Consolidated Communications Holdings
Consolidated Communications Holdings, Inc. (Form: 10-Q, Received: 08/05/2016 15:27:38)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2016

 

or

 

[     ]    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission File Number 000-51446

 

RG_HI

 

CONSOLIDATED COMMUNICATIONS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

 

 

02-0636095

 

 

(State or other jurisdiction

 

 

 

(I.R.S. Employer

 

 

of incorporation or organization)

 

 

 

Identification No.)

 

 

 

 

 

 

 

 

 

121 South 17 th Street, Mattoon, Illinois

 

 

 

61938-3987

 

 

 

 

 

 

 

 

 

(Address of principal executive offices)

 

 

 

(Zip Code)

 

 

  (217) 235-3311   

(Registrant’s telephone number, including area code)

 

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   X           No ____

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, 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 and post such files).

 

Yes   X            No ____

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer    Accelerated filer    

 

Non-accelerated filer___ (Do not check if a smaller reporting company)   Smaller reporting company ____

 

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

 

Yes                No   X     

 

On July 29, 2016, the registrant had 50,654,989 shares of Common Stock outstanding.

 

 

 


 

Table of Contents

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

PART I. FINANCIAL INFORMATION  

 

 

 

 

 

 

Item 1.  

Financial Statements

 

1

 

 

 

 

Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

 

 

 

 

Item 3.  

Quantitative and Qualitative Disclosures About Market Risk

 

46

 

 

 

 

Item 4.  

Controls and Procedures

 

46

 

 

 

 

PART II. OTHER INFORMATION  

 

 

 

 

 

 

Item 1.  

Legal Proceedings

 

47

 

 

 

 

Item 6.  

Exhibits

 

49

 

 

 

 

SIGNATURES  

 

50

 

 

 

 


 

Table of Contents

PART I.  FINANCIAL INFORMATIO N

 

ITEM 1.  FINANCIAL STATEMENT S

 

CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; Amounts in thousands except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30,

 

Six Months Ended June 30,

 

 

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenues

 

$

186,871

 

$

201,010

 

$

375,717

 

$

393,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and products (exclusive of depreciation and amortization)

 

 

80,763

 

 

86,376

 

 

160,483

 

 

166,268

 

Selling, general and administrative expenses

 

 

39,053

 

 

43,308

 

 

79,729

 

 

85,693

 

Loss on impairment

 

 

610

 

 

 —

 

 

610

 

 

 —

 

Depreciation and amortization

 

 

43,491

 

 

43,651

 

 

87,631

 

 

87,207

 

Income from operations

 

 

22,954

 

 

27,675

 

 

47,264

 

 

54,420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

(19,106)

 

 

(20,429)

 

 

(37,752)

 

 

(41,103)

 

Loss on extinguishment of debt

 

 

 —

 

 

(41,242)

 

 

 —

 

 

(41,242)

 

Investment income

 

 

8,704

 

 

9,004

 

 

15,901

 

 

15,445

 

Other, net

 

 

(72)

 

 

(40)

 

 

(58)

 

 

(97)

 

Income (loss) before income taxes

 

 

12,480

 

 

(25,032)

 

 

25,355

 

 

(12,577)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

 

12,323

 

 

(9,104)

 

 

17,296

 

 

(4,478)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

157

 

 

(15,928)

 

 

8,059

 

 

(8,099)

 

Less: net income attributable to noncontrolling interest

 

 

81

 

 

40

 

 

134

 

 

59

 

Net income (loss) attributable to common shareholders

 

$

76

 

$

(15,968)

 

$

7,925

 

$

(8,158)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per basic and diluted common shares attributable to common shareholders

 

$

 —

 

$

(0.32)

 

$

0.15

 

$

(0.16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.38

 

$

0.38

 

$

0.77

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

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CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited; Amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

June 30,

 

Six Months Ended

June 30,

 

 

    

2016

    

2015

    

2016

    

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

157

 

$

(15,928)

 

$

8,059

 

$

(8,099)

 

Pension and post-retirement obligations:

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of actuarial losses and prior service credit to earnings, net of tax

 

 

678

 

 

464

 

 

1,357

 

 

866

 

Derivative instruments designated as cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of derivatives, net of tax

 

 

(168)

 

 

(237)

 

 

(598)

 

 

(802)

 

Reclassification of realized loss to earnings, net of tax

 

 

158

 

 

229

 

 

307

 

 

491

 

Comprehensive income (loss)

 

 

825

 

 

(15,472)

 

 

9,125

 

 

(7,544)

 

Less: comprehensive income attributable to noncontrolling interest

 

 

81

 

 

40

 

 

134

 

 

59

 

Total comprehensive income (loss) attributable to common shareholders

 

$

744

 

$

(15,512)

 

$

8,991

 

$

(7,603)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

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CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Amounts in thousands except share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

    

2016

    

2015

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,555

 

$

15,878

 

Accounts receivable, net of allowance for doubtful accounts

 

 

64,524

 

 

68,848

 

Income tax receivable

 

 

13,959

 

 

23,867

 

Prepaid expenses and other current assets

 

 

21,922

 

 

17,815

 

Assets held for sale

 

 

28,689

 

 

 —

 

Total current assets

 

 

153,649

 

 

126,408

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

1,062,181

 

 

1,093,261

 

Investments

 

 

106,931

 

 

105,543

 

