Altice USA, Inc. - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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


			For the quarterly period ended			March 31, 2022


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

For the transition period from

Commission File Number

Registrant; State of Incorporation; Address and Telephone Number

IRS Employer Identification No.

001-38126

38-3980194

Altice USA, Inc.

Delaware

1 Court Square West

Long Island City,

New York

11101

(516)

803-2300

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

☒

☐

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

☒

☐

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. (Check one)

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

(Do not check if a smaller reporting company)

Emerging growth company

☐

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes

☐

☒

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	ATUS	NYSE


Number of shares of common stock outstanding as of April 22, 2022			454,654,818

ALTICE USA, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		2

Item 1. Financial Statements

ALTICE USA, INC. AND SUBSIDIARIES
Consolidated Financial Statements
	Consolidated Balance Sheets - March 31, 2022 (Unaudited) and December 31, 2021	4
	Consolidated Statements of Operations - Three months ended March 31, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Comprehensive Income - Three months ended March 31, 2022 and 2021 (Unaudited)	6
	Consolidated Statements of Stockholders' Deficiency - Three months ended March 31, 2022 and 2021 (Unaudited)	7
	Consolidated Statements of Cash Flows - Three months ended March 31, 2022 and 2021 (Unaudited)	8
	Combined Notes to Consolidated Financial Statements (Unaudited)	14
Supplemental Financial Statements Furnished:
CSC HOLDINGS, LLC AND SUBSIDIARIES
Consolidated Financial Statements
	Consolidated Balance Sheets - March 31, 2022 (Unaudited) and December 31, 2021	9
	Consolidated Statements of Operations - Three months ended March 31, 2022 and 2021 (Unaudited)	10
	Consolidated Statements of Comprehensive Income - Three months ended March 31, 2022 and 2021 (Unaudited)	11
	Consolidated Statements of Member's Deficiency - Three months ended March 31, 2022 and 2021 (Unaudited)	12
	Consolidated Statements of Cash Flows - Three months ended March 31, 2022 and 2021 (Unaudited)	13
	Combined Notes to Consolidated Financial Statements (Unaudited)	14
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3. Quantitative and Qualitative Disclosures About Market Risk		41
Item 4. Controls and Procedures		42
PART II. OTHER INFORMATION		43
Item 1. Legal Proceedings		43


Item 6. Exhibits		43
SIGNATURES		44

Part I. FINANCIAL INFORMATION

This Form 10-Q contains statements that constitute forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Act of 1934, as amended. In this Form 10-Q there are statements concerning our future operating results and future financial performance. Words such as "expects", "anticipates", "believes", "estimates", "may", "will", "should", "could", "potential", "continue", "intends", "plans" and similar words and terms used in the discussion of future operating results, future financial performance and future events identify forward-looking statements. Investors are cautioned that such forward-looking statements are not guarantees of future performance, results or events and involve risks and uncertainties and that actual results or developments may differ materially from the forward-looking statements as a result of various factors.

We operate in a highly competitive, consumer and technology driven and rapidly changing business that is affected by government regulation and economic, strategic, technological, political and social conditions. Various factors could adversely affect our operations, business or financial results in the future and cause our actual results to differ materially from those contained in the forward-looking statements. In addition, important factors that could cause our actual results to differ materially from those in our forward-looking statements include:

•competition for broadband, video and telephony customers from existing competitors (such as broadband communications companies, direct broadcast satellite ("DBS") providers, wireless data and telephony providers, and Internet-based providers) and new fiber-based competitors entering our footprint;

•changes in consumer preferences, laws and regulations or technology that may cause us to change our operational strategies;

•increased difficulty negotiating programming agreements on favorable terms, if at all, resulting in increased costs to us and/or the loss of popular programming;

•increasing programming costs and delivery expenses related to our products and services;

•our ability to achieve anticipated customer and revenue growth, to successfully introduce new products and services and to implement our growth strategy;

•our ability to complete our capital investment plans on time and on budget, including our plan to build a parallel fiber-to-the-home ("FTTH") network, and deploy Altice One, our home communications platform;

•our ability to develop mobile voice and data services and our ability to attract customers to these services;

•the effects of economic conditions or other factors which may negatively affect our customers’ demand for our current and future products and services;

•the effects of industry conditions;

•demand for digital and linear advertising products and services;

•our substantial indebtedness and debt service obligations;

•adverse changes in the credit market;

•changes as a result of any tax reforms that may affect our business;

•financial community and rating agency perceptions of our business, operations, financial condition and the industries in which we operate;

•the restrictions contained in our financing agreements;

•our ability to generate sufficient cash flow to meet our debt service obligations;

•fluctuations in interest rates which may cause our interest expense to vary from quarter to quarter;

•technical failures, equipment defects, physical or electronic break-ins to our services, computer viruses and similar problems;

•cybersecurity incidents as a result of hacking, phishing, denial of service attacks, dissemination of computer viruses, ransomware and other malicious software, misappropriation of data, and other malicious attempts;

•disruptions to our networks, infrastructure and facilities as a result of natural disasters, power outages, accidents, maintenance failures, telecommunications failures, degradation of plant assets, terrorist attacks and similar events;

•labor shortages and supply chain disruptions;

•the impact from the coronavirus ("COVID-19") pandemic;

•our ability to obtain necessary hardware, software, communications equipment and services and other items from our vendors at reasonable costs;

•our ability to effectively integrate acquisitions and to maximize expected operating efficiencies from our acquisitions or as a result of the transactions, if any;

•significant unanticipated increases in the use of bandwidth-intensive Internet-based services;

•the outcome of litigation, government investigations and other proceedings; and

•other risks and uncertainties inherent in our cable and other broadband communications businesses and our other businesses, including those listed under the caption "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 16, 2022 (the "Annual Report").

These factors are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could cause our actual results to differ materially from those expressed in any of our forward-looking statements.

Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements are made only as of the date of this Quarterly Report. Except to the extent required by law, we do not undertake, and specifically decline any obligation, to update any forward-looking statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

You should read this Quarterly Report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect. We qualify all forward-looking statements by these cautionary statements.

Certain numerical figures included in this Quarterly Report have been subject to rounding adjustments. Accordingly, such numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

Item 1. Financial Statements


ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
	March 31, 2022 (Unaudited)		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	195,648	$	195,711
Restricted cash	264		264
Accounts receivable, trade (less allowance for doubtful accounts of $27,945 and $27,931)	383,103		406,952

Prepaid expenses and other current assets ($3,830 and $3,776 due from affiliates)	203,963		186,707




Total current assets	782,978		789,634
Property, plant and equipment, net of accumulated depreciation of $7,362,691 and $7,142,852	6,513,910		6,340,467

Right-of-use operating lease assets	229,792		222,124
Investment securities pledged as collateral	2,011,164		2,161,937

Other assets	129,013		76,653
Amortizable intangibles, net of accumulated amortization of $5,198,304 and $5,051,149	2,055,028		2,202,001
Indefinite-lived cable television franchises	13,216,355		13,216,355
Goodwill	8,205,863		8,205,863
Total assets	$	33,144,103	$	33,215,034
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable	$	999,501	$	1,023,045
Interest payable	213,641		244,934
Accrued employee related costs	110,777		124,941

Deferred revenue	110,882		94,943
Debt	969,413		917,313
Other current liabilities ($22,872 and $31,810 due to affiliates)	373,166		329,943
Total current liabilities	2,777,380		2,735,119
Other liabilities	155,243		159,082
Deferred tax liability	5,032,641		5,048,129
Liabilities under derivative contracts	90,952		276,933
Right-of-use operating lease liability	243,035		237,226
Long-term debt, net of current maturities	25,471,418		25,629,447
Total liabilities	33,770,669		34,085,936
Commitments and contingencies (Note 14)
Stockholders' Deficiency:
Preferred stock, $0.01 par value, 100,000,000 shares authorized, no shares issued and outstanding	—		—
Class A common stock: $0.01 par value, 4,000,000,000 shares authorized, 270,344,035 shares issued and 270,323,826 shares outstanding as of March 31, 2022 and 270,341,685 shares issued and 270,320,798 shares outstanding as of December 31, 2021	2,703		2,703
Class B common stock: $0.01 par value, 1,000,000,000 shares authorized, 490,086,674 issued, 184,330,992 shares outstanding as of March 31, 2022 and 184,333,342 shares outstanding as of December 31, 2021	1,843		1,843
Class C common stock: $0.01 par value, 4,000,000,000 shares authorized, no shares issued and outstanding	—		—
Paid-in capital	58,527		18,005
Accumulated deficit	(652,285)		(848,836)
	(589,212)		(826,285)
Treasury stock, at cost (20,209 and 20,887 Class A common shares at March 31, 2022 and December 31, 2021, respectively)	—		—
Accumulated other comprehensive income	8,170		6,497
Total Altice USA stockholders' deficiency	(581,042)		(819,788)
Noncontrolling interests	(45,524)		(51,114)
Total stockholders' deficiency	(626,566)		(870,902)
Total liabilities and stockholders' deficiency	$	33,144,103	$	33,215,034

See accompanying notes to consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Revenue (including revenue from affiliates of $638 and $3,406 respectively) (See Note 13)	$	2,421,897	$	2,478,821
Operating expenses:
Programming and other direct costs (including charges from affiliates of $4,618 and $2,228, respectively) (See Note 13)	828,793		851,864
Other operating expenses (including charges from affiliates of $3,095 and $3,179, respectively) (See Note 13)	641,906		580,433
Restructuring and other expense	3,378		3,209
Depreciation and amortization (including impairments)	435,349		434,857
	1,909,426		1,870,363
Operating income	512,471		608,458
Other income (expense):
Interest expense, net	(303,362)		(316,312)
Gain (loss) on investments	(150,773)		73,453
Gain (loss) on derivative contracts, net	101,074		(53,565)
Gain on interest rate swap contracts, net	123,147		75,653

Other income, net	2,430		2,859
	(227,484)		(217,912)
Income before income taxes	284,987		390,546
Income tax expense	(82,846)		(112,007)
Net income	202,141		278,539
Net income attributable to noncontrolling interests	(5,590)		(4,403)
Net income attributable to Altice USA, Inc. stockholders	$	196,551	$	274,136
Income per share:
Basic income per share	$	0.43	$	0.58
Basic weighted average common shares (in thousands)	453,229		469,233

Diluted income per share	$	0.43	$	0.58
Diluted weighted average common shares (in thousands)	453,229		475,448
Cash dividends declared per common share	$	—	$	—

See accompanying notes to consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Net income	$	202,141	$	278,539
Other comprehensive income (loss):
Defined benefit pension plans	2,504		8,648
Applicable income taxes	(661)		(2,292)
Defined benefit pension plans, net of income taxes	1,843		6,356



Foreign currency translation adjustment	(170)		619
Applicable income taxes	—		—
Foreign currency translation adjustment, net	(170)		619
Other comprehensive income	1,673		6,975
Comprehensive income	203,814		285,514
Comprehensive income attributable to noncontrolling interests	(5,590)		(4,403)
Comprehensive income attributable to Altice USA, Inc. stockholders	$	198,224	$	281,111

See accompanying notes to consolidated financial statements.


