Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 04, 2014 | Jun. 30, 2013 | |
Entity Registrant Name | 'MONITRONICS INTERNATIONAL INC | ' | ' |
Entity Central Index Key | '0001265107 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Non-accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $0 |
Entity Common Stock, Shares Outstanding | ' | 0 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $4,355 | $3,433 |
Restricted cash | 40 | 2,640 |
Trade receivables, net of allowance for doubtful accounts of $1,937 in 2013 and $1,436 in 2012 | 13,019 | 10,891 |
Deferred income tax assets, net | 8,530 | 5,127 |
Prepaid and other current assets | 6,319 | 13,597 |
Total current assets | 32,263 | 35,688 |
Property and equipment, net of accumulated depreciation of $17,514 in 2013 and $10,189 in 2012 | 24,561 | 20,559 |
Subscriber accounts, net of accumulated amortization of $503,497 in 2013 and $308,487 in 2012 | 1,340,954 | 987,975 |
Dealer network and other intangible assets, net of accumulated amortization of $34,297 in 2013 and $20,580 in 2012 | 64,635 | 29,853 |
Goodwill | 526,513 | 350,213 |
Other assets, net | 29,611 | 22,156 |
Total assets | 2,018,537 | 1,446,444 |
Current liabilities: | ' | ' |
Accounts payable | 6,895 | 1,523 |
Accrued payroll and related liabilities | 3,179 | 3,179 |
Other accrued liabilities | 33,454 | 27,950 |
Deferred revenue | 14,379 | 10,327 |
Holdback liability | 19,758 | 10,818 |
Current portion of long-term debt | 9,166 | 6,950 |
Total current liabilities | 86,831 | 60,747 |
Non-current liabilities: | ' | ' |
Long-term debt | 1,597,627 | 1,101,433 |
Long-term holdback liability | 6,698 | ' |
Derivative financial instruments | 2,013 | 12,359 |
Deferred income tax liability, net | 17,579 | 8,849 |
Other liabilities | 16,065 | 4,132 |
Total liabilities | 1,726,813 | 1,187,520 |
Commitments and contingencies | ' | ' |
Stockholder's equity: | ' | ' |
Common stock, $.01 par value.1 share authorized, issued and outstanding at December 31, 2013 and December 31, 2012, respectively | ' | ' |
Additional paid-in capital | 337,038 | 298,932 |
Accumulated deficit | -45,388 | -27,765 |
Accumulated other comprehensive loss | 74 | -12,243 |
Total stockholder's equity | 291,724 | 258,924 |
Total liabilities and stockholder's equity | $2,018,537 | $1,446,444 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ' | ' |
Trade receivables, allowance for doubtful accounts (in dollars) | $1,937 | $1,436 |
Property and equipment, accumulated depreciation (in dollars) | 17,514 | 10,189 |
Subscriber accounts, accumulated amortization (in dollars) | 503,497 | 308,487 |
Dealer network and other intangible assets, accumulated amortization (in dollars) | $34,297 | $20,580 |
Par value of shares issued as a consideration (in dollars per share) | $0.01 | $0.01 |
Common stock, authorized shares | 1 | 1 |
Common stock, issued shares | 1 | 1 |
Common stock, outstanding shares | 1 | 1 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2011 |
Net revenue | $344,953 | $311,898 |
Operating expenses: | ' | ' |
Cost of services | 49,978 | 40,699 |
Selling, general, and administrative, including stock-based and long-term incentive compensation | 60,054 | 57,689 |
Amortization of subscriber accounts, dealer network and other intangible assets | 163,468 | 159,619 |
Depreciation | 5,286 | 4,704 |
Total operating expenses | 278,786 | 262,711 |
Operating income | 66,167 | 49,187 |
Other expense: | ' | ' |
Interest expense | 71,405 | 42,698 |
Realized and unrealized loss on derivative financial instruments | 2,044 | 10,601 |
Refinancing expense | 6,245 | ' |
Other expense | 630 | 83 |
Total other expense | 80,324 | 53,382 |
Loss before income taxes | -14,157 | -4,195 |
Income tax expense | 2,619 | 2,564 |
Net loss | -16,776 | -6,759 |
Other comprehensive income (loss): | ' | ' |
Unrealized gain (loss) on derivative contracts, net | -12,243 | ' |
Total other comprehensive income (loss), net of tax | -12,243 | ' |
Comprehensive loss | ($29,019) | ($6,759) |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities: | ' | ' | ' |
Net loss | ($17,623) | ($16,776) | ($6,759) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' | ' |
Amortization of subscriber accounts, dealer network and other intangible assets | 208,760 | 163,468 | 159,619 |
Depreciation | 7,327 | 5,286 | 4,704 |
Stock based compensation | 1,779 | 1,384 | 393 |
Deferred income tax expense | 1,190 | 421 | 389 |
Unrealized gain on derivative financial instruments | ' | -6,793 | -28,044 |
Refinancing expense | ' | 6,245 | ' |
Long-term debt discount amortization | 883 | 4,473 | 16,985 |
Other non-cash activity, net | 11,083 | 8,677 | 6,473 |
Changes in assets and liabilities: | ' | ' | ' |
Trade receivables | -8,165 | -5,778 | -5,365 |
Prepaid expenses and other assets | 8,361 | -4,289 | -8,651 |
Payables and other liabilities | 1,054 | 10,966 | 9,961 |
Net cash provided by operating activities | 214,649 | 167,284 | 149,705 |
Cash flows from investing activities: | ' | ' | ' |
Capital expenditures | -9,925 | -5,868 | -4,003 |
Cost of subscriber accounts acquired | -234,914 | -304,665 | -162,714 |
Cash paid for acquisitions, net of cash acquired | -478,738 | ' | ' |
Decrease (increase) in restricted cash | 2,600 | 48,780 | -44 |
Other, net | -98 | ' | ' |
Net cash used in investing activities | -721,075 | -261,753 | -166,761 |
Cash flows from financing activities: | ' | ' | ' |
Proceeds from long-term debt | 630,575 | 1,277,900 | 78,800 |
Payments of long-term debt | -133,048 | -1,133,387 | -59,800 |
Payments of deferred financing costs and refinancing costs | -8,179 | -46,721 | ' |
Contributions from Ascent Capital | 20,000 | ' | ' |
Dividend to Ascent Capital | -2,000 | -2,000 | ' |
Net cash provided by financing activities | 507,348 | 95,792 | 19,000 |
Net increase in cash and cash equivalents | 922 | 1,323 | 1,944 |
Cash and cash equivalents at beginning of period | 3,433 | 2,110 | 166 |
Cash and cash equivalents at end of period | 4,355 | 3,433 | 2,110 |
Supplemental cash flow information: | ' | ' | ' |
State taxes paid | 2,365 | 2,125 | 2,802 |
Interest paid | $88,250 | $52,327 | $25,204 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholder's Equity (USD $) | Total | Common Stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit |
In Thousands, except Share data, unless otherwise specified | USD ($) | USD ($) | USD ($) | USD ($) | |
Balance at Dec. 31, 2010 | $294,990 | ' | $299,220 | ' | ($4,230) |
Balance (in shares) at Dec. 31, 2010 | ' | 1 | ' | ' | ' |
Increase (Decrease) in Stockholder's Equity | ' | ' | ' | ' | ' |
Net loss | -6,759 | ' | ' | ' | -6,759 |
Stock-based compensation | 393 | ' | 393 | ' | ' |
Balance at Dec. 31, 2011 | 288,624 | ' | 299,613 | ' | -10,989 |
Balance (in shares) at Dec. 31, 2011 | ' | 1 | ' | ' | ' |
Increase (Decrease) in Stockholder's Equity | ' | ' | ' | ' | ' |
Net loss | -16,776 | ' | ' | ' | -16,776 |
Other comprehensive income (loss) | -12,243 | ' | ' | -12,243 | ' |
Dividend Paid to Ascent Capital | -2,000 | ' | -2,000 | ' | ' |
Stock-based compensation, net of withholding tax | 1,319 | ' | 1,319 | ' | ' |
Balance at Dec. 31, 2012 | 258,924 | ' | 298,932 | -12,243 | -27,765 |
Balance (in shares) at Dec. 31, 2012 | 1 | 1 | ' | ' | ' |
Increase (Decrease) in Stockholder's Equity | ' | ' | ' | ' | ' |
Net loss | -17,623 | ' | ' | ' | -17,623 |
Other comprehensive income (loss) | 12,317 | ' | ' | 12,317 | ' |
Contributions from Ascent Capital | 38,723 | ' | 38,723 | ' | ' |
Dividend Paid to Ascent Capital | -2,000 | ' | -2,000 | ' | ' |
Stock-based compensation, net of withholding tax | 1,383 | ' | 1,383 | ' | ' |
Balance at Dec. 31, 2013 | $291,724 | ' | $337,038 | $74 | ($45,388) |
Balance (in shares) at Dec. 31, 2013 | 1 | 1 | ' | ' | ' |
Basis_of_Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2013 | |
Basis of Presentation | ' |
Basis of Presentation | ' |
(1) Basis of Presentation | |
Monitronics International, Inc. and subsidiaries (the “Company” or “Monitronics”) provide security alarm monitoring and related services to residential and business subscribers throughout the United States and parts of Canada. The Company monitors signals arising from burglaries, fires, medical alerts, and other events through security systems installed by independent dealers at subscribers’ premises. | |
On December 17, 2010, Ascent Capital Group, Inc. (“Ascent Capital”) acquired 100% of the outstanding capital stock of the Company through the merger of Mono Lake Merger Sub, Inc. (“Merger Sub”), a direct wholly owned subsidiary of Ascent Capital established to consummate the merger, with and into the Company, with the Company as the surviving corporation in the merger (the “Monitronics Acquisition”). The Monitronics Acquisition was accounted for in accordance with accounting guidance for business combinations, and accordingly has resulted in the recognition of assets acquired and liabilities assumed at fair value as of the acquisition date. On August 16, 2013, Monitronics acquired all of the equity interests of Security Networks LLC (“Security Networks”) and certain affiliated entities (the “Security Networks Acquisition”). | |
The consolidated financial statements contained in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for all periods presented. | |
The Company has reclassified certain prior period amounts to conform to the current period’s presentation. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
(2) Summary of Significant Accounting Policies | |||||||||||
Consolidation Principles | |||||||||||
The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. All intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||
Cash and Cash Equivalents | |||||||||||
Cash and cash equivalents include cash on hand, cash in banks, and cash equivalents. The Company classifies all highly liquid investments with original maturities when purchased of three months or less as cash equivalents. | |||||||||||
Restricted Cash | |||||||||||
Restricted cash is cash that is restricted for a specific purpose and cannot be included in the cash and cash equivalents account. | |||||||||||
Trade Receivables | |||||||||||
Trade receivables consist primarily of amounts due from customers for recurring monthly monitoring services over a wide geographical base. The Company performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the accounts that are acquired. The Company has established an allowance for doubtful accounts for estimated losses resulting from the inability of subscribers to make required payments. Factors such as historical-loss experience, recoveries and economic conditions are considered in determining the sufficiency of the allowance to cover potential losses. The allowance for doubtful accounts as of December 31, 2013 and 2012 was $1,937,000 and $1,436,000, respectively. | |||||||||||
A summary of activity in the allowance for doubtful accounts for the years ending December 31, 2013, 2012 and 2011 is as follows (amounts in thousands): | |||||||||||
Balance | Charged | Write-Offs | Balance | ||||||||
Beginning | to Expense | and Other | End of | ||||||||
of Year | Year | ||||||||||
2013 | $ | 1,436 | 7,342 | (6,841 | ) | 1,937 | |||||
2012 | $ | 1,815 | 5,860 | (6,239 | ) | 1,436 | |||||
2011 | $ | 250 | 5,484 | (3,919 | ) | 1,815 | |||||
Concentration of Credit Risk | |||||||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivable. Monitronics performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the subscriber accounts that are acquired. Concentrations of credit risk with respect to trade accounts receivable are generally limited due to the large number of subscribers comprising Monitronics’ customer base. | |||||||||||
Fair Value of Financial Instruments | |||||||||||
Fair values of cash equivalents, current accounts receivable and current accounts payable approximate the carrying amounts because of their short-term nature. The Company’s debt instruments are recorded at amortized cost on the consolidated balance sheet. See note 11, Fair Value Measurements, for further fair value information around the Company’s debt instruments. | |||||||||||
Property and Equipment | |||||||||||
Property and equipment are carried at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the underlying lease. Estimated useful lives by class of asset are as follows: | |||||||||||
Leasehold improvements | 15 years or lease term, if shorter | ||||||||||
Machinery and equipment | 5 - 7 years | ||||||||||
Computer systems and software (included in Machinery and Equipment in note 6) | 3 - 5 years | ||||||||||
Management reviews the realizability of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the value and future benefits of long-term assets, their carrying value is compared to management’s best estimate of undiscounted future cash flows over the remaining economic life. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the estimated fair value of the assets. | |||||||||||
Subscriber Accounts | |||||||||||
Subscriber accounts relate to the cost of acquiring monitoring service contracts from independent dealers. The subscriber accounts acquired in the Monitronics and the Security Networks acquisitions were recorded at fair value under the acquisition method of accounting. All other acquired subscriber accounts are recorded at cost. All direct external costs associated with the creation of subscriber accounts are capitalized. Internal costs, including all personnel and related support costs, incurred solely in connection with subscriber account acquisitions and transitions are expensed as incurred. | |||||||||||
The costs of subscriber accounts acquired in the Monitronics and the Security Networks Acquisition, as well as certain accounts acquired in bulk purchases, are amortized using the 14-year 235% declining balance method. The costs of all other subscriber accounts are amortized using the 15-year 220% declining balance method, beginning in the month following the date of acquisition. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. Amortization of subscriber accounts was $195,010,000, $153,388,000 and $149,539,000 for the fiscal years ended December 31, 2013, 2012 and 2011, respectively. | |||||||||||
Based on subscriber accounts held at December 31, 2013, estimated amortization of subscriber accounts in the succeeding five fiscal years ending December 31 is as follows (amounts in thousands): | |||||||||||
2014 | $ | 216,709 | |||||||||
2015 | 181,689 | ||||||||||
2016 | 152,377 | ||||||||||
2017 | 127,808 | ||||||||||
2018 | 107,192 | ||||||||||
The Company reviews the subscriber accounts for impairment or a change in amortization method and period whenever events or changes indicate that the carrying amount of the asset may not be recoverable or the life should be shortened. For purposes of recognition and measurement of an impairment loss, the Company views subscriber accounts as a single pool because of the assets’ homogeneous characteristics, and the pool of subscriber accounts is the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. | |||||||||||
Dealer Network and Other Intangible Assets | |||||||||||
Dealer network is an intangible asset that relates to the dealer relationships that were acquired as part of the Monitronics Acquisition and the Security Networks Acquisition. Other intangible assets consist of non-compete agreements signed by the seller of Security Networks and certain key Security Networks executives. These intangible assets will be amortized on a straight-line basis over their estimated useful lives of five years. Amortization of dealer network and other intangible assets was $13,717,000, $10,080,000 and $10,080,000 for the fiscal years ended December 31, 2013, 2012 and 2010, respectively. | |||||||||||
The Company reviews the dealer network and other intangible assets for impairment or a change in amortization period whenever events or changes indicate that the carrying amount of the assets may not be recoverable or the lives should be shortened. | |||||||||||
Goodwill | |||||||||||
The Company accounts for its goodwill pursuant to the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other (“FASB ASC Topic 350”). In accordance with FASB ASC Topic 350, goodwill is not amortized, but rather tested for impairment at least annually. | |||||||||||
The Company assesses the recoverability of the carrying value of goodwill during the fourth quarter of its fiscal year or whenever events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. Recoverability is measured at the reporting unit level based on the provisions of FASB ASC Topic 350. | |||||||||||
To the extent necessary, recoverability of goodwill at a reporting unit level is measured using a discounted cash flow model incorporating discount rates commensurate with the risks involved, which is classified as a Level 3 measurement under FASB ASC Topic 820, Fair Value Measurements and Disclosures. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. If the calculated fair value is less than the current carrying value, impairment of the reporting unit may exist. When the recoverability test indicates potential impairment, the Company will calculate an implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment loss is recorded to write down the carrying value. An impairment loss cannot exceed the carrying value of goodwill assigned to the reporting unit but may indicate certain long-lived and amortizable intangible assets associated with the reporting unit may require additional impairment testing. | |||||||||||
Deferred Financing Costs | |||||||||||
Deferred financing costs are capitalized when the related debt is issued or when revolving credit lines increase the borrowing capacity of the Company. Deferred financing costs are amortized over the term of the related debt using the effective interest method. | |||||||||||
Holdback Liability | |||||||||||
The Company typically withholds payment of a designated percentage of the acquisition cost when it acquires subscriber accounts from dealers. The withheld funds are recorded as a liability until the guarantee period provided by the dealer has expired. The holdback is used as a reserve to cover any terminated subscriber accounts that are not replaced by the dealer during the guarantee period. At the end of the guarantee period, the dealer is responsible for any deficit or is paid the balance of the holdback. | |||||||||||
Derivative Financial Instruments | |||||||||||
The Company uses derivative financial instruments to manage exposure to movement in interest rates. The use of these financial instruments modifies the exposure of these risks with the intention of reducing the risk or cost. The Company does not use derivatives for speculative or trading purposes. The Company recognizes the fair value of all derivative instruments as either assets or liabilities at fair value on the consolidated balance sheets. Fair value is based on market quotes for similar instruments with the same duration. For derivative instruments that qualify for hedge accounting under the provisions of FASB ASC Topic 815, Derivatives and Hedging, unrealized gains and losses on the derivative instruments are reported in Accumulated other comprehensive income (loss), to the extent the hedges are effective, until the underlying transactions are recognized in earnings. Derivative instruments that do not qualify for hedge accounting are marked to market at the end of each accounting period with the change in fair value recorded in earnings. | |||||||||||
Revenue Recognition | |||||||||||
Revenue related to alarm monitoring services is recognized ratably over the life of the contract. Revenue related to maintenance and other services is recognized as the services are rendered. Deferred revenue includes payments for monitoring services to be provided in future periods. | |||||||||||
Income Taxes | |||||||||||
The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“FASB ASC Topic 740”), which prescribes an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than proposed changes in the tax law or rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. | |||||||||||