Goodwill

 

 

756,373

 

 

764,630

 

Other intangible assets

 

 

37,023

 

 

43,497

 

Other assets

 

 

6,682

 

 

5,187

 

Total assets

 

$

2,122,839

 

$

2,138,526

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

17,295

 

$

12,576

 

Advance billings and customer deposits

 

 

26,921

 

 

27,616

 

Dividends payable

 

 

19,623

 

 

19,551

 

Accrued compensation

 

 

19,986

 

 

21,883

 

Accrued interest

 

 

9,405

 

 

9,353

 

Accrued expense

 

 

43,284

 

 

42,384

 

Current portion of long-term debt and capital lease obligations

 

 

13,171

 

 

10,937

 

Liabilities held for sale

 

 

7,746

 

 

 —

 

Total current liabilities

 

 

157,431

 

 

144,300

 

 

 

 

 

 

 

 

 

Long-term debt and capital lease obligations

 

 

1,378,788

 

 

1,377,892

 

Deferred income taxes

 

 

237,363

 

 

236,529

 

Pension and other post-retirement obligations

 

 

110,325

 

 

112,966

 

Other long-term liabilities

 

 

16,544

 

 

16,140

 

Total liabilities

 

 

1,900,451

 

 

1,887,827

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock, par value $0.01 per share; 100,000,000 shares authorized, 50,654,989 and 50,470,096 shares outstanding as of June 30, 2016 and December 31, 2015, respectively

 

 

507

 

 

505

 

Additional paid-in capital

 

 

251,344

 

 

281,738

 

Retained earnings (deficit)

 

 

 —

 

 

(881)

 

Accumulated other comprehensive loss, net

 

 

(34,633)

 

 

(35,699)

 

Noncontrolling interest

 

 

5,170

 

 

5,036

 

Total shareholders’ equity

 

 

222,388

 

 

250,699

 

Total liabilities and shareholders’ equity

 

$

2,122,839

    

$

2,138,526

 

 

See accompanying notes.

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CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30,

 

 

    

2016

    

2015

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

115,505

 

$

95,816

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment, net

 

 

(62,271)

 

 

(65,538)

 

Proceeds from sale of assets

 

 

50

 

 

57

 

Proceeds from sale of investments

 

 

 —

 

 

846

 

Net cash used in investing activities

 

 

(62,221)

 

 

(64,635)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from bond offering

 

 

 —

 

 

294,780

 

Proceeds from issuance of long-term debt

 

 

7,000

 

 

40,000

 

Payment of capital lease obligations

 

 

(812)

 

 

(444)

 

Payment on long-term debt

 

 

(11,550)

 

 

(59,550)

 

Redemption of senior notes

 

 

 —

 

 

(261,874)

 

Payment of financing costs

 

 

 —

 

 

(4,468)

 

Share repurchases for minimum tax withholding

 

 

(71)

 

 

(282)

 

Dividends on common stock

 

 

(39,174)

 

 

(39,076)

 

Net cash used in financing activities

 

 

(44,607)

 

 

(30,914)

 

Increase in cash and cash equivalents

 

 

8,677

 

 

267

 

Cash and cash equivalents at beginning of period

 

 

15,878

 

 

6,679

 

Cash and cash equivalents at end of period

 

$

24,555

 

$

6,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

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CONSOLIDATED COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Business and Basis of Accounting

 

Consolidated Communications Holdings, Inc. (the “Company”, “we” or “our”) is a holding company with operating subsidiaries (collectively “Consolidated”) that provide integrated communications services in consumer, commercial and carrier channels in California, Illinois, Iowa, Kansas, Minnesota, Missouri, North Dakota, Pennsylvania, South Dakota, Texas and Wisconsin. 

 

We operate as both an Incumbent Local Exchange Carrier (“ILEC”) and a Competitive Local Exchange Carrier (“CLEC”), dependent upon the territory served.  We provide a wide range of services and products that include local and long-distance service, high-speed broadband Internet access, video services, Voice over Internet Protocol (“VoIP”), private line services, carrier grade access services, network capacity services over our regional fiber optic networks, cloud services, data center and managed services, directory publishing and equipment sales.  As of June 30, 2016, we had approximately 471 thousand voice connections, 463 thousand data connections and 112 thousand video connections.

 

In the opinion of management, the accompanying condensed consolidated balance sheets and related condensed consolidated statements of operations, comprehensive income (loss) and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States (“US GAAP” or “GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. Events subsequent to the balance sheet date have been evaluated for inclusion in the accompanying condensed consolidated financial statements through the date of issuance.  Management believes that the disclosures made are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results for a full year.  The information presented in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the accompanying notes to the financial statements (“Notes”) thereto included in our 2015 Annual Report on Form 10-K filed with the SEC.

 

Recent Accounting Pronouncements

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Update No. 2016-13 (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments. ASU 2016-13   establishes the new “current expected credit loss” model for measuring and recognizing credit losses on financial assets based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts.   The new guidance is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures.

 

In March 2016, FASB issued the Accounting Standards Update No. 2016-09 (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting . ASU 2016-09 simplifies various aspects of accounting for share-based payment arrangements, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows.  ASU 2016-09 is effective for annual and interim periods beginning after December 15, 2016 with early adoption permitted. We are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures.