ALTICE USA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (In thousands) (Unaudited)
	Class A Common Stock		Class B Common Stock		Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Stockholders' Deficiency		Non-controlling Interests		Total Deficiency
Balance at January 1, 2022	$	2,703	$	1,843	$	18,005	$	(848,836)	$	—	$	6,497	$	(819,788)	$	(51,114)	$	(870,902)
Net income attributable to stockholders	—		—		—		196,551		—		—		196,551		—		196,551
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		5,590		5,590

Pension liability adjustments, net of income taxes	—		—		—		—		—		1,843		1,843		—		1,843
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		(170)		(170)		—		(170)
Share-based compensation expense (equity classified)	—		—		40,512		—		—		—		40,512		—		40,512



Conversion of Class B to Class A shares	—		—		—		—		—		—		—		—		—
Issuance of common shares pursuant to employee long term incentive plan	—		—		10		—		—		—		10		—		10

Balance at March 31, 2022	$	2,703	$	1,843	$	58,527	$	(652,285)	$	—	$	8,170	$	(581,042)	$	(45,524)	$	(626,566)



Balance at January 1, 2021	$	2,972	$	1,859	$	—	$	(985,641)	$	(163,866)	$	3,646	$	(1,141,030)	$	(62,109)	$	(1,203,139)
Net income attributable to stockholders	—		—		—		274,136		—		—		274,136		—		274,136
Net income attributable to noncontrolling interests	—		—		—		—		—		—		—		4,403		4,403

Pension liability adjustments, net of income taxes	—		—		—		—		—		6,356		6,356		—		6,356
Foreign currency translation adjustment, net of income taxes	—		—		—		—		—		619		619		—		619
Share-based compensation expense (equity classified)	—		—		—		27,964		—		—		27,964		—		27,964
Redeemable equity vested	—		—		—		20,131		—		—		20,131		—		20,131
Change in redeemable equity	—		—		—		2,528		—		—		2,528		—		2,528
Class A shares acquired through share repurchase program and retired	(152)		—		—		(522,521)		—		—		(522,673)		—		(522,673)
Conversion of Class B to Class A shares	1		(1)		—		—		—		—		—		—		—
Issuance of common shares pursuant to employee long term incentive plan	1		—		—		2,037		6		—		2,044		—		2,044
Other	—		—		—		(4,244)		—		—		(4,244)		4,302		58
Balance at March 31, 2021	$	2,822	$	1,858	$	—	$	(1,185,610)	$	(163,860)	$	10,621	$	(1,334,169)	$	(53,404)	$	(1,387,573)

See accompanying notes to consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	202,141	$	278,539
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including impairments)	435,349		434,857


Loss (gain) on investments	150,773		(73,453)
Loss (gain) on derivative contracts, net	(101,074)		53,565

Amortization of deferred financing costs and discounts (premiums) on indebtedness	20,342		23,039

Share-based compensation expense	40,532		28,281
Deferred income taxes	(16,149)		29,165
Decrease in right-of-use assets	10,955		10,816
Provision for doubtful accounts	14,737		11,133
Other	(287)		1,074
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade	9,112		55,293
Prepaid expenses and other assets	(19,462)		(26,321)
Amounts due from and due to affiliates	(8,992)		4,627
Accounts payable and accrued liabilities	(13,477)		(29,696)
Deferred revenue	14,613		38,501
Liabilities related to interest rate swap contracts	(138,894)		(89,798)
Net cash provided by operating activities	600,219		749,622
Cash flows from investing activities:
Capital expenditures	(392,371)		(212,791)





Other, net	888		2,143
Net cash used in investing activities	(391,483)		(210,648)
Cash flows from financing activities:
Proceeds from long-term debt	150,000		150,000
Repayment of long-term debt	(329,688)		(225,863)


Proceeds from collateralized indebtedness and related derivative contracts, net	—		185,105
Repayment of collateralized indebtedness and related derivative contracts, net	—		(185,105)



Principal payments on finance lease obligations	(28,941)		(18,330)
Purchase of shares of Altice USA Class A common stock, pursuant to a share repurchase program	—		(503,645)






Other	—		393
Net cash used in financing activities	(208,629)		(597,445)
Net increase (decrease) in cash and cash equivalents	107		(58,471)
Effect of exchange rate changes on cash and cash equivalents	(170)		620
Net decrease in cash and cash equivalents	(63)		(57,851)
Cash, cash equivalents and restricted cash at beginning of year	195,975		278,686
Cash, cash equivalents and restricted cash at end of period	$	195,912	$	220,835

See accompanying notes to consolidated financial statements.


CSC HOLDINGS, LLC AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
	March 31, 2022 (Unaudited)		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	193,850	$	193,154
Restricted cash	264		264
Accounts receivable, trade (less allowance for doubtful accounts of $27,945 and $27,931)	383,103		406,952

Prepaid expenses and other current assets ($3,830 and $3,776 due from affiliates)	203,205		186,707




Total current assets	780,422		787,077
Property, plant and equipment, net of accumulated depreciation of $7,362,691 and $7,142,852	6,513,910		6,340,467

Right-of-use operating lease assets	229,792		222,124
Investment securities pledged as collateral	2,011,164		2,161,937

Other assets	129,013		76,653
Amortizable intangibles, net of accumulated amortization of $5,198,304 and $5,051,149	2,055,028		2,202,001
Indefinite-lived cable television franchises	13,216,355		13,216,355
Goodwill	8,205,863		8,205,863
Total assets	$	33,141,547	$	33,212,477


LIABILITIES AND MEMBER'S DEFICIENCY
Current Liabilities:
Accounts payable	$	999,501	$	1,023,045
Interest payable	213,641		244,934
Accrued employee related costs	110,777		124,941

Deferred revenue	110,882		94,943
Debt	969,413		917,313
Other current liabilities ($22,872 and $31,810 due to affiliates)	373,166		329,944
Total current liabilities	2,777,380		2,735,120

Other liabilities	155,243		159,082
Deferred tax liability	5,051,955		5,067,442
Liabilities under derivative contracts	90,952		276,933
Right-of-use operating lease liability	243,035		237,226
Long-term debt, net of current maturities	25,471,418		25,629,447
Total liabilities	33,789,983		34,105,250
Commitments and contingencies (Note 14)


Member's deficiency (100 membership units issued and outstanding)	(611,082)		(848,156)
Accumulated other comprehensive income	8,170		6,497
Total member's deficiency	(602,912)		(841,659)
Noncontrolling interest	(45,524)		(51,114)
Total deficiency	(648,436)		(892,773)
Total liabilities and member's deficiency	$	33,141,547	$	33,212,477

See accompanying notes to consolidated financial statements.

CSC HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Revenue (including revenue from affiliates of $638 and $3,406 respectively) (See Note 13)	$	2,421,897	$	2,478,821
Operating expenses:
Programming and other direct costs (including charges from affiliates of $4,618 and $2,228, respectively) (See Note 13)	828,793		851,864
Other operating expenses (including charges from affiliates of $3,095 and $3,179, respectively) (See Note 13)	641,906		580,433
Restructuring and other expense	3,378		3,209
Depreciation and amortization (including impairments)	435,349		434,857
	1,909,426		1,870,363
Operating income	512,471		608,458
Other income (expense):
Interest expense, net	(303,362)		(316,312)
Gain (loss) on investments	(150,773)		73,453
Gain (loss) on derivative contracts, net	101,074		(53,565)
Gain on interest rate swap contracts, net	123,147		75,653

Other income, net	2,430		2,859
	(227,484)		(217,912)
Income before income taxes	284,987		390,546
Income tax expense	(82,846)		(112,007)
Net income	202,141		278,539
Net income attributable to noncontrolling interests	(5,590)		(4,403)
Net income attributable to CSC Holdings, LLC sole member	$	196,551	$	274,136

See accompanying notes to consolidated financial statements.

CSC HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Net income	$	202,141	$	278,539
Other comprehensive income (loss):
Defined benefit pension plans	2,504		8,648
Applicable income taxes	(661)		(2,292)
Defined benefit pension plans, net of income taxes	1,843		6,356



Foreign currency translation adjustment	(170)		619
Applicable income taxes	—		—
Foreign currency translation adjustment, net	(170)		619
Other comprehensive income	1,673		6,975
Comprehensive income	203,814		285,514
Comprehensive income attributable to noncontrolling interests	(5,590)		(4,403)
Comprehensive income attributable to CSC Holdings, LLC's sole member	$	198,224	$	281,111

See accompanying notes to consolidated financial statements.

CSC HOLDINGS, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL MEMBER'S DEFICIENCY

(In thousands)

(Unaudited)


	Member's Deficiency		Accumulated Other Comprehensive Income		Total Member's Deficiency		Noncontrolling Interests		Total Deficiency

Balance at January 1, 2022	$	(848,156)	$	6,497	$	(841,659)	$	(51,114)	$	(892,773)
Net income attributable to CSC Holdings' sole member	196,551		—		196,551		—		196,551
Net income attributable to noncontrolling interests	—		—		—		5,590		5,590

Pension liability adjustments, net of income taxes	—		1,843		1,843		—		1,843
Foreign currency translation adjustment, net of income taxes	—		(170)		(170)		—		(170)
Share-based compensation expense (equity classified)	40,512		—		40,512		—		40,512




Other	11		—		11		—		11
Balance at March 31, 2022	$	(611,082)	$	8,170	$	(602,912)	$	(45,524)	$	(648,436)




Balance at January 1, 2021	$	(1,172,505)	$	3,646	$	(1,168,859)	$	(62,109)	$	(1,230,968)
Net income attributable to CSC Holdings' sole member	274,136		—		274,136		—		274,136
Net income attributable to noncontrolling interests	—		—		—		4,403		4,403

Pension liability adjustments, net of income taxes	—		6,356		6,356		—		6,356
Foreign currency translation adjustment, net of income taxes	—		619		619		—		619
Share-based compensation expense (equity classified)	27,964		—		27,964		—		27,964
Redeemable equity vested	20,131		—		20,131		—		20,131
Change in redeemable equity	2,528		—		2,528		—		2,528
Cash distributions to parent	(501,000)		—		(501,000)		—		(501,000)
Non-cash distributions to parent	(748)		—		(748)		—		(748)
Other	(4,056)		—		(4,056)		4,302		246
Balance at March 31, 2021	$	(1,353,550)	$	10,621	$	(1,342,929)	$	(53,404)	$	(1,396,333)

See accompanying notes to consolidated financial statements.

