousands) 2019 2018 Change in plan assets Fair value of plan assets at the beginning of the year $ 2,791 $ 2,484 Employer contributions 8,527 9,746 Plan participant’s contributions 269 384 Actual return on plan assets 374 307 Benefits paid (8,797) (10,130) Fair value of plan assets at the end of the year $ 3,164 $ 2,791 Funded status at year end $ (103,968) $ (107,111) |
Schedule of amounts recognized in the consolidated balance sheets | (In thousands) 2019 2018 Current liabilities $ (5,619) $ (6,594) Long-term liabilities $ (98,349) $ (100,517) |
Schedule of amounts recognized in accumulated other comprehensive loss | (In thousands) 2019 2018 Unamortized prior service cost (credit) $ (872) $ 2,200 Unamortized net actuarial gain (7,987) (10,396) $ (8,859) $ (8,196) |
Schedule of the components of net periodic pension cost | (In thousands) 2019 2018 2017 Service cost $ 957 $ 405 $ 498 Interest cost 4,231 4,128 3,034 Expected return on plan assets (180) (142) (113) Amortization of: Net actuarial gain (2,033) (56) (173) Prior service cost (credit) 3,072 367 (521) Net periodic postretirement benefit cost $ 6,047 $ 4,702 $ 2,725 |
Summary of changes in plan assets and benefit obligations recognized in other comprehensive loss, before tax effects | (In thousands) 2019 2018 Actuarial gain, net $ 376 $ (8,682) Recognized actuarial gain 2,033 56 Prior service cost — 6,662 Recognized prior service cost (3,072) (367) Total amount recognized in other comprehensive loss, before tax effects $ (663) $ (2,331) |
Schedule of weighted-average discount rate assumptions used to determine benefit obligations and net periodic pension benefit cost | 2019 2018 2017 Net periodic benefit cost 4.35 % 3.62 % 3.96 % Benefit obligation 3.34 % 4.35 % 3.67 % |
Schedule of a one percent change in the assumed healthcare cost trend rate | (In thousands) 1% Increase 1% Decrease Effect on total of service and interest cost $ 293 $ (277) Effect on postretirement benefit obligation $ 4,586 $ (4,634) |
Schedule of fair values of assets for the entity's defined benefit pension plans | As of December 31, (In thousands) 2019 Common Collective Trusts measured at NAV: (1) Short-term investments (2) $ 53 Equities: Global 1,252 Real estate 474 Fixed Income 1,385 Total plan assets $ 3,164 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) Cash and cash equivalents $ 4 $ 4 $ — $ — Equities: U.S. common stocks 240 240 — — International stocks 83 83 — — Funds: U.S. mid cap 75 75 — — U.S. large cap 74 74 — — Emerging markets 188 188 — — International 449 449 — — Total plan assets in the fair value hierarchy 1,113 $ 1,113 $ — $ — Common Collective Trusts measured at NAV: (1) Short-term investments (2) 61 Equities: U.S. small cap 123 U.S. large cap 133 Emerging markets 103 International 181 Fixed Income 1,220 Total plan assets 2,934 Benefit payments payable (141) Other liabilities (3) (2) Net plan assets $ 2,791 (1) Certain investments that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy. The fair value amounts presented in these tables are intended to permit reconciliation of the fair value hierarchy to the total plan assets. (2) Short-term investments include investment in a common collective trust which is principally comprised of certificates of deposit, commercial paper and U.S. government obligations with maturities less than one year. (3) Net amount due for securities purchased and sold. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INCOME TAXES | |
Schedule of components of income tax expense (benefit) | For the Year Ended (In thousands) 2019 2018 2017 Current: Federal $ 143 $ 247 $ 1,055 State 1,392 1,634 145 Total current expense 1,535 1,881 1,200 Deferred: Federal (4,339) (17,248) (141,726) State (910) (8,760) 15,599 Total deferred benefit (5,249) (26,008) (126,127) Total income tax benefit $ (3,714) $ (24,127) $ (124,927) |
Schedule of reconciliation of the federal statutory tax rate to the effective tax rate | For the Year Ended (In percentages) 2019 2018 2017 Statutory federal income tax rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal benefit 10.6 5.2 4.1 Transaction costs — — (5.8) Other permanent differences (4.5) (0.9) 0.2 Change in deferred tax rate (2.9) 3.7 (9.1) Change in deferred tax rate - Federal Tax Reform — 6.9 189.4 Valuation allowance (4.7) (2.3) (4.3) Provision to return (0.5) 0.5 — Sale of stock in subsidiary — (1.0) — State audit settlement (3.2) — — Acquisition related — (1.3) — Other (0.1) 0.5 — 15.7 % 32.3 % 209.5 % |
Schedule of components of the net deferred tax liability | Year Ended December 31, (In thousands) 2019 2018 Non-current deferred tax assets: Reserve for uncollectible accounts $ 1,194 $ 1,164 Accrued vacation pay deducted when paid 4,152 4,371 Accrued expenses and deferred revenue 9,839 12,848 Net operating loss carryforwards 86,535 76,659 Pension and postretirement obligations 80,245 84,786 Share-based compensation 693 9 Derivative instruments 5,868 (825) Financing costs 176 189 Tax credit carryforwards 6,077 6,411 194,779 185,612 Valuation allowance (6,680) (9,158) Net non-current deferred tax assets 188,099 176,454 Non-current deferred tax liabilities: Goodwill and other intangibles (66,271) (82,992) Basis in investment (5) (12) Partnership investments (16,138) (14,425) Property, plant and equipment (278,712) (267,154) (361,126) (364,583) Net non-current deferred taxes $ (173,027) $ (188,129) |
Schedule of reconciliation of the unrecognized tax benefits | Liability for Unrecognized Tax Benefits (In thousands) 2019 2018 Balance at January 1 $ 4,933 $ 4,296 Additions for tax positions related to FairPoint acquisition — 637 Balance at December 31 $ 4,933 $ 4,933 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of minimum annual contractual obligations and the estimated timing and effect the obligations will have on liquidity and cash flows | Minimum Annual Contractual Obligations (in thousands) 2020 2021 2022 2023 2024 Thereafter Total Service and support agreements (1) $ 19,455 $ 10,429 $ 8,112 $ 6,751 $ 339 $ 305 $ 45,391 Transport and data connectivity 9,787 7,964 6,850 5,256 5,242 151 35,250 Capital expenditures (2) 3,945 — — — — — 3,945 Other operating agreements (3) 3,301 2,458 2,017 1,983 383 915 11,057 Total $ 36,488 $ 20,851 $ 16,979 $ 13,990 $ 5,964 $ 1,371 $ 95,643 (1) We have entered into service and maintenance agreements to support various computer hardware and software applications and certain equipment. (2) We have binding commitments with numerous suppliers for future capital expenditures. (3) We have entered into various non-cancelable rental agreements for certain facilities and equipment used in our operations. |
QUARTERLY FINANCIAL INFORMATI_2
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
Schedule of unaudited quarterly financial information | Quarter Ended 2019 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 338,649 $ 333,532 $ 333,326 $ 331,035 Operating income $ 16,720 $ 14,300 $ 23,542 $ 26,719 Net income (loss) attributable to common stockholders $ (7,265) $ (7,387) $ 257 $ (5,988) Basic and diluted earnings (loss) per share $ (0.11) $ (0.10) $ — $ (0.08) Quarter Ended 2018 March 31, June 30, September 30, December 31, (In thousands, except per share amounts) Net revenues $ 356,039 $ 350,221 $ 348,064 $ 344,750 Operating income $ 9,239 $ 5,427 $ 748 $ 3,555 Net loss attributable to common stockholders $ (11,298) $ (10,643) $ (14,914) $ (13,979) Basic and diluted loss per share $ (0.16) $ (0.15) $ (0.21) $ (0.20) |
CONDENSED CONSOLIDATING FINAN_2
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (amounts in thousands) December 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 12,387 $ 8 $ — $ — $ 12,395 Accounts receivable, net — 78 112,415 7,523 — 120,016 Income taxes receivable 1,812 — 791 66 — 2,669 Prepaid expenses and other current assets — — 41,431 356 — 41,787 Total current assets 1,812 12,465 154,645 7,945 — 176,867 Property, plant and equipment, net — — 1,770,187 65,691 — 1,835,878 Intangibles and other assets: Investments — 8,863 103,854 — — 112,717 Investments in subsidiaries 3,547,466 3,520,346 17,165 — (7,084,977) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 164,069 — — 164,069 Other intangible assets — — 1,470 9,087 — 10,557 Advances due to/from affiliates, net — 2,289,433 893,394 113,473 (3,296,300) — Deferred income taxes 86,447 5,661 — — (92,108) — Other assets 1,506 — 52,887 522 — 54,915 Total assets $ 3,637,231 $ 5,836,768 $ 4,126,764 $ 262,899 $ (10,473,385) $ 3,390,277 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 30,936 $ — $ — $ 30,936 Advance billings and customer deposits — — 44,436 1,274 — 45,710 Accrued compensation — — 56,356 713 — 57,069 Accrued interest — 7,523 351 — — 7,874 Accrued expense 50 2,565 71,659 1,132 — 75,406 Current portion of long term debt and finance lease obligations — 18,350 8,808 143 — 27,301 Total current liabilities 50 28,438 212,546 3,262 — 244,296 Long-term debt and finance lease obligations — 2,235,609 15,001 67 — 2,250,677 Advances due to/from affiliates, net 3,296,300 — — — (3,296,300) — Deferred income taxes — — 240,983 24,152 (92,108) 173,027 Pension and postretirement benefit obligations — — 285,832 16,464 — 302,296 Other long-term liabilities — 25,255 46,656 819 — 72,730 Total liabilities 3,296,350 2,289,302 801,018 44,764 (3,388,408) 3,043,026 Shareholders’ equity: Common Stock 720 — 17,411 30,000 (47,411) 720 Other shareholders’ equity 340,161 3,547,466 3,301,965 188,135 (7,037,566) 340,161 Total Consolidated Communications Holdings, Inc. shareholders’ equity 340,881 3,547,466 3,319,376 218,135 (7,084,977) 340,881 Noncontrolling interest — — 6,370 — — 6,370 Total shareholders’ equity 340,881 3,547,466 3,325,746 218,135 (7,084,977) 347,251 Total liabilities and shareholders’ equity $ 3,637,231 $ 5,836,768 $ 4,126,764 $ 262,899 $ (10,473,385) $ 3,390,277 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 (amounts in thousands) Year Ended December 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ 193 $ 1,300,835 $ 48,142 $ (12,628) $ 1,336,542 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 572,661 14,261 (11,986) 574,936 Selling, general and administrative expenses 7,565 — 282,586 9,579 (642) 299,088 Depreciation and amortization — — 371,572 9,665 — 381,237 Operating income (loss) (7,565) 193 74,016 14,637 — 81,281 Other income (expense): Interest expense, net of interest income 60 (136,696) (86) 62 — (136,660) Intercompany interest income (expense) — 58,908 (58,831) (77) — — Gain on extinguishment of debt — 4,510 — — — 4,510 Investment income — 190 37,898 — — 38,088 Equity in earnings of subsidiaries, net (13,067) 44,271 775 — (31,979) — Other, net 1 47 (10,042) (870) — (10,864) Income (loss) before income taxes (20,571) (28,577) 43,730 13,752 (31,979) (23,645) Income tax expense (benefit) (188) (15,510) 9,338 2,646 — (3,714) Net income (loss) (20,383) (13,067) 34,392 11,106 (31,979) (19,931) Less: net income attributable to noncontrolling interest — — 452 — — 452 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (20,383) $ (13,067) $ 33,940 $ 11,106 $ (31,979) $ (20,383) Total comprehensive income (loss) attributable to common shareholders $ (48,039) $ (40,723) $ 23,867 $ 12,377 $ 4,479 $ (48,039) Year Ended December 31, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,356,074 $ 55,541 $ (12,541) $ 1,399,074 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 607,582 16,386 (12,096) 611,872 Selling, general and administrative expenses 4,087 — 317,289 12,674 (445) 333,605 Acquisition and other transaction costs 1,960 — — — — 1,960 Depreciation and amortization — — 422,704 9,964 — 432,668 Operating income (loss) (6,047) — 8,499 16,517 — 18,969 Other income (expense): Interest expense, net of interest income (103) (136,378) 1,785 118 — (134,578) Intercompany interest income (expense) — 58,908 (58,844) (64) — — Investment income — 178 39,418 — — 39,596 Equity in earnings of subsidiaries, net (42,181) 8,858 5,133 — 28,190 — Other, net 7 — 1,067 241 — 1,315 Income (loss) before income taxes (48,324) (68,434) (2,942) 16,812 28,190 (74,698) Income tax expense (benefit) 2,510 (26,253) (5,784) 5,400 — (24,127) Net income (loss) (50,834) (42,181) 2,842 11,412 28,190 (50,571) Less: net income attributable to noncontrolling interest — — 263 — — 263 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (50,834) $ (42,181) $ 2,579 $ 11,412 $ 28,190 $ (50,834) Total comprehensive income (loss) attributable to common shareholders $ (55,963) $ (47,310) $ (3,545) $ 10,486 $ 40,369 $ (55,963) Year Ended December 31, 2017 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 1,013,505 $ 58,776 $ (12,707) $ 1,059,574 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 447,029 11,245 (12,276) 445,998 Selling, general and administrative expenses 1,924 30 234,198 13,420 (431) 249,141 Acquisition and other transaction costs 33,650 — — — — 33,650 Depreciation and amortization — — 280,843 11,030 — 291,873 Operating income (loss) (35,574) (30) 51,435 23,081 — 38,912 Other income (expense): Interest expense, net of interest income (12) (128,737) (1,183) 146 — (129,786) Intercompany interest income (expense) — 58,909 (58,827) (82) — — Investment income — 157 31,592 — — 31,749 Equity in earnings of subsidiaries, net 101,863 109,015 1,918 — (212,796) — Other, net — 3 (694) 188 — (503) Income (loss) before income taxes 66,277 39,317 24,241 23,333 (212,796) (59,628) Income tax expense (benefit) 1,332 (27,610) (97,667) (982) — (124,927) Net income (loss) 64,945 66,927 121,908 24,315 (212,796) 65,299 Less: net income attributable to noncontrolling interest — — 354 — — 354 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 64,945 $ 66,927 $ 121,554 $ 24,315 $ (212,796) $ 64,945 Total comprehensive income (loss) attributable to common shareholders $ 64,139 $ 71,746 $ 119,174 $ 25,381 $ (216,301) $ 64,139 |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (amounts in thousands) Year Ended December 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (3,205) $ (57,831) $ 381,366 $ 18,766 $ 339,096 Cash flows from investing activities: Purchases of property, plant and equipment — — (223,715) (8,488) (232,203) Proceeds from sale of assets — — 14,707 11 14,718 Distributions from investments — — 329 — 329 Other — — (663) — (663) Net cash used in investing activities — — (209,342) (8,477) (217,819) Cash flows from financing activities: Proceeds from issuance of long-term debt — 195,000 — — 195,000 Payment of finance lease obligation — — (12,322) (197) (12,519) Payment on long-term debt — (195,350) — — (195,350) Repurchase of senior notes — (49,804) — — (49,804) Share repurchases for minimum tax withholding (363) — — — (363) Dividends on common stock (55,445) — — — (55,445) Transactions with affiliates, net 59,013 110,756 (159,676) (10,093) — Net cash provided by (used in) financing activities 3,205 60,602 (171,998) (10,290) (118,481) Increase (decrease) in cash and cash equivalents — 2,771 26 (1) 2,796 Cash and cash equivalents at beginning of period — 9,616 (18) 1 9,599 Cash and cash equivalents at end of period $ — $ 12,387 $ 8 $ — $ 12,395 Year Ended December 31, 2018 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ 2,323 $ (43,781) $ 388,930 $ 9,849 $ 357,321 Cash flows from investing activities: Purchases of property, plant and equipment — — (235,147) (9,669) (244,816) Proceeds from sale of assets — — 1,688 437 2,125 Proceeds from business dispositions 20,999 — — — 20,999 Distributions from investments — — 233 — 233 Net cash used in investing activities 20,999 — (233,226) (9,232) (221,459) Cash flows from financing activities: Proceeds from issuance of long-term debt — 189,588 — — 189,588 Payment of finance lease obligation — — (12,559) (196) (12,755) Payment on long-term debt — (207,938) — — (207,938) Share repurchases for minimum tax withholding (593) — — — (593) Dividends on common stock (110,222) — — — (110,222) Transactions with affiliates, net 87,493 62,828 (149,901) (420) — Net cash provided by (used in) financing activities (23,322) 44,478 (162,460) (616) (141,920) Increase (decrease) in cash and cash equivalents — 697 (6,756) 1 (6,058) Cash and cash equivalents at beginning of period — 8,919 6,738 — 15,657 Cash and cash equivalents at end of period $ — $ 9,616 $ (18) $ 1 $ 9,599 Year Ended December 31, 2017 Subsidiary Parent Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (23,237) $ (25,625) $ 235,810 $ 23,079 $ 210,027 Cash flows from investing activities: Business acquisition, net of cash acquired (862,385) — — — (862,385) Purchases of property, plant and equipment — — (167,187) (13,998) (181,185) Proceeds from sale of assets — — 829 30 859 Net cash provided by (used in) investing activities (862,385) — (166,358) (13,968) (1,042,711) Cash flows from financing activities: Proceeds from issuance of long-term debt — 1,052,325 — — 1,052,325 Payment of finance lease obligation — — (7,746) (187) (7,933) Payment on long-term debt — (111,337) — — (111,337) Payment of financing costs — (16,732) — — (16,732) Share repurchases for minimum tax withholding (571) — — — (571) Dividends on common stock (94,138) — — — (94,138) Transactions with affiliates, net 980,681 (916,776) (54,981) (8,924) — Other (350) — — — (350) Net cash provided by (used in) financing activities 885,622 7,480 (62,727) (9,111) 821,264 Increase in cash and cash equivalents — (18,145) 6,725 — (11,420) Cash and cash equivalents at beginning of period — 27,064 13 — 27,077 Cash and cash equivalents at end of period $ — $ 8,919 $ 6,738 $ — $ 15,657 |
BUSINESS DESCRIPTION AND SUMM_4
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) | Dec. 31, 2019itemstatemi |
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of states | state | 23 |
Number of fiber route miles | mi | 37,000 |
Number of voice connections | 836,000 |
Number of data connections | 784,000 |
Number of video connections | 84,000 |
BUSINESS DESCRIPTION AND SUMM_5
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Activity in the entity's accounts receivable allowance | |||
Balance at beginning of year | $ 4,421 | $ 6,667 | $ 2,813 |
Provision charged to expense | 9,347 | 8,793 | 7,072 |
Write-offs, less recoveries | (9,219) | (11,039) | (6,516) |
Acquired allowance for doubtful accounts | 3,298 | ||
Balance at end of year | $ 4,549 | $ 4,421 | $ 6,667 |
BUSINESS DESCRIPTION AND SUMM_6
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant, and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property, plant and equipment | |||
Total plant in service | $ 3,975,275 | $ 3,774,198 | |
Less: accumulated depreciation and amortization | (2,228,481) | (1,953,813) | |
Plant in service | 1,746,794 | 1,820,385 | |
Totals | 1,835,878 | 1,927,126 | |
Depreciation and amortization expense | $ 315,000 | 366,300 | $ 263,800 |
Internal use network and non-network software | Maximum | |||
Property, plant and equipment | |||
Period after which property plan and equipment capitalized | 1 year | ||
Land and buildings | |||
Property, plant and equipment | |||
Total plant in service | $ 270,443 | 257,208 | |
Land and buildings | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 18 years | ||
Land and buildings | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 40 years | ||
Central office switching and transmission | |||
Property, plant and equipment | |||
Total plant in service | $ 1,363,533 | 1,234,687 | |
Central office switching and transmission | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Central office switching and transmission | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 25 years | ||
Outside plant cable, wire and fiber facilities | |||
Property, plant and equipment | |||
Total plant in service | $ 2,002,264 | 1,934,185 | |
Outside plant cable, wire and fiber facilities | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Outside plant cable, wire and fiber facilities | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 50 years | ||
Furniture, fixtures and equipment | |||
Property, plant and equipment | |||
Total plant in service | $ 287,711 | 285,102 | |
Furniture, fixtures and equipment | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 3 years | ||
Furniture, fixtures and equipment | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 15 years | ||
Assets under finance leases | |||
Property, plant and equipment | |||
Total plant in service | $ 51,324 | 63,016 | |
Assets under finance leases | Minimum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 1 year | ||
Assets under finance leases | Maximum | |||
Property, plant and equipment | |||
Estimated Useful Lives | 20 years | ||
Construction in progress | |||
Property, plant and equipment | |||
Total plant in service | $ 59,624 | 68,325 | |
Construction inventory | |||
Property, plant and equipment | |||
Total plant in service | $ 29,460 | $ 38,416 |
BUSINESS DESCRIPTION AND SUMM_7
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Finite lived intangible assets | |||
Impairment charge for goodwill | $ 0 | $ 0 | $ 0 |
Preceding period of average stock price used to calculate impairment of reporting unit under the fair value model | 3 months | ||
Goodwill | $ 1,035,274 | 1,035,274 | |
Gross Carrying Amount | 321,333 | 524,451 | |
Accumulated Amortization | (157,264) | (294,566) | |
Amortization of intangible assets | 66,200 | 66,300 | $ 28,000 |
Expected amortization expense | |||
2020 | 50,652 | ||
2021 | 39,479 | ||
2022 | 30,850 | ||
2023 | 23,963 | ||
2024 | 10,617 | ||
Thereafter | 8,508 | ||
Net carrying amount | 164,069 | ||
Customer Relationships | |||
Finite lived intangible assets | |||
Gross Carrying Amount | 321,333 | 516,561 | |
Accumulated Amortization | $ (157,264) | (287,602) | |
Customer Relationships | Minimum | |||
Finite lived intangible assets | |||
Useful Lives | 3 years | ||
Customer Relationships | Maximum | |||
Finite lived intangible assets | |||
Useful Lives | 13 years | ||
Tradenames | |||
Finite lived intangible assets | |||
Indefinitely renewable tradenames | $ 10,600 | 10,600 | |
Gross Carrying Amount | 2,290 | ||
Accumulated Amortization | (2,290) | ||
Tradenames | Minimum | |||
Finite lived intangible assets | |||
Useful Lives | 1 year | ||
Tradenames | Maximum | |||
Finite lived intangible assets | |||
Useful Lives | 2 years | ||
Other Intangible Assets | |||
Finite lived intangible assets | |||
Gross Carrying Amount | 5,600 | ||
Accumulated Amortization | $ (4,674) | ||
Other Intangible Assets | Maximum | |||
Finite lived intangible assets | |||
Useful Lives | 5 years |
BUSINESS DESCRIPTION AND SUMM_8
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-based , Pension Plan, and Income Taxes (Details) | 12 Months Ended |
Dec. 31, 2019item | |
Share-based Compensation | |
Vesting period over which the cost of RSAs and PSAs is recognized | 4 years |
Pension Plan and Other Post-Retirement Benefits | |
Number of non-qualified plans | 2 |
Amortization threshold (as a percentage) | 10.00% |
Income Taxes | |
Minimum number of states in which entity operates | 1 |
BUSINESS DESCRIPTION AND SUMM_9
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs and Cash Flow (Details) - USD ($) $ in Thousands, shares in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Advertising costs | |||
Advertising expense | $ 11,500 | $ 11,400 | $ 10,900 |
Statement of Cash Flows Information | |||
Interest, net of amounts capitalized | 129,508 | 122,422 | 106,499 |
Interest capitalized | 3,737 | 5,659 | 1,246 |
Income taxes (received) paid, net | (8,374) | (9,060) | 953 |
Noncash investing and financing activities: | |||
