# Optimum Communications, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [Optimum Communications, Inc.](/companies/optu.md) (CIK 1702780)
- Form: 10-Q
- Filed: 2023-08-03
- Accepted by EDGAR: Aug 2, 2023, 17:58 ET
- Period: 2023-06-30
- Accession: 0001628280-23-026858
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1702780/000162828023026858/atus-20230630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1702780/000162828023026858/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $2.32bn | us-gaap:Revenues |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $4.62bn | us-gaap:Revenues |
| Cost of revenue | 3 months, 2023-04-01 to 2023-06-30 | $762.3m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-01-01 to 2023-06-30 | $1.53bn | us-gaap:CostOfGoodsAndServicesSold |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $482.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $907.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $48.7m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $79.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $78.3m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $104.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.17 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.23 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.17 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.23 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 454,688,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 455,139,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $855.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $1.06bn | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-06-30 | $219.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-06-30 | $736.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-06-30 | $32.11bn | us-gaap:Assets |
| Current liabilities | at 2023-06-30 | $3.01bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-06-30 | $32.49bn | us-gaap:Liabilities |
| Long-term debt | at 2023-06-30 | $24.00bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-06-30 | $1.11bn | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-06-30 | −$378.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 58,501 characters.

*All dollar amounts, except per customer and per share data, included in the following discussion, are presented in thousands.*

The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses. For a complete discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our consolidated financial statements, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.

### Overview

### Our Business

We principally provide broadband communications and video services in the United States and market our services primarily under the Optimum brand. We deliver broadband, video, telephony, and mobile services to residential and business customers across our footprint. Our footprint extends across 21 states (primarily in the New York metropolitan area and various markets in the south-central United States) through a fiber-rich hybrid-fiber coaxial ("HFC") broadband network and a FTTH network. Additionally, we offer news programming and advertising services.

### Key Factors Impacting Operating Results and Financial Condition

Our future performance is dependent, to a large extent, on the impact of direct competition, general economic conditions (including capital and credit market conditions), our ability to manage our businesses effectively, and our relative strength and leverage in the marketplace, both with suppliers and customers. For more information, see "Risk Factors" and "Business-Competition" included in our Annual Report on Form 10-K for the year ended December 31, 2022 and the cautionary statement regarding forward-looking statements included in this Quarterly Report.

We derive revenue principally through monthly charges to residential customers of our broadband, video, telephony and mobile services. We also derive revenue from digital video recorder, video-on-demand ("VOD"), pay-per-view, installation and home shopping commissions. Our residential broadband, video, telephony and mobile services accounted for approximately 42%, 33%, 3%, and 1% respectively, of our consolidated revenue for the six months ended June 30, 2023. We also derive revenue from the sale of a wide and growing variety of products and services to both large enterprise and small and medium-sized business ("SMB") customers, including broadband, telephony, networking, video, and mobile services. For the six months ended June 30, 2023, 16% of our consolidated revenue was derived from these business services. In addition, we derive revenues from the sale of advertising time available on the programming carried on our cable television systems, digital advertising, branded content, affiliation fees for news programming, and data analytics, which accounted for approximately 5% of our consolidated revenue for the six months ended June 30, 2023. Our other revenue, which includes mobile equipment revenue, for the six months ended June 30, 2023 accounted for less than 1% of our consolidated revenue.

Revenue is impacted by rate increases, changes in the amount of promotional offerings, changes in the number of customers that subscribe to our services, including additional services sold to our existing customers, programming package changes by our video customers, speed tier changes by our broadband customers, and acquisitions and construction of cable systems that result in the addition of new customers. Additionally, the allocation of revenue between the residential offerings is impacted by changes in the standalone selling price of each performance obligation within our promotional bundled offers.

Our ability to increase the number of customers to our services is significantly related to our penetration rates.

We operate in a highly competitive consumer-driven industry and we compete against a variety of broadband, video, mobile, fixed wireless broadband and fixed-line telephony providers and delivery systems, including broadband communications companies, wireless data and telephony providers, fiber-based service providers, satellite delivered video signals, Internet-delivered video content and broadcast television signals available to residential and business customers in our service areas. Our competitors include AT&T, Inc., DirecTV, DISH Network Corporation, Frontier Communications Corporation, Lumen Technologies, Inc., T-Mobile US, Inc., and Verizon Communications Inc. Consumers' selection of an alternate source of service, whether due to economic constraints, technological advances, or preference, negatively impacts the demand for our services. For more information on our competitive landscape, see "Risk Factors" and "Business-Competition" included in our Annual Report on Form 10-K for the year ended December 31, 2022.

Our programming costs, which are the most significant component of our operating expenses, are impacted by increases in contractual rates, changes in the number of customers receiving certain programming services, and new channel launches. We expect contractual rates to increase in the future. See "Results of Operations" below for more information regarding the key factors impacting our revenues and operating expenses.

Historically, we have made substantial investments in our network and the development of new and innovative products and other service offerings for our customers as a way of differentiating ourselves from our competitors and we expect to do so in the future. Our ongoing FTTH network build enables us to deliver multi-gig broadband speeds to FTTH customers in order to meet the growing data needs of residential and business customers. In addition, we have launched a full service mobile offering to consumers across our footprint. We may incur greater than anticipated capital expenditures in connection with these initiatives, fail to realize anticipated benefits, experience delays and business disruptions or encounter other challenges to executing them as planned. See "Liquidity and Capital Resources- Capital Expenditures" for additional information regarding our capital expenditures.

### Non-GAAP Financial Measures

We define Adjusted EBITDA, which is a non-GAAP financial measure, as net income (loss) excluding income taxes, non-operating income or expenses, gain (loss) on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments and sale of affiliate interests, interest expense, net, depreciation and amortization, share-based compensation, restructuring expense and other operating items (such as significant legal settlements, contractual payments for terminated employees, and impairments). See reconciliation of net income to Adjusted EBITDA below.

Adjusted EBITDA eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business and from intangible assets recognized from acquisitions, as well as certain non-cash and other operating items that affect the period-to-period comparability of our operating performance. In addition, Adjusted EBITDA is unaffected by our capital and tax structures and by our investment activities.

We believe Adjusted EBITDA is an appropriate measure for evaluating the operating performance of the Company. Adjusted EBITDA and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in our industry. Internally, we use revenue and Adjusted EBITDA measures as important indicators of our business performance and evaluate management’s effectiveness with specific reference to these indicators. We believe Adjusted EBITDA provides management and investors a useful measure for period-to-period comparisons of our core business and operating results by excluding items that are not comparable across reporting periods or that do not otherwise relate to the Company’s ongoing operating results. Adjusted EBITDA should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with GAAP. Since Adjusted EBITDA is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies.

