Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 02, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Entity File Number | 000-51446 | |
Entity Registrant Name | CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 02-0636095 | |
Entity Central Index Key | 0001304421 | |
Entity Address, Address Line One | 2116 South 17th Street | |
Entity Address, City or Town | Mattoon | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 61938-5973 | |
City Area Code | 217 | |
Local Phone Number | 235-3311 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Title of 12(b) Security | Common Stock - $0.01 par value | |
Trading Symbol | CNSL | |
Security Exchange Name | NASDAQ | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 116,610,525 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net revenues | $ 275,162 | $ 298,390 | $ 551,288 | $ 598,668 |
Operating expense: | ||||
Cost of services and products (exclusive of depreciation and amortization) | 126,967 | 135,888 | 258,905 | 271,783 |
Selling, general and administrative expenses | 83,565 | 75,510 | 164,849 | 148,795 |
Loss on impairment of assets held for sale | 77,755 | 77,755 | 126,490 | |
Loss on disposal of assets | 2,384 | 5,688 | ||
Depreciation and amortization | 79,538 | 72,543 | 157,237 | 144,893 |
Income (loss) from operations | (95,047) | 14,449 | (113,146) | (93,293) |
Other income (expense): | ||||
Interest expense, net of interest income | (36,903) | (30,156) | (70,763) | (59,671) |
Other, net | 5,410 | 3,099 | 8,168 | 6,441 |
Loss from continuing operations before income taxes | (126,540) | (12,608) | (175,741) | (146,523) |
Income tax benefit | (18,448) | (2,017) | (30,688) | (16,836) |
Loss from continuing operations | (108,092) | (10,591) | (145,053) | (129,687) |
Discontinued operations: | ||||
Income from discontinued operations | 9,821 | 17,884 | ||
Income tax expense | 742 | 5,258 | ||
Income from discontinued operations | 9,079 | 12,626 | ||
Net loss | (108,092) | (1,512) | (145,053) | (117,061) |
Less: dividends on Series A preferred stock | 10,704 | 9,802 | 21,291 | 19,400 |
Less: net income attributable to noncontrolling interest | 161 | 203 | 304 | 318 |
Net loss attributable to common shareholders | $ (118,957) | $ (11,517) | $ (166,648) | $ (136,779) |
Net income (loss) per common share - basic and diluted | ||||
Loss from continuing operations - Basic | $ (1.05) | $ (0.18) | $ (1.47) | $ (1.33) |
Loss from continuing operations - Diluted | (1.05) | (0.18) | (1.47) | (1.33) |
Income from discontinued operations - Basic | 0.08 | 0.11 | ||
Income from discontinued operations - Diluted | 0.08 | 0.11 | ||
Net loss per basic common shares attributable to common shareholders | (1.05) | (0.10) | (1.47) | (1.22) |
Net loss per diluted common shares attributable to common shareholders | $ (1.05) | $ (0.10) | $ (1.47) | $ (1.22) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net loss | $ (108,092) | $ (1,512) | $ (145,053) | $ (117,061) |
Pension and post-retirement obligations: | ||||
Amortization of actuarial loss (gain) and prior service cost (credit) to earnings, net of tax | (999) | (52) | (1,998) | (104) |
Derivative instruments designated as cash flow hedges: | ||||
Change in fair value of derivatives, net of tax | 3,089 | 2,883 | 3,055 | 7,521 |
Reclassification of realized loss (gain) to earnings, net of tax | (2,387) | 1,324 | (4,366) | 2,663 |
Comprehensive income (loss) | (108,389) | 2,643 | (148,362) | (106,981) |
Less: comprehensive income attributable to noncontrolling interest | 161 | 203 | 304 | 318 |
Total comprehensive income (loss) attributable to common shareholders | $ (108,550) | $ 2,440 | $ (148,666) | $ (107,299) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 202,578 | $ 325,852 |
Short-term investments | 87,951 | |
Accounts receivable, net of allowance for credit losses | 100,827 | 119,675 |
Income tax receivable | 6,811 | 1,670 |
Prepaid expenses and other current assets | 60,138 | 62,996 |
Assets held for sale | 68,997 | |
Total current assets | 439,351 | 598,144 |
Property, plant and equipment, net | 2,390,071 | 2,234,122 |
Investments | 9,095 | 10,297 |
Goodwill | 814,624 | 929,570 |
Customer relationships, net | 29,772 | 43,089 |
Other intangible assets | 10,557 | 10,557 |
Other assets | 65,942 | 61,315 |
Total assets | 3,759,412 | 3,887,094 |
Current liabilities: | ||
Accounts payable | 50,306 | 33,096 |
Advance billings and customer deposits | 45,625 | 46,664 |
Accrued compensation | 55,585 | 60,903 |
Accrued interest | 18,175 | 18,201 |
Accrued expense | 126,220 | 95,206 |
Current portion of long-term debt and finance lease obligations | 16,821 | 12,834 |
Liabilities held for sale | 3,297 | |
Total current liabilities | 316,029 | 266,904 |
Long-term debt and finance lease obligations | 2,135,344 | 2,129,462 |
Deferred income taxes | 241,873 | 274,309 |
Pension and other post-retirement obligations | 120,756 | 123,644 |
Other long-term liabilities | 46,172 | 47,326 |
Total liabilities | 2,860,174 | 2,841,645 |
Commitments and contingencies (Note 15) | ||
Series A preferred stock, par value $0.01 per share; 10,000,000 shares authorized, 477,047 and 456,343 shares outstanding as of June 30, 2023 and December 31, 2022, respectively; liquidation preference of $498,338 and $477,047 as of June 30, 2023 and December 31, 2022, respectively | 349,971 | 328,680 |
Shareholders' equity: | ||
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,610,525 and 115,167,193 shares outstanding as of June 30, 2023 and December 31, 2022, respectively | 1,167 | 1,152 |
Additional paid-in capital | 701,287 | 720,442 |
Retained earnings (accumulated deficit) | (157,223) | (11,866) |
Accumulated other comprehensive loss, net | (3,919) | (610) |
Noncontrolling interest | 7,955 | 7,651 |
Total shareholders' equity | 549,267 | 716,769 |
Total liabilities, mezzanine equity and shareholders' equity | $ 3,759,412 | $ 3,887,094 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Temporary equity, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Temporary equity, shares authorized | 10,000,000 | 10,000,000 |
Temporary equity, shares outstanding | 477,047 | 456,343 |
Temporary equity, liquidation preference | $ 498,338 | $ 477,047 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares outstanding | 116,610,525 | 115,167,193 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Preferred Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss, net | Non-controlling Interest | Total |
Balance at Dec. 31, 2021 | $ 288,576 | ||||||
Balance (in shares) at Dec. 31, 2021 | 434,000 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Series A preferred stock issued (in shares) | 3,000 | ||||||
Dividends on Series A preferred stock accrued | $ 9,598 | ||||||
Balance at Mar. 31, 2022 | $ 298,174 | ||||||
Balance (in shares) at Mar. 31, 2022 | 437,000 | ||||||
Balance at Dec. 31, 2021 | $ 1,137 | $ 740,746 | $ (141,599) | $ (59,571) | $ 7,087 | $ 547,800 | |
Balance (in shares) at Dec. 31, 2021 | 113,647,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Shares issued under employee plan, net of forfeitures | $ 17 | (17) | |||||
Shares issued under employee plan, net of forfeitures (in shares) | 1,792,000 | ||||||
Dividends on Series A preferred stock accrued | (9,598) | (9,598) | |||||
Non-cash, share-based compensation | 2,199 | 2,199 | |||||
Purchase and retirement of common stock | (114) | (114) | |||||
Purchase and retirement of common stock (in shares) | (16,000) | ||||||
Other comprehensive income (loss) | 5,925 | 5,925 | |||||
Net income (loss) | (115,664) | 115 | (115,549) | ||||
Balance at Mar. 31, 2022 | $ 1,154 | 733,216 | (257,263) | (53,646) | 7,202 | 430,663 | |
Balance (in shares) at Mar. 31, 2022 | 115,424,000 | ||||||
Balance at Dec. 31, 2021 | $ 288,576 | ||||||
Balance (in shares) at Dec. 31, 2021 | 434,000 | ||||||
Balance at Jun. 30, 2022 | $ 307,976 | ||||||
Balance (in shares) at Jun. 30, 2022 | 437,000 | ||||||
Balance at Dec. 31, 2021 | $ 1,137 | 740,746 | (141,599) | (59,571) | 7,087 | 547,800 | |
Balance (in shares) at Dec. 31, 2021 | 113,647,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | (117,061) | ||||||
Balance at Jun. 30, 2022 | $ 1,154 | 726,247 | (258,978) | (49,491) | 7,405 | 426,337 | |
Balance (in shares) at Jun. 30, 2022 | 115,396,000 | ||||||
Balance at Mar. 31, 2022 | $ 298,174 | ||||||
Balance (in shares) at Mar. 31, 2022 | 437,000 | ||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Dividends on Series A preferred stock accrued | $ 9,802 | ||||||
Balance at Jun. 30, 2022 | $ 307,976 | ||||||
Balance (in shares) at Jun. 30, 2022 | 437,000 | ||||||
Balance at Mar. 31, 2022 | $ 1,154 | 733,216 | (257,263) | (53,646) | 7,202 | 430,663 | |
Balance (in shares) at Mar. 31, 2022 | 115,424,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Shares issued under employee plan, net of forfeitures (in shares) | (28,000) | ||||||
Dividends on Series A preferred stock accrued | (9,802) | (9,802) | |||||
Non-cash, share-based compensation | 2,833 | 2,833 | |||||
Other comprehensive income (loss) | 4,155 | 4,155 | |||||
Net income (loss) | (1,715) | 203 | (1,512) | ||||
Balance at Jun. 30, 2022 | $ 1,154 | 726,247 | (258,978) | (49,491) | 7,405 | $ 426,337 | |
Balance (in shares) at Jun. 30, 2022 | 115,396,000 | ||||||
Balance at Dec. 31, 2022 | $ 328,680 | ||||||
Balance (in shares) at Dec. 31, 2022 | 456,000 | 456,343 | |||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||
Series A preferred stock issued (in shares) | 21,000 | ||||||
Dividends on Series A preferred stock accrued | $ 10,587 | ||||||
Balance at Mar. 31, 2023 | $ 339,267 | ||||||
Balance (in shares) at Mar. 31, 2023 | 477,000 | ||||||
Balance at Dec. 31, 2022 | $ 1,152 | 720,442 | (11,866) | (610) | 7,651 | $ 716,769 | |
Balance (in shares) at Dec. 31, 2022 | 115,167,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Shares issued under employee plan, net of forfeitures | $ 17 | (17) | |||||
Shares issued under employee plan, net of forfeitures (in shares) | 1,738,000 | ||||||
Dividends on Series A preferred stock accrued | (10,587) | (10,587) | |||||
Non-cash, share-based compensation | 799 | 799 | |||||
Purchase and retirement of common stock | $ (2) | (1,034) | (1,036) | ||||
Purchase and retirement of common stock (in shares) | (256,000) | ||||||
Other comprehensive income (loss) | (3,012) | (3,012) | |||||
Net income (loss) | (37,104) | 143 | (36,961) | ||||
Balance at Mar. 31, 2023 | $ 1,167 | 709,603 | (48,970) | (3,622) | 7,794 | $ 665,972 | |
Balance (in shares) at Mar. 31, 2023 | 116,649,000 | ||||||
Balance at Dec. 31, 2022 | $ 328,680 | ||||||
Balance (in shares) at Dec. 31, 2022 | 456,000 | 456,343 | |||||
Balance at Jun. 30, 2023 | $ 349,971 | ||||||
Balance (in shares) at Jun. 30, 2023 | 477,000 | 477,047 | |||||
Balance at Dec. 31, 2022 | $ 1,152 | 720,442 | (11,866) | (610) | 7,651 | $ 716,769 | |
Balance (in shares) at Dec. 31, 2022 | 115,167,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Other comprehensive income (loss) | (3,309) | ||||||
Net income (loss) | (145,053) | ||||||
Balance at Jun. 30, 2023 | $ 1,167 | 701,287 | (157,223) | (3,919) | 7,955 | $ 549,267 | |
Balance (in shares) at Jun. 30, 2023 | 116,610,000 | ||||||
Balance at Mar. 31, 2023 | $ 339,267 | ||||||
Balance (in shares) at Mar. 31, 2023 | 477,000 | ||||||
Balance at Jun. 30, 2023 | $ 349,971 | ||||||
Balance (in shares) at Jun. 30, 2023 | 477,000 | 477,047 | |||||
Balance at Mar. 31, 2023 | $ 1,167 | 709,603 | (48,970) | (3,622) | 7,794 | $ 665,972 | |
Balance (in shares) at Mar. 31, 2023 | 116,649,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Shares issued under employee plan, net of forfeitures (in shares) | (39,000) | ||||||
Dividends on Series A preferred stock accrued | $ 10,704 | (10,704) | (10,704) | ||||
Non-cash, share-based compensation | 2,388 | 2,388 | |||||
Other comprehensive income (loss) | (297) | (297) | |||||
Net income (loss) | (108,253) | 161 | (108,092) | ||||
Balance at Jun. 30, 2023 | $ 1,167 | $ 701,287 | $ (157,223) | $ (3,919) | $ 7,955 | $ 549,267 | |
Balance (in shares) at Jun. 30, 2023 | 116,610,000 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (145,053) | $ (117,061) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 157,237 | 144,893 |
Deferred income taxes | (31,259) | (11,826) |
Cash distributions from wireless partnerships in excess of current earnings | 1,661 | |
Pension and post-retirement contributions in excess of expense | (5,537) | (19,161) |
Stock-based compensation expense | 3,187 | 5,032 |
Amortization of deferred financing costs and discounts | 3,721 | 3,626 |
Loss on impairment of assets held for sale | 77,755 | 126,490 |
Loss on disposal of assets | 5,688 | |
Other, net | (2,861) | (396) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 10,874 | 12,796 |
Income tax receivable | (5,141) | (1,599) |
Prepaid expenses and other assets | (3,930) | (3,890) |
Accounts payable | 2,748 | 5,572 |
Accrued expenses and other liabilities | (110) | (4,632) |
Net cash provided by operating activities | 67,319 | 141,505 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment, net | (280,860) | (332,914) |
Purchase of investments | (39,959) | |
Proceeds from sale and maturity of investments | 91,623 | 126,554 |
Proceeds from sale of assets | 6,801 | 1,794 |
Proceeds from business dispositions | 26,042 | |
Net cash used in investing activities | (182,436) | (218,483) |
Cash flows from financing activities: | ||
Payment of finance lease obligations | (7,121) | (4,524) |
Share repurchases for minimum tax withholding | (1,036) | (114) |
Net cash used in financing activities | (8,157) | (4,638) |
Change in cash and cash equivalents | (123,274) | (81,616) |
Cash and cash equivalents at beginning of period | 325,852 | 99,635 |