Equipment acquired through finance or capital lease agreements | $ 6,227 | $ 19,200 | $ 12,800 |
FairPoint acquisition | |||
Noncash investing and financing activities: | |||
Number of shares issued on date of merger | 20.1 | ||
Value of shares issued in connection with the merger | $ 431,000 |
BUSINESS DESCRIPTION AND SUM_10
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Noncontrolling Interest (Details) - ETFL | Dec. 31, 2019 |
Noncontrolling Interest | |
Ownership interest (as a percent) | 63.00% |
Eastex Telecom Investments, LLC | |
Noncontrolling Interest | |
Minority interest holding percentage | 37.00% |
BUSINESS DESCRIPTION AND SUM_11
BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment to retained earnings | $ (576) | |
Lease liabilities | 26,408 | |
ROU assets | $ 26,239 | |
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 | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | $ 331,035 | $ 333,326 | $ 333,532 | $ 338,649 | $ 344,750 | $ 348,064 | $ 350,221 | $ 356,039 | $ 1,336,542 | $ 1,399,074 | $ 1,059,574 |
Receivables, contract assets and contract liabilities | |||||||||||
Accounts receivable, net | 120,016 | 133,136 | 120,016 | 133,136 | |||||||
Contract assets | 18,804 | 12,128 | 18,804 | 12,128 | |||||||
Contract liabilities | $ 50,974 | $ 52,966 | 50,974 | 52,966 | |||||||
Recognized expenses related to deferred contract acquisition costs. | 6,300 | 2,900 | |||||||||
Recognized revenue related to deferred revenue | $ 397,500 | 354,200 | |||||||||
Revenue, Practical Expedient, Remaining Performance Obligation | true | ||||||||||
Minimum | |||||||||||
Receivables, contract assets and contract liabilities | |||||||||||
Payment term | 30 years | ||||||||||
Maximum | |||||||||||
Receivables, contract assets and contract liabilities | |||||||||||
Payment term | 60 days | ||||||||||
Commercial and carrier | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | $ 596,541 | 608,683 | 460,761 | ||||||||
Commercial and carrier - Data and transport services (including VoIP) | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 355,325 | 349,413 | 274,221 | ||||||||
Commercial and carrier - Voice services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 188,322 | 202,875 | 152,632 | ||||||||
Commercial and carrier - Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 52,894 | 56,395 | 33,908 | ||||||||
Subsidies | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 72,440 | 83,371 | 62,272 | ||||||||
Consumer | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 519,300 | 543,489 | 412,736 | ||||||||
Consumer - Broadband (VoIP and Data) | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 257,083 | 253,119 | 183,634 | ||||||||
Consumer - Video services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 81,378 | 88,338 | 91,406 | ||||||||
Consumer - Voice services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 180,839 | 202,032 | 137,696 | ||||||||
Network access | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | 138,056 | 152,582 | 110,196 | ||||||||
Other products and services | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total operating revenues | $ 10,205 | $ 10,949 | $ 13,609 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic and diluted earnings per share attributable to common shareholders | |||||||||||
Net income (loss) | $ (19,931) | $ (50,571) | $ 65,299 | ||||||||
Less: net income attributable to noncontrolling interest | 452 | 263 | 354 | ||||||||
Income (loss) attributable to common shareholders before allocation of earnings to participating securities | $ (5,988) | $ 257 | $ (7,387) | $ (7,265) | $ (13,979) | $ (14,914) | $ (10,643) | $ (11,298) | (20,383) | (50,834) | 64,945 |
Less: earnings allocated to participating securities | 462 | 810 | 362 | ||||||||
Net income (loss) attributable to common shareholders, after earnings allocated to participating securities | $ (20,845) | $ (51,644) | $ 64,583 | ||||||||
Weighted-average number of common shares outstanding | 70,837 | 70,613 | 60,373 | ||||||||
Basic and diluted earnings (loss) per common share: | |||||||||||
Net income (loss) per basic and diluted common shares attributable to common shareholders | $ (0.08) | $ (0.10) | $ (0.11) | $ (0.20) | $ (0.21) | $ (0.15) | $ (0.16) | $ (0.29) | $ (0.73) | $ 1.07 | |
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 1,100 | 500 | 300 |
ACQUISITIONS AND DIVESTITURES -
ACQUISITIONS AND DIVESTITURES - (Details) $ / shares in Units, $ in Thousands, shares in Millions | 6 Months Ended | 12 Months Ended | |||
Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2019statemi | Jul. 03, 2017USD ($)mi | |
Unaudited Pro Forma Results | |||||
Number of states | state | 23 | ||||
Number of fiber route miles | mi | 37,000 | ||||
Transaction costs | $ 1,960 | $ 33,650 | |||
Incremental Term Loan Facility | |||||
Unaudited Pro Forma Results | |||||
Aggregate principal amount | $ 935,000 | ||||
FairPoint acquisition | |||||
Unaudited Pro Forma Results | |||||
Operating revenues | 1,460,620 | ||||
Income from operations | 60,926 | ||||
Net income | 91,131 | ||||
Less: net income attributable to noncontrolling interest | 354 | ||||
Net income attributable to common stockholders | $ 90,777 | ||||
Net income per common share-basic and diluted (in dollars per share) | $ / shares | $ 1.29 | ||||
Number of fiber route miles | mi | 22,000 | ||||
Number of route miles of fiber network in New England | mi | 17,000 | ||||
Number of shares issued on date of merger | shares | 20.1 | ||||
Transaction costs | $ 33,000 | ||||
FairPoint acquisition | Acquisition-related Costs | |||||
Unaudited Pro Forma Results | |||||
Net revenues | $ 389,500 | ||||
Net income | (22,700) | ||||
Transaction costs | $ 12,300 |
ACQUISITIONS AND DIVESTITURES_2
ACQUISITIONS AND DIVESTITURES - Divestiture (Details) - USD ($) $ in Thousands | Jul. 31, 2018 | Aug. 31, 2017 | Dec. 31, 2018 |
Divestitures | |||
Proceeds from business dispositions | $ 20,999 | ||
Peoples | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Divestitures | |||
Proceeds from business dispositions | $ 21,000 | ||
Income tax expense from divestiture | 800 | ||
Peoples | Disposal Group, Held-for-sale, Not Discontinued Operations | |||
Divestitures | |||
Annual revenue from divestitures (as a percentage) | 1.00% | ||
Selling, general and administrative expense | Peoples | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Divestitures | |||
Gain (loss) on sale of business dispositions | $ (200) |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Investments | |||
Cash distributions received from partnerships treated as investments at cost | $ 16,800 | $ 17,300 | $ 12,800 |
Carrying value of investments in excess of underlying equity | 32,800 | $ 32,800 | |
Investments | |||
Cash surrender value of life insurance policies | 2,474 | 2,371 | |
Total | $ 112,717 | $ 110,853 | |
GTE Mobilnet of South Texas Limited Partnership | |||
Investments | |||
Ownership percentage of investments at cost | 2.34% | 2.34% | |
Investments | |||
Investments at cost | $ 21,450 | $ 21,450 | |
Pittsburgh SMSA Limited Partnership | |||
Investments | |||
Ownership percentage of investments at cost | 3.60% | 3.60% | |
Investments | |||
Investments at cost | $ 22,950 | $ 22,950 | |
CoBank, ACB Stock | |||
Investments | |||
Investments at cost | 8,910 | 9,051 | |
Other | |||
Investments | |||
Investments at cost | $ 298 | $ 298 | |
GTE Mobilnet of Texas RSA #17 Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 20.51% | 20.51% | |
Investments | |||
Equity method investments | $ 20,162 | $ 17,800 | |
Pennsylvania RSA 6(I) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 16.67% | 16.67% | |
Investments | |||
Equity method investments | $ 7,658 | $ 7,786 | |
Pennsylvania RSA 6(II) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 23.67% | 23.67% | |
Investments | |||
Equity method investments | $ 28,815 | $ 29,147 |
INVESTMENTS - Equity Method (De
INVESTMENTS - Equity Method (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Investments | |||
Number of entity's investments which is accounted for using equity method | item | 3 | ||
Cash distributions received from partnerships treated as equity method investees | $ 19,000 | $ 21,800 | $ 17,200 |
Summary of unaudited summarized income statement information | |||
Total revenues | 349,640 | 346,251 | 350,611 |
Income from operations | 100,182 | 100,571 | 104,973 |
Net income before taxes | 99,146 | 99,408 | 103,497 |
Net income | 99,146 | 99,408 | 103,497 |
Summary of unaudited summarized balance sheet information | |||
Current assets | 80,655 | 75,040 | 78,782 |
Non-current assets | 156,672 | 103,996 | 95,959 |
Current liabilities | 33,292 | 24,719 | 22,472 |
Non-current liabilities | 92,477 | 51,840 | 51,463 |
Partnership equity | 111,558 | $ 102,478 | $ 100,806 |
ASC 606 Adjustments | ASU 2014-09 | |||
Investments | |||
Adjustment of partnership interests | $ 1,800 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Measurements | ||
Current interest rate swap assets | $ (2,565) | $ 2,465 |
Long-term interest rate swap assets | 1,524 | |
Long-term interest rate swap liabilities | (24,960) | (6,647) |
Total | (27,525) | (2,658) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Current interest rate swap assets | (2,565) | 2,465 |
Long-term interest rate swap assets | 1,524 | |
Long-term interest rate swap liabilities | (24,960) | (6,647) |
Total | $ (27,525) | $ (2,658) |
FAIR VALUE MEASUREMENTS - Fin_2
FAIR VALUE MEASUREMENTS - Financial Instruments Not Carried at FV (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Fair Value Measurements | ||
Long-term debt | $ 2,262,111 | $ 2,315,077 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt | $ 2,125,497 | $ 2,155,127 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Jul. 03, 2017USD ($) | Jun. 08, 2015USD ($) | Oct. 31, 2016USD ($) | Sep. 30, 2014USD ($) | Mar. 31, 2020 | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Debt | |||||||||||
Total long-term debt | $ 2,262,111 | $ 2,262,111 | |||||||||
Total long-term debt | 2,262,111 | 2,262,111 | $ 2,315,077 | ||||||||
Less: current portion of long-term debt | (18,350) | (18,350) | (18,350) | ||||||||
Less: deferred debt issuance costs | (8,152) | (8,152) | (11,386) | ||||||||
Total long-term debt | 2,235,609 | 2,235,609 | 2,285,341 | ||||||||
Unamortized discount | $ 7,602 | $ 7,602 | |||||||||
Leverage ratio | 3 | 4.38 | 4.38 | ||||||||
Deferred debt issuance costs | $ 8,152 | $ 8,152 | 11,386 | ||||||||
Dividend declared | $ 27,865 | 110,383 | $ 101,951 | ||||||||
Interest coverage ratio | 3.69 | 3.69 | |||||||||
Repayments of senior notes | $ 49,804 | ||||||||||
Gain (loss) on extinguishment of debt | $ 4,510 | ||||||||||
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 | $ 443,002 | $ 443,002 | 497,009 | ||||||||
Unamortized discount | $ 1,998 | $ 1,998 | $ 2,991 | ||||||||
Aggregate principal amount | $ 300,000 | $ 200,000 | |||||||||
Interest rate (as a percent) | 6.50% | 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 | |||||||||
Repurchase amount of the aggregate principal | $ 55,000 | $ 55,000 | |||||||||
Senior Secured Credit Facility | Weighted average | |||||||||||
Debt | |||||||||||
Weighted average interest rate (as a percent) | 4.80% | 5.54% | |||||||||
Term Loan | |||||||||||
Debt | |||||||||||
Total long-term debt | 1,779,109 | $ 1,779,109 | $ 1,796,068 | ||||||||
Unamortized discount | $ 2,300 | $ 5,604 | 5,604 | 6,994 | |||||||
Aggregate principal amount | $ 900,000 | ||||||||||
Quarterly principal payments required | $ 2,250 | ||||||||||
Issue discount (as a percentage) | 0.25% | ||||||||||
Term Loan | LIBOR | |||||||||||
Debt | |||||||||||
Interest rate (as a percent) | 3.00% | 3.00% | |||||||||
Term Loan | LIBOR | Minimum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 1.00% | ||||||||||
