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Accounting Changes and Recent Accounting Pronouncements (Policies) | 6 Months Ended
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Jun. 30, 2018
Accounting Changes and Error Corrections [Abstract] |
Accounting Changes and Recent Accounting Pronouncements | Accounting Changes ASU 2014-09 In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of goods or services to customers. We adopted ASU 2014-09 effective January 1, 2018 by recording the cumulative effect of the adoption to our accumulated deficit. We applied the new standard to contracts that were not complete at January 1, 2018. The comparative information for the three and six months ended June 30, 2017 contained within these condensed consolidated financial statements and notes has not been restated and continues to be reported under the accounting standards in effect for such period. The implementation of ASU 2014-09 did not have a material impact on our consolidated financial statements. The principal impacts of ASU 2014-09 on our revenue recognition policies relate to our accounting for (i) time-limited discounts and free service periods provided to our customers and (ii) certain upfront fees charged to our customers, as follows:
• | When we enter into contracts to provide services to our customers, we often provide time-limited discounts or free service periods. Under previous accounting rules, we recognized revenue, net of discounts, during the promotional periods and did not recognize any revenue during free service periods. Under ASU 2014-09, revenue recognition for those contracts that contain substantive termination penalties is accelerated, as the impact of the discounts or free service periods is recognized uniformly over the contractual period. For contracts that do not have substantive termination penalties, we continue to record the impacts of partial or full discounts during the applicable promotional periods.
• | When we enter into contracts to provide services to our customers, we often charge installation or other upfront fees. Under previous accounting rules, installation fees related to services provided over our cable networks were recognized as revenue during the period in which the installation occurred to the extent these fees were equal to or less than direct selling costs. Under ASU 2014-09, these fees are generally deferred and recognized as revenue over the contractual period, or longer if the upfront fee results in a material renewal right.
ASU 2014-09 also impacted our accounting for certain upfront costs directly associated with obtaining and fulfilling customer contracts. Under our previous policy, these costs were expensed as incurred unless the costs were in the scope of another accounting topic that allowed for capitalization. Under ASU 2014-09, certain upfront costs associated with contracts that have substantive termination penalties and a term of one year or more are recognized as assets and amortized to operating costs and expenses over the applicable period benefited. For additional information regarding our adoption of ASU 2014-09, see note 3. The cumulative effect of the adoption of ASU 2014-09 on our summary balance sheet information as of January 1, 2018 is as follows:
| Balance at December 31, 2017 |  | ASU 2014-09 Adjustments |  | Balance at January 1, 2018
| in millions
Assets: |  |  |  |  |
Trade receivables, net | $ | 1,411.0 |  |  | (0.7 | ) |  | $ | 1,410.3 |
Current assets of discontinued operations | $ | 268.1 |  |  | 98.2 |  |  | $ | 366.3 |
Other current assets | $ | 351.9 |  |  | 76.6 |  |  | $ | 428.5 |
Investments and related note receivables (a) | $ | 6,671.4 |  |  | 191.2 |  |  | $ | 6,862.6 |
Deferred tax assets | $ | 3,133.1 |  |  | (16.0 | ) |  | $ | 3,117.1 |
Long-term assets of discontinued operations | $ | 11,141.1 |  |  | 29.1 |  |  | $ | 11,170.2 |
Other assets, net | $ | 3,720.2 |  |  | 21.4 |  |  | $ | 3,741.6 |
Liabilities: |  |  |  |  |
Deferred revenue | $ | 942.2 |  |  | 5.6 |  |  | $ | 947.8 |
Current liabilities of discontinued operations | $ | 1,587.7 |  |  | 26.7 |  |  | $ | 1,614.4 |
Other accrued and current liabilities | $ | 2,240.0 |  |  | 1.2 |  |  | $ | 2,241.2 |
Long-term liabilities of discontinued operations | $ | 9,967.6 |  |  | 39.1 |  |  | $ | 10,006.7 |
Other long-term liabilities | $ | 2,247.0 |  |  | 2.7 |  |  | $ | 2,249.7 |
Equity: |  |  |  |  |
Accumulated deficit (a) | $ | (6,217.6 | ) |  | 320.1 |  |  | $ | (5,897.5 | )
Noncontrolling interests | $ | (412.0 | ) |  | 4.4 |  |  | $ | (407.6 | )
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(a) | The ASU 2014-09 adjustment amounts include the impact of our share of the VodafoneZiggo JV’s adjustment to its owners’ equity.
