Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 28, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Consolidated Communications Holdings, Inc. | |
Entity Central Index Key | 1,304,421 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,654,989 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net revenues | $ 191,541 | $ 193,958 | $ 567,258 | $ 587,546 |
Operating expenses: | ||||
Cost of services and products (exclusive of depreciation and amortization) | 85,646 | 83,209 | 246,129 | 249,477 |
Selling, general and administrative expenses | 39,935 | 51,044 | 119,664 | 136,737 |
Loss on impairment | 610 | |||
Depreciation and amortization | 43,224 | 46,057 | 130,855 | 133,264 |
Income from operations | 22,736 | 13,648 | 70,000 | 68,068 |
Other income (expense): | ||||
Interest expense, net of interest income | (19,075) | (19,174) | (56,827) | (60,277) |
Loss on extinguishment of debt | (41,242) | |||
Investment income | 8,735 | 10,601 | 24,636 | 26,046 |
Other, net | (316) | (110) | (374) | (207) |
Income (loss) before income taxes | 12,080 | 4,965 | 37,435 | (7,612) |
Income tax expense (benefit) | 4,991 | 2,220 | 22,287 | (2,258) |
Net income (loss) | 7,089 | 2,745 | 15,148 | (5,354) |
Less: net income attributable to noncontrolling interest | 77 | 150 | 211 | 209 |
Net income (loss) attributable to common shareholders | $ 7,012 | $ 2,595 | $ 14,937 | $ (5,563) |
Net income (loss) per common share - basic and diluted | ||||
Net income (loss) per basic and diluted common share attributable to common shareholders (in dollars per share) | $ 0.14 | $ 0.05 | $ 0.29 | $ (0.11) |
Dividends declared per common share (in dollars per share) | $ 0.39 | $ 0.39 | $ 1.16 | $ 1.16 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ 7,089 | $ 2,745 | $ 15,148 | $ (5,354) |
Pension and post-retirement obligations: | ||||
Amortization of actuarial losses and prior service credit to earnings, net of tax | 679 | 401 | 2,036 | 1,267 |
Derivative instruments designated as cash flow hedges: | ||||
Change in fair value of derivatives, net of tax | 3 | (390) | (595) | (1,192) |
Reclassification of realized loss to earnings, net of tax | 159 | 185 | 466 | 676 |
Comprehensive income (loss) | 7,930 | 2,941 | 17,055 | (4,603) |
Less: comprehensive income attributable to noncontrolling interest | 77 | 150 | 211 | 209 |
Total comprehensive income (loss) attributable to common shareholders | $ 7,853 | $ 2,791 | $ 16,844 | $ (4,812) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 33,403 | $ 15,878 |
Accounts receivable, net of allowance for doubtful accounts | 68,447 | 68,848 |
Income tax receivable | 9,132 | 23,867 |
Prepaid expenses and other current assets | 18,081 | 17,815 |
Total current assets | 129,063 | 126,408 |
Property, plant and equipment, net | 1,065,528 | 1,093,261 |
Investments | 106,916 | 105,543 |
Goodwill | 760,998 | 764,630 |
Other intangible assets | 34,758 | 43,497 |
Other assets | 6,896 | 5,187 |
Total assets | 2,104,159 | 2,138,526 |
Current liabilities: | ||
Accounts payable | 15,010 | 12,576 |
Advance billings and customer deposits | 29,255 | 27,616 |
Dividends payable | 19,623 | 19,551 |
Accrued compensation | 17,569 | 21,883 |
Accrued interest | 17,564 | 9,353 |
Accrued expense | 38,154 | 42,384 |
Current portion of long-term debt and capital lease obligations | 14,429 | 10,937 |
Total current liabilities | 151,604 | 144,300 |
Long-term debt and capital lease obligations | 1,377,549 | 1,377,892 |
Deferred income taxes | 238,359 | 236,529 |
Pension and other post-retirement obligations | 109,035 | 112,966 |
Other long-term liabilities | 16,091 | 16,140 |
Total liabilities | 1,892,638 | 1,887,827 |
Commitments and contingencies (Note 11) | ||
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 100,000,000 shares authorized, 50,654,989 and 50,470,096 shares outstanding as of September 30, 2016 and December 31, 2015, respectively | 507 | 505 |
Additional paid-in capital | 239,559 | 281,738 |
Retained earnings (deficit) | (881) | |
Accumulated other comprehensive loss, net | (33,792) | (35,699) |
Noncontrolling interest | 5,247 | 5,036 |
Total shareholders' equity | 211,521 | 250,699 |
Total liabilities and shareholders' equity | $ 2,104,159 | $ 2,138,526 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares outstanding | 50,654,989 | 50,470,096 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Net cash provided by operating activities | ||
Net cash provided by operating activities | $ 173,591 | $ 167,637 |
Cash flows from investing activities: | ||
Business acquisition, net of cash acquired | (13,422) | |
Purchases of property, plant and equipment, net | (94,158) | (100,119) |
Proceeds from sale of assets | 71 | 118 |
Proceeds from business disposition | 20,892 | |
Proceeds from sale of investments | 846 | |
Net cash used in investing activities | (86,617) | (99,155) |
Cash flows from financing activities: | ||
Proceeds from bond offering | 294,780 | |
Proceeds from the issuance of long-term debt | 31,000 | 61,000 |
Payment of capital lease obligations | (1,757) | (658) |
Payment on long-term debt | (39,825) | (80,825) |
Redemption of senior notes | (261,874) | |
Payment of financing costs | (4,805) | |
Share repurchases for minimum tax withholding | (71) | (282) |
Dividends on common stock | (58,796) | (58,643) |
Net cash used in financing activities | (69,449) | (51,307) |
Increase in cash and cash equivalents | 17,525 | 17,175 |
Cash and cash equivalents at beginning of period | 15,878 | 6,679 |
Cash and cash equivalents at end of period | $ 33,403 | $ 23,854 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company”, “we” or “our”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide integrated communications services in consumer, commercial and carrier channels in California, Illinois, Iowa, Kansas, Minnesota, Missouri, North Dakota, Pennsylvania, South Dakota, Texas and Wisconsin. We operate as both an Incumbent Local Exchange Carrier (“ILEC”) and a Competitive Local Exchange Carrier (“CLEC”), dependent upon the territory served. We provide a wide range of services and products that include local and long-distance service, high-speed broadband Internet access, video services, Voice over Internet Protocol (“VoIP”), custom calling features, private line services, carrier grade access services, network capacity services over our regional fiber optic networks, cloud services, data center and managed services, directory publishing and equipment sales and services. As of September 30, 2016, we had approximately 462 thousand voice connections, 470 thousand data connections and 109 thousand video connections. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss) and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2015 Annual Report on Form 10-K filed with the SEC. Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update No. 2016-15 (“ASU 2016-15”), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance concerning the classification of certain cash receipts and cash payments in the statement of cash flows. The new guidance is effective for annual and interim periods beginning after December 15, 2017 and should be applied retrospectively with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements. In June 2016, FASB issued the Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 establishes the new “current expected credit loss” model for measuring and recognizing credit losses on financial assets based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts. The new guidance is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures. In March 2016, FASB issued the Accounting Standards Update No. 2016-09 (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 simplifies various aspects of accounting for share-based payment arrangements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures. In February 2016, FASB issued the Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases . ASU 2016-02 establishes a new lease accounting model for leases. Lessees will be required to recognize most leases on their balance sheets but lease expense will be recognized on the income statement in a manner similar to existing requirements. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures. Effective January 1, 2016, we adopted Accounting Standards Update No. 2015-16 (“ASU 2015-16”), Simplifying the Accounting for Measurement-Period Adjustments . ASU 2015-16 requires that the acquiring company in a business combination recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are determined and record in the reporting period in which the adjustments are determined the effect on earnings of changes in depreciation, amortization and other items resulting from the change to the provisional amounts. The adoption of this standard did not have any impact on our condensed consolidated financial statements and related disclosures. In August 2014, FASB issued the Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . ASU 2014-15 requires management to evaluate for each annual and interim reporting period whether conditions or events give rise to substantial doubt that an entity has the ability to continue as a going concern within one year following issuance of the financial statements and requires specific disclosures regarding the conditions or events leading to substantial doubt. The new guidance is effective for annual and interim periods ending after December 15, 2016, with early adoption permitted. The adoption of ASU 2014-15 will not have a material impact on our financial position or results of operations. In May 2014, FASB issued the Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 provides new comprehensive guidance concerning the recognition and measurement of revenue. As a result, significant additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, FASB issued the Accounting Standards Update No. 2015-14 (“ASU 2015-14”), Deferral of the Effective Date . ASU 2015-14 defers the effective date of ASU 2014-09 for all entities by one year. Accordingly, the new guidance in ASU 2014-09 is effective for annual and interim periods beginning on or after December 15, 2017. Companies are allowed to transition using either the modified retrospective or full retrospective adoption method. If full retrospective adoption is chosen, three years of financial information must be presented in accordance with the new standard. In 2016, the FASB issued additional accounting standards updates to clarify and provide implementation guidance related to ASU 2014-09. The effective date and transition requirements for the additional updates and implementation guidance are the same as the effective date and transition requirements for ASU 2014-09. We are currently evaluating the alternative methods of adoption and the effect this guidance will have on our condensed consolidated financial statements and related disclosures. |
ACQUISITION AND DIVESTITURE
ACQUISITION AND DIVESTITURE | 9 Months Ended |
Sep. 30, 2016 | |
ACQUISITION AND DIVESTITURE | |
ACQUISITION AND DIVESTITURE | 2. ACQUISITION AND DIVESTITURE Acquisition On April 18, 2016, we entered into a definitive agreement to acquire substantially all of the assets of Champaign Telephone Company, Inc. and its sister company, Big Broadband Services, LLC, a private business communications provider in the Champaign-Urbana, IL area. The acquisition was completed on July 1, 2016. The aggregate purchase price, including customary working capital adjustments, consisted of cash consideration of $13.4 million, which was paid from our existing cash resources. The preliminary fair value of the acquired assets and liabilities assumed consists primarily of property, plant and equipment of $6.9 million, intangible assets of $1.0 million and working capital of $0.9 million. Goodwill recognized from the acquisition is expected to be approximately $4.6 million. We expect goodwill and other intangible assets to be amortizable and deductible for income tax purposes. We are in the process of finalizing the valuation of the net assets acquired, most notably, the valuation of property, plant and equipment. Upon completion of the final fair value assessment, the fair values of the net assets acquired may differ from the preliminary assessment. We expect to finalize these valuations during the quarter ended December 31, 2016. Divestiture On May 3, 2016, we entered into a definitive agreement to sell all of the issued and outstanding stock of our non-core, rural ILEC business located in northwest Iowa, Consolidated Communications of Iowa Company (“CCIC”), formerly Heartland Telecommunications Company of Iowa. CCIC provides telecommunications and data services to residential and business customers in 11 rural communities in northwest Iowa and surrounding areas. The sale was completed on September 1, 2016 for total cash proceeds of approximately $21.0 million, net of certain contractual adjustments, subject to a customary working capital adjustment. The major classes of assets and liabilities sold consisted of the following: (In thousands) Current assets $ Property, plant and equipment Goodwill Total assets $ Current liabilities $ Deferred taxes Other long-term liabilities Total liabilities $ In May 2016, in connection with the expected sale, the carrying value of CCIC was reduced to its estimated fair value and we recognized an impairment loss of $0.6 million during the nine months ended September 30, 2016. During the quarter and nine months ended September 30, 2016, we recognized an additional loss on the sale of $0.3 million, which is included in other, net in the condensed consolidated statement of operations, as a result of changes in estimated working capital. We recognized a taxable gain on the transaction resulting in current income tax expense of $7.2 million during the nine months ended September 30, 2016 to reflect the tax impact of the divestiture. See Note 10 for additional income tax related information regarding this transaction. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | 3. EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends during the vesting term. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period. Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive. The potentially dilutive impact of the Company’s restricted stock awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with any proceeds used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and purchased is included in the diluted share computation. The computation of basic and diluted EPS attributable to common shareholders computed using the two‑class method is as follows: Quarter Ended Nine Months Ended September 30, September 30, (In thousands, except per share amounts) 2016 2015 2016 2015 Net income (loss) $ $ $ $ Less: net income attributable to noncontrolling interest Income (loss) attributable to common shareholders before allocation of earnings to participating securities Less: earnings allocated to participating securities — Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ $ $ $ Weighted-average number of common shares outstanding Net income (loss) per common share attributable to common shareholders - basic and diluted $ $ $ $ Diluted earnings (loss) per common share attributable to common shareholders for the quarter and nine months ended September 30, 2016 exclude 0.4 million and 0.3 million potential common shares that could be issued under our share-based compensation plan, respectively, because the inclusion of the potential common shares would have an antidilutive effect. For each of the quarter and nine months ended September 30, 2015, diluted earnings (loss) per common share attributable to common shareholders excluded 0.3 million potential common shares . |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS Our investments are as follows: September 30, December 31, (In thousands) 2016 2015 Cash surrender value of life insurance policies $ $ Cost method investments: GTE Mobilnet of South Texas Limited Partnership (2.34% interest) Pittsburgh SMSA Limited Partnership (3.60% interest) CoBank, ACB Stock Other Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) Totals $ $ Cost Method We own 2.34% of GTE Mobilnet of South Texas Limited Partnership (the “Mobilnet South Partnership”). The principal activity of the Mobilnet South Partnership is providing cellular service in the Houston, Galveston and Beaumont, Texas metropolitan areas. We also own 3.60% of Pittsburgh SMSA Limited Partnership (“Pittsburgh SMSA”), which provides cellular service in and around the Pittsburgh metropolitan area. Because of our limited influence over these partnerships, we use the cost method to account for both of these investments. It is not practicable to estimate the fair value of these investments. We did not evaluate any of the investments for impairment during the quarters or nine months ended September 30, 2016 or 2015 as no factors indicating impairment existed. For the quarters ended September 30, 2016 and 2015, we received cash distributions from these partnerships totaling $3.1 million and $5.0 million, respectively. For the nine months ended September 30, 2016 and 2015, we received cash distributions from these partnerships totaling $9.6 million and $9.8 million, respectively. CoBank, ACB (“CoBank”) is a cooperative bank owned by its customers. On an annual basis, CoBank distributes patronage in the form of cash and stock in the cooperative based on the Company’s outstanding loan balance with CoBank, which has traditionally been a significant lender in the Company’s credit facility. The investment in CoBank represents the accumulation of the equity patronage paid by CoBank to the Company. Equity Method We own 20.51% of GTE Mobilnet of Texas RSA #17 Limited Partnership (“RSA #17”), 16.67% of Pennsylvania RSA 6(I) Limited Partnership (“RSA 6(I)”) and 23.67% of Pennsylvania RSA 6(II) Limited Partnership (“RSA 6(II)”). RSA #17 provides cellular service to a limited rural area in Texas. RSA 6(I) and RSA 6(II) provide cellular service in and around our Pennsylvania service territory. Because we have significant influence over the operating and financial policies of these three entities, we account for the investments using the equity method. For the quarters ended September 30, 2016 and 2015, we received cash distributions from these partnerships totaling $5.5 million and $15.0 million, respectively. For the nine months ended September 30, 2016 and 2015, we received cash distributions from these partnerships totaling $13.6 million and $24.3 million, respectively. The decline in cash distribtions was due in part to a non-recurring cash distribution received for the sale of the partnership owned towers during the quarter and nine months ended Septermber 30, 2015. The combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships are summarized below: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Total revenues $ $ $ $ Income from operations Net income before taxes Net income September 30, December 31, (In thousands) 2016 2015 Current assets $ $ Non-current assets Current liabilities Non-current liabilities Partnership equity |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE MEASUREMENTS Our derivative instruments related to interest rate swap agreements are required to be measured at fair value on a recurring basis. The fair values of the interest rate swaps are determined using valuation models which rely on the expected London Interbank Offered Rate (“LIBOR”) based yield curve and estimates of counterparty and Consolidated’s non-performance risk as the most significant inputs. Because each of these inputs are directly observable or can be corroborated by observable market data, we have categorized these interest rate swaps as Level 2 within the fair value hierarchy. See Note 7 for further discussion regarding our interest rate swap agreements. Our interest rate swap liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 were as follows: As of September 30, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Long-term interest rate swap liabilities $ $ - $ $ - Total $ $ - $ $ - As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ $ - $ $ - Long-term interest rate swap liabilities - - Total $ $ - $ $ - We have not elected the fair value option for any of our financial assets or liabilities. The carrying value of other financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities or variable-rate nature of the respective balances. The following table presents the other financial instruments that are not carried at fair value but which require fair value disclosure as of September 30, 2016 and December 31, 2015 . As of September 30, 2016 As of December 31, 2015 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Investments, equity basis $ n/a $ n/a Investments, at cost $ n/a $ n/a Long-term debt, excluding capital leases $ $ $ $ Cost & Equity Method Investments Our investments as of September 30, 2016 and December 31, 2015 accounted for under both the equity and cost methods consisted primarily of minority positions in various cellular telephone limited partnerships and our investment in CoBank. It is impracticable to determine the fair value of these investments. Long-term Debt The fair value of our senior notes was based on quoted market prices, and the fair value of borrowings under our credit facility was determined using current market rates for similar types of borrowing arrangements. We have categorized the long-term debt as Level 2 within the fair value hierarchy. |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt, presented net of unamortized discounts, consisted of the following: September 30, December 31, (In thousands) 2016 2015 Senior secured credit facility: Term loan 4, net of discount of $2,872 and $3,340 at September 30, 2016 and December 31, 2015, respectively $ $ Revolving loan 6.50% Senior notes due 2022, net of discount of $4,453 and $4,893 at September 30, 2016 and December 31, 2015, respectively Capital leases Less: current portion of long-term debt and capital leases Less: deferred debt issuance costs Total long-term debt $ $ Credit Agreement In December 2013, the Company, through certain of its wholly owned subsidiaries, entered into a Second Amended and Restated Credit Agreement with various financial institutions (the “Credit Agreement”). Subsequent to September 30, 2016, the Credit Agreement was amended and restated on October 5, 2016 as described below. Prior to the restatement, the Credit Agreement consisted of a $75.0 million revolving credit facility and initial term loans in the aggregate amount of $910.0 million (“Term 4”). The Credit Agreement also included an incremental term loan facility which provided the ability to request to borrow up to $300.0 million of incremental term loans subject to certain terms and conditions. Borrowings under the senior secured credit facility are secured by substantially all of the assets of the Company and its subsidiaries, with the exception of Consolidated Communications of Illinois Company and our majority-owned subsidiary, East Texas Fiber Line Incorporated. The Term 4 loan was issued in an original aggregate principal amount of $910.0 million with a maturity date of December 23, 2020. The Term 4 loan contained an original issuance discount of $4.6 million, which was being amortized over the term of the loan. The Term 4 loan required quarterly principal payments of $2.3 million and had an interest rate of LIBOR plus 3.25% subject to a 1.00% LIBOR floor. Prior to the restatement of the Credit Agreement, our revolving credit facility had a maturity date of December 23, 2018 and an applicable margin (at our election) of between 2.50% and 3.25% for LIBOR-based borrowings or between 1.50% and 2.25% for alternate base rate borrowings, depending on our total net leverage ratio. Based on our leverage ratio as of September 30, 2016, the borrowing margin for the three month period ending December 31, 2016 will be at a weighted-average margin of 3.00% f or a LIBOR-based loan or 2.00% for an alternate base rate loan. The applicable borrowing margin for the revolving credit facility is adjusted quarterly to reflect the leverage ratio from the prior quarter-end. As of September 30, 2016 and December 31, 2015, borrowings of $8.0 million and $10.0 million, respectively, were outstanding under the revolving credit facility. A stand-by letter of credit of $1.6 million, issued primarily in connection with the Company’s insurance coverage, was outstanding under our revolving credit facility as of September 30, 2016. The stand-by letter of credit is renewable annually and reduces the borrowing availability under the revolving credit facility. As of September 30, 2016, $65.4 million was available for borrowing under the revolving credit facility. The weighted-average interest rate on outstanding borrowings under our credit facility was 4.24% as of September 30, 2016 and December 31, 2015. Interest is payable at least quarterly . Net proceeds from asset sales exceeding certain thresholds, to the extent not reinvested, are required to be used to repay loans outstanding under the Credit Agreement. Credit Agreement Covenant Compliance The Credit Agreement contains various provisions and covenants, including, among other items, restrictions on the ability to pay dividends, incur additional indebtedness and issue capital stock. We have agreed to maintain certain financial ratios, including interest coverage and total net leverage ratios, all as defined in the Credit Agreement. As of September 30, 2016, we were in compliance with the Credit Agreement covenants . In general, our Credit Agreement restricts our ability to pay dividends to the amount of our available cash as defined in our Credit Agreement. As of September 30, 2016, and including the $19.6 million dividend declared in August 2016 and paid on November 1, 2016, we had $263.2 million in dividend availability under the credit facility covenant. Under our Credit Agreement, if our total net leverage ratio, as defined in the Credit Agreement, as of the end of any fiscal quarter is greater than 5.10:1.00, we will be required to suspend dividends on our common stock unless otherwise permitted by an exception for dividends that may be paid from the portion of proceeds of any sale of equity not used to fund acquisitions or make other investments. During any dividend suspension period, we will be required to repay debt in an amount equal to 50.0% of any increase in available cash, among other things. In addition, we will not be permitted to pay dividends if an event of default under the Credit Agreement has occurred and is continuing. Among other things, it will be an event of default if our total net leverage ratio or interest coverage ratio as of the end of any fiscal quarter is greater than 5.25:1.00 and less than 2.25:1.00, respectively. As of September 30, 2016, our total net leverage ratio under the Credit Agreement was 4.38:1.00, and our interest coverage ratio was 4.09:1.00. Restatement of Credit Agreement On October 5, 2016, the Company and certain of its subsidiaries entered into a Restatement Agreement to amend and restate the existing Credit Agreement through a Third Amended and Restated Credit Agreement (the “Restated Credit Agreement”). Under the terms of the Restated Credit Agreement, the Company issued initial term loans in the aggregate amount of $900.0 million, with a maturity date of October 5, 2023 (subject to earlier maturity on March 31, 2022 if the Company’s unsecured Senior Notes due in October 2022 are repaid in full or redeemed in full on or prior to March 31, 2022), and used the proceeds in part to pay off the outstanding Term 4 loan in the amount of $885.0 million. The Company also obtained a revolving loan facility of $110.0 million, with a maturity date of October 5, 2021, to replace the existing $75.0 million revolving credit facility scheduled to mature in December 2018. The terms, conditions and covenants of the initial term loan facility are materially consistent with those of the existing Credit Agreement. The initial term loan facility has an interest rate of LIBOR plus 3.00% with a 1.00% LIBOR floor and included an original issue discount of 0.25%. The spread on the revolving credit facility consists of a range from 2.50% to 3.25% based upon our total net leverage ratio. The Company has the ability to borrow an additional $300.0 million of incremental term loans subject to certain terms and conditions and can borrow more than the $300.0 million provided that its senior secured leverage ratio would not exceed 3.00:1.00. In connection with entering into the Restated Credit Agreement, we expect to incur a loss on the extinguishment of debt of approximately $6.5 million during the quarter ended December 31, 2016. Senior Notes 6.50% Senior Notes due 2022 In September 2014, we completed an offering of $200.0 million aggregate principal amount of 6.50% Senior Notes due in October 2022 (the “Existing Notes”). The Existing Notes were priced at par, which resulted in total gross proceeds of $200.0 million. On June 8, 2015, we completed an additional offering of $300.0 million in aggregate principal amount of 6.50% Senior Notes due 2022 (the “New Notes” and together with the Existing Notes, the “Senior Notes”). The New Notes were issued as additional notes under the same indenture pursuant to which the Existing Notes were previously issued on September 18, 2014. The New Notes were priced at 98.26% of par with a yield to maturity of 6.80% and resulted in total gross proceeds of approximately $294.8 million, excluding accrued interest. The discount and deferred debt issuance costs of $4.5 million incurred in connection with the issuance of the New Notes are being amortized using the effective interest method over the term of the notes. The Senior Notes mature on October 1, 2022 and interest is payable semi-annually on April 1 and October 1 of each year. Consolidated Communications, Inc. (“CCI”) is the primary obligor under the Senior Notes, and we and certain of our wholly‑owned subsidiaries have fully and unconditionally guaranteed the Senior Notes. The Senior Notes are senior unsecured obligations of the Company. The net proceeds from the issuance of the New Notes were used, in part, to redeem the remaining $227.2 million of our original $300.0 million aggregate principal amount of 10.875% Senior Notes due 2020 (the “2020 Notes”). In connection with the redemption of the 2020 Notes, we paid $261.9 million and recognized a loss on the extinguishment of debt of $41.2 million during the nine months ended September 30, 2015. During