FASB ASC Topic 740 specifies the accounting for uncertainty in income taxes recognized in a company’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. In instances where the Company has taken or expects to take a tax position in its tax return and the Company believes it is more likely than not that such tax position will be upheld by the relevant taxing authority, the Company records the benefits of such tax position in its consolidated financial statements. | |||||||||||
Stock-Based Compensation | |||||||||||
The Company accounts for stock-based awards pursuant to FASB ASC Topic 718, Compensation — Stock Compensation (“FASB ASC Topic 718”), which requires companies to measure the cost of employee services received in exchange for an award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the award, and to recognize that cost over the period during which the employee is required to provide service (usually the vesting period of the award). | |||||||||||
The grant-date fair value of the Ascent Capital stock options granted to the Company’s employees was calculated using the Black-Scholes model. The expected term of the awards was calculated using the simplified method included in FASB ASC Topic 718. The volatility used in the calculation is based on the historical volatility of peer companies and the risk-free rate is based on Treasury Bonds with a term similar to that of the subject options. A dividend rate of zero was utilized for all granted stock options. | |||||||||||
Estimates | |||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s consolidated financial statements primarily relate to valuation of goodwill, other intangible assets, long-lived assets, deferred tax assets, derivative financial instruments, and the amount of the allowance for doubtful accounts. These estimates are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts them when facts and circumstances change. As the effects of future events cannot be determined with any certainty, actual results could differ from the estimates upon which the carrying values were based. | |||||||||||
Accounting_Pronouncements
Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Pronouncements | ' |
Accounting Pronouncements | ' |
(3) Accounting Pronouncements | |
There were no new accounting pronouncements issued during the year ended December 31, 2013 that are expected to have a material impact on the Company. | |
Correction_of_Immaterial_Error
Correction of Immaterial Error | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Correction of Immaterial Error | ' | ||||||
Correction of Immaterial Error | ' | ||||||
(4) Correction of Immaterial Error | |||||||
During the fourth quarter of 2013, the Company identified errors related to certain state tax matters, including sales and use taxes, resulting in an understatement of net loss for periods from January 1, 2008 to December 31, 2012. Management considered both the quantitative and qualitative factors within the provisions of SEC Staff Accounting Bulletin No. 99, Materiality, and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Based on evaluation of the error, management has concluded that the prior period errors were immaterial to the previously issued financial statements. As such, management has elected to correct the identified error in the prior periods. In doing so, balances in the consolidated financial statements included in this Form 10-K have been adjusted to reflect the correction in the proper periods. Future filings that include prior periods will be corrected, as needed, when filed. | |||||||
The effect of recording the immaterial correction in the consolidated financial statements as of December 31, 2012 and 2011 is as follows (amounts in thousands, except per share amounts): | |||||||
For the year ended December 31, 2012 | |||||||
As Reported | As Revised | ||||||
Deferred income taxes, net | $ | 5,100 | 5,127 | ||||
Total current assets | 35,661 | 35,688 | |||||
Goodwill | 349,227 | 350,213 | |||||
Total assets | 1,445,431 | 1,446,444 | |||||
Other accrued liabilities | 25,613 | 27,950 | |||||
Total current liabilities | 58,410 | 60,747 | |||||
Other liabilities (non-current) | 3,961 | 4,132 | |||||
Total liabilities | 1,185,012 | 1,187,520 | |||||
Accumulated deficit | (26,270 | ) | (27,765 | ) | |||
Total stockholder’s equity | 260,419 | 258,924 | |||||
Total liabilities and stockholder’s equity | 1,445,431 | 1,446,444 | |||||
Cost of services | 49,791 | 49,978 | |||||
Selling, general, and administrative, including stock-based and long-term compensation | 59,575 | 60,054 | |||||
Operating income | 66,833 | 66,167 | |||||
Interest expense | 71,328 | 71,405 | |||||
Loss before income taxes | (13,414 | ) | (14,157 | ) | |||
Income tax expense | 2,616 | 2,619 | |||||
Net loss | (16,030 | ) | (16,776 | ) | |||
Comprehensive loss | (28,273 | ) | (29,019 | ) | |||
For the year ended December 31, 2011 | |||||||
As Reported | As Revised | ||||||
Accumulated deficit | $ | (10,240 | ) | (10,989 | ) | ||
Total stockholder’s equity | 289,373 | 288,624 | |||||
Cost of services | 40,553 | 40,699 | |||||
Selling, general, and administrative, including stock-based and long-term compensation | 57,170 | 57,689 | |||||
Operating income | 49,852 | 49,187 | |||||
Interest expense | 42,655 | 42,698 | |||||
Loss before income taxes | (3,487 | ) | (4,195 | ) | |||
Income tax expense | 2,523 | 2,564 | |||||
Net loss | (6,010 | ) | (6,759 | ) | |||
Comprehensive loss | (6,010 | ) | (6,759 | ) | |||
Security_Networks_Acquisition
Security Networks Acquisition | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Security Networks Acquisition | ' | ||||||
Security Networks Acquisition | ' | ||||||
(5) Security Networks Acquisition | |||||||
On August 16, 2013 (the “Closing Date”), the Company acquired all of the equity interests of Security Networks and certain affiliated entities. The purchase price (the “Security Networks Purchase Price”) of $500,557,000 consisted of $481,834,000 in cash and 253,333 shares of Ascent Capital’s Series A common stock (par value $0.01 per share) with a Closing Date fair value of $18,723,000. The Security Networks Purchase Price includes post-closing adjustments of $1,057,000. | |||||||
The cash portion of the Security Networks purchase price was funded by cash contributions from Ascent Capital, the proceeds of the Company’s issuance of $175,000,000 in aggregate principal amount of 9.125% Senior Notes due 2020, the proceeds of incremental term loans of $225,000,000 issued under the Company’s existing credit facility and the proceeds of a $100,000,000 intercompany loan from Ascent Capital. | |||||||
The Security Networks Acquisition was accounted for as a business combination utilizing the acquisition method in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under the acquisition method of accounting, the Security Networks Purchase Price has been allocated to Security Networks’ tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimates of fair value as follows (amounts in thousands): | |||||||
Cash | $ | 3,096 | |||||
Trade receivables | 1,305 | ||||||
Other current assets | 1,677 | ||||||
Property and equipment | 1,404 | ||||||
Subscriber accounts | 307,800 | ||||||
Dealer network and other intangible assets | 48,500 | ||||||
Goodwill | 176,300 | ||||||
Holdback liability, current and non-current | (9,620 | ) | |||||
Deferred income tax liabilities | (4,108 | ) | |||||
Other current and non-current liabilities | (25,797 | ) | |||||
Fair value of consideration | $ | 500,557 | |||||
The Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (File No. 333-110025), filed with the Commission on November 14, 2013 (the “September 2013 10-Q”), included an initial allocation of the purchase price based on preliminary data. Subsequent to filing the Company’s September 2013 10-Q, an adjustment was made to increase goodwill by $3,267,000. The increase to goodwill is primarily related to the inclusion of $4,108,000 of estimated deferred income tax liabilities in the allocation, offset by the decrease of the Security Networks Purchase Price as discussed above. Other adjustments relate to the finalization of certain assumptions and estimates used to determine the fair value of acquired assets and assumed liabilities. These adjustments resulted in an $82,000 decrease in other current assets, a $100,000 increase to subscriber accounts and a $234,000 increase in other current and non-current liabilities, including the holdback liability. | |||||||
The preliminary estimates of fair value of assets acquired and liabilities assumed are based on available information as of the date of this report and may be revised as additional information becomes available, which primarily includes obtaining the Security Networks final short period federal and state income tax returns for 2013, which are expected to be filed in 2014. | |||||||
Goodwill in the amount of $176,300,000 was recognized in connection with the Security Networks Acquisition and was calculated as the excess of the consideration transferred over the net assets recognized, including deferred taxes, and represents the value to the Company for Security Networks’ recurring revenue and cash flow streams and its unique business strategy of partnering with independent dealers to obtain customers. Approximately $141,607,000 of the goodwill is estimated to be deductible for tax purposes. | |||||||
The subscriber accounts acquired in the Security Networks Acquisition are amortized using the 14-year 235% declining balance method. The dealer network and other intangible assets acquired, which consist of non-compete agreements, are amortized on a straight-line basis over their estimated useful lives of five years. | |||||||
The Company’s results of operations for the year ended December 31, 2013 include the operations of the Security Networks business from the Closing Date. For the year ended December 31, 2013, net revenue and operating loss attributable to Security Networks was $39,997,000 and $74,000, respectively. Net revenue attributable to Security Networks for the year ended reflects the negative impact of a $2,715,000 fair value adjustment that reduced deferred revenue acquired in the Security Networks Acquisition. | |||||||
As of December 31, 2013, the Company has incurred $2,470,000 of legal and professional services expense and other costs related to the Security Networks Acquisition, which are included in Selling, general, and administrative expense in the consolidated statements of operations and comprehensive income (loss). | |||||||
The following table includes unaudited pro forma information for the Company, which includes the historical operating results of Security Networks prior to ownership by the Company. This pro forma information gives effect to certain adjustments, including increased amortization to reflect the fair value assigned to the subscriber accounts and dealer network and other intangible assets acquired and increased interest expense relating to the debt transactions entered into to fund the Security Networks Acquisition. The pro-forma results assume that the Security Networks Acquisition and the debt transactions had occurred on January 1, 2012 for all periods presented. They are not necessarily indicative of the results of operations that would have occurred if the acquisition had been made at the beginning of the periods presented or that may be obtained in the future. | |||||||
Year ended December 31, | |||||||
2013 | 2012 | ||||||
(amounts in thousands, except | |||||||
per share amounts) | |||||||
As reported: | |||||||
Net revenue | $ | 451,033 | (a) | 344,943 | |||
Net loss | (17,623 | ) | (16,776 | ) | |||
Supplemental pro-forma: | |||||||
Net revenue | $ | 515,792 | 420,716 | (b) | |||
Net loss (c) | (30,871 | ) | (70,491 | ) | |||
(a) As reported net revenue year ended December 31, 2013 reflects the negative impact of a $2,715,000 fair value adjustment that reduced deferred revenue acquired in the Security Networks Acquisition. | |||||||
(b) Pro-forma net revenue for the year ended December 31, 2012 reflects the negative impact of a $2,715,000 fair value adjustment that would have reduced deferred revenue acquired in the Security Networks Acquisition. | |||||||
(c) The pro-forma net loss from continuing operations amounts for the year ended December 31, 2013 include non-recurring acquisition costs incurred by the Company of $2,470,000. | |||||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Property and Equipment | ' | ||||||
Property and Equipment | ' | ||||||
(6) Property and Equipment | |||||||
Property and equipment consist of the following (amounts in thousands): | |||||||
As of December 31, | |||||||
2013 | 2012 | ||||||
Property and equipment, net: | |||||||
Land | $ | 172 | 172 | ||||
Leasehold improvements | 3,338 | 2,803 | |||||
Machinery and equipment | 38,565 | 27,773 | |||||
42,075 | 30,748 | ||||||
Accumulated depreciation | (17,514 | ) | (10,189 | ) | |||
$ | 24,561 | 20,559 | |||||
Depreciation expense for property and equipment was $7,327,000, $5,286,000 and $4,704,000 for the years ended December 31, 2013, 2012 and 2011, respectively. | |||||||
Goodwill
Goodwill | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Goodwill | ' | ||||
Goodwill | ' | ||||
(7) Goodwill | |||||
The following table provides the activity and balances of goodwill (amounts in thousands): | |||||
Balance at December 31, 2011 | $ | 350,213 | |||
Period activity | — | ||||
Balance at December 31, 2012 | 350,213 | ||||
Security Networks Acquisition | 176,300 | ||||
Balance at December 31, 2013 | $ | 526,513 | |||
In connection with the Company’s 2013 annual goodwill impairment analysis, the Company did not record an impairment loss related to goodwill as the estimated fair value the Company’s reporting unit exceeded the carrying value of the underlying assets. | |||||
Other_Accrued_Liabilities
Other Accrued Liabilities | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Other Accrued Liabilities | ' | ||||||
Other Accrued Liabilities | ' | ||||||
(8) Other Accrued Liabilities | |||||||
Other accrued liabilities consisted of the following (amounts in thousands): | |||||||
As of December 31, | |||||||
2013 | 2012 | ||||||
Interest payable | $ | 17,258 | 9,624 | ||||
Income taxes payable | 2,647 | 2,286 | |||||
Legal accrual | 705 | 9,324 | |||||
Other | 12,844 | 6,716 | |||||
Total other accrued liabilities | $ | 33,454 | 27,950 | ||||
LongTerm_Debt
Long-Term Debt | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Long-Term Debt | ' | |||||||
Long-Term Debt | ' | |||||||
(9) Long-Term Debt | ||||||||
Long-term debt consisted of the following (amounts in thousands): | ||||||||
As of December 31, | ||||||||
2013 | 2012 | |||||||
9.125% Senior Notes due April 1, 2020 | $ | 585,000 | $ | 410,000 | ||||
9.868% Promissory Note to Ascent Capital due October 1, 2020 | 100,000 | — | ||||||
Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% (a) | 902,293 | 685,583 | ||||||
$225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% (a) | 19,500 | 12,800 | ||||||
1,606,793 | 1,108,383 | |||||||
Less current portion of long-term debt | (9,166 | ) | (6,950 | ) | ||||
Long-term debt | $ | 1,597,627 | $ | 1,101,433 | ||||
(a) The interest rate on the term loan and the revolving credit facility was LIBOR plus 4.25%, subject to a LIBOR floor of 1.25%, until March 25, 2013. | ||||||||
Senior Notes | ||||||||
On March 23, 2012, the Company closed on a $410,000,000 privately placed debt offering of 9.125% Senior Notes due 2020 (the “Existing Senior Notes”). In August 2012, the Company completed an exchange of the Existing Senior Notes for identical securities in a registered offering under the Securities Act of 1933, as amended. | ||||||||
On July 17, 2013, an additional $175,000,000 of 9.125% Senior Notes (the “New Senior Notes”) were issued by Monitronics Escrow Corporation (the “Escrow Issuer”), a wholly-owned subsidiary of Ascent Capital. The proceeds from this offering were placed in escrow and were released upon the Closing Date. Upon the Closing Date, the Escrow Issuer was merged into the Company and the Company assumed the New Senior Notes (the New Senior Notes, together with the Existing Senior Notes, are collectively referred to as the “Senior Notes”). In December 2013, the Company completed an exchange of the New Senior Notes for identical securities in a registered offering under the Securities Act of 1933, as amended. | ||||||||
The Senior Notes mature on April 1, 2020 and bear interest at 9.125% per annum. Interest payments are due semi-annually on April 1 and October 1 of each year, beginning on October 1, 2012. | ||||||||
The Senior Notes are guaranteed by all of the Company’s existing subsidiaries. Ascent Capital has not guaranteed any of the Company’s obligations under the Senior Notes. | ||||||||
Ascent Intercompany Loan | ||||||||
On August 16, 2013, in connection with the Security Networks Acquisition, the Company executed and delivered a Promissory Note to Ascent Capital in a principal amount of $100,000,000 (the “Ascent Intercompany Loan”). The entire principal amount under the Ascent Intercompany Loan is due on October 1, 2020. The Company may prepay any portion of the balance of the Ascent Intercompany Loan at any time from time to time without fee, premium or penalty (subject to certain financial covenants associated with the Company’s other indebtedness). Any unpaid balance of the Ascent Intercompany Loan bears interest at a rate equal to 9.868% per annum, payable semi-annually in cash in arrears on January 12th and July 12th of each year, commencing on January 12, 2014. Borrowings under the Ascent Intercompany Loan constitute unsecured obligations of the Company and are not guaranteed by any of the Company’s subsidiaries. | ||||||||
Credit Facility | ||||||||
On March 23, 2012, the Company entered into a senior secured credit facility with the lenders party thereto and Bank of America, N.A., as administrative agent, which provided a $550,000,000 term loan at a 1% discount and a $150,000,000 revolving credit facility (the “Credit Agreement”). Proceeds from the Credit Agreement and the Senior Notes, together with cash on hand, were used to retire all outstanding borrowings under the Company’s former credit facility, securitization debt, and to settle all related derivative contracts (the “Refinancing”). | ||||||||
On November 7, 2012, the Company entered into an amendment to the Credit Agreement (“Amendment No. 1”), which provided an incremental term loan with an aggregate principal amount of $145,000,000. The incremental term loan was used to fund the acquisition of approximately 93,000 subscriber accounts for a purchase price of approximately $131,000,000. | ||||||||
On March 25, 2013, the Company entered into a second amendment to the Credit Agreement (“Amendment No. 2”). Pursuant to Amendment No. 2, the Company repriced the interest rates applicable to the Credit Agreement’s facility (the “Repricing”) which is comprised of the term loans and revolving credit facility noted above. Concurrently with the Repricing, the Company extended the maturity of the revolving credit facility by nine months to December 22, 2017. | ||||||||
On August 16, 2013, in connection with the Security Networks Acquisition, the Company entered into a third amendment (“Amendment No. 3”) to the Credit Agreement to provide for, among other things, (i) an increase in the commitments under the revolving credit facility in a principal amount of $75,000,000, resulting in an aggregate principal amount of $225,000,000, (ii) new term loans in an aggregate principal amount of $225,000,000 (the “Incremental Term Loans”) at a 0.5% discount and (iii) certain other amendments to the Credit Agreement, each as set forth in Amendment No. 3 (the Credit Agreement together with Amendment No. 1, Amendment No. 2 and Amendment No. 3, the “Credit Facility”). | ||||||||
