Discontinued Operations

9 Months Ended

Sep. 30, 2022

Discontinued Operations

Discontinued Operations

Note 3. Discontinued Operations

Sale of Service Areas

On June 30, 2021, WOW entered into two separate asset sales with two different buyers. On September 1, 2021, WOW completed the sale of its Cleveland and Columbus, Ohio markets and on November 1, 2021, WOW completed the sale of its Chicago, Illinois, Evansville, Indiana and Baltimore, Maryland markets. The Company will present these markets as discontinued operations in the consolidated statements of operations and exclude from continuing operations for all periods in which such discontinued operations are presented. Results of discontinued operations include all revenues and direct expenses of these markets. General corporate overhead is not allocated to discontinued operations.

The following table presents information regarding certain components of income from discontinued operations:

	Three months ended		Nine months ended
	September 30,		September 30,
	2021		2021
	(in millions)
Revenue	$	83.7	$	293.9
Costs and expenses:
Operating (excluding depreciation and amortization)		28.9		106.1
Selling, general and administrative		5.2		10.7
Depreciation and amortization		—		41.0
		34.1		157.8
Income from operations		49.6		136.1
Other income:
Interest income		—		0.4
Gain on sale of assets, net		689.9		690.1
Other income, net		—		0.1
Income from discontinued operations before provision for income tax		739.5		826.7
Income tax expense		(200.4)		(220.4)
Income from discontinued operations	$	539.1	$	606.3

The following table presents revenue by service offering from discontinued operations:

	Three months ended		Nine months ended
	September 30,		September 30,
	2021		2021
	(in millions)
Residential subscription
HSD	$	41.4	$	143.5
Video		27.1		98.6
Telephony		3.0		10.9
Total Residential subscription	$	71.5	$	253.0
Business subscription
HSD	$	5.0	$	16.7
Video		0.7		2.5
Telephony		2.3		7.9
Total business subscription	$	8.0	$	27.1
Total subscription services revenue		79.5		280.1
Other business services revenue		0.6		1.6
Other revenue		3.6		12.2
Total revenue	$	83.7	$	293.9

The following table presents specified items of cash flow and significant non-cash items of discontinued operations:

	Nine months ended
	September 30,
	2021
	(in millions)
Specified items of cash flow:
Capital expenditures	$	41.2
Non-cash operating activities:
Operating lease additions	$	—
Non-cash investing activities:
Capital expenditure accounts payable and accruals	$	2.3

In connection with the asset sales, the Company entered into two separate transition services agreements under which WOW will continue to provide certain services to each of the buyers. Under the transition services agreements, the buyers may elect a variety of services, including but not limited to: information technology, network, business support services, etc. The term of the transition services agreements are for 12 months following each closing date, respectively, with two optional three month extensions. As of September 30, 2022, the transition services agreements with both buyers were still in effect for certain limited services. None of the costs related to the employees, processes or systems utilized to provide the services under the transition services agreements were allocated to discontinued operations.

Income earned under these agreements is presented in other income, net in the condensed consolidated statement of operations and associated receivables are presented in accounts receivable – other, net in the condensed consolidated balance sheet. The Company recognized $1.3 million and $14.8 million of income related to the transition service agreements for the three and nine months ended September 30, 2022, respectively.