Sale of Wireless Operations

9 Months Ended

Sep. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Sale of Wireless Operations

2. SALE OF WIRELESS OPERATIONS

On December 4, 2014, the Company entered into a Purchase and Sale Agreement to sell to General Communication, Inc. (“GCI”), ACSW’s interest in AWN and substantially all the assets and subscribers used primarily in the wireless business of Alaska Communications and its affiliates (the “Wireless Sale”). The transaction was completed on February 2, 2015, and a gain of $48,232 was recorded in the nine-month period ended September 30, 2015. The following table provides the calculation of the gain:

Consideration:
Cash	$	44,688
Cash held in escrow		228
Principal payment on 2010 Senior Credit Facility		240,472
Total consideration		285,388
Carrying value of assets and liabilities sold:
Equity investment in AWN		250,192
Assets and liabilities, net		5,349
Net change in deferred capacity revenue		(18,385	)
Total carrying value of assets and liabilities sold		237,156
Gain on disposal of assets	$	48,232

Cash proceeds on the sale in the nine-month period ended September 30, 2015 were $285,160, of which $240,472 was used to pay down the Company’s 2010 Senior Secured Credit Facility. The gain and cash proceeds reflected resolution of adjustments for certain working capital assets and liabilities, minimum subscriber levels, preferred distributions and other items. Cash held in escrow at September 30, 2015 of $228 was disbursed to the Company in the fourth quarter of 2015 upon timely completion of certain backhaul orders. These backhaul orders consisted of services rendered by the Company in the normal course of business, and the resulting profit margin was consistent with that typically generated from such services. Accordingly, the $228 was recorded as revenue in the fourth quarter of 2015.

The following table provides the final calculation of the gain recorded in 2015:

Consideration:
Cash	$	44,688
Principal payment on 2010 Senior Credit Facility		240,472
Total consideration		285,160
Carrying value of assets and liabilities sold:
Equity investment in AWN		250,192
Assets and liabilities, net		5,121
Net change in deferred capacity revenue		(18,385	)
Total carrying value of assets and liabilities sold		236,928
Gain on disposal of assets	$	48,232

In connection with its decision to sell its wireless operations, the Company incurred a number of transaction related and wind-down costs in 2015. In addition, costs were incurred in connection with plans associated with synergies and future cost reductions resulting from the Company becoming a more focused broadband and managed IT services company. The costs incurred for wind-down and synergy activities include those associated with workforce reductions, termination of retail store and other contracts, and other associated obligations that meet the criteria for reporting as exit obligations under Accounting Standards Codification (“ASC”) 420, “Exit or Disposal Cost Obligations” (“ASC 420”). The Company also incurred costs associated with termination benefits accounted for under ASC 712, “Compensation – Nonretirement Postemployment Benefits” (“ASC 712”). Significant wind-down costs included contract termination costs associated with retail store leases. These obligations included costs associated with the disposal of capital lease assets and liabilities and costs to vacate operating leases.

The following table summarizes the Company’s current obligations for exit activities, including costs accounted for under both ASC 420 and ASC 712, as of and for the nine-month period ended September 30, 2016. No further charges under these plans are expected.

	Labor Obligations			Contract Terminations		Other Associated Obligations		Total
Balance at December 31, 2015	$	1,223		$	—	$	—	$	1,223
Credited to expense		(93	)		—		—		(93	)
Paid and/or settled		(1,121	)		—		—		(1,121	)
Balance at September 30, 2016	$	9		$	—	$	—	$	9

The exit liability is included in “Accounts payable, accrued and other current liabilities” on the Company’s “Consolidated Balance Sheets”.