Cash and cash equivalents at end of period | $ 202,578 | $ 18,019 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “our” or “us”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide communication solutions to consumer, commercial and carrier customers across a service area in over 20 states. Leveraging our advanced fiber network spanning approximately 58,800 fiber route miles, we offer residential high-speed Internet, video, phone and home security services as well as a comprehensive business product suite including: data and Internet solutions, voice, data center services, security services, managed and IT services, and an expanded suite of cloud services. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss), mezzanine equity and shareholders’ equity and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2022 Annual Report on Form 10-K filed with the SEC. Recent Developments Take Private Proposal On April 12, 2023, our board of directors (the “Board”) received a non-binding proposal letter from Searchlight Capital Partners, L.P. (“Searchlight”), together with its affiliated investment funds, and British Columbia Investment Management Corporation (“BCI” and together with Searchlight, the “Searchlight Group”) to acquire all of the outstanding common shares of Consolidated not already owned by the Searchlight Group for cash consideration of $4.00 per share (the “Proposal”). The Proposal letter states that any potential transaction must be subject to the approval and recommendation by a special committee of independent and disinterested directors, advised by independent legal and financial advisors. The Proposal letter also indicates that any potential transaction would be subject to a non-waivable condition requiring the approval of the holders of a majority of the shares of Common Stock that are not owned by the Searchlight Group. The Board has formed a special committee of independent directors to evaluate and consider the Proposal. The Proposal constitutes only an indication of interest by the Searchlight Group and does not constitute a binding commitment with respect to the proposed transaction or any other transaction. No agreement, arrangement or understanding between Consolidated and the Searchlight Group relating to any proposed transaction will be created unless definitive documentation is executed and delivered by the appropriate parties. There can be no assurance that the Proposal will result in a transaction occurring, its timing, or ultimate terms. On December 7, 2021, we closed on the final stage of the investment agreement (the “Investment Agreement”) entered into on September 13, 2020 with an affiliate of Searchlight. In connection with the Investment Agreement, affiliates of Searchlight have invested an aggregate of $425.0 million in the Company and hold a combination of Series A perpetual preferred stock and approximately 34% of the Company’s outstanding common stock as of June 30, 2023. For a more complete discussion of the transaction, refer to Note 4. Cost Savings Initiative In July 2023, we initiated a business simplification and cost savings initiative plan intended to further align our company as a fiber-first provider, improve operating efficiencies, lower our cost structure and ultimately improve the overall customer experience. This initiative includes a reduction in workforce, consolidation and elimination of certain facilities and review of our product offerings. We anticipate incurring costs of approximately $10.0 million to $15.0 million during the next nine to twelve months to implement and execute the plan. The scope of the plan is expected to be finalized during the second half of 2023. Discontinued Operations – Sale of Investment in Wireless Partnerships On September 13, 2022, we completed the sale of our five limited wireless partnership interests to Cellco Partnership (“Cellco”) for an aggregate purchase price of $490.0 million, other than a portion of the interest in one of the partnerships which was sold to a limited partner of such partnership pursuant to its right of first refusal. Cellco is the general partner for each of the five wireless partnerships and is an indirect, wholly-owned subsidiary of Verizon Communications, Inc. In accordance with Accounting Standards Codification (“ASC”) 205-20, Presentation of Financial Statements – Discontinued Operations Accounts Receivable and Allowance for Credit Losses Accounts receivable (“AR”) consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for credit losses (“ACL”) based on our historical loss experience, current conditions and forecasted changes including but not limited to changes related to the economy, our industry and business. Uncollectible accounts are written-off (removed from AR and charged against the ACL) when internal collection efforts have been unsuccessful. Subsequently, if payment is received from the customer, the recovery is credited to the ACL. The following table summarizes the activity in ACL for the six months ended June 30, 2023 and 2022: Six Months Ended June 30, (In thousands) 2023 2022 Balance at beginning of year $ 11,470 $ 9,961 Provision charged to expense 4,140 4,230 Write-offs, less recoveries (3,190) (3,669) Balance at end of year $ 12,420 $ 10,522 Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04 (“ASU 2020-04”), Facilitation of the Effects of Reference Rate Reform on Financial Reporting Reference Rate Reform (Topic 848): Scope Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 to extend the optional relief guidance in Topic 848 from December 31, 2022 to December 31, 2024. The adoption of this guidance in 2023 did not have a material impact on our condensed consolidated financial statements and related disclosures. Reclassifications Certain amounts in our 2022 condensed consolidated financial statements have been reclassified to conform to the current year presentation which consists of the presentation of the financial results for our wireless partnership interests as discontinued operations. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2023 | |
REVENUE | |
REVENUE | 2. REVENUE Nature of Contracts with Customers Our revenue contracts with customers may include a promise or promises to deliver goods such as equipment and/or services such as broadband, video or voice services. Promised goods and services are considered distinct as the customer can benefit from the goods or services either on their own or together with other resources that are readily available to the customer and the Company’s promise to transfer a good or service to the customer is separately identifiable from other promises in the contract. The Company accounts for goods and services as separate performance obligations. Each service is considered a single performance obligation as it is providing a series of distinct services that are substantially the same and have the same pattern of transfer. The transaction price is determined at contract inception and reflects the amount of consideration to which we expect to be entitled in exchange for transferring a good or service to the customer. This amount is generally equal to the market price of the goods and/or services promised in the contract and may include promotional discounts. The transaction price excludes amounts collected on behalf of third parties such as sales taxes and regulatory fees. Conversely, nonrefundable upfront fees, such as service activation and set-up fees, are included in the transaction price. In determining the transaction price, we consider our enforceable rights and obligations within the contract. We do not consider the possibility of a contract being cancelled, renewed or modified. The transaction price is allocated to each performance obligation based on the standalone selling price of the good or service, net of the related discount, as applicable. Revenue is recognized when or as performance obligations are satisfied by transferring control of the good or service to the customer. Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Operating Revenues Consumer: Broadband (Data and VoIP) $ 71,339 $ 67,592 $ 139,300 $ 133,503 Voice services 31,352 36,643 63,615 74,095 Video services 9,362 14,359 18,956 28,725 112,053 118,594 221,871 236,323 Commercial: Data services (includes VoIP) 53,230 57,113 106,364 115,008 Voice services 32,236 35,775 64,867 72,114 Other 10,378 11,287 20,134 22,847 95,844 104,175 191,365 209,969 Carrier: Data and transport services 31,224 36,263 64,147 69,748 Voice services 4,263 3,718 8,630 7,570 Other 313 354 663 745 35,800 40,335 73,440 78,063 Subsidies 7,072 6,534 14,108 13,117 Network access 22,747 24,846 47,191 51,059 Other products and services 1,646 3,906 3,313 10,137 Total operating revenues $ 275,162 $ 298,390 $ 551,288 $ 598,668 Contract Assets and Liabilities The following table provides information about receivables, contract assets and contract liabilities from our revenue contracts with customers: June 30, (In thousands) 2023 2022 Accounts receivable, net $ 100,827 $ 117,479 Contract assets 30,071 24,928 Contract liabilities 56,963 56,659 Contract assets include costs that are incremental to the acquisition of a contract. Incremental costs are those that result directly from obtaining a contract or costs that would not have been incurred if the contract had not been obtained, which primarily relate to sales commissions and certain contract fulfillment costs. These costs are deferred and amortized over the expected customer life. We determined that the expected customer life is the expected period of benefit as the commission on the renewal contract is not commensurate with the commission on the initial contract. During the three months ended June 30, 2023 and 2022, the Company recognized expense of $3.2 million and $3.1 million, respectively, related to deferred contract acquisition costs. During the six months ended June 30, 2023 and 2022, the Company recognized expense of $6.7 million and $6.2 million, respectively, related to deferred contract acquisition costs Contract liabilities include deferred revenues related to advanced payments for services and nonrefundable, upfront service activation and set-up fees, which are generally deferred and amortized over the expected customer life as the option to renew without paying an upfront fee provides the customer with a material right. During the three months ended June 30, 2023 and 2022, the Company recognized previously deferred revenues of $100.8 million and $122.6 million, respectively. For the six months ended June 30, 2023 and 2022, the Company recognized previously deferred revenues of $221.5 million and $244.2 million, respectively. A receivable is recognized in the period the Company provides goods or services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are generally 30 to 60 days. Performance Obligations Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers 1. The performance obligation is part of a contract that has an original expected duration of one year or less. 2. Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer in accordance with ASC 606-10-55-18. The Company has elected these practical expedients. Performance obligations related to our service revenue contracts are generally satisfied over time. For services transferred over time, revenue is recognized based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract. As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | 3. EARNINGS (LOSS) PER SHARE Basic and diluted earnings (loss) per common share (“EPS”) are computed using the two-class method, which is an earnings allocation method that determines EPS for each class of common stock and participating securities considering dividends declared and participation rights in undistributed earnings. Common stock related to certain of the Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends, if declared, during the vesting term. The potentially dilutive impact of the Company’s restricted stock awards is determined using the treasury stock method. Under the treasury stock method, if the average market price during the period exceeds the exercise price, these instruments are treated as if they had been exercised with the proceeds of exercise used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and repurchased is included in the diluted share computation. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period. Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive. The computation of basic and diluted EPS attributable to common shareholders computed using the two-class method is as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share amounts) 2023 2022 2023 2022 Loss from continuing operations $ (108,092) $ (10,591) $ (145,053) $ (129,687) Less: dividends on Series A preferred stock 10,704 9,802 21,291 19,400 Less: net income attributable to noncontrolling interest 161 203 304 318 Loss from continuing operations attributable to common shareholders (118,957) (20,596) (166,648) (149,405) Income from discontinued operations attributable to common shareholders — 9,079 — 12,626 Net loss attributable to common shareholders $ (118,957) $ (11,517) $ (166,648) $ (136,779) Weighted-average number of common shares outstanding 113,050 111,697 112,995 111,694 Basic and diluted earnings (loss) per common share: Loss from continuing operations $ (1.05) $ (0.18) $ (1.47) $ (1.33) Income from discontinued operations — 0.08 — 0.11 Net loss per common share attributable to common shareholders - basic and diluted $ (1.05) $ (0.10) $ (1.47) $ (1.22) Diluted EPS attributable to common shareholders for the three months ended June 30, 2023 and 2022 excludes 3.6 million and 3.7 million potential common shares related to our share-based compensation plan, respectively, because the inclusion of the potential common shares would have an antidilutive effect. For the six months ended June 30, 2023 and 2022, diluted EPS attributable to common shareholders excludes 3.0 million and 3.1 million potential common shares, respectively. |
SEARCHLIGHT INVESTMENT
SEARCHLIGHT INVESTMENT | 6 Months Ended |
Jun. 30, 2023 | |
SEARCHLIGHT INVESTMENT | |
SEARCHLIGHT INVESTMENT | 4. SEARCHLIGHT INVESTMENT In connection with the Investment Agreement entered into on September 13, 2020, affiliates of Searchlight committed to invest up to an aggregate of $425.0 million in the Company. The investment commitment was structured in two stages. In the first stage of the transaction, which was completed on October 2, 2020, Searchlight invested $350.0 million in the Company in exchange for 6,352,842 shares, or approximately 8%, of the Company’s common stock and was issued a CPR that was convertible, upon the receipt of certain regulatory and shareholder approvals, into an additional 17,870,012 shares, or 16.9%, of the Company’s common stock. In addition, Searchlight received the right to an unsecured subordinated note with an aggregate principal amount of approximately $395.5 million (the “Note”), which was convertible into shares of a new series of perpetual preferred stock of the Company with an aggregate liquidation preference equal to the principal amount of the Note plus accrued interest as of the date of conversion. On July 15, 2021, the Company received all required state public utility commission regulatory approvals necessary for the conversion of the CPR into 16.9% additional shares of the Company’s common stock. As a result, the CPR was converted into 17,870,012 shares of common stock, which were issued to Searchlight on July 16, 2021. In the second stage of the transaction, which was completed on December 7, 2021 following the receipt of Federal Communications Commission (“FCC”) and certain regulatory approvals and the satisfaction of certain other customary closing conditions, Searchlight invested an additional $75.0 million and was issued the Note. On December 7, 2021, Searchlight elected to convert the Note into 434,266 shares of Series A Perpetual Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”). In addition, the CPR converted into an additional 15,115,899 shares, or an additional 10.1%, of the Company’s common stock. As of June 30, 2023 and December 31, 2022, the total shares of common stock issued to Searchlight represent approximately 34% of the Company’s outstanding common stock. On December 7, 2021, Searchlight exercised its option to convert the Note and the net carrying value of the Note of $285.9 million, net of unamortized discount and issuance costs of $139.7 million and $8.7 million, respectively, was converted into 434,266 shares of Series A Preferred Stock at a liquidation preference of $1,000 per share. Dividends on the Series A Preferred Stock accrue daily on the liquidation preference at a rate of 9.0% per annum, payable semi-annually in arrears. See Note 11 for more information on the terms of the Series A Preferred Stock. With the strategic investment from Searchlight, we intend to enhance our fiber infrastructure and accelerate the investment in our network, which will include the upgrade of approximately 1.6 million passings across select service areas to enable multi-Gig capable services to these homes and small businesses. |