CSC HOLDINGS LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	202,141	$	278,539
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including impairments)	435,349		434,857



Loss (gain) on investments	150,773		(73,453)
Loss (gain) on derivative contracts, net	(101,074)		53,565

Amortization of deferred financing costs and discounts (premiums) on indebtedness	20,342		23,039

Share-based compensation expense	40,532		28,281
Deferred income taxes	(16,149)		29,165
Decrease in right-of-use assets	10,955		10,816
Provision for doubtful accounts	14,737		11,133
Other	(287)		1,074
Change in assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable, trade	9,112		55,293
Prepaid expenses and other assets	(18,703)		(26,321)
Amounts due from and due to affiliates	(8,992)		3,882
Accounts payable and accrued liabilities	(13,477)		(29,611)
Deferred revenue	14,613		38,501
Liabilities related to interest rate swap contracts	(138,894)		(89,798)
Net cash provided by operating activities	600,978		748,962
Cash flows from investing activities:
Capital expenditures	(392,371)		(212,791)


Other, net	888		2,143
Net cash used in investing activities	(391,483)		(210,648)
Cash flows from financing activities:
Proceeds from long-term debt	150,000		150,000
Repayment of long-term debt	(329,688)		(225,863)


Proceeds from collateralized indebtedness and related derivative contracts, net	—		185,105
Repayment of collateralized indebtedness and related derivative contracts, net	—		(185,105)
Distributions to parent	—		(501,000)



Principal payments on finance lease obligations	(28,941)		(18,330)

Other	—		(1,465)

Net cash used in financing activities	(208,629)		(596,658)
Net increase (decrease) in cash and cash equivalents	866		(58,344)
Effect of exchange rate changes on cash and cash equivalents	(170)		620
Net increase (decrease) in cash and cash equivalents	696		(57,724)
Cash, cash equivalents and restricted cash at beginning of year	193,418		278,202
Cash, cash equivalents and restricted cash at end of period	$	194,114	$	220,478

See accompanying notes to consolidated financial statements.

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 1. DESCRIPTION OF BUSINESS AND RELATED MATTERS

The Company and Related Matters

Altice USA, Inc. ("Altice USA") was incorporated in Delaware on September 14, 2015. Altice USA is majority-owned by Patrick Drahi through Next Alt. S.a.r.l. ("Next Alt"). Patrick Drahi also controls Altice Group Lux S.à.r.l, formerly Altice Europe N.V. ("Altice Europe") and its subsidiaries and other entities.

Altice USA, through CSC Holdings, LLC (a wholly-owned subsidiary of Cablevision Systems Corporation) and its consolidated subsidiaries ("CSC Holdings," and collectively with Altice USA, the "Company"), principally provides broadband communications and video services in the United States. It markets its residential services primarily under two brands: Optimum, in the New York metropolitan area, and Suddenlink, principally in markets in the south-central United States. It operates enterprise services under the brands Lightpath, Altice Business, Optimum Business and Suddenlink Business. It delivers broadband, video, telephony services, proprietary content and advertising services to residential and business customers. In addition, the Company offers a full service mobile offering, to consumers across its footprint. As these brands are managed on a consolidated basis, the Company classifies its operations in one segment.

The accompanying consolidated financial statements ("consolidated financial statements") of Altice USA include the accounts of Altice USA and its majority-owned subsidiaries and the accompanying consolidated financial statements of CSC Holdings include the accounts of CSC Holdings and its majority-owned subsidiaries. Altice USA is a holding company and has no business operations independent of its CSC Holdings subsidiary, whose operating results and financial position are consolidated into Altice USA. The consolidated balance sheets and statements of operations of Altice USA are essentially identical to the consolidated balance sheets and statements of operations of CSC Holdings, with the following exceptions: Altice USA has additional cash, prepaid expenses and other current assets, and deferred taxes on its consolidated balance sheet.

The combined notes to the consolidated financial statements relate to the Company, which, except as noted, are essentially identical for Altice USA and CSC Holdings. All significant intercompany transactions and balances between Altice USA or CSC Holdings and their respective consolidated subsidiaries are eliminated in both sets of consolidated financial statements. Intercompany transactions between Altice USA and CSC Holdings are not eliminated in the CSC Holdings consolidated financial statements, but are eliminated in the Altice USA consolidated financial statements.

The financial statements of CSC Holdings are included herein as supplemental information as CSC Holdings is not an SEC registrant.

NOTE 2. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Accordingly, these financial statements do not include all the information and notes required for complete annual financial statements.

The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

The financial statements presented in this report are unaudited; however, in the opinion of management, such financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented.

The results of operations for the interim periods are not necessarily indicative of the results that might be expected for future interim periods or for the full year ending December 31, 2022.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. See Note 10 for a discussion of fair value estimates.

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 3. ACCOUNTING STANDARDS

Accounting Standards Adopted in 2022

ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which will require companies to apply the definition of a performance obligation under ASC Topic 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer generally recognizes assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers, at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded before the acquisition under ASC Topic 606. ASU No. 2021-08 is effective for the Company on January 1, 2023, however the Company elected to early adopt this ASU on January 1, 2022. The guidance will be applied to any future business combinations.

ASU No. 2021-10, Government Assistance (Topic 832)

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832), which requires business entities to disclose information about transactions with a government that are accounted for by applying a grant or contribution model by analogy (for example, IFRS guidance in IAS 20 or guidance on contributions for not-for-profit entities in ASC 958-605). For transactions in the scope of the new standard, business entities will need to provide information about the nature of the transaction, including significant terms and conditions, as well as the amounts and specific financial statement line items affected by the transaction. The Company adopted the new guidance on January 1, 2022 and the Company will provide required disclosures for any future material transactions.

NOTE 4. REVENUE

The following table presents the composition of revenue:


	Three Months Ended March 31,
	2022		2021
Broadband	$	985,517	$	970,571
Video	841,887		905,834
Telephony	85,234		106,981
Residential revenue	1,912,638		1,983,386
Business services and wholesale revenue	367,522		367,216
News and advertising	114,675		105,070
Mobile	24,035		19,235
Other	3,027		3,914
Total revenue	$	2,421,897	$	2,478,821

The Company is assessed non-income related taxes by governmental authorities, including franchising authorities (generally under multi-year agreements), and collects such taxes from its customers. In instances where the tax is being assessed directly on the Company, amounts paid to the governmental authorities are recorded as programming and other direct costs and amounts received from the customers are recorded as revenue. For the three months ended March 31, 2022 and 2021, the amount of franchise fees and certain other taxes and fees included as a component of revenue aggregated $59,088 and $66,056, respectively.

Customer Contract Costs

Deferred enterprise sales commission costs are included in other current and noncurrent assets in the consolidated

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

balance sheets and totaled $16,674 and $17,669 as of March 31, 2022 and December 31, 2021, respectively.

A significant portion of our revenue is derived from residential and SMB customer contracts which are month-to month. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Contracts with enterprise customers generally range from three years to five years, and services may only be terminated in accordance with the contractual terms.

Concentration of Credit Risk

The Company did not have a single customer that represented 10% or more of its consolidated revenues for the three months ended March 31, 2022 and 2021 or 10% or more of its consolidated net trade receivables at March 31, 2022 and December 31, 2021, respectively.

NOTE 5. NET INCOME PER SHARE

Basic net income per common share attributable to Altice USA stockholders is computed by dividing net income attributable to Altice USA stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share attributable to Altice USA stockholders reflects the dilutive effects of stock options, restricted stock and restricted stock units. For such awards that are performance based, the diluted effect is reflected upon the achievement of the performance criteria.

The following table presents a reconciliation of weighted average shares used in the calculations of the basic and diluted net income per share attributable to Altice USA stockholders for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022	2021
	(in thousands)
Basic weighted average shares outstanding	453,229	469,233
Effect of dilution:
Stock options	—	6,170
Restricted stock	—	45

Diluted weighted average shares outstanding	453,229	475,448

Weighted average shares excluded from diluted weighted average shares outstanding:
Anti-dilutive shares	58,401	495
Performance stock units and restricted stock whose performance metrics have not been achieved.	7,705	8,748

Net income per membership unit for CSC Holdings is not presented since CSC Holdings is a limited liability company and a wholly-owned subsidiary of Altice USA.

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 6. SUPPLEMENTAL CASH FLOW INFORMATION

The Company's non-cash investing and financing activities and other supplemental data were as follows:


	Three Months Ended March 31,
	2022		2021
Non-Cash Investing and Financing Activities:
Altice USA and CSC Holdings:

Property and equipment accrued but unpaid	$	323,815	$	266,995

Notes payable issued for the purchase of equipment and other assets	35,070		—
Unsettled purchases of shares of Altice USA, Inc. Class A common stock, pursuant to a share repurchase program	—		18,942
Right-of-use assets acquired in exchange for finance lease obligations	47,288		38,348




CSC Holdings:

Distributions to parent	—		745
Supplemental Data:
Altice USA and CSC Holdings:
Cash interest paid	313,024		310,878
Income taxes paid, net	23,042		9,727

NOTE 7. INTANGIBLE ASSETS

The following table summarizes information relating to the Company's acquired amortizable intangible assets:


	As of March 31, 2022						As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Estimated Useful Lives
Customer relationships	$	6,113,669	$	(4,142,528)	$	1,971,141	$	6,113,669	$	(4,020,282)	$	2,093,387	3 to 18 years
Trade names	1,081,083		(1,012,129)		68,954		1,081,083		(988,563)		92,520		2 to 10 years
Other amortizable intangibles	58,580		(43,647)		14,933		58,398		(42,304)		16,094		1 to 15 years
	$	7,253,332	$	(5,198,304)	$	2,055,028	$	7,253,150	$	(5,051,149)	$	2,202,001

Amortization expense for the three months ended March 31, 2022 and 2021 aggregated $147,155 and $165,114, respectively.

