10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

or

  ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-36863

Cable One, Inc.

(Exact name of registrant as specified in its charter)

Delaware	13-3060083
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
210 E. Earll Drive, Phoenix, Arizona	85012
(Address of Principal Executive Offices)	(Zip Code)

(602) 364-6000

(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 ☑ 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 ☑ No ☐

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

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
(Do not check if a smaller reporting company)
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date:

Description of Class	Shares Outstanding as of May 1, 2017
Common Stock, par value $0.01	5,724,293

CABLE ONE, INC.

FORM 10-Q

 TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signatures		27

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 PART I:  FINANCIAL INFORMATION

Item 1.     Financial Statements

CABLE ONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)	March 31, 2017			December 31, 2016
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	173,467		$	138,040
Accounts receivable, net		31,039			37,073
Prepaid assets		14,160			10,824
Total Current Assets		218,666			185,937
Property, plant and equipment, net		616,739			619,621
Intangibles, net		497,460			497,480
Goodwill		84,928			84,928
Other assets		5,701			9,305
Total Assets	$	1,423,494		$	1,397,271
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable and accrued liabilities	$	68,298		$	82,703
Deferred revenue		22,614			22,190
Income taxes payable		14,758			-
Long-term debt - current portion		6,875			6,250
Total Current Liabilities		112,545			111,143
Long-term debt		529,407			530,886
Deferred income taxes		276,770			276,297
Accrued compensation and other liabilities		23,926			24,434
Total Liabilities		942,648			942,760
Commitments and contingencies (see Note 11)
Stockholders' Equity
Preferred stock ($0.01 par value; 4,000,000 shares authorized; none issued or outstanding)		-			-
Common stock ($0.01 par value; 40,000,000 shares authorized; 5,887,899 shares issued; and 5,723,775 and 5,708,223 shares outstanding as of March 31, 2017 and December 31, 2016, respectively)		59			59
Additional paid-in capital		20,096			17,669
Retained earnings		536,412			511,776
Accumulated other comprehensive loss		(444	)		(446	)
Treasury stock, at cost (164,124 and 179,676 shares held as of March 31, 2017 and December 31, 2016, respectively)		(75,277	)		(74,547	)
Total Stockholders' Equity		480,846			454,511
Total Liabilities and Stockholders' Equity	$	1,423,494		$	1,397,271

See accompanying notes to unaudited condensed consolidated financial statements.

1

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31,
(in thousands, except per share and share data)	2017			2016
Revenues	$	207,427		$	202,805
Costs and expenses
Operating (excluding depreciation and amortization)		69,083			76,428
Selling, general and administrative		45,733			43,893
Depreciation and amortization		38,404			34,693
(Gain) loss on disposal of assets		(6,146	)		408
Total operating costs and expenses		147,074			155,422
Income from operations		60,353			47,383
Interest expense		(7,606	)		(7,555	)
Other income (expense), net		287			510
Income before income taxes		53,034			40,338
Provision for income taxes		19,819			13,294
Net income	$	33,215		$	27,044
Other comprehensive gain (loss), net of tax		2			(27	)
Comprehensive income	$	33,217		$	27,017
Net income per common share:
Basic	$	5.86		$	4.67
Diluted	$	5.80		$	4.65
Weighted average common shares outstanding:
Basic		5,671,838			5,796,252
Diluted		5,730,901			5,810,639

See accompanying notes to unaudited condensed consolidated financial statements.

2

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

						Additional					Treasury			Accumulated Other			Total
	Common Stock					Paid-In		Retained			Stock,			Comprehensive			Stockholders’
(in thousands, except share data)	Shares			Amount		Capital		Earnings			at cost			Loss			Equity
Balance at December 31, 2016		5,708,223		$	59	$	17,669	$	511,776		$	(74,547	)	$	(446	)	$	454,511
Net income		-			-		-		33,215			-			-			33,215
Changes in pension, net of tax		-			-		-		-			-			2			2
Equity-based compensation		-			-		2,427		-			-			-			2,427
Issuance of restricted stock awards, net of forfeitures		16,769			-		-		-			-			-			-
Repurchase of common stock		(700	)		-		-		-			(399	)		-			(399	)
Withholding tax for restricted stock awards		(517	)									(331	)					(331	)
Dividends paid to stockholders		-			-		-		(8,579	)		-			-			(8,579	)
Balance at March 31, 2017		5,723,775		$	59	$	20,096	$	536,412		$	(75,277	)	$	(444	)	$	480,846

See accompanying notes to unaudited condensed consolidated financial statements.

3

CABLE ONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended March 31,
(in thousands)	2017			2016
Cash flows from operating activities:
Net income	$	33,215		$	27,044
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		38,404			34,693
Amortization of deferred financing costs		400			404
Equity-based compensation		2,427			3,046
Deferred income taxes		472			(2,670	)
(Gain) loss on disposal of assets		(6,146	)		408
Changes in operating assets and liabilities:
Accounts receivable, net		6,034			4,967
Prepaid assets		(3,336	)		(4,948	)
Accounts payable and accrued liabilities		(7,977	)		2,473
Deferred revenue		424			29
Income taxes payable		14,758			11,765
Other assets and other liabilities, net		(415	)		328
Net cash provided by operating activities		78,260			77,539
Cash flows from investing activities:
Capital expenditures		(35,917	)		(27,395	)
Change in accrued expenses related to capital expenditures		(1,143	)		(19,365	)
Proceeds from sales of property, plant and equipment		10,075			195
Net cash used in investing activities		(26,985	)		(46,565	)
Cash flows from financing activities:
Payments on long-term debt		(1,254	)		(628	)
Repurchase of common stock		(399	)		(34,591	)
Payment of withholding tax for restricted shares		(331	)		-
Dividends paid to stockholders		(8,579	)		(8,694	)
Cash overdraft		(5,285	)		(43	)
Net cash used in financing activities		(15,848	)		(43,956	)
Change in cash and cash equivalents		35,427			(12,982	)
Cash and cash equivalents, beginning of period		138,040			119,199
Cash and cash equivalents, end of period	$	173,467		$	106,217
Supplemental cash flow disclosures:
Cash paid for interest	$	743		$	646
Cash paid for income taxes	$	42		$	3,624

See accompanying notes to unaudited condensed consolidated financial statements.

4

CABLE ONE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 19 Western, Midwestern and Southern states of the United States of America as of March 31, 2017. Prior to July 1, 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 1, 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 12 for details on this transaction.

Unless otherwise stated or the context otherwise indicates, all references in this Quarterly Report on Form 10-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 10-01 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 10-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, the Company changed its accounting estimate related to the capitalization of certain internal labor and related costs associated with construction and customer installation activities. Capitalized labor costs increased $5.9 million in the first quarter of 2017 compared to the first quarter of 2016.

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Recently Adopted and Issued Accounting Pronouncements. In 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 2017-04 removes Step 2 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.

In 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 2017-01 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 1, 2017.

In August 2016, 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 2016-15 is effective for the first quarter of 2018 with early adoption permitted. The Company is evaluating the impact of adopting ASU 2016-15 on its financial statements.

In 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 2016-09 was effective for the first quarter of 2017. The ASU is expected to result in increased volatility to the Company’s income tax expense.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 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 2016-02 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.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 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.

6

2. REVENUES

The Company’s revenues by product line were as follows (in thousands):

	Three Months Ended March 31,
	2017		2016
Residential
Data	$	90,201	$	83,439
Video		72,454		74,853
Voice		9,867		11,314
Business services		26,961		23,827
Advertising sales		5,622		7,003
Other		2,322		2,369
Total revenues	$	207,427	$	202,805

The amount of franchise fees recorded on a gross basis and included in residential video revenues above was $3.5 million and $3.6 million for the three months ended March 31, 2017 and 2016, respectively.

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):

	March 31, 2017			December 31, 2016
Cable distribution systems	$	1,069,545		$	1,048,790
Customer premise equipment		179,893			181,852
Other equipment and fixtures		371,429			359,957
Buildings and leasehold improvements		89,021			88,592
Capitalized software		87,591			83,815
Construction in progress		60,592			64,822
Land		9,612			9,612
Total property, plant and equipment		1,867,683			1,837,440
Less accumulated depreciation		(1,250,944	)		(1,217,819	)
Property, plant and equipment, net	$	616,739		$	619,621

Depreciation and amortization expense was $38.4 million and $34.7 million for the three months ended March 31, 2017 and 2016, respectively.

The Company's previous headquarters building and adjoining property were held for sale at December 31, 2016. In January 2017, the Company sold a portion of this property for $10.1 million in gross proceeds and recognized a related gain of $6.6 million. The remaining property’s carrying value of $4.6 million was included in Other assets in the Condensed Consolidated Balance Sheets as assets held for sale at March 31, 2017.

4. GOODWILL AND INTANGIBLE ASSETS

The carrying amount of goodwill at March 31, 2017 and December 31, 2016 was $84.9 million. The Company historically has not recorded any impairment of goodwill.

Intangible assets (excluding goodwill) consisted of the following (dollars in thousands):

					March 31, 2017
	Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,141	$	3,817	$	324
Indefinite-Lived Intangible Assets (Excluding Goodwill)
Franchise agreements					$	497,136

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					December 31, 2016
	Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,138	$	3,794	$	344
Indefinite-Lived Intangible Assets (Excluding Goodwill)
Franchise agreements					$	497,136

5. LONG-TERM DEBT

Long-term debt as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands):

	March 31, 2017			December 31, 2016
Senior Unsecured Notes	$	450,000		$	450,000
Senior Credit Facilities		93,750			95,000
Capital lease obligation		280			284
Total debt		544,030			545,284
Less unamortized debt issuance costs		(7,748	)		(8,148	)
Less current portion of long-term debt		(6,875	)		(6,250	)
Total Long-term debt	$	529,407		$	530,886

5.750% Senior Unsecured Notes Due 2022. On June 17, 2015, the Company issued $450 million aggregate principal amount of 5.750% senior unsecured notes due 2022 (the “Notes”). The Notes mature on June 15, 2022 and interest is payable on June 15 and December 15 of each year.

The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any other applicable securities laws. The Notes were offered in the United States only to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration set forth in Rule 144A under the Securities Act and outside the United States to non-U.S. persons in reliance on the exemption from registration set forth in Regulation S under the Securities Act.

The Notes were issued pursuant to an indenture (the “Indenture”) dated as of June 17, 2015. The Indenture provides for early redemption of the Notes, at the option of the Company, at the prices and subject to the terms specified in the Indenture. The Indenture includes certain covenants relating to debt incurrence, liens, restricted payments, asset sales and transactions with affiliates, changes in control and mergers or sales of all or substantially all of the Company’s assets. The Indenture also provides for customary events of default (subject, in certain cases, to customary grace periods).

Senior Credit Facilities Due 2020. On June 30, 2015, the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto.  The Credit Agreement provides for a five-year revolving credit facility in an aggregate amount of $200 million (the “Revolving Credit Facility”) and a five-year term loan facility in an aggregate amount of $100 million (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Senior Credit Facilities”). Concurrently with its entry into the Credit Agreement, the Company borrowed the full amount of the Term Loan Facility (the “Term Loan”).

Borrowings under the Senior Credit Facilities bear interest, at the Company’s option, at a rate per annum determined by reference to either the London Interbank Offered Rate (“LIBOR”) or an adjusted base rate, in each case plus an applicable interest rate margin. The applicable interest rate margin with respect to LIBOR borrowings is a rate per annum between 1.50% and 2.25% and the applicable interest rate margin with respect to adjusted base rate borrowings is a rate per annum between 0.50% and 1.25%, in each case determined on a quarterly basis by reference to a pricing grid based upon the Company’s total net leverage ratio. In addition, the Company is required to pay commitment fees on any unused portion of the Revolving Credit Facility at a rate between 0.25% per annum and 0.40% per annum, determined by reference to the pricing grid. As of March 31, 2017, borrowings under the Senior Credit Facilities bore interest at a rate of 2.50% per annum and commitment fees accrue at a rate of 0.25% per annum. Outstanding borrowings under the Term Loan Facility were $93.8 million and the Company had $197.2 million available for borrowing under the Revolving Credit Facility at March 31, 2017.

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The Revolving Credit Facility also gives the Company the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility of $2.8 million at March 31, 2017 were held for the benefit of certain general and liability insurance matters and bore interest at a rate of 1.625% per annum.

The Senior Credit Facilities may be prepaid at any time without premium, and periodic principal repayments are due in certain quarterly installments as set forth in the Credit Agreement, with the outstanding balance of the Term Loan Facility to be paid on the fifth anniversary of funding.

The Company may, subject to the terms and conditions of the Credit Agreement, obtain additional credit facilities of up to $300 million under the Credit Agreement pursuant to an uncommitted incremental facility.

The Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including limitations on indebtedness, liens, restricted payments, prepayments of certain indebtedness, investments, dispositions of assets, restrictions on subsidiary distributions and negative pledge clauses, fundamental changes, transactions with affiliates and amendments to organizational documents. The Credit Agreement also requires the Company to maintain specified ratios of total net leverage and first lien net leverage to consolidated operating cash flow. The Credit Agreement also contains customary events of default, including non-payment of principal, interest, fees or other amounts, material inaccuracy of any representation or warranty, failure to observe or perform any covenant, default in respect of other material debt of the Company and of its restricted subsidiaries, bankruptcy or insolvency, the entry against the Company or any of its restricted subsidiaries of a material judgment, the occurrence of certain ERISA events, impairment of the loan documentation and the occurrence of a change of control. 

The Company was in compliance with all debt covenants as of March 31, 2017. 

As of March 31, 2017, the future maturities of long-term debt were as follows (in thousands): 

Years Ending December 31:	Amount
2017	$	5,013
2018		8,767
2019		12,517
2020		67,517
2021		17
Thereafter		450,199
Total	$	544,030

On February 13, 2017, the Company entered into an amendment to the Credit Agreement to permit, among other things, the incurrence of the $650 million of senior secured loans expected to be used to finance the acquisition of NewWave. On May 1, 2017, the Company entered into a Restatement Agreement (the “Restatement Agreement”) pursuant to which the Company amended and restated the Credit Agreement (as so amended and restated, the “Amended and Restated Credit Agreement”). See Note 12 for details on this transaction.

