Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 25, 2018 | |
Entity Registrant Name | Ascent Capital Group, Inc. | |
Entity Central Index Key | 1,437,106 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Series A Common Stock | ||
Entity Common Stock, Shares Outstanding (in shares) | 12,017,149 | |
Series B Common Stock | ||
Entity Common Stock, Shares Outstanding (in shares) | 381,528 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||||
Cash and cash equivalents | $ 30,087 | $ 10,465 | $ 42,257 | $ 12,319 |
Restricted cash | 93 | 0 | ||
Marketable securities, at fair value | 107,450 | 105,958 | ||
Trade receivables, net of allowance for doubtful accounts of $3,632 in 2018 and $4,162 in 2017 | 12,300 | 12,645 | ||
Prepaid and other current assets | 23,498 | 11,175 | ||
Total current assets | 173,428 | 140,243 | ||
Property and equipment, net of accumulated depreciation of $40,537 in 2018 and $37,915 in 2017 | 34,070 | 32,823 | ||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization of $1,468,359 in 2018 and $1,439,164 in 2017 | 1,224,937 | 1,302,028 | ||
Dealer network and other intangible assets, net of accumulated amortization of $45,859 in 2018 and $42,806 in 2017 | 3,941 | 6,994 | ||
Goodwill | 563,549 | 563,549 | ||
Other assets | 27,633 | 9,348 | ||
Total assets | 2,027,558 | 2,054,985 | ||
Current liabilities: | ||||
Accounts payable | 12,910 | 11,092 | ||
Accrued payroll and related liabilities | 6,145 | 3,953 | ||
Other accrued liabilities | 66,584 | 52,329 | ||
Deferred revenue | 13,477 | 13,871 | ||
Holdback liability | 7,601 | 9,309 | ||
Current portion of long-term debt | 11,000 | 11,000 | ||
Total current liabilities | 117,717 | 101,554 | ||
Non-current liabilities: | ||||
Long-term debt | 1,783,253 | 1,778,044 | ||
Long-term holdback liability | 2,191 | 2,658 | ||
Derivative financial instruments | 6,553 | 13,491 | ||
Deferred income tax liability, net | 13,973 | 13,311 | ||
Other liabilities | 3,259 | 3,255 | ||
Total liabilities | 1,926,946 | 1,912,313 | ||
Commitments and contingencies | ||||
Stockholders’ equity: | ||||
Preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued | 0 | 0 | ||
Additional paid-in capital | 1,424,068 | 1,423,899 | ||
Accumulated deficit | (1,331,281) | (1,277,118) | ||
Accumulated other comprehensive income (loss), net | 7,701 | (4,233) | ||
Total stockholders’ equity | 100,612 | 142,672 | ||
Total liabilities and stockholders’ equity | 2,027,558 | 2,054,985 | ||
Series A Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 120 | 120 | ||
Series B Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 4 | 4 | ||
Series C Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | $ 0 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Trade receivables, allowance for doubtful accounts | $ 3,632 | $ 4,162 |
Property and equipment, accumulated depreciation | 40,537 | 37,915 |
Subscriber accounts, accumulated amortization | 1,468,359 | 1,439,164 |
Dealer network and other intangible assets, accumulated amortization | $ 45,859 | $ 42,806 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Series A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized shares (in shares) | 45,000,000 | 45,000,000 |
Common stock, issued shares (in shares) | 12,002,103 | 11,999,630 |
Common stock, outstanding shares (in shares) | 12,002,103 | 11,999,630 |
Series B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized shares (in shares) | 5,000,000 | 5,000,000 |
Common stock, issued shares (in shares) | 381,528 | 381,528 |
Common stock, outstanding shares (in shares) | 381,528 | 381,528 |
Series C Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized shares (in shares) | 45,000,000 | 45,000,000 |
Common stock, issued shares (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net revenue | $ 133,753 | $ 141,200 |
Operating expenses: | ||
Cost of services | 32,701 | 29,969 |
Selling, general and administrative, including stock-based and long-term incentive compensation | 37,406 | 36,245 |
Radio conversion costs | 0 | 232 |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 54,411 | 59,547 |
Depreciation | 2,621 | 2,127 |
Gain on disposal of operating assets | 0 | (6,638) |
Total operating expenses | 127,139 | 121,482 |
Operating income | 6,614 | 19,718 |
Other expense (income), net: | ||
Interest income | (481) | (395) |
Interest expense | 38,652 | 37,486 |
Other income, net | (2,065) | (242) |
Total other expense (income), net | 36,106 | 36,849 |
Loss from continuing operations before income taxes | (29,492) | (17,131) |
Income tax expense from continuing operations | 1,346 | 1,814 |
Net loss from continuing operations | (30,838) | (18,945) |
Discontinued operations: | ||
Income from discontinued operations, net of income tax of $0 | 0 | 92 |
Net loss | (30,838) | (18,853) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 0 | 58 |
Unrealized holding gain (loss) on marketable securities, net | (3,077) | 551 |
Unrealized gain on derivative contracts, net | 14,406 | 1,049 |
Total other comprehensive income, net of tax | 11,329 | 1,658 |
Comprehensive loss | $ (19,509) | $ (17,195) |
Basic and diluted income (loss) per share: | ||
Continuing operations (in dollars per share) | $ (2.51) | $ (1.56) |
Discontinued operations (in dollars per share) | 0 | 0.01 |
Net loss (in dollars per share) | $ (2.51) | $ (1.55) |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Income tax, discontinued operations | $ 0 | $ 0 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (30,838) | $ (18,853) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Income from discontinued operations, net of income tax | 0 | (92) |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 54,411 | 59,547 |
Depreciation | 2,621 | 2,127 |
Stock-based and long-term incentive compensation | 226 | 1,576 |
Deferred income tax expense | 662 | 1,052 |
Gain on disposal of operating assets | 0 | (6,638) |
Amortization of debt discount and deferred debt costs | 2,959 | 2,673 |
Bad debt expense | 3,017 | 2,557 |
Other non-cash activity, net | 41 | 1,872 |
Changes in assets and liabilities: | ||
Trade receivables | (2,672) | (1,659) |
Prepaid expenses and other assets | 851 | 1,506 |
Contract asset, net | (70) | 0 |
Subscriber accounts - deferred contract acquisition costs | (898) | (754) |
Payables and other liabilities | 17,644 | 4,491 |
Operating activities from discontinued operations, net | 0 | (3,408) |
Net cash provided by operating activities | 47,954 | 45,997 |
Cash flows from investing activities: | ||
Capital expenditures | (3,310) | (1,693) |
Cost of subscriber accounts acquired | (24,560) | (46,708) |
Purchases of marketable securities | (7,998) | (2,627) |
Proceeds from sale of marketable securities | 5,495 | 997 |
Proceeds from the disposal of operating assets | 0 | 12,090 |
Increase in restricted cash | (93) | 0 |
Net cash used in investing activities | (30,466) | (37,941) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 50,000 | 64,750 |
Payments on long-term debt | (47,750) | (42,600) |
Value of shares withheld for share-based compensation | (116) | (268) |
Net cash provided by financing activities | 2,134 | 21,882 |
Net increase in cash and cash equivalents | 19,622 | 29,938 |
Cash and cash equivalents at beginning of period | 10,465 | 12,319 |
Cash and cash equivalents at end of period | 30,087 | 42,257 |
Supplemental cash flow information: | ||
State taxes paid, net | 0 | 3 |
Interest paid | 22,920 | 22,643 |
Accrued capital expenditures | $ 830 | $ 780 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total | Common StockSeries A Common Stock | Common StockSeries B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Increase (Decrease) in Stockholders' Equity | ||||||
Impact of adoption | Accounting Standards Update 2014-09 | $ (22,720) | $ (22,720) | ||||
Impact of adoption | Accounting Standards Update 2017-12 | (605) | $ 605 | ||||
Adjusted balance at January 1, 2018 | 119,952 | $ 120 | $ 4 | $ 1,423,899 | (1,300,443) | (3,628) |
Beginning Balance at Dec. 31, 2017 | 142,672 | 120 | 4 | 1,423,899 | (1,277,118) | (4,233) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (30,838) | (30,838) | ||||
Other comprehensive income | 11,329 | 11,329 | ||||
Stock-based compensation | 285 | 285 | ||||
Value of shares withheld for minimum tax liability | (116) | (116) | ||||
Ending Balance at Mar. 31, 2018 | $ 100,612 | $ 120 | $ 4 | $ 1,424,068 | $ (1,331,281) | $ 7,701 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Ascent Capital Group, Inc. ("Ascent Capital" or the "Company") condensed consolidated financial statements represent the financial position and results of operations of Ascent Capital and its consolidated subsidiaries. Monitronics International, Inc. ("MONI") is the primary, wholly owned, operating subsidiary of the Company. MONI provides residential customers and commercial client accounts with monitored home and business security systems, as well as interactive and home automation services. MONI is supported by a network of independent Authorized Dealers providing products and support to customers in the United States, Canada and Puerto Rico. MONI’s wholly owned subsidiary, LiveWatch Security LLC (“LiveWatch”) is a Do-It-Yourself home security firm, offering professionally monitored security services through a direct-to-consumer sales channel. On February 26, 2018, MONI entered into an exclusive, long-term, trademark licensing agreement with The Brink’s Company ("Brink's"), which will result in a complete rebranding of MONI and LiveWatch as Brinks Home Security TM . Under the terms of the agreement, MONI will have exclusive use of the BRINKS and Brinks Home Security trademarks related to the residential smart home and home security categories in the U.S. and Canada. Effective April 1, 2018, MONI will pay Brink’s customary licensing fees and minimum and growth-based royalties that will increase over time as the Brinks Home Security brand is reintroduced. The agreement provides for an initial term of seven years and, subject to certain conditions, allows for subsequent renewal periods whereby MONI can extend the agreement beyond 20 years. The Company is currently completing rebranding tasks, as well as integration tasks, such that the MONI and LiveWatch sales channels will be combined under the Brinks Home Security brand. The brand rollout is expected to occur in the second quarter of 2018. The unaudited interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s (the "SEC") Regulation S-X. Accordingly, it does not include all of the information required by generally accepted accounting principles in the United States ("GAAP") for complete financial statements. The Company’s unaudited condensed consolidated financial statements as of March 31, 2018 , and for the three months ended March 31, 2018 and 2017 , include Ascent Capital and all of its direct and indirect subsidiaries. The accompanying interim condensed consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the Ascent Capital Annual Report on Form 10-K for the year ended December 31, 2017 , filed with the SEC on March 5, 2018 . The Company adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("Topic 606") using the modified retrospective approach on January 1, 2018, at which time it became effective for the Company. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The Company also adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12") which simplifies the application of hedge accounting guidance. The standard was early adopted effective January 1, 2018, and the Company recognized an opening equity adjustment to reduce Accumulated deficit, offset by a gain in Accumulated other comprehensive income (loss). The comparative information has not been restated and continues to be reported under the accounting standards in effect during those periods. See note 2, Recent Accounting Pronouncements , and note 3, Revenue Recognition , in the notes to the condensed consolidated financial statements for further discussion. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s condensed consolidated financial statements primarily relate to valuation of subscriber accounts, valuation of deferred tax assets and valuation of goodwill. These estimates are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts them when facts and circumstances change. As the effects of future events cannot be determined with any certainty, actual results could differ from the estimates upon which the carrying values were based. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an amortization of the associated asset. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and becomes effective on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). Currently, the fair value of the reporting unit is compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit is lower than its carrying amount, then the implied fair value of goodwill is calculated. If the implied fair value of goodwill is lower than the carrying value of goodwill an impairment is recognized (identified as "Step 2"). ASU 2017-04 eliminates Step 2 from the impairment test; therefore, a goodwill impairment will be recognized as the difference of the fair value and the carrying value. ASU 2017-04 becomes effective on January 1, 2020 with early adoption permitted. The Company is currently evaluating when to adopt the standard. In August 2017, the FASB issued ASU 2017-12 to amend the hedge accounting rules to align risk management activities and financial reporting by simplifying the application of hedge accounting guidance. The guidance expands the ability to hedge nonfinancial and financial risk components and eliminates the requirement to separately measure and report hedge ineffectiveness. Additionally, certain hedge effectiveness assessment requirements may be accomplished qualitatively instead of quantitatively. ASU 2017-12 is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. The Company early adopted ASU 2017-12 effective January 1, 2018, and as such, an opening equity adjustment of $605,000 was recognized that reduced Accumulated deficit, offset by a gain in Accumulated other comprehensive income (loss). This adjustment primarily relates to the derecognition of the cumulative ineffectiveness recorded on the Company's interest rate swap derivative instruments, as well as adjustments to cumulative dedesignation adjustments. The Company does not expect this adoption to have a material impact on its financial position, results of operations or cash flows on an ongoing basis. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Topic 606 amends and supersedes FASB Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition ("Topic 605"). The core principle of Topic 606 is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Accounting Policy for Periods Commencing January 1, 2018 The Company offers its subscribers professional alarm monitoring services, as well as interactive and home automation services, through equipment at the subscriber's site that communicates with the Company’s central monitoring station and interfaces with other equipment at the site and third party technology companies for interactive and home automation services. These services are typically provided under alarm monitoring agreements (“AMAs”) between the Company and the subscriber. The equipment at the site is either obtained independently from the Company’s network of third party Authorized Dealers or directly from the Company, via its direct-to-consumer sales channel. The Company also offers equipment sales and installation services and, to its existing subscribers, maintenance services on existing alarm equipment. The Company also collects fees for contract monitoring, which are services provided to other security alarm companies for monitoring their accounts on a wholesale basis and other fees from subscribers for late fee or insufficient fund charges. Revenue under subscriber AMAs is allocated to alarm monitoring revenue and, if applicable, product and installation revenue based on the stand alone selling prices (“SSP”) of each performance obligation as a percentage of the total SSP of all performance obligations. Allocated alarm monitoring revenue is recognized as the monthly service is provided. Allocated product and installation revenue is recognized when the product sale is complete or shipped and the installation service is provided, typically at inception of the AMA. Product and installation revenue is not applicable to AMA's acquired from Authorized Dealers in their initial term. Any cash not received from the subscriber at the time of product sale and installation is recognized as a contract asset at inception of the AMA and is subsequently amortized over the subscriber contract term as a reduction of the amounts billed for professional alarm monitoring, interactive and home automation services. If a subscriber cancels the AMA within the negotiated term, any existing contract asset is determined to be impaired and is immediately expensed in full to Selling, general and administrative expense on the condensed consolidated statement of operations. Maintenance services are billed and recognized as revenue when the services are completed in the home and agreed to by the subscriber under the subscriber AMA. Contract monitoring fees are recognized as alarm monitoring revenue as the monitoring service is provided. Other fees are recognized as other revenue when billed to the subscriber which coincides with the timing of when the services are provided. Disaggregation of Revenue Revenue is disaggregated by source of revenue as follows (in thousands): Three Months Ended 2018 2017 Alarm monitoring revenue $ 124,840 136,891 Product and installation revenue 8,147 3,294 Other revenue 766 1,015 Total Net revenue $ 133,753 141,200 Contract Balances The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): March 31, 2018 At adoption Trade receivables, net $ 12,300 12,645 Contract assets, net - current portion (a) 13,543 14,197 Contract assets, net - long-term portion (b) 11,101 10,377 Deferred revenue 13,477 12,892 (a) Amount is included in Prepaid and other current assets in the unaudited condensed consolidated balance sheets. (b) Amount is included in Other assets in the unaudited condensed consolidated balance sheets. Changes in Accounting Policies The Company adopted Topic 606, effective January 1, 2018, using the modified retrospective transition method. Under the modified retrospective transition method, the Company evaluated active AMAs on the adoption date as if each AMA had been accounted for under Topic 606 from its inception. Some revenue related to AMAs originated through our direct-to-consumer channel or through extensions that would have been recognized in future periods under Topic 605 were recast under Topic 606 as if revenue had been accelerated and recognized in prior periods, as it will be allocated to product and installation performance obligations. A contract asset was recorded as of the adoption date for any cash that has yet to be collected on the accelerated revenue. As this transition method requires that the Company not adjust historical reported revenue amounts, the accelerated revenue that would have been recognized under this method prior to the adoption date was recorded as an adjustment to opening retained earnings and, thus, will not be recognized as revenue in future periods as previously required under Topic 605. Therefore, the comparative information has not been adjusted and continues to be reported under Topic 605. Under Topic 605, revenue provided under the AMA was recognized as the services were provided, based on the recurring monthly revenue amount billed for each month under contract. Product, installation and service revenue generally was recognized as billed and incurred. Under Topic 606, the Company concluded that certain product and installation services sold or provided to our customers at AMA inception are capable of being distinct and are distinct within the context of the contract. As such, when the Company initiates an AMA with a customer directly and provides equipment and installation services, each component is considered a performance obligation that must have revenue allocated accordingly. The allocation is based on the SSP of each performance obligation as a percentage of the total SSP of all performance obligations multiplied by the total consideration, or cash, expected to be received over the contract term. These AMAs may relate to new customers originated by the Company through its direct-to-consumer channel or existing customers who agree to new contract terms through customer service offerings. For AMAs with multiple performance obligations, management notes that a certain amount of the revenue billed on a recurring monthly basis is recognized earlier under Topic 606 than it was recognized under Topic 605, as a portion of that revenue is allocated to the equipment sale and installation, which is satisfied upon delivery of the product and performance of the installation services at AMA inception. Revenue on AMAs originated through the Authorized Dealer program are not impacted by Topic 606 in their initial term, as the customer contracts for the equipment sale and installation separately with the Authorized Dealer prior to the Company purchasing the AMA from the Authorized Dealer. Revenue on these customers is recognized as the service is provided based on the recurring monthly revenue amount billed for each month of the AMA. Maintenance service revenue for repair of existing alarm equipment at the subscribers' premises will continue to be billed and recognized based on their SSP at the time the Company performs the services. Topic 606 also requires the deferral of incremental costs of obtaining a contract with a customer. Certain direct and incremental costs were capitalized under Topic 605, including on new AMAs obtained in connection with a subscriber move (“Moves Costs”). Under Topic 606, Moves Costs are expensed as incurred to accompany the allocated revenue recognized upon product and installation performance obligations recognized at the AMA inception. There are no other significant changes in contract costs that are capitalized or the period over which they are expensed. Impacts on Financial Statements The significant effects of adopting Topic 606 are changes to Prepaid and other current assets, Subscriber accounts, net, Other assets, net, Net revenue, Cost of services, Selling, general and administrative and Amortization of subscriber accounts for the period beginning January 1, 2018 for AMAs initiated by the Company with the customer directly with multiple performance obligations, as a portion of that revenue is allocated to the equipment sale and installation, which is satisfied upon delivery of the product and performance of the installation services at AMA inception. The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2018 (in thousands): i. Condensed consolidated balance sheets Impact of changes in accounting policies As reported March 31, 2018 Adjustments Balances without adoption of Topic 606 Assets Current assets: Cash and cash equivalents $ 30,087 — 30,087 Restricted cash 93 — 93 Marketable securities, at fair value 107,450 — 107,450 Trade receivables, net of allowance for doubtful accounts 12,300 — 12,300 Prepaid and other current assets 23,498 (13,543 ) 9,955 Total current assets 173,428 (13,543 ) 159,885 Property and equipment, net of accumulated depreciation 34,070 — 34,070 Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization 1,224,937 48,249 1,273,186 Dealer network and other intangible assets, net of accumulated amortization 3,941 — 3,941 Goodwill 563,549 — 563,549 Other assets, net 27,633 (11,101 ) 16,532 Total assets $ 2,027,558 23,605 2,051,163 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,910 — 12,910 Accrued payroll and related liabilities 6,145 — 6,145 Other accrued liabilities 66,584 — 66,584 Deferred revenue 13,477 1,192 14,669 Holdback liability 7,601 — 7,601 Current portion of long-term debt 11,000 — 11,000 Total current liabilities 117,717 1,192 118,909 Non-current liabilities: Long-term debt 1,783,253 — 1,783,253 Long-term holdback liability 2,191 — 2,191 Derivative financial instruments 6,553 — 6,553 Deferred income tax liability, net 13,973 — 13,973 Other liabilities 3,259 — 3,259 Total liabilities 1,926,946 1,192 1,928,138 Commitments and contingencies Stockholders’ equity: Preferred stock — — — Series A common stock 120 — 120 Series B common stock 4 — 4 Series C common stock — — — Additional paid-in capital 1,424,068 — 1,424,068 Accumulated deficit (1,331,281 ) 22,413 (1,308,868 ) Accumulated other comprehensive income, net 7,701 — 7,701 Total stockholders’ equity 100,612 22,413 123,025 Total liabilities and stockholders’ equity $ 2,027,558 23,605 2,051,163 ii. Condensed consolidated statements of operations and comprehensive income (loss) Impact of changes in accounting policies As reported three months ended March 31, 2018 Adjustments Balances without adoption of Topic 606 Net revenue $ 133,753 (325 ) 133,428 Operating expenses: Cost of services 32,701 (1,922 ) 30,779 Selling, general and administrative, including stock-based and long-term incentive compensation 37,406 21 37,427 Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 54,411 1,883 56,294 Depreciation 2,621 — 2,621 127,139 (18 ) 127,121 Operating income 6,614 (307 ) 6,307 Other expense (income), net: Interest income (481 ) — (481 ) Interest expense 38,652 — 38,652 Other income, net (2,065 ) — (2,065 ) 36,106 — 36,106 Loss before income taxes (29,492 ) (307 ) (29,799 ) Income tax expense 1,346 — 1,346 Net loss (30,838 ) (307 ) (31,145 ) Other comprehensive income (loss): Unrealized holding loss on marketable securities, net (3,077 ) — (3,077 ) Unrealized gain on derivative contracts, net 14,406 — 14,406 Total other comprehensive income, net of tax 11,329 — 11,329 Comprehensive loss $ (19,509 ) (307 ) (19,816 ) iii. Condensed consolidated statements of cash flows Impact of changes in accounting policies As reported three months ended March 31, 2018 Adjustments Balances without adoption of Topic 606 Cash flows from operating activities: Net loss $ (30,838 ) (307 ) (31,145 ) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 54,411 1,883 56,294 Depreciation 2,621 — 2,621 Stock-based and long-term incentive compensation 226 — 226 Deferred income tax expense 662 — 662 Amortization of debt discount and deferred debt costs 2,959 — 2,959 Bad debt expense 3,017 — 3,017 Other non-cash activity, net 41 — 41 Changes in assets and liabilities: Trade receivables (2,672 ) — (2,672 ) Prepaid expenses and other assets 851 — 851 Contract asset, net (70 ) 70 — Subscriber accounts - deferred contract acquisition costs (898 ) 63 (835 ) Payables and other liabilities 17,644 388 18,032 Net cash provided by operating activities 47,954 2,097 50,051 Cash flows from investing activities: Capital expenditures (3,310 ) — (3,310 ) Cost of subscriber accounts acquired (24,560 ) (2,097 ) (26,657 ) Purchases of marketable securities (7,998 ) — (7,998 ) Proceeds from sale of marketable securities 5,495 — 5,495 Increase in restricted cash (93 ) — (93 ) Net cash used in investing activities (30,466 ) (2,097 ) (32,563 ) Cash flows from financing activities: Proceeds from long-term debt 50,000 — 50,000 Payments on long-term debt (47,750 ) — (47,750 ) Value of shares withheld for share-based compensation (116 ) — (116 ) Net cash provided by financing activities 2,134 — 2,134 Net increase in cash and cash equivalents 19,622 — 19,622 Cash and cash equivalents at beginning of period 10,465 — 10,465 Cash and cash equivalents at end of period $ 30,087 — 30,087 |
