UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-36863

Cable One, Inc.

(Exact name of registrant as specified in its charter)

Delaware		13-3060083
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

210 E. Earll Drive, Phoenix, Arizona		85012
(Address of Principal Executive Offices)		(Zip Code)

(602) 364-6000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, par value $0.01		CABO		New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

Description of Class	Shares Outstanding as of ~~August 4, 2021~~July 29, 2022
Common stock, par value $0.01	~~6,038,066~~5,879,342

Table of Contents

CABLE ONE, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION		1

Item 1.	Condensed Consolidated Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4037

Item 4.	Controls and Procedures	4037

PART II: OTHER INFORMATION		4138

Item 1.	Legal Proceedings	4138

Item 1A.	Risk Factors	4138

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4338

Item 3.	Defaults Upon Senior Securities	4338

Item 4.	Mine Safety Disclosures	4338

Item 5.	Other Information	4338

Item 6.	Exhibits	4439

SIGNATURES		4540

References herein to “Cable One,” “us,” “our,” “we” or the “Company” refer to Cable One, Inc., together with its wholly owned subsidiaries.

Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business, strategy, acquisitions and strategic investments, dividend policy, financial results and financial ~~condition as well as anticipated impacts from, and our responses to, the COVID-19 pandemic.~~condition. Forward-looking statements often include words such as “will,” “should,” “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Important factors that could cause our actual results to differ materially from those in our forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors, which are discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 Form 10-K”) ~~and this Quarterly Report on Form 10-Q:~~:

●

the duration and severity of the COVID-19 pandemic and its effects on our business, financial condition, results of operations and cash flows;

●

rising levels of competition from historical and new entrants in our markets;

●

recent and future changes in technology;

●

our ability to continue to grow our business services products;

●

increases in programming costs and retransmission fees;

●

our ability to obtain hardware, software and operational support from vendors;

●

risks that we may fail to realize the benefits anticipated as a result of our purchase of the remaining interests in Hargray Acquisition Holdings, LLC (“Hargray”) that we did not already own (the “Hargray Acquisition”);

●

risks relating to existing or future acquisitions and strategic investments by us;

●

risks that the implementation of our new enterprise resource planning ~~(“ERP”)~~ system disrupts business operations;

●

the integrity and security of our network and information systems;

●

the impact of possible security breaches and other disruptions, including cyber-attacks;

●

our failure to obtain necessary intellectual and proprietary rights to operate our business and the risk of intellectual property claims and litigation against us;

●

legislative or regulatory efforts to impose network neutrality and other new requirements on our data services;

●

additional regulation of our video and voice services;

●

our ability to renew cable system franchises;

●

increases in pole attachment costs;

●

changes in local governmental franchising authority and broadcast carriage regulations;

●

the potential adverse effect of our level of indebtedness on our business, financial condition or results of operations and cash flows;

●

the restrictions the terms of our indebtedness place on our business and corporate actions;

	●	the possibility that interest rates will continue to rise, causing our obligations to service our variable rate indebtedness to increase significantly;
	●	the transition away from the London Interbank Offered Rate ("LIBOR") and the adoption of alternative reference rates;

●

risks associated with our convertible indebtedness;

●

our ability to continue to pay dividends;

●

provisions in our charter, by-laws and Delaware law that could discourage takeovers and limit the judicial forum for certain disputes;

	●	adverse economic ~~conditions;~~conditions, labor shortages, supply chain disruptions and changes in rates of inflation;
	●	lower demand for our residential data and business services;

●

fluctuations in our stock price;

●

dilution from equity awards, convertible indebtedness and potential future convertible debt and stock issuances;

●

damage to our reputation or brand image;

●

our ability to retain key employees (whom we refer to as associates);

●

our ability to incur future indebtedness;

●

provisions in our charter that could limit the liabilities for directors; and

●

the other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), including but not limited to those described under "Risk Factors" in our ~~2020~~2021 Form ~~10-K and this Quarterly Report on Form 10-Q.~~10-K.

Any forward-looking statements made by us in this document speak only as of the date on which they are made. We are under no obligation, and expressly disclaim any obligation, except as required by law, to update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

Table of Contents

PART I: FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CABLE ONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(dollars in thousands, except par values)	June 30, 2021			December 31, 2020			*June 30, 2022*			*December 31, 2021*
Assets
Current Assets:
Cash and cash equivalents	$	448,965		$	574,909		$	279,978		$	388,802
Accounts receivable, net		55,185			38,768			63,073			56,253
Income taxes receivable		17,027			41,245			13,659			24,193
Prepaid and other current assets		33,031			17,891			39,311			31,705
Total Current Assets		554,208			672,813			396,021			500,953
Equity investments		697,527			807,781			1,185,518			727,565
Property, plant and equipment, net		1,753,563			1,265,460			1,631,251			1,854,104
Intangible assets, net		2,840,700			1,278,198			2,708,895			2,861,137
Goodwill		944,871			430,543			928,947			967,913
Other noncurrent assets		39,133			33,543			44,444			42,322
Total Assets	$	6,830,002		$	4,488,338		$	6,895,076		$	6,953,994

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	240,592		$	174,139		$	164,780		$	203,387
Deferred revenue		23,572			21,051			23,113			26,851
Current portion of long-term debt		34,524			26,392			47,374			38,837
Total Current Liabilities		298,688			221,582			235,267			269,075
Long-term debt		3,816,150			2,148,798			3,778,181			3,799,500
Deferred income taxes		806,630			366,675			915,494			854,156
Interest rate swap liability		102,875			155,357			0			81,627
Other noncurrent liabilities		124,814			100,627			60,630			156,541
Total Liabilities		5,149,157			2,993,039			4,989,572			5,160,899

Commitments and contingencies (refer to note 15)
Commitments and contingencies (refer to note 16)

Stockholders' Equity
Preferred stock ($0.01 par value; 4,000,000 shares authorized; none issued or outstanding)		0			0			0			0
Common stock ($0.01 par value; 40,000,000 shares authorized; 6,175,399 shares issued; and 6,036,582 and 6,027,704 shares outstanding as of June 30, 2021 and December 31, 2020, respectively)		62			62
Common stock ($0.01 par value; 40,000,000 shares authorized; 6,175,399 shares issued; and 5,916,571 and 6,046,362 shares outstanding as of June 30, 2022 and December 31, 2021, respectively)								62			62
Additional paid-in capital		544,992			535,586			566,796			555,640
Retained earnings		1,372,724			1,228,172			1,664,176			1,456,543
Accumulated other comprehensive loss		(101,237	)		(140,683	)
Treasury stock, at cost (138,817 and 147,695 shares held as of June 30, 2021 and December 31, 2020, respectively)		(135,696	)		(127,838	)
Accumulated other comprehensive income (loss)								7,255			(82,795	)
Treasury stock, at cost (258,828 and 129,037 shares held as of June 30, 2022 and December 31, 2021, respectively)								(332,785	)		(136,355	)
Total Stockholders' Equity		1,680,845			1,495,299			1,905,504			1,793,095
Total Liabilities and Stockholders' Equity	$	6,830,002		$	4,488,338		$	6,895,076		$	6,953,994

See accompanying notes to the condensed consolidated financial statements.

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CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Six Months Ended						*Three Months Ended*						*Six Months Ended*
	June 30, 2021						June 30,						*June 30,*						*June 30,*
(dollars in thousands, except per share data)	2021			2020			2021			2020			*2022*			*2021*			*2022*			*2021*
Revenues	$	401,749		$	328,303		$	743,011		$	649,499		$	429,085		$	401,749		$	855,811		$	743,011
Costs and Expenses:
Operating (excluding depreciation and amortization)		112,350			106,028			213,814			211,956			118,393			112,350			237,812			213,814
Selling, general and administrative		88,017			64,994			157,059			127,878			90,787			88,017			178,553			157,059
Depreciation and amortization		84,915			65,584			153,445			130,863			88,423			84,915			176,343			153,445
(Gain) loss on asset sales and disposals, net		1,058			988			938			(4,633	)		2,173			1,058			4,663			938
(Gain) loss on sales of businesses														8,253			0			(13,833	)		0
Total Costs and Expenses		286,340			237,594			525,256			466,064			308,029			286,340			583,538			525,256
Income from operations		115,409			90,709			217,755			183,435			121,056			115,409			272,273			217,755
Interest expense		(28,947	)		(16,615	)		(52,528	)		(35,289	)		(32,080	)		(28,947	)		(62,160	)		(52,528	)
Other income (expense), net		12,149			1,655			20,249			3,389			8,066			12,149			96,126			20,249
Income before income taxes and equity method investment income (loss), net		98,611			75,749			185,476			151,535			97,042			98,611			306,239			185,476
Income tax provision (benefit)		(8,616	)		13,209			9,099			19,669			22,773			(8,616	)		64,274			9,099
Income before equity method investment income (loss), net		107,227			62,540			176,377			131,866			74,269			107,227			241,965			176,377
Equity method investment income (loss), net		(1,074	)		0			(1,642	)		0			(5,024	)		(1,074	)		(1,244	)		(1,642	)
Net income	$	106,153		$	62,540		$	174,735		$	131,866		$	69,245		$	106,153		$	240,721		$	174,735

Net Income per Common Share:
Basic	$	17.65		$	10.72		$	29.06		$	22.87		$	11.64		$	17.65		$	40.24		$	29.06
Diluted	$	16.68		$	10.63		$	28.00		$	22.66		$	11.11		$	16.68		$	38.05		$	28.00
Weighted Average Common Shares Outstanding:
Basic		6,014,351			5,831,796			6,013,382			5,764,850			5,946,507			6,014,351			5,982,494			6,013,382
Diluted		6,455,817			5,883,417			6,312,843			5,819,633			6,369,649			6,455,817			6,407,106			6,312,843

Unrealized gain (loss) on cash flow hedges and other, net of tax	$	(16,021	)	$	(9,459	)	$	39,446		$	(94,084	)	$	32,646		$	(16,021	)	$	90,050		$	39,446
Comprehensive income	$	90,132		$	53,081		$	214,181		$	37,782		$	101,891		$	90,132		$	330,771		$	214,181

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

						Additional					Accumulated Other			Treasury			Total								*Additional*					*Accumulated Other*			*Treasury*			*Total*
	Common Stock					Paid-In		Retained			Comprehensive			Stock,			Stockholders’			*Common Stock*					*Paid-In*		*Retained*			*Comprehensive*			*Stock,*			*Stockholders’*
(dollars in thousands, except per share data)	Shares			Amount		Capital		Earnings			Loss			at cost			Equity			*Shares*			*Amount*		*Capital*		*Earnings*			*Gain (Loss)*			*at cost*			*Equity*
Balance at March 31, 2021		6,034,609		$	62	$	539,713	$	1,281,667		$	(85,216	)	$	(135,579	)	$	1,600,647
Balance at March 31, 2022																					6,011,790		$	62	$	560,845	$	1,611,357		$	(25,391	)	$	(210,726	)	$	1,936,147
Net income		-			0		0		106,153			0			0			106,153			-			-		-		69,245			-			-			69,245
Unrealized gain (loss) on cash flow hedges and other, net of tax		-			0		0		0			(16,021	)		0			(16,021	)
Unrealized gain on cash flow hedges and other, net of tax																					-			-		-		-			32,646			-			32,646
Equity-based compensation		-			0		5,279		0			0			0			5,279			-			-		5,951		-			-			-			5,951
Issuance of equity awards, net of forfeitures		2,037			0		0		0			0			0			0			647			0		0		0			0			0			0
Repurchases of common stock																					(95,837	)		0		0		0			0			(122,013	)		(122,013	)
Withholding tax for equity awards		(64	)		0		0		0			0			(117	)		(117	)		(29	)		-		-		-			-			(46	)		(46	)
Dividends paid to stockholders ($2.50 per common share)		-			0		0		(15,096	)		0			0			(15,096	)
Balance at June 30, 2021		6,036,582		$	62	$	544,992	$	1,372,724		$	(101,237	)	$	(135,696	)	$	1,680,845
Dividends paid to stockholders ($2.75 per common share)																					-			-		-		(16,426	)		-			-			(16,426	)
Balance at June 30, 2022																					5,916,571		$	62	$	566,796	$	1,664,176		$	7,255		$	(332,785	)	$	1,905,504

Additional
Accumulated Other
Treasury

Total

Common Stock

Paid-In

Retained
Comprehensive
Stock,

Stockholders’

(dollars in thousands, except per share data)

Shares

Amount

Capital

Earnings
Loss
at cost

Equity

Balance at March 31, 2020
5,724,857 $ 59 $ 54,419 $ 1,036,877 $ (152,783 ) $ (127,681 ) $ 810,891
Net income
- 0 0 62,540 0 0 62,540
Unrealized gain (loss) on cash flow hedges and other, net of tax
- 0 0 0 (9,459 ) 0 (9,459 )
Equity-based compensation
- 0 3,426 0 0 0 3,426
Issuance of common stock
287,500 3 469,796 0 0 0 469,799
Issuance of equity awards, net of forfeitures
7,494 0 0 0 0 0 0
Withholding tax for equity awards
(17 ) 0 0 0 0 (27 ) (27 )
Dividends paid to stockholders ($2.25 per common share)
- 0 0 (13,624 ) 0 0 (13,624 )
Balance at June 30, 2020
6,019,834 $ 62 $ 527,641 $ 1,085,793 $ (162,242 ) $ (127,708 ) $ 1,323,546

						Additional					Accumulated Other			Treasury			Total								*Additional*					*Accumulated Other*			*Treasury*			*Total*
	Common Stock					Paid-In		Retained			Comprehensive			Stock,			Stockholders’			*Common Stock*					*Paid-In*		*Retained*			*Comprehensive*			*Stock,*			*Stockholders’*
(dollars in thousands, except per share data)	Shares			Amount		Capital		Earnings			Loss			at cost			Equity			*Shares*			*Amount*		*Capital*		*Earnings*			*Loss*			*at cost*			*Equity*
Balance at December 31, 2020		6,027,704		$	62	$	535,586	$	1,228,172		$	(140,683	)	$	(127,838	)	$	1,495,299
Balance at March 31, 2021																					6,034,609		$	62	$	539,713	$	1,281,667		$	(85,216	)	$	(135,579	)	$	1,600,647
Net income		-			0		0		174,735			0			0			174,735			-			-		-		106,153			-			-			106,153
Unrealized gain (loss) on cash flow hedges and other, net of tax		-			0		0		0			39,446			0			39,446
Unrealized loss on cash flow hedges and other, net of tax																					-			0		0		0			(16,021	)		0			(16,021	)
Equity-based compensation		-			0		9,406		0			0			0			9,406			-			-		5,279		-			-			-			5,279
Issuance of equity awards, net of forfeitures		12,435			0		0		0			0			0			0			2,037			0		0		0			0			0			0
Withholding tax for equity awards		(3,557	)		0		0		0			0			(7,858	)		(7,858	)		(64	)		-		-		-			-			(117	)		(117	)
Dividends paid to stockholders ($5.00 per common share)		-			0		0		(30,183	)		0			0			(30,183	)
Dividends paid to stockholders ($2.50 per common share)																					-			-		-		(15,096	)		-			-			(15,096	)
Balance at June 30, 2021		6,036,582		$	62	$	544,992	$	1,372,724		$	(101,237	)	$	(135,696	)	$	1,680,845			6,036,582		$	62	$	544,992	$	1,372,724		$	(101,237	)	$	(135,696	)	$	1,680,845

Table of Contents

						Additional					Accumulated Other			Treasury			Total								*Additional*					*Accumulated Other*			*Treasury*			*Total*
	Common Stock					Paid-In		Retained			Comprehensive			Stock,			Stockholders’			*Common Stock*					*Paid-In*		*Retained*			*Comprehensive*			*Stock,*			*Stockholders’*
(dollars in thousands, except per share data)	Shares			Amount		Capital		Earnings			Loss			at cost			Equity			*Shares*			*Amount*		*Capital*		*Earnings*			*Gain (Loss)*			*at cost*			*Equity*
Balance at December 31, 2019		5,715,377		$	59	$	51,198	$	980,355		$	(68,158	)	$	(121,885	)	$	841,569
Balance at December 31, 2021																					6,046,362		$	62	$	555,640	$	1,456,543		$	(82,795	)	$	(136,355	)	$	1,793,095
Net income		-			0		0		131,866			0			0			131,866			-			-		-		240,721			-			-			240,721
Unrealized gain (loss) on cash flow hedges and other, net of tax		-			0		0		0			(94,084	)		0			(94,084	)
Unrealized gain on cash flow hedges and other, net of tax																					-			-		-		-			90,050			-			90,050
Equity-based compensation		-			0		6,647		0			0			0			6,647			-			-		11,156		-			-			-			11,156
Issuance of common stock		287,500			3		469,796		0			0			0			469,799
Issuance of equity awards, net of forfeitures		20,746			0		0		0			0			0			0			16,556			0		0		0			0			0			0
Repurchases of common stock																					(143,637	)		0		0		0			0			(191,709	)		(191,709	)
Withholding tax for equity awards		(3,789	)		0		0		0			0			(5,823	)		(5,823	)		(2,710	)		-		-		-			-			(4,721	)		(4,721	)
Dividends paid to stockholders ($4.50 per common share)		-			0		0		(26,428	)		0			0			(26,428	)
Balance at June 30, 2020		6,019,834		$	62	$	527,641	$	1,085,793		$	(162,242	)	$	(127,708	)	$	1,323,546
Dividends paid to stockholders ($5.50 per common share)																					-			-		-		(33,088	)		-			-			(33,088	)
Balance at June 30, 2022																					5,916,571		$	62	$	566,796	$	1,664,176		$	7,255		$	(332,785	)	$	1,905,504

						*Additional*					*Accumulated Other*			*Treasury*			*Total*
	*Common Stock*					*Paid-In*		*Retained*			*Comprehensive*			*Stock,*			*Stockholders’*
(dollars in thousands, except per share data)	*Shares*			*Amount*		*Capital*		*Earnings*			*Loss*			*at cost*			*Equity*
Balance at December 31, 2020		6,027,704		$	62	$	535,586	$	1,228,172		$	(140,683	)	$	(127,838	)	$	1,495,299
Net income		-			-		-		174,735			-			-			174,735
Unrealized gain on cash flow hedges and other, net of tax		-			-		-		-			39,446			-			39,446
Equity-based compensation		-			-		9,406		-			-			-			9,406
Issuance of equity awards, net of forfeitures		12,435			0		0		0			0			0			0
Withholding tax for equity awards		(3,557	)		-		-		-			-			(7,858	)		(7,858	)
Dividends paid to stockholders ($5.00 per common share)		-			-		-		(30,183	)		-			-			(30,183	)
Balance at June 30, 2021		6,036,582		$	62	$	544,992	$	1,372,724		$	(101,237	)	$	(135,696	)	$	1,680,845

See accompanying notes to the condensed consolidated financial statements.

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CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,						*Six Months Ended June 30,*
(in thousands)	2021			2020			*2022*			*2021*
Cash flows from operating activities:
Net income	$	174,735		$	131,866		$	240,721		$	174,735
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		153,445			130,863			176,343			153,445
Non-cash interest expense		4,307			2,212			4,770			4,307
Equity-based compensation		9,406			6,647			11,156			9,406
Write-off of debt issuance costs		2,131			0			0			2,131
Change in deferred income taxes		(10,900	)		30,827			29,582			(10,900	)
(Gain) loss on asset sales and disposals, net		938			(4,633	)		4,663			938
(Gain) loss on sales of businesses								(13,833	)		0
Equity method investment (income) loss, net		1,642			0			1,244			1,642
Fair value adjustment		15,790			0
Fair value adjustments								(90,724	)		15,790
Gain on step acquisition		(33,406	)		0			0			(33,406	)
Changes in operating assets and liabilities:
Accounts receivable, net		1,574			(2,899	)		(10,149	)		1,574
Income taxes receivable		24,218			(12,117	)		10,534			24,218
Prepaid and other current assets		(7,134	)		(4,019	)		(7,219	)		(7,134	)
Accounts payable and accrued liabilities		9,787			(3,387	)		(6,719	)		9,787
Deferred revenue		2,521			1,693			(982	)		2,521
Other		(1,429	)		(4,858	)		3,699			(1,429	)
Net cash provided by operating activities		347,625			272,195			353,086			347,625

Cash flows from investing activities:
Purchase of business, net of cash acquired		(1,953,643	)		0			0			(1,953,643	)
Purchase of equity investment		0			(27,245	)
Cash paid for debt and equity investments								(23,075	)		0
Capital expenditures		(161,165	)		(143,416	)		(206,737	)		(161,165	)
Change in accrued expenses related to capital expenditures		8,616			(740	)		5,094			8,616
Proceeds from sales of property, plant and equipment		229			617			319			229
Issuance of note and other receivables		0			(7,288	)
Proceeds from sales of operations								9,227			0
Net cash used in investing activities		(2,105,963	)		(178,072	)		(215,172	)		(2,105,963	)

Cash flows from financing activities:
Proceeds of equity issuance		0			488,750
Proceeds from long-term debt borrowings		1,695,850			100,000			0			1,695,850
Payment of equity issuance costs		0			(18,951	)
Payment of debt issuance costs		(13,741	)		0			0			(13,741	)
Payments on long-term debt		(13,159	)		(114,390	)		(17,220	)		(13,159	)
Repurchases of common stock								(191,709	)		0
Payment of withholding tax for equity awards		(7,858	)		(5,823	)		(4,721	)		(7,858	)
Dividends paid to stockholders		(30,183	)		(26,428	)		(33,088	)		(30,183	)
Deposits received for asset construction		1,485			0			0			1,485
Net cash provided by financing activities		1,632,394			423,158
Net cash provided by (used in) financing activities								(246,738	)		1,632,394

Change in cash and cash equivalents		(125,944	)		517,281
Decrease in cash and cash equivalents								(108,824	)		(125,944	)
Cash and cash equivalents, beginning of period		574,909			125,271			388,802			574,909
Cash and cash equivalents, end of period	$	448,965		$	642,552		$	279,978		$	448,965

Supplemental cash flow disclosures:
Cash paid for interest, net of capitalized interest	$	46,950		$	32,700		$	57,343		$	46,950
Cash paid for income taxes, net of refunds received	$	(4,240	)	$	840		$	24,193		$	(4,240	)

See accompanying notes to the condensed consolidated financial statements.

