Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2020 | |
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 - $0.01 par value | |
Trading Symbol | CNSL | |
Security Exchange Name | NASDAQ | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 73,041,782 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | Feb. 18, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net revenues | $ 325,662 | $ 338,649 | ||
Operating expense: | ||||
Cost of services and products (exclusive of depreciation and amortization) | 137,755 | 148,319 | ||
Selling, general and administrative expenses | 67,817 | 74,367 | ||
Depreciation and amortization | 82,738 | 99,243 | ||
Income from operations | 37,352 | 16,720 | ||
Other income (expense): | ||||
Interest expense, net of interest income | (32,095) | (34,283) | ||
Gain on extinguishment of debt | 234 | |||
Investment income | 10,579 | 8,601 | ||
Other, net | 4,594 | (1,369) | ||
Income (loss) before income taxes | 20,664 | (10,331) | ||
Income tax expense (benefit) | 5,041 | (3,145) | ||
Net income (loss) | 15,623 | (7,186) | ||
Less: net income attributable to noncontrolling interest | 76 | 79 | ||
Net income (loss) attributable to common shareholders | $ 15,547 | $ (7,265) | ||
Net loss per common share - basic and diluted | ||||
Net income (loss) per basic and diluted common shares attributable to common shareholders | $ 0.22 | $ (0.11) | ||
Dividends declared per common share (in dollars per share) | $ 0.38738 | $ 0.39 | $ 0.38738 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||
Net income (loss) | $ 15,623 | $ (7,186) |
Pension and post-retirement obligations: | ||
Amortization of actuarial losses and prior service cost to earnings, net of tax | 336 | 1,026 |
Derivative instruments designated as cash flow hedges: | ||
Change in fair value of derivatives, net of tax | (11,944) | (6,689) |
Cumulative adjustment upon adoption of ASU 2017-12 | (576) | |
Reclassification of realized loss (gain) to earnings | 1,608 | (207) |
Comprehensive income (loss) | 5,623 | (13,632) |
Less: comprehensive income attributable to noncontrolling interest | 76 | 79 |
Total comprehensive income (loss) attributable to common shareholders | $ 5,547 | $ (13,711) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 14,139 | $ 12,395 |
Accounts receivable, net of allowance for doubtful accounts | 122,340 | 120,016 |
Income tax receivable | 4,174 | 2,669 |
Prepaid expenses and other current assets | 45,175 | 41,787 |
Total current assets | 185,828 | 176,867 |
Property, plant and equipment, net | 1,806,945 | 1,835,878 |
Investments | 113,197 | 112,717 |
Goodwill | 1,035,274 | 1,035,274 |
Customer relationships, net | 151,407 | 164,069 |
Other intangible assets | 10,557 | 10,557 |
Other assets | 51,925 | 54,915 |
Total assets | 3,355,133 | 3,390,277 |
Current liabilities: | ||
Accounts payable | 19,902 | 30,936 |
Advance billings and customer deposits | 47,224 | 45,710 |
Accrued compensation | 56,105 | 57,069 |
Accrued interest | 14,945 | 7,874 |
Accrued expense | 73,776 | 75,406 |
Current portion of long-term debt and finance lease obligations | 25,722 | 27,301 |
Total current liabilities | 237,674 | 244,296 |
Long-term debt and finance lease obligations | 2,209,748 | 2,250,677 |
Deferred income taxes | 174,489 | 173,027 |
Pension and other post-retirement obligations | 293,145 | 302,296 |
Other long-term liabilities | 86,418 | 72,730 |
Total liabilities | 3,001,474 | 3,043,026 |
Commitments and contingencies (Note 12) | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 73,041,782 and 71,961,045 shares outstanding as of March 31, 2020 and December 31, 2019, respectively | 731 | 720 |
Additional paid-in capital | 493,125 | 492,246 |
Accumulated deficit | (55,775) | (71,217) |
Accumulated other comprehensive loss, net | (90,868) | (80,868) |
Noncontrolling interest | 6,446 | 6,370 |
Total shareholders' equity | 353,659 | 347,251 |
Total liabilities and shareholders' equity | $ 3,355,133 | $ 3,390,277 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 73,041,782 | 71,961,045 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss, net | Non-controlling Interest | Total |
Balance at Dec. 31, 2018 | $ 712 | $ 513,070 | $ (50,834) | $ (53,212) | $ 5,918 | $ 415,654 |
Balance (in shares) at Dec. 31, 2018 | 71,187 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cash dividends on common stock | (27,356) | (576) | (27,932) | |||
Shares issued under employee plan, net of forfeitures | $ 9 | (9) | ||||
Shares issued under employee plan, net of forfeitures (in shares) | 923 | |||||
Non-cash, share-based compensation | 1,498 | 1,498 | ||||
Other comprehensive income (loss) | (6,446) | (6,446) | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2017-12 | 576 | 576 | ||||
Net income (loss) | (7,265) | 79 | (7,186) | |||
Balance at Mar. 31, 2019 | $ 721 | 487,203 | (58,099) | (59,658) | 5,997 | 376,164 |
Balance (in shares) at Mar. 31, 2019 | 72,110 | |||||
Balance at Dec. 31, 2019 | $ 720 | 492,246 | (71,217) | (80,868) | 6,370 | 347,251 |
Balance (in shares) at Dec. 31, 2019 | 71,961 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Shares issued under employee plan, net of forfeitures | $ 11 | (11) | ||||
Shares issued under employee plan, net of forfeitures (in shares) | 1,081 | |||||
Non-cash, share-based compensation | 890 | 890 | ||||
Other comprehensive income (loss) | (10,000) | (10,000) | ||||
Cumulative adjustment of new accounting standard adoption | ASU 2016-13 | (105) | (105) | ||||
Net income (loss) | 15,547 | 76 | 15,623 | |||
Balance at Mar. 31, 2020 | $ 731 | $ 493,125 | $ (55,775) | $ (90,868) | $ 6,446 | $ 353,659 |
Balance (in shares) at Mar. 31, 2020 | 73,042 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 15,623 | $ (7,186) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 82,738 | 99,243 |
Cash distributions from wireless partnerships in less than current earnings | (307) | (1,118) |
Pension and post-retirement contributions in excess of expense | (8,571) | (5,980) |
Stock-based compensation expense | 890 | 1,498 |
Amortization of deferred financing costs | 1,196 | 1,213 |
Gain on extinguishment of debt | (234) | |
Other, net | (4,138) | 397 |
Changes in operating assets and liabilities, net of acquired businesses: | ||
Accounts receivable, net | 1,204 | 810 |
Income tax receivable | 5,024 | (3,227) |
Prepaid expenses and other assets | (1,826) | (2,419) |
Accounts payable | (11,034) | (6,497) |
Accrued expenses and other liabilities | 4,425 | (1,737) |
Net cash provided by operating activities | 84,990 | 74,997 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment, net | (42,389) | (53,394) |
Proceeds from sale of assets | 2,187 | 865 |
Distributions from investments | 426 | 329 |
Net cash used in investing activities | (39,776) | (52,200) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 10,000 | 51,000 |
Payment of finance lease obligations | (2,674) | (3,507) |
Payment on long-term debt | (46,588) | (45,588) |
Repurchase of senior notes | (4,208) | |
Dividends on common stock | (27,577) | |
Net cash used in financing activities | (43,470) | (25,672) |
Change in cash and cash equivalents | 1,744 | (2,875) |
Cash and cash equivalents at beginning of period | 12,395 | 9,599 |
Cash and cash equivalents at end of period | $ 14,139 | $ 6,724 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “our” or “us”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide communication solutions to consumer, commercial and carrier customers across a 23-state service area. Leveraging our advanced fiber network spanning more than 37,500 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 March 31, 2020, we had approximately 821,000 voice connections, 786,000 data connections and 83,000 video connections. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2019 Annual Report on Form 10-K filed with the SEC. Recent Developments We are closely monitoring the impact on our business of the current outbreak of a novel strain of coronavirus (“COVID-19”). We are taking precautions to ensure the safety of our employees, customers and business partners, while assuring business continuity and reliable service and support to our customers. While we have not seen a significant adverse impact to our financial results from COVID-19 to date, if the pandemic continues to cause significant negative impacts to economic conditions, our results of operations, financial condition and liquidity could be adversely impacted. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted by the U.S. government as an emergency economic stimulus package that includes spending and tax breaks to strengthen the US economy and fund a nationwide effort to curtail the economic effects of COVID-19. The CARES Act includes, among other things, deferral of certain employer payroll tax payments, the delay in payment of minimum required pension contributions due in 2020 until January 1, 2021 and certain income tax law changes including modifications to the net interest deduction limitations. In April 2020, we began deferring the payment of the employer portion of Social Security taxes and estimate that approximately $4.2 million for employer payroll tax payments otherwise due in the second quarter of 2020 will be deferred with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022. At this time, we have elected not to delay the payment of our minimum required pension contributions due in 2020 and the potential deferral of employer payroll tax payments for future quarters in 2020 will continued to be assessed based on the extent of the future impacts of COVID-19 on our business. The CARES Act is not expected to have a material impact on our consolidated financial statements. Accounts Receivable and Allowance for Credit Losses Effective January 1, 2020, we adopted Accounting Standards Update (“ASU”) No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments, Accounts receivable (“AR”) consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for credit losses (“ACL”) based on our historical loss experience, current conditions and forecasted changes including but not limited to changes related to the economy, our industry and business. Uncollectible accounts are written-off (removed from AR and charged against the ACL) when internal collection efforts have been unsuccessful. Subsequently, if payment is received from the customer, the recovery is credited to the ACL. The following table summarizes the activity in ACL for the quarters ended March 31, 2020 and 2019: Quarter Ended (In thousands) 2020 2019 Balance at beginning of year $ 4,549 $ 4,421 Cumulative adjustment upon adoption of ASU 2016-13 144 — Provision charged to expense 2,083 2,608 Write-offs, less recoveries (1,814) (2,233) Balance at end of year $ 4,962 $ 4,796 Recent Accounting Pronouncements Effective January 1, 2020, we adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments Effective January 1, 2020, we adopted 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 March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04 (“ASU 2020-04”), Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. . In November 2019, the FASB issued ASU No. 2019-12 (“ASU 2019-12”), Income Taxes Income Taxes. In August 2018, the FASB issued ASU No. 2018-14 (“ASU 2018-14”), Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2020 | |
