atni_Current folio 10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

Form 10-Q

 

 

 

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

 

For the quarterly period ended March 31, 2019

 

OR

 

 

 

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

 

For the transition period from           to             

 

Commission File Number 001-12593

 


 

ATN INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware
(State or other jurisdiction of
incorporation or organization)

47‑0728886
(I.R.S. Employer
Identification No.)

500 Cummings Center, Suite 2450
Beverly, Massachusetts
(Address of principal executive offices)

01915
(Zip Code)

(978) 619‑1300

(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 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 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 ☐

 

 

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  ☒

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $.01 per share

 

ATNI

 

The Nasdaq Stock Market LLC

As of May 9, 2019, the registrant had outstanding 15,993,769  shares of its common stock ($.01 par value).

 

 

1


 

ATN INTERNATIONAL, INC.

FORM 10-Q

 

Quarter Ended March 31, 2019

 

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS 

3

 

 

 

PART I—FINANCIAL INFORMATION 

4

 

 

 

Item 1 

Unaudited Condensed Consolidated Financial Statements

4

 

 

 

 

Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018  

4

 

 

 

 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018

5

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2019 and 2018

6

 

 

 

 

Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2019 and 2018

7

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018

8

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

 

 

 

Item 2 

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

27-45

 

 

 

Item 3 

Quantitative and Qualitative Disclosures About Market Risk

45

 

 

 

Item 4 

Controls and Procedures

46

 

 

 

PART II—OTHER INFORMATION 

46

 

 

 

Item 1 

Legal Proceedings

46

 

 

 

Item 1A 

Risk Factors

46

 

 

 

Item 2 

Unregistered Sales of Equity Securities and Use of Proceeds

46

 

 

Item 6 

Exhibits

48

 

 

 

SIGNATURES 

49

 

 

 

CERTIFICATIONS

 

 

 

2


 

Cautionary Statement Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q (or the “Report”) contains forward-looking statements relating to, among other matters, our future financial performance and results of operations; the estimated timeline for increase in revenues from our customers in the US Virgin Islands following Hurricanes Irma and Maria (the “Hurricanes”); the competitive environment in our key markets, demand for our services and industry trends; the pace of expansion and improvement of our telecommunications network and renewable energy operations including our level of estimated future capital expenditures and our realization of the benefits of these investments and their impact on our customers; the anticipated timing of our build schedule and energy production of our India renewable energy projects; our pipeline of additional solar capacity; expectations regarding our revenue, expenses and financial performance; our compliance with requirements for certain grants and programs and the anticipated timing of the receipt of funds under such grants and programs; the impact of new accounting pronouncements; our satisfaction of performance obligations; the impact of litigation; the sufficiency of our cash and our expectations regarding capital expenditures; and management’s plans and strategy for the future. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results.  Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others, (1) the general performance of our operations, including operating margins, revenues, capital expenditures, and the future growth and retention of our major customers and subscriber base and commercial and industrial demand for solar power; (2) our ability to maintain favorable roaming arrangements and satisfy the needs and demands of our major wireless customers; (3) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes and cyber security concerns in the telecommunications industry; (4) government regulation of our businesses, which may impact our Federal Communications Commission (“FCC”) and other telecommunications licenses or our renewables business; (5) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (6) our ability to receive financial support from the government for our rebuild in the US Virgin Islands and the timing of such support; (7) economic, political and other risks facing our operations; (8) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (9) our ability to find investment or acquisition or disposition opportunities that fit the strategic goals of the Company; (10) the occurrence of weather events and natural catastrophes; (11) increased competition; (12) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (13) our continued access to capital and credit markets; and (14) the risk of currency fluctuation for those markets in which we operate in.  These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019 as may be updated by our Quarterly Reports on Form 10-Q and the other reports we file from time to time with the SEC.  Except as required by law, the Company undertakes no obligation and has no intention to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements.

 

In this Report, the words “the Company”, “we,” “our,” “ours,” “us” and “ATN” refer to ATN International, Inc. and its subsidiaries. This Report contains trademarks, service marks and trade names that are the property of, or licensed by, ATN and its subsidiaries.

 

Reference to dollars ($) refer to US dollars unless otherwise specifically indicated.