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CABLE ONE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business. Cable One is a fully integrated provider of data, video and voice services to residential and business ~~subscribers~~customers in 24 Western, Midwestern and Southern U.S. states. Cable One provided service to approximately ~~1,134,000~~1.1 million residential and business customers, of which approximately ~~1,017,000~~1,059,000 subscribed to data services, ~~287,000~~221,000 subscribed to video services and ~~153,000~~140,000 subscribed to voice services, as of June 30, ~~2021.~~2022.

On ~~July~~October 1, 2020, the Company ~~acquired Valu-Net LLC,~~contributed its Anniston, Alabama system (the “Anniston System”) to Hargray in exchange for an ~~all-fiber internet service provider headquartered~~approximately 15% equity interest in ~~Kansas (“Valu-Net”), for a purchase price of $38.9 million in cash~~Hargray on a ~~debt-free~~fully diluted basis. ~~Refer to note~~ 2 ~~for details on this transaction.~~

On December 30, 2021, the Company acquired certain assets and assumed certain liabilities from Cable America Missouri, LLC, a data, video and voice services provider in central Missouri ("CableAmerica"), for $113.1 million in cash on a debt-free basis. The all-cash transaction was financed with cash on hand. Refer to note 2 for further details on this transaction.

On January 1, 2022, the Company closed a joint venture transaction in which the Company contributed certain fiber operations (including certain fiber assets of Hargray and a majority of the operations of Delta Communications, L.L.C. ("Clearwave")) (the "Clearwave Fiber Contribution") and certain unaffiliated third-party investors contributed cash to a newly formed entity, Clearwave Fiber LLC ("Clearwave Fiber"). The operations contributed by the Company generated approximately 3% of Cable One's consolidated revenues for the three months ended December 31, 2021. The Company's approximately 58% investment in Clearwave Fiber was valued at $440.0 million as of the closing date. Clearwave Fiber is intended to accelerate deployment of fiber internet to residents and businesses in existing markets and near-adjacent areas, as well as to provide connectivity to unserved and underserved areas in such markets via fiber-to-the-premises service. Clearwave Fiber is reported on Cable One’s balance sheet under the equity method of accounting, with the proportionate share of its net income (loss) each period reflected within Cable One's operating results on a one quarter lag. Refer to note5 for ~~information~~further details on this transaction and on the Company’s other equity ~~investments completed during~~ ~~2020.~~investments.

Basis of Presentation. The condensed consolidated financial statements and accompanying notes thereto have been prepared in accordance with: (i) generally accepted accounting principles in the United States (“GAAP”) for interim financial information; and (ii) the guidance of Rule 10-01 of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for financial statements required to be filed with the SEC. As permitted under such guidance, certain notes and other financial information normally required by GAAP have been omitted. Management believes the condensed consolidated financial statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows as of and for the periods presented herein. These condensed consolidated financial statements are unaudited and should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the ~~2020~~2021 Form 10-K.

The December 31, ~~2020~~ 2021year-end balance sheet data presented herein was derived from the Company’s audited consolidated financial statements included in the ~~2020~~2021 Form 10-K, but does not include all disclosures required by GAAP. The Company’s interim results of operations may not be indicative of its future results.

Principles of Consolidation. The accompanying condensed consolidated financial statements include the accounts of the Company, including its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Segment Reporting. Accounting Standards Codification ("ASC") 280 - Segment Reporting requires the disclosure of factors used to identify an entity’s reportable segments. Based on the Company’s chief operating decision maker’s review and assessment of the Company’s operating performance for purposes of performance monitoring and resource allocation, the Company determined that its operations, including the decisions to allocate resources and deploy capital, are organized and managed on a consolidated basis. Accordingly, management has identified ~~one~~1 operating segment, which is its reportable segment, under this organizational and reporting structure.

Use of Estimates. The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported herein. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates and underlying assumptions.

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Recently Adopted Accounting Pronouncements. In ~~August 2020,~~November 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. ~~2020~~2021-~~06,~~10, ~~Debt-Debt with Conversion and Other Options (Subtopic~~Government Assistance (Topic ~~470~~-20~~) and Derivatives and Hedging-Contracts in Entity~~’~~s Own Equity (Subtopic~~ ~~815~~-40832): ~~Accounting for Convertible Instruments and Contracts in an Entity~~’~~s Own Equity~~Disclosures by Business Entities about Government Assistance. ASU ~~2020~~2021-0610 ~~simplifies~~requires additional disclosure around the ~~accounting for certain~~type of any government assistance received and its impact on the consolidated financial instruments with characteristics of both liabilities and equity by reducing the number of applicable accounting models, improving the decision usefulness and relevance of the information provided to financial statement users. As it relates to convertible instruments, this update amends existing guidance to reduce certain form-over-substance-based accounting conclusions, provides additional earnings per share guidance and improves disclosure effectiveness.statements. The Company ~~early~~ adopted ~~ASU~~ ~~2020~~-06 on ~~January 1, 2021~~ ~~and accounted for~~ the ~~Convertible Notes (as defined and described~~updated guidance in ~~note~~ 8~~) issued during~~ the first quarter of ~~2021~~2022. ~~under the updated guidance.~~

~~Table of Contents~~

In ~~December 2019,~~ ~~the FASB issued ASU~~ ~~No.~~~~2019~~-~~12,~~~~Income Taxes (Topic~~ ~~740~~~~): Simplifying the Accounting for Income Taxes~~~~. ASU~~ ~~2019~~-12 removes certain exceptions related to intraperiod tax allocations, foreign subsidiaries and interim reporting that are present within existing GAAP. The ASU also provides updated guidance regarding the tax treatment of certain franchise taxes, goodwill and nontaxable entities, among other items. In addition, ASU ~~2019~~-12 clarifies that the effect of a change in tax laws or rates should be reflected in the annual effective tax rate computation during the interim period that includes the enactment date. Certain provisions must be adopted on prescribed retrospective, modified retrospective and prospective bases, while other provisions ~~may~~ ~~be adopted on either a retrospective or modified retrospective basis. The Company adopted ASU~~ ~~2019~~-12 on ~~January 1, 2021~~ ~~on a prospective basis.~~ The adoption did not have a material impact on the ~~Company’s~~Company's consolidated financial ~~statements upon adoption.~~statements.

In October 2021, the FASB issued ASU 2021-08,Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires entities to apply existing revenue recognition guidance when recognizing and measuring contract assets acquired and contract liabilities assumed in a business combination. The Company adopted the updated guidance in the first quarter of 2022. The adoption did not have a material impact on the Company's consolidated financial statements.

Recently Issued But Not Yet Adopted Accounting Pronouncements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference ~~London Interbank Offered Rate (“LIBOR”)~~LIBOR and other reference rates ~~expected~~that are to be discontinued. The ASU may be adopted at any time through December 31, 2022. The Company currently holds certain debt and interest rate swaps that reference LIBOR. The Company plans to adopt ASU 2020-04 when the contracts underlying such instruments are amended as a result of reference rate reform. The Company is currently evaluating the expected impact of the adoption of this guidance on its consolidated financial statements.

2. ACQUISITIONS

The Company accounts for certain acquisitions as business combinations pursuant to ASC ~~805.~~805 - Business Combinations. In accordance with ASC 805, the Company uses its best estimates and assumptions to assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that is available as of the acquisition date. The Company believes that the information available provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed for each acquisition, however, preliminary measurements of fair value for each acquisition are subject to change during the measurement period, and such changes could be material. The Company expects to finalize the valuation after each acquisition as soon as practicable but no later than one year after the acquisition date.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired in a business combination and represents the future economic benefits expected to arise from anticipated synergies and intangible assets that do not qualify for separate recognition, including an assembled workforce, noncontractual relationships and other agreements. As an indefinite-lived asset, goodwill is not amortized but rather is subject to impairment testing on at least an annual basis.

Acquisition costs incurred by the Company are not included as components of consideration transferred and instead are accounted for as expenses in the period in which the costs are incurred. The Company incurred ~~$4.8~~$1.2 million and ~~$1.3~~$4.8 million of acquisition costs during the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and $2.5 million and $9.2 million ~~and $3.3 million~~of acquisition costs during the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. These costs are included in selling, general and administrative expenses within the Company’s condensed consolidated statements of operations and comprehensive income.

The following acquisitions occurred during the periods presented:

CableAmerica. On December 30, 2021, the Company acquired certain assets and assumed certain liabilities of CableAmerica, a data, video and voice services provider in central Missouri, for a purchase price of $113.1 million on a cash-free and debt-free basis.

Acquired identifiable intangible assets associated with the CableAmerica acquisition consisted of the following (dollars in thousands):

			Useful Life
	Fair Value		(in years)
Customer relationships	$	15,400		14.0
Trademark and trade name	$	500		3.0
Franchise agreements	$	49,600	Indefinite

Customer relationships and franchise agreements were valued using the multi-period excess earnings method (“MPEEM”) of the income approach. Significant assumptions used in the valuations include projected revenue growth rates, customer attrition rates, future earnings before interest, taxes, depreciation and amortization (“EBITDA” and as adjusted, “Adjusted EBITDA”) margins, future capital expenditures and appropriate discount rates. No residual value was assigned to the acquired customer relationships, trademark and trade name or franchise agreements. The customer relationships are amortized on an accelerated basis commensurate with future anticipated cash flows. The trademark and trade name are amortized on a straight-line basis. The total weighted average amortization period for the acquired finite-lived intangible assets is 13.7 years.

The CableAmerica acquisition resulted in the recognition of $25.6 million of goodwill, which is deductible for tax purposes.

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Hargray. On May 3, 2021, the Company acquired the remaining approximately 85% equity interest in Hargray, a data, video and voice services provider, that it did not already own for an approximately $2.0 billion cash purchase price, which implied a $2.2 billion total enterprise value for Hargray on a cash-free and debt-free basis, subject to customary post-closing adjustments. The all-cash transaction was funded through a combination of cash on hand and proceeds from indebtedness. The Hargray Acquisition expanded the Company’s presence in the Southeastern U.S. and is expected to enable the Company to capitalize on Hargray’s experience and expertise in fiber expansion.basis.

~~Table of Contents~~

The following table summarizes the allocation of the Hargray purchase price consideration as of the acquisition date, reflecting immaterial measurement period adjustments (in thousands):

	Preliminary Purchase Price Allocation		*Initial Purchase Price Allocation*		*Measurement Period Adjustments*			*Purchase Price Allocation*
Assets Acquired
Cash and cash equivalents	$	17,652	$	17,652	$	0		$	17,652
Accounts receivable		17,991		17,991		(62	)		17,929
Income taxes receivable				0		720			720
Prepaid and other current assets		8,006		8,006		0			8,006
Property, plant and equipment		457,158		457,158		(525	)		456,633
Intangible assets		1,592,000		1,592,000		0			1,592,000
Other noncurrent assets		4,636		4,636		2,940			7,576
Total Assets Acquired		2,097,443		2,097,443		3,073			2,100,516

Liabilities Assumed
Accounts payable and accrued liabilities		36,457		36,457		1,770			38,227
Deferred revenue (short-term portion)		8,462		8,462		0			8,462
Current portion of long-term debt (finance leases)		1,375
Long-term debt (finance leases)		2,912
Current portion of long-term debt				1,375		(1,375	)		0
Long-term debt				2,912		(2,912	)		0
Deferred income taxes		437,725		437,725		3,652			441,377
Other noncurrent liabilities		6,974		6,974		2,912			9,886
Total Liabilities Assumed		493,905		493,905		4,047			497,952

Net assets acquired		1,603,538		1,603,538		(974	)		1,602,564
Purchase price consideration⁽¹⁾		2,117,866		2,117,866		(756	)		2,117,110
Goodwill recognized	$	514,328	$	514,328	$	218		$	514,546

⁽¹⁾

Consists of approximately $2.0 billion of cash for the additional approximately 85% equity interest in Hargray that the Company did not already own and the $146.6 million May 3, 2021 fair value of the Company’s existing approximately 15% equity investment in Hargray. The Company recognized a $33.4 million non-cash gain within other income in the condensed consolidated statement of operations and comprehensive income upon the acquisition, representing the difference between the existing equity investment’s fair value and $113.2 million carrying value. The fair value of the existing investment was calculated as approximately 15% of the fair value of Hargray’s total equity value (determined using the discounted cash flow method of the income approach, less debt), excluding the impact of any synergies or control premium that would be realized by a controlling interest.

Acquired identifiable intangible assets associated with the Hargray Acquisition ~~consist~~consisted of the following (dollars in thousands):

							*Useful Life*
	Fair Value		Useful Life (in years)		*Fair Value*		*(in years)*
Customer relationships	$	472,000		13.7	$	472,000		13.7
Trademark and trade name	$	10,000		4.2	$	10,000		4.2
Franchise agreements	$	1,110,000	Indefinite		$	1,110,000	Indefinite

Customer relationships and franchise agreements were valued using the ~~multi-period excess earnings method (“MPEEM”)~~MPEEM of the income approach. Significant assumptions used in the valuations include projected revenue growth rates, customer attrition rates, future ~~earnings before interest, taxes, depreciation and amortization (“EBITDA” and as adjusted, “Adjusted EBITDA”)~~EBITDA margins, future capital expenditures and an appropriate discount ~~rate.~~rates. No residual value was assigned to the acquired customer relationships, or trademark and trade ~~name.~~name or franchise agreements. The customer relationships are amortized on an accelerated basis commensurate with future anticipated cash flows. The trademark and trade name are amortized on a straight-line basis. The total weighted average amortization period for the acquired finite-lived intangible assets is 13.5 years.

The Hargray Acquisition resulted in the recognition of ~~$514.3~~$514.5 million of goodwill, which is not deductible for tax purposes.

~~For the quarter ended~~ ~~June 30, 2021,~~ ~~the Company recognized revenues of $50.6 million and net income of $4.4 million from Hargray operations, which included acquired intangible assets amortization expense of $8.5 million.~~

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~~The following unaudited pro forma combined results of operations information for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020~~ ~~has been prepared as if the Hargray Acquisition had occurred on~~ ~~January 1, 2020 (~~~~in thousands, except per share data):~~

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenues
$ 428,947 $ 388,609 $ 845,909 $ 771,955
Net income
$ 44,062 $ 53,177 $ 113,603 $ 111,359
Net income per common share:

Basic
$ 7.33 $ 9.12 $ 18.89 $ 19.32
Diluted
$ 7.07 $ 8.71 $ 18.08 $ 18.39

~~The unaudited pro forma combined results of operations information reflects the following pro forma adjustments (dollars in thousands):~~

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Depreciation and amortization
$ (2,048 ) $ (2,983 ) $ (6,152 ) $ (6,495 )
Interest expense
$ (768 ) $ (1,922 ) $ (2,813 ) $ (19,629 )
Acquisition costs
$ (11,950 ) $ 0 $ (15,403 ) $ 0
Gain on step acquisition $ (33,400 ) $ 0 $ (33,400 ) $ 0
Income tax provision
$ 31,178 $ 1,226 $ 33,579 $ 6,531
Weighted average common shares outstanding - diluted
0 404,248 143,618 404,248

~~The unaudited pro forma combined results of operations information is provided for informational purposes only and is~~ ~~not~~ ~~necessarily intended to represent the results that would have been achieved had the Hargray acquisition been consummated on~~ ~~January 1, 2020~~ ~~or indicative of the results that~~ ~~may~~ ~~be achieved in the future.~~

~~Valu-Net.~~ On ~~July 1, 2020,~~ ~~the Company acquired Valu-Net, an all-fiber internet service provider headquartered in Kansas, for a purchase price of $38.9 million.~~

~~Acquired identifiable intangible assets associated with the Valu-Net acquisition consisted of the following (dollars in thousands):~~

Fair Value

Useful Life (in years)

Customer relationships
$ 7,700 13.5
Trademark and trade name
$ 800
Indefinite

Franchise agreements
$ 11,200
Indefinite

Customer relationships and franchise agreements were valued using the MPEEM of the income approach. Significant assumptions used in the valuations include projected revenue growth rates, future EBITDA margins, future capital expenditures and an appropriate discount rate. No ~~residual value was assigned to the acquired customer relationships. The customer relationships are amortized on an accelerated basis commensurate with future anticipated cash flows.~~

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3. REVENUES

Revenues by product line and other revenue-related disclosures were as follows (in thousands):

									*Three Months Ended*				*Six Months Ended*
	Three Months Ended June 30, 2021				Six Months Ended June 30,				*June 30,*				*June 30,*
	2021		2020		2021		2020		*2022*		*2021*		*2022*		*2021*
Residential:
Data	$	207,648	$	164,015	$	391,253	$	319,005	$	233,330	$	207,648	$	463,483	$	391,253
Video		87,240		87,328		163,257		172,650		84,761		87,240		169,419		163,257
Voice		12,112		12,120		22,589		24,547		10,715		12,112		22,610		22,589
Business services		76,616		58,469		136,978		116,331		76,660		76,616		153,152		136,978
Other		18,133		6,371		28,934		16,966		23,619		18,133		47,147		28,934
Total revenues	$	401,749	$	328,303	$	743,011	$	649,499	$	429,085	$	401,749	$	855,811	$	743,011

Franchise and other regulatory fees	$	8,110	$	6,615	$	14,262	$	12,963	$	7,962	$	8,110	$	16,056	$	14,262
Deferred commission amortization	$	1,265	$	1,338	$	2,733	$	2,699	$	1,263	$	1,265	$	2,517	$	2,733

Other revenues are comprised primarily of regulatory revenues, advertising sales, ~~customer~~ late charges and reconnect ~~fees and regulatory revenue.~~fees.

Fees imposed on the Company by various governmental authorities, including franchise fees, are passed through on a monthly basis to the Company’s customers and are periodically remitted to authorities. As the Company acts as principal, these fees are reported in video and voice revenues on a gross basis with corresponding expenses included within operating expenses in the condensed consolidated statements of operations and comprehensive income.

Deferred commission amortization expense is included within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income.

Current deferred revenue liabilities consist of refundable customer prepayments, up-front charges and installation fees. As of June 30, ~~2021,~~ 2022, the Company’s remaining performance obligations pertain to the refundable customer prepayments and consist of providing future data, video and voice services to customers. Of the ~~$21.1~~$26.9 million of current deferred revenue at December 31, ~~2020,~~ 2021~~$17.6~~, $23.1 million was recognized during the six months ended June 30, ~~2021.~~ 2022. Noncurrent deferred revenue liabilities consist of up-front charges and installation fees from business customers.

4. OPERATING ASSETS AND LIABILITIES

Accounts receivable consisted of the following (in thousands):

	June 30, 2021			December 31, 2020			*June 30, 2022*			*December 31, 2021*
Trade receivables	$	50,229		$	32,795		$	49,994		$	41,947
Other receivables		7,799			7,225			16,334			16,847
Less: Allowance for credit losses		(2,843	)		(1,252	)		(3,255	)		(2,541	)
Total accounts receivable, net	$	55,185		$	38,768		$	63,073		$	56,253

The changes in the allowance for credit losses were as follows (in thousands):

		Three Months Ended June 30,						Six Months Ended June 30,						*Three Months Ended June 30,*						*Six Months Ended June 30,*
		2021			2020			2021			2020			*2022*			*2021*				*2022*		*2021*
Beginning balance		$	1,374		$	2,997		$	1,252		$	1,201		$	2,580		$	1,374		$	2,541		$	1,252
Additions - charged to costs and expenses⁽¹⁾			1,484			5,956			2,127			8,075			2,077			1,484			3,795			2,127
Deductions - write-offs	��		(1,405	)		(966	)		(3,856	)		(3,239	)		(2,631	)		(1,405	)		(5,892	)		(3,856	)
Recoveries collected			1,390			1,412			3,320			3,362			1,229			1,390			2,811			3,320
Ending balance		$	2,843		$	9,399		$	2,843		$	9,399		$	3,255		$	2,843		$	3,255		$	2,843

⁽¹⁾	~~Includes $1.4 million of additional reserves assumed in the Hargray Acquisition.~~

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Prepaid and other current assets consisted of the following (in thousands):

	June 30, 2021		December 31, 2020		*June 30, 2022*		*December 31, 2021*
Prepaid repairs and maintenance	$	7,520	$	1,013	$	8,379	$	4,788
Software implementation costs		1,200		1,035		1,349		1,199
Prepaid insurance		949		2,200		173		3,325
Prepaid rent		2,472		1,471		2,800		2,107
Prepaid software		5,398		4,544		6,179		6,982
Deferred commissions		4,028		4,026		2,976		4,295
Interest rate swap asset						4,685		0
All other current assets		11,464		3,602		12,770		9,009
Total prepaid and other current assets	$	33,031	$	17,891	$	39,311	$	31,705

Other noncurrent assets consisted of the following (in thousands):

	June 30, 2021		December 31, 2020		*June 30, 2022*		*December 31, 2021*
Operating lease right-of-use assets	$	17,990	$	13,408	$	11,470	$	15,501
Deferred commissions		6,713		5,798		9,514		8,624
Software implementation costs		7,485		6,879		7,147		7,782
Debt issuance costs		2,915		3,249		2,243		2,576
Debt investment						2,000		0
Assets held for sale						3,527		3,819
Interest rate swap asset						6,097		0
All other noncurrent assets		4,030		4,209		2,446		4,020
Total other noncurrent assets	$	39,133	$	33,543	$	44,444	$	42,322

Accounts payable and accrued liabilities consisted of the following (in thousands):

	June 30, 2021		December 31, 2020		*June 30, 2022*		*December 31, 2021*
Accounts payable	$	53,040	$	22,686	$	39,723	$	35,716
Accrued programming costs		25,772		20,279		23,884		23,703
Accrued compensation and related benefits		42,570		26,467		32,841		34,731
Accrued sales and other operating taxes		11,532		7,425		11,399		12,872
Accrued franchise fees		4,301		4,021		3,902		4,397
Deposits		12,801		6,300		6,602		6,840
Operating lease liabilities		5,763		3,772		4,103		5,633
Interest rate swap liability		30,559		30,646		0		26,662
Accrued insurance costs		7,104		7,292		6,223		5,542
Cash overdrafts		6,452		8,847		8,506		11,517
Equity investment payable⁽¹⁾		13,387		13,387		5,087		13,387
Interest payable		5,233		4,128		5,308		5,172
Amount due to Hargray⁽²⁾		0		6,822
All other accrued liabilities		22,078		12,067		17,202		17,215
Total accounts payable and accrued liabilities	$	240,592	$	174,139	$	164,780	$	203,387

⁽¹⁾	Consists of the unfunded portion of the Company’s equity investment in Wisper ISP, LLC (“Wisper”). ~~Refer to note~~ 5 ~~for details on this transaction.~~
⁽²⁾	~~Consists of amounts due to Hargray in connection with transition services provided as part~~The Company funded $8.3 million of the ~~Anniston Exchange (as defined in note~~then outstanding investment payable to Wisper during the 5six) months ended June 30, 2022. Refer to note 5 for details on this ~~transaction.~~investment.

