| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
| Dec. 31, 2017 |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| Basis of Presentation | Basis of Presentation
The consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and certain entities, which are consolidated in accordance with the provisions of the Financial Accounting Standards Board’s (“FASB”) authoritative guidance on the consolidation of variable interest entities since it is determined that the Company is the primary beneficiary of these entities.
Certain reclassifications have been made in the December 31, 2016 financial statements to conform to the Company’s consolidated income statements to how it analyzes its operations in the current period. These changes did not impact operating income. For the year ended December 31, 2016 the aggregate impact of the changes included an decrease to termination and access fees of $4.9 million, an increase to engineering and operations expenses of $7.5 million, a decrease to sales and marketing expenses of $0.8 million, an increase to equipment expense of $0.6 million and a decrease to general and administrative expenses of $2.4 million. |
| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates relate to the allowance for doubtful accounts, useful lives of the Company’s fixed and finite-lived intangible assets, allocation of purchase price to assets acquired and liabilities assumed in business combinations, fair value of indefinite-lived intangible assets, goodwill and income taxes. Actual results could differ significantly from those estimates. |
| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers all investments with an original maturity of three months or less at date of purchase to be cash equivalents. The Company places its cash and temporary investments with banks and other institutions that it believes have a high credit quality. At December 31, 2017, the Company had deposits with banks in excess of FDIC insured limits and $33.3 million of its cash is on deposit with noninsured institutions such as corporate money market issuers and cash held in foreign banks. The Company’s cash and cash equivalents are not subject to any restrictions (see Note 9). As of December 31, 2017 and 2016, the Company held $12.6 million and $7.5 million, respectively, of its cash in Guyana dollars. While there are risks associated with the conversion of Guyana dollars to U.S. dollars due to limited liquidity in the Guyana foreign currency markets, to date it has not prevented the Company from converting Guyana dollars into U.S. dollars within a given three month period or from converting at a price that reasonably approximates the reported exchange rate. |
| Short Term Investments | Short Term Investments
The Company's short-term investments consist of corporate bonds, which have remaining maturities of more than three months at the date of purchase, and equity securities classified as available for sale, which are stated at fair value. Unrealized gains and losses, net of related income taxes, for available for sale securities are reported as net increases and decreases to accumulated other comprehensive income (loss) until realized. The estimated fair values of investments are based on quoted market prices as of the end of the reporting period. The corporate bonds as of December 31, 2017 have contractual maturities of less than one year. |
| Restricted Cash | Restricted Cash
The majority of the Company’s restricted cash balance is held in the Company’s Ahana Renewables subsidiary as described in Note 4. The restricted cash is held in escrow and serves as collateral for Ahana Renewables’ Debt in order to meet future debt service obligations and other operating obligations of the solar facilities. |
| Allowance for Doubtful Accounts | Allowance for Doubtful Accounts
The Company maintains an allowance for doubtful accounts for the estimated probable losses on uncollectible accounts receivable. The allowance is based upon a number of factors including the credit worthiness of customers, the Company’s historical experience with customers, the age of the receivable and current market and economic conditions. Such factors are reviewed and updated by the Company on a quarterly basis. Uncollectible amounts are charged against the allowance account. |
| Materials and Supplies | Materials and Supplies
Materials and supplies primarily include handsets, customer premise equipment, cables and poles which have not yet been placed in service as part of telecommunications equipment and are recorded at the lower of cost or market cost being determined on the basis of specific identification and market determined using replacement. |
| Fixed Assets | Fixed Assets
The Company’s fixed assets are recorded at cost and depreciated using the straight‑line method generally between 3 and 39 years. Expenditures for major renewals and betterments that extend the useful lives of fixed assets are capitalized. Repairs and replacements of minor items of property are charged to maintenance expense as incurred. The cost of fixed assets in service and under construction includes an allocation of indirect costs applicable to construction. Grants received for the construction of assets are recognized as a reduction of the cost of fixed assets, a reduction of depreciation expense over the useful lives of the assets and as a reduction of capital expenditures in the statements of cash flows.
The fair value of a liability for an asset retirement obligation is recorded in the period in which it is incurred if a reasonable estimate of fair value can be made. In periods subsequent to initial measurement, period‑to‑period changes in the liability for an asset retirement obligation resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flows are recognized. The increase in the carrying value of the associated long‑lived asset is depreciated over the corresponding estimated economic life. The consolidated balance sheets include accruals of $3.9 million and $3.2 million as of December 31, 2017 and 2016, respectively, for estimated costs associated with asset retirement obligations.
