CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables)

3 Months Ended

Mar. 31, 2020

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Schedule of condensed consolidating balance sheets

Condensed Consolidating Balance Sheets

(In thousands)

	March 31, 2020
	Parent		Subsidiary Issuer		Guarantors		Non-Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	14,136	$	3	$	—	$	—	$	14,139
Accounts receivable, net		—		76		115,840		6,424		—		122,340
Income taxes receivable		8,609		4,006		—		—		(8,441)		4,174
Prepaid expenses and other current assets		89		—		44,995		180		(89)		45,175
Total current assets		8,698		18,218		160,838		6,604		(8,530)		185,828
Property, plant and equipment, net		—		—		1,742,114		64,831		—		1,806,945
Intangibles and other assets:
Investments		—		9,064		104,133		—		—		113,197
Investments in subsidiaries		3,553,744		3,549,345		17,372		—		(7,120,461)		—
Goodwill		—		—		969,093		66,181		—		1,035,274
Customer relationships, net		—		—		151,407		—		—		151,407
Other intangible assets		—		—		1,470		9,087		—		10,557
Advances due to/from affiliates, net		—		2,238,012		940,841		117,801		(3,296,654)		—
Deferred income taxes		81,425		9,302		—		—		(90,727)		—
Other assets		—		—		51,449		476		—		51,925
Total assets	$	3,643,867	$	5,823,941	$	4,138,717	$	264,980	$	(10,516,372)	$	3,355,133
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	19,902	$	—	$	—	$	19,902
Advance billings and customer deposits		—		—		45,890		1,334		—		47,224
Accrued compensation		—		—		55,288		817		—		56,105
Accrued interest		—		14,518		427		—		—		14,945
Accrued expense		—		3,050		69,609		1,206		(89)		73,776
Income tax payable		—		—		7,636		805		(8,441)		—
Current portion of long term debt and finance lease obligations		—		18,350		7,223		149		—		25,722
Total current liabilities		—		35,918		205,975		4,311		(8,530)		237,674
Long-term debt and finance lease obligations		—		2,195,775		13,946		27		—		2,209,748
Advances due to/from affiliates, net		3,296,654		—		—		—		(3,296,654)		—
Deferred income taxes		—		—		241,061		24,155		(90,727)		174,489
Pension and postretirement benefit obligations		—		—		278,279		14,866		—		293,145
Other long-term liabilities		—		38,504		47,130		784		—		86,418
Total liabilities		3,296,654		2,270,197		786,391		44,143		(3,395,911)		3,001,474
Shareholders’ equity:
Common Stock		731		—		17,411		30,000		(47,411)		731
Other shareholders’ equity		346,482		3,553,744		3,328,469		190,837		(7,073,050)		346,482
Total Consolidated Communications Holdings, Inc. shareholders’ equity		347,213		3,553,744		3,345,880		220,837		(7,120,461)		347,213
Noncontrolling interest		—		—		6,446		—		—		6,446
Total shareholders’ equity		347,213		3,553,744		3,352,326		220,837		(7,120,461)		353,659
Total liabilities and shareholders’ equity	$	3,643,867	$	5,823,941	$	4,138,717	$	264,980	$	(10,516,372)	$	3,355,133

Condensed Consolidating Balance Sheet

(In thousands)