The Credit Facility term loans bear interest at LIBOR plus 3.25%, subject to a LIBOR floor of 1.00%, and mature on March 23, 2018. Principal payments of approximately $2,292,000 and interest on the term loans are due quarterly. The Credit Facility revolver bears interest at LIBOR plus 3.75%, subject to a LIBOR floor of 1.00%, and matures on December 22, 2017. There is an annual commitment fee of 0.50% on unused portions of the Credit Facility revolver. As of December 31, 2013, $205,500,000 is available for borrowing under the revolving credit facility. | ||||||||
At any time after the occurrence of an event of default under the Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Credit Facility immediately due and payable and terminate any commitment to make further loans under the Credit Facility. In addition, failure to comply with restrictions contained in the Senior Notes could lead to an event of default under the Credit Facility. | ||||||||
The Credit Facility is secured by a pledge of all of the outstanding stock of the Company and all of its existing subsidiaries and is guaranteed by all of the Company’s existing subsidiaries. Ascent Capital has not guaranteed any of the Company’s obligations under the Credit Facility. | ||||||||
As of December 31, 2013, the Company has deferred financing costs, net of accumulated amortization, of $25,322,000 related to the Senior Notes and Credit Facility. These costs are included in Other assets, net on the accompanying condensed consolidated balance sheet and will be amortized over the remaining term of the respective debt instruments using the effective-interest method. | ||||||||
As a result of the Refinancing, the Company accelerated amortization of the securitization debt premium and certain deferred financing costs related to the former senior secured credit facility, and expensed certain other refinancing costs. The components of the Refinancing expense, reflected in the consolidated statement of operations and comprehensive income (loss) as a component of Other income (expense) for the year ended December 31, 2012, are as follows (amounts in thousands): | ||||||||
For the year ended | ||||||||
December 31, 2012 | ||||||||
Accelerated amortization of deferred financing costs | $ | 389 | ||||||
Accelerated amortization of securitization debt discount | 6,679 | |||||||
Other refinancing costs | 7,628 | |||||||
Gain on early termination of derivative instruments | (8,451 | ) | ||||||
Total refinancing expense | $ | 6,245 | ||||||
In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loans under the Credit Facility, the Company entered into two interest rate swap agreements (each with separate counterparties) in 2012, with terms similar to the Credit Facility term loans (the “Existing Swap Agreements”). On March 25, 2013, the Company negotiated amendments to the terms of the Existing Swap Agreements to coincide with the Repricing. In the third quarter of 2013, the Company entered into two additional interest rate swap agreements in conjunction with the Incremental Term Loans (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). | ||||||||
The Swaps have a maturity date of March 23, 2018 to match the term of the Credit Facility term loans. The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting. See note 10, Derivatives, for further disclosures related to these derivative instruments. As a result of the Swaps, the interest rate on the borrowings under the Credit Facility term loans have been effectively converted from a variable rate to a weighted average fixed rate of 5.06%. | ||||||||
The terms of the Senior Notes and Credit Facility provide for certain financial and nonfinancial covenants. As of December 31, 2013, the Company was in compliance with all required covenants. | ||||||||
Principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands): | ||||||||
2014 | $ | 9,166 | ||||||
2015 | 9,166 | |||||||
2016 | 9,166 | |||||||
2017 | 28,666 | |||||||
2018 | 870,802 | |||||||
2019 | — | |||||||
Thereafter | 685,000 | |||||||
Total principal payments | 1,611,966 | |||||||
Less: | ||||||||
Unamortized discount on the Credit Facility term loans | 5,173 | |||||||
Total debt on condensed consolidated balance sheet | $ | 1,606,793 | ||||||
Derivatives
Derivatives | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Derivatives | ' | ||||||||
Derivatives | ' | ||||||||
(10) Derivatives | |||||||||
The Company utilizes interest rate swap agreements to reduce the interest rate risk inherent in the Company’s variable rate Credit Facility term loans. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatility. The Company incorporates credit valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. See note 11, Fair Value Measurements, for additional information about the credit valuation adjustments. | |||||||||
At December 31, 2013, derivative financial instruments include one interest rate swap with a fair value of $2,495,000, that constitute an asset of the Company and three interest rate swaps with a fair value $2,013,000 that constitute a liability of the Company. At December 31, 2012, derivative financial instruments include an interest rate swap with a fair value of $116,000, that constitutes an asset of the Company, and an interest rate swap with a fair value of $12,359,000, that constitutes a liability of the Company. The Swaps are included in Other Assets, net and Derivative financial instruments on the consolidated balance sheets. For the years ended December 31, 2013 and 2012, all of the outstanding Swaps are designated and qualify as cash flow hedging instruments, with the effective portion of the Swaps change in fair value recorded in Accumulated other comprehensive loss. Any ineffective portions of the Swaps change in fair value are recognized in current earnings in Interest expense. Changes in the fair value of the Swaps recognized in Accumulated other comprehensive loss are reclassified to Interest expense when the hedged interest payments on the underlying debt are recognized. Amounts in Accumulated other comprehensive loss expected to be recognized in Interest expense in the coming 12 months total approximately $5,044,000. | |||||||||
At December 31, 2011, derivative financial instruments include one interest rate cap with a fair value of $25,000, that constitutes an asset of the Company, an interest rate floor with a fair value of $19,320,000 that constitutes a liability of the Company, and three interest rate swaps (“2011 Swaps”) with an aggregate fair value of $16,959,000 that constitute liabilities of the Company. The interest rate cap is included in Other assets on the consolidated balance sheet, while the interest rate floor and 2011 Swaps are included in Derivative financial instruments on the consolidated balance sheet. The interest rate cap, floor and 2011 Swaps were not designated as hedges. | |||||||||
The objective of the swap derivative instruments was to reduce the risk associated with the Company’s term loan variable interest rates. In effect, the swap derivative instruments convert variable interest rates into fixed interest rates on the Company’s term loan borrowings. It is the Company’s policy to offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting agreement. As of December 31, 2013, 2012 and 2011, no such amounts were offset. | |||||||||
The Swaps’ outstanding notional balance as of December 31, 2013 and terms are noted below: | |||||||||
Notional | Effective Date | Fixed | Variable Rate Received | ||||||
Rate Paid | |||||||||
$ | 540,375,000 | March 28, 2013 | 1.884 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | ||||
143,187,500 | March 28, 2013 | 1.384 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | |||||
111,934,673 | September 30, 2013 | 1.959 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
111,934,673 | September 30, 2013 | 1.85 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
(a) On March 25, 2013, Monitronics negotiated amendments to the terms of these interest rate swap agreements to coincide with the Repricing (the “Amended Swaps”). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, the Company simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation will be recognized in Interest expense over the remaining life of the Amended Swaps. | |||||||||
The impact of the derivatives designated as cash flow hedges on the consolidated financial statements is depicted below (amounts in thousands): | |||||||||
For the year ended December 31, | |||||||||
2013 | 2012 | ||||||||
Effective portion of gain (loss) recognized in Accumulated other comprehensive loss | $ | 7,014 | (15,715 | ) | |||||
Effective portion of loss reclassified from Accumulated other comprehensive loss into Net income (a) | $ | (5,303 | ) | (3,472 | ) | ||||
Ineffective portion of amount of gain (loss) recognized into Net income on interest rate swaps (a) | $ | 24 | — | ||||||
(a) Amounts are included in Interest expense in the consolidated statements of operations and comprehensive income (loss). | |||||||||
On March 23, 2012, in connection with the Refinancing, the Company terminated all of its previously outstanding derivative financial instruments and recorded a gain of $8,451,000. These derivative financial instruments were not designated as hedges. For the year ended December 31, 2012, the realized and unrealized loss on derivative financial instruments includes settlement payments of $8,837,000 partially offset by a $6,793,000 unrealized gain related to the change in the fair value of these derivatives prior to their termination in March 2012. | |||||||||
For the year ended December 31, 2011, the realized and unrealized loss on derivative financial instruments includes settlement payments of $38,645,000 partially offset by a $28,044,000 unrealized gain related to the change in the fair value of these derivatives prior to their termination in March 2012. | |||||||||
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Fair Value Measurements | ' | ||||||||||
Fair Value Measurements | ' | ||||||||||
(11) Fair Value Measurements | |||||||||||
According to the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories: | |||||||||||
· Level 1 - Quoted prices for identical instruments in active markets. | |||||||||||
· Level 2 - Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets. | |||||||||||
· Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market. | |||||||||||
The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at December 31 (amounts in thousands): | |||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||
2013 | |||||||||||
Derivative financial instruments - assets | $ | — | 2,495 | — | 2,495 | ||||||
Derivative financial instruments - liabilities | — | (2,013 | ) | — | (2,013 | ) | |||||
Total | $ | — | 482 | — | 482 | ||||||
2012 | |||||||||||
Derivative financial instruments - assets | $ | — | 116 | — | 116 | ||||||
Derivative financial instruments - liabilities | — | (12,359 | ) | — | -12,359 | ||||||
Total | $ | — | (12,243 | ) | — | (12,243 | ) | ||||
The Company has determined that the majority of the inputs used to value the Swaps fall within Level 2 of the fair value hierarchy. The credit valuation adjustments associated with the derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by its counterparties. As the counterparties have publicly available credit information, the credit spreads over LIBOR used in the calculations represent implied credit default swap spreads obtained from a third-party credit data provider. However, as of December 31, 2013, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Swaps. As a result, the Company has determined that the December 31, 2013 derivative valuation is classified in Level 2 of the fair value hierarchy. | |||||||||||
The following table presents the activity in the Level 3 balances (amounts in thousands): | |||||||||||
Year Ended December 31, | |||||||||||
Derivative financial instruments — liabilities | 2013 | 2012 | |||||||||
Beginning balance | $ | — | $ | (16,959 | ) | ||||||
Unrealized gain | — | 16,959 | |||||||||
Ending balance | $ | — | $ | — | |||||||
Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): | |||||||||||
Long term debt, including current portion: | December 31, 2013 | December 31, 2012 | |||||||||
Carrying value | $ | 1,606,793 | $ | 1,108,383 | |||||||
Fair value (a) | 1,656,797 | 1,130,978 | |||||||||
(a) The fair value is based on valuations from third party financial institutions and is classified as Level 2 in the hierarchy. | |||||||||||
The Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity. | |||||||||||
Restructuring_Charges
Restructuring Charges | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Restructuring Charges | ' | ||||||||||||
Restructuring Charges | ' | ||||||||||||
(12) Restructuring Charges | |||||||||||||
In connection with the Security Networks Acquisition, management approved a restructuring plan to transition Security Networks operations in West Palm Beach and Kissimmee, Florida to Dallas, Texas (the “2013 Restructuring Plan”). The 2013 Restructuring Plan provides certain employees with a severance package that entitles them to benefits upon completion of the transition in 2014. Severance costs related to the 2013 Restructuring Plan are recognized ratably over the future service period. During the year ended December 31, 2013, the Company recorded $1,111,000 of restructuring charges related to employee termination benefits. | |||||||||||||
Additionally, in connection with the 2013 Restructuring Plan, the Company allocated approximately $492,000 of the Security Networks Purchase Price to accrued restructuring in relation to the Security Networks’ severance agreement entered into with its former Chief Executive Officer. | |||||||||||||
There were no restructuring charges recorded for the years ended December 31, 2012 and 2011. | |||||||||||||
The following table provides the activity and balances of the Company’s restructuring plans (amounts in thousands): | |||||||||||||
Year ended December 31, 2013 | |||||||||||||
2013 Restructuring Plan | Opening | Additions | Deductions (b) | Other | Ending balance | ||||||||
balance | |||||||||||||
Severance and retention | $ | — | 1,111 | (33 | ) | 492 | (a) | 1,570 | |||||
(a) Amount was recorded upon the acquisition of Security Networks. | |||||||||||||
(b) Represents cash payments. | |||||||||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | ' | ||||||||
(13) Income Taxes | |||||||||
The Company’s income tax expense consists of the following (amounts in thousands): | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Current: | |||||||||
Federal | $ | — | — | — | |||||
State | 2,827 | 2,198 | 2,201 | ||||||
2,827 | 2,198 | 2,201 | |||||||
Deferred: | |||||||||
Federal | (2,407 | ) | 406 | 353 | |||||
State | 3,597 | 15 | 10 | ||||||
1,190 | 421 | 363 | |||||||
Total income tax expense | $ | 4,017 | 2,619 | 2,564 | |||||
Income tax expense differs from the amounts computed by applying the United States federal income tax rate of 35% as a result of the following (amounts in thousands): | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Computed expected tax benefit | $ | (4,762 | ) | (4,955 | ) | (1,468 | ) | ||
State and local income taxes, net of federal income taxes | 4,176 | 1,438 | 1,437 | ||||||
Change in valuation allowance affecting tax expense | 2,696 | 5,538 | 2,462 | ||||||
Non-deductible expenses | 426 | 191 | 208 | ||||||
Amortization of indefinite-lived assets | 1,481 | 431 | 155 | ||||||
Other, net | — | (24 | ) | (230 | ) | ||||
Income tax expense | $ | 4,017 | 2,619 | 2,564 | |||||
Components of deferred tax assets and liabilities as of December 31 are as follows (amounts in thousands): | |||||||||
2013 | 2012 | ||||||||
Current assets: | |||||||||
Allowance for doubtful accounts | $ | 1,072 | $ | 505 | |||||
Accrued liabilities | 8,921 | 6,160 | |||||||
Other | — | 29 | |||||||
Total current deferred tax assets | 9,993 | 6,694 | |||||||
Valuation allowance | (1,463 | ) | (1,567 | ) | |||||
Current deferred tax assets, net | 8,530 | 5,127 | |||||||
Noncurrent assets: | |||||||||
Net operating loss carryforwards | 108,504 | 75,181 | |||||||
Derivative financial instruments | — | 4,308 | |||||||
Business credits | 1,495 | 1,524 | |||||||
Other | 2,464 | 1,014 | |||||||
Total noncurrent deferred tax assets | 112,463 | 82,027 | |||||||
Valuation allowance | (16,161 | ) | (17,107 | ) | |||||
Noncurrent deferred tax asset, net | 96,302 | 64,920 | |||||||
Total deferred tax assets, net | 104,832 | 70,047 | |||||||
Noncurrent liabilities: | |||||||||
Intangible assets | (110,164 | ) | (70,634 | ) | |||||
Property, plant and equipment | (3,692 | ) | (3,135 | ) | |||||
Other | (25 | ) | — | ||||||
Total deferred tax liabilities | (113,881 | ) | (73,769 | ) | |||||
Net deferred tax liabilities | $ | (9,049 | ) | $ | (3,722 | ) | |||
The Company’s deferred tax assets and liabilities are reported in the accompanying consolidated balance sheets as follows (amounts in thousands): | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Current deferred tax assets, net | $ | 8,530 | $ | 5,127 | |||||
Long-term deferred tax liabilities, net | (17,579 | ) | (8,849 | ) | |||||
Net deferred tax assets (liabilities) | $ | (9,049 | ) | $ | (3,722 | ) | |||
For the year ended December 31, 2013, the valuation allowance decreased by $1,050,000. The change in the valuation allowance is attributable to an increase of $2,696,000 related to income tax expense, which includes the impact of a reduction of the Company’s valuation allowance of $3,887,000 in connection with the acquisition of Security Networks, offset by a decrease of $4,334,000 related to changes in the derivative fair values recorded in other comprehensive income and a decrease in other deferred tax liabilities of $588,000. | |||||||||
As of December 31, 2013, the Company had $305,551,000 of federal net operating loss carryforwards, which begin to expire, if unused, in 2024. Approximately $130,367,000 of the Company’s federal net operating losses are subject to IRC Section 382 limitations. In addition, the Company had available for federal income tax purposes an alternative minimum tax credit carryforward of $426,000, which is available for an indefinite period. As of December 31, 2013, the Company had available for state income tax purposes net operating loss carryforwards of $98,581,000 and state tax credits of $1,070,000, the latter of which will expire in 2026. | |||||||||
As of December 31, 2013, the Company’s federal income tax returns for the 2010 through 2012 tax years remain subject to examination by the IRS and state authorities. The Company’s state income tax returns subsequent to 2008 are subject to examination by state tax authorities. | |||||||||
A reconciliation of the beginning and ending amount of uncertain tax positions, which is recorded in other long term liabilities, is as follows (amounts in thousands): | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
As of the beginning of the year | $ | 247 | 247 | 207 | |||||
Increases for tax positions of current years | — | — | 40 | ||||||
As of the end of the year | $ | 247 | 247 | 247 | |||||
When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes interest expense from the first period the interest would begin accruing according to the relevant tax law. Any accrual of interest and penalties related to underpayment of income taxes on uncertain tax positions is included in Income tax expense from continuing operations in the accompanying consolidated statements of operations. As of December 31, 2013 accrued interest and penalties related to uncertain tax positions were approximately $55,000. The Company does not expect a significant change in uncertain tax positions in the next twelve months. | |||||||||
Stockbased_and_LongTerm_Compen
Stock-based and Long-Term Compensation | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Stock-based and Long-Term Compensation | ' | ||||||
Stock-based and Long-Term Compensation | ' | ||||||
(14) Stock-based and Long-Term Compensation | |||||||