DIVESTITURES
DIVESTITURES | 6 Months Ended |
Jun. 30, 2023 | |
DIVESTITURES | |
DIVESTITURES | 5. DIVESTITURES Washington Operations On July 10, 2023, we entered into a definitive agreement to sell all of the issued and outstanding stock of our business located in Washington, Consolidated Communications of Comerco Company (“CCCC”), which directly owns all of the issued and outstanding shares of Consolidated Communications of Washington Company (“CCWC” and together with CCCC”, the “Washington operations”), for gross cash proceeds of approximately $73.0 million, subject to customary working capital adjustments and other post-closing purchase price adjustments. The transaction is expected to close in the second half of 2024 and is subject to the receipt of all customary regulatory approvals and the satisfaction of other closing conditions. The asset sale aligns with our ongoing strategic asset review and focus on our fiber expansion plans in our core broadband regions. At June 30, 2023, the major classes of assets and liabilities to be sold were classified as held for sale in the condensed consolidated balance sheet and consisted of the following: (In thousands) Current assets $ 1,018 Property, plant and equipment 29,219 Goodwill 114,946 Other long-term assets 1,569 Impairment to net realizable value (77,755) Total assets $ 68,997 Current liabilities $ 1,983 Other long-term liabilities 1,314 Total liabilities $ 3,297 During the three months ended June 30, 2023, the carrying value of the net assets to be sold were reduced to their estimated fair value of approximately $65.7 million, which was determined based on the estimated selling price less costs to sell and were classified as Level 2 within the fair value hierarchy. As a result, we recognized an impairment loss of $77.8 million during the three and six months ended June 30, 2023. Kansas City Operations On March 2, 2022, we entered into a definitive agreement to sell substantially all the assets of our business located in the Kansas City market (the “Kansas City operations”). The Kansas City operations provide data, voice and video services to customers within the Kansas City metropolitan area and surrounding counties and includes approximately 17,100 consumer customers and 1,600 commercial customers. The sale closed on November 30, 2022 for gross cash proceeds of $82.1 million, subject to the finalization of certain working capital and other post-closing purchase price adjustments. We expect to utilize the proceeds from the sale to support our fiber expansion plan in our core regions. In connection with the classification as assets held for sale during the three months ended March 31, 2022, the carrying value of the net assets was reduced to their estimated fair value and we recognized an impairment loss of $126.5 million during the six months ended June 30, 2022. During the three months ended September 30, 2022, we recognized an additional impairment loss of $5.2 million as a result of an increase in net assets held for sale and estimated selling costs during the period. During the three months ended December 31, 2022, we recognized an additional loss on the sale of $16.8 million as a result of purchase price adjustments and an increase in net assets held for sale and estimated selling costs during the period. During the six months ended June 30, 2023, we recognized an additional loss on sale of $2.1 million as a result of expected purchase price adjustments and changes in working capital. Ohio Operations On September 22, 2021, we entered into a definitive agreement to sell substantially all of the assets of our non-core, rural ILEC business located in Ohio, Consolidated Communications of Ohio Company (“CCOC” or the “Ohio Operations”). CCOC provides telecommunications and data services to residential and business customers in 11 rural communities in Ohio and surrounding areas and included approximately 3,800 access lines and 3,900 data connections. The sale was completed on January 31, 2022 for gross cash proceeds of $26.1 million, including customary working capital adjustments. The asset sale aligns with our strategic asset review and focus on our core broadband regions. In September 2021, in connection with the expected sale, the carrying value of the net assets were reduced to their estimated fair value and we recognized an impairment loss of $5.7 million during the three months ended September 30, 2021. During the six months ended June 30, 2022, we recognized an additional loss on the sale of $0.5 million, which is included in selling, general and administrative expense |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2023 | |
INVESTMENTS. | |
INVESTMENTS | 6. INVESTMENTS Our investments are as follows: June 30, December 31, (In thousands) 2023 2022 Short-term investments: Held-to-maturity debt securities $ — $ 87,951 Long-term investments: Cash surrender value of life insurance policies $ 3,067 $ 2,774 CoBank, ACB Stock 5,755 7,250 Other 273 273 $ 9,095 $ 10,297 Held-to-Maturity Debt Securities Investments in debt securities that we have the positive intent and ability to hold until maturity are classified as held-to-maturity. We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. Investments with original maturities of more than three months and less than one year are classified as short-term investments. Held-to maturity debt securities are recorded at amortized cost, which approximates fair value, and realized gains or losses are recognized in earnings. Our held-to-maturity debt securities consist of investments in commercial paper and certificate of deposits. At June 30, 2023, we had no held-to-maturity investments. At December 31, 2022, we had $88.0 million of investments in commercial paper included in short-term investments. The investments have original maturities of less than one year. As of December 31, 2022, the amortized cost of the investments approximated their fair value and the gross unrecognized gains and losses were not material. Long-Term Investments 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. Discontinued Operations Investments at Cost We owned 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 owned 3.60% of Pittsburgh SMSA Limited Partnership, which provides cellular service in and around the Pittsburgh metropolitan area. Because of our limited influence over these partnerships, we accounted for these investments at our initial cost less any impairment because fair value was not readily available for these investments. For these investments, we adjusted the carrying value for any purchases or sales of our ownership interests, if any. Prior to classification as discontinued operations, we recorded distributions received from these investments as investment income in non-operating income (expense). For the three and six months ended June 30, 2022, we received cash distributions from these partnerships of $5.2 million and $9.0 million, respectively. Equity Method We owned 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 had significant influence over the operating and financial policies of these three entities, we accounted for the investments using the equity method. Prior to classification as discontinued operations, income was recognized as investment income in non-operating income (expense) on our proportionate share of earnings and cash distributions were recorded as a reduction in our investment. For the three and six months ended June 30, 2022, we received cash distributions from these partnerships of $6.1 million and $10.5 million, respectively. On September 13, 2022, we completed the sale of our five limited wireless partnership interests to Cellco for an aggregate purchase price of $490.0 million. Cellco is the general partner for each of the five wireless partnerships and is an indirect, wholly-owned subsidiary of Verizon Communications, Inc. A portion of the interest in one of the partnerships was sold to a limited partner of such partnership, pursuant to its right of first refusal. We intend to use the proceeds from the sale to support our fiber expansion plan. The financial results of the limited partnership interests have been reported as discontinued operations in our condensed consolidated statements of operations for prior periods presented. The results of discontinued operations included in the condensed consolidated statements of operations consisted of the following: Three Months Ended Six Months Ended (In thousands) June 30, 2022 June 30, 2022 Investment income $ 9,821 $ 17,884 Gain on sale of discontinued operations — — Income from discontinued operations, before income taxes 9,821 17,884 Income tax expense 742 5,258 Net income from discontinued operations $ 9,079 $ 12,626 In connection with the sale of the partnership interests, we expect to recognize a taxable gain of approximately of $477.7 million on the transaction. For federal income tax purposes, we expect to utilize our available net operating loss carryforwards to offset the taxable gain. For state income tax purposes, we are estimating approximately $8.0 million in state tax liabilities. In the statement of cash flows, we have elected to combine cash flows from discontinued operations with cash flows from continuing operations. During the three and six months ended June 30, 2022, cash provided by operating activities for discontinued operations was $11.3 million and $19.5 million, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 7. FAIR VALUE MEASUREMENTS Our derivative instruments related to interest rate swap agreements are required to be measured at fair value on a recurring basis. The fair values of the interest rate swaps are determined using valuation models and are categorized within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and observable market data of similar instruments. See Note 9 for further discussion regarding our interest rate swap agreements. Our interest rate swap agreements measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 were as follows: As of June 30, 2023 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap assets $ 1,039 $ — $ 1,039 $ — Long-term interest rate swap assets 3,998 — 3,998 — Total $ 5,037 $ — $ 5,037 $ — As of December 31, 2022 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap assets $ 5,959 $ — $ 5,959 $ — We have not elected the fair value option for any of our other assets or liabilities. The carrying value of other financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. The following table presents the other financial instruments that are not carried at fair value but which require fair value disclosure as of June 30, 2023 and December 31, 2022. As of June 30, 2023 As of December 31, 2022 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,142,007 $ 1,771,411 $ 2,141,176 $ 1,759,430 Investments Our investments as of June 30, 2023 and December 31, 2022 accounted for at cost consisted primarily of our investment in CoBank. It is impracticable to determine the fair value of this investment. 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 | 6 Months Ended |
Jun. 30, 2023 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 8. LONG-TERM DEBT Long-term debt, presented net of unamortized discounts, consisted of the following: June 30, December 31, (In thousands) 2023 2022 Senior secured credit facility: Term loans, net of discounts of $7,868 and $8,699 at June 30, 2023 and December 31, 2022, respectively $ 992,007 $ 991,176 6.50% Senior notes due 2028 750,000 750,000 5.00% Senior notes due 2028 400,000 400,000 Finance leases 41,894 35,746 2,183,901 2,176,922 Less: current portion of long-term debt and finance leases (16,821) (12,834) Less: deferred debt issuance costs (31,736) (34,626) Total long-term debt $ 2,135,344 $ 2,129,462 Credit Agreement On October 2, 2020, the Company, through certain of its wholly-owned subsidiaries, entered into a Credit Agreement with various financial institutions (as amended, the “Credit Agreement”) to replace the Company’s previous credit agreement in its entirety. The Credit Agreement consisted of term loans in an original aggregate amount of $1,250.0 million (the “Initial Term Loans”) and a revolving loan facility of $250.0 million. The Credit Agreement also includes an incremental loan facility which provides the ability to borrow, subject to certain terms and conditions, incremental loans in an aggregate amount of up to the greater of (a) $300.0 million plus (b) an amount which would not cause its senior secured leverage ratio not to exceed 3.70:1.00 (the “Incremental Facility”). Borrowings under the Credit Agreement are secured by substantially all of the assets of the Company and its subsidiaries, subject to certain exceptions. The Initial Term Loans were issued in an original aggregate principal amount of $1,250.0 million with a maturity date of October 2, 2027 and contained an original issuance discount of 1.5% or $18.8 million, which is being amortized over the term of the loan. Prior to amendments to the Credit Agreement, as described below, the Initial Term Loans required quarterly principal payments of $3.1 million, which commenced December 31, 2020, and bore interest at a rate of 4.75% plus the London Interbank Offered Rate (“LIBOR”) subject to a 1.00% LIBOR floor. On January 15, 2021, the Company entered into Amendment No. 1 to the Credit Agreement in which we borrowed an additional $150.0 million aggregate principal amount of incremental term loans (the “Incremental Term Loans”). The Incremental Term Loans have terms and conditions identical to the Initial Term Loans including the same maturity date and interest rate. The Initial Term Loans and Incremental Term Loans, collectively (the “Term Loans”), comprise a single class of term loans under the Credit Agreement. On March 18, 2021, the Company repaid $397.0 million of the outstanding Term Loans with the net proceeds received from the issuance of $400.0 million aggregate principal amount of 5.00% senior secured notes due 2028 (the “5.00% Senior Notes”), as described below. The repayment of the Term Loans was applied to the remaining principal payments in direct order of maturity, thereby eliminating the required quarterly principal payments through the remaining term of the loan. On April 5, 2021, the Company, entered into Amendment No. 2 to the Credit Agreement (the “Second Amendment”) to refinance the outstanding Term Loans of $999.9 million. The terms and conditions of the Credit Agreement remain substantially similar and unchanged except with respect to the interest rate applicable to the Term Loans and certain other provisions. As a result of the Second Amendment, the interest rate of the Term Loans was reduced to 3.50% plus LIBOR subject to a 0.75% LIBOR floor. The maturity date of the Term Loans of October 2, 2027 remained unchanged. On November 22, 2022, the Company, entered into Amendment No. 3 to the Credit Agreement (the “Third Amendment”) to, among other things, extend the maturity of the revolving credit facility by two years from October 2, 2025 to October 2, 2027, subject to springing maturity on April 2, 2027 if the Term Loans, as of April 1, 2027, are scheduled to mature earlier than March 31, 2028. The Third Amendment also relaxed the revolving credit facility’s consolidated first lien leverage maintenance covenant, as described below, through June 30, 2025 to 6.35:1.00 from 5.85:1.00. On April 17, 