Senior secured credit facility - revolving loan | |||||||||||
Debt | |||||||||||
Total long-term debt | $ 40,000 | $ 40,000 | 22,000 | ||||||||
Maximum borrowing capacity of credit facility | $ 110,000 | ||||||||||
Amounts outstanding | 40,000 | 40,000 | 22,000 | ||||||||
Stand-by letter of credit outstanding | 17,100 | 17,100 | |||||||||
Available borrowing capacity | 52,900 | 52,900 | |||||||||
Senior secured credit facility - revolving loan | LIBOR | |||||||||||
Debt | |||||||||||
Amounts outstanding | 30,000 | $ 30,000 | 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 | 10,000 | $ 10,000 | $ 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% | ||||||||||
Senior Notes | |||||||||||
Debt | |||||||||||
Gain (loss) on extinguishment of debt | $ 3,100 | $ 1,100 | $ 300 | ||||||||
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 |
LONG-TERM DEBT - Future Maturit
LONG-TERM DEBT - Future Maturities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Aggregate maturities of our long-term debt | |
2020 | $ 18,350 |
2021 | 58,350 |
2022 | 463,350 |
2023 | 1,729,663 |
Total maturities | 2,269,713 |
Unamortized discount | (7,602) |
Long-term debt excluding capital leases | $ 2,262,111 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | Mar. 12, 2018USD ($)item | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) |
Derivatives | |||
Number of swap agreements that provide for the entity or the counterparties to post collateral | item | 0 | ||
Forward starting fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Term of derivative contract | 1 year | ||
Interest rate swaps | |||
Derivatives | |||
Total fair value, derivative asset (liability) | $ (27,525) | $ (2,658) | |
Cash flow hedges | Interest rate swaps | |||
Derivatives | |||
Derivative, Notional Amount | $ 500,000 | ||
Notional amount | 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 | |||
Derivative, Notional Amount | $ 705,000 | ||
Prepaid expenses and other current assets | (2,565) | ||
Other Assets. | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Derivative, Notional Amount | 650,000 | ||
Other assets | 2,465 | ||
Other Assets. | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Derivative, Notional Amount | 500,000 | ||
Other assets | (5,698) | ||
Accrued Expense | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Derivative, Notional Amount | 705,000 | ||
Accrued expense | 1,524 | ||
Other long-term liabilities | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Derivative, Notional Amount | 500,000 | ||
Other long-term liabilities | (18,303) | ||
Other long-term liabilities | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Derivative, Notional Amount | 705,000 | ||
Other long-term liabilities | $ (6,657) | ||
Other long-term liabilities | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Derivative, Notional Amount | 705,000 | ||
Other long-term liabilities | $ (949) |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Instruments | ||
Derivatives | ||
Deferred gain (losses) included in AOCI (pretax) | $ (22,500) | $ 3,200 |
Loss included in AOCI to be recognized in the next 12 months | 10,800 | |
Cash flow hedges | ||
Derivatives | ||
Unrealized loss recognized in AOCI, pretax | (26,013) | |
Deferred loss reclassified from AOCI to interest expense | $ (1,108) |
LEASES (Details)
LEASES (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating lease right-of-use assets | $ 26,239 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets [Member] |
Current lease liabilities | $ (6,173) |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesMember |
Noncurrent lease liabilities | $ (20,235) |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | cnsl:OtherLongTermLiabilitiesMember |
Finance lease right-of-use assets, net of accumulated depreciation of $28,909 | $ 22,414 |
Finance Lease, Right-of-Use Asset, Accumulated Depreciation | $ 28,909 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentMember |
Current lease liabilities | $ (8,951) |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] | cnsl:CurrentPortionOfLlongTermDebtAndFinanceLeaseObligationsMember |
Noncurrent lease liabilities | $ (15,068) |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | cnsl:LongTermDebtAndFinanceleaseObligations |
Operating leases, Weighted-average remaining lease term | 7 years 7 months 6 days |
Finance leases, Weighted-average remaining lease term | 5 years 7 months 6 days |
Operating leases, Weighted-average discount rate | 7.20% |
Finance leases, Weighted-average discount rate | 7.15% |
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 | 89 years |
Operating Lease, Renewal Term | 5 years |
LEASES - Components of lease ex
LEASES - Components of lease expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
LEASES | |
Amortization of right-of-use assets | $ 12,031 |
Interest on lease liabilities | 1,993 |
Operating lease cost | 8,902 |
Variable lease cost | 2,392 |
Total lease cost | $ 25,318 |
LEASES - Supplemental cash info
LEASES - Supplemental cash information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
LEASES | |||
Operating cash flows for operating leases | $ 8,701 | ||
Operating cash flows for finance leases | 1,993 | ||
Financing cash flows for finance leases | 12,519 | $ 12,755 | $ 7,933 |
Right-of-use assets obtained in exchange for new lease liabilities: Operating leases | 2,269 | ||
Right-of-use assets obtained in exchange for new lease liabilities: Finance leases | $ 6,227 | $ 19,200 | $ 12,800 |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Operating Leases | |
2020 | $ 7,860 |
2021 | 5,716 |
2022 | 5,035 |
2023 | 3,374 |
2024 | 2,286 |
Thereafter | 10,691 |
Total lease payments | 34,962 |
Less: Interest | (8,554) |
Operating lease liabilities | $ 26,408 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent cnsl:OtherLiabilitiesAndDerivativeLiabilitiesNoncurrent |
Finance Leases | |
2020 | $ 10,280 |
2021 | 5,095 |
2022 | 3,190 |
2023 | 1,739 |
2024 | 1,665 |
Thereafter | 6,604 |
Total lease payments | 28,573 |
Less: Interest | (4,554) |
Finance lease liabilities | $ 24,019 |
LEASES - Future minimum lease p
LEASES - Future minimum lease payments for operating and capital leases under ASC 840 (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Operating Leases | |
2019 | $ 11,663 |
2020 | 8,640 |
2021 | 5,675 |
2022 | 3,821 |
2023 | 2,282 |
Thereafter | 8,268 |
Total lease payments | 40,349 |
Capital Leases | |
2019 | 13,798 |
2020 | 8,303 |
2021 | 3,471 |
2022 | 2,582 |
2023 | 1,489 |
Thereafter | 6,405 |
Total lease payments | 36,048 |
Less: Interest | (5,686) |
Present value of the lease payments | $ 30,362 |
LEASES - Lessor (Details)
LEASES - Lessor (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Sales-type Lease, Lease Income [Abstract] | |
Lessor, revenue recognized | $ 2 |
Lessor gain | $ 1.6 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 18, 2019 | Apr. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock-based compensation plans | |||||||||
Dividends declared per common share (in dollars per share) | $ 0.38738 | $ 0.38738 | $ 0.38738 | $ 0.38738 | $ 0.38738 | $ 0.39 | $ 1.55 | $ 1.55 | |
Additional shares of common stock authorized | 2,000,000 | ||||||||
Shares of common stock authorized for issuance | 4,650,000 | ||||||||
Vesting period | 4 years | ||||||||
Shares | |||||||||
Shares granted | 922,886 | 478,210 | 161,082 | ||||||
Total fair value of the awards vested | $ 5.6 | $ 4.1 | $ 3.4 | ||||||
Weighted Average Grant Date Fair Value | |||||||||
Income tax benefits related to stock-based compensation | 1.8 | $ 1.3 | $ 1.1 | ||||||
Unrecognized share-based compensation | |||||||||
Unrecognized compensation cost | $ 10.6 | ||||||||
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 | ||||||||
Payout opportunity as a percentage of the target | 120.00% | ||||||||
Minimum | |||||||||
Stock-based compensation plans | |||||||||
Payout opportunity as a percentage of the target | 0.00% | ||||||||
Restricted stock | |||||||||
Stock-based compensation plans | |||||||||
Vesting period | 4 years | ||||||||
Shares | |||||||||
Non-vested shares outstanding at the beginning of the period | 338,771 | ||||||||
Shares granted | 551,214 | 478,210 | 124,100 | ||||||
Shares vested | (318,891) | ||||||||
Shares forfeited, cancelled or retired | (38,649) | ||||||||
Non-vested shares outstanding at the end of the period | 338,771 | 532,445 | 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 | $ 12.45 | $ 23.12 | ||||||
Shares vested (in dollars per share) | 12.14 | ||||||||
Shares forfeited, cancelled or retired (in dollars per share) | 10.77 | ||||||||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 14.31 | $ 11.58 | $ 14.31 | ||||||
Performance shares | |||||||||
Shares | |||||||||
Non-vested shares outstanding at the beginning of the period | 35,626 | ||||||||
Shares granted | 371,672 | 36,982 | |||||||
Shares vested | (116,323) | ||||||||
Shares forfeited, cancelled or retired | (14,980) | ||||||||
Non-vested shares outstanding at the end of the period | 35,626 | 275,995 | 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) | 12.45 | $ 23.27 | |||||||
Shares vested (in dollars per share) | 14.57 | ||||||||
Shares forfeited, cancelled or retired (in dollars per share) | 12.74 | ||||||||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 21.97 | $ 13.29 | $ 21.97 |
EQUITY - Compensation costs (De
EQUITY - Compensation costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation plans | |||
Stock-based compensation expense | $ 6,836 | $ 5,119 | $ 2,766 |
Restricted stock | |||
Stock-based compensation plans | |||
Stock-based compensation expense | 4,013 | 3,249 | 1,986 |
Performance shares | |||
Stock-based compensation plans | |||
Stock-based compensation expense | $ 2,823 | $ 1,870 | $ 780 |
EQUITY - Changes in AOCI (Detai
EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | $ (53,212) | $ (48,083) | |
Other comprehensive loss before reclassifications | (35,975) | (11,526) | |
Cumulative adjustment upon adoption of ASU 2017-12, net of tax of $(203) | (576) | ||
Amounts reclassified from accumulated other comprehensive loss | 8,895 | 6,397 | |
Net current period other comprehensive income (loss) | (27,656) | (5,129) | $ (806) |
Balance at the end of the period | (80,868) | (53,212) | (48,083) |
Pension and Post-Retirement Obligations | |||
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | (55,514) | (48,464) | |
Other comprehensive loss before reclassifications | (16,738) | (10,835) | |
Amounts reclassified from accumulated other comprehensive loss | 7,936 | 3,785 | |
Net current period other comprehensive income (loss) | (8,802) | (7,050) | |
Balance at the end of the period | (64,316) | (55,514) | (48,464) |
Derivative Instruments | |||
Accumulated other comprehensive loss, net of tax, by component | |||
Balance at the beginning of the period | 2,302 | 381 | |
Other comprehensive loss before reclassifications | (19,237) | (691) | |
Cumulative adjustment upon adoption of ASU 2017-12, net of tax of $(203) | (576) | ||
Amounts reclassified from accumulated other comprehensive loss | 959 | 2,612 | |
Net current period other comprehensive income (loss) | (18,854) | 1,921 | |
Balance at the end of the period | $ (16,552) | $ 2,302 | $ 381 |
EQUITY - Reclassification from
EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
EQUITY | ||||
Plan curtailment | $ 1,200 | $ 1,300 | ||
Settlement loss | $ (6,700) | $ (6,700) | ||
Loss before income taxes | (23,645) | (74,698) | (59,628) | |
Interest expense | (136,660) | (134,578) | (129,786) | |
Tax benefit | 3,714 | 24,127 | 124,927 | |
Net income (loss) | (19,931) | (50,571) | $ 65,299 | |
Pension and Post-Retirement Obligations | ||||
EQUITY | ||||
Prior service (cost) credit | (857) | (163) | ||
