Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 10, 2020 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-12593 | |
Entity Registrant Name | ATN INTERNATIONAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-0728886 | |
Entity Address, Address Line One | 500 Cummings Center, Suite 2450 | |
Entity Address, City or Town | Beverly | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 01915 | |
City Area Code | 978 | |
Local Phone Number | 619-1300 | |
Title of 12(b) Security | Common Stock, par value $.01 per share | |
Trading Symbol | ATNI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,968,423 | |
Entity Central Index Key | 0000879585 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 124,798 | $ 161,287 |
Restricted cash | 1,072 | 1,071 |
Short-term investments | 285 | 416 |
Accounts receivable, net of allowances for credit losses of $11.6 million and $12.7 million, respectively | 46,683 | 35,904 |
Inventory, materials and supplies | 4,553 | 5,253 |
Prepayments and other current assets | 66,799 | 24,792 |
Total current assets | 244,190 | 228,723 |
Fixed Assets: | ||
Property, plant and equipment | 1,262,306 | 1,237,555 |
Less accumulated depreciation | (674,449) | (631,974) |
Net fixed assets | 587,857 | 605,581 |
Telecommunication licenses, net | 93,686 | 93,686 |
Goodwill | 60,691 | 60,691 |
Customer relationships, net | 6,619 | 7,441 |
Operating lease right-of-use assets | 63,933 | 68,763 |
Other assets | 54,629 | 65,841 |
Total assets | 1,111,605 | 1,130,726 |
Current Liabilities: | ||
Current portion of long-term debt | 3,750 | 3,750 |
Accounts payable and accrued liabilities | 70,661 | 74,093 |
Dividends payable | 2,723 | 2,721 |
Accrued taxes | 9,039 | 8,517 |
Current portion of operating lease liabilities | 11,313 | 11,406 |
Advance payments and deposits | 20,946 | 19,182 |
Total current liabilities | 118,432 | 119,669 |
Deferred income taxes | 5,476 | 8,680 |
Operating lease liabilities, excluding current portion | 52,420 | 56,164 |
Other liabilities | 56,760 | 57,454 |
Long-term debt, excluding current portion | 80,874 | 82,676 |
Total liabilities | 313,962 | 324,643 |
Commitments and contingencies (Note 13) | ||
ATN International, Inc. Stockholders' Equity: | ||
Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding | ||
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,373,090 and 17,324,858 shares issued, respectively, 15,968,423 and 16,001,937 shares outstanding, respectively | 172 | 172 |
Treasury stock, at cost; 1,404,668 and 1,322,922 shares, respectively | (55,316) | (51,129) |
Additional paid-in capital | 189,785 | 188,471 |
Retained earnings | 540,183 | 541,890 |
Accumulated other comprehensive income | (6,094) | (3,282) |
Total ATN International, Inc. stockholders' equity | 668,730 | 676,122 |
Non-controlling interests | 128,913 | 129,961 |
Total equity | 797,643 | 806,083 |
Total liabilities and equity | $ 1,111,605 | $ 1,130,726 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowances (in dollars) | $ 11.6 | $ 12.7 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,373,090 | 17,324,858 |
Common stock, shares outstanding | 15,968,423 | 16,001,937 |
Treasury stock, shares | 1,404,668 | 1,322,922 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
REVENUE: | ||||
Total Revenue | $ 109,098 | $ 107,721 | $ 220,004 | $ 211,021 |
OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated): | ||||
Termination and access fees | 28,470 | 27,930 | 56,583 | 55,818 |
Engineering and operations | 17,367 | 19,107 | 35,856 | 38,139 |
Sales, marketing and customer service | 9,373 | 9,874 | 18,876 | 19,264 |
General and administrative | 24,752 | 26,590 | 49,676 | 50,405 |
Transaction-related charges | 72 | 28 | 116 | 68 |
Depreciation and amortization | 21,991 | 21,549 | 44,509 | 42,267 |
(Gain) loss on disposition of long-lived assets | 49 | (111) | 64 | 191 |
Total operating expenses | 102,074 | 104,967 | 205,680 | 206,152 |
Income from operations | 7,024 | 2,754 | 14,324 | 4,869 |
OTHER INCOME (EXPENSE) | ||||
Interest income | 66 | 517 | 309 | 1,445 |
Interest expense | (1,574) | (1,263) | (2,730) | (2,544) |
Other income (expense) | 590 | (255) | (2,310) | (68) |
Other income (expense), net | (918) | (1,001) | (4,731) | (1,167) |
INCOME BEFORE INCOME TAXES | 6,106 | 1,753 | 9,593 | 3,702 |
Income tax provisions | (2,258) | (274) | (1,149) | 939 |
NET INCOME | 8,364 | 2,027 | 10,742 | 2,763 |
Net income attributable to non-controlling interests, net of tax expense of $0.2 million, $0.3 million, $0.6 million, $0.7 million, respectively. | (3,618) | (2,883) | (7,009) | (5,198) |
NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS | $ 4,746 | $ (856) | $ 3,733 | $ (2,435) |
NET INCOME (LOSS) PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS: | ||||
Basic (in dollars per share) | $ 0.30 | $ (0.05) | $ 0.23 | $ (0.15) |
Diluted (in dollars per share) | $ 0.30 | $ (0.05) | $ 0.23 | $ (0.15) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
Basic (in shares) | 15,970 | 15,997 | 15,958 | 15,986 |
Diluted (in shares) | 16,004 | 15,997 | 15,993 | 15,986 |
DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK (in dollars per share) | $ 0.17 | $ 0.17 | $ 0.34 | $ 0.34 |
Communication services | ||||
REVENUE: | ||||
Total Revenue | $ 106,240 | $ 105,019 | $ 214,145 | $ 205,633 |
Other | ||||
REVENUE: | ||||
Total Revenue | $ 2,858 | $ 2,702 | $ 5,859 | $ 5,388 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Noncontrolling interest income tax expense | $ 0.2 | $ 0.3 | $ 0.6 | $ 0.7 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income | $ 8,364 | $ 2,027 | $ 10,742 | $ 2,763 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1,782 | 263 | (2,644) | 500 |
Unrealized gain (loss) on derivatives | 8 | (112) | (168) | (173) |
Other comprehensive income (loss), net of tax | 1,790 | 151 | (2,812) | 327 |
Comprehensive income | 10,154 | 2,178 | 7,930 | 3,090 |
Less: Comprehensive income attributable to non-controlling interests | (3,618) | (2,883) | (7,009) | (5,198) |
Comprehensive income (loss) attributable to ATN International, Inc. | $ 6,536 | $ (705) | $ 921 | $ (2,108) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total ATNI Stockholders' Equity | Common Stock | Treasury Stock, at cost | Additional Paid In Capital | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Non-Controlling Interests | Total |
Balance, beginning of period at Dec. 31, 2018 | $ 695,387 | $ 172 | $ (48,547) | $ 181,778 | $ 563,593 | $ (1,609) | $ 127,937 | $ 823,324 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Purchase of shares of common stock | (1,578) | (1,578) | (1,578) | |||||
Stock-based compensation | 3,334 | 3,334 | 3,334 | |||||
Dividends declared on common stock | (5,352) | (5,352) | (3,904) | (9,256) | ||||
Repurchase of non-controlling interests | (861) | (861) | ||||||
Investments made by minority shareholders in consolidated affiliates | 488 | 488 | ||||||
Comprehensive income: | ||||||||
Net income (loss) | (2,435) | (2,435) | 5,198 | 2,763 | ||||
Other comprehensive income | 327 | 327 | 327 | |||||
Comprehensive income | (2,108) | 5,198 | 3,090 | |||||
Balance, end of period at Jun. 30, 2019 | 689,683 | 172 | (50,125) | 185,112 | 555,806 | (1,282) | 128,858 | 818,541 |
Balance, beginning of period at Mar. 31, 2019 | 691,021 | 172 | (50,116) | 183,079 | 559,319 | (1,433) | 128,963 | 819,984 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Purchase of shares of common stock | (9) | (9) | (9) | |||||
Stock-based compensation | 2,033 | 2,033 | 2,033 | |||||
Dividends declared on common stock | (2,657) | (2,657) | (2,348) | (5,005) | ||||
Repurchase of non-controlling interests | (640) | (640) | ||||||
Comprehensive income: | ||||||||
Net income (loss) | (856) | (856) | 2,883 | 2,027 | ||||
Other comprehensive income | 151 | 151 | 151 | |||||
Comprehensive income | (705) | 2,883 | 2,178 | |||||
Balance, end of period at Jun. 30, 2019 | 689,683 | 172 | (50,125) | 185,112 | 555,806 | (1,282) | 128,858 | 818,541 |
Balance, beginning of period at Dec. 31, 2019 | 676,122 | 172 | (51,129) | 188,471 | 541,890 | (3,282) | 129,961 | 806,083 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Purchase of shares of common stock | (4,187) | (4,187) | (4,187) | |||||
Stock-based compensation | 2,614 | 2,614 | 107 | 2,721 | ||||
Dividends declared on common stock | (5,440) | (5,440) | (5,553) | (10,993) | ||||
Repurchase of non-controlling interests | (1,300) | (1,300) | (2,611) | (3,911) | ||||
Comprehensive income: | ||||||||
Net income (loss) | 3,733 | 3,733 | 7,009 | 10,742 | ||||
Other comprehensive income | (2,812) | (2,812) | (2,812) | |||||
Comprehensive income | 921 | 7,009 | 7,930 | |||||
Balance, end of period at Jun. 30, 2020 | 668,730 | 172 | (55,316) | 189,785 | 540,183 | (6,094) | 128,913 | 797,643 |
Balance, beginning of period at Mar. 31, 2020 | 665,758 | 172 | (54,358) | 189,667 | 538,161 | (7,884) | 127,321 | 793,079 |
Increase (Decrease) in Stockholders' Equity | ||||||||
Purchase of shares of common stock | (958) | (958) | (958) | |||||
Stock-based compensation | 1,418 | 1,418 | 131 | 1,549 | ||||
Dividends declared on common stock | (2,724) | (2,724) | (1,321) | (4,045) | ||||
Repurchase of non-controlling interests | (1,300) | (1,300) | (836) | (2,136) | ||||
Comprehensive income: | ||||||||
Net income (loss) | 4,746 | 4,746 | 3,618 | 8,364 | ||||
Other comprehensive income | 1,790 | 1,790 | 1,790 | |||||
Comprehensive income | 6,536 | 3,618 | 10,154 | |||||
Balance, end of period at Jun. 30, 2020 | $ 668,730 | $ 172 | $ (55,316) | $ 189,785 | $ 540,183 | $ (6,094) | $ 128,913 | $ 797,643 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY | ||||
Purchase of shares of common stock | 17,854 | 151 | 80,746 | 28,393 |
Dividends declared on common stock (dollars per per share) | $ 0.17 | $ 0.17 | $ 0.34 | $ 0.34 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 10,742 | $ 2,763 |
Adjustments to reconcile net income to net cash flows provided by operating activities: | ||
Depreciation and amortization | 44,509 | 42,267 |
Provision for doubtful accounts | 3,397 | 2,736 |
Amortization of debt discount and debt issuance costs | 260 | 290 |
Stock-based compensation | 2,721 | 3,334 |
Deferred income taxes | (3,204) | (4,574) |
Loss on equity investments | 1,412 | |
Loss on disposition of long-lived assets | 64 | 191 |
Unrealized loss on foreign currency | 780 | (160) |
Other non-cash activity | 11 | |
Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions: | ||
Accounts receivable | (14,475) | (14,886) |
Materials and supplies, prepayments, and other current assets | (7,313) | (9,130) |
Prepaid income taxes | 399 | 5,158 |
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities | 2,497 | 10,570 |
Accrued taxes | (1,838) | (22,011) |
Other assets | 993 | 251 |
Other liabilities | (569) | 1,712 |
Net cash provided by operating activities | 40,375 | 18,522 |
Cash flows from investing activities: | ||
Capital expenditures | (31,965) | (35,396) |
Purchase intangible assets, including deposits | (20,000) | |
Purchases of strategic investments | (2,768) | (10,000) |
Purchase of short-term investments | (5,028) | |
Proceeds from sale of short-term investments | 141 | |
Net cash used in investing activities | (54,733) | (50,283) |
Cash flows from financing activities: | ||
Dividends paid on common stock | (5,443) | (5,439) |
Distributions to non-controlling interests | (5,541) | (3,878) |
Payment of debt issuance costs | (1,059) | (1,340) |
Principal repayments of term loan | (1,876) | (1,887) |
Purchases of common stock - share based compensation | (1,733) | (1,578) |
Purchases of common stock - share buyback | (2,449) | |
Repurchases of non-controlling interests | (3,911) | (861) |
Investments made by minority shareholders in consolidated affiliates | 488 | |
Net cash used in financing activities | (22,012) | (14,495) |
Effect of foreign currency exchange rates on cash and cash equivalents | (118) | 31 |
Net change in cash, cash equivalents, and restricted cash | (36,488) | (46,225) |
Total cash, cash equivalents, and restricted cash, beginning of period | 162,358 | 192,907 |
Total cash, cash equivalents, and restricted cash, end of period | 125,870 | 146,682 |
Noncash investing activity: | ||
Purchases of property, plant and equipment included in accounts payable and accrued expenses | $ 7,715 | $ 6,356 |
ORGANIZATION AND BUSINESS OPERA
ORGANIZATION AND BUSINESS OPERATIONS | 6 Months Ended |
Jun. 30, 2020 | |
ORGANIZATION AND BUSINESS OPERATIONS | |
ORGANIZATION AND BUSINESS OPERATIONS | 1. ORGANIZATION AND BUSINESS OPERATIONS The Company is a holding company that, directly and through its subsidiaries, owns and operates telecommunications businesses in North America, the Caribbean and Bermuda as well as a renewable energy business in India. The Company was incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than half of its operations to stockholders in 1998. Since that time, has engaged in many strategic acquisitions and investments to help grow its operations, using the generated its established operating units to in its existing businesses , to make strategic investments in additional businesses, and to return cash to the Company’s investors. The Company has built, and seeks to maintain, resources to support its operating subsidiaries and to improve their customer acquisition, retention, and satisfaction while maintaining optimal operating efficiencies. looks businesses that opportunities or potential strategic benefits, but additional capital investment in order to execute on their business plans. holds controlling positions to of its investments and non-controlling positions in others. frequently product and development component in addition to the prospect of generating on its invested capital. The Company has identified three operating segments to manage and review its operations and to facilitate investor presentations of its results. These three operating segments are as follows: ● International Telecom. The Company’s international telecom segment offers services to other telecom providers (“Carrier Services”), such as international long-distance, roaming from other carriers’ customers traveling into the Company’s retail markets, and transport and access services, as well as fixed internet and voice services and retail mobility services to customers in Bermuda, Guyana and the US Virgin Islands. The Company also offers fixed video services in Bermuda, the Cayman Islands, and the US Virgin Islands. In addition, the international telecom segment offers managed information technology services to enterprise customers. ● US Telecom. In the United States, the Company offers Carrier Services, including wholesale roaming services, site maintenance and the leasing of critical network infrastructure such as towers and transport facilities, as well as fixed and mobile communications services to the Company’s retail and enterprise customers in the Southwestern United States. ● Renewable Energy. In India, the Company provides distributed generation solar power to corporate, utility and municipal customers. The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments in which the Company reports its revenue and the markets it served as of June 30, 2020: Segment Services Markets Tradenames International Telecom Mobility Bermuda, Guyana, US Virgin Islands GTT+, One, Viya Fixed Bermuda, Cayman Islands, Guyana, US Virgin Islands GTT+, One, Logic, Viya Carrier Services Bermuda, Guyana, US Virgin Islands GTT+, One, Viya Managed Services Bermuda, Cayman Islands, US Virgin Islands Fireminds, One, Logic, Viya US Telecom Mobility United States (rural markets) Commnet, Choice, Choice NTUA Wireless, WestNet, Geoverse Fixed United States Commnet, Choice, Choice NTUA Wireless, Deploycom, WestNet Carrier Services United States Commnet, Essextel Managed Services United States Choice Renewable Energy Solar India Vibrant Energy The Company actively evaluates potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, that meet its return on investment and other criteria. In addition, the Company considers non-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-term growth potential for the Company, either individually, or as research and development businesses that can support the Company’s operating subsidiaries in new product and service development and offerings. The Company provides management, technical, financial, regulatory, and marketing services to its subsidiaries and typically receives a management fee equal to a percentage of their revenues which is eliminated in consolidation. For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Note 12 to the Consolidated Financial Statements included in this Report. COVID-19 In March 2020, the World Health Organization declared a novel strain of coronavirus, now referred to as COVID-19, as a pandemic, and the virus has now spread globally to over 200 countries and territories, including the United States and other countries in which the Company has substantial operations. The Company is continuing to monitor and assess the effects of the COVID-19 pandemic on its commercial operations, the safety of its employees and their families, its sales force and customers and any potential impact on the Company’s revenue in 2020. The preparation of the condensed consolidated financial statements requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis the Company evaluates estimates, judgments and methodologies. The Company assessed certain accounting matters and estimates that generally require consideration of forecasted financial information in context with the information and estimates reasonably available to the Company and the unknown future impacts COVID-19 as of June 30, 2020 and through the date of this report. The accounting matters assessed included, but were not limited to, the Company’s allowance for credit losses, the carrying value of the Company’s goodwill and other long-lived assets, financial assets, valuation allowances for tax assets and revenue recognition. The Company assessed the impacts of COVID-19 on the consolidated financial statements as of and for the quarter ended June 30, 2020, in particular the impacts on lines of revenues, operating expenses as well as the deferral and savings on other operating expenses and capital expenditures. During the quarter, while the Company experienced strengthened demand for its broadband services in several of its markets, the Company experienced a reduction in roaming revenue, mobile revenue and handset sales within the Company’s International Telecom segment due to pandemic-related travel and stay-at-home restrictions. The Company also recognized declines in its communications revenue as a result of its granting of As a result, the Company’s assessment did not indicate that there was a material impact to the Company’s consolidated financial statements as of and for the quarter ended June 30, 2020. However, the Company’s future assessments of the impacts of COVID-19 for the remainder of the year or its ability to realize continued operational expense savings, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods. The extent to which the COVID-19 pandemic ultimately impacts the Company’s business, financial condition, results of operations, cash flows, and liquidity may differ from the Company management’s current estimates due to inherent uncertainties regarding the duration and further spread of the outbreak, its severity, actions taken to contain the virus or treat its impact, and how quickly and to what extent economic conditions normalize and more customary operating conditions resume. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 2. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial information included herein is unaudited; however, the Company believes such information and the disclosures herein are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial position and results of operations for the periods described therein. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Results of interim periods may not be indicative of results for the full year. These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020, The condensed consolidated financial statements include the accounts of the Company, its subsidiaries in which the Company holds controlling interests 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. Presentation of Revenue Effective January 1, 2020, the Company changed its presentation of revenue in the Condensed Consolidated Statement of Operations and in the Selected Segment Financial Information tables. This change is intended to better align the Company’s financial performance with the views of management and industry competitors, and to facilitate a more constructive dialogue with the investment community. Specifically, the previously disclosed revenue categories of wireless and wireline revenue are being represented as mobility, fixed and Carrier Services revenue within the Company’s segment information and are included within communications services revenue within its Statements of Operations. Managed services revenue, which was previously a component of wireline revenue, along with revenue from the Company’s Renewable Energy operations, is now included in other revenue. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequently issued related updates (“ASU 2016-02”), which provide 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 became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company adopted ASC 2016-02 on January 1, 2019 utilizing the optional transition method with a cumulative adjustment on the date of adoption and not adjusting prior periods. Refer to Note 4 of the Condensed 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. The Company adopted this standard on January 1, 2019. There was not a material impact to the Company’s Consolidated Financial Statements upon adoption. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company adopted ASU 2016-13 using the modified retrospective approach on its January 1, 2020 effective date. Refer to Note 3 of the Condensed Consolidated Financial Statements in this Report. |
REVENUE RECOGNITION AND RECEIVA
REVENUE RECOGNITION AND RECEIVABLES | 6 Months Ended |
Jun. 30, 2020 | |
REVENUE RECOGNITION AND RECEIVABLES | |
REVENUE RECOGNITION AND RECEIVABLES | 3. REVENUE RECOGNITION AND RECEIVABLES Contract Assets and Liabilities The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. In these contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s balance sheets. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on the Company’s balance sheets. In July 2019 and August 2020, the Company entered into a Network Build and Maintenance Agreement (the “FirstNet Agreement”) and First Amendment to that agreement with AT&T Mobility, LLC (“AT&T”), respectively, to build a portion of AT&T’s network for the First Responder Network Authority (“FirstNet”) as well as a commercial wireless network in or near the Company’s current operating area in the Southwestern United States (the “FirstNet Transaction”). The transaction includes construction and service performance obligations. The Company allocated the transaction price of the FirstNet Agreement to each performance obligation based on the relative standalone selling price of each performance obligation in the contract. The standalone selling price is the estimated price the Company would charge for the good or service in a separate transaction with similar customers in similar circumstances. The Company has certain wholesale roaming agreements that contain stand ready performance obligations and management allocates transaction value to performance obligations based on the standalone selling price. The standalone selling price is the estimated price the Company would charge for the good or service with similar customers in similar circumstances. Management determined the performance obligations were obligations to make the service continuously available and will recognize revenue evenly over the service period. Contract assets and liabilities consisted of the following (in thousands): June 30, 2020 December 31, 2019 $ Change % Change Contract asset – current $ 2,217 $ 2,413 $ (196) (8) % Contract asset – noncurrent 651 905 (254) (28) % Contract liability – current (13,598) (15,044) 1,446 10 % Contract liability – noncurrent (5,193) (5,450) 257 5 % Net contract liability $ (15,923) $ (17,176) $ 1,253 7 % The contract asset – current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet. The decrease in the Company’s net contract liability was due to the timing of customer prepayments, contract billings, and the FirstNet Transaction. During the six months ended June 30, 2020, the Company recognized revenue of $13.2 million related to its December 31, 2019 contract liability. During the three and six months ended June 30, 2020 the Company amortized $0.6 million and $1.3 million, respectively, of the December 31, 2019 contract asset into revenue. The Company did not recognize any revenue in the six months ended June 30, 2020 related to performance obligations that were satisfied or partially satisfied in previous periods. Contract Acquisition Costs The June 30, 2020 balance sheet includes current contract acquisition costs of $1.7 million in prepayments and other current assets and long term contract acquisition costs of $1.1 million in other assets. During the three and six months ended June 30, 2020, the Company amortized $0.5 million and $1.0 million, respectively, of contract acquisition cost. Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts, which include a promotional discount, and the Company’s construction and service contracts. The transaction price allocated to unsatisfied performance obligations was $232 million and $241 million at June 30, 2020 and December 31, 2019, respectively. The Company expects to satisfy the majority of the remaining performance obligations and recognize the transaction price within 24 months and the remainder thereafter. The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations. However, the Company omits these contracts from its disclosure by applying the right to invoice , one year or less, and wholly unsatisfied performance obligation practical expedients. Disaggregation The Company's revenue is presented on a disaggregated basis in Note 12 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision makers for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from communication services and other revenue. Communication Services revenue is further disaggregated into mobility, fixed, Carrier Services, and other services. Other revenue is further disaggregated into renewable energy and managed services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Receivables The Company adopted ASU 2016-13 on January 1, 2020. The standard requires that certain financial assets be measured at amortized cost reflecting an allowance for estimated credit losses expected to occur over the life of the assets. The estimate of credit losses is based on all relevant information including historical information, current conditions, and reasonable and supportable forecasts that affect the collectability of the amounts. The Company adopted ASU 2016-13 using the modified retrospective approach, however, there was no impact of adoption on retained earnings. The standard impacted the Company’s calculation of credit losses from trade receivables. Historically, the Company recorded credit losses subsequent to the initial revenue transaction. After adoption of ASU 2016-13, the Company will record an estimate of future credit losses in conjunction with the revenue transaction based on the information available including historical experience and management’s expectations of future conditions. Those estimates will be updated as additional information becomes available. Our allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. There is no significant impact to the Company’s operating results for the current period due to the adoption of this standard. million. At January 1, 2020 the Company had gross accounts receivable of $48.6 million and an allowance for credit losses of $12.7 million. The Company monitors receivables through the use of historical operating data adjusted for expectation of future performance as appropriate. Activity in the allowance for credit losses is below: Six months ended June 30, 2020 Balance at January 1, 2020 $ 12,724 Current period provision for expected losses 3,397 Write-offs charged against the allowance (4,875) Recoveries collected 354 Balance at June 30, 2020 $ 11,600 |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
LEASES | 4. LEASES The Company adopted ASU 2016-02 on January 1, 2019, utilizing the optional transition method with a cumulative adjustment on the date of adoption. Under this approach, the guidance was applied to leases that had commenced as of January 1, 2019 with a cumulative effect adjustment as of that date and prior periods were not adjusted. Upon adoption, the Company recognized an operating lease right-of-use (“ROU”) asset of $70.8 million, a short-term lease liability of $8.2 million, and a long-term lease liability of $61.2 million. The adoption had no impact on retained earnings or other components of equity. The Company elected the package of practical expedients . Under the package of practical expedients, for existing leases, the Company does not reassess: i) whether the arrangement contains a lease; ii) lease classification and; iii) initial direct costs. The Company has operating and financing leases for towers, land, corporate offices, retail facilities, and data transport capacity. The lease terms are generally between three and ten years , some of which include additional renewal options. Supplemental lease information The components of lease expense were as follows (in thousands): Three months ended June 30, 2020 Three months ended June 30, 2019 Six months ended June 30, 2020 Six months ended June 30, 2019 Operating lease cost: Operating lease cost $ 4,029 $ 4,151 $ 8,076 $ 7,667 Short-term lease cost 729 867 1,271 1,578 Variable lease cost 1,540 288 2,343 1,250 Total operating lease cost $ 6,298 $ 5,306 $ 11,690 $ 10,495 Finance lease cost: Amortization of right-of-use asset $ 522 $ 586 $ 1,094 $ 1,179 Variable costs 186 262 458 558 Total finance lease cost $ 708 $ 848 $ 1,552 $ 1,737 During the six months ended June 30, 2020 and 2019, the Company paid $7.2 million and $3.8 million, respectively, related to lease liabilities. During the six months ended June 30, 2020 and 2019 the Company recorded million, respectively, of lease liabilities arising from ROU assets. At June 30, 2020, finance leases with a cost of , plant and equipment. At December 31, 2019, finance leases with a cost of The weighted average remaining lease terms and discount rates as of June 30, 2020 and December 31, 2019 are noted in the table below: June 30, 2020 December 31, 2019 Weighted-average remaining lease term Operating leases 6.2 years 6.5 years Financing leases 11.8 years 11.7 years Weighted-average discount rate Operating leases 5.0% 5.0% Financing leases n/a n/a Maturities of lease liabilities as of June 30, 2020 were as follows (in thousands): Operating Leases 2020 (excluding the six months ended June 30, 2020) $ 7,659 2021 14,279 2022 13,019 2023 10,737 2024 9,638 Thereafter 19,329 Total lease payments 74,661 Less imputed interest (10,928) Total $ 63,733 Maturities of lease liabilities as of December 31, 2019 were as follows (in thousands): Operating Leases 2020 $ 14,526 2021 13,714 2022 12,787 2023 10,713 2024 9,671 Thereafter 18,355 Total lease payments 79,766 Less imputed interest (12,195) Total $ 67,571 As of June 30, 2020, the Company did not have any material operating or finance leases that have not yet commenced. |
USE OF ESTIMATES
USE OF ESTIMATES | 6 Months Ended |
Jun. 30, 2020 | |
USE OF ESTIMATES | |
USE OF ESTIMATES | 5. 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 credit losses, 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, assessing the impairment of assets, revenue, and income taxes. Actual results could differ significantly from those estimates. See Note 1 for a discussion of the impact of COVID-19 on the use of these estimates. |
FAIR VALUE MEASUREMENTS AND INV
FAIR VALUE MEASUREMENTS AND INVESTMENTS | 6 Months Ended |
Jun. 30, 2020 | |
FAIR VALUE MEASUREMENTS AND INVESTMENTS | |
FAIR VALUE MEASUREMENTS AND INVESTMENTS | 6. FAIR VALUE MEASUREMENTS AND INVESTMENTS 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 June 30, 2020 and December 31, 2019 are summarized as follows (in thousands): June 30, 2020 Significant Other Quoted Prices in Observable Unobservable Active Markets Inputs Inputs Description (Level 1) (Level 2) (Level 3) Total Certificates of deposit $ — $ 380 $ — $ 380 Money market funds 2,410 — — 2,410 Short term investments 285 — — 285 Other investments — — 13,313 13,313 Interest rate swap — (224) — (224) Total assets and liabilities measured at fair value $ 2,695 $ 156 $ 13,313 $ 16,164 December 31, 2019 Significant Other Quoted Prices in Observable Unobservable Active Markets Inputs Inputs Description (Level 1) (Level 2) (Level 3) Total Certificates of deposit $ — $ 380 $ — $ 380 Money market funds 2,329 — — 2,329 Short term investments 416 — — 416 Other investments — — 12,700 12,700 Interest rate swap — (56) — (56) Total assets and liabilities measured at fair value $ 2,745 $ 324 $ 12,700 $ 15,769 Certificate of Deposit As of June 30, 2020 and December 31, 2019, this asset class consisted of a time deposit at a financial institution denominated in US 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 June 30, 2020 and December 31, 2019, this asset class consisted of a money market portfolio that comprises Federal government and US 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 June 30, 2020 and December 31, 2019, these asset classes consisted of short term foreign and US 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. The Company held equity securities with a fair value of $0.1 million and $0.2 million at June 30, 2020 and December 31, 2019, respectively. Net income includes $0.1 million of losses for the three and six months ended June 30, 2020. No gain or loss was recorded in the three and six months ended June 30, 2019. Other Investments In the first quarter of 2019, the Company made an investment in an early-stage venture through the acquisition of a convertible debt instrument. The Company elected to fair value the investment upon acquisition. At June 30, 2020, the fair value of the investment was $10.9 million. During the three and six months ended June 30, 2020, the Company recorded $0.3 million and $0.7 million, respectively, of income from changes in the fair value of the investment. The asset is classified within Level 3 of the fair value hierarchy. The Company used the income approach to fair value the investment and the inputs consisted of a discount rate calculated based on the investment attributes and the probability of potential future scenarios occurring. In the third quarter of 2019, the Company made a $14.4 million investment in a renewable energy partnership. The Company received an investment tax credit of $12.0 million from its investment and will receive future cash distributions from the partnership’s operations. The Company elected the deferral method to account for the credit and elected the fair value option to account for the equity investment. The Company’s investment had a fair value of $2.4 million at June 30, 2020, and $2.5 million at December 31, 2019. The asset is classified within Level 3 of the fair value hierarchy. The Company used the income approach to fair value the investment and the inputs consisted of a discount rate and future cash flows calculated based on the investment attributes. The Company also holds investments in equity securities consisting of non-controlling investments in privately held companies. These investments, over which the Company does not have the ability to exercise significant influence, are without readily determinable fair values. The investments are measured at cost, less any impairment, adjusted for observable price changes of similar investments of the same issuer. Fair value is not estimated for these investments 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 investments was $2.1 million at June 30, 2020 and December 31, 2019. These investments are included with other assets on the consolidated balance sheets. Equity Method Investments In the first quarter of 2020, the Company increased its ownership in one investment of a privately held company to approximately 24% of the outstanding voting equity through an additional $2.8 million investment. With this investment the Company obtained the ability to exercise significant influence over the investee and began accounting for the investment under the equity method of accounting recording its share of the investee’s earnings or losses. The carrying value of the investment was million at June 30, 2020. The value increased million. The investment is included with other assets on the consolidated balance sheets. 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. The fair value of long-term debt is estimated using Level 2 inputs. At June 30, 2020, the fair value of long-term debt, including the current portion, was million. At December 31, 2019, the fair value of long-term debt, including the current portion, was |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2020 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 7. LONG-TERM DEBT On April 10, 2019, the Company entered into a credit facility, with CoBank, ACB and a syndicate of other lenders (the “2019 Credit Facility”). The 2019 Credit Facility provides for a $200 million revolving credit facility that includes up to (i) $75 million for standby or trade letters of credit and (ii) $10 million under a swingline sub-facility. Approximately $16.0 million of performance and standby letters of credit have been issued and remain outstanding and undrawn as of June 30, 2020. The 2019 Credit Facility matures on April 10, 2024. Amounts borrowed under the 2019 Credit Facility bear interest at a rate equal to, at the Company’s option, either (i) the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging between 1.25% to 2.25% or (ii) a base rate plus an applicable margin ranging from 0.25% to 1.25%. Swingline loans bear interest at the base rate plus the applicable margin for base rate loans. The base rate is equal to the higher of (i) 1.00% plus the higher of (x) the LIBOR for an interest period of one month and (y) the LIBOR for an interest period of one week; (ii) the Federal Funds Effective Rate (as defined in the 2019 Credit Facility) plus 0.50% per annum; and (iii) the Prime Rate (as defined in the 2019 Credit Facility). The applicable margin is determined based on the Total Net Leverage Ratio (as defined in the 2019 Credit Facility). Under the terms of the 2019 Credit Facility, we must also pay a fee ranging from 0.150% to 0.375% of the average daily unused portion of the 2019 Credit Facility over each calendar quarter. The 2019 Credit Facility contains customary representations, warranties and covenants, including a financial covenant that imposes a maximum ratio of indebtedness to EBITDA as well as covenants limiting additional indebtedness, liens, guaranties, mergers and consolidations, substantial asset sales, investments and loans, sale and leasebacks, transactions with affiliates and fundamental changes. The Company’s investments in “unrestricted” subsidiaries and certain dividend payments to the Company’s stockholders are not limited unless the Total Net Leverage Ratio is equal to or greater than 1.75 to 1.0. The Total Net Leverage Ratio is measured each fiscal quarter and is required to be less than or equal to 2.75 to 1.0. In the event of a Qualifying Acquisition (as defined in the 2019 Credit Facility), the Total Net Leverage Ratio increases to 3.25 to 1.0 for the subsequent three fiscal quarters. The 2019 Credit Facility also provides for the incurrence by the Company of incremental term loan facilities, when combined with increases to revolving loan commitments, in an aggregate amount not to exceed $200 million (the “Accordion”). Amounts borrowed under the Accordion are also subject to proforma compliance with a net leverage ratio financial covenant. As of June 30, 2020, the Company was in compliance with all of the financial covenants, had no outstanding borrowings and, net of the $16.0 million of outstanding performance letters of credit, had $184.0 million of availability under the 2019 Credit Facility. FirstNet Receivables Credit Facility On March 26, 2020, Commnet Finance, a wholly owned subsidiary of Commnet Wireless, entered into a receivables credit facility with the Company, Commnet Wireless, and CoBank, ACB (the “Receivables Credit Facility”). The Receivables Credit Facility provides for a senior secured delayed draw term loan in an aggregate principal amount of up to $75 million and the proceeds may be used to acquire certain receivables from Commnet Wireless. The receivables to be financed and sold under the Receivables Credit Facility, which provide the loan security, relate to the obligations of AT&T under the FirstNet Agreement. The delayed draw period will expire on December 31, 2021. The maturity date for each loan will be set by CoBank and will match the weighted average maturity of the receivables financed. Interest on the loans accrues at a rate based on (i) the LIBOR plus 2.50%, (ii) a base rate plus 1.50% or (iii) a fixed annual interest rate to be quoted by CoBank The Receivables Credit Facility contains customary events of termination, representations and warranties, affirmative and negative covenants and events of default customary for facilities of this type. Viya Debt The Company, and certain of its subsidiaries, have entered into a $60.0 million loan agreement (the “Viya Debt”) with Rural Telephone Finance Cooperative (“RTFC”). The Viya Debt agreement contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guaranties, sale of assets and liens) and a financial covenant that limits the maximum ratio of indebtedness to annual operating cash flow to 3.5 to 1.0 (the “Net Leverage Ratio”). This covenant is tested on an annual basis at the end of each fiscal year. Interest is paid quarterly at a fixed rate of 4.0% and principal repayment is not required until maturity on July 1, 2026. Prepayment of the Viya Debt may be subject to a fee under certain circumstances. The debt is secured by certain assets of the Company’s Viya subsidiaries and is guaranteed by the Company. With RTFC’s consent, the Company funded the restoration of Viya’s network, following the Hurricanes, through an intercompany loan arrangement with a $75.0 million limit. The Company was not in compliance with the Net Leverage Ratio covenant for the year ending December 31, 2019 and received a waiver from the RTFC on February 26, 2020. The Company paid a fee of $0.9 million in 2016 to lock in the interest rate at 4% per annum over the term of the Viya Debt. The fee was recorded as a reduction to the Viya Debt carrying amount and is being amortized over the life of the loan. As of June 30, 2020, $60.0 million of the Viya Debt remained outstanding and $0.6 million of the rate lock fee was unamortized. One Communications Debt The Company has an outstanding loan from HSBC Bank Bermuda Limited (the “One Communications Debt”) which is scheduled to mature on May 22, 2022 and bears interest at the one-month LIBOR plus a margin ranging between 2.5% to 2.75%, paid quarterly. The One Communications Debt contains customary representations, warranties and affirmative and negative covenants (including limitations on additional debt, guarantees, sale of assets and liens) and financial covenants, tested annually as of and for the twelve months ended December 31st, that limit the ratio of tangible net worth to long term debt and total net debt to EBITDA and require a minimum debt service coverage ratio (as defined in the One Communications Debt agreement). The Company was in compliance with its covenants as of December 31, 2019. As a condition of the One Communications Debt, the Company was required to enter into a hedging arrangement with a notional amount equal to at least 30% of the outstanding loan balance and a term corresponding to the term of the One Communications Debt. As such, the Company entered into an amortizing interest rate swap that has been designated as a cash flow hedge, which had an original notional amount of $11.0 million, has an interest rate of 1.874%, and expires in March 2022. As of June 30, 2020, the swap had an unamortized notional amount of $7.9 million. The Company capitalized $0.3 million of fees associated with the One Communications Debt which are being amortized over the life of the debt and are recorded as a reduction to the debt carrying amount. As of June 30, 2020, $25.3 million of the One Communications Debt was outstanding and $0.1 million of the capitalized fees remained unamortized. |
GOVERNMENT GRANTS
GOVERNMENT GRANTS | 6 Months Ended |
Jun. 30, 2020 | |
GOVERNMENT GRANTS | |
GOVERNMENT GRANTS | 8. GOVERNMENT GRANTS The Federal Universal Service Fund (“USF”) is a subsidy program managed by the Federal Communications Commission (“FCC”). USF funds are disbursed to telecommunication providers through programs: the High Cost Program; Low Income Program (“Lifeline Program”); Schools and Libraries Program (“E-Rate Program”); and Rural Health Care Program. The Company participates in the High Cost Program, Lifeline Program, E-Rate Programs, and Rural Health Care Support Program as further described below. All of these funding programs are subject to certain operational and reporting compliance requirements. The Company believes it is in compliance with all applicable requirements. During the three and six month periods ended June 30, 2020, the Company recorded $4.1 million and $8.2 million, respectively, of revenue from the High Cost Program in its International Telecom segment. During the three and six month periods ended June 30, 2019, the Company recorded million, respectively, of revenue from the High Cost Program in its International Telecom segment. Also, during the three and six month periods ended June 30, 2020, the Company recorded million, respectively, of High Cost Program revenue in its US Telecom segment. During the three and six month periods ended June 30, 2019, the Company recorded million, respectively, of High Cost Program revenue in its US Telecom segment. The Company is subject to certain operational, reporting and construction requirements as a result of this funding, and the Company believes that it is in compliance with all of these requirements. In August 2018, the Company was awarded $79.9 million over 10 years under the Connect America Fund Phase II Auction. The Company is required to provide fixed broadband and voice services to certain eligible areas in the United States. The Company is subject to operational and reporting requirements under the program and the Company expects to incur additional capital expenditures to comply with these requirements. The Company determined the award is a revenue grant, and as a result the Company will record the funding as revenue upon receipt. During the three and six month periods ended June 30, 2020, the Company recorded million, respectively, from the Connect America Fund Phase II program. During the three and six months ended June 30, 2019, the Company recorded Once these projects are constructed, the Company is obligated to provide service to the E-Rate Program participants. The Company receives funds upon construction completion and is in various stages of constructing the networks. During 2019, the Company received million offset operating activities. The Company expects to meet all requirements associated with these grants. The Company also receives funding to provide discounted telecommunication services to eligible customers under the E-Rate Program, Lifeline Program, and Rural Health Care Support Program. During the three and six months ended June 30, 2020, the Company recorded revenue of million, respectively, in the aggregate from these programs. During the three and six months ended June 30, 2019, the Company recorded revenue of million, respectively, in the aggregate from these programs. The Company is subject to certain operational and reporting requirements under the above mentioned programs and it believes that it is in compliance with all of these requirements. Tribal Bidding Credit As part of the broadcast television spectrum incentive auction, the FCC implemented a tribal lands bidding credit to encourage deployment of wireless services utilizing 600 MHz spectrum on the lands of federally recognized tribes. The Company received a bidding credit of $7.4 million under this program in 2018. A portion of these funds will be used to offset network capital costs and a portion will be used to offset the costs of supporting the networks. The Company’s current estimate is that it will use $5.4 million to offset capital costs, consequently reducing future depreciation expense and $2.0 million to offset the cost of supporting the network which will reduce future operating expense. The credits are subject to certain requirements, including deploying service by January 2021 and meeting minimum coverage metrics. If the requirements are not met the funds may be subject to claw back provisions. The Company currently expects to comply with all applicable requirements related to these funds. |
RETIREMENT PLANS
RETIREMENT PLANS | 6 Months Ended |
Jun. 30, 2020 | |
RETIREMENT PLANS | |
RETIREMENT PLANS | 9. RETIREMENT PLANS The Company has noncontributory defined benefit pension and noncontributory defined medical, dental, vision, and life benefit plans for eligible employees in its International Telecom segment who meet certain eligibility criteria. The Company recorded the net periodic benefit cost identified below (in thousands): Three months ended June 30, 2020 June 30, 2019 Pension benefits Postretirement benefits Pension benefits Postretirement benefits Operating expense Service cost $ 423 $ 32 $ 447 $ 37 Non-operating expense Interest cost 879 45 841 40 Expected return on plan assets (1,158) — (1,263) — Actuarial (gain)/ loss (7) (15) 7 (17) Net periodic pension expense $ 137 $ 62 $ 32 $ 60 Six months ended June 30, 2020 June 30, 2019 Pension benefits Postretirement benefits Pension benefits Postretirement benefits Operating expense Service cost $ 846 $ 64 $ 895 $ 74 Non-operating expense Interest cost 1,758 90 1,682 80 Expected return on plan assets (2,316) — (2,527) — Actuarial (gain)/ loss (14) (30) 15 (34) Net periodic pension expense $ 274 $ 124 $ 65 $ 120 In the first quarter of 2020, the Company began the process of winding up one of its pension plans. At December 31, 2019 this plan had assets of $15.1 million and a projected benefit obligation of $15.6 million. The Company is not required to make contributions to its pension and postretirement benefit plans. However, the Company periodically evaluates whether to make discretionary contributions. The Company funds its postretirement benefit plans as claims are made. During the six months ended June 30, 2020 the Company contributed $0.7 million to its pension benefit plans. The Company did not make any contributions to its pension benefit plans during the six months ended June 30, 2019. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2020 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES The Company’s effective tax rate for the three months ended June 30, 2020 and 2019 was (37.0%) and (15.6%), respectively. On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act, among other things, allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The effective tax rate for the three months ended June 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a) and (iii) discrete items including a $2.9 million benefit from the reversal of an unrecognized tax position due to statute of limitations expiration and a $0.5 million expense for interest on unrecognized tax positions. The effective tax rate for the three months ended June 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the US Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) a $1.1 million benefit from the reversal of unrecognized tax positions due to statute of limitations expiration, net interest expense on unrecognized tax positions and (ii) a $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure. The Company’s effective tax rate for the six months ended June 30, 2020 and 2019 was (12.0%) and 25.4%, respectively. The effective tax rate for the six months ended June 30, 2020 was primarily impacted by the following items: (i) the remeasurement of a forecasted domestic loss at a higher tax rate due to carryback provisions as provided by the CARES Act, (ii) the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), and (iii) discrete items including a $2.9 million benefit from the reversal of an unrecognized tax position due to statute of limitations expiration, a $1.0 million expense for interest on unrecognized tax positions, a $0.4 million expense to record a valuation allowance against an investment write-down which cannot be benefitted for tax purposes, and a $0.3 million benefit (net) related to the remeasurement of existing losses and temporary differences at a higher tax rate due to carryback provisions as provided by the CARES Act. The effective tax rate for the six months ended June 30, 2019 was primarily impacted by the mix of income generated among the jurisdictions in which the Company operates along with the exclusion of losses in the US Virgin Islands and India where the Company cannot benefit from those losses as required by ASC 740-270-30-36(a), in addition to the following discrete items: (i) a $0.6 million benefit from the reversal of unrecognized tax positions due to statute expiration, net interest expense on unrecognized tax positions and (ii) a $0.5 million benefit from the reversal of a deferred tax liability due to an intercompany debt restructure. The Company’s effective tax rate is based upon estimated income before provision for income taxes for the year, composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for potential tax consequences, benefits and/or resolutions of tax contingencies. The Company’s consolidated tax rate will continue to be impacted by any transactional or one-time items in the future and the mix of income in any given year generated among the jurisdictions in which the Company operates. While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from the Company’s accrued positions as a result of uncertain and complex application of tax law and regulations. Additionally, the recognition and measurement of certain tax benefits include estimates and judgment by management. Accordingly, the Company could record additional provisions or benefits for US federal, state, and foreign tax matters in future periods as new information becomes available. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
NET INCOME (LOSS) PER SHARE | |
NET INCOME (LOSS) PER SHARE | 11. NET INCOME (LOSS) PER SHARE For the three months ended June 30, 2020 and 2019, the calculations of basic and diluted weighted average shares of common stock outstanding do not include 5,000 shares and 13,000 shares, respectively, relating to stock options as the effects of those options were anti-dilutive. For each of the six months ended June 30, 2020 and 2019, the calculation of basic and diluted weighted average shares of common stock outstanding do not include 5,000 shares relating to stock options as the effects of those options were anti-dilutive. |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2020 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 12. SEGMENT REPORTING The Company has the following three reportable and operating segments: i) International Telecom, ii) US Telecom, and iii) Renewable Energy. The following tables provide information for each operating segment (in thousands): For the Three Months Ended June 30, 2020 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 19,062 $ 2,367 $ — $ — $ 21,429 Fixed 56,567 4,937 — — 61,504 Carrier Services 1,897 20,856 — — 22,753 Other 554 — — — 554 Total Communication Services Revenue 78,080 28,160 — — 106,240 Other Renewable Energy — — 874 — 874 Managed Services 1,984 — — — 1,984 Total Other Revenue 1,984 — 874 — 2,858 Total Revenue 80,064 28,160 874 — 109,098 Depreciation and amortization 14,132 5,717 486 1,656 21,991 Non-cash stock-based compensation 28 — 131 1,402 1,561 Operating income (loss) 14,617 1,826 (620) (8,799) 7,024 For the Three Months Ended June 30, 2019 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 21,007 $ 2,800 $ — $ — $ 23,807 Fixed 54,954 3,622 — — 58,576 Carrier Services 2,306 19,992 — — 22,298 Other 338 — — — 338 Total Communication Services Revenue 78,605 26,414 — — 105,019 Other Renewable Energy — — 1,448 — 1,448 Managed Services 1,254 — — 1,254 Total Other Revenue 1,254 — 1,448 — 2,702 Total Revenue 79,859 26,414 1,448 — 107,721 Depreciation and amortization 13,606 5,551 638 1,754 21,549 Non-cash stock-based compensation 11 — — 2,017 2,028 Operating income (loss) 11,057 1,521 167 (9,991) 2,754 For the Six Months Ended June 30, 2020 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 39,198 $ 4,770 $ — $ — $ 43,968 Fixed 115,056 9,762 — — 124,818 Carrier Services 3,541 40,927 — — 44,468 Other 891 — — — 891 Total Communication Services Revenue 158,686 55,459 — — 214,145 Other Renewable Energy — — 2,196 — 2,196 Managed Services 3,663 — — — 3,663 Total Other Revenue 3,663 — 2,196 — 5,859 Total Revenue 162,349 55,459 2,196 — 220,004 Depreciation and amortization 28,448 11,602 1,100 3,359 44,509 Non-cash stock-based compensation (9) — 131 2,599 2,721 Operating income (loss) 28,005 4,019 (1,077) (16,623) 14,324 For the Six Months Ended June 30, 2019 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 41,402 $ 5,494 $ — $ — $ 46,896 Fixed 111,080 5,581 — — 116,661 Carrier Services 4,567 36,832 — — 41,399 Other 677 — — — 677 Total Communication Services Revenue 157,726 47,907 — — 205,633 Other Renewable Energy — — 2,938 — 2,938 Managed Services 2,450 — — 2,450 Total Other Revenue 2,450 — 2,938 — 5,388 Total Revenue 160,176 47,907 2,938 — 211,021 Depreciation and amortization 26,621 11,149 1,253 3,244 42,267 Non-cash stock-based compensation 21 — — 3,313 3,334 Operating income (loss) 24,936 (2,006) (16) (18,045) 4,869 (1) Corporate and Other items refer to corporate overhead costs and consolidating adjustments Selected balance sheet data for each of the Company’s segments as of June 30, 2020 and December 31, 2019 consists of the following (in thousands): International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated June 30, 2020 Cash, Cash equivalents, and Investments $ 60,598 $ 29,304 $ 22,801 $ 12,380 $ 125,083 Total current assets 112,845 58,928 25,537 46,880 244,190 Fixed assets, net 456,633 66,189 44,852 20,183 587,857 Goodwill 25,421 35,270 — — 60,691 Total assets 656,414 222,046 71,033 162,112 1,111,605 Total current liabilities 71,627 23,994 1,164 21,647 118,432 Total debt 84,624 — — — 84,624 December 31, 2019 Cash, Cash equivalents, and Investments $ 43,125 $ 38,240 $ 25,054 $ 55,284 $ 161,703 Total current assets 91,497 54,207 27,534 55,485 228,723 Fixed assets, net 466,523 69,184 48,421 21,453 605,581 Goodwill 25,421 35,270 — — 60,691 Total assets 647,228 222,356 76,723 184,419 1,130,726 Total current liabilities 77,644 24,905 2,745 14,375 119,669 Total debt 86,426 — — — 86,426 Capital Expenditures International US Renewable Corporate and Six months ended June 30, Telecom Telecom Energy Other (1) Consolidated 2020 $ 19,929 $ 8,883 $ 1,634 $ 1,519 $ 31,965 2019 23,692 6,368 817 4,519 35,396 (1) Corporate and other items refer to corporate overhead costs and consolidating adjustments |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES Regulatory and Litigation Matters The Company and its subsidiaries are subject to certain regulatory and legal proceedings and other claims arising in the ordinary course of business, some of which involve claims for damages and taxes that are substantial in amount. The Company believes that, except for the items discussed below, for which the Company is currently unable to predict the final outcome, the disposition of proceedings currently pending will not have a material adverse effect on the Company’s financial position or results of operations. The Company’s Guyana subsidiary, GTT, holds a license to provide domestic and international voice and data services in Guyana on an exclusive basis until December 2030. Since 2001, the Government of Guyana has stated its intention to introduce additional competition into Guyana’s telecommunications sector. In connection therewith, the Company and GTT have met on several occasions with officials of the Government of Guyana to discuss potential modifications of GTT’s exclusivity and other rights under the existing agreement and license. On July 18, 2016, the Guyana Parliament passed telecommunications legislation that introduces material changes to many features of Guyana’s existing telecommunications regulatory regime with the intention of creating a more competitive market. The legislation was signed into law on August 5, 2016. The legislation does not have the effect of terminating the Company’s exclusive license. Instead the legislation as passed requires the Minister of Telecommunications to conduct further proceedings and issue implementing orders to enact the various provisions of the legislation, including the issuance of competing licenses. The Company cannot predict the manner in which or when the legislation will be implemented by the Minister of Telecommunications. In January 2019 the Government of Guyana and the Company met to discuss modifications of the Company’s and GTT’s exclusivity rights and other rights under the Company’s existing agreement and GTT’s license. In early March 2020, Guyana held an election the results of which were disputed, and a winner was not formally declared until August 2, 2020. Although the election results have been formally determined and the new Government sworn in, there can be no assurance that our discussions with the Government will resume or be concluded, or that such discussions will satisfactorily address the Company’s contractual exclusivity rights. Although the Company believes that it would be entitled to damages or other compensation for any involuntary termination of its contractual exclusivity rights, it cannot guarantee that it would prevail in a proceeding to enforce its rights or that its actions would effectively halt any unilateral action by the Government. Historically, GTT has been subject to other long-standing litigation proceedings and disputes in Guyana that have not yet been resolved. The Company believes that none of these additional proceedings would, in the event of an adverse outcome, have a material impact on the Company’s consolidated financial position, results of operations or liquidity. In a letter dated September 8, 2006, the National Frequency Management Unit (“NFMU”) agreed that total spectrum fees in Guyana should not increase for the years 2006 and 2007. However, that letter implied that spectrum fees in 2008 and onward may be increased beyond the amount GTT agreed to with the Government. GTT has objected to the NFMU’s proposed action and reiterated its position that an increase in fees prior to development of an acceptable methodology would violate the Government’s prior agreement. In 2011, GTT paid the NFMU $2.6 million representing payments in full for 2008, 2009 and 2010. However, by letter dated November 23, 2011, the NFMU stated that it did not concur with GTT’s inference that the amount was payment in full for the specified years as it was NFMU’s continued opinion that the final calculation for spectrum fees was not agreed upon and was still an outstanding issue. By further letter dated November 24, 2011, the NFMU further rejected a proposal that was previously submitted jointly by GTT and another communications provider that outlined a recommended methodology for the calculation of these fees. The NFMU stated that it would prepare its own recommendation for consideration by the Minister of Telecommunications, who would decide the matter. GTT has paid undisputed spectrum fees according to the methodology used for its 2011 payments, and has reserved amounts payable according to this methodology. There have been limited further discussions on this subject and GTT has not had the opportunity to review any recommendation made by the NFMU to the Minister. On May 8, 2009, a GTT competitor, Digicel, filed a lawsuit in Guyana challenging the legality of GTT’s exclusive license rights under Guyana’s constitution and GTT intervened in the suit in order to oppose Digicel’s claims. The case remains pending. The Company believes that any legal challenge to GTT’s exclusive license rights granted in 1990 is without merit and the Company intends to defend vigorously against such legal challenge. GTT has filed several lawsuits in the High Court of Guyana asserting that, despite its denials, Digicel is engaged in international bypass in violation of GTT’s exclusive license rights, the interconnection agreement between the parties, and the laws of Guyana. GTT is seeking injunctive relief to stop the illegal bypass activity and monetary damages. Digicel filed counterclaims alleging that GTT has violated the terms of the interconnection agreement and Guyana laws. These suits, in 2010 and 2012, have been consolidated Digicel’s constitutional challenge described above. Prior to the declaration of COVID-19 related travel and business restrictions in Guyana, the consolidated cases were scheduled to proceed to in 2020 . GTT is also involved in several legal claims regarding its tax filings with the Guyana Revenue Authority dating back to 1991 regarding the deductibility of intercompany advisory fees as well as other tax assessments. The Company maintains that any liability GTT might be found to have with respect to the disputed tax assessments that the Guyana Revenue Authority has alleged total $44.1 million, would be offset in part by the amounts necessary to ensure that GTT’s return on investment was no less than 15% per annum for the relevant periods. The Company believes that some adverse outcome is probable and has accordingly accrued $5.0 million as of June 30, 2020 for these matters. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial information included herein is unaudited; however, the Company believes such information and the disclosures herein are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial position and results of operations for the periods described therein. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Results of interim periods may not be indicative of results for the full year. These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020, The condensed consolidated financial statements include the accounts of the Company, its subsidiaries in which the Company holds controlling interests 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. Presentation of Revenue Effective January 1, 2020, the Company changed its presentation of revenue in the Condensed Consolidated Statement of Operations and in the Selected Segment Financial Information tables. This change is intended to better align the Company’s financial performance with the views of management and industry competitors, and to facilitate a more constructive dialogue with the investment community. Specifically, the previously disclosed revenue categories of wireless and wireline revenue are being represented as mobility, fixed and Carrier Services revenue within the Company’s segment information and are included within communications services revenue within its Statements of Operations. Managed services revenue, which was previously a component of wireline revenue, along with revenue from the Company’s Renewable Energy operations, is now included in other revenue. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequently issued related updates (“ASU 2016-02”), which provide 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 became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company adopted ASC 2016-02 on January 1, 2019 utilizing the optional transition method with a cumulative adjustment on the date of adoption and not adjusting prior periods. Refer to Note 4 of the Condensed 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. The Company adopted this standard on January 1, 2019. There was not a material impact to the Company’s Consolidated Financial Statements upon adoption. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosure relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company adopted ASU 2016-13 using the modified retrospective approach on its January 1, 2020 effective date. Refer to Note 3 of the Condensed Consolidated Financial Statements in this Report. |
ORGANIZATION AND BUSINESS OPE_2
ORGANIZATION AND BUSINESS OPERATIONS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
ORGANIZATION AND BUSINESS OPERATIONS | |
Schedule of the operating activities of the Company's principal subsidiaries, the segments in which the Company reports its revenue and markets served | Segment Services Markets Tradenames International Telecom Mobility Bermuda, Guyana, US Virgin Islands GTT+, One, Viya Fixed Bermuda, Cayman Islands, Guyana, US Virgin Islands GTT+, One, Logic, Viya Carrier Services Bermuda, Guyana, US Virgin Islands GTT+, One, Viya Managed Services Bermuda, Cayman Islands, US Virgin Islands Fireminds, One, Logic, Viya US Telecom Mobility United States (rural markets) Commnet, Choice, Choice NTUA Wireless, WestNet, Geoverse Fixed United States Commnet, Choice, Choice NTUA Wireless, Deploycom, WestNet Carrier Services United States Commnet, Essextel Managed Services United States Choice Renewable Energy Solar India Vibrant Energy |
REVENUE RECOGNITION AND RECEI_2
REVENUE RECOGNITION AND RECEIVABLES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
REVENUE RECOGNITION AND RECEIVABLES | |
Summary of contracts asset and liabilities | Contract assets and liabilities consisted of the following (in thousands): June 30, 2020 December 31, 2019 $ Change % Change Contract asset – current $ 2,217 $ 2,413 $ (196) (8) % Contract asset – noncurrent 651 905 (254) (28) % Contract liability – current (13,598) (15,044) 1,446 10 % Contract liability – noncurrent (5,193) (5,450) 257 5 % Net contract liability $ (15,923) $ (17,176) $ 1,253 7 % |
Schedule of activity in allowances for credit losses | Six months ended June 30, 2020 Balance at January 1, 2020 $ 12,724 Current period provision for expected losses 3,397 Write-offs charged against the allowance (4,875) Recoveries collected 354 Balance at June 30, 2020 $ 11,600 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
LEASES | |
Summary of components of lease expense | The components of lease expense were as follows (in thousands): Three months ended June 30, 2020 Three months ended June 30, 2019 Six months ended June 30, 2020 Six months ended June 30, 2019 Operating lease cost: Operating lease cost $ 4,029 $ 4,151 $ 8,076 $ 7,667 Short-term lease cost 729 867 1,271 1,578 Variable lease cost 1,540 288 2,343 1,250 Total operating lease cost $ 6,298 $ 5,306 $ 11,690 $ 10,495 Finance lease cost: Amortization of right-of-use asset $ 522 $ 586 $ 1,094 $ 1,179 Variable costs 186 262 458 558 Total finance lease cost $ 708 $ 848 $ 1,552 $ 1,737 |
Summary of weighted-average remaining lease term and discount rate | The weighted average remaining lease terms and discount rates as of June 30, 2020 and December 31, 2019 are noted in the table below: June 30, 2020 December 31, 2019 Weighted-average remaining lease term Operating leases 6.2 years 6.5 years Financing leases 11.8 years 11.7 years Weighted-average discount rate Operating leases 5.0% 5.0% Financing leases n/a n/a |
Summary of maturities of lease liabilities | Maturities of lease liabilities as of June 30, 2020 were as follows (in thousands): Operating Leases 2020 (excluding the six months ended June 30, 2020) $ 7,659 2021 14,279 2022 13,019 2023 10,737 2024 9,638 Thereafter 19,329 Total lease payments 74,661 Less imputed interest (10,928) Total $ 63,733 Maturities of lease liabilities as of December 31, 2019 were as follows (in thousands): Operating Leases 2020 $ 14,526 2021 13,714 2022 12,787 2023 10,713 2024 9,671 Thereafter 18,355 Total lease payments 79,766 Less imputed interest (12,195) Total $ 67,571 |
FAIR VALUE MEASUREMENTS AND I_2
FAIR VALUE MEASUREMENTS AND INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
FAIR VALUE MEASUREMENTS AND INVESTMENTS | |
Schedule of assets and liabilities of the entity measured at fair value on a recurring basis | Assets and liabilities of the Company measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 are summarized as follows (in thousands): June 30, 2020 Significant Other Quoted Prices in Observable Unobservable Active Markets Inputs Inputs Description (Level 1) (Level 2) (Level 3) Total Certificates of deposit $ — $ 380 $ — $ 380 Money market funds 2,410 — — 2,410 Short term investments 285 — — 285 Other investments — — 13,313 13,313 Interest rate swap — (224) — (224) Total assets and liabilities measured at fair value $ 2,695 $ 156 $ 13,313 $ 16,164 December 31, 2019 Significant Other Quoted Prices in Observable Unobservable Active Markets Inputs Inputs Description (Level 1) (Level 2) (Level 3) Total Certificates of deposit $ — $ 380 $ — $ 380 Money market funds 2,329 — — 2,329 Short term investments 416 — — 416 Other investments — — 12,700 12,700 Interest rate swap — (56) — (56) Total assets and liabilities measured at fair value $ 2,745 $ 324 $ 12,700 $ 15,769 |
RETIREMENT PLANS (Tables)
RETIREMENT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
RETIREMENT PLANS | |
Schedule of components of the plan's net periodic pension cost | Three months ended June 30, 2020 June 30, 2019 Pension benefits Postretirement benefits Pension benefits Postretirement benefits Operating expense Service cost $ 423 $ 32 $ 447 $ 37 Non-operating expense Interest cost 879 45 841 40 Expected return on plan assets (1,158) — (1,263) — Actuarial (gain)/ loss (7) (15) 7 (17) Net periodic pension expense $ 137 $ 62 $ 32 $ 60 Six months ended June 30, 2020 June 30, 2019 Pension benefits Postretirement benefits Pension benefits Postretirement benefits Operating expense Service cost $ 846 $ 64 $ 895 $ 74 Non-operating expense Interest cost 1,758 90 1,682 80 Expected return on plan assets (2,316) — (2,527) — Actuarial (gain)/ loss (14) (30) 15 (34) Net periodic pension expense $ 274 $ 124 $ 65 $ 120 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
SEGMENT REPORTING | |
Schedule of information for each operating segment | The following tables provide information for each operating segment (in thousands): For the Three Months Ended June 30, 2020 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 19,062 $ 2,367 $ — $ — $ 21,429 Fixed 56,567 4,937 — — 61,504 Carrier Services 1,897 20,856 — — 22,753 Other 554 — — — 554 Total Communication Services Revenue 78,080 28,160 — — 106,240 Other Renewable Energy — — 874 — 874 Managed Services 1,984 — — — 1,984 Total Other Revenue 1,984 — 874 — 2,858 Total Revenue 80,064 28,160 874 — 109,098 Depreciation and amortization 14,132 5,717 486 1,656 21,991 Non-cash stock-based compensation 28 — 131 1,402 1,561 Operating income (loss) 14,617 1,826 (620) (8,799) 7,024 For the Three Months Ended June 30, 2019 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 21,007 $ 2,800 $ — $ — $ 23,807 Fixed 54,954 3,622 — — 58,576 Carrier Services 2,306 19,992 — — 22,298 Other 338 — — — 338 Total Communication Services Revenue 78,605 26,414 — — 105,019 Other Renewable Energy — — 1,448 — 1,448 Managed Services 1,254 — — 1,254 Total Other Revenue 1,254 — 1,448 — 2,702 Total Revenue 79,859 26,414 1,448 — 107,721 Depreciation and amortization 13,606 5,551 638 1,754 21,549 Non-cash stock-based compensation 11 — — 2,017 2,028 Operating income (loss) 11,057 1,521 167 (9,991) 2,754 For the Six Months Ended June 30, 2020 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 39,198 $ 4,770 $ — $ — $ 43,968 Fixed 115,056 9,762 — — 124,818 Carrier Services 3,541 40,927 — — 44,468 Other 891 — — — 891 Total Communication Services Revenue 158,686 55,459 — — 214,145 Other Renewable Energy — — 2,196 — 2,196 Managed Services 3,663 — — — 3,663 Total Other Revenue 3,663 — 2,196 — 5,859 Total Revenue 162,349 55,459 2,196 — 220,004 Depreciation and amortization 28,448 11,602 1,100 3,359 44,509 Non-cash stock-based compensation (9) — 131 2,599 2,721 Operating income (loss) 28,005 4,019 (1,077) (16,623) 14,324 For the Six Months Ended June 30, 2019 International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated Revenue Communication Services Mobility $ 41,402 $ 5,494 $ — $ — $ 46,896 Fixed 111,080 5,581 — — 116,661 Carrier Services 4,567 36,832 — — 41,399 Other 677 — — — 677 Total Communication Services Revenue 157,726 47,907 — — 205,633 Other Renewable Energy — — 2,938 — 2,938 Managed Services 2,450 — — 2,450 Total Other Revenue 2,450 — 2,938 — 5,388 Total Revenue 160,176 47,907 2,938 — 211,021 Depreciation and amortization 26,621 11,149 1,253 3,244 42,267 Non-cash stock-based compensation 21 — — 3,313 3,334 Operating income (loss) 24,936 (2,006) (16) (18,045) 4,869 (1) Corporate and Other items refer to corporate overhead costs and consolidating adjustments |
Schedule of segment balance sheet data and capital expenditures | Selected balance sheet data for each of the Company’s segments as of June 30, 2020 and December 31, 2019 consists of the following (in thousands): International US Renewable Corporate and Telecom Telecom Energy Other (1) Consolidated June 30, 2020 Cash, Cash equivalents, and Investments $ 60,598 $ 29,304 $ 22,801 $ 12,380 $ 125,083 Total current assets 112,845 58,928 25,537 46,880 244,190 Fixed assets, net 456,633 66,189 44,852 20,183 587,857 Goodwill 25,421 35,270 — — 60,691 Total assets 656,414 222,046 71,033 162,112 1,111,605 Total current liabilities 71,627 23,994 1,164 21,647 118,432 Total debt 84,624 — — — 84,624 December 31, 2019 Cash, Cash equivalents, and Investments $ 43,125 $ 38,240 $ 25,054 $ 55,284 $ 161,703 Total current assets 91,497 54,207 27,534 55,485 228,723 Fixed assets, net 466,523 69,184 48,421 21,453 605,581 Goodwill 25,421 35,270 — — 60,691 Total assets 647,228 222,356 76,723 184,419 1,130,726 Total current liabilities 77,644 24,905 2,745 14,375 119,669 Total debt 86,426 — — — 86,426 Capital Expenditures International US Renewable Corporate and Six months ended June 30, Telecom Telecom Energy Other (1) Consolidated 2020 $ 19,929 $ 8,883 $ 1,634 $ 1,519 $ 31,965 2019 23,692 6,368 817 4,519 35,396 (1) Corporate and other items refer to corporate overhead costs and consolidating adjustments |
ORGANIZATION AND BUSINESS OPE_3
ORGANIZATION AND BUSINESS OPERATIONS (Details) | 6 Months Ended |
Jun. 30, 2020segment | |
ORGANIZATION AND BUSINESS OPERATIONS | |
Number of Operating Segments | 3 |
REVENUE RECOGNITION AND RECEI_3
REVENUE RECOGNITION AND RECEIVABLES - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Contract Assets and Liabilities | ||
Contract Asset - current | $ 2,413 | |
Change in contract asset - current | (196) | |
Contract Asset - current | $ 2,217 | $ 2,217 |
% of change in contract asset - current | (8.00%) | |
Contract asset, noncurrent | $ 905 | |
Change in contract Asset - noncurrent | (254) | |
Contract asset, noncurrent | 651 | $ 651 |
% of change in contract Asset - noncurrent | (28.00%) | |
Contract liability- current | $ (15,044) | |
Change in contract liabilities - current | 1,446 | |
Contract liability- current | (13,598) | $ (13,598) |
% of change in contract liabilities - current | 10.00% | |
Contract liability- noncurrent | $ (5,450) | |
Change in contract liabilities - noncurrent | 257 | |
Contract liability- noncurrent | (5,193) | $ (5,193) |
% of change in contract liabilities - Noncurrent | 5.00% | |
Net contract liability | $ (17,176) | |
Change in net contract liability | 1,253 | |
Net contract liability | (15,923) | $ (15,923) |
% of change in net contract liability | 7.00% | |
Revenue recognized related to contract liability | $ 13,200 | |
Amortization of contract assets | $ 600 | 1,300 |
Revenue recognized in the period related to performance obligations that were satisfied or partially satisfied in previous periods | $ 0 | |
Retail revenue period for billing postpaid customers in advance | 1 month |
REVENUE RECOGNITION AND RECEI_4
REVENUE RECOGNITION AND RECEIVABLES - Contract Acquisition Costs (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | |
Contract Acquisition Costs | ||
Amortization of contract acquisition cost | $ 0.5 | $ 1 |
Prepayments and other current assets | ||
Contract Acquisition Costs | ||
Short-term contract acquisition costs | 1.7 | 1.7 |
Other assets | ||
Contract Acquisition Costs | ||
Long-term contract acquisition costs | $ 1.1 | $ 1.1 |
REVENUE RECOGNITION AND RECEI_5
REVENUE RECOGNITION AND RECEIVABLES - Remaining Performance Obligations - (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2020 | Dec. 31, 2019 | |
Revenue Recognition | ||
Transaction price allocated to unsatisfied performance obligations | $ 241 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-07-01 | ||
Revenue Recognition | ||
Transaction price allocated to unsatisfied performance obligations | $ 232 | |
Period to satisfy the remaining performance obligations and recognize the transaction price | 24 months | |
Right to invoice and wholly unsatisfied performance obligation practical expedients | true |
REVENUE RECOGNITION AND RECEI_6
REVENUE RECOGNITION AND RECEIVABLES - Allowance for Credit Losses - (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Allowance for Credit Loss | ||
Gross accounts receivable | $ 58.2 | $ 48.6 |
Accounts receivable allowance | $ 11.6 | 12.7 |
Accounting Standards Update 2016-13 | Restatement Adjustment | ||
Allowance for Credit Loss | ||
Cumulative effect adjustment due to adoption of new accounting | $ 0 |
REVENUE RECOGNITION AND RECEI_7
REVENUE RECOGNITION AND RECEIVABLES - Allowance for Credit Losses Rollforward - (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
REVENUE RECOGNITION AND RECEIVABLES | ||
Beginning Balance | $ 12,724 | |
Current period provision for expected losses | 3,397 | $ 2,736 |
Write-offs charged against the allowance | (4,875) | |
Recoveries collected | 354 | |
Ending Balance | $ 11,600 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | |
LEASES | |||
Operating lease right-of-use asset | $ 63,933 | $ 68,763 | |
Short-term lease liability | 11,313 | 11,406 | |
Long-term lease liability | $ 52,420 | $ 56,164 | |
Package of practical expedients | true | ||
Minimum | |||
LEASES | |||
Operating lease, lease term | 3 years | ||
Finance lease, lease term | 3 years | ||
Maximum | |||
LEASES | |||
Operating lease, lease term | 10 years | ||
Finance lease, lease term | 10 years | ||
Restatement Adjustment | ASC 842 | |||
LEASES | |||
Operating lease right-of-use asset | $ 70,800 | ||
Short-term lease liability | 8,200 | ||
Long-term lease liability | 61,200 | ||
Cumulative effect adjustment due to adoption of new accounting | $ 0 |
LEASES - Components of Lease Ex
LEASES - Components of Lease Expense and Payments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
LEASES | |||||
Operating lease cost | $ 4,029 | $ 4,151 | $ 8,076 | $ 7,667 | |
Short-term lease cost | 729 | 867 | 1,271 | 1,578 | |
Variable lease cost | 1,540 | 288 | 2,343 | 1,250 | |
Total operating lease cost | 6,298 | 5,306 | 11,690 | 10,495 | |
Payments for lease liabilities | 7,200 | 3,800 | |||
Lease liabilities arising from right-of-use assets | 1,700 | 3,300 | |||
Finance lease cost: | |||||
Amortization of right-of-use asset | 522 | 586 | 1,094 | 1,179 | |
Variable costs | 186 | 262 | 458 | 558 | |
Total finance lease cost | 708 | $ 848 | 1,552 | $ 1,737 | |
Finance leases cost included in property, plant and equipment | $ 25,200 | $ 25,200 | $ 25,900 | ||
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:PropertyPlantAndEquipmentGross | us-gaap:PropertyPlantAndEquipmentGross | us-gaap:PropertyPlantAndEquipmentGross | ||
Accumulated depreciation related to finance leases | $ 10,000 | $ 10,000 | $ 9,400 |
LEASES - Weighted average remai
LEASES - Weighted average remaining lease terms and discount rates (Details) | Jun. 30, 2020 | Dec. 31, 2019 |
LEASES | ||
Operating leases, weighted average remaining lease term | 6 years 2 months 12 days | 6 years 6 months |
Financing leases, weighted average remaining lease term | 11 years 9 months 18 days | 11 years 8 months 12 days |
Operating leases, weighted average discount rate | 5.00% | 5.00% |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
LEASES | ||
2020 (excluding the six months ended June 30, 2020) | $ 7,659 | |
2020 | $ 14,526 | |
2021 | 14,279 | 13,714 |
2022 | 13,019 | 12,787 |
2023 | 10,737 | 10,713 |
2024 | 9,638 | 9,671 |
Thereafter | 19,329 | 18,355 |
Total lease payments | 74,661 | 79,766 |
Less imputed interest | (10,928) | (12,195) |
Total | $ 63,733 | $ 67,571 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:OperatingLeaseLiabilityCurrent us-gaap:OperatingLeaseLiabilityNoncurrent | us-gaap:OperatingLeaseLiabilityCurrent us-gaap:OperatingLeaseLiabilityNoncurrent |
FAIR VALUE MEASUREMENTS AND I_3
FAIR VALUE MEASUREMENTS AND INVESTMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | Sep. 30, 2019 | |
Fair value measurements | ||||||
Increase in carrying value | $ (1,412) | |||||
Privately Held Investment | ||||||
Fair value measurements | ||||||
Ownership percentage | 24.00% | 24.00% | ||||
Additional investment | $ 2,800 | |||||
Increase in carrying value | 2,000 | |||||
Share investee loss | 400 | |||||
Currency losses | 400 | |||||
Other assets | Privately Held Investment | ||||||
Fair value measurements | ||||||
Carrying value | $ 17,500 | 17,500 | ||||
Carrying Value | ||||||
Fair value measurements | ||||||
Long-term debt | 84,600 | 84,600 | $ 86,400 | |||
Carrying Value | Other assets | ||||||
Fair value measurements | ||||||
Strategic investments | 2,100 | 2,100 | 2,100 | |||
Short Term Investments | ||||||
Fair value measurements | ||||||
Equity investments | 100 | 100 | 200 | |||
Loss (gain) on equity securities | 100 | $ 0 | 100 | $ 0 | ||
Other investments | ||||||
Fair value measurements | ||||||
Equity investments | 10,900 | 10,900 | ||||
Change in fair value of investment | 300 | 700 | ||||
Other investments | Renewable energy partnership | ||||||
Fair value measurements | ||||||
Investment cost | $ 14,400 | |||||
Investment Tax Credit | 12,000 | |||||
Equity investments | 2,400 | 2,400 | 2,500 | |||
Level 2 | Estimated Fair Value | ||||||
Fair value measurements | ||||||
Long-term debt | 85,100 | 85,100 | 86,900 | |||
Recurring basis | ||||||
Fair value measurements | ||||||
Total assets and liabilities measured at fair value | 16,164 | 16,164 | 15,769 | |||
Recurring basis | Certificate of deposit | ||||||
Fair value measurements | ||||||
Cash and cash equivalents | 380 | 380 | 380 | |||
Recurring basis | Money market funds | ||||||
Fair value measurements | ||||||
Cash and cash equivalents | 2,410 | 2,410 | 2,329 | |||
Recurring basis | Short Term Investments | ||||||
Fair value measurements | ||||||
Investments | 285 | 285 | 416 | |||
Recurring basis | Other investments | ||||||
Fair value measurements | ||||||
Investments | 13,313 | 13,313 | 12,700 | |||
Recurring basis | Interest rate swap | ||||||
Fair value measurements | ||||||
Derivative liabilities | (224) | (224) | (56) | |||
Recurring basis | Level 1 | ||||||
Fair value measurements | ||||||
Total assets and liabilities measured at fair value | 2,695 | 2,695 | 2,745 | |||
Recurring basis | Level 1 | Money market funds | ||||||
Fair value measurements | ||||||
Cash and cash equivalents | 2,410 | 2,410 | 2,329 | |||
Recurring basis | Level 1 | Short Term Investments | ||||||
Fair value measurements | ||||||
Investments | 285 | 285 | 416 | |||
Recurring basis | Level 2 | ||||||
Fair value measurements | ||||||
Total assets and liabilities measured at fair value | 156 | 156 | 324 | |||
Recurring basis | Level 2 | Certificate of deposit | ||||||
Fair value measurements | ||||||
Cash and cash equivalents | 380 | 380 | 380 | |||
Recurring basis | Level 2 | Interest rate swap | ||||||
Fair value measurements | ||||||
Derivative liabilities | (224) | (224) | (56) | |||
Recurring basis | Level 3 | ||||||
Fair value measurements | ||||||
Total assets and liabilities measured at fair value | 13,313 | 13,313 | 12,700 | |||
Recurring basis | Level 3 | Other investments | ||||||
Fair value measurements | ||||||
Investments | $ 13,313 | $ 13,313 | $ 12,700 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Millions | Mar. 26, 2020USD ($) | Apr. 10, 2019USD ($) | May 22, 2017USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2018USD ($) | Jul. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jul. 01, 2016USD ($) |
One Communications Debt | ||||||||
Long-term debt | ||||||||
Financing costs | $ 0.3 | |||||||
Outstanding debt | $ 25.3 | |||||||
Unamortized financing costs | 0.1 | |||||||
One Communications Debt | Minimum | ||||||||
Long-term debt | ||||||||
Percentage of notional amount required for hedging arrangement | 30.00% | |||||||
One Communications Debt | Minimum | One-month LIBOR | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 2.50% | |||||||
One Communications Debt | Maximum | One-month LIBOR | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 2.75% | |||||||
Viya Debt | ||||||||
Long-term debt | ||||||||
Term loan assumed | $ 60 | |||||||
Net leverage ratio | 3.5 | |||||||
Stated interest rate | 4.00% | 4.00% | ||||||
Financing costs | $ 0.9 | |||||||
Intercompany debt limit | $ 75 | |||||||
Outstanding debt | 60 | |||||||
Unamortized financing costs | 0.6 | |||||||
Revolver loan | Credit facility | ||||||||
Long-term debt | ||||||||
Maximum borrowing capacity | $ 200 | |||||||
Remaining borrowing capacity | 184 | |||||||
Net leverage ratio | 1.75 | |||||||
Net leverage ratio, if qualifying event | 3.25 | |||||||
Revolver loan | Credit facility | Minimum | ||||||||
Long-term debt | ||||||||
Commitment fee (as a percent) | 0.15% | |||||||
Revolver loan | Credit facility | Minimum | LIBOR | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 1.25% | |||||||
Revolver loan | Credit facility | Minimum | Base rate | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 0.25% | |||||||
Revolver loan | Credit facility | Maximum | ||||||||
Long-term debt | ||||||||
Commitment fee (as a percent) | 0.375% | |||||||
Net leverage ratio | 2.75 | |||||||
Revolver loan | Credit facility | Maximum | LIBOR | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 2.25% | |||||||
Revolver loan | Credit facility | Maximum | Base rate | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 1.25% | |||||||
Letter of credit sub-facility | Credit facility | ||||||||
Long-term debt | ||||||||
Maximum borrowing capacity | $ 75 | |||||||
Performance letters of credit issued and outstanding | 16 | |||||||
Swingline sub-facility | Credit facility | ||||||||
Long-term debt | ||||||||
Maximum borrowing capacity | $ 10 | |||||||
Base rate before one-week or one-month LIBOR (as a percent) | 1.00% | |||||||
Swingline sub-facility | Credit facility | Federal Funds Effective Rate | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 0.50% | |||||||
Commnet Finance | Senior secured delayed draw term loan | Receivable credit facility | ||||||||
Long-term debt | ||||||||
Maximum borrowing capacity | $ 75 | |||||||
Commnet Finance | Senior secured delayed draw term loan | Receivable credit facility | LIBOR | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 2.50% | |||||||
Commnet Finance | Senior secured delayed draw term loan | Receivable credit facility | Base rate | ||||||||
Long-term debt | ||||||||
Basis spread on variable rate (as a percent) | 1.50% | |||||||
Cash flow hedge | Interest rate swap | ||||||||
Long-term debt | ||||||||
Notional amount | $ 7.9 | $ 11 | ||||||
Interest rate (as a percent) | 1.874% |
GOVERNMENT GRANTS (Details)
GOVERNMENT GRANTS (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Aug. 31, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)itemMW | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Government Grants | |||||||
Revenue | $ 109,098 | $ 107,721 | $ 220,004 | $ 211,021 | |||
Universal Service Fund programs | |||||||
Government Grants | |||||||
Number of fund disbursement programs | item | 4 | ||||||
High-Cost Support Program | US Telecom | |||||||
Government Grants | |||||||
Revenue | 300 | 300 | $ 600 | 600 | |||
High-Cost Support Program | International Telecom | |||||||
Government Grants | |||||||
Revenue | 4,100 | 4,100 | 8,200 | 8,200 | |||
E-Rate, Lifeline and Rural Health Care Support Programs | |||||||
Government Grants | |||||||
Revenue | 2,200 | 1,600 | 4,400 | 3,200 | |||
E-Rate | |||||||
Government Grants | |||||||
Grant Funds Awarded | $ 15,800 | ||||||
Proceeds from completion of construction | $ 5,400 | ||||||
Reimbursement of capital expenditures | 3,100 | ||||||
Offsetting operating activities | $ 2,300 | ||||||
Tribal Bidding Credit | |||||||
Government Grants | |||||||
Wireless service spectrum (in Mhz) | MW | 600 | ||||||
Revenue | $ 7,400 | ||||||
Grant funds used to offset fixed asset related costs | 5,400 | $ 5,400 | |||||
Grant funds used to offset operating expenses | 2,000 | 2,000 | |||||
Connect America Fund Phase II Auction | |||||||
Government Grants | |||||||
Revenue | $ 1,900 | $ 1,500 | $ 3,800 | $ 1,500 | |||
Grant Funds Awarded | $ 79,900 | ||||||
Grant fund term | 10 years |
RETIREMENT PLANS - Net Periodic
RETIREMENT PLANS - Net Periodic Pension Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Pension Plans | |||||
Components of the plan's net periodic pension cost | |||||
Service cost | $ 423 | $ 447 | $ 846 | $ 895 | |
Interest cost | 879 | 841 | 1,758 | 1,682 | |
Expected return on plan assets | (1,158) | (1,263) | (2,316) | (2,527) | |
Actuarial (gain)/ loss | (7) | 7 | (14) | 15 | |
Net periodic pension expense | 137 | 32 | 274 | 65 | |
Company contributions | 700 | ||||
Funded status of plan | |||||
Plan Net Assets | $ 15,600 | ||||
Projected benefit obligation | $ 15,100 | ||||
Postretirement Benefits | |||||
Components of the plan's net periodic pension cost | |||||
Service cost | 32 | 37 | 64 | 74 | |
Interest cost | 45 | 40 | 90 | 80 | |
Actuarial (gain)/ loss | (15) | (17) | (30) | (34) | |
Net periodic pension expense | $ 62 | $ 60 | $ 124 | $ 120 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
INCOME TAXES | ||||
Effective tax rate (as a percent) | (37.00%) | (15.60%) | (12.00%) | 25.40% |
Benefit from the reversal of unrecognized tax positions due to statute expiration | $ 2.9 | $ 1.1 | $ 2.9 | $ 0.6 |
Interest on unrecognized tax position | $ 0.5 | 1 | ||
Income tax benefit from reversal of deferred tax liability due to intercompany debt restructure | $ 0.5 | $ 0.5 | ||
Change in valuation allowance | 0.4 | |||
Benefit (net) related to remeasurement of existing losses | $ 0.3 |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock options | ||||
Anti-dilutive common shares not included for computation of earnings per share | ||||
Anti-dilutive potential shares excluded from the computation of diluted weighted average shares outstanding (in shares) | 5,000 | 13,000 | 5,000 | 5,000 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment reporting | |||||
Number of reportable segments | segment | 3 | ||||
Revenue | |||||
Revenue | $ 109,098 | $ 107,721 | $ 220,004 | $ 211,021 | |
Depreciation and amortization | 21,991 | 21,549 | 44,509 | 42,267 | |
Non-cash stock-based compensation | 1,561 | 2,028 | 2,721 | 3,334 | |
Operating income (loss) | 7,024 | 2,754 | 14,324 | 4,869 | |
Segment Assets | |||||
Cash, Cash equivalents, and Investments | 125,083 | 125,083 | $ 161,703 | ||
Total current assets | 244,190 | 244,190 | 228,723 | ||
Fixed assets, net | 587,857 | 587,857 | 605,581 | ||
Goodwill | 60,691 | 60,691 | 60,691 | ||
Total assets | 1,111,605 | 1,111,605 | 1,130,726 | ||
Total current liabilities | 118,432 | 118,432 | 119,669 | ||
Total debt | 84,624 | 84,624 | 86,426 | ||
Capital Expenditures | |||||
Capital expenditures | 31,965 | 35,396 | |||
Communication services | |||||
Revenue | |||||
Revenue | 106,240 | 105,019 | 214,145 | 205,633 | |
Mobility | |||||
Revenue | |||||
Revenue | 21,429 | 23,807 | 43,968 | 46,896 | |
Fixed | |||||
Revenue | |||||
Revenue | 61,504 | 58,576 | 124,818 | 116,661 | |
Carrier services | |||||
Revenue | |||||
Revenue | 22,753 | 22,298 | 44,468 | 41,399 | |
Other | |||||
Revenue | |||||
Revenue | 554 | 338 | 891 | 677 | |
Other | |||||
Revenue | |||||
Revenue | 2,858 | 2,702 | 5,859 | 5,388 | |
Renewable Energy | |||||
Revenue | |||||
Revenue | 874 | 1,448 | 2,196 | 2,938 | |
Managed Services | |||||
Revenue | |||||
Revenue | 1,984 | 1,254 | 3,663 | 2,450 | |
Corporate and Other | |||||
Revenue | |||||
Depreciation and amortization | 1,656 | 1,754 | 3,359 | 3,244 | |
Non-cash stock-based compensation | 1,402 | 2,017 | 2,599 | 3,313 | |
Operating income (loss) | (8,799) | (9,991) | (16,623) | (18,045) | |
Segment Assets | |||||
Cash, Cash equivalents, and Investments | 12,380 | 12,380 | 55,284 | ||
Total current assets | 46,880 | 46,880 | 55,485 | ||
Fixed assets, net | 20,183 | 20,183 | 21,453 | ||
Total assets | 162,112 | 162,112 | 184,419 | ||
Total current liabilities | 21,647 | 21,647 | 14,375 | ||
Capital Expenditures | |||||
Capital expenditures | 1,519 | 4,519 | |||
International Telecom | Operating segments | |||||
Revenue | |||||
Revenue | 80,064 | 79,859 | 162,349 | 160,176 | |
Depreciation and amortization | 14,132 | 13,606 | 28,448 | 26,621 | |
Non-cash stock-based compensation | 28 | 11 | (9) | 21 | |
Operating income (loss) | 14,617 | 11,057 | 28,005 | 24,936 | |
Segment Assets | |||||
Cash, Cash equivalents, and Investments | 60,598 | 60,598 | 43,125 | ||
Total current assets | 112,845 | 112,845 | 91,497 | ||
Fixed assets, net | 456,633 | 456,633 | 466,523 | ||
Goodwill | 25,421 | 25,421 | 25,421 | ||
Total assets | 656,414 | 656,414 | 647,228 | ||
Total current liabilities | 71,627 | 71,627 | 77,644 | ||
Total debt | 84,624 | 84,624 | 86,426 | ||
Capital Expenditures | |||||
Capital expenditures | 19,929 | 23,692 | |||
International Telecom | Operating segments | Communication services | |||||
Revenue | |||||
Revenue | 78,080 | 78,605 | 158,686 | 157,726 | |
International Telecom | Operating segments | Mobility | |||||
Revenue | |||||
Revenue | 19,062 | 21,007 | 39,198 | 41,402 | |
International Telecom | Operating segments | Fixed | |||||
Revenue | |||||
Revenue | 56,567 | 54,954 | 115,056 | 111,080 | |
International Telecom | Operating segments | Carrier services | |||||
Revenue | |||||
Revenue | 1,897 | 2,306 | 3,541 | 4,567 | |
International Telecom | Operating segments | Other | |||||
Revenue | |||||
Revenue | 554 | 338 | 891 | 677 | |
International Telecom | Operating segments | Other | |||||
Revenue | |||||
Revenue | 1,984 | 1,254 | 3,663 | 2,450 | |
International Telecom | Operating segments | Managed Services | |||||
Revenue | |||||
Revenue | 1,984 | 1,254 | 3,663 | 2,450 | |
US Telecom | Operating segments | |||||
Revenue | |||||
Revenue | 28,160 | 26,414 | 55,459 | 47,907 | |
Depreciation and amortization | 5,717 | 5,551 | 11,602 | 11,149 | |
Operating income (loss) | 1,826 | 1,521 | 4,019 | (2,006) | |
Segment Assets | |||||
Cash, Cash equivalents, and Investments | 29,304 | 29,304 | 38,240 | ||
Total current assets | 58,928 | 58,928 | 54,207 | ||
Fixed assets, net | 66,189 | 66,189 | 69,184 | ||
Goodwill | 35,270 | 35,270 | 35,270 | ||
Total assets | 222,046 | 222,046 | 222,356 | ||
Total current liabilities | 23,994 | 23,994 | 24,905 | ||
Capital Expenditures | |||||
Capital expenditures | 8,883 | 6,368 | |||
US Telecom | Operating segments | Communication services | |||||
Revenue | |||||
Revenue | 28,160 | 26,414 | 55,459 | 47,907 | |
US Telecom | Operating segments | Mobility | |||||
Revenue | |||||
Revenue | 2,367 | 2,800 | 4,770 | 5,494 | |
US Telecom | Operating segments | Fixed | |||||
Revenue | |||||
Revenue | 4,937 | 3,622 | 9,762 | 5,581 | |
US Telecom | Operating segments | Carrier services | |||||
Revenue | |||||
Revenue | 20,856 | 19,992 | 40,927 | 36,832 | |
Renewable Energy | Operating segments | |||||
Revenue | |||||
Revenue | 874 | 1,448 | 2,196 | 2,938 | |
Depreciation and amortization | 486 | 638 | 1,100 | 1,253 | |
Non-cash stock-based compensation | 131 | 131 | |||
Operating income (loss) | (620) | 167 | (1,077) | (16) | |
Segment Assets | |||||
Cash, Cash equivalents, and Investments | 22,801 | 22,801 | 25,054 | ||
Total current assets | 25,537 | 25,537 | 27,534 | ||
Fixed assets, net | 44,852 | 44,852 | 48,421 | ||
Total assets | 71,033 | 71,033 | 76,723 | ||
Total current liabilities | 1,164 | 1,164 | $ 2,745 | ||
Capital Expenditures | |||||
Capital expenditures | 1,634 | 817 | |||
Renewable Energy | Operating segments | Other | |||||
Revenue | |||||
Revenue | 874 | 1,448 | 2,196 | 2,938 | |
Renewable Energy | Operating segments | Renewable Energy | |||||
Revenue | |||||
Revenue | $ 874 | $ 1,448 | $ 2,196 | $ 2,938 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2011 | |
Contingency related to spectrum fees | ||
Commitments and contingencies | ||
Spectrum fees paid | $ 2.6 | |
Legal claims regarding tax filings with the Guyana Revenue Authority | ||
Commitments and contingencies | ||
Future payments related to disputed tax assessments | $ 44.1 | |
Accrued contingent liability | $ 5 | |
Legal claims regarding tax filings with the Guyana Revenue Authority | Minimum | ||
Commitments and contingencies | ||
Percentage of return on investment ensured by the government of Guyana | 15.00% |