During 2013 and 2012, certain employees of Monitronics were granted restricted shares of Ascent Capital Series A common stock and options to purchase shares of Ascent Capital Series A common stock under Ascent Capital’s 2008 Incentive Plan. The restricted shares of Ascent Capital Series A common stock vest over periods ranging from four to five years. The fair values for the restricted stock awards were the closing prices of the Ascent Capital Series A common stock on the applicable dates of grant. | |||||||
The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing method. The weighted averages of the assumptions used in the model are as follows: | |||||||
Year Ended December 31, | |||||||
2013 | 2012 | ||||||
Risk-free interest rate | — | 0.89 | % | ||||
Estimated life in years | — | 4.76 | |||||
Dividend yield | — | 0 | % | ||||
Volatility | — | 43 | % | ||||
The following table presents the number and weighted average exercise price (“WAEP”) of options to purchase Ascent Capital Series A common stock granted to certain Monitronics employees: | |||||||
Series A | |||||||
common stock | WAEP | ||||||
Outstanding at January 1, 2013 | 250,447 | $ | 49.38 | ||||
Granted | — | — | |||||
Exercised | 3,605 | 48.93 | |||||
Forfeited | (16,875 | ) | 49.37 | ||||
Outstanding at December 31, 2013 | 229,967 | 49.39 | |||||
Exercisable at December 31, 2013 | 34,042 | $ | 48.41 | ||||
The intrinsic value of outstanding stock option awards and exercisable stock option awards at December 31, 2013 was $8,319,000 and $1,237,000, respectively. The weighted average remaining contractual life of both outstanding and exercisable awards at December 31, 2013 was 4.5 years and 4.25 years, respectively. | |||||||
The following table presents the number and weighted average fair value (“WAFV”) of unvested restricted stock awards granted to certain Monitronics employees: | |||||||
Series A | |||||||
common stock | WAFV | ||||||
Outstanding at January 1, 2013 | 77,689 | $ | 43.91 | ||||
Granted | 9,706 | 86.53 | |||||
Vested | (15,410 | ) | 81.17 | ||||
Cancelled | (5,308 | ) | 45.74 | ||||
Outstanding at December 31, 2013 | 66,677 | $ | 48.36 | ||||
As of December 31, 2013, the total compensation cost related to unvested equity awards was approximately $4,162,000. Such amount will be recognized in the consolidated statements of operations over a period of approximately 4 years. | |||||||
Stockholders_Equity
Stockholder's Equity | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Stockholder's Equity | ' | ||||||
Stockholder's Equity | ' | ||||||
(15) Stockholder’s Equity | |||||||
Common Stock | |||||||
Pursuant to the Monitronics Acquisition, the Company deauthorized all shares of Class A and Class B common stock upon its merger with Merger Sub on December 17, 2010. The newly formed entity has one share of common stock issued and outstanding to Ascent Capital as of December 31, 2010. There have been no changes to the common stock issued and outstanding since the Monitronics Acquisition. | |||||||
Other Comprehensive Income (Loss) | |||||||
Accumulated other comprehensive income (loss) included in the consolidated balance sheets and consolidated statement of stockholder’s equity reflect the aggregate fair market value adjustments to the Swaps. | |||||||
The change in the components of accumulated other comprehensive income (loss), net of taxes, is summarized as follows (amounts in thousands): | |||||||
Unrealized | Accumulated | ||||||
Gains and Losses on | Other | ||||||
Derivative | Comprehensive | ||||||
Instruments, net (a) | Income (Loss) | ||||||
Balance at December 31, 2010 | $ | — | — | ||||
Gain (loss) through Accumulated other comprehensive income (loss) | — | — | |||||
Reclassifications into net income | — | — | |||||
Balance at December 31, 2011 | — | — | |||||
Gain (loss) through Accumulated other comprehensive income (loss) | (15,715 | ) | (15,715 | ) | |||
Reclassifications into net income | 3,472 | 3,472 | |||||
Balance at December 31, 2012 | (12,243 | ) | (12,243 | ) | |||
Gain (loss) through Accumulated other comprehensive income (loss) | 7,014 | 7,014 | |||||
Reclassifications into net income | 5,303 | 5,303 | |||||
Balance at December 31, 2013 | $ | 74 | 74 | ||||
(a) No income taxes were recorded unrealized loss on derivative instrument amounts for 2013 and 2012 because the Company is subject to a full valuation allowance. Amounts reclassified into net income are included in Interest expense on the consolidated statement of operations. See note 10, Derivatives, for further information. | |||||||
Employee_Benefit_Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2013 | |
Employee Benefit Plans | ' |
Employee Benefit Plans | ' |
(16) Employee Benefit Plans | |
The Company offers a 401(k) defined contribution plan covering most of its full-time domestic employees. The plan is funded by employee and employer contributions. Total 401(k) plan expense for the years ended December 31, 2013, 2012 and 2011 was $116,000, $106,000 and $74,000, respectively. | |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies | ' | ||||
Commitments and Contingencies | ' | ||||
(17) Commitments and Contingencies | |||||
Contractual Obligations | |||||
Future minimum lease payments under scheduled operating leases, which are primarily for buildings and equipment, having initial or remaining noncancelable terms in excess of one year are as follows (in thousands): | |||||
Year ended December 31: | |||||
2014 | $ | 2,939 | |||
2015 | 1,235 | ||||
2016 | 264 | ||||
2017 | 95 | ||||
2018 | 95 | ||||
Thereafter | 55 | ||||
Minimum lease commitments | $ | 4,683 | |||
Rent expense was approximately $2,262,000, $1,855,000 and $1,865,000 for the years ended December 31, 2013, 2012 and 2011, respectively. | |||||
Legal | |||||
The Company is involved in litigation and similar claims incidental to the conduct of its business, including from time to time, contractual disputes, claims related to alleged security system failures and claims related to alleged violations of the U.S. Telephone Consumer Protection Act. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, management’s estimate of the outcomes of such matters and experience in contesting, litigating and settling similar matters. In management’s opinion, none of the pending actions is likely to have a material adverse impact on the Company’s financial position or results of operations. The Company accrues and expenses legal fees related to loss contingency matters as incurred. | |||||
Based on events occurring in the State of Georgia in 2006, a monitoring service subscriber filed suit against the Company and Tel-Star Alarms, Inc., an authorized dealer, alleging negligence. On November 16, 2011, a Georgia trial court awarded the plaintiff $8,600,000, of which $6,000,000 was covered by the Company’s general liability insurance policies. At that time, the Company funded approximately $2,640,000 into an escrow account for the excess liability above the insurance coverage. In July 2013, the trial court’s ruling was affirmed by the Georgia Court of Appeals and, in November 2013, the Georgia Supreme Court denied our appeal. Upon the denial, the funded escrow account was released to the plaintiff and the Company’s insurance provider settled the remaining liability due. | |||||
Quarterly_Financial_Informatio
Quarterly Financial Information (Unaudited) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Quarterly Financial Information (Unaudited) | ' | ||||||||||
Quarterly Financial Information (Unaudited) | ' | ||||||||||
(18) Quarterly Financial Information (Unaudited) | |||||||||||
1st | 2nd | 3rd | 4th | ||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||
Amounts in thousands | |||||||||||
2013:00:00 | |||||||||||
Net Revenue | $ | 100,158 | 102,273 | 115,844 | 132,758 | ||||||
Operating income | $ | 23,250 | 20,849 | 17,663 | 20,777 | ||||||
Net income (loss) | $ | 1,349 | 592 | (9,310 | ) | (10,254 | ) | ||||
2012:00:00 | |||||||||||
Net Revenue | $ | 81,881 | 83,315 | 84,667 | 95,090 | ||||||
Operating income | $ | 17,088 | 16,602 | 14,848 | 17,629 | ||||||
Net loss | $ | (3,772 | ) | (3,753 | ) | (5,095 | ) | (4,156 | ) |
Consolidating_Guarantor_Financ
Consolidating Guarantor Financial Information | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Consolidating Guarantor Financial Information | ' | ||||||||||||
Consolidating Guarantor Financial Information | ' | ||||||||||||
(19) Consolidating Guarantor Financial Information | |||||||||||||
The Senior Notes were issued and the Credit Facility was entered into by Monitronics (the “Parent Issuer”) and both are guaranteed by all of the Company’s existing U.S. subsidiaries (“Subsidiary Guarantors”). Ascent Capital has not guaranteed any of the Company’s obligations under the Senior Notes or Credit Facility. | |||||||||||||
Consolidating guarantor financial information has not been presented for the years ended December 31, 2012 and 2011, as substantially all of the Company’s operations were conducted by the Parent Issuer entity. The Company believes that disclosing such information would not provide investors with any additional information that would be material in evaluating the sufficiency of the guarantees. | |||||||||||||
The condensed consolidating financial information for the Parent Issuer, the Subsidiary Guarantors and the non-guarantors as of and for the year ended December 31, 2013, are as follows: | |||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Balance Sheets | |||||||||||||
As of December 31, 2013 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 1,775 | 2,580 | — | — | 4,355 | |||||||
Restricted cash | 40 | — | — | — | 40 | ||||||||
Trade receivables, net | 11,374 | 1,645 | — | — | 13,019 | ||||||||
Deferred income tax assets, net | 6,763 | 1,767 | — | — | 8,530 | ||||||||
Prepaid and other current assets | 9,916 | 1,003 | — | (4,600 | ) | 6,319 | |||||||
Total current assets | 29,868 | 6,995 | — | (4,600 | ) | 32,263 | |||||||
Investment in subsidiaries | 498,820 | — | — | (498,820 | ) | — | |||||||
Property and equipment, net | 23,572 | 989 | — | — | 24,561 | ||||||||
Subscriber accounts, net | 1,025,605 | 315,349 | — | — | 1,340,954 | ||||||||
Dealer network and other intangible assets, net | 19,773 | 44,862 | — | — | 64,635 | ||||||||
Goodwill | 350,213 | 176,300 | — | — | 526,513 | ||||||||
Other assets, net | 29,611 | — | — | — | 29,611 | ||||||||
Total assets | $ | 1,977,462 | 544,495 | — | (503,420 | ) | 2,018,537 | ||||||
Liabilities and Stockholder’s Equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 5,491 | 1,404 | — | — | 6,895 | |||||||
Accrued payroll and related liabilities | 2,649 | 530 | — | — | 3,179 | ||||||||
Other accrued liabilities | 27,137 | 10,917 | — | (4,600 | ) | 33,454 | |||||||
Deferred revenue | 11,037 | 3,342 | — | — | 14,379 | ||||||||
Holdback liability | 16,640 | 3,118 | — | — | 19,758 | ||||||||
Current portion of long-term debt | 9,166 | — | — | — | 9,166 | ||||||||
Total current liabilities | 72,120 | 19,311 | — | (4,600 | ) | 86,831 | |||||||
Non-current liabilities: | |||||||||||||
Long-term debt | 1,597,627 | — | — | — | 1,597,627 | ||||||||
Long-term holdback liability | — | 6,698 | — | — | 6,698 | ||||||||
Derivative financial instruments | 2,013 | — | — | — | 2,013 | ||||||||
Deferred income tax liability, net | 10,577 | 7,002 | — | — | 17,579 | ||||||||
Other liabilities | 3,401 | 12,664 | — | — | 16,065 | ||||||||
Total liabilities | 1,685,738 | 45,675 | — | (4,600 | ) | 1,726,813 | |||||||
Total stockholder’s equity | 291,724 | 498,820 | — | (498,820 | ) | 291,724 | |||||||
Total liabilities and stockholder’s equity | $ | 1,977,462 | 544,495 | — | (503,420 | ) | 2,018,537 | ||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | |||||||||||||
Year ended December, 2013 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Net revenue | $ | 411,036 | 39,997 | — | — | 451,033 | |||||||
Operating expenses: | |||||||||||||
Cost of services | 65,903 | 8,233 | — | — | 74,136 | ||||||||
Selling, general, and administrative, including stock-based and long-term incentive compensation | 70,706 | 6,456 | — | — | 77,162 | ||||||||
Amortization of subscriber accounts, dealer network and other intangible assets | 185,161 | 23,599 | — | — | 208,760 | ||||||||
Depreciation | 6,655 | 672 | — | — | 7,327 | ||||||||
Restructuring charges | — | 1,111 | — | 1,111 | |||||||||
Gain on sale of operating assets | (2 | ) | — | — | — | (2 | ) | ||||||
328,423 | 40,071 | — | — | 368,494 | |||||||||
Operating income (loss) | 82,613 | (74 | ) | — | — | 82,539 | |||||||
Other expense: | |||||||||||||
Equity in loss of subsidiaries | 1,736 | — | — | (1,736 | ) | — | |||||||
Interest expense | 95,680 | 465 | — | — | 96,145 | ||||||||
97,416 | 465 | — | (1,736 | ) | 96,145 | ||||||||
Loss before income taxes | (14,803 | ) | (539 | ) | — | 1,736 | (13,606 | ) | |||||
Income tax expense | 2,820 | 1,197 | — | — | 4,017 | ||||||||
Net loss | (17,623 | ) | (1,736 | ) | — | 1,736 | (17,623 | ) | |||||
Other comprehensive loss: | |||||||||||||
Unrealized gain on derivative contracts | 12,317 | — | — | — | 12,317 | ||||||||
Total other comprehensive income | 12,317 | — | — | — | 12,317 | ||||||||
Comprehensive loss | $ | (5,306 | ) | (1,736 | ) | — | 1,736 | (5,306 | ) | ||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Statement of Cash Flows | |||||||||||||
Year ended , 2013 | |||||||||||||
Parent Issuer | Subsidiary | Non- | Eliminations | Consolidated | |||||||||
Guarantors | Guarantors | ||||||||||||
(amounts in thousands) | |||||||||||||
Net cash provided by operating activities | $ | 187,594 | 27,055 | — | — | 214,649 | |||||||
Investing activities: | |||||||||||||
Capital expenditures | (9,667 | ) | (258 | ) | — | — | (9,925 | ) | |||||
Purchases of subscriber accounts | (207,601 | ) | (27,313 | ) | — | — | (234,914 | ) | |||||
Cash acquired (paid) on acquisition | (481,834 | ) | 3,096 | — | — | (478,738 | ) | ||||||
Decrease in restricted cash | 2,600 | — | — | — | 2,600 | ||||||||
Other, net | (98 | ) | — | — | — | (98 | ) | ||||||
Net cash used in investing activities | (696,600 | ) | (24,475 | ) | — | — | (721,075 | ) | |||||
Financing activities: | |||||||||||||
Proceeds from long-term debt | 630,575 | — | — | — | 630,575 | ||||||||
Payments of long-term debt | (133,048 | ) | — | — | — | (133,048 | ) | ||||||
Payments of deferred financing costs and refinancing costs | (8,179 | ) | — | — | — | (8,179 | ) | ||||||
Contribution from Ascent Capital | 20,000 | — | — | — | 20,000 | ||||||||
Dividend to Ascent Capital | (2,000 | ) | — | — | — | (2,000 | ) | ||||||
Net cash provided by financing activities | 507,348 | — | — | — | 507,348 | ||||||||
Net increase (decrease) in cash and cash equivalents | (1,658 | ) | 2,580 | — | — | 922 | |||||||
Cash and cash equivalents at beginning of period | 3,433 | — | — | — | 3,433 | ||||||||
Cash and cash equivalents at end of period | $ | 1,775 | 2,580 | — | — | 4,355 | |||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Consolidation Principles | ' | ||||||||||
Consolidation Principles | |||||||||||
The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. All intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||
Cash and Cash Equivalents | ' | ||||||||||
Cash and Cash Equivalents | |||||||||||
Cash and cash equivalents include cash on hand, cash in banks, and cash equivalents. The Company classifies all highly liquid investments with original maturities when purchased of three months or less as cash equivalents. | |||||||||||
Restricted Cash | ' | ||||||||||
Restricted Cash | |||||||||||
Restricted cash is cash that is restricted for a specific purpose and cannot be included in the cash and cash equivalents account. | |||||||||||
Trade Receivables | ' | ||||||||||
Trade Receivables | |||||||||||
Trade receivables consist primarily of amounts due from customers for recurring monthly monitoring services over a wide geographical base. The Company performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the accounts that are acquired. The Company has established an allowance for doubtful accounts for estimated losses resulting from the inability of subscribers to make required payments. Factors such as historical-loss experience, recoveries and economic conditions are considered in determining the sufficiency of the allowance to cover potential losses. The allowance for doubtful accounts as of December 31, 2013 and 2012 was $1,937,000 and $1,436,000, respectively. | |||||||||||
A summary of activity in the allowance for doubtful accounts for the years ending December 31, 2013, 2012 and 2011 is as follows (amounts in thousands): | |||||||||||
Balance | Charged | Write-Offs | Balance | ||||||||
Beginning | to Expense | and Other | End of | ||||||||
of Year | Year | ||||||||||
2013 | $ | 1,436 | 7,342 | (6,841 | ) | 1,937 | |||||
2012 | $ | 1,815 | 5,860 | (6,239 | ) | 1,436 | |||||
2011 | $ | 250 | 5,484 | (3,919 | ) | 1,815 | |||||
Concentration of Credit Risk | ' | ||||||||||
Concentration of Credit Risk | |||||||||||
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivable. Monitronics performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the subscriber accounts that are acquired. Concentrations of credit risk with respect to trade accounts receivable are generally limited due to the large number of subscribers comprising Monitronics’ customer base. | |||||||||||
Fair Value of Financial Instruments | ' | ||||||||||
Fair Value of Financial Instruments | |||||||||||
Fair values of cash equivalents, current accounts receivable and current accounts payable approximate the carrying amounts because of their short-term nature. The Company’s debt instruments are recorded at amortized cost on the consolidated balance sheet. See note 11, Fair Value Measurements, for further fair value information around the Company’s debt instruments. | |||||||||||
Property and Equipment | ' | ||||||||||
Property and Equipment | |||||||||||
Property and equipment are carried at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the underlying lease. Estimated useful lives by class of asset are as follows: | |||||||||||
Leasehold improvements | 15 years or lease term, if shorter | ||||||||||
Machinery and equipment | 5 - 7 years | ||||||||||
Computer systems and software (included in Machinery and Equipment in note 6) | 3 - 5 years | ||||||||||
Management reviews the realizability of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the value and future benefits of long-term assets, their carrying value is compared to management’s best estimate of undiscounted future cash flows over the remaining economic life. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the estimated fair value of the assets. | |||||||||||
Subscriber Accounts | ' | ||||||||||
Subscriber Accounts | |||||||||||
Subscriber accounts relate to the cost of acquiring monitoring service contracts from independent dealers. The subscriber accounts acquired in the Monitronics and the Security Networks acquisitions were recorded at fair value under the acquisition method of accounting. All other acquired subscriber accounts are recorded at cost. All direct external costs associated with the creation of subscriber accounts are capitalized. Internal costs, including all personnel and related support costs, incurred solely in connection with subscriber account acquisitions and transitions are expensed as incurred. | |||||||||||
The costs of subscriber accounts acquired in the Monitronics and the Security Networks Acquisition, as well as certain accounts acquired in bulk purchases, are amortized using the 14-year 235% declining balance method. The costs of all other subscriber accounts are amortized using the 15-year 220% declining balance method, beginning in the month following the date of acquisition. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. Amortization of subscriber accounts was $195,010,000, $153,388,000 and $149,539,000 for the fiscal years ended December 31, 2013, 2012 and 2011, respectively. | |||||||||||
Based on subscriber accounts held at December 31, 2013, estimated amortization of subscriber accounts in the succeeding five fiscal years ending December 31 is as follows (amounts in thousands): | |||||||||||