Investments in Marketable Secur
Investments in Marketable Securities | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments in Marketable Securities | Investments in Marketable Securities Ascent Capital owns marketable securities primarily consisting of diversified corporate bond funds. The following table presents a summary of amounts recorded on the condensed consolidated balance sheets (amounts in thousands): As of March 31, 2018 Cost Basis (b) Unrealized Gains Unrealized Losses Total Mutual funds (a) $ 106,627 823 — 107,450 Ending balance $ 106,627 823 — 107,450 As of December 31, 2017 Cost Basis (b) Unrealized Gains Unrealized Losses Total Equity securities $ 3,432 2,039 — 5,471 Mutual funds (a) 98,628 1,859 — 100,487 Ending balance $ 102,060 3,898 — 105,958 (a) Primarily consists of corporate bond funds. (b) When an other-than-temporary impairment occurs, the Company reduces the cost basis of the marketable security involved. In the third quarter of 2017, the Company recognized a non-cash charge for an other-than-temporary impairment of $220,000 on its equity securities. The equity security impairment was primarily attributable to foreign exchange losses based on weakening of the trading currency of the underlying investment. The equity securities were sold in the first quarter of 2018 for a realized gain of $2,063,000 due to a third party completing the acquisition of the underlying investee. The following table provides the realized investment gains and losses and the total proceeds received from the sale of marketable securities (amounts in thousands): Three Months Ended 2018 2017 Gross realized gains $ 2,063 6 Gross realized losses $ — — Total proceeds $ 5,495 997 |
Goodwill
Goodwill | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following table provides the activity and balances of goodwill by reporting unit (amounts in thousands): MONI LiveWatch Total Balance at 12/31/2017 $ 527,502 $ 36,047 $ 563,549 Period activity — — — Balance at 3/31/2018 $ 527,502 $ 36,047 $ 563,549 The Company accounts for its goodwill pursuant to the provisions of FASB ASC Topic 350, Intangibles - Goodwill and Other ("FASB ASC Topic 350"). In accordance with FASB ASC Topic 350, goodwill is not amortized, but rather tested for impairment annually, or earlier if an event occurs, or circumstances change, that indicate the fair value of a reporting unit may be below its carrying amount. In the first quarter of 2018, the Company determined that a triggering event had occurred due to a sustained decrease in the Company's share price. In response to the triggering event, the Company performed a quantitative impairment test noting that the estimated fair value for each of the Company's reporting units exceeded the carrying amount of the underlying assets. Thus no impairment was indicated. |
Other Accrued Liabilities
Other Accrued Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | Other Accrued Liabilities Other accrued liabilities consisted of the following (amounts in thousands): March 31, December 31, Interest payable $ 28,287 $ 15,927 Income taxes payable 3,598 2,950 Legal settlement reserve (a) 23,000 23,000 Other 11,699 10,452 Total Other accrued liabilities $ 66,584 $ 52,329 (a) See note 12, Commitments, Contingencies and Other Liabilities , for further information. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (amounts in thousands): March 31, December 31, Ascent Capital 4.00% Convertible Senior Notes due July 15, 2020 with an effective rate of 8.9% $ 83,795 $ 82,614 MONI 9.125% Senior Notes due April 1, 2020 with an effective rate of 9.5% 580,658 580,159 MONI term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00%, with an effective rate of 7.7% 1,058,020 1,059,598 MONI $295 million revolving credit facility, matures September 30, 2021, LIBOR plus 4.00%, subject to a LIBOR floor of 1.00%, with an effective rate of 6.0% 71,780 66,673 1,794,253 1,789,044 Less current portion of long-term debt (11,000 ) (11,000 ) Long-term debt $ 1,783,253 $ 1,778,044 Ascent Capital Convertible Senior Notes The Ascent Capital convertible senior notes total $96,775,000 in aggregate principal amount, mature on July 15, 2020 and bear interest at 4.00% per annum (the "Convertible Notes"). Interest on the Convertible Notes is payable semi-annually on January 15 and July 15 of each year. The Convertible Notes are convertible, under certain circumstances, into cash, shares of Ascent Capital's Series A common stock, par value $0.01 per share (the "Series A Common Stock"), or any combination thereof at Ascent Capital’s election. Holders of the Convertible Notes ("Noteholders") have the right, at their option, to convert all or any portion of such Convertible Notes, subject to the satisfaction of certain conditions, at an initial conversion rate of 9.7272 shares of Series A Common Stock per $1,000 principal amount of Convertible Notes (subject to adjustment in certain situations), which represents an initial conversion price per share of Series A Common Stock of approximately $102.804 (the "Conversion Price"). Ascent Capital is entitled to settle any such conversion by delivery of cash, shares of Series A Common Stock or any combination thereof at Ascent Capital's election. In addition, Noteholders have the right to submit Convertible Notes for conversion, subject to the satisfaction of certain conditions, in the event of certain corporate transactions. In the event of a fundamental change (as such term is defined in the indenture governing the Convertible Notes) at any time prior to the maturity date, each Noteholder shall have the right, at such Noteholder’s option, to require Ascent Capital to repurchase for cash any or all of such Noteholder’s Convertible Notes on the repurchase date specified by Ascent Capital at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, including unpaid additional interest, if any, unless the repurchase date occurs after an interest record date and on or prior to the related interest payment date, as specified in the indenture. The Convertible Notes are within the scope of FASB ASC Subtopic 470-20, Debt with Conversion and Other Options , and as such are required to be separated into a liability and equity component. The carrying amount of the liability component is calculated by measuring the fair value of a similar liability (including any embedded features other than the conversion option) that does not have an associated conversion option. The carrying amount of the equity component is determined by deducting the fair value of the liability component from the initial proceeds ascribed to the Convertible Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, treated as a debt discount, is amortized to interest cost over the expected life of a similar liability that does not have an associated conversion option using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification as prescribed in FASB ASC Subtopic 815-40, Contracts in an Entity’s Own Equity . The Convertible Notes are presented on the consolidated balance sheet as follows (amounts in thousands): As of As of Principal $ 96,775 $ 96,775 Unamortized discount (12,157 ) (13,263 ) Deferred debt costs (823 ) (898 ) Carrying value $ 83,795 $ 82,614 The Company is using an effective interest rate of 14.0% to calculate the accretion of the debt discount, which is being recorded as interest expense over the expected remaining term to maturity of the Convertible Notes. The Company recognized contractual interest expense of $968,000 for both of the three months ended March 31, 2018 and 2017 . The Company amortized $1,181,000 of the Convertible Notes debt discount and deferred debt costs into interest expense for the three months ended March 31, 2018 , compared to $1,027,000 for the three months ended March 31, 2017 . Hedging Transactions Relating to the Offering of the Convertible Notes In connection with the issuance of the Convertible Notes, Ascent Capital entered into separate privately negotiated purchased call options (the "Bond Hedge Transactions"). The Bond Hedge Transactions require the counterparties to offset Series A Common Stock deliverable or cash payments made by Ascent Capital upon conversion of the Convertible Notes in the event that the volume-weighted average price of Series A Common Stock on each trading day of the relevant valuation period is greater than the strike price of $102.804 , which corresponds to the Conversion Price of the Convertible Notes. The Bond Hedge Transactions cover, subject to anti-dilution adjustments, approximately 1,007,000 shares of Series A Common Stock, which is equivalent to the number of shares initially issuable upon conversion of the Convertible Notes, and are expected to reduce the potential dilution with respect to the Series A Common Stock, and/or offset potential cash payments Ascent Capital is required to make in excess of the principal amount of the Convertible Notes upon conversion. Concurrently with the Bond Hedge Transactions, Ascent Capital also entered into separate privately negotiated warrant transactions with each of the call option counterparties (the "Warrant Transactions"). The warrants are European options, and are exercisable in tranches on consecutive trading days starting after the maturity of the Convertible Notes. The warrants cover the same initial number of shares of Series A Common Stock, subject to anti-dilution adjustments, as the Bond Hedge Transactions. The Warrant Transactions require Ascent Capital to deliver Series A Common Stock or make cash payments to the counterparties on each expiration date with a value equal to the number of warrants exercisable on that date times the excess of the volume-weighted average price of the Series A Common Stock over the strike price of $118.62 , which effectively reflects a 50% conversion premium on the Convertible Notes. As such, the Warrant Transactions may have a dilutive effect with respect to the Series A Common Stock to the extent the Warrant Transactions are settled with shares of Series A Common Stock. Ascent Capital may elect to settle its delivery obligation under the Warrant Transactions in cash. The Bond Hedge Transactions and Warrant Transactions are separate transactions entered into by Ascent Capital, are not part of the terms of the Convertible Notes and will not affect the Noteholders’ rights under the Convertible Notes. The Noteholders will not have any rights with respect to the Bond Hedge Transactions or the Warrant Transactions. MONI Senior Notes The MONI senior notes total $ 585,000,000 in principal, mature on April 1, 2020 and bear interest at 9.125% per annum (the "Senior Notes"). Interest payments are due semi-annually on April 1 and October 1 of each year. The Senior Notes are guaranteed by all of MONI’s existing domestic subsidiaries. Ascent Capital has not guaranteed any of MONI's obligations under the Senior Notes. As of March 31, 2018 , the Senior Notes had deferred financing costs and unamortized premium, net of accumulated amortization of $ 4,342,000 . MONI Credit Facility On September 30, 2016, MONI entered into an amendment ("Amendment No. 6") with the lenders of its existing senior secured credit agreement dated March 23, 2012, and as amended and restated on April 9, 2015, February 17, 2015, August 16, 2013, March 25, 2013, and November 7, 2012 (the "Existing Credit Agreement"). Amendment No. 6 provided for, among other things, the issuance of a $1,100,000,000 senior secured term loan at a 1.5% discount and a new $ 295,000,000 super priority revolver (the Existing Credit Agreement together with Amendment No. 6, the "Credit Facility"). On March 29, 2018, MONI borrowed an incremental $26,691,000 on its Credit Facility revolver to fund its April 2, 2018 interest payment due under the Senior Notes. As of March 31, 2018 , the Credit Facility term loan has a principal amount of $ 1,083,500,000 , maturing on September 30, 2022. The term loan requires quarterly interest payments and quarterly principal payments of $2,750,000 . The term loan bears interest at LIBOR plus 5.5% , subject to a LIBOR floor of 1.0% . The Credit Facility revolver has a principal amount outstanding of $ 73,500,000 as of March 31, 2018 and matures on September 30, 2021. The Credit Facility revolver bears interest at LIBOR plus 4.0% , subject to a LIBOR floor of 1.0% . There is a commitment fee of 0.5% on unused portions of the Credit Facility revolver. As of March 31, 2018 , $ 221,500,000 is available for borrowing under the Credit Facility revolver subject to certain