 

In February 2016, FASB issued the Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases . ASU 2016-02 establishes a new lease accounting model for leases. Lessees will be required to recognize most leases on their balance sheets but lease expense will be recognized on the income statement in a manner similar to existing requirements. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. We

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are currently evaluating the impact this update will have on our condensed consolidated financial statements and related disclosures.

 

Effective January 1, 2016, we adopted Accounting Standards Update No. 2015-16 (“ASU 2015-16”), Simplifying the Accounting for Measurement-Period Adjustments . ASU 2015-16 requires that the acquiring company in a business combination recognize adjustments to provisional amounts identified during the measurement period in the reporting period in which the adjustments are determined and record in the reporting period in which the adjustments are determined the effect on earnings of changes in depreciation, amortization and other items resulting from the change to the provisional amounts. The adoption of this standard did not have any impact on our condensed consolidated financial statements and related disclosures.

 

In August 2014, FASB issued the Accounting Standards Update No. 2014-15 (“ASU 2014-15”), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . ASU 2014-15 requires management to evaluate for each annual and interim reporting period whether conditions or events give rise to substantial doubt that an entity has the ability to continue as a going concern within one year following issuance of the financial statements and requires specific disclosures regarding the conditions or events leading to substantial doubt. The new guidance is effective for annual and interim periods ending after December 15, 2016, with early adoption permitted.  The adoption of ASU 2014-15 is not expected to have a material impact on our financial position or results of operations.

 

In May 2014, FASB issued the Accounting Standards Update No. 2014-09 (“ASU 2014-09”), Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 provides new comprehensive guidance concerning the recognition and measurement of revenue. As a result, significant additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, FASB issued the Accounting Standards Update No. 2015-14 (“ASU 2015-14”), Deferral of the Effective Date . ASU 2015-14 defers the effective date of ASU 2014-09 for all entities by one year. Accordingly, the new guidance in ASU 2014-09 is effective for annual and interim periods beginning on or after December 15, 2017.  Companies are allowed to transition using either the modified retrospective or full retrospective adoption method. If full retrospective adoption is chosen, three years of financial information must be presented in accordance with the new standard.  In 2016, the FASB issued additional accounting standards updates to clarify and provide implementation guidance related to ASU 2014-09. The effective date and transition requirements for the additional updates and implementation guidance are the same as the effective date and transition requirements for ASU 2014-09. We are currently evaluating the alternative methods of adoption and the effect this guidance will have on our condensed consolidated financial statements and related disclosures.

 

 

 

2.  ACQUISITION AND DIVESTITURE

 

Acquisition

 

On April 18, 2016, we entered into a definitive agreement to acquire substantially all of the assets of Champaign Telephone Company, Inc. and its sister company, Big Broadband Services, LLC, a private business communications provider in the Champaign-Urbana, IL area.  The acquisition was completed on July 1, 2016.  The aggregate purchase price, including customary working capital adjustments, consisted of cash consideration of approximately $13.4 million, which was paid from our existing cash resources.  The preliminary fair value of the acquired assets and liabilities assumed consisted primarily of property, plant and equipment of $6.5 million, intangible assets of $1.1 million and working capital of $1.3 million.  Goodwill recognized from the acquisition is expected to be approximately $4.5 million and is not deductible for income tax purposes.  Upon completion of the final fair value assessment, the fair values of the net assets acquired may differ from the preliminary assessment.  We expect to finalize these valuations during the quarter ended December 31, 2016.

 

Divestiture

 

On May 3, 2016, we entered into a definitive agreement to sell all of the issued and outstanding stock of our non-core, rural ILEC business located in northwest Iowa, Consolidated Communications of Iowa Company (“CCIC”), formerly Heartland Telecommunications Company of Iowa, for approximately $22.5 million in cash, prior to certain contractual

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adjustments.  CCIC provides telecommunications and data services to residential and business customers in 11 rural communities in northwest Iowa and surrounding areas.  The transaction is expected to close in the third quarter of 2016 and is subject to customary closing conditions, including regulatory approvals.

 

At June 30, 2016, the major classes of assets and liabilities to be sold were classified as held for sale in the condensed consolidated balance sheet and consisted of the following:

 

 

 

 

 

 

(In thousands)

    

 

 

Current assets

 

$

796

 

Property, plant and equipment

 

 

20,221

 

Goodwill

 

 

7,647

 

Other assets

 

 

25

 

Total assets

 

$

28,689

 

 

 

 

 

 

Current liabilities

 

$

352

 

Deferred taxes

 

 

7,373

 

Other long-term liabilities

 

 

21

 

Total liabilities

 

$

7,746

 

 

In connection with the classification as assets held for sale, the carrying value of CCIC was reduced to its estimated fair value of approximately $20.9 million, which was determined based on the estimated selling price less costs to sell and was classified as Level 2 within the fair value hierarchy.  As a result, we recognized an impairment loss of $0.6 million during the quarter and six months ended June 30, 2016. 

 

 

3.  EARNINGS (LOSS) PER SHARE

 

Basic and diluted earnings (loss) per share (“EPS”) are computed using the two-class method, which is an earnings allocation that determines EPS for each class of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. The Company’s restricted stock awards are considered participating securities because holders are entitled to receive non-forfeitable dividends during the vesting term. Diluted EPS includes securities that could potentially dilute basic EPS during a reporting period.  Dilutive securities are not included in the computation of loss per share when a company reports a net loss from continuing operations as the impact would be anti-dilutive.