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 quarters ended March 31, 2020 and 2019: Quarter Ended March 31, (In thousands) 2020 2019 Operating Revenues Commercial and carrier: Data and transport services (includes VoIP) $ 89,572 $ 88,126 Voice services 45,720 48,070 Other 11,712 15,176 147,004 151,372 Consumer: Broadband (VoIP and Data) 64,076 63,085 Video services 19,131 20,736 Voice services 43,176 45,879 126,383 129,700 Subsidies 18,454 18,159 Network access 31,465 36,591 Other products and services 2,356 2,827 Total operating revenues $ 325,662 $ 338,649 Contract Assets and Liabilities The following table provides information about receivables, contract assets and contract liabilities from our revenue contracts with customers: March 31, (In thousands) 2020 2019 Accounts receivable, net $ 122,340 $ 132,326 Contract assets 19,704 13,897 Contract liabilities 52,905 55,212 Contract assets include costs that are incremental to the acquisition of a contract. Incremental costs are those that result directly from obtaining a contract or costs that would not have been incurred if the contract had not been obtained, which primarily relate to sales commissions. These costs are deferred and amortized over the expected customer life. We determined that the expected customer life is the expected period of benefit as the commission on the renewal contract is not commensurate with the commission on the initial contract. During the quarters ended March 31, 2020 and 2019, the Company recognized expense of $2.1 million and $1.2 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 are generally deferred and amortized over the expected customer life as the option to renew without paying an upfront fee provides the customer with a material right. During the quarters ended March 31, 2020 and 2019, the Company deferred and recognized revenues of $111.2 million and $94.0 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 Accounting Standards Codification (“ASC”) Topic 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 (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | 3. EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per common share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for each class of common stock and participating securities considering dividends declared and participation rights in undistributed earnings. Certain of the Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends, if declared, during the vesting term. The potentially dilutive impact of the Company’s restricted stock awards is determined using the treasury stock method. Under the treasury stock method, if the average market price during the period exceeds the exercise price, these instruments are treated as if they had been exercised with the proceeds of exercise used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and repurchased is included in the diluted share computation. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period. Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive. The computation of basic and diluted EPS attributable to common shareholders computed using the two-class method is as follows: Quarter Ended March 31, (In thousands, except per share amounts) 2020 2019 Net income (loss) $ 15,623 $ (7,186) Less: net income attributable to noncontrolling interest 76 79 Income (loss) attributable to common shareholders before allocation of earnings to participating securities 15,547 (7,265) Less: earnings allocated to participating securities 247 457 Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ 15,300 $ (7,722) Weighted-average number of common shares outstanding 71,153 70,813 Net income (loss) per common share attributable to common shareholders - basic and diluted $ 0.22 $ (0.11) Diluted EPS attributable to common shareholders for the quarters ended March 31, 2020 and 2019 excludes 1.1 million and 0.7 million potential common shares, respectively, that could be issued under our share-based compensation plan, because the inclusion of the potential common shares would have an antidilutive effect. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2020 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS Our investments are as follows: March 31, December 31, (In thousands) 2020 2019 Cash surrender value of life insurance policies $ 2,699 $ 2,474 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 8,882 8,910 Other 273 298 Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) 20,399 20,162 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,620 7,658 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 28,924 28,815 Totals $ 113,197 $ 112,717 Investments at Cost We own 2.34%of GTE Mobilnet of South Texas Limited Partnership (the “Mobilnet South Partnership”). The principal activity of the Mobilnet South Partnership is providing cellular service in the Houston, Galveston and Beaumont, Texas metropolitan areas. We also own 3.60% of Pittsburgh SMSA Limited Partnership, which provides cellular service in and around the Pittsburgh metropolitan area. Because of our limited influence over these partnerships, we account for these investments at our initial cost less any impairment because fair value is not readily available for these investments. No indictors of impairment existed for any of the investments during the quarters ended March 31, 2020 or 2019. For these investments, we adjust the carrying value for any purchases or sales of our ownership interests, if any. We record distributions received from these investments as investment income in non-operating income (expense). For the quarters ended March 31, 2020 and 2019, we received cash distributions from these partnerships totaling $5.3 million and $3.3 million, respectively. CoBank, ACB (“CoBank”) is a cooperative bank owned by its customers. On an annual basis, CoBank distributes patronage in the form of cash and stock in the cooperative based on the Company’s outstanding loan balance with CoBank, which has traditionally been a significant lender in the Company’s credit facility. The investment in CoBank represents the accumulation of the equity patronage paid by CoBank to the Company. Equity Method We own 20.51%of GTE Mobilnet of Texas RSA #17 Limited Partnership (“RSA #17”), 16.67% of Pennsylvania RSA 6(I) Limited Partnership (“RSA 6(I)”) and 23.67% of Pennsylvania RSA 6(II) Limited Partnership (“RSA 6(II)”). RSA #17 provides cellular service to a limited rural area in Texas. RSA 6(I) and RSA 6(II) provide cellular service in and around our Pennsylvania service territory. Because we have significant influence over the operating and financial policies of these three entities, we account for the investments using the equity method. Income is recognized as investment income in non-operating income (expense) on our proportionate share of earnings and cash distributions are recorded as a reduction in our investment. For the quarters ended March 31, 2020 and 2019, we received cash distributions from these partnerships totaling $4.8 million and $4.0 million, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE MEASUREMENTS Our derivative instruments related to interest rate swap agreements are required to be measured at fair value on a recurring basis. The fair values of the interest rate swaps are determined using valuation models and are categorized within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and observable market data of similar instruments. See Note 7 for further discussion regarding our interest rate swap agreements. Our interest rate swap agreements measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 were as follows: As of March 31, 2020 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ (3,049) $ — $ (3,049) $ — Long-term interest rate swap liabilities (38,209) — (38,209) — Total $ (41,258) $ — $ (41,258) $ — 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) $ — 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 March 31, 2020 and December 31, 2019. As of March 31, 2020 As of December 31, 2019 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,221,567 $ 1,943,100 $ 2,262,111 $ 2,125,497 Cost & Equity Method Investments Our investments as of March 31, 2020 and December 31, 2019 accounted for at cost and under the equity method consisted primarily of minority positions in various cellular telephone limited partnerships and our investment in CoBank. It is impracticable to determine the fair value of these investments. Long-term Debt The fair value of our senior notes was based on quoted market prices, and the fair value of borrowings under our credit facility was determined using current market rates for similar types of borrowing arrangements. We have categorized the long-term debt as Level 2 within the fair value hierarchy. |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2020 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt, presented net of unamortized discounts, consisted of the following: March 31, December 31, (In thousands) 2020 2019 Senior secured credit facility: Term loans, net of discounts of $5,250 and $5,604 at March 31, 2020 and December 31, 2019, respectively $ 1,774,875 $ 1,779,109 Revolving loan 8,000 40,000 6.50% Senior notes due 2022, net of discount of $1,817 and $1,998 at March 31, 2020 and December 31, 2019, respectively 438,692 443,002 Finance leases 21,345 24,019 2,242,912 2,286,130 Less: current portion of long-term debt and finance leases (25,722) (27,301) Less: deferred debt issuance costs (7,442) (8,152) Total long-term debt $ 2,209,748 $ 2,250,677 Credit Agreement In October 2016, the Company, through certain of its wholly owned subsidiaries, entered into a Third Amended and Restated Credit Agreement with various financial institutions (as amended, the “Credit Agreement”). The Credit Agreement consists of a $110.0 million revolving credit facility, an initial term loan in the aggregate amount of $900.0 million (the “Initial Term Loan”) and an incremental term loan in the aggregate amount of $935.0 million (the “Incremental Term Loan”), collectively (the “Term Loans”). The Credit Agreement also includes an incremental loan facility which provides the ability to borrow, subject to certain terms and conditions, incremental loans in an aggregate amount of up to the greater of (a) $300.0 million and (b) an amount which would cause its senior secured leverage ratio not to exceed 3.00:1.00 (the “Incremental Facility”). Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company and its subsidiaries, with the exception of Consolidated Communications of Illinois Company and our majority-owned subsidiary, East Texas Fiber Line Incorporated. The Initial Term Loan was issued in an original aggregate principal amount of $900.0 million with a maturity date of October 5, 2023, but is subject to earlier maturity on March 31, 2022 if the Company’s unsecured Senior Notes due in October 2022 are not repaid in full or redeemed in full on or prior to March 31, 2022. The Initial Term Loan contains an original issuance discount of 0.25% or $2.3 million, which is being amortized over the term of the loan. The Initial Term Loan requires quarterly principal payments of $2.25 million and has an interest rate of 3.00% plus the London Interbank Offered Rate (“LIBOR”) subject to a 1.00% LIBOR floor. The Incremental Term Loan was issued in an original aggregate principal amount of $935.0 million and included an original issue discount of 0.50%, which is being amortized over the term of the loan. The Incremental Term Loan has the same maturity date and interest rate as the Initial Term Loan and requires quarterly principal payments of $2.34 million. Our revolving credit facility has a maturity date of October 5, 2021 and an applicable margin (at our election) of between 2.50% and 3.25% for LIBOR-based borrowings or between 1.50% and 2.25% for alternate base rate borrowings, in each case depending on our total net leverage ratio. Based on our leverage ratio as of March 31, 2020, the borrowing margin for the three month period ending June 30, 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 March 31, 2020, alternate base rate borrowings of $8.0 million were outstanding under the revolving credit facility. At 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. Stand-by letters of credit of $18.6 million were outstanding under our revolving credit facility as of March 31, 2020. The stand-by letters of credit are renewable annually and reduce the borrowing availability under the revolving credit facility. As of March 31, 2020, $83.4 million was available for borrowing under the revolving credit facility. The weighted-average interest rate on outstanding borrowings under our credit facility was 4.01% and 4.80% as of March 31, 2020 and December 31, 2019, respectively. Interest is payable at least quarterly. Credit Agreement Covenant Compliance The Credit Agreement contains various provisions and covenants, including, among other items, restrictions on the ability to pay dividends, incur additional indebtedness and issue certain capital stock. We have agreed to maintain certain financial ratios, including interest coverage and total net leverage ratios, all as defined in the Credit Agreement. Among other things, it will be an event of default if our