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 8. DEBT

The following table provides details of the Company's outstanding debt:


		Interest Rate			March 31, 2022				December 31, 2021
Date Issued	Maturity Date				Principal Amount		Carrying Amount (a)		Principal Amount		Carrying Amount (a)
CSC Holdings Senior Notes:
September 27, 2012	September 15, 2022	5.875	%		$	649,024	$	639,996	$	649,024	$	635,310
May 23, 2014	June 1, 2024	5.250	%		750,000		714,781		750,000		711,137
October 18, 2018	April 1, 2028	7.500	%		4,118		4,113		4,118		4,113
November 27, 2018	April 1, 2028	7.500	%		1,045,882		1,044,622		1,045,882		1,044,582
July 10 and October 7, 2019	January 15, 2030	5.750	%		2,250,000		2,282,054		2,250,000		2,282,875
June 16 and August 17, 2020	December 1, 2030	4.625	%		2,325,000		2,365,965		2,325,000		2,366,886
May 13, 2021	November 15, 2031	5.000	%		500,000		498,269		500,000		498,234
					7,524,024		7,549,800		7,524,024		7,543,137
CSC Holdings Senior Guaranteed Notes:
September 23, 2016	April 15, 2027	5.500	%		1,310,000		1,306,649		1,310,000		1,306,508
January 29, 2018	February 1, 2028	5.375	%		1,000,000		994,459		1,000,000		994,262
January 24, 2019	February 1, 2029	6.500	%		1,750,000		1,747,579		1,750,000		1,747,511
June 16, 2020	December 1, 2030	4.125	%		1,100,000		1,095,770		1,100,000		1,095,672
August 17, 2020	February 15, 2031	3.375	%		1,000,000		997,040		1,000,000		996,970
May 13, 2021	November 15, 2031	4.500	%		1,500,000		1,494,815		1,500,000		1,494,710
					7,660,000		7,636,312		7,660,000		7,635,633
CSC Holdings Restricted Group Credit Facility:
Revolving Credit Facility	January 31, 2024 (c)	2.647	%	(b)	740,000		734,574		900,000		893,864
Term Loan B	July 17, 2025	2.647	%		2,857,500		2,849,508		2,865,000		2,856,421
Incremental Term Loan B-3	January 15, 2026	2.647	%		1,236,750		1,233,418		1,239,938		1,236,394

Incremental Term Loan B-5	April 15, 2027	2.897	%		2,940,000		2,923,069		2,947,500		2,929,813
					7,774,250		7,740,569		7,952,438		7,916,492
Lightpath Senior Notes:
September 29, 2020	September 15, 2028	5.625	%		415,000		407,342		415,000		407,104
Lightpath Senior Secured Notes:
September 29, 2020	September 15, 2027	3.875	%		450,000		442,057		450,000		441,739
Lightpath Term Loan	November 30, 2027	3.750	%		592,500		578,195		594,000		579,119
Lightpath Revolving Credit Facility	November 30, 2025	(d)			—		—		—		—
					1,457,500		1,427,594		1,459,000		1,427,962
Collateralized indebtedness (see Note 9)					1,759,017		1,716,600		1,759,017		1,706,997
Finance lease obligations					237,082		237,082		218,735		218,735
Notes payable and supply chain financing (e)					132,874		132,874		97,804		97,804
					26,544,747		26,440,831		26,671,018		26,546,760
Less: current portion of credit facility debt					(78,750)		(78,750)		(78,750)		(78,750)
Less: current portion of senior notes					(649,024)		(639,996)		(649,024)		(635,310)
Less: current portion of finance lease obligations					(121,201)		(121,201)		(109,204)		(109,204)
Less: current portion of notes payable and supply chain financing					(129,466)		(129,466)		(94,049)		(94,049)
					(978,441)		(969,413)		(931,027)		(917,313)
Long-term debt					$	25,566,306	$	25,471,418	$	25,739,991	$	25,629,447

(a)The carrying amount is net of the unamortized deferred financing costs and/or discounts/premiums and with respect to certain notes, a fair value adjustment resulting from the Cequel and Cablevision acquisitions.

(b)At March 31, 2022, $133,706 of the revolving credit facility was restricted for certain letters of credit issued on behalf of the Company and $1,601,294 of the facility was undrawn and available, subject to covenant limitations.

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

(c)The revolving credit facility of an aggregate principal amount of $2,475,000 is priced at LIBOR plus 2.25%.

(d)There were no borrowings outstanding under the Lightpath Revolving Credit Facility which provides for commitments in an aggregate principal amount of $100,000. Borrowings bear interest at a rate per annum equal to the adjusted LIBOR rate or the alternate base rate, as applicable, plus the applicable margin, where the applicable margin is (i) with respect to any alternate base rate loan, 2.25% per annum and (ii) with respect to any eurodollar loan, 3.25% per annum.

(e)Includes $124,968 related to supply chain financing agreements that are required to be repaid within one year from the date of the respective agreement.

For financing purposes, the Company has two debt silos: CSC Holdings and Lightpath. The CSC Holdings silo is structured as a restricted group (the "Restricted Group") and an unrestricted group, which includes certain designated subsidiaries and investments (the "Unrestricted Group"). The Restricted Group is comprised of CSC Holdings and substantially all of its wholly-owned operating subsidiaries excluding Cablevision Lightpath LLC ("Lightpath"), a 50.01% owned subsidiary of the Company, which became an unrestricted subsidiary in September 2020. These Restricted Group subsidiaries are subject to the covenants and restrictions of the credit facility and indentures governing the notes issued by CSC Holdings. The Lightpath silo includes all of its operating subsidiaries which are subject to the covenants and restrictions of the credit facility and indentures governing the notes issued by Lightpath.

Both CSC Holdings and Lightpath's credit facilities agreements contain certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under the credit facilities will be entitled to take various actions, including the acceleration of amounts due under the credit facilities and all actions permitted to be taken by a secured creditor.

As of March 31, 2022, CSC Holdings and Cablevision Lightpath were in compliance with applicable financial covenants under their respective credit facilities and with applicable financial covenants under each respective indenture by which the senior guaranteed notes, senior secured notes and senior notes were issued.

Summary of Debt Maturities

The future maturities of debt payable by the Company under its various debt obligations outstanding as of March 31, 2022, including notes payable and collateralized indebtedness (see Note 9), but excluding finance lease obligations, are as follows:


2022	$	810,706
2023	1,867,882
2024	1,568,889
2025	2,823,750
2026	1,224,938
Thereafter	18,011,500

NOTE 9. DERIVATIVE CONTRACTS AND COLLATERALIZED INDEBTEDNESS

Prepaid Forward Contracts

The Company has entered into various transactions to limit the exposure against equity price risk on its shares of Comcast Corporation ("Comcast") common stock. The Company has monetized all of its stock holdings in Comcast through the execution of prepaid forward contracts, collateralized by an equivalent amount of the respective underlying stock. At maturity, the contracts provide for the option to deliver cash or shares of Comcast stock with a value determined by reference to the applicable stock price at maturity. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing the Company to retain upside appreciation from the hedge price per share to the relevant cap price.

The Company received cash proceeds upon execution of the prepaid forward contracts discussed above which has been reflected as collateralized indebtedness in the accompanying consolidated balance sheets. In addition, the Company separately accounts for the equity derivative component of the prepaid forward contracts. These equity derivatives have not been designated as hedges for accounting purposes. Therefore, the net fair values of the equity derivatives have been reflected in the accompanying consolidated balance sheets as an asset or liability and the net

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

increases or decreases in the fair value of the equity derivative component of the prepaid forward contracts are included in gain (loss) on derivative contracts in the accompanying consolidated statements of operations.

All of the Company's monetization transactions are obligations of its wholly-owned subsidiaries that are not part of the Restricted Group; however, CSC Holdings has provided guarantees of the subsidiaries' ongoing contract payment expense obligations and potential payments that could be due as a result of an early termination event (as defined in the agreements). If any one of these contracts was terminated prior to its scheduled maturity date, the Company would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date. As of March 31, 2022, the Company did not have an early termination shortfall relating to any of these contracts.

The Company monitors the financial institutions that are counterparties to its equity derivative contracts. All of the counterparties to such transactions carry investment grade credit ratings as of March 31, 2022.

In January 2021, the Company settled collateralized indebtedness and an equity derivative contract aggregating $185,105 upon maturity related to 5,337,750 shares of Comcast common stock held by us, with proceeds of $185,105 received in the current period pursuant to the synthetic monetization closeout transaction in November 2019. In connection with this transaction the Company recorded (i) a decrease in notes payable of $59,451 and (ii) an increase in collateralized debt of $59,451.

Interest Rate Swap Contracts

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 on our consolidated balance sheets, with changes in fair value reflected in the consolidated statements of operations. As of March 31, 2022, the Company did not hold and has not issued derivative instruments for trading or speculative purposes.

The following represents the location of the assets and liabilities associated with the Company's derivative instruments within the consolidated balance sheets:


Derivatives Not Designated as Hedging Instruments	Balance Sheet Location	Fair Value at
		March 31, 2022		December 31, 2021

Asset Derivatives:
Interest rate swap contracts	Prepaid expenses and other current assets	$	—	$	2,993

Interest rate swap contracts	Other asset, long-term	53,539		—

		53,539		2,993
Liability Derivatives:

Interest rate swap contracts	Other current liabilities	—		(3,441)
Prepaid forward contracts	Liabilities under derivative contracts, long-term	(60,868)		(161,942)
Interest rate swap contracts	Liabilities under derivative contracts, long-term	(30,084)		(114,991)
		$	(90,952)	$	(280,374)

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

The following table presents certain consolidated statement of operations data related to our derivative contracts and the underlying common stock:


	Three Months Ended March 31,
	2022		2021
Gain (loss) on derivative contracts related to change in the value of equity derivative contracts related to Comcast common stock	$	101,074	$	(53,565)
Change in the fair value of Comcast common stock included in gain (loss) on investments	(150,773)		73,453
Gain on interest rate swap contracts	123,147		75,653

The following is a summary of interest rate swap contracts outstanding at March 31, 2022:

Trade Date

Maturity Date

Notional Amount

Company Pays

Company Receives

March 2020

January 2025

500,000

Fixed rate of 1.53%

Three-month LIBOR

December 2018

January 2025

500,000

Fixed rate of 1.625%

Three-month LIBOR

March 2020

January 2025

500,000

Fixed rate of 1.458%

Three-month LIBOR

December 2018

December 2026

750,000

Fixed rate of 2.9155%

Three-month LIBOR

December 2018

December 2026

750,000

Fixed rate of 2.9025%

Three-month LIBOR

NOTE 10. FAIR VALUE MEASUREMENT

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity's pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

•Level I - Quoted prices for identical instruments in active markets.