 

The potentially dilutive impact of the Company’s restricted stock awards is determined using the treasury stock method. Under the treasury stock method, awards are treated as if they had been exercised with any proceeds used to repurchase common stock at the average market price during the period. Any incremental difference between the assumed number of shares issued and purchased is included in the diluted share computation.

 

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The computation of basic and diluted EPS attributable to common shareholders computed using the two ‑class method is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In thousands, except per share amounts)

    

2016

    

2015

    

2016

    

2015

 

Net income (loss)

 

$

157

 

$

(15,928)

 

$

8,059

 

$

(8,099)

 

Less: net income attributable to noncontrolling interest

 

 

81

 

 

40

 

 

134

 

 

59

 

Income (loss) attributable to common shareholders before allocation of earnings to participating securities

 

 

76

 

 

(15,968)

 

 

7,925

 

 

(8,158)

 

Less: earnings allocated to participating securities

 

 

131

 

 

 —

 

 

262

 

 

 —

 

Net income (loss) attributable to common shareholders, after earnings allocated to participating securities

 

$

(55)

 

$

(15,968)

 

$

7,663

 

$

(8,158)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding

 

 

50,294

 

 

50,175

 

 

50,291

 

 

50,161

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share attributable to common shareholders - basic and diluted

 

$

 —

 

$

(0.32)

 

$

0.15

 

$

(0.16)

 

 

Diluted earnings (loss) per common share attributable to common shareholders for the quarter and six months ended June 30, 2016 exclude  0.4 million and 0.3 million potential common shares that could be issued under our share-based compensation plan, respectively, because the inclusion of the potential common shares would have an antidilutive effect. For each of the quarter and six months ended June 30, 2015, diluted earnings (loss) per common share attributable to common shareholders excluded  0.3 million potential common shares .

 

4.  INVESTMENTS

 

Our investments are as follows:

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

(In thousands)

    

2016

    

2015

 

Cash surrender value of life insurance policies

 

$

2,217

 

$

2,149

 

Cost method investments:

 

 

 

 

 

 

 

GTE Mobilnet of South Texas Limited Partnership (2.34% interest)

 

 

21,450

 

 

21,450

 

Pittsburgh SMSA Limited Partnership (3.60% interest)

 

 

22,950

 

 

22,950

 

CoBank, ACB Stock

 

 

8,138

 

 

7,971

 

Other

 

 

200

 

 

200

 

Equity method investments:

 

 

 

 

 

 

 

GTE Mobilnet of Texas RSA #17 Limited Partnership (20.51% interest)

 

 

17,897

 

 

18,099

 

Pennsylvania RSA 6(I) Limited Partnership (16.67% interest)

 

 

6,430

 

 

6,167

 

Pennsylvania RSA 6(II) Limited Partnership (23.67% interest)

 

 

27,649

 

 

26,557

 

Totals

 

$

106,931

 

$

105,543

 

 

Cost Method

 

We own 2.34% of GTE Mobilnet of South Texas Limited Partnership (the “Mobilnet South Partnership”).  The principal activity of the Mobilnet South Partnership is providing cellular service in the Houston, Galveston and Beaumont, Texas metropolitan areas.  We also own 3.60% of Pittsburgh SMSA Limited Partnership (“Pittsburgh SMSA”), which provides cellular service in and around the Pittsburgh metropolitan area.  Because of our limited influence over these partnerships, we use the cost method to account for both of these investments.  It is not practicable to estimate the fair value of these investments.  We did not evaluate any of the investments for impairment during the quarters or six months ended June 30, 2016 or 2015 as no factors indicating impairment existed.  For the quarters ended June 30, 2016 and 2015, we received

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cash distributions from these partnerships totaling $3.8 million and $3.0 million, respectively. For the six months ended June 30, 2016 and 2015, we received cash distributions from these partnerships totaling $6.5 million and $4.9 million, respectively.

 

CoBank, ACB (“CoBank”) is a cooperative bank owned by its customers.  On an annual basis, CoBank distributes patronage in the form of cash and stock in the cooperative based on the Company’s outstanding loan balance with CoBank, which has traditionally been a significant lender in the Company’s credit facility.  The investment in CoBank represents the accumulation of the equity patronage paid by CoBank to the Company.

 

Equity Method

 

We own 20.51% of GTE Mobilnet of Texas RSA #17 Limited Partnership (“RSA #17”), 16.67% of Pennsylvania RSA 6(I) Limited Partnership (“RSA 6(I)”) and 23.67% of Pennsylvania RSA 6(II) Limited Partnership (“RSA 6(II)”).  RSA #17 provides cellular service to a limited rural area in Texas.  RSA 6(I) and RSA 6(II) provide cellular service in and around our Pennsylvania service territory.  Because we have significant influence over the operating and financial policies of these three entities, we account for the investments using the equity method.  For the quarters ended June 30, 2016 and 2015, we received cash distributions from these partnerships totaling $4.0 million and $4.1 million, respectively. For the six months ended June 30, 2016 and 2015, we received cash distributions from these partnerships totaling $8.1 million and $9.3 million, respectively.