In accordance with the authoritative guidance for the accounting for the impairment or disposal of long‑lived assets, the Company evaluates the carrying value of long‑lived assets, including property and equipment, in relation to the operating performance and future undiscounted cash flows of the underlying business whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss exists when estimated undiscounted cash flows attributable to an asset are less than its carrying amount. If an asset is deemed to be impaired, the amount of the impairment loss recognized represents the excess of the asset’s carrying value as compared to its estimated fair value, based on management’s assumptions and projections.
Management’s estimate of the future cash flows attributable to its long‑lived assets and the fair value of its businesses involve significant uncertainty. Those estimates are based on management’s assumptions of future results, growth trends and industry conditions. If those estimates are not met, the Company could have additional impairment charges in the future, and the amounts may be material.
The Company did not record any fixed asset impairments for the year ended December 31, 2017. See Note 3, Impact of Hurricanes Irma and Maria , regarding the Company’s write off of certain damaged fixed assets. See Note 4, Disposition- U.S. Telecom, regarding the Company’s impairment of certain fixed assets in the year ended December 31, 2016. |
| Goodwill and Indefinite-Lived Intangible Assets | Goodwill and Indefinite‑Lived Intangible Assets
Goodwill is the amount by which the cost of acquired net assets exceeded the fair value of those net assets on the date of acquisition. The Company allocates goodwill to reporting units at the time of acquisition and bases that allocation on which reporting units will benefit from the acquired assets and liabilities. Reporting units are defined as operating segments or one level below an operating segment, referred to as a component. The Company has determined that its reporting units are components of its multiple operating segments. The Company assesses goodwill for impairment on an annual basis in the fourth quarter or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. If the book value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit an impairment charge is recorded equal to the excess, but not more than the total amount of goodwill allocated to the reporting unit.
A significant majority of the Company’s telecommunications licenses are not amortized and are carried at their historical costs. The Company believes that telecommunications licenses generally have an indefinite life based on the historical ability to renew such licenses, that such renewals may be obtained indefinitely and at little cost, and that the related technology used is not expected to be replaced in the foreseeable future. The Company has elected to perform its annual testing of its telecommunications licenses in the fourth quarter of each fiscal year, or more often if events or circumstances indicate that there may be impairment. If the value of these assets were impaired by some factor, such as an adverse change in the subsidiary’s operating market, the Company may be required to record an impairment charge. The impairment test consists of a comparison of the fair value of telecommunications licenses with their carrying amount on a license by license basis and as a part of the test the Company assesses the appropriateness of the application of the indefinite‑lived assertion.
As of December 31, 2017 and 2016, the Company performed its annual impairment assessment of its goodwill and indefinite‑lived intangible assets (telecommunications licenses) and determined that no impairment charge was required. See Note 8 for a discussion of the Company’s quantitative and qualitative tests of its goodwill. Also, see Note 4, Disposition- U.S. Telecom, regarding the Company’s impairment of goodwill in the year ended December 31, 2016. |
| Other Intangible Assets | Other Intangible Assets
Intangible assets resulting from the acquisitions of entities accounted for using the purchase method of accounting are estimated by management based on the fair value of assets acquired. These include acquired customer relationships, tradenames, and franchise rights.