2023, the Company entered into Amendment No. 4 to the Credit Agreement (the “Fourth Amendment”) to replace remaining LIBOR-based benchmark rates with Secured Overnight Financing Rate (“SOFR”)-based benchmark rates. As part of the replacement to SOFR-benchmark rates, borrowings will include an adjustment of 0.11%, 0.26% and 0.43% for borrowings of one, three and six month loans, respectively. With the amendment, the interest rate of the Term Loans is 3.50% plus SOFR plus the SOFR adjustment (subject to a 0.75% SOFR floor). The revolving credit facility has a maturity date of October 2, 2027 and an applicable margin (at our election) of 4.00% for SOFR-based borrowings or 3.00% for alternate base rate borrowings, with a 0.25% reduction in each case if the consolidated first lien leverage ratio, as defined in the Credit Agreement, does not exceed 3.20 to 1.00. At June 30, 2023 and December 31, 2022, there were no borrowings outstanding under the revolving credit facility. Stand-by letters of credit of $35.4 million were outstanding under our revolving credit facility as of June 30, 2023. The stand-by letters of credit are renewable annually and reduce the borrowing availability under the revolving credit facility. As of June 30, 2023, $214.6 million was available for borrowing under the revolving credit facility, subject to certain covenants. The weighted-average interest rate on outstanding borrowings under our credit facility was 8.77% and 7.63% as of June 30, 2023 and December 31, 2022, respectively. Interest is payable at least quarterly. Credit Agreement Covenant Compliance The Credit Agreement contains various provisions and covenants, including, among other items, restrictions on the ability to pay dividends, incur additional indebtedness, and issue certain capital stock. We have agreed to maintain certain financial ratios, including a maximum consolidated first lien leverage ratio, as defined in the Credit Agreement. Among other things, it will be an event of default, with respect to the revolving credit facility only, if our consolidated first lien leverage ratio is greater than 6.35:1.00 as of the end of any fiscal quarter, if on such date the testing threshold is met. The testing threshold is met if the aggregate amount of our borrowings outstanding under the revolving credit facility exceeds 35%. As of June 30, 2023, the testing threshold was not met and our consolidated first lien leverage ratio under the Credit Agreement was 5.59:1.00. As of June 30, 2023, we were in compliance with the Credit Agreement covenants. Senior Notes On October 2, 2020, we completed an offering of $750.0 million aggregate principal amount of 6.50% unsubordinated secured notes due 2028 (the “6.50% Senior Notes”). The 6.50% Senior Notes were priced at par and bear interest at a rate of 6.50%, payable semi-annually on April 1 and October 1 of each year. The 6.50% Senior Notes mature on October 1, 2028. On March 18, 2021, we issued $400.0 million aggregate principal amount 5.00% Senior Notes, together with the 6.50% Senior Notes (the “Senior Notes”). The 5.00% Senior Notes were priced at par and bear interest at a rate of 5.00% per year, payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2021. The 5.00% Senior Notes mature on October 1, 2028. The net proceeds from the issuance of the 5.00% Senior Notes were used to repay $397.0 million of the Term Loans outstanding under the Credit Agreement. The Senior Notes are unsubordinated secured obligations of the Company, secured by a first priority lien on the collateral that secures the Company’s obligations under the Credit Agreement. The Senior Notes are fully and unconditionally guaranteed on a first priority secured basis by the Company and the majority of our wholly-owned subsidiaries. The offerings of the Senior Notes have not been registered under the Securities Act of 1933, as amended or any state securities laws. Senior Notes Covenant Compliance Subject to certain exceptions and qualifications, the indentures governing the Senior Notes contain customary covenants that, among other things, limits the Company 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 indentures also contain customary events of default. As of June 30, 2023, the Company was in compliance with all terms, conditions and covenants under the indentures governing the Senior Notes. |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2023 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 9. DERIVATIVE FINANCIAL INSTRUMENTS We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed-rate basis, thereby reducing the impact of interest rate changes on future cash interest payments. Derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets. We may designate certain of our interest rate swaps as cash flow hedges of our expected future interest payments. For derivative instruments designated as a cash flow hedge, the change in the fair value is recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and is recognized as an adjustment to earnings over the period in which the hedged item impacts earnings. When an interest rate swap agreement terminates, any resulting gain or loss is recognized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt obligation. If a derivative instrument is de-designated, the remaining gain or loss in AOCI on the date of de-designation is amortized to earnings over the remaining term of the hedging instrument. For derivative financial instruments that are not designated as a hedge, including those that have been de-designated, changes in fair value are recognized on a current basis in earnings. Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in our condensed consolidated statements of cash flows. The following interest rate swaps were outstanding as of June 30, 2023: Notional (In thousands) Amount 2023 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 500,000 Prepaid expenses and other current assets $ 1,039 Forward starting fixed to 1-month floating SOFR $ 500,000 Other long-term assets 3,998 Total Fair Values $ 5,037 Our fixed to 1-month floating LIBOR interest rate swap agreements matured on July 31, 2023. The forward-starting interest rate swap agreements, which became effective July 31, 2023, have a fixed rate of 3.941% and mature on September 30, 2026. The following interest rate swaps were outstanding as of December 31, 2022: Notional (In thousands) Amount 2022 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 500,000 Prepaid expenses and other current assets $ 5,959 The counterparties to our various swaps are highly rated financial institutions. None of the swap agreements provide for either us or the counterparties to post collateral nor do the agreements include any covenants related to the financial condition of Consolidated or the counterparties. The swaps of any counterparty that is a lender, as defined in our credit facility, are secured along with the other creditors under the credit facility. Each of the swap agreements provides that in the event of a bankruptcy filing by either Consolidated or the counterparty, any amounts owed between the two parties would be offset in order to determine the net amount due between parties. As of June 30, 2023 and December 31, 2022, the total pre-tax unrealized gain related to our interest rate swap agreements included in AOCI was $5.1 million and $6.9 million, respectively. From the balance in AOCI as of June 30, 2023, we expect to recognize a gain of approximately $7.4 million in earnings in the next twelve months. Information regarding our cash flow hedge transactions is as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Unrealized gain recognized in AOCI, pretax $ 4,180 $ 3,899 $ 4,133 $ 10,172 Deferred gain (loss) reclassified from AOCI to interest expense $ 3,231 $ (1,791) $ 5,909 $ (3,602) |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
LEASES | 10. LEASES Lessor We have various arrangements for use of our network assets for which we are the lessor, including tower space, certain colocation, conduit and dark fiber arrangements. These leases meet the criteria for operating lease classification. Lease income associated with these types of leases is not material. Occasionally, we enter into arrangements where the term may be for a major part of the asset’s remaining economic life such as in indefeasible right of use (“IRU”) arrangements for dark fiber or conduit, which meet the criteria for sales-type lease classification. During the three months ended June 30, 2022, we entered into a dark fiber IRU arrangement for exclusive access to and unrestricted use of specific assets. The arrangement was recognized as a sale-type lease as the term of the arrangement is for a major part of the assets’ remaining economic life. During the three months ended June 30, 2022, we recognized revenue of $3.1 million and a gain of $0.9 million related to this arrangement. During the three and six months ended June 30, 2023, we did not enter into any such arrangements. |
MEZZANINE EQUITY
MEZZANINE EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
MEZZANINE EQUITY | |
MEZZANINE EQUITY | 11. MEZZANINE EQUITY Series A Preferred Stock The Company is authorized to issue up to 10,000,000 shares of Series A Perpetual Preferred Stock with a par value of $0.01 per share. The Series A Preferred Stock ranks senior to the Company’s common stock with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company and redemption rights. The following is a summary of certain provisions under the Certificate of Designations of the Series A Perpetual Preferred Stock (“Certificate of Designations”). Dividends Dividends on each share of Series A Preferred Stock accrue daily on the liquidation preference at a rate of 9.0% per annum and will be payable semi-annually in arrears on January 1 and July 1 of each year. Subsequent to a waiver issued by Searchlight in November 2022 as described below, dividends are payable until October 2, 2027 at our election, either in cash or in-kind through an accrual of unpaid dividends, which are automatically added to the liquidation preference; and after October 2, 2027, solely in cash. The liquidation preference at any given time is $1,000 per share. In the event that the Company’s Board of Directors fails to declare and pay dividends in cash after October 2, 2027, among other conditions, the dividend rate applicable to each subsequent dividend period will increase to 11.0%. On November 22, 2022, in connection with entering into the Third Amendment to the Credit Agreement, Searchlight waived for two years, until October 2, 2027, the obligation under the Certificate of Designations to begin paying in cash after October 2, 2025 rather than being permitted to accrue dividends on the Series A Preferred Stock. Any dividend not declared and fully paid in cash during the waiver period or otherwise, will continue to accrue in accordance with the Certificate of Designations. Redemption Upon a fundamental change such as a change of control, liquidation, dissolution or winding up event, holders of the Series A Preferred Stock will have the right to require the Company to repurchase all or any part of the outstanding Series A Preferred Stock for cash at a price equal the liquidation preference and accrued and unpaid dividends through and including the fundamental change date. The Company may, at its option redeem all or any part of the outstanding shares of Series A Preferred Stock at a purchase price per share in cash equal to the sum of the liquidation preference and accrued and unpaid dividends. A premium may also be payable in connection with any such redemption. Voting Rights Holders of Series A Preferred Stock are entitled to one vote per share on matters specifically related to the Series A Preferred Stock. The holders do not otherwise have any voting rights. If preferred dividends have not been paid in cash in full for two dividend periods after October 2, 2027, whether or not consecutive, then the holders of the Series A Preferred Stock, voting together as a single class, will be entitled to elect two additional directors to the board of directors. In accordance with ASC 480, Distinguishing Liabilities from Equity On December 7, 2021, upon the completion of the Searchlight investment as described in Note 4, we issued 434,266 shares of Series A Preferred Stock with a carrying value of $285.9 million. As of December 31, 2022, the liquidation preference of the Series A Preferred Stock was $477.0 million, which included accrued and unpaid dividends of $20.7 million. On January 1, 2023, the Company paid dividends in-kind of $20.7 million or 20,704 shares. As of June 30, 2023, the liquidation preference of the Series A Preferred Stock was $498.3 million, which includes accrued and unpaid dividends of $21.3 million. Searchlight is the sole holder of all of the issued and outstanding shares of the Company’s Series A Preferred Stock. The Company intends to exercise the paid-in-kind dividend option on the Series A Preferred Stock through at least 2025. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | 12. SHAREHOLDERS’ EQUITY Share-Based Compensation Our Board of Directors (or its Compensation Committee) may grant share-based awards from our shareholder approved Consolidated Communications Holdings, Inc. Long-Term Incentive Plan, as amended and/or restated (the “Plan”). The Plan permits the issuance of awards in the form of stock options, stock appreciation rights, stock grants, and stock unit grants to eligible directors and employees at the discretion of the Compensation Committee of the Board of Directors. On February 26, 2023, our Board of Directors adopted, and on May 1, 2023, the shareholders approved an amendment to the Plan to increase by 5,280,000 shares the number of shares of our common stock authorized for issuance under the Plan. With the amendment, approximately 15,330,000 shares of our common stock are authorized for issuance under the Plan, provided that in any calendar year an eligible employee may be granted no more than 300,000 stock options or 300,000 stock appreciation rights, and a non-employee director may be granted no more than 25,000 stock options or 25,000 stock appreciation rights. In addition, stock awards and stock unit awards granted to an employee in any calendar year may not cover shares having a fair market value on the date of grant that exceeds $6,000,000 ($500,000 in the case of a non-employee director). Unless terminated sooner, the Plan will continue in effect until April 30, 2028. The following table summarizes total compensation costs recognized for share-based payments during the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Restricted stock $ 1,240 $ 1,411 $ 2,163 $ 2,441 Performance shares 1,148 1,422 1,024 2,591 Total $ 2,388 $ 2,833 $ 3,187 $ 5,032 Share-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. As of June 30, 2023, total unrecognized compensation cost related to non-vested Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”) was $15.7 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 six-month period ended June 30, 2023: RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - December 31, 2022 1,185,980 $ 5.84 1,464,058 $ 7.07 Shares granted 1,695,071 $ 3.02 370,667 $ 5.41 Shares vested (82,644) $ 6.28 (705,432) $ 7.64 Shares forfeited, cancelled or retired (204,121) $ 5.76 (162,609) $ 8.20 Non-vested shares outstanding - June 30, 2023 2,594,286 $ 3.99 966,684 $ 7.06 Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component for the six-month period ended June 30, 2023: Pension and Post-Retirement Derivative (In thousands) Obligations Instruments Total Balance at December 31, 2022 $ (5,738) $ 5,128 $ (610) Other comprehensive gain before reclassifications — 3,055 3,055 Amounts reclassified from accumulated other comprehensive loss (1,998) (4,366) (6,364) Net current period other comprehensive income (1,998) (1,311) (3,309) Balance at June 30, 2023 $ (7,736) $ 3,817 $ (3,919) The following table summarizes reclassifications from accumulated other comprehensive loss for the three and six months ended June 30, 2023 and 2022: Three Months Ended June 30, Six Months Ended June 30, Affected Line Item in the (In thousands) 2023 2022 2023 2022 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ 133 $ 195 $ 265 $ 389 (a) Actuarial gain (loss) 1,223 (123) 2,446 (246) (a) 1,356 72 2,711 143 Total before tax (357) (20) (713) (39) Tax expense $ 999 $ 52 $ 1,998 $ 104 Net of tax Gain (loss) on cash flow hedges: Interest rate derivatives $ 3,231 $ (1,791) $ 5,909 $ (3,602) Interest expense (844) 467 (1,543) 939 Tax (expense) benefit $ 2,387 $ (1,324) $ 4,366 $ (2,663) 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 13 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 | 6 Months Ended |