We also use Operating Free Cash Flow (defined as Adjusted EBITDA less cash capital expenditures), and Free Cash Flow (defined as net cash flows from operating activities less cash capital expenditures) as indicators of the Company’s financial performance. We believe these measures are two of several benchmarks used by investors, analysts and peers for comparison of performance in our industry, although they may not be directly comparable to similar measures reported by other companies.

### Results of Operations - Altice USA (unaudited)

| Revenue: | Three Months Ended June 30, 2023 | 2022 | Favorable (Unfavorable) 2023 | Six Months Ended June 30, 2022 |  | Favorable (Unfavorable) |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Broadband | $965,865 | $1,002,680 | $(36,815) | $1,922,910 | $1,988,197 | $(65,287) |
| Video | 775,138 | 841,549 | (66,411) | 1,545,739 | 1,683,436 | (137,697) |
| Telephony | 76,069 | 84,621 | (8,552) | 153,750 | 169,855 | (16,105) |
| Mobile (a) | 18,147 | 16,863 | 1,284 | 33,673 | 31,805 | 1,868 |
| Residential revenue (a) | 1,835,219 | 1,945,713 | (110,494) | 3,656,072 | 3,873,293 | (217,221) |
| Business services and wholesale (a) | 364,704 | 371,613 | (6,909) | 728,345 | 739,243 | (10,898) |
| News and advertising | 113,465 | 133,250 | (19,785) | 212,202 | 247,925 | (35,723) |
| Other (a) | 10,886 | 12,438 | (1,552) | 21,633 | 24,450 | (2,817) |
| **Total revenue** | 2,324,274 | 2,463,014 | (138,740) | 4,618,252 | 4,884,911 | (266,659) |
| **Operating expenses:** |  |  |  |  |  |  |
| Programming and other direct costs | 762,280 | 819,011 | 56,731 | 1,533,999 | 1,647,804 | 113,805 |
| Other operating expenses | 656,128 | 673,464 | 17,336 | 1,307,373 | 1,315,370 | 7,997 |
| Restructuring expense and other operating items | 5,178 | 2,673 | (2,505) | 34,850 | 6,051 | (28,799) |
| Depreciation and amortization (including impairments) | 418,705 | 446,125 | 27,420 | 834,917 | 881,474 | 46,557 |
| **Operating income** | 481,983 | 521,741 | (39,758) | 907,113 | 1,034,212 | (127,099) |
| Other income (expense): |  |  |  |  |  |  |
| Interest expense, net | (406,709) | (310,213) | (96,496) | (795,987) | (613,575) | (182,412) |
| Gain (loss) on investments, net | — | (325,601) | 325,601 | 192,010 | (476,374) | 668,384 |
| Gain (loss) on derivative contracts, net | — | 219,114 | (219,114) | (166,489) | 320,188 | (486,677) |
| Gain on interest rate swap contracts, net | 61,165 | 39,868 | 21,297 | 46,736 | 163,015 | (116,279) |
| Gain on extinguishment of debt and write-off of deferred financing costs | — | — | — | 4,393 | — | 4,393 |
| Other income (loss), net | (1,570) | 2,521 | (4,091) | 8,635 | 4,951 | 3,684 |
| **Income before income taxes** | 134,869 | 147,430 | (12,561) | 196,411 | 432,417 | (236,006) |
| Income tax expense | (48,725) | (33,890) | (14,835) | (79,097) | (116,736) | 37,639 |
| **Net income** | 86,144 | 113,540 | (27,396) | 117,314 | 315,681 | (198,367) |
| Net income attributable to noncontrolling interests | (7,844) | (7,366) | (478) | (13,149) | (12,956) | (193) |
| **Net income attributable to Altice USA, Inc. stockholders** | $78,300 | $106,174 | $(27,874) | $104,165 | $302,725 | $(198,560) |

(a) Beginning in the second quarter of 2023, mobile service revenue previously included in mobile revenue is now separately reported in residential revenue and business services revenue. In addition, mobile equipment revenue previously included in mobile revenue is now included in other revenue. Prior period amounts have been revised to conform with this presentation.

The following is a reconciliation of net income to Adjusted EBITDA and Operating Free Cash Flow (unaudited):

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $86,144 | $113,540 | $117,314 | $315,681 |
| Income tax expense | 48,725 | 33,890 | 79,097 | 116,736 |
| Other loss (income), net | 1,570 | (2,521) | (8,635) | (4,951) |
| Gain on interest rate swap contracts, net | (61,165) | (39,868) | (46,736) | (163,015) |
| Loss (gain) on derivative contracts, net | — | (219,114) | 166,489 | (320,188) |
| Loss (gain) on investments, net | — | 325,601 | (192,010) | 476,374 |
| Gain on extinguishment of debt and write-off of deferred financing costs | — | — | (4,393) | — |
| Interest expense, net | 406,709 | 310,213 | 795,987 | 613,575 |
| Depreciation and amortization | 418,705 | 446,125 | 834,917 | 881,474 |
| Restructuring expense and other operating items | 5,178 | 2,673 | 34,850 | 6,051 |
| Share-based compensation | 15,876 | 36,529 | 13,253 | 77,061 |
| **Adjusted EBITDA** | **921,742** | **1,007,068** | **1,790,133** | **1,998,798** |
| Capital expenditures (cash) | 473,445 | 485,126 | 1,056,342 | 877,497 |
| **Operating Free Cash Flow** | **$448,297** | **$521,942** | **$733,791** | **$1,121,301** |

The following is a reconciliation of net cash flow from operating activities to Free Cash Flow (Deficit) (unaudited):

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| **Net cash flows from operating activities** | **$438,841** | **$676,335** | **$855,687** | **$1,276,554** |
| Less: Capital expenditures (cash) | 473,445 | 485,126 | 1,056,342 | 877,497 |
| **Free Cash Flow (Deficit)** | **$(34,604)** | **$191,209** | **$(200,655)** | **$399,057** |

32

The following table sets forth certain customer metrics for the Company (unaudited):