Customer relationships are amortized over their estimated lives ranging from 7-13 years, which are based on the pattern in which economic benefit of the customer relationship is estimated to be realized. |
| Debt | Debt
Debt is measured at amortized cost. Debt issuance costs on term loans and specified maturity borrowings are recorded as a reduction to the carrying value of the debt and are amortized as interest expense in the consolidated income statements over the period of the debt. Fees related to revolving credit facilities and lines of credit are recorded in other assets in the consolidated balance sheet and are amortized as interest expense in the consolidated income statements over the life of the facility. Except for interest costs incurred for the construction of a qualifying asset which are capitalized during the period the assets are prepared for their intended use, interest costs are expensed. |
| Non-Controlling Interests | Non‑Controlling Interests
The non‑controlling interests in the accompanying consolidated balance sheets reflect the original investments and subsequent capital contributions made by the minority stockholders in the Company’s subsidiaries which are less than wholly owned. Non-controlling interests acquired in a business combination are initially recorded at fair value. Subsequently, all non-controlling interest is adjusted for the minority stockholder’s proportional share of the earnings or losses, net of any distributions. |
| Changes in Accumulated Other Comprehensive Income (Loss) | Changes in Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss), by component, were as follows (in thousands):
Projected
Pension
Benefit
Translation
Short Term
Obligation
Adjustment
Investment
Total
Balance at December 31, 2014
$
(2,672)
$
(249)
$
—
$
(2,921)
Adjust funded status of pension plan, net of tax of $0.7 million
(809)
—
—
(809)
Foreign currency translation adjustment
—
26
—
26
Balance at December 31, 2015
(3,481)
(223)
—
(3,704)
Adjust funded status of pension plan, net of tax of $0.7 million
5,251
—
—
5,251
Foreign currency translation adjustment
—
(687)
—
(687)
Unrealized gain on marketable securities
—
—
868
868
Balance at December 31, 2016
1,770
(910)
868
1,728
Adjust funded status of pension plan, net of tax of $0.7 million
1,357
—
—
1,357
Foreign currency translation adjustment
—
1,265
—
1,265
Reclassifications of gains on sale of marketable securities to net income
—
—
(1,044)
(1,044)
Unrealized gain on marketable securities
—
—
440
Balance at December 31, 2017
$
3,127
$
355
$
264
$
3,746
Amounts reclassified from accumulated other comprehensive income to net income were as follows (in thousands):
2017
2016
2015
Pension and other postretirement benefit plans
$
$
$
Realized gains on marketable securities
(1,044)
—
—
Total
$
(328)
$
$ |
| Revenue Recognition | Revenue Recognition- Telecommunications
Service revenues are primarily derived from providing access to and usage of the Company’s networks and facilities as well as video content. Access revenues from postpaid customers are generally billed one month in advance and are recognized over the period that the corresponding service is rendered to customers. Revenues derived from usage of the Company’s networks, including airtime, data, video, roaming, long‑distance and Universal Service Fund revenues, are recognized when the services are provided and are included in unbilled revenues until billed to the customer. Prepaid service, including airtime, data, and other services, sold to customers is recorded as deferred revenue prior to the commencement of services and is recognized when the service is used or expires. Access and usage‑based services are billed throughout the month based on the bill cycle assigned to a particular customer. As a result of billing cycle cut‑off times, management must estimate service revenues earned but not yet billed at the end of each reporting period.
Sales of communications products including wireless handsets and accessories represent a separate earnings process and are recognized when the products are delivered to and accepted by customers. The Company accounts for transactions involving both the activation of service and the sale of equipment in accordance with the authoritative guidance for the accounting for revenue arrangements with multiple deliverables. Fees assessed to communications customers to activate service are not a separate unit of accounting and are allocated to the delivered item (equipment) and recognized as product sales to the extent that the aggregate proceeds received from the customer for the equipment and activation fee do not exceed the relative fair value of the equipment or the contingent cash cap. Commissions paid to employees and third parties are expensed as incurred and included in sales and marketing expenses.
Wholesale revenues are those revenues generated from providing voice or data services to the customers of other wireless carriers principally through roaming agreements, and the revenue is recognized as the service is rendered to customers.
Sales and use and state excise taxes collected from customers that are remitted to the governmental authorities are reported on a net basis and excluded from the revenues and sales.
Revenue Recognition-Renewable Energy
Revenue from the Company’s Renewable Energy segment is generated from the sale of electricity through power purchase agreements (“PPA’s”) with various customers that generally range from 10 to 25 years. The Company recognizes revenue from the PPA’s as electricity is generated and sold at contractual rates as defined within the respective PPA.