6. FAIR VALUE MEASUREMENTS

The Company’s deferred compensation liabilities were $17.6 million and $18.2 million at March 31, 2017 and December 31, 2016, respectively. These liabilities are included in Accounts payable and accrued liabilities and Accrued compensation and other liabilities in the Condensed Consolidated Balance Sheets. These liabilities represent the market value of a participant’s balance in a notional investment account that is comprised primarily of mutual funds, which is based on observable market prices. However, since the deferred compensation obligations are not exchanged in an active market, they are classified as Level 2 in the fair value hierarchy. Realized and unrealized gains (losses) on deferred compensation are included in operating income.

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The carrying amounts and fair values of the Company’s long-term debt, including current portion, money market and commercial paper investments as of March 31, 2017, were as follows (in thousands):

	March 31, 2017
	Carrying		Fair
	Amount		Value
Assets:
Money market investments	$	72,334	$	72,334
Commercial paper	$	91,297	$	91,512
Long-term debt, including current portion:
Notes	$	450,000	$	469,125
Term Loan	$	93,750	$	93,750

Money market investments are included in Cash and cash equivalents in the Condensed Consolidated Balance Sheets. Commercial paper investments with original maturities of 90 days or less are also included in Cash and cash equivalents. These investments are primarily held in U.S. Treasury securities and registered money market funds. These investments were valued using a market approach based on the quoted market prices of the money market investments (Level 1) or inputs that include quoted market prices for investments similar to the commercial paper (Level 2). The fair value of the Notes was estimated based on market prices in active markets (Level 2). The fair value of the Term Loan was estimated based on discounting the remaining principal and interest payments using current market rates for similar debt (Level 2). 

7. TREASURY STOCK

Share Repurchase Program. On July 1, 2015, the Company’s board of directors (the “Board”) authorized up to $250 million of share repurchases (subject to a total cap of 600,000 shares of Company common stock). Purchases under the share repurchase program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases will be based on a number of factors, including share price and business and market conditions. Through March 31, 2017, the Company had repurchased 165,633 shares at an aggregate cost of $73.1 million. During the three months ended March 31, 2017, the Company repurchased 700 shares at an aggregate cost of $0.4 million.

Restricted Stock Tax Withholding. Treasury stock is recorded at cost and is presented as a reduction of stockholders’ equity in the Condensed Consolidated Financial Statements. Shares of common stock with a fair market value equal to the applicable statutory minimum amount of the employee withholding taxes due are withheld by the Company upon the vesting of restricted stock to pay the applicable statutory minimum amount of employee withholding taxes and are considered common stock repurchases. The Company then pays the applicable statutory minimum amount of withholding taxes in cash. The amount remitted during the three months ended March 31, 2017 was $0.3 million for which the Company withheld 517 shares of common stock. Treasury shares of 164,124 held at March 31, 2017 includes the aforementioned shares withheld for withholding tax.

8. EQUITY-BASED COMPENSATION

On June 5, 2015, the Board adopted the Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”), which became effective July 1, 2015. The 2015 Plan is designed to promote the interests of the Company and its stockholders by providing the employees and directors of the Company with incentives and rewards to encourage them to continue in the service of the Company and with a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company. Any of the directors, officers and employees of the Company and its affiliates are eligible to be granted one or more of the following types of awards under the 2015 Plan: (1) incentive stock options, (2) non-qualified stock options, (3) restricted stock awards, (4) stock appreciation rights (“SARs”), (5) restricted stock units (“RSUs”), (6) cash-based awards, (7) performance-based awards, (8) dividend equivalent rights and (9) other stock-based awards, including, without limitation, performance stock units and deferred stock units. The 2015 Plan includes the authority to grant awards that are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended. Unless the 2015 Plan is sooner terminated by the Board, no awards may be granted under the 2015 Plan after the tenth anniversary of its effective date.

The 2015 Plan provides that, subject to certain adjustments for certain corporate events, the maximum number of shares of Company common stock that may be issued under the 2015 Plan is equal to 600,000, and no more than 400,000 shares may be issued pursuant to incentive stock options. At March 31, 2017, 329,962 shares were available for issuance under the 2015 Plan.

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Restricted Stock Awards. The Company has granted restricted shares of Company common stock subject to service-based and performance-based vesting conditions under the 2015 Plan to employees of the Company. Restricted share awards generally cliff-vest on the three-year anniversary of the grant date or in four equal ratable installments beginning on the first anniversary of the grant date (generally subject to the holder’s continued employment with the Company through the applicable vesting date), except in the case of awards made to individuals (i) whose equity awards issued by GHC were forfeited in connection with the Company’s spin-off (the “spin-off”) from GHC (the “Replacement Shares”), which Replacement Shares vested on December 12, 2016 (with certain exceptions as provided in the applicable award agreement), or (ii) who did not receive an equity award from GHC in 2015 in anticipation of the spin-off (the “Staking Shares”), which Staking Shares are scheduled to cliff-vest on January 2, 2018. Performance-based restricted shares are or were subject to performance metrics related primarily to year-over-year or three-year cumulative growth in Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) less capital expenditures or year-over-year growth in Adjusted EBITDA and capital expenditures as a percentage of total revenues. Restricted shares are subject to the terms and conditions of the 2015 Plan and will otherwise be subject to the terms and conditions of the applicable award agreement.

The compensation arrangements for the Company’s non-employee directors under the 2015 Plan as of March 31, 2017 provided that each non-employee director is entitled to an annual retainer of $150,000, plus an additional annual retainer of $15,000 for each non-employee director who serves as a committee chair or as lead independent director.  Each such retainer will be provided in the form of RSUs. Such RSUs will generally be granted on the date of the Company’s annual stockholders’ meeting and will vest on the first anniversary of the grant date, subject to the director’s continued service through such vesting date.  Settlement of such RSUs will be in the form of one share of the Company’s common stock and will follow vesting, unless the director has previously elected to defer such settlement until his or her separation from service from the Board. As of March 31, 2017, 2,210 RSUs, including Dividend Equivalent Units (“DEUs”), were vested and deferred.

Restricted shares, RSUs and DEUs are collectively referred to as “restricted stock.” A summary of restricted stock activities for the three months ended March 31, 2017 is as follows:  

				Weighted Average
				Grant Date
	Restricted			Fair Value
	Stock			Per Share
Unvested as of December 31, 2016		38,425		$	402.13
Granted		13,978		$	619.67
Shares granted due to performance achievement		5,006		$	433.66
Forfeited		(1,904	)	$	432.95
Vested		(284	)	$	380.50
Unvested as of March 31, 2017		55,221		$	459.16
Vested and unissued as of March 31, 2017		2,210		$	415.10

Compensation expense associated with unvested restricted stock is recognized on a straight-line basis over the vesting period. The expense recognized each period is dependent upon the Company’s estimate of the number of shares that will ultimately vest. Equity-based compensation expense for restricted stock was $1.7 million for the three months ended March 31, 2017.  At March 31, 2017, there was $11.0 million of unrecognized compensation expense related to restricted stock, which is expected to be recognized over a weighted average period of 1.4 years.

Stock Appreciation Rights. The Company has granted SARs under the 2015 Plan to certain executives and other employees of the Company. The SARs are scheduled to vest in four equal ratable installments beginning on the first anniversary of the grant date (generally subject to the holder’s continued employment with the Company through the applicable vesting date). The SARs are subject to the terms and conditions of the 2015 Plan and will otherwise be subject to the terms and conditions of the applicable award agreement.

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A summary of SAR activity is as follows:

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Fair Value		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 2016		136,000		$	426.80	$	88.07	$	26,510		8.7
Granted		20,000		$	619.66	$	138.01				9.8
Exercised		(5,625	)	$	422.31	$	87.22
Forfeited		(5,200	)	$	422.31	$	87.22
Outstanding as of March 31, 2017		145,175		$	453.71	$	95.01	$	24,790		8.6
Vested and exercisable as of March 31, 2017		25,550		$	422.31	$	87.22	$	5,165		8.4

The fair value of the SARs was measured based on the Black-Scholes model. The inputs used in the model for the three months ended March 31, 2017 were as follows:  

	2017
Expected volatility		20.93	%
Risk-free interest rate		2.15	%
Expected term (in years)		6.25
Expected dividend yield		0.96	%

Compensation expense associated with unvested SARs is recognized on a straight-line basis over the vesting period. The expense recognized each period is dependent upon our estimate of the number of SARs that will ultimately vest. Equity-based compensation expense for the SARs was $0.7 million for the three months ended March 31, 2017. At March 31, 2017, there was $9.7 million of unrecognized compensation expense related to the SARs, which is expected to be recognized over a weighted average period of 1.3 years.

Compensation Expense. Total equity-based compensation expense recognized was $2.4 million and $3.0 million for the three months ended March 31, 2017 and 2016, respectively and was included in Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations and Comprehensive Income. The Company has recorded an income tax benefit of $3.5 million related to the equity-based awards granted through March 31, 2017. The deferred tax asset related to all outstanding equity-based awards was $5.7 million as of March 31, 2017.  

9. INCOME TAXES

The Company’s effective tax rate was 37.4% and 33.0% for the three months ended March 31, 2017 and 2016, respectively. The increase in the effective tax rate primarily reflects $2.2 million of income tax benefits from certain spin-off and state tax items recognized in the prior year quarter which did not recur.

10. NET INCOME PER SHARE

Basic net income per common share is computed by dividing the net income allocable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per share further includes any common shares available to be issued upon vesting or exercise of outstanding equity awards if such inclusion would be dilutive. 

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The following table sets forth the computation of basic and diluted net income per common share (in thousands, except share and per share amounts):

	Three Months Ended March 31,
	2017		2016
Numerator:
Net income	$	33,215	$	27,044
Denominator:
Weighted average common shares outstanding - Basic		5,671,838		5,796,252
Effect of dilutive equity awards (1)		59,063		14,387
Weighted average common shares outstanding - Diluted		5,730,901		5,810,639
Net income per share:
Basic	$	5.86	$	4.67
Diluted	$	5.80	$	4.65

⁽¹⁾ SARs outstanding that were not included in the diluted net income per share calculation because the effect would have been anti-dilutive were 443 and 1,038 for the three months ended March 31, 2017 and 2016, respectively.

11. COMMITMENTS AND CONTINGENCIES

Litigation and Legal Matters. The Company is subject to complaints and administrative proceedings and is a defendant in various civil lawsuits that have arisen in the ordinary course of its business. Such matters include: contract disputes; actions alleging negligence; invasion of privacy; trademark, copyright and patent infringement; violations of applicable wage and hour laws; statutory or common law claims involving current and former employees; and other matters. Although the outcomes of the legal claims and proceedings against the Company cannot be predicted with certainty, based on currently available information, management believes that there are no existing claims or proceedings that are likely to have a material effect on the Company’s business, financial condition, results of operations or cash flows. Also, based on currently available information, management is of the opinion that the exposure to future material losses from existing legal proceedings is not reasonably possible or that future material losses in excess of the amounts accrued are not reasonably possible.

Regulation in the Cable Industry. The operation of a cable system is extensively regulated by the Federal Communications Commission (the “FCC”), some state governments and most local governments. The FCC has the authority to enforce its regulations through the imposition of substantial fines, the issuance of cease and desist orders and/or the imposition of other administrative sanctions, such as the revocation of FCC licenses needed to operate certain transmission facilities used in connection with cable operations. The Telecommunications Act of 1996 altered the regulatory structure governing the nation’s communications providers. It removed barriers to competition in both the cable television market and the voice services market. Among other things, it reduced the scope of cable rate regulation and encouraged additional competition in the video programming industry by allowing telephone companies to provide video programming in their own telephone service areas. Future legislative and regulatory changes could adversely affect the Company’s operations.

GHC Agreements. On June 16, 2015, Cable One entered into several agreements with GHC that set forth the principal actions taken in connection with the spin-off and that govern the relationship of the parties following the spin-off, including a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement. The aggregate costs and reimbursements paid to GHC totaled $0.1 million for the three months ended March 31, 2017 and 2016, respectively.

12. SUBSEQUENT EVENT

On January 18, 2017, the Company announced that the Company entered into an Agreement and Plan of Merger, dated as of January 17, 2017 (the “Merger Agreement”), to acquire NewWave from funds affiliated with GTCR LLC, a private equity firm based in Chicago. NewWave was a cable operator providing data, video and voice services to residential and business customers throughout non-urban areas of Arkansas, Illinois, Indiana, Louisiana, Mississippi, Missouri and Texas. On May 1, 2017, the Company completed the transaction and NewWave became a wholly owned subsidiary of the Company. The Company paid a purchase price of $735 million in cash, on a debt-free, cash-free basis and subject to customary post-closing adjustments.

On May 1, 2017, the Company entered into the Restatement Agreement, pursuant to which the Company amended and restated the Credit Agreement and incurred $750 million of senior secured loans (the “Incremental Loans”) which were used to (i) finance the transactions contemplated by the Merger Agreement, (ii) repay in full the Company’s existing term “A” loans and (iii) pay fees and expenses.

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The Incremental Loans consist of (a) a five-year incremental term “A” loan in an aggregate principal amount of $250 million (the “Incremental TLA”) and (b) a seven-year incremental term “B” loan in an aggregate principal amount of $500 million (the “Incremental TLB”), which are guaranteed by the Company’s wholly owned subsidiaries and are secured, subject to certain exceptions, by substantially all assets of the Company and the guarantors.

The interest margins applicable to the Incremental Loans under the Amended and Restated Credit Agreement are, at the Company’s option, equal to either a LIBOR or a base rate, plus an applicable margin equal to, (x) with respect to the Incremental TLA, 2.25% to 1.50% for LIBOR loans and 1.25% to 0.50% for base rate loans, determined on a quarterly basis by reference to a pricing grid based on the Company’s total net leverage ratio and (y) with respect to the Incremental TLB, 2.25% for LIBOR loans and 1.25% for base rate loans. The Incremental TLA amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of 2.5% per annum for the first year after funding, 5.0% per annum for the second year after funding, 7.5% for the third year after funding and 10.0% per annum for the fourth and fifth years after funding, with the balance due upon maturity of the Incremental TLA. The Incremental TLB amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of 1.0% per annum, with the balance due upon maturity of the Incremental TLB. The Incremental TLB is subject to a 1% prepayment penalty if prepaid within six-months of funding, benefits from certain “most favored nation” pricing protections and does not benefit from the financial maintenance covenants under the Amended and Restated Credit Agreement. Other than as set forth above, the Incremental Loans are subject to terms substantially similar to those under the Credit Agreement.

The Company is currently in the process of finalizing the accounting for the acquisition of NewWave and expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the second quarter of 2017.

