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CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION | 9 Months Ended
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Sep. 30, 2018
Accounting Changes and Error Corrections [Abstract] |
CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION | CHANGE IN ACCOUNTING POLICIES AND ATS ACQUISITION Adoption of ASC 606 - Revenue from Contracts with Customers On January 1, 2018, the Company adopted the guidance pursuant to ASC 606. The Company elected to apply the guidance on a full retrospective basis, which required the Company to reflect the impact of the updated guidance for all periods presented. The adoption of the guidance resulted in the deferral of certain installation revenue, the deferral of certain commission expenses, and a reduction of revenue due to the reclassification of certain third party giveaways and incentives from operating expense. Additionally, the Company made changes in the composition of revenue resulting from the allocation of value related to bundled services sold to residential customers at a discount. Installation Services Revenue Pursuant to ASC 606, the Company's installation services revenue is deferred and recognized over the benefit period. For residential customers, the benefit period is less than one year. For business and wholesale customers, the benefit period is the contract term. Prior to the adoption of ASC 606, the Company recognized installation services revenue for residential and small and medium-sized business ("SMB") customers when installations were completed. As a result of the deferral of installation services revenue for residential and SMB customers, the Company recognized contract liabilities of $6,978 and recorded a cumulative effect adjustment of $5,093 (net of tax of $1,885) to retained earnings. The accounting for installation services revenue related to business and wholesale customers has not changed. Commission Expenses Pursuant to ASC 606, the Company defers commission expenses related to obtaining a contract with a customer when the expected period of benefit is greater than one year and amortizes these costs over the average contract term. For commission expenses related to customer contracts with a term of one year or less, the Company is utilizing the practical expedient and is recognizing the costs when incurred. Prior to the adoption of ASC 606, the Company recognized commission expenses related to the sale of its services when incurred. As a result of the change in the timing of recognition of these commission expenses, the Company recognized contract assets of $24,329 and recorded a cumulative effect adjustment of $17,759 (net of tax of $6,570) to retained earnings. Third Party Product Giveaways and Incentives When the Company acts as the agent in providing certain product giveaways or incentives, revenue is recorded net of the costs of the giveaways and incentives. For the three and nine months ended September 30, 2017, costs of $4,094 and $13,490, respectively for the giveaways and incentives recorded in other operating expense have been reclassified to revenue. Bundled Services The Company provides bundled services at a discounted rate to its customers. Under ASC 606, revenue should be allocated to separate performance obligations within a bundled offering based on the relative stand-alone selling price of each service within the bundle. In connection with the adoption of ASC 606, the Company revised the amounts allocated to each performance obligation within its bundled offerings which reduced previously reported revenue for telephony services and increased previously reported revenue allocated to pay television and broadband services. Adoption of ASU No. 2017-07 - Compensation-Retirement Benefits (Topic 715) On January 1, 2018, the Company adopted the guidance pursuant to ASU No. 2017‑07. ASU No. 2017‑07 requires that an employer disaggregate the service cost component from the other components of net benefit cost. In connection with the adoption of ASU No. 2017‑07, the Company retroactively reclassified certain pension costs from other operating expenses to other income (expense), net. The adoption of ASU No. 2017-07 had no impact on the Company's condensed consolidated balance sheet. Acquisition of ATS As discussed in Note 1, the Company completed the ATS Acquisition in the first quarter of 2018. ATS was previously owned by Altice N.V. and a member of ATS's management through a holding company. As the acquisition is a combination of businesses under common control, the Company combined the results of operations and related assets and liabilities of ATS for all periods since the formation of ATS, including goodwill of $23,101, representing the amount previously transferred to ATS. The following table summarizes the impact of adopting ASC 606 and the impact of the ATS Acquisition on the Company's condensed consolidated balance sheet:
| December 31, 2017
| As Reported |  | Impact of ASC 606 |  | Impact of ATS Acquisition |  | As Adjusted
Cash and cash equivalents | $ | 273,329 |  |  | $ | — |  |  | $ | 56,519 |  |  | $ | 329,848 |
Other current assets | 580,231 |  |  | 14,068 |  |  | (20,548 | ) |  | 573,751 |
Property, plant and equipment, net | 6,063,829 |  |  | — |  |  | (40,003 | ) |  | 6,023,826 |
Goodwill | 7,996,760 |  |  | — |  |  | 23,101 |  |  | 8,019,861 |
Other assets, long-term | 19,861,076 |  |  | 10,261 |  |  | (6,541 | ) |  | 19,864,796 |
Total assets | $ | 34,775,225 |  |  | $ | 24,329 |  |  | $ | 12,528 |  |  | $ | 34,812,082 |
Current liabilities | $ | 2,492,983 |  |  | $ | 6,978 |  |  | $ | 20,401 |  |  | $ | 2,520,362 |
Deferred tax liability, long-term | 4,775,115 |  |  | 4,685 |  |  | (10,514 | ) |  | 4,769,286 |
Liabilities, long-term | 21,779,997 |  |  | — |  |  | 6,394 |  |  | 21,786,391 |
Total liabilities | 29,048,095 |  |  | 11,663 |  |  | 16,281 |  |  | 29,076,039 |
Redeemable equity | 231,290 |  |  | — |  |  | — |  |  | 231,290 |
Paid-in capital | 4,642,128 |  |  | — |  |  | 23,101 |  |  | 4,665,229 |
Retained earnings | 854,824 |  |  | 12,666 |  |  | (26,854 | ) |  | 840,636 |
Total stockholders' equity | 5,495,840 |  |  | 12,666 |  |  | (3,753 | ) |  | 5,504,753 |
Total liabilities and stockholders' equity | $ | 34,775,225 |  |  | $ | 24,329 |  |  | $ | 12,528 |  |  | $ | 34,812,082 |
The following table summarizes the impact of adopting ASC 606 and ASU No. 2017-07 and the impact of the ATS Acquisition on the Company's condensed consolidated statements of operations:
| Three Months Ended September 30, 2017
| As Reported |  | Impact of ASC 606 |  | Impact of ASU No. 2017-07 |  | Impact of ATS Acquisition |  | As Adjusted
Residential: |  |  |  |  |  |  |  |  |
Pay TV | $ | 1,054,392 |  |  | $ | 15,807 |  |  | $ | — |  |  | $ | (253 | ) |  | $ | 1,069,946 |
Broadband | 646,094 |  |  | 12,372 |  |  | — |  |  | (188 | ) |  | 658,278 |
Telephony | 204,753 |  |  | (32,155 | ) |  | — |  |  | (119 | ) |  | 172,479 |
Business services and wholesale | 324,760 |  |  | (118 | ) |  | — |  |  | — |  |  | 324,642 |
Advertising | 89,292 |  |  | — |  |  | — |  |  | — |  |  | 89,292 |
Other | 7,884 |  |  | — |  |  | — |  |  | — |  |  | 7,884 |
Total revenue | 2,327,175 |  |  | (4,094 | ) |  | — |  |  | (560 | ) |  | 2,322,521 |
Programming and other direct costs | 755,101 |  |  | — |  |  | — |  |  | — |  |  | 755,101 |
Other operating expenses | 560,497 |  |  | (4,094 | ) |  | (2,921 | ) |  | 16,629 |  |  | 570,111 |
Restructuring and other expense | 53,448 |  |  | — |  |  | — |  |  | — |  |  | 53,448 |
Depreciation and amortization | 823,265 |  |  | — |  |  | — |  |  | 21 |  |  | 823,286 |
Operating income | 134,864 |  |  | — |  |  | 2,921 |  |  | (17,210 | ) |  | 120,575 |
Other expense, net | (451,638 | ) |  | — |  |  | (2,921 | ) |  | — |  |  | (454,559 | )
Loss before income taxes | (316,774 | ) |  | — |  |  | — |  |  | (17,210 | ) |  | (333,984 | )
Income tax benefit | 134,688 |  |  | — |  |  | — |  |  | 6,862 |  |  | 141,550 |
Net loss | $ | (182,086 | ) |  | $ | — |  |  | $ | — |  |  | $ | (10,348 | ) |  | $ | (192,434 | )
| Nine Months Ended September 30, 2017
| As Reported |  | Impact of ASC 606 |  | Impact of ASU No. 2017-07 |  | Impact of ATS Acquisition |  | As Adjusted
Residential: |  |  |  |  |  |  |  |  |
Pay TV | $ | 3,185,610 |  |  | $ | 39,630 |  |  | $ | — |  |  | $ | (253 | ) |  | $ | 3,224,987 |
Broadband | 1,887,279 |  |  | 39,725 |  |  | — |  |  | (188 | ) |  | 1,926,816 |
Telephony | 624,077 |  |  | (92,257 | ) |  | — |  |  | (119 | ) |  | 531,701 |
Business services and wholesale | 968,291 |  |  | (588 | ) |  | — |  |  | — |  |  | 967,703 |
Advertising | 270,154 |  |  | — |  |  | — |  |  | — |  |  | 270,154 |
Other | 25,781 |  |  | — |  |  | — |  |  | — |  |  | 25,781 |
Total revenue | 6,961,192 |  |  | (13,490 | ) |  | — |  |  | (560 | ) |  | 6,947,142 |
Programming and other direct costs | 2,272,147 |  |  | — |  |  | — |  |  | — |  |  | 2,272,147 |
Other operating expenses | 1,767,624 |  |  | (13,490 | ) |  | (9,852 | ) |  | 25,195 |  |  | 1,769,477 |
Restructuring and other expense | 142,765 |  |  | — |  |  | — |  |  | — |  |  | 142,765 |
Depreciation and amortization | 2,138,776 |  |  | — |  |  | — |  |  | 24 |  |  | 2,138,800 |
Operating income | 639,880 |  |  | — |  |  | 9,852 |  |  | (25,779 | ) |  | 623,953 |
Other expense, net | (1,802,608 | ) |  | — |  |  | (9,852 | ) |  | 1 |  |  | (1,812,459 | )
Loss before income taxes | (1,162,728 | ) |  | — |  |  | — |  |  | (25,778 | ) |  | (1,188,506 | )
Income tax benefit | 429,664 |  |  | — |  |  | — |  |  | 10,281 |  |  | 439,945 |
Net loss | $ | (733,064 | ) |  | $ | — |  |  | $ | — |  |  | $ | (15,497 | ) |  | $ | (748,561 | )

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