The Company’s Renewable Energy segment also generates revenue from the sale of Solar Renewable Energy Credits (“SRECs”). Revenue is recognized as SRECs are sold through long-term purchase agreeements at the contractual rate specified in the agreement. |
| Termination and access fee expenses | Termination and access fee expenses. Termination and access fee expenses are charges that are incurred for voice and data transport circuits (in particular, the circuits between the Company’s wireless sites and its switches), internet capacity, other access fees incurred to terminate calls, customer bad debt expense, telecommunication spectrum fees and direct costs associated with the Company’s Renewable Energy segment. |
| Engineering and operations expenses | Engineering and operations expenses. Engineering and operations expenses include the expenses associated with developing, operating and supporting the Company’s expanding telecommunications networks and renewable energy operations, including the salaries and benefits incurred to employees directly involved in the development and operation of the Company’s networks and renewable energy operations. |
| Sales and marketing expenses | Sales and marketing expenses. Sales and marketing expenses include salaries and benefits incurred to sales personnel, customer service expenses, sales commissions and the costs associated with the development and implementation of promotion and marketing campaigns. |
| Equipment expenses | Equipment expenses. Equipment expenses include the costs of wireless handsets and customer equipment. |
| General and administrative expenses | General and administrative expenses. General and administrative expenses include salaries, benefits and related costs for general corporate functions including executive management, finance and administration, legal and regulatory, facilities, information technology and human resources. General and administrative expenses also include internal costs associated with the Company’s performance of due-diligence in connection with acquisition activities. |
| Transactions-related charges | Transaction-related charges. Transaction-related charges include the external costs, such as legal, tax, accounting and consulting fees directly associated with acquisition and disposition-related activities. Transaction-related charges do not include internal costs, such as employee salary and travel-related expenses, incurred in connection with acquisitions or dispositions or any integration-related costs. |
| Restructuring charges | Restructuring charges. Restructuring charges include costs incurred in integrating our newly acquired Companies. |
| Depreciation and amortization expenses | Depreciation and amortization expenses. Depreciation and amortization expenses represent the depreciation and amortization charges recorded on our property and equipment and intangible assets. |
| Impairment of goodwill and long-lived assets | Impairment of goodwill and long-lived assets. The Company evaluates the carrying value of its long lived assets, including property and equipment, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss exists when estimated undiscounted cash flows attributable to non-current assets subject to depreciation and amortization and discounted cash flows for intangible assets not subject to amortization are less than their carrying amount. For long lived assets other than goodwill, if an asset is deemed to be impaired, the amount of the impairment loss recognized represents the excess of the asset’s carrying value as compared to its estimated fair value, based on management’s assumptions and projections.
The Company also assesses the carrying value of goodwill and indefinite‑lived intangible assets on an annual basis or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. The carrying value of each reporting unit, including goodwill assigned to that reporting unit, is compared to its fair value. If the carrying value of the reporting unit, including goodwill, exceeds the fair value of the reporting unit an impairment charge is recorded equal to the excess, but not more than the total amount of goodwill allocated to the reporting unit. |
| Gain on sale of assets | Gain on sale of assets . The Company sells assets from time to time. A gain or loss is recorded by comparing the carrying amount of the assets to the proceeds received. |
| Loss on damaged assets and other related charges, net of insurance recoveries | Loss on damaged assets and other hurricane related charges, net of insurance recoveries . In September 2017, the Company’s operations in the U.S. Virgin Islands were severely damaged by Hurricanes Irma and Maria. The company recorded losses related to the disposition of damaged assets as well as incremental operating expenses directly attributable to the Hurricanes. These losses are offset by insurance proceeds. See Note 3, Impact of Hurricanes Irma and Maria . |
| Accounting for Grants | Accounting for Grants
The Company has received funding from the U.S. Government and its agencies under Stimulus and Universal Service Fund programs. These funding programs are generally designed to fund telecommunications infrastructure expansion into rural or underserved areas of the United States. The funding programs are evaluated to determine if they represent funding related to capital expenditures (capital grants) or operating activities (income grants).
Funding received from Universal Service Fund programs is received over time for operating the Company’s network in certain rural geographical areas and is considered an income grant. Accordingly, such funding is recognized as operating cash inflows. Once services are provided, revenue is recognized in the Company’s consolidated income statements. As of December 31, 2017, the Company has received approximately $21.1 million in Mobility Funds.
Funding received from the Phase I Mobility Fund, as further described in Note 10, is for the use of both capital expenditures and operating costs incurred by the Company. Accordingly, funding received for capital expenditures from the Phase I Mobility Fund is recorded as a reduction to property, plant and equipment on the Company’s consolidated balance sheets, an investing cash inflow within capital expenditures and a future reduction in depreciation expense in the consolidated income statements. Funding received for operating costs is recorded as a reduction to the Company’s operating expenses in its consolidated income statements and an operating cash inflow.