Actuarial loss | (3,195) | (6,054) | ||
Plan curtailment | 1,156 | |||
Settlement loss | (6,726) | (94) | ||
Loss before income taxes | (10,778) | (5,155) | ||
Tax benefit | 2,842 | 1,370 | ||
Net income (loss) | (7,936) | (3,785) | ||
Derivative Instruments | ||||
EQUITY | ||||
Interest expense | (1,108) | (3,467) | ||
Tax benefit | 149 | 855 | ||
Net income (loss) | $ (959) | $ (2,612) |
PENSION PLANS AND OTHER POST-_3
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Defined Benefit Plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Change in benefit obligation | ||||
Benefit obligation at the end of the year | $ 24,400 | $ 24,400 | ||
Amounts recognized in the consolidated balance sheets | ||||
Long-term liabilities | (302,296) | (302,296) | $ (314,134) | |
Components of net periodic pension costs | ||||
Plan curtailment | (1,200) | $ (1,300) | ||
Plan settlement | 6,700 | 6,700 | ||
Defined Benefit Plans | ||||
Change in benefit obligation | ||||
Benefit obligation at the beginning of the year | 712,174 | 777,987 | ||
Service cost | 50 | 5,809 | 3,055 | |
Interest cost | 30,327 | 28,870 | 21,882 | |
Actuarial loss (gain) | 80,023 | (67,558) | ||
Benefits paid | (31,581) | (30,870) | ||
Plan amendments | 1,216 | |||
Plan curtailment | (1) | |||
Plan settlement | (31,172) | (3,279) | ||
Benefit obligation at the end of the year | 759,821 | 759,821 | 712,174 | 777,987 |
Change in plan assets | ||||
Fair value of plan assets at the beginning of the year | 499,791 | 552,240 | ||
Employer contributions | 27,516 | 26,200 | ||
Actual return on plan assets | 92,413 | (44,500) | ||
Benefits paid | (31,581) | (30,870) | ||
Plan settlement | (31,172) | (3,279) | ||
Fair value of plan assets at the end of the year | 556,967 | 556,967 | 499,791 | 552,240 |
Funded status at year end | (202,854) | (202,854) | (212,383) | |
Amounts recognized in the consolidated balance sheets | ||||
Current liabilities | (243) | (243) | (243) | |
Long-term liabilities | (202,611) | (202,611) | (212,140) | |
Amounts recognized in accumulated other comprehensive income | ||||
Unamortized prior service cost (credit) | 1,052 | 1,052 | 1,175 | |
Unamortized net actuarial loss (gain) | 107,982 | 107,982 | 95,362 | |
Total | 109,034 | 109,034 | 96,537 | |
Components of net periodic pension costs | ||||
Service cost | 50 | 5,809 | 3,055 | |
Interest cost | 30,327 | 28,870 | 21,882 | |
Expected return on plan assets | (34,627) | (38,640) | (28,459) | |
Net amortization loss (gain) | 2,890 | 6,110 | 6,244 | |
Net prior service cost (credit) amortization | 123 | (204) | (316) | |
Plan curtailment | (1,156) | (1,337) | ||
Plan settlement | 6,726 | 94 | 17 | |
Net periodic pension cost (benefit) | 5,489 | 883 | $ 1,086 | |
Changes in plan assets and benefit obligations recognized in other comprehensive income, before tax effects | ||||
Actuarial loss (gain), net | 22,236 | 15,583 | ||
Recognized actuarial (loss) gain | (2,890) | (6,111) | ||
Prior service cost (credit) | (123) | 1,216 | ||
Recognized prior service (cost) credit | 204 | |||
Plan curtailment | 1,156 | |||
Plan settlement | (6,726) | (94) | ||
Total amount recognized in other comprehensive income, before tax effects | 12,497 | $ 11,954 | ||
Amount to be amortized from accumulated other comprehensive income in net periodic benefit cost in the next fiscal year | ||||
Estimated net actuarial loss that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | 100 | 100 | ||
Estimated net prior service cost that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ 2,000 | $ 2,000 | ||
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | ||||
Discount rate - net periodic benefit cost (as a percent) | 4.36% | 3.75% | 4.02% | |
Discount rate - benefit obligation (as a percent) | 3.51% | 3.51% | 4.39% | 3.75% |
Expected long-term rate of return on plan assets (as a percent) | 6.97% | 7.03% | 7.23% | |
Rate of compensation/salary increase for net periodic benefit cost (as a percent) | 2.50% | 2.50% | 2.39% | |
Post-retirement Benefit Obligations | ||||
Change in benefit obligation | ||||
Benefit obligation at the beginning of the year | $ 109,902 | $ 116,970 | ||
Service cost | 957 | 405 | $ 498 | |
Interest cost | 4,231 | 4,128 | 3,034 | |
Plan participant contributions | 269 | 384 | ||
Actuarial loss (gain) | 570 | (8,517) | ||
Benefits paid | (8,797) | (10,130) | ||
Plan amendments | 6,662 | |||
Benefit obligation at the end of the year | $ 107,132 | 107,132 | 109,902 | 116,970 |
Change in plan assets | ||||
Fair value of plan assets at the beginning of the year | 2,791 | 2,484 | ||
Employer contributions | 8,527 | 9,746 | ||
Plan participant contributions | 269 | 384 | ||
Actual return on plan assets | 374 | 307 | ||
Benefits paid | (8,797) | (10,130) | ||
Fair value of plan assets at the end of the year | 3,164 | 3,164 | 2,791 | 2,484 |
Funded status at year end | (103,968) | (103,968) | (107,111) | |
Amounts recognized in the consolidated balance sheets | ||||
Current liabilities | (5,619) | (5,619) | (6,594) | |
Long-term liabilities | (98,349) | (98,349) | (100,517) | |
Amounts recognized in accumulated other comprehensive income | ||||
Unamortized prior service cost (credit) | (872) | (872) | 2,200 | |
Unamortized net actuarial loss (gain) | (7,987) | (7,987) | (10,396) | |
Total | $ (8,859) | (8,859) | (8,196) | |
Components of net periodic pension costs | ||||
Service cost | 957 | 405 | 498 | |
Interest cost | 4,231 | 4,128 | 3,034 | |
Expected return on plan assets | (180) | (142) | (113) | |
Net amortization loss (gain) | (2,033) | (56) | (173) | |
Net prior service cost (credit) amortization | 3,072 | 367 | (521) | |
Net periodic pension cost (benefit) | 6,047 | 4,702 | $ 2,725 | |
Changes in plan assets and benefit obligations recognized in other comprehensive income, before tax effects | ||||
Actuarial loss (gain), net | 376 | (8,682) | ||
Recognized actuarial (loss) gain | 2,033 | 56 | ||
Prior service cost (credit) | 6,662 | |||
Recognized prior service (cost) credit | (3,072) | (367) | ||
Total amount recognized in other comprehensive income, before tax effects | $ (663) | (2,331) | ||
Increase in net periodic post-retirement benefit cost | $ 1,400 | |||
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | ||||
Discount rate - net periodic benefit cost (as a percent) | 4.35% | 3.62% | 3.96% | |
Discount rate - benefit obligation (as a percent) | 3.34% | 3.34% | 4.35% | 3.67% |
Estimated net prior service cost that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ 1,600 | |||
Estimated net actuarial gain that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ (1,900) |
PENSION PLANS AND OTHER POST-_4
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Non-qualified Deferred Comp Agreements (Details) | 12 Months Ended | |
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | |
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 | $ 300,000 | $ 300,000 |
Net present value of the remaining obligations | $ 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 | 2,400,000 |
Death benefit payable | 7,100,000 | $ 7,000,000 |
New benefits accrued | $ 0 |
PENSION PLANS AND OTHER POST-_5
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Contributions (Details) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2019USD ($)employeeitem | Dec. 31, 2019USD ($)itememployee | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Defined benefit plans | ||||
Number of non-contributory qualified defined benefit pension plans | item | 3 | |||
New benefits accrued | $ 0 | $ 0 | ||
Defined Benefit Plan, Benefit Obligation | 24,400,000 | $ 24,400,000 | ||
Number Of Participants Transferred | item | 500 | |||
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | (6,700,000) | $ (6,700,000) | ||
Defined Benefit Plans | ||||
Defined benefit plans | ||||
New benefits accrued | 0 | 0 | ||
Defined Benefit Plan, Benefit Obligation | 759,821,000 | 759,821,000 | $ 712,174,000 | $ 777,987,000 |
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements | (6,726,000) | (94,000) | (17,000) | |
Employer contributions | 27,516,000 | 26,200,000 | ||
Amount to be amortized from accumulated other comprehensive income in net periodic benefit cost in the next fiscal year | ||||
Estimated net actuarial loss that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | 100,000 | 100,000 | ||
Estimated net prior service cost that will be amortized from accumulated other comprehensive loss in net periodic postretirement cost | $ 2,000,000 | $ 2,000,000 | ||
Post-retirement Benefit Obligations | ||||
Defined benefit plans | ||||
Number of persons eligible to become a new participant | employee | 0 | 0 | ||
Defined Benefit Plan, Benefit Obligation | $ 107,132,000 | $ 107,132,000 | 109,902,000 | $ 116,970,000 |
Assets in unfunded plans | $ 0 | 0 | ||
Employer contributions | 8,527,000 | $ 9,746,000 | ||
Weighted-average assumptions used to determine the projected benefit obligations and net periodic benefit cost | ||||
Effect of one percent increase on total of service and interest cost | 293,000 | |||
Effect of one percent increase on postretirement benefit obligation | 4,586,000 | |||
Effect of one percent decrease on postretirement benefit obligation | (4,634,000) | |||
Effect of one percent decrease on total of service and interest cost | $ (277,000) | |||
Health care trend rate assumed for the next fiscal year (as a percent) | 6.50% | 6.50% | ||
Ultimate health care cost trend rate (as a percent) | 5.00% | 5.00% | ||
Supplemental Plans | ||||
Defined benefit plans | ||||
Number of non-qualified plans | item | 2 | |||
Number of persons eligible to become a new participant | item | 0 | 0 | ||
Assets in unfunded plans | $ 0 | $ 0 |
PENSION PLANS AND OTHER POST-_6
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Plan Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Post-retirement benefit obligation | |||
Unfunded commitments | $ 0 | ||
Minimum | |||
Post-retirement benefit obligation | |||
Long-term investment horizon | 5 years | ||
Maximum | |||
Post-retirement benefit obligation | |||
Redemption notice period | 180 days | ||
Long-term investment horizon | 15 years | ||
Defined Benefit Plans | |||
Post-retirement benefit obligation | |||
Fair value of assets | $ 556,967 | $ 499,957 | |
Other liabilities | (166) | ||
Net plan assets | 556,967 | 499,791 | $ 552,240 |
Expected contribution in the next fiscal year | 25,000 | ||
Benefit payments expected to be paid | |||
2020 | 33,725 | ||
2021 | 34,797 | ||
2022 | 35,775 | ||
2023 | 36,577 | ||
2024 | 37,741 | ||
2025-2029 | 197,690 | ||
Defined Benefit Plans | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 40 | 340,578 | |
Defined Benefit Plans | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 40 | 295,145 | |
Defined Benefit Plans | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 45,433 | ||
Defined Benefit Plans | Cash and Cash Equivalents [Member] | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 21 | 15,107 | |
Defined Benefit Plans | Cash and Cash Equivalents [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 21 | 15,107 | |
Defined Benefit Plans | U.S. common stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 15 | 46,830 | |
Defined Benefit Plans | U.S. common stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 15 | 46,830 | |
Defined Benefit Plans | International stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4 | 9,656 | |
Defined Benefit Plans | International stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4 | 9,656 | |
Defined Benefit Plans | U.S. small cap | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 7,222 | ||
Defined Benefit Plans | U.S. small cap | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 7,222 | ||
