Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 24, 2016 | Jun. 30, 2015 | |
Document Information [Line Items] | |||
Entity Registrant Name | INTERFACE SECURITY SYSTEMS HOLDINGS INC | ||
Entity Central Index Key | 1,164,255 | ||
Document Type | 10-K | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 0 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Common Class A [Member] | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 2,632,839.70 | ||
Common Class B [Member] | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 976,880.09 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 12,096 | $ 25,833 |
Accounts receivable, less allowance for doubtful accounts of $1,441 and $1,105 at December 31, 2015 and 2014, respectively | 16,002 | 11,964 |
Inventories | 14,333 | 21,655 |
Prepaid expenses and other assets | 4,513 | 3,460 |
Total current assets | 46,944 | 62,912 |
Property and equipment, net | 49,636 | 27,718 |
Intangible assets, net | 18,512 | 24,332 |
Goodwill | 40,463 | 40,463 |
Deferred charges | 4,520 | 6,654 |
Other assets | 6,380 | 7,216 |
Total assets | 166,455 | 169,295 |
Current liabilities | ||
Current portion of capital leases and other obligations | 2,808 | 2,126 |
Accounts payable | 14,528 | 18,070 |
Accrued expenses | 18,288 | 16,901 |
Customer deposits | 1,671 | 2,375 |
Deferred revenue | 3,344 | 3,419 |
Total current liabilities | 40,639 | 42,891 |
Long-term deferred revenue | 3,110 | 2,826 |
Deferred tax liability | 7,497 | 8,088 |
Capital leases and other obligations | 979 | 2,280 |
Long-term debt | 266,000 | 262,000 |
Total liabilities | 318,225 | 318,085 |
Mezzanine equity | ||
Total mezzanine equity | 163,399 | 163,399 |
Stockholders’ deficit | ||
Additional paid-in-capital | 121,364 | 71,564 |
Accumulated deficit | (436,569) | (383,789) |
Total stockholders’ deficit | (315,169) | (312,189) |
Total liabilities and stockholders’ deficit | 166,455 | 169,295 |
Redeemable Class A Preferred Stock [Member] | ||
Mezzanine equity | ||
Total mezzanine equity | 110,284 | 110,284 |
Redeemable Class C Preferred Stock [Member] | ||
Mezzanine equity | ||
Total mezzanine equity | 41,154 | 41,154 |
Convertible and Redeemable Class E Preferred Stock [Member] | ||
Mezzanine equity | ||
Total mezzanine equity | 11,961 | 11,961 |
Common Class A [Member] | ||
Stockholders’ deficit | ||
Value of common stock | 26 | 26 |
Common Class B [Member] | ||
Stockholders’ deficit | ||
Value of common stock | $ 10 | $ 10 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Allowance for doubtful accounts | $ 1,441 | $ 1,105 |
Redeemable Class A Preferred Stock [Member] | ||
Mezzanine equity, par value (in dollars per share) | $ 1 | $ 1 |
Mezzanine equity, shares authorized (in shares) | 70,000 | 70,000 |
Mezzanine equity, shares outstanding (in shares) | 39,398 | 39,398 |
Redeemable Class C Preferred Stock [Member] | ||
Mezzanine equity, par value (in dollars per share) | $ 1 | $ 1 |
Mezzanine equity, shares authorized (in shares) | 60,000 | 60,000 |
Mezzanine equity, shares outstanding (in shares) | 16,094 | 16,094 |
Convertible and Redeemable Class E Preferred Stock [Member] | ||
Mezzanine equity, par value (in dollars per share) | $ 1 | $ 1 |
Mezzanine equity, shares authorized (in shares) | 50,000 | 50,000 |
Mezzanine equity, shares outstanding (in shares) | 10,467 | 11,060 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 3,000,000 | 3,000,000 |
Common stock, shares outstanding (in shares) | 2,632,840 | 2,632,840 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,500,000 | 1,500,000 |
Common stock, shares outstanding (in shares) | 976,880 | 976,880 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Revenue | |||
Services | $ 128,799 | $ 106,501 | $ 111,520 |
Products | 20,568 | 16,346 | 15,222 |
Total revenue | 149,367 | 122,847 | 126,742 |
Costs and Expenses | |||
Cost of services | 114,372 | 94,273 | 86,902 |
Cost of products | 17,598 | 14,333 | 15,659 |
General and administrative expenses | 25,041 | 26,946 | 25,776 |
Amortization | 5,820 | 8,516 | 10,761 |
Depreciation | 13,945 | 9,879 | 10,121 |
Loss on extinguishment of debt | 0 | 0 | 572 |
Loss on sale of long-lived assets | 1,316 | 1,719 | 109 |
Gain on sale of Transferred Assets | 0 | (39,715) | 0 |
Total costs and expenses | 178,092 | 115,951 | 149,900 |
Income (loss) from operations | (28,725) | 6,896 | (23,158) |
Interest expense | (24,822) | (24,529) | (23,954) |
Interest income | 4 | 8 | 14 |
Loss before provision for income taxes | (53,543) | (17,625) | (47,098) |
Provision for income taxes | 763 | (1,038) | (722) |
Net loss | (52,780) | (18,663) | (47,820) |
Net loss attributable to noncontrolling interest | 0 | 0 | 30 |
Net loss attributable to Interface Security Systems Holdings, Inc. | (52,780) | (18,663) | (47,790) |
Net loss attributable to common stockholders | (52,780) | (25,392) | (65,685) |
Redeemable Class A Preferred Stock [Member] | |||
Costs and Expenses | |||
Dividends on preferred stock | 0 | (4,564) | (10,411) |
Redeemable Class C Preferred Stock [Member] | |||
Costs and Expenses | |||
Dividends on preferred stock | 0 | (1,630) | (3,717) |
Convertible and Redeemable Class E Preferred Stock [Member] | |||
Costs and Expenses | |||
Dividends on preferred stock | 0 | (502) | (2,358) |
Convertible and Redeemable Class F Preferred Stock [Member] | |||
Costs and Expenses | |||
Dividends on preferred stock | 0 | (14) | (596) |
Redeemable Class G Preferred Stock [Member] | |||
Costs and Expenses | |||
Dividends on preferred stock | $ 0 | $ (19) | $ (813) |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Class A [Member] | Common Class B [Member] | Common Stock [Member]Common Class A [Member] | Common Stock [Member]Common Class B [Member] | Additional paid-in Capital [Member] | Related Party Receivables [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] |
Balances, beginning of period at Dec. 31, 2012 | $ (292,733) | $ 0 | $ 0 | $ 0 | $ (124) | $ (292,481) | $ (128) | ||
Balances, beginning of period (in shares) at Dec. 31, 2012 | 21,677 | 8,043 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Purchase of noncontrolling interest | (73) | (231) | 158 | ||||||
Repayments on related party notes | 24 | 24 | |||||||
Dividends accrued on preferred stock | (17,895) | (17,895) | |||||||
Net loss | (47,820) | (47,790) | (30) | ||||||
Balances, end of period at Dec. 31, 2013 | (358,497) | $ 0 | $ 0 | 0 | (100) | (358,397) | 0 | ||
Balances, end of period (in shares) at Dec. 31, 2013 | 21,677 | 8,043 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Repayments on related party notes | 100 | 100 | |||||||
Dividends accrued on preferred stock | (6,729) | (6,729) | |||||||
Issuance of common stock | 71,600 | $ 26 | $ 10 | 71,564 | |||||
Issuance of common stock (in shares) | 2,611,163 | 968,837 | |||||||
Net loss | (18,663) | (18,663) | |||||||
Balances, end of period at Dec. 31, 2014 | (312,189) | $ 26 | $ 10 | 71,564 | 0 | (383,789) | 0 | ||
Balances, end of period (in shares) at Dec. 31, 2014 | 2,632,840 | 976,880 | 2,632,840 | 976,880 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Capital contribution | 49,800 | 49,800 | |||||||
Net loss | (52,780) | (52,780) | |||||||
Balances, end of period at Dec. 31, 2015 | $ (315,169) | $ 26 | $ 10 | $ 121,364 | $ 0 | $ (436,569) | $ 0 | ||
Balances, end of period (in shares) at Dec. 31, 2015 | 2,632,840 | 976,880 | 2,632,840 | 976,880 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Cash flows from operating activities | |||
Net loss | $ (52,780) | $ (18,663) | $ (47,820) |
Adjustments to reconcile net loss to net cash used in operating activities | |||
Amortization | 5,820 | 8,516 | 10,761 |
Depreciation | 13,945 | 9,879 | 10,121 |
Amortization of deferred charges | 2,203 | 2,184 | 2,226 |
Deferred income tax | (590) | 594 | 569 |
Loss on sale of long-lived assets | 1,316 | 1,719 | 109 |
Gain on sale of Transferred Assets | 0 | (39,715) | 0 |
Loss on extinguishment of debt | 0 | 0 | 572 |
Change in operating assets and liabilities | |||
Accounts receivable | (4,039) | (1,557) | (2,008) |
Inventories | 8,260 | (9,608) | 348 |
Prepaid expenses, notes receivable and other assets | (217) | (6,998) | (710) |
Accounts payable | (3,566) | 6,846 | 1,281 |
Accrued expenses | 2,179 | 1,618 | 4,375 |
Customer deposits | (704) | (501) | (75) |
Deferred revenue | 210 | 833 | 896 |
Net cash used in operating activities | (27,963) | (44,853) | (19,355) |
Cash flows from investing activities | |||
Capital expenditures, subscriber system assets | (35,828) | (17,503) | (15,471) |
Capital expenditures, other | (1,358) | (1,501) | (1,302) |
Proceeds from sale of property and equipment | 30 | 332 | 0 |
Proceeds from sale of Transferred Assets | 0 | 40,799 | 87 |
Change in restricted cash | 0 | 2,000 | (2,000) |
Net cash (used in) provided by investing activities | (37,156) | 24,127 | (18,686) |
Cash flows from financing activities | |||
Proceeds from debt | 0 | 0 | 230,000 |
Payments on debt | 0 | 0 | (210,378) |
Proceeds from Revolving Credit Facility | 4,000 | 5,500 | 28,500 |
Payments on capital leases and other obligations | (2,350) | (3,716) | (592) |
Repayments on related party notes | 0 | 100 | 24 |
Capital contribution | 49,800 | 71,564 | 0 |
Proceeds of issuance from common stock | 0 | 36 | 0 |
Dividends paid on preferred stock | 0 | (17,912) | 0 |
Redemption of preferred stock | 0 | (9,374) | 0 |
Deferred charges | (68) | 0 | (10,653) |
Purchase of noncontrolling interest | 0 | 0 | (73) |
Net cash provided by financing activities | 51,382 | 46,198 | 36,828 |
Net (decrease) increase in cash | (13,737) | 25,472 | (1,213) |
Cash and cash equivalents | |||
Beginning of period | 25,833 | 361 | 1,574 |
End of period | 12,096 | 25,833 | 361 |
Supplemental Disclosures | |||
Cash paid for interest | 22,610 | 22,502 | 14,673 |
Cash paid for taxes | 380 | 180 | 180 |
Noncash items | |||
Capital expenditures in accounts payable | 231 | 209 | 611 |
Acquisition of inventory through financing arrangements | 938 | 5,281 | 0 |
Acquisition of managed support services through financing arrangements | 0 | 1,984 | 0 |
Acquisition of equipment through capital leases | 0 | 539 | 0 |
Redeemable Class A Preferred Stock [Member] | |||
Noncash items | |||
Dividends accrued | 0 | (4,564) | (10,411) |
Redeemable Class C Preferred Stock [Member] | |||
Noncash items | |||
Dividends accrued | 0 | (1,630) | (3,717) |
Convertible and Redeemable Class E Preferred Stock [Member] | |||
Noncash items | |||
Dividends accrued | 0 | (502) | (2,358) |
Convertible and Redeemable Class F Preferred Stock [Member] | |||
Noncash items | |||
Dividends accrued | 0 | (14) | (596) |
Redeemable Class G Preferred Stock [Member] | |||
Noncash items | |||
Dividends accrued | $ 0 | $ (19) | $ (813) |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Organization Interface Security Systems Holdings, Inc. (“Holdings”) is a Delaware corporation. Holdings is a technology company engaged in the sale, provisioning, installation, monitoring and maintenance of physical security and secured network services to primarily large, commercial, multi-site customers throughout the United States. Holdings is primarily owned by SunTx Capital Partners, L.P. and its affiliates (“SunTx Capital Partners”), which owns approximately 88 % of the voting power of Holdings’ indirect parent company, Interface Grand Master Holdings, Inc. (“Grand Master”) on a fully diluted basis. Grand Master is the owner of 100 % of the capital stock of Interface Master Holdings, Inc. (“Master Holdings”), the direct parent company of Holdings. Holdings owns 100 % of the outstanding membership interests of its principal operating subsidiary, Interface Security Systems, L.L.C. (“Interface Systems”). Collectively, Holdings and Interface Systems are referred to herein as the “Company” or “Interface”. The Company's secured network services include secure managed broadband (“SMB”), payment card industry (“PCI”) compliance, digital Voice over Internet Protocol (“VoIP”) and other ancillary services. The Company's comprehensive service offerings are designed to meet the needs of commercial enterprises that require a standardized and secure IP platform capable of servicing all of their distributed locations. We combine a complete suite of customized network and physical security services, which includes industry leading interactive video monitoring, into a fully-integrated bundle, enabling our customers to consolidate services from multiple vendors into a single service provider, which significantly enhances the quality and breadth of their security while also reducing their costs enabling them to Simplify To The Power of One ® . Revision During the third quarter of 2015, the Company identified that immaterial amounts of certain sales incentives and discounts provided to its customers were improperly recorded as cost of services instead of being recorded as a direct offset to services revenue. In accordance with Accounting Standards Codification (“ASC”) 605-50, Revenue Recognition - Customer Payments and Incentives, these sales incentives and discounts should be recorded as an offset to revenues instead of being reported as a cost of services. Pursuant to the guidance of Staff Accounting Bulletin (“SAB”) No. 99, Materiality, the Company concluded that the errors were not material to any of its prior year consolidated financial statements. The accompanying consolidated statement of operations for the year ended December 31, 2015 includes a cumulative revision relating to these errors for the six months ended June 30, 2015 and were immaterial to the years previously reported. These revisions did not have any effect on income (loss) from operations, net income (loss), cash flows, or other reporting metrics nor did they affect the Company’s past compliance with debt covenants. The following table compares previously reported services revenue, total revenue, cost of services, total costs and expenses to as adjusted amounts for the each of the three month periods ended March 31, 2015 and June 30, 2015 and the six months ended June 30, 2015 (in thousands): Three Months Ended March 31, 2015 As Reported Correction As Adjusted Services revenue $ 32,869 $ (4,340 ) $ 28,529 Total revenue 38,302 (4,340 ) 33,962 Cost of services 32,915 (4,340 ) 28,575 Total costs and expenses 48,712 (4,340 ) 44,372 Three Months Ended June 30, 2015 As Reported Correction As Adjusted Services revenue $ 34,235 $ (1,792 ) $ 32,443 Total revenue 38,511 (1,792 ) 36,719 Cost of services 29,421 (1,792 ) 27,629 Total costs and expenses 45,070 (1,792 ) 43,278 Six Months Ended June 30, 2015 As Reported Correction As Adjusted Services revenue $ 67,104 $ (6,132 ) $ 60,972 Total revenue 76,813 (6,132 ) 70,681 Cost of services 62,336 (6,132 ) 56,204 Total costs and expenses 93,782 (6,132 ) 87,650 Operating Model and Liquidity Under the organizational and reporting structure, the Company conducts business in one operating segment, which is identified by the Company based on how resources are allocated and operating decisions are made. Management evaluates performance and allocates resources based on the Company as a whole. The Company’s operations are conducted through the use of a unified network and are managed and reported to its Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”), the Company's chief operating decision makers, on a consolidated basis. The CEO and CFO assess performance and allocate resources based on the consolidated results