*(in thousands)*

|  | June 30, 2023 | March 31, 2023 | June 30, 2022 |
| --- | ---: | ---: | ---: |
| **Total passings (a)** | **9,578.6** | **9,512.2** | **9,363.1** |
| **Total customer relationships (b)** | **4,810.5** | **4,853.3** | **4,947.3** |
| Residential | 4,429.5 | 4,472.4 | 4,564.2 |
| SMB | 381.0 | 380.9 | 383.1 |
| **Residential customers:** |  |  |  |
| Broadband | 4,227.0 | 4,263.7 | 4,333.6 |
| Video | 2,312.2 | 2,380.5 | 2,574.2 |
| Telephony | 1,640.8 | 1,703.5 | 1,886.9 |
| **Penetration of total passings (c)** | **50.2%** | **51.0%** | **52.8%** |
| **Average revenue per user ("ARPU") (d)** | **$137.44** | **$135.32** | **$141.36** |
| **Total mobile lines (e)** | **264.2** | **247.9** | **231.3** |
| **FTTH total passings (f)** | **2,659.5** | **2,373.0** | **1,587.1** |
| **FTTH customer relationships (g)** | **249.7** | **209.9** | **104.4** |
| FTTH Residential | 245.9 | 207.2 | 103.7 |
| FTTH SMB | 3.9 | 2.7 | 0.7 |
| **Penetration of FTTH total passings (h)** | **9.4%** | **8.8%** | **6.6%** |

(a) Represents the estimated number of single residence homes, apartments and condominium units passed by our HFC and FTTH network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our HFC and FTTH network. Broadband services were not available to approximately 30 thousand passings and telephony services were not available to approximately 500 thousand passings.

(b) Represents number of households/businesses that receive at least one of the Company's fixed-line services. Customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets on our HFC and FTTH network. Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group. Most of these accounts are also not entirely free, as they typically generate revenue through pay-per-view or other pay services and certain equipment fees. Free status is not granted to regular customers as a promotion. In counting bulk residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master account for the entire building as a customer. We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.

(c) Represents the number of total customer relationships divided by total passings.

(d) Calculated by dividing the average monthly revenue for the respective quarter (fourth quarter for annual periods) derived from the sale of broadband, video, telephony and mobile services to residential customers by the average number of total residential customers for the same period and excludes mobile-only customer relationships. ARPU amounts for prior periods have been adjusted to include mobile service revenue.

(e) Includes approximately 200, 23,000 and 35,800 customers receiving free service as of June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

(f) Represents the estimated number of single residence homes, apartments and condominium units passed by the FTTH network in areas serviceable without further extending the transmission lines. In addition, it includes commercial establishments that have connected to our FTTH network.

(g) Represents number of households/businesses that receive at least one of the Company's fixed-line services on our FTTH network. FTTH customers represent each customer account (set up and segregated by customer name and address), weighted equally and counted as one customer, regardless of size, revenue generated, or number of boxes, units, or outlets on our FTTH network. Free accounts are included in the customer counts along with all active accounts, but they are limited to a prescribed group. Most of these accounts are also not entirely free, as they typically generate revenue through pay-per view or other pay services and certain equipment fees. Free status is not granted to regular customers as a promotion. In counting bulk residential customers, such as an apartment building, we count each subscribing family unit within the building as one customer, but do not count the master account for the entire building as a customer. We count a bulk commercial customer, such as a hotel, as one customer, and do not count individual room units at that hotel.

(h) Represents the number of total FTTH customer relationships divided by FTTH total passings.

### Comparison of Results for the Three Months Ended June 30, 2023 compared to the Three Months Ended June 30, 2022

### Broadband Revenue

Broadband revenue for the three and six months ended June 30, 2023 was $965,865 and $1,922,910, respectively, and $1,002,680 and $1,988,197, for the three and six months ended June 30, 2022, respectively. Broadband revenue is derived principally through monthly charges to residential subscribers of our broadband services. Revenue is impacted by rate increases, changes in the amount of promotional offerings, changes in the number of customers, and changes in speed tiers. Additionally, the allocation of revenue between the residential offerings is impacted by changes in the standalone selling price of each performance obligation within our promotional bundled offers.

Broadband revenue decreased $36,815 (4%) and $65,287 (3%) for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The decreases were due to a decline in broadband customers, and lower average recurring broadband revenue per broadband customer.

### Video Revenue

Video revenue for the three and six months ended June 30, 2023 was $775,138 and $1,545,739, respectively, and $841,549 and $1,683,436, for the three and six months ended June 30, 2022, respectively. Video revenue is derived principally through monthly charges to residential customers of our video services. Revenue is impacted by rate increases, changes in the amount of promotional offerings, changes in the number of customers, additional services sold to our existing customers, and changes in programming packages. Additionally, the allocation of revenue between the residential offerings is impacted by changes in the standalone selling price of each performance obligation within our promotional bundled offers.

Video revenue decreased $66,411 (8%) and $137,697 (8%) for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The decreases were due to a decline in video customers, partially offset by higher average recurring video revenue per video customer, primarily driven by certain rate increases.

### Telephony Revenue

Telephony revenue for the three and six months ended June 30, 2023 was $76,069 and $153,750, respectively, and $84,621 and $169,855, for the three and six months ended June 30, 2022, respectively. Telephony revenue is derived principally through monthly charges to residential customers of our telephony services. Revenue is impacted by changes in rates for services, changes in the amount of promotional offerings, changes in the number of customers, and additional services sold to our existing customers. Additionally, the allocation of revenue between the residential offerings is impacted by changes in the standalone selling price of each performance obligation within our promotional bundled offers.

Telephony revenue decreased $8,552 (10%) and $16,105 (9%) for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The decreases were primarily due to a decline in telephony customers.

### Mobile Service Revenue

Mobile service revenue for the three and six months ended June 30, 2023 was $18,147 and $33,673, respectively, and $16,863 and $31,805 for the three and six months ended June 30, 2022, respectively. Mobile revenue increased $1,284 (8%) and $1,868 (6%) for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The increase was due primarily to an increase in mobile customers, partially offset by an increase in promotional offerings.

### Business Services and Wholesale Revenue

Business services and wholesale revenue for the three and six months ended June 30, 2023 was $364,704 and $728,345, respectively, and $371,613 and $739,243 for the three and six months ended June 30, 2022, respectively. Business services and wholesale revenue is derived primarily from the sale of fiber-based telecommunications services to the business market, and the sale of broadband, video, telephony, and mobile services to small and SMB customers.

Business services and wholesale revenue decreased $6,909 (2%) and $10,898 (1%) for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The decreases were due to lower

SMB broadband revenue, lower backhaul revenue attributable to wholesale customers and lower contract termination fee revenue.