financial covenants. The maturity date for both the term loan and the revolving credit facility under the Credit Facility are subject to a springing maturity 181 days prior to the scheduled maturity date of the Senior Notes, or October 3, 2019 (the "Springing Maturity") if MONI is unable to refinance the Senior Notes by that date. In addition, at any time after the occurrence of an event of default under the Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Credit Facility immediately due and payable and terminate any commitment to make further loans under the Credit Facility. Also, failure to comply with restrictions contained in the Senior Notes could lead to an event of default under the Credit Facility. The Credit Facility is secured by a pledge of all of the outstanding stock of MONI and all of its existing subsidiaries and is guaranteed by all of MONI's existing domestic subsidiaries. Ascent Capital has not guaranteed any of MONI's obligations under the Credit Facility. As of March 31, 2018 , MONI has deferred financing costs and unamortized discounts, net of accumulated amortization, of $ 27,200,000 related to the Credit Facility. In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loan under the Credit Facility term loan, MONI has entered into interest rate swap agreements with terms similar to the Credit Facility term loan (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting. As a result of these interest rate swaps, MONI's effective weighted average interest rate on the borrowings under the Credit Facility term loan was 7.98% as of March 31, 2018 . See note 8, Derivatives , for further disclosures related to these derivative instruments. The terms of the Convertible Notes, the Senior Notes and the Credit Facility provide for certain financial and nonfinancial covenants. As of March 31, 2018 , the Company was in compliance with all required covenants under these financing arrangements. As of March 31, 2018 , principal payments scheduled to be made on the Company’s debt obligations, assuming no Springing Maturity of the Credit Facility, are as follows (amounts in thousands): Remainder of 2018 $ 8,250 2019 11,000 2020 692,775 2021 84,500 2022 1,042,250 2023 — Thereafter — Total principal payments 1,838,775 Less: Unamortized deferred debt costs, discounts and premium, net 44,522 Total debt on condensed consolidated balance sheet $ 1,794,253 |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives MONI utilizes Swaps to reduce the interest rate risk inherent in MONI's variable rate Credit Facility term loan. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatility. The Company incorporates credit valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. See note 9, Fair Value Measurements , for additional information about the credit valuation adjustments. All of the Swaps are designated and qualify as cash flow hedging instruments, with the effective portion of the Swaps' change in fair value recorded in Accumulated other comprehensive income (loss). Changes in the fair value of the Swaps recognized in Accumulated other comprehensive income (loss) are reclassified to Interest expense when the hedged interest payments on the underlying debt are recognized. Amounts in Accumulated other comprehensive income (loss) expected to be recognized as Interest expense in the coming 12 months total approximately $1,114,000 . As of March 31, 2018 , the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below: Notional Effective Date Maturity Date Fixed Rate Paid Variable Rate Received $ 190,982,778 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 249,375,000 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 49,875,000 March 23, 2018 April 9, 2022 2.504% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 376,057,500 March 23, 2018 September 30, 2022 1.833% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) On September 30, 2016, MONI negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the "Amended Swaps"). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, MONI simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive income (loss) relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): Three Months Ended 2018 2017 Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) $ 13,668 (733 ) Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss (a) $ (738 ) (1,782 ) Ineffective portion of amount of loss recognized into Net loss (a) $ — 18 (a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Upon the adoption of ASU 2017-12 on January 1, 2018, ineffectiveness is no longer measured or recognized. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements According to the FASB ASC Topic 820, Fair Value Measurement , fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories: • Level 1 - Quoted prices for identical instruments in active markets. • Level 2 - Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets. • Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market. The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at March 31, 2018 and December 31, 2017 (amounts in thousands): Level 1 Level 2 Level 3 Total March 31, 2018 Investments in marketable securities (a) $ 107,450 — — 107,450 Interest rate swap agreements - assets (b) — 13,833 — 13,833 Interest rate swap agreements - liabilities (b) — (6,553 ) — (6,553 ) Total $ 107,450 7,280 — 114,730 December 31, 2017 Investments in marketable securities (a) $ 105,958 — — 105,958 Interest rate swap agreements - assets (b) — 7,058 — 7,058 Interest rate swap agreements - liabilities (b) — (13,817 ) — (13,817 ) Total $ 105,958 (6,759 ) — 99,199 (a) Level 1 investments primarily consist of diversified corporate bond funds. (b) Swap asset values are included in non-current Other assets and Swap liability values are included in non-current Derivative financial instruments on the condensed consolidated balance sheets. The Company has determined that the significant inputs used to value the Swaps fall within Level 2 of the fair value hierarchy. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy. Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): March 31, 2018 December 31, 2017 Long term debt, including current portion: Carrying value $ 1,794,253 1,789,044 Fair value (a) 1,642,644 1,709,342 (a) The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. Ascent Capital’s other financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The following table presents the activity in Series A Common Stock and Ascent Capital's Series B Common Stock, par value $0.01 per share (the "Series B Common Stock"), for the three months ended March 31, 2018 : Series A Common Stock Series B Common Stock Balance at December 31, 2017 11,999,630 381,528 Issuance of stock awards 13,153 — Restricted stock canceled for tax withholding (10,680 ) — Balance at March 31, 2018 12,002,103 381,528 Accumulated Other Comprehensive Income (Loss) The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period presented (amounts in thousands): Foreign Currency Translation Adjustments Unrealized Holding Gains and Losses on Marketable Securities, net (a) Unrealized Gains and Losses on Derivative Instruments, net (b) Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ (758 ) 3,900 (7,375 ) (4,233 ) Impact of adoption of ASU 2017-12 — — 605 605 Adjusted balance at January 1, 2018 (758 ) 3,900 (6,770 ) (3,628 ) Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 — (1,014 ) 13,668 12,654 Reclassifications of loss (gain) into Net loss, net of income tax of $0 — (2,063 ) 738 (1,325 ) Net current period Other comprehensive income (loss) — (3,077 ) 14,406 11,329 Balance at March 31, 2018 $ (758 ) 823 7,636 7,701 (a) Amounts reclassified into net loss are included in Other income, net on the condensed consolidated statement of operations. See note 4, Investments in Marketable Securities , for further information. (b) Amounts reclassified into net loss are included in Interest expense on the condensed consolidated statement of operations. See note 8, Derivatives , for further information. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B | Basic and Diluted Earnings (Loss) Per Common Share—Series A and Series B Basic earnings (loss) per common share ("EPS") is computed by dividing net income (loss) by the weighted average number of shares of Series A and Series B Common Stock outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the sum of the weighted average number of shares of Series A and Series B Common Stock outstanding and the effect of dilutive securities, including the Company's outstanding stock options, unvested restricted stock and restricted stock units. For all periods presented, diluted EPS is computed the same as basic EPS because the Company recorded a loss from continuing operations, which would make potentially dilutive securities anti-dilutive. Diluted shares outstanding excluded an aggregate of 193,239 stock options, unvested restricted shares and performance units for the three months ended March 31, 2018 because their inclusion would have been anti-dilutive. Diluted shares outstanding excluded an aggregate of 384,606 stock options, unvested restricted shares and performance units for the three months ended March 31, 2017 because their inclusion would have been anti-dilutive. Three Months Ended 2018 2017 Weighted average number of shares of Series A and Series B Common Stock 12,298,922 12,134,061 |
Commitments, Contingencies and
Commitments, Contingencies and Other Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Liabilities | Commitments, Contingencies and Other Liabilities MONI was named as a defendant in multiple putative class actions consolidated in U.S. District Court (Northern District of West Virginia) on behalf of purported class(es) of persons who claim to have received telemarketing calls in violation of various state and federal laws. The actions were brought by plaintiffs seeking monetary damages on behalf of all plaintiffs who received telemarketing calls made by a Monitronics Authorized Dealer, or any Authorized Dealer’s lead generator or sub-dealer. In the second quarter of 2017, MONI and the plaintiffs agreed to settle this litigation for $28,000,000 ("the Settlement Amount"). MONI is actively seeking to recover the Settlement Amount under its insurance policies. The settlement agreement remains subject to court approval and the court’s entry of a final order dismissing the actions. In the third quarter of 2017, MONI paid $5,000,000 of the Settlement Amount pursuant to the settlement agreement with the plaintiffs. In addition to the above, the Company is also involved in litigation and similar claims incidental to the conduct of its business, including from time to time, contractual disputes, claims related to alleged security system failures and claims related to alleged violations of the U.S. Telephone Consumer Protection Act. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, management's estimate of the outcomes of such matters and experience in contesting, litigating and settling similar matters. In management's opinion, none of the pending actions are likely to have a material adverse impact on the Company's financial position or results of operations. The Company accrues and expenses legal fees related to loss contingency matters as incurred. |
Reportable Business Segments
Reportable Business Segments | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Reportable Business Segments | Reportable Business Segments Description of Segments The Company operates through two reportable business segments according to the nature and economic characteristics of its services as well as the manner in which the information issued internally by the Company's key decision maker, who is the Company's Chief Executive Officer. The Company's business segments are as follows: MONI The MONI segment is engaged in the business of providing security alarm monitoring services: monitoring signals arising from burglaries, fires, medical alerts and other events through security systems at subscribers' premises, as well as providing customer service and technical support. MONI primarily outsources the sales, installation and most of its field service functions to its dealers. LiveWatch LiveWatch is a Do-It-Yourself home security provider offering professionally monitored security services through a direct-to-consumer sales channel. LiveWatch offers a differentiated go-to-market strategy through direct response TV, internet and radio advertising. When a customer initiates the process to obtain monitoring services, LiveWatch pre-configures the alarm monitoring system based on customer specifications. LiveWatch then packages and ships the equipment directly to the customer. The customer self-installs the equipment on-site and activates the monitoring service over the phone. Other Activities Other Activities primarily consists of Ascent Capital's corporate costs, including administrative and other activities not associated with the operation of the reportable segments, and eliminations. As they arise, transactions between segments are recorded on an arm's length basis using relevant market prices. The following table sets forth selected data from the accompanying condensed consolidated statements of operations for the periods indicated (amounts in thousands): MONI LiveWatch Other Consolidated Three Months Ended March 31, 2018 Net revenue $ 125,773 $ 7,980 $ — $ 133,753 Depreciation and amortization $ 55,236 $ 1,790 $ 6 $ 57,032 Net loss from continuing operations before income taxes $ (17,629 ) $ (7,232 ) $ (4,631 ) $ (29,492 ) Three Months Ended March 31, 2017 Net revenue $ 134,408 $ 6,792 $ — $ 141,200 Depreciation and amortization $ 60,508 $ 1,159 $ 7 $ 61,674 Net loss from continuing operations before income taxes $ (13,299 ) $ (5,930 ) $ 2,098 $ (17,131 ) The following table sets forth selected data from the accompanying condensed consolidated balance sheets for the periods indicated (amounts in thousands): MONI LiveWatch Other Consolidated Balance at March 31, 2018 Subscriber accounts and deferred contract acquisition costs, net of amortization $ 1,203,996 $ 20,941 $ — $ 1,224,937 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 1,980,081 $ 62,453 $ (14,976 ) $ 2,027,558 Balance at December 31, 2017 Subscriber accounts and deferred contract acquisition costs, net of amortization $ 1,280,813 $ 21,215 $ — $ 1,302,028 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 1,996,240 $ 63,233 $ (4,488 ) $ 2,054,985 |