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, 2016 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K filed with the SEC on March 1, 2017. Our results of operations for the three months ended March 31, 2017 may not be indicative of our future results.

Overview

Our Business

We are a fully integrated provider of data, video and voice services in 19 Western, Midwestern and Southern states as of March 31, 2017. We provide these broadband services to residential and business customers in more than 400 cities and towns. The markets we serve are primarily non-metropolitan, secondary markets, with 76% of our customers located in five states: Arizona, Idaho, Mississippi, Oklahoma and Texas. Our biggest customer concentrations are in the Mississippi Gulf Coast region and in the greater Boise, Idaho region. We are the seventh-largest cable system operator in the United States based on customers and revenues in 2016, providing service to 660,968 residential and business customers out of approximately 1.7 million homes passed as of March 31, 2017. Of these customers, 523,327 subscribed to data services, 307,187 subscribed to video services and 113,368 subscribed to voice services.  

We generate substantially all of our revenues through five primary products. Ranked by share of our total revenues through the first three months of 2017, they are residential data (43.5%) residential video (34.9%), business services (data, voice and video – 13.0%), residential voice (4.8%) and advertising sales (2.7%). The profit margins, growth rates and capital intensity of our five primary products vary significantly due to competition, product maturity and relative costs.

On May 1, 2017, we completed the acquisition of all of the outstanding equity interests of NewWave and NewWave became a wholly owned subsidiary of ours. We 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 12 of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for details on this transaction.

Prior to 2012, we were focused on growing revenues through subscriber retention and growth in overall primary service units (“PSUs”). Accordingly, our strategies consisted of, among others, offering promotional discounts to new and existing subscribers adding new services and to subscribers purchasing more than one service offering. Since 2012, we have adapted our strategy to face the industry-wide trends of declining profitability of residential video services and declining revenues from residential voice services. We believe the declining profitability of residential video services is primarily due to competition from other content providers and increasing programming costs and retransmission fees, and the declining revenues from residential voice services is primarily due to the increasing use of wireless voice services in addition to, or instead of, landline voice service. Beginning in 2013, we shifted our focus away from maximizing customer PSUs and towards growing and maintaining our higher margin businesses, namely residential data and business services. Separately, we have also focused on retaining customers with a high expected lifetime value (“LTV”), who are less attracted by discounting, require less support and churn less. This strategy focuses on increasing Adjusted EBITDA, Adjusted EBITDA less capital expenditures and margins (see “Use of Adjusted EBITDA” for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure).

The trends described above have impacted our four largest product lines in the following ways:

• Residential data. We experienced growth in the number of and revenues from our residential data customers every year since 2013. We expect this growth to continue due to projected increases in the number of potential customers for us to serve, as there are still a number of households in our markets that do not subscribe to data services from any provider. We expect to capture a portion of these customers and anticipate capturing additional market share from existing data subscribers due to our recent upgrades in broadband capacity and our ability to offer higher access speeds than many of our competitors.

• Residential video. Residential video service is a competitive and highly penetrated business. As we focus on the higher-margin businesses of residential data and business services, we are de-emphasizing our residential video business and, as a result, expect residential video revenues to decline in the future.

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• Residential voice. We have experienced declines in residential voice customers as a result of homes in the United States deciding to terminate their landline voice service and exclusively use wireless voice service. We believe this trend will continue because of competition from wireless voice service. Revenues from residential voice customers have declined over recent years, and we expect this decline will continue.

• Business services. We have experienced significant growth in business data and voice customers and revenues and expect this to continue. We attribute this growth to our strategic focus shift on increasing sales to business customers. More recently, we have expanded our efforts to attract enterprise business customers. Margins in products sold to business customers have remained attractive, and we expect this trend to continue.

We continue to experience increased competition, particularly from telephone companies, cable overbuilders, over-the-top (“OTT”) video providers and direct broadcast satellite (“DBS”) television providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. We made elevated levels of capital investments between 2012 and 2015 to increase our cable plant capacities and reliability, launch all-digital video services, which has freed up approximately three-fourths of average plant bandwidth for data services, and increase data capacity by moving from four-channel bonding to 32-channel bonding. We expect to continue devoting financial resources to infrastructure improvements because we believe these investments are necessary to remain competitive.

Our goals are to continue to grow residential data and business services and to maintain profit margins to deliver strong Adjusted EBITDA. To achieve these goals, we intend to continue our industrial engineering-driven cost management, remain focused on customers with high LTV and follow through with further planned investments in broadband plant upgrades and new data services offerings for residential and business customers.

Our business is subject to extensive governmental regulation. Such regulation has led to increases in our operational and administrative expenses. In addition, we could be significantly impacted by changes to the existing regulatory framework, whether triggered by legislative, administrative or judicial rulings. In 2015, the FCC used its Title II authority to regulate broadband internet access services through the Open Internet Order (the “Order”). According to the Order, the FCC will forbear from systematic rate regulation of internet access service at the subscriber level, which we believe will permit us to continue to manage data usage efficiently by establishing appropriate rates. However, the Order also imposes on all providers of broadband internet access service, including us, obligations that limit the ways certain types of traffic can be managed. In June 2016, the U.S. Court of Appeals for the D.C. Circuit upheld the Order in its entirety. In April 2017, the FCC announced plans to circulate a Notice of Proposed Rulemaking to revise the rulespreviously adopted in the Order, which is scheduled to be voted on by the FCC in May 2017. On May 1, 2017, the U.S. Court of Appeals for the D.C. Circuit denied a petition for an en banc rehearing of the June 2016 decision upholding the Order. We cannot predict whether or when future changes to the regulatory framework will occur at the FCC or in the courts. We also cannot predict whether or to what extent the rules as revised by the FCC or the courts may affect our operations or impose costs on our business.

Results of Operations

Customer Counts and PSUs by Primary Products

As of March 31, 2017, our total PSUs decreased 39,028 year-over-year, with increases in residential data PSUs of 10,362 and business PSUs of 6,016 offset by decreases in residential video and voice PSUs of 42,798 and 12,608, respectively. Our total customer relationships decreased 4,606, or less than 1%, year-over-year. The changes in residential video and voice PSUs were due to our shift in strategy to focus on growing residential data and business services as discussed above.

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The following table provides an overview of selected customer data for our cable systems for the time periods specified:  

	March 31,				Annual Net Gain/(Loss)
	2017		2016		Change			% Change
Residential data PSUs		477,439		467,077		10,362			2.2
Residential video PSUs (1)		293,726		336,524		(42,798	)		(12.7	)
Residential voice PSUs		94,741		107,349		(12,608	)		(11.7	)
Total residential PSUs		865,906		910,950		(45,044	)		(4.9	)
Business data PSUs (2)		45,888		41,347		4,541			11.0
Business video PSUs		13,461		14,052		(591	)		(4.2	)
Business voice PSUs (3)		18,627		16,561		2,066			12.5
Total business PSUs		77,976		71,960		6,016			8.4
Total PSUs		943,882		982,910		(39,028	)		(4.0	)
Total residential customer relationships		608,515		617,225		(8,710	)		(1.4	)
Total business customer relationships		52,453		48,349		4,104			8.5
Total customer relationships		660,968		665,574		(4,606	)		(0.7	)

⁽¹⁾ Residential video PSUs include all basic residential customers who receive video services and may have one or more digital set-top boxes or cable cards deployed. Residential bulk multi-dwelling accounts are included in our video PSUs.

(2)	Business data PSUs include commercial accounts that receive data service via a cable modem and commercial accounts that receive broadband service optically via fiber connections.
(3)	Business voice customers who have multiple voice lines are only counted once in the PSU total.

In recent years, our customer mix has shifted, causing subscribers to move from triple-play packages to single and double-play packages. This is because some residential video customers have defected to DBS and OTT offerings in lieu of video and more households have discontinued landline voice service. In addition, we have focused on selling data-only packages to new customers rather than on cross-selling video to these customers.

Comparison of Three Months Ended March 31, 2017 to Three Months Ended March 31, 2016

Revenues

Revenues increased $4.6 million, or 2.3%, due primarily to increases in residential data and business services revenues of $6.8 million and $3.1 million, respectively, partially offset by decreases in residential video and residential voice revenues of $2.4 million and $1.4 million, respectively. The declines in residential video and residential voice revenues were primarily attributable to residential video customer losses of 12.7% and residential voice customer losses of 11.7%.

Revenues by service offering were as follows for the three months ended March 31, 2017 and 2016, together with the percentages of revenues that each item represented for the periods presented (dollars in thousands):

	Three Months Ended March 31,
	2017				2016				2017 vs. 2016
	Revenues		% of Total		Revenues		% of Total		$ Change			% Change
Residential data	$	90,201		43.5	$	83,439		41.1	$	6,762			8.1
Residential video		72,454		34.9		74,853		36.9		(2,399	)		(3.2	)
Residential voice		9,867		4.8		11,314		5.6		(1,447	)		(12.8	)
Business services		26,961		13.0		23,827		11.7		3,134			13.2
Advertising sales		5,622		2.7		7,003		3.5		(1,381	)		(19.7	)
Other		2,322		1.1		2,369		1.2		(47	)		(2.0	)
Total revenues	$	207,427		100.0	$	202,805		100.0	$	4,622			2.3

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Average monthly revenue per unit for the indicated service offerings were as follows for the three months ended March 31, 2017 and 2016: 

	Three Months Ended March 31,				2017 vs. 2016
	2017		2016		$ Change			% Change
Residential data (1)	$	63.53	$	59.94	$	3.59			6.0
Residential video (1)		80.47		72.70		7.77			10.7
Residential voice (1)		34.18		34.54		(0.36	)		(1.0	)
Business services (2)		172.87		165.93		6.94			4.2

(1)	Average monthly per unit values represent the applicable residential service revenues divided by the corresponding average number of PSUs at the beginning and end of each period.
(2)	Average monthly per unit values represent business services revenues divided by the average number of business customer relationships at the beginning and end of each period.

Residential data service revenues increased $6.8 million, or 8.1%, due primarily to an increase in residential data customers of 2.2% year-over-year, a reduction in package discounting and increased subscriptions to premium tiers by residential customers.

Residential video service revenues decreased $2.4 million, or 3.2%, due primarily to residential video customer losses of 12.7%, partially offset by a rate adjustment in the first quarter of 2017 and a broadcast television surcharge imposed beginning in the second quarter of 2016.

Residential voice service revenues decreased $1.4 million, or 12.8%, due primarily to a decline in residential voice customers of 11.7% year-over-year as more residential customers have discontinued landline voice service.

Business services revenues increased $3.1 million, or 13.2%, due primarily to growth in our business data and voice services to small and medium-sized businesses and enterprise customers and a rate adjustment for business video customers in the first quarter of 2017. Total business customer relationships increased 8.5% year-over-year. Overall, business services comprised 13.0% of our total revenues for the first quarter of 2017 compared to 11.7% of our total revenues for the first quarter of 2016.

Advertising sales revenues decreased $1.4 million, or 19.7%, due primarily to the negative impact of decreased video customers on the number of viewers available to be reached by advertising spots.

Other revenues of $2.3 million in the first quarter of 2017 were flat compared to the first quarter of 2016.

 Operating Costs and Expenses  

Operating expenses (excluding depreciation and amortization) were $69.1 million in the first quarter of 2017 and decreased $7.3 million, or 9.6%. Operating expenses as a percentage of revenues were 33.3% for the first quarter of 2017 compared to 37.7% for the first quarter of 2016. Overall, programming costs decreased $1.2 million and non-programming operating expenses decreased $6.1 million. The lower programming costs were attributable to a 12.7% reduction in residential video customers from the prior year quarter, partially offset by price increases from various programmers in the first quarter of 2017. The decrease in non-programming operating expenses was primarily attributable to a $4.7 million decrease in labor costs in the first quarter of 2017 associated with our aforementioned change in accounting estimate for capitalized labor costs, lower backbone and internet connectivity fees of $0.8 million and lower repair and maintenance costs of $0.5 million. Operating expenses would have been $73.8 million in the first quarter of 2017, a decrease of $2.7 million, or 3.5%, excluding the favorable impact of the $4.7 million of higher capitalized labor costs. Operating expenses as a percentage of revenues, excluding such favorable impact, would have been 35.6% in the first quarter of 2017 compared to 37.7% in the first quarter of 2016.

Selling, general and administrative expenses increased $1.8 million, or 4.2%, to $45.7 million. Selling, general and administrative expenses as a percentage of revenues were 22.0% and 21.6% for first quarter of 2017 and 2016, respectively. Increased acquisition-related costs of $1.4 million, compensation expenses of $1.2 million, promotional and advertising expenses of $0.8 million and repair and maintenance expenses of $0.4 million more than offset a reduction in labor costs of $1.2 million due to the change in accounting estimate for capitalized labor costs and decreased group insurance expenses of $0.9 million. Selling, general and administrative expenses would have increased $3.1 million, or 7.0%, year-over-year, excluding the favorable impact of the $1.2 million of higher capitalized labor costs. Selling, general and administrative expenses as a percentage of revenues, excluding such favorable impact, would have been 22.6% in the first quarter of 2017 compared to 21.6% in the first quarter of 2016.

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Depreciation and amortization increased $3.7 million, or 10.7%, due primarily to new assets placed in service since the first quarter of 2016, partially offset by assets that became fully depreciated during that period. As a percentage of revenues, depreciation expense was 18.5% for the first quarter of 2017 compared to 17.1% for the first quarter of 2016.

We recognized a net gain on disposal of assets of $6.1 million in the first quarter of 2017, primarily related to the sale of a non-operating property. We sold a portion of a property that included our previous headquarters building. In the first quarter of 2016, we recognized a net loss of $0.4 million on disposals of assets.

Interest Expense

Interest expense was $7.6 million in the first quarter of both 2017 and 2016.

Other Income (Expense)

Other income (expense) of $0.3 million in the first quarter of 2017 was primarily attributable to interest income. Other income (expense) of $0.5 million in the first quarter of 2016 consisted of interest income and certain state income tax credits.

Provision for Income Taxes

Provision for income taxes increased $6.5 million, or 49.1%, primarily due to an increase in income before taxes of $12.7 million. Our effective tax rate was 37.4% and 33.0% for the three months ended March 31, 2017 and 2016, respectively. The increase in the effective tax rate primarily reflects $2.2 million of income tax benefits from certain spin-off and state tax items recognized in the prior year quarter which did not recur.

