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Note 2 - Acquisitions | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 2. ACQUISITIONS The Company accounts for certain acquisitions as business combinations pursuant to ASC 805 - Business Combinations. In accordance with ASC 805, the Company uses its best estimates and assumptions to assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date based on the information that is available as of the acquisition date. The Company believes that the information available provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed for each acquisition, however, preliminary measurements of fair value for each acquisition are subject to change during the measurement period, and such changes could be material. The Company expects to finalize the valuation after each acquisition as soon as practicable but no later than one year after the acquisition date. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired in a business combination and represents the future economic benefits expected to arise from anticipated synergies and intangible assets that do not qualify for separate recognition, including an assembled workforce, noncontractual relationships and other agreements. As an indefinite-lived asset, goodwill is not amortized but rather is subject to impairment testing on at least an annual basis. Acquisition costs incurred by the Company are not included as components of consideration transferred and instead are accounted for as expenses in the period in which the costs are incurred. The Company incurred $0.3 million and $0.8 million of acquisition costs during the three months ended September 30, 2022 and 2021, respectively, and $2.8 million and $10.0 million of acquisition costs during the nine months ended September 30, 2022 and 2021, respectively. These costs are included in selling, general and administrative expenses within the Company’s condensed consolidated statements of operations and comprehensive income. The following acquisitions occurred during the periods presented: CableAmerica. On December 30, 2021, the Company acquired certain assets and assumed certain liabilities of CableAmerica, a data, video and voice services provider in central Missouri, for a purchase price of $113.1 million on a cash-free and debt-free basis. Acquired identifiable intangible assets associated with the CableAmerica acquisition consisted of the following (dollars in thousands):
|  |  |  |  |  | Useful Life |
|  | Fair Value |  |  | (in years) |
Customer relationships |  | $ | 15,400 |  |  |  | 14.0 |
Trademark and trade name |  | $ | 500 |  |  |  | 3.0 |
Franchise agreements |  | $ | 49,600 |  |  | Indefinite |
Customer relationships and franchise agreements were valued using the multi-period excess earnings method (“MPEEM”) of the income approach. Significant assumptions used in the valuations include projected revenue growth rates, customer attrition rates, future earnings before interest, taxes, depreciation and amortization (“EBITDA” and as adjusted, “Adjusted EBITDA”) margins, future capital expenditures and appropriate discount rates. No residual value was assigned to the acquired customer relationships, trademark and trade name or franchise agreements. The customer relationships are amortized on an accelerated basis commensurate with future anticipated cash flows. The trademark and trade name are amortized on a straight-line basis. The total weighted average amortization period for the acquired finite-lived intangible assets is 13.7 years. The CableAmerica acquisition resulted in the recognition of $25.6 million of goodwill, which is deductible for tax purposes. Hargray. On May 3, 2021, the Company acquired the remaining approximately 85% equity interest in Hargray, a data, video and voice services provider, that it did not already own for an approximately $2.0 billion cash purchase price, which implied a $2.2 billion total enterprise value for Hargray on a cash-free and debt-free basis. The following table summarizes the allocation of the Hargray purchase price consideration as of the acquisition date, reflecting immaterial measurement period adjustments (in thousands):
|  | Initial Purchase Price Allocation |  |  | Measurement Period Adjustments |  |  | Purchase Price Allocation |
Assets Acquired |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 17,652 |  |  | $ | - |  |  | $ | 17,652 |
Accounts receivable |  |  | 17,991 |  |  |  | (62 | ) |  |  | 17,929 |
Income taxes receivable |  |  | - |  |  |  | 720 |  |  |  | 720 |
Prepaid and other current assets |  |  | 8,006 |  |  |  | - |  |  |  | 8,006 |
Property, plant and equipment |  |  | 457,158 |  |  |  | (525 | ) |  |  | 456,633 |
Intangible assets |  |  | 1,592,000 |  |  |  | - |  |  |  | 1,592,000 |
Other noncurrent assets |  |  | 4,636 |  |  |  | 2,940 |  |  |  | 7,576 |
Total Assets Acquired |  |  | 2,097,443 |  |  |  | 3,073 |  |  |  | 2,100,516 |
Liabilities Assumed |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  |  | 36,457 |  |  |  | 1,770 |  |  |  | 38,227 |
Deferred revenue (short-term portion) |  |  | 8,462 |  |  |  | - |  |  |  | 8,462 |
Current portion of long-term debt |  |  | 1,375 |  |  |  | (1,375 | ) |  |  | - |
Long-term debt |  |  | 2,912 |  |  |  | (2,912 | ) |  |  | - |
Deferred income taxes |  |  | 437,725 |  |  |  | 3,652 |  |  |  | 441,377 |
Other noncurrent liabilities |  |  | 6,974 |  |  |  | 2,912 |  |  |  | 9,886 |
Total Liabilities Assumed |  |  | 493,905 |  |  |  | 4,047 |  |  |  | 497,952 |
Net assets acquired |  |  | 1,603,538 |  |  |  | (974 | ) |  |  | 1,602,564 |
Purchase price consideration(1) |  |  | 2,117,866 |  |  |  | (756 | ) |  |  | 2,117,110 |
Goodwill recognized |  | $ | 514,328 |  |  | $ | 218 |  |  | $ | 514,546 |
(1) | Consists of approximately $2.0 billion of cash for the additional approximately 85% equity interest in Hargray that the Company did not already own and the $146.6 million May 3, 2021 fair value of the Company’s existing approximately 15% equity investment in Hargray. The Company recognized a $33.4 million non-cash gain within other income in the condensed consolidated statement of operations and comprehensive income upon the acquisition, representing the difference between the existing equity investment’s fair value and $113.2 million carrying value. The fair value of the existing investment was calculated as approximately 15% of the fair value of Hargray’s total equity value (determined using the discounted cash flow method of the income approach, less debt), excluding the impact of any synergies or control premium that would be realized by a controlling interest.
Acquired identifiable intangible assets associated with the Hargray Acquisition consisted of the following (dollars in thousands):
|  |  |  |  |  | Useful Life |
|  | Fair Value |  |  | (in years) |
Customer relationships |  | $ | 472,000 |  |  |  | 13.7 |
Trademark and trade name |  | $ | 10,000 |  |  |  | 4.2 |
Franchise agreements |  | $ | 1,110,000 |  |  | Indefinite |
Customer relationships and franchise agreements were valued using the MPEEM of the income approach. Significant assumptions used in the valuations include projected revenue growth rates, customer attrition rates, future EBITDA margins, future capital expenditures and appropriate discount rates. No residual value was assigned to the acquired customer relationships, trademark and trade name or franchise agreements. The customer relationships are amortized on an accelerated basis commensurate with future anticipated cash flows. The trademark and trade name are amortized on a straight-line basis. The total weighted average amortization period for the acquired finite-lived intangible assets is 13.5 years. The Hargray Acquisition resulted in the recognition of $514.5 million of goodwill, which is not deductible for tax purposes.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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