Recent Accounting Pronounceme21
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an amortization of the associated asset. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and becomes effective on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). Currently, the fair value of the reporting unit is compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit is lower than its carrying amount, then the implied fair value of goodwill is calculated. If the implied fair value of goodwill is lower than the carrying value of goodwill an impairment is recognized (identified as "Step 2"). ASU 2017-04 eliminates Step 2 from the impairment test; therefore, a goodwill impairment will be recognized as the difference of the fair value and the carrying value. ASU 2017-04 becomes effective on January 1, 2020 with early adoption permitted. The Company is currently evaluating when to adopt the standard. In August 2017, the FASB issued ASU 2017-12 to amend the hedge accounting rules to align risk management activities and financial reporting by simplifying the application of hedge accounting guidance. The guidance expands the ability to hedge nonfinancial and financial risk components and eliminates the requirement to separately measure and report hedge ineffectiveness. Additionally, certain hedge effectiveness assessment requirements may be accomplished qualitatively instead of quantitatively. ASU 2017-12 is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. The Company early adopted ASU 2017-12 effective January 1, 2018, and as such, an opening equity adjustment of $605,000 was recognized that reduced Accumulated deficit, offset by a gain in Accumulated other comprehensive income (loss). This adjustment primarily relates to the derecognition of the cumulative ineffectiveness recorded on the Company's interest rate swap derivative instruments, as well as adjustments to cumulative dedesignation adjustments. The Company does not expect this adoption to have a material impact on its financial position, results of operations or cash flows on an ongoing basis. |
Revenue Recognition | The Company offers its subscribers professional alarm monitoring services, as well as interactive and home automation services, through equipment at the subscriber's site that communicates with the Company’s central monitoring station and interfaces with other equipment at the site and third party technology companies for interactive and home automation services. These services are typically provided under alarm monitoring agreements (“AMAs”) between the Company and the subscriber. The equipment at the site is either obtained independently from the Company’s network of third party Authorized Dealers or directly from the Company, via its direct-to-consumer sales channel. The Company also offers equipment sales and installation services and, to its existing subscribers, maintenance services on existing alarm equipment. The Company also collects fees for contract monitoring, which are services provided to other security alarm companies for monitoring their accounts on a wholesale basis and other fees from subscribers for late fee or insufficient fund charges. Revenue under subscriber AMAs is allocated to alarm monitoring revenue and, if applicable, product and installation revenue based on the stand alone selling prices (“SSP”) of each performance obligation as a percentage of the total SSP of all performance obligations. Allocated alarm monitoring revenue is recognized as the monthly service is provided. Allocated product and installation revenue is recognized when the product sale is complete or shipped and the installation service is provided, typically at inception of the AMA. Product and installation revenue is not applicable to AMA's acquired from Authorized Dealers in their initial term. Any cash not received from the subscriber at the time of product sale and installation is recognized as a contract asset at inception of the AMA and is subsequently amortized over the subscriber contract term as a reduction of the amounts billed for professional alarm monitoring, interactive and home automation services. If a subscriber cancels the AMA within the negotiated term, any existing contract asset is determined to be impaired and is immediately expensed in full to Selling, general and administrative expense on the condensed consolidated statement of operations. Maintenance services are billed and recognized as revenue when the services are completed in the home and agreed to by the subscriber under the subscriber AMA. Contract monitoring fees are recognized as alarm monitoring revenue as the monitoring service is provided. Other fees are recognized as other revenue when billed to the subscriber which coincides with the timing of when the services are provided. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue Disaggregated by Source | Revenue is disaggregated by source of revenue as follows (in thousands): Three Months Ended 2018 2017 Alarm monitoring revenue $ 124,840 136,891 Product and installation revenue 8,147 3,294 Other revenue 766 1,015 Total Net revenue $ 133,753 141,200 |
Schedule of Contract Balances and Financial Statement Impact | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): March 31, 2018 At adoption Trade receivables, net $ 12,300 12,645 Contract assets, net - current portion (a) 13,543 14,197 Contract assets, net - long-term portion (b) 11,101 10,377 Deferred revenue 13,477 12,892 (a) Amount is included in Prepaid and other current assets in the unaudited condensed consolidated balance sheets. (b) Amount is included in Other assets in the unaudited condensed consolidated balance sheets. The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the three months ended March 31, 2018 (in thousands): i. Condensed consolidated balance sheets Impact of changes in accounting policies As reported March 31, 2018 Adjustments Balances without adoption of Topic 606 Assets Current assets: Cash and cash equivalents $ 30,087 — 30,087 Restricted cash 93 — 93 Marketable securities, at fair value 107,450 — 107,450 Trade receivables, net of allowance for doubtful accounts 12,300 — 12,300 Prepaid and other current assets 23,498 (13,543 ) 9,955 Total current assets 173,428 (13,543 ) 159,885 Property and equipment, net of accumulated depreciation 34,070 — 34,070 Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization 1,224,937 48,249 1,273,186 Dealer network and other intangible assets, net of accumulated amortization 3,941 — 3,941 Goodwill 563,549 — 563,549 Other assets, net 27,633 (11,101 ) 16,532 Total assets $ 2,027,558 23,605 2,051,163 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 12,910 — 12,910 Accrued payroll and related liabilities 6,145 — 6,145 Other accrued liabilities 66,584 — 66,584 Deferred revenue 13,477 1,192 14,669 Holdback liability 7,601 — 7,601 Current portion of long-term debt 11,000 — 11,000 Total current liabilities 117,717 1,192 118,909 Non-current liabilities: Long-term debt 1,783,253 — 1,783,253 Long-term holdback liability 2,191 — 2,191 Derivative financial instruments 6,553 — 6,553 Deferred income tax liability, net 13,973 — 13,973 Other liabilities 3,259 — 3,259 Total liabilities 1,926,946 1,192 1,928,138 Commitments and contingencies Stockholders’ equity: Preferred stock — — — Series A common stock 120 — 120 Series B common stock 4 — 4 Series C common stock — — — Additional paid-in capital 1,424,068 — 1,424,068 Accumulated deficit (1,331,281 ) 22,413 (1,308,868 ) Accumulated other comprehensive income, net 7,701 — 7,701 Total stockholders’ equity 100,612 22,413 123,025 Total liabilities and stockholders’ equity $ 2,027,558 23,605 2,051,163 ii. Condensed consolidated statements of operations and comprehensive income (loss) Impact of changes in accounting policies As reported three months ended March 31, 2018 Adjustments Balances without adoption of Topic 606 Net revenue $ 133,753 (325 ) 133,428 Operating expenses: Cost of services 32,701 (1,922 ) 30,779 Selling, general and administrative, including stock-based and long-term incentive compensation 37,406 21 37,427 Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 54,411 1,883 56,294 Depreciation 2,621 — 2,621 127,139 (18 ) 127,121 Operating income 6,614 (307 ) 6,307 Other expense (income), net: Interest income (481 ) — (481 ) Interest expense 38,652 — 38,652 Other income, net (2,065 ) — (2,065 ) 36,106 — 36,106 Loss before income taxes (29,492 ) (307 ) (29,799 ) Income tax expense 1,346 — 1,346 Net loss (30,838 ) (307 ) (31,145 ) Other comprehensive income (loss): Unrealized holding loss on marketable securities, net (3,077 ) — (3,077 ) Unrealized gain on derivative contracts, net 14,406 — 14,406 Total other comprehensive income, net of tax 11,329 — 11,329 Comprehensive loss $ (19,509 ) (307 ) (19,816 ) iii. Condensed consolidated statements of cash flows Impact of changes in accounting policies As reported three months ended March 31, 2018 Adjustments Balances without adoption of Topic 606 Cash flows from operating activities: Net loss $ (30,838 ) (307 ) (31,145 ) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 54,411 1,883 56,294 Depreciation 2,621 — 2,621 Stock-based and long-term incentive compensation 226 — 226 Deferred income tax expense 662 — 662 Amortization of debt discount and deferred debt costs 2,959 — 2,959 Bad debt expense 3,017 — 3,017 Other non-cash activity, net 41 — 41 Changes in assets and liabilities: Trade receivables (2,672 ) — (2,672 ) Prepaid expenses and other assets 851 — 851 Contract asset, net (70 ) 70 — Subscriber accounts - deferred contract acquisition costs (898 ) 63 (835 ) Payables and other liabilities 17,644 388 18,032 Net cash provided by operating activities 47,954 2,097 50,051 Cash flows from investing activities: Capital expenditures (3,310 ) — (3,310 ) Cost of subscriber accounts acquired (24,560 ) (2,097 ) (26,657 ) Purchases of marketable securities (7,998 ) — (7,998 ) Proceeds from sale of marketable securities 5,495 — 5,495 Increase in restricted cash (93 ) — (93 ) Net cash used in investing activities (30,466 ) (2,097 ) (32,563 ) Cash flows from financing activities: Proceeds from long-term debt 50,000 — 50,000 Payments on long-term debt (47,750 ) — (47,750 ) Value of shares withheld for share-based compensation (116 ) — (116 ) Net cash provided by financing activities 2,134 — 2,134 Net increase in cash and cash equivalents 19,622 — 19,622 Cash and cash equivalents at beginning of period 10,465 — 10,465 Cash and cash equivalents at end of period $ 30,087 — 30,087 |
Investments in Marketable Sec23
Investments in Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Activity of Investments Classified as Available-For-Sale Securities | The following table presents a summary of amounts recorded on the condensed consolidated balance sheets (amounts in thousands): As of March 31, 2018 Cost Basis (b) Unrealized Gains Unrealized Losses Total Mutual funds (a) $ 106,627 823 — 107,450 Ending balance $ 106,627 823 — 107,450 As of December 31, 2017 Cost Basis (b) Unrealized Gains Unrealized Losses Total Equity securities $ 3,432 2,039 — 5,471 Mutual funds (a) 98,628 1,859 — 100,487 Ending balance $ 102,060 3,898 — 105,958 (a) Primarily consists of corporate bond funds. (b) When an other-than-temporary impairment occurs, the Company reduces the cost basis of the marketable security involved. In the third quarter of 2017, the Company recognized a non-cash charge for an other-than-temporary impairment of $220,000 on its equity securities. The equity security impairment was primarily attributable to foreign exchange losses based on weakening of the trading currency of the underlying investment. The equity securities were sold in the first quarter of 2018 for a realized gain of $2,063,000 due to a third party completing the acquisition of the underlying investee. |