 

 

 

 

3


 

PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

171,483

 

$

191,836

Restricted cash

 

 

1,071

 

 

1,071

Short-term investments

 

 

5,280

 

 

393

Accounts receivable, net of allowances of $16.7 million and $16.5 million, respectively

 

 

46,161

 

 

38,305

Inventory, materials and supplies

 

 

6,239

 

 

6,305

Prepayments and other current assets

 

 

30,910

 

 

37,855

Total current assets

 

 

261,144

 

 

275,765

Fixed Assets:

 

 

 

 

 

 

Property, plant and equipment

 

 

1,201,404

 

 

1,188,916

Less accumulated depreciation

 

 

(581,606)

 

 

(562,064)

Net fixed assets

 

 

619,798

 

 

626,852

Telecommunication licenses, net

 

 

93,686

 

 

93,686

Goodwill

 

 

63,970

 

 

63,970

Customer relationships, net

 

 

8,783

 

 

9,323

Operating lease right-of-use assets

 

 

68,185

 

 

 —

Other assets

 

 

47,264

 

 

37,708

Total assets

 

$

1,162,830

 

$

1,107,304

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Current portion of long-term debt

 

$

4,688

 

$

4,688

Accounts payable and accrued liabilities

 

 

72,394

 

 

80,873

Dividends payable

 

 

2,719

 

 

2,720

Accrued taxes

 

 

32,099

 

 

31,795

Current portion of operating lease liabilities

 

 

8,351

 

 

 —

Advance payments and deposits

 

 

21,066

 

 

20,574

Total current liabilities

 

 

141,317

 

 

140,650

Deferred income taxes

 

 

8,362

 

 

10,276

Operating lease liabilities

 

 

58,835

 

 

 —

Other liabilities

 

 

48,952

 

 

46,760

Long-term debt, excluding current portion

 

 

85,380

 

 

86,294

Total liabilities

 

 

342,846

 

 

283,980

Commitments and contingencies (Note 15)

 

 

 

 

 

 

ATN International, Inc. Stockholders’ Equity:

 

 

 

 

 

 

Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding

 

 

 —

 

 

 —

Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,294,690 and 17,274,215 shares issued, respectively, 15,993,920 and 16,002,699 shares outstanding respectively

 

 

172

 

 

172

Treasury stock, at cost; 1,300,770 and 1,271,516 shares, respectively

 

 

(50,116)

 

 

(48,547)

Additional paid-in capital

 

 

183,079

 

 

181,778

Retained earnings

 

 

559,319

 

 

563,593

Accumulated other comprehensive income

 

 

(1,433)

 

 

(1,609)

Total ATN International, Inc. stockholders’ equity

 

 

691,021

 

 

695,387

Non-controlling interests

 

 

128,963

 

 

127,937

Total equity

 

 

819,984

 

 

823,324

Total liabilities and equity

 

$

1,162,830

 

$

1,107,304

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

4


 

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(Unaudited)

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31, 

 

    

2019

    

2018

REVENUE:

 

 

 

 

 

 

Wireless

 

$

41,613

 

$

50,548

Wireline

 

 

60,197

 

 

48,096

Renewable energy

 

 

1,490

 

 

5,831

Total revenue

 

 

103,300

 

 

104,475

OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):

 

 

 

 

 

 

Termination and access fees

 

 

27,888

 

 

25,914

Engineering and operations

 

 

19,032

 

 

18,152

Sales, marketing and customer service

 

 

9,390

 

 

8,562

General and administrative

 

 

23,816

 

 

25,540

Transaction-related charges

 

 

40

 

 

27

Depreciation and amortization

 

 

20,718

 

 

21,305

Loss on disposition of long-lived assets

 

 

302

 

 

284

Loss on damaged assets and other hurricane related charges, net of insurance recovery

 

 

 —

 

 

482

Total operating expenses

 

 

101,186

 

 

100,266

Income from operations

 

 

2,114

 

 

4,209

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

Interest income

 

 

928

 

 

366

Interest expense

 

 

(1,281)

 

 

(2,204)

Other income (expenses)

 

 

187

 

 

(753)

Other expense, net

 

 

(166)

 

 

(2,591)

INCOME BEFORE INCOME TAXES

 

 

1,948

 

 

1,618

Income tax provisions

 

 

1,213

 

 

3,921

NET INCOME (LOSS)

 

 

735

 

 

(2,303)

Net income attributable to non-controlling interests, net of tax expense of $0.4 million and $0.3 million, respectively.

 

 

(2,316)

 

 

(3,252)

NET LOSS ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS

 

$

(1,581)

 

$

(5,555)

NET LOSS PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:

 

 

 

 

 

 

Basic

 

$

(0.10)

 

$

(0.35)

Diluted

 

$

(0.10)

 

$

(0.35)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

Basic

 

 

16,001

 

 

16,019

Diluted

 

 

16,001

 

 

16,019

DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK

 

$

0.17

 

$

0.17

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018 (Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2019

    

2018

 

Net income (loss)

 

$

735

 

$

(2,303)

 

Other comprehensive income:

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

237

 

 

(1,032)

 

Unrealized gain (loss) on derivatives

 

 

(61)

 

 

139

 

Other comprehensive income (loss), net of tax

 

 

176

 

 

(893)

 

Comprehensive income (loss)

 

 

911

 

 

(3,196)

 

Less: Comprehensive income attributable to non-controlling interests

 

 

(2,316)

 

 

(3,252)

 

Comprehensive income attributable to ATN International, Inc.