Jun. 30, 2023 | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | |
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS | 13. PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS Defined Benefit Plans We sponsor qualified defined benefit pension plans that are non-contributory covering substantially all of our hourly employees under collective bargaining agreements who fulfill minimum age and service requirements and certain salaried employees. The defined benefit pension plans are closed to all new entrants. All of our defined benefit pension plans are now frozen to all current employees, and no additional monthly pension benefits will accrue under those plans. We also maintain non-qualified supplemental retirement plans (the “Supplemental Plans” and, together with the defined benefit pension plans, the “Pension Plans”). The Supplemental Plans provide supplemental retirement benefits to certain former employees by providing for incremental pension payments to partially offset the reduction of the amount that would have been payable under the qualified defined benefit pension plans if it were not for limitations imposed by federal income tax regulations. The Supplemental Plans are closed to all new entrants. 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 benefit for our Pension Plans for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Interest cost $ 7,357 $ 5,558 $ 14,713 $ 11,116 Expected return on plan assets (7,850) (9,206) (15,700) (18,412) Net amortization loss 72 154 144 308 Net prior service cost amortization 30 30 61 61 Net periodic pension benefit $ (391) $ (3,464) $ (782) $ (6,927) The components of net periodic pension benefit other than the service cost component are included in other, net within other income (expense) in the condensed consolidated statements of operations. Post-retirement Benefit Obligations We sponsor various healthcare and life insurance plans (“Post-retirement Plans”) that provide post-retirement medical and life insurance benefits to certain groups of retired employees. Certain plans are frozen so that no person is eligible to become a new participant. Retirees share in the cost of healthcare benefits, making contributions that are adjusted periodically—either based upon collective bargaining agreements or because total costs of the program have changed. Covered expenses for retiree health benefits are paid as they are incurred. Post-retirement life insurance benefits are fully insured. A majority of the healthcare plans are unfunded and have no assets, and benefits are paid from the general operating funds of the Company. However, a certain healthcare plan is funded by assets that are separately designated within the Pension Plans for the sole purpose of providing payments of retiree medical benefits for this specific plan. The following table summarizes the components of the net periodic cost for our Post-retirement Plans for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Service cost $ 19 $ 145 $ 38 $ 290 Interest cost 750 677 1,500 1,354 Expected return on plan assets (47) (53) (94) (106) Net amortization gain (1,295) (31) (2,590) (62) Net prior service credit amortization (163) (225) (326) (450) Net periodic post-retirement cost (benefit) $ (736) $ 513 $ (1,472) $ 1,026 The components of net periodic post-retirement benefit cost other than the service cost component are included in other, net within other income (expense) in the condensed consolidated statements of operations. Contributions We elected to participate in the American Rescue Plan Act of 2021 (“ARPA”) beginning with the 2021 plan year. ARPA, which was signed into law in March 2021, included changes to the employer funding requirements and is designed to reduce the amounts of required contributions to provide funding relief for employers. During 2021 and the six months ended June 30, 2022, we elected to fund our pension contributions at the pre-ARPA levels, which has created a pre-funded balance. We expect that for the year ended December 31, 2023, no pension contributions will be required as we will use our current pre-funded balance to satisfy the minimum contribution requirements under ARPA. We expect to contribute approximately $6.2 million to our Post-retirement Plans in 2023. As of June 30, 2023, we have contributed $3.2 million of the annual contribution to the Post-retirement Plans. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 14. INCOME TAXES Our unrecognized tax benefits as of June 30, 2023 and December 31, 2022 were $4.9 million. The net amount of unrecognized tax benefits that, if recognized, would result in an impact to the effective tax rate is $4.7 million as of June 30, 2023 and December 31, 2022. We do not expect any material change in our unrecognized tax benefits during the remainder of 2023. 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 June 30, 2023, 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 2019 through 2021. The periods subject to examination for our state returns are years 2018 through 2021. In addition, prior tax years may be subject to examination by federal or state taxing authorities if the Company’s net operating loss carryovers from those prior years are utilized in the future. We are currently under examination by certain state taxing authorities. We do not expect any settlement or payment that may result from the examinations to have a material effect on our results or cash flows. Our effective tax rate was 14.6% and 16.0% for the three months ended June 30, 2023 and 2022, respectively and 17.5% and 11.5% for the six months ended June 30, 2023 and 2022, respectively. On July 10, 2023, we entered into a definitive agreement to sell our Washington operations. As a result, we recorded an increase of $14.3 million to our current tax expense for the three and six months ended June 30, 2023 related to the $77.8 million impairment loss of noncash goodwill that is not deductible for tax purposes. On March 2, 2022, we entered into a definitive agreement to sell substantially all the assets of our Kansas City operations. As a result, we recorded an increase to our current tax expense of $1.0 million and $17.9 million for the three and six months ended June 30, 2022, respectively, related to the $83.7 million impairment loss of noncash goodwill that is not deductible for tax purposes. The transaction to sell substantially all of the assets of our non-core, rural ILEC business located in Ohio closed on January 31, 2022. As a result, we recorded an increase of $0.2 million and $3.4 million to our current tax expense for the three and six months ended June 30, 2022, respectively, The Company does not consider these sales transactions and related goodwill adjustments unusual or infrequent and therefore the corresponding tax impact is recorded through continuing operations. Exclusive of these divestiture related adjustments he effective tax rate differed from the federal and state statutory rates due to various permanent income tax differences and differences in allocable income for the Company’s state tax filings |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 15. COMMITMENTS AND CONTINGENCIES Litigation, Regulatory Proceedings and Other Contingencies Gross Receipts Tax Two of our subsidiaries, Consolidated Communications of Pennsylvania Company LLC (“CCPA”) and Consolidated Communications Enterprise Services, Inc. (“CCES”), have, at various times, received Assessment Notices and/or Audit Assessment Notices from the Commonwealth of Pennsylvania Department of Revenue (“DOR”) increasing the amounts owed for the Pennsylvania Gross Receipts Tax, and have had audits performed for the tax years 2008 through 2018 (CCPA and CCES) and 2019 through 2020 (CCPA). We filed Petitions for Reassessment with the DOR’s Board of Appeals contesting these audit assessments. These cases remain pending and are in various stages of appeal. In May 2017, we entered into an agreement to guarantee any potential liabilities to the DOR up to $5.0 million. We believe that certain of the DOR’s findings regarding CCPA’s and CCES’s additional tax liabilities for the tax years 2008 through 2018, for which we have filed appeals, continue to lack merit. However, in 2019, CCPA and CCES finalized a settlement of the intrastate and interstate tax liabilities for the tax years 2008 through 2013, except for the 2010 CCPA appeals, bringing the appeals to a conclusion. The additional tax liabilities calculated by the DOR for these tax years for CCPA and CCES were approximately $3.4 million and $4.0 million, respectively. The settlement resulted in a payment from us to the DOR of $2.1 million, including interest, which the Company previously reserved for. The additional tax liabilities calculated by the DOR for CCPA and CCES for the remaining unsettled tax years 2010 (CCPA) and 2014 through 2022 (CCPA and CCES) are approximately $5.3 million and $2.6 million, respectively. Based on the initial settlement offers for the tax years 2008 through 2013 and the Company’s best estimate of the potential additional tax liabilities for the remaining unsettled tax years 2010 (CCPA) and 2014 through 2022 (CCPA and CCES), we have reserved $0.9 million and $2.0 million, including interest, for our CCPA and CCES subsidiaries, respectively. We expect the filings for the tax years 2014 through 2022 to be settled at a later date similar to the initial settlement. While we continue to believe a settlement of all remaining disputed claims is possible, we cannot anticipate at this time what the ultimate resolution of these cases will be, nor can we evaluate the likelihood of a favorable or unfavorable outcome or the potential losses (or gains) should such an outcome occur. We do not believe that the outcome of these claims will have a material adverse impact on our financial statements. Pole Sale On December 30, 2020, the Company reached an agreement to sell to Public Service Company of New Hampshire d/b/a Eversource Energy (“Eversource”) its joint ownership interest in approximately 343,000 poles and its sole ownership interest in approximately 3,800 poles located in the Eversource electric service area. The agreement also included the settlement of all vegetation maintenance costs disputed between the Company and Eversource through December 2020. The Company recognized a net loss of $1.9 million during the quarter ended December 31, 2020 associated with the execution of this agreement. Upon the closing of the sale, the Company would become a tenant on the poles and will pay pole attachment fees to Eversource. The Company would also no longer have any future obligations associated with vegetation maintenance. The purchase and sale transaction required regulatory approval by the New Hampshire Public Utilities Commission (“NHPUC”) and was submitted for approval by the parties in 2021. Formal hearings on the transaction concluded in May 2022. The NHPUC issued its order on November 18, 2022. The New England Cable and Telecommunications Alliance filed a motion for reconsideration and both parties filed a motion for clarification. During the three months ended December 31, 2022, the Company recorded an additional loss on the proposed sale of $8.3 million as a result of the November 18, 2022 NHPUC order which included certain adjustments to components of the purchase price and expense allocations between Eversource and the Company. The Company also increased its estimated closing costs necessary to complete the sale. The sale of the poles closed on May 1, 2023. During the three and six months ended June 30, 2023, we recognized an additional loss on the sale of $2.4 million and $3.6 million, respectively. From time to time we may be involved in litigation that we believe is of the type common to companies in our industry, including regulatory issues. While the outcome of these claims cannot be predicted with certainty, we do not believe that the outcome of any of these legal matters will have a material adverse impact on our financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Business and Basis of Accounting | Business and Basis of Accounting Consolidated Communications Holdings, Inc. (the “Company,” “we,” “our” or “us”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide communication solutions to consumer, commercial and carrier customers across a service area in over 20 states. Leveraging our advanced fiber network spanning approximately 58,800 fiber route miles, we offer residential high-speed Internet, video, phone and home security services as well as a comprehensive business product suite including: data and Internet solutions, voice, data center services, security services, managed and IT services, and an expanded suite of cloud services. In the opinion of management, the accompanying unaudited condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss), mezzanine equity and shareholders’ equity and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance. Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year. The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2022 Annual Report on Form 10-K filed with the SEC. |