Compliance with grant requirements is reviewed as of December 31st, of each year to ensure that conditions related to grants have been met and there is reasonable assurance that the Company will be able to retain the grant proceeds and to ensure that any contingencies that may arise from not meeting the conditions are appropriately recognized. |
| Income Taxes | Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies, and results of recent operations. If the Company determines that it would be able to realize our deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process whereby (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more‑likely‑than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related authority. It is possible that the ultimate resolution of these uncertain matters may be greater or less than the amount that the Company estimated. If payment of these amounts proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period in which it is determined that the liabilities are no longer necessary. If the estimate of tax liabilities proves to be more than the ultimate assessment, a further charge to expense would result.
The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statements of operations. Accrued interest and penalties are included within the related tax liability line in the consolidated balance sheets.
The Company does not provide for United States income taxes on earnings of foreign subsidiaries as such earnings are considered to be indefinitely reinvested, with the exception noted below. The 2017 Tax Act resulted in a one-time transition tax on the deemed repatriation of foreign earnings for federal tax purposes, and the tax impact of subsequent cash distributions from our foreign subsidiaries will be limited to foreign withholding, where applicable, and state taxes. Future cash dividends from Guyana are expected to be made in 2018, however no deferred tax liability has been recorded because the distributions are not subject to Guyanese withholding tax and the state tax impact is minimal. |
| Credit Concentrations and Significant Customers | Credit Concentrations and Significant Customers
Historically, the Company has been dependent on a limited amount of customers for its wholesale roaming business. The following table indicates the percentage of revenues generated from a single customer that exceeds 10% of the Company’s consolidated revenue in any of the past three years:
Customer
2017
2016
2015
Verizon
10
%
12
%
19
%
AT&T
13
%
14
%
17
%
No other customer accounted for more than 10% of consolidated revenue in any of the past three years.
The following table indicates the percentage of accounts receivable, from customers that exceed 10% of the Company’s consolidated accounts receivable, net of allowances, as of December 31, 2017 and 2016:
Customer
2017
2016
AT&T
18
%
%
Verizon
—
%
12
% |
| Foreign Currency Gains and Losses | Foreign Currency Gains and Losses
We translate the assets and liabilities of our foreign subsidiaries from their respective functional currencies, primarily the Indian Rupee and the Guyana Dollar, to U.S. dollars at the appropriate spot rates as of the balance sheet date. Changes in the carrying value of these assets and liabilities attributable to fluctuations in spot rates are recognized in foreign currency translation adjustment, a component of accumulated other comprehensive income. Income statement accounts are translated using the monthly average exchange rates during the year.
Monetary assets and liabilities denominated in a currency that is different from a reporting entity’s functional currency must first be remeasured from the applicable currency to the legal entity’s functional currency. The effect of this remeasurement process is reported in other income on the income statement. |
| Employee Benefit Plans | Employee Benefit Plans
The company sponsors pension and other postretirement benefit plans for employees of certain subsidiaries. Net periodic pension expense is recognized in the Company’s income statement. The Company recognizes a pension or other postretirement plan’s funded status as either an asset or liability in its consolidated balance sheet. Actuarial gains and losses are reported as a component of other comprehensive income and amortized through net periodic pension expense in subsequent periods. |
| Fair Value of Financial Instruments | Fair Value of Financial Instruments
In accordance with the provisions of fair value accounting, a fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based upon an exit price model.
The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:
Level 1
Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 assets and liabilities include money market funds, debt and equity securities and derivative contracts that are traded in an active exchange market.
Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange‑traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes corporate obligations and non‑exchange traded derivative contracts.