Net Income

As a result of the factors described above, our net income was $33.2 million for the first quarter of 2017 compared to $27.0 million for the first quarter of 2016. Net income excluding the impact of incremental capitalized labor costs resulting from our change in estimate would have been $29.5 million in the first quarter of 2017.

 Use of Adjusted EBITDA

We use certain measures that are not defined by GAAP to evaluate various aspects of our business. Adjusted EBITDA is a non-GAAP financial measure and should be considered in addition to, and not as a substitute for, net income reported in accordance with GAAP. This term, as defined by us, may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is reconciled to net income below.

Adjusted EBITDA is defined as net income plus interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense, severance expense, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on disposal of assets and other (income) expense, net. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business as well as other non-cash or special items and is unaffected by our capital structure or investment activities. This measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of financing. These costs are evaluated through other financial metrics.

We use Adjusted EBITDA to assess our performance. In addition, Adjusted EBITDA generally correlates to the leverage ratio calculation under our Senior Credit Facilities and outstanding Notes to determine compliance with the covenants contained in the Senior Credit Facilities and Notes. For the purpose of calculating compliance with leverage covenants, we use a measure similar to Adjusted EBITDA, as presented. Adjusted EBITDA is also a significant performance measure used by us in our annual incentive compensation program. Adjusted EBITDA does not take into account cash used for mandatory debt service requirements or other non-discretionary expenditures, and thus does not represent residual funds available for discretionary uses.

19

	Three Months Ended March 31,
(dollars in thousands)	2017			2016			$ Change			% Change
Net income (1)	$	33,215		$	27,044		$	6,171			22.8
Plus:   Interest expense		7,606			7,555			51			0.7
Provision for income taxes		19,819			13,294			6,525			49.1
Depreciation and amortization		38,404			34,693			3,711			10.7
Equity-based compensation expense		2,427			3,046			(619	)		(20.3	)
Severance expense		1,254			-			1,254			NM
(Gain) loss on deferred compensation		90			(220	)		310			NM
Acquisition-related costs		1,482			98			1,384			NM
(Gain) loss on disposal of assets		(6,146	)		408			(6,554	)		NM
Other (income) expense, net		(287	)		(510	)		223			(43.7	)
Adjusted EBITDA(1)	$	97,864		$	85,408		$	12,456			14.6

_______________

NM = Not meaningful.
(1)	Net income and Adjusted EBITDA results include the favorable impact of a reduction in expense of $5.9 million due to a change in accounting estimate related to capitalized labor costs in the first quarter of 2017. Excluding the impact of this change in estimate, net income growth would have been 9.1% year-over-year and Adjusted EBITDA growth would have been 7.7% year-over-year.

We believe Adjusted EBITDA is useful to investors in evaluating the operating performance of our Company. Adjusted EBITDA and similar measures with similar titles are commonly used by investors, analysts and peers to compare performance in our industry, although our measure of Adjusted EBITDA may not be directly comparable to similar measures reported by other companies.

Financial Condition: Liquidity and Capital Resources

Liquidity

Our primary funding requirements are for our ongoing operations, planned capital expenditures, payments of quarterly dividends, share repurchases and for the acquisition of NewWave. We believe that existing cash balances, our Senior Credit Facilities, as amended, and operating cash flows will provide adequate support for these funding requirements over the next 12 months. However, our ability to fund operations and share repurchases and make planned capital expenditures and quarterly dividend payments depends on future operating performance and cash flows, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

The following table shows a summary of our cash flows for the periods indicated (dollars in thousands):

	Three Months Ended March 31,
	2017			2016			$ Change		% Change
Net cash provided by operating activities	$	78,260		$	77,539		$	721		0.9
Net cash used in investing activities		(26,985	)		(46,565	)		19,580		(42.0	)
Net cash used in financing activities		(15,848	)		(43,956	)		28,108		(63.9	)
Change in cash and cash equivalents		35,427			(12,982	)		48,409		NM
Cash and cash equivalents, beginning of period		138,040			119,199			18,841		15.8
Cash and cash equivalents, end of period	$	173,467		$	106,217		$	67,250		63.3

 __________ 

NM =  Not meaningful.

During the three months ended March 31, 2017, our cash and cash equivalents increased $35.4 million. At March 31, 2017, we had $173.5 million of cash on hand compared to $138.0 million at December 31, 2016. Our working capital was $106.1 million and $74.8 million at March 31, 2017 and December 31, 2016, respectively.

20

Net cash provided by operating activities was $78.3 million and $77.5 million in the first quarter of 2017 and 2016, respectively. The year-over-year change in operating cash flow was primarily attributable to higher net income adjusted for depreciation and amortization, deferred taxes and gain on disposal of assets, partially offset by changes in operating assets and liabilities. The operating assets and liabilities change was primarily due to a change in accounts payable and accrued liabilities as a result of the timing of payroll and insurance payments compared to the first quarter of 2016.

Net cash used in investing activities was $27.0 million and $46.6 million for the first quarter of 2017 and 2016, respectively. Capital expenditures, including the related change in accrued expenses, were $37.1 million in the first quarter of 2017 compared to $46.8 million in the prior year quarter. Cash from investing activities included $10.1 million in proceeds received for the sale of a non-operating property in the first quarter of 2017.

Net cash used in financing activities was $15.8 million in the first quarter of 2017 compared to $44.0 million for the first quarter of 2016. The decrease was primarily attributable to lower financing cash outflows for share repurchases, partially offset by increased cash outflows associated with cash overdrafts due to the timing of disbursements.

On July 1, 2015, the Board authorized up to $250 million of share repurchases (subject to a total cap of 600,000 shares of our common stock). We plan to make purchases under the share repurchase program from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases will be based on a number of factors, including share price and business and market conditions. Since the inception of the share repurchase program through the end of the first quarter of 2017, we have repurchased 165,633 shares at an aggregate cost of $73.1 million. During the first quarter of 2017, we repurchased 700 shares at an aggregate cost of $0.4 million. Additionally, we currently expect to continue to pay quarterly cash dividends on shares of our common stock, subject to approval of the Board. During the first quarter of 2017, the Board approved a quarterly dividend of $1.50 per share of common stock, which was paid on March 10, 2017.

Financing Activity

On June 17, 2015, we issued $450 million aggregate principal amount of 5.750% senior unsecured notes due 2022. The Notes mature on June 15, 2022 and bear interest at a rate of 5.75% per year. Interest on the Notes is payable on June 15 and December 15 of each year. The Notes are jointly and severally guaranteed (the “Guarantees”) on a senior unsecured basis by each of our existing and future domestic subsidiaries that initially guaranteed (the “Guarantors”) the Senior Credit Facilities. The Notes are unsecured and senior obligations of the Company. The Guarantees are unsecured and senior obligations of the Guarantors. At our option, the Notes may be redeemed in whole or in part, at any time prior to June 15, 2018, at a price equal to 100% of the aggregate principal amount of the Notes plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a “make-whole” premium. We may also redeem the Notes, in whole or in part, at any time on or after June 15, 2018, at the redemption prices specified in the Indenture, plus accrued and unpaid interest, if any, to (but excluding) the redemption date. Additionally, at any time prior to June 15, 2018, we may redeem up to 35% of the aggregate principal amount of the Notes with the net cash proceeds from certain equity offerings at a price equal to 105.75% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. The Indenture includes certain covenants relating to debt incurrence, liens, restricted payments, assets sales and transactions with affiliates, changes in control and mergers or sales of all or substantially all of our assets.

On June 30, 2015, we entered into a Credit Agreement among the Company, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto.  The Credit Agreement provides for a five-year Revolving Credit Facility in an aggregate principal amount of $200 million and a five-year Term Loan Facility in an aggregate principal amount of $100 million. Concurrently with our entry into the Credit Agreement, we borrowed the full amount of the Term Loan Facility. The obligations under the Senior Credit Facilities are obligations of the Company and are guaranteed by the Subsidiary.  The obligations under the Senior Credit Facilities are secured, subject to certain exceptions, by substantially all of the assets of the Company and the Subsidiary.

Borrowings under the Senior Credit Facilities bear interest, at our option, at a rate per annum determined by reference to either the LIBOR or an adjusted base rate, in each case plus an applicable interest rate margin.  The applicable interest rate margin with respect to LIBOR borrowings is a rate per annum between 1.50% and 2.25% and the applicable interest rate margin with respect to adjusted base rate borrowings is a rate per annum between 0.50% and 1.25%, in each case determined on a quarterly basis by reference to a pricing grid based upon our total net leverage ratio. In addition, we are required to pay commitment fees on any unused portion of the Revolving Credit Facility at a rate between 0.25% per annum and 0.40% per annum, determined by reference to the pricing grid. As of March 31, 2017, borrowings under the Senior Credit Facilities bore interest at a rate of 2.50% per annum and commitment fees accrue at a rate of 0.25% per annum. Outstanding borrowings under the Term Loan Facility were $93.8 million and we had $197.2 million available for borrowing under the Revolving Credit Facility at March 31, 2017.

21

The Senior Credit Facilities may be prepaid at any time without premium.  The Term Loan Facility amortizes in equal quarterly installments at a rate of 2.5% per annum in the first year after funding, 5.0% per annum in the second year after funding, 7.5% per annum in the third year after funding, 10.0% per annum in the fourth year after funding and 15.0% per annum in the fifth year after funding, with the outstanding balance of the Term Loan Facility to be paid on the fifth anniversary of funding.

The Revolving Credit Facility also gives us the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility of $2.8 million at March 31, 2017 were held for the benefit of certain general and liability insurance matters and bore interest at a rate of 1.625% per annum.

On May 1, 2017, we entered into the Restatement Agreement pursuant to which we amended and restated the Credit Agreement. See Note 12 of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for details on this transaction.

We expect interest expense to increase in future periods, starting in the second quarter of 2017, due to the increased amount of debt we incurred in connection with the completion of the NewWave acquisition.

Capital Expenditures

We have significant ongoing capital expenditure requirements. Capital expenditures are funded primarily by cash on hand and cash flows from operating activities.

We have adopted capital expenditure disclosure guidance as supported by the Internet & Television Association (“NCTA”). These disclosures are not required under GAAP, nor do they impact our accounting for capital expenditures under GAAP. The amounts of capital expenditures reported in this Quarterly Report on Form 10-Q are calculated in accordance with NCTA disclosure guidelines, which include assets acquired during the relevant periods.

The following table presents our major capital expenditure categories in accordance with NCTA disclosure guidelines for the three months ended March 31, 2017 and 2016 (in thousands):

	Three Months Ended March 31,
	2017		2016
Customer premise equipment	$	6,161	$	7,980
Commercial		1,637		1,193
Scalable infrastructure		7,416		6,136
Line extensions		2,338		1,470
Upgrade/rebuild		5,493		2,910
Support capital		12,872		7,706
Total	$	35,917	$	27,395

Contractual Obligations and Contingent Commitments

The following is a summary of our contractual obligations remaining as of March 31, 2017 (in thousands):  

Years ending December 31,	Programming purchase commitments		Operating leases		Total debt, including capital leases		Other purchase obligations (1)		Total
2017	$	122,059	$	746	$	5,013	$	24,853	$	152,671
2018		131,109		728		8,767		18,790		159,394
2019		92,976		565		12,517		12,398		118,456
2020		56,323		453		67,517		6,688		130,981
2021		20,527		352		17		5,009		25,905
Thereafter		-		741		450,199		4,237		455,177
Total	$	422,994	$	3,585	$	544,030	$	71,975	$	1,042,584

_________

⁽¹⁾ Includes purchase obligations related to capital projects and other legally binding commitments. Other purchase orders made in the ordinary course of business are excluded from the table above. Any amounts for which we are liable under purchase orders are reflected in our Condensed Consolidated Balance Sheets within Accounts payable and accrued liabilities.

22

Programming and content purchases represent contracts that we have with cable television networks and broadcast stations to provide programming services to our subscribers. The amounts included above represent estimates of the future programming costs for these contract requirements and commitments based on tier placement as of March 31, 2017 and estimated subscriber numbers applied to the per-subscriber rates contained in these contracts. Actual amounts due under such contracts may differ from the amounts above based on the actual subscriber numbers and tier placements. In addition, programming purchases sometimes occur pursuant to non-binding commitments, which are not reflected in the summary above.

Total debt relates to principal repayment obligations as defined by the agreements described in the “Financing Activity” section above and for capital leases.

The following items are not included as contractual obligations due to various factors discussed below. However, we incur these costs as part of our operations:

• We rent utility poles used in our operations. Generally, pole rentals are cancellable on short notice, but we anticipate that such rentals will recur. Rent expense for pole attachments was approximately $1.5 million and $1.4 million for the three months ended March 31, 2017 and 2016, respectively. 

• We pay franchise fees under multi-year franchise agreements based on a percentage of revenues generated from video service per year. Franchise fees and other franchise-related costs included in the Condensed Consolidated Statements of Operations and Comprehensive Income were $3.5 million and $3.6 million for the three months ended March 31, 2017 and 2016, respectively. 

• We have cable franchise agreements requiring the construction of cable plant and the provision of services to customers within the franchise areas. In connection with these obligations under existing franchise agreements, we obtain surety bonds or letters of credit guaranteeing performance to municipalities and public utilities and payment of insurance premiums. Such surety bonds and letters of credit as of March 31, 2017 and December 31, 2016 totaled $5.5 million and $5.1 million, respectively. Payments under these arrangements are required only in the event of nonperformance. We do not expect that these contingent commitments will result in any amounts being paid. 

Off-Balance Sheet Arrangements

With the exception of surety bonds and letters of credit noted above, we do not have any off-balance-sheet arrangements or financing activities with special-purpose entities.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

An accounting policy is considered to be critical if it is important to our financial condition and results of operations and if it requires management’s most difficult, subjective and complex judgments in its application. Except for the change in accounting estimate regarding labor capitalization as discussed in Note 1 of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, there have been no material changes to the critical accounting policies and estimates included in our Annual Report on Form 10-K filed with the SEC on March 1, 2017.