the quarter ended September 30, 2015, we completed an exchange offer to register all of the Senior Notes under the Securities Act of 1933 (“Securities Act”). The terms of the registered Senior Notes are substantially identical to those of the Senior Notes prior to the exchange, except that the Senior Notes are now registered under the Securities Act and the transfer restrictions and registration rights previously applicable to the Senior Notes no longer apply to the registered Senior Notes. The exchange offer did not impact the aggregate principal amount or the remaining terms of the Senior Notes outstanding. Senior Notes Covenant Compliance Subject to certain exceptions and qualifications, the indenture governing the Senior Notes contains customary covenants that, among other things, limits CCI’s and its restricted subsidiaries’ ability to: incur additional debt or issue certain preferred stock; pay dividends or make other distributions on capital stock or prepay subordinated indebtedness; purchase or redeem any equity interests; make investments; create liens; sell assets; enter into agreements that restrict dividends or other payments by restricted subsidiaries; consolidate, merge or transfer all or substantially all of its assets; engage in transactions with its affiliates; or enter into any sale and leaseback transactions. The indenture also contains customary events of default. Among other matters, the Senior Notes indenture provides that CCI may not pay dividends or make other restricted payments, as defined in the indenture, if its total net leverage ratio is 4.75:1.00 or greater. This ratio is calculated differently than the comparable ratio under the Credit Agreement; among other differences, it takes into account, on a pro forma basis, synergies expected to be achieved as a result of certain acquisitions not yet reflected in historical results. As of September 30, 2016, this ratio was 4.51:1.00. If this ratio is met, dividends and other restricted payments may be made from cumulative consolidated cash flow since April 1, 2012, less 1.75 times fixed charges, less dividends and other restricted payments made since May 30, 2012. Dividends may be paid and other restricted payments may also be made from a “basket” of $50.0 million, none of which has been used to date, and pursuant to other exceptions identified in the indenture. Since dividends of $312.0 million have been paid since May 30, 2012, including the quarterly dividend declared in August 2016 and paid on November 1, 2016, there was $425.6 million of the $737.6 million of cumulative consolidated cash flow since May 30, 2012 available to pay dividends as of September 30, 2016. As of September 30, 2016, the Company was in compliance with all terms, conditions and covenants under the indenture governing the Senior Notes. Capital Leases We lease certain facilities and equipment under various capital leases which expire between 2016 and 2021. As of September 30, 2016, the present value of the minimum remaining lease commitments was approximately $17.1 million, of which $5.3 million was due and payable within the next twelve months. The leases require total remaining rental payments of $19.4 million as of September 30, 2016, of which $3.8 million will be paid to LATEL LLC, a related party entity. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 7. DERIVATIVE FINANCIAL INSTRUMENTS We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed‑rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. Derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets. We may designate certain of our interest rate swaps as cash flow hedges of our expected future interest payments. For derivative instruments designated as a cash flow hedge, the effective portion of the change in the fair value is recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and is recognized as an adjustment to earnings over the period in which the hedged item impacts earnings. When an interest rate swap agreement terminates, any resulting gain or loss is recognized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt obligation. If a derivative instrument is de-designated, the remaining gain or loss in AOCI on the date of de-designation is amortized to earnings over the remaining term of the hedging instrument. For derivative financial instruments that are not designated as a hedge, including those that have been de-designated, changes in fair value are recognized on a current basis in earnings. The ineffective portion of the change in fair value of any hedging derivative is recognized immediately in earnings. Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in our condensed consolidated statements of cash flows. The following interest rate swaps were outstanding as of September 30, 2016: Notional (In thousands) Amount 2016 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities $ Total Fair Values $ The following interest rate swaps were outstanding as of December 31, 2015: Notional (In thousands) Amount 2015 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities $ De-designated Hedges: Fixed to 1-month floating LIBOR $ Accrued expense Fixed to 1-month floating LIBOR (with floor) $ Accrued expense Total Fair Values $ The counterparties to our various swaps are highly rated financial institutions. None of the swap agreements provide for either us or the counterparties to post collateral nor do the agreements include any covenants related to the financial condition of Consolidated or the counterparties. The swaps of any counterparty that is a lender, as defined in our credit facility, are secured along with the other creditors under the credit facility. Each of the swap agreements provides that, in the event of a bankruptcy filing by either Consolidated or the counterparty, any amounts owed between the two parties would be offset in order to determine the net amount due between parties. This provision allows us to partially mitigate the risk of non‑performance by a counterparty. In 2013, interest rate swaps previously designated as cash flow hedges were de-designated as a result of amendments to our credit agreement. The interest rate swap agreements matured on various dates through September 2016. Prior to de-designation, the effective portion of the change in fair value of the interest rate swaps was recognized in AOCI. The balance of the unrealized loss included in AOCI as of the date the swaps were de-designated was amortized to earnings over the remaining term of the swap agreements. Changes in fair value of the de-designated swaps are immediately recognized in earnings as interest expense. For the nine months ended September 30, 2016, a gain of $0.2 million was recognized as a reduction to interest expense for the change in fair value of the de-designated swaps. For the quarter and nine months ended September 30, 2015, a gain of $0.1 million and $0.6 million, respectively, was recognized as a reduction to interest expense for the change in fair value of the de-designated swaps. As of September 30, 2016 and December 31, 2015, the pre-tax deferred losses related to our interest rate swap agreements included in AOCI were $1.3 million and $1.1 million, respectively. The estimated amount of losses included in AOCI as of September 30, 2016 that will be recognized in earnings in the next twelve months is approximately $1.2 million. Information regarding our cash flow hedge transactions is as follows: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Gain (loss) recognized in AOCI, pretax $ $ $ $ Deferred losses reclassified from AOCI to interest expense $ $ $ $ |
EQUITY
EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
EQUITY | |
EQUITY | 8. EQUITY Share-Based Compensation The following table summarizes total compensation costs recognized for share-based payments during the quarters and nine-month periods ended September 30, 2016 and 2015: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Restricted stock $ $ $ $ Performance shares Total $ $ $ $ Share-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations . As of September 30, 2016, total unrecognized compensation costs related to non-vested Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”) was $4.5 million and will be recognized over a weighted-average period of approximately 1.6 years. The following table summarizes the RSA and PSA activity for the nine-month period ended September 30, 2016: RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - January 1, 2016 $ $ Shares granted $ $ Shares vested $ $ Shares forfeited, cancelled or retired $ $ Non-vested shares outstanding - September 30, 2016 $ $ Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component for the nine-month period ended September 30, 2016: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications — Amounts reclassified from accumulated other comprehensive loss Net current period other comprehensive income Balance at September 30, 2016 $ $ $ The following table summarizes reclassifications from accumulated other comprehensive loss for the quarters and nine-month periods ended September 30, 2016 and 2015: Quarter Ended September 30, Nine Months Ended September 30, Affected Line Item in the (In thousands) 2016 2015 2016 2015 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ $ $ $ (a) Actuarial loss (a) Total before tax Tax benefit $ $ $ $ Net of tax Loss on cash flow hedges: Interest rate derivatives $ $ $ $ Interest expense Tax benefit $ $ $ $ Net of tax (a) These items are included in the components of net periodic benefit cost for our pension and other post-retirement benefit plans. See Note 9 for further discussion regarding our pension and other post-retirement benefit plans. |
PENSION PLAN AND OTHER POST-RET
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 9 Months Ended |
Sep. 30, 2016 | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 9. PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS Defined Benefit Plans We sponsor a qualified defined benefit pension plan (“Retirement Plan”) that is non-contributory covering certain of our hourly employees under collective bargaining agreements who fulfill minimum age and service requirements. Certain salaried employees are also covered by the Retirement Plan, although these benefits have previously been frozen. The Retirement Plan is closed to all new entrants. Benefits for eligible participants under collective bargaining agreements are accrued based on a cash balance benefit plan. We also have two non-qualified supplemental retirement plans (“Supplemental Plans”). The Supplemental Plans provide supplemental retirement benefits to certain former employees by providing for incremental pension payments to partially offset the reduction of the amount that would have been payable under the qualified defined benefit pension plans if it were not for limitations imposed by federal income tax regulations. The Supplemental Plans have previously been frozen so that no person is eligible to become a new participant. These plans are unfunded and have no assets. The benefits paid under the Supplemental Plans are paid from the general operating funds of the Company. The following table summarizes the components of net periodic pension cost for our defined benefit plans for the quarters and nine-month periods ended September 30, 2016 and 2015: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets Net amortization loss Net prior service credit amortization Net periodic pension cost (benefit) $ $ $ $ Other Non-qualified Deferred Compensation Agreements We are also liable for deferred compensation agreements with former members of the board of directors and certain other former employees of acquired companies. Depending on the plan, benefits are payable in monthly or annual installments for a period of time based on the terms of the agreement, which range from five years up to the life of the participant or to the beneficiary upon the death of the participant, and may begin as early as age 55. Participants accrue no new benefits as these plans had previously been frozen. Payments related to the deferred compensation agreements totaled approximately $0.2 million for each of the nine-month periods ended September 30, 2016 and 2015 . No payments were made during the quarters ended September 30, 2016 and 2015. The net present value of the remaining obligations was approximately $1.9 million and $2.1 million as of September 30, 2016 and December 31, 2015, respectively, and is included in pension and other post-retirement benefit obligations in the accompanying condensed consolidated balance sheets . We also maintain 25 life insurance policies on certain of the participating former directors and employees. We recognized $0.2 million in life insurance proceeds as other non-operating income during the nine-month period ended September 30, 2016. We did not recognize any life insurance proceeds during the quarter or nine-month periods ended September 30, 2015. The excess of the cash surrender value of the remaining life insurance policies over the notes payable balances related to these policies is determined by an independent consultant, and totaled $2.1 million as of September 30, 2016 and December 31, 2015. These amounts are included in investments in the accompanying condensed consolidated balance sheets. Cash principal payments for the policies and any proceeds from the policies are classified as operating activities in the condensed consolidated statements of cash flows. Post-retirement Benefit Obligations We sponsor various healthcare and life insurance plans (“Post-retirement Plans”) that provide post-retirement medical and life insurance benefits to certain groups of retired employees. Certain plans have previously been frozen so that no person is eligible to become a new participant. Retirees share in the cost of healthcare benefits, making contributions that are adjusted periodically—either based upon collective bargaining agreements or because total costs of the program have changed. Covered expenses for retiree health benefits are paid as they are incurred. Post-retirement life insurance benefits are fully insured. A majority of the healthcare plans are unfunded and have no assets, and benefits are paid from the general operating funds of the Company. However, a plan acquired in the purchase of another company is funded by assets that are separately designated within the Retirement Plan for the sole purpose of providing payments of retiree medical benefits for this specific plan. The following table summarizes the components of the net periodic cost for our post-retirement benefit plans for the quarters and nine-month periods ended September 30, 2016 and 2015: Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets Net amortization loss (gain ) — — Net prior service credit amortization Net periodic post-retirement benefit cost $ $ $ $ Contributions We expect to contribute approximately $0.3 million to our Supplemental Plans and $4.0 million to our Post‑retirement Plans in 2016. We do not expect to contribute to the Retirement Plan in 2016. As of September 30, 2016, we have contributed $0.2 million and $2.4 million of the annual contribution to the Supplemental Plans and Post-retirement Plans, respectively. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES There have been no material changes to our unrecognized tax benefits as reported at December 31, 2015. As of September 30, 2016 and December 31, 2015, the amount of unrecognized tax benefits was $0.1 million. The net amount of unrecognized benefits that, if recognized, would result in an impact to the effective rate is less than $0.1 million. We do not expect any material changes in our unrecognized tax benefits during the remainder of 2016. Our practice is to recognize interest and penalties related to income tax matters in interest expense and selling, general and administrative expenses, respectively. As of September 30, 2016, we did not have a material liability for interest or penalties and had no material interest or penalty expense. The periods subject to examination for our federal return are years 2013 through 2015. The periods subject to examination for our state returns are years 2011 through 2015. We are not currently under examination by federal or state taxing authorities. Our effective tax rate was 41.3 % and 44.7% for the quarters ended September 30, 2016 and 2015, respectively, and 59.5% and 29.7% for the nine months ended September 30, 2016 and 2015, respectively. During the quarter ended June 30, 2016, the Company entered into a definitive agreement to sell all of the issued and outstanding stock of CCIC in a taxable transaction. Accounting Standards Codification 740-30-25-7 (“ASC 740”) requires a company to assess whether the excess of the reported amount of an investment in a domestic subsidiary for financial reporting purposes over the underlying tax basis is a taxable temporary difference. Prior to the quarter ended June 30, 2016, the Company had met the criteria under ASC 740 to not record the tax effects of the taxable temporary difference related to the investment in CCIC as the Company expected to recover its investment in a tax-free manner. During the quarter ended June 30, 2016, the Company recorded a deferred tax liability and deferred tax expense of $7.5 million to reflect the taxable temporary difference related to the investment in CCIC. The transaction was completed during the quarter ended September 30, 2016. During the quarter ended September 30, 2016, the Company reclassified the deferred tax expense of $7.5 million recognized in the quarter ended June 30, 2016 to current tax expense and recorded an additional $0.3 million benefit to current tax expense. For the nine months ended September 30, 2016, this resulted in $7.2 million being recorded as current tax expense to reflect the tax impact of the transaction. During the quarter ended September 30, 2016, we recorded $0.4 million of deferred tax expense and a corresponding offset to the deferred tax asset related to an additional valuation allowance on $8.1 million state NOL carryforwards. We also recorded less than $0.1 million of tax benefit during the quarter ended September 30, 2016 to adjust our 2015 provision to match our 2015 returns compared to approximately $0.2 million of tax expense during the quarter ended September 30, 2015 to adjust our 2014 provision to match our 2014 returns. In addition, for the quarter and nine-month periods ended September 30, 2016 and 2015, the effective tax rate differed from the federal and state statutory rates due to non-deductible expenses and differences in allocable income for the Company’s state tax filings. Exclusive of these adjustments, our effective tax rate would have been approximately 39.2% and 41.7% for the quarters ended September 30, 2016 and 2015, respectively and 38.8% and 31.5% for the nine-month periods ended September 30, 2016 and 2015, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Litigation, Regulatory Proceedings and Other Contingencies In 2014, Sprint Communications Company L.P. (“Sprint”) along with MCI Communications Services, Inc. and Verizon Select Services Inc. (collectively, “Verizon”) filed lawsuits against us and many other Local Exchange Carriers (“LECs”) throughout the country challenging the switched access charges LECs assessed Sprint and Verizon, as interexchange carriers, for certain calls originating from mobile and wireline devices that are routed to us through an interexchange carrier. The plaintiffs’ position is based on their interpretation of federal law, among other things, and they are seeking refunds of past access charges paid for such calls. The disputed amounts total $2.4 million and cover periods dating back to 2006. CenturyLink, Inc. requested that the U.S. District Court’s Judicial Panel on Multi district Litigation (the “Panel”), which has the authority to transfer the pretrial proceedings to a single court for multiple civil cases involving common questions of fact, transfer and consolidate these cases in one court. The Panel ordered that these cases be transferred to and centralized in the U.S. District Court for the Northern District of Texas (the “Court”). On November 17, 2015, the Court dismissed these complaints based on its interpretation of federal law and held that LECs could assess switched access charges for the calls at issue (the “November Order”). The November Order also allowed the plaintiffs to amend their complaints to assert claims that arise under state laws independent of the dismissed claims asserted under federal law. While Verizon did not make such a filing, on May 16, 2016, Sprint filed Amended Complaints and on June 30, 2016, LEC defendants named in such complaints filed a Joint Motion to Strike or Dismiss the complaints. On August 1, 2016, Sprint filed its Opposition to the Joint Motion and these LEC defendants filed their reply on August 26, 2016. Relatedly, earlier this year, numerous LECs across the country, including a number of our LEC entities, filed complaints in various U.S. District Courts against Level 3 Communications, LLC and certain of its affiliates (collectively, “Level 3”) for its failure to pay access charges for certain calls that the November Order held could be assessed by LECs. These complaint cases were transferred to and included in the above-referenced consolidated proceeding before the Court. On May 31, 2016, Level 3 filed a Motion to Dismiss these complaints that largely repeated arguments the November Order rejected. Briefing on this Motion to Dismiss has concluded and the Court has yet to issue a decision on it. On July 19, 2016, the Court adopted a Scheduling Order proposed by the parties for the remaining proceedings, including, among other things, dates for the parties to informally resolve damage claims, i.e., the amounts in dispute and late payment charges. Once the proceedings before the Court become final following this process, Sprint, Verizon, and Level 3 are expected to appeal the November Order along with any order that may, for similar reasons, deny Level 3’s May 31, 2016 Motion to Dismiss. We have interconnection agreements in place with all wireless carriers and the applicable traffic is being billed at current access rates. Absent a decision by an appellate court that overturns the November Order or a decision granting Level 3’s Motion to Dismiss, it will be difficult for Sprint and Verizon to succeed on any claims against us or for Level 3 to avoid paying the access charges it disputes in this litigation. Therefore, we do not expect any potential settlement or judgment to have an adverse material impact on our financial results or cash flows. On April 14, 2008, Salsgiver Inc., a Pennsylvania-based telecommunications company, and certain of its affiliates (“Salsgiver”) filed a lawsuit against us and our former subsidiaries, North Pittsburgh Telephone Company and North Pittsburgh Systems Inc., in the Court of Common Pleas of Allegheny County, Pennsylvania alleging that we had prevented Salsgiver from connecting their fiber optic cables to our utility poles. Salsgiver sought compensatory and punitive damages as the result of alleged lost projected profits, damage to its business reputation and other costs. Salsgiver originally claimed to have sustained losses of approximately $125.0 million. We believe that these claims are without merit and that the alleged damages are completely unfounded. We had recorded approximately $0.4 million in 2011 in anticipation of the settlement of this case. During the quarter ended September 30, 2013, we recorded an additional $0.9 million, which included estimated legal fees. A jury trial concluded on May 14, 2015 with the jury ruling in our favor. Salsgiver subsequently filed a post-trial motion asking the judge to overturn the jury verdict. That motion was denied. On June 17, 2015, Salsgiver filed an appeal in the Pennsylvania Superior Court. Salsgiver’s brief was filed with the Superior Court on December 4, 2015, and we filed our response on January 18, 2016. The Pennsylvania Superior Court held oral arguments on May 17, 2016 and is expected to issue its ruling during the fourth quarter of 2016. We believe that, despite the appeal, the $1.3 million currently accrued represents management’s best estimate of the potential loss if the verdict is overturned in Salsgiver's favor. Two of our subsidiaries, Consolidated Communications of Pennsylvania Company LLC (“CCPA”) and Consolidated Communications Enterprise Services Inc. (“CCES”), have, at various times, received assessment notices from the Commonwealth of Pennsylvania Department of Revenue (“DOR”) increasing the amounts owed for Pennsylvania Gross Receipt Taxes, and/or have had audits performed for the tax years of 2008 through 2013. In addition, a re-audit was performed on CCPA for the 2010 calendar year. For the calendar years for which we received both additional assessment notices and audit actions, those issues have been combined by the DOR into a single docket for each year. Pennsylvania generally imposes tax on the gross receipts of telephone messages transmitted wholly within the state and telephone messages transmitted in interstate commerce where such messages originate or terminate in Pennsylvania, and the charges for such messages are billed to a service address in the state. In a 2013 decision involving Verizon Telephone Company of Pennsylvania (“Verizon Pennsylvania”), the Commonwealth Court of Pennsylvania held that the gross receipts tax applies to Verizon Pennsylvania’s installation of private phone lines because the sole purpose of private lines is to transmit messages. Similarly, the court held that directory assistance is subject to the gross receipts tax because it makes the transition of messages more effective. However, the court did not find Verizon Pennsylvania’s nonrecurring charges for the installation of telephone lines, moves of and changes to telephone lines and services and repairs of telephone lines to be subject to the gross receipts tax as no telephone messages are transmitted when Verizon Pennsylvania performs nonrecurring services. On appeal, the Supreme Court of Pennsylvania recently held in Verizon Pennsylvania, Inc. v. Commonwealth of Pennsylvania that charges for the installation of private phone lines, charges for directory assistance and certain nonrecurring charges were all subject to the state’s gross receipt tax. The Supreme Court of Pennsylvania found that all of the services, including those related to nonrecurring charges, in some way made transmission more effective or communication more satisfactory even though such services did not involve actual transmission. This is a partial reversal of the 2013 Commonwealth Court of Pennsylvania decision described above, which had ruled that while the charges for the installation of private phone lines and directory assistance were subject to the state’s gross receipts tax, the nonrecurring charges in question were not. As a motion for reconsideration has not been filed with the Supreme Court of Pennsylvania, and the period for such filing has expired, the case is now final. For the CCES subsidiary, the total additional tax liability calculated by the DOR auditors for the calendar years 2008 through 2013 is approximately $4.1 million. In May 2016, the Commonwealth of Pennsylvania Board of Finance and Revenue reviewed our appeals of cases for the audits in calendar years 2008 through 2013 and held that the charges in question were subject to the state’s gross receipt tax. In June 2016, we filed an appeal with the Pennsylvania Court of Common Pleas for the audits in calendar years 2008 through 2013. Our hearing is not expected to occur until June 2017. For the CCPA subsidiary, the total additional tax liability calculated by the DOR auditors for the calendar years 2008 through 2013 (using the re-audited 2010 number) is approximately $5.0 million. In May 2016, the Commonwealth of Pennsylvania Board of Finance and Revenue reviewed our appeals of cases for the audits in calendar years 2008 through 2013 and held that the charges in question were subject to the state’s gross receipts tax. In June 2016, we filed an appeal with the Pennsylvania Court of Common Pleas for the audits in calendar years 2008 through 2013. Our hearing is not expected to occur until June 2017. We believe that certain of the DOR’s findings regarding the Company’s additional tax liability for the calendar years 2008 through 2013, for which we have filed appeals, continue to lack merit. However, in light of the Supreme Court of Pennsylvania’s decision, we have accrued $1.4 million and $1.2 million for our CCES and CCPA subsidiaries, respectively. These accruals also include the Company’s best estimate of the potential 2014 and 2015 additional tax liabilities. We do not believe that the outcome of these claims will have a material adverse impact on our financial results or cash flows. From time to time we may be involved in litigation that we believe is of the type common to companies in our industry, including regulatory issues. While the outcome of these other claims cannot be predicted with certainty, we do not believe that the outcome of any of these other legal matters will have a material adverse impact on our business, results of operations, financial condition or cash flows. |
CONDENSED CONSOLIDATING FINANCI