   

The combined unaudited results of operations and financial position of our three equity investments in the cellular limited partnerships are summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In thousands)

    

2016

    

2015

    

2016

    

2015

 

Total revenues

 

$

81,885

 

$

86,286

 

$

164,542

 

$

173,016

 

Income from operations

 

 

26,797

 

 

26,911

 

 

52,393

 

 

53,805

 

Net income before taxes

 

 

26,396

 

 

26,626

 

 

51,585

 

 

53,615

 

Net income

 

 

26,396

 

 

26,626

 

 

51,585

 

 

53,615

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

(In thousands)

    

2016

    

2015

 

Current assets

 

$

70,473

 

$

57,716

 

Non-current assets

 

 

90,945

 

 

96,197

 

Current liabilities

 

 

19,211

 

 

20,576

 

Non-current liabilities

 

 

52,183

 

 

52,414

 

Partnership equity

 

 

90,024

 

 

80,923

 

 

 

5.  FAIR VALUE MEASUREMENTS

 

Our derivative instruments related to interest rate swap agreements are required to be measured at fair value on a recurring basis.  The fair values of the interest rate swaps are determined using valuation models which rely on the expected London Interbank Offered Rate (“LIBOR”) based yield curve and estimates of counterparty and Consolidated’s non-performance risk as the most significant inputs.  Because each of these inputs are directly observable or can be corroborated by observable market data, we have categorized these interest rate swaps as Level 2 within the fair value hierarchy. See Note 7 for further discussion regarding our interest rate swap agreements.

 

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Our interest rate swap liabilities measured at fair value on a recurring basis and subject to disclosure requirements as of June 30, 2016 and December 31, 2015 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2016

 

 

    

 

 

    

Quoted Prices

    

Significant

    

 

 

 

 

 

 

 

In Active

 

Other

 

Significant

 

 

 

 

 

 

Markets for

 

Observable

 

Unobservable

 

 

 

 

 

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Current interest rate swap liabilities

 

$

(39)

 

$

 -

 

$

(39)

 

$

 -

 

Long-term interest rate swap liabilities

 

 

(1,568)

 

 

 -

 

 

(1,568)

 

 

 -

 

Total

 

$

(1,607)

 

$

 -

 

$

(1,607)

 

$

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2015

 

 

    

 

 

    

Quoted Prices

    

Significant

    

 

 

 

 

 

 

 

In Active

 

Other

 

Significant

 

 

 

 

 

 

Markets for

 

Observable

 

Unobservable

 

 

 

 

 

 

Identical Assets

 

Inputs

 

Inputs

 

(In thousands)

 

Total

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Current interest rate swap liabilities

 

$

(190)

 

$

 -

 

$

(190)

 

$

 -

 

Long-term interest rate swap liabilities

 

 

(1,084)

 

 

 -

 

 

(1,084)

 

 

 -

 

Total

 

$

(1,274)

 

$

 -

 

$

(1,274)

 

$

 -

 

 

We have not elected the fair value option for any of our financial assets or liabilities.  The carrying value of other financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities or variable-rate nature of the respective balances.  The following table presents the other financial instruments that are not carried at fair value but which require fair value disclosure as of June 30, 2016 and December 31, 2015 .

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2016

 

As of December 31, 2015

 

(In thousands)

    

Carrying Value

    

Fair Value

    

Carrying Value

    

Fair Value

  

Investments, equity basis

 

$

51,976

 

 

n/a

 

$

50,823

 

 

n/a

 

Investments, at cost

 

$

52,738

 

 

n/a

 

$

52,571

 

 

n/a

 

Long-term debt, excluding capital leases

 

$

1,389,618

 

$

1,338,973

 

$

1,393,567

 

$

1,312,383

 

 

Cost & Equity Method Investments

 

Our investments as of June 30, 2016 and December 31, 2015 accounted for under both the equity and cost methods consisted primarily of minority positions in various cellular telephone limited partnerships and our investment in CoBank.  It is impracticable to determine the fair value of these investments.

 

Long-term Debt

 

The fair value of our senior notes was based on quoted market prices, and the fair value of borrowings under our credit facility was determined using current market rates for similar types of borrowing arrangements.  We have categorized the long-term debt as Level 2 within the fair value hierarchy.

 

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6.     LONG-TERM DEBT

 

Long-term debt, presented net of unamortized discounts, consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

(In thousands)

    

2016

    

2015

 

Senior secured credit facility:

 

 

 

 

 

 

 

Term loan 4, net of discount of $3,029 and $3,340 at June 30, 2016 and December 31, 2015, respectively

 

$

884,221

 

$

888,460

 

Revolving loan

 

 

10,000

 

 

10,000

 

6.50% Senior notes due 2022, net of discount of $4,602 and $4,893 at June 30, 2016 and December 31, 2015, respectively

 

 

495,397

 

 

495,107

 

Capital leases

 

 

13,662

 

 

7,580

 

 

 

 

1,403,280

 

 

1,401,147

 

Less: current portion of long-term debt and capital leases

 

 

(13,171)

 

 

(10,937)

 

Less: deferred debt issuance costs

 

 

(11,321)

 

 

(12,318)

 

Total long-term debt

 

$

1,378,788

 

$

1,377,892

 

 

Credit Agreement

 

In December 2013, the Company, through certain of its wholly owned subsidiaries, entered into a Second Amended and Restated Credit Agreement with various financial institutions (the “Credit Agreement”) to replace the Company’s previously amended credit agreement.  The Credit Agreement consists of a $75.0 million revolving credit facility and initial term loans in the aggregate amount of $910.0 million (“Term 4”).  The Credit Agreement also includes an incremental term loan facility which provides the ability to request to borrow up to $300.0 million of incremental term loans subject to certain terms and conditions.  Borrowings under the senior secured credit facility are secured by substantially all of the assets of the Company and its subsidiaries, with the exception of Consolidated Communications of Illinois Company and our majority-owned subsidiary, East Texas Fiber Line Incorporated.