23

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, estimates, assumptions and projections about the cable industry and our business and financial results. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Accordingly, undue reliance should not be placed on any forward-looking statement made by us or on our behalf. Important factors that could cause our actual results to differ materially from those in our forward-looking statements include government regulation, economic, strategic, political and social conditions and the following factors:

• the effect of our acquisition of NewWave on our ability to retain and hire key personnel and to maintain relationships with customers, suppliers and other business partners;

• the potential diversion of senior management’s attention from our ongoing operations due to the acquisition of NewWave;

• uncertainties as to our ability and the amount of time necessary to realize the expected synergies and other benefits of the NewWave transaction;

• our ability to integrate NewWave’s operations into our own in an efficient and effective manner;

• rising levels of competition from historical and new entrants in our markets;

• recent and future changes in technology;

• our ability to continue to grow our business services product;

• increases in programming costs and retransmission fees;

• our ability to obtain support from vendors;

• the effects of any significant acquisitions by us;

• adverse economic conditions;

• the integrity and security of our network and information systems;

• legislative and regulatory efforts to impose new legal requirements on our data services;

• changing and additional regulation of our data, video and voice services;

• our ability to renew cable system franchises;

• increases in pole attachment costs;

• the failure to meet earnings expectations;

• the adequacy of our risk management framework;

• changes in tax and other laws and regulations;

• changes in GAAP or other applicable accounting policies; and

• the other risks and uncertainties detailed in the section titled “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 1, 2017.

Any forward-looking statements made by us in this document speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential gain/loss arising from changes in market rates and prices, such as interest rates. There have been no significant changes to our market risk disclosures included in our Annual Report on Form 10-K filed with the SEC on March 1, 2017.  

Item 4.     Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

24

Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.  

PART II: OTHER INFORMATION

Item 1.     Legal Proceedings

None.

Item 1A.  Risk Factors

There have been no material changes to our risk factors as previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 1, 2017.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth certain information relating to the purchases of our common stock by us and any affiliated purchasers within the meaning of Rule 10b-18(a)(3) under the Exchange Act during the three months ended March 31, 2017 (dollars in thousands, except per share data): 

Period	Total # of Shares Purchased		Average Price Paid Per Share		Total # of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 to 31, 2017		700	$	569.95		700	$	176,865
February 1 to 28, 2017 (2)		91	$	635.69		-	$	176,865
March 1 to 31, 2017 (2)		426	$	634.32		-	$	176,865
Total		1,217	$	597.40		700

(1)

On July 1, 2015, the Board authorized up to $250 million of share repurchases (subject to a total cap of 600,000 shares of Company common stock), which was announced on August 7, 2015. Purchases under the share repurchase program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases will be based on a number of factors, including share price and business and market conditions.

(2)

Represents shares withheld from employees to satisfy estimated tax withholding obligations in connection with the vesting of restricted shares and exercises of SARs under the 2015 Plan. The average price paid per share for the common stock withheld was based on the closing price of our common stock on the applicable vesting or exercise date.

Item 3.     Defaults Upon Senior Securities

None.

Item 4.     Mine Safety Disclosures

Not applicable.

Item 5.     Other Information

Not applicable.

25

Item 6.     Exhibits

Exhibit No. Description

2.1	Agreement and Plan of Merger, dated as of January 17, 2017, by and among Cable One, Inc., RBI Holding LLC, Frequency Merger Sub, LLC, RBI Blocker Corp., RBI Blocker Holdings LLC, and GTCR-RBI, LLC, solely in its capacity as the equityholder representative (incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K/A of Cable One, Inc. filed on January 20, 2017).
4.1	First Supplemental Indenture, dated as of May 1, 2017, among Avenue Broadband Communications LLC, Telecommunications Management, LLC, Ultra Communications Group, LLC, and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of Cable One, Inc. filed on May 4, 2017).
10.1	Form of Stock Appreciation Right Agreement for stock appreciation right grants on or after January 3, 2017 (incorporated herein by reference to Exhibit 10.12 to the Annual Report on Form 10-K of Cable One, Inc. filed on March 1, 2017).
10.2	Form of Restricted Stock Award Agreement for performance-based restricted stock grants on or after January 3, 2017 (incorporated herein by reference to Exhibit 10.13 to the Annual Report on Form 10-K of Cable One, Inc. filed on March 1, 2017).
10.3	Form of Restricted Stock Award Agreement for time-based restricted stock grants on or after January 3, 2017 (incorporated herein by reference to Exhibit 10.14 to the Annual Report on Form 10-K of Cable One, Inc. filed on March 1, 2017).
10.4	Amendment No. 1 to Credit Agreement, dated as of February 13, 2017, among Cable One, Inc., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Cable One, Inc. filed on February 14, 2017).
10.5	Restatement Agreement, dated as of May 1, 2017, among Cable One, Inc., Cable One VoIP, LLC, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Cable One, Inc. filed on May 4, 2017).
10.6	Amended and Restated Cable One, Inc. 2015 Omnibus Incentive Compensation Plan (incorporated herein by reference to Annex B to the 2017 Proxy Statement of Cable One, Inc. filed on March 28, 2017).
10.7	Form of Non-Employee Director Restricted Stock Unit Agreement (incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K of Cable One, Inc. filed on May 4, 2017).
31.1	Principal Executive Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Principal Financial Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*

__________

* Filed herewith.

** Furnished herewith.

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CABLE ONE, INC. (Registrant)
By:	/s/ Julia M. Laulis
	Name:	Julia M. Laulis
	Title:	President and Chief Executive Officer

Date: May 5, 2017

By:	/s/ Kevin P. Coyle
	Name:	Kevin P. Coyle
	Title:	Chief Financial Officer

Date: May 5, 2017

27

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Julia M. Laulis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 of Cable One, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2017

/s/ Julia M. Laulis

Julia M. Laulis

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

 Exhibit 31.2

CERTIFICATION

I, Kevin P. Coyle, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 of Cable One, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 Date: May 5, 2017

/s/ Kevin P. Coyle

Kevin P. Coyle

Chief Financial Officer

(Principal Financial Officer)

EX-32

 Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Cable One, Inc. (the “Company”), for the quarter ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, Julia M. Laulis, principal executive officer of the Company, and Kevin P. Coyle, principal financial officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his or her knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Julia M. Laulis
	Julia M. Laulis
	Chief Executive Officer
	(Principal Executive Officer)
Date: May 5, 2017

By:	/s/ Kevin P. Coyle
	Kevin P. Coyle
	Chief Financial Officer
	(Principal Financial Officer)
Date: May 5, 2017

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 01, 2017
Document Information [Line Items]
Entity Registrant Name	CABLE ONE, INC.
Entity Central Index Key	0001632127
Trading Symbol	cabo
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding (in shares)		5,724,293
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 173,467	$ 138,040
Accounts receivable, net	31,039	37,073
Prepaid assets	14,160	10,824
Total Current Assets	218,666	185,937
Property, plant and equipment, net	616,739	619,621
Intangibles, net	497,460	497,480
Goodwill	84,928	84,928
Other assets	5,701	9,305
Total Assets	1,423,494	1,397,271
Current Liabilities:
Accounts payable and accrued liabilities	68,298	82,703
Deferred revenue	22,614	22,190
Income taxes payable	14,758
Long-term debt - current portion	6,875	6,250
Total Current Liabilities	112,545	111,143
Long-term debt	529,407	530,886
Deferred income taxes	276,770	276,297
Accrued compensation and other liabilities	23,926	24,434
Total Liabilities	942,648	942,760
Commitments and contingencies (see Note 11)
Stockholders' Equity
Preferred stock ($0.01 par value; 4,000,000 shares authorized; none issued or outstanding)
Common stock ($0.01 par value; 40,000,000 shares authorized; 5,887,899 shares issued; and 5,723,775 and 5,708,223 shares outstanding as of March 31, 2017 and December 31, 2016, respectively)	59	59
Additional paid-in capital	20,096	17,669
Retained earnings	536,412	511,776
Accumulated other comprehensive loss	(444)	(446)
Treasury stock, at cost (164,124 and 179,676 shares held as of March 31, 2017 and December 31, 2016, respectively)	(75,277)	(74,547)
Total Stockholders' Equity	480,846	454,511
Total Liabilities and Stockholders' Equity	$ 1,423,494	$ 1,397,271

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	4,000,000	4,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	5,887,899	5,887,899
Common stock, shares outstanding (in shares)	5,723,775	5,708,223
Treasury stock, shares (in shares)	164,124	179,676

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Revenues		$ 207,427	$ 202,805
Costs and expenses
Operating (excluding depreciation and amortization)		69,083	76,428
Selling, general and administrative		45,733	43,893
Depreciation and amortization		38,404	34,693
(Gain) loss on disposal of assets		(6,146)	408
Total operating costs and expenses		147,074	155,422
Income from operations		60,353	47,383
Interest expense		(7,606)	(7,555)
Other income (expense), net		287	510
Income before income taxes		53,034	40,338
Provision for income taxes		19,819	13,294
Net income		33,215	27,044
Other comprehensive gain (loss), net of tax		2	(27)
Comprehensive income		$ 33,217	$ 27,017
Net income per common share:
Basic (in dollars per share)	[1]	$ 5.86	$ 4.67
Diluted (in dollars per share)	[1]	$ 5.80	$ 4.65
Weighted average common shares outstanding:
Basic (in shares)	[1]	5,671,838	5,796,252
Diluted (in shares)	[1]	5,730,901	5,810,639

[1] On July 1, 2015, Graham Holdings Company distributed 5,843,313 shares of Cable One, Inc. common stock to existing holders of Graham Holdings Company common stock. Basic and diluted net income per common share for the year ended December 31, 2014 are calculated using the number of shares distributed on July 1, 2015.

XML

Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands	Dividends Paid to Shareholders [Member] Common Stock [Member]	Dividends Paid to Shareholders [Member] Additional Paid-in Capital [Member]	Dividends Paid to Shareholders [Member] Retained Earnings [Member]	Dividends Paid to Shareholders [Member] Treasury Stock [Member]	Dividends Paid to Shareholders [Member] AOCI Attributable to Parent [Member]	Dividends Paid to Shareholders [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2016							5,708,223
Balance at Dec. 31, 2016							$ 59	$ 17,669	$ 511,776	$ (74,547)	$ (446)	$ 454,511
Net income									33,215			33,215
Changes in pension, net of tax											2	2
Equity-based compensation (in shares)
Equity-based compensation								2,427				2,427
Issuance of restricted stock awards, net of forfeitures (in shares)							16,769
Issuance of restricted stock awards, net of forfeitures
Repurchase of common stock (in shares)							(700)					(700)
Repurchase of common stock										(399)		$ (399)
Withholding tax for restricted stock awards (in shares)							(517)					(517)
Withholding tax for restricted stock awards										(331)		$ (331)
Dividends paid to stockholders			$ (8,579)			$ (8,579)
Balance (in shares) at Mar. 31, 2017							5,723,775
Balance at Mar. 31, 2017							$ 59	$ 20,096	$ 536,412	$ (75,277)	$ (444)	$ 480,846

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 33,215	$ 27,044
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	38,404	34,693
Amortization of deferred financing costs	400	404
Equity-based compensation	2,427	3,046
Deferred income taxes	472	(2,670)
(Gain) loss on disposal of assets	(6,146)	408
Changes in operating assets and liabilities:
Accounts receivable, net	6,034	4,967
Prepaid assets	(3,336)	(4,948)
Accounts payable and accrued liabilities	(7,977)	2,473
Deferred revenue	424	29
Income taxes payable	14,758	11,765
Other assets and other liabilities, net	(415)	328
Net cash provided by operating activities	78,260	77,539
Cash flows from investing activities:
Capital expenditures	(35,917)	(27,395)
Change in accrued expenses related to capital expenditures	(1,143)	(19,365)
Proceeds from sales of property, plant and equipment	10,075	195
Net cash used in investing activities	(26,985)	(46,565)
Cash flows from financing activities:
Payments on long-term debt	(1,254)	(628)
Repurchase of common stock	(399)	(34,591)
Payment of withholding tax for restricted shares	(331)
Dividends paid to stockholders	(8,579)	(8,694)
Cash overdraft	(5,285)	(43)
Net cash used in financing activities	(15,848)	(43,956)
Change in cash and cash equivalents	35,427	(12,982)
Cash and cash equivalents, beginning of period	138,040	119,199
Cash and cash equivalents, end of period	173,467	106,217
Supplemental cash flow disclosures:
Cash paid for interest	743	646
Cash paid for income taxes	$ 42	$ 3,624

XML

Note 1 - Description of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

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

19

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

March

31,

2017.

Prior to

July

1,

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

1,

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

12

for details on this transaction.

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

10

-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

10

-

01

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

10

-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,

the Company changed its accounting estimate related to the capitalization of certain internal labor and related costs associated with construction and customer installation activities. Capitalized labor costs increased

$5.9

million in the

first

quarter of

2017

compared to the

first

quarter of

2016

.

Recently Adopted and Issued Accounting Pronouncements.

In

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

-

04

removes Step

2

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.

In

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

-

01

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

1,

2017.

In

August

201

6,

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

-

15

is effective for the

first

quarter of

2018

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

2016

-

15

on its financial statements.

In

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

-

09

was effective for the

first

quarter of

2017.

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

In

February

2016,

the FASB issued ASU No.

2016

-

02,

Leases (Topic

842)

. ASU

2016

-

02

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

-

02

is effective for the

first

quarter of

2019,

with early adoption permitted. The Company is evaluating the impact of adopting this guidanceon its financial statements.

In

May

2014,

the FASB issued ASU No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606)

. ASU

2014

-

09

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 guidanceon its financial statements

.

XML

Note 2 - Revenues

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Revenue Disclosure [Text Block]

2 . REVENUES

The Company

’s revenues by product line were as follows (in thousands):

	Three Months Ended March 31 ,
	201 7		201 6
Residential
Data	$	90,201	$	83,439
Video		72,454		74,853
Voice		9,867		11,314
Business services		26,961		23,827
Advertising sales		5,622		7,003
Other		2,322		2,369
Total revenues	$	207,427	$	202,805

The amount of franchise fees recorded on a gross basis and included in residential video revenues above was $

3.5

million and

$3.6

million for the

three

months ended

March

31,

2017

and

2016,

respectively.

XML

Note 3 - Property, Plant and Equipment

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

3 . PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):

	March 31 , 201 7			December 31, 2016
Cable distribution systems	$	1,069,545		$	1,048,790
Customer premise equipment		179,893			181,852
Other equipment and fixtures		371,429			359,957
Buildings and leasehold improvements		89,021			88,592
Capitalized software		87,591			83,815
Construction in progress		60,592			64,822
Land		9,612			9,612
Total property, plant and equipment		1,867,683			1,837,440
Less accumulated depreciation		(1,250,944	)		(1,217,819	)
Property, plant and equipment, net	$	616,739		$	619,621

Depreciation and amortization expense was $

38.4

million and

$34.7

million for the

three

months ended

March

31,

2017

and

2016,

respectively.