2014 | $ | 216,709 | |||||||||
2015 | 181,689 | ||||||||||
2016 | 152,377 | ||||||||||
2017 | 127,808 | ||||||||||
2018 | 107,192 | ||||||||||
The Company reviews the subscriber accounts for impairment or a change in amortization method and period whenever events or changes indicate that the carrying amount of the asset may not be recoverable or the life should be shortened. For purposes of recognition and measurement of an impairment loss, the Company views subscriber accounts as a single pool because of the assets’ homogeneous characteristics, and the pool of subscriber accounts is the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. | |||||||||||
Dealer Network and Other Intangible Assets | ' | ||||||||||
Dealer Network and Other Intangible Assets | |||||||||||
Dealer network is an intangible asset that relates to the dealer relationships that were acquired as part of the Monitronics Acquisition and the Security Networks Acquisition. Other intangible assets consist of non-compete agreements signed by the seller of Security Networks and certain key Security Networks executives. These intangible assets will be amortized on a straight-line basis over their estimated useful lives of five years. Amortization of dealer network and other intangible assets was $13,717,000, $10,080,000 and $10,080,000 for the fiscal years ended December 31, 2013, 2012 and 2010, respectively. | |||||||||||
The Company reviews the dealer network and other intangible assets for impairment or a change in amortization period whenever events or changes indicate that the carrying amount of the assets may not be recoverable or the lives should be shortened. | |||||||||||
Goodwill | ' | ||||||||||
Goodwill | |||||||||||
The Company accounts for its goodwill pursuant to the provisions of FASB ASC Topic 350, Intangibles — Goodwill and Other (“FASB ASC Topic 350”). In accordance with FASB ASC Topic 350, goodwill is not amortized, but rather tested for impairment at least annually. | |||||||||||
The Company assesses the recoverability of the carrying value of goodwill during the fourth quarter of its fiscal year or whenever events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. Recoverability is measured at the reporting unit level based on the provisions of FASB ASC Topic 350. | |||||||||||
To the extent necessary, recoverability of goodwill at a reporting unit level is measured using a discounted cash flow model incorporating discount rates commensurate with the risks involved, which is classified as a Level 3 measurement under FASB ASC Topic 820, Fair Value Measurements and Disclosures. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. If the calculated fair value is less than the current carrying value, impairment of the reporting unit may exist. When the recoverability test indicates potential impairment, the Company will calculate an implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment loss is recorded to write down the carrying value. An impairment loss cannot exceed the carrying value of goodwill assigned to the reporting unit but may indicate certain long-lived and amortizable intangible assets associated with the reporting unit may require additional impairment testing. | |||||||||||
Deferred Financing Costs | ' | ||||||||||
Deferred Financing Costs | |||||||||||
Deferred financing costs are capitalized when the related debt is issued or when revolving credit lines increase the borrowing capacity of the Company. Deferred financing costs are amortized over the term of the related debt using the effective interest method. | |||||||||||
Holdback Liability | ' | ||||||||||
Holdback Liability | |||||||||||
The Company typically withholds payment of a designated percentage of the acquisition cost when it acquires subscriber accounts from dealers. The withheld funds are recorded as a liability until the guarantee period provided by the dealer has expired. The holdback is used as a reserve to cover any terminated subscriber accounts that are not replaced by the dealer during the guarantee period. At the end of the guarantee period, the dealer is responsible for any deficit or is paid the balance of the holdback. | |||||||||||
Derivative Financial Instruments | ' | ||||||||||
Derivative Financial Instruments | |||||||||||
The Company uses derivative financial instruments to manage exposure to movement in interest rates. The use of these financial instruments modifies the exposure of these risks with the intention of reducing the risk or cost. The Company does not use derivatives for speculative or trading purposes. The Company recognizes the fair value of all derivative instruments as either assets or liabilities at fair value on the consolidated balance sheets. Fair value is based on market quotes for similar instruments with the same duration. For derivative instruments that qualify for hedge accounting under the provisions of FASB ASC Topic 815, Derivatives and Hedging, unrealized gains and losses on the derivative instruments are reported in Accumulated other comprehensive income (loss), to the extent the hedges are effective, until the underlying transactions are recognized in earnings. Derivative instruments that do not qualify for hedge accounting are marked to market at the end of each accounting period with the change in fair value recorded in earnings. | |||||||||||
Revenue Recognition | ' | ||||||||||
Revenue Recognition | |||||||||||
Revenue related to alarm monitoring services is recognized ratably over the life of the contract. Revenue related to maintenance and other services is recognized as the services are rendered. Deferred revenue includes payments for monitoring services to be provided in future periods. | |||||||||||
Income Taxes | ' | ||||||||||
Income Taxes | |||||||||||
The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes (“FASB ASC Topic 740”), which prescribes an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than proposed changes in the tax law or rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. | |||||||||||
FASB ASC Topic 740 specifies the accounting for uncertainty in income taxes recognized in a company’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. In instances where the Company has taken or expects to take a tax position in its tax return and the Company believes it is more likely than not that such tax position will be upheld by the relevant taxing authority, the Company records the benefits of such tax position in its consolidated financial statements. | |||||||||||
Stock-Based Compensation | ' | ||||||||||
Stock-Based Compensation | |||||||||||
The Company accounts for stock-based awards pursuant to FASB ASC Topic 718, Compensation — Stock Compensation (“FASB ASC Topic 718”), which requires companies to measure the cost of employee services received in exchange for an award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the award, and to recognize that cost over the period during which the employee is required to provide service (usually the vesting period of the award). | |||||||||||
The grant-date fair value of the Ascent Capital stock options granted to the Company’s employees was calculated using the Black-Scholes model. The expected term of the awards was calculated using the simplified method included in FASB ASC Topic 718. The volatility used in the calculation is based on the historical volatility of peer companies and the risk-free rate is based on Treasury Bonds with a term similar to that of the subject options. A dividend rate of zero was utilized for all granted stock options. | |||||||||||
Estimates | ' | ||||||||||
Estimates | |||||||||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s consolidated financial statements primarily relate to valuation of goodwill, other intangible assets, long-lived assets, deferred tax assets, derivative financial instruments, and the amount of the allowance for doubtful accounts. These estimates are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts them when facts and circumstances change. As the effects of future events cannot be determined with any certainty, actual results could differ from the estimates upon which the carrying values were based. | |||||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||
Schedule of activity in the allowance for doubtful accounts | ' | ||||||||||
A summary of activity in the allowance for doubtful accounts for the years ending December 31, 2013, 2012 and 2011 is as follows (amounts in thousands): | |||||||||||
Balance | Charged | Write-Offs | Balance | ||||||||
Beginning | to Expense | and Other | End of | ||||||||
of Year | Year | ||||||||||
2013 | $ | 1,436 | 7,342 | (6,841 | ) | 1,937 | |||||
2012 | $ | 1,815 | 5,860 | (6,239 | ) | 1,436 | |||||
2011 | $ | 250 | 5,484 | (3,919 | ) | 1,815 | |||||
Schedule of Estimated useful lives by class of asset | ' | ||||||||||
Leasehold improvements | 15 years or lease term, if shorter | ||||||||||
Machinery and equipment | 5 - 7 years | ||||||||||
Computer systems and software (included in Machinery and Equipment in note 6) | 3 - 5 years | ||||||||||
Schedule of estimated amortization of subscriber accounts | ' | ||||||||||
Based on subscriber accounts held at December 31, 2013, estimated amortization of subscriber accounts in the succeeding five fiscal years ending December 31 is as follows (amounts in thousands): | |||||||||||
2014 | $ | 216,709 | |||||||||
2015 | 181,689 | ||||||||||
2016 | 152,377 | ||||||||||
2017 | 127,808 | ||||||||||
2018 | 107,192 |
Correction_of_Immaterial_Error1
Correction of Immaterial Error (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Correction of Immaterial Error | ' | ||||||
Schedule of effect of recording the immaterial correction in the consolidated financial statements | ' | ||||||
The effect of recording the immaterial correction in the consolidated financial statements as of December 31, 2012 and 2011 is as follows (amounts in thousands, except per share amounts): | |||||||
For the year ended December 31, 2012 | |||||||
As Reported | As Revised | ||||||
Deferred income taxes, net | $ | 5,100 | 5,127 | ||||
Total current assets | 35,661 | 35,688 | |||||
Goodwill | 349,227 | 350,213 | |||||
Total assets | 1,445,431 | 1,446,444 | |||||
Other accrued liabilities | 25,613 | 27,950 | |||||
Total current liabilities | 58,410 | 60,747 | |||||
Other liabilities (non-current) | 3,961 | 4,132 | |||||
Total liabilities | 1,185,012 | 1,187,520 | |||||
Accumulated deficit | (26,270 | ) | (27,765 | ) | |||
Total stockholder’s equity | 260,419 | 258,924 | |||||
Total liabilities and stockholder’s equity | 1,445,431 | 1,446,444 | |||||
Cost of services | 49,791 | 49,978 | |||||
Selling, general, and administrative, including stock-based and long-term compensation | 59,575 | 60,054 | |||||
Operating income | 66,833 | 66,167 | |||||
Interest expense | 71,328 | 71,405 | |||||
Loss before income taxes | (13,414 | ) | (14,157 | ) | |||
Income tax expense | 2,616 | 2,619 | |||||
Net loss | (16,030 | ) | (16,776 | ) | |||
Comprehensive loss | (28,273 | ) | (29,019 | ) | |||
For the year ended December 31, 2011 | |||||||
As Reported | As Revised | ||||||
Accumulated deficit | $ | (10,240 | ) | (10,989 | ) | ||
Total stockholder’s equity | 289,373 | 288,624 | |||||
Cost of services | 40,553 | 40,699 | |||||
Selling, general, and administrative, including stock-based and long-term compensation | 57,170 | 57,689 | |||||
Operating income | 49,852 | 49,187 | |||||
Interest expense | 42,655 | 42,698 | |||||
Loss before income taxes | (3,487 | ) | (4,195 | ) | |||
Income tax expense | 2,523 | 2,564 | |||||
Net loss | (6,010 | ) | (6,759 | ) | |||
Comprehensive loss | (6,010 | ) | (6,759 | ) | |||
Security_Networks_Acquisition_
Security Networks Acquisition (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Security Networks Acquisition | ' | ||||||
Schedule of purchase price allocation | ' | ||||||
Under the acquisition method of accounting, the Security Networks Purchase Price has been allocated to Security Networks’ tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimates of fair value as follows (amounts in thousands): | |||||||
Cash | $ | 3,096 | |||||
Trade receivables | 1,305 | ||||||
Other current assets | 1,677 | ||||||
Property and equipment | 1,404 | ||||||
Subscriber accounts | 307,800 | ||||||
Dealer network and other intangible assets | 48,500 | ||||||
Goodwill | 176,300 | ||||||
Holdback liability, current and non-current | (9,620 | ) | |||||
Deferred income tax liabilities | (4,108 | ) | |||||
Other current and non-current liabilities | (25,797 | ) | |||||
Fair value of consideration | $ | 500,557 | |||||
Schedule of unaudited pro forma information | ' | ||||||
Year ended December 31, | |||||||
2013 | 2012 | ||||||
(amounts in thousands, except | |||||||
per share amounts) | |||||||
As reported: | |||||||
Net revenue | $ | 451,033 | (a) | 344,943 | |||
Net loss | (17,623 | ) | (16,776 | ) | |||
Supplemental pro-forma: | |||||||
Net revenue | $ | 515,792 | 420,716 | (b) | |||
Net loss (c) | (30,871 | ) | (70,491 | ) | |||
(a) As reported net revenue year ended December 31, 2013 reflects the negative impact of a $2,715,000 fair value adjustment that reduced deferred revenue acquired in the Security Networks Acquisition. | |||||||
(b) Pro-forma net revenue for the year ended December 31, 2012 reflects the negative impact of a $2,715,000 fair value adjustment that would have reduced deferred revenue acquired in the Security Networks Acquisition. | |||||||
(c) The pro-forma net loss from continuing operations amounts for the year ended December 31, 2013 include non-recurring acquisition costs incurred by the Company of $2,470,000. |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Property and Equipment | ' | ||||||
Schedule of property and equipment | ' | ||||||
Property and equipment consist of the following (amounts in thousands): | |||||||
As of December 31, | |||||||
2013 | 2012 | ||||||
Property and equipment, net: | |||||||
Land | $ | 172 | 172 | ||||
Leasehold improvements | 3,338 | 2,803 | |||||
Machinery and equipment | 38,565 | 27,773 | |||||
42,075 | 30,748 | ||||||
Accumulated depreciation | (17,514 | ) | (10,189 | ) | |||
$ | 24,561 | 20,559 |
Goodwill_Tables
Goodwill (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Goodwill | ' | ||||
Schedule of activity and balances of goodwill | ' | ||||
The following table provides the activity and balances of goodwill (amounts in thousands): | |||||
Balance at December 31, 2011 | $ | 350,213 | |||
Period activity | — | ||||
Balance at December 31, 2012 | 350,213 | ||||
Security Networks Acquisition | 176,300 | ||||
Balance at December 31, 2013 | $ | 526,513 |
Other_Accrued_Liabilities_Tabl
Other Accrued Liabilities (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Other Accrued Liabilities | ' | ||||||
Schedule of other accrued liabilities | ' | ||||||
Other accrued liabilities consisted of the following (amounts in thousands): | |||||||
As of December 31, | |||||||
2013 | 2012 | ||||||
Interest payable | $ | 17,258 | 9,624 | ||||
Income taxes payable | 2,647 | 2,286 | |||||
Legal accrual | 705 | 9,324 | |||||
Other | 12,844 | 6,716 | |||||
Total other accrued liabilities | $ | 33,454 | 27,950 |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Long-Term Debt | ' | |||||||
Schedule of long-term debt | ' | |||||||
Long-term debt consisted of the following (amounts in thousands): | ||||||||
As of December 31, | ||||||||
2013 | 2012 | |||||||
9.125% Senior Notes due April 1, 2020 | $ | 585,000 | $ | 410,000 | ||||
9.868% Promissory Note to Ascent Capital due October 1, 2020 | 100,000 | — | ||||||
Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% (a) | 902,293 | 685,583 | ||||||
$225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% (a) | 19,500 | 12,800 | ||||||
1,606,793 | 1,108,383 | |||||||
Less current portion of long-term debt | (9,166 | ) | (6,950 | ) | ||||
Long-term debt | $ | 1,597,627 | $ | 1,101,433 | ||||
(a) The interest rate on the term loan and the revolving credit facility was LIBOR plus 4.25%, subject to a LIBOR floor of 1.25%, until March 25, 2013. | ||||||||
Schedule of refinancing costs, reflected in the consolidated statement of operations and comprehensive income (loss) as a component of Other income (expense) | ' | |||||||
The components of the Refinancing expense, reflected in the consolidated statement of operations and comprehensive income (loss) as a component of Other income (expense) for the year ended December 31, 2012, are as follows (amounts in thousands): | ||||||||
For the year ended | ||||||||
December 31, 2012 | ||||||||
Accelerated amortization of deferred financing costs | $ | 389 | ||||||
Accelerated amortization of securitization debt discount | 6,679 | |||||||
Other refinancing costs | 7,628 | |||||||
Gain on early termination of derivative instruments | (8,451 | ) | ||||||
Total refinancing expense | $ | 6,245 | ||||||
Schedule of maturities of long-term debt including short term borrowings | ' | |||||||
Principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands): | ||||||||
2014 | $ | 9,166 | ||||||
2015 | 9,166 | |||||||
2016 | 9,166 | |||||||
2017 | 28,666 | |||||||
2018 | 870,802 | |||||||
2019 | — | |||||||
Thereafter | 685,000 | |||||||
Total principal payments | 1,611,966 | |||||||
Less: | ||||||||
Unamortized discount on the Credit Facility term loans | 5,173 | |||||||
Total debt on condensed consolidated balance sheet | $ | 1,606,793 |
Derivatives_Tables
Derivatives (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Derivatives | ' | ||||||||
Schedule of Swaps' outstanding notional balance and terms | ' | ||||||||
Notional | Effective Date | Fixed | Variable Rate Received | ||||||
Rate Paid | |||||||||
$ | 540,375,000 | March 28, 2013 | 1.884 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | ||||
143,187,500 | March 28, 2013 | 1.384 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | |||||
111,934,673 | September 30, 2013 | 1.959 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
111,934,673 | September 30, 2013 | 1.85 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
(a) On March 25, 2013, Monitronics negotiated amendments to the terms of these interest rate swap agreements to coincide with the Repricing (the “Amended Swaps”). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, the Company simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation will be recognized in Interest expense over the remaining life of the Amended Swaps. | |||||||||
Schedule of impact of the derivatives designated as cash flow hedges on the consolidated financial statements | ' | ||||||||
The impact of the derivatives designated as cash flow hedges on the consolidated financial statements is depicted below (amounts in thousands): | |||||||||
For the year ended December 31, | |||||||||
2013 | 2012 | ||||||||
Effective portion of gain (loss) recognized in Accumulated other comprehensive loss | $ | 7,014 | (15,715 | ) | |||||
Effective portion of loss reclassified from Accumulated other comprehensive loss into Net income (a) | $ | (5,303 | ) | (3,472 | ) | ||||
Ineffective portion of amount of gain (loss) recognized into Net income on interest rate swaps (a) | $ | 24 | — | ||||||
(a) Amounts are included in Interest expense in the consolidated statements of operations and comprehensive income (loss). |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Fair Value Measurements | ' | ||||||||||
Schedule of fair value level of assets and liabilities that are measured on a recurring basis | ' | ||||||||||
The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at December 31 (amounts in thousands): | |||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||
2013 | |||||||||||
Derivative financial instruments - assets | $ | — | 2,495 | — | 2,495 | ||||||
Derivative financial instruments - liabilities | — | (2,013 | ) | — | (2,013 | ) | |||||
Total | $ | — | 482 | — | 482 | ||||||
2012 | |||||||||||
Derivative financial instruments - assets | $ | — | 116 | — | 116 | ||||||