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments and intangible assets that have been impaired whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
Assets and liabilities of the Company measured at fair value on a recurring basis as of December 31, 2017 and 2016 are summarized as follows:
December 31, 2017
Significant Other
Quoted Prices in
Observable
Active Markets
Inputs
Description
(Level 1)
(Level 2)
Total
Certificates of deposit
$
—
$
391
$
391
Money market funds
2,894
—
2,894
Short term investments
555
6,521
7,076
Commercial paper
—
49,954
49,954
Interest rate swap
—
52
52
Total assets and liabilities measured at fair value
$
3,449
$
56,918
$
60,367
December 31, 2016
Significant Other
Quoted Prices in
Observable
Active Markets
Inputs
Description
(Level 1)
(Level 2)
Total
Certificates of deposit
$
—
$
391
$
391
Money market funds
29,027
—
29,027
Short term investments
1,751
7,486
9,237
Commercial paper
—
29,981
29,981
Total assets measured at fair value
$
30,778
$
37,858
$
68,636
Certificate of Deposit
As of December 31, 2017 and December 31, 2016 this asset class consisted of a time deposit at a financial institution denominated in U.S. dollars. The asset class is classified within Level 2 of the fair value hierarchy because the fair value was based on observable market data.
Money Market Funds
As of December 31, 2017 and December 31, 2016, this asset class consisted of a money market portfolio that comprises Federal government and U.S. Treasury securities. The asset class is classified within Level 1 of the fair value hierarchy because its underlying investments are valued using quoted market prices in active markets for identical assets.
Short Term Investments and Commercial Paper
As of December 31, 2017 and December 31, 2016, this asset class consisted of short term foreign and U.S. corporate bonds, equity securities, and commercial paper. Corporate bonds and commercial paper are classified within Level 2 of the fair value hierarchy because the fair value is based on observable market data. Equity securities are classified within Level 1 because fair value is based on quoted market prices in active markets for identical assets. |
| Other Fair Value Disclosures | Other Fair Value Disclosures
The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate their fair values because of the relatively short-term maturities of these financial instruments. The fair value of the interest rate swap is measured using level 2 inputs.
During the third quarter of 2017, the Company made strategic investments totaling $18.1 million. The investments are accounted for as cost method investments. At December 31, 2017, the Company holds $20.1 million of investments accounted for under the cost method. Strategic investments consist of non-controlling equity investments in privately held companies. These investments, which the Company does not have the ability to exercise significant influence, are without readily determinable fair values and are accounted for using the cost method of accounting. Under the cost method of accounting, the non-marketable securities are carried at cost and are adjusted only for other-than-temporary impairments, certain distributions and additional investments. Fair value is not estimated for non-marketable equity securities if there are no identified events or changes in circumstances that may have an effect on the fair value of the investment. The carrying value of the strategic investments was $20.1 million at December 31, 2017 and $2.0 million at December 31, 2016. Strategic investments are included with other assets on the consolidated balance sheets.
The fair value of long-term debt is estimated using Level 2 inputs. At December 31, 2017, the fair value of long-term debt, including the current portion, was $ 159.2 million and its book value was $ 155.8 million. At December 31, 2016, the fair value of the long-term debt, including the current portion, was $15 9.9 million and its book value was $ 156.8 million |
| Net Income Per Share | Net Income Per Share
Basic net income per share is computed by dividing net income attributable to the Company’s stockholders by the weighted‑average number of common shares outstanding during the period and does not include any other potentially dilutive securities. Diluted net income per share gives effect to all potentially dilutive securities using the treasury stock method.
The reconciliation from basic to diluted weighted average shares of Common Stock outstanding is as follows (in thousands):
Year ended December 31,
2017
2016
2015
Basic weighted-average shares of common stock outstanding
16,138
16,131
16,022
Stock options
72
96
120
Diluted weighted-average shares of common stock outstanding
16,210
16,227
16,142
The following notes the number of potential shares of common stock not included in the above calculation because the effects of such were anti‑dilutive (in thousands of shares):
For the Year Ended
December 31,
2017
2016
2015
Stock options
7
5
2
Total
7
5
2 |
| Stock-Based Compensation | Stock‑Based Compensation
The Company applies the fair value recognition provisions of the authoritative guidance for the accounting for stock‑based compensation and is expensing the fair value of the grants of options to purchase common stock over their vesting period of four years. Relating to grants of options, the Company recognized $0.1 million, $0.1 million and $0.4 million of non‑cash, share‑based compensation expense during 2017, 2016, and 2015, respectively. See Note 11 for assumptions used to calculate the fair value of the options granted.
The Company also issued 95,095 restricted shares of its common stock in 2017; 100,005 restricted shares of common stock in 2016 and 93,864 restricted shares of common stock in 2015. These shares are being charged to income based upon their fair values over their vesting period of four years. Non‑cash equity‑based compensation expense, related to the vesting of restricted shares issued was $6.6 million, $6.2 million and $4.3 million in 2017, 2016, and 2015, respectively.