	December 31, 2019
	Parent		Subsidiary Issuer		Guarantors		Non-Guarantors		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	12,387	$	8	$	—	$	—	$	12,395
Accounts receivable, net		—		78		112,415		7,523		—		120,016
Income taxes receivable		1,812		—		791		66		—		2,669
Prepaid expenses and other current assets		—		—		41,431		356		—		41,787
Total current assets		1,812		12,465		154,645		7,945		—		176,867
Property, plant and equipment, net		—		—		1,770,187		65,691		—		1,835,878
Intangibles and other assets:
Investments		—		8,863		103,854		—		—		112,717
Investments in subsidiaries		3,547,466		3,520,346		17,165		—		(7,084,977)		—
Goodwill		—		—		969,093		66,181		—		1,035,274
Customer relationships, net		—		—		164,069		—		—		164,069
Other intangible assets		—		—		1,470		9,087		—		10,557
Advances due to/from affiliates, net		—		2,289,433		893,394		113,473		(3,296,300)		—
Deferred income taxes		86,447		5,661		—		—		(92,108)		—
Other assets		1,506		—		52,887		522		—		54,915
Total assets	$	3,637,231	$	5,836,768	$	4,126,764	$	262,899	$	(10,473,385)	$	3,390,277
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	30,936	$	—	$	—	$	30,936
Advance billings and customer deposits		—		—		44,436		1,274		—		45,710
Accrued compensation		—		—		56,356		713		—		57,069
Accrued interest		—		7,523		351		—		—		7,874
Accrued expense		50		2,565		71,659		1,132		—		75,406
Current portion of long term debt and finance lease obligations		—		18,350		8,808		143		—		27,301
Total current liabilities		50		28,438		212,546		3,262		—		244,296
Long-term debt and finance lease obligations		—		2,235,609		15,001		67		—		2,250,677
Advances due to/from affiliates, net		3,296,300		—		—		—		(3,296,300)		—
Deferred income taxes		—		—		240,983		24,152		(92,108)		173,027
Pension and postretirement benefit obligations		—		—		285,832		16,464		—		302,296
Other long-term liabilities		—		25,255		46,656		819		—		72,730
Total liabilities		3,296,350		2,289,302		801,018		44,764		(3,388,408)		3,043,026
Shareholders’ equity:
Common Stock		720		—		17,411		30,000		(47,411)		720
Other shareholders’ equity		340,161		3,547,466		3,301,965		188,135		(7,037,566)		340,161
Total Consolidated Communications Holdings, Inc. shareholders’ equity		340,881		3,547,466		3,319,376		218,135		(7,084,977)		340,881
Noncontrolling interest		—		—		6,370		—		—		6,370
Total shareholders’ equity		340,881		3,547,466		3,325,746		218,135		(7,084,977)		347,251
Total liabilities and shareholders’ equity	$	3,637,231	$	5,836,768	$	4,126,764	$	262,899	$	(10,473,385)	$	3,390,277

Schedule of condensed consolidating statements of operations

Condensed Consolidating Statements of Operations

(In thousands)

	Quarter Ended March 31, 2020
	Parent		Subsidiary Issuer		Guarantors		Non-Guarantors		Eliminations		Consolidated
Net revenues	$	—	$	—	$	317,054	$	11,662	$	(3,054)	$	325,662
Operating expenses:
Cost of services and products (exclusive of depreciation and amortization)		—		—		137,034		3,669		(2,948)		137,755
Selling, general and administrative expenses		1,078		—		64,846		1,999		(106)		67,817
Depreciation and amortization		—		—		80,258		2,480		—		82,738
Operating income (loss)		(1,078)		—		34,916		3,514		—		37,352
Other income (expense):
Interest expense, net of interest income		(25)		(31,554)		(526)		10		—		(32,095)
Intercompany interest income (expense)		—		14,727		(14,711)		(16)		—		—
Gain on extinguishment of debt		—		234		—		—		—		234
Investment income		—		202		10,377		—		—		10,579
Equity in earnings of subsidiaries, net		16,383		28,769		207		—		(45,359)		—
Other, net		—		—		4,538		56		—		4,594
Income (loss) before income taxes		15,280		12,378		34,801		3,564		(45,359)		20,664
Income tax expense (benefit)		(267)		(4,005)		8,442		871		—		5,041
Net income (loss)		15,547		16,383		26,359		2,693		(45,359)		15,623
Less: net income attributable to noncontrolling interest		—		—		76		—		—		76
Net income (loss) attributable to Consolidated Communications Holdings, Inc.	$	15,547	$	16,383	$	26,283	$	2,693	$	(45,359)	$	15,547
Total comprehensive income (loss) attributable to common shareholders	$	5,547	$	6,383	$	26,610	$	2,702	$	(35,695)	$	5,547