 

$

(1,405)

 

$

(6,448)

 

 

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

6


 

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

For the Three Months Ended March 31, 2019 and 2018

(In Thousands, Except Share Data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Accumulated

    

Total

    

 

 

    

 

 

 

 

 

 

 

 

Treasury

 

Additional

 

 

 

 

Other

 

ATNI

 

Non-

 

 

 

 

 

 

Common

 

Stock,

 

Paid In

 

Retained

 

Comprehensive

 

Stockholders’

 

Controlling

 

Total

 

 

 

Stock

 

at cost

 

Capital

 

Earnings

 

Income/(Loss)

 

Equity

 

Interests

 

Equity

 

Balance, December 31, 2018

 

$

172

 

$

(48,547)

 

$

181,778

 

$

563,593

 

$

(1,609)

 

$

695,387

 

$

127,937

 

$

823,324

 

Purchase of 28,242 shares of common stock upon exercise of stock options

 

 

 —

 

 

(1,569)

 

 

 —

 

 

 —

 

 

 —

 

 

(1,569)

 

 

 —

 

 

(1,569)

 

Stock-based compensation

 

 

 —

 

 

 —

 

 

1,301

 

 

 —

 

 

 —

 

 

1,301

 

 

 —

 

 

1,301

 

Dividends declared on common stock ($0.17 per common share)

 

 

 —

 

 

 —

 

 

 —

 

 

(2,693)

 

 

 —

 

 

(2,693)

 

 

(1,553)

 

 

(4,246)

 

Repurchase of non-controlling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(225)

 

 

(225)

 

Investments made by minority shareholders in consolidated affiliates

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

488

 

 

488

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

(1,581)

 

 

 —

 

 

(1,581)

 

 

2,316

 

 

735

 

Other comprehensive loss

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

176

 

 

176

 

 

 —

 

 

176

 

Total comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(1,405)

 

 

2,316

 

 

911

 

Balance, March 31, 2019

 

$

172

 

$

(50,116)

 

$

183,079

 

$

559,319

 

$

(1,433)

 

$

691,021

 

$

128,963

 

$

819,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2017

 

$

170

 

$

(36,110)

 

$

167,973

 

$

552,948

 

$

3,746

 

$

688,727

 

$

141,496

 

$

830,223

 

Issuance of 12,500 shares of common stock upon exercise of stock options

 

 

 —

 

 

 —

 

 

498

 

 

 —

 

 

 —

 

 

498

 

 

 —

 

 

498

 

Purchase of 41,827 shares of common stock

 

 

 —

 

 

(2,538)

 

 

 —

 

 

 —

 

 

 —

 

 

(2,538)

 

 

 —

 

 

(2,538)

 

Stock-based compensation

 

 

 —

 

 

 —

 

 

1,576

 

 

 —

 

 

 —

 

 

1,576

 

 

 —

 

 

1,576

 

Dividends declared on common stock ($0.17 per common share)

 

 

 —

 

 

 —

 

 

 —

 

 

(2,696)

 

 

 —

 

 

(2,696)

 

 

(12,484)

 

 

(15,180)

 

Repurchase of non-controlling interests

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(3)

 

 

(3)

 

Cumulative effect adjustment due to adoption of new accounting pronouncements

 

 

 —

 

 

 —

 

 

 —

 

 

1,691

 

 

(203)

 

 

1,488

 

 

1,147

 

 

2,635

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 —

 

 

 —

 

 

 —

 

 

(5,555)

 

 

 —

 

 

(5,555)

 

 

3,252

 

 

(2,303)

 

Other comprehensive loss

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(893)

 

 

(893)

 

 

 —

 

 

(893)

 

Total comprehensive income

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(6,448)

 

 

3,252

 

 

(3,196)

 

Balance, March 31, 2018

 

$

170

 

$

(38,648)

 

$

170,047

 

$

546,388

 

$

2,650

 

$

680,607

 

$

133,408

 

$

814,015

 

 

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

 

7


 

 

 

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2019

    

2018

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

$

735

 

$

(2,303)

Adjustments to reconcile net income to net cash flows provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

20,718

 

 