The Company's previous headquarters building

and adjoining property were held for sale at

December

31,

2016.

In

January

2017,

the Company sold a portion of this property for

$10.1

million in gross proceeds and recognized a related gain of

$6.6

million. The remaining property’s carrying value of

$4.6

million was included in Other assets in the Condensed Consolidated Balance Sheets as assets held for sale at

March

31,

2017.

XML

Note 4 - Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

4 . GOODWILL AND INTANGIBLE ASSETS

The carrying amount of goodwill at

March

31,

2017

and

December

31,

2016

was

$84.9

million. The Company historically has not recorded any impairment of goodwill.

Intangible assets

(excluding goodwill) consisted of the following (dollars in thousands):

					March 31 , 201 7
	Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,141	$	3,817	$	324
Indefinite-Lived Intangible Assets ( E xcluding G oodwill)
Franchise agreements					$	497,136

					December 31 , 201 6
	Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,138	$	3,794	$	344
Indefinite-Lived Intangible Assets ( E xcluding G oodwill)
Franchise agreements					$	497,136

XML

Note 5 - Long-term Debt

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Long-term Debt [Text Block]

5 . LONG-TERM DEBT

Long-term debt as of

March

31,

2017

and

December

31,

2016

consisted of the following (in thousands):

	March 31 , 201 7			December 31, 201 6
Senior Unsecured Notes	$	450,000		$	450,000
Senior Credit Facilities		93,750			95,000
Capital lease obligation		280			284
Total debt		544,030			545,284
Less unamortized debt issuance costs		(7,748	)		(8,148	)
Less current portion of long-term debt		(6,875	)		(6,250	)
Total Long-term debt	$	529,407		$	530,886

5.750%

Senior Unsecured Notes Due

2022.

On

June

17,

2015,

the Company issued

$450

million aggregate principal amount of

5.750%

senior unsecured notes due

2022

(the “Notes”). The Notes mature on

June

15,

2022

and interest is payable on

June

15

and

December

15

of each year.

The Notes have not been, and will not be, registered under the Securities Act of

1933,

as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction and

may

not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any other applicable securities laws. The Notes were offered in the United States only to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration set forth in Rule

144A

under the Securities Act and outside the United States to non-U.S. persons in reliance on the exemption from registration set forth in Regulation S under the Securities Act.

The Notes were issued pursuant to an indenture (the “Indenture”) dated as of

June

17,

2015.

The Indenture provides for early redemption of the Notes, at the option of the Company, at the prices and subject to the terms specified in the Indenture. The Indenture includes certain covenants relating to debt incurrence, liens, restricted payments, asset sales and transactions with affiliates, changes in control and mergers or sales of all or substantially all of the Company

’s assets. The Indenture also provides for customary events of default (subject, in certain cases, to customary grace periods).

Senior Credit Facilities Due

2020.

On

June

30,

2015,

the Company entered into a Credit Agreement (the “Credit Agreement”) among the Company, as borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto.  The Credit Agreement provides for a

five

-year revolving credit facility in an aggregate amount of

$200

million (the “Revolving Credit Facility”) and a

five

-year term loan facility in an aggregate amount of

$100

million (the “Term Loan Facility” and, together with the Revolving Credit Facility, the “Senior Credit Facilities”). Concurrently with its entry into the Credit Agreement, the Company borrowed the full amount of the Term Loan Facility (the “Term Loan”).

Borrowings under the Senior Credit Facilities bear interest, at the Company

’s option, at a rate per annum determined by reference to either the London Interbank Offered Rate (“LIBOR”) or an adjusted base rate, in each case plus an applicable interest rate margin. The applicable interest rate margin with respect to LIBOR borrowings is a rate per annum between

1.50%

and

2.25%

and the applicable interest rate margin with respect to adjusted base rate borrowings is a rate per annum between

0.50%

and

1.25%,

in each case determined on a quarterly basis by reference to a pricing grid based upon the Company’s total net leverage ratio. In addition, the Company is required to pay commitment fees on any unused portion of the Revolving Credit Facility at a rate between

0.25%

per annum and

0.40%

per annum, determined by reference to the pricing grid. As of 

March

31,

2017,

borrowings under the Senior Credit Facilities bore interest at a rate of

2.50%

per annum and commitment fees accrue at a rate of 

0.25%

per annum. Outstanding borrowings under the Term Loan Facility were

$93.8

million and the Company had

$197.2

million available for borrowing under the Revolving Credit Facility at

March

31,

2017.

The

Revolving Credit Facility also gives the Company the ability to issue letters of credit, which reduce the amount available for borrowing under the Revolving Credit Facility. Letter of credit issuances under the Revolving Credit Facility of

$2.8

million at

March

31,

2017

were held for the benefit of certain general and liability insurance matters and bore interest at a rate of

1.625%

per annum.

The Senior Credit Facilities

may

be prepaid at any time without premium, and periodic principal repayments are due in certain quarterly installments as set forth in the Credit Agreement, with the outstanding balance of the Term Loan Facility to be paid on the

fifth

anniversary of funding.

The Company

may,

subject to the terms and conditions of the Credit Agreement, obtain additional credit facilities of up to

$300

million under the Credit Agreement pursuant to an uncommitted incremental facility.

The Credit Agreement contains customary representations, warranties and affirmative and negative covenants, including limitations on indebtedness, liens, restricted payments, prepayments of certain indebtedness, investments, dispositions of assets, restrictions on subsidiary distributions and negative pledge clauses, fundamental changes, transactions with affiliates and amendments to organizational documents.

 The Credit Agreement also requires the Company to maintain specified ratios of total net leverage and

first

lien net leverage to consolidated operating cash flow. The Credit Agreement also contains customary events of default, including non-payment of principal, interest, fees or other amounts, material inaccuracy of any representation or warranty, failure to observe or perform any covenant, default in respect of other material debt of the Company and of its restricted subsidiaries, bankruptcy or insolvency, the entry against the Company or any of its restricted subsidiaries of a material judgment, the occurrence of certain ERISA events, impairment of the loan documentation and the occurrence of a change of control. 

The Company was in compliance with all debt covenants as of

March

31,

2017.

 

As of

March

31,

2017,

the future maturities of long-term debt were as follows (in thousands): 

Years Ending December 31 :	Amount
201 7	$	5,013
201 8		8,767
201 9		12,517
20 20		67,517
202 1		17
Thereafter		450,199
Total	$	544,030

On

February

13,

2017,

the Company entered into an amendment to the Credit Agreement to permit, among other things, the incurrence of the

$650

million of senior secured loans expected to be used to finance the acquisition of NewWave. On

May

1,

2017,

the Company entered into a Restatement Agreement (the “Restatement Agreement”) pursuant to which the Company amended and restated the Credit Agreement (as so amended and restated, the “Amended and Restated Credit Agreement”). See Note

1

2

for details on this transaction.

XML

Note 6 - Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

6 . FAIR VALUE MEASUREMENTS

The Company

’s deferred compensation liabilities were

$17.6

million and

$18.2

million at

March

31,

2017

and

December

31,

2016,

respectively. These liabilities are included in Accounts payable and accrued liabilities and Accrued compensation and other liabilities in the Condensed Consolidated Balance Sheets. These liabilities represent the market value of a participant’s balance in a notional investment account that is comprised primarily of mutual funds, which is based on observable market prices. However, since the deferred compensation obligations are not exchanged in an active market, they are classified as Level

2

in the fair value hierarchy. Realized and unrealized gains (losses) on deferred compensation are included in operating income.

The carrying amounts and fair values of the Company

’s long-term debt, including current portion, money market and commercial paper investments as of

March

31,

2017,

were as follows (in thousands):

	March 31 , 201 7
	Carrying		Fair
	Amount		Value
Assets:
Money market investments	$	72,334	$	72,334
Commercial paper	$	91,297	$	91,512
Long-term debt, including current portion :
Notes	$	450,000	$	469,125
Term Loan	$	93,750	$	93,750

Money market investments are included in Cash and cash equivalents in the Condensed Consolidated Balance Sheets. Commercial paper investments with original maturities of

90

days or less are also included in Cash and cash equivalents. These investments are primarily held in U.S. Treasury securities and registered money market funds. These investments were valued using a market approach based on the quoted market prices of the

money market investments (Level

1)

or inputs that include quoted market prices for investments similar to the commercial paper (Level

2).

The fair value of the Notes was estimated based on market prices in active markets (Level

2).

The fair value of the Term Loan was estimated based on discounting the remaining principal and interest payments using current market rates for similar debt (Level

2).

 

XML

Note 7 - Treasury Stock

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Treasury Stock [Text Block]

7 . TREASURY STOCK

Share Repurchase Program.

On

July

1,

2015,

the Company’s board of directors (the “Board”) authorized up to

$250

million of share repurchases (subject to a total cap of

600,000

shares of Company common stock). Purchases under the share repurchase program

may

be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases will be based on a number of factors, including share price and business and market conditions. Through

March

31,

2017,

the Company had repurchased

165,633

shares at an aggregate cost of

$73.1

million. During the

three

months ended

March

31,

2017,

the Company repurchased

700

shares at an aggregate cost of

$0.4

million.

Restricted Stock Tax Withholding.

Treasury stock is recorded at cost and is presented as a reduction of stockholders’ equity in the Condensed Consolidated Financial Statements. Shares of common stock with a fair market value equal to the applicable statutory minimum amount of the employee withholding taxes due are withheld by the Company upon the vesting of restricted stock to pay the applicable statutory minimum amount of employee withholding taxes and are considered common stock repurchases. The Company then pays the applicable statutory minimum amount of withholding taxes in cash. The amount remitted during the

three

months ended

March

31,

2017

was

$0.3

million for which the Company withheld

517

shares of common stock. Treasury shares of

164,124

held at

March

31,

2017

includes the aforementioned shares withheld for withholding tax.

XML

Note 8 - Equity-based Compensation

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

8 . EQUITY-BASED COMPENSATION

On

June

5,

2015,

the Board adopted the Cable One, Inc.

2015

Omnibus Incentive Compensation Plan (the

“2015

Plan”), which became effective

July

1,

2015.

The

2015

Plan is designed to promote the interests of the Company and its stockholders by providing the employees and directors of the Company with incentives and rewards to encourage them to continue in the service of the Company and with a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company. Any of the directors, officers and employees of the Company and its affiliates are eligible to be granted

one

or more of the following types of awards under the

2015

Plan:

(1)

incentive stock options,

(2)

non-qualified stock options,

(3)

restricted stock awards,

(4)

stock appreciation rights (“SARs”),

(5)

restricted stock units (“RSUs”),

(6)

cash-based awards,

(7)

performance-based awards,

(8)

dividend equivalent rights and

(9)

other stock-based awards, including, without limitation, performance stock units and deferred stock units. The

2015

Plan includes the authority to grant awards that are intended to qualify as “qualified performance-based compensation” under Section

162(m)

of the Internal Revenue Code of

1986,

as amended. Unless the

2015

Plan is sooner terminated by the Board, no awards

may

be granted under the

2015

Plan after the

tenth

anniversary of its effective date.

The

2015

Plan provides that, subject to certain adjustments for certain corporate events, the maximum number of shares of Company common stock that

may

be issued under the

2015

Plan is equal to

600,000,

and no more than

400,000

shares

may

be issued pursuant to incentive stock options.

At

March

31,

2017,

329,962

shares were available for issuance under the

2015

Plan.

Restricted Stock Awards.

The Company has granted restricted shares of Company common stock subject to service-based and performance-based vesting conditions under the

2015

Plan to employees of the Company. Restricted share awards generally cliff-vest on the

three

-year anniversary of the grant date or in

four

equal ratable installments beginning on the

first

anniversary of the grant date (generally subject to the holder’s continued employment with the Company through the applicable vesting date), except in the case of awards made to individuals (i) whose equity awards issued by GHC were forfeited in connection with the Company’s spin-off (the “spin-off”) from GHC (the “Replacement Shares”), which Replacement Shares vested on

December

12,

2016

(with certain exceptions as provided in the applicable award agreement), or (ii) who did not receive an equity award from GHC in

2015

in anticipation of the spin-off (the “Staking Shares”), which Staking Shares are scheduled to cliff-vest on

January

2,

2018.

 Performance-based restricted shares are or were subject to performance metrics related primarily to year-over-year or

three

-year cumulative growth in Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) less capital expenditures or year-over-year growth in Adjusted EBITDA and capital expenditures as a percentage of total revenues. Restricted shares are subject to the terms and conditions of the

2015

Plan and will otherwise be subject to the terms and conditions of the applicable award agreement.

The compensation arrangements for the Company

’s non-employee directors under the

2015

Plan as of

March

31,

2017

provided that each non-employee director is entitled to an annual retainer of

$150,000,

plus an additional annual retainer of

$15,000

for each non-employee director who serves as a committee chair or as lead independent director.  Each such retainer will be provided in the form of RSUs. Such RSUs will generally be granted on the date of the Company’s annual stockholders’ meeting and will vest on the

first

anniversary of the grant date, subject to the director’s continued service through such vesting date.  Settlement of such RSUs will be in the form of

one

share of the Company’s common stock and will follow vesting, unless the director has previously elected to defer such settlement until his or her separation from service from the Board. As of

March

31,

2017,

2,210

RSUs, including Dividend Equivalent Units (“DEUs”), were vested and deferred.

Restricted

shares, RSUs and DEUs are collectively referred to as “restricted stock.” A summary of restricted stock activities for the

three

months ended

March

31,

2017

is as follows:  

				Weighted Average
				Grant Date
	Restricted			Fair Value
	Stock			Per Share
Unvested as of December 31, 2016		38,425		$	402.13
Granted		13,978		$	619.67
Shares granted due to performance achievement		5,006		$	433.66
Forfeited		(1,904	)	$	432.95
Vested		(284	)	$	380.50
Unvested as of March 31, 2017		55,221		$	459.16
Vested and unissued as of March 31, 2017		2,210		$	415.10

Compensation expense associated with unvested restricted stock is recognized on a straight-line basis over the vesting period. The expense recognized each period is dependent upon the Company

’s estimate of the number of shares that will ultimately vest. Equity-based compensation expense for restricted stock was

$1.7

million for the

three

months ended

March

31,

2017.

  At

March

31,

2017,

there was

$11.0

million of unrecognized compensation expense related to restricted stock, which is expected to be recognized over a weighted average period of

1.4

years.