### News and Advertising Revenue

News and advertising revenue for the three and six months ended June 30, 2023 was $113,465 and $212,202, respectively, and $133,250 and $247,925 for the three and six months ended June 30, 2022, respectively. News and advertising revenue is primarily derived from the sale of (i) advertising inventory available on the programming carried on our cable television systems, as well as other systems (linear revenue), (ii) digital advertising, (iii) data analytics, and (iv) branded content. News and advertising revenue also includes affiliation fees for news programming.

News and advertising revenue decreased $19,785 (15%) and $35,723 (14%) for the three and six months ended June 30, 2023, compared to the three and six months ended June 30, 2022 primarily due to a decrease in linear advertising.

### Other Revenue

Other revenue for the three and six months ended June 30, 2023 was $10,886 and $21,633, respectively, and $12,438 and $24,450, for the three and six months ended June 30, 2022, respectively. Other revenue includes revenue from sales of mobile equipment and other miscellaneous revenue streams.

### Programming and Other Direct Costs

Programming and other direct costs for the three and six months ended June 30, 2023 amounted to $762,280 and $1,533,999, respectively, and $819,011 and $1,647,804, for the three and six months ended June 30, 2022, respectively. Programming and other direct costs include cable programming costs, which are costs paid to programmers (net of amortization of any incentives received from programmers for carriage) for cable content (including costs of VOD and pay-per-view) and are generally paid on a per-customer basis. These costs are impacted by increases in contractual rates, changes in the number of customers receiving certain programming services, and new channel launches. These costs also include interconnection, call completion, circuit and transport fees paid to other telecommunication companies for the transport and termination of voice and data services, which typically vary based on rate changes and the level of usage by our customers. These costs also include franchise fees which are payable to the state governments and local municipalities where we operate and are primarily based on a percentage of certain categories of revenue derived from the provision of video service over our cable systems, which vary by state and municipality. These costs change in relation to changes in such categories of revenues or rate changes. Additionally, these costs include the costs of mobile devices sold to our customers and direct costs of providing mobile services.

The decreases of $56,731 (7%) and $113,805 (7%) for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 were primarily attributable to the following:

|  | Three Months | Six Months |
| --- | ---: | ---: |
| Decrease in programming costs primarily due to lower video customers, partially offset by net contractual rate increases | $(49,748) | $(93,527) |
| Decrease in taxes and surcharges, primarily due to refunds | (10,655) | (16,361) |
| Decrease in software license fees related to customer premise equipment | (1,779) | (9,482) |
| Other net increases | 5,451 | 5,565 |
|  | $(56,731) | $(113,805) |

#### Programming costs

Programming costs aggregated $622,736 and $1,263,103, respectively, for the three and six months ended June 30, 2023, and $672,484 and $1,356,630 for the three and six months ended June 30, 2022, respectively. Our programming costs in 2023 will continue to be impacted by changes in programming rates, which we expect to increase, and by changes in the number of video customers.

### Other Operating Expenses

Other operating expenses for the three and six months ended June 30, 2023 amounted to $656,128 and $1,307,373, respectively, and for the three and six months ended June 30, 2022 amounted to $673,464 and $1,315,370, respectively. Other operating expenses include staff costs and employee benefits including salaries of company employees and related taxes, benefits and other employee related expenses, as well as third-party labor costs. Other operating expenses also include network management and field service costs, which represent costs associated with the maintenance of our broadband network, including costs of certain customer connections and other costs associated with providing and maintaining services to our customers.

Customer installation and network repair and maintenance costs may fluctuate as a result of changes in the level of activities and the utilization of contractors as compared to employees. Also, customer installation costs fluctuate as the portion of our expenses that we are able to capitalize changes. Costs associated with the initial deployment of new customer premise equipment necessary to provide broadband, video and telephony services are capitalized (asset-based). The redeployment of customer premise equipment is expensed as incurred.

Other operating expenses also include costs related to our call center operations that handle customer inquiries and billing and collection activities, and sales and marketing costs, which include advertising production and placement costs associated with acquiring and retaining customers. These costs vary period to period and certain of these costs, such as sales and marketing, may increase with intense competition. Additionally, other operating expenses include various other administrative costs.

The decreases in other operating expenses of $17,336 (3%) and $7,997 (1%) for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 were attributable to the following:

|  | Three Months | Six Months |
| --- | ---: | ---: |
| Net increase in labor costs and benefits, partially offset by an increase in capitalizable activity | $13,270 | $49,277 |
| Increase in repairs and maintenance costs, net of capitalizable activity | 3,170 | 8,551 |
| Increase in bad debt | 1,586 | 7,107 |
| Increase in utility costs | 1,191 | 6,979 |
| Decrease in share-based compensation including credits resulting from the modification of awards to certain former executive officers primarily in the three months ended March 31, 2023 | (20,653) | (63,808) |
| Decrease in marketing costs due to costs incurred in 2022 from the rebranding of our services from Suddenlink to Optimum | (15,688) | (20,122) |
| Other net increases (decreases), net of capitalizable activity | (212) | 4,019 |
|  | $(17,336) | $(7,997) |

### Restructuring Expense and Other Operating Items

Restructuring expense and other operating items for the three and six months ended June 30, 2023 amounted to $5,178 and $34,850, respectively, as compared to $2,673 and $6,051 for the three and six months ended June 30, 2022, respectively, and comprised the following:

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Contractual payments for terminated employees | $1,213 | $394 | $29,232 | $1,867 |
| Facility realignment costs | 1,329 | 897 | 1,711 | 2,282 |
| Impairment of right-of-use operating lease assets | 9,118 | 127 | 9,123 | 201 |
| Remeasurement of contingent consideration related to acquisition | (6,511) | — | (6,310) | — |
| Transaction costs related to certain transactions not related to the Company's operations | 29 | 1,255 | 1,094 | 1,701 |
|  | $5,178 | $2,673 | $34,850 | $6,051 |

### Depreciation and Amortization

Depreciation and amortization for the three and six months ended June 30, 2023 amounted to $418,705 and $834,917, respectively, as compared to $446,125 and $881,474 for the three and six months ended June 30, 2022, respectively.

The decreases in depreciation and amortization of $27,420 and $46,557 for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 was due to lower amortization expense resulting from certain assets becoming fully amortized, partially offset by higher depreciation expense resulting from increased asset additions in 2023.