The impact of our adoption of ASU 2014-09 on our condensed consolidated balance sheet as of June 30, 2018 was not materially different from the impacts set forth in the above January 1, 2018 summary balance sheet information. Similarly, the adoption of ASU 2014-09 did not have a material impact on our condensed consolidated statement of operations for the three and six months ended June 30, 2018. ASU 2017-07 In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of the Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07), which changes the presentation of periodic benefit cost components. Under ASU 2017-07, we continue to present the service component of our net benefit cost as a component of operating income but present the other components of our net benefit cost, which can include credits, within non-operating income (expense) in our consolidated statements of operations. We adopted ASU 2017-07 on January 1, 2018 on a retrospective basis, which resulted in the reclassification of credits from SG&A expenses to other income, net, of $9.2 million for the six months ended June 30, 2017. ASU 2016-01 In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 primarily impacts our accounting for certain equity investments that were previously accounted for under the cost method. Under ASU 2016-01, these investments, which do not have readily determinable fair values, are accounted for at cost minus impairment, adjusted for any observable price changes of similar investments of the same issuer. We adopted the amendments of ASU 2016-01 related to equity securities without readily determinable fair values on January 1, 2018 on a prospective basis. ASU 2016-18 In November 2016, the FASB issued ASU No. 2016-18, Restricted Cash (ASU 2016-18), which requires the change in restricted cash to be included together with the change in cash and cash equivalents in our consolidated statement of cash flows. We adopted ASU 2016-18 on January 1, 2018 on a retrospective basis. Recent Accounting Pronouncements ASU 2016-02 In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02), which, for most leases, will result in lessees recognizing right-of-use assets and lease liabilities on the balance sheet and additional disclosures. ASU 2016-02, as amended by ASU No. 2018-11, Targeted Improvements, requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using one of two modified retrospective approaches. A number of optional practical expedients may be applied in transition. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. We will adopt ASU 2016-02 on January 1, 2019 by recording the cumulative effect of adoption to our accumulated deficit. Although we are currently evaluating the effect that ASU 2016-02 will have on our consolidated financial statements, the main impact of the adoption of this standard will be the recognition of right-of-use assets and lease liabilities in our consolidated balance sheet for those leases classified as operating leases under current U.S. GAAP. We do not intend to recognize right-of-use assets or lease liabilities for leases with a term of 12 months or less, as permitted by the short-term lease practical expedient in the standard. We also do not plan to apply the practical expedient that permits a lessee to account for lease and non-lease components in a contract as a single lease component and, accordingly, we will continue to account for these components separately. In transition, we plan to apply the practical expedients that permit us not to reassess (i) whether expired or existing contracts contain a lease under the new standard, (ii) the lease classification for expired or existing leases or (iii) whether previously-capitalized initial direct costs would qualify for capitalization under the new standard. In addition, we do not intend to use hindsight during transition. For a summary of our undiscounted future minimum lease payments under non-cancellable operating leases as of June 30, 2018, see note 15. We currently do not expect ASU 2016-02 to have a significant impact on our consolidated statements of operations or cash flows.