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Other noncurrent liabilities consisted of the following (in thousands):

	June 30, 2021		December 31, 2020		*June 30, 2022*		*December 31, 2021*
Operating lease liabilities	$	11,403	$	8,701	$	6,672	$	9,098
Accrued compensation and related benefits		14,209		10,086		10,086		11,010
Deferred revenue		6,665		4,981		6,305		6,854
MBI Net Option (as defined in note 5)⁽¹⁾		89,100		73,310		32,720		123,620
All other noncurrent liabilities		3,437		3,549		4,847		5,959
Total other noncurrent liabilities	$	124,814	$	100,627	$	60,630	$	156,541

⁽¹⁾

~~Consists of~~Represents the net value of the Company’s call and put options associated with the remaining equity interests in MBI (as defined in note 5), ~~valued at $0.0~~consisting of an asset of $28.9 million and ~~$89.1~~a liability of $61.7 million, respectively, as of June 30, ~~2021~~ 2022and ~~$0.7~~a liability of $17.8 million and ~~$74.0~~a liability of $105.8 million, respectively, as of December 31, ~~2020.~~ 2021. Refer to notes 5 and 10 for further information on the MBI Net Option (as defined in note 5).

5. EQUITY INVESTMENTS

On May 4, 2020, the Company made a minority equity investment for a less than 10% ownership interest in AMG Technology Investment Group, LLC, a wireless internet service provider (“Nextlink”), for $27.2 million. On July 10, 2020, the Company acquired a 40.4% minority equity interest in Wisper, a wireless internet service provider, for total consideration of $25.3 million. The Company has funded ~~$11.9~~$20.2 million of the total consideration for Wisper in ~~2020~~ and expects to fund the remainder within the next twelve months. On October 1, 2020, the Company contributed ~~its~~the Anniston ~~Alabama system (the “Anniston System”)~~System to Hargray, a data, video and voice services provider, in exchange for an approximately 15% equity interest in Hargray on a fully diluted basis ~~(the “Anniston Exchange”)~~ and recognized an $82.6 million non-cash gain. On November 12, 2020, the Company acquired a 45.0% minority equity interest in Mega Broadband Investments Holdings LLC, a data, video and voice services provider (“MBI”), for $574.9 million in cash.

On May 3, 2021, the Company acquired the remaining approximately 85% equity interest in Hargray that it did not already own for an approximately $2.0 billion cash purchase price, which implied a $2.2 billion total enterprise value for Hargray on a cash-free and debt-free basis, ~~subject to customary post-closing adjustments,~~ and recognized a $33.4 million non-cash gain as a result of the fair value remeasurement of the Company’s existing equity interest on the acquisition date. On October 1, 2021, the Company made a minority equity investment for a less than 10% ownership interest in Point Broadband Holdings, LLC, a fiber internet service provider ("Point Broadband"), for $25.0 million. On October 18, 2021, the Company completed a minority equity investment for a less than 10% ownership interest in Tristar Acquisition I Corp, a special-purpose acquisition company ("Tristar"), for $20.8 million. On November 5, 2021, the Company invested an additional $50.0 million to acquire preferred units in Nextlink, increasing its equity interest to approximately 17%.

On January 1, 2022, the Company closed a joint venture transaction in which the Company contributed certain fiber operations (including certain fiber assets of Hargray and a majority of the operations of Clearwave) and certain unaffiliated third-party investors contributed cash to a newly formed entity, Clearwave Fiber. The operations contributed by the Company generated approximately 3% of Cable One's consolidated revenues for the three months ended December 31, 2021. The Company's approximately 58% investment in Clearwave Fiber was valued at $440.0 million as of the closing date. The Company recognized a non-cash gain of $22.1 million associated with this transaction. On March 24, 2022, the Company invested an additional $5.4 million in Point Broadband, increasing its equity interest to approximately 7%. On April 1, 2022, the Company contributed its Tallahassee, Florida system to MetroNet Systems, LLC, a fiber internet service provider ("MetroNet"), in exchange for cash consideration of $7.0 million and an equity interest of less than 10% in MetroNet valued at $7.0 million. On June 1, 2022, the Company completed a minority equity investment for a less than 10% ownership interest in Visionary Communications, Inc., an internet service provider ("Visionary"), for $7.2 million.

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The carrying value of the Company’s equity investments without readily determinable fair values ~~were~~are determined based on fair valuations as of their respective acquisition ~~dates, and~~dates. As Tristar is publicly traded, the carrying value of the Company's Tristar investment is remeasured to fair value on a quarterly basis using market information.

The carrying value of the Company's equity investments consisted of the following (dollars in thousands):

							*Ownership*	*June 30,*		*December 31,*
	Ownership Percentage		June 30, 2021		December 31, 2020		*Percentage*	*2022*		*2021*
Cost Method Investments
Hargray^{(1), (2)}		~15%	$	0	$	113,165
MetroNet							<10%	$	7,000	$	0
Nextlink		<10%		27,245		27,245	<20%		77,245		77,245
Point Broadband							<10%		30,373		25,000
Tristar							<10%		22,907		23,083
Visionary							<10%		7,190		0
Others		<10%		14,619		10,066	<10%		12,980		13,170
Total cost method investments			$	41,864	$	150,476		$	157,695	$	138,498

Equity Method Investments
MBI⁽³⁾		45.0%	$	627,058	$	630,679
Clearwave Fiber							~58%	$	429,075	$	0
MBI⁽¹⁾							45.0%		565,789		557,715
Wisper		40.4%		28,605		26,626	40.4%		32,959		31,352
Total equity method investments			$	655,663	$	657,305		$	1,027,823	$	589,067

Total equity investments			$	697,527	$	807,781		$	1,185,518	$	727,565

⁽¹⁾	Upon initial investment, the Company calculated the fair value of Hargray’s total enterprise value using a hybrid of both the discounted cash flow method of the income approach and the guideline public company method of the market approach. Significant assumptions used in the valuation include projected revenue growth rates, customer attrition rates, future EBITDA margins, future capital expenditures and an appropriate discount rate. The enterprise value less Hargray’s debt and unamortized debt issuance costs was multiplied by Cable One’s minority equity interest percentage to determine the Hargray investment’s carrying value. The resulting non-cash gain was calculated as the difference between this carrying value and the book value of the Anniston System’s net assets, including its proportionate share of the Company’s franchise agreement and goodwill assets. The approximately 15% equity interest in Hargray as of ~~December 31, 2020~~ ~~was on a fully diluted basis.~~
⁽²⁾	~~As a result of the Company’s~~ ~~May 3, 2021~~ ~~acquisition of the remaining equity interests in Hargray that it did~~ ~~not~~ ~~already own, Hargray’s assets and liabilities were separately reflected within the Company’s condensed consolidated balance sheet as of~~ ~~June 30, 2021~~ and the existing cost method investment was eliminated, resulting in a $33.4 million non-cash gain recognized within other income in the condensed consolidated statement of operations and comprehensive income.
⁽³⁾	The Company holds a call option to purchase all but not less than all of the remaining equity interests in MBI that the Company does not already own between January 1, 2023 and June 30, 2024. If the call option is not exercised, certain investors in MBI hold a put option to sell (and to cause all members of MBI other than the Company to sell) to the Company all but not less than all of the remaining equity interests in MBI that the Company does not already own between July 1, 2025 and September 30, 2025. The call and put options (collectively referred to as the “MBI Net Option”) are measured at fair value using Monte Carlo simulations that rely on assumptions around MBI’s equity value, MBI’s and the Company’s equity volatility, MBI’s and the Company’s EBITDA volatility, risk adjusted discount rates and the Company’s cost of debt, among others. The final MBI purchase price allocation resulted in $630.7 million being allocated to the MBI equity investment and $19.7 million and $75.5 million being allocated to the call and put options, respectively. The MBI Net Option is remeasured at fair value on a quarterly basis. The carrying value of the MBI Net Option liability was ~~$89.1~~$32.7 million and ~~$73.3~~$123.6 million as of June 30, ~~2021~~ 2022and December 31, ~~2020,~~ 2021, respectively, and was included within other noncurrent liabilities in the condensed consolidated balance sheets. Refer to note 10 for further information on the MBI Net Option.

The carrying value of MBI exceeded the Company’s underlying equity in MBI’s net assets by approximately ~~$520.5~~$501.7 million and ~~$529.7~~$508.3 million as of June 30, ~~2021~~ 2022and December 31, ~~2020,~~ 2021, respectively.

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Equity method investment income (losses), which increase (decrease) the carrying value of the respective investment, and which are recorded on a one quarter lag, and the change in fair value of the MBI Net Option were as follows (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,					*Three Months Ended June 30,*						*Six Months Ended June 30,*
	2021			2020		2021			2020		*2022*			*2021*			*2022*			*2021*
Equity Method Investment Income (Loss)
Clearwave Fiber											$	(10,925	)	$	0		$	(10,925	)	$	0
MBI⁽¹⁾	$	(2,407	)	$	0	$	(3,621	)	$	0		5,293			(2,407	)		8,074			(3,621	)
Wisper		1,333			0		1,979			0		608			1,333			1,607			1,979
Total	$	(1,074	)	$	0	$	(1,642	)	$	0	$	(5,024	)	$	(1,074	)	$	(1,244	)	$	(1,642	)

Other Income (Expense), Net
MBI Net Option change in fair value	$	(21,350	)	$	0	$	(15,790	)	$	0	$	6,290		$	(21,350	)	$	90,900		$	(15,790	)

⁽¹⁾

The Company identified a $186.6 million difference between the fair values of certain of MBI’s finite-lived intangible assets and the respective carrying values recorded by MBI, of which $84.0 million was attributable to the Company’s 45% pro rata portion. The Company is amortizing its share on an accelerated basis over the lives of the respective assets. For the three months ended June 30, 2022, the Company recognized $8.5 million of its pro rata share of MBI’s net income and $3.2 million of its pro rata share of basis difference amortization. For the three months ended June 30, 2021, the Company recognized $1.6 million of its pro rata share of MBI’s net income ~~which was more than offset by the Company’s~~and $4.0 million of its pro rata share of basis difference amortization. For the six months ended June 30, 2022, the Company recognized $15.2 million of its pro rata share of MBI’s net income and $7.2 million of its pro rata share of basis difference amortization. For the six months ended June 30, 2021, the Company recognized $3.0 million of its pro rata share of MBI’s net income ~~which was more than offset by the Company’s~~and $6.6 million of its pro rata share of basis difference amortization.

The Company assesses each equity investment for indicators of impairment on a quarterly basis. ~~NaN~~No impairments were recorded for any of the periods presented.

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):

	June 30, 2021			December 31, 2020			*June 30, 2022*			*December 31, 2021*
Cable distribution systems	$	2,300,266		$	1,916,048		$	2,360,973		$	2,509,795
Customer premise equipment		305,471			283,831			330,392			320,937
Other equipment and fixtures		458,939			463,469			462,366			472,319
Buildings and improvements		138,632			117,367			134,832			142,754
Capitalized software		85,305			107,107			92,080			89,662
Construction in progress		196,630			89,488			177,533			172,706
Land		21,018			13,293			12,280			12,134
Right-of-use assets		10,744			10,314			11,241			11,241
Property, plant and equipment, gross		3,517,005			3,000,917			3,581,697			3,731,548
Less: Accumulated depreciation and amortization		(1,763,442	)		(1,735,457	)		(1,950,446	)		(1,877,444	)
Property, plant and equipment, net	$	1,753,563		$	1,265,460		$	1,631,251		$	1,854,104

The Company contributed $280.0 million of property, plant and equipment, net, to the Clearwave Fiber joint venture on January 1, 2022 and recognized a $22.1 million non-cash gain on the transaction. The Company divested $6.8 million of property, plant and equipment, net, in the dispositions of our Tallahassee, Florida system and certain other non-core assets during the three months ended June 30, 2022 and recognized an $8.3 million non-cash loss.

The Company classified $3.5 million of property, plant and equipment as held for sale as of June 30, 2022. Such assets are included within other noncurrent assets in the condensed consolidated balance sheet.

Depreciation and amortization expense for property, plant and equipment was ~~$65.9~~$67.6 million and ~~$54.5~~$65.9 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$123.9~~$134.8 million and ~~$108.6~~$123.9 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

7. GOODWILL AND INTANGIBLE ASSETS

The carrying amount of goodwill was ~~$944.9~~$928.9 million at June 30, ~~2021~~ 2022and ~~$430.5~~$967.9 at December 31, ~~2020,~~ 2021, with the ~~$514.3~~decrease attributable to $39.9 million of goodwill divested in the Clearwave Fiber transaction on January 1, 2022 and $1.8 million of goodwill divested in other transactions during the three months ended June 30, 2022, partially offset by a $2.7 million increase ~~attributable~~in goodwill related to ~~goodwill recognized in~~a measurement period adjustment associated with the Hargray Acquisition. The Company has not historically recorded any impairment of goodwill.

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Intangible assets consisted of the following (dollars in thousands):

																	*June 30, 2022*						*December 31, 2021*
																*Useful Life*	*Gross*				*Net*		*Gross*				*Net*
				June 30, 2021						December 31, 2020						*Range*	*Carrying*		*Accumulated*		*Carrying*		*Carrying*		*Accumulated*		*Carrying*
	Useful Life Range (in years)			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		*(in years)*	*Amount*		*Amortization*		*Amount*		*Amount*		*Amortization*		*Amount*
Finite-Lived Intangible Assets
Customer relationships	13.5	–	17	$	841,700	$	110,430	$	731,270	$	369,700	$	81,865	$	287,835	13.5 – 17	$	781,344	$	181,462	$	599,882	$	857,100	$	153,699	$	703,401
Trademarks and trade names	2.7	–	4.2		14,300		3,452		10,848		4,300		2,552		1,748	2.7 – 4.2		11,846		5,383		6,463		13,500		3,852		9,648
Wireless licenses	10	–	15		1,418		48		1,370		1,418		15		1,403	10 – 15		1,418		214		1,204		1,418		142		1,276
Total finite-lived intangible assets				$	857,418	$	113,930	$	743,488	$	375,418	$	84,432	$	290,986		$	794,608	$	187,059	$	607,549	$	872,018	$	157,693	$	714,325

Indefinite-Lived Intangible Assets
Franchise agreements								$	2,089,712					$	979,712						$	2,100,546					$	2,139,312
Trade names									7,500						7,500							800						7,500
Total indefinite-lived intangible assets								$	2,097,212					$	987,212						$	2,101,346					$	2,146,812

Total intangible assets, net								$	2,840,700					$	1,278,198						$	2,708,895					$	2,861,137

The $152.2 million decrease in the net carrying amount of intangible assets from December 31, 2021 to June 30, 2022 included $59.7 million of customer relationships, $8.1 million of trademarks and trade names and $27.7 million of franchise agreements divested in the Clearwave Fiber transaction on January 1, 2022 and an additional $4.0 million of customer relationships, $0.2 million of trademarks and trade names and $11.0 million of franchise agreements divested in other transactions during the three months ended June 30, 2022.

Intangible asset amortization expense was ~~$19.0~~$20.8 million and ~~$11.1~~$19.0 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$29.5~~$41.6 million and ~~$22.3~~$29.5 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

The future amortization of existing finite-lived intangible assets as of June 30, ~~2021~~ 2022was as follows (in thousands):

Year Ending December 31,	Amount		*Amount*
2021 (remaining six months)	$	45,020
2022		87,292
2022 (remaining six months)			$	42,061
2023		76,065		72,618
2024		69,716		65,828
2025		64,785		60,840
2026				55,326
Thereafter		400,610		310,876
Total	$	743,488	$	607,549

Actual amortization expense in future periods may differ from the amounts above as a result of intangible asset acquisitions or divestitures, changes in useful life estimates, impairments or other relevant factors.

8. DEBT

The carrying amount of long-term debt consisted of the following (in thousands):

	June 30, 2021			December 31, 2020			*June 30, 2022*			*December 31, 2021*
Senior Credit Facilities (as defined below)	$	2,328,756		$	1,541,621		$	2,295,025		$	2,311,890
Senior Notes (as defined below)		650,000			650,000			650,000			650,000
Convertible Notes (as defined below)		920,000			0			920,000			920,000
Finance lease liabilities		5,603			5,466			5,267			5,621
Total debt		3,904,359			2,197,087			3,870,292			3,887,511
Less: Unamortized debt discount		(22,764	)		0			(18,475	)		(20,602	)
Less: Unamortized debt issuance costs		(30,921	)		(21,897	)		(26,262	)		(28,572	)
Less: Current portion of long-term debt		(34,524	)		(26,392	)		(47,374	)		(38,837	)
Total long-term debt	$	3,816,150		$	2,148,798		$	3,778,181		$	3,799,500

Senior Credit Facilities. On ~~May 3, 2021,~~ ~~the~~The Company ~~amended the~~ ~~third~~ ~~amended and restated~~has in place a credit agreement ~~among the Company and its lenders, dated as of~~ ~~October 30, 2020 (~~~~as amended, the “Third Amended and Restated Credit Agreement”), to provide for a new~~ ~~seven-year incremental term “B” loan in an aggregate principal amount of $800.0 million maturing in~~ ~~2028~~(the ~~“Term Loan B-~~4”"Credit Agreement")~~. The Third Amended and Restated Credit Agreement also~~ that provides for senior secured term loans in original aggregate principal amounts of $700.0 million maturing in 2025 (the “Term Loan A-2”), $250.0 million maturing in 2027 (the “Term Loan B-2”) ~~and~~, $625.0 million maturing in 2027 (the “Term Loan B-3”) and $800.0 million maturing in 2028 (the "Term Loan B-4"), as well as a $500.0 million revolving credit facility maturing in 2025 (the “Revolving Credit Facility” and, together with the Term Loan A-2, the Term Loan B-2, the Term Loan B-3 and the Term Loan B-4, the “Senior Credit Facilities”). The Revolving Credit Facility also gives the Company the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility.

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~~The Term Loan B-~~4 ~~was drawn in full in connection with the closing of the Hargray Acquisition. The Term Loan B-~~4 is an obligation of the Company and is guaranteed by the Company’s wholly owned subsidiaries that guarantee the other obligations under the Third Amended and Restated Credit Agreement. The Term Loan B-4 ~~is secured, subject to certain exceptions, by substantially all of the assets of the Company and the guarantors under the Third Amended and Restated Credit Agreement.~~

~~The interest margin applicable to the Term Loan B-~~4 ~~is, at the Company’s option, equal to either LIBOR or a base rate, plus an applicable margin equal to 2.0% for LIBOR loans and 1.0% for base rate loans. The Term Loan B-~~4~~may~~ ~~be prepaid at any time without penalty or premium (subject to customary LIBOR breakage provisions), except for any prepayment within~~ ~~six~~ ~~months of the funding date in connection with certain repricing transactions, which will be subject to a 1.0% prepayment premium. The Term Loan B-~~4 ~~benefits from certain “most favored nation” pricing protections and is~~ ~~not~~ ~~subject to the financial maintenance covenants under the Third Amended and Restated Credit Agreement. The Term Loan B-~~4 amortizes in equal quarterly installments at a rate (expressed as a percentage of the original principal amount) of 1.0% per annum (subject to customary adjustments in the event of any prepayment), with the outstanding balance due upon maturity. The final maturity of the Term Loan B-4~~may~~ ~~be accelerated following an event of default under the Third Amended and Restated Credit Agreement. Other than with respect to maturity, amortization, prepayment premiums and pricing, the Term Loan B-~~4 ~~contains terms that are substantially similar to the existing Term Loan B-~~2 ~~and Term Loan B-~~3.

Refer to the table below summarizing the Company’s outstanding term loans as of June 30, ~~2021~~ 2022and note 10 to the Company’s audited consolidated financial statements included in the ~~2020~~2021 Form 10-K for further details on the Senior Credit Facilities.

The Company has issued letters of credit totaling $33.0 million under the Revolving Credit Facility on behalf of Wisper to guarantee its performance obligations under a Federal Communications Commission (“FCC”) broadband funding program. The fair value of the letters of credit approximates face value based on the short-term nature of the agreements. The Company would be liable for up to the total amount outstanding under the letters of credit if Wisper were to fail to satisfy all or some of its performance obligations under the FCC program. Wisper pledged certain assets in favor of the Company as collateral for issuing the letters of credit, which pledge was terminated in the ~~third~~ ~~quarter of~~ ~~2020~~ ~~at the same time that the Company closed an equity investment in Wisper, and Wisper has guaranteed and indemnified the Company in connection with such letters of credit.~~

As of June 30, ~~2021,~~ 2022~~the Company has assessed the likelihood of non-performance associated with the guarantee to be remote, and therefore,~~ no ~~liability has been accrued within the condensed consolidated balance sheet. Total letter of credit issuances under the Revolving Credit Facility totaled $41.0 million at~~ ~~June 30, 2021~~ ~~and bore interest at a rate of 1.88% per annum.~~

~~Table of Contents~~

~~As of~~ ~~June 30, 2021,~~ , the Company had approximately $2.3 billion of aggregate outstanding term loans, $51.2 million of outstanding letters of credit and ~~$459.0~~$448.8 million available for borrowing under the Revolving Credit Facility. A summary of the Company’s outstanding term loans as of June 30, ~~2021~~ 2022is as follows (dollars in thousands):

Instrument	Draw Date	Original Principal		Amortization Per Annum⁽¹⁾		Outstanding Principal		Final Maturity Date	Balance Due Upon Maturity		Benchmark Rate	Applicable Margin⁽²⁾		Interest Rate			*Draw Date(s)*	*Original Principal*		Amortization Per Annum⁽¹⁾	*Outstanding Principal*		*Final Maturity Date*	*Final Scheduled Principal Payment*		*Benchmark Rate*	Applicable Margin⁽²⁾	*Interest Rate*
Term Loan A-2	5/8/2019⁽³⁾	$	700,000	Varies⁽⁴⁾		$	668,101	10/30/2025	$	476,607	LIBOR		1.75%		1.85%		5/8/2019⁽³⁾ 10/1/2019⁽³⁾	$	700,000	Varies⁽⁴⁾	$	651,079	10/30/2025	$	476,607	LIBOR	1.75%	3.42%
	10/1/2019⁽³⁾
Term Loan B-2	1/7/2019		250,000		1.0%		244,375	10/30/2027		228,750	LIBOR		2.00%		2.10%		1/7/2019		250,000	1.0%		241,875	10/30/2027		228,750	LIBOR	2.00%	3.67%
Term Loan B-3	6/14/2019⁽⁵⁾		625,000		1.0%		616,280	10/30/2027		577,472	LIBOR		2.00%		2.10%		6/14/2019⁽⁵⁾ 10/30/2020⁽⁵⁾		625,000	1.0%		610,071	10/30/2027		577,472	LIBOR	2.00%	3.67%
	10/30/2020⁽⁵⁾
Term Loan B-4	5/3/2021		800,000		1.0%		800,000	5/3/2028		746,000	LIBOR		2.00%		2.10%		5/3/2021		800,000	1.0%		792,000	5/3/2028		746,000	LIBOR	2.00%	3.67%
Total		$	2,375,000			$	2,328,756		$	2,028,829						Total		$	2,375,000		$	2,295,025		$	2,028,829

⁽¹⁾	Payable in equal quarterly installments (expressed as a percentage of the original principal amount and subject to customary adjustments in the event of any prepayment). All loans may be prepaid at any time without penalty or premium (subject to customary LIBOR breakage provisions)~~, except for the Term Loan B-~~4, ~~which has a 1.0% prepayment premium for any prepayment within~~ ~~six~~ ~~months of the funding date of the Term Loan B-~~4 ~~in connection with certain repricing transactions.~~.
⁽²⁾	The Term Loan A-2 interest rate spread can vary between 1.25% and 1.75%, determined on a quarterly basis by reference to a pricing grid based on the Company’s Total Net Leverage Ratio (as defined in the ~~Third Amended and Restated~~ Credit Agreement). All other applicable margins are fixed.
⁽³⁾	On May 8, 2019, $250.0 million was drawn. On October 1, 2019, an additional $450.0 million was drawn. On October 30, 2020, the amortization schedule was reset.
⁽⁴⁾	Per annum amortization rates for years one through five following ~~the~~ October 30, 2020 ~~refinancing date~~ are 2.5%, 2.5%, 5.0%, 7.5% and 12.5%, respectively.
⁽⁵⁾	On June 14, 2019, $325.0 million was drawn. On October 30, 2020, an additional $300.0 million was drawn.