Schedule of Realized Gain (Loss) | The following table provides the realized investment gains and losses and the total proceeds received from the sale of marketable securities (amounts in thousands): Three Months Ended 2018 2017 Gross realized gains $ 2,063 6 Gross realized losses $ — — Total proceeds $ 5,495 997 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table provides the activity and balances of goodwill by reporting unit (amounts in thousands): MONI LiveWatch Total Balance at 12/31/2017 $ 527,502 $ 36,047 $ 563,549 Period activity — — — Balance at 3/31/2018 $ 527,502 $ 36,047 $ 563,549 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accrued Liabilities | Other accrued liabilities consisted of the following (amounts in thousands): March 31, December 31, Interest payable $ 28,287 $ 15,927 Income taxes payable 3,598 2,950 Legal settlement reserve (a) 23,000 23,000 Other 11,699 10,452 Total Other accrued liabilities $ 66,584 $ 52,329 (a) See note 12, Commitments, Contingencies and Other Liabilities , for further information. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following (amounts in thousands): March 31, December 31, Ascent Capital 4.00% Convertible Senior Notes due July 15, 2020 with an effective rate of 8.9% $ 83,795 $ 82,614 MONI 9.125% Senior Notes due April 1, 2020 with an effective rate of 9.5% 580,658 580,159 MONI term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00%, with an effective rate of 7.7% 1,058,020 1,059,598 MONI $295 million revolving credit facility, matures September 30, 2021, LIBOR plus 4.00%, subject to a LIBOR floor of 1.00%, with an effective rate of 6.0% 71,780 66,673 1,794,253 1,789,044 Less current portion of long-term debt (11,000 ) (11,000 ) Long-term debt $ 1,783,253 $ 1,778,044 |
Schedule of Convertible Notes Presented on the Consolidated Balance Sheet | The Convertible Notes are presented on the consolidated balance sheet as follows (amounts in thousands): As of As of Principal $ 96,775 $ 96,775 Unamortized discount (12,157 ) (13,263 ) Deferred debt costs (823 ) (898 ) Carrying value $ 83,795 $ 82,614 |
Schedule of Principal Payments | As of March 31, 2018 , principal payments scheduled to be made on the Company’s debt obligations, assuming no Springing Maturity of the Credit Facility, are as follows (amounts in thousands): Remainder of 2018 $ 8,250 2019 11,000 2020 692,775 2021 84,500 2022 1,042,250 2023 — Thereafter — Total principal payments 1,838,775 Less: Unamortized deferred debt costs, discounts and premium, net 44,522 Total debt on condensed consolidated balance sheet $ 1,794,253 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Swaps' Outstanding Notional Balance and Terms | As of March 31, 2018 , the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below: Notional Effective Date Maturity Date Fixed Rate Paid Variable Rate Received $ 190,982,778 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 249,375,000 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 49,875,000 March 23, 2018 April 9, 2022 2.504% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 376,057,500 March 23, 2018 September 30, 2022 1.833% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) On September 30, 2016, MONI negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the "Amended Swaps"). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, MONI simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive income (loss) relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. |
Schedule of Impact of the Derivatives Designated as Cash Flow Hedges | The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): Three Months Ended 2018 2017 Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) $ 13,668 (733 ) Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss (a) $ (738 ) (1,782 ) Ineffective portion of amount of loss recognized into Net loss (a) $ — 18 (a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Upon the adoption of ASU 2017-12 on January 1, 2018, ineffectiveness is no longer measured or recognized. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Level of Assets and Liabilities Measured on a Recurring Basis | The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at March 31, 2018 and December 31, 2017 (amounts in thousands): Level 1 Level 2 Level 3 Total March 31, 2018 Investments in marketable securities (a) $ 107,450 — — 107,450 Interest rate swap agreements - assets (b) — 13,833 — 13,833 Interest rate swap agreements - liabilities (b) — (6,553 ) — (6,553 ) Total $ 107,450 7,280 — 114,730 December 31, 2017 Investments in marketable securities (a) $ 105,958 — — 105,958 Interest rate swap agreements - assets (b) — 7,058 — 7,058 Interest rate swap agreements - liabilities (b) — (13,817 ) — (13,817 ) Total $ 105,958 (6,759 ) — 99,199 (a) Level 1 investments primarily consist of diversified corporate bond funds. (b) Swap asset values are included in non-current Other assets and Swap liability values are included in non-current Derivative financial instruments on the condensed consolidated balance sheets. |
Schedule of Carrying Values and Fair Values of Financial Instruments That are Not Carried at Fair Value | Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): March 31, 2018 December 31, 2017 Long term debt, including current portion: Carrying value $ 1,794,253 1,789,044 Fair value (a) 1,642,644 1,709,342 (a) The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Activity in the Series A and Series B Common Stock | The following table presents the activity in Series A Common Stock and Ascent Capital's Series B Common Stock, par value $0.01 per share (the "Series B Common Stock"), for the three months ended March 31, 2018 : Series A Common Stock Series B Common Stock Balance at December 31, 2017 11,999,630 381,528 Issuance of stock awards 13,153 — Restricted stock canceled for tax withholding (10,680 ) — Balance at March 31, 2018 12,002,103 381,528 |
Summary of the Changes in Accumulated Other Comprehensive Income (Loss) | The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period presented (amounts in thousands): Foreign Currency Translation Adjustments Unrealized Holding Gains and Losses on Marketable Securities, net (a) Unrealized Gains and Losses on Derivative Instruments, net (b) Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ (758 ) 3,900 (7,375 ) (4,233 ) Impact of adoption of ASU 2017-12 — — 605 605 Adjusted balance at January 1, 2018 (758 ) 3,900 (6,770 ) (3,628 ) Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 — (1,014 ) 13,668 12,654 Reclassifications of loss (gain) into Net loss, net of income tax of $0 — (2,063 ) 738 (1,325 ) Net current period Other comprehensive income (loss) — (3,077 ) 14,406 11,329 Balance at March 31, 2018 $ (758 ) 823 7,636 7,701 (a) Amounts reclassified into net loss are included in Other income, net on the condensed consolidated statement of operations. See note 4, Investments in Marketable Securities , for further information. (b) Amounts reclassified into net loss are included in Interest expense on the condensed consolidated statement of operations. See note 8, Derivatives , for further information. |
Basic and Diluted Earnings (L30
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Shares Used in Calculation of Basic and Diluted Earnings (Loss) Per Share | Three Months Ended 2018 2017 Weighted average number of shares of Series A and Series B Common Stock 12,298,922 12,134,061 |
Reportable Business Segments (T
Reportable Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table sets forth selected data from the accompanying condensed consolidated balance sheets for the periods indicated (amounts in thousands): MONI LiveWatch Other Consolidated Balance at March 31, 2018 Subscriber accounts and deferred contract acquisition costs, net of amortization $ 1,203,996 $ 20,941 $ — $ 1,224,937 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 1,980,081 $ 62,453 $ (14,976 ) $ 2,027,558 Balance at December 31, 2017 Subscriber accounts and deferred contract acquisition costs, net of amortization $ 1,280,813 $ 21,215 $ — $ 1,302,028 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 1,996,240 $ 63,233 $ (4,488 ) $ 2,054,985 The following table sets forth selected data from the accompanying condensed consolidated statements of operations for the periods indicated (amounts in thousands): MONI LiveWatch Other Consolidated Three Months Ended March 31, 2018 Net revenue $ 125,773 $ 7,980 $ — $ 133,753 Depreciation and amortization $ 55,236 $ 1,790 $ 6 $ 57,032 Net loss from continuing operations before income taxes $ (17,629 ) $ (7,232 ) $ (4,631 ) $ (29,492 ) Three Months Ended March 31, 2017 Net revenue $ 134,408 $ 6,792 $ — $ 141,200 Depreciation and amortization $ 60,508 $ 1,159 $ 7 $ 61,674 Net loss from continuing operations before income taxes $ (13,299 ) $ (5,930 ) $ 2,098 $ (17,131 ) |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) - MONI - The Brink's Company - Trademarks | Feb. 26, 2018 |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived license agreements, term | 7 years |
Finite-lived license agreements, renewal extension period | 20 years |
Recent Accounting Pronounceme33
Recent Accounting Pronouncements - Narrative (Details) - Accounting Standards Update 2017-12 - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 |
Accumulated Deficit | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Impact of adoption | $ 605 | |
Accumulated Deficit | New Accounting Pronouncement, Early Adoption, Effect | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Impact of adoption | $ 605 | |
Accumulated Other Comprehensive Income (Loss) | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Impact of adoption | $ (605) | |
Accumulated Other Comprehensive Income (Loss) | New Accounting Pronouncement, Early Adoption, Effect | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Impact of adoption | $ (605) |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Revenue by Source (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disaggregation of Revenue [Line Items] | ||
Total Net revenue | $ 133,753 | $ 141,200 |
Alarm monitoring revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total Net revenue | 124,840 | 136,891 |
Product and installation revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total Net revenue | 8,147 | 3,294 |
Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Total Net revenue | $ 766 | $ 1,015 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | ||
Trade receivables, net | $ 12,300 | $ 12,645 |
Contract assets, net - current portion | 13,543 | 14,197 |
Contract assets, net - long-term portion | 11,101 | 10,377 |
Deferred revenue | $ 13,477 | $ 13,871 |
Revenue Recognition - Impact on
Revenue Recognition - Impact on Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||||
Cash and cash equivalents | $ 30,087 | $ 10,465 | $ 42,257 | $ 12,319 |
Restricted cash | 93 | 0 | ||
Marketable securities, at fair value | 107,450 | 105,958 | ||
Trade receivables, net of allowance for doubtful accounts | 12,300 | 12,645 | ||
Prepaid and other current assets | 23,498 | 11,175 | ||
Total current assets | 173,428 | 140,243 | ||
Property and equipment, net of accumulated depreciation | 34,070 | 32,823 | ||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization | 1,224,937 | 1,302,028 | ||
Dealer network and other intangible assets, net of accumulated amortization | 3,941 | 6,994 | ||
Goodwill | 563,549 | 563,549 | ||
Other assets, net | 27,633 | 9,348 | ||
Total assets | 2,027,558 | 2,054,985 | ||
Current liabilities: | ||||
Accounts payable | 12,910 | 11,092 | ||
Accrued payroll and related liabilities | 6,145 | 3,953 | ||
Other accrued liabilities | 66,584 | 52,329 | ||
Deferred revenue | 13,477 | 13,871 | ||
Holdback liability | 7,601 | 9,309 | ||
Current portion of long-term debt | 11,000 | 11,000 | ||
Total current liabilities | 117,717 | 101,554 | ||
Non-current liabilities: | ||||
Long-term debt | 1,783,253 | 1,778,044 | ||
Long-term holdback liability | 2,191 | 2,658 | ||
Derivative financial instruments | 6,553 | 13,491 | ||
Deferred income tax liability, net | 13,973 | 13,311 | ||
Other liabilities | 3,259 | 3,255 | ||
Total liabilities | 1,926,946 | 1,912,313 | ||
Commitments and contingencies | ||||
Stockholders’ equity: | ||||
Preferred stock | 0 | 0 | ||
Additional paid-in capital | 1,424,068 | 1,423,899 | ||
Accumulated deficit | (1,331,281) | (1,277,118) | ||
Accumulated other comprehensive income, net | 7,701 | (4,233) | ||
Total stockholders’ equity | 100,612 | 142,672 | ||
Total liabilities and stockholders’ equity | 2,027,558 | 2,054,985 | ||
Adjustments | Accounting Standards Update 2014-09 | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | |||
Marketable securities, at fair value | 0 | |||
Trade receivables, net of allowance for doubtful accounts | 0 | |||
Prepaid and other current assets | (13,543) | |||
Total current assets | (13,543) | |||
Property and equipment, net of accumulated depreciation | 0 | |||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization | 48,249 | |||
Dealer network and other intangible assets, net of accumulated amortization | 0 | |||
Goodwill | 0 | |||
Other assets, net | (11,101) | |||
Total assets | 23,605 | |||
Current liabilities: | ||||
Accounts payable | 0 | |||
Accrued payroll and related liabilities | 0 | |||
Other accrued liabilities | 0 | |||
Deferred revenue | 1,192 | |||
Holdback liability | 0 | |||
Current portion of long-term debt | 0 | |||
Total current liabilities | 1,192 | |||
Non-current liabilities: | ||||
Long-term debt | 0 | |||
Long-term holdback liability | 0 | |||
Derivative financial instruments | 0 | |||
Deferred income tax liability, net | 0 | |||
Other liabilities | 0 | |||
Total liabilities | 1,192 | |||
Commitments and contingencies | ||||
Stockholders’ equity: | ||||
Preferred stock | 0 | |||
Additional paid-in capital | 0 | |||
Accumulated deficit | 22,413 | |||