total net leverage ratio or interest coverage ratio as of the end of any fiscal quarter is greater than 5.25:1.00 or less than 2.25:1.00, respectively. As of March 31, 2020, our total net leverage ratio under the Credit Agreement was 4.28:1.00 and our interest coverage ratio was 3.74:1.00. As of March 31, 2020, we were in compliance with the Credit Agreement covenants. Senior Notes 6.50% Senior Notes due 2022 In September 2014, we completed an offering of $200.0 million aggregate principal amount of 6.50% Senior Notes due in October 2022 (the “Existing Notes”). The Existing Notes were priced at par, which resulted in total gross proceeds of $200.0 million. On June 8, 2015, we completed an additional offering of $300.0 million in aggregate principal amount of 6.50% Senior Notes due 2022 (the “New Notes” and together with the Existing Notes, the “Senior Notes”). The New Notes were issued as additional notes under the same indenture pursuant to which the Existing Notes were previously issued on in September 2014. The New Notes were priced at 98.26% of par with a yield to maturity of 6.80% and resulted in total gross proceeds of approximately $294.8 million, excluding accrued interest. The discount is being amortized using the effective interest method over the term of the notes. The Senior Notes mature on October 1, 2022 and interest is payable semi-annually on April 1 and October 1 of each year. Consolidated Communications, Inc. (“CCI”) is the primary obligor under the Senior Notes, and we and the majority of our wholly-owned subsidiaries have fully and unconditionally guaranteed the Senior Notes. The Senior Notes are senior unsecured obligations of the Company. During the quarter ended March 31, 2020, we repurchased $4.5 million of the aggregate principal amount of the Senior Notes. In connection with the partial repurchase of the Senior Notes, we paid $4.2 million and recognized a gain on extinguishment of debt of $0.2 million during the quarter ended March 31, 2020. Senior Notes Covenant Compliance Subject to certain exceptions and qualifications, the indenture governing the Senior Notes contains customary covenants that, among other things, limits CCI’s and its restricted subsidiaries’ ability to: incur additional debt or issue certain preferred stock; pay dividends or make other distributions on capital stock or prepay subordinated indebtedness; purchase or redeem any equity interests; make investments; create liens; sell assets; enter into agreements that restrict dividends or other payments by restricted subsidiaries; consolidate, merge or transfer all or substantially all of its assets; engage in transactions with its affiliates; or enter into any sale and leaseback transactions. The indenture also contains customary events of default. As of March 31, 2020, the Company was in compliance with all terms, conditions and covenants under the indenture governing the Senior Notes. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 7. DERIVATIVE FINANCIAL INSTRUMENTS We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. Derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets. We may designate certain of our interest rate swaps as cash flow hedges of our expected future interest payments. For derivative instruments designated as a cash flow hedge, the change in the fair value is recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and is recognized as an adjustment to earnings over the period in which the hedged item impacts earnings. When an interest rate swap agreement terminates, any resulting gain or loss is recognized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt obligation. If a derivative instrument is de-designated, the remaining gain or loss in AOCI on the date of de-designation is amortized to earnings over the remaining term of the hedging instrument. For derivative financial instruments that are not designated as a hedge, including those that have been de-designated, changes in fair value are recognized on a current basis in earnings. Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in our condensed consolidated statements of cash flows. The following interest rate swaps were outstanding as of March 31, 2020: Notional (In thousands) Amount 2020 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 705,000 Accrued expense $ (3,049) Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (27,525) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (10,684) Total Fair Values $ (41,258) Our interest rate swap agreements mature on various dates between July 2020 and July 2023. The forward-starting interest rate swap agreement has a term of one year and becomes effective in July 2020. The following interest rate swaps were outstanding as of December 31, 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) 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. As of March 31, 2020 and December 31, 2019, the total pre-tax unrealized loss related to our interest rate swap agreements included in AOCI was $(36.5) million and $(22.5) million, respectively. From the balance in AOCI as of March 31, 2020, we expect to recognize a loss of approximately $18.8 million in earnings in the next twelve months. Information regarding our cash flow hedge transactions is as follows: Quarter Ended March 31, (In thousands) 2020 2019 Unrealized loss recognized in AOCI, pretax $ (16,152) $ (9,053) Deferred (loss) gain reclassified from AOCI to interest expense $ (2,175) $ 280 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2020 | |
LEASES | |
LEASES | 8. LEASES 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 quarters ended March 31, 2020 and 2019, we did not enter into any such arrangements. |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2020 | |
EQUITY | |
EQUITY | 9. EQUITY Dividends 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. Approximately 4,650,000 shares of our common stock are authorized for issuance under the Plan, provided that no more than 300,000 shares may be granted in the form of stock options or stock appreciation rights to any eligible employee or director in any calendar year. Unless terminated sooner, the Plan will continue in effect until April 30, 2028. The following table summarizes total compensation costs recognized for share-based payments during the quarters ended March 31, 2020 and 2019: Quarter Ended March 31, (In thousands) 2020 2019 Restricted stock $ 848 $ 927 Performance shares 42 571 Total $ 890 $ 1,498 Share-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. As of March 31, 2020, total unrecognized compensation cost related to non-vested Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”) was $17.7 million and will be recognized over a weighted-average period of approximately 1.8 years. The following table summarizes the RSA and PSA activity for the quarter ended March 31, 2020: RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - December 31, 2019 532,445 $ 11.58 275,995 $ 13.29 Shares granted 847,809 $ 6.31 240,669 $ 9.86 Shares forfeited, cancelled or retired (4,579) $ 11.29 (3,162) $ 12.62 Non-vested shares outstanding - March 31, 2020 1,375,675 $ 8.21 513,502 $ 11.40 Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component for the three-month period ended March 31, 2020: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2019 $ (64,316) $ (16,552) $ (80,868) Other comprehensive loss before reclassifications — (11,944) (11,944) Amounts reclassified from accumulated other comprehensive loss 336 1,608 1,944 Net current period other comprehensive income (loss) 336 (10,336) (10,000) Balance at March 31, 2020 $ (63,980) $ (26,888) $ (90,868) The following table summarizes reclassifications from accumulated other comprehensive loss for the quarters ended March 31, 2020 and 2019: Quarter Ended March 31, Affected Line Item in the (In thousands) 2020 2019 Statement of Income Amortization of pension and post-retirement items: Prior service cost $ (442) $ (798) (a) Actuarial loss (12) (595) (a) (454) (1,393) Total before tax 118 367 Tax benefit $ (336) $ (1,026) Net of tax Gain (Loss) on cash flow hedges: Interest rate derivatives $ (2,175) $ 280 Interest expense 567 (73) Tax benefit (expense) $ (1,608) $ 207 Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and other post-retirement benefit plans. See Note 10 for further discussion regarding our pension and other post-retirement benefit plans. |
PENSION PLANS AND OTHER POST-RE
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | 3 Months Ended |
Mar. 31, 2020 | |
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | |
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS | 10. PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS Defined Benefit Plans We sponsor 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 non-qualified supplemental retirement plans (the “Supplemental Plans” and, together with the defined benefit pension plans, the “Pension Plans”). The Supplemental Plans provide supplemental retirement benefits to certain former employees by providing for incremental pension payments to partially offset the reduction of the amount that would have been payable under the qualified defined benefit pension plans if it were not for limitations imposed by federal income tax regulations. The Supplemental Plans are frozen so that no person is eligible to become a new participant. These plans are unfunded and have no assets. The benefits paid under the Supplemental Plans are paid from the general operating funds of the Company. The following table summarizes the components of net periodic pension cost for our Pension Plans for the quarters ended March 31, 2020 and 2019: Quarter Ended March 31, (In thousands) 2020 2019 Service cost $ — $ 11 Interest cost 6,520 7,661 Expected return on plan assets (8,645) (8,671) Net amortization loss 311 703 Net prior service cost amortization 30 30 Net periodic pension benefit $ (1,784) $ (266) The components of net periodic pension benefit other than the service cost component are included in other, net within other income (expense) in the condensed consolidated statements of operations. 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 table summarizes the components of the net periodic cost for our Post-retirement Plans for the quarters ended March 31, 2020 and 2019: Quarter Ended March 31, (In thousands) 2020 2019 Service cost $ 258 $ 117 Interest cost 884 1,144 Expected return on plan assets (46) (43) Net amortization gain (299) (108) Net prior service cost amortization 412 768 Net periodic post-retirement benefit cost $ 1,209 $ 1,878 The components of net periodic post-retirement benefit cost other than the service cost component are included in other, net within other income (expense) in the condensed consolidated statements of operations. Contributions We expect to contribute approximately $24.0 million to our Pension Plans and $8.9 million to our Post-retirement Plans in 2020. As of March 31, 2020, we have contributed $5.8 million and $2.2 million of the annual contribution to the Pension Plans and Post-retirement Plans, respectively. Under the CARES Act, the payment of minimum required pension contributions due in 2020 may be delayed until January 1, 2021. On April 15, 2020, we made our scheduled quarterly contribution of $4.4 million to the Pension Plan. We are continuing to monitor and assess whether to elect the deferral until January 1, 2021 of the remaining required pension contributions due in 2020 based on the future impacts of COVID-19 on our business. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
INCOME TAXES | |