21,305

Provision for doubtful accounts

 

1,285

 

 

796

Amortization and write off of debt discount and debt issuance costs

 

160

 

 

197

Stock-based compensation

 

1,301

 

 

1,576

Deferred income taxes

 

(1,914)

 

 

(1,089)

Loss on disposition of long-lived assets

 

302

 

 

284

Unrealized (gain) loss on foreign currency

 

(64)

 

 

364

Other non-cash activity

 

(17)

 

 

85

Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:

 

 

 

 

 

Accounts receivable

 

(9,102)

 

 

(5,061)

Materials and supplies, prepayments, and other current assets

 

90

 

 

3,991

Prepaid income taxes

 

5,158

 

 

 —

Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities

 

(3,188)

 

 

(2,306)

Accrued taxes

 

1,620

 

 

3,292

Other assets

 

324

 

 

(581)

Other liabilities

 

1,362

 

 

1,994

Net cash provided by operating activities

 

18,770

 

 

22,544

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(17,641)

 

 

(21,041)

Hurricane rebuild capital expenditures

 

(123)

 

 

(30,851)

Hurricane insurance proceeds

 

 —

 

 

34,606

Receipt of government grants

 

 —

 

 

5,400

Purchase of other investments

 

(10,000)

 

 

 —

Purchase of short-term investments

 

(5,000)

 

 

 —

Proceeds from sale of investments

 

141

 

 

4,809

Net cash used in investing activities

 

(32,623)

 

 

(7,077)

Cash flows from financing activities:

 

 

 

 

 

Dividends paid on common stock

 

(2,720)

 

 

(2,724)

Distribution to non-controlling interests

 

(1,540)

 

 

(12,424)

Principal repayments of term loan

 

(949)

 

 

(938)

Stock-based compensation share repurchases

 

(1,569)

 

 

(2,041)

Repurchases of non-controlling interests

 

(225)

 

 

(3)

Investments made by minority shareholders in consolidated affiliates

 

488

 

 

 —

Net cash used in financing activities

 

(6,515)

 

 

(18,130)

Effect of foreign currency exchange rates on cash and cash equivalents

 

15

 

 

(31)

Net change in cash, cash equivalents, and restricted cash

 

(20,353)

 

 

(2,694)

Total cash, cash equivalents, and restricted cash, beginning of period

 

192,907

 

 

219,890

Total cash, cash equivalents, and restricted cash, end of period

$

172,554

 

$

217,196

Noncash investing activity:

 

 

 

 

 

Purchases of property, plant and equipment included in accounts payable and accrued expenses

$

8,129

 

$

20,068

 

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

 

 

8


 

ATN INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.ORGANIZATION AND BUSINESS OPERATIONS

 

The Company is a holding company that, directly and through its subsidiaries, owns and operates telecommunications and renewable energy businesses in North America, India, Bermuda and the Caribbean. The Company was incorporated in Delaware in 1987, began trading publicly in 1991 and spun off more than a half of its operations to stockholders in 1998.  Since that time, the Company has engaged in many strategic acquisitions and investments to help grow its operations, using the cash generated from its established operating units to re-invest in its existing businesses and to make strategic investments in earlier stage businesses.  The Company looks for businesses that offer growth opportunities or potential strategic benefits, but that require additional capital investment in order to execute on their business plans.  The Company holds controlling positions with respect to some of its investments and minority positions in others.  These strategic investments frequently offer a product and service development component in addition to the prospects of generating returns on its invested capital.   The Company has identified three operating segments to manage and review its operations, and to facilitate investor presentations of its results, as follows: 

 

·

US Telecom.  In the United States, the Company offers wireless and wireline services.  The Company offers wholesale wireless voice and data roaming services to national, regional, local and selected international wireless carriers in rural markets located principally in the Southwest and Midwest United States.  The Company also provides retail wireless, wireline services and wholesale long-distance voice services to telecommunications carriers in the areas in which it offers wireline services.

 

·

International Telecom.  The Company’s international wireless services include voice and data services to retail customers in Bermuda, Guyana and the US Virgin Islands.  The Company’s international wireline services include voice and data services in Bermuda, the Cayman Islands, Guyana and the US Virgin Islands, as well as video services in Bermuda, the Cayman Islands, and the US Virgin Islands. In addition, the Company offers wholesale long‑distance voice services to other telecommunications carriers in the countries in which it offers international wireline services.

 

·

Renewable Energy.   In India, the Company provides distributed generation solar power to corporate, utility and municipal customers.  Through November 6, 2018, the Company also provided distributed generation solar power in the United States in Massachusetts, California and New Jersey.