Senior Notes. In November 2020, the Company issued $650.0 million aggregate principal amount of 4.00% senior notes due 2030 (the “Senior Notes”). The Senior Notes bear interest at a rate of 4.00% per annum payable semi-annually in arrears on May 15th and November 15th of each ~~year, beginning on~~ ~~May 15, 2021.~~ year. The terms of the Senior Notes are governed by an indenture dated as of November 9, 2020 (the “Senior Notes Indenture”), among the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A. (“BNY”), as trustee.

At any time and from time to time prior to November 15, 2025, the Company may redeem some or all of the Senior Notes for cash at a redemption price equal to 100% of their principal amount, plus the “make-whole” premium described in the Senior Notes Indenture and accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. Beginning on November 15, 2025, the Company may redeem some or all of the Senior Notes at any time and from time to time at the applicable redemption prices listed in the Senior Notes Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time and from time to time prior to November 15, 2023, the Company may redeem up to 40% of the aggregate principal amount of Senior Notes with funds in an aggregate amount not exceeding the net cash proceeds from one or more equity offerings at a redemption price equal to 104% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

Upon the occurrence of a Change of Control and a Below Investment Grade Rating Event (each as defined in the Senior Notes Indenture), the Company is required to offer to repurchase the Senior Notes at 101% of the principal amount of such Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

Convertible Notes. In March 2021, the Company issued $575.0 million aggregate principal amount of 0.000% convertible senior notes due 2026 (the “2026 Notes”) and $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2028 (the “2028 Notes” and, together with the 2026 Notes, the “Convertible Notes,” and the Convertible Notes collectively with the Senior Notes, the “Notes”). The terms of the 2026 Notes and the 2028 Notes are each governed by a separate indenture dated as of March 5, 2021 (collectively, the “Convertible Notes Indentures” and together with the Senior Notes Indenture, the “Indentures”), in each case, among the Company, the guarantors party thereto and BNY, as trustee.

The 2026 Notes do not bear regular interest, and the principal amount of the 2026 Notes does not accrete. The 2028 Notes bear interest at a rate of 1.125% per annum. Interest on the 2028 Notes is payable semiannually in arrears on March 15th and September 15th of each year, ~~beginning on~~ ~~September 15, 2021,~~ unless earlier repurchased, converted or redeemed. The 2026 Notes are scheduled to mature on March 15, 2026, and the 2028 Notes are scheduled to mature on March 15, 2028. The initial conversion rate for each of the 2026 Notes and the 2028 Notes is 0.4394 shares of the Company’s common stock per $1,000 principal amount of 2026 Notes and 2028 Notes, as applicable (equivalent to an initial conversion price of $2,275.83 per share of common stock).

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The Convertible Notes are convertible at the option of the holders. The method of conversion into cash, shares of the Company’s common stock or a combination thereof is at the election of the Company. Prior to the close of business on the business day immediately preceding December 15, 2025, the 2026 Notes will be convertible at the option of the holders only upon the satisfaction of specified conditions and during certain periods. On or after December 15, 2025, holders may convert their 2026 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the relevant maturity date. Prior to the close of business on the business day immediately preceding December 15, 2027, the 2028 Notes will be convertible at the option of the holders only upon the satisfaction of specified conditions and during certain periods. On or after December 15, 2027, holders may convert their 2028 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the relevant maturity date. If the Company undergoes a “fundamental change” (as defined in the applicable Convertible Notes Indenture), holders of the applicable series of Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes of such series at a purchase price equal to 100% of the principal amount of the Convertible Notes of such series to be repurchased, plus accrued and unpaid interest to, but not including, the fundamental change repurchase date.

The Company may not redeem the 2026 Notes prior to March 20, 2024 and it may not redeem the 2028 Notes prior to March 20, 2025. No “sinking fund” is provided for the Convertible Notes. On or after March 20, 2024 and prior to December 15, 2025, the Company may redeem for cash all or any portion of the 2026 Notes, at its option, and on or after March 20, 2025 and prior to December 15, 2027, the Company may redeem for cash all or any portion of the 2028 Notes, at its option, in each case, if the last reported sale price per share of common stock has been at least 130% of the conversion price for such series of Convertible Notes then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Notes of such series to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

In addition, following a “make-whole fundamental change” (as defined in the applicable Convertible Notes Indenture) or if the Company delivers a notice of redemption in respect of any Convertible Notes of a series, in certain circumstances, the conversion rate applicable to such series of Convertible Notes will be increased for a holder who elects to convert any of such Convertible Notes in connection with such a make-whole fundamental change or convert any of such Convertible Notes called (or deemed called) for redemption during the related redemption period, as the case may be.

The carrying amounts of the Convertible Notes consisted of the following (in thousands):

	June 30, 2021									*June 30, 2022*									*December 31, 2021*
	2026 Notes			2028 Notes			Total			*2026 Notes*			*2028 Notes*			*Total*			*2026 Notes*			*2028 Notes*			*Total*
Gross carrying amount	$	575,000		$	345,000		$	920,000		$	575,000		$	345,000		$	920,000		$	575,000		$	345,000		$	920,000
Less: Unamortized discount		(14,124	)		(8,640	)		(22,764	)		(11,123	)		(7,352	)		(18,475	)		(12,611	)		(7,991	)		(20,602	)
Less: Unamortized debt issuance costs		(386	)		(244	)		(630	)		(304	)		(208	)		(512	)		(344	)		(226	)		(570	)
Net carrying amount	$	560,490		$	336,116		$	896,606		$	563,573		$	337,440		$	901,013		$	562,045		$	336,783		$	898,828

Interest expense on the Convertible Notes consisted of the following (dollars in thousands):

																	*Three Months Ended June 30,*																*Six Months Ended June 30,*
	Three Months Ended June 30, 2021								Six Months Ended June 30, 2021								*2022*								*2021*								*2022*								*2021*
	2026 Notes			2028 Notes			Total		2026 Notes			2028 Notes			Total		*2026 Notes*			*2028 Notes*			*Total*		*2026 Notes*			*2028 Notes*			*Total*		*2026 Notes*			*2028 Notes*			*Total*		*2026 Notes*			*2028 Notes*			*Total*
Contractual interest expense	$	0		$	970		$	970	$	0		$	1,261		$	1,261	$	-		$	970		$	970	$	-		$	970		$	970	$	0		$	1,941		$	1,941	$	0		$	1,261		$	1,261
Amortization of discount		748			321			1,069		970			416			1,386		748			321			1,069		748			321			1,069		1,488			639			2,127		970			416			1,386
Amortization of debt issuance costs		20			9			29		26			12			38		20			9			29		20			9			29		40			18			58		26			12			38
Total interest expense	$	768		$	1,300		$	2,068	$	996		$	1,689		$	2,685	$	768		$	1,300		$	2,068	$	768		$	1,300		$	2,068	$	1,528		$	2,598		$	4,126	$	996		$	1,689		$	2,685

Effective interest rate		0.5	%		1.5	%		0		0.5	%		1.5	%		0		0.5	%		1.5	%				0.5	%		1.5	%				0.5	%		1.5	%				0.5	%		1.5	%

General. The Notes are senior unsecured obligations of the Company and are guaranteed by the Company’s wholly owned domestic subsidiaries that guarantee the Senior Credit Facilities or that guarantee certain capital market debt of the Company in an aggregate principal amount in excess of $250.0 million.

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Each Indenture contains covenants that, among other things and subject to certain exceptions, limit (i) the Company’s ability to consolidate or merge with or into another person or sell or otherwise dispose of all or substantially all of the assets of the Company and its subsidiaries (taken as a whole) and (ii) the ability of the guarantors to consolidate with or merge with or into another person. The Senior Notes Indenture also contains a covenant that, subject to certain exceptions, limits the Company’s ability and the ability of its subsidiaries to incur any liens securing indebtedness for borrowed money.

Each Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, default in payment of principal or interest, breach of other agreements or covenants in respect of the relevant Notes by the Company or any guarantors, failure to pay certain other indebtedness at final maturity, acceleration of certain indebtedness prior to final maturity, failure to pay certain final judgments, failure of certain guarantees to be enforceable and certain events of bankruptcy, insolvency or reorganization; and, in the case of each Convertible Notes Indenture, failure to comply with the Company’s obligation to convert the relevant Convertible Notes under the applicable Convertible Notes Indenture and failure to give a fundamental change notice or a notice of a make-whole fundamental change under the applicable Convertible Notes Indenture.

Unamortized debt issuance costs consisted of the following (in thousands):

	June 30, 2021		December 31, 2020		*June 30, 2022*		*December 31, 2021*
Revolving Credit Facility portion:
Other noncurrent assets	$	2,915	$	3,249	$	2,243	$	2,576
Term loans and Notes portion:
Long-term debt (contra account)		30,921		21,897		26,262		28,572
Total	$	33,836	$	25,146	$	28,505	$	31,148

The Company recorded debt issuance cost amortization of ~~$1.8~~$1.3 million and ~~$1.1~~$1.8 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$2.9~~$2.6 million and ~~$2.2~~$2.9 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, within interest expense in the condensed consolidated statements of operations and comprehensive income.

The future maturities of outstanding borrowings as of June 30, ~~2021~~ 2022were as follows (in thousands):

Year Ending December 31,	Amount		*Amount*
2021 (remaining six months)	$	16,866
2022		37,986
2022 (remaining six months)			$	21,121
2023		55,008		55,008
2024		76,285		76,285
2025		557,147		557,147
2026				591,709
Thereafter		3,155,464		2,563,755
Total	$	3,898,756	$	3,865,025

The Company has issued letters of credit totaling $44.1 million on behalf of Wisper to guarantee its performance obligations under a Federal Communications Commission (“FCC”) broadband funding program, as of June 30, 2022. The fair value of the letters of credit approximates face value based on the short-term nature of the agreements. The Company would be liable for up to the total amount outstanding under the letters of credit if Wisper were to fail to satisfy all or some of its performance obligations under the FCC program. Wisper has guaranteed and indemnified the Company in connection with such letters of credit. As of June 30, 2022, the Company has assessed the likelihood of non-performance associated with the guarantee to be remote, and therefore, no liability has been accrued within the condensed consolidated balance sheets. Total letter of credit issuances under the Revolving Credit Facility were $51.2 million at June 30, 2022 and accrued fees at a rate of approximately 1.88% per annum.

On May 3, 2022, the Company entered into a letter of credit agreement with MUFG Bank, Ltd. ("MUFG") which provides for an additional $75.0 million letter of credit issuing capacity. NaN letters of credit were issued under this agreement as of June 30, 2022.

The Company was in compliance with all debt covenants as of June 30, ~~2021.~~ 2022

In ~~March 2021,~~ ~~the Company terminated $900.0 million of definitive bridge loan commitments that were originally received to finance a portion of the Hargray Acquisition purchase price.~~.

9. INTEREST RATE SWAPS

The Company is party to two interest rate swap agreements, designated as cash flow hedges, to manage the risk of fluctuations in interest rates on its variable rate LIBOR debt. Changes in the fair values of the interest rate swaps are reported through other comprehensive income until the underlying hedged debt’s interest expense impacts net income, at which point the corresponding change in fair value is reclassified from accumulated other comprehensive income to interest expense.

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A summary of the significant terms of the Company’s interest rate swap agreements is as follows (dollars in thousands):

Entry

Effective

Maturity

Notional

Settlement

Fixed

Entry

Date

Effective

Date

Maturity

Date⁽¹⁾

Notional Amount

Settlement Type

Settlement Frequency

Fixed

Base Rate

Date

Date⁽¹⁾

Amount

Type

Frequency

Base Rate

Swap A

3/7/2019

3/11/2019

3/11/2029

850,000

Receive one-month LIBOR, pay fixed

Monthly

2.653%

3/7/2019

3/11/2019

3/11/2029

850,000

Receive one-month LIBOR, pay fixed

Monthly

2.653%

Swap B

3/6/2019

6/15/2020

2/28/2029

350,000

Receive one-month LIBOR, pay fixed

Monthly

2.739%

3/6/2019

6/15/2020

2/28/2029

350,000

Receive one-month LIBOR, pay fixed

Monthly

2.739%

Total

1,200,000

Total

1,200,000

⁽¹⁾	Each swap may be terminated prior to the scheduled maturity at the election of the Company or the financial institution counterparty under the terms provided in each swap agreement.

The combined fair values of the Company’s interest rate swaps are reflected within the condensed consolidated balance sheets as follows (in thousands):

					*June 30, 2022*		*December 31, 2021*
Assets:
Current portion:
Prepaid and other current assets					$	4,685	$	0
Noncurrent portion:
Other noncurrent assets					$	6,097	$	0
	June 30, 2021		December 31, 2020
Liabilities:
Current portion:
Accounts payable and accrued liabilities	$	30,559	$	30,646	$	0	$	26,662
Noncurrent portion:
Interest rate swap liability	$	102,875	$	155,357	$	0	$	81,627
Total	$	133,434	$	186,003

Stockholders’ Equity:
Accumulated other comprehensive loss	$	100,651	$	140,090
Net Asset (Liability)					$	10,782	$	(108,289	)

Stockholders’ Equity:
Accumulated other comprehensive income (loss)					$	8,140	$	(81,873	)

The combined effect of the Company’s interest rate swaps on the condensed consolidated statements of operations and comprehensive income was as follows (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,						*Three Months Ended June 30,*						*Six Months Ended June 30,*
	2021			2020			2021			2020			*2022*			*2021*			*2022*			*2021*
Interest expense	$	7,803		$	4,964		$	15,451		$	7,048		$	5,800		$	7,803		$	13,409		$	15,451

Unrealized (gain) loss on cash flow hedges, gross	$	21,013		$	12,558		$	(52,569	)	$	124,872
Unrealized gain (loss) on cash flow hedges, gross													$	43,240		$	(21,013	)	$	119,071		$	52,569
Less: Tax effect		(4,989	)		(3,095	)		13,130			(30,781	)		(10,597	)		4,989			(29,058	)		(13,130	)
Unrealized (gain) loss on cash flow hedges, net of tax	$	16,024		$	9,463		$	(39,439	)	$	94,091
Unrealized gain (loss) on cash flow hedges, net of tax													$	32,643		$	(16,024	)	$	90,013		$	39,439

The Company does not hold any derivative instruments for speculative trading purposes.

10. FAIR VALUE MEASUREMENTS

Financial Assets and Liabilities. The Company has estimated the fair values of its financial instruments as of June 30, ~~2021~~ 2022using available market information or other appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, the following fair value estimates are not necessarily indicative of the amounts the Company would realize in an actual market exchange.

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The carrying amounts, fair values and related fair value hierarchy levels of the Company’s financial assets and liabilities as of June 30, ~~2021~~ 2022were as follows (in thousands):

		June 30, 2021					*June 30, 2022*
		Carrying		Fair		Fair Value	*Carrying*		*Fair*		*Fair Value*
		Amount		Value		Hierarchy	*Amount*		*Value*		*Hierarchy*
Assets:
Cash and cash equivalents:
Money market investments		$	412,727	$	412,727	Level 1	$	191,557	$	191,557	Level 1
Commercial paper							$	50,112	$	49,960	Level 2
Other noncurrent assets (including current portion):
Interest rate swap asset							$	10,782	$	10,782	Level 2

Liabilities:
*Long-term debt (including current portion):*	*Long-term debt (including current portion):*
Term loans		$	2,328,756	$	2,321,264	Level 2	$	2,295,025	$	2,230,122	Level 2
Senior Notes		$	650,000	$	650,780	Level 2	$	650,000	$	528,775	Level 2
Convertible Notes		$	920,000	$	927,636	Level 2	$	920,000	$	762,715	Level 2
Interest rate swap liability (including current portion):
Interest rate swaps		$	133,434	$	133,434	Level 2
Other noncurrent liabilities:
MBI Net Option		$	89,100	$	89,100	Level 3	$	32,720	$	32,720	Level 3

Money market investments are held primarily in U.S. Treasury securities and registered money market funds and are valued using a market approach based on quoted market prices (level 1). Commercial paper is primarily held with high-quality companies and is valued using quoted market prices for investments similar to the commercial paper (level 2). Money market investments and commercial paper with original maturities of three months or less are included within cash and cash equivalents in the condensed consolidated balance sheets. ~~The fair value of the term loans, Senior Notes and Convertible Notes are estimated based on market prices for similar instruments in active markets (level~~ 2). Interest rate swaps are measured at fair value within the condensed consolidated balance sheets on a recurring basis, with fair value determined using standard valuation models with assumptions about interest rates being based on those observed in underlying markets (level 2). The fair value of the term loans, Senior Notes and Convertible Notes are estimated based on market prices for similar instruments in active markets (level 2). The fair value of the MBI Net Option is measured using Monte Carlo simulations that use inputs considered unobservable and significant to the fair value measurement (level 3).

The assumptions used to determine the fair value of the MBI Net Option consisted of the following:

	June 30, 2021						December 31, 2020						*June 30, 2022*						*December 31, 2021*
	Cable One			MBI			Cable One			MBI			*Cable One*			*MBI*			*Cable One*			*MBI*
Equity volatility		30.0	%		30.0	%		28.0	%		30.0	%		30.0	%		30.0	%		30.0	%		30.0	%
EBITDA volatility		10.0	%		10.0	%		10.0	%		10.0	%		10.0	%		10.0	%		10.0	%		10.0	%
EBITDA risk-adjusted discount rate		5.0	%		6.5	%		5.0	%		6.5	%		7.5	%		9.0	%		5.0	%		6.5	%
Cost of debt		4.0	%		0			4.0	%		0			6.5	%					4.0	%

The Company regularly evaluates each of the assumptions used in establishing the fair value of the MBI Net Option. Significant changes in any of these assumptions could result in a significantly lower or higher fair value measurement. A change in one of these assumptions is not necessarily accompanied by a change in another assumption. Refer to note 5 for further information on the MBI Net Option.

The carrying amounts of accounts receivable, accounts payable and other financial assets and liabilities approximate fair value because of the short-term nature of these instruments.

Nonfinancial Assets and Liabilities. The Company’s nonfinancial assets, such as property, plant and equipment, intangible assets and goodwill, are not measured at fair value on a recurring basis. Assets acquired, including identifiable intangible assets and goodwill, and liabilities assumed in acquisitions are recorded at fair value on the respective acquisition dates, subject to potential future measurement period adjustments. Nonfinancial assets are subject to fair value adjustments when there is evidence that impairment may exist. No material impairments were recorded during the six months ended June 30, ~~2021~~ 2022or ~~2020.~~2021.

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11. STOCKHOLDERS’ EQUITY

~~Equity Offering.~~ In ~~May 2020,~~ the Company completed a public offering of 287,500 shares of its common stock (the “Public Offering”) for total net proceeds of $469.8 million, after deducting underwriting discounts and offering expenses. The Company used a portion of the net proceeds to repay in full its then-outstanding borrowings of $100.0 million under the Revolving Credit Facility and it used the remainder for general corporate purposes, including for acquisitions and strategic investments.

Treasury Stock. Treasury stock is recorded at cost and is presented as a reduction of stockholders’ equity in the condensed consolidated financial statements. Treasury shares of ~~138,817~~258,828 held at June 30, ~~2021~~ 2022include shares repurchased under the Company’s share repurchase ~~program~~programs and shares withheld for withholding tax, as described below.

Share Repurchase ~~Program.~~Programs. On July 1, 2015, the Company’s board of directors (the “Board”) authorized up to $250.0 million of share repurchases (subject to a total cap of 600,000 shares of common stock) (the "2015 Program"). ~~Purchases under~~On May 20, 2022, the Company's Board authorized up to $450.0 million of additional share repurchases (with no cap as to the number of shares of common stock) (the "2022 Program" and, together with the 2015 Program, the "Share Repurchase Programs"). At the end of the second quarter of 2022, the Company had exhausted the share repurchase ~~program~~authorization under the 2015 Program and had $403.4 million of remaining share repurchase authorization under the 2022 Program. Additional purchases under the 2022 Program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases are based on a number of factors, including share price and business and market conditions. Since the inception of the ~~share repurchase program~~Share Repurchase Programs through June 30, ~~2021,~~ 2022, the Company had repurchased ~~210,631~~354,268 shares of its common stock at an aggregate cost of ~~$104.9 million.~~ $296.6 million, includingNo143,637shares ~~were repurchased~~purchased at an aggregate cost of$191.7million during the six months ended June 30, ~~2021.~~2022.