of operations. A majority of the Company’s revenues are generated within the United States and a majority of the Company’s long-lived assets are located primarily within the United States. The Company’s business model is based on generating long-term contracts with customers to provide on-going monitoring, management, maintenance and related services that generate profitable recurring monthly revenue (“RMR”). The Company makes a one-time investment in sales and installation cost to create new customers internally and this investment is generally not capitalized. The Company generates substantial operating losses as a result of expensing the majority of its investment in subscriber RMR growth. The Company incurred net direct costs of $ 41.0 million, $ 29.7 million and $27.1 million to create new RMR of $ 3.1 million, $ 1.8 million and $ 1.5 million for the years ended December 31, 2015 , 2014 and 2013 , respectively. The Company's cash used for operations for the years ended December 31, 2015 , 2014 and 2013 is primarily due to installation costs to create new RMR. In January 2013, the Company closed an offering of 9 1/4% Senior Secured Notes due 2018 (the “Notes”) in an aggregate principal amount of $ 230.0 million, the proceeds of which were used to repay its then-existing revolver balance, senior subordinated note, subordinated notes payable and the fees and expenses associated with the offering. In addition, the Company had $ 36.1 million drawn and $ 13.9 million available for borrowing under the Revolving Credit Facility (as defined below) at December 31, 2015 . See Note 8. The Company used $ 28.0 million, $ 44.9 million, and $ 19.4 million of cash for operations for the years ended December 31, 2015 , 2014 and 2013 , respectively, and had positive working capital of $ 6.3 million as of December 31, 2015 and $ 20.0 million as of December 31, 2014 . In addition, as of December 31, 2015 , the Company had $ 269.8 million of total indebtedness, including capital leases and other obligations. During high volume net new RMR growth periods, management cannot provide assurance that the Company will achieve positive cash flow or have the ability to raise additional debt and/or equity capital. In the event that sufficient funds cannot be obtained to grow RMR and pay interest payments, management could elect to operate in Steady State and scale back the RMR growth to a level that would significantly reduce its investment costs. A majority of the expenses related to the sales and marketing activity for new RMR opportunities spent in 2015 would be eliminated as well as other fixed overhead and operating costs associated with installing new RMR and Contracted Backlog. As of December 31, 2014 , the Company could not provide assurance that it would achieve positive cash flow during high volume net new RMR growth periods, produce sufficient cash flow to meet all of its obligations if it were to enter Steady State or that it could raise additional debt and/or equity capital. These factors raised substantial doubt about the Company’s ability to continue as a going concern. The Company has raised capital in the past through the sale of debt securities and may seek alternative sources of capital or debt dependent on market conditions in the future. On June 30, 2015 , the Company entered into a consent and fifth amendment to the Credit Agreement, dated January 18, 2013 (as amended, the “Revolving Credit Facility”) with Capital One, N.A. (“Capital One”) to permit, and in which Capital One consented to, certain events in connection with the establishment of Grand Master, as the owner of 100 % of the capital stock of Master Holdings (“Grand Master Restructuring”). In connection with the restructuring, Grand Master closed a private placement of $ 67.0 million aggregate principal amount of unsecured notes on July 7, 2015. Also on July 7, 2015, Grand Master made a capital contribution through its subsidiaries of $ 49.8 million of the net proceeds from the offering to fund the Company's growth initiatives. On June 30, 2015 , the Company entered into a Master Services Agreement with a specialty retailer and distributor of professional beauty supplies, pursuant to which the Company will provide a fully-managed bundled services solution to approximately 4,200 locations. A portion of the net proceeds from the capital contribution was used to fund the deployment of this contract, which was substantially completed in February 2016. SunTx Capital Management Corp., as the ultimate general partner of SunTx Interface, LP, the majority stockholder of Holdings, is committed to fulfill the financial obligations and support any cash flow shortfalls or needs of Holdings through March 25, 2017. As a result, the conditions that raised the substantial doubt about whether we would continue as a going concern no longer existed as of March 24, 2016. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The significant accounting policies followed by the Company in the preparation of its consolidated financial statements are described below and are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Principles of Consolidation The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries, which are all 100% owned as of December 31, 2015 and December 31, 2014 . All significant transactions and account balances between entities included in the consolidated financial statements have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingencies. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made. Actual results could differ from those estimates. Some of the more significant estimates include the useful lives for and recoverability of tangible and intangible assets, purchase price allocations of acquired businesses and income taxes. Revenue Recognition The Company’s policy is to recognize revenue when it is realized or realizable and it is earned. The Company considers revenue realized or realizable and earned when risk of loss transfers, persuasive evidence of an arrangement exists, the price to the buyer is fixed and determinable, and collectability is reasonably assured. Service revenues for monitoring, maintenance or other service contracts are recognized ratably as services are rendered over the term of each customer agreement. Customer billings for services not yet rendered are deferred and recognized as revenue when the services are rendered and are included in deferred revenue in the consolidated balance sheets. Transactions for which the Company retains ownership of the alarm, SMB, VoIP or other system, revenues associated with the equipment and their related subscription monitoring or maintenance contracts, any set up fee and initial direct costs are deferred and are amortized on a straight-line basis over the longer of the estimated customer life or the initial term of the related contract. The related installation costs (labor, equipment, etc.) are capitalized into subscriber system assets and are amortized on a straight-line basis over the initial term of the customer contract. Arrangements involving the sale of alarm, SMB, VoIP or other systems, as well as other services to the customer can be considered to have multiple elements, including the sale of equipment, installation, monitoring and/or maintenance services. The Company assess revenue arrangements to determine the appropriate units of accounting. Once the units of accounting are properly determined, the Company evaluates the hierarchy of Vendor Specific Objective Evidence (“VSOE”), Third Party Evidence (“TPE”) and Best Estimate of Selling Price (“BESP”) to determine the appropriate selling price for each unit of accounting. VSOE of selling price is based on the price charged when the element is sold separately. TPE of selling price is established by evaluating largely interchangeable competitor products or services in stand-alone sales to similarly situated customers. BESP is established considering multiple factors, including, but not limited to, pricing practices in different geographies, gross margin objectives and internal costs. Some of the Company's offerings contain a significant element of proprietary technology and provide substantially unique features and functionality. As a result, the comparable pricing of products with similar functionality typically cannot be obtained. Additionally, the Company is unable to reliably determine what competitors products’ selling prices are on a stand-alone basis and typically not able to determine TPE for such products. Therefore BESP is used for such products in the selling price hierarchy for allocating the total arrangement consideration. Once the selling prices for all units of accounting are identified, the arrangement consideration is allocated to those separate units based on their relative selling prices. In those types of arrangements, the revenues associated with the equipment and installation services are limited to amounts that are not contingent upon the delivery of the monitoring and/or maintenance services. VSOE exists when we sell the deliverables separately and represents the actual price charged by us for each deliverable. When VSOE or TPE is not available, we use BESP to allocate the arrangement fees to deliverables. We generally use internal price lists that determine sales prices to external customers in determining its best estimate of the selling price of the various deliverables in multiple-element arrangements. BESP reflects our best estimate of what the selling prices of each deliverable would be if it were sold regularly on a standalone basis taking into consideration the cost structure of our business, technical skill required, customer location and other market conditions. For transactions in which the Company installs alarm, SMB, VoIP or other systems without any contracted future services, revenue is recognized upon completion of the installation. Early termination of the contract by the customer results in a termination charge in accordance with the customer contract, which is recognized when collectability is reasonably assured. The amounts of contract termination charges recognized in revenue during the years ended December 31, 2015 , 2014 and 2013 were not material. Provisions for certain rebates, refunds and discounts to customers are accounted for as reductions in revenue in the same period the related revenue is recorded based on sales terms and historical experience. Refunds occur in limited circumstances and only after all attempts to resolve customer concerns have been exhausted. Other Comprehensive Income As noted in the statement of operations, the Company did not recognize any other comprehensive income during 2015 , 2014 and 2013 . Cash and Cash Equivalents All amounts reported as cash and cash equivalents on the Company’s consolidated balance sheets represent cash or deposits and investments, which are available on demand to the Company with original maturities at the time of purchase of three months or less. Accounts Receivable Accounts receivable represents amounts due from customers on sales, installations, monitoring and maintenance contracts that have been adjusted for estimated uncollectible amounts. The Company grants credit to customers and does not require collateral for its accounts receivable. As security, the customer signs a binding agreement before any services are performed and payment for services is billed in advance. The allowance for doubtful accounts receivable reflects the best estimate of probable losses inherent in the Company’s receivable portfolio determined on the basis of historical experience and other currently available evidence. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. The allowance for uncollectible accounts receivables was $ 1.4 million and $ 1.1 million at December 31, 2015 and 2014 , respectively. Inventories Inventories are stated at the lower of cost, determined under the first-in, first-out (FIFO) method, or market. Inventories include the cost of materials, direct labor and work in progress. Obsolete or excess inventories are reflected at their estimated realizable values. Property and Equipment Property and equipment acquired through acquisition, is recorded at estimated fair market value under the purchase method of accounting as of the acquisition date. Additions to property and equipment subsequent to the acquisition date are recorded at cost. The Company capitalizes direct labor and related overhead costs associated with Company-owned monitoring systems installed on subscriber premises. In addition to equipment, direct labor and related overhead costs capitalized for the years ended December 31, 2015 , 2014 and 2013 was $ 35.9 million, $ 17.1 million and $ 15.6 million, respectively. Management evaluates long-lived assets, including property and equipment, for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, management recognizes the amount of the impairment by estimating the fair value of the assets and recording a provision for loss. The Company determined there were no events or changes in circumstances that indicate that the carrying value may not be recoverable as of December 31, 2015 and 2014 . Certain leased property is capitalized in accordance with authoritative accounting guidance and the present value of the related minimum lease payments is recorded as a liability, using interest rates appropriate at the inception of each lease. Amortization of capital leased property is computed on the straight-line method over the life of the asset. Expenditures for maintenance, repairs and minor renewals are expensed as incurred; expenditures for betterments and major renewals, which substantially increase the useful life of the asset, are capitalized. When assets are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operating results. The Company provides for depreciation using the straight-line method based upon estimated useful lives of the assets as follows: Years Subscriber system assets 3 to 7 Leasehold improvements 5 to 10 Software 3 to 5 Furniture, fixtures and equipment 5 to 7 Vehicles 3 to 5 Goodwill and Intangible Assets Goodwill results from the excess purchase price of an acquisition over the fair value of the net assets acquired and is not amortized. It is tested for impairment annually, or more frequently as warranted by events or changes in circumstances. In testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of the reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, a two-step, quantitative impairment test is then required, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. During the fourth quarter of 2015, the Company determined certain indicators of potential impairment were present. Based on this assessment, the Company performed a qualitative and quantitative step one analysis for goodwill impairment. Some of the qualitative impairment indicators management considered included significant differences between the carrying amount and the estimated fair value of assets and liabilities; macroeconomic conditions such as a deterioration in general economic condition or limitations on accessing capital; industry and market considerations such as a deterioration in the environment in which we operate and an increased competitive environment; cost factors such as increases in materials, labor, or other costs that have a negative effect on earnings and cash flows; overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; and other