Defined Benefit Plans | U.S. small cap | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 10,391 | ||
Defined Benefit Plans | U.S. mid cap | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 30,752 | ||
Defined Benefit Plans | U.S. mid cap | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 30,752 | ||
Defined Benefit Plans | U.S. large cap | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 51,847 | ||
Defined Benefit Plans | U.S. large cap | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 51,847 | ||
Defined Benefit Plans | U.S. large cap | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 11,268 | ||
Defined Benefit Plans | Emerging markets | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 15,954 | ||
Defined Benefit Plans | Emerging markets | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 15,954 | ||
Defined Benefit Plans | Emerging markets | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,739 | ||
Defined Benefit Plans | International | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 81,398 | ||
Defined Benefit Plans | International | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 81,398 | ||
Defined Benefit Plans | International | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 220,453 | 15,361 | |
Defined Benefit Plans | Real Estate | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 83,433 | ||
Defined Benefit Plans | U.S. treasury and government agency securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 25,616 | ||
Defined Benefit Plans | U.S. treasury and government agency securities | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 25,616 | ||
Defined Benefit Plans | Corporate and municipal bonds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 36,700 | ||
Defined Benefit Plans | Corporate and municipal bonds | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 36,700 | ||
Defined Benefit Plans | Mortgage/asset-backed securities | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,733 | ||
Defined Benefit Plans | Mortgage/asset-backed securities | Significant Other Observable Inputs (Level 2) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 8,733 | ||
Defined Benefit Plans | Mutual funds | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 10,763 | ||
Defined Benefit Plans | Mutual funds | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 10,763 | ||
Defined Benefit Plans | Fixed Income | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 243,840 | 103,345 | |
Defined Benefit Plans | Short-term investments | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 9,201 | 10,275 | |
Post-retirement Benefit Obligations | |||
Post-retirement benefit obligation | |||
Fair value of assets | 3,164 | 2,934 | |
Benefit payments payable | (141) | ||
Other liabilities | (2) | ||
Net plan assets | 3,164 | 2,791 | $ 2,484 |
Expected contribution in the next fiscal year | 8,900 | ||
Benefit payments expected to be paid | |||
2020 | 8,870 | ||
2021 | 8,734 | ||
2022 | 8,203 | ||
2023 | 7,735 | ||
2024 | 7,277 | ||
2025-2029 | 31,173 | ||
Post-retirement Benefit Obligations | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,113 | ||
Post-retirement Benefit Obligations | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,113 | ||
Post-retirement Benefit Obligations | Cash and Cash Equivalents [Member] | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4 | ||
Post-retirement Benefit Obligations | Cash and Cash Equivalents [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 4 | ||
Post-retirement Benefit Obligations | U.S. common stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 240 | ||
Post-retirement Benefit Obligations | U.S. common stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 240 | ||
Post-retirement Benefit Obligations | International stocks | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 83 | ||
Post-retirement Benefit Obligations | International stocks | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 83 | ||
Post-retirement Benefit Obligations | U.S. small cap | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 123 | ||
Post-retirement Benefit Obligations | U.S. mid cap | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 75 | ||
Post-retirement Benefit Obligations | U.S. mid cap | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 75 | ||
Post-retirement Benefit Obligations | U.S. large cap | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 74 | ||
Post-retirement Benefit Obligations | U.S. large cap | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 74 | ||
Post-retirement Benefit Obligations | U.S. large cap | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 133 | ||
Post-retirement Benefit Obligations | Emerging markets | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 188 | ||
Post-retirement Benefit Obligations | Emerging markets | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 188 | ||
Post-retirement Benefit Obligations | Emerging markets | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 103 | ||
Post-retirement Benefit Obligations | International | Fair Value Level 1 and Level 2 | |||
Post-retirement benefit obligation | |||
Fair value of assets | 449 | ||
Post-retirement Benefit Obligations | International | Quoted Prices In Active Markets for Identical Assets (Level 1) | |||
Post-retirement benefit obligation | |||
Fair value of assets | 449 | ||
Post-retirement Benefit Obligations | International | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,252 | 181 | |
Post-retirement Benefit Obligations | Real Estate | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 474 | ||
Post-retirement Benefit Obligations | Fixed Income | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | 1,385 | 1,220 | |
Post-retirement Benefit Obligations | Short-term investments | Fair Value Measured at Net Asset Value Per Share [Member] | |||
Post-retirement benefit obligation | |||
Fair value of assets | $ 53 | $ 61 |
PENSION PLANS AND OTHER POST-_7
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Defined Contribution Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | |||
Expense with respect to 401(k) plans | $ 15.8 | $ 13.7 | $ 9.6 |
INCOME TAXES - Income tax expen
INCOME TAXES - Income tax expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||
Federal | $ 143 | $ 247 | $ 1,055 |
State | 1,392 | 1,634 | 145 |
Total current expense | 1,535 | 1,881 | 1,200 |
Deferred: | |||
Federal | (4,339) | (17,248) | (141,726) |
State | (910) | (8,760) | 15,599 |
Total deferred benefit | (5,249) | (26,008) | (126,127) |
Total income tax benefit | $ (3,714) | $ (24,127) | $ (124,927) |
Reconciliation of the provision for income taxes computed at federal statutory rates to the effective rates | |||
Statutory federal income tax rate (as a percent) | 21.00% | 21.00% | 35.00% |
State income taxes, net of federal benefit (as a percent) | 10.60% | 5.20% | 4.10% |
Transaction costs (as a percent) | (5.80%) | ||
Other permanent differences (as a percent) | (4.50%) | (0.90%) | 0.20% |
Change in deferred tax rate (as a percent) | (2.90%) | 3.70% | (9.10%) |
Change in deferred tax rate - Federal Tax Reform (as a percent) | 6.90% | 189.40% | |
Valuation allowance (as a percent) | (4.70%) | (2.30%) | (4.30%) |
Provision to return (as a percent) | (0.50%) | 0.50% | |
Sale of stock in subsidiary (as a percent) | (1.00%) | ||
State audit settlement (as a percent) | (3.20%) | ||
Acquisition related (as a percent) | (1.30%) | ||
Other (as a percent) | (0.10%) | 0.50% | |
Total (as a percent) | 15.70% | 32.30% | 209.50% |
Non-current deferred tax assets: | |||
Reserve for uncollectible accounts | $ 1,194 | $ 1,164 | |
Accrued vacation pay deducted when paid | 4,152 | 4,371 | |
Accrued expenses and deferred revenue | 9,839 | 12,848 | |
Net operating loss carryforwards | 86,535 | 76,659 | |
Pension and postretirement obligations | 80,245 | 84,786 | |
Share-based compensation | 693 | 9 | |
Derivative instruments | 5,868 | ||
Derivative instruments | (825) | ||
Financing costs | 176 | 189 | |
Tax credit carryforwards | 6,077 | 6,411 | |
Total | 194,779 | 185,612 | |
Valuation allowance | (6,680) | (9,158) | |
Net non-current deferred tax assets | 188,099 | 176,454 | |
Non-current deferred tax liabilities: | |||
Goodwill and other intangibles | (66,271) | (82,992) | |
Basis in investment | (5) | (12) | |
Partnership investments | (16,138) | (14,425) | |
Property, plant and equipment | (278,712) | (267,154) | |
Total | (361,126) | (364,583) | |
Net non-current deferred taxes | $ (173,027) | $ (188,129) |
INCOME TAXES - Carryforwards (D
INCOME TAXES - Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income taxes | |||
Deferred tax assets related to net operating loss carryforwards | $ 86,535 | $ 76,659 | |
Net operating loss that can be carried forward indefinitely | 60,700 | ||
Deferred tax assets related to net operating loss that can be carried forward indefinitely | 12,800 | ||
Net operating loss carryforward that expire in 2026 to 2035 | $ 288,800 | ||
Deferred tax assets related to net operating loss carryforwards that expire in 2026 to 2035 | $ 60,600 | ||
Unrecognized tax benefits that would impact effective tax rate | 4,700 | ||
Reconciliation of the unrecognized tax benefits | |||
Balance at the beginning of the period | 4,933 | 4,296 | |
Additions for tax positions related to FairPoint acquisition | 0 | 637 | |
Balance at the end of the period | 4,933 | $ 4,933 | |
State | |||
Income taxes | |||
Net operating loss carryforwards | 758,500 | ||
Deferred tax assets related to net operating loss carryforwards | 16,700 | ||
Utilization of net operating loss carryforwards subject to Separate Return Limitation Year | 80,300 | ||
Deferred tax assets related to utilization of net operating loss carryforwards subject to Separate Return Limitation Year | 5,200 | ||
Utilization of tax credit carryforwards subject to Separate Return Limitation Year | 1,800 | ||
Deferred tax assets related to utilization of tax credit carryforwards subject to Separate Return Limitation Year | 1,500 | ||
Tax credit carryforwards | 7,700 | ||
Deferred tax assets related to tax credit carryforwards | 6,100 | ||
Federal | |||
Income taxes | |||
Net operating loss carryforwards | 349,500 | ||
Deferred tax assets related to net operating loss carryforwards | 73,400 | ||
Tax credit carryforwards | 1,500 | ||
Federal | ETFL | |||
Income taxes | |||
Net operating loss carryforwards | 1,000 | ||
Deferred tax assets related to net operating loss carryforwards | $ 200 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Long-term Purchase Commitment [Line Items] | ||
2020 | $ 36,488 | |
2021 | 20,851 | |
2022 | 16,979 | |
2023 | 13,990 | |
2024 | 5,964 | |
Thereafter | 1,371 | |
Total | 95,643 | |
Capital Leases | ||
Present value of the lease payments | $ 30,362 | |
Service and support agreements | ||
Long-term Purchase Commitment [Line Items] | ||
2020 | 19,455 | |
2021 | 10,429 | |
2022 | 8,112 | |
2023 | 6,751 | |
2024 | 339 | |
Thereafter | 305 | |
Total | 45,391 | |
Transport and data connectivity | ||
Long-term Purchase Commitment [Line Items] | ||
2020 | 9,787 | |
2021 | 7,964 | |
2022 | 6,850 | |
2023 | 5,256 | |
2024 | 5,242 | |
Thereafter | 151 | |
Total | 35,250 | |
Capital expenditures | ||
Long-term Purchase Commitment [Line Items] | ||
2020 | 3,945 | |
Total | 3,945 | |
Other operating agreements | ||
Long-term Purchase Commitment [Line Items] | ||
2020 | 3,301 | |
2021 | 2,458 | |
2022 | 2,017 | |
2023 | 1,983 | |
2024 | 383 | |
Thereafter | 915 | |
Total | $ 11,057 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Litigation (Details) $ in Thousands | Aug. 15, 2018USD ($) | Jul. 17, 2018USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)itemsubsidiary | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2018USD ($) | May 31, 2017USD ($) |
