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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended | March 31, 2021 | |
OR
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from | | to | | |
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Commission File Number | | Registrant; State of Incorporation; Address and Telephone Number | | IRS Employer Identification No. |
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001-38126 | | | | 38-3980194 |
| | Altice USA, Inc. | | |
| | Delaware | | |
| | 1 Court Square West | | |
| | Long Island City, | New York | 11101 | | |
| | (516) | 803-2300 | | | |
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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | | | | |
Yes | ☒ | No | ☐ |
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Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). | | |
Yes | ☒ | No | ☐ |
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Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one) |
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Large Accelerated Filer | ☒ | | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
(Do not check if a smaller reporting company) | | | Emerging growth company | ☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). | Yes | ☐ | No | ☒ |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading Symbol | Name of each exchange on which registered |
Class A Common Stock, par value $0.01 per share | ATUS | NYSE |
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Number of shares of common stock outstanding as of April 19, 2021 | 459,814,587 | |
ALTICE USA, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
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| Page |
PART I. FINANCIAL INFORMATION | |
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Item 1. Financial Statements | |
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ALTICE USA, INC. AND SUBSIDIARIES | |
Consolidated Financial Statements | |
| Consolidated Balance Sheets - March 31, 2021 (Unaudited) and December 31, 2020 | |
| Consolidated Statements of Operations - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Consolidated Statements of Comprehensive Income (Loss) - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Consolidated Statements of Stockholders' Equity (Deficiency) - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Consolidated Statements of Cash Flows - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Combined Notes to Consolidated Financial Statements (Unaudited) | |
Supplemental Financial Statements Furnished: | |
CSC HOLDINGS, INC. AND SUBSIDIARIES | |
Consolidated Financial Statements | |
| Consolidated Balance Sheets - March 31, 2021 (Unaudited) and December 31, 2020 | |
| Consolidated Statements of Operations - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Consolidated Statements of Comprehensive Income (Loss) - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Consolidated Statements of Member's Equity (Deficiency) - Three months ended March 31, 2021 and 2020 (Unaudited) | |
| Consolidated Statements of Cash Flows - Three months ended March 31, 2021 and 2020 Unaudited) | |
| Combined Notes to Consolidated Financial Statements (Unaudited) | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. Controls and Procedures | |
PART II. OTHER INFORMATION | |
Item 1. Legal Proceedings | |
Item 1A. Risk Factors | |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 6. Exhibits | |
SIGNATURES | |
Part I. FINANCIAL INFORMATION
This Form 10-Q contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Act of 1934, as amended. In this Form 10-Q there are statements concerning our future operating results and future financial performance. Words such as "expects", "anticipates", "believes", "estimates", "may", "will", "should", "could", "potential", "continue", "intends", "plans" and similar words and terms used in the discussion of future operating results, future financial performance and future events identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors.
We operate in a highly competitive, consumer and technology driven and rapidly changing business that is affected by government regulation and economic, strategic, technological, political and social conditions. Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained in the forward-looking statements. In addition, important factors that could cause our actual results to differ materially from those in our forward-looking statements include:
•competition for broadband, video and telephony customers from existing competitors (such as broadband communications companies, direct broadcast satellite ("DBS") providers, wireless data and telephony providers, and Internet-based providers) and new competitors entering our footprint;
•changes in consumer preferences, laws and regulations or technology that may cause us to change our operational strategies;
•increased difficulty negotiating programming agreements on favorable terms, if at all, resulting in increased costs to us and/or the loss of popular programming;
•increasing programming costs and delivery expenses related to our products and services;
•our ability to achieve anticipated customer and revenue growth, to successfully introduce new products and services and to implement our growth strategy;
•our ability to complete our capital investment plans on time and on budget, including our plan to build a fiber-to-the-home ("FTTH") network, and deploy Altice One, our home communications hub;
•our ability to develop mobile voice and data services and our ability to attract customers to these services;
•the effects of economic conditions or other factors which may negatively affect our customers’ demand for our current and future products and services;
•the effects of industry conditions;
•demand for digital and linear advertising products and services;
•our substantial indebtedness and debt service obligations;
•adverse changes in the credit market;
•changes as a result of any tax reforms that may affect our business;
•financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate;
•the restrictions contained in our financing agreements;
•our ability to generate sufficient cash flow to meet our debt service obligations;
•fluctuations in interest rates which may cause our interest expense to vary from quarter to quarter;
•technical failures, equipment defects, physical or electronic break-ins to our services, computer viruses and similar problems;
•the disruption or failure of our network, information systems or technologies as a result of computer hacking, computer viruses, "cyber-attacks," misappropriation of data, outages, natural disasters, and other material events;
•the impact from the coronavirus ("COVID-19") pandemic;
•our ability to obtain necessary hardware, software, communications equipment and services and other items from our vendors at reasonable costs;
•our ability to effectively integrate acquisitions and to maximize expected operating efficiencies from our acquisitions or as a result of the transactions, if any;
•significant unanticipated increases in the use of bandwidth-intensive Internet-based services;
•the outcome of litigation, government investigations and other proceedings; and
•other risks and uncertainties inherent in our cable and other broadband communications businesses and our other businesses, including those listed under the caption "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 11, 2021 (the "Annual Report").