relevant events such as changes in management, key personnel, strategy and customers. The Company evaluated the significance of identified events and circumstances on the basis of the weight of evidence along with how they could affect the relationship between the reporting unit's fair value and carrying amount, including positive mitigating events and circumstances. Based on the Company's long-term customer contracts and low attrition rates, the Company determined that a cash flow loss did not indicate that the carrying amount of assets may not be recoverable and therefore it did not meet the more likely than not criteria that the fair value of goodwill was less than its carrying amount. Under the quantitative impairment test, the Company compared the fair value of its reporting unit with its carrying amount. The estimated fair value of the reporting unit used in the goodwill impairment test is determined utilizing market indicators, a multiple of the Company's RMR. Based on quantitative and qualitative evaluations performed by the Company, management believes no impairment exists in the carrying value of its goodwill or other indefinite-lived intangible assets at December 31, 2015 and 2014 . Therefore step two of the goodwill impairment test was not required. The Company’s alarm monitoring contracts, which were acquired through acquisitions are amortized on a straight-line basis over periods ranging from 10 to 12 years. Deferred Charges Deferred charges consist of costs related to borrowings and are deferred and amortized to interest expense over the terms of the related borrowing. Deferred charges in the accompanying consolidated balance sheets are shown at cost, net of accumulated amortization. Customer Deposits Customer deposits represent cash advances received from customers for installing systems and customer payments for RMR prior to being delivered. Deferred Revenue Deferred revenue represents advance billings for customer monitoring, maintenance and managed services under contract terms. Revenue is recognized ratably over the period of service associated with the payment. For transactions in which we retain ownership of the system, any amounts collected upfront are deferred and amortized over the longer of the estimated customer life or the initial term of the contract. Fair Values of Financial Instruments The Company has established a process for determining fair value of its financial assets and liabilities using available market information or other appropriate valuation methodologies. Fair value is based upon quoted market prices, where available. If such valuation methods are not available, fair value is based on internally or externally developed models using market-based or independently-sourced market parameters, where available. Fair value may be subsequently adjusted to ensure that those assets and liabilities are recorded at fair value. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value estimate as of the Company’s reporting date. Fair value guidance establishes a three-level hierarchy for disclosure of fair value measurements, based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, as follows: • Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement. The carrying amounts of cash, cash deposits, accounts receivable, prepaid expenses, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these assets and liabilities. See Note 8 for the estimated fair value of the Notes. Income Taxes The Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method of accounting for income taxes. The current and deferred tax consequences of a transaction are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable currently or in future years. Deferred income taxes are provided for temporary differences between income tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. A valuation allowance reduces deferred tax assets when management determines it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. JOBS Act We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as a company is deemed to be an “emerging growth company,” it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. The JOBS Act also provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards. |
Sale of Transferred Assets
Sale of Transferred Assets | 12 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Transferred Assets | Sale of Transferred Assets Pursuant to an Asset Purchase Agreement (the “Asset Purchase Agreement”), dated as of January 9, 2014 (the “Closing Date”), by and among My Alarm Center, LLC, d/b/a Alarm Capital Alliance (“Buyer”), and Interface Systems, the Company sold certain residential customer contracts and related assets and liabilities used exclusively in, or necessary to conduct, the alarm system sales, installation, repair, maintenance and monitoring services of the Company’s Hawk Security Services brand (“Hawk”) in the State of Texas (the “Transferred Assets”) to the Buyer. The total purchase price for the Transferred Assets was approximately $ 42.8 million of which approximately $ 40.7 million was paid in cash to the Company. The remaining amount of the purchase price was held in escrow and released to the Company in August 2014. As of December 31, 2014 , the Transferred Assets met the criteria for assets held for sale under FASB ASC 360, Property, Plant and Equipment . As such, the assets and liabilities to be sold were reclassified as held for sale. Assets held for sale on the Company’s balance sheets as of December 31, 2014 included accounts receivable of approximately $ 0.3 million, inventory of $ 0.3 million and property, plant and equipment of $ 3.6 million. Liabilities held for sale on the Company’s balance sheets as of December 31, 2014 included accrued expenses of $ 0.1 million, customer deposits of $ 0.5 million, and deferred revenue of $ 0.8 million. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Products $ 6,470 $ 10,279 Work-in-process 7,863 11,376 $ 14,333 $ 21,655 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consists of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Subscriber system assets $ 68,920 $ 36,880 Equipment 3,517 2,809 Software 2,770 2,817 Vehicles 969 1,125 Furniture and fixtures 769 543 Leasehold improvements 987 933 77,932 45,107 Less: Accumulated depreciation (28,296 ) (17,389 ) $ 49,636 $ 27,718 Depreciation expense was $ 13.9 million, $ 9.9 million and $ 10.1 million for the years ended December 31, 2015 , 2014 and 2013 , respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company had $ 40.5 million of goodwill at December 31, 2015 and 2014 related to previous acquisitions made at a premium value. Intangible assets are recorded at cost or fair value if acquired in a business combination and consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Alarm monitoring contracts $ 37,269 $ 58,044 Internally developed software 4,347 4,347 Other 15 15 41,631 62,406 Less accumulated amortization for: Alarm monitoring contracts (19,492 ) (35,662 ) Internally developed software (3,614 ) (2,400 ) Other (13 ) (12 ) (23,119 ) (38,074 ) $ 18,512 $ 24,332 Amortization of intangible assets was $ 5.8 million, $ 8.5 million and $ 10.8 million for the years ended December 31, 2015 , 2014 and 2013 , respectively. Amortization of intangible assets for the following five years , as of December 31, 2015 , is as follows (in thousands): 2016 $ 4,013 2017 2,647 2018 1,995 2019 1,907 2020 1,877 Thereafter 6,073 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Interest $ 9,924 $ 9,896 Payroll and benefit related accruals 3,838 3,885 Taxes 1,795 1,233 Other 2,731 1,887 $ 18,288 $ 16,901 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Notes $ 230,000 $ 230,000 Revolving line of credit 36,000 32,000 $ 266,000 $ 262,000 The Notes in an aggregate principal amount of $ 230.0 million have a maturity date of January 15, 2018 and have an interest rate of 9 1/4% with semi-annual interest payments due on January 15th and July 15th. The Notes are jointly and severally guaranteed by each of the Company’s current and future domestic subsidiaries and are secured by substantially all of the Company’s and any guarantors’ existing and future tangible and intangible assets. The Company maintains a Revolving Credit Facility with Capital One, which allows the Company to borrow the lesser of $ 50.0 million or up to 5 times RMR. The Revolving Credit Facility matures on January 15, 2018 and had $ 36.1 million drawn and availability of $ 13.9 million at December 31, 2015 . The Revolving Credit Facility includes a $ 1.0 million sub-limit for the issuance of letters of credit, and the amount outstanding reduces the available borrowing capacity. As of December 31, 2015 and December 31, 2014 , the Company had $ 0.1 million in letters of credit outstanding. Borrowings under the Revolving Credit Facility bear interest at a floating rate per year equal to the higher of (A) the rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered for a period equal to one, two, three, or six months, as quoted on Reuters Screen LIBOR01 Page (or any successor / similar page or service) as of 11:00 a.m., London time, on the day that is two London banking days preceding the applicable interest determination date and (B) 0.50 %, plus the applicable margin of 3.25 %. As of each of December 31, 2015 and December 31, 2014 , the interest rate was 3.75 %. The Revolving Credit Facility includes financial covenants, including: (i) a covenant not to exceed a revolving facility usage to eligible RMR ratio of 5.0 to 1.0 , (ii) a covenant to maintain a minimum fixed charge coverage of at least 1.25 to 1.0 , and (iii) a covenant not to exceed a maximum gross RMR attrition rate of 13.0 % at any time. The Revolving Credit Facility is secured by a first priority perfected lien on substantially all of the same assets that secure the Notes. The Revolving Credit Facility also provides that, upon the occurrence of certain events of default, the Company’s obligations thereunder may be accelerated and any lending commitments terminated. Such events of default include payment defaults to the lenders, material inaccuracies of representations and warranties, covenant defaults, cross‑defaults to other material indebtedness, voluntary and involuntary bankruptcy proceedings, material money judgments, certain change of control events and other customary events of default. As of December 31, 2015 , the Company was in compliance with all of the restrictive and financial covenants. Based upon outstanding indebtedness as of December 31, 2015 , aggregate annual maturities on the total borrowings under all debt agreements as of December 31, 2015 are as follows (in thousands): Year Amount 2016 $ — 2017 — 2018 266,000 2019 — 2020 — $ 266,000 At December 31, 2015 , the Notes traded at a range of $ 96.50 to $ 98.50 based upon available market information. The range of the estimated fair value of the Notes was $ 220.0 million to $ 226.6 million as of December 31, 2015 and is classified with Level 2 of the valuation hierarchy. The carrying amount of debt outstanding under the Company's Revolving Credit Facility approximates fair value as interest rates on these borrowings approximate terms currently offered to the Company, which are considered Level 2. See Note 2. Costs related to borrowings are deferred and amortized to interest expense over the terms of the related borrowing. Deferred charges consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Deferred financing fees $ 10,989 $ 10,921 Accumulated amortization (6,469 ) (4,267 ) $ 4,520 $ 6,654 Amortization of deferred financing fees was $ 2.2 million for the years ended December 31, 2015 , 2014 and 2013 , which is included in interest expense in the accompanying consolidated statement of operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. The Company’s federal income tax returns from 2012 through 2014 remain subject to examination. In addition, certain carryforward attributes that were generated prior to 2012 may still be adjusted upon examination by the Internal Revenue Service to the extent utilized in a period open to examination. Various state jurisdiction tax years remain open to examination as well, though the Company believes any additional assessment will be immaterial to the consolidated financial statements. The Company recognized income tax benefit of $ 0.8 million for the year ended December 31, 2015 and income tax expense of $ 1.0 million and $ 0.7 million for the years ended December 31, 2014 and 2013 , respectively, resulting in an effective tax rate of 1.43 %, (4.26) % and (1.53) % for the years ended December 31, 2015 , 2014 and 2013 , respectively. In each year, income tax expense includes (i) the effects of a valuation allowance maintained for federal and state deferred tax assets including net operating loss carry forwards and (ii) expense for certain jurisdictions where the tax liability is determined based on non-income related activities. The components of the Company’s provision for income taxes for the years ended December 31, 2015 , 2014 and 2013 were as follows (in thousands): December 31, 2015 2014 2013 Current tax expense Federal $ — $ — $ — State (128 ) 496 154 Total current (128 ) 496 154 Deferred tax expense Federal (541 ) 485 516 State (94 ) 57 52 Total deferred (635 ) 542 568 Total provision for income taxes $ (763 ) $ 1,038 $ 722 The Company’s provision for income taxes differs from the expected tax expense amount computed by applying the statutory federal income tax rate of 35 % to loss before income taxes as a result of the following: 2015 2014 2013 Tax at U.S. statutory rate 35.00 % 35.00 % 35.00 % State taxes, net of benefit 0.42 % (2.27 )% 3.11 % Permanent differences (0.23 )% (10.14 )% — % Valuation allowance (38.51 )% (27.56 )% (39.34 )% Other, net 4.75 % 0.71 % (0.30 )% Effective tax rate 1.43 % (4.26 )% (1.53 )% At December 31, 2015 and December 31, 2014 , the deferred tax assets attributable to federal net operating loss carryforwards was $ 123.5 million and $ 102.7 million, respectively. Such carryforwards, which may provide future tax benefits, expire in various years through 2035. The deferred tax asset associated with these net operating loss carryforwards has been fully reserved for at December 31, 2015 and December 31, 2014 . The Company evaluated all significant available positive and negative evidence, including the existence of losses in recent years and our forecast of future taxable income, and, as a result, determined it was more likely than not that its federal and certain state deferred tax assets, including benefits related to net operating loss carry forwards, would not be realized based on the measurement standards required under the provisions of ASC 740. As such, the value of the deferred tax assets was fully offset by a valuation allowance, due to the current uncertainty of the future realization of the deferred tax assets. The Company also applies the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. ASC 740 specifies the accounting the accounting for uncertainty in income taxes recognized in a company’s financial statements by prescribing a minimum probability threshold a tax position is required to meet before being recognized in the financial statements. Management has evaluated all significant tax positions at December 31, 2015 and 2014 and concluded that there are no significant uncertain tax positions as defined by accounting standards and therefore there was no effect on the Company’s financial position or results of operations. If they were to arise, interest and penalties associated with unrecognized tax positions will be classified as additional income taxes in the statement of income. During the fourth quarter of 2015, the Company identified differences in the book basis and tax basis of acquired goodwill. As a result, the Company recorded a $ 1.1 million decrease in deferred tax liabilities for the three months ended December 31, 2015 resulting in an income tax benefit. Significant components of the Company’s deferred tax liabilities and assets are as follows as of December 31 (in thousands): 2015 2014 Net operating loss carry forward $ 123,478 $ 102,662 Amortizable assets 299 2,197 Miscellaneous accruals 701 894 Bad debt reserve 556 432 Inventory reserve 215 217 Gross deferred tax asset 125,249 106,402 Depreciable assets (724 ) (2,459 ) Amortizable assets - acquisition costs (1,100 ) (1,330 ) Goodwill (6,397 ) (6,758 ) Gross deferred tax liabilities (8,221 ) (10,547 ) Net deferred tax asset 117,028 95,855 Less: valuation allowances (124,525 ) (103,943 ) Net deferred tax liability $ (7,497 ) $ (8,088 ) |
