1.	DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business.

Cable One, Inc. (“Cable One”) owns and operates cable systems that provide data, video and voice services to residential and commercial subscribers in

Western, Midwestern and Southern states of the United States of America as of

March

31,

2017.

Prior to

July

2015,

Cable One operated as a wholly owned subsidiary of Graham Holdings Company (“GHC”). As of

March

31,

2017,

Cable One provided service to

523,327

data customers,

307,187

video customers and

113,368

voice customers. On

May

2017,

Cable One completed the acquisition of all of the outstanding equity interests of RBI Holding LLC (“NewWave”) and NewWave became a wholly owned subsidiary of Cable One. Cable One paid a purchase price of

$735

million in cash, on a debt-free, cash-free basis and subject to customary post-closing adjustments. See Note

for details on this transaction.

Unless otherwise stated or the context otherwise indicates, all references in this Quarterly Report on Form

-Q to “Cable One,” “us,” “our,” “we” or the “Company”

refer to Cable One, Inc. and its wholly owned subsidiary, Cable One VoIP LLC (the “Subsidiary”).

Basis of Presentation.

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with: (i) generally accepted accounting principles in the United States (“GAAP”) for interim financial information; and (ii) the guidance of Rule

of Regulation S-X under the Securities Exchange Act of

1934,

as amended (the “Exchange Act”), for financial statements required to be filed with the Securities and Exchange Commission (the “SEC”). As permitted under such rule, certain notes and other financial information normally required by GAAP have been condensed or omitted. Management believes the accompanying Condensed Consolidated Financial Statements reflect all normal and recurring adjustments necessary for a fair statement of the Company’s financial position, results of operations and cash flows as of and for the periods presented herein. These Condensed Consolidated Financial Statements are unaudited and should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form

-K for the fiscal year ended

December

31,

2016.

The Company’s interim results of operations

may

not be indicative of its future results.

Certain reclassifications have been made to prior period amounts to conform to the current

period presentation.

Principles of Consolidation.

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and the Subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Segment Reporting.

Accounting Standard Codification (“ASC”)

280

Segment Reporting

requires the disclosure of factors used to identify an enterprise’s reportable segments. The Company’s operations are organized and managed on the basis of cable systems within its geographic regions. Each cable system derives revenues from the delivery of similar products and services to a customer base that is also similar. Each cable system deploys similar technology to deliver the Company’s products and services, operates within a similar regulatory environment, has similar economic characteristics and is managed by the Company’s chief operating decision maker as part of an aggregate of all cable systems. Management evaluated the criteria for aggregation under ASC

280

and believes that the Company meets each of the respective criteria set forth therein. Accordingly, management has identified

one

reportable segment.

Use of Estimates.

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported herein. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods

may

be affected by changes in those estimates.

Change in Accounting Estimate.

In the

first

quarter of

2017,

the Company changed its accounting estimate related to the capitalization of certain internal labor and related costs associated with construction and customer installation activities. Historically, the Company did not have adequate information to identify and calculate all of the capitalizable labor and related costs, and therefore these costs were expensed as incurred. As a result of this change in estimate, capitalized labor costs increased

$5.9

million in the

first

quarter of

2017

compared to the

first

quarter of

2016.

Change in Accounting Estimate.

As a result of new systems and processes implemented in the

first

quarter of

2017,

$5.9

million in the

first

quarter of

2017

compared to the

first

quarter of

2016

Recently Adopted and Issued Accounting Pronouncements.

January

2017,

the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2017

04,

Intangibles

- Goodwill and Other (Topic

350):

Simplifying the Test for Goodwill Impairment.

ASU

2017

removes Step

of the current goodwill impairment test under ASC

350

and replaces it with a simplified model. Under the simplified model, a goodwill impairment will be calculated as the difference between the carrying amount of a reporting unit and its fair value, but not to exceed the carrying amount of goodwill. The amount of any impairment under the simplified model

may

differ from what would have been recognized under the

two

-step test. The ASU is effective for annual and any interim impairment tests performed for periods beginning after

December

15,

2019.

The Company is evaluating the impact of adopting this guidance on its financial statements.

January

2017,

the FASB issued ASU No.

2017

01,

Business Combinations (Topic

805):

Clarifying the Definition of a Business

. The purpose of the amendment is to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public entities, the amendments in ASU

2017

are effective for interim and annual reporting periods beginning after

December

15,

2017.

The Company is evaluating the impact of adopting this guidance on its financial statements relating to the acquisition of NewWave on

May

2017.

August

201

the FASB issued ASU No.

2016

15,

Statement of Cash Flows (Topic

230)

Classification of Certain Cash Receipts and Cash Payments

. The guidance clarifies the way in which certain cash receipts and cash payments should be classified on the statement of cash flows and also how the predominance principle should be applied when cash receipts and cash payments have aspects of more than

one

class of cash flows. ASU

2016

is effective for the

first

quarter of

2018

with early adoption permitted. The Company is evaluating the impact of adopting ASU

2016

on its financial statements.

March

2016,

the FASB issued ASU No.

2016

09,

Compensation - Stock Compensation (Topic

718):

Improvements to Employee Share-Based Payment Accounting

. The updated guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. ASU

2016

was effective for the

first

quarter of

2017.

The ASU is expected to result in increased volatility to the Company’s income tax expense.

February

2016,

the FASB issued ASU No.

2016

02,

Leases (Topic

842)

. ASU

2016

requires lessees to record most of their leases on the balance sheet, which will be recognized as a right-of-use asset and a lease liability. The Company will be required to classify each separate lease component as an operating or finance lease at the lease commencement date. Initial measurement of the right-of-use asset and lease liability is the same for operating and finance leases, however, expense recognition and amortization of the right-of-use asset differs. Operating leases will reflect lease expense on a straight-line basis similar to current operating leases. The straight-line expense will reflect the interest expense on the lease liability (effective interest method) and amortization of the right-of-use asset, which will be presented as a single line item in the operating expense section of the income statement. Finance leases will reflect a front-loaded expense pattern similar to the pattern for current capital leases. ASU

2016

is effective for the

first

quarter of

2019,

with early adoption permitted. The Company is evaluating the impact of adopting this guidance

on its financial statements.

May

2014,

the FASB issued ASU No.

2014

09,

Revenue from Contracts with Customers (Topic

606)

. ASU

2014

provides new guidance related to how an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also expands the required disclosures to include the disaggregation of revenue from contracts with customers into categories that depict how the nature, timing and uncertainty of revenue and cash flows are affected by economic factors. During

2016,

the FASB issued additional interpretive guidance relating to the standard which covered the topics of principal versus agent considerations and identifying performance obligations and licensing. The standard is effective for the Company in the

first

quarter of

2018.

The

two

permitted transition methods under the standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company has engaged

third

party revenue consultants to assist with the implementation of this guidance and continues evaluating the impact of adopting the guidance

on its financial statements