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 12. CONDENSED CONSOLIDATING FINANCIAL INFORMATION Consolidated Communications, Inc. is the primary obligor under the unsecured Senior Notes. We and substantially all of our subsidiaries, excluding Consolidated Communications of Illinois Company, have jointly and severally guaranteed the Senior Notes. All of the subsidiary guarantors are 100% direct or indirect wholly owned subsidiaries of the parent, and all guarantees are full, unconditional and joint and several with respect to principal, interest and liquidated damages, if any. As such, we present condensed consolidating balance sheets as of September 30, 2016 and December 31, 2015, condensed consolidating statements of operations for the quarters and nine-month periods ended September 30, 2016 and 2015 and condensed consolidating cash flows for the nine months ended September 30, 2016 and 2015 for each of the Company (Parent), Consolidated Communications, Inc. (Subsidiary Issuer), guarantor subsidiaries and other non-guarantor subsidiaries with any consolidating adjustments. See Note 6 for more information regarding our Senior Notes. Condensed Consolidating Balance Sheets (In thousands) September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ — $ — $ Accounts receivable, net — — Income taxes receivable — — — Prepaid expenses and other current assets — — — Total current assets Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Other assets — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — — Accrued expense Income tax payable — — Current portion of long term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — Total liabilities Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ Condensed Consolidating Balance Sheet (In thousands) December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ $ — $ Accounts receivable, net — — — Income taxes receivable — — Prepaid expenses and other current assets — — — Total current assets — Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Other assets — — — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — Accrued expense — Current portion of long term debt and capital lease obligations — — Total current liabilities — Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — — Total liabilities — Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ Condensed Consolidating Statements of Operations (In thousands) Quarter Ended September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — — Intercompany interest income (expense) — — — Investment income — — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Quarter Ended September 30, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Depreciation and amortization — — — Operating income (loss) Other income (expense): Interest expense, net of interest income — — Intercompany interest income (expense) — — Investment income — — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Condensed Consolidating Statements of Operations (In thousands) Nine Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Loss on impairment — — — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Nine Months Ended September 30, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Condensed Consolidating Statements of Cash Flows (In thousands) Nine Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Business acquisition, net of cash acquired — — — Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from business disposition — — — Net cash provided by (used in) investing activities — Cash flows from financing activities: Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ — $ Nine Months Ended September 30, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from sale of investments — — — Net cash used in investing activities — — Cash flows from financing activities: Proceeds from bond offering — — — Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Redemption of senior notes — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Accounting | Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company”, “we” or “our”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide integrated communications services in consumer, commercial and carrier channels in California, Illinois, Iowa, Kansas, Minnesota, Missouri, North Dakota, Pennsylvania, South Dakota, Texas and Wisconsin. We operate as both an Incumbent Local Exchange Carrier (“ILEC”) and a Competitive Local Exchange Carrier (“CLEC”), dependent upon the territory served. We provide a wide range of services and products that include local and long-distance service, high-speed broadband Internet access, video services, Voice over Internet Protocol (“VoIP”), custom calling features, private line services, carrier grade access services, network capacity services over our regional fiber optic networks, cloud services, data center and managed services, directory publishing and equipment sales and services. As of September 30, 2016, we had approximately 462 thousand voice connections, 470 thousand data connections and 109 thousand video connections. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss) and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2015 Annual Report on Form 10-K filed with the SEC. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2016, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update No. 2016-15 (“ASU 2016-15”), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance concerning the classification of certain cash receipts and cash payments in the statement of cash flows. The new guidance is effective for annual and interim periods beginning after December 15, 2017 and should be applied retrospectively with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements. In June 2016, FASB issued the Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments. ASU 2016-13 establishes the new “current expected credit loss” model for measuring and recognizing credit losses on financial assets based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts. The new guidance is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures. In March 2016, FASB issued the Accounting Standards Update No. 2016-09 (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 simplifies various aspects of accounting for share-based payment arrangements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures. In February 2016, FASB issued the Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases . ASU 2016-02 establishes a new lease accounting model for leases. Lessees will be required to recognize most leases on their balance sheets but lease expense will be recognized on the income statement in a manner similar to existing requirements. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures. Effective January 1, 2016, we adopted Accounting Standards Update No. 2015-16 (“ASU 2015-16”), Simplifying the Accounting for Measurement-Period Adjustments . ASU 2015-16 requires that the acquiring company in a business combination recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are determined and record in the reporting period in which the adjustments are determined the effect on earnings of changes in depreciation, amortization and other items resulting from the change to the provisional amounts. The adoption of this standard did not have any impact on our condensed consolidated financial statements and related disclosures. In August 2014, FASB issued the Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . ASU 2014-15 requires management to evaluate for each annual and interim reporting period whether conditions or events give rise to substantial doubt that an entity has the ability to continue as a going concern within one year following issuance of the financial statements and requires specific disclosures regarding the conditions or events leading to substantial doubt. The new guidance is effective for annual and interim periods ending after December 15, 2016, with early adoption permitted. The adoption of ASU 2014-15 will not have a material impact on our financial position or results of operations. In May 2014, FASB issued the Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 provides new comprehensive guidance concerning the recognition and measurement of revenue. As a result, significant additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, FASB issued the Accounting Standards Update No. 2015-14 (“ASU 2015-14”), Deferral of the Effective Date . ASU 2015-14 defers the effective date of ASU 2014-09 for all entities by one year. Accordingly, the new guidance in ASU 2014-09 is effective for annual and interim periods beginning on or after December 15, 2017. Companies are allowed to transition using either the modified retrospective or full retrospective adoption method. If full retrospective adoption is chosen, three years of financial information must be presented in accordance with the new standard. In 2016, the FASB issued additional accounting standards updates to clarify and provide implementation guidance related to ASU 2014-09. The effective date and transition requirements for the additional updates and implementation guidance are the same as the effective date and transition requirements for ASU 2014-09. We are currently evaluating the alternative methods of adoption and the effect this guidance will have on our condensed consolidated financial statements and related disclosures. |
ACQUISITION AND DIVESTITURE (Ta
ACQUISITION AND DIVESTITURE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ACQUISITION AND DIVESTITURE | |
Summary of assets and liabilities sold | (In thousands) Current assets $ Property, plant and equipment Goodwill Total assets $ Current liabilities $ Deferred taxes Other long-term liabilities Total liabilities $ |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of basic and diluted EPS | Quarter Ended Nine Months Ended September 30, September 30, (In thousands, except per share amounts) 2016 2015 2016 2015 Net income (loss) $ $ $ $ Less: net income attributable to noncontrolling interest Income (loss) attributable to common shareholders before allocation of earnings to participating securities Less: earnings allocated to participating securities — Net income (loss) attributable to common shareholders, after earnings allocated to participating securities $ $ $ $ Weighted-average number of common shares outstanding Net income (loss) per common share attributable to common shareholders - basic and diluted $ $ $ $ |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
INVESTMENTS | |
Schedule of investments | September 30, December 31, (In thousands) 2016 2015 Cash surrender value of life insurance policies $ $ Cost method investments: GTE Mobilnet of South Texas Limited Partnership (2.34% interest) Pittsburgh SMSA Limited Partnership (3.60% interest) CoBank, ACB Stock Other Equity method investments: GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest) Pennsylvania RSA 6(I) Limited Partnership (16.67% interest) Pennsylvania RSA 6(II) Limited Partnership (23.67% interest) Totals $ $ |
Summary of combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Total revenues $ $ $ $ Income from operations Net income before taxes Net income September 30, December 31, (In thousands) 2016 2015 Current assets $ $ Non-current assets Current liabilities Non-current liabilities Partnership equity |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap liabilities measured at fair value on a recurring basis | As of September 30, 2016 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Long-term interest rate swap liabilities $ $ - $ $ - Total $ $ - $ $ - As of December 31, 2015 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap liabilities $ $ - $ $ - Long-term interest rate swap liabilities - - Total $ $ - $ $ - |
Schedule of other financial instruments that are not carried at fair value but which require fair value disclosure | As of September 30, 2016 As of December 31, 2015 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Investments, equity basis $ n/a $ n/a Investments, at cost $ n/a $ n/a Long-term debt, excluding capital leases $ $ $ $ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | September 30, December 31, (In thousands) 2016 2015 Senior secured credit facility: Term loan 4, net of discount of $2,872 and $3,340 at September 30, 2016 and December 31, 2015, respectively $ $ Revolving loan 6.50% Senior notes due 2022, net of discount of $4,453 and $4,893 at September 30, 2016 and December 31, 2015, respectively Capital leases Less: current portion of long-term debt and capital leases Less: deferred debt issuance costs Total long-term debt $ $ |
DERIVATIVE FINANCIAL INSTRUME25
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | The following interest rate swaps were outstanding as of September 30, 2016: Notional (In thousands) Amount 2016 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities $ Total Fair Values $ The following interest rate swaps were outstanding as of December 31, 2015: Notional (In thousands) Amount 2015 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ Other long-term liabilities $ De-designated Hedges: Fixed to 1-month floating LIBOR $ Accrued expense Fixed to 1-month floating LIBOR (with floor) $ Accrued expense Total Fair Values $ |
Schedule of gains and losses on cash flow hedge transactions | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Gain (loss) recognized in AOCI, pretax $ $ $ $ Deferred losses reclassified from AOCI to interest expense $ $ $ $ |
EQUITY (Tables)
EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
EQUITY | |
Summary of total compensation costs recognized for share-based payments | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Restricted stock $ $ $ $ Performance shares Total $ $ $ $ |
Summary of RSA and PSA activity | RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - January 1, 2016 $ $ Shares granted $ $ Shares vested $ $ Shares forfeited, cancelled or retired $ $ Non-vested shares outstanding - September 30, 2016 $ $ |
Schedule of changes in accumulated other comprehensive loss, net of tax, by component | Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications — Amounts reclassified from accumulated other comprehensive loss Net current period other comprehensive income Balance at September 30, 2016 $ $ $ |
Summary of reclassifications from accumulated other comprehensive loss | Quarter Ended September 30, Nine Months Ended September 30, Affected Line Item in the (In thousands) 2016 2015 2016 2015 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ $ $ $ (a) Actuarial loss (a) Total before tax Tax benefit $ $ $ $ Net of tax Loss on cash flow hedges: Interest rate derivatives $ $ $ $ Interest expense Tax benefit $ $ $ $ Net of tax |
PENSION PLAN AND OTHER POST-R27
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost recognized in the consolidated statements of income | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets Net amortization loss Net prior service credit amortization Net periodic pension cost (benefit) $ $ $ $ |
Post-retirement Benefit Obligations | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost recognized in the consolidated statements of income | Quarter Ended Nine Months Ended September 30, September 30, (In thousands) 2016 2015 2016 2015 Service cost $ $ $ $ Interest cost Expected return on plan assets Net amortization loss (gain ) — — Net prior service credit amortization Net periodic post-retirement benefit cost $ $ $ $ |
CONDENSED CONSOLIDATING FINAN28
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | |
Schedule of condensed consolidating balance sheets | Condensed Consolidating Balance Sheets (In thousands) September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ — $ — $ Accounts receivable, net — — Income taxes receivable — — — Prepaid expenses and other current assets — — — Total current assets Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Other assets — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — — Accrued expense Income tax payable — — Current portion of long term debt and capital lease obligations — — Total current liabilities Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — Total liabilities Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ Condensed Consolidating Balance Sheet (In thousands) December 31, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated ASSETS Current assets: Cash and cash equivalents $ — $ $ $ $ — $ Accounts receivable, net — — — Income taxes receivable — — Prepaid expenses and other current assets — — — Total current assets — Property, plant and equipment, net — — — Intangibles and other assets: Investments — — — Investments in subsidiaries — — Goodwill — — — Other intangible assets — — — Other assets — — — — Total assets $ $ $ $ $ $ LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ — $ — $ $ — $ — $ Advance billings and customer deposits — — — Dividends payable — — — — Accrued compensation — — — Accrued interest — — Accrued expense — Current portion of long term debt and capital lease obligations — — Total current liabilities — Long-term debt and capital lease obligations — — Advances due to/from affiliates, net — — Deferred income taxes — Pension and postretirement benefit obligations — — — Other long-term liabilities — — Total liabilities — Shareholders’ equity: Common Stock — Other shareholders’ equity Total Consolidated Communications Holdings, Inc. shareholders’ equity Noncontrolling interest — — — — Total shareholders’ equity Total liabilities and shareholders’ equity $ $ $ $ $ $ |