Mezzanine Equity
Mezzanine Equity | 12 Months Ended |
Dec. 31, 2015 | |
Temporary Equity Disclosure [Abstract] | |
Mezzanine Equity | Mezzanine Equity Mezzanine equity in the consolidated balance sheets as of December 31, 2015 and December 31, 2014 is comprised of the Company’s Class A, Class C, and Class E preferred stock, including accrued dividends. In January 2014, the Company used a portion of the net proceeds from the sale of the Transferred Assets to redeem all of the issued and outstanding shares of the Company’s Class G preferred stock, Class F preferred stock and part of the Company’s Class E preferred stock and to pay a cash dividend in an aggregate amount of approximately $27.3 million to the stockholders, as permitted under the indenture governing the Notes. Upon adoption of the Company's amended and restated certificate of incorporation on May 29, 2014, each class of preferred stock ceased accruing dividends. In July 2015, in connection with the Grand Master Restructuring, stockholders of Master Holdings exchanged all of their shares of each class of common stock and each class of preferred stock of Master Holdings for an equal number of shares of common stock and preferred stock of Grand Master with substantially similar terms as the shares of Master Holdings. As a result, Grand Master now owns 100 % of the common stock and preferred stock of Master Holdings. There was no change in mezzanine equity from December 31, 2014. Stockholders’ Equity Holdings' amended and restated certificate of incorporation authorizes 3,000,000 shares of Class A common stock with a par value of $ 0.01 per share, and 1,500,000 shares of Class B common stock with a par value of $ 0.01 per share. See consolidated statement of changes in stockholder’s deficit for details of shares issued and outstanding. In addition, each share of Class A common stock is convertible into one share of Class B common stock at any time at the option of the stockholder. On December 13, 2001 (date of inception), members of Company management purchased shares of Holdings’ stock at prices determined by the Board of Directors of the Company. The purchase price for such shares was paid to Holdings with an aggregate of $ 250,000 in recourse promissory notes payable to the Company, with the shares pledged as collateral. In April 2014, all of the promissory notes issued by management were paid in full and terminated. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | Mezzanine Equity Mezzanine equity in the consolidated balance sheets as of December 31, 2015 and December 31, 2014 is comprised of the Company’s Class A, Class C, and Class E preferred stock, including accrued dividends. In January 2014, the Company used a portion of the net proceeds from the sale of the Transferred Assets to redeem all of the issued and outstanding shares of the Company’s Class G preferred stock, Class F preferred stock and part of the Company’s Class E preferred stock and to pay a cash dividend in an aggregate amount of approximately $27.3 million to the stockholders, as permitted under the indenture governing the Notes. Upon adoption of the Company's amended and restated certificate of incorporation on May 29, 2014, each class of preferred stock ceased accruing dividends. In July 2015, in connection with the Grand Master Restructuring, stockholders of Master Holdings exchanged all of their shares of each class of common stock and each class of preferred stock of Master Holdings for an equal number of shares of common stock and preferred stock of Grand Master with substantially similar terms as the shares of Master Holdings. As a result, Grand Master now owns 100 % of the common stock and preferred stock of Master Holdings. There was no change in mezzanine equity from December 31, 2014. Stockholders’ Equity Holdings' amended and restated certificate of incorporation authorizes 3,000,000 shares of Class A common stock with a par value of $ 0.01 per share, and 1,500,000 shares of Class B common stock with a par value of $ 0.01 per share. See consolidated statement of changes in stockholder’s deficit for details of shares issued and outstanding. In addition, each share of Class A common stock is convertible into one share of Class B common stock at any time at the option of the stockholder. On December 13, 2001 (date of inception), members of Company management purchased shares of Holdings’ stock at prices determined by the Board of Directors of the Company. The purchase price for such shares was paid to Holdings with an aggregate of $ 250,000 in recourse promissory notes payable to the Company, with the shares pledged as collateral. In April 2014, all of the promissory notes issued by management were paid in full and terminated. |
Benefit Plan
Benefit Plan | 12 Months Ended |
Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Benefit Plan | Benefit Plan The Company sponsors a 401(k) savings plan (the “Plan”) covering substantially all employees who are at least age 21 and have completed six months of service with the Company. The Company, at its discretion, may make employer contributions to the Plan. During the years ended December 31, 2015 , 2014 and 2013 , the Company made a contribution of $ 0.2 million, $ 0.1 million and $ 0.2 million, respectively, to the Plan. |
Lease Commitments and Other Obl
Lease Commitments and Other Obligations | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Lease Commitments and Other Obligations | Lease Commitments and Other Obligations Operating Leases The Company is party to various noncancelable operating leases for equipment, building rent, computer systems and vehicles with terms of one year or greater. At December 31, 2015 , the future minimum rental payments required under such leases are as follows (in thousands): 2016 $ 2,700 2017 2,303 2018 1,702 2019 1,505 2020 1,290 Thereafter 3,235 $ 12,735 Rental expense for equipment, building rent, computer systems and vehicles for the years ended December 31, 2015 , 2014 and 2013 was $ 6.6 million, $ 6.1 million and $ 4.8 million, respectively. In addition to the operating leases above, the Company has equipment leases that are accounted for as capital leases. At December 31, 2015 , the future minimum lease payments under such leases are as follows (in thousands): 2016 $ 240 2017 9 2018 and thereafter — 249 Less: current portion (240 ) $ 9 Capital leases for equipment had a book value of $ 2.1 million and $ 2.2 million and accumulated depreciation of $ 1.6 million and $ 1.5 million at December 31, 2015 and December 31, 2014 , respectively. The Company has entered into financing arrangements for the purchase of inventory and customer support services. The financing arrangements are non-interest bearing and range from 24 to 36 months in duration. The total amount of these borrowings, including current portion, was $ 2.7 million and $ 3.9 million at December 31, 2015 and December 31, 2014 , respectively. The current portion of these borrowings was $ 2.6 million and $ 1.8 million at December 31, 2015 and December 31, 2014 , respectively. The carrying amount of these financing arrangements approximates fair value as the imputed interest on the financing arrangements was not significant. Purchase Obligations The Company purchases service components from a variety of providers and enters into agreements with suppliers that either allow them to procure components based upon criteria as defined by the Company or that establish the parameters defining the Company’s requirements. These agreements are cancelable without a significant penalty, and with short notice, typically 30 days . Consequently, purchase commitments arising from these agreements that are cancelable upon notice and without significant penalties are not included in contractual obligations. |
Concentrations of Credit Risk a
Concentrations of Credit Risk and Significant Customers | 12 Months Ended |
Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentrations of Credit Risk and Significant Customers | Concentrations of Credit Risk and Significant Customers At times, the Company’s cash balances held in financial institutions are in excess of federally insured limits. The Company believes it is not exposed to any significant credit risk with respect to its cash and cash equivalents. The Company provides services and sells its products to a wide range of customers including commercial businesses and private residences. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for potential credit losses. The Company had concentrations of credit risk with two customers, representing 22.8 % and 15.9 %, respectively, of total revenues for the year ended December 31, 2015 . The associated accounts receivable from these two customers as a percentage of the Company’s accounts receivable, net, were 17.3 % and 12.7 %, respectively, as of December 31, 2015 . For the year ended December 31, 2014 , the Company’s two largest customers accounted for 18.5 % and 6.6 %, respectively, of total revenues and represented 17.5 % and 2.2 %, respectively, of the Company’s total accounts receivable, net, as of December 31, 2014 . The Company had significant concentrations of purchases with three vendors that totaled $ 24.5 million, $ 10.4 million and $ 8.4 million for the year ended December 31, 2015 , respectively. Purchases from these vendors represented 16.1 %, 6.8 % and 5.5 % of the Company’s total purchases for the year ended December 31, 2015 , respectively. The Company had an accounts payable balance from each of these vendors of $ 5.0 million, $ 2.6 million, and $ 0.9 million, respectively, at December 31, 2015. For the year ended December 31, 2014 , the Company’s three largest vendors accounted for $ 14.0 million, $ 11.0 million and $ 6.5 million, respectively. Purchases from these vendors represented 12.3 %, 9.6% and 5.7 % of the Company’s total purchases for the year ended December 31, 2014 , respectively. The Company had an accounts payable balance from each of these vendors of $ 2.8 million, $ 3.0 million, and $ 1.5 million, respectively, at December 31, 2014 . |
Noncontrolling Interest
Noncontrolling Interest | 12 Months Ended |
Dec. 31, 2015 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling Interest In November 2004, Holdings acquired 80 % of the voting common stock of GAC. As of December 31, 2013 , and as a result of subsequent stock purchases and additional capital contributions since 2004, Holdings owned approximately 99 % of the voting common stock of GAC. In the third quarter of 2013, Holdings acquired all of the remaining noncontrolling interest in the Greater Alarm Company, Inc. (“GAC”) for $ 0.1 million. The noncontrolling interest’s share of GAC’s net loss was $ 0.03 million for the year ended December 31, 2013 in the consolidated statement of operations. |
Related Party
Related Party | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party | Related Party Management Agreement In April 2010, the Company entered into a Management Services Agreement (the “Management Agreement”) with SunTx Capital Management Corp. (“SunTx Management”), the general partner of SunTx Capital Partners, L.P. Pursuant to the Management Agreement, SunTx Management provides certain management services to the Company. The term of the Management Agreement is ten years , which may be terminated by SunTx Management upon 90 days written notice to the Company. The Company pays SunTx Management, on a monthly basis, SunTx Management’s customary fees for rendering the management services, as set forth in a statement delivered to the Company from time to time. These fees are anticipated under the Management Agreement not to exceed $ 500,000 on an annual basis. The Company also reimburses SunTx Management for all out-of-pocket expenses and payroll costs of in-house legal counsel incurred by SunTx Management in connection with the management services and pays all taxes resulting from its purchase or use of the management services. In addition to the management services fee, in connection with any acquisitions, dispositions or debt or equity financings by Interface Systems or any of its affiliates, Interface Systems will pay SunTx Management a fee which shall not exceed an amount equal to 2 % of the total enterprise value involved in the transaction. The total enterprise value is determined by the board of directors of Interface Systems. Under the indenture for Grand Master's outstanding notes, the Company is permitted to make payments to SunTx Management under the Management Agreement (not to exceed $ 150,000 in any fiscal quarter), if among other requirements, the Company is permitted to incur at least $1.00 of additional indebtedness, pursuant to the fixed charge coverage ratio test set forth in the indenture for the Notes. The Company was not permitted to incur such $ 1.00 of additional indebtedness, for the trailing four quarters ended December 31, 2014 and 2015 and therefore, no fees were paid to SunTx Management during the period from June 2014 to December 2015. We paid to SunTx Management expenses of $ 0.2 million and $ 0.5 million for the years ended December 31, 2014 and 2013 , respectively. Commercial Security Services Agreement In September 2007, the Company entered into a commercial security services agreement with SunTx Capital Partners, L.P. Under this agreement, the Company agreed to install customer owned equipment and provide alarm monitoring, audio and video services, SMB and VoIP services. SunTx Capital Partners, L.P. agreed to pay the Company $ 14,400 , plus tax, per month and had an initial term of five years that is automatically renewed for additional one -year periods unless either party gives written notice to the other party of non-renewal at least sixty days prior to the expiration date. For each of the years ended December 31, 2015 , 2014 and 2013 , the SunTx Capital Partners, L.P. paid the Company $ 0.2 million. Other Related Party Transactions In March 2014, the Company entered into a settlement and advance agreement with a former senior executive employee of the Company and current shareholder of Grand Master (the “Former Employee”) . The agreement releases all current and future claims against the Company in return for a non-interest bearing loan of $ 500,000 to the Former Employee. The loan is secured by a promissory note and a pledge agreement securing 50% of the 2,074.02 shares of Grand Master's common stock (representing 7.0 % of the total outstanding common stock) owned by the Former Employee. Mr. Greg Shaw (a son of Mr. Michael Shaw, our Chief Executive Officer) is an employee of Holdings. Mr. Greg Shaw earned $ 588,400 , $ 302,000 and $ 159,000 for the years ended December 31, 2015 , 2014 and 2013 , respectively. |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies From time to time, the Company is involved in litigation and regulatory proceedings arising out of its operations. Management believes that the Company is not currently a party to any legal or regulatory proceedings, the adverse outcome of which, individually or in the aggregate, would materially adversely affect the Company’s business, financial position, results of operations or liquidity. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net ("ASU 2016-08"). This update provides clarifying guidance regarding the application of ASU 2014-09 - Revenue From Contracts with Customers when another party, along with the reporting entity, is involved in providing a good or a service to a customer. In these circumstances, an entity is required to determine whether the nature of its promise is to provide that good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). The amendments in the update clarify the implementation guidance on principal versus agent considerations. The update is effective, along with ASU 2014-09, for annual and interim periods beginning after December 15, 2017. The Company is reviewing its policies and processes to ensure compliance with the requirements in this update with regard to operations. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). The guidance in this ASU supersedes the leasing guidance in Topic 840, "Leases." Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases and leaves lessor accounting largely unchanged. For public companies, the amendments in ASU 2016-02 are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements and footnote disclosures. In November 2015, FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU 2015-17 requires entities to present deferred tax assets and liabilities as noncurrent in a classified balance sheet instead of separating into current and noncurrent amounts. For public companies, ASU 2105-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, on a prospective or retrospective basis. For all other entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all companies in any interim or annual period. The Company elected early adoption of this standard, as permitted beginning with fiscal year 2015 and applied this standard retrospectively to 2014. ASU 2015-17 did not have an impact on the Company's consolidated financial position, results of operations, or cash flows. See Note 9 for additional information regarding deferred tax assets and liabilities. In August 2015, FASB issued ASU No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (“ASU 2015-15”). This ASU adds Security Exchange Commission (“SEC”) paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. Application of this new accounting guidance will result in the reclassification of the Company's debt issuance costs. The Company had $ 3.5 million and $ 5.2 million of unamortized debt issuance costs classified within deferred charges which would be reclassified as a direct deduction from the carrying amount of long-term debt at December 31, 2015 and December 31, 2014 , respectively. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. For public companies, the guidance in ASU 2015-03, as amended by ASU 2015-15, is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. For all other entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. In August 2015, the FASB issued ASU No. 2015-14, R evenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”) deferring by one year the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) until reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In July 2015, the FASB decided to defer the effective date of the standard to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early application permitted, and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact that adopting ASU 2014-09 will have on its consolidated financial statements and footnote disclosures. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which simplifies the subsequent measurement of inventory, excluding inventory measured using the last-in, first-out or retail inventory methods. The guidance specifies that inventory currently measured at the lower of cost or market, where market could be determined with different methods, should now be measured at the lower of cost or net realizable value. For public companies, the pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. For all other entities, effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this Update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures. |
Unaudited Quarterly Financial D
Unaudited Quarterly Financial Data | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Financial Data | Unaudited Quarterly Financial Data The following table presents quarterly data for the fiscal years 2015 and 2014 (in thousands): Year Ended December 31, 2015 First Quarter Second Quarter Third Quarter Fourth Quarter (revised) (revised) Revenue $ 33,962 $ 36,719 $ 37,106 $ 41,580 Loss from operations (10,410 ) (6,559 ) (4,665 ) (7,091 ) Net loss (16,792 ) (12,936 ) (11,034 ) (12,018 ) Year Ended December 31, 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 28,720 $ 27,427 $ 32,424 $ 34,276 Income (loss) from operations 31,508 (5,652 ) (8,180 ) (10,780 ) Net income (loss) (a) 27,690 (12,901 ) (15,487 ) (17,965 ) (a) Net income for the first quarter of 2014 includes the $ 39.7 million gain on the sale of the Transferred Assets. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated all events or transactions through the date of this filing and has determined that there have been no subsequent events for which disclosure is required. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 12 Months Ended |
Dec. 31, 2015 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Consolidating Financial Information | Condensed Consolidating Financial Information In January 2013, Holdings and Interface Systems, as co-issuers, issued $ 230.0 million aggregate principal amount of Notes. See Note 8. Pursuant to the indenture governing the Notes, such notes are fully and unconditionally and jointly and severally guaranteed by each of the Company’s domestic restricted subsidiaries and are secured by substantially all of the Company’s and the guarantors’ existing and future tangible and intangible assets. Separate condensed consolidating information is not included because Interface Systems is a wholly-owned subsidiary and co-issuer of the Notes and Holdings has no independent assets or operations. There are no significant restrictions on the ability of Holdings to obtain funds from its subsidiary. Based on these facts, and in accordance with SEC Regulation S-X Rule 3-10, “Financial statements of guarantors and issuers of guaranteed securities registered or being registered,” the Company is not required to provide condensed consolidating financial information for its subsidiary. All consolidated amounts in the Company’s financial statements are representative of its subsidiary. |
Schedule II-Valuation and Quali
Schedule II-Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II-Valuation and Qualifying Accounts | INTERFACE SECURITY SYSTEMS HOLDINGS, INC. SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS ($ in thousands) Description Balance at Beginning of Year Additions to Deferred Taxes Balance at End of Year Valuation allowance on deferred tax liability: Year Ended December 31, 2013 $ 82,161 $ 14,203 $ 96,364 Year Ended December 31, 2014 96,364 7,579 103,943 Year Ended December 31, 2015 103,943 20,582 124,525 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Operating Model and Liquidity | Operating Model and Liquidity Under the organizational and reporting structure, the Company conducts business in one operating segment, which is identified by the Company based on how resources are allocated and operating decisions are made. Management evaluates performance and allocates resources based on the Company as a whole. The Company’s operations are conducted through the use of a unified network and are managed and reported to its Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”), the Company's chief operating decision makers, on a consolidated basis. The CEO and CFO assess performance and allocate resources based on the consolidated results of operations. A majority of the Company’s revenues are generated within the United States and a majority of the Company’s long-lived assets are located primarily within the United States. The Company’s business model is based on generating long-term contracts with customers to provide on-going monitoring, management, maintenance and related services that generate profitable recurring monthly revenue (“RMR”). The Company makes a one-time investment in sales and installation cost to create new customers internally and this investment is generally not capitalized. The Company generates substantial operating losses as a result of expensing the majority of its investment in subscriber RMR growth. The Company incurred net direct costs of $ 41.0 million, $ 29.7 million and $27.1 million to create new RMR of $ 3.1 million, $ 1.8 million and $ 1.5 million for the years ended December 31, 2015 , 2014 and 2013 , respectively. The Company's cash used for operations for the years ended December 31, 2015 , 2014 and 2013 is primarily due to installation costs to create new RMR. In January 2013, the Company closed an offering of 9 1/4% Senior Secured Notes due 2018 (the “Notes”) in an aggregate principal amount of $ 230.0 million, the proceeds of which were used to repay its then-existing revolver balance, senior subordinated note, subordinated notes payable and the fees and expenses associated with the offering. In addition, the Company had $ 36.1 million drawn and $ 13.9 million available for borrowing under the Revolving Credit Facility (as defined below) at December 31, 2015 . See Note 8. The Company used $ 28.0 million, $ 44.9 million, and $ 19.4 million of cash for operations for the years ended December 31, 2015 , 2014 and 2013 , respectively, and had positive working capital of $ 6.3 million as of December 31, 2015 and $ 20.0 million as of December 31, 2014 . In addition, as of December 31, 2015 , the Company had $ 269.8 million of total indebtedness, including capital leases and other obligations. During high volume net new RMR growth periods, management cannot provide assurance that the Company will achieve positive cash flow or have the ability to raise additional debt and/or equity capital. In the event that sufficient funds cannot be obtained to grow RMR and pay interest payments, management could elect to operate in Steady State and scale back the RMR growth to a level that would significantly reduce its investment costs. A majority of the expenses related to the sales and marketing activity for new RMR opportunities spent in 2015 would be eliminated as well as other fixed overhead and operating costs associated with installing new RMR and Contracted Backlog. |
Going Concern | As of December 31, 2014 , the Company could not provide assurance that it would achieve positive cash flow during high volume net new RMR growth periods, produce sufficient cash flow to meet all of its obligations if it were to enter Steady State or that it could raise additional debt and/or equity capital. These factors raised substantial doubt about the Company’s ability to continue as a going concern. The Company has raised capital in the past through the sale of debt securities and may seek alternative sources of capital or debt dependent on market conditions in the future. On June 30, 2015 , the Company entered into a consent and fifth amendment to the Credit Agreement, dated January 18, 2013 (as amended, the “Revolving Credit Facility”) with Capital One, N.A. (“Capital One”) to permit, and in which Capital One consented to, certain events in connection with the establishment of Grand Master, as the owner of 100 % of the capital stock of Master Holdings (“Grand Master Restructuring”). In connection with the restructuring, Grand Master closed a private placement of $ 67.0 million aggregate principal amount of unsecured notes on July 7, 2015. Also on July 7, 2015, Grand Master made a capital contribution through its subsidiaries of $ 49.8 million of the net proceeds from the offering to fund the Company's growth initiatives. On June 30, 2015 , the Company entered into a Master Services Agreement with a specialty retailer and distributor of professional beauty supplies, pursuant to which the Company will provide a fully-managed bundled services solution to approximately 4,200 locations. A portion of the net proceeds from the capital contribution was used to fund the deployment of this contract, which was substantially completed in February 2016. SunTx Capital Management Corp., as the ultimate general partner of SunTx Interface, LP, the majority stockholder of Holdings, is committed to fulfill the financial obligations and support any cash flow shortfalls or needs of Holdings through March 25, 2017. As a result, the conditions that raised the substantial doubt about whether we would continue as a going concern no longer existed as of March 24, 2016. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries, which are all 100% owned as of December 31, 2015 and December 31, 2014 . All significant transactions and account balances between entities included in the consolidated financial statements have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingencies. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made. Actual results could differ from those estimates. Some of the more significant estimates include the useful lives for and recoverability of tangible and intangible assets, purchase price allocations of acquired businesses and income taxes. |