Accumulated other comprehensive income, net | 0 | |||
Total stockholders’ equity | 22,413 | |||
Total liabilities and stockholders’ equity | 23,605 | |||
Balances without adoption of Topic 606 | ||||
Current assets: | ||||
Cash and cash equivalents | 30,087 | 10,465 | ||
Restricted cash | 93 | |||
Marketable securities, at fair value | 107,450 | |||
Trade receivables, net of allowance for doubtful accounts | 12,300 | |||
Prepaid and other current assets | 9,955 | |||
Total current assets | 159,885 | |||
Property and equipment, net of accumulated depreciation | 34,070 | |||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization | 1,273,186 | |||
Dealer network and other intangible assets, net of accumulated amortization | 3,941 | |||
Goodwill | 563,549 | |||
Other assets, net | 16,532 | |||
Total assets | 2,051,163 | |||
Current liabilities: | ||||
Accounts payable | 12,910 | |||
Accrued payroll and related liabilities | 6,145 | |||
Other accrued liabilities | 66,584 | |||
Deferred revenue | 14,669 | |||
Holdback liability | 7,601 | |||
Current portion of long-term debt | 11,000 | |||
Total current liabilities | 118,909 | |||
Non-current liabilities: | ||||
Long-term debt | 1,783,253 | |||
Long-term holdback liability | 2,191 | |||
Derivative financial instruments | 6,553 | |||
Deferred income tax liability, net | 13,973 | |||
Other liabilities | 3,259 | |||
Total liabilities | 1,928,138 | |||
Commitments and contingencies | ||||
Stockholders’ equity: | ||||
Preferred stock | 0 | |||
Additional paid-in capital | 1,424,068 | |||
Accumulated deficit | (1,308,868) | |||
Accumulated other comprehensive income, net | 7,701 | |||
Total stockholders’ equity | 123,025 | |||
Total liabilities and stockholders’ equity | 2,051,163 | |||
Series A Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 120 | 120 | ||
Series A Common Stock | Adjustments | Accounting Standards Update 2014-09 | ||||
Stockholders’ equity: | ||||
Common stock | 0 | |||
Series A Common Stock | Balances without adoption of Topic 606 | ||||
Stockholders’ equity: | ||||
Common stock | 120 | |||
Series B Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 4 | 4 | ||
Series B Common Stock | Adjustments | Accounting Standards Update 2014-09 | ||||
Stockholders’ equity: | ||||
Common stock | 0 | |||
Series B Common Stock | Balances without adoption of Topic 606 | ||||
Stockholders’ equity: | ||||
Common stock | 4 | |||
Series C Common Stock | ||||
Stockholders’ equity: | ||||
Common stock | 0 | $ 0 | ||
Series C Common Stock | Adjustments | Accounting Standards Update 2014-09 | ||||
Stockholders’ equity: | ||||
Common stock | 0 | |||
Series C Common Stock | Balances without adoption of Topic 606 | ||||
Stockholders’ equity: | ||||
Common stock | $ 0 |
Revenue Recognition - Impact 37
Revenue Recognition - Impact on Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net revenue | $ 133,753 | $ 141,200 |
Operating expenses: | ||
Cost of services | 32,701 | 29,969 |
Selling, general and administrative, including stock-based and long-term incentive compensation | 37,406 | 36,245 |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 54,411 | 59,547 |
Depreciation | 2,621 | 2,127 |
Total operating expenses | 127,139 | 121,482 |
Operating income | 6,614 | 19,718 |
Other expense (income), net: | ||
Interest income | (481) | (395) |
Interest expense | 38,652 | 37,486 |
Other income, net | (2,065) | (242) |
Total other expense (income), net | 36,106 | 36,849 |
Loss from continuing operations before income taxes | (29,492) | (17,131) |
Income tax expense | 1,346 | 1,814 |
Net loss from continuing operations | (30,838) | (18,945) |
Other comprehensive income (loss): | ||
Unrealized holding loss on marketable securities, net | (3,077) | 551 |
Unrealized gain on derivative contracts, net | 14,406 | 1,049 |
Total other comprehensive income, net of tax | 11,329 | 1,658 |
Comprehensive loss | (19,509) | $ (17,195) |
Adjustments | Accounting Standards Update 2014-09 | ||
Income Statement [Abstract] | ||
Net revenue | (325) | |
Operating expenses: | ||
Cost of services | (1,922) | |
Selling, general and administrative, including stock-based and long-term incentive compensation | 21 | |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 1,883 | |
Depreciation | 0 | |
Total operating expenses | (18) | |
Operating income | (307) | |
Other expense (income), net: | ||
Interest income | 0 | |
Interest expense | 0 | |
Other income, net | 0 | |
Total other expense (income), net | 0 | |
Loss from continuing operations before income taxes | (307) | |
Income tax expense | 0 | |
Net loss from continuing operations | (307) | |
Other comprehensive income (loss): | ||
Unrealized holding loss on marketable securities, net | 0 | |
Unrealized gain on derivative contracts, net | 0 | |
Total other comprehensive income, net of tax | 0 | |
Comprehensive loss | (307) | |
Balances without adoption of Topic 606 | ||
Income Statement [Abstract] | ||
Net revenue | 133,428 | |
Operating expenses: | ||
Cost of services | 30,779 | |
Selling, general and administrative, including stock-based and long-term incentive compensation | 37,427 | |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 56,294 | |
Depreciation | 2,621 | |
Total operating expenses | 127,121 | |
Operating income | 6,307 | |
Other expense (income), net: | ||
Interest income | (481) | |
Interest expense | 38,652 | |
Other income, net | (2,065) | |
Total other expense (income), net | 36,106 | |
Loss from continuing operations before income taxes | (29,799) | |
Income tax expense | 1,346 | |
Net loss from continuing operations | (31,145) | |
Other comprehensive income (loss): | ||
Unrealized holding loss on marketable securities, net | (3,077) | |
Unrealized gain on derivative contracts, net | 14,406 | |
Total other comprehensive income, net of tax | 11,329 | |
Comprehensive loss | $ (19,816) |
Revenue Recognition - Impact 38
Revenue Recognition - Impact on Condensed Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (30,838) | $ (18,853) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 54,411 | 59,547 |
Depreciation | 2,621 | 2,127 |
Stock-based and long-term incentive compensation | 226 | 1,576 |
Deferred income tax expense | 662 | 1,052 |
Amortization of debt discount and deferred debt costs | 2,959 | 2,673 |
Bad debt expense | 3,017 | 2,557 |
Other non-cash activity, net | 41 | 1,872 |
Changes in assets and liabilities: | ||
Trade receivables | (2,672) | (1,659) |
Prepaid expenses and other assets | 851 | 1,506 |
Contract asset, net | (70) | 0 |
Subscriber accounts - deferred contract acquisition costs | (898) | (754) |
Payables and other liabilities | 17,644 | 4,491 |
Net cash provided by operating activities | 47,954 | 45,997 |
Cash flows from investing activities: | ||
Capital expenditures | (3,310) | (1,693) |
Cost of subscriber accounts acquired | (24,560) | (46,708) |
Purchases of marketable securities | (7,998) | (2,627) |
Proceeds from sale of marketable securities | 5,495 | 997 |
Increase in restricted cash | (93) | 0 |
Net cash used in investing activities | (30,466) | (37,941) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 50,000 | 64,750 |
Payments on long-term debt | (47,750) | (42,600) |
Value of shares withheld for share-based compensation | (116) | (268) |
Net cash provided by financing activities | 2,134 | 21,882 |
Net increase in cash and cash equivalents | 19,622 | 29,938 |
Cash and cash equivalents at beginning of period | 10,465 | 12,319 |
Cash and cash equivalents at end of period | 30,087 | $ 42,257 |
Adjustments | Accounting Standards Update 2014-09 | ||
Cash flows from operating activities: | ||
Net loss | (307) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 1,883 | |
Depreciation | 0 | |
Stock-based and long-term incentive compensation | 0 | |
Deferred income tax expense | 0 | |
Amortization of debt discount and deferred debt costs | 0 | |
Bad debt expense | 0 | |
Other non-cash activity, net | 0 | |
Changes in assets and liabilities: | ||
Trade receivables | 0 | |
Prepaid expenses and other assets | 0 | |
Contract asset, net | 70 | |
Subscriber accounts - deferred contract acquisition costs | 63 | |
Payables and other liabilities | 388 | |
Net cash provided by operating activities | 2,097 | |
Cash flows from investing activities: | ||
Capital expenditures | 0 | |
Cost of subscriber accounts acquired | (2,097) | |
Purchases of marketable securities | 0 | |
Proceeds from sale of marketable securities | 0 | |
Increase in restricted cash | 0 | |
Net cash used in investing activities | (2,097) | |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 0 | |
Payments on long-term debt | 0 | |
Value of shares withheld for share-based compensation | 0 | |
Net cash provided by financing activities | 0 | |
Net increase in cash and cash equivalents | 0 | |
Cash and cash equivalents at beginning of period | 0 | |
Cash and cash equivalents at end of period | 0 | |
Balances without adoption of Topic 606 | ||
Cash flows from operating activities: | ||
Net loss | (31,145) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 56,294 | |
Depreciation | 2,621 | |
Stock-based and long-term incentive compensation | 226 | |
Deferred income tax expense | 662 | |
Amortization of debt discount and deferred debt costs | 2,959 | |
Bad debt expense | 3,017 | |
Other non-cash activity, net | 41 | |
Changes in assets and liabilities: | ||
Trade receivables | (2,672) | |
Prepaid expenses and other assets | 851 | |
Contract asset, net | 0 | |
Subscriber accounts - deferred contract acquisition costs | (835) | |
Payables and other liabilities | 18,032 | |
Net cash provided by operating activities | 50,051 | |
Cash flows from investing activities: | ||
Capital expenditures | (3,310) | |
Cost of subscriber accounts acquired | (26,657) | |
Purchases of marketable securities | (7,998) | |
Proceeds from sale of marketable securities | 5,495 | |
Increase in restricted cash | (93) | |
Net cash used in investing activities | (32,563) | |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 50,000 | |
Payments on long-term debt | (47,750) | |
Value of shares withheld for share-based compensation | (116) | |
Net cash provided by financing activities | 2,134 | |
Net increase in cash and cash equivalents | 19,622 | |
Cash and cash equivalents at beginning of period | 10,465 | |
Cash and cash equivalents at end of period | $ 30,087 |
Investments in Marketable Sec39
Investments in Marketable Securities - Schedule of Investment Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Cost Basis | $ 106,627 | $ 102,060 |
Unrealized Gains | 823 | 3,898 |
Unrealized Losses | 0 | 0 |
Total | 107,450 | 105,958 |
Mutual funds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost Basis | 106,627 | 98,628 |
Unrealized Gains | 823 | 1,859 |
Unrealized Losses | 0 | 0 |
Total | 107,450 | 100,487 |
Other than temporary impairment losses, investments, available-for-sale securities | 220 | |
Equity securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost Basis | 3,432 | |
Unrealized Gains | 2,039 | |
Unrealized Losses | 0 | |
Total | $ 5,471 | |
Realized gain, sale of equity security | $ 2,063 |
Investments in Marketable Sec40
Investments in Marketable Securities - Realized Gain (Loss) On Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||
Gross realized gains | $ 2,063 | $ 6 |
Gross realized losses | 0 | 0 |
Total proceeds | $ 5,495 | $ 997 |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Goodwill [Roll Forward] | |
Beginning Balance | $ 563,549 |
Period activity | 0 |
Ending Balance | 563,549 |
MONI | |
Goodwill [Roll Forward] | |
Beginning Balance | 527,502 |
Period activity | 0 |
Ending Balance | 527,502 |
LiveWatch | |
Goodwill [Roll Forward] | |
Beginning Balance | 36,047 |
Period activity | 0 |
Ending Balance | $ 36,047 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairment | $ 0 |
Other Accrued Liabilities - Sch
Other Accrued Liabilities - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Interest payable | $ 28,287 | $ 15,927 |
Income taxes payable | 3,598 | 2,950 |
Legal settlement reserve | 23,000 | 23,000 |
Other | 11,699 | 10,452 |
Total Other accrued liabilities | $ 66,584 | $ 52,329 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | |||
Carrying value | $ 1,794,253,000 | $ 1,789,044,000 | |
Less current portion of long-term debt | (11,000,000) | (11,000,000) | |
Long-term debt | 1,783,253,000 | 1,778,044,000 | |
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 83,795,000 | 82,614,000 | |
Stated interest rate on debt | 4.00% | ||
Effective interest rate | 8.90% | ||
Senior Notes 9.125 Percent Due 2020 | MONI | Senior Notes | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 580,658,000 | 580,159,000 | |
Stated interest rate on debt | 9.125% | ||
Effective interest rate | 9.50% | ||
Term Loan Due September 2022 | MONI | Term Loan | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 1,058,020,000 | 1,059,598,000 | |
Effective interest rate | 7.70% | ||
Term Loan Due September 2022 | MONI | Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate index | 5.50% | ||
Variable rate basis floor | 1.00% | ||
Revolving Credit Facility Due 2021 | MONI | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 71,780,000 | $ 66,673,000 | |
Effective interest rate | 6.00% | ||
Borrowing capacity | $ 295,000,000 | $ 295,000,000 | |
Revolving Credit Facility Due 2021 | MONI | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate index | 4.00% | ||