INCOME TAXES | 11. INCOME TAXES Our unrecognized tax benefits as of March 31, 2020 and December 31, 2019 were $4.9 million. The net amount of unrecognized tax benefits that, if recognized, would result in an impact to the effective tax rate is $4.7 million as of March 31, 2020 and December 31, 2019. We do not expect any material change in our unrecognized tax benefits during the remainder of 2020. 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 March 31, 2020, we did not have a material liability for interest or penalties and had no material interest or penalty expense. The periods subject to examination for our federal return are years 2016 through 2018. The periods subject to examination for our state returns are years 2015 through 2018. In addition, prior tax years may be subject to examination by federal or state taxing authorities if the Company’s net operating loss carryovers from those prior years are utilized in the future. We are currently under 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. Our effective tax rate was 24.4% and 30.4% for the quarters ended March 31, 2020 and 2019, respectively. The effective tax rate differed from the federal and state statutory rates primarily due to various permanent income tax differences and differences in allocable income for the Company’s state tax filings. As of March 31, 2020, the CARES Act did not have a material impact on the Company's income tax positions. We will continue to evaluate the impact of enacted and future legislation. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Litigation, Regulatory Proceedings and Other Contingencies Access Charges In 2014, Sprint Communications Company L.P. (“Sprint”) along with MCI Communications Services, Inc. and Verizon Select Services Inc. (collectively, “Verizon”) filed lawsuits against certain subsidiaries of the Company including FairPoint Communications, Inc. (“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 the fourth quarter of 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 the fourth quarter of 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. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 13. CONDENSED CONSOLIDATING FINANCIAL INFORMATION Consolidated Communications, Inc. is the primary obligor under the unsecured Senior Notes. We and substantially all of our subsidiaries 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 March 31, 2020 and December 31, 2019, condensed consolidating statements of operations for the quarters ended March 31, 2020 and 2019 and condensed consolidating statements of cash flows for the three-month periods ended March 31, 2020 and 2019 for each of the Company (Parent), Consolidated Communications, Inc. (Subsidiary Issuer), guarantor subsidiaries and other non-guarantor subsidiaries with any consolidating adjustments. See Note 6 for more information regarding our Senior Notes. Condensed Consolidating Balance Sheets (In thousands) March 31, 2020 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 14,136 $ 3 $ — $ — $ 14,139 Accounts receivable, net — 76 115,840 6,424 — 122,340 Income taxes receivable 8,609 4,006 — — (8,441) 4,174 Prepaid expenses and other current assets 89 — 44,995 180 (89) 45,175 Total current assets 8,698 18,218 160,838 6,604 (8,530) 185,828 Property, plant and equipment, net — — 1,742,114 64,831 — 1,806,945 Intangibles and other assets: Investments — 9,064 104,133 — — 113,197 Investments in subsidiaries 3,553,744 3,549,345 17,372 — (7,120,461) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 151,407 — — 151,407 Other intangible assets — — 1,470 9,087 — 10,557 Advances due to/from affiliates, net — 2,238,012 940,841 117,801 (3,296,654) — Deferred income taxes 81,425 9,302 — — (90,727) — Other assets — — 51,449 476 — 51,925 Total assets $ 3,643,867 $ 5,823,941 $ 4,138,717 $ 264,980 $ (10,516,372) $ 3,355,133 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 19,902 $ — $ — $ 19,902 Advance billings and customer deposits — — 45,890 1,334 — 47,224 Accrued compensation — — 55,288 817 — 56,105 Accrued interest — 14,518 427 — — 14,945 Accrued expense — 3,050 69,609 1,206 (89) 73,776 Income tax payable — — 7,636 805 (8,441) — Current portion of long term debt and finance lease obligations — 18,350 7,223 149 — 25,722 Total current liabilities — 35,918 205,975 4,311 (8,530) 237,674 Long-term debt and finance lease obligations — 2,195,775 13,946 27 — 2,209,748 Advances due to/from affiliates, net 3,296,654 — — — (3,296,654) — Deferred income taxes — — 241,061 24,155 (90,727) 174,489 Pension and postretirement benefit obligations — — 278,279 14,866 — 293,145 Other long-term liabilities — 38,504 47,130 784 — 86,418 Total liabilities 3,296,654 2,270,197 786,391 44,143 (3,395,911) 3,001,474 Shareholders’ equity: Common Stock 731 — 17,411 30,000 (47,411) 731 Other shareholders’ equity 346,482 3,553,744 3,328,469 190,837 (7,073,050) 346,482 Total Consolidated Communications Holdings, Inc. shareholders’ equity 347,213 3,553,744 3,345,880 220,837 (7,120,461) 347,213 Noncontrolling interest — — 6,446 — — 6,446 Total shareholders’ equity 347,213 3,553,744 3,352,326 220,837 (7,120,461) 353,659 Total liabilities and shareholders’ equity $ 3,643,867 $ 5,823,941 $ 4,138,717 $ 264,980 $ (10,516,372) $ 3,355,133 Condensed Consolidating Balance Sheet (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 Condensed Consolidating Statements of Operations (In thousands) Quarter Ended March 31, 2020 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 317,054 $ 11,662 $ (3,054) $ 325,662 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 137,034 3,669 (2,948) 137,755 Selling, general and administrative expenses 1,078 — 64,846 1,999 (106) 67,817 Depreciation and amortization — — 80,258 2,480 — 82,738 Operating income (loss) (1,078) — 34,916 3,514 — 37,352 Other income (expense): Interest expense, net of interest income (25) (31,554) (526) 10 — (32,095) Intercompany interest income (expense) — 14,727 (14,711) (16) — — Gain on extinguishment of debt — 234 — — — 234 Investment income — 202 10,377 — — 10,579 Equity in earnings of subsidiaries, net 16,383 28,769 207 — (45,359) — Other, net — — 4,538 56 — 4,594 Income (loss) before income taxes 15,280 12,378 34,801 3,564 (45,359) 20,664 Income tax expense (benefit) (267) (4,005) 8,442 871 — 5,041 Net income (loss) 15,547 16,383 26,359 2,693 (45,359) 15,623 Less: net income attributable to noncontrolling interest — — 76 — — 76 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 15,547 $ 16,383 $ 26,283 $ 2,693 $ (45,359) $ 15,547 Total comprehensive income (loss) attributable to common shareholders $ 5,547 $ 6,383 $ 26,610 $ 2,702 $ (35,695) $ 5,547 Quarter Ended March 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 329,278 $ 12,469 $ (3,098) $ 338,649 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 147,801 3,506 (2,988) 148,319 Selling, general and administrative expenses 1,655 (193) 70,600 2,415 (110) 74,367 Depreciation and amortization — — 96,781 2,462 — 99,243 Operating income (loss) (1,655) 193 14,096 4,086 — 16,720 Other income (expense): Interest expense, net of interest income (28) (34,088) (167) — — (34,283) Intercompany interest income (expense) — 14,727 (14,708) (19) — — Investment income — 190 8,411 — — 8,601 Equity in earnings of subsidiaries, net (6,076) 7,242 213 — (1,379) — Other, net (3) 56 (1,408) (14) — (1,369) Income (loss) before income taxes (7,762) (11,680) 6,437 4,053 (1,379) (10,331) Income tax expense (benefit) (497) (5,604) 1,756 1,200 — (3,145) Net income (loss) (7,265) (6,076) 4,681 2,853 (1,379) (7,186) Less: net income attributable to noncontrolling interest — — 79 — — 79 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (7,265) $ (6,076) $ 4,602 $ 2,853 $ (1,379) $ (7,265) Total comprehensive income (loss) attributable to common shareholders $ (13,711) $ (12,522) $ 5,560 $ 2,921 $ 4,041 $ (13,711) Condensed Consolidating Statements of Cash Flows (In thousands) Three Months Ended March 31, 2020 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (354) $ (8,877) $ 88,395 $ 5,826 $ 84,990 Cash flows from investing activities: Purchases of property, plant and equipment — — (40,923) (1,466) (42,389) Proceeds from sale of assets — — 2,184 3 2,187 Proceeds from sale of investments — — 426 — 426 Net cash used in investing activities — — (38,313) (1,463) (39,776) Cash flows from financing activities: Proceeds from issuance of long-term debt — 10,000 — — 10,000 Payment of finance lease obligation — — (2,641) (33) (2,674) Payment on long-term debt — (46,588) — — (46,588) Repurchase of senior notes — (4,208) — — (4,208) Transactions with affiliates, net 354 51,422 (47,446) (4,330) — Net cash provided by (used in) financing activities 354 10,626 (50,087) (4,363) (43,470) Increase (decrease) in cash and cash equivalents — 1,749 (5) — 1,744 Cash and cash equivalents at beginning of period — 12,387 8 — 12,395 Cash and cash equivalents at end of period $ — $ 14,136 $ 3 $ — $ 14,139 Three Months Ended March 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (178) $ (9,043) $ 77,551 $ 6,667 $ 74,997 Cash flows from investing activities: Purchases of property, plant and equipment — — (51,617) (1,777) (53,394) Proceeds from sale of assets — — 863 2 865 Proceeds from sale of investments — — 329 — 329 Net cash used in investing activities — — (50,425) (1,775) (52,200) Cash flows from financing activities: Proceeds from issuance of long-term debt — 51,000 — — 51,000 Payment of finance lease obligation — — (3,471) (36) (3,507) Payment on long-term debt — (45,588) — — (45,588) Dividends on common stock (27,577) — — — (27,577) Transactions with affiliates, net 27,755 (1,206) (21,693) (4,856) — Net cash provided by (used in) financing activities 178 4,206 (25,164) (4,892) (25,672) Increase (decrease) in cash and cash equivalents — (4,837) 1,962 — (2,875) Cash and cash equivalents at beginning of period — 9,616 (18) 1 9,599 Cash and cash equivalents at end of period $ — $ 4,779 $ 1,944 $ 1 $ 6,724 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
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 37,500 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 March 31, 2020, we had approximately 821,000 voice connections, 786,000 data connections and 83,000 video connections. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2019 Annual Report on Form 10-K filed with the SEC. |
Recent Developments | Recent Developments We are closely monitoring the impact on our business of the current outbreak of a novel strain of coronavirus (“COVID-19”). We are taking precautions to ensure the safety of our employees, customers and business partners, while assuring business continuity and reliable service and support to our customers. While we have not seen a significant adverse impact to our financial results from COVID-19 to date, if the pandemic continues to cause significant negative impacts to economic conditions, our results of operations, financial condition and liquidity could be adversely impacted. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted by the U.S. government as an emergency economic stimulus package that includes spending and tax breaks to strengthen the US economy and fund a nationwide effort to curtail the economic effects of COVID-19. The CARES Act includes, among other things, deferral of certain employer payroll tax payments, the delay in payment of minimum required pension contributions due in 2020 until January 1, 2021 and certain income tax law changes including modifications to the net interest deduction limitations. In April 2020, we began deferring the payment of the employer portion of Social Security taxes and estimate that approximately $4.2 million for employer payroll tax payments otherwise due in the second quarter of 2020 will be deferred with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022. At this time, we have elected not to delay the payment of our minimum required pension contributions due in 2020 and the potential deferral of employer payroll tax payments for future quarters in 2020 will continued to be assessed based on the extent of the future impacts of COVID-19 on our business. The CARES Act is not expected to have a material impact on our consolidated financial statements. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Effective January 1, 2020, we adopted Accounting Standards Update (“ASU”) No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments, Accounts receivable (“AR”) consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for credit losses (“ACL”) based on our historical loss experience, current conditions and forecasted changes including but not limited to changes related to the economy, our industry and business. Uncollectible accounts are written-off (removed from AR and charged against the ACL) when internal collection efforts have been unsuccessful. Subsequently, if payment is received from the customer, the recovery is credited to the ACL. The following table summarizes the activity in ACL for the quarters ended March 31, 2020 and 2019: Quarter Ended (In thousands) 2020 2019 Balance at beginning of year $ 4,549 $ 4,421 Cumulative adjustment upon adoption of ASU 2016-13 144 — Provision charged to expense 2,083 2,608 Write-offs, less recoveries (1,814) (2,233) Balance at end of year $ 4,962 $ 4,796 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Effective January 1, 2020, we adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments Effective January 1, 2020, we adopted 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 March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04 (“ASU 2020-04”), Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. . In November 2019, the FASB issued ASU No. 2019-12 (“ASU 2019-12”), Income Taxes Income Taxes. In August 2018, the FASB issued ASU No. 2018-14 (“ASU 2018-14”), Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of activity for ACL | Quarter Ended (In thousands) 2020 2019 Balance at beginning of year $ 4,549 $ 4,421 Cumulative adjustment upon adoption of ASU 2016-13 144 — Provision charged to expense 2,083 2,608 Write-offs, less recoveries (1,814) (2,233) Balance at end of year $ 4,962 $ 4,796 |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