 

The Term 4 loan was issued in an original aggregate principal amount of $910.0 million with a maturity date of December 23, 2020.  The Term 4 loan contains an original issuance discount of $4.6 million, which is being amortized over the term of the loan.  The Term 4 loan requires quarterly principal payments of $2.3 million and has an interest rate of LIBOR plus 3.25% subject to a 1.00% LIBOR floor.

 

Our revolving credit facility has a maturity date of December 23, 2018 and an applicable margin (at our election) of between 2.50% and 3.25% for LIBOR-based borrowings or between 1.50% and 2.25% for alternate base rate borrowings, depending on our leverage ratio.  Based on our leverage ratio as of June 30, 2016, the borrowing margin for the next three month period ending September 30, 2016 will be at a weighted-average margin of 3.00% f or a LIBOR-based loan or 2.00% for an alternate base rate loan.  The applicable borrowing margin for the revolving credit facility is adjusted quarterly to reflect the leverage ratio from the prior quarter-end.  As of June 30, 2016 and December 31, 2015, borrowings of $10.0 million were outstanding under the revolving credit facility.  A stand-by letter of credit of $1.6 million, issued primarily in connection with the Company’s insurance coverage, was outstanding under our revolving credit facility as of June 30, 2016.  The stand-by letter of credit is renewable annually and reduces the borrowing availability under the revolving credit facility.  As of June 30, 2016, $63.4 million was available for borrowing under the revolving credit facility.

 

The weighted-average interest rate on outstanding borrowings under our credit facility was 4.24% as of June 30, 2016 and December 31, 2015.  Interest is payable at least quarterly .

 

Net proceeds from asset sales exceeding certain thresholds, to the extent not reinvested, are required to be used to repay loans outstanding under the Credit Agreement.

 

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Credit Agreement Covenant Compliance

 

The Credit Agreement contains various provisions and covenants, including, among other items, restrictions on the ability to pay dividends, incur additional indebtedness and issue capital stock.  We have agreed to maintain certain financial ratios, including interest coverage and total net leverage ratios, all as defined in the Credit Agreement.  As of June 30, 2016, we were in compliance with the Credit Agreement covenants .

 

In general, our Credit Agreement restricts our ability to pay dividends to the amount of our available cash as defined in our Credit Agreement.  As of June 30, 2016, and including the $19.6 million dividend declared in May 2016 and paid on August 1, 2016, we had $258.5 million in dividend availability under the credit facility covenant.

 

Under our Credit Agreement, if our total net leverage ratio, as defined in the Credit Agreement, as of the end of any fiscal quarter is greater than 5.10:1.00, we will be required to suspend dividends on our common stock unless otherwise permitted by an exception for dividends that may be paid from the portion of proceeds of any sale of equity not used to fund acquisitions or make other investments.  During any dividend suspension period, we will be required to repay debt in an amount equal to 50.0% of any increase in available cash, among other things.  In addition, we will not be permitted to pay dividends if an event of default under the Credit Agreement has occurred and is continuing.  Among other things, it will be an event of default if our total net leverage ratio or interest coverage ratio as of the end of any fiscal quarter is greater than 5.25:1.00 and less than 2.25:1.00, respectively.  As of June 30, 2016, our total net leverage ratio under the Credit Agreement was 4.22:1.00, and our interest coverage ratio was 4.25:1.00.

 

Senior Notes

 

6.50% Senior Notes due 2022

 

In September 2014, we completed an offering of $200.0 million aggregate principal amount of 6.50% Senior Notes due in October 2022 (the “Existing Notes”).  The Existing Notes were priced at par, which resulted in total gross proceeds of $200.0 million.  On June 8, 2015, we completed an additional offering of $300.0 million in aggregate principal amount of 6.50% Senior Notes due 2022 (the “New Notes” and together with the Existing Notes, the “Senior Notes”).  The New Notes were issued as additional notes under the same indenture pursuant to which the Existing Notes were previously issued on September 18, 2014.  The New Notes were priced at 98.26% of par with a yield to maturity of 6.80% and resulted in total gross proceeds of approximately $294.8 million, excluding accrued interest.  The discount and deferred debt issuance costs of $4.5 million incurred in connection with the issuance of the New Notes are being amortized using the effective interest method over the term of the notes. 

 

The Senior Notes mature on October 1, 2022 and interest is payable semi-annually on April 1 and October 1 of each year. Consolidated Communications, Inc. (“CCI”) is the primary obligor under the Senior Notes, and we and certain of our wholly ‑owned subsidiaries have fully and unconditionally guaranteed the Senior Notes.  The Senior Notes are senior unsecured obligations of the Company.

 

The net proceeds from the issuance of the New Notes were used, in part, to redeem the remaining $227.2 million of our original $300.0 million aggregate principal amount of 10.875% Senior Notes due 2020 (the “2020 Notes”).  In connection with the redemption of the 2020 Notes, we paid $261.9 million and recognized a loss on the extinguishment of debt of $41.2 million during the quarter and six months ended June 30, 2015.