Litigation and Contingencies | ||||||||||||||||||
Revenue recorded | $ 331,035 | $ 333,326 | $ 333,532 | $ 338,649 | $ 344,750 | $ 348,064 | $ 350,221 | $ 356,039 | $ 1,336,542 | $ 1,399,074 | $ 1,059,574 | |||||||
Subsidies revenue | $ 4,900 | |||||||||||||||||
Payments to DOR | $ 2,100 | |||||||||||||||||
Number of subsidiaries that received assessment notice | subsidiary | 2 | |||||||||||||||||
Consolidated Communications Enterprise Services Inc. (CCES) | ||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||
Litigation amount accrued | 1,500 | $ 1,500 | ||||||||||||||||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | ||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||
Litigation amount accrued | $ 700 | $ 700 | ||||||||||||||||
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 | |||||||||||||||||
Decline in ICC support (as a percent) | 5.00% | |||||||||||||||||
Subsidies revenue | $ 7,200 | |||||||||||||||||
Contingent asset | $ 8,700 | 8,700 | $ 8,700 | |||||||||||||||
FairPoint Communications, Inc | Level 3 Communications | ||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||
Amount awarded | $ 1,200 | |||||||||||||||||
Subsidies | ||||||||||||||||||
Litigation and Contingencies | ||||||||||||||||||
Revenue recorded | $ 72,440 | $ 83,371 | $ 62,272 | |||||||||||||||
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 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | Apr. 04, 2019USD ($) | Apr. 04, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)itemlease | Dec. 31, 2018USD ($)leasebuilding | Dec. 31, 2017USD ($) | Oct. 31, 2019lease | Dec. 01, 2010USD ($) |
Related party transactions | ||||||||
Rental payments to be made over the terms of capital leases | $ 28,573 | |||||||
Interest expense related to finance leases | 1,993 | |||||||
Amortization expense related to finance leases | $ 12,031 | |||||||
Agracel | Richard A. Lumpkin | ||||||||
Related party transactions | ||||||||
Percentage of beneficial ownership | 37.00% | 37.00% | 37.00% | 37.00% | ||||
LATEL | ||||||||
Related party transactions | ||||||||
Number of lease agreements terminated | lease | 1 | |||||||
Number of lease agreements having a maturity date of May 31, 2021 | lease | 2 | |||||||
LATEL | Richard A. Lumpkin | ||||||||
Related party transactions | ||||||||
Percentage of beneficial ownership | 68.50% | 68.50% | 68.50% | 68.50% | ||||
LATEL | Agracel | ||||||||
Related party transactions | ||||||||
Ownership percentage | 50.00% | 50.00% | ||||||
LATEL | ||||||||
Related party transactions | ||||||||
Number of capital leases | lease | 3 | |||||||
Number of buildings leased under capital leases | building | 3 | |||||||
Number of options to extend term of capital lease | item | 2 | |||||||
Extended period of capital leases | 5 years | |||||||
Rental payments to be made over the terms of capital leases | $ 7,900 | |||||||
Capital leases, carrying value | $ 1,700 | |||||||
Interest expense related to capital leases | 300 | $ 300 | ||||||
Interest expense related to finance leases | $ 100 | $ 100 | ||||||
Amortization expense related to capitalized leases | $ 400 | $ 400 | ||||||
Amortization expense related to finance leases | $ 100 |
RELATED PARTY TRANSACTIONS - Lo
RELATED PARTY TRANSACTIONS - Long Term Debt (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Apr. 04, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2014 | |
First Mid Illinois | ||||
Related party transactions | ||||
Revenue | $ 0.2 | $ 0.9 | $ 0.7 | |
Related parties | Senior Notes 6.50 Percent Due 2022 | ||||
Related party transactions | ||||
Notes payable from related parties | $ 5 | |||
Interest paid to related parties | $ 0.1 | $ 0.3 | $ 0.3 |
QUARTERLY FINANCIAL INFORMATI_3
QUARTERLY FINANCIAL INFORMATION (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 03, 2017 | |
Net revenues | $ 331,035 | $ 333,326 | $ 333,532 | $ 338,649 | $ 344,750 | $ 348,064 | $ 350,221 | $ 356,039 | $ 1,336,542 | $ 1,399,074 | $ 1,059,574 | |
Operating income (loss) | 26,719 | 23,542 | 14,300 | 16,720 | 3,555 | 748 | 5,427 | 9,239 | 81,281 | 18,969 | 38,912 | |
Net income (loss) attributable to common stockholders | $ (5,988) | 257 | $ (7,387) | $ (7,265) | $ (13,979) | $ (14,914) | $ (10,643) | $ (11,298) | $ (20,383) | $ (50,834) | $ 64,945 | |
Basic and diluted earnings (loss) per share | $ (0.08) | $ (0.10) | $ (0.11) | $ (0.20) | $ (0.21) | $ (0.15) | $ (0.16) | $ (0.29) | $ (0.73) | $ 1.07 | ||
Severance costs incurred | $ 8,700 | $ 5,700 | $ 4,000 | |||||||||
Subsidies revenue | $ 4,900 | |||||||||||
Transaction costs | $ 1,960 | $ 33,650 | ||||||||||
Plan settlement | 6,700 | $ 6,700 | ||||||||||
Gains (Losses) on Extinguishment of Debt | $ 4,510 | |||||||||||
Incremental Term Loan Facility | ||||||||||||
Aggregate principal amount | $ 935,000 | |||||||||||
Senior Notes | ||||||||||||
Gains (Losses) on Extinguishment of Debt | $ 3,100 | $ 1,100 | $ 300 |
CONDENSED CONSOLIDATING FINAN_3
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current assets: | ||||
Cash and cash equivalents | $ 12,395 | $ 9,599 | ||
Accounts receivable, net | 120,016 | 133,136 | ||
Income taxes receivable | 2,669 | 11,072 | ||
Prepaid expenses and other current assets | 41,787 | 44,336 | ||
Total current assets | 176,867 | 198,143 | ||
Property, plant and equipment, net | 1,835,878 | 1,927,126 | ||
Intangibles and other assets: | ||||
Investments | 112,717 | 110,853 | ||
Goodwill | 1,035,274 | 1,035,274 | ||
Customer relationships, net | 164,069 | 228,959 | ||
Other intangible assets | 10,557 | 11,483 | ||
Other assets | 54,915 | 23,423 | ||
Total assets | 3,390,277 | 3,535,261 | ||
Current liabilities: | ||||
Accounts payable | 30,936 | 32,502 | ||
Advance billings and customer deposits | 45,710 | 47,724 | ||
Dividends payable | 27,579 | |||
Accrued compensation | 57,069 | 64,459 | ||
Accrued interest | 7,874 | 9,232 | ||
Accrued expense | 75,406 | 71,650 | ||
Current portion of long term debt and finance lease obligations | 27,301 | 30,468 | ||
Total current liabilities | 244,296 | 283,614 | ||
Long-term debt and finance lease obligations | 2,250,677 | 2,303,585 | ||
Deferred income taxes | 173,027 | 188,129 | ||
Pension and postretirement benefit obligations | 302,296 | 314,134 | ||
Other long-term liabilities | 72,730 | 30,145 | ||
Total liabilities | 3,043,026 | 3,119,607 | ||
Shareholders' equity: | ||||
Common Stock | 720 | 712 | ||
Other shareholders' equity | 340,161 | 409,024 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 340,881 | 409,736 | ||
Noncontrolling interest | 6,370 | 5,918 | ||
Total shareholders' equity | 347,251 | 415,654 | $ 573,942 | $ 176,255 |
Total liabilities and shareholders' equity | 3,390,277 | 3,535,261 | ||
Eliminations | ||||
Current assets: | ||||
Cash and cash equivalents | (18) | |||
Accounts receivable, net | (37) | |||
Total current assets | (55) | |||
Intangibles and other assets: | ||||
Investments in subsidiaries | (7,084,977) | (7,109,038) | ||
Advances due to/from affiliates, net | (3,296,300) | (3,237,287) | ||
Deferred income taxes | (92,108) | (76,758) | ||
Other assets | 3,011 | |||
Total assets | (10,473,385) | (10,420,127) | ||
Current liabilities: | ||||
Accrued expense | (55) | |||
Total current liabilities | (55) | |||
Advances due to/from affiliates, net | (3,296,300) | (3,237,287) | ||
Deferred income taxes | (92,108) | (73,747) | ||
Total liabilities | (3,388,408) | (3,311,089) | ||
Shareholders' equity: | ||||
Common Stock | (47,411) | (47,411) | ||
Other shareholders' equity | (7,037,566) | (7,061,627) | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | (7,084,977) | (7,109,038) | ||
Total shareholders' equity | (7,084,977) | (7,109,038) | ||
Total liabilities and shareholders' equity | (10,473,385) | (10,420,127) | ||
Parent | Reportable legal entity | ||||
Current assets: | ||||
Income taxes receivable | 1,812 | 10,272 | ||
Total current assets | 1,812 | 10,272 | ||
Intangibles and other assets: | ||||
Investments in subsidiaries | 3,547,466 | 3,587,612 | ||
Deferred income taxes | 86,447 | 76,758 | ||
Other assets | 1,506 | |||
Total assets | 3,637,231 | 3,674,642 | ||
Current liabilities: | ||||
Dividends payable | 27,579 | |||
Accrued expense | 50 | 40 | ||
Total current liabilities | 50 | 27,619 | ||
Advances due to/from affiliates, net | 3,296,300 | 3,237,287 | ||
Total liabilities | 3,296,350 | 3,264,906 | ||
Shareholders' equity: | ||||
Common Stock | 720 | 712 | ||
Other shareholders' equity | 340,161 | 409,024 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 340,881 | 409,736 | ||
Total shareholders' equity | 340,881 | 409,736 | ||
Total liabilities and shareholders' equity | 3,637,231 | 3,674,642 | ||
Subsidiary Issuer | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 12,387 | 9,616 | ||
Accounts receivable, net | 78 | |||
Prepaid expenses and other current assets | 2,465 | |||
Total current assets | 12,465 | 12,081 | ||
Intangibles and other assets: | ||||
Investments | 8,863 | 8,673 | ||
Investments in subsidiaries | 3,520,346 | 3,505,477 | ||
Advances due to/from affiliates, net | 2,289,433 | 2,379,079 | ||
Deferred income taxes | 5,661 | |||
Other assets | 1,524 | |||
Total assets | 5,836,768 | 5,906,834 | ||
Current liabilities: | ||||
Accrued interest | 7,523 | 8,430 | ||
Accrued expense | 2,565 | 37 | ||
Current portion of long term debt and finance lease obligations | 18,350 | 18,350 | ||
Total current liabilities | 28,438 | 26,817 | ||
Long-term debt and finance lease obligations | 2,235,609 | 2,285,341 | ||
Deferred income taxes | 122 | |||
Other long-term liabilities | 25,255 | 6,942 | ||
Total liabilities | 2,289,302 | 2,319,222 | ||
Shareholders' equity: | ||||
Other shareholders' equity | 3,547,466 | 3,587,612 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,547,466 | 3,587,612 | ||
Total shareholders' equity | 3,547,466 | 3,587,612 | ||
Total liabilities and shareholders' equity | $ 5,836,768 | 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 | $ 8 | |||
Accounts receivable, net | 112,415 | 122,743 | ||
Income taxes receivable | 791 | 790 | ||
Prepaid expenses and other current assets | 41,431 | 41,547 | ||
Total current assets | 154,645 | 165,080 | ||
Property, plant and equipment, net | 1,770,187 | 1,861,009 | ||
Intangibles and other assets: | ||||
Investments | 103,854 | 102,180 | ||
Investments in subsidiaries | 17,165 | 15,949 | ||
Goodwill | 969,093 | 969,093 | ||
Customer relationships, net | 164,069 | 228,959 | ||
Other intangible assets | 1,470 | 2,396 | ||
Advances due to/from affiliates, net | 893,394 | 760,310 | ||
Other assets | 52,887 | 18,237 | ||
Total assets | 4,126,764 | 4,123,213 | ||
Current liabilities: | ||||
Accounts payable | 30,936 | 32,502 | ||
Advance billings and customer deposits | 44,436 | 46,316 | ||
Accrued compensation | 56,356 | 63,688 | ||
Accrued interest | 351 | 802 | ||
Accrued expense | 71,659 | 70,365 | ||
Current portion of long term debt and finance lease obligations | 8,808 | 11,968 | ||
Total current liabilities | 212,546 | 225,641 | ||
Long-term debt and finance lease obligations | 15,001 | 17,988 | ||
Deferred income taxes | 240,983 | 239,880 | ||
Pension and postretirement benefit obligations | 285,832 | 295,815 | ||
Other long-term liabilities | 46,656 | 22,305 | ||
Total liabilities | 801,018 | 801,629 | ||
Shareholders' equity: | ||||
Common Stock | 17,411 | 17,411 | ||
Other shareholders' equity | 3,301,965 | 3,298,255 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,319,376 | 3,315,666 | ||
Noncontrolling interest | 6,370 | 5,918 | ||
Total shareholders' equity | 3,325,746 | 3,321,584 | ||
Total liabilities and shareholders' equity | 4,126,764 | 4,123,213 | ||
Non-Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 1 | |||
Accounts receivable, net | 7,523 | 10,430 | ||