Schedule of condensed consolidating statements of operations | Condensed Consolidating Statements of Operations (In thousands) Quarter Ended September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — — Intercompany interest income (expense) — — — Investment income — — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Quarter Ended September 30, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Depreciation and amortization — — — Operating income (loss) Other income (expense): Interest expense, net of interest income — — Intercompany interest income (expense) — — Investment income — — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Condensed Consolidating Statements of Operations (In thousands) Nine Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Loss on impairment — — — — Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ Nine Months Ended September 30, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Eliminations Consolidated Net revenues $ — $ $ $ $ $ Operating expenses: Cost of services and products (exclusive of depreciation and amortization) — — Selling, general and administrative expenses Depreciation and amortization — — — Operating income (loss) — Other income (expense): Interest expense, net of interest income — Intercompany interest income (expense) — — Loss on extinguishment of debt — — — — Investment income — — — Equity in earnings of subsidiaries, net — — Other, net — — Income (loss) before income taxes Income tax expense (benefit) — Net income (loss) Less: net income attributable to noncontrolling interest — — — — Net income (loss) attributable to Consolidated Communications Holdings, Inc. $ $ $ $ $ $ Total comprehensive income (loss) attributable to common shareholders $ $ $ $ $ $ |
Schedule of condensed consolidating statements of cash flows | Condensed Consolidating Statements of Cash Flows (In thousands) Nine Months Ended September 30, 2016 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Business acquisition, net of cash acquired — — — Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from business disposition — — — Net cash provided by (used in) investing activities — Cash flows from financing activities: Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ — $ Nine Months Ended September 30, 2015 Parent Subsidiary Issuer Guarantors Non-Guarantors Consolidated Net cash (used in) provided by operating activities $ $ $ $ $ Cash flows from investing activities: Purchases of property, plant and equipment — — Proceeds from sale of assets — — Proceeds from sale of investments — — — Net cash used in investing activities — — Cash flows from financing activities: Proceeds from bond offering — — — Proceeds from issuance of long-term debt — — — Payment of capital lease obligation — — Payment on long-term debt — — — Redemption of senior notes — — — Payment of financing costs — — — Share repurchases for minimum tax withholding — — — Dividends on common stock — — — Transactions with affiliates, net — Net cash provided by (used in) financing activities Increase (decrease) in cash and cash equivalents — Cash and cash equivalents at beginning of period — Cash and cash equivalents at end of period $ — $ $ $ $ |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) item in Thousands | Sep. 30, 2016item |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Number of voice connections | 462 |
Number of data connections | 470 |
Number of video connections | 109 |
ACQUISITION AND DIVESTITURE (De
ACQUISITION AND DIVESTITURE (Details) - USD ($) $ in Thousands | Jul. 01, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Estimated purchase price allocation | |||
Goodwill | $ 760,998 | $ 764,630 | |
Champaign Telephone Company And Big Broadband Services | |||
Agreement and Plan of Merger | |||
Cash paid on acquisition | $ 13,400 | ||
Estimated purchase price allocation | |||
Working capital | 900 | ||
Property, plant and equipment | 6,900 | ||
Intangible assets | 1,000 | ||
Goodwill | $ 4,600 |
ACQUISITION AND DISPOSITIONS -
ACQUISITION AND DISPOSITIONS - Divestiture (Details) $ in Thousands | Sep. 01, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Jun. 30, 2016USD ($) |
Assets and liabilities classified as held for sale | ||||||
Proceeds from business disposition | $ 20,892 | |||||
Loss on impairment | 610 | |||||
Income tax expense (benefit) | $ 4,991 | $ 2,220 | $ 22,287 | $ (2,258) | ||
CCIC | ||||||
Assets and liabilities classified as held for sale | ||||||
Deferred taxes | $ 7,500 | |||||
CCIC | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||||
Assets and liabilities classified as held for sale | ||||||
Proceeds from business disposition | $ 21,000 | |||||
Rural communities | item | 11 | |||||
Current assets | 567 | |||||
Property, plant, and equipment | 20,348 | |||||
Goodwill | 7,647 | |||||
Total assets | 28,562 | |||||
Current liabilities | 255 | |||||
Deferred taxes | 7,041 | |||||
Other long-term liabilities | 21 | |||||
Total liabilities | $ 7,317 | |||||
Additional loss on sale | $ (300) | $ (300) | ||||
Income tax expense (benefit) | 7,200 | |||||
Parent | ||||||
Assets and liabilities classified as held for sale | ||||||
Proceeds from business disposition | $ 20,892 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Basic and Diluted Earnings Per Share Using Two-class Method: | ||||
Net income (loss) | $ 7,089 | $ 2,745 | $ 15,148 | $ (5,354) |
Less: net income attributable to noncontrolling interest | 77 | 150 | 211 | 209 |
Income (loss) attributable to common shareholders before allocation of earnings to participating securities | 7,012 | 2,595 | 14,937 | (5,563) |
Less: earnings allocated to participating securities | 131 | 119 | 393 | |
Net income (loss) attributable to common shareholders | $ 6,881 | $ 2,476 | $ 14,544 | $ (5,563) |
Weighted-average number of common shares outstanding | 50,294 | 50,174 | 50,292 | 50,166 |
Basic and diluted earnings per common share: | ||||
Net income (loss) per basic and diluted common share attributable to common shareholders (in dollars per share) | $ 0.14 | $ 0.05 | $ 0.29 | $ (0.11) |
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 400 | 300 | 300 | 300 |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)item | |
Investments | |||||
Cash distributions received from partnerships treated as cost method investees | $ 3,100 | $ 5,000 | $ 9,600 | $ 9,800 | |
Cash distributions received from partnerships treated as equity method investees | $ 5,500 | $ 15,000 | $ 13,600 | $ 24,300 | |
Number of entity's investments which is accounted for using equity method | item | 3 | 3 | 3 | ||
Investments | |||||
Cash surrender value of life insurance policies | $ 2,104 | $ 2,104 | $ 2,149 | ||
Total | $ 106,916 | $ 106,916 | $ 105,543 | ||
GTE Mobilnet of South Texas Limited Partnership | |||||
Investments | |||||
Ownership percentage of cost method investee | 2.34% | 2.34% | 2.34% | ||
Investments | |||||
Cost method investments: | $ 21,450 | $ 21,450 | $ 21,450 | ||
Pittsburgh SMSA Limited Partnership | |||||
Investments | |||||
Ownership percentage of cost method investee | 3.60% | 3.60% | 3.60% | ||
Investments | |||||
Cost method investments: | $ 22,950 | $ 22,950 | $ 22,950 | ||
CoBank, ACB Stock | |||||
Investments | |||||
Cost method investments: | 8,138 | 8,138 | 7,971 | ||
Other | |||||
Investments | |||||
Cost method investments: | $ 200 | $ 200 | $ 200 | ||
GTE Mobilnet of Texas RSA #17 Limited Partnership | |||||
Investments | |||||
Ownership percentage of equity method investee | 20.51% | 20.51% | 20.51% | ||
Investments | |||||
Equity method investments: | $ 17,885 | $ 17,885 | $ 18,099 | ||
Pennsylvania RSA 6(I) Limited Partnership | |||||
Investments | |||||
Ownership percentage of equity method investee | 16.67% | 16.67% | 16.67% | ||
Investments | |||||
Equity method investments: | $ 6,438 | $ 6,438 | $ 6,167 | ||
Pennsylvania RSA 6(II) Limited Partnership | |||||
Investments | |||||
Ownership percentage of equity method investee | 23.67% | 23.67% | 23.67% | ||
Investments | |||||
Equity method investments: | $ 27,751 | $ 27,751 | $ 26,557 |
INVESTMENTS - Equity Method (De
INVESTMENTS - Equity Method (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Summary of unaudited summarized income statement information | |||||
Total revenues | $ 83,149 | $ 86,885 | $ 247,691 | $ 259,901 | |
Income from operations | 24,690 | 27,322 | 77,083 | 81,127 | |
Net income before taxes | 24,295 | 26,991 | 75,880 | 80,606 | |
Net income | 24,295 | $ 26,991 | 75,880 | $ 80,606 | |
Summary of unaudited summarized balance sheet information | |||||
Current assets | 70,063 | 70,063 | $ 57,716 | ||
Non-current assets | 89,310 | 89,310 | 96,197 | ||
Current liabilities | 19,741 | 19,741 | 20,576 | ||
Non-current liabilities | 52,062 | 52,062 | 52,414 | ||
Partnership equity | $ 87,570 | $ 87,570 | $ 80,923 |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value Measurements | ||
Current interest rate swap liabilities | $ (190) | |
Long-term interest rate swap liabilities | $ (1,304) | (1,084) |
Total Fair Value | (1,304) | (1,274) |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Current interest rate swap liabilities | (190) | |
Long-term interest rate swap liabilities | (1,304) | (1,084) |
Total Fair Value | $ (1,304) | $ (1,274) |
FAIR VALUE MEASUREMENTS - Fin36
FAIR VALUE MEASUREMENTS - Financial Instuments Not Carried at FV (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Carrying Value | ||
Fair Value Measurements | ||
Investments, equity basis | $ 52,074 | $ 50,823 |
Investments, at cost | 52,738 | 52,571 |
Long-term debt | 1,385,650 | 1,393,567 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt | $ 1,380,705 | $ 1,312,383 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Nov. 01, 2016USD ($) | Oct. 05, 2016USD ($) | Jun. 08, 2015USD ($) | Sep. 18, 2014USD ($) | Aug. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2013USD ($) |
Debt | |||||||||||
Total long-term debt | $ 1,402,791,000 | $ 1,401,147,000 | |||||||||
Less: current portion of long-term debt and capital leases | (14,429,000) | (10,937,000) | |||||||||
Less: deferred debt issuance costs | (10,813,000) | (12,318,000) | |||||||||
Total long-term debt | 1,377,549,000 | 1,377,892,000 | |||||||||
Loan paid | 39,825,000 | $ 80,825,000 | |||||||||
Dividend declared | $ 19,600,000 | ||||||||||
Dividends available for distribution | $ 263,200,000 | ||||||||||
Leverage ratio | 4.38 | ||||||||||
Interest coverage ratio | 4.09 | ||||||||||
Percentage of increase in available cash used in repayment of debt during dividend suspension period | 50.00% | ||||||||||
Repayments of senior notes | 261,874,000 | ||||||||||
Loss on extinguishment of debt | $ 41,242,000 | ||||||||||
Forecast | |||||||||||
Debt | |||||||||||
Dividend paid | $ 19,600,000 | ||||||||||
Leverage ratio | 3 | ||||||||||
Loss on extinguishment of debt | $ 6,500,000 | ||||||||||
Minimum | |||||||||||
Debt | |||||||||||
Interest coverage ratio | 2.25 | ||||||||||
Maximum | |||||||||||
Debt | |||||||||||
Leverage ratio | 5.10 | ||||||||||
Leverage ratio for an event of default | 5.25 | ||||||||||
Senior Notes 6.50 Percent Due 2022 | |||||||||||
Debt | |||||||||||
Total long-term debt | $ 495,547,000 | 495,107,000 | |||||||||
Less: deferred debt issuance costs | $ (4,500,000) | ||||||||||
Unamortized discount | 4,453,000 | $ 4,893,000 | |||||||||
Interest rate (as a percent) | 6.50% | 6.50% | |||||||||
Aggregate principal amount | $ 300,000,000 | $ 200,000,000 | |||||||||
Issue price as a percentage of par | 98.26% | ||||||||||
Yield to maturity (as a percent) | 6.80% | ||||||||||
Gross proceeds | $ 294,800,000 | $ 200,000,000 | |||||||||
Dividend declared | $ 312,000,000 | ||||||||||
Remaining consolidated cash available for dividends and other restricted payments | 425,600,000 | ||||||||||
Cumulative consolidated cash available to pay dividends and other restricted payments | 737,600,000 | ||||||||||
Dividends available for distribution | $ 50,000,000 | ||||||||||
Number of times to be applied to fixed charges for calculating the deduction from cumulative consolidated net cash | 1.75 | ||||||||||
Net leverage ratio | 4.51 | ||||||||||
Senior Notes 6.50 Percent Due 2022 | Maximum | |||||||||||
Debt | |||||||||||
Net leverage ratio | 4.75 | ||||||||||
Senior Notes 10.875 Percent Due 2020 | |||||||||||
Debt | |||||||||||
Interest rate (as a percent) | 10.875% | ||||||||||
Aggregate principal amount | $ 300,000,000 | ||||||||||
Debt amount redeemed | 227,200,000 | ||||||||||
Repayments of senior notes | $ 261,900,000 | ||||||||||
Loss on extinguishment of debt | $ 41,200,000 | ||||||||||
Senior Secured Credit Facility | Weighted average | |||||||||||
Debt | |||||||||||
Weighted average interest rate (as a percent) | 4.24% | 4.24% | |||||||||
Senior secured credit facility - revolving loan | |||||||||||
Debt | |||||||||||
Total long-term debt | $ 8,000,000 | $ 10,000,000 | |||||||||
Maximum borrowing capacity of credit facility | $ 75,000,000 | ||||||||||
Amounts outstanding | 8,000,000 | 10,000,000 | |||||||||
Stand-by letter of credit outstanding | 1,600,000 | ||||||||||
Available borrowing capacity | $ 65,400,000 | ||||||||||
Senior secured credit facility - revolving loan | Forecast | |||||||||||
Debt | |||||||||||
Maximum borrowing capacity of credit facility | $ 110,000,000 | ||||||||||
Senior secured credit facility - revolving loan | Minimum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 2.50% | ||||||||||
Senior secured credit facility - revolving loan | Maximum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 3.25% | ||||||||||
Senior secured credit facility - revolving loan | LIBOR | Minimum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 2.50% | ||||||||||
Senior secured credit facility - revolving loan | LIBOR | Maximum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 3.25% | ||||||||||
Senior secured credit facility - revolving loan | LIBOR | Weighted average | Forecast | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 3.00% | ||||||||||
Senior secured credit facility - revolving loan | Alternate base rate | Minimum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 1.50% | ||||||||||
Senior secured credit facility - revolving loan | Alternate base rate | Maximum | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 2.25% | ||||||||||