	Quarter Ended March 31, 2019
	Parent		Subsidiary Issuer		Guarantors		Non-Guarantors		Eliminations		Consolidated
Net revenues	$	—	$	—	$	329,278	$	12,469	$	(3,098)	$	338,649
Operating expenses:
Cost of services and products (exclusive of depreciation and amortization)		—		—		147,801		3,506		(2,988)		148,319
Selling, general and administrative expenses		1,655		(193)		70,600		2,415		(110)		74,367
Depreciation and amortization		—		—		96,781		2,462		—		99,243
Operating income (loss)		(1,655)		193		14,096		4,086		—		16,720
Other income (expense):
Interest expense, net of interest income		(28)		(34,088)		(167)		—		—		(34,283)
Intercompany interest income (expense)		—		14,727		(14,708)		(19)		—		—
Investment income		—		190		8,411		—		—		8,601
Equity in earnings of subsidiaries, net		(6,076)		7,242		213		—		(1,379)		—
Other, net		(3)		56		(1,408)		(14)		—		(1,369)
Income (loss) before income taxes		(7,762)		(11,680)		6,437		4,053		(1,379)		(10,331)
Income tax expense (benefit)		(497)		(5,604)		1,756		1,200		—		(3,145)
Net income (loss)		(7,265)		(6,076)		4,681		2,853		(1,379)		(7,186)
Less: net income attributable to noncontrolling interest		—		—		79		—		—		79
Net income (loss) attributable to Consolidated Communications Holdings, Inc.	$	(7,265)	$	(6,076)	$	4,602	$	2,853	$	(1,379)	$	(7,265)
Total comprehensive income (loss) attributable to common shareholders	$	(13,711)	$	(12,522)	$	5,560	$	2,921	$	4,041	$	(13,711)

Schedule of condensed consolidating statements of cash flows

Condensed Consolidating Statements of Cash Flows

(In thousands)

	Three Months Ended March 31, 2020
	Parent		Subsidiary Issuer		Guarantors		Non-Guarantors		Consolidated
Net cash (used in) provided by operating activities	$	(354)	$	(8,877)	$	88,395	$	5,826	$	84,990
Cash flows from investing activities:
Purchases of property, plant and equipment		—		—		(40,923)		(1,466)		(42,389)
Proceeds from sale of assets		—		—		2,184		3		2,187
Proceeds from sale of investments		—		—		426		—		426
Net cash used in investing activities		—		—		(38,313)		(1,463)		(39,776)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		—		10,000		—		—		10,000
Payment of finance lease obligation		—		—		(2,641)		(33)		(2,674)
Payment on long-term debt		—		(46,588)		—		—		(46,588)
Repurchase of senior notes		—		(4,208)		—		—		(4,208)
Transactions with affiliates, net		354		51,422		(47,446)		(4,330)		—
Net cash provided by (used in) financing activities		354		10,626		(50,087)		(4,363)		(43,470)
Increase (decrease) in cash and cash equivalents		—		1,749		(5)		—		1,744
Cash and cash equivalents at beginning of period		—		12,387		8		—		12,395
Cash and cash equivalents at end of period	$	—	$	14,136	$	3	$	—	$	14,139

	Three Months Ended March 31, 2019
	Parent		Subsidiary Issuer		Guarantors		Non-Guarantors		Consolidated
Net cash (used in) provided by operating activities	$	(178)	$	(9,043)	$	77,551	$	6,667	$	74,997
Cash flows from investing activities:
Purchases of property, plant and equipment		—		—		(51,617)		(1,777)		(53,394)
Proceeds from sale of assets		—		—		863		2		865
Proceeds from sale of investments		—		—		329		—		329
Net cash used in investing activities		—		—		(50,425)		(1,775)		(52,200)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		—		51,000		—		—		51,000
Payment of finance lease obligation		—		—		(3,471)		(36)		(3,507)
Payment on long-term debt		—		(45,588)		—		—		(45,588)
Dividends on common stock		(27,577)		—		—		—		(27,577)
Transactions with affiliates, net		27,755		(1,206)		(21,693)		(4,856)		—
Net cash provided by (used in) financing activities		178		4,206		(25,164)		(4,892)		(25,672)
Increase (decrease) in cash and cash equivalents		—		(4,837)		1,962		—		(2,875)
Cash and cash equivalents at beginning of period		—		9,616		(18)		1		9,599
Cash and cash equivalents at end of period	$	—	$	4,779	$	1,944	$	1	$	6,724