These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could cause our actual results to differ materially from those expressed in any of our forward-looking statements.
Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements are made only as of the date of this Quarterly Report. Except to the extent required by law, we do not undertake, and specifically decline any obligation, to update any forward-looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. We qualify all forward-looking statements by these cautionary statements.
Certain numerical figures included in this Quarterly Report have been subject to rounding adjustments. Accordingly, such numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.
Item 1. Financial Statements
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ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) |
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| March 31, 2021 (Unaudited) | | December 31, 2020 |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 220,571 | | | $ | 278,422 | |
Restricted cash | 264 | | | 264 | |
Accounts receivable, trade (less allowance for doubtful accounts of $22,395 and $25,198) | 376,155 | | | 442,581 | |
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Prepaid expenses and other current assets | 221,819 | | | 200,252 | |
Amounts due from affiliates | 3,795 | | | 4,262 | |
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Derivative contracts | 8,252 | | | 50,785 | |
Total current assets | 830,856 | | | 976,566 | |
Property, plant and equipment, net of accumulated depreciation of $6,639,771 and $6,431,843 | 5,843,572 | | | 5,805,996 | |
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Right-of-use operating lease assets | 234,358 | | | 241,342 | |
Investment securities pledged as collateral | 2,324,308 | | | 2,250,854 | |
Derivative contracts | — | | | 4,774 | |
Other assets | 92,137 | | | 87,429 | |
Amortizable intangibles, net of accumulated amortization of $4,574,426 and $4,409,312 | 2,616,017 | | | 2,781,116 | |
Indefinite-lived cable television franchises | 13,068,017 | | | 13,068,017 | |
Goodwill | 8,160,566 | | | 8,160,566 | |
Total assets | $ | 33,169,831 | | | $ | 33,376,660 | |
See accompanying notes to consolidated financial statements.
ALTICE USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except share and per share amounts)
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | March 31, 2021 (Unaudited) | | December 31, 2020 |
| | | |
Current Liabilities: | | | |
Accounts payable | $ | 879,032 | | | $ | 795,576 | |
Interest payable | 233,968 | | | 252,060 | |
Accrued employee related costs | 104,220 | | | 142,116 | |
Amounts due to affiliates | 12,698 | | | 8,538 | |
Deferred revenue | 153,032 | | | 109,798 | |
Debt | 1,258,055 | | | 1,245,713 | |
Other current liabilities | 550,263 | | | 544,302 | |
Total current liabilities | 3,191,268 | | | 3,098,103 | |
| | | |
Other liabilities | 172,766 | | | 192,563 | |
Deferred tax liability | 5,037,625 | | | 5,006,167 | |
Liabilities under derivative contracts | 472,402 | | | 523,150 | |
Right-of-use operating lease liability | 248,758 | | | 257,424 | |
Long-term debt, net of current maturities | 25,431,481 | | | 25,476,629 | |
Total liabilities | 34,554,300 | | | 34,554,036 | |
Commitments and contingencies (Note 16) | | | |
Redeemable equity | 3,104 | | | 25,763 | |
Stockholders' Deficiency: | | | |
Preferred stock, $0.01 par value, 100,000,000 shares authorized, no shares issued and outstanding | — | | | — | |
Class A common stock: $0.01 par value, 4,000,000,000 shares authorized, 282,245,265 shares issued and 276,179,014 shares outstanding as of March 31, 2021 and 297,203,087 shares issued and 290,573,672 shares outstanding as of December 31, 2020 | 2,822 | | | 2,972 | |
Class B common stock: $0.01 par value, 1,000,000,000 shares authorized, 490,086,674 issued, 185,798,393 shares outstanding as of March 31, 2021 and 185,895,903 shares outstanding as of December 31, 2020 | 1,858 | | | 1,859 | |
Class C common stock: $0.01 par value, 4,000,000,000 shares authorized, no shares issued and outstanding | — | | | — | |
Paid-in capital | — | | | — | |
Accumulated deficit | (1,185,610) | | | (985,641) | |
| (1,180,930) | | | (980,810) | |
Treasury stock, at cost (6,066,251 and 6,629,415 Class A common shares at March 31, 2021 and December 31, 2020, respectively) | (163,860) | | | (163,866) | |
Accumulated other comprehensive income | 10,621 | | | 3,646 | |
Total Altice USA stockholders' deficiency | (1,334,169) | | | (1,141,030) | |
Noncontrolling interests | (53,404) | | | (62,109) | |
Total stockholders' deficiency | (1,387,573) | | | (1,203,139) | |
Total liabilities and stockholders' deficiency | $ | 33,169,831 | | | $ | 33,376,660 | |
See accompanying notes to consolidated financial statements.
ALTICE USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2021 | | 2020 |
Revenue (including revenue from affiliates of $3,406 and $3,488 respectively) (See Note 15) | $ | 2,478,821 | | | $ | 2,450,256 | |
Operating expenses: | | | |
Programming and other direct costs (including charges from affiliates of $2,228 and $2,189 respectively) (See Note 15) | 851,864 | | | 864,514 | |
Other operating expenses (including charges from affiliates of $3,179 and $3,941 respectively) (See Note 15) | 580,433 | | | 582,309 | |
Restructuring and other expense | 3,209 | | | 7,294 | |
Depreciation and amortization (including impairments) | 434,857 | | | 547,569 | |
| 1,870,363 | | | 2,001,686 | |
Operating income | 608,458 | | | 448,570 | |
Other income (expense): | | | |
Interest expense | (316,339) | | | (365,211) | |
Interest income | 27 | | | 1,659 | |
Gain (loss) on investments and sale of affiliate interests, net | 73,453 | | | (455,473) | |
Gain (loss) on derivative contracts, net | (53,565) | | | 439,861 | |
Gain (loss) on interest rate swap contracts, net | 75,653 | | | (54,832) | |
| | | |
Other income, net | 2,859 | | | 923 | |
| (217,912) | | | (433,073) | |
Income before income taxes | 390,546 | | | 15,497 | |
Income tax expense | (112,007) | | | (17,035) | |
Net income (loss) | 278,539 | | | (1,538) | |
Net loss (income) attributable to noncontrolling interests | (4,403) | | | 680 | |
Net income (loss) attributable to Altice USA, Inc. stockholders | $ | 274,136 | | | $ | (858) | |
Income (loss) per share: | | | |
Basic income (loss) per share | $ | 0.58 | | | $ | — | |
Basic weighted average common shares (in thousands) | 469,233 | | | 621,414 | |
| | | |
Diluted income (loss) per share | $ | 0.58 | | | $ | — | |
Diluted weighted average common shares (in thousands) | 475,448 | | | 621,414 | |
Cash dividends declared per common share | $ | — | | | $ | — | |
See accompanying notes to consolidated financial statements.
ALTICE USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
| | | | | | | | | | | | |
| Three Months Ended March 31, | |
| 2021 | | 2020 | |
Net income (loss) | $ | 278,539 | | | $ | (1,538) | | |
Other comprehensive income (loss): | | | | |
Defined benefit pension plans: | | | | |
Unrecognized actuarial gain (loss) | 9,396 | | | (13,469) | | |
Applicable income taxes | (2,490) | | | 3,598 | | |
Unrecognized gain (loss) arising during period, net of income taxes | 6,906 | | | (9,871) | | |
| | | | |
| | | | |
| | | | |
Settlement loss (gain) included in other expense, net | (748) | | | 502 | | |
Applicable income taxes | 198 | | | (134) | | |
Settlement loss (gain) included in other expense, net, net of income taxes | (550) | | | 368 | | |
| | | | |
| | | | |
| | | | |
Foreign currency translation adjustment | 619 | | | (424) | | |
Applicable income taxes | — | | | — | | |
Foreign currency translation adjustment, net | 619 | | | (424) | | |
Other comprehensive income (loss) | 6,975 | | | (9,927) | | |
Comprehensive income (loss) | 285,514 | | | (11,465) | | |
Comprehensive loss (income) attributable to noncontrolling interests | (4,403) | | | 680 | | |
Comprehensive income (loss) attributable to Altice USA, Inc. stockholders | $ | 281,111 | | | $ | (10,785) | | |
See accompanying notes to consolidated financial statements.
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ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (In thousands) (Unaudited) |
| Class A Common Stock | | Class B Common Stock | | Paid-in Capital | | Accumulated Deficit | | Treasury Stock | | Accumulated Other Comprehensive Income | | Total Stockholders' Deficiency | | Non-controlling Interests | | Total Deficiency |
Balance at January 1, 2021 | $ | 2,972 | | | $ | 1,859 | | | $ | — | | | $ | (985,641) | | | $ | (163,866) | | | $ | 3,646 | | | $ | (1,141,030) | | | $ | (62,109) | | | $ | (1,203,139) | |
Net income attributable to stockholders | — | | | — | | | — | | | 274,136 | | | — | | | — | | | 274,136 | | | — | | | 274,136 | |
Net income attributable to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,403 | | | 4,403 | |
| | | | | | | | | | | | | | | | | |
Pension liability adjustments, net of income taxes | — | | | — | | | — | | | — | | | — | | | 6,356 | | | 6,356 | | | — | | | 6,356 | |
Foreign currency translation adjustment, net of income taxes | — | | | — | | | — | | | — | | | — | | | 619 | | | 619 | | | — | | | 619 | |
Share-based compensation expense (equity classified) | — | | | — | | | — | | | 27,964 | | | — | | | — | | | 27,964 | | | — | | | 27,964 | |
Redeemable equity vested | — | | | — | | | — | | | 20,131 | | | — | | | — | | | 20,131 | | | — | | | 20,131 | |
Change in redeemable equity | — | | | — | | | — | | | 2,528 | | | — | | | — | | | 2,528 | | | — | | | 2,528 | |
Class A shares acquired through share repurchase program and retired | (152) | | | — | | | — | | | (522,521) | | | — | | | — | | | (522,673) | | | — | | | (522,673) | |
Conversion of Class B to Class A shares | 1 | | | (1) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Issuance of common shares pursuant to employee long term incentive plan | 1 | | | — | | | — | | | 2,037 | | | 6 | | | — | | | 2,044 | | | — | | | 2,044 | |
Other | — | | | — | | | — | | | (4,244) | | | — | | | — | | | (4,244) | | | 4,302 | | | 58 | |
Balance at March 31, 2021 | $ | 2,822 | | | $ | 1,858 | | | $ | — | | | $ | (1,185,610) | | | $ | (163,860) | | | $ | 10,621 | | | $ | (1,334,169) | | | $ | (53,404) | | | $ | (1,387,573) | |
See accompanying notes to consolidated financial statements.
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ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (In thousands) (Unaudited) |
| Class A Common Stock | | Class B Common Stock | | Paid-in Capital | | Retained Earnings | | Treasury Stock | | Accumulated Other Comprehensive Loss | | Total Stockholders' Equity | | Non-controlling Interest | | Total Equity |
Balance at January 1, 2020 | $ | 4,572 | | | $ | 1,862 | | | $ | 2,039,918 | | | $ | 390,766 | | | $ | (163,904) | | | $ | (3,250) | | | $ | 2,269,964 | | | $ | 9,298 | | | $ | 2,279,262 | |
Net loss attributable to stockholders | — | | | — | | | — | | | (858) | | | — | | | — | | | (858) | | | — | | | (858) | |
Net loss attributable to noncontrolling interests | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (680) | | | (680) | |
| | | | | | | | | | | | | | | | | |
Pension liability adjustments, net of income taxes | — | | | — | | | — | | | — | | | — | | | (9,503) | | | (9,503) | | | — | | | (9,503) | |
Foreign currency translation adjustment, net of income taxes | — | | | — | | | — | | | — | | | — | | | (424) | | | (424) | | | — | | | (424) | |
Share-based compensation expense | — | | | — | | 27,370 | | | — | | | — | | | — | | | 27,370 | | | — | | | 27,370 | |
Redeemable equity vested | — | | | — | | | 29,479 | | | — | | | — | | | — | | | 29,479 | | | — | | | 29,479 | |
Change in redeemable equity | — | | | — | | | 13,260 | | | — | | | — | | | — | | | 13,260 | | | — | | | 13,260 | |
| | | | | | | | | | | | | | | | | |
Class A shares acquired through share repurchase program and retired | (312) | | | — | | | (749,686) | | | — | | | — | | | — | | | (749,998) | | | — | | | (749,998) | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Issuance of common shares pursuant to employee long term incentive plan | 1 | | | — | | | 2,495 | | | — | | | 11 | | | — | | | 2,507 | | | — | | | 2,507 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Balance at March 31, 2020 | $ | 4,261 | | | $ | 1,862 | | | $ | 1,362,836 | | | $ | 389,908 | | | $ | (163,893) | | | $ | (13,177) | | | $ | 1,581,797 | | | $ | 8,618 | | | $ | 1,590,415 | |
See accompanying notes to consolidated financial statements.
ALTICE USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2021 | | 2020 | | |
Cash flows from operating activities: | | | | | |
Net income (loss) | $ | 278,539 | | | $ | (1,538) | | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
Depreciation and amortization (including impairments) | 434,857 | | | 547,569 | | | |
| | | | | |
| | | | | |
Loss (gain) on investments and sale of affiliate interests, net | (73,453) | | | 455,473 | | | |
Loss (gain) on derivative contracts, net | 53,565 | | | (439,861) | | | |
| | | | | |
Amortization of deferred financing costs and discounts (premiums) on indebtedness | 23,039 | | | 23,944 | | | |
| | | | | |
Share-based compensation expense | 28,281 | | | 27,946 | | | |
Deferred income taxes | 29,165 | | | 30,225 | | | |
Decrease in right-of-use assets | 10,816 | | | 11,474 | | | |
Provision for doubtful accounts | 11,133 | | | 19,880 | | | |
Other | 1,074 | | | 1,849 | | | |
Change in assets and liabilities, net of effects of acquisitions and dispositions: | | | | | |
Accounts receivable, trade | 55,293 | | | (4,458) | | | |
Prepaid expenses and other assets | (26,321) | | | (34,800) | | | |
Amounts due from and due to affiliates | 4,627 | | | 3,894 | | | |
Accounts payable and accrued liabilities | (29,696) | | | (165,728) | | | |
Deferred revenue | 38,501 | | | (5,153) | | | |
Liabilities related to interest rate swap contracts | (89,798) | | | 122,849 | | | |
Net cash provided by operating activities | 749,622 | | | 593,565 | | | |
Cash flows from investing activities: | | | | | |
Capital expenditures | (212,791) | | | (299,082) | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Other, net | 2,143 | | | 1,339 | | | |
Net cash used in investing activities | (210,648) | | | (297,743) | | | |
Cash flows from financing activities: | | | | | |
Proceeds from long-term debt | 150,000 | | | — | | | |
Repayment of long-term debt | (225,863) | | | (18,183) | | | |
| | | | | |
| | | | | |
Proceeds from collateralized indebtedness and related derivative contracts, net | 185,105 | | | — | | | |
Repayment of collateralized indebtedness and related derivative contracts, net | (185,105) | | | — | | | |
| | | | | |
| | | | | |
| | | | | |
Principal payments on finance lease obligations | (18,330) | | | (5,700) | | | |
Purchase of shares of Altice USA Class A common stock, pursuant to a share repurchase program | (503,645) | | | (726,005) | | | |
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| | | | | |
Other | 393 | | (2,915) | | | |
Net cash used in financing activities | (597,445) | | | (752,803) | | | |
Net decrease in cash and cash equivalents | (58,471) | | | (456,981) | | | |
Effect of exchange rate changes on cash and cash equivalents | 620 | | | (424) | | | |
Net decrease in cash and cash equivalents | (57,851) | | | (457,405) | | | |
Cash, cash equivalents and restricted cash at beginning of year | 278,686 | | | 702,160 | | | |
Cash, cash equivalents and restricted cash at end of period | $ | 220,835 | | | $ | 244,755 | | | |
See accompanying notes to consolidated financial statements.
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CSC HOLDINGS, LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
|
| | | |
| March 31, 2021 (Unaudited) | | December 31, 2020 |
ASSETS | | | |
Current Assets: | | | |
Cash and cash equivalents | $ | 220,214 | | | $ | 277,938 | |
Restricted cash | 264 | | | 264 | |
Accounts receivable, trade (less allowance for doubtful accounts of $22,395 and $25,198) | 376,155 | | | 442,581 | |
| | | |
Prepaid expenses and other current assets | 221,819 | | | 200,252 | |
Amounts due from affiliates | 3,795 | | | 4,262 | |
| | | |
| | | |
Derivative contracts | 8,252 | | | 50,785 | |
Total current assets | 830,499 | | | 976,082 | |
Property, plant and equipment, net of accumulated depreciation of $6,639,771 and $6,431,843 | 5,843,572 | | | 5,805,996 | |
| | | |
Right-of-use operating lease assets | 234,358 | | | 241,342 | |
Investment securities pledged as collateral | 2,324,308 | | | 2,250,854 | |
Derivative contracts | — | | | 4,774 | |
Other assets | 92,137 | | | 87,429 | |
Amortizable intangibles, net of accumulated amortization of $4,574,426 and $4,409,312 | 2,616,017 | | | 2,781,116 | |
Indefinite-lived cable television franchises | 13,068,017 | | | 13,068,017 | |
Goodwill | 8,160,566 | | | 8,160,566 | |
Total assets | $ | 33,169,474 | | | $ | 33,376,176 | |
See accompanying notes to consolidated financial statements.
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CSC HOLDINGS, LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) (In thousands, except per membership unit amounts) |
LIABILITIES AND MEMBER'S DEFICIENCY | March 31, 2021 (Unaudited) | | December 31, 2020 |
| | | |
Current Liabilities: | | | |
Accounts payable | $ | 879,032 | | | $ | 795,576 | |
Interest payable | 233,968 | | | 252,060 | |
Accrued employee related costs | 104,220 | | | 142,116 | |
Amounts due to affiliates | 12,698 | | | 8,538 | |
Deferred revenue | 153,032 | | | 109,798 | |
Debt | 1,258,055 | | | 1,245,713 | |
Other current liabilities | 530,853 | | | 543,834 | |
Total current liabilities | 3,171,858 | | | 3,097,635 | |
| | | |
Other liabilities | 172,766 | | | 192,563 | |
Deferred tax liability | 5,065,438 | | | 5,033,980 | |
Liabilities under derivative contracts | 472,402 | | | 523,150 | |
Right-of-use operating lease liability | 248,758 | | | 257,424 | |
Long-term debt, net of current maturities | 25,431,481 | | | 25,476,629 | |
Total liabilities | 34,562,703 | | | 34,581,381 | |
Commitments and contingencies (Note 16) | | | |
Redeemable equity | 3,104 | | | 25,763 | |
| | | |
Member's deficiency (100 membership units issued and outstanding) | (1,353,550) | | | (1,172,505) | |
Accumulated other comprehensive income | 10,621 | | | 3,646 | |
Total member's deficiency | (1,342,929) | | | (1,168,859) | |
Noncontrolling interest | (53,404) | | | (62,109) | |
Total deficiency | (1,396,333) | | | (1,230,968) | |
Total liabilities and member's deficiency | $ | 33,169,474 | | | $ | 33,376,176 | |
See accompanying notes to consolidated financial statements.
CSC HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2021 | | 2020 |
Revenue (including revenue from affiliates of $3,406 and $3,488 respectively) (See Note 15) | $ | 2,478,821 | | | $ | 2,450,256 | |
Operating expenses: | | | |
Programming and other direct costs (including charges from affiliates of $2,228 and $2,189 respectively) (See Note 15) | 851,864 | | | 864,514 | |
Other operating expenses (including charges from affiliates of $3,179 and $3,941 respectively) (See Note 15) | 580,433 | | | 582,309 | |
Restructuring and other expense | 3,209 | | | 7,294 | |
Depreciation and amortization (including impairments) | 434,857 | | | 547,569 | |
| 1,870,363 | | | 2,001,686 | |
Operating income | 608,458 | | | 448,570 | |
Other income (expense): | | | |
Interest expense | (316,339) | | | (365,211) | |
Interest income | 27 | | | 1,659 | |
Gain (loss) on investments and sale of affiliate interests, net | 73,453 | | | (455,819) | |
Gain (loss) on derivative contracts, net | (53,565) | | | 439,861 | |
Gain (loss) on interest rate swap contracts, net | 75,653 | | | (54,832) | |
| | | |
Other income, net | 2,859 | | | 923 | |
| (217,912) | | | (433,419) | |
Income before income taxes | 390,546 | | | 15,151 | |
Income tax expense | (112,007) | | | (5,029) | |
Net income | 278,539 | | | 10,122 | |
Net loss (income) attributable to noncontrolling interests | (4,403) | | | 680 | |
Net income attributable to CSC Holdings, LLC sole member | $ | 274,136 | | | $ | 10,802 | |
See accompanying notes to consolidated financial statements.
CSC HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2021 | | 2020 |
Net income | $ | 278,539 | | | $ | 10,122 | |
Other comprehensive income: | | | |
Defined benefit pension plans: | | | |
Unrecognized actuarial gain (loss) | 9,396 | | | (13,469) | |
Applicable income taxes | (2,490) | | | 3,598 | |
Unrecognized gain (loss) arising during period, net of income taxes | 6,906 | | | (9,871) | |
| | | |
| | | |
| | | |
Settlement loss (gain) included in other expense, net | (748) | | | 502 | |
Applicable income taxes | 198 | | | (134) | |
Settlement loss (gain) included in other expense, net, net of income taxes | (550) | | | 368 | |
| | | |
| | | |
| | | |
Foreign currency translation adjustment | 619 | | | (424) | |
| | | |
| | | |
Other comprehensive income (loss) | 6,975 | | | (9,927) | |
Comprehensive income | 285,514 | | | 195 | |
Comprehensive loss (income) attributable to noncontrolling interests | (4,403) | | | 680 | |
Comprehensive income attributable to CSC Holdings, LLC's sole member | $ | 281,111 | | | $ | 875 | |
See accompanying notes to consolidated financial statements.
CSC HOLDINGS, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL MEMBER'S EQUITY (DEFICIENCY)
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Member's Equity (Deficiency) | | Accumulated Other Comprehensive Income (Loss) | | Total Member's Equity (Deficiency) | | Noncontrolling Interests | | Total Equity (Deficiency) |
| | | | | | | | | |
Balance at January 1, 2021 | $ | (1,172,505) | | | $ | 3,646 | | | $ | (1,168,859) | | | $ | (62,109) | | | $ | (1,230,968) | |
Net income attributable to CSC Holdings' sole member | 274,136 | | | — | | | 274,136 | | | — | | | 274,136 | |
Net income attributable to noncontrolling interests | — | | | — | | | — | | | 4,403 | | | 4,403 | |
| | | | | | | | | |
Pension liability adjustments, net of income taxes | — | | | 6,356 | | | 6,356 | | | — | | | 6,356 | |
Foreign currency translation adjustment, net of income taxes | — | | | 619 | | | 619 | | | — | | | 619 | |
Share-based compensation expense (equity classified) | 27,964 | | | — | | | 27,964 | | | — | | | 27,964 | |
Redeemable equity vested | 20,131 | | | — | | | 20,131 | | | — | | | 20,131 | |
Change in redeemable equity | 2,528 | | | — | | | 2,528 | | | — | | | 2,528 | |
Cash distributions to parent | (501,000) | | | — | | | (501,000) | | | — | | | (501,000) | |
| | | | | | | | | |
Other | (4,804) | | | — | | | (4,804) | | | 4,302 | | | (502) | |
Balance at March 31, 2021 | $ | (1,353,550) | | | $ | 10,621 | | | $ | (1,342,929) | | | $ | (53,404) | | | $ | (1,396,333) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance at January 1, 2020 | $ | 2,047,397 | | | $ | (3,250) | | | $ | 2,044,147 | | | $ | 9,298 | | | $ | 2,053,445 | |
Net income attributable to CSC Holdings' sole member | 10,802 | | | — | | | 10,802 | | | — | | | 10,802 | |
Net loss attributable to noncontrolling interests | — | | | — | | | — | | | (680) | | | (680) | |
| | | | | | | | | |
Pension liability adjustments, net of income taxes | — | | | (9,503) | | | (9,503) | | | — | | | (9,503) | |
Foreign currency translation adjustment, net of income taxes | — | | | (424) | | | (424) | | | — | | | (424) | |
Share-based compensation expense | 27,370 | | | — | | | 27,370 | | | — | | | 27,370 | |
Redeemable equity vested | 29,479 | | | — | | | 29,479 | | | — | | | 29,479 | |
Change in redeemable equity | 13,260 | | | — | | | 13,260 | | | — | | | 13,260 | |
Cash distributions to parent | (720,350) | | | — | | | (720,350) | | | — | | | (720,350) | |
| | | | | | | | | |
Non-cash distributions to parent | (150,602) | |