Revenue Recognition | Revenue Recognition The Company’s policy is to recognize revenue when it is realized or realizable and it is earned. The Company considers revenue realized or realizable and earned when risk of loss transfers, persuasive evidence of an arrangement exists, the price to the buyer is fixed and determinable, and collectability is reasonably assured. Service revenues for monitoring, maintenance or other service contracts are recognized ratably as services are rendered over the term of each customer agreement. Customer billings for services not yet rendered are deferred and recognized as revenue when the services are rendered and are included in deferred revenue in the consolidated balance sheets. Transactions for which the Company retains ownership of the alarm, SMB, VoIP or other system, revenues associated with the equipment and their related subscription monitoring or maintenance contracts, any set up fee and initial direct costs are deferred and are amortized on a straight-line basis over the longer of the estimated customer life or the initial term of the related contract. The related installation costs (labor, equipment, etc.) are capitalized into subscriber system assets and are amortized on a straight-line basis over the initial term of the customer contract. Arrangements involving the sale of alarm, SMB, VoIP or other systems, as well as other services to the customer can be considered to have multiple elements, including the sale of equipment, installation, monitoring and/or maintenance services. The Company assess revenue arrangements to determine the appropriate units of accounting. Once the units of accounting are properly determined, the Company evaluates the hierarchy of Vendor Specific Objective Evidence (“VSOE”), Third Party Evidence (“TPE”) and Best Estimate of Selling Price (“BESP”) to determine the appropriate selling price for each unit of accounting. VSOE of selling price is based on the price charged when the element is sold separately. TPE of selling price is established by evaluating largely interchangeable competitor products or services in stand-alone sales to similarly situated customers. BESP is established considering multiple factors, including, but not limited to, pricing practices in different geographies, gross margin objectives and internal costs. Some of the Company's offerings contain a significant element of proprietary technology and provide substantially unique features and functionality. As a result, the comparable pricing of products with similar functionality typically cannot be obtained. Additionally, the Company is unable to reliably determine what competitors products’ selling prices are on a stand-alone basis and typically not able to determine TPE for such products. Therefore BESP is used for such products in the selling price hierarchy for allocating the total arrangement consideration. Once the selling prices for all units of accounting are identified, the arrangement consideration is allocated to those separate units based on their relative selling prices. In those types of arrangements, the revenues associated with the equipment and installation services are limited to amounts that are not contingent upon the delivery of the monitoring and/or maintenance services. VSOE exists when we sell the deliverables separately and represents the actual price charged by us for each deliverable. When VSOE or TPE is not available, we use BESP to allocate the arrangement fees to deliverables. We generally use internal price lists that determine sales prices to external customers in determining its best estimate of the selling price of the various deliverables in multiple-element arrangements. BESP reflects our best estimate of what the selling prices of each deliverable would be if it were sold regularly on a standalone basis taking into consideration the cost structure of our business, technical skill required, customer location and other market conditions. For transactions in which the Company installs alarm, SMB, VoIP or other systems without any contracted future services, revenue is recognized upon completion of the installation. Early termination of the contract by the customer results in a termination charge in accordance with the customer contract, which is recognized when collectability is reasonably assured. The amounts of contract termination charges recognized in revenue during the years ended December 31, 2015 , 2014 and 2013 were not material. Provisions for certain rebates, refunds and discounts to customers are accounted for as reductions in revenue in the same period the related revenue is recorded based on sales terms and historical experience. Refunds occur in limited circumstances and only after all attempts to resolve customer concerns have been exhausted. |
Cash and Cash Equivalents | Cash and Cash Equivalents All amounts reported as cash and cash equivalents on the Company’s consolidated balance sheets represent cash or deposits and investments, which are available on demand to the Company with original maturities at the time of purchase of three months or less. |
Accounts Receivable | Accounts Receivable Accounts receivable represents amounts due from customers on sales, installations, monitoring and maintenance contracts that have been adjusted for estimated uncollectible amounts. The Company grants credit to customers and does not require collateral for its accounts receivable. As security, the customer signs a binding agreement before any services are performed and payment for services is billed in advance. The allowance for doubtful accounts receivable reflects the best estimate of probable losses inherent in the Company’s receivable portfolio determined on the basis of historical experience and other currently available evidence. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. |
Inventories | Inventories Inventories are stated at the lower of cost, determined under the first-in, first-out (FIFO) method, or market. Inventories include the cost of materials, direct labor and work in progress. Obsolete or excess inventories are reflected at their estimated realizable values. |
Property and Equipment | Property and Equipment Property and equipment acquired through acquisition, is recorded at estimated fair market value under the purchase method of accounting as of the acquisition date. Additions to property and equipment subsequent to the acquisition date are recorded at cost. The Company capitalizes direct labor and related overhead costs associated with Company-owned monitoring systems installed on subscriber premises. In addition to equipment, direct labor and related overhead costs capitalized for the years ended December 31, 2015 , 2014 and 2013 was $ 35.9 million, $ 17.1 million and $ 15.6 million, respectively. Management evaluates long-lived assets, including property and equipment, for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Whether impairment has occurred is determined by comparing the estimated undiscounted cash flows attributable to the assets with the carrying value of the assets. If the carrying value exceeds the undiscounted cash flows, management recognizes the amount of the impairment by estimating the fair value of the assets and recording a provision for loss. The Company determined there were no events or changes in circumstances that indicate that the carrying value may not be recoverable as of December 31, 2015 and 2014 . Certain leased property is capitalized in accordance with authoritative accounting guidance and the present value of the related minimum lease payments is recorded as a liability, using interest rates appropriate at the inception of each lease. Amortization of capital leased property is computed on the straight-line method over the life of the asset. Expenditures for maintenance, repairs and minor renewals are expensed as incurred; expenditures for betterments and major renewals, which substantially increase the useful life of the asset, are capitalized. When assets are retired or otherwise disposed of, their cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operating results. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill results from the excess purchase price of an acquisition over the fair value of the net assets acquired and is not amortized. It is tested for impairment annually, or more frequently as warranted by events or changes in circumstances. In testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of the reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, a two-step, quantitative impairment test is then required, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test. During the fourth quarter of 2015, the Company determined certain indicators of potential impairment were present. Based on this assessment, the Company performed a qualitative and quantitative step one analysis for goodwill impairment. Some of the qualitative impairment indicators management considered included significant differences between the carrying amount and the estimated fair value of assets and liabilities; macroeconomic conditions such as a deterioration in general economic condition or limitations on accessing capital; industry and market considerations such as a deterioration in the environment in which we operate and an increased competitive environment; cost factors such as increases in materials, labor, or other costs that have a negative effect on earnings and cash flows; overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; and other relevant events such as changes in management, key personnel, strategy and customers. The Company evaluated the significance of identified events and circumstances on the basis of the weight of evidence along with how they could affect the relationship between the reporting unit's fair value and carrying amount, including positive mitigating events and circumstances. Based on the Company's long-term customer contracts and low attrition rates, the Company determined that a cash flow loss did not indicate that the carrying amount of assets may not be recoverable and therefore it did not meet the more likely than not criteria that the fair value of goodwill was less than its carrying amount. Under the quantitative impairment test, the Company compared the fair value of its reporting unit with its carrying amount. The estimated fair value of the reporting unit used in the goodwill impairment test is determined utilizing market indicators, a multiple of the Company's RMR. Based on quantitative and qualitative evaluations performed by the Company, management believes no impairment exists in the carrying value of its goodwill or other indefinite-lived intangible assets at December 31, 2015 and 2014 . Therefore step two of the goodwill impairment test was not required. The Company’s alarm monitoring contracts, which were acquired through acquisitions are amortized on a straight-line basis over periods ranging from 10 to 12 years. |
Deferred Charges | Deferred Charges Deferred charges consist of costs related to borrowings and are deferred and amortized to interest expense over the terms of the related borrowing. Deferred charges in the accompanying consolidated balance sheets are shown at cost, net of accumulated amortization. |
Customer Deposits | Customer Deposits Customer deposits represent cash advances received from customers for installing systems and customer payments for RMR prior to being delivered. |
Deferred Revenue | Deferred Revenue Deferred revenue represents advance billings for customer monitoring, maintenance and managed services under contract terms. Revenue is recognized ratably over the period of service associated with the payment. For transactions in which we retain ownership of the system, any amounts collected upfront are deferred and amortized over the longer of the estimated customer life or the initial term of the contract. |
Fair Value of Financial Instruments | Fair Values of Financial Instruments The Company has established a process for determining fair value of its financial assets and liabilities using available market information or other appropriate valuation methodologies. Fair value is based upon quoted market prices, where available. If such valuation methods are not available, fair value is based on internally or externally developed models using market-based or independently-sourced market parameters, where available. Fair value may be subsequently adjusted to ensure that those assets and liabilities are recorded at fair value. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value estimate as of the Company’s reporting date. Fair value guidance establishes a three-level hierarchy for disclosure of fair value measurements, based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, as follows: • Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset and liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement. The carrying amounts of cash, cash deposits, accounts receivable, prepaid expenses, accounts payable and accrued expenses approximate fair value due to the short-term maturities of these assets and liabilities. See Note 8 for the estimated fair value of the Notes. |
Income Taxes | Income Taxes The Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes (“ASC 740”), which requires the use of the asset and liability method of accounting for income taxes. The current and deferred tax consequences of a transaction are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable currently or in future years. Deferred income taxes are provided for temporary differences between income tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. A valuation allowance reduces deferred tax assets when management determines it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net ("ASU 2016-08"). This update provides clarifying guidance regarding the application of ASU 2014-09 - Revenue From Contracts with Customers when another party, along with the reporting entity, is involved in providing a good or a service to a customer. In these circumstances, an entity is required to determine whether the nature of its promise is to provide that good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). The amendments in the update clarify the implementation guidance on principal versus agent considerations. The update is effective, along with ASU 2014-09, for annual and interim periods beginning after December 15, 2017. The Company is reviewing its policies and processes to ensure compliance with the requirements in this update with regard to operations. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"). The guidance in this ASU supersedes the leasing guidance in Topic 840, "Leases." Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases and leaves lessor accounting largely unchanged. For public companies, the amendments in ASU 2016-02 are effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements and footnote disclosures. In November 2015, FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). ASU 2015-17 requires entities to present deferred tax assets and liabilities as noncurrent in a classified balance sheet instead of separating into current and noncurrent amounts. For public companies, ASU 2105-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, on a prospective or retrospective basis. For all other entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all companies in any interim or annual period. The Company elected early adoption of this standard, as permitted beginning with fiscal year 2015 and applied this standard retrospectively to 2014. ASU 2015-17 did not have an impact on the Company's consolidated financial position, results of operations, or cash flows. See Note 9 for additional information regarding deferred tax assets and liabilities. In August 2015, FASB issued ASU No. 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (“ASU 2015-15”). This ASU adds Security Exchange Commission (“SEC”) paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015, Emerging Issues Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs , which requires the presentation of debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability. Application of this new accounting guidance will result in the reclassification of the Company's debt issuance costs. The Company had $ 3.5 million and $ 5.2 million of unamortized debt issuance costs classified within deferred charges which would be reclassified as a direct deduction from the carrying amount of long-term debt at December 31, 2015 and December 31, 2014 , respectively. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. For public companies, the guidance in ASU 2015-03, as amended by ASU 2015-15, is effective for annual periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. For all other entities, the amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. In August 2015, the FASB issued ASU No. 2015-14, R evenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”) deferring by one year the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) until reporting periods beginning after December 15, 2017, with early adoption permitted for annual reporting periods beginning on or after December 15, 2016, and interim periods within those annual periods. ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In July 2015, the FASB decided to defer the effective date of the standard to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early application permitted, and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact that adopting ASU 2014-09 will have on its consolidated financial statements and footnote disclosures. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which simplifies the subsequent measurement of inventory, excluding inventory measured using the last-in, first-out or retail inventory methods. The guidance specifies that inventory currently measured at the lower of cost or market, where market could be determined with different methods, should now be measured at the lower of cost or net realizable value. For public companies, the pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is not permitted. For all other entities, effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this Update should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures. |