Recent Developments | Recent Developments Take Private Proposal On April 12, 2023, our board of directors (the “Board”) received a non-binding proposal letter from Searchlight Capital Partners, L.P. (“Searchlight”), together with its affiliated investment funds, and British Columbia Investment Management Corporation (“BCI” and together with Searchlight, the “Searchlight Group”) to acquire all of the outstanding common shares of Consolidated not already owned by the Searchlight Group for cash consideration of $4.00 per share (the “Proposal”). The Proposal letter states that any potential transaction must be subject to the approval and recommendation by a special committee of independent and disinterested directors, advised by independent legal and financial advisors. The Proposal letter also indicates that any potential transaction would be subject to a non-waivable condition requiring the approval of the holders of a majority of the shares of Common Stock that are not owned by the Searchlight Group. The Board has formed a special committee of independent directors to evaluate and consider the Proposal. The Proposal constitutes only an indication of interest by the Searchlight Group and does not constitute a binding commitment with respect to the proposed transaction or any other transaction. No agreement, arrangement or understanding between Consolidated and the Searchlight Group relating to any proposed transaction will be created unless definitive documentation is executed and delivered by the appropriate parties. There can be no assurance that the Proposal will result in a transaction occurring, its timing, or ultimate terms. On December 7, 2021, we closed on the final stage of the investment agreement (the “Investment Agreement”) entered into on September 13, 2020 with an affiliate of Searchlight. In connection with the Investment Agreement, affiliates of Searchlight have invested an aggregate of $425.0 million in the Company and hold a combination of Series A perpetual preferred stock and approximately 34% of the Company’s outstanding common stock as of June 30, 2023. For a more complete discussion of the transaction, refer to Note 4. Cost Savings Initiative In July 2023, we initiated a business simplification and cost savings initiative plan intended to further align our company as a fiber-first provider, improve operating efficiencies, lower our cost structure and ultimately improve the overall customer experience. This initiative includes a reduction in workforce, consolidation and elimination of certain facilities and review of our product offerings. We anticipate incurring costs of approximately $10.0 million to $15.0 million during the next nine to twelve months to implement and execute the plan. The scope of the plan is expected to be finalized during the second half of 2023. Discontinued Operations – Sale of Investment in Wireless Partnerships On September 13, 2022, we completed the sale of our five limited wireless partnership interests to Cellco Partnership (“Cellco”) for an aggregate purchase price of $490.0 million, other than a portion of the interest in one of the partnerships which was sold to a limited partner of such partnership pursuant to its right of first refusal. Cellco is the general partner for each of the five wireless partnerships and is an indirect, wholly-owned subsidiary of Verizon Communications, Inc. In accordance with Accounting Standards Codification (“ASC”) 205-20, Presentation of Financial Statements – Discontinued Operations |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable (“AR”) consists primarily of amounts due to the Company from normal business activities. We maintain an allowance for credit losses (“ACL”) based on our historical loss experience, current conditions and forecasted changes including but not limited to changes related to the economy, our industry and business. Uncollectible accounts are written-off (removed from AR and charged against the ACL) when internal collection efforts have been unsuccessful. Subsequently, if payment is received from the customer, the recovery is credited to the ACL. The following table summarizes the activity in ACL for the six months ended June 30, 2023 and 2022: Six Months Ended June 30, (In thousands) 2023 2022 Balance at beginning of year $ 11,470 $ 9,961 Provision charged to expense 4,140 4,230 Write-offs, less recoveries (3,190) (3,669) Balance at end of year $ 12,420 $ 10,522 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04 (“ASU 2020-04”), Facilitation of the Effects of Reference Rate Reform on Financial Reporting Reference Rate Reform (Topic 848): Scope Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 to extend the optional relief guidance in Topic 848 from December 31, 2022 to December 31, 2024. The adoption of this guidance in 2023 did not have a material impact on our condensed consolidated financial statements and related disclosures. |
Reclassifications | Reclassifications Certain amounts in our 2022 condensed consolidated financial statements have been reclassified to conform to the current year presentation which consists of the presentation of the financial results for our wireless partnership interests as discontinued operations. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of activity for ACL | Six Months Ended June 30, (In thousands) 2023 2022 Balance at beginning of year $ 11,470 $ 9,961 Provision charged to expense 4,140 4,230 Write-offs, less recoveries (3,190) (3,669) Balance at end of year $ 12,420 $ 10,522 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
REVENUE | |
Schedule of disaggregation of revenue | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Operating Revenues Consumer: Broadband (Data and VoIP) $ 71,339 $ 67,592 $ 139,300 $ 133,503 Voice services 31,352 36,643 63,615 74,095 Video services 9,362 14,359 18,956 28,725 112,053 118,594 221,871 236,323 Commercial: Data services (includes VoIP) 53,230 57,113 106,364 115,008 Voice services 32,236 35,775 64,867 72,114 Other 10,378 11,287 20,134 22,847 95,844 104,175 191,365 209,969 Carrier: Data and transport services 31,224 36,263 64,147 69,748 Voice services 4,263 3,718 8,630 7,570 Other 313 354 663 745 35,800 40,335 73,440 78,063 Subsidies 7,072 6,534 14,108 13,117 Network access 22,747 24,846 47,191 51,059 Other products and services 1,646 3,906 3,313 10,137 Total operating revenues $ 275,162 $ 298,390 $ 551,288 $ 598,668 |
Schedule of receivables, contract assets and contract liabilities | June 30, (In thousands) 2023 2022 Accounts receivable, net $ 100,827 $ 117,479 Contract assets 30,071 24,928 Contract liabilities 56,963 56,659 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of basic and diluted EPS | Three Months Ended Six Months Ended June 30, June 30, (In thousands, except per share amounts) 2023 2022 2023 2022 Loss from continuing operations $ (108,092) $ (10,591) $ (145,053) $ (129,687) Less: dividends on Series A preferred stock 10,704 9,802 21,291 19,400 Less: net income attributable to noncontrolling interest 161 203 304 318 Loss from continuing operations attributable to common shareholders (118,957) (20,596) (166,648) (149,405) Income from discontinued operations attributable to common shareholders — 9,079 — 12,626 Net loss attributable to common shareholders $ (118,957) $ (11,517) $ (166,648) $ (136,779) Weighted-average number of common shares outstanding 113,050 111,697 112,995 111,694 Basic and diluted earnings (loss) per common share: Loss from continuing operations $ (1.05) $ (0.18) $ (1.47) $ (1.33) Income from discontinued operations — 0.08 — 0.11 Net loss per common share attributable to common shareholders - basic and diluted $ (1.05) $ (0.10) $ (1.47) $ (1.22) |
DIVESTITURES (Tables)
DIVESTITURES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Consolidated Communications of Comerco Company, Washington | |
Divestitures | |
Schedule of major classes of assets and liabilities to be sold were classified as held for sale in the condensed consolidated balance sheet | (In thousands) Current assets $ 1,018 Property, plant and equipment 29,219 Goodwill 114,946 Other long-term assets 1,569 Impairment to net realizable value (77,755) Total assets $ 68,997 Current liabilities $ 1,983 Other long-term liabilities 1,314 Total liabilities $ 3,297 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Schedule of investments | June 30, December 31, (In thousands) 2023 2022 Short-term investments: Held-to-maturity debt securities $ — $ 87,951 Long-term investments: Cash surrender value of life insurance policies $ 3,067 $ 2,774 CoBank, ACB Stock 5,755 7,250 Other 273 273 $ 9,095 $ 10,297 |
Disposed of by Sale | Five Limited Partnership Interests | |
Schedule of income statement effects and cash flows related to discontinued operations | Three Months Ended Six Months Ended (In thousands) June 30, 2022 June 30, 2022 Investment income $ 9,821 $ 17,884 Gain on sale of discontinued operations — — Income from discontinued operations, before income taxes 9,821 17,884 Income tax expense 742 5,258 Net income from discontinued operations $ 9,079 $ 12,626 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
Schedule of interest rate swap agreements measured at fair value on a recurring basis | As of June 30, 2023 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap assets $ 1,039 $ — $ 1,039 $ — Long-term interest rate swap assets 3,998 — 3,998 — Total $ 5,037 $ — $ 5,037 $ — As of December 31, 2022 Quoted Prices Significant In Active Other Significant Markets for Observable Unobservable Identical Assets Inputs Inputs (In thousands) Total (Level 1) (Level 2) (Level 3) Current interest rate swap assets $ 5,959 $ — $ 5,959 $ — |
Schedule of other financial instruments that are not carried at fair value but which require fair value disclosure | As of June 30, 2023 As of December 31, 2022 (In thousands) Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding finance leases $ 2,142,007 $ 1,771,411 $ 2,141,176 $ 1,759,430 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LONG-TERM DEBT | |
Schedule of components of long-term debt, presented net of unamortized discounts | June 30, December 31, (In thousands) 2023 2022 Senior secured credit facility: Term loans, net of discounts of $7,868 and $8,699 at June 30, 2023 and December 31, 2022, respectively $ 992,007 $ 991,176 6.50% Senior notes due 2028 750,000 750,000 5.00% Senior notes due 2028 400,000 400,000 Finance leases 41,894 35,746 2,183,901 2,176,922 Less: current portion of long-term debt and finance leases (16,821) (12,834) Less: deferred debt issuance costs (31,736) (34,626) Total long-term debt $ 2,135,344 $ 2,129,462 |
DERIVATIVE FINANCIAL INSTRUME_2
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
DERIVATIVE FINANCIAL INSTRUMENTS | |
Schedule of outstanding interest rate swaps | Notional (In thousands) Amount 2023 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 500,000 Prepaid expenses and other current assets $ 1,039 Forward starting fixed to 1-month floating SOFR $ 500,000 Other long-term assets 3,998 Total Fair Values $ 5,037 Notional (In thousands) Amount 2022 Balance Sheet Location Fair Value Cash Flow Hedges: Fixed to 1-month floating LIBOR (with floor) $ 500,000 Prepaid expenses and other current assets $ 5,959 |
Schedule of gains and losses on cash flow hedge transactions | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Unrealized gain recognized in AOCI, pretax $ 4,180 $ 3,899 $ 4,133 $ 10,172 Deferred gain (loss) reclassified from AOCI to interest expense $ 3,231 $ (1,791) $ 5,909 $ (3,602) |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SHAREHOLDERS' EQUITY | |
Summary of total compensation costs recognized for share-based payments | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Restricted stock $ 1,240 $ 1,411 $ 2,163 $ 2,441 Performance shares 1,148 1,422 1,024 2,591 Total $ 2,388 $ 2,833 $ 3,187 $ 5,032 |
Summary of RSA and PSA activity | RSAs PSAs Weighted Weighted Average Grant Average Grant Shares Date Fair Value Shares Date Fair Value Non-vested shares outstanding - December 31, 2022 1,185,980 $ 5.84 1,464,058 $ 7.07 Shares granted 1,695,071 $ 3.02 370,667 $ 5.41 Shares vested (82,644) $ 6.28 (705,432) $ 7.64 Shares forfeited, cancelled or retired (204,121) $ 5.76 (162,609) $ 8.20 Non-vested shares outstanding - June 30, 2023 2,594,286 $ 3.99 966,684 $ 7.06 |
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, 2022 $ (5,738) $ 5,128 $ (610) Other comprehensive gain before reclassifications — 3,055 3,055 Amounts reclassified from accumulated other comprehensive loss (1,998) (4,366) (6,364) Net current period other comprehensive income (1,998) (1,311) (3,309) Balance at June 30, 2023 $ (7,736) $ 3,817 $ (3,919) |
Summary of reclassifications from accumulated other comprehensive loss | Three Months Ended June 30, Six Months Ended June 30, Affected Line Item in the (In thousands) 2023 2022 2023 2022 Statement of Income Amortization of pension and post-retirement items: Prior service credit $ 133 $ 195 $ 265 $ 389 (a) Actuarial gain (loss) 1,223 (123) 2,446 (246) (a) 1,356 72 2,711 143 Total before tax (357) (20) (713) (39) Tax expense $ 999 $ 52 $ 1,998 $ 104 Net of tax Gain (loss) on cash flow hedges: Interest rate derivatives $ 3,231 $ (1,791) $ 5,909 $ (3,602) Interest expense (844) 467 (1,543) 939 Tax (expense) benefit $ 2,387 $ (1,324) $ 4,366 $ (2,663) 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 13 for further discussion regarding our pension and other post-retirement benefit plans. |
PENSION PLAN AND OTHER POST-R_2
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Defined Benefit Plans | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Interest cost $ 7,357 $ 5,558 $ 14,713 $ 11,116 Expected return on plan assets (7,850) (9,206) (15,700) (18,412) Net amortization loss 72 154 144 308 Net prior service cost amortization 30 30 61 61 Net periodic pension benefit $ (391) $ (3,464) $ (782) $ (6,927) |
Post-retirement Benefit Obligations | |
Post-retirement benefit obligation | |
Schedule of the components of net periodic pension cost | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2023 2022 2023 2022 Service cost $ 19 $ 145 $ 38 $ 290 Interest cost 750 677 1,500 1,354 Expected return on plan assets (47) (53) (94) (106) Net amortization gain (1,295) (31) (2,590) (62) Net prior service credit amortization (163) (225) (326) (450) Net periodic post-retirement cost (benefit) $ (736) $ 513 $ (1,472) $ 1,026 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Business (Details) | Jun. 30, 2023 state mi |
Number of fiber route miles | mi | 58,800 |
Minimum | |
Number of states | state | 20 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Developments (Details) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended | |||||
Dec. 31, 2023 USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Apr. 12, 2023 $ / shares | Sep. 13, 2022 USD ($) item | Dec. 07, 2021 USD ($) | Sep. 13, 2020 USD ($) | |
Disposed of by Sale | |||||||
Investment Holdings [Line Items] | |||||||
Number of wireless partnerships | item | 5 | ||||||
Discontinued operation, consideration | $ 490 | ||||||
Minimum | Forecast | |||||||
Investment Holdings [Line Items] | |||||||
Restructuring charges | $ 10 | ||||||
Maximum | Forecast | |||||||
Investment Holdings [Line Items] | |||||||
Restructuring charges | $ 15 | ||||||
Investment Agreement | Searchlight | |||||||
Investment Holdings [Line Items] | |||||||
Percentage of company stock on as converted basis | 34% | 34% | |||||
Capital commitment | $ 75 | ||||||
Investment Agreement | Searchlight | Subordinated Debt | Maximum | |||||||
Investment Holdings [Line Items] | |||||||
Capital commitment | $ 425 | $ 425 | |||||
Take Private Proposal | Searchlight Group | |||||||
Investment Holdings [Line Items] | |||||||
Cash consideration price per share | $ / shares | $ 4 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable and Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Activity in the entity's accounts receivable allowance | ||
Balance at beginning of year | $ 11,470 | $ 9,961 |
Provision charged to expense | 4,140 | 4,230 |
Write-offs, less recoveries | (3,190) | (3,669) |
Balance at end of year | $ 12,420 | $ 10,522 |
REVENUE (Details)
REVENUE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 275,162 | $ 298,390 | $ 551,288 | $ 598,668 |
Receivables, contract assets and contract liabilities | ||||