Derivative financial instruments - liabilities | — | (12,359 | ) | — | -12,359 | ||||||
Total | $ | — | (12,243 | ) | — | (12,243 | ) | ||||
Schedule of activity in the Level 3 balances | ' | ||||||||||
The following table presents the activity in the Level 3 balances (amounts in thousands): | |||||||||||
Year Ended December 31, | |||||||||||
Derivative financial instruments — liabilities | 2013 | 2012 | |||||||||
Beginning balance | $ | — | $ | (16,959 | ) | ||||||
Unrealized gain | — | 16,959 | |||||||||
Ending balance | $ | — | $ | — | |||||||
Schedule of Carrying values and fair values of financial instruments that are not carried at fair value | ' | ||||||||||
Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): | |||||||||||
Long term debt, including current portion: | December 31, 2013 | December 31, 2012 | |||||||||
Carrying value | $ | 1,606,793 | $ | 1,108,383 | |||||||
Fair value (a) | 1,656,797 | 1,130,978 | |||||||||
(a) The fair value is based on valuations from third party financial institutions and is classified as Level 2 in the hierarchy. | |||||||||||
Restructuring_Charges_Tables
Restructuring Charges (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Restructuring Charges | ' | ||||||||||||
Schedule of activity and balances of the restructuring plans | ' | ||||||||||||
The following table provides the activity and balances of the Company’s restructuring plans (amounts in thousands): | |||||||||||||
Year ended December 31, 2013 | |||||||||||||
2013 Restructuring Plan | Opening | Additions | Deductions (b) | Other | Ending balance | ||||||||
balance | |||||||||||||
Severance and retention | $ | — | 1,111 | (33 | ) | 492 | (a) | 1,570 | |||||
(a) Amount was recorded upon the acquisition of Security Networks. | |||||||||||||
(b) Represents cash payments. | |||||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes | ' | ||||||||
Schedule of income tax expense | ' | ||||||||
The Company’s income tax expense consists of the following (amounts in thousands): | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Current: | |||||||||
Federal | $ | — | — | — | |||||
State | 2,827 | 2,198 | 2,201 | ||||||
2,827 | 2,198 | 2,201 | |||||||
Deferred: | |||||||||
Federal | (2,407 | ) | 406 | 353 | |||||
State | 3,597 | 15 | 10 | ||||||
1,190 | 421 | 363 | |||||||
Total income tax expense | $ | 4,017 | 2,619 | 2,564 | |||||
Schedule of a reconciliation of the reported amount of income tax (expense) benefit from continuing operations | ' | ||||||||
Income tax expense differs from the amounts computed by applying the United States federal income tax rate of 35% as a result of the following (amounts in thousands): | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
Computed expected tax benefit | $ | (4,762 | ) | (4,955 | ) | (1,468 | ) | ||
State and local income taxes, net of federal income taxes | 4,176 | 1,438 | 1,437 | ||||||
Change in valuation allowance affecting tax expense | 2,696 | 5,538 | 2,462 | ||||||
Non-deductible expenses | 426 | 191 | 208 | ||||||
Amortization of indefinite-lived assets | 1,481 | 431 | 155 | ||||||
Other, net | — | (24 | ) | (230 | ) | ||||
Income tax expense | $ | 4,017 | 2,619 | 2,564 | |||||
Schedule of components of deferred tax assets and liabilities | ' | ||||||||
Components of deferred tax assets and liabilities as of December 31 are as follows (amounts in thousands): | |||||||||
2013 | 2012 | ||||||||
Current assets: | |||||||||
Allowance for doubtful accounts | $ | 1,072 | $ | 505 | |||||
Accrued liabilities | 8,921 | 6,160 | |||||||
Other | — | 29 | |||||||
Total current deferred tax assets | 9,993 | 6,694 | |||||||
Valuation allowance | (1,463 | ) | (1,567 | ) | |||||
Current deferred tax assets, net | 8,530 | 5,127 | |||||||
Noncurrent assets: | |||||||||
Net operating loss carryforwards | 108,504 | 75,181 | |||||||
Derivative financial instruments | — | 4,308 | |||||||
Business credits | 1,495 | 1,524 | |||||||
Other | 2,464 | 1,014 | |||||||
Total noncurrent deferred tax assets | 112,463 | 82,027 | |||||||
Valuation allowance | (16,161 | ) | (17,107 | ) | |||||
Noncurrent deferred tax asset, net | 96,302 | 64,920 | |||||||
Total deferred tax assets, net | 104,832 | 70,047 | |||||||
Noncurrent liabilities: | |||||||||
Intangible assets | (110,164 | ) | (70,634 | ) | |||||
Property, plant and equipment | (3,692 | ) | (3,135 | ) | |||||
Other | (25 | ) | — | ||||||
Total deferred tax liabilities | (113,881 | ) | (73,769 | ) | |||||
Net deferred tax liabilities | $ | (9,049 | ) | $ | (3,722 | ) | |||
Schedule of company's deferred tax assets and liabilities reported in the accompanying consolidated balance sheets | ' | ||||||||
The Company’s deferred tax assets and liabilities are reported in the accompanying consolidated balance sheets as follows (amounts in thousands): | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Current deferred tax assets, net | $ | 8,530 | $ | 5,127 | |||||
Long-term deferred tax liabilities, net | (17,579 | ) | (8,849 | ) | |||||
Net deferred tax assets (liabilities) | $ | (9,049 | ) | $ | (3,722 | ) | |||
Schedule of a reconciliation of the beginning and ending amount of uncertain tax positions | ' | ||||||||
A reconciliation of the beginning and ending amount of uncertain tax positions, which is recorded in other long term liabilities, is as follows (amounts in thousands): | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | 2011 | |||||||
As of the beginning of the year | $ | 247 | 247 | 207 | |||||
Increases for tax positions of current years | — | — | 40 | ||||||
As of the end of the year | $ | 247 | 247 | 247 |
Stockbased_and_LongTerm_Compen1
Stock-based and Long-Term Compensation (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Stock-based and Long-Term Compensation | ' | ||||||
Schedule of assumptions used in the Black-Scholes model to determine grant date fair value | ' | ||||||
Year Ended December 31, | |||||||
2013 | 2012 | ||||||
Risk-free interest rate | — | 0.89 | % | ||||
Estimated life in years | — | 4.76 | |||||
Dividend yield | — | 0 | % | ||||
Volatility | — | 43 | % | ||||
Schedule of number and weighted average exercise price ("WAEP") of options | ' | ||||||
Series A | |||||||
common stock | WAEP | ||||||
Outstanding at January 1, 2013 | 250,447 | $ | 49.38 | ||||
Granted | — | — | |||||
Exercised | 3,605 | 48.93 | |||||
Forfeited | (16,875 | ) | 49.37 | ||||
Outstanding at December 31, 2013 | 229,967 | 49.39 | |||||
Exercisable at December 31, 2013 | 34,042 | $ | 48.41 | ||||
Schedule of number and weighted average fair value ("WAFV") of unvested restricted stock awards | ' | ||||||
Series A | |||||||
common stock | WAFV | ||||||
Outstanding at January 1, 2013 | 77,689 | $ | 43.91 | ||||
Granted | 9,706 | 86.53 | |||||
Vested | (15,410 | ) | 81.17 | ||||
Cancelled | (5,308 | ) | 45.74 | ||||
Outstanding at December 31, 2013 | 66,677 | $ | 48.36 | ||||
Stockholders_Equity_Tables
Stockholder's Equity (Tables) | 12 Months Ended | ||||||
Dec. 31, 2013 | |||||||
Stockholder's Equity | ' | ||||||
Summary of change in components of accumulated other comprehensive income (loss), net of taxes | ' | ||||||
The change in the components of accumulated other comprehensive income (loss), net of taxes, is summarized as follows (amounts in thousands): | |||||||
Unrealized | Accumulated | ||||||
Gains and Losses on | Other | ||||||
Derivative | Comprehensive | ||||||
Instruments, net (a) | Income (Loss) | ||||||
Balance at December 31, 2010 | $ | — | — | ||||
Gain (loss) through Accumulated other comprehensive income (loss) | — | — | |||||
Reclassifications into net income | — | — | |||||
Balance at December 31, 2011 | — | — | |||||
Gain (loss) through Accumulated other comprehensive income (loss) | (15,715 | ) | (15,715 | ) | |||
Reclassifications into net income | 3,472 | 3,472 | |||||
Balance at December 31, 2012 | (12,243 | ) | (12,243 | ) | |||
Gain (loss) through Accumulated other comprehensive income (loss) | 7,014 | 7,014 | |||||
Reclassifications into net income | 5,303 | 5,303 | |||||
Balance at December 31, 2013 | $ | 74 | 74 | ||||
(a) No income taxes were recorded unrealized loss on derivative instrument amounts for 2013 and 2012 because the Company is subject to a full valuation allowance. Amounts reclassified into net income are included in Interest expense on the consolidated statement of operations. See note 10, Derivatives, for further information. |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies | ' | ||||
Schedule of future minimum lease payments under scheduled operating leases | ' | ||||
Future minimum lease payments under scheduled operating leases, which are primarily for buildings and equipment, having initial or remaining noncancelable terms in excess of one year are as follows (in thousands): | |||||
Year ended December 31: | |||||
2014 | $ | 2,939 | |||
2015 | 1,235 | ||||
2016 | 264 | ||||
2017 | 95 | ||||
2018 | 95 | ||||
Thereafter | 55 | ||||
Minimum lease commitments | $ | 4,683 |
Quarterly_Financial_Informatio1
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Quarterly Financial Information (Unaudited) | ' | ||||||||||
Schedule of quarterly financial information | ' | ||||||||||
1st | 2nd | 3rd | 4th | ||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||
Amounts in thousands | |||||||||||
2013:00:00 | |||||||||||
Net Revenue | $ | 100,158 | 102,273 | 115,844 | 132,758 | ||||||
Operating income | $ | 23,250 | 20,849 | 17,663 | 20,777 | ||||||
Net income (loss) | $ | 1,349 | 592 | (9,310 | ) | (10,254 | ) | ||||
2012:00:00 | |||||||||||
Net Revenue | $ | 81,881 | 83,315 | 84,667 | 95,090 | ||||||
Operating income | $ | 17,088 | 16,602 | 14,848 | 17,629 | ||||||
Net loss | $ | (3,772 | ) | (3,753 | ) | (5,095 | ) | (4,156 | ) |
Consolidating_Guarantor_Financ1
Consolidating Guarantor Financial Information (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Consolidating Guarantor Financial Information | ' | ||||||||||||
Condensed Consolidating Balance Sheets | ' | ||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Balance Sheets | |||||||||||||
As of December 31, 2013 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 1,775 | 2,580 | — | — | 4,355 | |||||||
Restricted cash | 40 | — | — | — | 40 | ||||||||
Trade receivables, net | 11,374 | 1,645 | — | — | 13,019 | ||||||||
Deferred income tax assets, net | 6,763 | 1,767 | — | — | 8,530 | ||||||||
Prepaid and other current assets | 9,916 | 1,003 | — | (4,600 | ) | 6,319 | |||||||
Total current assets | 29,868 | 6,995 | — | (4,600 | ) | 32,263 | |||||||
Investment in subsidiaries | 498,820 | — | — | (498,820 | ) | — | |||||||
Property and equipment, net | 23,572 | 989 | — | — | 24,561 | ||||||||
Subscriber accounts, net | 1,025,605 | 315,349 | — | — | 1,340,954 | ||||||||
Dealer network and other intangible assets, net | 19,773 | 44,862 | — | — | 64,635 | ||||||||
Goodwill | 350,213 | 176,300 | — | — | 526,513 | ||||||||
Other assets, net | 29,611 | — | — | — | 29,611 | ||||||||
Total assets | $ | 1,977,462 | 544,495 | — | (503,420 | ) | 2,018,537 | ||||||
Liabilities and Stockholder’s Equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 5,491 | 1,404 | — | — | 6,895 | |||||||
Accrued payroll and related liabilities | 2,649 | 530 | — | — | 3,179 | ||||||||
Other accrued liabilities | 27,137 | 10,917 | — | (4,600 | ) | 33,454 | |||||||
Deferred revenue | 11,037 | 3,342 | — | — | 14,379 | ||||||||
Holdback liability | 16,640 | 3,118 | — | — | 19,758 | ||||||||
Current portion of long-term debt | 9,166 | — | — | — | 9,166 | ||||||||
Total current liabilities | 72,120 | 19,311 | — | (4,600 | ) | 86,831 | |||||||
Non-current liabilities: | |||||||||||||
Long-term debt | 1,597,627 | — | — | — | 1,597,627 | ||||||||
Long-term holdback liability | — | 6,698 | — | — | 6,698 | ||||||||
Derivative financial instruments | 2,013 | — | — | — | 2,013 | ||||||||
Deferred income tax liability, net | 10,577 | 7,002 | — | — | 17,579 | ||||||||
Other liabilities | 3,401 | 12,664 | — | — | 16,065 | ||||||||
Total liabilities | 1,685,738 | 45,675 | — | (4,600 | ) | 1,726,813 | |||||||
Total stockholder’s equity | 291,724 | 498,820 | — | (498,820 | ) | 291,724 | |||||||
Total liabilities and stockholder’s equity | $ | 1,977,462 | 544,495 | — | (503,420 | ) | 2,018,537 | ||||||
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | |||||||||||||
Year ended December, 2013 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Net revenue | $ | 411,036 | 39,997 | — | — | 451,033 | |||||||
Operating expenses: | |||||||||||||
Cost of services | 65,903 | 8,233 | — | — | 74,136 | ||||||||
Selling, general, and administrative, including stock-based and long-term incentive compensation | 70,706 | 6,456 | — | — | 77,162 | ||||||||
Amortization of subscriber accounts, dealer network and other intangible assets | 185,161 | 23,599 | — | — | 208,760 | ||||||||
Depreciation | 6,655 | 672 | — | — | 7,327 | ||||||||
Restructuring charges | — | 1,111 | — | 1,111 | |||||||||
Gain on sale of operating assets | (2 | ) | — | — | — | (2 | ) | ||||||
328,423 | 40,071 | — | — | 368,494 | |||||||||
Operating income (loss) | 82,613 | (74 | ) | — | — | 82,539 | |||||||
Other expense: | |||||||||||||
Equity in loss of subsidiaries | 1,736 | — | — | (1,736 | ) | — | |||||||
Interest expense | 95,680 | 465 | — | — | 96,145 | ||||||||
97,416 | 465 | — | (1,736 | ) | 96,145 | ||||||||
Loss before income taxes | (14,803 | ) | (539 | ) | — | 1,736 | (13,606 | ) | |||||
Income tax expense | 2,820 | 1,197 | — | — | 4,017 | ||||||||
Net loss | (17,623 | ) | (1,736 | ) | — | 1,736 | (17,623 | ) | |||||
Other comprehensive loss: | |||||||||||||
Unrealized gain on derivative contracts | 12,317 | — | — | — | 12,317 | ||||||||
Total other comprehensive income | 12,317 | — | — | — | 12,317 | ||||||||
Comprehensive loss | $ | (5,306 | ) | (1,736 | ) | — | 1,736 | (5,306 | ) | ||||
Condensed Consolidating Statement of Cash Flows | ' | ||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Statement of Cash Flows | |||||||||||||
Year ended , 2013 | |||||||||||||
Parent Issuer | Subsidiary | Non- | Eliminations | Consolidated | |||||||||
Guarantors | Guarantors | ||||||||||||
(amounts in thousands) | |||||||||||||
Net cash provided by operating activities | $ | 187,594 | 27,055 | — | — | 214,649 | |||||||
Investing activities: | |||||||||||||
Capital expenditures | (9,667 | ) | (258 | ) | — | — | (9,925 | ) | |||||
Purchases of subscriber accounts | (207,601 | ) | (27,313 | ) | — | — | (234,914 | ) | |||||
Cash acquired (paid) on acquisition | (481,834 | ) | 3,096 | — | — | (478,738 | ) | ||||||
Decrease in restricted cash | 2,600 | — | — | — | 2,600 | ||||||||
Other, net | (98 | ) | — | — | — | (98 | ) | ||||||
Net cash used in investing activities | (696,600 | ) | (24,475 | ) | — | — | (721,075 | ) | |||||
Financing activities: | |||||||||||||
Proceeds from long-term debt | 630,575 | — | — | — | 630,575 | ||||||||
Payments of long-term debt | (133,048 | ) | — | — | — | (133,048 | ) | ||||||
Payments of deferred financing costs and refinancing costs | (8,179 | ) | — | — | — | (8,179 | ) | ||||||
Contribution from Ascent Capital | 20,000 | — | — | — | 20,000 | ||||||||
Dividend to Ascent Capital | (2,000 | ) | — | — | — | (2,000 | ) | ||||||
Net cash provided by financing activities | 507,348 | — | — | — | 507,348 | ||||||||
Net increase (decrease) in cash and cash equivalents | (1,658 | ) | 2,580 | — | — | 922 | |||||||
Cash and cash equivalents at beginning of period | 3,433 | — | — | — | 3,433 | ||||||||
Cash and cash equivalents at end of period | $ | 1,775 | 2,580 | — | — | 4,355 | |||||||
Basis_of_Presentation_Details
Basis of Presentation (Details) | Dec. 17, 2010 |
Basis of Presentation | ' |
Percentage of outstanding capital stock acquired by parent company | 100.00% |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Changes in allowance for doubtful accounts | ' | ' | ' |
Balance beginning of year | $1,436 | $1,815 | $250 |
Charged to expense | 7,342 | 5,860 | 5,484 |
Write-offs and other | -6,841 | -6,239 | -3,919 |
Balance end of year | $1,937 | $1,436 | $1,815 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended |
Dec. 31, 2013 | |
Leasehold improvements | ' |
Property and Equipment | ' |
Estimated useful lives | '15 years |
Machinery and equipment | Minimum | ' |
Property and Equipment | ' |
Estimated useful lives | '5 years |
Machinery and equipment | Maximum | ' |
Property and Equipment | ' |
Estimated useful lives | '7 years |
Computer systems and software | Minimum | ' |
Property and Equipment | ' |
Estimated useful lives | '3 years |
Computer systems and software | Maximum | ' |
Property and Equipment | ' |
Estimated useful lives | '5 years |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) (USD $) | 12 Months Ended | |||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | |
Subscriber accounts | Subscriber accounts | Subscriber accounts | Subscriber accounts | Dealer network and other intangible assets | Dealer network and other intangible assets | Dealer network and other intangible assets | ||||
Ascent Capital Group, Inc. | ||||||||||
Subscriber accounts and Dealer network | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets amortization period | ' | ' | ' | '14 years | ' | ' | '15 years | '5 years | ' | ' |
Amortization rate (as a percent) | ' | ' | ' | 235.00% | ' | ' | 220.00% | ' | ' | ' |
Amortization of subscriber accounts and dealer network | $208,760,000 | $163,468,000 | $159,619,000 | $195,010,000 | $153,388,000 | $149,539,000 | ' | $13,717,000 | $10,080,000 | $10,080,000 |
Estimated amortization of subscriber accounts in succeeding five fiscal years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2014 | ' | ' | ' | 216,709,000 | ' | ' | ' | ' | ' | ' |
2015 | ' | ' | ' | 181,689,000 | ' | ' | ' | ' | ' | ' |
2016 | ' | ' | ' | 152,377,000 | ' | ' | ' | ' | ' | ' |
2017 | ' | ' | ' | 127,808,000 | ' | ' | ' | ' | ' | ' |
2018 | ' | ' | ' | $107,192,000 | ' | ' | ' | ' | ' | ' |
Stock-Based Compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividend rate (as a percent) | 0.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Correction_of_Immaterial_Error2
Correction of Immaterial Error (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | |
Deferred income tax assets, net | $8,530,000 | ' | ' | ' | $5,127,000 | ' | ' | ' | $8,530,000 | $5,127,000 | ' | ' |
Total current assets | 32,263,000 | ' | ' | ' | 35,688,000 | ' | ' | ' | 32,263,000 | 35,688,000 | ' | ' |
Goodwill | 526,513,000 | ' | ' | ' | 350,213,000 | ' | ' | ' | 526,513,000 | 350,213,000 | 350,213,000 | ' |
Total assets | 2,018,537,000 | ' | ' | ' | 1,446,444,000 | ' | ' | ' | 2,018,537,000 | 1,446,444,000 | ' | ' |
Other accrued liabilities | 33,454,000 | ' | ' | ' | 27,950,000 | ' | ' | ' | 33,454,000 | 27,950,000 | ' | ' |
Total current liabilities | 86,831,000 | ' | ' | ' | 60,747,000 | ' | ' | ' | 86,831,000 | 60,747,000 | ' | ' |
Other liabilities (non-current) | 16,065,000 | ' | ' | ' | 4,132,000 | ' | ' | ' | 16,065,000 | 4,132,000 | ' | ' |
Total liabilities | 1,726,813,000 | ' | ' | ' | 1,187,520,000 | ' | ' | ' | 1,726,813,000 | 1,187,520,000 | ' | ' |
Accumulated deficit | -45,388,000 | ' | ' | ' | -27,765,000 | ' | ' | ' | -45,388,000 | -27,765,000 | -10,989,000 | ' |
Total stockholder's equity | 291,724,000 | ' | ' | ' | 258,924,000 | ' | ' | ' | 291,724,000 | 258,924,000 | 288,624,000 | 294,990,000 |
Total liabilities and stockholder's equity | 2,018,537,000 | ' | ' | ' | 1,446,444,000 | ' | ' | ' | 2,018,537,000 | 1,446,444,000 | ' | ' |
Cost of services | ' | ' | ' | ' | ' | ' | ' | ' | 74,136,000 | 49,978,000 | 40,699,000 | ' |
Selling, general, and administrative, including stock-based and long-term incentive compensation | ' | ' | ' | ' | ' | ' | ' | ' | 77,162,000 | 60,054,000 | 57,689,000 | ' |
Operating income | 20,777,000 | 17,663,000 | 20,849,000 | 23,250,000 | 17,629,000 | 14,848,000 | 16,602,000 | 17,088,000 | 82,539,000 | 66,167,000 | 49,187,000 | ' |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 96,145,000 | 71,405,000 | 42,698,000 | ' |