 

The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments in which the Company reports its revenue and the markets it served as of March 31, 2019:

 

 

 

 

 

 

 

 

 

Segment

   

Services

   

Markets

   

Tradenames

 

US Telecom

 

Wireless

 

United States (rural markets)

 

Choice, Choice NTUA Wireless, Commnet, WestNet, Geoverse

 

 

 

Wireline

 

United States

 

Essextel, Deploycom

 

International Telecom

 

Wireline

 

Bermuda, Cayman Islands, Guyana, US Virgin Islands

 

Fireminds, GTT+, One, Logic, Viya

 

 

 

Wireless

 

Bermuda, Guyana, US Virgin Islands

 

GTT+, One, Viya

 

 

 

Video Services

 

Bermuda, Cayman Islands, US Virgin Islands

 

Logic, One, Viya

 

Renewable Energy

 

Solar

 

India

 

Vibrant Energy

 

 

 The Company actively evaluates potential acquisitions, investment opportunities and other strategic transactions, both domestic and international, that meet its return on investment and other criteria.  In addition, the

9


 

Company considers non-controlling investments in earlier stage businesses that it considers strategically relevant, and which may offer long-term growth potential for the Company, either individually, or as research and development businesses that can support the Company’s operating subsidiaries in new product and service development and offerings. The Company provides management, technical, financial, regulatory, and marketing services to its subsidiaries and typically receives a management fee equal to a percentage of their revenues, which is eliminated in consolidation. For further information about the Company’s financial segments and geographical information about its operating revenues and assets, also see Note 14 to the Consolidated Financial Statements included in this Report.

 

 

2. BASIS OF PRESENTATION 

 

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial information included herein is unaudited; however, the Company believes such information and the disclosures herein are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial position and results of operations for such periods. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Results of interim periods may not be indicative of results for the full year.  These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019.

 

The condensed consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and certain entities, which are consolidated in accordance with the provisions of the Financial Accounting Standards Board’s (“FASB”) authoritative guidance on the consolidation of variable interest entities, since it is determined that the Company is the primary beneficiary of these entities.

 

Recent Accounting Pronouncements 

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), and subsequently issued related updates, (collectively known as ASC 606), which provides a single, comprehensive revenue recognition model for all contracts with customers. The revenue standard is based on the principle that revenue should be recognized 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 Company adopted this standard on January 1, 2018.  Refer to Note 3 to the Consolidated Financial Statements in this Report.

 

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”), which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The Company adopted this standard on January 1, 2018.  Upon adoption the Company held $20.1 million of equity investments that did not have readily determinable fair values.  As a result these investments are measured at cost less impairments, adjusted for observable price changes of similar investments of the same issuer.  The Company has not adjusted the cost of these investments since acquisition.  Upon adoption, the Company held $0.6 million of equity investments with readily determinable fair values and reclassified $0.2 million of unrealized gains on this investment to retained earnings. 

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” and subsequently issued related updates (“ASU 2016-02”), which provide comprehensive lease accounting guidance.  The standard requires entities to recognize lease assets and liabilities on the balance sheet as well as disclosure of key information about leasing arrangements.  ASU 2016-02 became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted.  The Company adopted ASC 2016-02 on January 1, 2019 utilizing the optional transition method with a cumulative adjustment on the date of adoption and not adjusting prior periods.  Refer to Note 4 of the Condensed Consolidated Financial Statements.

 

10


 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides further clarification on eight cash flow classification issues. The Company adopted this standard on January 1, 2018.  In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” (“ASU 2016-18”). The amendments in ASU 2016-18 are intended to reduce diversity in practice related to the classification and presentation of changes in restricted cash or restricted cash equivalents on the statement of cash flows. The amendments in ASU 2016-18 require that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard on January 1, 2018. 

 

In October 2016 the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory”. The new standard eliminates all intra-entity sales of assets other than inventory, the exception under current standards that permits the tax effects of intra-entity asset transfers to be deferred until the transferred asset is sold to a third party or otherwise recovered through use. As a result, a reporting entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new standard was effective for the Company on January 1, 2018. There was not a material impact to the Company’s Consolidated Financial Statements upon adoption.

 

In March 2017, the FASB issued ASU 2017-07, “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”. The new guidance requires the service cost component to be presented separately from the other components of net benefit costs. Service cost will be presented with other employee compensation cost within income from operations. The other components of net benefit cost, such as interest cost, expected return on plan assets, amortization of prior service cost and gains or losses are required to be presented in other income. The Company adopted this standard on January 1, 2018. 