Revenue Recognition and Related Costs | Policies Our revenue recognition and certain other accounting policies, as revised to reflect the impacts of our adoption of ASU 2014-09, are set forth below. Service Revenue — Cable Networks. We recognize revenue from the provision of video, broadband internet and fixed-line telephony services over our cable network to customers in the periods the related services are provided, with the exception of revenue recognized pursuant to certain contracts that contain promotional discounts, as described below. Installation fees related to services provided over our cable network are generally deferred and recognized as revenue over the contractual period, or longer if the upfront fee results in a material renewal right. Sale of Multiple Products and Services. We sell video, broadband internet, fixed-line telephony and, in most of our markets, mobile services to our customers in bundled packages at a rate lower than if the customer purchased each product on a standalone basis. Revenue from bundled packages generally is allocated proportionally to the individual products or services based on the relative standalone selling price for each respective product or service. Mobile Revenue — General. Consideration from mobile contracts is allocated to the airtime service component and the handset component based on the relative standalone selling prices of each component. In markets where we offer handsets and airtime services in separate contracts entered into at the same time, we account for these contracts as a single contract. Mobile Revenue — Airtime Services. We recognize revenue from mobile services in the periods in which the related services are provided. Revenue from pre-pay customers is deferred prior to the commencement of services and recognized as the services are rendered or usage rights expire. Mobile Revenue — Handset Revenue. Revenue from the sale of handsets is recognized at the point in which the goods have been transferred to the customer. Some of our mobile handset contracts that permit the customer to take control of the handset upfront and pay for the handset in installments over a contractual period may contain a significant financing component. For contracts with terms of one year or more, we recognize any significant financing component as revenue over the contractual period using the effective interest method. We do not record the effect of a significant financing component if the contractual period is less than one year. B2B Revenue. We defer upfront installation and certain nonrecurring fees received on B2B contracts where we maintain ownership of the installed equipment. The deferred fees are amortized into revenue on a straight-line basis, generally over the longer of the term of the arrangement or the expected period of performance. Contract Costs. Incremental costs to obtain a contract with a customer, such as incremental sales commissions, are generally recognized as assets and amortized to SG&A expenses over the applicable period benefited, which generally is the contract life. If, however, the amortization period is less than one year, we expense such costs in the period incurred. Contract fulfillment costs, such as porting costs, are recognized as assets and amortized to other operating costs over the applicable period benefited, which is generally the substantive contract term for the related service contract. Promotional Discounts. For subscriber promotions, such as discounted or free services during an introductory period, revenue is recognized uniformly over the contractual period if the contract has substantive termination penalties. If a contract does not have substantive termination penalties, revenue is recognized only to the extent of the discounted monthly fees charged to the subscriber, if any. Subscriber Advance Payments. Payments received in advance for the services we provide are deferred and recognized as revenue when the associated services are provided. Sales, Use and Other Value-Added Taxes. Revenue is recorded net of applicable sales, use and other value-added taxes. For a disaggregation of our revenue by major category and by reportable and geographic segment, see note 16. Contract Balances The timing of revenue recognition may differ from the timing of invoicing our customers. We record a trade receivable when we have transferred goods or services to a customer but have not yet received payment. Our trade receivables are reported net of an allowance for doubtful accounts. Such allowance aggregated $57.0 million and $89.5 million at June 30, 2018 and January 1, 2018, respectively. If we transfer goods or services to a customer but do not have an unconditional right to payment, we record a contract asset. Contract assets typically arise from the uniform recognition of introductory promotional discounts over the contract period and accrued revenue for handset sales. Our contract assets were $27.7 million and $26.1 million as of June 30, 2018 and January 1, 2018, respectively. The current and long-term portions of our contract asset balance at June 30, 2018 are included within other current assets and other assets, net, respectively, in our condensed consolidated balance sheet. We record deferred revenue when we receive payment prior to transferring goods or services to a customer. We primarily defer revenue for (i) installation and other upfront services and (ii) other services that are invoiced prior to when services are provided. Our deferred revenue balances were $889.2 million and $1,005.2 million as of June 30, 2018 and January 1, 2018, respectively. The decrease in deferred revenue for the six months ended June 30, 2018 is primarily due to $801.8 million of revenue recognized that was included in our deferred revenue balance at January 1, 2018, partially offset by advanced billings in certain markets. The current and long-term portions of our deferred revenue balance at June 30, 2018 are included within deferred revenue and other long-term liabilities, respectively, in our condensed consolidated balance sheet. Contract Costs Our aggregate assets associated with incremental costs to obtain and fulfill our contracts were $68.4 million and $68.1 million at June 30, 2018 and January 1, 2018, respectively. The current and long-term portions of our assets related to contract costs at June 30, 2018 are included within other current assets and other assets, net, respectively, in our condensed consolidated balance sheet. We amortized $28.5 million and $51.3 million to operating costs and expenses during the three and six months ended June 30, 2018, respectively, related to these assets. Unsatisfied Performance Obligations A large portion of our revenue is derived from customers who are not subject to contracts. Revenue from customers who are subject to contracts is generally recognized over the term of such contracts, which is typically 12 months for our residential service, one to three years for our mobile contracts and one to five years for our B2B contracts.

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