General Information | Note 1. General Information ā WideOpenWest, Inc. (āWOWā or the āCompanyā) is a leading broadband services provider offering high-speed data (āHSDā), cable television (āVideoā), and digital telephony (āTelephonyā) services to residential and business customers. At September 30, 2021, the Company served customers in seventeen Midwestern and Southeastern markets in the United States, including its Midwestern broadband networks in Detroit and Lansing, Michigan; Chicago, Illinois; Evansville, Indiana and Baltimore, Maryland. The Southeastern systems are located in Augusta, Columbus, Newnan and West Point, Georgia; Charleston, South Carolina; Dothan, Auburn, Huntsville and Montgomery, Alabama; Knoxville, Tennessee; and Panama City and Pinellas County, Florida. ā The Companyās operations are managed and reported to its Chief Executive Officer (āCEOā), the Companyās chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company operates as one reportable segment. ā Discontinued Operations ā Sale of Service Areas ā On June 30, 2021, WOW entered into an Asset Purchase Agreement with Atlantic Broadband (OH), LLC, (āAtlanticā), a U.S. cable operator and subsidiary of Cogeco Communications, Inc. and Atlantic Broadband Finance, LLC, a Delaware limitied liability company (the āAtlantic Purchase Agreementā), whereby Atlantic agreed to acquire the Companyās Cleveland and Columbus, Ohio markets for approximately $1.125 billion, subject to adjustments, including customary working capital adjustments, as specified in the Atlantic Purchase Agreement. The sale was completed on September 1, 2021. Refer to Note 5 ā Asset Sales for additional information reguarding the sale. ā Additionally, on June 30, 2021, WOW entered into an Asset Purchase Agreement with Radiate HoldCo, LLC, a telecommunications holding company affiliated with RCN Telecom Services LLC, Grande Communications Networks, LLC and WaveDivision Holdings, LLC (collectively, āAstound Broadbandā) (the āAstound Purchase Agreementā), whereby Radiate HoldCo, LLC agreed to acquire the Companyās Chicago, Illinois, Evansville, Indiana and Baltimore, Maryland markets for approximately $661 million, subject to adjustments, including customary working capital adjustments, as specified in the Astound Purchase Agreement. The sale was completed on November 1, 2021. Refer to Note 14 ā Subsequent Events for additional information regarding the sale. ā The divestiture of these markets represents a strategic shift in WOWās business as the markets represented approximately 37% of total revenue for the three and six months ended June 30, 2021 and as such were presented as discontinued operations in the Form 10-Q for the period ending June 30, 2021. The Company will continue to present these markets as discontinued operations in the condensed consolidated statements of operations and exclude from continuing operations for all periods in which such discontinued operations are presented. Results of discontinued operations include all revenues and direct expenses of these markets. General corporate overhead is not allocated to discontinued operations. The assets and liabilities associated with these markets, as specified in the asset purchase agreements, are classified as held for sale in our condensed consolidated balance sheets. ā In connection with the divestiture of the Ohio markets, the Company has entered into a transition services agreement under which WOW will continue to provide certain services to Atlantic. A similar agreement commenced with Astound Broadband upon close of the Astound Purchase Agreement subsequent to the periods presented. Under the transition services agreements, the buyers may elect a variety of services, including but not limited to: information technology, network, business support services, etc. The term of the transition services agreements are for 12 months following the closing date, with two optional three month extensions. None of the costs related to the employees, processes or systems that will be utilized to provide the services under the transition services agreements were allocated to discontinued operations. The assets and liabilities sold under the Atlantic Purchase Agreement were written off during the third quarter in