Accounts receivable, net | 100,827 | 117,479 | 100,827 | 117,479 |
Contract assets | 30,071 | 24,928 | 30,071 | 24,928 |
Contract liabilities | 56,963 | 56,659 | 56,963 | 56,659 |
Recognized expenses related to deferred contract acquisition costs. | 3,200 | 3,100 | 6,700 | 6,200 |
Revenue recognized from beginning of year and current period increase in contract liability | 100,800 | 122,600 | $ 221,500 | 244,200 |
Revenue, Practical Expedient, Remaining Performance Obligation | true | |||
Minimum | ||||
Receivables, contract assets and contract liabilities | ||||
Payment term | 30 days | |||
Maximum | ||||
Receivables, contract assets and contract liabilities | ||||
Payment term | 60 days | |||
Consumer | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 112,053 | 118,594 | $ 221,871 | 236,323 |
Consumer - Broadband (Data and VoIP) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 71,339 | 67,592 | 139,300 | 133,503 |
Consumer - Voice services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 31,352 | 36,643 | 63,615 | 74,095 |
Consumer - Video services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 9,362 | 14,359 | 18,956 | 28,725 |
Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 95,844 | 104,175 | 191,365 | 209,969 |
Commercial - Data services (including VoIP) | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 53,230 | 57,113 | 106,364 | 115,008 |
Commercial - Voice services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 32,236 | 35,775 | 64,867 | 72,114 |
Commercial - Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 10,378 | 11,287 | 20,134 | 22,847 |
Carrier | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 35,800 | 40,335 | 73,440 | 78,063 |
Carrier - Data and transport services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 31,224 | 36,263 | 64,147 | 69,748 |
Carrier - Voice services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 4,263 | 3,718 | 8,630 | 7,570 |
Carrier - Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 313 | 354 | 663 | 745 |
Subsidies | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 7,072 | 6,534 | 14,108 | 13,117 |
Network access | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | 22,747 | 24,846 | 47,191 | 51,059 |
Other products and services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total operating revenues | $ 1,646 | $ 3,906 | $ 3,313 | $ 10,137 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Basic and diluted earnings per share attributable to common shareholders | ||||
Loss from continuing operations | $ (108,092) | $ (10,591) | $ (145,053) | $ (129,687) |
Less: dividends on Series A preferred stock | 10,704 | 9,802 | 21,291 | 19,400 |
Less: net income attributable to noncontrolling interest | 161 | 203 | 304 | 318 |
Loss from continuing operations attributable to common shareholders | (118,957) | (20,596) | (166,648) | (149,405) |
Income from discontinued operations attributable to common shareholders | 9,079 | 12,626 | ||
Net loss attributable to common shareholders | $ (118,957) | $ (11,517) | $ (166,648) | $ (136,779) |
Weighted-average number of common shares outstanding, basic | 113,050 | 111,697 | 112,995 | 111,694 |
Weighted-average number of common shares outstanding, diluted | 113,050 | 111,697 | 112,995 | 111,694 |
Loss from continuing operations - Basic | $ (1.05) | $ (0.18) | $ (1.47) | $ (1.33) |
Loss from continuing operations - Diluted | (1.05) | (0.18) | (1.47) | (1.33) |
Income from discontinued operations - Basic | 0.08 | 0.11 | ||
Income from discontinued operations - Diluted | 0.08 | 0.11 | ||
Net loss per basic common shares attributable to common shareholders | (1.05) | (0.10) | (1.47) | (1.22) |
Net loss per diluted common shares attributable to common shareholders | $ (1.05) | $ (0.10) | $ (1.47) | $ (1.22) |
Common shares excluded from computation of potentially dilutive shares because of anti-dilutive effect | 3,600 | 3,700 | 3,000 | 3,100 |
SEARCHLIGHT INVESTMENT (Details
SEARCHLIGHT INVESTMENT (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Dec. 07, 2021 USD ($) $ / shares shares | Jul. 16, 2021 shares | Oct. 02, 2020 USD ($) shares | Sep. 13, 2020 USD ($) item | Jun. 30, 2023 USD ($) item $ / shares | Dec. 31, 2022 USD ($) $ / shares | |
Investment Holdings [Line Items] | ||||||
Temporary equity, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||||
Deferred debt issuance costs | $ 31,736 | $ 34,626 | ||||
Series A preferred stock | ||||||
Investment Holdings [Line Items] | ||||||
Series A preferred stock issued (in shares) | shares | 434,266 | |||||
Temporary equity, par value (in dollars per share) | $ / shares | $ 0.01 | |||||
Preferred stock dividend rate | 9% | |||||
Liquidation preference per share | $ / shares | $ 1,000 | |||||
Investment Agreement | ||||||
Investment Holdings [Line Items] | ||||||
Number of passings across select service areas | item | 1,600,000 | |||||
Investment Agreement | Searchlight | ||||||
Investment Holdings [Line Items] | ||||||
Capital commitment | $ 75,000 | |||||
Number of stages | item | 2 | |||||
Proceeds from issuance of shares | $ 350,000 | |||||
Shares exchanged in Investment Agreement | shares | 6,352,842 | |||||
Percentage of share issued | 8% | |||||
Additional shares upon conversion of contingent payment right | shares | 15,115,899 | 17,870,012 | 17,870,012 | |||
Percentage of additional shares approved after conversion of CPR | 10.10% | 16.90% | 16.90% | |||
Percentage of stock on an as-converted basis | 34% | 34% | ||||
Series A preferred stock issued (in shares) | shares | 434,266 | |||||
Temporary equity, par value (in dollars per share) | $ / shares | $ 0.01 | |||||
Aggregate principal amount | $ 395,500 | |||||
Number of homes and small businesses for plan to upgrade | item | 225,000 | |||||
Investment Agreement | Searchlight | Subordinated Debt | ||||||
Investment Holdings [Line Items] | ||||||
Series A preferred stock issued (in shares) | shares | 434,266 | |||||
Preferred stock dividend rate | 9% | |||||
Carrying value | $ 285,900 | |||||
Unamortized discount | 139,700 | |||||
Deferred debt issuance costs | $ 8,700 | |||||
Liquidation preference per share | $ / shares | $ 1,000 | |||||
Investment Agreement | Searchlight | Maximum | Subordinated Debt | ||||||
Investment Holdings [Line Items] | ||||||
Capital commitment | $ 425,000 | $ 425,000 |
DIVESTITURES - Washington Opera
DIVESTITURES - Washington Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jul. 10, 2023 | |
Divestitures | ||||
Impairment loss on assets held for sale | $ 77,755 | $ 77,755 | $ 126,490 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | Consolidated Communications of Comerco Company, Washington | ||||
Divestitures | ||||
Cash consideration | $ 73,000 | |||
Fair value of assets held for sale | 65,700 | 65,700 | ||
Impairment loss on assets held for sale | $ 77,800 | $ 77,800 |
DIVESTITURES - Major Classes of
DIVESTITURES - Major Classes of Assets and Liabilities (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Major classes of assets and liabilities | |
Current assets | $ 68,997 |
Current liabilities | 3,297 |
Disposal Group, Held-for-sale, Not Discontinued Operations | Consolidated Communications of Comerco Company, Washington | |
Major classes of assets and liabilities | |
Current assets | 1,018 |
Property, plant and equipment | 29,219 |
Goodwill | 114,946 |
Other long-term assets | 1,569 |
Impairment to net realizable value | (77,755) |
Total assets | 68,997 |
Current liabilities | 1,983 |
Other long-term liabilities | 1,314 |
Total liabilities | $ 3,297 |
DIVESTITURES - Kansas City Oper
DIVESTITURES - Kansas City Operations (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Nov. 30, 2022 USD ($) customer | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | |
Divestitures | ||||||
Impairment loss on assets held for sale | $ 77,755 | $ 77,755 | $ 126,490 | |||
Proceeds from sale of assets | 6,801 | 1,794 | ||||
Gain (loss) on disposal of assets | $ (2,384) | (5,688) | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Kansas City operations | ||||||
Divestitures | ||||||
Number of consumer customers | customer | 17,100 | |||||
Number of commercial customers | customer | 1,600 | |||||
Impairment loss on assets held for sale | $ 5,200 | $ 126,500 | ||||
Proceeds from sale of assets | $ 82,100 | |||||
Loss on disposal | $ 16,800 | $ 2,100 |
DIVESTITURES - Ohio Operations
DIVESTITURES - Ohio Operations (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 USD ($) | Sep. 30, 2021 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jan. 31, 2022 USD ($) item | |
Divestitures | |||||
Impairment loss on assets held for sale | $ 77,755 | $ 77,755 | $ 126,490 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Assets of non-core, rural ILEC business located in Ohio | |||||
Divestitures | |||||
Cash consideration | $ 26,100 | ||||
Number of rural communities providing telecommunications and data services | item | 11 | ||||
Number of access lines | item | 3,800 | ||||
Number of data connections | item | 3,900 | ||||
Impairment loss on assets held for sale | $ 5,700 | ||||
Loss on disposal | $ 500 | ||||
Loss on Disposal, Statements of Operations Location | Selling, general and administrative expenses |
INVESTMENTS (Details)
INVESTMENTS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Sep. 13, 2022 USD ($) item | Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | |
Investments | |||||
Held-to-maturity debt securities | $ 87,951 | ||||
Cash surrender value of life insurance policies | $ 3,067 | 2,774 | |||
Total | 9,095 | 10,297 | |||
Discontinued operations, additional information | |||||
Number of entity's investments which is accounted for using equity method | item | 3 | ||||
Number of investments which a portion of interest was sold | item | 1 | ||||
Income from discontinued operations, before income taxes | $ 9,821 | $ 17,884 | |||
Income tax expense | 742 | 5,258 | |||
Income from discontinued operations | 9,079 | 12,626 | |||
Discontinued Operations, Previously Recorded At Cost | |||||
Investments | |||||
Cash distributions received from partnerships treated as investments at cost | 5,200 | 9,000 | |||
GTE Mobilnet of South Texas Limited Partnership | |||||
Discontinued operations, additional information | |||||
Ownership percentage of investments at cost | 2.34% | ||||
Pittsburgh SMSA Limited Partnership | |||||
Discontinued operations, additional information | |||||
Ownership percentage of investments at cost | 3.60% | ||||
Discontinued Operations, Previously Recorded Via The Equity Method | |||||
Discontinued operations, additional information | |||||
Cash distributions received from partnerships treated as equity method investees | 6,100 | 10,500 | |||
Disposed of by Sale | |||||
Discontinued operations, additional information | |||||
Number of Wireless Partnerships | item | 5 | ||||
Discontinued operation, consideration | $ 490,000 | ||||
Investment income | 9,821 | 17,884 | |||
Income from discontinued operations, before income taxes | 9,821 | 17,884 | |||
Income tax expense | 742 | 5,258 | |||
Income from discontinued operations | 9,079 | 12,626 | |||
Taxable gain on sale | 477,700 | ||||
Cash provided by operating activities - discontinued operations | $ 11,300 | $ 19,500 | |||
Disposed of by Sale | Minimum | |||||
Discontinued operations, additional information | |||||
Estimated state income taxes | $ 8,000 | ||||
Short-term investments. | |||||
Investments | |||||
Investments in commercial paper | 88,000 | ||||
CoBank, ACB Stock | |||||
Investments | |||||
Investments at cost | 5,755 | 7,250 | |||
Other | |||||
Investments | |||||
Investments at cost | $ 273 | $ 273 | |||
GTE Mobilnet of Texas RSA #17 Limited Partnership | GTE Mobilnet of Texas RSA #17 Limited Partnership | |||||
Discontinued operations, additional information | |||||
Ownership percentage of equity method investee | 20.51% | ||||
Pennsylvania RSA 6(I) Limited Partnership | Pennsylvania RSA 6(I) Limited Partnership | |||||
Discontinued operations, additional information | |||||
Ownership percentage of equity method investee | 16.67% | ||||
Pennsylvania RSA 6(II) Limited Partnership | Pennsylvania RSA 6(II) Limited Partnership | |||||
Discontinued operations, additional information | |||||
Ownership percentage of equity method investee | 23.67% |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Fair Value Measurements | ||
Current interest rate swap assets | $ 1,039 | $ 5,959 |
Long-term interest rate swap assets | 3,998 | |
Total | 5,037 | |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Current interest rate swap assets | 1,039 | $ 5,959 |
Long-term interest rate swap assets | 3,998 | |
Total | $ 5,037 |
FAIR VALUE MEASUREMENTS - Fin_2
FAIR VALUE MEASUREMENTS - Financial Instruments Not Carried at FV (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Carrying Value | ||
Fair Value Measurements | ||
Long-term debt, excluding finance leases | $ 2,142,007 | $ 2,141,176 |
Fair Value | ||
Fair Value Measurements | ||
Long-term debt, excluding finance leases | $ 1,771,411 | $ 1,759,430 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||||||
Apr. 17, 2023 | Nov. 22, 2022 | Apr. 05, 2021 USD ($) | Mar. 18, 2021 USD ($) | Oct. 02, 2020 USD ($) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2020 USD ($) | Nov. 21, 2022 | Jan. 15, 2021 USD ($) | |
Debt | ||||||||||
Total long-term debt and finance leases | $ 2,183,901 | $ 2,176,922 | ||||||||
Less: current portion of long-term debt and finance leases | (16,821) | (12,834) | ||||||||
Less: deferred debt issuance costs | (31,736) | (34,626) | ||||||||
Total long-term debt | $ 2,135,344 | $ 2,129,462 | ||||||||
Maximum | ||||||||||
Debt | ||||||||||
Leverage ratio for an event of default | 6.35 | |||||||||
Senior Secured Credit Facility | ||||||||||
Debt | ||||||||||
Leverage ratio | 5.59 | |||||||||
Covenant testing threshold | 35% | |||||||||
Senior Secured Credit Facility | Weighted average | ||||||||||
Debt | ||||||||||
Weighted average interest rate (as a percent) | 8.77% | 7.63% | ||||||||
Term Loans | ||||||||||
Debt | ||||||||||
Total long-term debt and finance leases | $ 992,007 | $ 991,176 | ||||||||
Unamortized discount | 7,868 | 8,699 | ||||||||
Aggregate principal amount | $ 1,250,000 | |||||||||
Interest rate (as a percent) | 4.75% | |||||||||
Quarterly principal payments required | $ 3,100 | |||||||||
Issue discount (as a percentage) | 1.50% | |||||||||
Variable rate basis, floor (as a percent) | 1% | |||||||||
Original issuance discount | $ 18,800 | |||||||||
Repayment of debt | $ 397,000 | |||||||||
Senior secured credit facility - revolving loan | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity of credit facility | $ 250,000 | |||||||||
Amounts outstanding | 0 | 0 | ||||||||
Stand-by letter of credit outstanding | 35,400 | |||||||||
Available borrowing capacity | $ 214,600 | |||||||||
Reduction of spread on variable rate | 0.25% | |||||||||
Senior secured credit facility - revolving loan | Maximum | ||||||||||
Debt | ||||||||||
Leverage ratio to receive interest rate reduction | 3.20 | |||||||||
Senior secured credit facility - revolving loan | SOFR | ||||||||||
Debt | ||||||||||
Margin (as a percent) | 4% | |||||||||
Senior secured credit facility - revolving loan | Alternate base rate | ||||||||||
Debt | ||||||||||
Margin (as a percent) | 3% | |||||||||
Finance leases | ||||||||||
Debt | ||||||||||
Total long-term debt and finance leases | $ 41,894 | 35,746 | ||||||||