In connection with certain acquisitions, the Company issued shares of the acquired company to its local management and recorded $0.3 million, $0.1 million, and $0.3 million of stock based compensation during 2017, 2016 and 2015, respectively.
Stock‑based compensation expense is recognized within general and administrative expenses within the consolidated income statements. |
| Business combinations | Business Combinations
The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Contingent consideration obligations that are elements of the consideration transferred are recognized as of the acquisition date as part of the fair value transferred in exchange for the acquired business. Acquisition-related costs incurred in connection with a business combination are expensed as incurred. |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, which provides a single, comprehensive revenue recognition model for all contracts with customers. The revenue standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. The FASB has since modified the standard with several ASU’s which must be adopted concurrently. The Company’s evaluation identified the impacted areas to include the following:
·
The timing of revenue recognition and the allocation of revenue between equipment and services. The reallocation and timing impacts generally arise when bundle discounts are provided in a contract arrangement that includes equipment and service performance obligations. In these cases, the revenue will be allocated according to the relative stand-alone selling prices of the performance obligations included in the bundle and this may be different than how the products and services are billed to the customer and recognized under current guidance. The substantial majority of the Company’s revenues are earned from products and services which are sold to customers at stand-alone selling prices and bundle discounts are limited to certain geographic markets and services. As a result, this change will not have a material impact on the Company’s revenues.
·
Contract cost assets will be established to defer incremental contract acquisition costs. These costs generally relate to commissions paid to sales associates. The Company expects to utilize the practical expedient which allows expensing of contract acquisition costs when the expected amortization period is one year or less. This change will not have a material impact on the company’s operating expenses.
·
The new standard will require certain amounts be recorded as contract assets, liabilities, and deferred contract acquisition assets on the balance sheet as well as enhanced disclosures around performance obligations.
·
Overall the adoption of the standard on January 1, 2018 will not result in a material change to the timing or amount of the Company’s revenues.
The Company performed its assessment of the new standard based on products and services offered through December 31, 2017. The impacts noted above may change in future periods due to changes in contractual terms or new service and product offerings. The Company has implemented new processes and controls related to ASU 2014-09. The Company will use the modified retrospective adoption method which requires it to apply the standard only to the most current period presented with the cumulative effect of applying the standard being recognized through retained earnings at the adoption date.
In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40),” which requires management to assess a company’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. ASU 2014-15 is effective for annual reporting periods ending after December 15, 2016. Early application is permitted. The Company adopted this guidance for the fourth quarter ended December 31, 2016. The adoption of this guidance did not impact the Company’s Consolidated Financial Statements.
In April 2015, the FASB issued ASU 2015-05, “Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement”, which provides guidance about whether a cloud computing arrangement includes software and how to account for the license for software. The new guidance does not change the accounting for a customer’s accounting for service contracts. The adoption of ASU 2015-05 by the Company on January 1, 2017 did not have a material impact on the Company’s financial position, result of operations or cash flows.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective January 1, 2018, with early adoption permitted under certain circumstances. At December 31, 2017, the Company holds $20.1 million of equity investments accounted for under the cost method. The Company will adopt the standard on January 1, 2018. The Company is continuing to evaluate the overall impact of this guidance and currently does not expect the adoption of ASU 2016-01 will have a material effect on our Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which provides comprehensive lease accounting guidance. The standard requires entities to recognize lease assets and liabilities on the balance sheet as well as disclosure of key information about leasing arrangements. ASU 2016-02 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its Consolidated Financial Statements.
In March 2016, the FASB issued ASU 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. The Company adopted ASU 2016-09 on January 1, 2017. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. This had no impact on the Company’s historical results. Also as a result of the adoption, the Company changed its policy election to account for forfeitures as they occur rather than on an estimated basis. The change resulted in the Company reclassifying $0.3 million from additional paid-in capital to retained earnings for the net cumulative-effect adjustment in stock compensation expense related to prior periods.
In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides further clarification on eight cash flow classification issues. The standard further clarifies the classification of several elements of the statement of cash flows with the following being relevant to the company:
·
debt prepayment or debt extinguishment costs are classified as cash outflows from financing activities. This is consistent with the Company’s current accounting policy.