 

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities” (“ASU 2017-12”). The standard: (a) expands and refines hedge accounting for both financial and non-financial risk components, (b) aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and (c) includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company adopted this standard on January 1, 2019.  There was not a material impact to the Company’s Consolidated Financial Statements upon adoption.

 

In February 2018, the FASB issued ASU 2018-02 “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” (“ASU 2018-02”).  The standard gives entities the option to reclassify to retained earnings tax effects related to items in accumulated other comprehensive income that were impacted by the 2017 Tax Cuts and Jobs Act.  The guidance is effective for all entities for fiscal years beginning after December 31, 2018 and interim periods within those fiscal years.  Early adoption is permitted.  The guidance may be applied in the period of adoption or retrospectively to each impacted period.  The Company adopted this standard on January 1, 2018.  The impact of the adoption results in a $0.8 million reclassification from accumulated other comprehensive income to retained earnings, which is offset by an equivalent valuation allowance, the net impact is zero.

 

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). This standard requires entities that are customers in cloud computing arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance. The guidance may be applied retrospectively or prospectively to implementation costs incurred after the date of adoption. ASU 2018-15 is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted. The Company prospectively adopted this standard in the fourth quarter of 2018.  The Company capitalized $0.5 million and $0.6 million of implementation costs

11


 

during the three months ended March 31, 2019 and December 31, 2018, respectively, and none of those amounts were amortized at March 31, 2019.

 

 

3.  REVENUE RECOGNITION 

 

Impacts of adoption in the current period

 

The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method.  The Company elected the practical expedient to apply the new guidance only to contracts that were not substantially complete at the adoption date.   The cumulative effect of adopting ASC 606 resulted in a contract asset of $1.6 million, of which $1.2 million was recorded in prepayments and other current assets, and $0.4 million was recorded in other assets, a contract liability of $0.2 million recorded in advance payments and deposits, contract acquisition costs of $1.5 million of which $0.9 million was recorded in prepayments and other current assets and $0.6 million was recorded in other assets, and a deferred tax liability of $0.3 million with the offset of $1.5 million recorded to retained earnings and $1.1 million recorded to minority interest. 

 

Contract Assets and Liabilities

 

The Company recognizes contract assets and liabilities on its balance sheet.  Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount.  In these contracts the revenue recognized exceeds the amount billed to the customer.  The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s balance sheet.  Contract liabilities consist of advance payments and billings in excess of revenue recognized.  Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers.  To the extent the service is not provided by the reporting date the amount is recognized as a contract liability.  Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on its balance sheets.  Contract assets and liabilities consisted of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

December 31, 2018

 

$ Change

 

% Change

Contract asset – current

$

2,010

$

1,900

$

110

 

6%

Contract asset – noncurrent

 

779

 

802

 

(23)

 

-3%

Contract liabilities

 

(15,239)

 

(13,787)

 

(1,452)

 

11%

Net contract liability

$

(12,450)

$

(11,085)

$

(1,365)

 

12%

 

 

The contract asset – current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet.  The increase in the Company’s net contract liability was due to the timing of customer prepayments and contract billings.  During the three months ended March 31, 2019, the Company recognized revenue of $9.1 million related to its December 31, 2018 contract liability and amortized $0.6 million of the December 31, 2018 contract asset into revenue.  The Company did not recognize any revenue in the three months ended March 31, 2019 related to performance obligations that were satisfied or partially satisfied in previous periods.   

 

Contract Acquisition Costs

 

The March 31, 2019 balance sheet includes current contract acquisition costs of $1.5  million in prepayments and other current assets and long term contract acquisition costs of $0.9 million in other assets.  During the three months ended March 31, 2019, the Company amortized $0.5 million of contract acquisition cost. 

 

12


 

Remaining Performance Obligations

 

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts that include a promotional discount.  The transaction price allocated to unsatisfied performance obligations was $11.9 million and $12.1 million at March 31, 2019 and December 31, 2018, respectively.  The Company expects to satisfy the remaining performance obligations and recognize the transaction price within 24 months.  The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations.  However, the Company omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients.

 

Disaggregation

 

The Company's revenue is presented on a disaggregated basis in Note 14 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision makers for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus international wireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

 

4. LEASES

 

The Company’s significant accounting policies are detailed in “Note 2 – Summary of Significant Accounting Policies” within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2018. The Company’s accounting policies are updated as a result of adopting ASU 2016-02 “Leases (Topic 842)” (“ASC 842”) on January 1, 2019. The adoption of ASC 842 impacted the accounting for leases as further described below.