 

During the quarter ended September 30, 2015, we completed an exchange offer to register all of the Senior Notes under the Securities Act of 1933 (“Securities Act”).  The terms of the registered Senior Notes are substantially identical to those of the Senior Notes prior to the exchange, except that the Senior Notes are now registered under the Securities Act and the transfer restrictions and registration rights previously applicable to the Senior Notes no longer apply to the registered Senior Notes.  The exchange offer did not impact the aggregate principal amount or the remaining terms of the Senior Notes outstanding.

 

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Senior Notes Covenant Compliance

 

Subject to certain exceptions and qualifications, the indenture governing the Senior Notes contains customary covenants that, among other things, limits CCI’s and its restricted subsidiaries’ ability to: incur additional debt or issue certain preferred stock; pay dividends or make other distributions on capital stock or prepay subordinated indebtedness; purchase or redeem any equity interests; make investments; create liens; sell assets; enter into agreements that restrict dividends or other payments by restricted subsidiaries; consolidate, merge or transfer all or substantially all of its assets; engage in transactions with its affiliates; or enter into any sale and leaseback transactions.  The indenture also contains customary events of default.

 

Among other matters, the Senior Notes indenture provides that CCI may not pay dividends or make other restricted payments, as defined in the indenture, if its total net leverage ratio is 4.75:1.00 or greater.  This ratio is calculated differently than the comparable ratio under the Credit Agreement; among other differences, it takes into account, on a pro forma basis, synergies expected to be achieved as a result of certain acquisitions not yet reflected in historical results.  As of June 30, 2016, this ratio was 4.41:1.00.  If this ratio is met, dividends and other restricted payments may be made from cumulative consolidated cash flow since April 1, 2012, less 1.75 times fixed charges, less dividends and other restricted payments made since May 30, 2012.  Dividends may be paid and other restricted payments may also be made from a “basket” of $50.0 million, none of which has been used to date, and pursuant to other exceptions identified in the indenture.  Since dividends of $292.3 million have been paid since May 30, 2012, including the quarterly dividend declared in May 2016 and paid on August 1, 2016, there was $402.1 million of the $694.4 million of cumulative consolidated cash flow since May 30, 2012 available to pay dividends as of June 30, 2016.  As of June 30, 2016, the Company was in compliance with all terms, conditions and covenants under the indenture governing the Senior Notes.

 

Capital Leases

 

We lease certain facilities and equipment under various capital leases which expire between 2016 and 2021.  As of June 30, 2016, the present value of the minimum remaining lease commitments was approximately $13.7 million, of which $4.1 million was due and payable within the next twelve months. The leases require total remaining rental payments of $15.8 million as of June 30, 2016, of which $3.9 million will be paid to LATEL LLC, a related party entity.

 

7.  DERIVATIVE FINANCIAL INSTRUMENTS

 

We use derivative financial instruments to manage our exposure to the risks associated with fluctuations in interest rates. Our interest rate swap agreements effectively convert a portion of our floating-rate debt to a fixed ‑rate basis, thereby reducing the impact of interest rate changes on future cash interest payments.  Derivative financial instruments are recorded at fair value in our condensed consolidated balance sheets.  We may designate certain of our interest rate swaps as cash flow hedges of our expected future interest payments.  For derivative instruments designated as a cash flow hedge, the effective portion of the change in the fair value is recognized as a component of accumulated other comprehensive income (loss) (“AOCI”) and is recognized as an adjustment to earnings over the period in which the hedged item impacts earnings. When an interest rate swap agreement terminates, any resulting gain or loss is recognized over the shorter of the remaining original term of the hedging instrument or the remaining life of the underlying debt obligation.  If a derivative instrument is de-designated, the remaining gain or loss in AOCI on the date of de-designation is amortized to earnings over the remaining term of the hedging instrument. For derivative financial instruments that are not designated as a hedge, including those that have been de-designated, changes in fair value are recognized on a current basis in earnings.  The ineffective portion of the change in fair value of any hedging derivative is recognized immediately in earnings.  Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in our condensed consolidated statements of cash flows.

 

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The following interest rate swaps were outstanding as of June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

    

Notional

    

 

    

 

 

 

(In thousands)

 

Amount

 

2016 Balance Sheet Location

 

Fair Value

 

Cash Flow Hedges:

 

 

 

 

 

 

 

 

 

Fixed to 1-month floating LIBOR (with floor)

 

$

200,000

 

Other long-term liabilities

 

$

(1,568)

 

 

 

 

 

 

 

 

 

 

 

De-designated Hedges:

 

 

 

 

 

 

 

 

 

Fixed to 1-month floating LIBOR (with floor)

 

$

50,000

 

Accrued expense

 

 

(39)

 

Total Fair Values

 

 

 

 

 

 

$

(1,607)

 

 

The following interest rate swaps were outstanding as of December 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

    

Notional

    

 

    

 

 

 

(In thousands)

 

Amount

 

2015 Balance Sheet Location

 

Fair Value

 

Cash Flow Hedges:

 

 

 

 

 

 

 

 

 

Fixed to 1-month floating LIBOR (with floor)

 

$

150,000

 

Other long-term liabilities

 

$

(1,084)

 

 

 

 

 

 

 

 

 

 

 

De-designated Hedges:

 

 