·
contingent consideration payments made three months or less after a business combination are classified as investing activities and those made after that time are classified as financing activities. The Company currently classifies all payments made in a business combination as investing activities. When adopted, the Company will reclassify $1.2 million of cash payments to financing activities for the year ended December 31, 2017.
·
proceeds from the settlement of insurance claims are classified on the basis of the nature of the loss. This is consistent with the Company’s current accounting policy.
·
distributions received from equity method investees are classified using either a cumulative earning or nature of distribution approach. The Company is currently evaluating both methods of adoption.
·
separately identifiable cash flows and application of the predominance principle. This is consistent with the Company’s current accounting policy.
ASU 2016-15 will become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. ASU 2016-15 is to be applied using a retrospective transition method for each period presented. The Company will adopt this standard on January 1, 2018.
In October 2016 the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory”. The new standard eliminates all intra-entity sales of assets other than inventory, the exception under current standards that permits the tax effects of intra-entity asset transfers to be deferred until the transferred asset is sold to a third party or otherwise recovered through use. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new standard will be effective for the Company on January 1, 2018. The Company does not expect the impact of the new standard to be material to its Consolidated Financial Statements.
In November 2016, the FASB issued Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” or ASU 2016-18. The amendments in ASU 2016-18 are intended to reduce diversity in practice related to the classification and presentation of changes in restricted or restricted cash equivalents on the statement of cash flows. The amendments in ASU 2016-18 require that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. At December 31, 2017, the Company held $11.9 million of restricted cash. ASU 2016-18 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2017, with early adoption permitted. The Company will adopt this standard on January 1, 2018. Upon adoption of ASU 2016-18 the restricted cash balance at that time will be included in cash and cash equivalents in the statement of cash flows.
In January 2017, the FASB issued Accounting Standards Update 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” or ASU 2017-01. The amendments in ASU 2017-01 provide a screen to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. Under ASU 2017-01, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business and the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. ASU 2017-01 also narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. ASU 2017-01 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2017, with early adoption permitted. The Company prospectively adopted ASU 2017-01 in the fourth quarter of 2016. The Company expects that the standard will result in accounting for more transactions as asset acquisitions as opposed to business combination.
In January 2017, the FASB issued Accounting Standards Update 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” or ASU 2017-04. The amendments in ASU 2017-04 simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities. Instead, under the amendments in ASU 2017-04, an entity performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but not more than the total amount of goodwill allocated to the reporting unit. ASU 2017-04 is effective for annual reporting periods, including interim periods within those periods, beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard in the third quarter of 2017. Refer to Note 8 for discussion of impairment tests performed during 2017.
In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (“ASU 2017-07”). The new guidance requires the service cost component to be presented separately from the other components of net benefit costs. Service cost will be presented with other employee compensation cost within operations. The other components of net benefit cost, such as interest cost, amortization of prior service cost and gains or losses are required to be presented outside of operations. This is a change from the Company’s current accounting policy in which all components of net periodic pension and postretirement benefit costs are included within operating income. The new guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The guidance should be applied retrospectively for the presentation of the service cost component in the income statement and allows a practical expedient for the estimation basis for applying the retrospective presentation requirements. The Company will adopt ASU 2017-07 on January 1, 2018 and does not expect the impact of the new standard to be material to its Consolidated Financial Statements.
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The standard: (a) expands and refines hedge accounting for both financial and non-financial risk components, (b) aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and (c) includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including the adoption in an interim period. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance related to cash flow and net investment hedges existing at the date of adoption should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The guidance related to presentation and disclosure should be applied prospectively. The Company is currently assessing the impact of ASU 2017-12 on its Consolidated Financial Statements.
In February 2018, the FASB issued ASU 2018-02 “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” (“ASU 2018-02”). The standard gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that were impacted by the 2017 Tax Cuts and Jobs Act. The guidance is effective for all entities for fiscal years beginning after December 31, 2018 and interim periods within those fiscal years. Early adoption is permitted. The guidance may be applied in the period of adoption or retrospectively to each impacted period. The Company has elected to early adopt ASU 2018-02 on its consolidated financial Statements and apply it to the period of adoption. The impact of the adoption results in a $0.8 million reclassification from accumulated other comprehensive income to retained earnings, which is offset by an equivalent valuation allowance, the net impact is zero. |