### Adjusted EBITDA

Adjusted EBITDA amounted to $921,742 and $1,790,133, respectively, for the three and six months ended June 30, 2023 as compared to $1,007,068 and $1,998,798 for the three and six months ended June 30, 2022, respectively.

Adjusted EBITDA is a non-GAAP measure that is defined as net income (loss) excluding income taxes, non-operating income or expenses, loss on extinguishment of debt and write-off of deferred financing costs, gain (loss) on interest rate swap contracts, gain (loss) on derivative contracts, gain (loss) on investments and sale of affiliate interests, interest expense, net, depreciation and amortization (including impairments), share-based compensation, restructuring expense and other operating items (such as significant legal settlements, contractual payments for terminated employees, and impairments). See reconciliation of net income (loss) to adjusted EBITDA above.

The decreases in Adjusted EBITDA of $85,326 and $208,665 for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022, respectively, were due to the decreases in revenue, partially offset by decreases in operating expenses during 2023 (excluding depreciation and amortization, restructuring and other operating items and share-based compensation), as discussed above.

### Operating Free Cash Flow

Operating free cash flow was $448,297 and $733,791, respectively. for the three and six months ended June 30, 2023 as compared to $521,942 and $1,121,301 for the three and six months ended June 30, 2022, respectively. The decrease in operating free cash flow of $73,645 for the three months ended June 30, 2023 as compared to the same period in 2022 was due to a decrease in Adjusted EBITDA, partially offset by a decrease in capital expenditures. The decrease in operating free cash flow of $387,510 for the six months ended June 30, 2023 as compared to the same period in 2022 was due to a decrease in Adjusted EBITDA and an increase in capital expenditures.

### Free Cash Flow (Deficit)

Free cash flow (deficit) was $(34,604) and $(200,655), respectively, for the three and six months ended June 30, 2023 as compared to $191,209 and $399,057 for the three and six months ended June 30, 2022, respectively. The decrease in free cash flow of $225,813 in the three month period was due to a decrease in net cash provided by operating activities, partially offset by a decrease in capital expenditures. The decrease in free cash flow of $599,712 in the six month period was due to a decrease in net cash provided by operating activities and an increase in capital expenditures.

### Interest Expense, net

Interest expense, net was $406,709 and $795,987, respectively, for the three and six months ended June 30, 2023, as compared to $310,213 and $613,575, respectively, for the same periods in the prior year. The increases of $96,496 and $182,412 for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 were attributable to the following:

|  | Three Months | Six Months |
| --- | ---: | ---: |
| Increase primarily due to an increase in interest rates, partially offset by a decrease in average debt balances | $110,688 | $213,615 |
| Lower (higher) capitalized interest related to FTTH network construction | 651 | (4,617) |
| Higher interest income | (1,676) | (3,796) |
| Other net decreases, primarily lower amortization of deferred financing costs and original issue discounts | (13,167) | (22,790) |
|  | $96,496 | $182,412 |

### Gain (Loss) on Investments

Gain (loss) on investments was $192,010 for the six months ended June 30, 2023 compared to $(325,601) and $(476,374) for the three and six months ended June 30, 2022, respectively, and consisted primarily of the increase (decrease) in the fair value of the Comcast common stock owned by the Company through January 24, 2023. The effects of these gains (losses) were partially offset by the losses (gains) on the related equity derivative contracts, net described below.

### Gain (Loss) on Derivative Contracts, net

Gain (loss) on derivative contracts, net for the six months ended June 30, 2023 amounted to $(166,489) compared to $219,114 and $320,188 for the three and six months ended June 30, 2022, respectively, and included realized and unrealized gains or losses due to the change in fair value of equity derivative contracts relating to the Comcast common stock owned by the Company through January 24, 2023. The effects of these gains (losses) are partially offset by losses (gains) on investment securities pledged as collateral, which are included in gain (loss) on investments discussed above.

### Gain on Interest Rate Swap Contracts, net

Gain on interest rate swap contracts, net was $61,165 and $46,736, respectively, for the three and six months ended June 30, 2023 compared to $39,868 and $163,015 for the three and six months ended June 30, 2022, respectively. These amounts represent the change in the fair value of the interest rate swap contracts. These swap contracts are not designated as hedges for accounting purposes.

### Other Income (Loss), net

Other income (loss), net amounted to $(1,570) and $8,635, respectively, for the three and six months ended June 30, 2023 compared to $2,521 and $4,951 for the three and six months ended June 30, 2022, respectively. These amounts include the non-service benefit or cost components of the Company's pension plans and dividends received on Comcast common stock owned by the Company through January 24, 2023.

### Income Tax Expense

For the three and six months ended June 30, 2023, Altice USA recorded a tax expense of $48,725 and $79,097 on pre-tax income of $134,869 and $196,411, respectively, resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The higher tax rate was primarily due to the impact of certain non-deductible expenses, state tax expense, and tax deficiencies on share-based compensation.

For the three and six months ended June 30, 2022, Altice USA recorded a tax expense of $33,890 and $116,736 on pre-tax income of $147,430 and $432,417, respectively, resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The higher tax rate was due to the impact of certain non-deductible expenses and state tax expense.

### CSC HOLDINGS, LLC

The following is a reconciliation of CSC Holdings' net income to Adjusted EBITDA and Operating Free Cash Flow:

|  | CSC Holdings Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $86,144 | $113,540 | $117,314 | $315,681 |
| Income tax expense | 48,725 | 33,890 | 79,097 | 116,736 |
| Other income, net | 1,570 | (2,521) | (8,635) | (4,951) |
| Gain on interest rate swap contracts, net | (61,165) | (39,868) | (46,736) | (163,015) |
| Loss (gain) on derivative contracts, net | — | (219,114) | 166,489 | (320,188) |
| Loss (gain) on investments, net | — | 325,601 | (192,010) | 476,374 |
| Loss on extinguishment of debt and write-off of deferred financing costs | — | — | (4,393) | — |
| Interest expense, net | 406,709 | 310,213 | 795,987 | 613,575 |
| Depreciation and amortization | 418,705 | 446,125 | 834,917 | 881,474 |
| Restructuring expense and other operating items | 5,178 | 2,673 | 34,850 | 6,051 |
| Share-based compensation | 15,876 | 36,529 | 13,253 | 77,061 |
| **Adjusted EBITDA** | **921,742** | **1,007,068** | **1,790,133** | **1,998,798** |
| Capital expenditures (cash) | 473,445 | 485,126 | 1,056,342 | 877,497 |
| **Operating Free Cash Flow** | **$448,297** | **$521,942** | **$733,791** | **$1,121,301** |

Refer to Altice USA's Management's Discussion and Analysis of Financial Condition and Results of Operations above.