Senior secured credit facility - revolving loan | Alternate base rate | Weighted average | Forecast | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 2.00% | ||||||||||
Term loan 4 | |||||||||||
Debt | |||||||||||
Total long-term debt | $ 882,103,000 | 888,460,000 | |||||||||
Unamortized discount | 2,872,000 | 3,340,000 | 4,600,000 | ||||||||
Aggregate principal amount | 910,000,000 | ||||||||||
Quarterly principal payments required | $ 2,300,000 | ||||||||||
Term loan 4 | Forecast | |||||||||||
Debt | |||||||||||
Loan paid | 885,000,000 | ||||||||||
Term loan 4 | LIBOR | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 3.25% | ||||||||||
Variable rate basis, floor (as a percent) | 1.00% | ||||||||||
Incremental Term Loan Facility | Maximum | |||||||||||
Debt | |||||||||||
Additional borrowing capacity | $ 300,000,000 | ||||||||||
Incremental Term Loan Facility | Maximum | Forecast | |||||||||||
Debt | |||||||||||
Additional borrowing capacity | 300,000,000 | ||||||||||
Capital leases | |||||||||||
Debt | |||||||||||
Total long-term debt | $ 17,141,000 | $ 7,580,000 | |||||||||
Initial term loan | Forecast | |||||||||||
Debt | |||||||||||
Aggregate principal amount | $ 900,000,000 | ||||||||||
Issue discount (as a percentage) | 0.25% | ||||||||||
Initial term loan | LIBOR | Forecast | |||||||||||
Debt | |||||||||||
Margin (as a percent) | 3.00% | ||||||||||
Variable rate basis, floor (as a percent) | 1.00% |
LONG-TERM DEBT - Capital Leases
LONG-TERM DEBT - Capital Leases (Details) $ in Millions | Sep. 30, 2016USD ($) |
Capital Leases | |
Present value of the minimum remaining lease commitments | $ 17.1 |
Capital lease commitments due and payable within the next 12 months | 5.3 |
Total remaining rental payments | 19.4 |
LATEL | |
Capital Leases | |
Total remaining rental payments | $ 3.8 |
DERIVATIVE FINANCIAL INSTRUME39
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Derivatives | ||||
Number of swap agreements that provide for the entity or the counterparties to post collateral | item | 0 | |||
Interest rate swaps | ||||
Derivatives | ||||
Fair Value, Other long-term liabilities | $ (1,304) | |||
Total Fair Value | $ (1,274) | |||
Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 250,000 | 150,000 | ||
Fair Value, Other long-term liabilities | (1,304) | (1,084) | ||
De-designated Hedges | Fixed to 1-month floating LIBOR (with floor) | ||||
Derivatives | ||||
Notional amount | 50,000 | |||
Accrued expense | (110) | |||
De-designated Hedges | Fixed to 1-month floating LIBOR, two | ||||
Derivatives | ||||
Notional amount | 50,000 | |||
Accrued expense | $ (80) | |||
De-designated Hedges | Interest rate swaps | ||||
Derivatives | ||||
Gain recognized as a reduction to interest expense | $ 100 | $ 200 | $ 600 |
DERIVATIVE FINANCIAL INSTRUME40
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Derivative Instruments | |||||
Derivatives | |||||
Deferred losses included in AOCI (pretax) | $ (1,300) | $ (1,300) | $ (1,100) | ||
Losses included in AOCI to be recognized in the next 12 months | 1,200 | ||||
Cash flow hedges | |||||
Derivatives | |||||
Gain (loss) recognized in AOCI, pretax | 5 | $ (631) | (968) | $ (1,932) | |
Deferred losses reclassified from AOCI to interest expense | $ (259) | $ (300) | $ (758) | $ (1,096) |
EQUITY - Share-based Compensati
EQUITY - Share-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Weighted Average Grant Date Fair Value | ||||
Pretax stock-based compensation expense | $ 862 | $ 742 | $ 2,666 | $ 2,265 |
Unrecognized share-based compensation | ||||
Unrecognized compensation costs | $ 4,500 | $ 4,500 | ||
Weighted-average period of recognition | 1 year 7 months 6 days | |||
Restricted stock | ||||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 99,360 | |||
Shares granted | 100,040 | |||
Shares vested | (6,974) | |||
Shares forfeited, cancelled or retired | (2,067) | |||
Non-vested shares outstanding at the end of the period | 190,359 | 190,359 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 19.40 | |||
Shares granted (in dollars per share) | 23.95 | |||
Shares vested (in dollars per share) | 21.31 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 19.74 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 21.72 | $ 21.72 | ||
Pretax stock-based compensation expense | $ 516 | 401 | $ 1,588 | 1,267 |
Performance shares | ||||
Shares | ||||
Non-vested shares outstanding at the beginning of the period | 83,224 | |||
Shares granted | 94,066 | |||
Shares vested | (2,104) | |||
Shares forfeited, cancelled or retired | (4,112) | |||
Non-vested shares outstanding at the end of the period | 171,074 | 171,074 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 18.75 | |||
Shares granted (in dollars per share) | 20.86 | |||
Shares vested (in dollars per share) | 19.11 | |||
Shares forfeited, cancelled or retired (in dollars per share) | 19.81 | |||
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 19.88 | $ 19.88 | ||
Pretax stock-based compensation expense | $ 346 | $ 341 | $ 1,078 | $ 998 |
EQUITY - Changes in AOCI (Detai
EQUITY - Changes in AOCI (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accumulated other comprehensive loss, net of tax, by component | |
Balance at the beginning of the period | $ (35,699) |
Other comprehensive income before reclassifications | (595) |
Amounts reclassified from accumulated other comprehensive loss | 2,502 |
Net current period other comprehensive income | 1,907 |
Balance at the end of the period | (33,792) |
Pension and Post-Retirement Obligations | |
Accumulated other comprehensive loss, net of tax, by component | |
Balance at the beginning of the period | (35,025) |
Amounts reclassified from accumulated other comprehensive loss | 2,036 |
Net current period other comprehensive income | 2,036 |
Balance at the end of the period | (32,989) |
Derivative Instruments | |
Accumulated other comprehensive loss, net of tax, by component | |
Balance at the beginning of the period | (674) |
Other comprehensive income before reclassifications | (595) |
Amounts reclassified from accumulated other comprehensive loss | 466 |
Net current period other comprehensive income | (129) |
Balance at the end of the period | $ (803) |
EQUITY - Reclassification from
EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
EQUITY | ||||
Income (loss) before income taxes | $ 12,080 | $ 4,965 | $ 37,435 | $ (7,612) |
Interest expense | (19,075) | (19,174) | (56,827) | (60,277) |
Tax benefit (expense) | (4,991) | (2,220) | (22,287) | 2,258 |
Net income (loss) | 7,089 | 2,745 | 15,148 | (5,354) |
Pension and Post-Retirement Obligations | ||||
EQUITY | ||||
Prior service credit | 245 | 487 | 734 | 834 |
Actuarial (loss) gain | (1,356) | (1,145) | (4,067) | (2,913) |
Income (loss) before income taxes | (1,111) | (658) | (3,333) | (2,079) |
Tax benefit (expense) | 432 | 257 | 1,297 | 812 |
Net income (loss) | (679) | (401) | (2,036) | (1,267) |
Derivative Instruments | ||||
EQUITY | ||||
Interest expense | (259) | (300) | (758) | (1,096) |
Tax benefit (expense) | 100 | 115 | 292 | 420 |
Net income (loss) | $ (159) | $ (185) | $ (466) | $ (676) |
PENSION PLANS AND OTHER POST-RE
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($)employeeitem | |
Defined Benefit Plans | |
Defined benefit plans | |
Expected contribution to pension plan | $ 300 |
Employer contributions | $ 200 |
Post-retirement Benefit Obligations | |
Defined benefit plans | |
Number of persons eligible to become a new participant | employee | 0 |
Plan unfunded status | $ 0 |
Expected contribution to pension plan | 4,000 |
Employer contributions | $ 2,400 |
Supplemental Plans | |
Defined benefit plans | |
Number of non-qualified plans | item | 2 |
Number of persons eligible to become a new participant | item | 0 |
Plan unfunded status | $ 0 |
PENSION PLANS AND OTHER POST-45
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Components of net periodic pension cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Defined Benefit Plans | ||||
Components of net periodic pension costs | ||||
Service costs | $ 86 | $ 50 | $ 258 | $ 308 |
Interest costs | 4,072 | 3,978 | 12,218 | 11,841 |
Expected return on plan assets | (5,159) | (5,842) | (15,477) | (17,529) |
Net amortization loss (gain) | 1,356 | 1,105 | 4,067 | 3,013 |
Prior service credit amortization | (114) | (115) | (343) | (343) |
Net periodic pension cost (benefit) | 241 | (824) | 723 | (2,710) |
Post-retirement Benefit Obligations | ||||
Components of net periodic pension costs | ||||
Service costs | 151 | 155 | 451 | 450 |
Interest costs | 505 | 458 | 1,515 | 1,284 |
Expected return on plan assets | (37) | (111) | (112) | |
Expected return on plan assets | 4 | |||
Net amortization loss (gain) | 40 | (100) | ||
Prior service credit amortization | (131) | (372) | (391) | (491) |
Net periodic pension cost (benefit) | $ 488 | $ 285 | $ 1,464 | $ 1,031 |
PENSION PLANS AND OTHER POST-46
PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS - Other Non-qualified Deferred Comp Agreements (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Other Non-qualified Deferred Compensation Agreements | |||||
Minimum number of years benefits are payable | 5 years | ||||
Minimum age at which payments under deferred compensation agreements may begin | 55 years | ||||
Payment related to deferred compensation agreements | $ 0 | $ 0 | $ 0.2 | $ 0.2 | |
Net present value of the remaining obligations | 1.9 | $ 1.9 | $ 2.1 | ||
Number of life insurance policies | item | 25 | ||||
Excess of cash surrender value of remaining life insurance policies over notes payable | $ 2.1 | $ 2.1 | $ 2.1 | ||
Proceeds from Life Insurance Policies | $ 0.2 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Jun. 30, 2016 | |
Unrecognized tax benefits | $ 0.1 | $ 0.1 | $ 0.1 | |||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | $ 0.1 | $ 0.1 | ||||
Effective tax rate (as a percent) | 41.30% | 44.70% | 59.50% | 29.70% | ||
Effective tax rate exclusive of taxable adjustment | 39.20% | 41.70% | 38.80% | 31.50% | ||
Changes in unrecognized tax benefits | $ 0 | |||||
Deferred tax expense | $ 0.4 | |||||
Current tax expense (benefit) | (0.1) | $ 0.2 | ||||
State | ||||||
Valuation allowance | 8.1 | $ 8.1 | ||||
CCIC | ||||||
Deferred taxes | $ 7.5 | |||||
Current tax expense | 7.5 | $ 7.2 | ||||
Additional current tax expense (benefit) | $ (0.3) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Apr. 14, 2008USD ($) | Sep. 30, 2016USD ($)subsidiary | Sep. 30, 2013USD ($) | Dec. 31, 2011USD ($) |
Litigation and Contingencies | ||||
Number of subsidiaries that received assessment notice | subsidiary | 2 | |||
Consolidated Communications Enterprise Services Inc. (CCES) | ||||
Litigation and Contingencies | ||||
Litigation amount accrued | $ 1.4 | |||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | ||||
Litigation and Contingencies | ||||
Litigation amount accrued | 1.2 | |||
Sprint, MCI Communication Services, and Verizon | ||||
Litigation and Contingencies | ||||
Disputed amount | 2.4 | |||
Salsgiver Inc. | ||||
Litigation and Contingencies | ||||
Original amount of sustained losses claimed by plaintiff | $ 125 | |||
Litigation amount accrued | 1.3 | $ 0.9 | $ 0.4 | |
Assessment by Commonwealth of Pennsylvania Department of Revenue | Consolidated Communications Enterprise Services Inc. (CCES) | ||||
Litigation and Contingencies | ||||
Total additional tax liability calculated by the auditors for calendar years 2008 through 2013 | 4.1 | |||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Consolidated Communications of Pennsylvania Company LLC (CCPA) | ||||
Litigation and Contingencies | ||||
Total additional tax liability calculated by the auditors for calendar years 2008 through 2013 | $ 5 |
CONDENSED CONSOLIDATING FINAN49
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Balance Sheets (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Current assets: | ||||
Cash and cash equivalents | $ 33,403 | $ 15,878 | $ 23,854 | $ 6,679 |
Accounts receivable, net | 68,447 | 68,848 | ||
Income taxes receivable | 9,132 | 23,867 | ||
Prepaid expenses and other current assets | 18,081 | 17,815 | ||
Total current assets | 129,063 | 126,408 | ||
Property, plant and equipment, net | 1,065,528 | 1,093,261 | ||
Intangibles and other assets: | ||||
Investments | 106,916 | 105,543 | ||
Goodwill | 760,998 | 764,630 | ||
Other intangible assets | 34,758 | 43,497 | ||
Other assets | 6,896 | 5,187 | ||
Total assets | 2,104,159 | 2,138,526 | ||
Current liabilities: | ||||
Accounts payable | 15,010 | 12,576 | ||
Advance billings and customer deposits | 29,255 | 27,616 | ||
Dividends payable | 19,623 | 19,551 | ||
Accrued compensation | 17,569 | 21,883 | ||
Accrued interest | 17,564 | 9,353 | ||
Accrued expense | 38,154 | 42,384 | ||
Current portion of long term debt and capital lease obligations | 14,429 | 10,937 | ||
Total current liabilities | 151,604 | 144,300 | ||
Long-term debt and capital lease obligations | 1,377,549 | 1,377,892 | ||
Deferred income taxes | 238,359 | 236,529 | ||
Pension and postretirement benefit obligations | 109,035 | 112,966 | ||
Other long-term liabilities | 16,091 | 16,140 | ||
Total liabilities | 1,892,638 | 1,887,827 | ||
Shareholders' equity: | ||||
Common Stock | 507 | 505 | ||
Other shareholders' equity | 205,767 | 245,158 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 206,274 | 245,663 | ||
Noncontrolling interest | 5,247 | 5,036 | ||
Total shareholders' equity | 211,521 | 250,699 | ||
Total liabilities and shareholders' equity | 2,104,159 | 2,138,526 | ||
Eliminations | ||||
Current assets: | ||||
Accounts receivable, net | (60) | |||
Income taxes receivable | (37,580) | |||
Total current assets | (37,640) | |||
Intangibles and other assets: | ||||
Investments in subsidiaries | (4,316,653) | (4,221,181) | ||
Total assets | (4,354,293) | (4,221,181) | ||
Current liabilities: | ||||
Accrued expense | (60) | |||
Income tax payable | (37,580) | |||
Total current liabilities | (37,640) | |||
Total liabilities | (37,640) | |||
Shareholders' equity: | ||||
Common Stock | (47,411) | (47,411) | ||
Other shareholders' equity | (4,269,242) | (4,173,770) | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | (4,316,653) | (4,221,181) | ||
Total shareholders' equity | (4,316,653) | (4,221,181) | ||
Total liabilities and shareholders' equity | (4,354,293) | (4,221,181) | ||
Parent | Reportable legal entity | ||||
Current assets: | ||||
Income taxes receivable | 46,712 | 23,390 | ||
Total current assets | 46,712 | 23,390 | ||
Intangibles and other assets: | ||||
Investments in subsidiaries | 2,241,414 | 2,189,142 | ||
Other assets | 74 | |||
Total assets | 2,288,200 | 2,212,532 | ||
Current liabilities: | ||||
Dividends payable | 19,623 | 19,551 | ||
Accrued interest | 136 | |||
Accrued expense | 102 | 35 | ||
Total current liabilities | 19,725 | 19,722 | ||
Advances due to/from affiliates, net | 2,103,919 | 1,979,788 | ||
Deferred income taxes | (41,788) | (32,641) | ||
Other long-term liabilities | 70 | |||
Total liabilities | 2,081,926 | 1,966,869 | ||
Shareholders' equity: | ||||
Common Stock | 507 | 505 | ||
Other shareholders' equity | 205,767 | 245,158 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 206,274 | 245,663 | ||
Total shareholders' equity | 206,274 | 245,663 | ||
Total liabilities and shareholders' equity | 2,288,200 | 2,212,532 | ||
Subsidiary Issuer | ||||