REVENUE | |
Schedule of disaggregation of revenue | Quarter Ended March 31, (In thousands) 2020 2019 Operating Revenues Commercial and carrier: Data and transport services (includes VoIP) $ 89,572 $ 88,126 Voice services 45,720 48,070 Other 11,712 15,176 147,004 151,372 Consumer: Broadband (VoIP and Data) 64,076 63,085 Video services 19,131 20,736 Voice services 43,176 45,879 126,383 129,700 Subsidies 18,454 18,159 Network access 31,465 36,591 Other products and services 2,356 2,827 Total operating revenues $ 325,662 $ 338,649 |
Schedule of receivables, contract assets and contract liabilities | March 31, (In thousands) 2020 2019 Accounts receivable, net $ 122,340 $ 132,326 Contract assets 19,704 13,897 Contract liabilities 52,905 55,212 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of basic and diluted EPS | Quarter Ended March 31, (In thousands, except per share amounts) 2020 2019 Net income (loss) $ 15,623 $ (7,186) Less: net income attributable to noncontrolling interest 76 79 Income (loss) attributable to common shareholders before allocation of earnings to participating securities 15,547 (7,265) Less: earnings allocated to participating securities 247 457 Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ 15,300 $ (7,722) Weighted-average number of common shares outstanding 71,153 70,813 Net income (loss) per common share attributable to common shareholders - basic and diluted $ 0.22 $ (0.11) |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
INVESTMENTS | |
Schedule of investments | March 31, December 31, (In thousands) 2020 2019 Cash surrender value of life insurance policies $ 2,699 $ 2,474 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 8,882 8,910 Other 273 298 Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) 20,399 20,162 Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) 7,620 7,658 Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) 28,924 28,815 Totals $ 113,197 $ 112,717 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap assets and liabilities measured at fair value on a recurring basis | As of March 31, 2020 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ (3,049) $ — $ (3,049) $ — Long-term interest rate swap liabilities (38,209) — (38,209) — Total $ (41,258) $ — $ (41,258) $ — 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) $ — |
Schedule of other financial instruments that are not carried at fair value but which require fair value disclosure | As of March 31, 2020 As of December 31, 2019 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,221,567 $ 1,943,100 $ 2,262,111 $ 2,125,497 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | March 31, December 31, (In thousands) 2020 2019 Senior secured credit facility: Term loans, net of discounts of $5,250 and $5,604 at March 31, 2020 and December 31, 2019, respectively $ 1,774,875 $ 1,779,109 Revolving loan 8,000 40,000 6.50% Senior notes due 2022, net of discount of $1,817 and $1,998 at March 31, 2020 and December 31, 2019, respectively 438,692 443,002 Finance leases 21,345 24,019 2,242,912 2,286,130 Less: current portion of long-term debt and finance leases (25,722) (27,301) Less: deferred debt issuance costs (7,442) (8,152) Total long-term debt $ 2,209,748 $ 2,250,677 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | The following interest rate swaps were outstanding as of March 31, 2020: Notional (In thousands) Amount 2020 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 705,000 Accrued expense $ (3,049) Fixed to 1-month floating LIBOR (with floor) $ 500,000 Other long-term liabilities (27,525) Forward starting fixed to 1-month floating LIBOR (with floor) $ 705,000 Other long-term liabilities (10,684) Total Fair Values $ (41,258) Our interest rate swap agreements mature on various dates between July 2020 and July 2023. The forward-starting interest rate swap agreement has a term of one year and becomes effective in July 2020. The following interest rate swaps were outstanding as of December 31, 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) |
Schedule of gains and losses on cash flow hedge transactions | Quarter Ended March 31, (In thousands) 2020 2019 Unrealized loss recognized in AOCI, pretax $ (16,152) $ (9,053) Deferred (loss) gain reclassified from AOCI to interest expense $ (2,175) $ 280 |
EQUITY (Tables)
EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
EQUITY | |
Summary of total compensation costs recognized for share-based payments | Quarter Ended March 31, (In thousands) 2020 2019 Restricted stock $ 848 $ 927 Performance shares 42 571 Total $ 890 $ 1,498 |
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, 2019 532,445 $ 11.58 275,995 $ 13.29 Shares granted 847,809 $ 6.31 240,669 $ 9.86 Shares forfeited, cancelled or retired (4,579) $ 11.29 (3,162) $ 12.62 Non-vested shares outstanding - March 31, 2020 1,375,675 $ 8.21 513,502 $ 11.40 |
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, 2019 $ (64,316) $ (16,552) $ (80,868) Other comprehensive loss before reclassifications — (11,944) (11,944) Amounts reclassified from accumulated other comprehensive loss 336 1,608 1,944 Net current period other comprehensive income (loss) 336 (10,336) (10,000) Balance at March 31, 2020 $ (63,980) $ (26,888) $ (90,868) |
Summary of reclassifications from accumulated other comprehensive loss | Quarter Ended March 31, Affected Line Item in the (In thousands) 2020 2019 Statement of Income Amortization of pension and post-retirement items: Prior service cost $ (442) $ (798) (a) Actuarial loss (12) (595) (a) (454) (1,393) Total before tax 118 367 Tax benefit $ (336) $ (1,026) Net of tax Gain (Loss) on cash flow hedges: Interest rate derivatives $ (2,175) $ 280 Interest expense 567 (73) Tax benefit (expense) $ (1,608) $ 207 Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and other post-retirement benefit plans. See Note 10 for further discussion regarding our pension and other post-retirement benefit plans. |
PENSION PLANS AND OTHER POST-_2
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | Quarter Ended March 31, (In thousands) 2020 2019 Service cost $ — $ 11 Interest cost 6,520 7,661 Expected return on plan assets (8,645) (8,671) Net amortization loss 311 703 Net prior service cost amortization 30 30 Net periodic pension benefit $ (1,784) $ (266) |
Post-retirement Benefit Obligations | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | Quarter Ended March 31, (In thousands) 2020 2019 Service cost $ 258 $ 117 Interest cost 884 1,144 Expected return on plan assets (46) (43) Net amortization gain (299) (108) Net prior service cost amortization 412 768 Net periodic post-retirement benefit cost $ 1,209 $ 1,878 |
CONDENSED CONSOLIDATING FINAN_2
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (In thousands) March 31, 2020 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ 14,136 $ 3 $ — $ — $ 14,139 Accounts receivable, net — 76 115,840 6,424 — 122,340 Income taxes receivable 8,609 4,006 — — (8,441) 4,174 Prepaid expenses and other current assets 89 — 44,995 180 (89) 45,175 Total current assets 8,698 18,218 160,838 6,604 (8,530) 185,828 Property, plant and equipment, net — — 1,742,114 64,831 — 1,806,945 Intangibles and other assets: Investments — 9,064 104,133 — — 113,197 Investments in subsidiaries 3,553,744 3,549,345 17,372 — (7,120,461) — Goodwill — — 969,093 66,181 — 1,035,274 Customer relationships, net — — 151,407 — — 151,407 Other intangible assets — — 1,470 9,087 — 10,557 Advances due to/from affiliates, net — 2,238,012 940,841 117,801 (3,296,654) — Deferred income taxes 81,425 9,302 — — (90,727) — Other assets — — 51,449 476 — 51,925 Total assets $ 3,643,867 $ 5,823,941 $ 4,138,717 $ 264,980 $ (10,516,372) $ 3,355,133 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ 19,902 $ — $ — $ 19,902 Advance billings and customer deposits — — 45,890 1,334 — 47,224 Accrued compensation — — 55,288 817 — 56,105 Accrued interest — 14,518 427 — — 14,945 Accrued expense — 3,050 69,609 1,206 (89) 73,776 Income tax payable — — 7,636 805 (8,441) — Current portion of long term debt and finance lease obligations — 18,350 7,223 149 — 25,722 Total current liabilities — 35,918 205,975 4,311 (8,530) 237,674 Long-term debt and finance lease obligations — 2,195,775 13,946 27 — 2,209,748 Advances due to/from affiliates, net 3,296,654 — — — (3,296,654) — Deferred income taxes — — 241,061 24,155 (90,727) 174,489 Pension and postretirement benefit obligations — — 278,279 14,866 — 293,145 Other long-term liabilities — 38,504 47,130 784 — 86,418 Total liabilities 3,296,654 2,270,197 786,391 44,143 (3,395,911) 3,001,474 Shareholders’ equity: Common Stock 731 — 17,411 30,000 (47,411) 731 Other shareholders’ equity 346,482 3,553,744 3,328,469 190,837 (7,073,050) 346,482 Total Consolidated Communications Holdings, Inc. shareholders’ equity 347,213 3,553,744 3,345,880 220,837 (7,120,461) 347,213 Noncontrolling interest — — 6,446 — — 6,446 Total shareholders’ equity 347,213 3,553,744 3,352,326 220,837 (7,120,461) 353,659 Total liabilities and shareholders’ equity $ 3,643,867 $ 5,823,941 $ 4,138,717 $ 264,980 $ (10,516,372) $ 3,355,133 Condensed Consolidating Balance Sheet (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 |
Schedule of condensed consolidating statements of operations | Condensed Consolidating Statements of Operations (In thousands) Quarter Ended March 31, 2020 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 317,054 $ 11,662 $ (3,054) $ 325,662 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 137,034 3,669 (2,948) 137,755 Selling, general and administrative expenses 1,078 — 64,846 1,999 (106) 67,817 Depreciation and amortization — — 80,258 2,480 — 82,738 Operating income (loss) (1,078) — 34,916 3,514 — 37,352 Other income (expense): Interest expense, net of interest income (25) (31,554) (526) 10 — (32,095) Intercompany interest income (expense) — 14,727 (14,711) (16) — — Gain on extinguishment of debt — 234 — — — 234 Investment income — 202 10,377 — — 10,579 Equity in earnings of subsidiaries, net 16,383 28,769 207 — (45,359) — Other, net — — 4,538 56 — 4,594 Income (loss) before income taxes 15,280 12,378 34,801 3,564 (45,359) 20,664 Income tax expense (benefit) (267) (4,005) 8,442 871 — 5,041 Net income (loss) 15,547 16,383 26,359 2,693 (45,359) 15,623 Less: net income attributable to noncontrolling interest — — 76 — — 76 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ 15,547 $ 16,383 $ 26,283 $ 2,693 $ (45,359) $ 15,547 Total comprehensive income (loss) attributable to common shareholders $ 5,547 $ 6,383 $ 26,610 $ 2,702 $ (35,695) $ 5,547 Quarter Ended March 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ — $ 329,278 $ 12,469 $ (3,098) $ 338,649 Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — 147,801 3,506 (2,988) 148,319 Selling, general and administrative expenses 1,655 (193) 70,600 2,415 (110) 74,367 Depreciation and amortization — — 96,781 2,462 — 99,243 Operating income (loss) (1,655) 193 14,096 4,086 — 16,720 Other income (expense): Interest expense, net of interest income (28) (34,088) (167) — — (34,283) Intercompany interest income (expense) — 14,727 (14,708) (19) — — Investment income — 190 8,411 — — 8,601 Equity in earnings of subsidiaries, net (6,076) 7,242 213 — (1,379) — Other, net (3) 56 (1,408) (14) — (1,369) Income (loss) before income taxes (7,762) (11,680) 6,437 4,053 (1,379) (10,331) Income tax expense (benefit) (497) (5,604) 1,756 1,200 — (3,145) Net income (loss) (7,265) (6,076) 4,681 2,853 (1,379) (7,186) Less: net income attributable to noncontrolling interest — — 79 — — 79 Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ (7,265) $ (6,076) $ 4,602 $ 2,853 $ (1,379) $ (7,265) Total comprehensive income (loss) attributable to common shareholders $ (13,711) $ (12,522) $ 5,560 $ 2,921 $ 4,041 $ (13,711) |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (In thousands) Three Months Ended March 31, 2020 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (354) $ (8,877) $ 88,395 $ 5,826 $ 84,990 Cash flows from investing activities: Purchases of property, plant and equipment — — (40,923) (1,466) (42,389) Proceeds from sale of assets — — 2,184 3 2,187 Proceeds from sale of investments — — 426 — 426 Net cash used in investing activities — — (38,313) (1,463) (39,776) Cash flows from financing activities: Proceeds from issuance of long-term debt — 10,000 — — 10,000 Payment of finance lease obligation — — (2,641) (33) (2,674) Payment on long-term debt — (46,588) — — (46,588) Repurchase of senior notes — (4,208) — — (4,208) Transactions with affiliates, net 354 51,422 (47,446) (4,330) — Net cash provided by (used in) financing activities 354 10,626 (50,087) (4,363) (43,470) Increase (decrease) in cash and cash equivalents — 1,749 (5) — 1,744 Cash and cash equivalents at beginning of period — 12,387 8 — 12,395 Cash and cash equivalents at end of period $ — $ 14,136 $ 3 $ — $ 14,139 Three Months Ended March 31, 2019 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ (178) $ (9,043) $ 77,551 $ 6,667 $ 74,997 Cash flows from investing activities: Purchases of property, plant and equipment — — (51,617) (1,777) (53,394) Proceeds from sale of assets — — 863 2 865 Proceeds from sale of investments — — 329 — 329 Net cash used in investing activities — — (50,425) (1,775) (52,200) Cash flows from financing activities: Proceeds from issuance of long-term debt — 51,000 — — 51,000 Payment of finance lease obligation — — (3,471) (36) (3,507) Payment on long-term debt — (45,588) — — (45,588) Dividends on common stock (27,577) — — — (27,577) Transactions with affiliates, net 27,755 (1,206) (21,693) (4,856) — Net cash provided by (used in) financing activities 178 4,206 (25,164) (4,892) (25,672) Increase (decrease) in cash and cash equivalents — (4,837) 1,962 — (2,875) Cash and cash equivalents at beginning of period — 9,616 (18) 1 9,599 Cash and cash equivalents at end of period $ — $ 4,779 $ 1,944 $ 1 $ 6,724 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2020USD ($) | Mar. 31, 2020itemstatemi | |
Number of states | state | 23 | |||
Number of fiber route miles | mi | 37,500 | |||
Number of voice connections | 821,000 | |||
Number of data connections | 786,000 | |||
Number of video connections | 83,000 | |||
Forecast | ||||
Deferred payroll taxes | $ | $ 4.2 | |||
Percentage of deferred payroll taxes due | 50.00% | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Activity in the entity's accounts receivable allowance | ||
Balance at beginning of year | $ 4,549 | $ 4,421 |
Provision charged to expense | 2,083 | 2,608 |
Write-offs, less recoveries | (1,814) | (2,233) |
Balance at end of year | 4,962 | $ 4,796 |
Adjustment | ASU 2016-13 | ||
Activity in the entity's accounts receivable allowance | ||
Cumulative adjustment upon adoption of ASU 2016-13 | $ 144 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment to retained earnings | $ (576) | |
ASU 2016-13 | Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative adjustment to retained earnings | $ (100) |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | $ 325,662 | $ 338,649 |
Receivables, contract assets and contract liabilities | ||
Accounts receivable, net | 122,340 | 132,326 |
Contract assets | 19,704 | 13,897 |
Contract liabilities | 52,905 | 55,212 |
Recognized expenses related to deferred contract acquisition costs. | 2,100 | 1,200 |
Recognized revenue related to deferred revenue | $ 111,200 | 94,000 |
Revenue, Practical Expedient, Remaining Performance Obligation | true | |
Minimum | ||
Receivables, contract assets and contract liabilities | ||
Payment term | 30 days | |
Maximum | ||
Receivables, contract assets and contract liabilities | ||
Payment term | 60 days | |
Commercial and carrier | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | $ 147,004 | 151,372 |
Commercial and carrier - Data and transport services (including VoIP) | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 89,572 | 88,126 |
Commercial and carrier - Voice services | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 45,720 | 48,070 |
Commercial and carrier - Other | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 11,712 | 15,176 |
Subsidies | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 18,454 | 18,159 |
Consumer | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 126,383 | 129,700 |
Consumer - Broadband (VoIP and Data) | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 64,076 | 63,085 |
Consumer - Video services | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 19,131 | 20,736 |
Consumer - Voice services | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 43,176 | 45,879 |
Network access | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | 31,465 | 36,591 |
Other products and services | ||
Disaggregation of Revenue [Line Items] | ||
Total operating revenues | $ 2,356 | $ 2,827 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic and diluted earnings per share attributable to common shareholders | ||
Net income (loss) | $ 15,623 | $ (7,186) |
Less: net income attributable to noncontrolling interest | 76 | 79 |
Net income (loss) attributable to common shareholders | 15,547 | (7,265) |
Less: earnings allocated to participating securities | 247 | 457 |
Net income (loss) attributable to common shareholders, after earnings allocated to participating securities | $ 15,300 | $ (7,722) |
Weighted-average number of common shares outstanding | 71,153 | 70,813 |
Basic and diluted earnings (loss) per common share: | ||
Net income (loss) per common share attributable to common shareholders - basic and diluted | $ 0.22 | $ (0.11) |
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 1,100 | 700 |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Investments | |||
Cash distributions received from partnerships treated as investments at cost | $ 5,300 | $ 3,300 | |
Investments | |||
Cash surrender value of life insurance policies | 2,699 | $ 2,474 | |
Total | $ 113,197 | $ 112,717 | |
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 | 8,882 | 8,910 | |
Other | |||
Investments | |||
Investments at cost | $ 273 | $ 298 | |
GTE Mobilnet of Texas RSA #17 Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 20.51% | 20.51% | |
Investments | |||
Equity method investments | $ 20,399 | $ 20,162 | |
Pennsylvania RSA 6(I) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 16.67% | 16.67% | |
Investments | |||
Equity method investments | $ 7,620 | $ 7,658 | |
Pennsylvania RSA 6(II) Limited Partnership | |||
Investments | |||
Ownership percentage of equity method investee | 23.67% | 23.67% | |
Investments | |||
Equity method investments | $ 28,924 | $ 28,815 |
INVESTMENTS - Equity Method (De
INVESTMENTS - Equity Method (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | Dec. 31, 2019item | |
INVESTMENTS | |||
Number of entity's investments which is accounted for using equity method | item | 3 | 3 | |
Cash distributions received from partnerships treated as equity method investees | $ | $ 4.8 | $ 4 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value Measurements | ||
Current interest rate swap liabilities | $ (3,049) | $ (2,565) |
Long-term interest rate swap liabilities | (38,209) | (24,960) |
Total | (41,258) | (27,525) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Current interest rate swap liabilities | (3,049) | (2,565) |
Long-term interest rate swap liabilities | (38,209) | (24,960) |
Total | $ (41,258) | $ (27,525) |
FAIR VALUE MEASUREMENTS - Fin_2
FAIR VALUE MEASUREMENTS - Financial Instruments Not Carried at FV (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Value | ||
Fair Value Measurements | ||
Long-term debt | $ 2,221,567 | $ 2,262,111 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt | $ 1,943,100 | $ 2,125,497 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | Dec. 21, 2016 | Jun. 08, 2015USD ($) | Dec. 31, 2017USD ($) | Oct. 31, 2016USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2020 | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Debt | |||||||||
Total long-term debt and finance leases | $ 2,242,912 | $ 2,286,130 | |||||||
Less: current portion of long-term debt and finance leases | (25,722) | (27,301) | |||||||
Total long-term debt | 2,209,748 | 2,250,677 | |||||||
Less: deferred debt issuance costs | $ (7,442) | (8,152) | |||||||
Leverage ratio | 3 | 4.28 | |||||||
Deferred debt issuance costs | $ 7,442 | 8,152 | |||||||
Dividend declared | $ 27,932 | ||||||||
Interest coverage ratio | 3.74 | ||||||||
Repayments of senior notes | $ 4,208 | ||||||||
Gain on extinguishment of debt | $ 234 | ||||||||
Minimum | |||||||||
Debt | |||||||||
Interest coverage ratio | 2.25 | ||||||||
Maximum | |||||||||
Debt | |||||||||
Leverage ratio for an event of default | 5.25 | ||||||||
Senior Notes 6.50 Percent Due 2022 | |||||||||
Debt | |||||||||
Total long-term debt and finance leases | $ 438,692 | 443,002 | |||||||
Unamortized discount | $ 1,817 | $ 1,998 | |||||||
Aggregate principal amount | $ 300,000 | $ 200,000 | |||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | |||||
Issue price as a percentage of par | 98.26% | ||||||||
Yield to maturity (as a percent) | 6.80% | ||||||||
Gross proceeds | $ 294,800 | $ 200,000 | |||||||
Repayments of senior notes | $ 4,500 | ||||||||
Senior Secured Credit Facility | Weighted average | |||||||||
Debt | |||||||||
Weighted average interest rate (as a percent) | 4.01% | 4.80% | |||||||
Term Loan | |||||||||
Debt | |||||||||
Total long-term debt and finance leases | $ 1,774,875 | $ 1,779,109 | |||||||
Unamortized discount | $ 2,300 | 5,250 | 5,604 | ||||||
Aggregate principal amount | $ 900,000 | ||||||||
Quarterly principal payments required | $ 2,250 | ||||||||
Issue discount (as a percentage) | 0.25% | ||||||||
Term Loan | LIBOR | |||||||||
Debt | |||||||||
Margin (as a percent) | 3.00% | ||||||||
Term Loan | LIBOR | Minimum | |||||||||
Debt | |||||||||
Margin (as a percent) | 1.00% | ||||||||
Senior secured credit facility - revolving loan | |||||||||
Debt | |||||||||
Total long-term debt and finance leases | $ 8,000 | 40,000 | |||||||
Maximum borrowing capacity of credit facility | $ 110,000 | ||||||||
Amounts outstanding | 8,000 | 40,000 | |||||||
Stand-by letter of credit outstanding | 18,600 | ||||||||
Available borrowing capacity | $ 83,400 | ||||||||
Senior secured credit facility - revolving loan | LIBOR | |||||||||
Debt | |||||||||
Amounts outstanding | 30,000 | ||||||||
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 | ||||||||
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% | ||||||||
Finance leases | |||||||||
Debt | |||||||||
Total long-term debt and finance leases | $ 21,345 | $ 24,019 | |||||||
Incremental Term Loan Facility | |||||||||
Debt | |||||||||
Aggregate principal amount | 935,000 | ||||||||
Quarterly principal payments required | $ 2,340 | ||||||||
Issue discount (as a percentage) | 0.50% | ||||||||
Incremental Term Loan Facility | Maximum | |||||||||
Debt | |||||||||
Additional borrowing capacity | $ 300,000 |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Derivatives | |||
Number of swap agreements that provide for the entity or the counterparties to post collateral | item | 0 | ||
Interest rate swaps | |||
Derivatives | |||
Total fair value, derivative asset (liability) | $ (41,258) | $ (27,525) | |
Accrued Expense | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 705,000 | 705,000 | |
Accrued expense | (3,049) | (2,565) | |