 

 

 

 

 

 

 

Fixed to 1-month floating LIBOR

 

$

50,000

 

Accrued expense

 

 

(80)

 

Fixed to 1-month floating LIBOR (with floor)

 

$

50,000

 

Accrued expense

 

 

(110)

 

Total Fair Values

 

 

 

 

 

 

$

(1,274)

 

 

The counterparties to our various swaps are highly rated financial institutions. None of the swap agreements provide for either us or the counterparties to post collateral nor do the agreements include any covenants related to the financial condition of Consolidated or the counterparties.  The swaps of any counterparty that is a lender, as defined in our credit facility, are secured along with the other creditors under the credit facility.  Each of the swap agreements provides that, in the event of a bankruptcy filing by either Consolidated or the counterparty, any amounts owed between the two parties would be offset in order to determine the net amount due between parties.  This provision allows us to partially mitigate the risk of non ‑performance by a counterparty.

 

In 2013, interest rate swaps previously designated as cash flow hedges were de-designated as a result of amendments to our credit agreement.  The interest rate swap agreements mature on various dates through September 2016.  Prior to de-designation, the effective portion of the change in fair value of the interest rate swaps was recognized in AOCI.  The balance of the unrealized loss included in AOCI as of the date the swaps were de-designated is being amortized to earnings over the remaining term of the swap agreements.  Changes in fair value of the de-designated swaps are immediately recognized in earnings as interest expense.  For the quarters ended June 30, 2016 and 2015, a gain of $0.1 million and $0.3 million, respectively, was recognized as a reduction to interest expense for the change in fair value of the de-designated swaps.  For the six months ended June 30, 2016 and 2015, a gain of $0.2 million and $0.5 million, respectively, was recognized as a reduction to interest expense for the change in fair value of the de-designated swaps.

 

As of June 30, 2016 and December 31, 2015, the pre-tax deferred losses related to our interest rate swap agreements included in AOCI were $1.6 million and $1.1 million, respectively.  The estimated amount of losses included in AOCI as of June 30, 2016 that will be recognized in earnings in the next twelve months is approximately $1.0 million.

 

Information regarding our cash flow hedge transactions is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In thousands)

    

2016

    

2015

    

2016

    

2015

 

Loss recognized in AOCI, pretax

 

$

(273)

 

$

(384)

 

$

(973)

 

$

(1,301)

 

Deferred losses reclassified from AOCI to interest expense

 

$

(256)

 

$

(370)

 

$

(499)

 

$

(796)

 

 

 

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8.  EQUITY

 

Share-Based Compensation

 

The following table summarizes total compensation costs recognized for share-based payments during the quarters and six-month periods ended June 30, 2016 and 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In thousands)

    

2016

    

2015

    

2016

    

2015

 

Restricted stock

 

$

511

 

$

379

 

$

1,072

 

$

866

 

Performance shares

 

 

401

 

 

331

 

 

732

 

 

657

 

Total

 

$

912

 

$

710

 

$

1,804

 

$

1,523

 

 

Share-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations .

 

As of June 30, 2016, total unrecognized compensation costs related to non-vested Restricted Stock Awards (“RSAs”) and Performance Share Awards (“PSAs”) was $6.0 million and will be recognized over a weighted-average period of approximately 1.4 years.

 

The following table summarizes the RSA and PSA activity for the six-month period ended June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSAs

 

PSAs

 

 

    

 

    

Weighted

    

 

    

Weighted

 

 

 

 

 

Average 

Grant

 

 

 

Average 

Grant

 

 

 

Shares

 

Date Fair 

Value

 

Shares

 

Date Fair 

Value

 

Non-vested shares outstanding - January 1, 2016

 

99,360

 

$

19.40

 

83,224

 

$

18.75

 

Shares granted

 

100,040

 

$

23.95

 

94,066

 

$

20.86

 

Shares vested

 

(6,974)

 

$

21.31

 

(2,104)

 

$

19.11

 

Shares forfeited, cancelled or retired

 

(2,067)

 

$

19.74

 

(4,112)

 

$

19.81

 

Non-vested shares outstanding - June 30, 2016

 

190,359

 

$

21.72

 

171,074

 

$

19.88

 

 

Accumulated Other Comprehensive Loss

 

The following table summarizes the changes in accumulated other comprehensive loss, net of tax, by component for the six-month period ended June 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Pension and

    

 

 

    

 

 

 

 

 

Post-Retirement

 

Derivative

 

 

 

 

(In thousands)

 

Obligations

 

Instruments

 

Total

 

Balance at December 31, 2015

 

$

(35,025)

 

$

(674)

 

$

(35,699)

 

Other comprehensive income before reclassifications

 

 

 —

 

 

(598)

 

 

(598)

 

Amounts reclassified from accumulated other comprehensive loss

 

 

1,357

 

 

307

 

 

1,664

 

Net current period other comprehensive income

 

 

1,357

 

 

(291)

 

 

1,066

 

Balance at June 30, 2016

 

$

(33,668)

 

$

(965)

 

$

(34,633)

 

 

15


 

Table of Contents

The following table summarizes reclassifications from accumulated other comprehensive loss for the quarters and six-month periods ended June 30, 2016 and 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

Quarter Ended June 30,

 

Six Months Ended June 30,

 

Affected Line Item in the

 

(In thousands)

    

2016

    

2015

    

2016