The following is a reconciliation of CSC Holdings' net cash flow from operating activities to Free Cash Flow (Deficit):

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| **Net cash flows from operating activities** | **$438,841** | **$675,576** | **$855,687** | **$1,276,554** |
| Less: Capital expenditures (cash) | 473,445 | 485,126 | 1,056,342 | 877,497 |
| **Free Cash Flow (Deficit)** | **$(34,604)** | **$190,450** | **$(200,655)** | **$399,057** |

### LIQUIDITY AND CAPITAL RESOURCES

Altice USA has no operations independent of its subsidiaries. Funding for our subsidiaries has generally been provided by cash flow from their respective operations, cash on hand and borrowings under the CSC Holdings revolving credit facility and the proceeds from the issuance of securities and borrowings under syndicated term loans in the capital markets. Our decision as to the use of cash generated from operating activities, cash on hand, borrowings under the revolving credit facility or accessing the capital markets has been based upon an ongoing review of the funding needs of the business, the optimal allocation of cash resources, the timing of cash flow generation and the cost of borrowing under the revolving credit facility, debt securities and syndicated term loans.

We expect to utilize free cash flow and availability under the CSC Holdings revolving credit facility, as well as future refinancing transactions, to further extend the maturities of, or reduce the principal on, our debt obligations. The timing and terms of any refinancing transactions will be subject to, among other factors, market conditions. Additionally, we may, from time to time, depending on market conditions and other factors, use cash on hand and the proceeds from other borrowings to repay the outstanding debt securities through open market purchases, privately negotiated purchases, tender offers, or redemptions.

We believe existing cash balances, operating cash flows and availability under the CSC Holdings revolving credit facility will provide adequate funds to support our current operating plan, make planned capital expenditures and fulfill our debt service requirements for the next twelve months. However, our ability to fund our operations, make planned capital expenditures, make scheduled payments on our indebtedness and repay our indebtedness depends on our future operating performance and cash flows and our ability to access the capital markets, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. Competition, market disruptions or a deterioration in economic conditions could lead to lower demand for our products, as well as lower levels of advertising, and increased incidence of customers' inability to pay for the services we provide. These events would adversely impact our results of operations, cash flows and financial position. Although we currently believe amounts available under the CSC Holdings revolving credit facility will be available when, and if, needed, we can provide no assurance that access to such funds will not be impacted by adverse conditions in the financial markets or other conditions. The obligations of the financial institutions under the revolving credit facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.

In the longer term, we may not be able to generate sufficient cash from operations to fund anticipated capital expenditures, meet all existing future contractual payment obligations and repay our debt at maturity. As a result, we could be dependent upon our continued access to the capital and credit markets to issue additional debt or equity or refinance existing debt obligations. We intend to raise significant amounts of funding over the next several years to fund capital expenditures, repay existing obligations and meet other obligations, and the failure to do so successfully could adversely affect our business. If we are unable to do so, we will need to take other actions including deferring capital expenditures, selling assets, seeking strategic investments from third parties or reducing or eliminating stock repurchases and discretionary uses of cash.

### Debt Outstanding

The following tables summarize the carrying value of our outstanding debt, net of unamortized deferred financing costs, discounts and premiums (excluding accrued interest) as of June 30, 2023, as well as interest expense for the six months ended June 30, 2023:

| Debt outstanding: | CSC Holdings Restricted Group | Lightpath | Other Unrestricted Entities | Altice USA/CSC Holdings |
| --- | ---: | ---: | ---: | ---: |
| Credit facility debt | $7,714,231 | $573,671 | $— | $8,287,902 |
| Senior guaranteed notes | 8,633,454 | — | — | 8,633,454 |
| Senior secured notes | — | 443,715 | — | 443,715 |
| Senior notes | 6,920,582 | 408,601 | — | 7,329,183 |
| Subtotal | 23,268,267 | 1,425,987 | — | 24,694,254 |
| Finance lease obligations | 252,147 | — | — | 252,147 |
| Notes payable and supply chain financing | 168,696 | — | — | 168,696 |
| Total debt | $23,689,110 | $1,425,987 | $— | $25,115,097 |
| **Interest expense:** |  |  |  |  |
| Credit facility debt, senior notes, finance leases, notes payable and supply chain financing | $746,360 | $46,635 | $— | $792,995 |
| Collateralized indebtedness relating to stock monetizations (a) | — | — | 7,227 | 7,227 |
| Total interest expense | $746,360 | $46,635 | $7,227 | $800,222 |

(a) This indebtedness was collateralized by shares of Comcast common stock. In January 2023, we settled this debt by delivering the Comcast shares we held and the related equity derivative contracts, resulting in the receipt of cash of approximately $50,500 (including dividends of $11,598).

### Payment Obligations Related to Debt

As of June 30, 2023, total amounts payable by us in connection with our outstanding obligations, including related interest, as well as notes payable and supply chain financing, but excluding finance lease obligations are as follows:

|  | CSC Holdings Restricted Group | Lightpath | Altice USA/ CSC Holdings |
| --- | ---: | ---: | ---: |
| 2023 | $831,906 | $42,357 | $874,263 |
| 2024 | 2,314,250 | 84,294 | 2,398,544 |
| 2025 (a) | 3,737,290 | 83,745 | 3,821,035 |
| 2026 | 1,765,973 | 79,065 | 1,845,038 |
| 2027 | 5,202,191 | 1,108,904 | 6,311,095 |
| Thereafter (b) | 16,989,252 | 438,344 | 17,427,596 |
| Total | $30,840,862 | $1,836,709 | $32,677,571 |

(a) Includes $825,000 principal amount and related interest related to the CSC Holdings' revolving credit facility that is due on the earlier of (i) July 13, 2027 and (ii) April 17, 2025 if, as of such date, any Term Loan B borrowings are still outstanding, unless the Term Loan B maturity date has been extended to a date falling after July 13, 2027.

(b) Includes $1,996,937 principal amount related to the CSC Holdings' Incremental Term Loan B-6 that is due on the earlier of (i) January 15, 2028 and (ii) April 15, 2027 if, as of such date, any Incremental Term Loan B-5 borrowings are still outstanding, unless the Incremental Term Loan B-5 maturity date has been extended to a date falling after January 15, 2028.