•Level II - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

•Level III - Instruments whose significant value drivers are unobservable.

The following table presents the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis and their classification under the fair value hierarchy:


	Fair Value Hierarchy	March 31, 2022		December 31, 2021
Assets:
Money market funds	Level I	$	131,259	$	100,015
Investment securities pledged as collateral	Level I	2,011,164		2,161,937
Prepaid forward contracts	Level II	—		—
Interest rate swap contracts	Level II	53,539		2,993
Liabilities:
Prepaid forward contracts	Level II	60,868		161,942
Interest rate swap contracts	Level II	30,084		118,432

The Company's money market funds which are classified as cash equivalents and investment securities pledged as collateral are classified within Level I of the fair value hierarchy because they are valued using quoted market prices.

The Company's derivative contracts and liabilities under derivative contracts on the Company's consolidated balance sheets are valued using market-based inputs to valuation models. These valuation models require a variety of inputs, including contractual terms, market prices, yield curves, and measures of volatility. When appropriate, valuations are

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

adjusted for various factors such as liquidity, bid/offer spreads and credit risk considerations. Such adjustments are generally based on available market evidence. Since model inputs can generally be verified and do not involve significant management judgment, the Company has concluded that these instruments should be classified within Level II of the fair value hierarchy.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate fair value of each class of financial instruments for which it is practicable to estimate:

Credit Facility Debt, Collateralized Indebtedness, Senior Notes, Senior Guaranteed Notes, Senior Secured Notes, Notes Payable, and Supply Chain Financing

The fair values of each of the Company's debt instruments are based on quoted market prices for the same or similar issues or on the current rates offered to the Company for instruments of the same remaining maturities. The fair value of notes payable is based primarily on the present value of the remaining payments discounted at the borrowing cost. The carrying value of outstanding amounts related to supply chain financing agreements approximates the fair value due to their short-term maturity (less than one year).

The carrying values, estimated fair values, and classification under the fair value hierarchy of the Company's financial instruments, excluding those that are carried at fair value in the accompanying consolidated balance sheets, are summarized below:


		March 31, 2022				December 31, 2021
	Fair Value Hierarchy	Carrying Amount (a)		Estimated Fair Value		Carrying Amount (a)		Estimated Fair Value

Credit facility debt	Level II	$	8,318,764	$	8,366,750	$	8,495,611	$	8,546,438
Collateralized indebtedness	Level II	1,716,600		1,727,051		1,706,997		1,741,710
Senior guaranteed notes and senior secured notes	Level II	8,078,369		7,610,688		8,077,372		8,180,813
Senior notes	Level II	7,957,142		7,203,109		7,950,241		7,883,071
Notes payable and supply chain financing	Level II	132,874		132,861		97,804		97,588





		$	26,203,749	$	25,040,459	$	26,328,025	$	26,449,620

(a)Amounts are net of unamortized deferred financing costs and discounts/premiums.

The fair value estimates related to the Company's debt instruments presented above are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgments and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

NOTE 11. INCOME TAXES

In general, the Company is required to use an estimated annual effective tax rate ("AETR") to measure the income tax expense or benefit recognized on a year to date basis in an interim period. In addition, certain items included in income tax expense as well as the tax impact of certain items included in pretax income must be treated as discrete items. The income tax expense or benefit associated with these discrete items is fully recognized in the interim period in which the items occur.

For the three months ended March 31, 2022, the Company recorded a tax expense of $82,846 on pre-tax income of $284,987, 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.

For the three months ended March 31, 2021, the Company recorded a tax expense of $112,007 on pre-tax income of $390,546, 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.

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

NOTE 12. SHARE-BASED COMPENSATION

The following table presents share-based compensation expense recognized by the Company and unrecognized compensation cost:


	Share-Based Compensation				Unrecognized Compensation Cost As of March 31, 2022
	Three Months Ended March 31,
	2022		2021
Awards issued pursuant to LTIP:
Stock Option Awards	$	22,497	$	24,223	$	130,916
Performance Stock Units	2,026		2,982		40,931
Restricted Share Units	16,009		317		93,723
Other awards	—		759		—
	$	40,532	$	28,281	$	265,570

Stock Option Awards

The following table summarizes activity related to stock options granted to Company employees:


	Shares Under Option	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (a)
Balance at December 31, 2021	50,998,816	$	22.51	8.29	$	6,801
Granted	1,284,633	14.01

Forfeited	(927,472)	22.63
Balance at March 31, 2022 (b)	51,355,977	$	22.30	7.96	276
Options exercisable at March 31, 2022	19,713,832	$	24.23	6.36	$	—

(a)The aggregate intrinsic value is calculated as the difference between the exercise price and the closing price of Altice USA's Class A common stock at the respective date.

(b)Options to purchase 13,147,405 shares are subject to shareholder approval of an increase of shares authorized to be issued pursuant to the Company's 2017 Long Term Incentive Plan ("LTIP").

The total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of approximately 2.52 years.

The weighted-average fair value of stock option awards granted during the three months ended March 31, 2022 was $4.50. The following weighted-average assumptions were used to calculate the fair values of stock option awards granted during the three months ended March 31, 2022:


Risk-free interest rate			1.93%
Expected life (in years)			6.16
Dividend yield			—%
Volatility			37.09%

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Performance Stock Unit Awards

The following table summarizes activity related to performance stock units ("PSUs") granted to Company employees:


			Number of PSUs
Balance at December 31, 2021			6,361,894
Forfeited			(163,621)
Balance at March 31, 2022			6,198,273

The PSUs have a weighted average grant date fair value of $10.65 per unit. The total unrecognized compensation cost related to the outstanding PSUs is expected to be recognized over a weighted-average period of approximately 3.83 years.

Restricted Share Units

The following table summarizes activity related to restricted share units granted to Company employees:


			Number of Units
Balance at December 31, 2021			6,617,837
Granted			416,484
Forfeited			(158,111)
Balance at March 31, 2022 (a)			6,876,210

(a)5,023,530 Restricted stock units are subject to shareholder approval of an increase of shares authorized to be issued pursuant to the 2017 LTIP.

Lightpath Plan Awards

As of March 31, 2022, 433,225 Class A-1 management incentive units and 231,928 Class A-2 management incentive units ("Award Units") granted to certain employees of Lightpath were outstanding. Vested units will be redeemed upon a partial exit, a change in control or the completion of an initial public offering, as defined in the Lightpath Holdings LLC agreement. The grant date fair value of the Award Units granted and outstanding aggregated $29,000 and will be expensed in the period in which a partial exit or a liquidity event is consummated.

NOTE 13. AFFILIATE AND RELATED PARTY TRANSACTIONS

Affiliate and Related Party Transactions

Altice USA is controlled by Patrick Drahi through Next Alt who also controls Altice Europe and other entities.

As the transactions discussed below were conducted between entities under common control by Mr. Drahi, amounts charged for certain services may not have represented amounts that might have been received or incurred if the transactions were based upon arm's length negotiations.

The following table summarizes the revenue and expenses related to services provided to or received from affiliates and related parties:


	Three Months Ended March 31,
	2022		2021
Revenue	$	638	$	3,406
Operating expenses:
Programming and other direct costs	$	(4,618)	$	(2,228)
Other operating expenses, net	(3,095)		(3,179)

Operating expenses, net	(7,713)		(5,407)






Net charges	$	(7,075)	$	(2,001)
Capital Expenditures	$	11,838	$	10,621

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

Revenue

The Company recognized revenue primarily from the sale of advertising to subsidiaries of Altice Europe, including Teads S.A. ("Teads") and in 2021, a foundation controlled by Mr. Drahi.

Programming and other direct costs

Programming and other direct costs include costs incurred by the Company for advertising services provided by Teads.

Other operating expenses, net

Other operating expenses primarily include charges for services provided by certain subsidiaries of Altice Europe and other related parties.

Capital Expenditures

Capital expenditures primarily include costs for equipment purchased and software development services provided by subsidiaries of Altice Europe.

Aggregate amounts that were due from and due to affiliates and related parties are summarized below:



	March 31, 2022		December 31, 2021


Due from:
Altice Europe	$	295	$	241
Other affiliates and related parties	3,535		3,535
	$	3,830	$	3,776
Due to:
Altice Europe	$	21,524	$	30,604
Other affiliates and related parties	1,348		1,206
	$	22,872	$	31,810

Amounts due from affiliates presented in the table above and included in prepaid expenses and other current assets in the accompanying balance sheets represent amounts paid by the Company on behalf of or for services provided to the respective related party. Amounts due to affiliates presented in the table above and included in other current liabilities in the accompanying balance sheets relate to the purchase of equipment and advertising services, as well as reimbursement for payments made on our behalf.

CSC Holdings

During the three months ended March 31, 2021, CSC Holdings made cash equity distribution payments to its parent. Also, CSC Holdings recorded net non-cash equity contributions (distributions) during the three months ended March 31, 2021 which represent the non-cash settlement of intercompany balances with Altice USA. These balances primarily include amounts due to/due from Altice USA pursuant to a tax sharing agreement between the entities. See summary below:


	Three Months Ended March 31,
		2022		2021
Cash distribution payments to Altice USA		$	—	$	(501,000)
Non-cash equity distributions, net to Altice USA		—		(748)

NOTE 14. COMMITMENTS AND CONTINGENCIES

Legal Matters

On June 23, 2020, a purported stockholder of the Company filed a complaint in the Court of Chancery of the State of Delaware, derivatively on behalf of the Company, against Patrick Drahi, Next Alt S.à.r.l., and those directors of the Company who are members of the Compensation Committee (collectively, the “Director Defendants”). The Company

ALTICE USA, INC. AND SUBSIDIARIES

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except share and per share amounts)

(Unaudited)

is also named as a nominal defendant in the complaint. The complaint alleges that the Director Defendants breached their fiduciary duties to the Company’s stockholders, and wasted corporate assets, by approving certain equity grants for Patrick Drahi. The complaint seeks rescission of the equity awards, monetary damages, and costs and disbursements for the plaintiff. On October 15, 2020, the Director Defendants answered the complaint and the Company filed a general denial of liability. Following negotiations with plaintiff, the parties executed a stipulation and agreement of compromise, settlement, and release on April 27, 2022 to settle the litigation. That settlement remains subject to court approval.