Other long-term liabilities | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 500,000 | 500,000 | |
Other long-term liabilities | (27,525) | (18,303) | |
Other long-term liabilities | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Notional amount | 705,000 | 705,000 | |
Other long-term liabilities | $ (10,684) | $ (6,657) | |
Forecast | Cash flow hedges | Forward starting fixed to 1-month floating LIBOR (with floor) | |||
Derivatives | |||
Term of derivative contract | 1 year |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Derivative Instruments | |||
Derivatives | |||
Deferred gain (losses) included in AOCI (pretax) | $ (36,500) | $ (22,500) | |
Loss included in AOCI to be recognized in the next 12 months | (18,800) | ||
Cash flow hedges | |||
Derivatives | |||
Unrealized loss recognized in AOCI, pretax | (16,152) | $ (9,053) | |
Deferred (loss) gain reclassified from AOCI to interest expense | $ (2,175) | $ 280 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 18, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 |
Stock-based compensation plans | ||||
Dividends declared per common share (in dollars per share) | $ 0.38738 | $ 0.39 | $ 0.38738 | |
Shares of common stock authorized for issuance | 4,650,000 | |||
Unrecognized share-based compensation | ||||
Unrecognized compensation cost | $ 17.7 | |||
Weighted-average period of recognition | 1 year 9 months 18 days | |||
Maximum | ||||
Stock-based compensation plans | ||||
Shares that may be granted in the form of stock options or stock appreciation rights to any eligible employee or director in any calendar year | 300,000 | |||
Restricted stock | ||||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 532,445 | |||
Shares granted | 847,809 | |||
Shares forfeited, cancelled or retired | (4,579) | |||
Non-vested shares outstanding at the end of the period | 1,375,675 | |||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 11.58 | |||
Shares granted (in dollars per share) | 6.31 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 11.29 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 8.21 | |||
Performance shares | ||||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 275,995 | |||
Shares granted | 240,669 | |||
Shares forfeited, cancelled or retired | (3,162) | |||
Non-vested shares outstanding at the end of the period | 513,502 | |||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 13.29 | |||
Shares granted (in dollars per share) | 9.86 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 12.62 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 11.40 |
EQUITY - Compensation costs (De
EQUITY - Compensation costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-based compensation plans | ||
Stock-based compensation expense | $ 890 | $ 1,498 |
Restricted stock | ||
Stock-based compensation plans | ||
Stock-based compensation expense | 848 | 927 |
Performance shares | ||
Stock-based compensation plans | ||
Stock-based compensation expense | $ 42 | $ 571 |
EQUITY - Changes in AOCI (Detai
EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accumulated other comprehensive loss, net of tax, by component | ||
Balance at the beginning of the period | $ (80,868) | |
Other comprehensive loss before reclassifications | (11,944) | |
Cumulative adjustment upon adoption of ASU 2017-12 | $ (576) | |
Amounts reclassified from accumulated other comprehensive loss | 1,944 | |
Net current period other comprehensive income (loss) | (10,000) | $ (6,446) |
Balance at the end of the period | (90,868) | |
Pension and Post-Retirement Obligations | ||
Accumulated other comprehensive loss, net of tax, by component | ||
Balance at the beginning of the period | (64,316) | |
Amounts reclassified from accumulated other comprehensive loss | 336 | |
Net current period other comprehensive income (loss) | 336 | |
Balance at the end of the period | (63,980) | |
Derivative Instruments | ||
Accumulated other comprehensive loss, net of tax, by component | ||
Balance at the beginning of the period | (16,552) | |
Other comprehensive loss before reclassifications | (11,944) | |
Amounts reclassified from accumulated other comprehensive loss | 1,608 | |
Net current period other comprehensive income (loss) | (10,336) | |
Balance at the end of the period | $ (26,888) |
EQUITY - Reclassification from
EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
EQUITY | ||
Income (loss) before income taxes | $ 20,664 | $ (10,331) |
Interest expense | (32,095) | (34,283) |
Tax benefit | (5,041) | 3,145 |
Net income (loss) | 15,623 | (7,186) |
Pension and Post-Retirement Obligations | ||
EQUITY | ||
Prior service (cost) credit | (442) | (798) |
Actuarial loss | (12) | (595) |
Income (loss) before income taxes | (454) | (1,393) |
Tax benefit | 118 | 367 |
Net income (loss) | (336) | (1,026) |
Derivative Instruments | ||
EQUITY | ||
Interest expense | (2,175) | 280 |
Tax benefit | 567 | (73) |
Net income (loss) | $ (1,608) | $ 207 |
PENSION PLANS AND OTHER POST-_3
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of net periodic pension cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Defined Benefit Plans | ||
Components of net periodic pension costs | ||
Service cost | $ 11 | |
Interest cost | $ 6,520 | 7,661 |
Expected return on plan assets | (8,645) | (8,671) |
Net amortization loss (gain) | 311 | 703 |
Net prior service cost amortization | 30 | 30 |
Net periodic pension cost (benefit) | (1,784) | (266) |
Post-retirement Benefit Obligations | ||
Components of net periodic pension costs | ||
Service cost | 258 | 117 |
Interest cost | 884 | 1,144 |
Expected return on plan assets | (46) | (43) |
Net amortization loss (gain) | (299) | (108) |
Net prior service cost amortization | 412 | 768 |
Net periodic pension cost (benefit) | $ 1,209 | $ 1,878 |
PENSION PLANS AND OTHER POST-_4
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Contributions (Details) | Apr. 15, 2020USD ($) | Mar. 31, 2020USD ($)itememployee |
Defined Benefit Plans | ||
Defined benefit plans | ||
New benefits accrued | $ 0 | |
Expected contribution to pension plan | 24,000,000 | |
Employer contributions | $ 5,800,000 | |
Post-retirement Benefit Obligations | ||
Defined benefit plans | ||
Number of persons eligible to become a new participant | employee | 0 | |
Assets in unfunded plans | $ 0 | |
Expected contribution to pension plan | 8,900,000 | |
Employer contributions | $ 2,200,000 | |
Supplemental Plans | ||
Defined benefit plans | ||
Number of persons eligible to become a new participant | item | 0 | |
Assets in unfunded plans | $ 0 | |
Forecast | Defined Benefit Plans | ||
Defined benefit plans | ||
Employer contributions | $ 4,400,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
INCOME TAXES | |||
Unrecognized tax benefits | $ 4.9 | $ 4.9 | |
Unrecognized tax benefits that would impact effective tax rate | $ 4.7 | $ 4.7 | |
Effective tax rate (as a percent) | 24.40% | 30.40% |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Litigation (Details) $ in Thousands | Aug. 15, 2018USD ($) | Jul. 17, 2018USD ($) | Mar. 31, 2020USD ($)itemsubsidiary | Mar. 31, 2019USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Mar. 31, 2020USD ($) | May 31, 2017USD ($) |
Litigation and Contingencies | ||||||||
Revenue recorded | $ 325,662 | $ 338,649 | ||||||
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 | |||||||
FairPoint Communications, Inc | Level 3 Communications | ||||||||
Litigation and Contingencies | ||||||||
Amount awarded | $ 1,200 | |||||||
Subsidies | ||||||||
Litigation and Contingencies | ||||||||
Revenue recorded | $ 18,454 | $ 18,159 | ||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Maximum | ||||||||
Litigation and Contingencies | ||||||||
Potential liability amount guaranteed | $ 5,000 | |||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Consolidated Communications Enterprise Services Inc. (CCES) | ||||||||
Litigation and Contingencies | ||||||||
Total additional tax liability calculated by the auditors | $ 6,100 | |||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Consolidated Communications of Pennsylvania Company LLC (CCPA) | ||||||||
Litigation and Contingencies | ||||||||
Total additional tax liability calculated by the auditors | $ 7,400 |
CONDENSED CONSOLIDATING FINAN_3
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Current assets: | ||||
Cash and cash equivalents | $ 14,139 | $ 12,395 | ||
Accounts receivable, net | 122,340 | 120,016 | ||
Income taxes receivable | 4,174 | 2,669 | ||
Prepaid expenses and other current assets | 45,175 | 41,787 | ||
Total current assets | 185,828 | 176,867 | ||
Property, plant and equipment, net | 1,806,945 | 1,835,878 | ||
Intangibles and other assets: | ||||
Investments | 113,197 | 112,717 | ||
Goodwill | 1,035,274 | 1,035,274 | ||
Customer relationships, net | 151,407 | 164,069 | ||
Other intangible assets | 10,557 | 10,557 | ||
Other assets | 51,925 | 54,915 | ||
Total assets | 3,355,133 | 3,390,277 | ||
Current liabilities: | ||||
Accounts payable | 19,902 | 30,936 | ||
Advance billings and customer deposits | 47,224 | 45,710 | ||
Accrued compensation | 56,105 | 57,069 | ||
Accrued interest | 14,945 | 7,874 | ||
Accrued expense | 73,776 | 75,406 | ||
Current portion of long term debt and finance lease obligations | 25,722 | 27,301 | ||
Total current liabilities | 237,674 | 244,296 | ||
Long-term debt and finance lease obligations | 2,209,748 | 2,250,677 | ||
Deferred income taxes | 174,489 | 173,027 | ||
Pension and postretirement benefit obligations | 293,145 | 302,296 | ||
Other long-term liabilities | 86,418 | 72,730 | ||
Total liabilities | 3,001,474 | 3,043,026 | ||
Shareholders' equity: | ||||
Common Stock | 731 | 720 | ||
Other shareholders' equity | 346,482 | 340,161 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 347,213 | 340,881 | ||
Noncontrolling interest | 6,446 | 6,370 | ||
Total shareholders' equity | 353,659 | 347,251 | $ 376,164 | $ 415,654 |
Total liabilities and shareholders' equity | 3,355,133 | 3,390,277 | ||
Eliminations | ||||
Current assets: | ||||
Income taxes receivable | (8,441) | |||
Prepaid expenses and other current assets | (89) | |||
Total current assets | (8,530) | |||
Intangibles and other assets: | ||||
Investments in subsidiaries | (7,120,461) | (7,084,977) | ||
Advances due to/from affiliates, net | (3,296,654) | (3,296,300) | ||
Deferred income taxes | (90,727) | (92,108) | ||
Total assets | (10,516,372) | (10,473,385) | ||
Current liabilities: | ||||
Accrued expense | (89) | |||
Income tax payable | (8,441) | |||
Total current liabilities | (8,530) | |||
Advances due to/from affiliates, net | (3,296,654) | (3,296,300) | ||
Deferred income taxes | (90,727) | (92,108) | ||
Total liabilities | (3,395,911) | (3,388,408) | ||
Shareholders' equity: | ||||
Common Stock | (47,411) | (47,411) | ||
Other shareholders' equity | (7,073,050) | (7,037,566) | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | (7,120,461) | (7,084,977) | ||
Total shareholders' equity | (7,120,461) | (7,084,977) | ||
Total liabilities and shareholders' equity | (10,516,372) | (10,473,385) | ||
Parent | Reportable legal entity | ||||
Current assets: | ||||
Income taxes receivable | 8,609 | 1,812 | ||
Prepaid expenses and other current assets | 89 | |||
Total current assets | 8,698 | 1,812 | ||
Intangibles and other assets: | ||||
Investments in subsidiaries | 3,553,744 | 3,547,466 | ||
Deferred income taxes | 81,425 | 86,447 | ||
Other assets | 1,506 | |||
Total assets | 3,643,867 | 3,637,231 | ||
Current liabilities: | ||||
Accrued expense | 50 | |||
Total current liabilities | 50 | |||
Advances due to/from affiliates, net | 3,296,654 | 3,296,300 | ||
Total liabilities | 3,296,654 | 3,296,350 | ||
Shareholders' equity: | ||||
Common Stock | 731 | 720 | ||
Other shareholders' equity | 346,482 | 340,161 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 347,213 | 340,881 | ||
Total shareholders' equity | 347,213 | 340,881 | ||
Total liabilities and shareholders' equity | 3,643,867 | 3,637,231 | ||
Subsidiary Issuer | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 14,136 | 12,387 | ||
Accounts receivable, net | 76 | 78 | ||
Income taxes receivable | 4,006 | |||
Total current assets | 18,218 | 12,465 | ||
Intangibles and other assets: | ||||
Investments | 9,064 | 8,863 | ||
Investments in subsidiaries | 3,549,345 | 3,520,346 | ||