Income taxes receivable | 66 | 10 | ||
Prepaid expenses and other current assets | 356 | 324 | ||
Total current assets | 7,945 | 10,765 | ||
Property, plant and equipment, net | 65,691 | 66,117 | ||
Intangibles and other assets: | ||||
Goodwill | 66,181 | 66,181 | ||
Other intangible assets | 9,087 | 9,087 | ||
Advances due to/from affiliates, net | 113,473 | 97,898 | ||
Other assets | 522 | 651 | ||
Total assets | 262,899 | 250,699 | ||
Current liabilities: | ||||
Advance billings and customer deposits | 1,274 | 1,408 | ||
Accrued compensation | 713 | 771 | ||
Accrued expense | 1,132 | 1,263 | ||
Current portion of long term debt and finance lease obligations | 143 | 150 | ||
Total current liabilities | 3,262 | 3,592 | ||
Long-term debt and finance lease obligations | 67 | 256 | ||
Deferred income taxes | 24,152 | 21,874 | ||
Pension and postretirement benefit obligations | 16,464 | 18,319 | ||
Other long-term liabilities | 819 | 898 | ||
Total liabilities | 44,764 | 44,939 | ||
Shareholders' equity: | ||||
Common Stock | 30,000 | 30,000 | ||
Other shareholders' equity | 188,135 | 175,760 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 218,135 | 205,760 | ||
Total shareholders' equity | 218,135 | 205,760 | ||
Total liabilities and shareholders' equity | $ 262,899 | $ 250,699 |
CONDENSED CONSOLIDATING FINAN_4
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | $ 331,035 | $ 333,326 | $ 333,532 | $ 338,649 | $ 344,750 | $ 348,064 | $ 350,221 | $ 356,039 | $ 1,336,542 | $ 1,399,074 | $ 1,059,574 |
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 574,936 | 611,872 | 445,998 | ||||||||
Selling, general and administrative expenses | 299,088 | 333,605 | 249,141 | ||||||||
Acquisition and other transaction costs | 1,960 | 33,650 | |||||||||
Depreciation and amortization | 381,237 | 432,668 | 291,873 | ||||||||
Income from operations | 26,719 | 23,542 | 14,300 | 16,720 | 3,555 | 748 | 5,427 | 9,239 | 81,281 | 18,969 | 38,912 |
Other income (expense): | |||||||||||
Interest expense, net of interest income | (136,660) | (134,578) | (129,786) | ||||||||
Gain (loss) on extinguishment of debt | 4,510 | ||||||||||
Investment income | 38,088 | 39,596 | 31,749 | ||||||||
Other, net | (10,864) | 1,315 | (503) | ||||||||
Loss before income taxes | (23,645) | (74,698) | (59,628) | ||||||||
Income tax expense (benefit) | (3,714) | (24,127) | (124,927) | ||||||||
Net income (loss) | (19,931) | (50,571) | 65,299 | ||||||||
Less: net income (loss) attributable to noncontrolling interest | 452 | 263 | 354 | ||||||||
Net income (loss) attributable to common shareholders | $ (5,988) | $ 257 | $ (7,387) | $ (7,265) | $ (13,979) | $ (14,914) | $ (10,643) | $ (11,298) | (20,383) | (50,834) | 64,945 |
Total comprehensive income (loss) attributable to common shareholders | (48,039) | (55,963) | 64,139 | ||||||||
Eliminations | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | (12,628) | (12,541) | (12,707) | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | (11,986) | (12,096) | (12,276) | ||||||||
Selling, general and administrative expenses | (642) | (445) | (431) | ||||||||
Other income (expense): | |||||||||||
Equity in earnings of subsidiaries, net | (31,979) | 28,190 | (212,796) | ||||||||
Loss before income taxes | (31,979) | 28,190 | (212,796) | ||||||||
Net income (loss) | (31,979) | 28,190 | (212,796) | ||||||||
Net income (loss) attributable to common shareholders | (31,979) | 28,190 | (212,796) | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 4,479 | 40,369 | (216,301) | ||||||||
Parent | Reportable legal entity | |||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 7,565 | 4,087 | 1,924 | ||||||||
Acquisition and other transaction costs | 1,960 | 33,650 | |||||||||
Income from operations | (7,565) | (6,047) | (35,574) | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | 60 | (103) | (12) | ||||||||
Equity in earnings of subsidiaries, net | (13,067) | (42,181) | 101,863 | ||||||||
Other, net | 1 | 7 | |||||||||
Loss before income taxes | (20,571) | (48,324) | 66,277 | ||||||||
Income tax expense (benefit) | (188) | 2,510 | 1,332 | ||||||||
Net income (loss) | (20,383) | (50,834) | 64,945 | ||||||||
Net income (loss) attributable to common shareholders | (20,383) | (50,834) | 64,945 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | (48,039) | (55,963) | 64,139 | ||||||||
Subsidiary Issuer | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 193 | ||||||||||
Operating expenses: | |||||||||||
Selling, general and administrative expenses | 30 | ||||||||||
Income from operations | 193 | (30) | |||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (136,696) | (136,378) | (128,737) | ||||||||
Intercompany interest income (expense) | 58,908 | 58,908 | 58,909 | ||||||||
Gain (loss) on extinguishment of debt | 4,510 | ||||||||||
Investment income | 190 | 178 | 157 | ||||||||
Equity in earnings of subsidiaries, net | 44,271 | 8,858 | 109,015 | ||||||||
Other, net | 47 | 3 | |||||||||
Loss before income taxes | (28,577) | (68,434) | 39,317 | ||||||||
Income tax expense (benefit) | (15,510) | (26,253) | (27,610) | ||||||||
Net income (loss) | (13,067) | (42,181) | 66,927 | ||||||||
Net income (loss) attributable to common shareholders | (13,067) | (42,181) | 66,927 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | (40,723) | (47,310) | 71,746 | ||||||||
Guarantors | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 1,300,835 | 1,356,074 | 1,013,505 | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 572,661 | 607,582 | 447,029 | ||||||||
Selling, general and administrative expenses | 282,586 | 317,289 | 234,198 | ||||||||
Depreciation and amortization | 371,572 | 422,704 | 280,843 | ||||||||
Income from operations | 74,016 | 8,499 | 51,435 | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | (86) | 1,785 | (1,183) | ||||||||
Intercompany interest income (expense) | (58,831) | (58,844) | (58,827) | ||||||||
Investment income | 37,898 | 39,418 | 31,592 | ||||||||
Equity in earnings of subsidiaries, net | 775 | 5,133 | 1,918 | ||||||||
Other, net | (10,042) | 1,067 | (694) | ||||||||
Loss before income taxes | 43,730 | (2,942) | 24,241 | ||||||||
Income tax expense (benefit) | 9,338 | (5,784) | (97,667) | ||||||||
Net income (loss) | 34,392 | 2,842 | 121,908 | ||||||||
Less: net income (loss) attributable to noncontrolling interest | 452 | 263 | 354 | ||||||||
Net income (loss) attributable to common shareholders | 33,940 | 2,579 | 121,554 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | 23,867 | (3,545) | 119,174 | ||||||||
Non-Guarantors | Reportable legal entity | |||||||||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |||||||||||
Net revenues | 48,142 | 55,541 | 58,776 | ||||||||
Operating expenses: | |||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 14,261 | 16,386 | 11,245 | ||||||||
Selling, general and administrative expenses | 9,579 | 12,674 | 13,420 | ||||||||
Depreciation and amortization | 9,665 | 9,964 | 11,030 | ||||||||
Income from operations | 14,637 | 16,517 | 23,081 | ||||||||
Other income (expense): | |||||||||||
Interest expense, net of interest income | 62 | 118 | 146 | ||||||||
Intercompany interest income (expense) | (77) | (64) | (82) | ||||||||
Other, net | (870) | 241 | 188 | ||||||||
Loss before income taxes | 13,752 | 16,812 | 23,333 | ||||||||
Income tax expense (benefit) | 2,646 | 5,400 | (982) | ||||||||
Net income (loss) | 11,106 | 11,412 | 24,315 | ||||||||
Net income (loss) attributable to common shareholders | 11,106 | 11,412 | 24,315 | ||||||||
Total comprehensive income (loss) attributable to common shareholders | $ 12,377 | $ 10,486 | $ 25,381 |
CONDENSED CONSOLIDATING FINAN_5
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | $ 339,096 | $ 357,321 | $ 210,027 |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (862,385) | ||
Purchases of property, plant and equipment | (232,203) | (244,816) | (181,185) |
Proceeds from sale of assets | 14,718 | 2,125 | 859 |
Proceeds from business dispositions | 20,999 | ||
Distributions from investments | 329 | 233 | |
Other | (663) | ||
Net cash used in investing activities | (217,819) | (221,459) | (1,042,711) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 195,000 | 189,588 | 1,052,325 |
Payment of finance lease obligations | (12,519) | (12,755) | (7,933) |
Payment on long-term debt | (195,350) | (207,938) | (111,337) |
Payment of financing costs | (16,732) | ||
Repurchase of senior notes | (49,804) | ||
Share repurchases for minimum tax withholding | (363) | (593) | (571) |
Dividends on common stock | (55,445) | (110,222) | (94,138) |
Other | (350) | ||
Net cash used in financing activities | (118,481) | (141,920) | 821,264 |
Change in cash and cash equivalents | 2,796 | (6,058) | (11,420) |
Cash and cash equivalents at beginning of period | 9,599 | 15,657 | 27,077 |
Cash and cash equivalents at end of period | 12,395 | 9,599 | 15,657 |
Parent | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | (3,205) | 2,323 | (23,237) |
Cash flows from investing activities: | |||
Business acquisition, net of cash acquired | (862,385) | ||
Proceeds from business dispositions | 20,999 | ||
Net cash used in investing activities | 20,999 | (862,385) | |
Cash flows from financing activities: | |||
Share repurchases for minimum tax withholding | (363) | (593) | (571) |
Dividends on common stock | (55,445) | (110,222) | (94,138) |
Transactions with affiliates, net | 59,013 | 87,493 | 980,681 |
Other | (350) | ||
Net cash used in financing activities | 3,205 | (23,322) | 885,622 |
Subsidiary Issuer | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | (57,831) | (43,781) | (25,625) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt | 195,000 | 189,588 | 1,052,325 |
Payment on long-term debt | (195,350) | (207,938) | (111,337) |
Payment of financing costs | (16,732) | ||
Repurchase of senior notes | (49,804) | ||
Transactions with affiliates, net | 110,756 | 62,828 | (916,776) |
Net cash used in financing activities | 60,602 | 44,478 | 7,480 |
Change in cash and cash equivalents | 2,771 | 697 | (18,145) |
Cash and cash equivalents at beginning of period | 9,616 | 8,919 | 27,064 |
Cash and cash equivalents at end of period | 12,387 | 9,616 | 8,919 |
Guarantors | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | 381,366 | 388,930 | 235,810 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (223,715) | (235,147) | (167,187) |
Proceeds from sale of assets | 14,707 | 1,688 | 829 |
Distributions from investments | 329 | 233 | |
Other | (663) | ||
Net cash used in investing activities | (209,342) | (233,226) | (166,358) |
Cash flows from financing activities: | |||
Payment of finance lease obligations | (12,322) | (12,559) | (7,746) |
Transactions with affiliates, net | (159,676) | (149,901) | (54,981) |
Net cash used in financing activities | (171,998) | (162,460) | (62,727) |
Change in cash and cash equivalents | 26 | (6,756) | 6,725 |
Cash and cash equivalents at beginning of period | (18) | 6,738 | 13 |
Cash and cash equivalents at end of period | 8 | (18) | 6,738 |
Non-Guarantors | |||
Cash flows from operating activities: | |||
Net cash (used in) provided by operating activities | 18,766 | 9,849 | 23,079 |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (8,488) | (9,669) | (13,998) |
Proceeds from sale of assets | 11 | 437 | 30 |
Net cash used in investing activities | (8,477) | (9,232) | (13,968) |
Cash flows from financing activities: | |||
Payment of finance lease obligations | (197) | (196) | (187) |
Transactions with affiliates, net | (10,093) | (420) | (8,924) |
Net cash used in financing activities | (10,290) | (616) | $ (9,111) |
Change in cash and cash equivalents | (1) | 1 | |
Cash and cash equivalents at beginning of period | $ 1 | ||
Cash and cash equivalents at end of period | $ 1 |