Loss before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -13,606,000 | -14,157,000 | -4,195,000 | ' |
Income tax expense | ' | ' | ' | ' | ' | ' | ' | ' | 4,017,000 | 2,619,000 | 2,564,000 | ' |
Net loss | -10,254,000 | -9,310,000 | 592,000 | 1,349,000 | -4,156,000 | -5,095,000 | -3,753,000 | -3,772,000 | -17,623,000 | -16,776,000 | -6,759,000 | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | -5,306,000 | -29,019,000 | -6,759,000 | ' |
As Reported | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred income tax assets, net | ' | ' | ' | ' | 5,100,000 | ' | ' | ' | ' | 5,100,000 | ' | ' |
Total current assets | ' | ' | ' | ' | 35,661,000 | ' | ' | ' | ' | 35,661,000 | ' | ' |
Goodwill | ' | ' | ' | ' | 349,227,000 | ' | ' | ' | ' | 349,227,000 | ' | ' |
Total assets | ' | ' | ' | ' | 1,445,431,000 | ' | ' | ' | ' | 1,445,431,000 | ' | ' |
Other accrued liabilities | ' | ' | ' | ' | 25,613,000 | ' | ' | ' | ' | 25,613,000 | ' | ' |
Total current liabilities | ' | ' | ' | ' | 58,410,000 | ' | ' | ' | ' | 58,410,000 | ' | ' |
Other liabilities (non-current) | ' | ' | ' | ' | 3,961,000 | ' | ' | ' | ' | 3,961,000 | ' | ' |
Total liabilities | ' | ' | ' | ' | 1,185,012,000 | ' | ' | ' | ' | 1,185,012,000 | ' | ' |
Accumulated deficit | ' | ' | ' | ' | -26,270,000 | ' | ' | ' | ' | -26,270,000 | -10,240,000 | ' |
Total stockholder's equity | ' | ' | ' | ' | 260,419,000 | ' | ' | ' | ' | 260,419,000 | 289,373,000 | ' |
Total liabilities and stockholder's equity | ' | ' | ' | ' | 1,445,431,000 | ' | ' | ' | ' | 1,445,431,000 | ' | ' |
Cost of services | ' | ' | ' | ' | ' | ' | ' | ' | ' | 49,791,000 | 40,553,000 | ' |
Selling, general, and administrative, including stock-based and long-term incentive compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | 59,575,000 | 57,170,000 | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | ' | 66,833,000 | 49,852,000 | ' |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | 71,328,000 | 42,655,000 | ' |
Loss before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | ' | -13,414,000 | -3,487,000 | ' |
Income tax expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,616,000 | 2,523,000 | ' |
Net loss | ' | ' | ' | ' | ' | ' | ' | ' | ' | -16,030,000 | -6,010,000 | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | ' | ($28,273,000) | ($6,010,000) | ' |
Security_Networks_Acquisition_1
Security Networks Acquisition (Details) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Nov. 07, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Aug. 16, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 14, 2013 | Aug. 16, 2013 | Nov. 14, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | |
Subscriber accounts | Subscriber accounts | Dealer network and other intangible assets | New Senior Notes | Ascent Capital Group, Inc. | Ascent Capital Group, Inc. | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | Security Networks Acquisition | ||||||||||||
Subscriber accounts | Promissory note | Purchase price adjustment | Subscriber accounts | Subscriber accounts | Dealer network and other intangible assets | New Senior Notes | Incremental term loan | Promissory note | Ascent Capital Group, Inc. | Ascent Capital Group, Inc. | |||||||||||||||||||
Purchase price adjustment | Series A common stock | ||||||||||||||||||||||||||||
Security networks acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price, cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $481,834,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 253,333 |
Common stock, par value (in dollars per share) | $0.01 | ' | ' | ' | $0.01 | ' | ' | ' | $0.01 | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 |
Fair value of shares issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18,723,000 |
Amount of post-closing adjustments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,057,000 | ' |
Proceeds from issuance of debt | ' | ' | ' | ' | ' | ' | ' | ' | 630,575,000 | 1,277,900,000 | 78,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 175,000,000 | 225,000,000 | 100,000,000 | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9.13% | ' | 9.87% | ' | ' | ' | ' | ' | ' | ' | 9.13% | ' | ' | ' | ' |
Purchase price allocation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,096,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Trade receivables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,305,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other current assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,677,000 | ' | ' | -82,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,404,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 307,800,000 | 100,000 | 48,500,000 | ' | ' | ' | ' | ' |
Goodwill | 526,513,000 | ' | ' | ' | 350,213,000 | ' | ' | ' | 526,513,000 | 350,213,000 | 350,213,000 | ' | ' | ' | ' | ' | ' | 176,300,000 | ' | ' | 3,267,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Holdback liability, current and non-current | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -9,620,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred income tax liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -4,108,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other current and non-current liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -25,797,000 | ' | ' | -234,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of consideration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 131,000,000 | ' | ' | ' | ' | ' | 500,557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in goodwill related to estimated deferred income tax liabilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,108,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill deductible for tax purposes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 141,607,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intangible assets amortization period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '14 years | '5 years | ' | '15 years | ' | ' | ' | ' | ' | '14 years | ' | '5 years | ' | ' | ' | ' | ' |
Amortization rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 235.00% | ' | ' | 220.00% | ' | ' | ' | ' | ' | 235.00% | ' | ' | ' | ' | ' | ' | ' |
Net revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 39,997,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -74,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Negative impact on net revenue of acquiree due to fair value adjustment that reduced deferred revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,715,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Legal and professional services expense related to acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,470,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reported net revenue | 132,758,000 | 115,844,000 | 102,273,000 | 100,158,000 | 95,090,000 | 84,667,000 | 83,315,000 | 81,881,000 | 451,033,000 | 344,953,000 | 311,898,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reported net loss | ' | ' | ' | ' | ' | ' | ' | ' | -17,623,000 | -16,776,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net revenue | ' | ' | ' | ' | ' | ' | ' | ' | 515,792,000 | 420,716,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net loss | ' | ' | ' | ' | ' | ' | ' | ' | -30,871,000 | -70,491,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value adjustment that reduced deferred revenue reflected by pro forma revenue | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,715,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Property and equipment | ' | ' | ' |
Property and equipment, gross | $42,075 | $30,748 | ' |
Accumulated depreciation | -17,514 | -10,189 | ' |
Property and equipment, net | 24,561 | 20,559 | ' |
Depreciation | 7,327 | 5,286 | 4,704 |
Land | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 172 | 172 | ' |
Leasehold improvements | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | 3,338 | 2,803 | ' |
Machinery and equipment | ' | ' | ' |
Property and equipment | ' | ' | ' |
Property and equipment, gross | $38,565 | $27,773 | ' |
Goodwill_Details
Goodwill (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2011 |
Activity and balances of goodwill | ' | ' |
Balance at the beginning of the period | $350,213 | $350,213 |
Security Networks Acquisition | 176,300 | ' |
Balance at the end of the period | $526,513 | $350,213 |
Other_Accrued_Liabilities_Deta
Other Accrued Liabilities (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Other Accrued Liabilities | ' | ' |
Interest payable | $17,258 | $9,624 |
Income taxes payable | 2,647 | 2,286 |
Legal accrual | 705 | 9,324 |
Other | 12,844 | 6,716 |
Total other accrued liabilities | $33,454 | $27,950 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 12 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Dec. 31, 2012 | Nov. 07, 2012 | Aug. 16, 2013 | Dec. 31, 2013 | Jul. 17, 2013 | Dec. 31, 2012 | Mar. 23, 2012 | Aug. 16, 2013 | Aug. 16, 2013 | Dec. 31, 2013 | Mar. 25, 2013 | Mar. 23, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 07, 2012 | Aug. 16, 2013 | Mar. 25, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 23, 2012 | Aug. 16, 2013 | |
Interest rate swap | Interest rate swap | Subscriber accounts | Security Networks Acquisition | 9.125% Senior Notes due April 1, 2020 | 9.125% Senior Notes due April 1, 2020 | 9.125% Senior Notes due April 1, 2020 | 9.125% Senior Notes due April 1, 2020 | 9.125% Senior Notes due April 1, 2020 | 9.868% Promissory Note to Ascent Capital due October 1, 2020 | 9.868% Promissory Note to Ascent Capital due October 1, 2020 | Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% | Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% | Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% | Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% | Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% | Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% | $225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% | $225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% | $225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% | $225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% | $225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% | ||||
Designated as hedging | Designated as hedging | item | Security Networks Acquisition | Security Networks Acquisition | Ascent Capital | Security Networks Acquisition | Security Networks Acquisition | ||||||||||||||||||
item | item | ||||||||||||||||||||||||
Long-term debt instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of debt instrument | ' | ' | ' | ' | ' | ' | ' | 9.13% | ' | ' | ' | 9.13% | ' | 9.87% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate for variable interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | ' | 'LIBOR | ' | ' | ' | 'LIBOR | 'LIBOR | ' | ' | ' |
Variable interest rate spread (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4.25% | ' | 3.25% | ' | ' | ' | 4.25% | 3.75% | ' | ' | ' |
Maximum borrowing capacity under the facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $225,000,000 | ' | $150,000,000 | $225,000,000 |
Interest rate description floor rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.25% | ' | 1.00% | ' | ' | ' | 1.25% | 1.00% | ' | ' | ' |
Long-term debt including current portion | 1,606,793,000 | 1,108,383,000 | ' | ' | ' | ' | ' | 585,000,000 | ' | 410,000,000 | ' | ' | ' | 100,000,000 | ' | ' | 902,293,000 | 685,583,000 | ' | ' | ' | 19,500,000 | 12,800,000 | ' | ' |
Less current portion of long-term debt | -9,166,000 | -6,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt | 1,597,627,000 | 1,101,433,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instruments issued | ' | ' | ' | ' | ' | ' | ' | ' | 175,000,000 | ' | 410,000,000 | ' | ' | ' | ' | 550,000,000 | ' | ' | 145,000,000 | 225,000,000 | ' | ' | ' | ' | ' |
Proceeds from issuance of debt | 630,575,000 | 1,277,900,000 | 78,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | 175,000,000 | 100,000,000 | ' | ' | ' | ' | ' | ' | 225,000,000 | ' | ' | ' | ' | ' |
Discount rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' |
Principal payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,292,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Commitment fees on unused portion of facility (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' |
Number of Subscriber Accounts Acquired | ' | ' | ' | ' | ' | 93,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price | ' | ' | ' | ' | ' | 131,000,000 | 500,557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in maximum borrowing capacity under the facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 |
Remaining balance on the Credit Facility Revolver | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $205,500,000 | ' | ' | ' |
Number of interest rate swap agreements | ' | ' | ' | 2 | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
LongTerm_Debt_Details_2
Long-Term Debt (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2013 | |
Long-Term Debt | ' | ' |
Deferred financing costs | ' | $25,322,000 |
Refinancing costs | ' | ' |
Accelerated amortization of deferred financing costs | 389,000 | ' |
Accelerated amortization of securitization debt discount | 6,679,000 | ' |
Other refinancing costs | 7,628,000 | ' |
Gain on early termination of derivative instruments | -8,451,000 | ' |
Total refinancing expenses | 6,245,000 | ' |
Scheduled maturities of long-term debt | ' | ' |
2014 | ' | 9,166,000 |
2015 | ' | 9,166,000 |
2016 | ' | 9,166,000 |
2017 | ' | 28,666,000 |
2018 | ' | 870,802,000 |
Thereafter | ' | 685,000,000 |
Total principal payments | ' | 1,611,966,000 |
Less: Unamortized discount on the Credit Facility term loans | ' | 5,173,000 |
Total debt on condensed consolidated balance sheet | 1,108,383,000 | 1,606,793,000 |
Term loan | ' | ' |
Scheduled maturities of long-term debt | ' | ' |
Total debt on condensed consolidated balance sheet | $685,583,000 | $902,293,000 |
Interest rate swap | Designated as hedging | Term loan | ' | ' |
Effective interest rate swap on term loan | ' | ' |
Weighted average fixed rate (as a percent) | ' | 5.06% |
Derivatives_Details
Derivatives (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2011 | Dec. 31, 2011 |
Interest rate swaps (Swaps) | Interest rate swaps (Swaps) | Interest rate swaps (Swaps) | 1.884 % interest rate swaps | 1.384 % interest rate swaps | 1.959 % interest rate swaps | 1.850 % interest rate swaps | Interest rate cap | Interest rate floor | ||||
Not designated as hedge | Cash flow hedge | Cash flow hedge | Not designated as hedge | Not designated as hedge | ||||||||
item | item | item | ||||||||||
Derivatives | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of derivative financial instruments, asset | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | 1 | ' |
Aggregate fair value of an asset | ' | ' | ' | ' | $2,495,000 | $116,000 | ' | ' | ' | ' | $25,000 | ' |
Number of derivative financial instruments, liability | ' | ' | ' | 3 | 3 | ' | ' | ' | ' | ' | ' | ' |
Aggregate fair value of an liability | ' | ' | ' | 16,959,000 | 2,013,000 | 12,359,000 | ' | ' | ' | ' | ' | 19,320,000 |
Amount in Accumulated OCL expected to recognize in interest expense in coming 12 months | ' | ' | ' | ' | 5,044,000 | ' | ' | ' | ' | ' | ' | ' |
Derivative instruments amounts offset | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional | ' | ' | ' | ' | ' | ' | $540,375,000 | $143,187,500 | $111,934,673 | $111,934,673 | ' | ' |
Rate Paid (as a percent) | ' | ' | ' | ' | ' | ' | 1.88% | 1.38% | 1.96% | 1.85% | ' | ' |
Variable interest rate base | ' | ' | ' | ' | ' | ' | '3 mo.USD-LIBOR-BBA | '3 mo.USD-LIBOR-BBA | '3 mo.USD-LIBOR-BBA | '3 mo.USD-LIBOR-BBA | ' | ' |
Variable interest rate base floor | ' | ' | ' | ' | ' | ' | 1.00% | 1.00% | 1.00% | 1.00% | ' | ' |
Derivatives_Details_2
Derivatives (Details 2) (Interest rate swaps (Swaps), Cash flow hedge, USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Interest rate swaps (Swaps) | Cash flow hedge | ' | ' |
Impact of the Swap on the consolidated financial statements | ' | ' |
Effective portion of gain (loss) recognized in Accumulated other comprehensive loss | $7,014 | ($15,715) |
Effective portion of loss reclassified from Accumulated other comprehensive loss into Net income | -5,303 | -3,472 |
Ineffective portion of amount of gain (loss) recognized into Net income on interest rate swaps | $24 | ' |
Derivatives_Details_3
Derivatives (Details 3) (USD $) | 0 Months Ended | 12 Months Ended | |
Mar. 23, 2012 | Dec. 31, 2012 | Dec. 31, 2011 | |
Derivatives | ' | ' | ' |
Gain on early termination of derivative instruments | ' | $8,451,000 | ' |
Interest rate swaps (Swaps) | Not designated as hedge | ' | ' | ' |
Derivatives | ' | ' | ' |
Gain on early termination of derivative instruments | 8,451,000 | ' | ' |
Settlement payments | ' | 8,837,000 | 38,645,000 |
Unrealized gain related to the change in fair value of derivatives | ' | $6,793,000 | $28,044,000 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring, USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Level 2 | ' | ' |
Fair value measurements | ' | ' |
Derivative financial instruments - assets | $2,495 | $116 |
Derivative financial instruments - liabilities | -2,013 | -12,359 |
Total | 482 | -12,243 |
Total | ' | ' |
Fair value measurements | ' | ' |
Derivative financial instruments - assets | 2,495 | 116 |
Derivative financial instruments - liabilities | -2,013 | -12,359 |
Total | $482 | ($12,243) |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2013 |
Activity in the Level 3 balances | ' | ' |
Beginning balance | ($16,959) | ' |
Unrealized gain | 16,959 | ' |
Long term debt, including current portion: | ' | ' |
Carrying value | 1,108,383 | 1,606,793 |
Fair value | $1,130,978 | $1,656,797 |
Restructuring_Charges_Details
Restructuring Charges (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Restructuring Charges | ' | ' | ' |
Restructuring charges | $1,111 | ' | ' |
Change in activity of restructuring reserves during the period | ' | ' | ' |
Additions | 1,111 | ' | ' |
2013 Restructuring Plan | Severance and retention | ' | ' | ' |
Restructuring Charges | ' | ' | ' |
Restructuring charges | 1,111 | 0 | 0 |
Change in activity of restructuring reserves during the period | ' | ' | ' |
Additions | 1,111 | 0 | 0 |
Deductions | -33 | ' | ' |
Other | 492 | ' | ' |
Ending balance | $1,570 | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Current: | ' | ' | ' |
State | $2,827,000 | $2,198,000 | $2,201,000 |
Total current | 2,827,000 | 2,198,000 | 2,201,000 |
Deferred: | ' | ' | ' |
Federal | -2,407,000 | 406,000 | 353,000 |
State | 3,597,000 | 15,000 | 10,000 |
Total deferred | 1,190,000 | 421,000 | 363,000 |
Total income tax expense | 4,017,000 | 2,619,000 | 2,564,000 |
United States federal income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
Differences between the actual income tax expense and the amount computed by applying the United States federal income tax rate to income before income taxes | ' | ' | ' |
Computed expected tax benefit | -4,762,000 | -4,955,000 | -1,468,000 |
State and local income taxes, net of federal income taxes | 4,176,000 | 1,438,000 | 1,437,000 |
Change in valuation allowance affecting income tax expense | 2,696,000 | 5,538,000 | 2,462,000 |
Non-deductible expenses | 426,000 | 191,000 | 208,000 |
Amortization of indefinite-lived assets | 1,481,000 | 431,000 | 155,000 |
Other, net | ' | -24,000 | -230,000 |
Total income tax expense | 4,017,000 | 2,619,000 | 2,564,000 |
Current assets: | ' | ' | ' |
Allowance for doubtful accounts | 1,072,000 | 505,000 | ' |
Accrued liabilities | 8,921,000 | 6,160,000 | ' |
Other | ' | 29,000 | ' |
Total current deferred tax assets | 9,993,000 | 6,694,000 | ' |
Valuation allowance | -1,463,000 | -1,567,000 | ' |
Total current deferred tax assets, net of valuation allowance | 8,530,000 | 5,127,000 | ' |
Noncurrent assets: | ' | ' | ' |
Net operating loss carryforwards | 108,504,000 | 75,181,000 | ' |
Derivative financial instruments | ' | 4,308,000 | ' |
Business credits | 1,495,000 | 1,524,000 | ' |
Other | 2,464,000 | 1,014,000 | ' |