 

The Company adopted ASC 842 on January 1, 2019, utilizing the optional transition method with a cumulative adjustment on the date of adoption.  Under this approach, the guidance was applied to leases that had commenced as of January 1, 2019 with a cumulative effect adjustment as of that date and prior periods were not adjusted.  Upon adoption, the Company recognized an operating lease right-of-use (“ROU”) asset of $70.8 million, a short-term lease liability of $8.2 million, and a long-term lease liability of $61.2 million.  The adoption had no impact on retained earnings or other components of equity.  

The Company elected the package of practical expedients. Under the package of practical expedients, for existing leases, the Company does not reassess: i) whether the arrangement contains a lease; ii) lease classification and; iii) initial direct costs. 

The Company determines if an agreement is a lease at inception. Operating leases are included in ROU assets, current portion of operating lease liabilities, and operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property and equipment in the Company’s consolidated balance sheets.  To date the Company has prepaid its financing leases.  As a result, there is no interest cost, lease liability, or discount rate applicable to financing leases.   

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The present value is calculated using the Company’s incremental borrowing rate based on the information available at the commencement date, as our leases do not contain an implicit rate.  The Company utilized assumptions based on its existing borrowing facilities and other market specific data to determine its incremental borrowing rate. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include renewal options to extend the lease.  The Company includes renewal options that are reasonably certain to be exercised in the initial lease term.  When determining whether a lease term is reasonably certain to be exercised, the Company considers several factors, including the present and anticipated future needs of its customers being serviced by the asset.  Lease expense is

13


 

recognized on a straight-line basis over the lease term.  The Company does not separate non-lease components from lease components. 

 

The Company has operating and financing leases for towers, land, corporate offices, retail facilities, and data transport capacity.  The lease terms are generally between three and ten years, some of which include additional renewal options.

 

Supplemental lease information

 

The components of lease expense were as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31,2019

 

Operating lease cost:

 

 

 

Operating lease cost

$

3,516

 

Short-term lease cost

 

713

 

Variable lease cost

 

961

 

Total operating lease cost

$

5,190

 

 

 

 

 

Finance lease cost:

 

 

 

Amortization of right-of-use asset

$

593

 

Variable costs

 

296

 

Total finance lease cost

$

889

 

 

During the three months ended March 31, 2019, the Company paid $3.2 million of operating cash flows, which were included in the measurement of lease liabilities.  Also during the three months ended March 31, 2019, the Company recorded $0.2 million of lease liabilities arising from right-of-use assets.  At March 31, 2019, finance leases with a cost of $27.4 million and accumulated amortization of $7.9 million were included in property, plant and equipment.

 

The weighted average remaining lease terms and discount rates as of March 31, 2019 are noted in the table below:

 

 

 

 

 

 

 

 

 

Weighted average remaining lease term

 

 

 

Operating leases

 

7.3 years

 

Financing leases

 

12.1 years

 

 

 

 

 

Weighted average discount rate

 

 

 

Operating leases

 

4.9%

 

Financing leases

 

n/a

 

 

14


 

Maturities of lease liabilities as of March 31, 2019 were as follows (in thousands):

 

 

 

 

 

 

 

Operating Leases

 

2019 (excluding the three months ended March 31, 2019)

$

8,356

 

2020

 

12,746

 

2021

 

11,591

 

2022

 

10,816

 

2023

 

10,097

 

Thereafter

 

27,319

 

Total lease payments

 

80,925

 

Less imputed interest

 

(13,739)

 

Total

$

67,186

 

 

Maturities of lease liabilities as of December 31, 2018 were as follows (in thousands):

 

 

 

 

 

 

 

Operating Leases

 

2019

$

11,801

 

2020

 

12,650

 

2021

 

11,491

 

2022

 

10,713

 

2023

 

9,990

 

Thereafter

 

27,325

 

Total lease payments

$

83,970

 

 

As of March 31, 2019, the Company did not have any material operating or finance leases that have not yet commenced.

 

5. USE OF ESTIMATES

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates relate to the allowance for doubtful accounts, useful lives of the Company’s fixed and finite-lived intangible assets, allocation of purchase price to assets acquired and liabilities assumed in business combinations, fair value of indefinite-lived intangible assets, goodwill, assessing the impairment of assets, revenue, and income taxes. Actual results could differ significantly from those estimates.

 

6. IMPACT OF HURRICANES IRMA AND MARIA

 

During September 2017, the US Virgin Islands economy, the Company’s customer base and its operations in the US Virgin Islands were severely impacted by Hurricanes Irma and Maria (collectively, the “Hurricanes”).  Both the Company’s wireless and wireline networks and commercial operations were severely damaged by these storms and as a result of the significant damage to the wireline network and the lack of consistent commercial power in the territory, the Company was unable to provide most of its wireline services, which comprise the majority of its revenue in this business, from mid-September 2017 through a majority of 2018.  The Company received insurance recoveries of $34.6 million in February 2018 to aid its recovery from the impact of the Hurricanes.