### CSC Holdings Restricted Group

For financing purposes, the Company is structured as a restricted group (the "Restricted Group") and an unrestricted group, which includes certain designated subsidiaries and investments. The CSC Holdings Restricted Group is comprised of CSC Holdings and substantially all of its wholly-owned operating subsidiaries, excluding Lightpath which became an unrestricted subsidiary in September 2020. These subsidiaries are subject to the covenants and restrictions of the credit facility and indentures governing the notes issued by CSC Holdings.

Sources of cash for the Restricted Group include primarily cash flow from the operations of the businesses in the Restricted Group, borrowings under its credit facility and issuance of securities in the capital markets, contributions from its parent, and, from time to time, distributions or loans from its subsidiaries. The Restricted Group's principal uses of cash include: capital spending, in particular, the capital requirements associated with the upgrade of its digital broadband, video and telephony services, including costs to build our FTTH network; debt service; distributions made to its parent to fund share repurchases; other corporate expenses and changes in working capital; and investments that it may fund from time to time.

### CSC Holdings Credit Facility

In October 2015, a wholly-owned subsidiary of Altice USA, which merged with and into CSC Holdings on June 21, 2016, entered into a senior secured credit facility, which currently provides U.S. dollar term loans currently in an aggregate principal amount of $3,000,000 ($1,528,162 outstanding at June 30, 2023) (the "CSC Term Loan Facility"), and U.S. dollar revolving loan commitments in an aggregate principal amount of $2,475,000 ($825,000 outstanding at June 30, 2023) (the "CSC Revolving Credit Facility" and, together with the CSC Term Loan Facility, the "CSC Credit Facilities"), which are governed by a credit facilities agreement entered into by, inter alios, CSC Holdings, certain lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent and security agent (as amended, restated, supplemented or otherwise modified from time to time, the "CSC Credit Facilities Agreement").

In October 2018, CSC Holdings entered into a $1,275,000 ($524,379 outstanding at June 30, 2023) incremental term loan facility (the “Incremental Term Loan B-3”), in October 2019, CSC Holdings entered into a $3,000,000 ($2,902,500 outstanding at June 30, 2023) incremental term loan facility ("Incremental Term Loan B-5") and in December 2022, CSC Holdings entered into a $2,001,942 ($1,996,937 outstanding at June 30, 2023) incremental term loan facility (the "Incremental Term Loan B-6") under its existing credit facilities agreement.

### Senior Guaranteed Notes

In April 2023, CSC Holdings issued $1,000,000 in aggregate principal amount of senior guaranteed notes that bear interest at a rate of 11.250% and mature on May 15, 2028 (the "2028 Senior Guaranteed Notes"). The Company used the proceeds to repay outstanding borrowings drawn under the CSC Revolving Credit Facility. See Note 8 to our consolidated financial statements for further information regarding the 2028 Senior Guaranteed Notes.

### Lightpath Credit Facility

In November 2020, Lightpath entered into a credit agreement which provides a term loan in an aggregate principal amount of $600,000 ($585,000 outstanding at June 30, 2023) and revolving loan commitments in an aggregate principal amount of $100,000. As of June 30, 2023, there were no borrowings outstanding under the Lightpath revolving credit facility.

In June 2023, Lightpath entered into an amendment (the "First Amendment") under its existing credit facility agreement to replace LIBOR-based benchmark rates with SOFR-based benchmark rates. The First Amendment provides for interest on borrowings under its term loan and revolving credit facility to be calculated for any (i) SOFR loan, at a rate per annum equal to the Term SOFR (plus spread adjustments of 0.11448%,0.26161% and 0.42826% for interest periods of one, three and six months, respectively) or (ii) the alternate base rate loan, at the alternative base rate as applicable, plus the applicable margin in each case, where the applicable margin is 2.25% per annum with respect to any alternate base rate loan and 3.25% per annum with respect to any SOFR loan.

See Note 8 to our consolidated financial statements for further information on the above debt obligations.

### Capital Expenditures

The following table presents the Company's capital expenditures:

|  | Three Months Ended June 30, 2023 | 2022 | Six Months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Customer premise equipment | $60,849 | $80,266 | $146,910 | $161,850 |
| Network infrastructure | 239,457 | 313,066 | 586,313 | 546,889 |
| Support and other | 92,133 | 52,504 | 169,106 | 98,164 |
| Business Services | 81,006 | 39,290 | 154,013 | 70,594 |
| Capital expenditures (cash basis) | 473,445 | 485,126 | 1,056,342 | 877,497 |
| Right-of-use assets acquired in exchange for finance lease obligations | 48,477 | 47,483 | 83,652 | 94,771 |
| Notes payable issued to vendor for the purchase of equipment and other assets | 26,795 | 16,431 | 97,235 | 51,501 |
| Change in accrued and unpaid purchases and other | (61,310) | 17,498 | (149,616) | 5,633 |
| Capital expenditures (accrual basis) | $487,407 | $566,538 | $1,087,613 | $1,029,402 |

Customer premise equipment includes expenditures for drop cable, fiber gateways, modems, routers, and other equipment installed at customer locations. Network infrastructure includes (i) scalable infrastructure, such as headend and related equipment, (ii) line extensions, such as fiber and coaxial cable, amplifiers, electronic equipment, and design and engineering costs to expand the network, and (iii) upgrade and rebuild, including costs to modify or replace existing segments of the network. Support and other capital expenditures include costs associated with the replacement or enhancement of non-network assets, such as software systems, vehicles, facilities, and office equipment. Business services capital expenditures include primarily equipment, support and other costs related to our fiber-based telecommunications business serving enterprise customers.

### Cash Flow Discussion

### Altice USA

#### Operating Activities

Net cash provided by operating activities amounted to $855,687 for the six months ended June 30, 2023 compared to $1,276,554 for the six months ended June 30, 2022.

The decrease in cash provided by operating activities of $420,867 in 2023 as compared to 2022 resulted from a decrease in net income before depreciation and amortization and other non-cash items of $555,903, partially offset by an increase of $135,036 due to changes in working capital (including an increase in interest payments of $181,314 and a decrease in tax payments of $53,128) as well as the timing of payments of liabilities, and collections of accounts receivable, among other items.

#### Investing Activities

Net cash used in investing activities for the six months ended June 30, 2023 was $1,057,920 compared to $878,107 for the six months ended June 30, 2022. The 2023 investing activities consisted primarily of capital expenditures of $1,056,342. The 2022 investing activities consisted primarily of capital expenditures of $877,497.