Incremental Term Loan Facility | ||||||||||
Debt | ||||||||||
Aggregate principal amount | $ 150,000 | |||||||||
Leverage ratio | 3.70 | |||||||||
Incremental Term Loan Facility | Maximum | ||||||||||
Debt | ||||||||||
Additional borrowing capacity | $ 300,000 | |||||||||
6.50% senior secured notes due 2028 | ||||||||||
Debt | ||||||||||
Total long-term debt and finance leases | $ 750,000 | $ 750,000 | ||||||||
Aggregate principal amount | $ 750,000 | |||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | |||||||
5.00% senior secured notes due 2028 | ||||||||||
Debt | ||||||||||
Total long-term debt and finance leases | $ 400,000 | $ 400,000 | ||||||||
Aggregate principal amount | $ 400,000 | |||||||||
Interest rate (as a percent) | 5% | 5% | 5% | |||||||
Second Amendment | ||||||||||
Debt | ||||||||||
Aggregate principal amount | $ 999,900 | |||||||||
Interest rate (as a percent) | 3.50% | |||||||||
Variable rate basis, floor (as a percent) | 0.75% | |||||||||
Third Amendment | ||||||||||
Debt | ||||||||||
Debt Instrument, Extension Term | 2 years | |||||||||
Third Amendment | Maximum | ||||||||||
Debt | ||||||||||
Leverage ratio for an event of default | 6.35 | 5.85 | ||||||||
Fourth Amendment | SOFR | ||||||||||
Debt | ||||||||||
Interest rate (as a percent) | 3.50% | |||||||||
Variable rate basis, floor (as a percent) | 0.75% | |||||||||
Fourth Amendment | One month SOFR | ||||||||||
Debt | ||||||||||
Additional rate | 0.11% | |||||||||
Fourth Amendment | Three month SOFR | ||||||||||
Debt | ||||||||||
Additional rate | 0.26% | |||||||||
Fourth Amendment | Six month SOFR | ||||||||||
Debt | ||||||||||
Additional rate | 0.43% |
DERIVATIVE FINANCIAL INSTRUME_3
DERIVATIVE FINANCIAL INSTRUMENTS - Interest Rate Swaps (Details) $ in Thousands | Jun. 30, 2023 USD ($) item | Dec. 31, 2022 USD ($) |
Derivatives | ||
Number of swap agreements that provide for the entity or the counterparties to post collateral | item | 0 | |
Cash flow hedges | ||
Derivatives | ||
Total fair value, derivative asset (liability) | $ 5,037 | |
Cash flow hedges | Forward starting fixed to 1-month floating SOFR | ||
Derivatives | ||
Fixed interest rate (as a percent) | 3.941% | |
Prepaid expense and other current assets | Cash flow hedges | Fixed to 1-month floating LIBOR (with floor) | ||
Derivatives | ||
Derivative, Notional Amount | $ 500,000 | $ 500,000 |
Total fair value, derivative asset (liability) | 1,039 | $ 5,959 |
Other Noncurrent Assets | Cash flow hedges | Forward starting fixed to 1-month floating SOFR | ||
Derivatives | ||
Derivative, Notional Amount | 500,000 | |
Total fair value, derivative asset (liability) | $ 3,998 |
DERIVATIVE FINANCIAL INSTRUME_4
DERIVATIVE FINANCIAL INSTRUMENTS - Effect of Interest Rate Derivatives (Details) - Interest rate swaps - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Derivative Instruments | |||||
Derivatives | |||||
Deferred gain included in AOCI (pretax) | $ 5,100 | $ 5,100 | $ 6,900 | ||
Gain included in AOCI to be recognized in the next 12 months | 7,400 | ||||
Cash flow hedges | |||||
Derivatives | |||||
Unrealized gain recognized in AOCI, pretax | 4,180 | $ 3,899 | 4,133 | $ 10,172 | |
Deferred gain (loss) reclassified from AOCI to interest expense | $ 3,231 | $ (1,791) | $ 5,909 | $ (3,602) |
LEASES - Lessor (Details)
LEASES - Lessor (Details) $ in Millions | 3 Months Ended |
Jun. 30, 2022 USD ($) | |
Lessor | |
Lessor, revenue recognized | $ 3.1 |
Lessor gain | $ 0.9 |
MEZZANINE EQUITY (Details)
MEZZANINE EQUITY (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||
Jan. 01, 2023 USD ($) shares | Nov. 22, 2022 | Dec. 07, 2021 USD ($) shares | Jun. 30, 2023 USD ($) item Vote director $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Temporary Equity [Line Items] | |||||
Temporary equity, shares authorized | shares | 10,000,000 | 10,000,000 | |||
Temporary equity, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||
Temporary equity, liquidation preference | $ 498,338 | $ 477,047 | |||
Cash payment waived duration | 2 years | ||||
Series A preferred stock | |||||
Temporary Equity [Line Items] | |||||
Temporary equity, shares authorized | shares | 10,000,000 | ||||
Temporary equity, par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Preferred stock dividend rate | 9% | ||||
Liquidation preference per share | $ / shares | $ 1,000 | ||||
Number of votes per preferred stock | Vote | 1 | ||||
Entitlement of preferred stock holder to appoint director. | director | 2 | ||||
Series A preferred stock issued | $ 285,900 | ||||
Series A preferred stock issued (in shares) | shares | 434,266 | ||||
Temporary equity, liquidation preference | $ 498,300 | 477,000 | |||
Number of dividend payment periods | item | 2 | ||||
Dividend paid in kind (Value) | $ 20,700 | ||||
Paid dividends in-kind (in shares) | shares | 20,704 | ||||
Accrued and unpaid dividends | $ 21,300 | $ 20,700 | |||
Series A preferred stock | Board of directors fails to declare and pay dividends | |||||
Temporary Equity [Line Items] | |||||
Preferred stock dividend rate | 11% |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) | 6 Months Ended | |
Feb. 26, 2023 | Jun. 30, 2023 | |
Stock-based compensation plans | ||
Additional shares of common stock authorized | 5,280,000 | |
Shares of common stock authorized for issuance | 15,330,000 | |
Unrecognized share-based compensation | ||
Unrecognized compensation cost | $ 15,700,000 | |
Weighted-average period of recognition | 1 year 7 months 6 days | |
Employee Stock Option | Eligible Employees | ||
Stock-based compensation plans | ||
Shares that may be granted in the form of stock options or stock appreciation rights | 300,000 | |
Employee Stock Option | Nonemployee | ||
Stock-based compensation plans | ||
Shares that may be granted in the form of stock options or stock appreciation rights | 25,000 | |
Stock Appreciation Rights (SARs) | Eligible Employees | ||
Stock-based compensation plans | ||
Shares that may be granted in the form of stock options or stock appreciation rights | 300,000 | |
Stock Appreciation Rights (SARs) | Nonemployee | ||
Stock-based compensation plans | ||
Shares that may be granted in the form of stock options or stock appreciation rights | 25,000 | |
Stock awards and stock unit awards | Eligible Employees | ||
Stock-based compensation plans | ||
Fair value of share-based awards and stock units awards that may be granted | $ 6,000,000 | |
Stock awards and stock unit awards | Nonemployee | ||
Stock-based compensation plans | ||
Fair value of share-based awards and stock units awards that may be granted | $ 500,000 | |
Restricted stock | ||
Shares | ||
Non-vested shares outstanding at the beginning of the period | 1,185,980 | |
Shares granted | 1,695,071 | |
Shares vested | (82,644) | |
Shares forfeited, cancelled or retired | (204,121) | |
Non-vested shares outstanding at the end of the period | 2,594,286 | |
Weighted Average Grant Date Fair Value | ||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 5.84 | |
Shares granted (in dollars per share) | 3.02 | |
Shares vested (in dollars per share) | 6.28 | |
Shares forfeited, cancelled or retired (in dollars per share) | 5.76 | |
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 3.99 | |
Performance shares | ||
Shares | ||
Non-vested shares outstanding at the beginning of the period | 1,464,058 | |
Shares granted | 370,667 | |
Shares vested | (705,432) | |
Shares forfeited, cancelled or retired | (162,609) | |
Non-vested shares outstanding at the end of the period | 966,684 | |
Weighted Average Grant Date Fair Value | ||
Non-vested shares outstanding at the beginning of the period (in dollars per share) | $ 7.07 | |
Shares granted (in dollars per share) | 5.41 | |
Shares vested (in dollars per share) | 7.64 | |
Shares forfeited, cancelled or retired (in dollars per share) | 8.20 | |
Non-vested shares outstanding at the end of the period (in dollars per share) | $ 7.06 |
SHAREHOLDERS' EQUITY - Compensa
SHAREHOLDERS' EQUITY - Compensation costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Stock-based compensation plans | ||
Stock-based compensation expense | $ 2,388 | $ 2,833 |
Restricted stock | ||
Stock-based compensation plans | ||
Stock-based compensation expense | 1,240 | 1,411 |
Performance shares | ||
Stock-based compensation plans | ||
Stock-based compensation expense | $ 1,148 | $ 1,422 |
SHAREHOLDERS' EQUITY - Changes
SHAREHOLDERS' EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | |
Accumulated other comprehensive loss, net of tax, by component | |||||
Balance at the beginning of the period | $ (610) | $ (610) | |||
Other comprehensive gain before reclassifications | 3,055 | ||||
Amounts reclassified from accumulated other comprehensive loss | (6,364) | ||||
Net current period other comprehensive income (loss) | $ (297) | (3,012) | $ 4,155 | $ 5,925 | (3,309) |
Balance at the end of the period | (3,919) | (3,919) | |||
Pension and Post-Retirement Obligations | |||||
Accumulated other comprehensive loss, net of tax, by component | |||||
Balance at the beginning of the period | (5,738) | (5,738) | |||
Amounts reclassified from accumulated other comprehensive loss | (1,998) | ||||
Net current period other comprehensive income (loss) | (1,998) | ||||
Balance at the end of the period | (7,736) | (7,736) | |||
Derivative Instruments | |||||
Accumulated other comprehensive loss, net of tax, by component | |||||
Balance at the beginning of the period | $ 5,128 | 5,128 | |||
Other comprehensive gain before reclassifications | 3,055 | ||||
Amounts reclassified from accumulated other comprehensive loss | (4,366) | ||||
Net current period other comprehensive income (loss) | (1,311) | ||||
Balance at the end of the period | $ 3,817 | $ 3,817 |
SHAREHOLDERS' EQUITY - Reclassi
SHAREHOLDERS' EQUITY - Reclassification from AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
EQUITY | ||||||
Loss from continuing operations before income taxes | $ (126,540) | $ (12,608) | $ (175,741) | $ (146,523) | ||
Interest expense | (36,903) | (30,156) | (70,763) | (59,671) | ||
Tax benefit (expense) | 18,448 | 2,017 | 30,688 | 16,836 | ||
Net loss | (108,092) | $ (36,961) | (1,512) | $ (115,549) | (145,053) | (117,061) |
Pension and Post-Retirement Obligations | ||||||
EQUITY | ||||||
Prior service credit | 133 | 195 | 265 | 389 | ||
Actuarial gain (loss) | 1,223 | (123) | 2,446 | (246) | ||
Loss from continuing operations before income taxes | 1,356 | 72 | 2,711 | 143 | ||
Tax benefit (expense) | (357) | (20) | (713) | (39) | ||
Net loss | 999 | 52 | 1,998 | 104 | ||
Derivative Instruments | ||||||
EQUITY | ||||||
Interest expense | 3,231 | (1,791) | 5,909 | (3,602) | ||
Tax benefit (expense) | (844) | 467 | (1,543) | 939 | ||
Net loss | $ 2,387 | $ (1,324) | $ 4,366 | $ (2,663) |
PENSION PLAN AND OTHER POST-R_3
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS - Components of net periodic pension cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Defined Benefit Plans | ||||
Components of net periodic pension costs | ||||
Interest cost | $ 7,357 | $ 5,558 | $ 14,713 | $ 11,116 |
Expected return on plan assets | (7,850) | (9,206) | (15,700) | (18,412) |
Net amortization (gain) loss | 72 | 154 | 144 | 308 |
Net prior service cost (credit) amortization | 30 | 30 | 61 | 61 |
Net periodic pension cost (benefit) | (391) | (3,464) | (782) | (6,927) |
Post-retirement Benefit Obligations | ||||
Components of net periodic pension costs | ||||
Service cost | 19 | 145 | 38 | 290 |
Interest cost | 750 | 677 | 1,500 | 1,354 |
Expected return on plan assets | (47) | (53) | (94) | (106) |
Net amortization (gain) loss | (1,295) | (31) | (2,590) | (62) |
Net prior service cost (credit) amortization | (163) | (225) | (326) | (450) |
Net periodic pension cost (benefit) | $ (736) | $ 513 | $ (1,472) | $ 1,026 |
PENSION PLAN AND OTHER POST-R_4
PENSION PLAN AND OTHER POST-RETIREMENT BENEFITS - Contributions (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) employee | |
Defined Benefit Plans | |
Defined benefit plans | |
New benefits accrued | $ 0 |
Post-retirement Benefit Obligations | |
Defined benefit plans | |
Number of persons eligible to become a new participant | employee | 0 |
Assets in unfunded plans | $ 0 |
Expected contribution to pension plan | 6,200 |
Employer contributions | 3,200 |
Supplemental Plans | |
Defined benefit plans | |
Assets in unfunded plans | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Unrecognized tax benefits | $ 4.9 | $ 4.9 | $ 4.9 | ||
Unrecognized tax benefits that would impact effective tax rate | $ 4.7 | $ 4.7 | $ 4.7 | ||
Effective tax rate (as a percent) | 14.60% | 16% | 17.50% | 11.50% | |
Effective tax rate exclusive of taxable adjustment | 25.70% | 25.50% | 25.50% | 26% | |
Disposal Group, Held-for-sale, Not Discontinued Operations | Consolidated Communications of Comerco Company, Washington | |||||
Tax expense related to non deductible noncash goodwill | $ 14.3 | $ 14.3 | |||
Impairment loss of noncash goodwill not deductible for tax purpose | $ 77.8 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Assets of non-core, rural ILEC business located in Ohio | |||||
Tax expense related to non deductible noncash goodwill | $ 0.2 | $ 3.4 | |||
Impairment loss of noncash goodwill not deductible for tax purpose | 16.3 | ||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Kansas City operations | |||||
Tax expense related to non deductible noncash goodwill | $ 1 | 17.9 | |||
Impairment loss of noncash goodwill not deductible for tax purpose | $ 83.7 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Litigation (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2020 USD ($) | Jun. 30, 2023 USD ($) subsidiary | Dec. 31, 2019 USD ($) | Dec. 30, 2020 item | May 31, 2017 USD ($) | |
Litigation and Contingencies | |||||||
Number of subsidiaries that received assessment notice | subsidiary | 2 | ||||||
Payments to DOR | $ 2.1 | ||||||
Number of poles sold in joint venture | item | 343,000 | ||||||
Number of poles sold that were solely owned | item | 3,800 | ||||||
Loss from sale of poles | $ 2.4 | $ 8.3 | $ 1.9 | $ 3.6 | |||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | |||||||
Litigation and Contingencies | |||||||
Litigation amount accrued | 0.9 | 0.9 | |||||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | Tax Year 2008 Through 2013, excluding 2010 | |||||||
Litigation and Contingencies | |||||||
Total additional tax liability calculated by the auditors | 3.4 | ||||||
Consolidated Communications of Pennsylvania Company LLC (CCPA) | Tax Year 2010, 2014 Through 2022 | |||||||
Litigation and Contingencies | |||||||
Total additional tax liability calculated by the auditors | 5.3 | ||||||
Consolidated Communications Enterprise Services Inc. (CCES) | |||||||
Litigation and Contingencies | |||||||
Litigation amount accrued | $ 2 | 2 | |||||
Consolidated Communications Enterprise Services Inc. (CCES) | Tax Year 2008 Through 2013 | |||||||
Litigation and Contingencies | |||||||
Total additional tax liability calculated by the auditors | 4 | ||||||
Consolidated Communications Enterprise Services Inc. (CCES) | Tax Year 2014 Through 2022 | |||||||
Litigation and Contingencies | |||||||
Total additional tax liability calculated by the auditors | $ 2.6 | ||||||
Assessment by Commonwealth of Pennsylvania Department of Revenue | Maximum | |||||||
Litigation and Contingencies | |||||||
Potential liability amount guaranteed | $ 5 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |