atus-20220930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the quarterly period ended			September 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

Registrant; State of Incorporation; Address and Telephone Number

IRS Employer Identification No.

001-38126

38-3980194

Altice USA, Inc.

Delaware

1 Court Square West

Long Island City,

New York

11101

(516)

803-2300

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

☒

☐

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

☒

☐

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)

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes

☐

☒

Securities registered pursuant to Section 12(b) of the Act:


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


Number of shares of common stock outstanding as of October 28, 2022			454,668,428

ALTICE USA, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		2

Item 1. Financial Statements

ALTICE USA, INC. AND SUBSIDIARIES
Consolidated Financial Statements
	Consolidated Balance Sheets - September 30, 2022 (Unaudited) and December 31, 2021	4
	Consolidated Statements of Operations - Three and nine months ended September 30, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Comprehensive Income - Three and nine months ended September 30, 2022 and 2021 (Unaudited)	6
	Consolidated Statements of Stockholders' Deficiency - Three and nine months ended September 30, 2022 and 2021 (Unaudited)	7
	Consolidated Statements of Cash Flows - Nine months ended September 30, 2022 and 2021 (Unaudited)	12
	Combined Notes to Consolidated Financial Statements (Unaudited)	19
Supplemental Financial Statements Furnished:
CSC HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Financial Statements
	Consolidated Balance Sheets - September 30, 2022 (Unaudited) and December 31, 2021	13
	Consolidated Statements of Operations - Three and nine months ended September 30, 2022 and 2021 (Unaudited)	14
	Consolidated Statements of Comprehensive Income - Three and nine months ended September 30, 2022 and 2021 (Unaudited)	15
	Consolidated Statements of Member's Deficiency - Three and nine months ended September 30, 2022 and 2021 (Unaudited)	16
	Consolidated Statements of Cash Flows - Nine months ended September 30, 2022 and 2021 (Unaudited)	18
	Combined Notes to Consolidated Financial Statements (Unaudited)	19
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		34
Item 3. Quantitative and Qualitative Disclosures About Market Risk		48
Item 4. Controls and Procedures		50
PART II. OTHER INFORMATION		51
Item 1. Legal Proceedings		51


Item 6. Exhibits		51
SIGNATURES		52

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 fiber-based 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 parallel fiber-to-the-home ("FTTH") network, and deploy Altice One, our entertainment and connectivity platform;

•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;

•cybersecurity incidents as a result of hacking, phishing, denial of service attacks, dissemination of computer viruses, ransomware and other malicious software, misappropriation of data, and other malicious attempts;

•disruptions to our networks, infrastructure and facilities as a result of natural disasters, power outages, accidents, maintenance failures, telecommunications failures, degradation of plant assets, terrorist attacks and similar events;

•labor shortages and supply chain disruptions;

•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 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 16, 2022 (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


ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
	September 30, 2022 (Unaudited)		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	250,576	$	195,711
Restricted cash	265		264
Accounts receivable, trade (less allowance for doubtful accounts of $37,900 and $27,931, respectively)	343,355		406,952

Prepaid expenses and other current assets ($519 and $3,776 due from affiliates, respectively)	164,412		183,714
Derivative contracts	481,914		2,993
Investment securities pledged as collateral	1,259,877		—




Total current assets	2,500,399		789,634
Property, plant and equipment, net of accumulated depreciation of $7,649,014 and $7,142,852, respectively	7,077,966		6,340,467

Right-of-use operating lease assets	234,707		222,124
Investment securities pledged as collateral	—		2,161,937

Other assets	264,974		76,653
Amortizable intangibles, net of accumulated amortization of $5,421,667 and $5,051,149, respectively	1,782,300		2,202,001
Indefinite-lived cable television franchises	13,216,355		13,216,355
Goodwill	8,205,863		8,205,863
Total assets	$	33,282,564	$	33,215,034
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable	$	1,084,737	$	1,023,045
Interest payable	224,278		244,934
Accrued employee related costs	155,384		124,941

Deferred revenue	90,040		94,943
Debt	2,062,295		917,313
Other current liabilities ($26,821 and $31,810 due to affiliates, respectively)	352,772		329,943
Total current liabilities	3,969,506		2,735,119
Other liabilities	160,716		159,082
Deferred tax liability	4,956,050		5,048,129
Liabilities under derivative contracts	—		276,933
Right-of-use operating lease liability	245,360		237,226
Long-term debt, net of current maturities	24,290,003		25,629,447
Total liabilities	33,621,635		34,085,936
Commitments and contingencies (Note 14)
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, 270,358,014 shares issued and 270,338,751 shares outstanding as of September 30, 2022 and 270,341,685 shares issued and 270,320,798 shares outstanding as of December 31, 2021	2,704		2,703
Class B common stock: $0.01 par value, 1,000,000,000 shares authorized, 490,086,674 issued, 184,329,677 shares outstanding as of September 30, 2022 and 184,333,342 shares outstanding as of December 31, 2021	1,843		1,843
Class C common stock: $0.01 par value, 4,000,000,000 shares authorized, no shares issued and outstanding	—		—
Paid-in capital	137,660		18,005
Accumulated deficit	(461,160)		(848,836)
	(318,953)		(826,285)
Treasury stock, at cost (19,263 and 20,887 Class A common shares, respectively)	—		—
Accumulated other comprehensive income	5,432		6,497
Total Altice USA stockholders' deficiency	(313,521)		(819,788)
Noncontrolling interests	(25,550)		(51,114)
Total stockholders' deficiency	(339,071)		(870,902)
Total liabilities and stockholders' deficiency	$	33,282,564	$	33,215,034

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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue (including revenue from affiliates of $649, $3,277, $1,765, and $9,718, respectively) (See Note 13)	$	2,393,552	$	2,574,882	$	7,278,463	$	7,569,711
Operating expenses:
Programming and other direct costs (including charges from affiliates of $4,086, $5,294, $11,419, and $12,026, respectively) (See Note 13)	782,121		843,909		2,429,925		2,545,645
Other operating expenses (including charges from affiliates of $3,111, $3,274, $9,243 and $9,149, respectively) (See Note 13)	694,390		590,519		2,009,760		1,760,132
Restructuring and other expense	4,007		1,885		10,058		10,958
Depreciation and amortization (including impairments)	445,769		447,958		1,327,243		1,327,142
	1,926,287		1,884,271		5,776,986		5,643,877
Operating income	467,265		690,611		1,501,477		1,925,834
Other income (expense):
Interest expense, net	(340,989)		(319,001)		(954,564)		(954,684)
Gain (loss) on investments	(425,686)		(46,821)		(902,060)		151,651
Gain (loss) on derivative contracts, net	323,668		43,385		643,856		(109,020)
Gain on interest rate swap contracts, net	105,945		5,521		268,960		59,600
Loss on extinguishment of debt and write-off of deferred financing costs	—		—		—		(51,712)
Other income, net	3,245		2,280		8,196		7,606
	(333,817)		(314,636)		(935,612)		(896,559)
Income before income taxes	133,448		375,975		565,865		1,029,275
Income tax expense	(35,827)		(105,226)		(152,563)		(279,053)
Net income	97,621		270,749		413,302		750,222
Net income attributable to noncontrolling interests	(12,670)		(3,896)		(25,626)		(11,573)
Net income attributable to Altice USA, Inc. stockholders	$	84,951	$	266,853	$	387,676	$	738,649
Income per share:
Basic income per share	$	0.19	$	0.59	$	0.86	$	1.61
Basic weighted average common shares (in thousands)	453,239		454,049		453,233		460,023

Diluted income per share	$	0.19	$	0.58	$	0.86	$	1.59
Diluted weighted average common shares (in thousands)	453,390		457,163		453,284		465,349
Cash dividends declared per common share	$	—	$	—	$	—	$	—

See accompanying notes to consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	97,621	$	270,749	$	413,302	$	750,222
Other comprehensive income (loss):
Defined benefit pension plans	540		(2,084)		(1,515)		8,056
Applicable income taxes	(143)		555		400		(2,142)
Defined benefit pension plans, net of income taxes	397		(1,529)		(1,115)		5,914



Foreign currency translation adjustment	159		(619)		50		(140)
Applicable income taxes	—		—		—		—
Foreign currency translation adjustment, net of income taxes	159		(619)		50		(140)
Other comprehensive income (loss)	556		(2,148)		(1,065)		5,774
Comprehensive income	98,177		268,601		412,237		755,996
Comprehensive income attributable to noncontrolling interests	(12,670)		(3,896)		(25,626)		(11,573)
Comprehensive income attributable to Altice USA, Inc. stockholders	$	85,507	$	264,705	$	386,611	$	744,423

See accompanying notes to consolidated financial statements.


ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands) (Unaudited)
	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Altice USA Stockholders' Deficiency		Non-controlling Interests		Total Deficiency
Balance at January 1, 2022	$	2,703	$	1,843	$	18,005	$	(848,836)	$	—	$	6,497	$	(819,788)	$	(51,114)	$	(870,902)
Net income attributable to stockholders	—		—		—		196,551		—		—		196,551		—		196,551
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		5,590		5,590

Pension liability adjustments, net of income taxes	—		—		—		—		—		1,843		1,843		—		1,843
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		(170)		(170)		—		(170)
Share-based compensation expense (equity classified)	—		—		40,512		—		—		—		40,512		—		40,512




Issuance of common shares pursuant to employee long term incentive plan	—		—		10		—		—		—		10		—		10

Balance at March 31, 2022	2,703		1,843		58,527		(652,285)		—		8,170		(581,042)		(45,524)		(626,566)
Net income attributable to stockholders	—		—		—		106,174		—		—		106,174		—		106,174
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		7,366		7,366

Pension liability adjustments, net of income taxes	—		—		—		—		—		(3,355)		(3,355)		—		(3,355)
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		61		61		—		61
Share-based compensation expense (equity classified)	—		—		41,680		—		—		—		41,680		—		41,680




Issuance of common shares pursuant to employee long term incentive plan	—		—		6		—		—		—		6		—		6

Balance at June 30, 2022	$	2,703	$	1,843	$	100,213	$	(546,111)	$	—	$	4,876	$	(436,476)	$	(38,158)	$	(474,634)

See accompanying notes to consolidated financial statements.



ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands) (Unaudited)
	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Altice USA Stockholders'Deficiency		Non-controlling Interests		Total Deficiency
Balance at June 30, 2022	$	2,703	$	1,843	$	100,213	$	(546,111)	$	—	$	4,876	$	(436,476)	$	(38,158)	$	(474,634)
Net income attributable to stockholders	—		—		—		84,951		—		—		84,951		—		84,951
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		12,670		12,670
Distributions to noncontrolling interests	—		—		—		—		—		—		—		(62)		(62)
Pension liability adjustments, net of income taxes	—		—		—		—		—		397		397		—		397
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		159		159		—		159
Share-based compensation expense (equity classified)	—		—		37,527		—		—		—		37,527		—		37,527
Issuance of common shares pursuant to employee long term incentive plan	1		—		(80)		—		—		—		(79)		—		(79)

Balance at September 30, 2022	$	2,704	$	1,843	$	137,660	$	(461,160)	$	—	$	5,432	$	(313,521)	$	(25,550)	$	(339,071)



ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands) (Unaudited)
	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Altice USA 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.


ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands) (Unaudited)
	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Altice USA Stockholders'Deficiency		Non-controlling Interests		Total Deficiency
Balance at March 31, 2021	$	2,822	$	1,858	$	—	$	(1,185,610)	$	(163,860)	$	10,621	$	(1,334,169)	$	(53,404)	$	(1,387,573)
Net income attributable to stockholders	—		—		—		197,660		—		—		197,660		—		197,660
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		3,274		3,274
Pension liability adjustments, net of income taxes	—		—		—		—		—		1,088		1,088		—		1,088
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		(140)		(140)		—		(140)
Share-based compensation expense (equity classified)	—		—		—		27,385		—		—		27,385		—		27,385
Redeemable equity vested	—		—		—		3,618		—		—		3,618		—		3,618
Change in redeemable equity	—		—		—		(514)		—		—		(514)		—		(514)
Class A shares acquired through share repurchase program and retired	(58)		—		—		(202,787)		—		—		(202,845)		—		(202,845)

Issuance of common shares pursuant to employee long term incentive plan	8		—		—		(488)		9,365		—		8,885		—		8,885
Retirement of treasury stock	(59)		—		—		(154,436)		154,495		—		—		—		—
Other	—		—		—		92		—		—		92		76		168
Balance at June 30, 2021	$	2,713	$	1,858	$	—	$	(1,315,080)	$	—	$	11,569	$	(1,298,940)	$	(50,054)	$	(1,348,994)

See accompanying notes to consolidated financial statements.


ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands) (Unaudited)
	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Altice USA Stockholders'Deficiency		Non-controlling Interests		Total Deficiency
Balance at June 30, 2021	$	2,713	$	1,858	$	—	$	(1,315,080)	$	—	$	11,569	$	(1,298,940)	$	(50,054)	$	(1,348,994)
Net income attributable to stockholders	—		—		—		266,853		—		—		266,853		—		266,853
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		3,896		3,896
Pension liability adjustments, net of income taxes	—		—		—		—		—		(1,529)		(1,529)		—		(1,529)
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		(619)		(619)		—		(