Advances due to/from affiliates, net | 2,238,012 | 2,289,433 | ||
Deferred income taxes | 9,302 | 5,661 | ||
Total assets | 5,823,941 | 5,836,768 | ||
Current liabilities: | ||||
Accrued interest | 14,518 | 7,523 | ||
Accrued expense | 3,050 | 2,565 | ||
Current portion of long term debt and finance lease obligations | 18,350 | 18,350 | ||
Total current liabilities | 35,918 | 28,438 | ||
Long-term debt and finance lease obligations | 2,195,775 | 2,235,609 | ||
Other long-term liabilities | 38,504 | 25,255 | ||
Total liabilities | 2,270,197 | 2,289,302 | ||
Shareholders' equity: | ||||
Other shareholders' equity | 3,553,744 | 3,547,466 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,553,744 | 3,547,466 | ||
Total shareholders' equity | 3,553,744 | 3,547,466 | ||
Total liabilities and shareholders' equity | $ 5,823,941 | 5,836,768 | ||
Guarantors | ||||
Condensed Consolidating Balance Sheet | ||||
Ownership interest (as a percent) | 100.00% | |||
Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | $ 3 | 8 | ||
Accounts receivable, net | 115,840 | 112,415 | ||
Income taxes receivable | 791 | |||
Prepaid expenses and other current assets | 44,995 | 41,431 | ||
Total current assets | 160,838 | 154,645 | ||
Property, plant and equipment, net | 1,742,114 | 1,770,187 | ||
Intangibles and other assets: | ||||
Investments | 104,133 | 103,854 | ||
Investments in subsidiaries | 17,372 | 17,165 | ||
Goodwill | 969,093 | 969,093 | ||
Customer relationships, net | 151,407 | 164,069 | ||
Other intangible assets | 1,470 | 1,470 | ||
Advances due to/from affiliates, net | 940,841 | 893,394 | ||
Other assets | 51,449 | 52,887 | ||
Total assets | 4,138,717 | 4,126,764 | ||
Current liabilities: | ||||
Accounts payable | 19,902 | 30,936 | ||
Advance billings and customer deposits | 45,890 | 44,436 | ||
Accrued compensation | 55,288 | 56,356 | ||
Accrued interest | 427 | 351 | ||
Accrued expense | 69,609 | 71,659 | ||
Income tax payable | 7,636 | |||
Current portion of long term debt and finance lease obligations | 7,223 | 8,808 | ||
Total current liabilities | 205,975 | 212,546 | ||
Long-term debt and finance lease obligations | 13,946 | 15,001 | ||
Deferred income taxes | 241,061 | 240,983 | ||
Pension and postretirement benefit obligations | 278,279 | 285,832 | ||
Other long-term liabilities | 47,130 | 46,656 | ||
Total liabilities | 786,391 | 801,018 | ||
Shareholders' equity: | ||||
Common Stock | 17,411 | 17,411 | ||
Other shareholders' equity | 3,328,469 | 3,301,965 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 3,345,880 | 3,319,376 | ||
Noncontrolling interest | 6,446 | 6,370 | ||
Total shareholders' equity | 3,352,326 | 3,325,746 | ||
Total liabilities and shareholders' equity | 4,138,717 | 4,126,764 | ||
Non-Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Accounts receivable, net | 6,424 | 7,523 | ||
Income taxes receivable | 66 | |||
Prepaid expenses and other current assets | 180 | 356 | ||
Total current assets | 6,604 | 7,945 | ||
Property, plant and equipment, net | 64,831 | 65,691 | ||
Intangibles and other assets: | ||||
Goodwill | 66,181 | 66,181 | ||
Other intangible assets | 9,087 | 9,087 | ||
Advances due to/from affiliates, net | 117,801 | 113,473 | ||
Other assets | 476 | 522 | ||
Total assets | 264,980 | 262,899 | ||
Current liabilities: | ||||
Advance billings and customer deposits | 1,334 | 1,274 | ||
Accrued compensation | 817 | 713 | ||
Accrued expense | 1,206 | 1,132 | ||
Income tax payable | 805 | |||
Current portion of long term debt and finance lease obligations | 149 | 143 | ||
Total current liabilities | 4,311 | 3,262 | ||
Long-term debt and finance lease obligations | 27 | 67 | ||
Deferred income taxes | 24,155 | 24,152 | ||
Pension and postretirement benefit obligations | 14,866 | 16,464 | ||
Other long-term liabilities | 784 | 819 | ||
Total liabilities | 44,143 | 44,764 | ||
Shareholders' equity: | ||||
Common Stock | 30,000 | 30,000 | ||
Other shareholders' equity | 190,837 | 188,135 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 220,837 | 218,135 | ||
Total shareholders' equity | 220,837 | 218,135 | ||
Total liabilities and shareholders' equity | $ 264,980 | $ 262,899 |
CONDENSED CONSOLIDATING FINAN_4
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||
Net revenues | $ 325,662 | $ 338,649 |
Operating expenses: | ||
Cost of services and products (exclusive of depreciation and amortization) | 137,755 | 148,319 |
Selling, general and administrative expenses | 67,817 | 74,367 |
Depreciation and amortization | 82,738 | 99,243 |
Income from operations | 37,352 | 16,720 |
Other income (expense): | ||
Interest expense, net of interest income | (32,095) | (34,283) |
Gain on extinguishment of debt | 234 | |
Investment income | 10,579 | 8,601 |
Other, net | 4,594 | (1,369) |
Income (loss) before income taxes | 20,664 | (10,331) |
Income tax expense (benefit) | 5,041 | (3,145) |
Net income (loss) | 15,623 | (7,186) |
Less: net income (loss) attributable to noncontrolling interest | 76 | 79 |
Net income (loss) attributable to common shareholders | 15,547 | (7,265) |
Total comprehensive income (loss) attributable to common shareholders | 5,547 | (13,711) |
Eliminations | ||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||
Net revenues | (3,054) | (3,098) |
Operating expenses: | ||
Cost of services and products (exclusive of depreciation and amortization) | (2,948) | (2,988) |
Selling, general and administrative expenses | (106) | (110) |
Other income (expense): | ||
Equity in earnings of subsidiaries, net | (45,359) | (1,379) |
Income (loss) before income taxes | (45,359) | (1,379) |
Net income (loss) | (45,359) | (1,379) |
Net income (loss) attributable to common shareholders | (45,359) | (1,379) |
Total comprehensive income (loss) attributable to common shareholders | (35,695) | 4,041 |
Parent | Reportable legal entity | ||
Operating expenses: | ||
Selling, general and administrative expenses | 1,078 | 1,655 |
Income from operations | (1,078) | (1,655) |
Other income (expense): | ||
Interest expense, net of interest income | (25) | (28) |
Equity in earnings of subsidiaries, net | 16,383 | (6,076) |
Other, net | (3) | |
Income (loss) before income taxes | 15,280 | (7,762) |
Income tax expense (benefit) | (267) | (497) |
Net income (loss) | 15,547 | (7,265) |
Net income (loss) attributable to common shareholders | 15,547 | (7,265) |
Total comprehensive income (loss) attributable to common shareholders | 5,547 | (13,711) |
Subsidiary Issuer | Reportable legal entity | ||
Operating expenses: | ||
Selling, general and administrative expenses | (193) | |
Income from operations | 193 | |
Other income (expense): | ||
Interest expense, net of interest income | (31,554) | (34,088) |
Intercompany interest income (expense) | 14,727 | 14,727 |
Gain on extinguishment of debt | 234 | |
Investment income | 202 | 190 |
Equity in earnings of subsidiaries, net | 28,769 | 7,242 |
Other, net | 56 | |
Income (loss) before income taxes | 12,378 | (11,680) |
Income tax expense (benefit) | (4,005) | (5,604) |
Net income (loss) | 16,383 | (6,076) |
Net income (loss) attributable to common shareholders | 16,383 | (6,076) |
Total comprehensive income (loss) attributable to common shareholders | 6,383 | (12,522) |
Guarantors | Reportable legal entity | ||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||
Net revenues | 317,054 | 329,278 |
Operating expenses: | ||
Cost of services and products (exclusive of depreciation and amortization) | 137,034 | 147,801 |
Selling, general and administrative expenses | 64,846 | 70,600 |
Depreciation and amortization | 80,258 | 96,781 |
Income from operations | 34,916 | 14,096 |
Other income (expense): | ||
Interest expense, net of interest income | (526) | (167) |
Intercompany interest income (expense) | (14,711) | (14,708) |
Investment income | 10,377 | 8,411 |
Equity in earnings of subsidiaries, net | 207 | 213 |
Other, net | 4,538 | (1,408) |
Income (loss) before income taxes | 34,801 | 6,437 |
Income tax expense (benefit) | 8,442 | 1,756 |
Net income (loss) | 26,359 | 4,681 |
Less: net income (loss) attributable to noncontrolling interest | 76 | 79 |
Net income (loss) attributable to common shareholders | 26,283 | 4,602 |
Total comprehensive income (loss) attributable to common shareholders | 26,610 | 5,560 |
Non-Guarantors | Reportable legal entity | ||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||
Net revenues | 11,662 | 12,469 |
Operating expenses: | ||
Cost of services and products (exclusive of depreciation and amortization) | 3,669 | 3,506 |
Selling, general and administrative expenses | 1,999 | 2,415 |
Depreciation and amortization | 2,480 | 2,462 |
Income from operations | 3,514 | 4,086 |
Other income (expense): | ||
Interest expense, net of interest income | 10 | |
Intercompany interest income (expense) | (16) | (19) |
Other, net | 56 | (14) |
Income (loss) before income taxes | 3,564 | 4,053 |
Income tax expense (benefit) | 871 | 1,200 |
Net income (loss) | 2,693 | 2,853 |
Net income (loss) attributable to common shareholders | 2,693 | 2,853 |
Total comprehensive income (loss) attributable to common shareholders | $ 2,702 | $ 2,921 |
CONDENSED CONSOLIDATING FINAN_5
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net cash (used in) provided by operating activities | $ 84,990 | $ 74,997 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (42,389) | (53,394) |
Proceeds from sale of assets | 2,187 | 865 |
Distributions from investments | 426 | 329 |
Net cash used in investing activities | (39,776) | (52,200) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 10,000 | 51,000 |
Payment of finance lease obligations | (2,674) | (3,507) |
Payment on long-term debt | (46,588) | (45,588) |
Repurchase of senior notes | (4,208) | |
Dividends on common stock | (27,577) | |
Net cash used in financing activities | (43,470) | (25,672) |
Change in cash and cash equivalents | 1,744 | (2,875) |
Cash and cash equivalents at beginning of period | 12,395 | 9,599 |
Cash and cash equivalents at end of period | 14,139 | 6,724 |
Parent | ||
Cash flows from operating activities: | ||
Net cash (used in) provided by operating activities | (354) | (178) |
Cash flows from financing activities: | ||
Dividends on common stock | (27,577) | |
Transactions with affiliates, net | 354 | 27,755 |
Net cash used in financing activities | 354 | 178 |
Subsidiary Issuer | ||
Cash flows from operating activities: | ||
Net cash (used in) provided by operating activities | (8,877) | (9,043) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 10,000 | 51,000 |
Payment on long-term debt | (46,588) | (45,588) |
Repurchase of senior notes | (4,208) | |
Transactions with affiliates, net | 51,422 | (1,206) |
Net cash used in financing activities | 10,626 | 4,206 |
Change in cash and cash equivalents | 1,749 | (4,837) |
Cash and cash equivalents at beginning of period | 12,387 | 9,616 |
Cash and cash equivalents at end of period | 14,136 | 4,779 |
Guarantors | ||
Cash flows from operating activities: | ||
Net cash (used in) provided by operating activities | 88,395 | 77,551 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (40,923) | (51,617) |
Proceeds from sale of assets | 2,184 | 863 |
Distributions from investments | 426 | 329 |
Net cash used in investing activities | (38,313) | (50,425) |
Cash flows from financing activities: | ||
Payment of finance lease obligations | (2,641) | (3,471) |
Transactions with affiliates, net | (47,446) | (21,693) |
Net cash used in financing activities | (50,087) | (25,164) |
Change in cash and cash equivalents | (5) | 1,962 |
Cash and cash equivalents at beginning of period | 8 | (18) |
Cash and cash equivalents at end of period | 3 | 1,944 |
Non-Guarantors | ||
Cash flows from operating activities: | ||
Net cash (used in) provided by operating activities | 5,826 | 6,667 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (1,466) | (1,777) |
Proceeds from sale of assets | 3 | 2 |
Net cash used in investing activities | (1,463) | (1,775) |
Cash flows from financing activities: | ||
Payment of finance lease obligations | (33) | (36) |
Transactions with affiliates, net | (4,330) | (4,856) |
Net cash used in financing activities | $ (4,363) | (4,892) |
Cash and cash equivalents at beginning of period | 1 | |
Cash and cash equivalents at end of period | $ 1 |