Organization and Basis of Pre30
Organization and Basis of Presentation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Comparison of Previously Reported Services Revenue, Total Revenue, Cost of Services, Total Costs and Expenses to As Adjusted Amounts | The following table compares previously reported services revenue, total revenue, cost of services, total costs and expenses to as adjusted amounts for the each of the three month periods ended March 31, 2015 and June 30, 2015 and the six months ended June 30, 2015 (in thousands): Three Months Ended March 31, 2015 As Reported Correction As Adjusted Services revenue $ 32,869 $ (4,340 ) $ 28,529 Total revenue 38,302 (4,340 ) 33,962 Cost of services 32,915 (4,340 ) 28,575 Total costs and expenses 48,712 (4,340 ) 44,372 Three Months Ended June 30, 2015 As Reported Correction As Adjusted Services revenue $ 34,235 $ (1,792 ) $ 32,443 Total revenue 38,511 (1,792 ) 36,719 Cost of services 29,421 (1,792 ) 27,629 Total costs and expenses 45,070 (1,792 ) 43,278 Six Months Ended June 30, 2015 As Reported Correction As Adjusted Services revenue $ 67,104 $ (6,132 ) $ 60,972 Total revenue 76,813 (6,132 ) 70,681 Cost of services 62,336 (6,132 ) 56,204 Total costs and expenses 93,782 (6,132 ) 87,650 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment | The Company provides for depreciation using the straight-line method based upon estimated useful lives of the assets as follows: Years Subscriber system assets 3 to 7 Leasehold improvements 5 to 10 Software 3 to 5 Furniture, fixtures and equipment 5 to 7 Vehicles 3 to 5 Property and equipment consists of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Subscriber system assets $ 68,920 $ 36,880 Equipment 3,517 2,809 Software 2,770 2,817 Vehicles 969 1,125 Furniture and fixtures 769 543 Leasehold improvements 987 933 77,932 45,107 Less: Accumulated depreciation (28,296 ) (17,389 ) $ 49,636 $ 27,718 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Products $ 6,470 $ 10,279 Work-in-process 7,863 11,376 $ 14,333 $ 21,655 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The Company provides for depreciation using the straight-line method based upon estimated useful lives of the assets as follows: Years Subscriber system assets 3 to 7 Leasehold improvements 5 to 10 Software 3 to 5 Furniture, fixtures and equipment 5 to 7 Vehicles 3 to 5 Property and equipment consists of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Subscriber system assets $ 68,920 $ 36,880 Equipment 3,517 2,809 Software 2,770 2,817 Vehicles 969 1,125 Furniture and fixtures 769 543 Leasehold improvements 987 933 77,932 45,107 Less: Accumulated depreciation (28,296 ) (17,389 ) $ 49,636 $ 27,718 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets are recorded at cost or fair value if acquired in a business combination and consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Alarm monitoring contracts $ 37,269 $ 58,044 Internally developed software 4,347 4,347 Other 15 15 41,631 62,406 Less accumulated amortization for: Alarm monitoring contracts (19,492 ) (35,662 ) Internally developed software (3,614 ) (2,400 ) Other (13 ) (12 ) (23,119 ) (38,074 ) $ 18,512 $ 24,332 |
Schedule of Future Amortization of Intangible Assets | Amortization of intangible assets for the following five years , as of December 31, 2015 , is as follows (in thousands): 2016 $ 4,013 2017 2,647 2018 1,995 2019 1,907 2020 1,877 Thereafter 6,073 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Interest $ 9,924 $ 9,896 Payroll and benefit related accruals 3,838 3,885 Taxes 1,795 1,233 Other 2,731 1,887 $ 18,288 $ 16,901 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consists of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Notes $ 230,000 $ 230,000 Revolving line of credit 36,000 32,000 $ 266,000 $ 262,000 |
Schedule of Debt Maturities | Based upon outstanding indebtedness as of December 31, 2015 , aggregate annual maturities on the total borrowings under all debt agreements as of December 31, 2015 are as follows (in thousands): Year Amount 2016 $ — 2017 — 2018 266,000 2019 — 2020 — $ 266,000 |
Schedule of Deferred Charges | Deferred charges consist of the following at December 31, 2015 and December 31, 2014 (in thousands): December 31, 2015 December 31, 2014 Deferred financing fees $ 10,989 $ 10,921 Accumulated amortization (6,469 ) (4,267 ) $ 4,520 $ 6,654 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Provision for Income Taxes | The components of the Company’s provision for income taxes for the years ended December 31, 2015 , 2014 and 2013 were as follows (in thousands): December 31, 2015 2014 2013 Current tax expense Federal $ — $ — $ — State (128 ) 496 154 Total current (128 ) 496 154 Deferred tax expense Federal (541 ) 485 516 State (94 ) 57 52 Total deferred (635 ) 542 568 Total provision for income taxes $ (763 ) $ 1,038 $ 722 |
Schedule of Effective Income Tax Rate Reconciliation | The Company’s provision for income taxes differs from the expected tax expense amount computed by applying the statutory federal income tax rate of 35 % to loss before income taxes as a result of the following: 2015 2014 2013 Tax at U.S. statutory rate 35.00 % 35.00 % 35.00 % State taxes, net of benefit 0.42 % (2.27 )% 3.11 % Permanent differences (0.23 )% (10.14 )% — % Valuation allowance (38.51 )% (27.56 )% (39.34 )% Other, net 4.75 % 0.71 % (0.30 )% Effective tax rate 1.43 % (4.26 )% (1.53 )% |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax liabilities and assets are as follows as of December 31 (in thousands): 2015 2014 Net operating loss carry forward $ 123,478 $ 102,662 Amortizable assets 299 2,197 Miscellaneous accruals 701 894 Bad debt reserve 556 432 Inventory reserve 215 217 Gross deferred tax asset 125,249 106,402 Depreciable assets (724 ) (2,459 ) Amortizable assets - acquisition costs (1,100 ) (1,330 ) Goodwill (6,397 ) (6,758 ) Gross deferred tax liabilities (8,221 ) (10,547 ) Net deferred tax asset 117,028 95,855 Less: valuation allowances (124,525 ) (103,943 ) Net deferred tax liability $ (7,497 ) $ (8,088 ) |
Lease Commitments and Other O38
Lease Commitments and Other Obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments Under Operating Leases | At December 31, 2015 , the future minimum rental payments required under such leases are as follows (in thousands): 2016 $ 2,700 2017 2,303 2018 1,702 2019 1,505 2020 1,290 Thereafter 3,235 $ 12,735 |
Schedule of Future Minimum Lease Payments Under Capital Leases | At December 31, 2015 , the future minimum lease payments under such leases are as follows (in thousands): 2016 $ 240 2017 9 2018 and thereafter — 249 Less: current portion (240 ) $ 9 |
Unaudited Quarterly Financial39
Unaudited Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following table presents quarterly data for the fiscal years 2015 and 2014 (in thousands): Year Ended December 31, 2015 First Quarter Second Quarter Third Quarter Fourth Quarter (revised) (revised) Revenue $ 33,962 $ 36,719 $ 37,106 $ 41,580 Loss from operations (10,410 ) (6,559 ) (4,665 ) (7,091 ) Net loss (16,792 ) (12,936 ) (11,034 ) (12,018 ) Year Ended December 31, 2014 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 28,720 $ 27,427 $ 32,424 $ 34,276 Income (loss) from operations 31,508 (5,652 ) (8,180 ) (10,780 ) Net income (loss) (a) 27,690 (12,901 ) (15,487 ) (17,965 ) (a) Net income for the first quarter of 2014 includes the $ 39.7 million gain on the sale of the Transferred Assets. |
Organization and Basis of Pre40
Organization and Basis of Presentation - Narrative (Details) | Jul. 07, 2015USD ($) | Jun. 30, 2015location | Jul. 31, 2015 | Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Jan. 31, 2013USD ($) |
Variable Interest Entity [Line Items] | |||||||
Number of operating segments | segment | 1 | ||||||
Net direct costs of new recurring monthly revenue | $ 41,000,000 | $ 29,700,000 | $ 27,100,000 | ||||
Recurring monthly revenue (RMR) | 3,100,000 | 1,800,000 | 1,500,000 | ||||
Net cash used in operating activities | 28,000,000 | 44,900,000 | $ 19,400,000 | ||||
Working capital | 6,300,000 | $ 20,000,000 | |||||
Long-term debt, including current portion | 269,800,000 | ||||||
Number of locations, fully-managed bundled services solution provided | location | 4,200 | ||||||
Line of Credit [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Amount drawn | 36,100,000 | ||||||
Amount available for borrowing | $ 13,900,000 | ||||||
Senior secured notes [Member] | Senior Secured Notes Due 2018 [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Stated interest rate (percent) | 9.25% | 9.25% | |||||
Face amount of debt issued | $ 230,000,000 | ||||||
SunTx Capital Partners, L.P. [Member] | Interface Master Holdings, Inc. [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Voting power owned (percent) | 88.00% | ||||||
Interface Grand Master Holdings, Inc. [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Voting power owned (percent) | 100.00% | 100.00% | |||||
Interface Grand Master Holdings, Inc. [Member] | Unsecured Debt [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Face amount of debt issued | $ 67,000,000 | ||||||
Capital contribution | $ 49,800,000 | ||||||
Interface Systems [Member] | |||||||
Variable Interest Entity [Line Items] | |||||||
Percent ownership in Interface Systems | 100.00% |
Organization and Basis of Pre41
Organization and Basis of Presentation - Schedule of Adjustments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||||
Services revenue | $ 32,443 | $ 28,529 | $ 60,972 | $ 128,799 | $ 106,501 | $ 111,520 | ||||||
Total revenue | $ 41,580 | $ 37,106 | 36,719 | 33,962 | $ 34,276 | $ 32,424 | $ 27,427 | $ 28,720 | 70,681 | 149,367 | 122,847 | 126,742 |
Cost of services | 27,629 | 28,575 | 56,204 | 114,372 | 94,273 | 86,902 | ||||||
Total costs and expenses | 43,278 | 44,372 | 87,650 | $ 178,092 | $ 115,951 | $ 149,900 | ||||||
Scenario, Previously Reported [Member] | ||||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||||
Services revenue | 34,235 | 32,869 | 67,104 | |||||||||
Total revenue | 38,511 | 38,302 | 76,813 | |||||||||
Cost of services | 29,421 | 32,915 | 62,336 | |||||||||
Total costs and expenses | 45,070 | 48,712 | 93,782 | |||||||||
Restatement Adjustment [Member] | ||||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||||
Services revenue | (1,792) | (4,340) | (6,132) | |||||||||
Total revenue | (1,792) | (4,340) | (6,132) | |||||||||
Cost of services | (1,792) | (4,340) | (6,132) | |||||||||
Total costs and expenses | $ (1,792) | $ (4,340) | $ (6,132) |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||
Percentage owned by Parent | 100.00% | 100.00% |
Allowance for doubtful accounts | $ 1,441 | $ 1,105 |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Equipment, direct labor and related overhead costs capitalized | $ 35.9 | $ 17.1 | $ 15.6 |
Subscriber System Assets [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 3 years | ||
Subscriber System Assets [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 7 years | ||
Leaseholds and Leasehold Improvements [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 5 years | ||
Leaseholds and Leasehold Improvements [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 10 years | ||
Software [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 3 years | ||
Software [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 5 years | ||
Furniture and Fixtures [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 5 years | ||
Furniture and Fixtures [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 7 years | ||
Vehicles [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 3 years | ||
Vehicles [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, useful life | 5 years |
Summary of Significant Accoun44
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||
Impairment in carrying value of goodwill | $ 0 | $ 0 |
Impairment of other indefinite-lived lived intangible assets | $ 0 | $ 0 |
Customer Contracts [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 10 years | |
Customer Contracts [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible asset, useful life | 12 years |
Sale of Transferred Assets (Det
Sale of Transferred Assets (Details) - Discontinued Operations, Held-for-sale [Member] - Hawk Security Services [Member] - USD ($) $ in Millions | Jan. 09, 2014 | Dec. 31, 2014 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total purchase price | $ 42.8 | |
Purchase price paid in cash | $ 40.7 | |
Accounts receivable | $ 0.3 | |
Inventory | 0.3 | |
Property, plant and equipment | 3.6 | |
Accrued liabilities | 0.1 | |
Customer deposits | 0.5 | |
Deferred revenue | $ 0.8 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Products | $ 6,470 | $ 10,279 |
Work-in-process | 7,863 | 11,376 |
Inventory, net | $ 14,333 | $ 21,655 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 77,932 | $ 45,107 | |
Less: Accumulated depreciation | (28,296) | (17,389) | |
Property and equipment, net | 49,636 | 27,718 | |
Depreciation expense | 13,945 | 9,879 | $ 10,121 |
Subscriber system assets [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 68,920 | 36,880 | |
Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 3,517 | 2,809 | |
Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,770 | 2,817 | |
Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 969 | 1,125 | |
Furniture and fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 769 | 543 | |
Leasehold improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 987 | $ 933 |
Goodwill and Intangible Asset48
Goodwill and Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 40,463 | $ 40,463 |
Goodwill and Intangible Asset49
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, gross | $ 41,631 | $ 62,406 | |
Intangible assets, accumulated amortization | (23,119) | (38,074) | |
Intangible assets, net | 18,512 | 24,332 | |
Amortization | 5,820 | 8,516 | $ 10,761 |
Alarm monitoring contracts [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, gross | 37,269 | 58,044 | |
Intangible assets, accumulated amortization | (19,492) | (35,662) | |
Internally developed software [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, gross | 4,347 | 4,347 | |
Intangible assets, accumulated amortization | (3,614) | (2,400) | |
Other [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible assets, gross | 15 | 15 | |
Intangible assets, accumulated amortization | $ (13) | $ (12) |
Goodwill and Intangible Asset50
Goodwill and Intangible Assets - Future Amortization of Intangible Assets (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity | |
2,016 | $ 4,013 |
2,017 | 2,647 |
2,018 | 1,995 |
2,019 | 1,907 |
2,020 | 1,877 |
Thereafter | $ 6,073 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Interest | $ 9,924 | $ 9,896 |
Payroll and benefit related accruals | 3,838 | 3,885 |
Taxes | 1,795 | 1,233 |
Other | 2,731 | 1,887 |
Accrued expenses | $ 18,288 | $ 16,901 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 266,000 | $ 262,000 |
Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 230,000 | 230,000 |
Revolving line of credit [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 36,000 | $ 32,000 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jan. 31, 2013 | |
Debt Instrument [Line Items] | ||||
Long-term debt | $ 266,000,000 | $ 262,000,000 | ||
Amortization of financing fees | 2,203,000 | $ 2,184,000 | $ 2,226,000 | |
Line of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Amount drawn | 36,100,000 | |||
Amount available for borrowing | 13,900,000 | |||
Credit Agreement [Member] | Revolving Credit Facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 50,000,000 | |||
Covenant terms, recurring monthly revenue ratio | 5 | |||
Amount drawn | $ 36,100,000 | |||
Amount available for borrowing | $ 13,900,000 | |||
Covenant terms, fixed-charge coverage ratio (at least) | 1.25 | |||
Covenant, maximum gross attrition rate (percent) | 13.00% | |||
Credit Agreement [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Line of credit, interest rate at period end (percent) | 3.75% | 3.75% | ||
Credit Agreement [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Initial Spread [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on LIBOR (percent) | 0.50% | |||
Credit Agreement [Member] | Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | Additional Spread [Member] | ||||
Debt Instrument [Line Items] | ||||
Basis spread on LIBOR (percent) | 3.25% | |||
Credit Agreement [Member] | Letter of Credit [Member] | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 1,000,000 | |||
Amount drawn | 100,000 | $ 100,000 | ||
Senior secured notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 230,000,000 | $ 230,000,000 | ||
Senior secured notes, bid price | 96.5 | |||
Senior secured notes, ask price | 98.5 | |||
Senior secured notes [Member] | Fair Value, Inputs, Level 2 [Member] | Minimum [Member] | ||||
Debt Instrument [Line Items] | ||||
Fair value of debt | 220,000,000 | |||
Senior secured notes [Member] | Fair Value, Inputs, Level 2 [Member] | Maximum [Member] | ||||
Debt Instrument [Line Items] | ||||
Fair value of debt | 226,600,000 | |||
Senior secured notes [Member] | Senior Secured Notes Due 2018 [Member] | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 230,000,000 | |||
Stated interest rate (percent) | 9.25% | 9.25% |
Long-Term Debt - Schedule of De
Long-Term Debt - Schedule of Debt Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Contractual Obligation, Fiscal Year Maturity Schedule | ||
2,016 | $ 0 | |
2,017 | 0 | |
2,018 | 266,000 | |
2,019 | 0 | |
2,020 | 0 | |
Long-term debt | $ 266,000 | $ 262,000 |
Long-Term Debt - Schedule of 55
Long-Term Debt - Schedule of Deferred Charges (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Deferred financing fees | $ 10,989 | $ 10,921 |
Accumulated amortization | (6,469) | (4,267) |
Deferred financing fees, net | $ 4,520 | $ 6,654 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (benefit) expense | $ (763) | $ 1,038 | $ 722 | |
Effective tax rate (percent) | 1.43% | (4.26%) | (1.53%) | |
Net operating loss carry forward | $ 123,478 | $ 123,478 | $ 102,662 | |
Decrease in deferred tax liabilities | $ 1,100 | $ (590) | $ 594 | $ 569 |
Income Taxes - Components of In
Income Taxes - Components of Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current tax expense | |||
Federal | $ 0 | $ 0 | $ 0 |
State | (128) | 496 | 154 |
Total current | (128) | 496 | 154 |
Deferred tax expense | |||
Federal | (541) | 485 | 516 |
State | (94) | 57 | 52 |
Total deferred | (635) | 542 | 568 |
Total provision for income taxes | $ (763) | $ 1,038 | $ 722 |
Income Taxes - Income Tax Recon
Income Taxes - Income Tax Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | |||
Tax at U.S. statutory rate | 35.00% | 35.00% | 35.00% |
State taxes, net of benefit | 0.42% | (2.27%) | 3.11% |
Permanent differences | (0.23%) | (10.14%) | 0.00% |
Valuation allowance | (38.51%) | (27.56%) | (39.34%) |
Other, net | 4.75% | 0.71% | (0.30%) |
Effective tax rate | 1.43% | (4.26%) | (1.53%) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward | $ 123,478 | $ 102,662 |
Amortizable assets | 299 | 2,197 |
Miscellaneous accruals | 701 | 894 |
Bad debt reserve | 556 | 432 |
Inventory reserve | 215 | 217 |
Gross deferred tax asset | 125,249 | 106,402 |
Depreciable assets | (724) | (2,459) |
Amortizable assets - acquisition costs | (1,100) | (1,330) |
Goodwill | (6,397) | (6,758) |
Gross deferred tax liabilities | (8,221) | (10,547) |
Net deferred tax asset | 117,028 | 95,855 |
Less: valuation allowances | (124,525) | (103,943) |
Net deferred tax liability | $ (7,497) | $ (8,088) |
Mezzanine Equity - Narrative (D
Mezzanine Equity - Narrative (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Jul. 31, 2015 | Jan. 31, 2014 |
Temporary Equity [Line Items] | |||
Payments of dividends | $ 27.3 | ||
Interface Grand Master Holdings, Inc. [Member] | |||
Temporary Equity [Line Items] | |||
Voting power owned (percent) | 100.00% | 100.00% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 13, 2001 | |
Common Stock [Member] | Management [Member] | |||
Class of Stock [Line Items] | |||
Related party notes receivable | $ 250 | ||
Common Class A [Member] | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 3,000,000 | 3,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common Class B [Member] | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized (in shares) | 1,500,000 | 1,500,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Class A Common Stock for Class B Common Stock [Member] | |||
Class of Stock [Line Items] | |||
Conversion of stock, number of shares that can be received in a conversion | 1 |
Benefit Plan (Details)
Benefit Plan (Details) - Plan [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Contribution Plan Disclosure [Line Items] | |||
Age requirement (years) | 21 years | ||
Requisite service period (months) | 6 months | ||
Contributions to Plan | $ 0.2 | $ 0.1 | $ 0.2 |
Lease Commitments and Other O63
Lease Commitments and Other Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating Leases, Future Minimum Rental Payments Due | |||
2,016 | $ 2,700 | ||
2,017 | 2,303 | ||
2,018 | 1,702 | ||
2,019 | 1,505 | ||
2,020 | 1,290 | ||
Thereafter | 3,235 | ||
Operating leases, future minimum rental payments due | 12,735 | ||
Operating leases, rent expense | 6,600 | $ 6,100 | $ 4,800 |
Capital Leases, Future Minimum Rental Payments Due | |||
2,016 | 240 | ||
2,017 | 9 | ||
2018 and thereafter | 0 | ||
Capital leases, future minimum rental payments due | 249 | ||
Less: current portion | (240) | ||
Capital leases, future minimum payments, less current portion | 9 | ||
Capital leases for equipment and vehicles | 2,100 | 2,200 | |
Accumulated depreciation for capital leased assets | $ 1,600 | 1,500 | |
Debt Instrument [Line Items] | |||
Typical amount of time allowed to cancel purchase agreement without significant penalty (days) | 30 days | ||
Notes Payable, Other Payables [Member] | Non-Interest Bearing [Member] | |||
Debt Instrument [Line Items] | |||
Financing arrangement for purchase of inventory | $ 2,700 | 3,900 | |
Financing arrangement for purchase of inventory, current portion | $ 2,600 | $ 1,800 | |
Minimum [Member] | |||
Debt Instrument [Line Items] | |||
Long-term purchase commitment period (months) | 24 months | ||
Maximum [Member] | |||
Debt Instrument [Line Items] | |||
Long-term purchase commitment period (months) | 36 months |
Concentrations of Credit Risk64
Concentrations of Credit Risk and Significant Customers (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2015USD ($)customervendor | Dec. 31, 2014USD ($)customer | |
Concentration Risk [Line Items] | ||
Number of major customers | customer | 2 | 2 |
Number of Major Vendors | vendor | 3 | |
Customer Concentration Risk [Member] | Sales Revenue, Goods, Net [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 22.80% | 18.50% |
Customer Concentration Risk [Member] | Sales Revenue, Goods, Net [Member] | Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 15.90% | 6.60% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer One [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 17.30% | 17.50% |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Two [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 12.70% | 2.20% |
Vendor Concentration Risk, Security Alarm and Managed Services Industry [Member] | ||
Concentration Risk [Line Items] | ||
Payments to suppliers | $ 10.4 | $ 11 |
Vendor One [Member] | Supplier Concentration Risk [Member] | Purchases [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 16.10% | 12.30% |
Payments to suppliers | $ 24.5 | $ 14 |
Vendor One [Member] | Vendor Concentration Risk, Subscriber System Assets [Member] | ||
Concentration Risk [Line Items] | ||
Accounts payable | $ 5 | |
Vendor One [Member] | Vendor Concentration Risk, Security Alarm and Managed Services Industry [Member] | Purchases [Member] | ||
Concentration Risk [Line Items] | ||
Accounts payable | $ 2.8 | |
Vendor Two [Member] | Supplier Concentration Risk [Member] | Purchases [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 6.80% | 9.60% |
Vendor Two [Member] | Vendor Concentration Risk, Security Alarm and Managed Services Industry [Member] | ||
Concentration Risk [Line Items] | ||
Accounts payable | $ 2.6 | |
Vendor Two [Member] | Vendor Concentration Risk, Security Alarm and Managed Services Industry [Member] | Purchases [Member] | ||
Concentration Risk [Line Items] | ||
Accounts payable | $ 3 | |
Vendor Three [Member] | Supplier Concentration Risk [Member] | Purchases [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 5.50% | 5.70% |
Payments to suppliers | $ 8.4 | $ 6.5 |
Vendor Three [Member] | Vendor Concentration Risk, Security Alarm and Managed Services Industry [Member] | ||
Concentration Risk [Line Items] | ||
Accounts payable | $ 0.9 | |
Vendor Three [Member] | Vendor Concentration Risk, Security Alarm and Managed Services Industry [Member] | Purchases [Member] | ||
Concentration Risk [Line Items] | ||
Accounts payable | $ 1.5 |
Noncontrolling Interest (Detail
Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Sep. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2004 | |
Noncontrolling Interest [Line Items] | |||||
Noncontrolling interest share of net loss | $ 0 | $ 0 | $ 30 | ||
GAC [Member] | |||||
Noncontrolling Interest [Line Items] | |||||
Noncontrolling interest share of net loss | $ 30 | ||||
GAC [Member] | Holdings [Member] | |||||
Noncontrolling Interest [Line Items] | |||||
Voting common stock acquired | 80.00% | ||||
Percent of common stock owned | 99.00% | ||||
Acquisition of remaining noncontrolling interest | $ 100 |
Related Party (Details)
Related Party (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Affiliated Entity [Member] | SunTx Management [Member] | ||||
Related Party Transaction [Line Items] | ||||
Term of management agreement | 10 years | |||
Notice period for termination of management agreement | 90 days | |||
Annual management services fees to be paid under Management Agreement (not to exceed) | $ 500,000 | |||
Equity transaction fee to be paid under Management Agreement, as a percentage of the total enterprise value involved in the transaction (not to exceed) | 2.00% | |||
Management service fees, maximum quarterly payment (not to exceed) | $ 150,000 | |||
Minimum amount of additional indebtedness allowed | 1 | |||
Management agreement, requirements, minimum amount of indebtedness allowed | 1 | $ 1 | ||
Affiliated Entity [Member] | Fees Paid Under Management Agreement [Member] | SunTx Management [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party transactions, expenses | 200,000 | $ 500,000 | ||
Affiliated Entity [Member] | Commercial Security Services Agreement [Member] | SunTx Capital Partners, L.P. [Member] | ||||
Related Party Transaction [Line Items] | ||||
Monthly pre-tax agreement amount | $ 14,400 | |||
Initial term | 5 years | |||
Automatic renewal term | 1 year | |||
Revenue | $ 200,000 | 200,000 | 200,000 | |
Former Employee and Shareholder [Member] | Settled Litigation [Member] | ||||
Related Party Transaction [Line Items] | ||||
Non-interest bearing loan to former employee and shareholder | $ 500,000 | |||
Percentage of common stock owned by related party secured by pledge agreement | 50.00% | |||
Number of shares of common stock owned by related party | 2,074.02 | |||
Percentage of common stock outstanding owned by related party | 7.00% | |||
Immediate Family Member of CEO [Member] | Related Party, Salary Paid [Member] | ||||
Related Party Transaction [Line Items] | ||||
Employee earnings | $ 588,400 | $ 302,000 | $ 159,000 |
Recently Issued Accounting St67
Recently Issued Accounting Standards - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2015 | Dec. 31, 2014 |
Accounting Changes and Error Corrections [Abstract] | ||
Unamortized debt issuance costs | $ 3.5 | $ 5.2 |
Unaudited Quarterly Financial68
Unaudited Quarterly Financial Data (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||||
Revenue | $ 41,580 | $ 37,106 | $ 36,719 | $ 33,962 | $ 34,276 | $ 32,424 | $ 27,427 | $ 28,720 | $ 70,681 | $ 149,367 | $ 122,847 | $ 126,742 |
Income (loss) from operations | (7,091) | (4,665) | (6,559) | (10,410) | (10,780) | (8,180) | (5,652) | 31,508 | (28,725) | 6,896 | (23,158) | |
Net income (loss) | $ (12,018) | $ (11,034) | $ (12,936) | $ (16,792) | $ (17,965) | $ (15,487) | $ (12,901) | $ 27,690 | (52,780) | (18,663) | (47,820) | |
Gain on sale of Transferred Assets | 0 | $ 39,715 | $ 0 | |||||||||
Transferred Assets [Member] | ||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||||||
Gain on sale of Transferred Assets | $ 39,700 |
Condensed Consolidating Finan69
Condensed Consolidating Financial Information (Details) | Jan. 31, 2013USD ($) |
Senior Secured Notes Due 2018 [Member] | Senior secured notes [Member] | |
Condensed Balance Sheet Statements, Captions [Line Items] | |
Face amount of debt issued | $ 230,000,000 |
Schedule II-Valuation and Qua70
Schedule II-Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 103,943 | $ 96,364 | $ 82,161 |
Additions to Deferred Taxes | 20,582 | 7,579 | 14,203 |
Balance at End of Year | $ 124,525 | $ 103,943 | $ 96,364 |