Variable rate basis floor | 1.00% |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands | Sep. 30, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Mar. 29, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||||
Interest expense | $ 38,652,000 | $ 37,486,000 | |||
MONI | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit | 73,500,000 | ||||
Remaining borrowing capacity | 221,500,000 | ||||
MONI | Secured Debt | |||||
Debt Instrument [Line Items] | |||||
Deferred financing costs and unamortized discounts | $ 27,200,000 | ||||
MONI | LIBOR | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Unused capacity commitment fee percentage | 0.50% | ||||
Series A Common Stock | |||||
Debt Instrument [Line Items] | |||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Convertible Senior Notes 4 Percent Due 2020 | Warrant | |||||
Debt Instrument [Line Items] | |||||
Strike price (in dollars per share) | $ 118.62 | ||||
Warrant strike price, conversion premium, percentage | 50.00% | ||||
Convertible Debt | Convertible Senior Notes 4 Percent Due 2020 | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 96,775,000 | ||||
Stated interest rate on debt | 4.00% | ||||
Principal amount for conversion ratio | $ 1,000 | ||||
Redemption price percentage | 100.00% | ||||
Effective interest rate to calculate accretion | 14.00% | ||||
Interest expense | $ 968,000 | 968,000 | |||
Amortization of debt discount and deferred debt costs | $ 1,181,000 | $ 1,027,000 | |||
Convertible Debt | Convertible Senior Notes 4 Percent Due 2020 | Series A Common Stock | |||||
Debt Instrument [Line Items] | |||||
Conversion ratio on debt | 9.7272 | ||||
Conversion price (in dollars per share) | $ 102.804 | ||||
Convertible Debt | Convertible Senior Notes 4 Percent Due 2020 | Series A Common Stock | Call Option | |||||
Debt Instrument [Line Items] | |||||
Shares attributable to dilutive effect of debt conversion (in shares) | 1,007 | ||||
Senior Notes Due April 2020 | Senior Notes 9.125 Percent Due 2020 | MONI | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 585,000,000 | ||||
Stated interest rate on debt | 9.125% | ||||
Accumulated amortization, debt issuance costs | $ 4,342,000 | ||||
Term Loan | Interest Rate Swap | MONI | Designated as Hedging Instrument | |||||
Debt Instrument [Line Items] | |||||
Derivative, fixed interest rate | 7.98% | ||||
Term Loan | Term Loan Due September 2022 | MONI | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 1,100,000,000 | $ 1,083,500,000 | |||
Debt discount on purchase price, percentage | 1.50% | ||||
Periodic payment of principal and interest | $ 2,750,000 | ||||
Springing maturity period | 181 days | ||||
Term Loan | Term Loan Due September 2022 | MONI | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate index | 5.50% | ||||
Variable rate basis floor | 1.00% | ||||
Revolving Credit Facility | Revolving Credit Facility Due 2021 | MONI | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | $ 295,000,000 | $ 295,000,000 | |||
Line of credit | $ 26,691,000 | ||||
Revolving Credit Facility | Revolving Credit Facility Due 2021 | MONI | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Spread on variable rate index | 4.00% | ||||
Variable rate basis floor | 1.00% |
Long-Term Debt - Schedule of Co
Long-Term Debt - Schedule of Convertible Notes (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Principal | $ 1,838,775 | |
Carrying value | 1,794,253 | $ 1,789,044 |
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Principal | 96,775 | 96,775 |
Unamortized discount | (12,157) | (13,263) |
Deferred debt costs | (823) | (898) |
Carrying value | $ 83,795 | $ 82,614 |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of Long and Short Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Remainder of 2018 | $ 8,250 | |
2,019 | 11,000 | |
2,020 | 692,775 | |
2,021 | 84,500 | |
2,022 | 1,042,250 | |
2,023 | 0 | |
Thereafter | 0 | |
Total principal payments | 1,838,775 | |
Less: | ||
Unamortized deferred debt costs, discounts and premium, net | 44,522 | |
Carrying value | $ 1,794,253 | $ 1,789,044 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Cash Flow Hedging | Interest Rate Swap | |
Derivatives | |
Amounts in accumulated other comprehensive loss expected to be reclassified during next twelve months | $ 1,114 |
Derivatives - Summary of Deriva
Derivatives - Summary of Derivative Instruments (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
3.110 % interest rate swaps | |
Derivatives | |
Notional | $ 190,982,778 |
Fixed Rate Paid | 3.11% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
3.110 % interest rate swaps | |
Derivatives | |
Notional | $ 249,375,000 |
Fixed Rate Paid | 3.11% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
2.504 % Interest rate swaps | |
Derivatives | |
Notional | $ 49,875,000 |
Fixed Rate Paid | 2.504% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
1.833 % interest rate swaps | |
Derivatives | |
Notional | $ 376,057,500 |
Fixed Rate Paid | 1.833% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
Derivatives - Summary of Cash F
Derivatives - Summary of Cash Flow Hedges (Details) - Cash Flow Hedging - Interest Rate Swap - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Derivatives | ||
Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) | $ 13,668 | $ (733) |
Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss | (738) | (1,782) |
Ineffective portion of amount of loss recognized into Net loss | $ 0 | $ 18 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value Measurements | ||
Investments in marketable securities | $ 107,450 | $ 105,958 |
Recurring | ||
Fair Value Measurements | ||
Investments in marketable securities | 107,450 | 105,958 |
Total | 114,730 | 99,199 |
Recurring | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 13,833 | 7,058 |
Interest rate swap agreements - liabilities | (6,553) | (13,817) |
Recurring | Level 1 | ||
Fair Value Measurements | ||
Investments in marketable securities | 107,450 | 105,958 |
Total | 107,450 | 105,958 |
Recurring | Level 1 | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 0 | 0 |
Interest rate swap agreements - liabilities | 0 | 0 |
Recurring | Level 2 | ||
Fair Value Measurements | ||
Investments in marketable securities | 0 | 0 |
Total | 7,280 | (6,759) |
Recurring | Level 2 | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 13,833 | 7,058 |
Interest rate swap agreements - liabilities | (6,553) | (13,817) |
Recurring | Level 3 | ||
Fair Value Measurements | ||
Investments in marketable securities | 0 | 0 |
Total | 0 | 0 |
Recurring | Level 3 | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 0 | 0 |
Interest rate swap agreements - liabilities | $ 0 | $ 0 |
Fair Value Measurements - Sch52
Fair Value Measurements - Schedule of Fair Value Not Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Long term debt, including current portion: | ||
Carrying value | $ 1,794,253 | $ 1,789,044 |
Fair value | $ 1,642,644 | $ 1,709,342 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Series B Common Stock | ||
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Stockholders' Equity - Activity
Stockholders' Equity - Activity in Common Stock Roll Forward (Details) | 3 Months Ended |
Mar. 31, 2018shares | |
Series A Common Stock | |
Increase (Decrease) in Stockholders' Equity | |
Balance, beginning of period (in shares) | 11,999,630 |
Issuance of stock awards (in shares) | 13,153 |
Restricted stock forfeitures and tax withholding (in shares) | (10,680) |
Balance, end of period (in shares) | 12,002,103 |
Series B Common Stock | |
Increase (Decrease) in Stockholders' Equity | |
Balance, beginning of period (in shares) | 381,528 |
Issuance of stock awards (in shares) | 0 |
Restricted stock forfeitures and tax withholding (in shares) | 0 |
Balance, end of period (in shares) | 381,528 |
Stockholders' Equity - Changes
Stockholders' Equity - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Changes in accumulated other comprehensive loss | |||
Beginning Balance | $ 142,672,000 | ||
Adjusted balance at January 1, 2018 | $ 119,952,000 | ||
Net current period Other comprehensive income (loss) | 11,329,000 | $ 1,658,000 | |
Ending Balance | 100,612,000 | ||
Gain through Accumulated other comprehensive income (loss), income tax | 0 | ||
Reclassifications of loss (gain) into Net loss, income tax | 0 | ||
Foreign Currency Translation Adjustments | |||
Changes in accumulated other comprehensive loss | |||
Beginning Balance | (758,000) | ||
Adjusted balance at January 1, 2018 | (758,000) | ||
Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 | 0 | ||
Reclassifications of loss (gain) into Net loss, net of income tax of $0 | 0 | ||
Net current period Other comprehensive income (loss) | 0 | ||
Ending Balance | (758,000) | ||
Unrealized holding gains and losses on marketable securities, net | |||
Changes in accumulated other comprehensive loss | |||
Beginning Balance | 3,900,000 | ||
Adjusted balance at January 1, 2018 | 3,900,000 | ||
Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 | (1,014,000) | ||
Reclassifications of loss (gain) into Net loss, net of income tax of $0 | (2,063,000) | ||
Net current period Other comprehensive income (loss) | (3,077,000) | ||
Ending Balance | 823,000 | ||
Unrealized gains and losses on derivative instruments, net | |||
Changes in accumulated other comprehensive loss | |||
Beginning Balance | (7,375,000) | ||
Adjusted balance at January 1, 2018 | (6,770,000) | ||
Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 | 13,668,000 | ||
Reclassifications of loss (gain) into Net loss, net of income tax of $0 | 738,000 | ||
Net current period Other comprehensive income (loss) | 14,406,000 | ||
Ending Balance | 7,636,000 | ||
Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive loss | |||
Beginning Balance | (4,233,000) | ||
Adjusted balance at January 1, 2018 | (3,628,000) | ||
Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 | 12,654,000 | ||
Reclassifications of loss (gain) into Net loss, net of income tax of $0 | (1,325,000) | ||
Net current period Other comprehensive income (loss) | 11,329,000 | ||
Ending Balance | $ 7,701,000 | ||
Accounting Standards Update 2017-12 | Unrealized gains and losses on derivative instruments, net | |||
Changes in accumulated other comprehensive loss | |||
Impact of adoption of ASU 2017-12 | 605,000 | ||
Accounting Standards Update 2017-12 | Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive loss | |||
Impact of adoption of ASU 2017-12 | $ 605,000 |
Basic and Diluted Earnings (L56
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B - Narrative (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Excluded stock options, unvested restricted stock awards and performance units (in shares) | 193,239 | 384,606 |
Basic and Diluted Earnings (L57
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B - Schedule of Weighted Average Number of Shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Weighted average number of shares of Series A and Series B Common Stock (in shares) | 12,298,922 | 12,134,061 |
Commitments, Contingencies an58
Commitments, Contingencies and Other Liabilities - Narrative (Details) - MONI - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2017 | Jun. 30, 2017 | |
Loss Contingencies [Line Items] | ||
Legal reserve | $ 28 | |
Settlement amount paid | $ 5 |
Reportable Business Segments -
Reportable Business Segments - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018segment | |
Segment Reporting [Abstract] | |
Number of reportable business segments | 2 |
Reportable Business Segments 60
Reportable Business Segments - Schedules of Financial Information By Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||
Net revenue | $ 133,753 | $ 141,200 | |
Depreciation and amortization | 57,032 | 61,674 | |
Net loss from continuing operations before income taxes | (29,492) | (17,131) | |
Subscriber accounts and deferred contract acquisition costs, net of amortization | 1,224,937 | $ 1,302,028 | |
Goodwill | 563,549 | 563,549 | |
Total assets | 2,027,558 | 2,054,985 | |
MONI | |||
Segment Reporting Information [Line Items] | |||
Goodwill | 527,502 | 527,502 | |
LiveWatch | |||
Segment Reporting Information [Line Items] | |||
Goodwill | 36,047 | 36,047 | |
Operating Segments | MONI | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 125,773 | 134,408 | |
Depreciation and amortization | 55,236 | 60,508 | |
Net loss from continuing operations before income taxes | (17,629) | (13,299) | |
Subscriber accounts and deferred contract acquisition costs, net of amortization | 1,203,996 | 1,280,813 | |
Goodwill | 527,502 | 527,502 | |
Total assets | 1,980,081 | 1,996,240 | |
Operating Segments | LiveWatch | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 7,980 | 6,792 | |
Depreciation and amortization | 1,790 | 1,159 | |
Net loss from continuing operations before income taxes | (7,232) | (5,930) | |
Subscriber accounts and deferred contract acquisition costs, net of amortization | 20,941 | 21,215 | |
Goodwill | 36,047 | 36,047 | |
Total assets | 62,453 | 63,233 | |
Other | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 0 | 0 | |
Depreciation and amortization | 6 | 7 | |
Net loss from continuing operations before income taxes | (4,631) | $ 2,098 | |
Subscriber accounts and deferred contract acquisition costs, net of amortization | 0 | 0 | |
Goodwill | 0 | 0 | |
Total assets | $ (14,976) | $ (4,488) |