 

During the three months ended March 31, 2018 and March 31, 2019, the Company spent $30.9 million and $0.1 million, respectively, for network restoration and resiliency enhancements that allowed the reconnection of a significant

15


 

majority of affected households and businesses as of the period end.  The Company expects that its wireline network restoration work is substantially complete, however, returning the Company’s revenue to pre-Hurricane levels may take significant time as a result of population movements, the negative economic impact the Hurricanes had on the local economy, and the Company’s subscriber base’s future appetite for continued wireline services.

 

7. DISPOSITIONS, PLATFORM AND MINORITY INVESTMENTS

 

Dispositions

 

 Renewable Energy

 

 

On November 6, 2018, the Company completed the sale of its US solar business that owned and managed distributed generation solar power projects operated under the Ahana name in Massachusetts, California and New Jersey (the “US Solar Operations”) to CleanCapital Holdco 4, LLC. The transaction had a total value of approximately $122.6 million, which included a cash purchase price of $65.3 million and the assumption of approximately $57.3 million in debt, and is subject to certain other post-closing adjustments (the “US Solar Transaction”).  The Company is finalizing working capital adjustments.  Approximately $6.5 million of the purchase price will be held in escrow for a period of twelve months after the closing to secure the Company’s indemnification obligation. The table below identifies the assets and liabilities transferred (in thousands): 

 

 

 

 

 

Consideration Received

$

65,286

 

Assets and liabilities disposed

 

 

 

Cash

 

3,049

 

Accounts receivable

 

1,248

 

Prepayments and other current assets

 

801

 

Property, plant and equipment

 

94,678

 

Restricted cash

 

8,407

 

Other assets

 

38

 

Current portion of long-term debt

 

(6,992)

 

Accounts payable and accrued liabilities

 

(938)

 

Accrued taxes

 

586

 

Long-term debt, excluding current portion

 

(48,038)

 

Net assets disposed

 

52,839

 

 

 

 

 

Consideration less net assets disposed

 

12,447

 

 

 

 

 

Transaction costs

 

(2,133)

 

 

 

 

 

Gain

$

10,314

 

 

The Company allocated $1.1 million of the gain to non-controlling interests within the consolidated income statement.  During the year ended December 31, 2018, the Company incurred $2.1 million of transaction related charges pertaining to legal, accounting and consulting services associated with the transaction.  The US Solar Operations do not qualify as a discontinued operation because the disposition did not represent a strategic shift that would have a major effect on the Company’s operations and financial results. As a result, the historical results are included in continuing operations. 

 

16


 

Platform Investments

 

US Telecom

 

During the second quarter of 2018, the Company invested in a new platform, based in the United States, to develop in-building wireless network technology that enables building owners to capitalize on the growing demand for better indoor wireless solutions.  Also during the second quarter of 2018, the Company provided funding for another new platform, based in the United States, seeking to “build to suit” large scale fiber networks to serve the telecommunications and content provider industries in need of lower latency long haul fiber transit services.  Both of these investments are consolidated in the Company’s results.

 

8. FAIR VALUE MEASUREMENTS

 

In accordance with the provisions of fair value accounting, a fair value measurement assumes that a transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability and defines fair value based upon an exit price model.

The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

 

 

 

Level 1

 

Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 assets and liabilities include money market funds, debt and equity securities and derivative contracts that are traded in an active exchange market.

 

 

 

 

Level 2

 

Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange‑traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes corporate obligations and non‑exchange traded derivative contracts.

 

 

 

 

Level 3

 

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments and intangible assets that have been impaired whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

 

17


 

Assets and liabilities of the Company measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 are summarized as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

 

 

 

 

 

 

    

 

 

    

Significant Other

 

 

 

    

 

 

 

 

Quoted Prices in

 

Observable

 

Unobservable

 

 

 

 

 

Active Markets

 

Inputs

 

Inputs

 

 

 

Description

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Total

Certificates of deposit

 

$

 —

 

$

380

 

$

 —

 

$

380

Money market funds

 

 

2,615

 

 

 —

 

 

 —

 

 

2,615

Short term investments

 

 

5,280

 

 

 —

 

 

 —

 

 

5,280

Other investments

 

 

 —

 

 

 —

 

 

10,000

 

 

10,000

Commercial paper

 

 

 —

 

 

13,975

 

 

 —