conjunction with the closing of the transaction and as such, the following table presents the aggregate amounts of the classes of assets and liabilities to be sold under the the Astound Purchase Agreement as of September 30, 2021. The amounts presented for the period ending December 31, 2020 include the assets and liabilities to be sold under the Astound Purchase Agreement and Atlantic Purchase Agreement: ā ā ā ā ā ā ā ā ā ā September 30, ā December 31, ā 2021 2020 ā ā (in millions) Assets ā ā Current assets ā ā Accounts receivableātrade, net of allowance for doubtful accounts of $1.1 and $1.8, respectively ā $ 10.0 ā $ 25.1 Accounts receivableāother, net ā ā ā 0.9 Prepaid expenses and other ā 5.5 ā 13.2 Total current assets ā 15.5 ā 39.2 Right-of-use lease assetsāoperating ā ā 2.2 ā ā 2.8 Property, plant and equipment, net ā 150.8 ā 379.4 Franchise operating rights ā 111.2 ā 165.4 Goodwill ā 68.8 ā 183.7 Intangible assets subject to amortization, net ā 0.1 ā 0.2 Other non-current assets ā 4.0 ā 8.5 Total assets ā $ 352.6 ā $ 779.2 Liabilities and stockholdersā deficit ā ā Current liabilities ā ā Accounts payableātrade ā $ 2.7 ā $ 11.4 Current portion of long-term lease liabilityāoperating ā ā 0.4 ā ā 0.7 Accrued liabilities and other ā 7.6 ā 18.9 Current portion of unearned service revenue ā 6.8 ā 16.9 Total current liabilities ā 17.5 ā 47.9 Long-term lease liabilityāoperating ā ā 1.6 ā ā 2.3 Other non-current liabilities ā ā 0.4 ā ā ā Total liabilities ā $ 19.5 ā $ 50.2 ā The following table presents information regarding certain components of income from discontinued operations: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended ā Nine months ended ā September 30, September 30, ā ā 2021 (1) 2020 ā 2021 (1) 2020 ā ā (in millions) Revenue ā $ 83.7 ā $ 105.6 ā $ 293.9 ā $ 312.0 Costs and expenses: ā ā ā ā ā Operating (excluding depreciation and amortization) ā 28.9 ā 40.3 ā 106.1 ā 127.7 Selling, general and administrative ā 5.2 ā 5.6 ā 10.7 ā 11.5 Depreciation and amortization ā ā ā 20.0 ā 41.0 ā 59.3 ā ā 34.1 ā 65.9 ā 157.8 ā 198.5 Income from operations ā 49.6 ā 39.7 ā 136.1 ā 113.5 Other income (expense): ā ā ā ā ā Interest income (expense) ā ā ā ā ā ā ā ā 0.4 ā ā ā Gain on sale of assets, net ā ā 689.9 ā ā ā ā ā 690.1 ā ā 0.1 Other income, net ā ā ā ā ā 0.1 ā 0.1 Income from discontinued operations before provision for income tax ā 739.5 ā 39.7 ā 826.7 ā 113.7 Income tax expense ā (200.4) ā (10.4) ā (220.4) ā (28.0) Income from discontinued operations ā $ 539.1 ā $ 29.3 ā $ 606.3 ā $ 85.7 (1) Includes activity for the Cleveland and Columbus, Ohio markets through September 1, 2021. The following table presents revenue by service offering from discontinued operations: ā ā ā ā ā ā ā ā ā ā ā ā ā ā ā Three months ended ā Nine months ended ā ā September 30, ā September 30, ā 2021 (1) 2020 2021 (1) ā 2020 ā ā (in millions) Residential subscription ā ā ā ā ā ā ā ā ā ā ā ā HSD ā $ 41.4 ā $ 46.8 ā $ 143.5 ā $ 136.3 Video ā 27.1 ā 40.0 ā ā 98.6 ā ā 119.6 Telephony ā 3.0 ā 4.2 ā ā 10.9 ā ā 12.8 Total Residential subscription ā $ 71.5 ā $ 91.0 ā $ 253.0 ā $ 268.7 Business subscription ā ā ā ā ā ā ā ā ā ā ā ā HSD ā $ 5.0 ā $ 5.7 ā $ 16.7 ā $ 16.8 Video ā ā 0.7 ā ā 0.9 ā ā 2.5 ā ā 2.7 Telephony ā ā 2.3 ā ā 2.9 ā ā 7.9 ā ā 8.9 Total business subscription ā $ 8.0 ā $ 9.5 ā $ 27.1 ā $ 28.4 Total subscription services revenue ā ā 79.5 ā ā 100.5 ā ā 280.1 ā ā 297.1 Other business services revenue ā ā 0.6 ā ā 0.5 ā ā 1.6 ā ā 1.5 Other revenue ā ā 3.6 ā ā 4.6 ā ā 12.2 ā ā 13.4 Total revenue ā $ 83.7 ā $ 105.6 ā $ 293.9 ā $ 312.0 (1) Includes the activity for the Cleveland and Columbus, Ohio markets through September 1, 2021. The following table presents specified items of cash flow and significant non-cash items of discontinued operations for the nine months ended: ā ā ā ā ā ā ā ā ā September 30, ā September 30, ā 2021 (1) 2020 ā ā (in millions) Specified items of cash flow: ā ā Capital expenditures ā $ 41.2 ā $ 44.9 ā ā ā ā ā ā ā Non-cash operating activities: ā ā ā ā ā Operating lease additions ā $ ā ā $ 0.6 Non-cash investing activities: ā ā ā ā ā ā Capital expenditure accounts payable and accruals ā $ 2.3 ā $ 1.9 (1) Includes the activity for the Cleveland and Columbus, Ohio markets through September 1, 2021. ā |