Tax Withholding for Equity Awards. At the employee’s option, shares of common stock are withheld by the Company upon the vesting of restricted stock and exercise of stock appreciation rights (“SARs”) to cover the applicable statutory minimum amount of employee withholding taxes, which the Company then pays to the taxing authorities in cash. The amounts remitted during the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were ~~$7.9~~$4.7 million and ~~$5.8~~$7.9 million, for which the Company withheld ~~3,557~~2,710 and ~~3,789~~3,557 shares of common stock, respectively.

12. EQUITY-BASED COMPENSATION

At the Company’s 2022 annual meeting of stockholders held on May 20, 2022, the Company’s stockholders approved the Cable One, Inc. 2022 Omnibus Incentive Compensation Plan (the “2022 Plan”), which had been previously approved, subject to stockholder approval, by the Board on March 28, 2022. The2022 Plan superseded and replaced the then existing Amended and Restated Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (the “2015 Plan” and, together with the 2022 Plan, the "Incentive Compensation Plans"), provided, however, that any awards previously granted under the 2015 Plan will remain in effect pursuant to their respective terms. No further awards will be granted under the 2015 Plan. The 2015 Plan provided for, and the 2022 Plan provides for, grants of incentive stock options, non-qualified stock options, restricted stock awards, SARs, restricted stock units (“RSUs”), cash-based awards, performance-based awards, dividend equivalent units (“DEUs” and, together with restricted stock awards and RSUs, “Restricted Stock”) and other stock-based awards, including performance stock units and deferred stock units. Directors, officers, employees and consultants of the Company are eligible for grants under the ~~2015~~ ~~Plan~~Incentive Compensation Plans as part of the Company’s ~~approach to~~ long-term incentive ~~compensation.~~compensation programs. At June 30, ~~2021,~~ 2022~~97,056~~, 470,410 shares were available for issuance under the ~~2015~~2022 Plan.

Compensation expense associated with equity-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award, with forfeitures recognized as incurred. The Company’s equity-based compensation expense, included within selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive income, was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,				*Three Months Ended June 30,*				*Six Months Ended June 30,*
	2021		2020		2021		2020		*2022*		*2021*		*2022*		*2021*
Restricted Stock	$	4,549	$	2,678	$	7,973	$	5,185	$	5,185	$	4,549	$	9,822	$	7,973
SARs		730		748		1,433		1,462		766		730		1,334		1,433
Total	$	5,279	$	3,426	$	9,406	$	6,647	$	5,951	$	5,279	$	11,156	$	9,406

The Company recognized ~~income~~excess tax benefits of ~~$0.9~~$0.0 million and ~~$2.7~~$0.9 million during the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$4.5~~$0.5 million and ~~$7.9~~$4.5 million during the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The deferred tax asset related to all outstanding equity-based awards was ~~$3.7~~$5.0 million as of June 30, ~~2021.~~2022.

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Restricted Stock. A summary of Restricted Stock activity during the six months ended June 30, ~~2021~~ 2022is as follows:

	Restricted Stock			Weighted Average Grant Date Fair Value Per Share					*Weighted*
Outstanding as of December 31, 2020		34,944		$	1,037.83
									*Average Grant*
						*Restricted*			*Date Fair Value*
						*Stock*			*Per Share*
Outstanding as of December 31, 2021							34,026		$	1,487.02
Granted		10,679		$	2,188.72		18,707		$	1,692.29
Forfeited		(1,071	)	$	1,319.94		(1,282	)	$	1,899.54
Vested and issued		(10,949	)	$	844.57		(7,451	)	$	1,178.21
Outstanding as of June 30, 2021		33,603		$	1,457.56
Outstanding as of June 30, 2022							44,000		$	1,614.57

Vested and deferred as of June 30, 2021		5,947		$	750.62
Vested and deferred as of June 30, 2022							6,927		$	889.05

At June 30, ~~2021,~~ 2022, there was ~~$31.4~~$36.4 million of unrecognized compensation expense related to Restricted Stock, which is expected to be recognized over a weighted average period of ~~1.5~~1.6 years.

Stock Appreciation Rights. A summary of SARs activity during the six months ended June 30, ~~2021~~ 2022is as follows:

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)											*Weighted*
Outstanding as of December 31, 2020		58,365		$	866.54	$	204.29	$	79,446		7.3
																	*Weighted*				*Average*
															*Weighted*		*Average*		*Aggregate*		*Remaining*
												*Stock*			*Average*		*Grant*		*Intrinsic*		*Contractual*
												*Appreciation*			*Exercise*		*Date Fair*		*Value*		*Term*
												*Rights*			*Price*		*Value*		*(in thousands)*		*(in years)*
Outstanding as of December 31, 2021													45,740		$	1,075.34	$	263.62	$	32,897		7.1
Granted		1,500		$	2,227.72	$	584.38	$	-		9.5		0		$	0	$	0	$	-		-
Exercised		(3,674	)	$	746.04	$	177.22	$	3,870		-		(1,500	)	$	765.50	$	182.44	$	805		-
Forfeited		(1,601	)	$	834.92	$	201.50						(1,750	)	$	1,492.73	$	375.76
Outstanding as of June 30, 2021		54,590		$	912.97	$	216.64	$	55,053		6.9
Expired													(375	)	$	1,851.23	$	469.52
Outstanding as of June 30, 2022													42,115		$	1,062.12	$	260.02	$	15,550		6.5

Exercisable as of June 30, 2021		30,037		$	666.56	$	152.28	$	37,434		5.9
Exercisable as of June 30, 2022													27,115		$	815.46	$	192.80	$	13,815		5.8

At June 30, ~~2021,~~ 2022, there was ~~$5.6~~$4.2 million of unrecognized compensation expense related to SARs, which is expected to be recognized over a weighted average period of ~~1.2~~1.1 years.

~~The grant date fair value of the SARs is measured using the Black-Scholes valuation model. The weighted average inputs used in the model for grants awarded during the~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~were as follows:~~

	~~Inputs~~
~~Expected volatility~~		~~27.37~~	%
~~Risk-free interest rate~~		~~0.54~~	%
~~Expected term (in years)~~		~~6.25~~
~~Expected dividend yield~~		~~0.45~~	%

13. INCOME TAXES

The Company’s effective tax rate was ~~-8.7%~~23.5% and ~~17.4%~~-8.7% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~4.9%~~21.0% and ~~13.0%~~4.9% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. ~~The change~~The increase in the effective tax rate for the three months ended June 30, ~~2021~~ 2022compared to the prior year quarter was ~~related~~due primarily to a $35.4 million ~~increase in~~ income tax benefit from the reversal of a pre-existing deferred tax liability on the ~~Company’s pre-existing equity~~ investment in Hargray ~~partially offset by a $5.2 million increase in income tax expense related to a change in valuation allowance and a $2.8 million income tax benefit~~ in the prior year ~~attributable to the net operating loss (“NOL”) carryback provision of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)~~ that did not ~~recur in the current year.~~recur. The ~~decrease~~increase in the effective tax rate for the six months ended June 30, ~~2021~~ 2022compared to the prior year period was ~~related~~due primarily to the aforementioned $35.4 million of income tax benefit, ~~from the deferred tax liability reversal,~~ partially offset by ~~a $9.8~~$20.4 million ~~income tax benefit attributable to the NOL carryback provision~~ of ~~the CARES Act in the prior year period that did~~ ~~not~~ ~~recur in~~ ~~2021,~~ ~~a $3.8 million increase in~~ income tax expense related to a change in valuation allowance ~~and a $3.5 million decrease~~ in ~~income tax benefit attributable to equity-based compensation.~~the prior year that did not recur.

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14. OTHER INCOME AND EXPENSE

Other income (expense) consisted of the following (in thousands):

	*Three Months Ended June 30,*						*Six Months Ended June 30,*
	*2022*			*2021*			*2022*			*2021*
MBI Net Option fair value adjustment	$	6,290		$	(21,350	)	$	90,900		$	(15,790	)
Write-off of debt issuance costs		0			(1,644	)		0			(2,131	)
Interest and investment income		3,043			2,392			6,485			5,617
Gain on step acquisition		0			33,406			0			33,406
Mark-to-market adjustments and other		(1,267	)		(655	)		(1,259	)		(853	)
Other income (expense), net	$	8,066		$	12,149		$	96,126		$	20,249

~~14.~~15. NET INCOME PER COMMON SHARE

Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period. The denominator used in calculating diluted net income per common share further includes any common shares available to be issued upon vesting or exercise of outstanding equity-based compensation awards if such inclusion would be dilutive, calculated using the treasury stock method, and any common shares to be issued upon conversion of the Convertible Notes, calculated using the if-converted method.

The computation of basic and diluted net income per common share was as follows (dollars in thousands, except per share amounts):

	Three Months Ended June 30,				Six Months Ended June 30,				*Three Months Ended June 30,*				*Six Months Ended June 30,*
	2021		2020		2021		2020		*2022*		*2021*		*2022*		*2021*
Numerator:
Net income - basic	$	106,153	$	62,540	$	174,735	$	131,866	$	69,245	$	106,153	$	240,721	$	174,735
Add: Convertible Notes interest expense, net of tax		1,551		0		2,014		0		1,551		1,551		3,095		2,014
Net income - diluted	$	107,704	$	62,540	$	176,749	$	131,866	$	70,796	$	107,704	$	243,816	$	176,749

Denominator:
Weighted average common shares outstanding - basic		6,014,351		5,831,796		6,013,382		5,764,850		5,946,507		6,014,351		5,982,494		6,013,382
Effect of dilutive equity-based compensation awards⁽¹⁾		37,218		51,621		38,831		54,783		18,894		37,218		20,364		38,831
Effect of dilution from if-converted Convertible Notes⁽²⁾		404,248		0		260,630		0		404,248		404,248		404,248		260,630
Weighted average common shares outstanding - diluted		6,455,817		5,883,417		6,312,843		5,819,633		6,369,649		6,455,817		6,407,106		6,312,843

Net Income per Common Share:
Basic	$	17.65	$	10.72	$	29.06	$	22.87	$	11.64	$	17.65	$	40.24	$	29.06
Diluted	$	16.68	$	10.63	$	28.00	$	22.66	$	11.11	$	16.68	$	38.05	$	28.00

Supplemental Net Income per Common Share Disclosure:
Anti-dilutive shares from equity-based compensation awards⁽¹⁾		8,415		506		8,415		363		14,667		8,415		14,667		8,415

⁽¹⁾	Equity-based compensation awards whose impact is considered to be anti-dilutive under the treasury stock method were excluded from the diluted net income per common share calculation.
⁽²⁾	Based on a conversion rate of 0.4394 shares of common stock per weighted $1,000 principal amount of Convertible Notes outstanding during ~~the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2021.~~all periods presented.

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~~15.~~16. COMMITMENTS AND CONTINGENCIES

Contractual Obligations. The Company has obligations to make future payments for goods and services under certain contractual arrangements. These contractual obligations secure the future rights to various goods and services to be used in the normal course of the Company’s operations. In accordance with applicable accounting rules, the future rights and obligations pertaining to firm commitments, such as certain purchase obligations under contracts, are not reflected as assets or liabilities in the condensed consolidated balance sheets. As of June 30, ~~2021,~~ 2022~~except for additional debt obligations disclosed in note~~ 8,, there have been no material changes to the contractual obligations previously disclosed in the ~~2020~~2021 Form 10-K.

In addition, the Company incurs recurring utility pole rental costs and fees imposed by various governmental authorities, including franchise fees, as part of its operations. However, these costs are not included in the Company’s contractual obligations as they are cancellable on short notice, in the case of pole rental costs, or are passed through on a monthly basis to the Company’s customers and are periodically remitted to authorities, in the case of fees imposed by governmental authorities. The Company also has franchise agreements requiring plant construction and the provision of services to customers within the franchise areas. In connection with these obligations under existing franchise agreements, the Company obtains surety bonds or letters of credit guaranteeing performance to municipalities and public utilities and payment of insurance premiums. Payments under these arrangements are required only in the remote event of nonperformance. The Company issued letters of credit totaling ~~$33.0~~$44.1 million on behalf of Wisper to guarantee its performance obligations under an FCC broadband funding program. As of June 30, ~~2021,~~ 2022, the Company has assessed the likelihood of non-performance associated with the guarantee to be remote, and therefore, no liability has been accrued within the condensed consolidated balance sheet. Refer to note 8 for further details on this transaction.

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Litigation and Legal Matters. The Company is subject to complaints and administrative proceedings and has been a defendant in various civil lawsuits that have arisen in the ordinary course of its business. Such matters include contract disputes; actions alleging negligence, invasion of privacy, trademark, copyright and patent infringement, and violations of applicable wage and hour laws; statutory or common law claims involving current and former employees; and other matters. Although the outcomes of any legal claims and proceedings against the Company cannot be predicted with certainty, based on currently available information, the Company believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its business, financial condition, results of operations or cash flows.

Regulation in the Company’s Industry. The Company’s operations are extensively regulated by the FCC, some state governments and most local governments. The FCC has the authority to enforce its regulations through the imposition of substantial fines, the issuance of ~~cease and desist~~cease-and-desist orders and/or the imposition of other administrative sanctions, such as the revocation of FCC licenses needed to operate certain transmission facilities used in connection with cable operations. Future legislative and regulatory changes could adversely affect the Company’s operations.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations ~~and financial condition~~ should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2020~~2021 and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” both of which are contained in our ~~2020~~2021 Form 10-K. Our results of operations and financial condition discussed herein may not be indicative of our future results and trends.

Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” all totals, percentages and year-over-year changes are calculated using exact numbers. Minor differences may exist due to rounding.

~~Any discussion of consolidated~~The results ~~or performance~~discussed below include Hargray operations for the ~~three and six months ended June 30, 2021 is inclusive of~~period since the ~~Valu-Net operations, which were acquired on July 1, 2020, and approximately two months of Hargray operations, which were acquired on~~ May 3, 2021 acquisition date and ~~excludes~~CableAmerica operations for the ~~Anniston System, which was divested on October~~period since the December 30, 2021 acquisition date, and exclude the operations contributed to Clearwave Fiber (the "Clearwave Fiber Contribution") for the period since the January 1, ~~2020. The Anniston System was included in the~~2022 contribution date. Hargray ~~Acquisition~~ and ~~its~~CableAmerica operations are ~~included in~~collectively referred to as the ~~Company’s results with~~"Acquired Operations" within the ~~Hargray operations.~~following discussion.

Overview

We are a fully integrated provider of data, video and voice services to residential and business customers in 24 Western, Midwestern and Southern ~~states. We provided these broadband services to residential and business customers in approximately 1,050 communities~~states as of June 30, ~~2021.~~2022. The markets we serve are primarily non-metropolitan, secondary and tertiary markets, with approximately ~~72%~~73% of our customers located in seven states as of June 30, ~~2021:~~2022: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. Our ~~biggest~~biggest customer concentrations are in the Mississippi Gulf Coast region and in the greater Boise, Idaho region. We provided service to approximately ~~1,134,000~~1.1 million residential and business customers out of approximately ~~2.6~~2.7 million homes passed as of June 30, ~~2021.~~2022. Of these customers, approximately ~~1,017,000~~1,059,000 subscribed to data services, ~~287,000~~221,000 subscribed to video services and ~~153,000~~140,000 subscribed to voice services as of June 30, ~~2021.~~2022.

We generate substantially all of our revenues through three primary product lines. Ranked by share of our total revenues through the first six months of ~~2021,~~2022, they are residential data ~~(52.7%~~(54.2%), residential video ~~(22.0%~~(19.8%) and business services (data, voice and video: ~~18.4%~~17.9%). The profit margins, growth rates and/or capital intensity of these three primary product lines vary significantly due to competition, product maturity and relative costs.

We focus on growing our higher margin businesses, namely residential data and business services. Beginning in 2013, we began our shift away from our prior concentration on growing revenues through subscriber retention and maximizing customer primary service units (“PSUs”). We adapted our strategy to face the industry-wide trends of declining profitability of residential video services and declining revenues from residential voice services. The declining profitability of residential video services is due primarily to increasing programming costs and retransmission fees and competition from other content providers, and the declining revenues from residential voice services are due primarily to the increasing use of wireless voice services instead of residential voice services. Separately, we have also focused on retaining customers who are likely to produce higher relative value over the life of their service relationships with us, are less attracted by discounting, require less support and churn less. This strategy focuses on increasing Adjusted EBITDA, Adjusted EBITDA less capital expenditures and producing higher margins.

Excluding the effects of our recently completed and any potential future acquisitions and divestitures, the trends described above ~~and the COVID-19 pandemic~~ have impacted, and are expected to further impact, our three primary product lines in the following ways:

●

Residential data. We have experienced growth in residential data customers and revenues every year since 2013, and that growth accelerated during the 12 months ended June 30, 2021, in part as a result of the COVID-19 pandemic and our associated responses. During 2020, we organically added over 50% more residential data customers than we did during the four-and-a-half-year period between our July 2015 spin-off from our former corporate parent and the end of 2019.2013. We expect growth for this product line to continue over the long-term as we believe upgrades in our broadband capacity, our ability to offer higher access speeds than many of our competitors, the reliability and flexibility of our data service offerings and our ~~Wi-Fi~~WiFi support service will enable us to continue to grow average monthly revenue per unit ("ARPU") from our existing customers and capture additional market share from both data subscribers who use other providers as well as households in our footprint that do not yet subscribe to data services from any provider. We experienced elevated growth rates in residential data customers and revenues during the first two years of the COVID-19 pandemic, but are now seeing a return to more normalized, pre-pandemic growth patterns.

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●

Residential video. Residential video service is an increasingly costly and fragmenting business, with programming costs and retransmission fees continuing to escalate in the face of a proliferation of streaming content alternatives. We intend to continue our strategy of focusing on the higher-margin businesses of residential data and business services while de-emphasizing our residential video business. As a result of our video strategy, we expect that residential video customers and revenues will decline further in the future. In 2021, we began the launch of Sparklight® TV, an internet protocol-based (“IPTV”) video service that allows customers with our Sparklight TV app to stream our video channels from the ~~cloud through a new app. This~~cloud. Currently, all of our homes passed in non-Hargray markets have access to Sparklight TV, and we are now working to expand access to the Hargray markets as well. This transition from linear to IPTV video service ~~will enable~~enables us to reclaim bandwidth, freeing up network capacity to increase data speeds and capacity across our network.

●

Business services. We have experienced significant growth in business data customers and revenues, and we expect this growth to continue over the long-term. We attribute this growth to our strategic focus on increasing sales to business customers and our efforts to attract enterprise business customers. Margins for products sold to business customers have remained attractive, which we expect will continue.

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We continue to experience increased competition, particularly from telephone companies, ~~cable~~fiber and municipal overbuilders, over-the-top (“OTT”) video providers and direct broadcast satellite (“DBS”) television providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. In addition, a key objective of our capital allocation process is to invest in initiatives designed to drive revenue and Adjusted EBITDA expansion. More than ~~50%~~60% of our total capital expenditures since 2017 were focused on infrastructure improvements that were intended to grow these measures. We continue to invest capital to, among other things, increase fiber density and coverage, expand our footprint, increase plant and data ~~capacities as well as~~capacity, enhance network ~~reliability. As of June 30, 2021, we offered~~reliability and improve the customer experience. We offer Gigabit data service to ~~approximately 98%~~nearly all of our homes ~~passed. We are also deploying~~passed and have deployed DOCSIS 3.1, which, together with Sparklight TV, ~~will~~ further ~~increase~~increases our network capacity and ~~enable~~enables future growth in our residential data and business services product lines.

We expect to continue to devote financial resources to infrastructure improvements in existing and newly acquired markets as well as to expand high-speed data service in areas where our consortium was designated the winning bidder for the FCC’s Rural Digital Opportunity Fund Phase I auction. We believe these investments are necessary to continually meet our customers’ needs and to remain competitive. The capital enhancements associated with recent acquisitions include rebuilding ~~low capacity~~low-capacity markets; reclaiming bandwidth from analog video services; implementing 32-channel bonding; deploying DOCSIS ~~3.1; converting~~4.0; consolidating back office functions such as billing, accounting and service provisioning; migrating products to legacy Cable One platforms; and expanding our high-capacity fiber network.

Our primary goals are to continue growing residential data and business services revenues, to increase profit margins and to deliver strong Adjusted EBITDA and Adjusted EBITDA less capital expenditures. To achieve these goals, we intend to continue our disciplined cost management approach, remain focused on customers with expected higher relative value and follow through with further planned investments in broadband plant upgrades, including the deployment of DOCSIS ~~3.1~~4.0 capabilities and new data service offerings for residential and business customers. At the same time, we intend to continue balancing the impact of the COVID-19 pandemic on our business, associates, customers and other stakeholders. We also plan to continue seeking broadband-related acquisition and strategic investment opportunities in rural markets in addition to pursuing organic growth through market expansion projects.

Our recent acquisitions and strategic investments include:

●

On May ~~4, 2020, we made a minority equity investment for a less than 10% ownership interest in Nextlink, a wireless internet service provider, for $27.2 million.~~

●

On July 1, 2020, we acquired Valu-Net, an all-fiber internet service provider headquartered in Kansas with approximately 5,000 residential data subscribers at the time of the acquisition. We paid a purchase price of $38.9 million in cash on a debt-free basis.

●

~~On July 10, 2020, we acquired an approximately 40% minority equity interest in Wisper, a wireless internet service provider, for total consideration of $25.3 million.~~

●

On October 1, 2020, we contributed the assets of the Anniston System to Hargray in exchange for an approximately 15% equity interest, on a fully diluted basis, in Hargray, a data, video and voice services provider. The Anniston System had approximately 19,000 residential data subscribers at the time of the transaction.

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●

~~On November 12, 2020, we acquired a 45% minority equity interest in MBI, a data, video and voice services provider, for $574.9 million in cash.~~

●

~~On May~~ 3, 2021, we acquired the remaining approximately 85% equity interest in Hargray, a data, video and voice services provider to residential and business customers throughout Alabama, Florida, Georgia and South Carolina, that we did not already own for an approximately $2.0 billion cash purchase price that implied a $2.2 billion total enterprise value for Hargray on a cash-free and debt-free basis, subject to customary post-closing adjustments. The Hargray Acquisition was financed with cash on hand and net proceeds from indebtedness. The Hargray Acquisition expanded our presence in the Southeastern U.S. and is expected to enable us to capitalize on Hargray’s experience and expertise in fiber expansion.basis.

~~COVID-19 Update~~
●
On October 1, 2021, we made a minority equity investment for a less than 10% ownership interest in Point Broadband, a fiber internet service provider, for $25.0 million. On March 24, 2022, we invested an additional $5.4 million in Point Broadband.

The actions we took in response to the COVID-19 pandemic did not have any notable negative impact on our results for the first two quarters of 2021, due primarily to the resumption of billing late charges, reconnect fees and data overage fees as well as the normalization of labor costs in the fourth quarter of 2020. We experienced a positive impact on residential data revenues for the six months ended June 30, 2021 as a result of retaining a significant number of residential data customers acquired during 2020 and continued growth of residential data customers during the period, and we expect that there will continue to be a positive impact on 2021 residential data revenues from these factors, albeit at a slower pace during the remainder of 2021. However, we continue to face various uncertainties related to the impact of the COVID-19 pandemic on the overall economy and our business, including whether we will be able to sustain continued customer growth, our level of bad debt expense and whether some of the expense reductions realized during the second half of 2020 and the first half of 2021 will continue or if those expenses will return to more normal levels given the fluid situation regarding pandemic-related restrictions across the country.
●
On October 18, 2021, we completed a minority equity investment for a less than 10% ownership interest in Tristar, a special-purpose acquisition company, for $20.8 million.

We continue to monitor the evolving situation caused by the COVID-19 pandemic, and we may take further actions required by governmental authorities or that we determine are prudent to support the well-being of our associates, customers, suppliers, business partners and others. The degree to which the COVID-19 pandemic impacts our operations, business, financial results and financial condition will depend on future developments, which are highly uncertain, continuously evolving and in many cases cannot be predicted. This includes, but is not limited to, the duration and spread of the pandemic and its variants, its severity, the efficacy of vaccines (particularly with respect to emerging strains of the virus), the actions to contain the virus or treat its impact, potential legislative or regulatory efforts to impose new requirements on our data services and how quickly and to what extent normal social, economic and operating conditions can resume.
●
On November 5, 2021, we invested an additional $50.0 million in Nextlink, a wireless internet service provider, resulting in us owning an approximately 17% equity interest in Nextlink.

●

On December 30, 2021, we acquired certain assets and assumed certain liabilities from CableAmerica, a data, video and voice services provider in central Missouri, for $113.1 million in cash on a debt-free basis.

~~Refer to the section entitled “Risks Factors” in the 2020 Form 10-K for additional risks we face due to the COVID-19 pandemic.~~

●

On January 1, 2022, we closed a joint venture transaction in which we contributed certain fiber operations (including certain fiber assets of Hargray and a majority of the operations of Clearwave) and certain unaffiliated third-party investors contributed cash, to a newly formed entity, Clearwave Fiber. The operations we contributed generated approximately 3% of our consolidated revenues for the three months ended December 31, 2021. Our approximately 58% investment in Clearwave Fiber was valued at $440.0 million as of the closing date. We recognized a non-cash gain of $22.1 million associated with this transaction. Clearwave Fiber is intended to accelerate deployment of fiber internet to residents and businesses in existing markets and near-adjacent areas, as well as to provide connectivity to unserved and underserved areas in such markets via fiber-to-the-premises service.

●

On April 1, 2022, we contributed our Tallahassee, Florida system to MetroNet, a fiber internet service provider, in exchange for cash consideration of $7.0 million and an equity interest of less than 10% in MetroNet valued at $7.0 million.

●

On June 1, 2022, we completed a minority equity investment for a less than 10% ownership interest in Visionary, an internet service provider, for $7.2 million.

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Results of Operations

PSU and Customer Counts

Selected subscriber data for the periods presented was as follows (in thousands, except percentages):

As of June 30,

Annual Net Gain (Loss)

2021

2020

Change

% Change

Residential data PSUs⁽¹⁾
923 758 165 21.7
Residential video PSUs⁽¹⁾
272 276 (4 ) (1.3 )
Residential voice PSUs⁽¹⁾
110 98 12 11.8
Total residential PSUs⁽¹⁾
1,305 1,132 173 15.3

Business data PSUs⁽¹⁾
94 80 14 17.3
Business video PSUs⁽¹⁾
14 14 0 3.2
Business voice PSUs⁽¹⁾
44 35 9 25.5
Total business services PSUs⁽¹⁾
152 129 23 18.0

Total data PSUs
1,017 838 179 21.3
Total video PSUs
287 290 (3 ) (1.1 )
Total voice PSUs
153 133 20 15.3
Total PSUs
1,457 1,261 196 15.5

Residential customer relationships⁽¹⁾
1,032 876 156 17.8
Business customer relationships⁽¹⁾
102 86 17 19.6
Total customer relationships
1,134 962 172 17.9

⁽¹⁾

Due to the recency of the May 3, 2021 Hargray Acquisition, certain Hargray bulk accounts are counted as business PSUs and business customer relationships, whereas we classify such accounts as residential PSUs and residential customer relationships. We are currently in the process of aligning Hargray’s methodology with our methodology so that future PSU and customer relationship counts are calculated on the same basis.

	As of June 30,				Annual Net Gain (Loss)
	2022		2021		Change			% Change
Residential data PSUs		964		923		41			4.4
Residential video PSUs		208		272		(64	)		(23.6	)
Residential voice PSUs		99		110		(11	)		(10.2	)
Total residential PSUs		1,270		1,305		(35	)		(2.6	)

Business data PSUs		96		94		2			1.7
Business video PSUs		13		14		(2	)		(13.3	)
Business voice PSUs		41		44		(3	)		(5.8	)
Total business services PSUs		149		152		(3	)		(1.9	)

Total data PSUs		1,059		1,017		43			4.2
Total video PSUs		221		287		(66	)		(23.1	)
Total voice PSUs		140		153		(14	)		(9.0	)
Total PSUs		1,420		1,457		(37	)		(2.6	)

Residential customer relationships		1,025		1,032		(7	)		(0.7	)
Business customer relationships		102		102		(1	)		(0.8	)
Total customer relationships		1,126		1,134		(8	)		(0.7	)

In recent years, our customer mix has shifted ~~causing subscribers to move~~away from double- and triple-play packages combining data, video ~~and~~and/or voice services, ~~to single~~which is in line with our strategy of focusing on our higher margin residential data and ~~double-play packages.~~business services product lines. This is largely because some residential video customers have defected to DBS services and OTT offerings and households continue to discontinue residential voice service. In addition, we have focused on selling data-only packages to new customers rather than cross-selling video to these customers. ~~Meanwhile, the COVID-19 pandemic and our responses to it have accelerated this customer mix shift.~~

Use of Nonfinancial Metrics and ~~Average Monthly Revenue per Unit (~~“ARPU”)

We use various nonfinancial metrics to measure, manage and monitor our operating performance on an ongoing basis. Such metrics include homes passed, PSUs and customer relationships. Homes passed represents the number of serviceable and marketable homes and businesses passed by our active plant. A PSU represents a single subscription to a particular service offering. Residential bulk multi-dwelling PSUs are generally classified as residential and are counted at the individual unit level. Business voice customers who have multiple voice lines are counted as a single PSU. A customer relationship represents a single customer who subscribes to one or more PSUs.

We believe homes passed, PSU and customer relationship counts are useful to investors in evaluating our operating performance. Similar measures with similar titles are common measures used by investors, analysts and peers to compare performance in our industry, although our measures of homes passed, PSUs and customer relationships may not be directly comparable to similarly titled measures reported by other companies.

We use ARPU to evaluate and monitor the amount of revenue generated by each type of service subscribed to by customers and the contribution to total revenues as well as to analyze and compare growth patterns. Residential ARPU values represent the applicable residential service revenues (excluding installation and activation fees) divided by the corresponding average of the number of PSUs at the beginning and end of each period, divided by the number of months in the period, except that for any PSUs added or subtracted as a result of an acquisition or divestiture occurring during the period, the associated ARPU values represent the applicable residential service revenues (excluding installation and activation fees) divided by the pro-rated average number of PSUs during such period. Business services ARPU values represent business services revenues divided by the average of the number of business customer relationships at the beginning and end of each period, divided by the number of months in the period, except that for any business customer relationships added or subtracted as a result of an acquisition or divestiture occurring during the period, the associated ARPU values represent business services revenues divided by the pro-rated average number of business customer relationships during such period.

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We believe ARPU is useful to investors in evaluating our operating performance. ARPU and similar measures with similar titles are common measures used by investors, analysts and peers to compare performance in our industry, although our measure of ARPU may not be directly comparable to similarly titled measures reported by other companies.

Comparison of Three Months Ended June 30, ~~2021~~2022 to Three Months Ended June 30, ~~2020~~2021

Revenues

Revenues increased ~~$73.4~~$27.3 million, or ~~22.4%~~6.8%, due primarily to ~~$50.6~~$25.2 million of additional revenues from ~~Hargray operations~~the Acquired Operations as well as ~~increases~~an increase in ~~our~~ higher margin ~~product lines of~~ residential data and business services revenues, ~~of $25.7 million and $3.3 million, respectively, and a $4.9 million increase in other revenues,~~ partially offset by the contribution of Clearwave operations to Clearwave Fiber that generated $5.6 million of revenues in the prior year quarter and decreases in residential video and residential voice revenues.

Revenues by service offering for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, together with the percentages of total revenues that each item represented for the periods presented, were as follows (dollars in thousands):

	Three Months Ended June 30,														Three Months Ended June 30,
	2021				2020				2021 vs. 2020						2022				2021				2022 vs. 2021
	Revenues		% of Total		Revenues		% of Total		$ Change			% Change			Revenues		% of Total		Revenues		% of Total		$ Change			% Change
Residential data	$	207,648		51.7	$	164,015		50.0	$	43,633			26.6		$	233,330		54.4	$	207,648		51.7	$	25,682			12.4
Residential video		87,240		21.7		87,328		26.6		(88	)		(0.1	)		84,761		19.8		87,240		21.7		(2,479	)		(2.8	)
Residential voice		12,112		3.0		12,120		3.7		(8	)		(0.1	)		10,715		2.5		12,112		3.0		(1,397	)		(11.5	)
Business services		76,616		19.1		58,469		17.8		18,147			31.0			76,660		17.9		76,616		19.1		44			0.1
Other		18,133		4.5		6,371		1.9		11,762			184.6			23,619		5.5		18,133		4.5		5,486			30.3
Total revenues	$	401,749		100.0	$	328,303		100.0	$	73,446			22.4		$	429,085		100.0	$	401,749		100.0	$	27,336			6.8

Residential data service revenues increased ~~$43.6~~$25.7 million, or ~~26.6%~~12.4%, due primarily to ~~$18.0~~$13.6 million of additional revenues from ~~Hargray operations,~~the Acquired Operations, as well as subscriber growth, a reduction in package discounting and increased customer subscriptions to premium ~~tiers.~~tiers, including the migration of customers on our 100 Megabits per second ("Mbps") plan to our 200 Mbps plan in March 2022.

Residential video service revenues ~~were flat~~decreased $2.5 million, or 2.8%, due primarily to ~~$9.0~~a decrease in residential video subscribers, partially offset by $5.1 million of additional revenues from ~~Hargray operations~~the Acquired Operations and a rate adjustment implemented in March ~~2021, offset by a decrease in residential video subscribers.~~2022.

Residential voice service revenues ~~were flat~~decreased $1.4 million, or 11.5%, due primarily to ~~$1.9 million from Hargray operations, offset by~~ a decrease in residential voice ~~subscribers.~~subscribers, partially offset by $0.6 million of additional revenues from the Acquired Operations.

Business services revenues increased ~~$18.1 million, or 31.0%,~~slightly due primarily to ~~$14.9~~$1.3 million of additional revenues from ~~Hargray operations~~the Acquired Operations and growth in our business data and voice services to small and medium-sized businesses and enterprise ~~customers. Total~~customers, partially offset by the contribution of Clearwave operations to Clearwave Fiber that generated $5.6 million of business ~~customer relationships increased 19.6% year-over-year.~~services revenues in the second quarter of 2021.

Other revenues increased ~~$11.8~~$5.5 million, or ~~184.6%~~30.3%, due primarily to ~~$6.8~~$4.7 million of additional revenues from ~~Hargray operations and higher advertising revenues, late charges and reconnect fees compared to~~ the ~~second quarter~~Acquired Operations, consisting primarily of 2020 which was negatively impacted by actions we took in response to the COVID-19 pandemic, including temporarily discontinuing charging data overage fees, waiving late charges and suspending collection activities.regulatory revenues.

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ARPU for the indicated service offerings for the three months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:

Three Months Ended June 30,

2021 vs. 2020

2021

2020

$ Change

% Change

Residential data⁽¹⁾
$ 78.34 $ 73.80 $ 4.54 6.2
Residential video⁽¹⁾
$ 110.32 $ 102.95 $ 7.37 7.2
Residential voice⁽¹⁾
$ 39.28 $ 40.35 $ (1.07 ) (2.7 )
Business services⁽¹⁾
$ 263.86 $ 228.11 $ 35.75 15.7

⁽¹⁾

	Three Months Ended June 30,				2022 vs. 2021
	2022		2021		$ Change			% Change
Residential data	$	80.44	$	78.34	$	2.10			2.7
Residential video	$	130.28	$	110.32	$	19.96			18.1
Residential voice	$	35.52	$	39.28	$	(3.76	)		(9.6	)
Business services	$	252.00	$	263.86	$	(11.86	)		(4.5	)

Costs and Expenses

Operating expenses (excluding depreciation and amortization) were ~~$112.4~~$118.4 million for the three months ended June 30, ~~2021~~2022 and increased ~~$6.3~~$6.0 million, or ~~6.0%~~5.4%, compared to the three months ended June 30, ~~2020.~~2021. The increase in operating expenses was primarily attributable to ~~$14.8~~$6.7 million of additional expenses related to ~~Hargray operations, partially offset by a $7.3~~the Acquired Operations and $2.7 million ~~reduction in programming expenses and a $3.1 million decrease in~~of higher labor and other compensation-related ~~costs. Operating expenses for the three months ended June 30, 2020 included $3.9~~costs, partially offset by $4.1 million of ~~increased labor and other operating~~lower programming expenses as a result of ~~the COVID-19 pandemic.~~video customer losses. Operating expenses as a percentage of revenues were ~~28.0%~~27.6% and ~~32.3%~~28.0% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Selling, general and administrative expenses were ~~$88.0~~$90.8 million for the three months ended June 30, ~~2021~~2022 and increased ~~$23.0~~$2.8 million, or ~~35.4%~~3.1%, compared to the three months ended June 30, ~~2020.~~2021. The increase in selling, general and administrative expenses was primarily attributable to ~~$13.6~~$1.1 million of additional expenses related to ~~Hargray operations~~the Acquired Operations and increases ~~of $4.9 million~~ in labor and other compensation-related costs ~~$3.5~~of $1.8 million, inbad debt expense of $1.5 million, marketing costs of $1.4 million and professional fees of $1.4 million, partially offset by lower acquisition-related costs ~~$3.2~~of $3.6 million ~~in health insurance costs, $1.6 million in professional fees~~ and ~~$1.0 million in~~ system conversion costs partially offset by a $5.8 million decrease in bad debt expense. The increase in labor and other compensation-related costs was due to higher stock-based compensation, increased headcount and higher average salary rates. The increase in acquisition-related costs was due to expenses related to the Hargray Acquisition. The increase in health insurance costs was the result of lower-than-normal costs in the prior year quarter from reduced claims activity in connection with stay-at-home orders issued during the pandemic. Higher bad debt expense in the three months ended June 30, 2020 was the result of higher expense estimates in that period resulting from the pandemic. Selling,$1.1 million. Selling, general and administrative expenses as a percentage of revenues were ~~21.9%~~21.2% and ~~19.8%~~21.9% for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Depreciation and amortization expense was ~~$84.9~~$88.4 million for the three months ended June 30, ~~2021, including $15.7 million from Hargray operations,~~2022 and increased ~~$19.3~~$3.5 million, or ~~29.5%~~4.1%, compared to the three months ended June 30, ~~2020.~~2021. The increase in depreciation and amortization expense was primarily due to $8.6 million of additional expenses from the Acquired Operations, partially offset by lower expenses resulting from the Clearwave Fiber Contribution. Depreciation and amortization expense as a percentage of revenues was ~~21.1%~~20.6% and ~~20.0%~~21.1% for the three months ended June 30, 2022 and 2021, respectively.

We recognized $8.3 million in non-cash losses associated with the dispositions of our Tallahassee, Florida system and ~~2020, respectively.~~certain other non-core assets during the three months ended June 30, 2022.

Interest Expense

Interest expense was ~~$28.9~~$32.1 million for the three months ended June 30, ~~2021~~2022 and increased ~~$12.3~~$3.1 million, or ~~74.2%~~10.8%, compared to the three months ended June 30, ~~2020.~~2021. The increase was driven primarily by additional outstanding debt throughout the period and higher interest ~~rate swap settlement expense, partially offset by lower interest~~ rates.

Other Income (Expense), Net

Other income, net, was $8.1 million for the three months ended June 30, 2022 and consisted primarily of a $6.3 million non-cash gain on fair value adjustment associated with the MBI Net Option and interest and investment income. Other income, net, was $12.1 million for the three months ended June 30, 2021 and consisted primarily of a $33.4 million non-cash gain on fair value adjustment associated with our existing investment in Hargray upon the acquisition of Hargray ~~Acquisition~~ and interest and investment income, partially offset by a $21.4 million non-cash loss on fair value adjustment associated with the MBI Net Option. ~~Other income, net, was $1.7 million for the three months ended June 30, 2020 and consisted of interest and investment income.~~

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Income Tax Provision (Benefit)

Income tax provision was $22.8 million for the three months ended June 30, 2022 compared to an income tax benefit ~~was~~of $8.6 million for the three months ended June 30, 2021 ~~compared to income~~and our effective tax ~~provision of $13.2 million~~rate was 23.5% and -8.7% for the three months ended June 30, ~~2020. Our~~2022 and 2021, respectively. The increase in the effective tax rate was ~~-8.7% and 17.4% for the three months ended June 30, 2021 and 2020, respectively. The changes were~~ due primarily to a $35.4 million ~~increase in~~ income tax benefit from the reversal of a pre-existing deferred tax liability on the investment in Hargray ~~partially offset by a $5.2 million increase in income tax expense related to the change in valuation allowance and a $2.8 million income tax benefit~~ in the prior year ~~attributable to the NOL carryback provision of the CARES Act~~ that did not ~~recur in the current year.~~recur.

Net Income

Net income was $69.2 million for the three months ended June 30, 2022 compared to $106.2 million for the three months ended June 30, ~~2021 compared to $62.5 million for the three months ended June 30, 2020, an increase of $43.6 million.~~2021.

Unrealized ~~Loss~~Gain on Cash Flow Hedges and Other, Net of Tax

Unrealized ~~loss~~gain on cash flow hedges and other, net of tax was ~~$16.0~~$32.6 million for the three months ended June 30, ~~2021 and increased $6.6 million, or 69.4%,~~2022 compared to ~~the $9.5~~$16.0 million loss for the three months ended June 30, ~~2020~~2021. The $48.7 million change was due ~~primarily~~ to comparatively ~~lower~~higher projected future increases in interest rates.

Comparison of Six Months Ended June 30, ~~2021~~2022 to Six Months Ended June 30, ~~2020~~2021

Revenues

Revenues increased ~~$93.5~~$112.8 million, or ~~14.4%~~15.2%, due primarily to ~~$50.6~~$102.1 million of additional revenues from ~~Hargray operations~~the Acquired Operations as well as ~~increases~~an increase in ~~our~~ higher margin ~~product lines of~~ residential data and business services revenues, ~~of $54.3 million and $5.8 million, respectively, and a $5.1 million increase in other revenues,~~ partially offset by the contribution of Clearwave operations to Clearwave Fiber that generated $11.0 million of revenues in the prior year period and decreases in residential video and residential voice revenues.

Revenues by service offering for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, together with the percentages of total revenues that each item represented for the periods presented, were as follows (dollars in thousands):

	Six Months Ended June 30,														Six Months Ended June 30,
	2021				2020				2021 vs. 2020						2022				2021				2022 vs. 2021
	Revenues		% of Total		Revenues		% of Total		$ Change			% Change			Revenues		% of Total		Revenues		% of Total		$ Change		% Change
Residential data	$	391,253		52.7	$	319,005		49.1	$	72,248			22.6		$	463,483		54.2	$	391,253		52.7	$	72,230		18.5
Residential video		163,257		22.0		172,650		26.6		(9,393	)		(5.4	)		169,419		19.8		163,257		22.0		6,162		3.8
Residential voice		22,589		3.0		24,547		3.8		(1,958	)		(8.0	)		22,610		2.6		22,589		3.0		21		0.1
Business services		136,978		18.4		116,331		17.9		20,647			17.7			153,152		17.9		136,978		18.4		16,174		11.8
Other		28,934		3.9		16,966		2.6		11,968			70.5			47,147		5.5		28,934		3.9		18,213		62.9
Total revenues	$	743,011		100.0	$	649,499		100.0	$	93,512			14.4		$	855,811		100.0	$	743,011		100.0	$	112,800		15.2

Residential data service revenues increased $72.2 million, or ~~22.6%~~18.5%, due primarily to ~~$18.0~~$44.2 million of additional revenues from ~~Hargray operations~~the Acquired Operations, as well as subscriber growth, a reduction in package discounting and increased customer subscriptions to premium ~~tiers.~~tiers, including the migration of customers on our 100 Mbps plan to our 200 Mbps plan in March 2022.

Residential video service revenues ~~decreased $9.4~~increased $6.2 million, or ~~5.4%~~3.8%, due primarily to ~~a decrease in residential video subscribers, partially offset by $9.0~~$19.1 million of additional revenues from ~~Hargray operations~~the Acquired Operations and a rate adjustment implemented in March ~~2021.~~2022, partially offset by a decrease in residential video subscribers.

Residential voice service revenues ~~decreased $2.0 million, or 8.0%, due primarily to a~~were unchanged from prior year as the decrease in residential voice subscribers ~~partially~~was offset by ~~$1.9~~$3.2 million of additional revenues from ~~Hargray operations.~~the Acquired Operations.

Business services revenues increased ~~$20.6~~$16.2 million, or ~~17.7%~~11.8%, due primarily to ~~$14.9~~$18.8 million of additional revenues from ~~Hargray operations~~the Acquired Operations and growth in our business data and voice services to small and medium-sized businesses and enterprise ~~customers. Total~~customers, partially offset by the contribution of Clearwave operations to Clearwave Fiber that generated $11.0 million of business ~~customer relationships~~services revenues in the first half of 2021.

Other revenues increased ~~19.6% year-over-year.~~$18.2 million, or 62.9%, due primarily to $16.7 million of additional revenues from the Acquired Operations, consisting primarily of regulatory revenues.

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Other revenues increased $12.0 million, or 70.5%, due primarily to $6.8 million from Hargray operations and higher advertising revenues, late charges and reconnect fees compared to the prior year period which was negatively impacted by actions we took in response to the COVID-19 pandemic, including temporarily discontinuing charging data overage fees, waiving late charges and suspending collection activities.

ARPU for the indicated service offerings for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:

Six Months Ended June 30,

2021 vs. 2020

2021

2020

$ Change

% Change

Residential data⁽¹⁾
$ 78.03 $ 72.68 $ 5.35 7.4
Residential video⁽¹⁾
$ 107.15 $ 99.97 $ 7.18 7.2
Residential voice⁽¹⁾
$ 39.32 $ 40.22 $ (0.90 ) (2.2 )
Business services⁽¹⁾
$ 250.30 $ 227.39 $ 22.91 10.1

⁽¹⁾

	Six Months Ended June 30,				2022 vs. 2021
	2022		2021		$ Change			% Change
Residential data	$	80.46	$	78.03	$	2.43			3.1
Residential video	$	124.43	$	107.15	$	17.28			16.1
Residential voice	$	37.03	$	39.32	$	(2.29	)		(5.8	)
Business services	$	252.87	$	250.30	$	2.57			1.0

Costs and Expenses

Operating expenses (excluding depreciation and amortization) were ~~$213.8~~$237.8 million for the six months ended June 30, ~~2021~~2022 and increased ~~$1.9~~$24.0 million, or ~~0.9%~~11.2%, compared to the six months ended June 30, ~~2020.~~2021. The increase in operating expenses was primarily attributable to ~~$14.8~~$29.4 million of additional expenses related to ~~Hargray operations,~~the Acquired Operations and a $3.1 million increase in labor and other compensation-related costs, partially offset by a ~~$12.7~~$9.5 million reduction in programming expenses ~~and~~as a ~~$3.0 million decrease in labor and other compensation-related costs.~~result of video customer losses. Operating expenses as a percentage of revenues were 27.8% and 28.8% for the six months ended June 30, ~~2020 included $4.1 million of increased labor~~2022 and ~~other operating expenses as a result of the COVID-19 pandemic. Operating expenses as a percentage of revenues were 28.8% and 32.6% for the six months ended June 30,~~ 2021, ~~and 2020,~~ respectively.

Selling, general and administrative expenses were ~~$157.1~~$178.6 million for the six months ended June 30, ~~2021~~2022 and increased ~~$29.2~~$21.5 million, or ~~22.8%~~13.7%, compared to the six months ended June 30, ~~2020.~~2021. The increase in selling, general and administrative expenses was primarily attributable to ~~$13.6~~$17.1 million of additional expenses related to ~~Hargray operations~~the Acquired Operations and increases of ~~$6.6~~$3.6 million in marketing costs, $3.4 million in professional fees, $3.0 million in labor and other compensation-related costs, ~~$5.9 million in acquisition-related costs, $5.0~~$2.2 million in health insurance costs ~~$2.5 million in professional services costs~~ and $2.0 million in ~~system conversion costs,~~bad debt expense, partially offset by a ~~$7.3~~$6.7 million decrease in ~~bad debt expense. The increase in labor and other compensation-related costs was due to higher stock-based compensation, increased headcount and higher average salary rates. The increase in~~ acquisition-related costs was due to expenses related to the Hargray Acquisition. The increase in health insurance costs was the result of lower-than-normal costs in the prior year period from reduced claims activity in connection with stay-at-home orders issued during the pandemic. Higher bad debt expense in the six months ended June 30, 2020 was the result of higher expense estimates in that period resulting from the pandemic. Selling,costs. Selling, general and administrative expenses as a percentage of revenues were ~~21.1%~~20.9% and ~~19.7%~~21.1% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Depreciation and amortization expense was ~~$153.4~~$176.3 million for the six months ended June 30, ~~2021, including $15.7 million from Hargray operations,~~2022 and increased ~~$22.6~~$22.9 million, or ~~17.3%~~14.9%, compared to the six months ended June 30, ~~2020.~~2021. The increase in depreciation and amortization expense was primarily due to $33.0 million of additional expenses from the Acquired Operations, partially offset by lower expenses resulting from the Clearwave Fiber Contribution. Depreciation and amortization expense as a percentage of revenues was ~~20.7%~~20.6% and ~~20.1%~~20.7% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

We recognized a $13.8 million net ~~loss on asset sales~~non-cash gain associated with the Clearwave Fiber Contribution and ~~disposals~~the dispositions of ~~$0.9 million for~~our Tallahassee, Florida system and certain other non-core assets during the six months ended June 30, 2021 and a net gain on asset sales and disposals of $4.6 million for the for the six months ended June 30, 2020. The six months ended June 30, 2020 included a $6.6 million non-cash gain on the sale of certain tower properties.2022.

Interest Expense

Interest expense was ~~$52.5~~$62.2 million for the six months ended June 30, ~~2021~~2022 and increased ~~$17.2~~$9.6 million, or ~~48.9%~~18.3%, compared to the six months ended June 30, ~~2020,~~2021. The increase was driven primarily by additional outstanding debt throughout the period and higher interest ~~rate swap settlement expense, partially offset by lower interest~~ rates.

~~Table of Contents~~

Other Income (Expense), Net

Other income, net, was $96.1 million for the six months ended June 30, 2022 and consisted primarily of a $90.9 million non-cash gain on fair value adjustment associated with the MBI Net Option and interest and investment income. Other income, net, was $20.2 million for the six months ended June 30, 2021 and consisted primarily of a $33.4 million non-cash gain on fair value adjustment associated with our existing investment in Hargray upon the Hargray Acquisition and interest and investment income, partially offset by a $15.8 million non-cash loss on fair value adjustment associated with the MBI Net Option. ~~Other income, net, was $3.4 million for the six months ended June~~

30 ~~2020 and consisted~~

Table of ~~interest and investment income.~~

Contents

Income Tax Provision

Income ~~tax~~tax provision ~~was~~was $64.3 million and $9.1 million for the six months ended June 30, 2022 and 2021, respectively, and ~~decreased $10.6 million, or 53.7%, compared to the six months ended June 30, 2020. Our~~our effective tax rate was ~~4.9%~~21.0% and ~~13.0%~~4.9% for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~decreases~~ increasein ~~the income tax provision and~~ the effective tax rate ~~were~~was due primarily to a $35.4 million ~~increase in~~ income tax benefit from the reversal of a pre-existing deferred tax liability on the investment in Hargray ~~partially offset by a $9.8 million income tax benefit attributable to the NOL carryback provision of the CARES Act~~ in the prior year ~~period~~ that did not recur, ~~in 2021, a $3.8~~partially offset by $20.4 million ~~increase in~~of income tax expense related to a change in valuation allowance ~~and a $3.5 million decrease~~ in ~~income tax benefit attributable to equity-based compensation.~~the prior year that did not recur.

Net Income

Net income was $240.7 million for the six months ended June 30, 2022 compared to $174.7 million for the six months ended June 30, ~~2021 compared to $131.9 million for the six months ended June 30, 2020, an increase of $42.9 million.~~2021.

Unrealized Gain ~~(Loss)~~ on Cash Flow Hedges and Other, Net of Tax

Unrealized gain on cash flow hedges and other, net of tax was $90.1 million and $39.4 million for the six months ended June 30, 2022 and 2021, ~~compared~~respectively, and increased $50.6 million, or 128.3%, due to ~~an unrealized loss of $94.1 million for the six months ended June 30, 2020 due primarily to~~comparatively higher projected future increases in interest rates.

Use of Adjusted EBITDA

We use certain measures that are not defined by GAAP to evaluate various aspects of our business. Adjusted EBITDA is a non-GAAP financial measure and should be considered in addition to, not as superior to, or as a substitute for, net income reported in accordance with GAAP. Adjusted EBITDA is reconciled to net income below, the most directly comparable GAAP financial measure.

Adjusted EBITDA is defined as net income plus interest expense, income tax provision (benefit), depreciation and amortization, equity-based compensation, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on asset sales and disposals, system conversion costs, rebranding costs, (gain) loss on sales of businesses, equity method investment (income) loss, other (income) expense and other unusual items, as provided in the following table. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business as well as other non-cash or special items and is unaffected by our capital structure or investment activities. This measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of debt financing. These costs are evaluated through other financial measures.

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We use Adjusted EBITDA to assess our performance. In addition, Adjusted EBITDA generally correlates to the measure used in the leverage ratio calculations under the ~~Third Amended and Restated~~ Credit Agreement and the Senior Notes Indenture to determine compliance with the covenants contained in the ~~Third Amended and Restated~~ Credit Agreement and the ability to take certain actions under the Senior Notes Indenture. Adjusted EBITDA is also a significant performance measure used by us in connection with our ~~annual~~ incentive compensation ~~program.~~programs. Adjusted EBITDA does not take into account cash used for mandatory debt service requirements or other non-discretionary expenditures, and thus does not represent residual funds available for discretionary uses.

	Three Months Ended June 30,						2021 vs. 2020						Three Months Ended June 30,						2022 vs. 2021
(dollars in thousands)	2021			2020			$ Change			% Change			2022			2021			$ Change			% Change
Net income	$	106,153		$	62,540		$	43,613			69.7		$	69,245		$	106,153		$	(36,908	)		(34.8	)

Plus: Interest expense		28,947			16,615			12,332			74.2			32,080			28,947			3,133			10.8
Income tax provision (benefit)		(8,616	)		13,209			(21,825	)		(165.2	)		22,773			(8,616	)		31,389			NM
Depreciation and amortization		84,915			65,584			19,331			29.5			88,423			84,915			3,508			4.1
Equity-based compensation		5,279			3,426			1,853			54.1			5,951			5,279			672			12.7
(Gain) loss on deferred compensation		78			206			(128	)		(62.1	)		(94	)		78			(172	)		(220.5	)
Acquisition-related costs		4,835			1,293			3,542			NM			1,221			4,835			(3,614	)		(74.7	)
(Gain) loss on asset sales and disposals, net		1,058			988			70			7.1			2,173			1,058			1,115			105.4
System conversion costs		1,618			647			971			150.1			498			1,618			(1,120	)		(69.2	)
Rebranding costs		26			311			(285	)		(91.6	)		-			26			(26	)		(100.0	)
(Gain) loss on sales of businesses														8,253			-			8,253			NM
Equity method investment (income) loss, net		1,074			-			1,074			NM			5,024			1,074			3,950			NM
Other (income) expense, net		(12,149	)		(1,655	)		(10,494	)		NM			(8,066	)		(12,149	)		4,083			(33.6	)

Adjusted EBITDA	$	213,218		$	163,164		$	50,054			30.7		$	227,481		$	213,218		$	14,263			6.7

NM = Not meaningful.

	Six Months Ended June 30,						2021 vs. 2020						Six Months Ended June 30,						2022 vs. 2021
(dollars in thousands)	2021			2020			Change			Change			2022			2021			$ Change			% Change
Net income	$	174,735		$	131,866		$	42,869			32.5	%	$	240,721		$	174,735		$	65,986			37.8

Plus: Interest expense		52,528			35,289			17,239			48.9			62,160			52,528			9,632			18.3
Income tax provision		9,099			19,669			(10,570	)		(53.7	)		64,274			9,099			55,175			NM
Depreciation and amortization		153,445			130,863			22,582			17.3			176,343			153,445			22,898			14.9
Equity-based compensation		9,406			6,647			2,759			41.5			11,156			9,406			1,750			18.6
(Gain) loss on deferred compensation		105			(21	)		126			NM			(160	)		105			(265	)		NM
Acquisition-related costs		9,205			3,310			5,895			178.1			2,503			9,205			(6,702	)		(72.8	)
(Gain) loss on asset sales and disposals, net		938			(4,633	)		5,571			(120.2	)		4,663			938			3,725			NM
System conversion costs		2,669			696			1,973			NM			1,071			2,669			(1,598	)		(59.9	)
Rebranding costs		70			578			(508	)		(87.9	)		-			70			(70	)		(100.0	)
(Gain) loss on sales of businesses														(13,833	)		-			(13,833	)		NM
Equity method investment (income) loss, net		1,642			-			1,642			NM			1,244			1,642			(398	)		(24.2	)
Other (income) expense, net		(20,249	)		(3,389	)		(16,860	)		NM			(96,126	)		(20,249	)		(75,877	)		NM

Adjusted EBITDA	$	393,593		$	320,875		$	72,718			22.7		$	454,016		$	393,593		$	60,423			15.4

NM = Not meaningful.

We believe that Adjusted EBITDA is useful to investors in evaluating our operating performance. Adjusted EBITDA and similar measures with similar titles are common measures used by investors, analysts and peers to compare performance in our industry, although our measure of Adjusted EBITDA may not be directly comparable to similarly titled measures reported by other companies.

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Financial Condition: Liquidity and Capital Resources

Liquidity

Our primary funding requirements are for our ongoing operations, capital expenditures, potential acquisitions and strategic investments, payments of quarterly dividends and share repurchases. We believe that existing cash balances, our Senior Credit Facilities and operating cash flows will provide adequate support for these funding requirements over the next 12 months. However, our ability to fund operations, make capital expenditures, make future acquisitions and strategic investments, pay quarterly dividends and make share repurchases depends on future operating performance and cash flows, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, ~~including the impact of the COVID-19 pandemic,~~ some of which are beyond our control.

As part of our 45% minority equity interest in MBI, we acquired a call option to purchase all but not less than all of the remaining equity interests in MBI that we do not already own, which is exercisable at any time between January 1, 2023 and June 30, 2024. If we do not exercise the call option, then investors affiliated with GTCR LLC, a private equity firm based in Chicago, may exercise a put option under which we are obligated to purchase all but not less than all of the direct and indirect equity interests in MBI that we do not already own from all members of MBI other than us, which is exercisable at any time between July 1, 2025 through September 30, 2025. The purchase price payable upon the exercise of the call option or the put option, as applicable, will be calculated under a formula based on a multiple of MBI’s adjusted EBITDA. We have not yet obtained the capital that we believe will be necessary to pay the purchase price if either the call option or the put option are exercised.

A summary of our net cash flows for the periods indicated was as follows (dollars in thousands):

Six Months Ended June 30,

2021 vs. 2020

2021

2020

$ Change

% Change

Net cash provided by operating activities
$ 347,625 $ 272,195 $ 75,430 27.7
Net cash used in investing activities
(2,105,963 ) (178,072 ) (1,927,891 ) NM
Net cash provided by financing activities
1,632,394 423,158 1,209,236 NM
Change in cash and cash equivalents
(125,944 ) 517,281 (643,225 ) (124.3 )
Cash and cash equivalents, beginning of period
574,909 125,271 449,638 NM
Cash and cash equivalents, end of period
$ 448,965 $ 642,552 $ (193,587 ) (30.1 )

~~NM = Not meaningful.~~

	Six Months Ended June 30,						2022 vs. 2021
	2022			2021			$ Change			% Change
Net cash provided by operating activities	$	353,086		$	347,625		$	5,461			1.6
Net cash used in investing activities		(215,172	)		(2,105,963	)		1,890,791			(89.8	)
Net cash provided by (used in) financing activities		(246,738	)		1,632,394			(1,879,132	)		(115.1	)
Decrease in cash and cash equivalents		(108,824	)		(125,944	)		17,120			(13.6	)
Cash and cash equivalents, beginning of period		388,802			574,909			(186,107	)		(32.4	)
Cash and cash equivalents, end of period	$	279,978		$	448,965		$	(168,987	)		(37.6	)

The ~~$75.4~~$5.5 million year-over-year increase in net cash provided by operating activities was primarily attributable to an increase in Adjusted EBITDA of ~~$72.7~~$60.4 million ~~a favorable change in accounts payable~~ and ~~accrued liabilities, an increase in tax refunds received~~lower acquisition-related and ~~a favorable change in accounts receivable,~~system conversion costs, partially offset by ~~an increase~~increases in cash paid for income taxes and interest and ~~acquisition-related costs.~~unfavorable changes in accounts receivable and accounts payable.

The $1.9 billion ~~increase~~decrease in net cash used in investing activities from the prior year period was due primarily to ~~approximately~~the $2.0 billion ~~in net cash~~ paid for the Hargray Acquisition in the ~~second quarter~~prior year and $9.2 million of ~~2021~~proceeds received from the dispositions of our Tallahassee, Florida system and certain other non-core assets during 2022, partially offset by a ~~$8.4~~$49.1 million increase in cash paid for capital expenditures ~~partially offset~~and $23.1 million invested in debt and equity investments during 2022 that did not occur in the prior year.

The $1.9 billion change in net cash provided by (used in) financing activities from the ~~$27.2 million equity investment in Nextlink and $7.3 million issuance~~prior year period was due primarily to net proceeds of ~~a note and other receivables to Wisper~~$1.7 billion from debt issuances in the prior year that did not ~~recur.~~

The $1.2 billion increase in net cash provided by financing activities from the prior year period was due primarily to net proceeds of $895.2 million and $789.8 million from the offering of the Convertible Notes (the “Convertible Notes Offering”) and Term Loan B-4 issuance, respectively, during the first half of 2021, partially offset by $469.8recur, as well as $191.7 million of ~~net proceeds from the Public Offering~~share repurchases during 2022 that did not occur in the prior ~~year period that did not recur.~~year.

On July 1, 2015, the Board authorized up to $250.0 million of share repurchases (subject to a total cap of 600,000 shares of our common stock). ~~Purchases under~~On May 20, 2022, the Company's Board authorized up to $450.0 million of additional share repurchases (with no cap as to the number of shares of common stock). At the end of the second quarter of 2022, we had exhausted the share repurchase ~~program~~authorization under the 2015 Program and had $403.4 million of remaining share repurchase authorization under the 2022 Program. Additional purchases under the 2022 Program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases are based on a number of factors, including share price and business and market conditions. Since the inception of the ~~share repurchase program~~Share Repurchase Programs through ~~the end of the second quarter of 2021,~~June 30, 2022, we have repurchased ~~210,631~~354,268 shares of our common stock at an aggregate cost of ~~$104.9 million. No~~ $296.6 million, including143,637shares ~~were repurchased~~purchased at an aggregate cost of $191.7 million during the six months ended June 30, ~~2021.~~2022. We may, from time to time, continue to opportunistically repurchase shares depending on the trading price of our common stock, market conditions and other factors.

We currently expect to continue to pay comparable quarterly cash dividends on shares of our common stock, subject to approval of the Board. During the second quarter of ~~2021,~~2022, the Board approved a quarterly dividend of ~~$2.50~~$2.75 per share of common stock, which was paid on June ~~18, 2021.~~17, 2022.

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Financing Activity

Senior Credit ~~Facility~~Facilities

On May 3, 2021, we amended the Third Amended and Restated Credit Agreement to provide for the new seven-year Term Loan B-4 in an aggregate principal amount of $800.0 million. The interest margin applicable to the Term Loan B-4 is, at our option, equal to either LIBOR or a base rate, plus an applicable margin equal to 2.0% for LIBOR loans and 1.0% for base rate loans. The Term Loan B-4 may be prepaid at any time without penalty or premium (subject to customary LIBOR breakage provisions), except for any prepayment within six months of the funding date in connection with certain repricing transactions, which will be subject to a 1.0% prepayment premium. The Term Loan B-4 benefits from certain “most favored nation” pricing protections and is not subject to the financial maintenance covenants under the Third Amended and Restated Credit Agreement. The Term Loan B-4 amortizes in equal quarterly installments at a rate (expressed as a percentage of the original principal amount) of 1.0% per annum (subject to customary adjustments in the event of any prepayment), with the outstanding balance due upon maturity. The Term Loan B-4 was drawn in full in connection with the closing of the Hargray Acquisition.

The ~~Third Amended and Restated~~ Credit Agreement ~~also~~ provides for the Term Loan A-2, the Term Loan B-2, the Term Loan B-3, the Term Loan B-4 and the Revolving Credit Facility. ~~Additionally, the~~The Revolving Credit Facility gives us the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility.

We have issued letters of credit totaling $33.0 million under the Revolving Credit Facility on behalf of Wisper to guarantee its performance obligations under an FCC broadband funding program. The fair value of the letters of credit approximates face value based on the short-term nature of the agreements. We would be liable for up to the total amount outstanding under the letters of credit if Wisper were to fail to satisfy all or some of its performance obligations under the FCC program. Wisper pledged certain assets in favor of us as collateral for issuing the letters of credit, which pledge was terminated in the third quarter of 2020 at the same time that we closed an equity investment in Wisper, and Wisper has guaranteed and indemnified us in connection with such letters of credit. As of June 30, ~~2021,~~2022, we have assessed the likelihood of non-performance associated with the guarantee to be remote, and therefore, no liability has been accrued within the condensed consolidated balance sheet. Total letter of credit issuances under the Revolving Credit Facility totaled $41.0 million and bore interest at a rate of 1.88% per annum.

~~As of June 30, 2021, we~~ had approximately $2.3 billion of aggregate outstanding term loans, $51.2 million of outstanding letters of credit and ~~$459.0~~$448.8 million available for borrowing under the Revolving Credit Facility. A summary of our outstanding term loans as of June 30, ~~2021~~2022 is as follows (dollars in thousands):

Instrument	Draw Date	Original Principal		Amortization Per Annum⁽¹⁾		Outstanding Principal		Final Maturity Date	Balance Due Upon Maturity		Benchmark Rate	Applicable Margin⁽²⁾		Interest Rate			Draw Date(s)	Original Principal		Amortization Per Annum⁽¹⁾	Outstanding Principal		Final Maturity Date	Final Scheduled Principal Payment		Benchmark Rate	Applicable Margin⁽²⁾	Interest Rate
Term Loan A-2	5/8/2019⁽³⁾	$	700,000	Varies⁽⁴⁾		$	668,101	10/30/2025	$	476,607	LIBOR		1.75%		1.85%		5/8/2019⁽³⁾ 10/1/2019⁽³⁾	$	700,000	Varies⁽⁴⁾	$	651,079	10/30/2025	$	476,607	LIBOR	1.75%	3.42%
	10/1/2019⁽³⁾
Term Loan B-2	1/7/2019		250,000		1.0%		244,375	10/30/2027		228,750	LIBOR		2.00%		2.10%		1/7/2019		250,000	1.0%		241,875	10/30/2027		228,750	LIBOR	2.00%	3.67%
Term Loan B-3	6/14/2019⁽⁵⁾		625,000		1.0%		616,280	10/30/2027		577,472	LIBOR		2.00%		2.10%		6/14/2019⁽⁵⁾ 10/30/2020⁽⁵⁾		625,000	1.0%		610,071	10/30/2027		577,472	LIBOR	2.00%	3.67%
	10/30/2020⁽⁵⁾
Term Loan B-4	5/3/2021		800,000		1.0%		800,000	5/3/2028		746,000	LIBOR		2.00%		2.10%		5/3/2021		800,000	1.0%		792,000	5/3/2028		746,000	LIBOR	2.00%	3.67%
Total		$	2,375,000			$	2,328,756		$	2,028,829						Total		$	2,375,000		$	2,295,025		$	2,028,829

⁽¹⁾	Payable in equal quarterly installments (expressed as a percentage of the original principal amount and subject to customary adjustments in the event of any prepayment). All loans may be prepaid at any time without penalty or premium (subject to customary LIBOR breakage provisions)~~, except for the Term Loan B-4, which has a 1.0% prepayment premium for any prepayment within six months of the funding date of the Term Loan B-4 in connection with certain repricing transactions.~~.
⁽²⁾	The Term Loan A-2 interest rate spread can vary between 1.25% and 1.75%, determined on a quarterly basis by reference to a pricing grid based on our Total Net Leverage Ratio (as defined in the ~~Third Amended and Restated~~ Credit Agreement). All other applicable margins are fixed.
⁽³⁾	On May 8, 2019, $250.0 million was drawn. On October 1, 2019, an additional $450.0 million was drawn. On October 30, 2020, the amortization schedule was reset.
⁽⁴⁾	Per annum amortization rates for years one through five following ~~the~~ October 30, 2020 ~~refinancing date~~ are 2.5%, 2.5%, 5.0%, 7.5% and 12.5%, respectively.
⁽⁵⁾	On June 14, 2019, $325.0 million was drawn. On October 30, 2020, an additional $300.0 million was drawn.

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Senior Notes

In November 2020, we completed the offering of $650.0 million aggregate principal amount of Senior Notes due 2030. The Senior Notes bear interest at a rate of 4.00% per annum payable semi-annually in arrears on May 15th and November 15th of each ~~year, beginning on May 15, 2021.~~year. The Senior Notes are required to be guaranteed on a senior unsecured basis by each of our existing and future wholly owned domestic subsidiaries that guarantees our obligations under our Senior Credit Facilities or that guarantees certain capital markets debt of ours or a guarantor in an aggregate principal amount in excess of $250.0 million.

Convertible Notes

In March 2021, we completed the Convertible Notes ~~Offering~~offering of $575.0 million aggregate principal amount of 2026 Notes and $345.0 million aggregate principal amount of 2028 Notes. The net proceeds from the Convertible Notes Offering were $895.2 million after deducting initial purchaser discounts and other offering costs and expenses. We used the net proceeds from the Convertible Notes Offering for general corporate purposes, including to finance a portion of the purchase price in connection with the Hargray Acquisition. The Convertible Notes are senior unsecured obligations of ours and are guaranteed by our wholly owned domestic subsidiaries that guarantee the Senior Credit Facilities or that guarantee certain of our Notes in an aggregate principal amount in excess of $250.0 million. The 2026 Notes do not bear regular interest, and the principal amount of the 2026 Notes do not accrete. The 2028 Notes bear interest at a rate of 1.125% per annum. Interest on the 2028 Notes is payable semiannually in arrears on March 15th and September 15th of each year, ~~beginning on September 15, 2021,~~ unless earlier repurchased, converted or redeemed. The 2026 Notes are scheduled to mature on March 15, 2026, and the 2028 Notes are scheduled to mature on March 15, 2028. The initial conversion rate for each of the 2026 Notes and the 2028 Notes is 0.4394 shares of our common stock per $1,000 principal amount of 2026 Notes and 2028 Notes, as applicable (equivalent to an initial conversion price of $2,275.83 per share of common stock). The initial conversion price of each of the 2026 Notes and the 2028 Notes represents a premium of 25.0% over the last reported sale price of $1,820.83 per share of our common stock on March 2, 2021. The Convertible Notes are convertible at the option of the holders. The method of conversion into cash, shares of our common stock or a combination thereof is at our election.

Other Debt-Related Information

As of June 30, 2022, letter of credit issuances totaled $51.2 million and accrued fees at a rate of approximately 1.88% per annum.

On May 3, 2022, we entered into a letter of credit agreement with MUFG which provides for an additional $75.0 million of letter of credit issuing capacity. No letters of credit were issued under this agreement as of June 30, 2022.

We were in compliance with all debt covenants as of June 30, ~~2021.~~2022.

We recorded debt issuance cost amortization of ~~$1.8~~$1.3 million and ~~$1.1~~$1.8 million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$2.9~~$2.6 million and ~~$2.2~~$2.9 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, within interest expense in the condensed consolidated statements of operations and comprehensive income.

Unamortized debt issuance costs consisted of the following (in thousands):

	June 30, 2021		December 31, 2020		June 30, 2022		December 31, 2021
Revolving Credit Facility portion:
Other noncurrent assets	$	2,915	$	3,249	$	2,243	$	2,576
Term loans and Notes portion:
Long-term debt (contra account)		30,921		21,897		26,262		28,572
Total	$	33,836	$	25,146	$	28,505	$	31,148

~~Unamortized~~The unamortized debt discount associated with the Convertible Notes was ~~$22.8~~$18.5 million as of June 30, ~~2021. The Company~~2022. We recorded debt discount amortization of $1.1 million for both the three months ended June 30, 2022 and 2021, respectively, and $2.1 million and $1.4 million for the ~~three and~~ six months ended June 30, 2022 and 2021, respectively, within interest expense in the condensed consolidated statements of operations and comprehensive income.

We are party to two interest rate swap agreements to convert our interest payment obligations with respect to an aggregate of $1.2 billion of our variable rate LIBOR indebtedness to a fixed rate. Under the first swap agreement, with respect to a notional amount of $850.0 million, our monthly payment obligation is determined at a fixed base rate of 2.653%. Under the second swap agreement, with respect to a notional amount of $350.0 million, our monthly payment obligation is determined at a fixed base rate of 2.739%. Both interest rate swap agreements are scheduled to mature in the first quarter of 2029 but each may be terminated prior to the scheduled maturity at our election or that of the financial institution counterparty under the terms provided in each swap agreement. We recognized losses of ~~$7.8~~$5.8 million and ~~$5.0~~$7.8 million on interest rate swaps during the three months ended June 30, 2022 and 2021, respectively, and ~~2020, respectively,~~losses of $13.4 million and $15.5 million ~~and $7.0 million during~~for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, which were reflected within interest expense in the condensed consolidated statements of operations and comprehensive income.

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~~In March 2021, we terminated $900.0 million of definitive bridge loan commitments that were originally received to finance a portion of the Hargray Acquisition purchase price.~~

Refer to notes 10 and 12 to our audited consolidated financial statements included in the ~~2020~~2021 Form 10-K and notes 8 and 9 to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further details regarding our financing activity, outstanding debt and interest rate swaps.

Capital Expenditures

We have significant ongoing capital expenditure requirements as well as capital enhancements associated with acquired operations, including rebuilding low capacity markets; reclaiming bandwidth from analog video services; implementing 32-channel bonding; deploying DOCSIS ~~3.1; converting~~4.0; consolidating back office functions such as billing, accounting and service provisioning; migrating products to legacy Cable One platforms; and expanding our high-capacity fiber network. Capital expenditures are funded primarily by cash on hand and cash flows from operating activities.

Our capital expenditures by category for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021 were as follows (in thousands):

	Six Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2022		2021
Customer premise equipment⁽¹⁾	$	36,856	$	34,227	$	51,005	$	36,856
Commercial⁽²⁾		21,233		22,457		16,439		21,233
Scalable infrastructure⁽³⁾		25,398		23,093		35,307		25,398
Line extensions⁽⁴⁾		18,904		9,522		23,375		18,904
Upgrade/rebuild⁽⁵⁾		36,898		27,789		37,732		36,898
Support capital⁽⁶⁾		21,876		26,328		42,879		21,876
Total	$	161,165	$	143,416	$	206,737	$	161,165

⁽¹⁾	Customer premise equipment includes costs incurred at customer locations, including installation costs and customer premise equipment (e.g., modems and set-top boxes).
⁽²⁾	Commercial includes costs related to securing business services customers and PSUs, including small and medium-sized businesses and enterprise customers.
⁽³⁾	Scalable infrastructure includes costs not related to customer premise equipment to secure growth of new customers and PSUs or provide service enhancements (e.g., headend equipment).
⁽⁴⁾	Line extensions include network costs associated with entering new service areas (e.g., fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering).
⁽⁵⁾	Upgrade/rebuild includes costs to modify or replace existing fiber/coaxial cable networks, including betterments.
⁽⁶⁾	Support capital includes costs associated with the replacement or enhancement of non-network assets due to technological and physical obsolescence (e.g., non-network equipment, land, buildings and vehicles) and capitalized internal labor costs not associated with customer installation activities.

Contractual Obligations and Contingent Commitments

As of June 30, 2021, except for the $11.0 million increase to the letters of credit issued on behalf of Wisper to guarantee its performance obligations under an FCC broadband funding program and additional debt obligations disclosed above,2022, there have been no material changes to the contractual obligations and contingent commitments previously disclosed in the ~~2020~~2021 Form 10-K.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or financing arrangements with special-purpose entities.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

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An accounting policy is considered to be critical if it is important to our results of operations and financial condition and if it requires management’s most difficult, subjective and complex judgments in its application.

There have been no material changes to our critical accounting policy and estimate disclosures described in our ~~2020~~2021 Form 10-K.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from changes in market rates and prices. There have been no material changes to the market risk disclosures described in the ~~2020~~2021 Form 10-K other than as set forth below.

On May 3, 2021, we obtained the $800.0 million aggregate principal amount Term Loan B-4 in connection with the closing of the Hargray Acquisition. Based on the principal outstanding under the Senior Credit Facilities with exposure to LIBOR at June 30, 2021 and December 31, 2020, assuming, hypothetically, that the LIBOR applicable to the Senior Credit Facilities was 100 basis points higher, our annual interest expense would have increased $11.3 million and $3.4 million, respectively.

As of June 30, ~~2021,~~2022, we had $650.0 million, $575.0 million ~~aggregate principal amount of 2026 Notes outstanding~~ and $345.0 million aggregate principal amount of the Senior Notes, 2026 Notes and 2028 Notes, respectively, outstanding. Although the ~~Convertible~~Senior Notes and 2028 Notes are based on a fixed ~~rate,~~rates and the 2026 Notes do not bear interest, changes in interest rates could impact the fair market value of such notes. As of June 30, ~~2021,~~2022, the fair market ~~value~~values of the ~~Convertible~~Senior Notes, ~~was $927.6 million.~~2026 Notes and 2028 Notes were $528.8 million, $473.7 million and $289.0 million, respectively.

ITEM 4.

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management is responsible for establishing and maintaining adequate disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation as of June 30, ~~2021~~2022 of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). Based on the Company’s evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, ~~2021.~~2022.

Changes in Internal Control Over Financial Reporting

As a result of the Hargray Acquisition on May 3, 2021, the Company has implemented internal controls over financial reporting to include consolidation of Hargray and acquisition-related accounting and disclosures. The Hargray operations utilize separate information and accounting systems and processes. The Company is in the process of reviewing and evaluating the design and operating effectiveness of internal control over financial reporting relating to the Hargray operations.

The Company implemented a new ERP system in the second quarter of 2021. The implementation has required significant investments of time, money and resources. Furthermore, the implementation has resulted in changes to many of the Company’s existing operational, financial and administrative business processes, including, but not limited to, the Company’s budgeting, purchasing, receiving, provisioning, servicing, accounting and reporting processes. The new ERP system has required both the implementation of new internal controls and changes to existing internal control frameworks and procedures.

~~Except as disclosed above, there~~There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II: OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

~~Except as set forth below, there~~There have been no material changes to the risk factors previously disclosed in the ~~2020~~2021 Form 10-K.

~~Risks Relating to Our Business~~

~~Implementation of our new ERP system could disrupt business operations.~~

We implemented a new ERP system in the second quarter of 2021. The implementation has required and may continue to require significant investments of time, money and resources and may result in the diversion of senior management’s attention from our ongoing operations. Furthermore, the implementation has resulted and may continue to result in changes to many of our existing operational, financial and administrative business processes, including, but not limited to, our budgeting, purchasing, receiving, provisioning, servicing, accounting and reporting processes. The new ERP system has required and may continue to require both the implementation of new internal controls and changes to existing internal control frameworks and procedures. If technical problems or other significant issues arise in connection with the implementation or operation of the new ERP system, it could have a material negative impact on our operations, business, financial results and financial condition.

~~Risks Relating to Our Indebtedness~~

We have incurred substantial indebtedness, including in connection with various acquisitions, and the degree to which we are now leveraged may have a material adverse effect on our business, financial condition or results of operations and cash flows.

We currently have a substantial amount of indebtedness. This substantial amount of indebtedness could limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, strategic investments, debt service requirements, stock repurchases or other purposes. It may also increase our vulnerability to adverse economic, market and industry conditions (including the impact of the COVID-19 pandemic), limit our flexibility in planning for, or reacting to, changes in our business operations or to our industry overall, and place us at a disadvantage in relation to our competitors that have lower debt levels.

Our ability to make payments on and to refinance our indebtedness, including the debt incurred in connection with acquisitions, as well as any future debt that we may incur, will depend on our ability to generate cash in the future from operations, financings or asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors, some of which are beyond our control.

Our inability to raise funds necessary to repurchase, or settle conversions of, either series of the Convertible Notes, upon a fundamental change as described in the applicable Convertible Notes Indenture, may lead to defaults under such indenture and under agreements governing our existing or future indebtedness.

If we repurchase the Convertible Notes for cash, which holders may require upon a fundamental change as described in the applicable Convertible Note Indenture, or settle such Convertible Notes by cash or by a combination of cash and shares of our common stock in the event a holder elects to convert their Convertible Notes following a fundamental change, we will be required to make cash payments with respect to the Convertible Notes being converted or repurchased.

~~Table of Contents~~

However, we may not have enough available cash or be able to obtain financing at the time we are required to make purchases of the Convertible Notes being surrendered or converted. In addition, our ability to repurchase the Convertible Notes or to pay cash upon conversion of Convertible Notes is limited by the agreements governing our existing indebtedness and may also be limited by law, by regulatory authority or by agreements that will govern our future indebtedness. Our failure to repurchase Convertible Notes at a time when the repurchase is required by the applicable Convertible Notes Indenture or to pay cash payable on future conversions of the Convertible Notes as required by such indenture would constitute a default under such indenture. A default under the applicable Convertible Notes Indenture or the fundamental change itself could also lead to a default under agreements governing our existing or future indebtedness (including the Third Amended and Restated Credit Agreement and the Senior Notes Indenture).

~~The conditional conversion feature of either series of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.~~

In the event the conditional conversion feature of either series of the Convertible Notes is triggered, holders of the applicable Convertible Notes will be entitled to convert such Convertible Notes at any time during specified periods at their option. If one or more holders elect to convert their Convertible Notes, we initially elect to satisfy our conversion obligations by combination settlement. In addition, in the future, we may elect to settle all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert the Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

~~Conversion of either series of the Convertible Notes will dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.~~

The conversion of some or all of the Convertible Notes will dilute the ownership interests of existing stockholders to the extent we deliver shares of our common stock upon conversion of any of the Convertible Notes. The Convertible Notes may from time to time in the future be convertible at the option of their holders prior to their scheduled terms under certain circumstances. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.

~~Table of Contents~~

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Certain information relating to common stock repurchases by the Company and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) under the Exchange Act during the three months ended June 30, ~~2021~~2022 were as follows (dollars in thousands, except per share data):

Period

Total Number
of Shares
Purchased

Average Price
Paid Per Share

Total Number of
Shares Purchased
as Part of Publicly Announced Plans
or Programs⁽¹⁾

Approximate Dollar Value of Shares
that May Yet Be Purchased Under
the Plans or
Programs

April 1 to 30, 2021⁽²⁾
64 $ 1,829.28 - $ 145,081
May 1 to 31, 2021
- $ - - $ 145,081
June 1 to 30, 2021
- $ - - $ 145,081
Total
64 $ 1,829.28 -

							Approximate Dollar
					Total Number of		Value of Shares
					Shares Purchased		that May Yet Be
	Total Number				as Part of Publicly		Purchased Under
	of Shares		Average Price		Announced Plans		the Plans or
Period	Purchased		Paid Per Share		or Programs⁽¹⁾		Programs
April 1 to 30, 2022⁽²⁾		19,166	$	1,416.69		19,137	$	48,277
May 1 to 31, 2022		22,700	$	1,177.21		22,700	$	471,554
June 1 to 30, 2022		54,000	$	1,262.63		54,000	$	403,372
Total		95,866	$	1,273.20		95,837

⁽¹⁾

On July 1, 2015, the Board authorized up to $250.0 million of share repurchases (subject to a total cap of 600,000 shares of common stock), which was announced on August 7, ~~2015.~~2015 (the "2015 Program"). On May 20, 2022, the Company's Board authorized up to $450.0 million of additional share repurchases (with no cap as to the number of shares of common stock), which was announced on May 23, 2022 (the "2022 Program"). The 2022 Program was in addition to the repurchase authorization ~~does~~then remaining under the 2015 Program. The authorizations do not have an expiration date. ~~Purchases under~~At the end of the second quarter of 2022, the Company had exhausted the share repurchase ~~program~~authorization under the 2015 Program and had $403.4 million of remaining share repurchase authorization under the 2022 Program. Additional purchases under the 2022 Program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases are based on a number of factors, including share price and business and market conditions.

⁽²⁾

~~Represents~~Includes shares withheld from associates to satisfy estimated tax withholding obligations in connection with the vesting of restricted stock and/or exercises of SARs under the ~~2015 Plan.~~Incentive Compensation Plans. The average price paid per share for the common stock withheld was based on the closing price of the Company’s common stock on the applicable vesting or exercise measurement date.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

Not applicable.

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ITEM 6.

EXHIBITS

Exhibit Number	Description

~~4.1~~ 3.1	~~First Supplemental Indenture, dated as~~Amended and Restated Certificate of ~~June 30, 2021, to that certain Indenture, dated as~~Incorporation of ~~November 9, 2020, by and among~~ Cable One, Inc.~~, the guarantors from time~~ (incorporated herein by reference to ~~time party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, relating~~Exhibit 3.1 to the 4.00% Senior Notes due 2030.*Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

~~4.2~~ 3.2	~~First Supplemental Indenture, dated as of June 30, 2021, to that certain Indenture, dated as of March 5, 2021, by~~Amended and ~~among~~Restated By-laws of Cable One, Inc.~~, the guarantors from time~~ (incorporated herein by reference to ~~time party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, relating~~Exhibit 3.2 to the 0.000% Convertible Senior Notes due 2026.*Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

~~4.3~~ 10.1	~~First Supplemental Indenture, dated as of June 30, 2021, to that certain Indenture, dated as of March 5, 2021, by and among~~ Cable One, Inc., the guarantors from time to time party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the 1.125% Convertible Senior Notes due 2028.*

~~10.1~~	Amendment No. 2, dated as of May 3, 2021, to the Third Amended and Restated Credit Agreement, dated as of October 30, 2020, among Cable One, Inc., certain of its wholly owned subsidiaries party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto 2022 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form ~~8-K~~8-K/A of Cable One, Inc. filed on May ~~3, 2021)~~25, 2022).

10.2	Form of Non-Employee Director Restricted Stock Unit Award Agreement for annual equity grants beginning in 2022 (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

10.3	Form of Non-Employee Director Restricted Stock Unit Award Agreement for grants in lieu of annual cash fees beginning in 2022 (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

10.4	Form of Restricted Stock Award Agreement for time-based proportional-vest restricted stock grants beginning in 2022 (incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

10.5	Form of Restricted Stock Award Agreement for time-based cliff-vest restricted stock grants beginning in 2022 (incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

10.6	Form of Stock Appreciation Right Agreement for grants beginning in 2022 (incorporated herein by reference to Exhibit 10.6 to the Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

10.7	Form of Restricted Stock Award Agreement for performance-based restricted stock grants beginning in 2022 (incorporated herein by reference to Exhibit 10.7 to the Current Report on Form 8-K/A of Cable One, Inc. filed on May 25, 2022).

31.1	Principal Executive Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Principal Financial Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH	Inline XBRL Taxonomy Extension Schema Document.*

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.*

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

104	The cover page of this Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2021,~~2022, formatted in Inline XBRL (included within the Exhibit 101 attachments).

__________

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Cable One, Inc. (Registrant)

By:	/s/ Julia M. Laulis
	Name:	Julia M. Laulis
	Title:	Chair of the Board, President and Chief Executive Officer

Date: August ~~9, 2021~~4, 2022

By:	/s/ ~~Steven S. Cochran~~Todd M. Koetje
	Name:	~~Steven S. Cochran~~Todd M. Koetje
	Title:	Chief Financial Officer

Date: August ~~9, 2021~~

4, 2022

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	As of June 30,				Annual Net Gain (Loss)
	2021		2020		Change			% Change
Residential data PSUs⁽¹⁾		923		758		165			21.7
Residential video PSUs⁽¹⁾		272		276		(4	)		(1.3	)
Residential voice PSUs⁽¹⁾		110		98		12			11.8
Total residential PSUs⁽¹⁾		1,305		1,132		173			15.3

Business data PSUs⁽¹⁾		94		80		14			17.3
Business video PSUs⁽¹⁾		14		14		0			3.2
Business voice PSUs⁽¹⁾		44		35		9			25.5
Total business services PSUs⁽¹⁾		152		129		23			18.0

Total data PSUs		1,017		838		179			21.3
Total video PSUs		287		290		(3	)		(1.1	)
Total voice PSUs		153		133		20			15.3
Total PSUs		1,457		1,261		196			15.5

Residential customer relationships⁽¹⁾		1,032		876		156			17.8
Business customer relationships⁽¹⁾		102		86		17			19.6
Total customer relationships		1,134		962		172			17.9

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1 to 30, 2021⁽²⁾		64	$	1,829.28		-	$	145,081
May 1 to 31, 2021		-	$	-		-	$	145,081
June 1 to 30, 2021		-	$	-		-	$	145,081
Total		64	$	1,829.28		-