Stock Appreciation Rights.

The Company has granted SARs under the

2015

Plan to certain executives and other employees of the Company. The SARs are scheduled to vest in

four

equal ratable installments beginning on the

first

anniversary of the grant date (generally subject to the holder’s continued employment with the Company through the applicable vesting date). The SARs are subject to the terms and conditions of the

2015

Plan and will otherwise be subject to the terms and conditions of the applicable award agreement.

A summary of SAR activity is as follows:

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Fair Value		Aggregate Intrinsic Value ( in thousands )		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 201 6		136,000		$	426.80	$	88.07	$	26,510		8.7
Granted		20,000		$	619.66	$	138.01				9.8
Exercised		(5,625	)	$	422.31	$	87.22
Forfeited		(5,200	)	$	422.31	$	87.22
Outstanding as of March 31, 2017		145,175		$	453.71	$	95.01	$	24,790		8.6
Vested and exercisable as of March 31, 2017		25,550		$	422.31	$	87.22	$	5,165		8.4

The fair value of the SARs was measured based on the Black-Scholes model.

The inputs used in the model for the

three

months ended

March

31,

2017

were as follows:  

	201 7
Expected volatility		20.93	%
Risk-free interest rate		2.15	%
Expected term (in years)		6.25
Expected dividend yield		0.96	%

Compensation expense associated with unvested SARs is recognized on a straight-line basis over the vesting period. The expense recognized each period is dependent upon our estimate of the number of

SARs that will ultimately vest. Equity-based compensation expense for the SARs was

$0.7

million for the

three

months ended

March

31,

2017.

At

March

31,

2017,

there was

$9.7

million of unrecognized compensation expense related to the SARs, which is expected to be recognized over a weighted average period of

1.3

years.

Compensation Expense

.

Total equity-based compensation expense recognized was

$2.4

million and

$3.0

million for the

three

months ended

March

31,

2017

and

2016,

respectively and was included in Selling, general and administrative expenses within the Condensed Consolidated Statements of Operations and Comprehensive Income. The Company has recorded an income tax benefit of

$3.5

million related to the equity-based awards granted through

March

31,

2017.

The deferred tax asset related to all outstanding equity-based awards was

$5.7

million as of

March

31,

2017.

 

XML

Note 9 - Income Taxes

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9 . INCOME TAXES

The Company

’s effective tax rate was

37.4%

and

33.0%

for the

three

months ended

March

31,

2017

and

2016,

respectively. The increase in the effective tax rate primarily reflects

$2.2

million of income tax benefits from certain spin-off and state tax items recognized in the prior year quarter which did not recur.

XML

Note 10 - Net Income Per Share

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

1 0 . NET INCOME PER SHARE

Basic net income per common share is computed by dividing the net income allocable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per share further includes any common shares available to be issued upon

vesting or exercise of outstanding equity awards if such inclusion would be dilutive. 

The following table sets forth the computation of basic and diluted net income per common share (in thousands, except share and per share amounts):

	Three Months Ended March 31 ,
	201 7		201 6
Numerator:
Net income	$	33,215	$	27,044
Denominator:
Weighted average common shares outstanding - Basic		5,671,838		5,796,252
Effect of dilutive equity awards (1)		59,063		14,387
Weighted average common shares outstanding - Diluted		5,730,901		5,810,639
Net income per share:
Basic	$	5.86	$	4.67
Diluted	$	5.80	$	4.65

(1) SARs outstanding that were not included in the diluted net income per share calculation because the effect would have been anti-dilutive were 443 and 1,038 for the three months ended March 31, 2017 and 2016, respectively.

XML

Note 11 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

1 1 . COMMITMENTS AND CONTINGENCIES

Litigation and Legal Matters.

 The Company is subject to complaints and administrative proceedings and is a defendant in various civil lawsuits that have arisen in the ordinary course of its business. Such matters include: contract disputes; actions alleging negligence; invasion of privacy; trademark, copyright and patent infringement; violations of applicable wage and hour laws; statutory or common law claims involving current and former employees; and other matters. Although the outcomes of the legal claims and proceedings against the Company cannot be predicted with certainty, based on currently available information, management believes that there are no existing claims or proceedings that are likely to have a material effect on the Company’s business, financial condition, results of operations or cash flows. Also, based on currently available information, management is of the opinion that the exposure to future material losses from existing legal proceedings is not reasonably possible or that future material losses in excess of the amounts accrued are not reasonably possible.

Regulation in the Cable Industry.

The operation of a cable system is extensively regulated by the Federal Communications Commission (the “FCC”), some state governments and most local governments. The FCC has the authority to enforce its regulations through the imposition of substantial fines, the issuance of cease and desist orders and/or the imposition of other administrative sanctions, such as the revocation of FCC licenses needed to operate certain transmission facilities used in connection with cable operations. The Telecommunications Act of

1996

altered the regulatory structure governing the nation’s communications providers. It removed barriers to competition in both the cable television market and the voice services market. Among other things, it reduced the scope of cable rate regulation and encouraged additional competition in the video programming industry by allowing telephone companies to provide video programming in their own telephone service areas. Future legislative and regulatory changes could adversely affect the Company’s operations.

GHC Agreements.

On

June

16,

2015,

Cable One entered into several agreements with GHC that set forth the principal actions taken in connection with the spin-off and that govern the relationship of the parties following the spin-off, including a Separation and Distribution Agreement, a Tax Matters Agreement and an Employee Matters Agreement. The aggregate costs and reimbursements paid to GHC totaled

$0.1

million for the

three

months ended

March

31,

2017

and

2016,

respectively.

XML

Note 12 - Subsequent Event

3 Months Ended

Mar. 31, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

1 2 . SUBSEQUENT EVENT

On

January

18,

2017,

the Company announced that the Company entered into an Agreement and Plan of Merger, dated as of

January

17,

2017

(the “Merger Agreement”), to acquire NewWave from funds affiliated with GTCR LLC, a private equity firm based in Chicago. NewWave was a cable operator providing data, video and voice services to residential and business customers throughout non-urban areas of Arkansas, Illinois, Indiana, Louisiana, Mississippi, Missouri and Texas. On

May

1,

2017,

the Company completed the transaction and NewWave became a wholly owned subsidiary of the Company. The Company paid a purchase price of

$735

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

.

On

May

1,

2017,

the Company entered into the Restatement Agreement, pursuant to which the Company amended and restated the Credit Agreement and incurred

$750

million of senior secured loans (the “Incremental Loans”) which were used to (i) finance the transactions contemplated by the Merger Agreement, (ii) repay in full the Company

’s existing term “A” loans and (iii) pay fees and expenses.

The Incremental Loans consist of (a) a

five

-year incremental term “A” loan in an aggregate principal amount of

$250

million (the “Incremental TLA”) and (b) a

seven

-year incremental term “B” loan in an aggregate principal amount of

$500

million (the “Incremental TLB”), which are guaranteed by the Company

’s wholly owned subsidiaries and are secured, subject to certain exceptions, by substantially all assets of the Company and the guarantors.

The interest margins applicable to the Incremental Loans under the Amended and Restated Credit Agreement are, at the Company

’s option, equal to either a LIBOR or a base rate, plus an applicable margin equal to, (x) with respect to the Incremental TLA,

2.25%

to

1.50%

for LIBOR loans and

1.25%

to

0.50%

for base rate loans, determined on a quarterly basis by reference to a pricing grid based on the Company’s total net leverage ratio and (y) with respect to the Incremental TLB,

2.25%

for LIBOR loans and

1.25%

for base rate loans. The Incremental TLA amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of

2.5%

per annum for the

first

year after funding,

5.0%

per annum for the

second

year after funding,

7.5%

for the

third

year after funding and

10.0%

per annum for the

fourth

and

fifth

years after funding, with the balance due upon maturity of the Incremental TLA. The Incremental TLB amortizes quarterly at a rate (expressed as a percentage of the original principal amount) of

1.0%

per annum, with the balance due upon maturity of the Incremental TLB. The Incremental TLB is subject to a

1%

prepayment penalty if prepaid within

six

-months of funding, benefits from certain “most favored nation” pricing protections and does not benefit from the financial maintenance covenants under the Amended and Restated Credit Agreement. Other than as set forth above, the Incremental Loans are subject to terms substantially similar to those under the Credit Agreement.

The Company is currently in the process of finalizing the accounting for the acquisition of NewWave and expects to complete the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the

second

quarter of

2017

.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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

10

-

01

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

10

-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.

Consolidation, Policy [Policy Text Block]

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, Policy [Policy Text Block]

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, Policy [Policy Text Block]

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.

New Accounting Pronouncements, Policy [Policy Text Block]

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,

the Company changed its accounting estimate related to the capitalization of certain internal labor and related costs associated with construction and customer installation activities. Capitalized labor costs increased

$5.9

million in the

first

quarter of

2017

compared to the

first

quarter of

2016

.

Recently Adopted and Issued Accounting Pronouncements.

In

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

-

04

removes Step

2

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.

In

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

-

01

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

1,

2017.

In

August

201

6,

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

-

15

is effective for the

first

quarter of

2018

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

2016

-

15

on its financial statements.

In

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

-

09

was effective for the

first

quarter of

2017.

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

In

February

2016,

the FASB issued ASU No.

2016

-

02,

Leases (Topic

842)

. ASU

2016

-

02

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

-

02

is effective for the

first

quarter of

2019,

with early adoption permitted. The Company is evaluating the impact of adopting this guidanceon its financial statements.

In

May

2014,

the FASB issued ASU No.

2014

-

09,

Revenue from Contracts with Customers (Topic

606)

. ASU

2014

-

09

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 guidanceon its financial statements

.

XML

Note 2 - Revenues (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Revenue from External Customers by Products and Services [Table Text Block]

	Three Months Ended March 31 ,
	201 7		201 6
Residential
Data	$	90,201	$	83,439
Video		72,454		74,853
Voice		9,867		11,314
Business services		26,961		23,827
Advertising sales		5,622		7,003
Other		2,322		2,369
Total revenues	$	207,427	$	202,805

XML

Note 3 - Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	March 31 , 201 7			December 31, 2016
Cable distribution systems	$	1,069,545		$	1,048,790
Customer premise equipment		179,893			181,852
Other equipment and fixtures		371,429			359,957
Buildings and leasehold improvements		89,021			88,592
Capitalized software		87,591			83,815
Construction in progress		60,592			64,822
Land		9,612			9,612
Total property, plant and equipment		1,867,683			1,837,440
Less accumulated depreciation		(1,250,944	)		(1,217,819	)
Property, plant and equipment, net	$	616,739		$	619,621

XML

Note 4 - Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Intangible Assets and Goodwill [Table Text Block]

					March 31 , 201 7
	Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,141	$	3,817	$	324
Indefinite-Lived Intangible Assets ( E xcluding G oodwill)
Franchise agreements					$	497,136

					December 31 , 201 6
	Useful				Gross				Net
	Life				Carrying		Accumulated		Carrying
	Range (years)				Amount		Amortization		Amount
Amortized Intangible Assets
Cable franchise renewals and access rights		1	-	25	$	4,138	$	3,794	$	344
Indefinite-Lived Intangible Assets ( E xcluding G oodwill)
Franchise agreements					$	497,136

XML

Note 5 - Long-term Debt (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

	March 31 , 201 7			December 31, 201 6
Senior Unsecured Notes	$	450,000		$	450,000
Senior Credit Facilities		93,750			95,000
Capital lease obligation		280			284
Total debt		544,030			545,284
Less unamortized debt issuance costs		(7,748	)		(8,148	)
Less current portion of long-term debt		(6,875	)		(6,250	)
Total Long-term debt	$	529,407		$	530,886

Schedule of Maturities of Long-term Debt [Table Text Block]

Years Ending December 31 :	Amount
201 7	$	5,013
201 8		8,767
201 9		12,517
20 20		67,517
202 1		17
Thereafter		450,199
Total	$	544,030

XML

Note 6 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	March 31 , 201 7
	Carrying		Fair
	Amount		Value
Assets:
Money market investments	$	72,334	$	72,334
Commercial paper	$	91,297	$	91,512
Long-term debt, including current portion :
Notes	$	450,000	$	469,125
Term Loan	$	93,750	$	93,750

XML

Note 8 - Equity-based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

				Weighted Average
				Grant Date
	Restricted			Fair Value
	Stock			Per Share
Unvested as of December 31, 2016		38,425		$	402.13
Granted		13,978		$	619.67
Shares granted due to performance achievement		5,006		$	433.66
Forfeited		(1,904	)	$	432.95
Vested		(284	)	$	380.50
Unvested as of March 31, 2017		55,221		$	459.16
Vested and unissued as of March 31, 2017		2,210		$	415.10

Schedule of Share-based Compensation, Stock Appreciation Rights Award Activity [Table Text Block]

	Stock Appreciation Rights			Weighted Average Exercise Price		Weighted Average Fair Value		Aggregate Intrinsic Value ( in thousands )		Weighted Average Remaining Contractual Term (in years)
Outstanding as of December 31, 201 6		136,000		$	426.80	$	88.07	$	26,510		8.7
Granted		20,000		$	619.66	$	138.01				9.8
Exercised		(5,625	)	$	422.31	$	87.22
Forfeited		(5,200	)	$	422.31	$	87.22
Outstanding as of March 31, 2017		145,175		$	453.71	$	95.01	$	24,790		8.6
Vested and exercisable as of March 31, 2017		25,550		$	422.31	$	87.22	$	5,165		8.4

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block]

	201 7
Expected volatility		20.93	%
Risk-free interest rate		2.15	%
Expected term (in years)		6.25
Expected dividend yield		0.96	%

XML

Note 10 - Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended March 31 ,
	201 7		201 6
Numerator:
Net income	$	33,215	$	27,044
Denominator:
Weighted average common shares outstanding - Basic		5,671,838		5,796,252
Effect of dilutive equity awards (1)		59,063		14,387
Weighted average common shares outstanding - Diluted		5,730,901		5,810,639
Net income per share:
Basic	$	5.86	$	4.67
Diluted	$	5.80	$	4.65

XML

Note 1 - Description of Business and Basis of Presentation (Details Textual) $ in Millions		3 Months Ended
	May 01, 2017 USD ($)	Mar. 31, 2017 USD ($)
Number of States in which Entity Operates		19
Number of Reportable Segments		1
Reduction in Expense Due to Change in Capitalized Labor Accounting Estimate [Member]
Change in Accounting Estimate, Impact		$ 5.9
Subsequent Event [Member] | New Wave [Member]
Payments to Acquire Businesses, Gross	$ 735.0
Data [Member]
Number of Customers		523,327
Video [Member]
Number of Customers		307,187
Voice [Member]
Number of Customers		113,368