On November 6, 2018, Sprint Communications Company L.P ("Sprint") filed a complaint in the U.S. District Court for the District of Delaware alleging that the Company infringes Sprint’s patents purportedly by providing Voice over Internet Protocol ("VoIP") services. The lawsuit is part of a pattern of litigation that was initiated as far back as 2005 by Sprint against numerous broadband and telecommunications providers, which has resulted in judgments and settlements of significant value for Sprint. Trial is scheduled to commence on December 12, 2022, at which we expect Sprint to seek as much as $250 million in damages. The Company intends to vigorously defend the lawsuit.

The Company has received from UMG Recordings, Inc., Capitol Records, LLC, and BMG Rights Management (US) LLC letters alleging that the Company has not adequately addressed copyright infringement on its networks and is subject to liability and damages for secondary copyright infringement. The Company intends to vigorously defend these claims.

Although the outcome of the above matters cannot be predicted and the impact of a final resolution of these matters on the Company’s results of operations or financial position is not known or reasonably estimable at this time, management does not believe that the ultimate resolution of the matters, individually or together, will have a material adverse effect on the operations or financial position of the Company or the ability of the Company to meet its financial obligations as they become due, but they could be material to the Company’s consolidated results of operations or cash flows for any one period.

In addition to the matters discussed above, the Company also receives notices from third parties, and in some cases is named as a defendant in lawsuits, claiming infringement of various patents or copyrights relating to various aspects of the Company's businesses. In certain of these cases other industry participants are also defendants, and in certain of these cases the Company expects that some or all potential liability would be the responsibility of the Company's vendors pursuant to applicable contractual indemnification provisions. In the event that the Company is found to infringe on any patent or other intellectual property rights, the Company may be subject to substantial damages and/or an injunction that could require the Company or its vendors to modify certain products and services the Company offers to its subscribers, as well as enter into royalty or license agreements with respect to the patents at issue. The Company is also party to various other lawsuits, disputes and investigations arising in the ordinary course of its business, some of which may involve claims for substantial damages, fines or penalties. Although the outcome of these matters cannot be predicted and the impact of the final resolution of these matters on the Company's results of operations in a particular subsequent reporting period is not known, management does not believe that the resolution of these matters, individually, will have a material adverse effect on the operations or financial position of the Company or the ability of the Company to meet its financial obligations as they become due.

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

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, 2021.

Overview

Our Business

We principally provide broadband communications and video services in the United States and market our services primarily under two brands: Optimum, primarily in the New York metropolitan area, and Suddenlink, principally in markets in the south-central United States. We deliver broadband, video, telephony, and mobile services to approximately five million residential and business customers. Our footprint extends across 21 states through a fiber-rich hybrid-fiber coaxial ("HFC") broadband network and a fiber-to-the-home ("FTTH") network with approximately 9.3 million total passings as of March 31, 2022. Additionally, we offer news programming and content, advertising services, as well as a full service mobile offering to consumers across our footprint.

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, 2021.

In March 2020, the United States declared a national emergency concerning the outbreak of COVID-19. Since then, there have been extraordinary and wide-ranging actions taken by federal, state and local governmental authorities to contain and combat the outbreak and spread of the virus and new variants, including lockdowns, social distancing directives and testing, and vaccine mandates. While certain government regulations and mandates have eased and COVID-19 vaccines have become broadly available in certain areas, governmental authorities are continuing to monitor the situation and take various actions in an effort to slow or prevent an increase in the spread of COVID-19.

The COVID-19 pandemic significantly impacted our business, including how our customers use our products and services and how our employees provide services to our customers. Although the ultimate impact of the pandemic on our business cannot be predicted, and we cannot predict how our future results may be impacted if the pandemic continues, we have and will continue to provide our telecommunications services to our customers and work to adapt the environment in which we operate. See "Risk Factors - Our business, financial condition and results of operations may be adversely affected by the recent COVID-19 pandemic." in our Annual Report on Form 10-K for the year ended December 31, 2021.

We derive revenue principally through monthly charges to residential customers of our broadband, video, and telephony services. We also derive revenue from digital video recorder ("DVR"), video-on-demand ("VOD"), pay-per-view, installation and home shopping commissions. Our residential broadband, video, and telephony services accounted for approximately 41%, 35%, and 4%, respectively, of our consolidated revenue for the three months ended March 31, 2022. We also derive revenue from the sale of a wide and growing variety of products and services to both large enterprise and SMB customers, including broadband, telephony, networking and video services. For the three months ended March 31, 2022, 15% 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 three months ended March 31, 2022. Our mobile and other revenue for the three months ended March 31, 2022 accounted for approximately 1% of our consolidated revenue.

Revenue is impacted by rate increases, 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.

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 and 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. and its DirecTV subsidiary, Lumen Technologies, Inc., DISH Network Corporation, Frontier Communications Corporation 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, 2021.

Our programming costs, which are the most significant component of our operating expenses, are impacted by changes in programming rates, which we expect to increase, and by changes in the number of video customers. 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, with planned upgrades, will enable us to deliver Multi-gig broadband speeds 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.

Certain Transactions

The following transactions had an impact in the periods covered by this Management's Discussion and Analysis of Financial Condition and Results of Operations:

In June 2021, Lightpath completed an acquisition for an aggregate purchase price of approximately $28,260 and the operating results of the acquired business were consolidated as of the acquisition date.

In April 2021, the Company completed its acquisition of the cable assets of Morris Broadband, LLC in North Carolina for approximately $312,184 and the operating results of the acquired business were consolidated as of the acquisition date.

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, 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, interest expense, net, depreciation and amortization (including impairments), share-based compensation expense, restructuring expense, and transaction expenses.

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 the Company’s industry, although they may not be directly comparable to similar measures reported by other companies.

Results of Operations - Altice USA (unaudited)


	Three Months Ended March 31,				Favorable (Unfavorable)
	2022		2021
Revenue:
Broadband	$	985,517	$	970,571	$	14,946
Video	841,887		905,834		(63,947)
Telephony	85,234		106,981		(21,747)
Residential revenue	1,912,638		1,983,386		(70,748)


Business services and wholesale revenue	367,522		367,216		306
News and advertising	114,675		105,070		9,605
Mobile	24,035		19,235		4,800
Other	3,027		3,914		(887)
Total revenue	2,421,897		2,478,821		(56,924)
Operating expenses:
Programming and other direct costs	828,793		851,864		23,071
Other operating expenses	641,906		580,433		(61,473)
Restructuring and other expense	3,378		3,209		(169)
Depreciation and amortization (including impairments)	435,349		434,857		(492)
Operating income	512,471		608,458		(95,987)
Other income (expense):
Interest expense, net	(303,362)		(316,312)		12,950
Gain (loss) on investments	(150,773)		73,453		(224,226)
Gain (loss) on derivative contracts, net	101,074		(53,565)		154,639
Gain on interest rate swap contracts, net	123,147		75,653		47,494

Other income, net	2,430		2,859		(429)
Income before income taxes	284,987		390,546		(105,559)
Income tax expense	(82,846)		(112,007)		29,161
Net income	202,141		278,539		(76,398)
Net income attributable to noncontrolling interests	(5,590)		(4,403)		(1,187)
Net income attributable to Altice USA, Inc. stockholders	$	196,551	$	274,136	$	(77,585)

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


	Three Months Ended March 31,
	2022		2021
Net income	$	202,141	$	278,539
Income tax expense	82,846		112,007
Other income, net	(2,430)		(2,859)
Gain on interest rate swap contracts, net	(123,147)		(75,653)
Loss (gain) on derivative contracts, net	(101,074)		53,565
Loss (gain) on investments	150,773		(73,453)

Interest expense, net	303,362		316,312
Depreciation and amortization (including impairments)	435,349		434,857
Restructuring and other expense	3,378		3,209
Share-based compensation	40,532		28,281
Adjusted EBITDA	991,730		1,074,805
Less: Capital Expenditures (cash)	392,371		212,791
Operating Free Cash Flow	$	599,359	$	862,014

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


	Three Months Ended March 31,
	2022		2021

Net cash flows from operating activities	$	600,219	$	749,622
Less: Capital Expenditures (cash)	392,371		212,791
Free Cash Flow	$	207,848	$	536,831

The following table sets forth certain customer metrics, excluding our mobile customers, for the Company (unaudited):


	March 31,			December 31,			March 31,
	2022			2021			2021
	(in thousands)
Total passings (a)	9,304.9			9,263.3			9,067.6
Total customer relationships (b)(c)	4,995.0			5,014.7			5,023.2
Residential	4,612.1			4,632.8			4,647.4
SMB	382.9			381.9			375.8
Residential customers:
Broadband	4,373.2			4,386.2			4,370.8
Video	2,658.7			2,732.3			2,906.6
Telephony	1,951.5			2,005.2			2,161.2
Penetration of total passings (d)	53.7		%	54.1		%	55.4		%
ARPU (e)	$	137.92		$	137.79		$	142.24

FTTH total passings (f)	1,316.6			1,171.0			921.4
FTTH customer relationships (g)(h)	81.0			69.7			35.9
FTTH Residential	80.4			69.3			35.9
FTTH SMB	0.6			0.3			—
Penetration of FTTH total passings (i)	6.1		%	5.9		%	3.9		%

(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 total passings and telephony services were not available to approximately 500 thousand total passings. Amounts as of December 31, 2021 include approximately 89 thousand total passings that were acquired from Morris Broadband in April 2021.

(b)Represents number of households/businesses that receive at least one of the Company's fixed-line services.

(c)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. 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. Amounts as of December 31, 2021 include 37.3 thousand customer relationships (35.1 thousand residential and 2.2 thousand SMB) that were acquired from Morris Broadband in April 2021.

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

(e)Calculated by dividing the average monthly revenue for the respective quarter (fourth quarter for annual periods) derived from the sale of broadband, video and telephony services to residential customers by the average number of total residential customers for the same period.

(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.

(h)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.