#### Financing Activities

Net cash provided by (used in) financing activities amounted to $115,335 for the six months ended June 30, 2023, compared to $(361,082) for the six months ended June 30, 2022.

In 2023, the Company's financing activities consisted primarily of proceeds from long-term debt of $1,900,000 and net proceeds in connection with the settlement of collateralized indebtedness and derivative contracts of $38,902, partially offset by the repayment of debt of $1,739,493 and principal payments on finance lease obligations of $76,100.

In 2022, the Company's financing activities consisted of the repayment of debt of $758,861 and principal payments on finance lease obligations of $62,221, partially offset by proceeds from long-term debt of $460,000.

### CSC Holdings

#### Operating Activities

Net cash provided by operating activities amounted to $855,687 for the six months ended June 30, 2023 compared to $1,276,554 for the six months ended June 30, 2022.

The decrease in cash provided by operating activities of $420,867 in 2023 as compared to 2022 resulted from a decrease in net income before depreciation and amortization and other non-cash items of $555,903, partially offset by an increase of $135,036 due to changes in working capital (including an increase in interest payments of $181,314 and a decrease in tax payments of $53,128) as well as the timing of payments and collections of accounts receivable, among other items.

#### Investing Activities

Net cash used in investing activities for the six months ended June 30, 2023 was $1,057,920 compared to $878,107 for the six months ended June 30, 2022. The 2023 investing activities consisted primarily of capital expenditures of $1,056,342. The 2022 investing activities consisted primarily of capital expenditures of $877,497.

#### Financing Activities

Net cash provided by (used in) financing activities amounted to $115,335 for the six months ended June 30, 2023, compared to $(361,082) for the six months ended June 30, 2022.

In 2023, the Company's financing activities consisted primarily of proceeds from long-term debt of 1,900,000, and net proceeds in connection with the settlement of collateralized indebtedness and derivative contracts of $38,902, partially offset by the repayment of debt of $1,739,493 and principal payments on finance lease obligations of $76,100.

In 2022, the Company's financing activities consisted of the repayment of debt of $758,861 and principal payments on finance lease obligations of $62,221, partially offset by proceeds from long term debt of $460,000.

### Commitments and Contingencies

As of June 30, 2023, the Company's commitments and contingencies not reflected in the Company's balance sheet decreased to approximately $6,700,000 as compared to approximately $8,100,000 as of December 31, 2022. This decrease relates primarily to payments made in 2023 pursuant to programming commitments and a reduction in programming commitments due to a decrease in the number of video customers as of June 30, 2023 as compared to December 31, 2022.

### Share Repurchase Program

In June 2018, the Board of Directors of Altice USA authorized a share repurchase program of $2,000,000, and on July 30, 2019, the Board of Directors authorized a new incremental three-year share repurchase program of $5,000,000 that took effect following the completion in August 2019 of the $2,000,000 repurchase program. In November 2020, the Board of Directors authorized an additional $2,000,000 of share repurchases bringing the total amount of cumulative share repurchases authorized to $9,000,000. Under these repurchase programs, shares of Altice USA Class A common stock may be purchased from time to time in the open market and may include trading plans entered into with one or more brokerage firms in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934. Size and timing of these purchases will be determined based on market conditions and other factors.

For the six months ended June 30, 2023, Altice USA did not repurchase any shares. From inception through June 30, 2023, Altice USA repurchased an aggregate of 285,507,773 shares for a total purchase price of approximately $7,808,698. These acquired shares were retired and the cost of these shares was recorded in stockholders' deficiency in the consolidated balance sheet of Altice USA. As of June 30, 2023, Altice USA had approximately $1,191,302 of availability remaining under the incremental share repurchase program which expires in November 2023.

## Market risk

As filed, 2,670 characters.

*All dollar amounts, except per share data, included in the following discussion are presented in thousands.*

### Fair Value of Debt

At June 30, 2023, the fair value of our fixed rate debt, comprised of our senior guaranteed and senior secured notes, senior notes, notes payable and supply chain financing of $11,218,604 was lower than its carrying value of $16,575,048 by $5,356,444. The fair value of these financial instruments is estimated based on reference to quoted market prices for these or comparable securities. Our floating rate borrowings, comprised of our term loans and revolving credit facilities bear interest in reference SOFR-based market rates and thus their principal values approximate fair value. The effect of a hypothetical 100 basis point decrease in interest rates prevailing at June 30, 2023 would increase the estimated fair value of our fixed rate debt by $498,608 to $11,717,212. This estimate is based on the assumption of an immediate and parallel shift in interest rates across all maturities.

### Interest Rate Risk

To manage interest rate risk, we have from time to time entered into interest rate swap contracts to adjust the proportion of total debt that is subject to variable and fixed interest rates. Such contracts effectively fix the borrowing rates on floating rate debt to provide an economic hedge against the risk of rising rates and/or effectively convert fixed rate borrowings to variable rates to permit the Company to realize lower interest expense in a declining interest rate environment. We monitor the financial institutions that are counterparties to our interest rate swap contracts and we only enter into interest rate swap contracts with financial institutions that are rated investment grade. All such contracts are carried at their fair market values in our consolidated balance sheets, with changes in fair value reflected in the consolidated statements of operations. See Note 9 to our consolidated financial statements for a summary of interest rate swap contracts outstanding at June 30, 2023. The Company's outstanding interest rate swap contracts are not designated as hedges for accounting purposes. Accordingly, the changes in the fair value of these interest rate swap contracts are recorded through the statement of operations. For the three and six months ended June 30, 2023, the Company recorded a gain on interest rate swap contracts of $61,165 and $46,736 and had a fair value at June 30, 2023 of $192,113 recorded as other assets, long-term on the consolidated balance sheet.

As of June 30, 2023, we did not hold and have not issued derivative instruments for trading or speculative purposes.

## Controls and procedures

As filed, 834 characters.

### Evaluation of Disclosure Controls and Procedures

An evaluation was carried out under the supervision and with the participation of Altice USA's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under SEC rules). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of June 30, 2023.

### Changes in Internal Control

During the six months ended June 30, 2023, there were no changes in the Company's internal control over financial reporting that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

Filed Aug 3, 2023.
Source: SEC EDGAR, the filing index for accession 0001628280-23-026858. Last ingested by Listed: Nov 3, 2026, 21:23 ET. No prices; not investment advice.