XML

Note 2 - Revenues (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Franchise Costs	$ 3.5	$ 3.6

XML

Note 2 - Revenues - Revenues by Product Line (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Advertising sales	$ 5,622	$ 7,003
Other	2,322	2,369
Total revenues	207,427	202,805
Data [Member]
Revenues	90,201	83,439
Video [Member]
Revenues	72,454	74,853
Voice [Member]
Revenues	9,867	11,314
Commercial [Member]
Revenues	$ 26,961	$ 23,827

XML

Note 3 - Property, Plant and Equipment (Details Textual) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Jan. 31, 2017	Mar. 31, 2017	Mar. 31, 2016
Depreciation		$ 38.4	$ 34.7
Other Assets [Member]
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment		$ 4.6
Headquarters Building and Adjoining Property [Member]
Proceeds from Sale of Property Held-for-sale	$ 10.1
Gain (Loss) on Disposition of Property Plant Equipment	$ 6.6

XML

Note 3 - Property, Plant and Equipment - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property, plant and equipment gross	$ 1,867,683	$ 1,837,440
Less accumulated depreciation	(1,250,944)	(1,217,819)
Property, plant and equipment, net	616,739	619,621
Other Capitalized Property Plant and Equipment [Member]
Property, plant and equipment gross	1,069,545	1,048,790
Equipment [Member]
Property, plant and equipment gross	179,893	181,852
Furniture and Fixtures [Member]
Property, plant and equipment gross	371,429	359,957
Building and Leasehold Improvements[Member]
Property, plant and equipment gross	89,021	88,592
Software and Software Development Costs [Member]
Property, plant and equipment gross	87,591	83,815
Construction in Progress [Member]
Property, plant and equipment gross	60,592	64,822
Land [Member]
Property, plant and equipment gross	$ 9,612	$ 9,612

XML

Note 4 - Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Goodwill	$ 84,928	$ 84,928

XML

Note 4 - Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Franchise Rights [Member]
Gross Carrying Amount, Indefinite-lived Intangible Assets	$ 497,136	$ 497,136
Use Rights [Member]
Gross Carrying Amount	4,141	4,138
Accumulated Amortization	3,817	3,794
Net Carrying Amount	$ 324	$ 344
Minimum [Member] | Use Rights [Member]
Useful Life (Year)	1 year	1 year
Maximum [Member] | Use Rights [Member]
Useful Life (Year)	25 years	25 years

XML

Note 5 - Long-term Debt (Details Textual) - USD ($) $ in Thousands		3 Months Ended
	Jun. 30, 2015	Mar. 31, 2017	Feb. 13, 2017	Dec. 31, 2016	Jun. 17, 2015
Long-term Debt		$ 544,030
Secured Debt [Member]
Debt Instrument, Face Amount			$ 650,000
Senior Unsecured Notes Due 2022 [Member]
Debt Instrument, Face Amount					$ 450,000
Debt Instrument, Interest Rate, Stated Percentage					5.75%
Senior Unsecured Notes Due 2022 [Member] | Revolving Credit Facility [Member] | JPMorgan Chase Bank [Member]
Debt Instrument, Term	5 years
Senior Unsecured Notes Due 2022 [Member] | Secured Debt [Member] | JPMorgan Chase Bank [Member]
Debt Instrument, Term	5 years
Senior Credit Facilities Due 2020 [Member] | Term Loan [Member]
Long-term Debt		$ 93,750		$ 95,000
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member]
Line of Credit Facility, Commitment Fee Percentage		0.25%
Debt Instrument, Interest Rate, Effective Percentage		2.50%
Letters of Credit Outstanding, Amount		$ 2,800
Credit Facility, Maximum Additional Amount Allowable		300,000
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | Term Loan [Member]
Long-term Debt		$ 93,800
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | Minimum [Member]
Line of Credit Facility, Commitment Fee Percentage		0.25%
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | Maximum [Member]
Line of Credit Facility, Commitment Fee Percentage		0.40%
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate		1.50%
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate		2.25%
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate		0.50%
Senior Credit Facilities Due 2020 [Member] | JPMorgan Chase Bank [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate		1.25%
Senior Credit Facilities Due 2020 [Member] | Revolving Credit Facility [Member] | JPMorgan Chase Bank [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 200,000
Line of Credit Facility, Remaining Borrowing Capacity		$ 197,200
Senior Credit Facilities Due 2020 [Member] | Secured Debt [Member] | JPMorgan Chase Bank [Member]
Long-term Debt	$ 100,000
Senior Credit Facilities Due 2020 [Member] | Letter of Credit [Member] | JPMorgan Chase Bank [Member]
Debt Instrument, Interest Rate, Effective Percentage		1.625%

XML

Note 5 - Long-term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Long-term Debt	$ 544,030
Capital lease obligation	280	$ 284
Total debt	544,030	545,284
Less unamortized debt issuance costs	(7,748)	(8,148)
Less current portion of long-term debt	(6,875)	(6,250)
Total Long-term debt	529,407	530,886
Senior Unsecured Notes Due 2022 [Member]
Senior Unsecured Notes	450,000	450,000
Senior Credit Facilities Due 2020 [Member] | Term Loan [Member]
Long-term Debt	$ 93,750	$ 95,000

XML

Note 5 - Long-term Debt - Future Maturities (Details) $ in Thousands	Mar. 31, 2017 USD ($)
2017	$ 5,013
2018	8,767
2019	12,517
2020	67,517
2021	17
Thereafter	450,199
Total	$ 544,030

XML

Note 6 - Fair Value Measurements (Details Textual) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Deferred Compensation Liability, Current and Noncurrent	$ 17.6	$ 18.2

XML

Note 6 - Fair Value Measurements - Carrying Amounts and Fair Values (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Assets, carrying amount	$ 173,467	$ 138,040
Long-term debt, including current portion, carrying amount	544,030
Notes [Member]
Long-term debt, including current portion, carrying amount	450,000
Long-term debt, including current portion, fair value	469,125
Term Loan [Member]
Long-term debt, including current portion, carrying amount	93,750
Long-term debt, including current portion, fair value	93,750
Money Market Funds [Member]
Assets, carrying amount	72,334
Assets, fair value	72,334
Commercial Paper [Member]
Assets, carrying amount	91,297
Assets, fair value	$ 91,512

XML

Note 7 - Treasury Stock (Details Textual) - USD ($) $ in Thousands	3 Months Ended		21 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Dec. 31, 2016	Jul. 02, 2015
Stock Repurchase Program, Authorized Amount					$ 250,000
Stock Repurchase Program, Number of Shares Authorized to be Repurchased					600,000
Treasury Stock, Shares, Acquired	700		165,633
Treasury Stock, Value, Acquired, Cost Method	$ 399		$ 73,100
Payments Related to Tax Withholding for Share-based Compensation	$ 331
Shares Paid for Tax Withholding for Share Based Compensation	517
Treasury Stock, Shares	164,124		164,124	179,676

XML

Note 8 - Equity-based Compensation (Details Textual)	3 Months Ended
	Mar. 31, 2017 USD ($) shares	Mar. 31, 2016 USD ($)	Jun. 05, 2015 shares
Allocated Share-based Compensation Expense	$ 2,400,000	$ 3,000,000
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense	3,500,000
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-based Compensation Cost	$ 5,700,000
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Vesting Period, Number of Installments	4
Annual Retainer	$ 150,000
Additional Annual Retainer	15,000
Allocated Share-based Compensation Expense	1,700,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 11,000,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 146 days
Restricted Stock Units (RSUs) [Member] | Non-employee Directors [Member
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Vested and Deferred, Number | shares	2,210
Stock Appreciation Rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Share-based Compensation Arrangements by Share-based Payment Award, Vesting Period, Number of Installments	4
Allocated Share-based Compensation Expense	$ 700,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 9,700,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	1 year 109 days
The 2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | shares	329,962
The 2015 Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Maximum [Member] | The 2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | shares			600,000
Share-based Compensation Arrangement by Share-based Payment Award, Maximum Number of Shares Authorized for Incentive Stock Options | shares			400,000

XML

Note 8 - Equity-based Compensation - Summary of Restricted Stock (Details) - Restricted Stock and Restricted Stock Units [Member]	3 Months Ended
	Mar. 31, 2017 $ / shares shares
Unvested, restricted stock (in shares) | shares	38,425
Unvested, restricted stock, weighted avergae grant date fair value (in dollars per share) | $ / shares	$ 402.13
Granted, stock appreciation rights (in shares) | shares	13,978
Granted, weighted average fair value (in dollars per share) | $ / shares	$ 619.67
Shares granted due to performance achievement (in shares) | shares	5,006
Shares granted due to performance achievement, weighted average grant date fair value (in dollars per share) | $ / shares	$ 433.66
Forfeited, stock appreciation rights (in shares) | shares	(1,904)
Forfeited, weighted average fair value (in dollars per share) | $ / shares	$ 432.95
Vested, restricted stock (in shares) | shares	(284)
Vested, restricted stock, weighted avergae grant date fair value (in dollars per share) | $ / shares	$ 380.50
Unvested, restricted stock (in shares) | shares	55,221
Unvested, restricted stock, weighted avergae grant date fair value (in dollars per share) | $ / shares	$ 459.16
Vested and unissued, restricted stock (in shares) | shares	2,210
Vested and unissued, weighted average grant date fair value (in dollars per share) | $ / shares	$ 415.10

XML

Note 8 - Equity-based Compensation - Summary of Stock Appreciation Rights (Details) - Stock Appreciation Rights (SARs) [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Outstanding, stock appreciation rights (in shares)	136,000
Outstanding, weighted average exercise price (in dollars per share)	$ 426.80
Outstanding, Beginning Balance, weighted average fair value (in dollars per share)	$ 88.07
Outstanding, aggregate intrinsic value	$ 24,790	$ 26,510
Weighted Average Remaining Contractual Term, Outstanding (Year)	8 years 219 days	8 years 255 days
Granted, stock appreciation rights (in shares)	20,000
Granted, weighted average exercise price (in dollars per share)	$ 619.66
Granted, weighted average fair value (in dollars per share)	$ 138.01
Weighted Average Remaining Contractual Term, Granted (Year)	9 years 292 days
Exercised, stock appreciation rights (in shares)	(5,625)
Exercised, weighted average exercise price (in dollars per share)	$ 422.31
Exercised, weighted average fair value (in dollars per share)	$ 87.22
Forfeited, stock appreciation rights (in shares)	(5,200)
Forfeited, weighted average exercise price (in dollars per share)	$ 422.31
Forfeited, weighted average fair value (in dollars per share)	$ 87.22
Outstanding, stock appreciation rights (in shares)	145,175	136,000
Outstanding, weighted average exercise price (in dollars per share)	$ 453.71	$ 426.80
Outstanding, Beginning Balance, weighted average fair value (in dollars per share)	$ 95.01	$ 88.07
Vested and exercisable, stock appreciation rights (in shares)	25,550
Vested and exercisable, weighted average exercise price (in dollars per share)	$ 422.31
Vested and exercisable, weighted average fair value (in dollars per share)	$ 87.22
Vested and exercisable, aggregate intrinsic value	$ 5,165
Weighted Average Remaining Contractual Term, Vested and exercisable (Year)	8 years 146 days

XML

Note 8 - Equity-based Compensation - Stock Appreciation Rights, Fair Value Assumptions (Details) - Stock Appreciation Rights (SARs) [Member]	3 Months Ended
	Mar. 31, 2017
Expected volatility	20.93%
Risk-free interest rate	2.15%
Expected term (in years) (Year)	6 years 91 days
Expected dividend yield	0.96%

XML

Note 9 - Income Taxes (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	37.40%	33.00%
Income Tax Benefits Due to Certain Spin-off and State Tax Items	$ 2.2

XML

Note 10 - Net Income Per Share (Details Textual) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	443	1,038

XML

Note 10 - Net Income Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Net income		$ 33,215	$ 27,044
Basic (in shares)	[1]	5,671,838	5,796,252
Effect of dilutive equity awards (1) (in shares)	[2]	59,063	14,387
Weighted average common shares outstanding - Diluted (in shares)	[1]	5,730,901	5,810,639
Net income per common share:
Basic (in dollars per share)	[1]	$ 5.86	$ 4.67
Diluted (in dollars per share)	[1]	$ 5.80	$ 4.65

[1] On July 1, 2015, Graham Holdings Company distributed 5,843,313 shares of Cable One, Inc. common stock to existing holders of Graham Holdings Company common stock. Basic and diluted net income per common share for the year ended December 31, 2014 are calculated using the number of shares distributed on July 1, 2015.

[2] SARs outstanding that were not included in the diluted net income per share calculation because the effect would have been anti-dilutive were 443 and 1,038 for the three months ended March 31, 2017 and 2016, respectively.

XML

Note 11 - Commitments and Contingencies (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
GHC [Member]
Employee Medical and Worker's Compensation Claims Expense	$ 0.1	$ 0.1

XML

Note 12 - Subsequent Event (Details Textual) - USD ($) $ in Millions	May 01, 2017	Feb. 13, 2017
Secured Debt [Member]
Debt Instrument, Face Amount		$ 650.0
Subsequent Event [Member] | Secured Debt [Member]
Debt Instrument, Face Amount	$ 750.0
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan A [Member]
Debt Instrument, Face Amount	$ 250.0
Debt Instrument, Term	5 years
Long Term Debt, Amortization Rate, First Twelve Months	2.50%
Long Term Debt, Amortization Rate, Year Two	5.00%
Long Term Debt, Amortization Rate, Year Three	7.50%
Long Term Debt, Amortization Rate, Year Four	10.00%
Long Term Debt, Amortization Rate, Year Five	10.00%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan A [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.25%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan A [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.50%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan A [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan A [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan B [Member]
Debt Instrument, Face Amount	$ 500.0
Debt Instrument, Term	7 years
Debt Instrument, Amortization Percent on a Quarterly Basis	1.00%
Debt Instrument, Prepayment Penalty, Prepaid within Six Months, Percent	1.00%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan B [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate	2.25%
Subsequent Event [Member] | Secured Debt [Member] | Incremental Term Loan B [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	1.25%
New Wave [Member] | Subsequent Event [Member]
Payments to Acquire Businesses, Gross	$ 735.0