Current assets: | ||||
Cash and cash equivalents | 33,390 | 5,877 | 20,055 | 4,940 |
Subsidiary Issuer | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 33,390 | 5,877 | ||
Total current assets | 33,390 | 5,877 | ||
Intangibles and other assets: | ||||
Investments | 8,338 | 8,171 | ||
Investments in subsidiaries | 2,061,106 | 2,018,472 | ||
Other assets | 138 | |||
Total assets | 2,102,972 | 2,032,520 | ||
Current liabilities: | ||||
Accrued interest | 17,163 | 9,084 | ||
Accrued expense | 118 | 190 | ||
Income tax payable | 9,403 | |||
Current portion of long term debt and capital lease obligations | 9,100 | 9,100 | ||
Total current liabilities | 35,784 | 18,374 | ||
Long-term debt and capital lease obligations | 1,365,737 | 1,372,149 | ||
Advances due to/from affiliates, net | (1,549,258) | (1,548,990) | ||
Deferred income taxes | 7,991 | 762 | ||
Other long-term liabilities | 1,304 | 1,084 | ||
Total liabilities | (138,442) | (156,621) | ||
Shareholders' equity: | ||||
Other shareholders' equity | 2,241,414 | 2,189,141 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 2,241,414 | 2,189,141 | ||
Total shareholders' equity | 2,241,414 | 2,189,141 | ||
Total liabilities and shareholders' equity | $ 2,102,972 | 2,032,520 | ||
Guarantors | ||||
Condensed Consolidating Balance Sheet | ||||
Ownership interest (as a percent) | 100.00% | |||
Current assets: | ||||
Cash and cash equivalents | $ 13 | 7,629 | 1,604 | 820 |
Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 13 | 7,629 | ||
Accounts receivable, net | 62,200 | 62,460 | ||
Income taxes receivable | 352 | |||
Prepaid expenses and other current assets | 17,769 | 17,456 | ||
Total current assets | 79,982 | 87,897 | ||
Property, plant and equipment, net | 1,011,374 | 1,043,594 | ||
Intangibles and other assets: | ||||
Investments | 98,578 | 97,372 | ||
Investments in subsidiaries | 14,133 | 13,567 | ||
Goodwill | 694,817 | 698,449 | ||
Other intangible assets | 25,671 | 34,410 | ||
Other assets | 6,684 | 5,187 | ||
Total assets | 1,931,239 | 1,980,476 | ||
Current liabilities: | ||||
Accounts payable | 15,010 | 12,576 | ||
Advance billings and customer deposits | 27,750 | 26,023 | ||
Accrued compensation | 16,630 | 21,094 | ||
Accrued interest | 401 | 133 | ||
Accrued expense | 37,289 | 41,201 | ||
Income tax payable | 20,463 | |||
Current portion of long term debt and capital lease obligations | 5,147 | 1,745 | ||
Total current liabilities | 122,690 | 102,772 | ||
Long-term debt and capital lease obligations | 11,161 | 5,101 | ||
Advances due to/from affiliates, net | (465,200) | (360,715) | ||
Deferred income taxes | 249,119 | 245,579 | ||
Pension and postretirement benefit obligations | 90,089 | 93,097 | ||
Other long-term liabilities | 14,228 | 14,540 | ||
Total liabilities | 22,087 | 100,374 | ||
Shareholders' equity: | ||||
Common Stock | 17,411 | 17,411 | ||
Other shareholders' equity | 1,886,494 | 1,857,655 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 1,903,905 | 1,875,066 | ||
Noncontrolling interest | 5,247 | 5,036 | ||
Total shareholders' equity | 1,909,152 | 1,880,102 | ||
Total liabilities and shareholders' equity | 1,931,239 | 1,980,476 | ||
Non-Guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | 2,372 | $ 2,195 | $ 919 | |
Non-Guarantors | Reportable legal entity | ||||
Current assets: | ||||
Cash and cash equivalents | 2,372 | |||
Accounts receivable, net | 6,307 | 6,388 | ||
Income taxes receivable | 125 | |||
Prepaid expenses and other current assets | 312 | 359 | ||
Total current assets | 6,619 | 9,244 | ||
Property, plant and equipment, net | 54,154 | 49,667 | ||
Intangibles and other assets: | ||||
Goodwill | 66,181 | 66,181 | ||
Other intangible assets | 9,087 | 9,087 | ||
Total assets | 136,041 | 134,179 | ||
Current liabilities: | ||||
Advance billings and customer deposits | 1,505 | 1,593 | ||
Accrued compensation | 939 | 789 | ||
Accrued expense | 705 | 958 | ||
Income tax payable | 7,714 | |||
Current portion of long term debt and capital lease obligations | 182 | 92 | ||
Total current liabilities | 11,045 | 3,432 | ||
Long-term debt and capital lease obligations | 651 | 642 | ||
Advances due to/from affiliates, net | (89,461) | (70,083) | ||
Deferred income taxes | 23,037 | 22,829 | ||
Pension and postretirement benefit obligations | 18,946 | 19,869 | ||
Other long-term liabilities | 489 | 516 | ||
Total liabilities | (35,293) | (22,795) | ||
Shareholders' equity: | ||||
Common Stock | 30,000 | 30,000 | ||
Other shareholders' equity | 141,334 | 126,974 | ||
Total Consolidated Communications Holdings, Inc. shareholders' equity | 171,334 | 156,974 | ||
Total shareholders' equity | 171,334 | 156,974 | ||
Total liabilities and shareholders' equity | $ 136,041 | $ 134,179 |
CONDENSED CONSOLIDATING FINAN50
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||
Net revenues | $ 191,541 | $ 193,958 | $ 567,258 | $ 587,546 |
Operating expenses: | ||||
Cost of services and products (exclusive of depreciation and amortization) | 85,646 | 83,209 | 246,129 | 249,477 |
Selling, general and administrative expenses | 39,935 | 51,044 | 119,664 | 136,737 |
Loss on impairment | 610 | |||
Depreciation and amortization | 43,224 | 46,057 | 130,855 | 133,264 |
Income from operations | 22,736 | 13,648 | 70,000 | 68,068 |
Other income (expense): | ||||
Interest expense, net of interest income | (19,075) | (19,174) | (56,827) | (60,277) |
Loss on extinguishment of debt | (41,242) | |||
Investment income | 8,735 | 10,601 | 24,636 | 26,046 |
Other, net | (316) | (110) | (374) | (207) |
Income (loss) before income taxes | 12,080 | 4,965 | 37,435 | (7,612) |
Income tax expense (benefit) | 4,991 | 2,220 | 22,287 | (2,258) |
Net income (loss) | 7,089 | 2,745 | 15,148 | (5,354) |
Less: net income attributable to noncontrolling interest | 77 | 150 | 211 | 209 |
Net income (loss) attributable to common shareholders | 7,012 | 2,595 | 14,937 | (5,563) |
Total comprehensive income (loss) attributable to common shareholders | 7,853 | 2,791 | 16,844 | (4,812) |
Eliminations | ||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||
Net revenues | (3,294) | (3,310) | (9,856) | (10,120) |
Operating expenses: | ||||
Cost of services and products (exclusive of depreciation and amortization) | (3,186) | (3,194) | (9,533) | (9,722) |
Selling, general and administrative expenses | (108) | (117) | (323) | (398) |
Income from operations | 1 | |||
Other income (expense): | ||||
Equity in earnings of subsidiaries, net | (21,740) | (46,429) | (110,478) | (132,099) |
Income (loss) before income taxes | (21,740) | (46,428) | (110,478) | (132,099) |
Net income (loss) | (21,740) | (46,428) | (110,478) | (132,099) |
Net income (loss) attributable to common shareholders | (21,740) | (46,428) | (110,478) | (132,099) |
Total comprehensive income (loss) attributable to common shareholders | (23,260) | (47,025) | (114,421) | (134,117) |
Parent | Reportable legal entity | ||||
Operating expenses: | ||||
Selling, general and administrative expenses | 1,013 | 1,224 | 3,233 | 3,364 |
Income from operations | (1,013) | (1,224) | (3,233) | (3,364) |
Other income (expense): | ||||
Interest expense, net of interest income | 46 | (96) | ||
Intercompany interest income (expense) | (38,598) | (63,773) | (114,367) | |
Equity in earnings of subsidiaries, net | 9,678 | 30,993 | 59,840 | 74,129 |
Income (loss) before income taxes | 8,665 | (8,829) | (7,120) | (43,698) |
Income tax expense (benefit) | 1,653 | (11,424) | (22,057) | (38,135) |
Net income (loss) | 7,012 | 2,595 | 14,937 | (5,563) |
Net income (loss) attributable to common shareholders | 7,012 | 2,595 | 14,937 | (5,563) |
Total comprehensive income (loss) attributable to common shareholders | 7,853 | 2,791 | 16,844 | (4,812) |
Subsidiary Issuer | Reportable legal entity | ||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||
Net revenues | (9) | 50 | (15) | 152 |
Operating expenses: | ||||
Selling, general and administrative expenses | 46 | 7 | 135 | |
Income from operations | (9) | 4 | (22) | 17 |
Other income (expense): | ||||
Interest expense, net of interest income | (19,048) | (19,341) | (56,446) | (60,537) |
Intercompany interest income (expense) | 14,727 | 41,959 | 82,375 | 125,218 |
Loss on extinguishment of debt | (41,242) | |||
Investment income | 166 | 326 | ||
Equity in earnings of subsidiaries, net | 11,858 | 15,037 | 50,073 | 57,406 |
Other, net | (257) | (34) | (257) | (27) |
Income (loss) before income taxes | 7,271 | 37,625 | 75,889 | 81,161 |
Income tax expense (benefit) | (2,407) | 6,632 | 16,049 | 7,032 |
Net income (loss) | 9,678 | 30,993 | 59,840 | 74,129 |
Net income (loss) attributable to common shareholders | 9,678 | 30,993 | 59,840 | 74,129 |
Total comprehensive income (loss) attributable to common shareholders | 10,519 | 31,189 | 61,747 | 74,880 |
Guarantors | Reportable legal entity | ||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||
Net revenues | 180,284 | 182,455 | 532,785 | 552,691 |
Operating expenses: | ||||
Cost of services and products (exclusive of depreciation and amortization) | 86,403 | 83,315 | 246,856 | 249,931 |
Selling, general and administrative expenses | 35,810 | 44,646 | 108,032 | 119,167 |
Loss on impairment | 610 | |||
Depreciation and amortization | 40,837 | 43,917 | 123,914 | 127,068 |
Income from operations | 17,234 | 10,577 | 53,373 | 56,525 |
Other income (expense): | ||||
Interest expense, net of interest income | (68) | 160 | (476) | 346 |
Intercompany interest income (expense) | (14,711) | (4,064) | (20,116) | (12,946) |
Investment income | 8,735 | 10,601 | 24,470 | 25,720 |
Equity in earnings of subsidiaries, net | 204 | 399 | 565 | 564 |
Other, net | (60) | (72) | (100) | (168) |
Income (loss) before income taxes | 11,334 | 17,601 | 57,716 | 70,041 |
Income tax expense (benefit) | 3,625 | 5,971 | 20,826 | 23,699 |
Net income (loss) | 7,709 | 11,630 | 36,890 | 46,342 |
Less: net income attributable to noncontrolling interest | 77 | 150 | 211 | 209 |
Net income (loss) attributable to common shareholders | 7,632 | 11,480 | 36,679 | 46,133 |
Total comprehensive income (loss) attributable to common shareholders | 8,178 | 11,797 | 38,316 | 47,134 |
Non-Guarantors | Reportable legal entity | ||||
CONDENSED CONSOLIDATING FINANCIAL INFORMATION | ||||
Net revenues | 14,560 | 14,763 | 44,344 | 44,823 |
Operating expenses: | ||||
Cost of services and products (exclusive of depreciation and amortization) | 2,429 | 3,088 | 8,806 | 9,268 |
Selling, general and administrative expenses | 3,220 | 5,245 | 8,715 | 14,469 |
Depreciation and amortization | 2,387 | 2,140 | 6,941 | 6,196 |
Income from operations | 6,524 | 4,290 | 19,882 | 14,890 |
Other income (expense): | ||||
Interest expense, net of interest income | 41 | 7 | 49 | 10 |
Intercompany interest income (expense) | (16) | 703 | 1,514 | 2,095 |
Other, net | 1 | (4) | (17) | (12) |
Income (loss) before income taxes | 6,550 | 4,996 | 21,428 | 16,983 |
Income tax expense (benefit) | 2,120 | 1,041 | 7,469 | 5,146 |
Net income (loss) | 4,430 | 3,955 | 13,959 | 11,837 |
Net income (loss) attributable to common shareholders | 4,430 | 3,955 | 13,959 | 11,837 |
Total comprehensive income (loss) attributable to common shareholders | $ 4,563 | $ 4,039 | $ 14,358 | $ 12,103 |
CONDENSED CONSOLIDATING FINAN51
CONDENSED CONSOLIDATING FINANCIAL INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Net cash provided by operating activities | ||
Net cash (used in) provided by operating activities | $ 173,591 | $ 167,637 |
Cash flows from investing activities: | ||
Business acquisition, net of cash acquired | (13,422) | |
Purchases of property, plant and equipment | (94,158) | (100,119) |
Proceeds from sale of assets | 71 | 118 |
Proceeds from business disposition | 20,892 | |
Proceeds from sale of investments | 846 | |
Net cash used in investing activities | (86,617) | (99,155) |
Cash flows from financing activities: | ||
Proceeds from bond offering | 294,780 | |
Proceeds from issuance of long-term debt | 31,000 | 61,000 |
Payment of capital lease obligations | (1,757) | (658) |
Payment on long-term debt | (39,825) | (80,825) |
Redemption of senior notes | (261,874) | |
Payment of financing costs | (4,805) | |
Share repurchases for minimum tax withholding | (71) | (282) |
Dividends on common stock | (58,796) | (58,643) |
Net cash used in financing activities | (69,449) | (51,307) |
Increase in cash and cash equivalents | 17,525 | 17,175 |
Cash and cash equivalents at beginning of period | 15,878 | 6,679 |
Cash and cash equivalents at end of period | 33,403 | 23,854 |
Parent | ||
Net cash provided by operating activities | ||
Net cash (used in) provided by operating activities | (74,807) | (139,544) |
Cash flows from investing activities: | ||
Business acquisition, net of cash acquired | (13,422) | |
Proceeds from business disposition | 20,892 | |
Net cash used in investing activities | 7,470 | |
Cash flows from financing activities: | ||
Share repurchases for minimum tax withholding | (71) | (282) |
Dividends on common stock | (58,796) | (58,643) |
Transactions with affiliates, net | 126,204 | 198,469 |
Net cash used in financing activities | 67,337 | 139,544 |
Subsidiary Issuer | ||
Net cash provided by operating activities | ||
Net cash (used in) provided by operating activities | 36,606 | 77,987 |
Cash flows from financing activities: | ||
Proceeds from bond offering | 294,780 | |
Proceeds from issuance of long-term debt | 31,000 | 61,000 |
Payment on long-term debt | (39,825) | (80,825) |
Redemption of senior notes | (261,874) | |
Payment of financing costs | (4,805) | |
Transactions with affiliates, net | (268) | (71,148) |
Net cash used in financing activities | (9,093) | (62,872) |
Increase in cash and cash equivalents | 27,513 | 15,115 |
Cash and cash equivalents at beginning of period | 5,877 | 4,940 |
Cash and cash equivalents at end of period | 33,390 | 20,055 |
Guarantors | ||
Net cash provided by operating activities | ||
Net cash (used in) provided by operating activities | 184,604 | 218,271 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (83,867) | (94,111) |
Proceeds from sale of assets | 61 | 113 |
Proceeds from sale of investments | 846 | |
Net cash used in investing activities | (83,806) | (93,152) |
Cash flows from financing activities: | ||
Payment of capital lease obligations | (1,659) | (601) |
Transactions with affiliates, net | (106,755) | (123,734) |
Net cash used in financing activities | (108,414) | (124,335) |
Increase in cash and cash equivalents | (7,616) | 784 |
Cash and cash equivalents at beginning of period | 7,629 | 820 |
Cash and cash equivalents at end of period | 13 | 1,604 |
Non-Guarantors | ||
Net cash provided by operating activities | ||
Net cash (used in) provided by operating activities | 27,188 | 10,923 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (10,291) | (6,008) |
Proceeds from sale of assets | 10 | 5 |
Net cash used in investing activities | (10,281) | (6,003) |
Cash flows from financing activities: | ||
Payment of capital lease obligations | (98) | (57) |
Transactions with affiliates, net | (19,181) | (3,587) |
Net cash used in financing activities | (19,279) | (3,644) |
Increase in cash and cash equivalents | (2,372) | 1,276 |
Cash and cash equivalents at beginning of period | $ 2,372 | 919 |
Cash and cash equivalents at end of period | $ 2,195 |