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

Altice USA- Comparison of Results for the Three Months Ended March 31, 2022 compared to the Three Months Ended March 31, 2021

Broadband Revenue

Broadband revenue for the three months ended March 31, 2022 and 2021 was $985,517 and $970,571, 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 number of customers, including additional services sold to our existing subscribers, 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 increased $14,946 (2%) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was due primarily to higher average recurring broadband revenue per broadband customer, primarily driven by certain rate increases and service level changes and an increase in broadband customers.

Video Revenue

Video revenue for the three months ended March 31, 2022 and 2021 was $841,887 and $905,834, 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 number of customers, including 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 $63,947 (7%) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The decrease was due primarily 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 months ended March 31, 2022 and 2021 was $85,234 and $106,981, 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 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 $21,747 (20%) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The decrease was due to lower average recurring revenue per telephony customer and a decline in telephony customers.

Business Services and Wholesale Revenue

Business services and wholesale revenue for the three months ended March 31, 2022 and 2021 was $367,522 and $367,216, 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 and telephony services to SMB customers.

Business services and wholesale revenue increased $306 for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was due primarily to higher average broadband recurring revenue per SMB customer, primarily driven by certain rate increases and service level changes and an increase in SMB customers, partially offset by the absence of revenue in 2022 from a backhaul contract for air strands and lower SMB recurring video and telephony revenue.

News and Advertising Revenue

News and advertising revenue for the three months ended March 31, 2022 and 2021 was $114,675 and $105,070, 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 (linear revenue), (ii) digital advertising, (iii) branded content, and (iv) data analytics. News and advertising revenue also includes affiliation fees for news programming.

News and advertising revenue increased $9,605 (9%) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was primarily due to an increase in advertising revenue, primarily for linear advertising.

Mobile Revenue

Mobile revenue for the three months ended March 31, 2022 and 2021 was $24,035 and $19,235, respectively, and relates to sales of devices and mobile services. Mobile revenue increased $4,800 (25%) for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. The increase was due to higher mobile lines and devices sold. As of March 31, 2022, we had approximately 198,000 mobile lines (including 8,300 receiving free service) compared to approximately 174,000 mobile lines as of March 31, 2021.

Other Revenue

Other revenue for the three months ended March 31, 2022 and 2021 was $3,027 and $3,914, respectively. Other revenue includes revenue from other miscellaneous revenue streams.

Programming and Other Direct Costs

Programming and other direct costs for the three months ended March 31, 2022 and 2021 amounted to $828,793 and $851,864, 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 typically rise due to increases in contractual rates and new channel launches and are also impacted by changes in the number of customers receiving certain programming services. 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 decrease of $23,071 (3%) for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily attributable to the following:


Decrease in programming costs primarily due to lower video customers, partially offset by net contractual rate increases	$	(15,307)
Decrease in franchise fee costs due to lower video customers	(3,601)


Other net decreases	(4,163)
	$	(23,071)

Programming costs

Programming costs aggregated $684,146 and $699,453 for the three months ended March 31, 2022 and 2021, respectively. Our programming costs in 2022 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 months ended March 31, 2022 and 2021 amounted to $641,906 and $580,433, 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 increase in other operating expenses of $61,473 (11%), for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was attributable to the following:


Net increase in labor costs and benefits, partially offset by an increase in capitalizable activity	$	21,561
Increase in repairs and maintenance costs	13,262
Increase in share-based compensation costs	12,251
Increase in marketing costs	9,994
Other net increases	4,405
	$	61,473

Restructuring and Other Expense

Restructuring and other expense for the three months ended March 31, 2022 amounted to $3,378 as compared to $3,209 for the three months ended March 31, 2021. These amounts include severance and other employee related costs resulting from headcount reductions, facility realignment costs and impairments of certain ROU assets of $2,932 and $2,585, respectively, and transactions costs of $446 and $624, respectively.

Depreciation and Amortization

Depreciation and amortization for the three months ended March 31, 2022 and 2021 amounted to $435,349 and $434,857, respectively.

The increased in depreciation and amortization of $492 for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was due to an increase in depreciation as a result of higher asset additions in 2022 as compared to 2021, partially offset by lower amortization expense on intangible assets.

Adjusted EBITDA

Adjusted EBITDA amounted to $991,730 and $1,074,805 for the three months ended March 31, 2022 and 2021, respectively.

The decrease in Adjusted EBITDA for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was due to a decrease in revenue and an increase in operating expenses (excluding depreciation and amortization, restructuring and other expense and share-based compensation), as discussed above.

Operating Free Cash Flow

Operating free cash flow was $599,359 and $862,014 for the three months ended March 31, 2022 and 2021, respectively. The decrease in operating free cash flow for the three months ended March 31, 2022 as compared to the same period in 2021 is due to an increase in capital expenditures and a decrease in Adjusted EBITDA.

Free Cash Flow

Free cash flow was $207,848 and $536,831 for the three months ended March 31, 2022 and 2021, respectively. The decrease in free cash flow in the three month period is due an increase in capital expenditures and a decrease in cash flows from operating activities.

Interest Expense, net

Interest expense, net was $303,362 and $316,312 for the three months ended March 31, 2022 and 2021, respectively. The decrease of $12,950 for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was attributable to the following:


Decrease due primarily to changes in average debt balances	$	(11,241)
Higher interest income	(25)
Other net decreases, primarily amortization of deferred financing costs and original issue discounts	(1,684)
	$	(12,950)

Gain (Loss) on Investments

Gain (loss) on investments was $(150,773) and $73,453 for the three months ended March 31, 2022 and 2021, respectively and consists of the increase (decrease) in the fair value of Comcast common stock owned by the Company. The effects of these gains (losses) are 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 three months ended March 31, 2022 and 2021 amounted to $101,074 and $(53,565) and includes 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. The effects of these gains (losses) are 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 $123,147 and $75,653 for the three months ended March 31, 2022 and 2021, 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, net

Other income, net amounted to $2,430 and $2,859 for the three months ended March 31, 2022 and 2021, respectively. These amounts include dividends received on Comcast common stock owned by the Company and the non-service cost/benefit components of the Company's pension plan.

Income Tax Expense

For the three months ended March 31, 2022, Altice USA recorded a tax expense of $82,846 on pre-tax income of $284,987, 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.

For the three months ended March 31, 2021, Altice USA recorded a tax expense of $112,007 on pre-tax income of $390,546, 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 certain state tax expense adjustments.

CSC HOLDINGS, LLC

The consolidated statements of operations, adjusted EBITDA and Operating Free Cash Flow of CSC Holdings are identical to the consolidated statements of operations, adjusted EBITDA and Operating Free Cash Flow of Altice USA. 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:



	Three Months Ended March 31,
	2022		2021

Net cash flows from operating activities	$	600,978	$	748,962
Less: Capital expenditures (cash)	392,371		212,791
Free Cash Flow	$	208,607	$	536,171

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 target a year-end leverage ratio of 4.5x to 5.0x for CSC Holdings over time. We calculate our CSC Holdings net leverage ratio as net debt to L2QA EBITDA (Adjusted EBITDA for the two most recent consecutive fiscal quarters multiplied by 2.0).

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 well as interest expense for the three months ended March 31, 2022:


	CSC Holdings Restricted Group		Lightpath		Other Unrestricted Entities		Altice USA/CSC Holdings
Debt outstanding:
Credit facility debt	$	7,740,569	$	578,195	$	—	$	8,318,764
Senior guaranteed notes	7,636,312		—		—		7,636,312
Senior secured notes	—		442,057		—		442,057
Senior notes	7,549,800		407,342		—		7,957,142
Subtotal	22,926,681		1,427,594		—		24,354,275
Finance lease obligations	237,082		—		—		237,082
Notes payable and supply chain financing	132,874		—		—		132,874
Subtotal	23,296,637		1,427,594		—		24,724,231
Collateralized indebtedness relating to stock monetizations (a)	—		—		1,716,600		1,716,600
Total debt	$	23,296,637	$	1,427,594	$	1,716,600	$	26,440,831
Interest expense:
Credit facility debt, senior notes, finance leases, notes payable and supply chain financing	$	267,217	$	17,039	$	—	$	284,256
Collateralized indebtedness relating to stock monetizations (a)	—		—		19,158		19,158
Total interest expense	$	267,217	$	17,039	$	19,158	$	303,414

(a)This indebtedness is collateralized by shares of Comcast common stock. We intend to settle this debt by (i) delivering shares of Comcast common stock and the related equity contracts, or (ii) delivering cash from the net proceeds from new monetization contracts.

Payment Obligations Related to Debt

As of March 31, 2022, total amounts payable by us in connection with our outstanding obligations, including related interest, as well as notes payable and supply chain financing, and the value deliverable at maturity under monetization contracts, but excluding finance lease obligations are as follows:


	CSC Holdings Restricted Group		Lightpath		Other Unrestricted Entities (a)		Altice USA/ CSC Holdings
2022	$	1,584,583	$	41,205	$	25,345	$	1,651,133
2023	1,138,150		69,358		1,776,378		2,983,886
2024	2,552,009		68,038		—		2,620,047
2025	3,752,077		68,596		—		3,820,673
2026	2,064,347		66,532		—		2,130,879
Thereafter	18,822,805		1,503,803		—		20,326,608
Total	$	29,913,971	$	1,817,532	$	1,801,723	$	33,533,226

(a)Includes $1,801,723 related to the Company's collateralized indebtedness (including related interest). This indebtedness is collateralized by shares of Comcast common stock. We intend to settle this debt by (i) delivering shares of Comcast common stock and the related equity contracts or (ii) delivering cash from the net proceeds on new monetization contracts.

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 "Unrestricted Group"). 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 ($2,857,500 outstanding at March 31, 2022) (the "CSC Term Loan Facility", and the term loans extended under the CSC Term Loan Facility, the "CSC Term Loans") and U.S. dollar revolving loan commitments in an aggregate principal amount of $2,475,000 ($740,000 outstanding at March 31, 2022) (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 on June 20, 2016, June 21, 2016, July 21, 2016, September 9, 2016, December 9, 2016, March 15, 2017, January 12, 2018, October 15, 2018, January 24, 2019, February 7, 2019, May 14, 2019, and October 3, 2019, respectively, and as further 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 ($1,236,750 outstanding at March 31, 2022) incremental term loan facility (the “Incremental Term Loan B-3”) and in October 2019, CSC Holdings entered into a $3,000,000 ($2,940,000 outstanding at March 31, 2022) incremental term loan facility ("Incremental Term Loan B-5") under its existing credit facilities agreement.

See Note 8 to our consolidated financial statements for further information regarding the CSC Credit Facilities Agreement.

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 ($592,500 outstanding at March 31, 2022) and revolving loan commitments in an aggregate principal amount of $100,000. As of March 31, 2022, there were no borrowings outstanding under the Lightpath revolving credit facility. See Note 8 to our consolidated financial statements for further information regarding the Lightpath credit agreement.

Lightpath Interest Rate Swap Contract

Lightpath entered into an interest rate swap contract, effective April 2022, on a notional amount of $300,000, whereby Lightpath pays interest of 2.161% through December 2026 and receives interest based on the one-month LIBOR rate. This swap contract will not be designated as a hedge for accounting purposes. Accordingly, the changes in the fair value of this interest rate swap contract will be recorded through the statement of operations.

Capital Expenditures

The following table presents the Company's capital expenditures:


	Three Months Ended March 31,
	2022		2021
Customer premise equipment	$	81,584	$	41,836
Network infrastructure	233,823		116,387
Support and other	45,660		29,973
Business Services	31,304		24,595
Capital purchases (cash basis)	$	392,371	$	212,791
Right-of-use assets acquired in exchange for finance lease obligations	$	47,288	$	38,348
Notes payable issued to vendor for the purchase of equipment and other assets	35,070		—
Change in accrued and unpaid purchases and other	(11,865)		60,334
Capital purchases (accrual basis)	$	462,864	$	311,473

Customer premise equipment includes expenditures for set-top boxes, cable modems, routers and other equipment that is placed in a customer's home, as well as installation costs for placing assets into service. Network infrastructure includes: (i) scalable infrastructure, such as headend equipment, (ii) line extensions, such as FTTH and fiber/coaxial cable, amplifiers, electronic equipment, make-ready and design engineering, and (iii) upgrade and rebuild, including costs to modify or replace existing fiber/coaxial cable networks, including enhancements. Support and other capital expenditures includes 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, installation, support, and other costs related to our fiber based telecommunications business serving primarily enterprise customers.

In February 2022, the Company announced plans to accelerate its fiber network rollout and new build activity, including targeting 6.5 million fiber passings across its footprint by the end of 2025. The Company estimates it will incur approximately $1,700,000 to $1,800,000 of cash capital expenditures in fiscal year 2022 to advance its upgrade and expansion plans.

Cash Flow Discussion

Altice USA

Operating Activities

Net cash provided by operating activities amounted to $600,219 for the three months ended March 31, 2022 compared to $749,622 for the three months ended March 31, 2021.

The decrease in cash provided by operating activities of $149,403 in 2022 as compared to 2021 resulted from a decrease of $109,706 due to changes in working capital (including an increase in interest payments of $2,146 and an increase in tax payments of $13,315) as well as the timing of payments and collections of accounts receivable, among other items, and a decrease in net income before depreciation and amortization and other non-cash items of $39,697.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2022 was $391,483 compared to $210,648 for the three months ended March 31, 2021. The investing activities consisted primarily of capital expenditures of $392,371 and $212,791 for the three months ended March 31, 2022 and 2021, respectively.

Financing Activities

Net cash used in financing activities amounted to $208,629 for the three months ended March 31, 2022, compared to $597,445 for the three months ended March 31, 2021.

In 2022, the Company's financing activities consisted of the repayment of long-term debt of $329,688 and principal payments on finance lease obligations of $28,941, partially offset by proceeds from long-term debt of $150,000.

In 2021, the Company's financing activities consisted of the repurchase of common stock pursuant to a share repurchase program of $503,645, repayment of long-term debt of $225,863, repayment of collateralized indebtedness

and related derivative contracts, net of $185,105, principal payments on finance lease obligations of $18,330, partially offset by proceeds from collateralized indebtedness, net of $185,105, proceeds from long-term debt of $150,000, and other net cash receipts of $393.

CSC Holdings

Operating Activities

Net cash provided by operating activities amounted to $600,978 for the three months ended March 31, 2022, compared to $748,962 for the three months ended March 31, 2021.

The decrease in cash provided by operating activities of $147,984 in 2022 as compared to 2021 resulted from a decrease of $108,287 due to changes in working capital (including an increase in interest payments of $2,146 and an increase in tax payments of $13,315) as well as the timing of payments and collections of accounts receivable, among other items, and a decrease in net income before depreciation and amortization and other non-cash items of $39,697.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2022 was $391,483, compared to $210,648 for the three months ended March 31, 2021. The 2022 investing activities consisted primarily of capital expenditures of $392,371 and $212,791 for the three months ended March 31, 2022 and 2021, respectively.

Financing Activities

Net cash used in financing activities amounted to $208,629 for the three months ended March 31, 2022, compared to $596,658 for the three months ended March 31, 2021.

In 2021, the Company's financing activities consisted of distributions to its parent of $501,000, repayment of long-term debt of $225,863, repayment of collateralized indebtedness and related derivative contracts, net of $185,105, principal payments on finance lease obligations of $18,330, and other net cash payments of $1,465, partially offset by proceeds from collateralized indebtedness, net of $185,105 and proceeds from long term debt of $150,000.

Commitments and Contingencies

As of March 31, 2022, the Company's commitments and contingencies not reflected in the Company's balance sheet decreased to approximately $9,630,000 as compared to approximately $10,310,000 at December 31, 2021. This decrease relates primarily to payments made pursuant to programming commitments and a decrease in the number of customers receiving programming as of March 31, 2022 as compared to December 31, 2021.

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 incremental $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 three months ended March 31, 2022, Altice USA did not repurchase any shares. From inception through March 31, 2022, 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 March 31, 2022, Altice USA had approximately $1,191,302 of availability remaining under the incremental share repurchase program.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Equity Price Risk

We are exposed to market risks from changes in certain equity security prices. Our exposure to changes in equity security prices stems primarily from the shares of Comcast common stock we hold. We have entered into equity derivative contracts consisting of a collateralized loan and an equity collar to hedge our equity price risk and to monetize the value of these securities. These contracts, at maturity, are expected to offset declines in the fair value of these securities below the hedge price per share while allowing us to retain upside appreciation from the hedge price per share to the relevant cap price. The contracts' actual hedge prices per share vary depending on average stock prices in effect at the time the contracts were executed. The contracts' actual cap prices vary depending on the maturity and terms of each contract, among other factors. If any one of these contracts is terminated prior to its scheduled maturity date due to the occurrence of an event specified in the contract, we would be obligated to repay the fair value of the collateralized indebtedness less the sum of the fair values of the underlying stock and equity collar, calculated at the termination date. As of March 31, 2022, we did not have an early termination shortfall relating to any of these contracts.

The underlying stock and the equity collars are carried at fair value in our consolidated balance sheets and the collateralized indebtedness is carried at its principal value, net of discounts. These discounts are being amortized over the term of the related indebtedness. The carrying value of our collateralized indebtedness amounted to $1,716,600 at March 31, 2022. At maturity, the contracts provide for the option to deliver cash or shares of Comcast common stock, with a value determined by reference to the applicable stock price at maturity.

As of March 31, 2022, the fair value and the carrying value of our holdings of Comcast common stock aggregated $2,011,164. Assuming a 10% change in price, the potential change in the fair value of these investments would be approximately $201,116. As of March 31, 2022, the net fair value and the carrying value of the equity collar component of the equity derivative contracts entered into to partially hedge the equity price risk of our holdings of Comcast common stock aggregated $60,868, a net liability position. For the three months ended March 31, 2022, we recorded a net gain of $101,074 related to our outstanding equity derivative contracts and recorded an unrealized loss of $150,773 related to the Comcast common stock that we held.


Fair Value of Equity Derivative Contracts
Fair value as of December 31, 2021, net liability position	$	(161,942)
Change in fair value, net	101,074
Fair value as of March 31, 2022, net liability position	$	(60,868)

The maturity date, number of shares deliverable at the relevant maturity date, hedge price per share, and the lowest and highest cap prices received for the Comcast common stock monetized via an equity derivative prepaid forward contract are summarized in the following table:


# of Shares Deliverable	Maturity	Hedge Price per Share (a)	Cap Price (b)

42,955,236	2023	$40.95	$49.55

(a)Represents the price below which we are provided with downside protection and above which we retain upside appreciation. Also represents the price used in determining the cash proceeds payable to us at inception of the contracts.

(b)Represents the price up to which we receive the benefit of stock price appreciation.

Fair Value of Debt

At March 31, 2022, the fair value of our fixed rate debt, comprised of our collateralized debt, senior guaranteed and senior secured notes, senior notes and notes payable, of $16,673,709 was lower than its carrying value of $17,884,985 by $1,211,276. 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 to current LIBOR-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 March 31, 2022 would

increase the estimated fair value of our fixed rate debt by $840,618 to $17,514,327. 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 March 31, 2022. 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 months ended March 31, 2022, the Company recorded a gain on interest rate swap contracts of $123,147.

The following represents the location of the assets and liabilities associated with the Company's equity derivative contracts and interest rate swap contracts within the consolidated balance sheets:

Derivatives Not Designated as Hedging Instruments

Balance Sheet Location

Fair Value at
March 31, 2022

Asset Derivatives:

Interest rate swap contracts

Derivative contracts, long-term

53,539

Liability Derivatives:

Prepaid forward contracts

Liabilities under derivative contracts, long-term

(60,868)

Interest rate swap contracts

Liabilities under derivative contracts, long-term

(30,084)

(90,952)

As of March 31, 2022, we did not hold and have not issued derivative instruments for trading or speculative purposes.

Item 4. Controls and Procedures

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 March 31, 2022.

Changes in Internal Control

During the three months ended March 31, 2022, 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.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 14 to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of our legal proceedings.

Item 6. Exhibits


EXHIBIT NO.						DESCRIPTION

31.1						Section 302 Certification of the CEO.
31.2						Section 302 Certification of the CFO.
32						Section 906 Certifications of the CEO and CFO.
101						The following financial statements from Altice USA's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 filed with the Securities and Exchange Commission on April 28, 2022 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Stockholders' Deficiency; (v) the Consolidated Statements of Cash Flows; and (vi) the Combined Notes to Consolidated Financial Statements.
104						The cover page from this quarterly report on Form 10-Q formatted in Inline XBRL.

SIGNATURES

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

ALTICE USA, INC.

Date:

April 28, 2022

/s/ Michael J. Grau

By:

Michael J. Grau

Chief Financial Officer