Total noncurrent deferred tax assets | 112,463,000 | 82,027,000 | ' |
Valuation allowance | -16,161,000 | -17,107,000 | ' |
Total noncurrent assets, net of valuation allowance | 96,302,000 | 64,920,000 | ' |
Total deferred tax assets, net | 104,832,000 | 70,047,000 | ' |
Noncurrent deferred tax liabilities: | ' | ' | ' |
Intangible assets | -110,164,000 | -70,634,000 | ' |
Property, plant and equipment | -3,692,000 | -3,135,000 | ' |
Other | -25,000 | ' | ' |
Total deferred tax liabilities | -113,881,000 | -73,769,000 | ' |
Net deferred tax liabilities | -9,049,000 | -3,722,000 | ' |
Deferred tax assets and liabilities | ' | ' | ' |
Current deferred tax assets, net | 8,530,000 | 5,127,000 | ' |
Long-term deferred tax liabilities, net | -17,579,000 | -8,849,000 | ' |
Net deferred tax assets (liabilities) | -9,049,000 | -3,722,000 | ' |
Decrease in valuation allowance | -1,050,000 | ' | ' |
Amount of increase in income tax expense attributable to change in valuation allowance | 2,696,000 | ' | ' |
Decrease in valuation allowance in connection with the acquisition of Security Networks | -3,887,000 | ' | ' |
Decrease in valuation allowance related to changes in the derivative fair values | -4,334,000 | ' | ' |
Amount of decrease related to other deferred tax liabilities included in change in valuation allowance | $588,000 | ' | ' |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes | ' | ' | ' |
Federal net operating loss carryforward subject to IRC Section 382 limitations | ' | $130,367,000 | ' |
Alternative minimum tax credit carryforward | ' | 426,000 | ' |
Reconciliation of the beginning and ending amount of uncertain tax positions | ' | ' | ' |
Balance at the beginning of the period | 207,000 | 247,000 | 247,000 |
Increases for tax positions of current years | 40,000 | ' | ' |
Balance at the end of the period | 247,000 | 247,000 | 247,000 |
Accrued interest and penalties related to uncertain tax positions | ' | 55,000 | ' |
Federal | ' | ' | ' |
Operating loss carryforwards | ' | ' | ' |
Net operating loss carryforwards | ' | 305,551,000 | ' |
State | ' | ' | ' |
Operating loss carryforwards | ' | ' | ' |
Net operating loss carryforwards | ' | 98,581,000 | ' |
Income tax credits | ' | $1,070,000 | ' |
Stockbased_and_LongTerm_Compen2
Stock-based and Long-Term Compensation (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Assumptions used in the Black-Scholes model to determine grant date fair value | ' | ' |
Dividend rate (as a percent) | 0.00% | ' |
Additional disclosures | ' | ' |
Total compensation cost related to unvested equity awards | $4,162,000 | ' |
Period to recognize compensation cost | '4 years | ' |
Restricted Stock Awards | Class A Common Stock | Ascent Capital Group, Inc. | ' | ' |
Number of restricted stock awards | ' | ' |
Outstanding at the beginning of the period (in shares) | 77,689 | ' |
Granted (in shares) | 9,706 | ' |
Vested (in shares) | -15,410 | ' |
Cancelled (in shares) | -5,308 | ' |
Outstanding at the end of the period (in shares) | 66,677 | ' |
Weighted average fair value ("WAFV") | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $43.91 | ' |
Granted (in dollars per share) | $86.53 | ' |
Vested (in dollars per share) | $81.17 | ' |
Cancelled (in dollars per share) | $45.74 | ' |
Outstanding at the end of the period (in dollars per share) | $48.36 | ' |
Restricted Stock Awards | Class A Common Stock | Ascent Capital Group, Inc. | Low end of the range | ' | ' |
Stock-based compensation | ' | ' |
Vesting period | '4 years | ' |
Restricted Stock Awards | Class A Common Stock | Ascent Capital Group, Inc. | High end of the range | ' | ' |
Stock-based compensation | ' | ' |
Vesting period | '5 years | ' |
Stock option | Class A Common Stock | Ascent Capital Group, Inc. | ' | ' |
Assumptions used in the Black-Scholes model to determine grant date fair value | ' | ' |
Risk-free interest rate (as a percent) | ' | 0.89% |
Expected life | ' | '4 years 9 months 4 days |
Dividend rate (as a percent) | ' | 0.00% |
Volatility factor (as a percent) | ' | 43.00% |
Number of options | ' | ' |
Outstanding at beginning of period (in shares) | 250,447 | ' |
Exercised (in shares) | 3,605 | ' |
Forfeited (in shares) | -16,875 | ' |
Outstanding at end of period (in shares) | 229,967 | 250,447 |
Exercisable at the end of the period (in shares) | 34,042 | ' |
Weighted average exercise price ("WAEP") | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $49.38 | ' |
Exercised (in dollars per share) | $48.93 | ' |
Forfeited (in dollars per share) | $49.37 | ' |
Outstanding at the end of the period (in dollars per share) | $49.39 | $49.38 |
Exercisable at the end of the period (in dollars per share) | $48.41 | ' |
Additional disclosures | ' | ' |
Intrinsic value of option outstanding (in dollars) | 8,319,000 | ' |
Intrinsic value of option exercisable (in dollars) | $1,237,000 | ' |
Weighted average remaining contractual life of options outstanding | '4 years 6 months | ' |
Weighted average remaining contractual life of options exercisable | '4 years 3 months | ' |
Stockholders_Equity_Details
Stockholder's Equity (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 17, 2010 |
Stockholder's Equity | ' | ' | ' |
Common stock, share issued | 1 | 1 | 1 |
Common stock, share outstanding | 1 | 1 | 1 |
Changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Balance at the beginning of the period | ($12,243) | ' | ' |
Gain (loss) through Accumulated other comprehensive income (loss) | 7,014 | -15,715 | ' |
Reclassifications into net income | 5,303 | 3,472 | ' |
Balance at the end of the period | 74 | -12,243 | ' |
Unrealized Gains and Losses on Derivative Instruments, net | ' | ' | ' |
Changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Balance at the beginning of the period | -12,243 | ' | ' |
Gain (loss) through Accumulated other comprehensive income (loss) | 7,014 | -15,715 | ' |
Reclassifications into net income | 5,303 | 3,472 | ' |
Balance at the end of the period | 74 | -12,243 | ' |
Income taxes on unrealized loss on derivative instrument | $0 | $0 | ' |
Employee_Benefit_Plans_Details
Employee Benefit Plans (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Employee Benefit Plans | ' | ' | ' |
401(k) expense | $116,000 | $106,000 | $74,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | 0 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Nov. 16, 2011 | |
Negligence | ||||
Future minimum lease payments | ' | ' | ' | ' |
2014 | $2,939,000 | ' | ' | ' |
2015 | 1,235,000 | ' | ' | ' |
2016 | 264,000 | ' | ' | ' |
2017 | 95,000 | ' | ' | ' |
2018 | 95,000 | ' | ' | ' |
Thereafter | 55,000 | ' | ' | ' |
Total minimum lease payments | 4,683,000 | ' | ' | ' |
Rent expense for noncancelable operating leases | ' | ' | ' | ' |
Rent expense | 2,262,000 | 1,855,000 | 1,865,000 | ' |
Commitments and Contingencies | ' | ' | ' | ' |
Amount awarded to plaintiff | ' | ' | ' | 8,600,000 |
Portion of award expected to be covered by insurance | ' | ' | ' | 6,000,000 |
Amount held in escrow related to certain financial obligations | ' | ' | ' | $2,640,000 |
Quarterly_Financial_Informatio2
Quarterly Financial Information (Unaudited) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Quarterly Financial Information (Unaudited) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net Revenue | $132,758 | $115,844 | $102,273 | $100,158 | $95,090 | $84,667 | $83,315 | $81,881 | $451,033 | $344,953 | $311,898 |
Operating income | 20,777 | 17,663 | 20,849 | 23,250 | 17,629 | 14,848 | 16,602 | 17,088 | 82,539 | 66,167 | 49,187 |
Net income (loss) | ($10,254) | ($9,310) | $592 | $1,349 | ($4,156) | ($5,095) | ($3,753) | ($3,772) | ($17,623) | ($16,776) | ($6,759) |
Consolidating_Guarantor_Financ2
Consolidating Guarantor Financial Information (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Current assets: | ' | ' | ' | ' |
Cash and cash equivalents | $4,355,000 | $3,433,000 | $2,110,000 | $166,000 |
Restricted cash | 40,000 | 2,640,000 | ' | ' |
Trade receivables, net | 13,019,000 | 10,891,000 | ' | ' |
Deferred income tax assets, net | 8,530,000 | 5,127,000 | ' | ' |
Prepaid and other current assets | 6,319,000 | 13,597,000 | ' | ' |
Total current assets | 32,263,000 | 35,688,000 | ' | ' |
Property and equipment, net | 24,561,000 | 20,559,000 | ' | ' |
Subscriber accounts, net | 1,340,954,000 | 987,975,000 | ' | ' |
Dealer network and other intangible assets, net | 64,635,000 | 29,853,000 | ' | ' |
Goodwill | 526,513,000 | 350,213,000 | 350,213,000 | ' |
Other assets, net | 29,611,000 | 22,156,000 | ' | ' |
Total assets | 2,018,537,000 | 1,446,444,000 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 6,895,000 | 1,523,000 | ' | ' |
Accrued payroll and related liabilities | 3,179,000 | 3,179,000 | ' | ' |
Other accrued liabilities | 33,454,000 | 27,950,000 | ' | ' |
Deferred revenue | 14,379,000 | 10,327,000 | ' | ' |
Holdback liability | 19,758,000 | 10,818,000 | ' | ' |
Current portion of long-term debt | 9,166,000 | 6,950,000 | ' | ' |
Total current liabilities | 86,831,000 | 60,747,000 | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Long-term debt | 1,597,627,000 | 1,101,433,000 | ' | ' |
Long-term holdback liability | 6,698,000 | ' | ' | ' |
Derivative financial instruments | 2,013,000 | 12,359,000 | ' | ' |
Deferred income tax liability, net | 17,579,000 | 8,849,000 | ' | ' |
Other liabilities | 16,065,000 | 4,132,000 | ' | ' |
Total liabilities | 1,726,813,000 | 1,187,520,000 | ' | ' |
Total stockholder's equity | 291,724,000 | 258,924,000 | 288,624,000 | 294,990,000 |
Total liabilities and stockholder's equity | 2,018,537,000 | 1,446,444,000 | ' | ' |
Reportable legal entities | Parent Issuer | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and cash equivalents | 1,775,000 | 3,433,000 | ' | ' |
Restricted cash | 40,000 | ' | ' | ' |
Trade receivables, net | 11,374,000 | ' | ' | ' |
Deferred income tax assets, net | 6,763,000 | ' | ' | ' |
Prepaid and other current assets | 9,916,000 | ' | ' | ' |
Total current assets | 29,868,000 | ' | ' | ' |
Investment in subsidiaries | 498,820,000 | ' | ' | ' |
Property and equipment, net | 23,572,000 | ' | ' | ' |
Subscriber accounts, net | 1,025,605,000 | ' | ' | ' |
Dealer network and other intangible assets, net | 19,773,000 | ' | ' | ' |
Goodwill | 350,213,000 | ' | ' | ' |
Other assets, net | 29,611,000 | ' | ' | ' |
Total assets | 1,977,462,000 | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 5,491,000 | ' | ' | ' |
Accrued payroll and related liabilities | 2,649,000 | ' | ' | ' |
Other accrued liabilities | 27,137,000 | ' | ' | ' |
Deferred revenue | 11,037,000 | ' | ' | ' |
Holdback liability | 16,640,000 | ' | ' | ' |
Current portion of long-term debt | 9,166,000 | ' | ' | ' |
Total current liabilities | 72,120,000 | ' | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Long-term debt | 1,597,627,000 | ' | ' | ' |
Derivative financial instruments | 2,013,000 | ' | ' | ' |
Deferred income tax liability, net | 10,577,000 | ' | ' | ' |
Other liabilities | 3,401,000 | ' | ' | ' |
Total liabilities | 1,685,738,000 | ' | ' | ' |
Total stockholder's equity | 291,724,000 | ' | ' | ' |
Total liabilities and stockholder's equity | 1,977,462,000 | ' | ' | ' |
Reportable legal entities | Subsidiary Guarantors | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and cash equivalents | 2,580,000 | ' | ' | ' |
Trade receivables, net | 1,645,000 | ' | ' | ' |
Deferred income tax assets, net | 1,767,000 | ' | ' | ' |
Prepaid and other current assets | 1,003,000 | ' | ' | ' |
Total current assets | 6,995,000 | ' | ' | ' |
Property and equipment, net | 989,000 | ' | ' | ' |
Subscriber accounts, net | 315,349,000 | ' | ' | ' |
Dealer network and other intangible assets, net | 44,862,000 | ' | ' | ' |
Goodwill | 176,300,000 | ' | ' | ' |
Total assets | 544,495,000 | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 1,404,000 | ' | ' | ' |
Accrued payroll and related liabilities | 530,000 | ' | ' | ' |
Other accrued liabilities | 10,917,000 | ' | ' | ' |
Deferred revenue | 3,342,000 | ' | ' | ' |
Holdback liability | 3,118,000 | ' | ' | ' |
Total current liabilities | 19,311,000 | ' | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Long-term holdback liability | 6,698,000 | ' | ' | ' |
Deferred income tax liability, net | 7,002,000 | ' | ' | ' |
Other liabilities | 12,664,000 | ' | ' | ' |
Total liabilities | 45,675,000 | ' | ' | ' |
Total stockholder's equity | 498,820,000 | ' | ' | ' |
Total liabilities and stockholder's equity | 544,495,000 | ' | ' | ' |
Eliminations | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Prepaid and other current assets | -4,600,000 | ' | ' | ' |
Total current assets | -4,600,000 | ' | ' | ' |
Investment in subsidiaries | -498,820,000 | ' | ' | ' |
Total assets | -503,420,000 | ' | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Other accrued liabilities | -4,600,000 | ' | ' | ' |
Total current liabilities | -4,600,000 | ' | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Total liabilities | -4,600,000 | ' | ' | ' |
Total stockholder's equity | -498,820,000 | ' | ' | ' |
Total liabilities and stockholder's equity | ($503,420,000) | ' | ' | ' |
Consolidating_Guarantor_Financ3
Consolidating Guarantor Financial Information (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | $132,758,000 | $115,844,000 | $102,273,000 | $100,158,000 | $95,090,000 | $84,667,000 | $83,315,000 | $81,881,000 | $451,033,000 | $344,953,000 | $311,898,000 |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of services | ' | ' | ' | ' | ' | ' | ' | ' | 74,136,000 | 49,978,000 | 40,699,000 |
Selling, general, and administrative, including stock-based and long-term incentive compensation | ' | ' | ' | ' | ' | ' | ' | ' | 77,162,000 | 60,054,000 | 57,689,000 |
Amortization of subscriber accounts, dealer network and other intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | 208,760,000 | 163,468,000 | 159,619,000 |
Depreciation | ' | ' | ' | ' | ' | ' | ' | ' | 7,327,000 | 5,286,000 | 4,704,000 |
Restructuring charges | ' | ' | ' | ' | ' | ' | ' | ' | 1,111,000 | ' | ' |
Gain on sale of operating assets | ' | ' | ' | ' | ' | ' | ' | ' | -2,000 | ' | ' |
Total operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | 368,494,000 | 278,786,000 | 262,711,000 |
Operating income | 20,777,000 | 17,663,000 | 20,849,000 | 23,250,000 | 17,629,000 | 14,848,000 | 16,602,000 | 17,088,000 | 82,539,000 | 66,167,000 | 49,187,000 |
Other expense: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 96,145,000 | 71,405,000 | 42,698,000 |
Total other expense | ' | ' | ' | ' | ' | ' | ' | ' | 96,145,000 | 80,324,000 | 53,382,000 |
Loss before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -13,606,000 | -14,157,000 | -4,195,000 |
Income tax expense | ' | ' | ' | ' | ' | ' | ' | ' | 4,017,000 | 2,619,000 | 2,564,000 |
Net loss | -10,254,000 | -9,310,000 | 592,000 | 1,349,000 | -4,156,000 | -5,095,000 | -3,753,000 | -3,772,000 | -17,623,000 | -16,776,000 | -6,759,000 |
Other comprehensive loss: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrealized gain on derivative contracts | ' | ' | ' | ' | ' | ' | ' | ' | 12,317,000 | -12,243,000 | ' |
Total other comprehensive income (loss), net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 12,317,000 | -12,243,000 | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | -5,306,000 | -29,019,000 | -6,759,000 |
Reportable legal entities | Parent Issuer | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | ' | ' | ' | ' | ' | ' | ' | ' | 411,036,000 | ' | ' |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of services | ' | ' | ' | ' | ' | ' | ' | ' | 65,903,000 | ' | ' |
Selling, general, and administrative, including stock-based and long-term incentive compensation | ' | ' | ' | ' | ' | ' | ' | ' | 70,706,000 | ' | ' |
Amortization of subscriber accounts, dealer network and other intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | 185,161,000 | ' | ' |
Depreciation | ' | ' | ' | ' | ' | ' | ' | ' | 6,655,000 | ' | ' |
Gain on sale of operating assets | ' | ' | ' | ' | ' | ' | ' | ' | -2,000 | ' | ' |
Total operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | 328,423,000 | ' | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | 82,613,000 | ' | ' |
Other expense: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity in loss of subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | 1,736,000 | ' | ' |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 95,680,000 | ' | ' |
Total other expense | ' | ' | ' | ' | ' | ' | ' | ' | 97,416,000 | ' | ' |
Loss before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -14,803,000 | ' | ' |
Income tax expense | ' | ' | ' | ' | ' | ' | ' | ' | 2,820,000 | ' | ' |
Net loss | ' | ' | ' | ' | ' | ' | ' | ' | -17,623,000 | ' | ' |
Other comprehensive loss: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrealized gain on derivative contracts | ' | ' | ' | ' | ' | ' | ' | ' | 12,317,000 | ' | ' |
Total other comprehensive income (loss), net of tax | ' | ' | ' | ' | ' | ' | ' | ' | 12,317,000 | ' | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | -5,306,000 | ' | ' |
Reportable legal entities | Subsidiary Guarantors | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net revenue | ' | ' | ' | ' | ' | ' | ' | ' | 39,997,000 | ' | ' |
Operating expenses: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cost of services | ' | ' | ' | ' | ' | ' | ' | ' | 8,233,000 | ' | ' |
Selling, general, and administrative, including stock-based and long-term incentive compensation | ' | ' | ' | ' | ' | ' | ' | ' | 6,456,000 | ' | ' |
Amortization of subscriber accounts, dealer network and other intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | 23,599,000 | ' | ' |
Depreciation | ' | ' | ' | ' | ' | ' | ' | ' | 672,000 | ' | ' |
Restructuring charges | ' | ' | ' | ' | ' | ' | ' | ' | 1,111,000 | ' | ' |
Total operating expenses | ' | ' | ' | ' | ' | ' | ' | ' | 40,071,000 | ' | ' |
Operating income | ' | ' | ' | ' | ' | ' | ' | ' | -74,000 | ' | ' |
Other expense: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense | ' | ' | ' | ' | ' | ' | ' | ' | 465,000 | ' | ' |
Total other expense | ' | ' | ' | ' | ' | ' | ' | ' | 465,000 | ' | ' |
Loss before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | -539,000 | ' | ' |
Income tax expense | ' | ' | ' | ' | ' | ' | ' | ' | 1,197,000 | ' | ' |
Net loss | ' | ' | ' | ' | ' | ' | ' | ' | -1,736,000 | ' | ' |
Other comprehensive loss: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | -1,736,000 | ' | ' |
Eliminations | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other expense: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity in loss of subsidiaries | ' | ' | ' | ' | ' | ' | ' | ' | -1,736,000 | ' | ' |
Total other expense | ' | ' | ' | ' | ' | ' | ' | ' | -1,736,000 | ' | ' |
Loss before income taxes | ' | ' | ' | ' | ' | ' | ' | ' | 1,736,000 | ' | ' |
Net loss | ' | ' | ' | ' | ' | ' | ' | ' | 1,736,000 | ' | ' |
Other comprehensive loss: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | $1,736,000 | ' | ' |
Consolidating_Guarantor_Financ4
Consolidating Guarantor Financial Information (Details 3) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided by operating activities | $214,649,000 | $167,284,000 | $149,705,000 |
Investing activities: | ' | ' | ' |
Capital expenditures | -9,925,000 | -5,868,000 | -4,003,000 |
Purchases of subscriber accounts | -234,914,000 | -304,665,000 | -162,714,000 |
Cash paid for acquisitions, net of cash acquired | -478,738,000 | ' | ' |
Decrease in restricted cash | 2,600,000 | 48,780,000 | -44,000 |
Other, net | -98,000 | ' | ' |
Net cash used in investing activities | -721,075,000 | -261,753,000 | -166,761,000 |
Financing activities: | ' | ' | ' |
Proceeds from long-term debt | 630,575,000 | 1,277,900,000 | 78,800,000 |
Payments of long-term debt | -133,048,000 | -1,133,387,000 | -59,800,000 |
Payments of deferred financing costs and refinancing costs | -8,179,000 | -46,721,000 | ' |
Contribution from Ascent Capital | 20,000,000 | ' | ' |
Dividend to Ascent Capital | -2,000,000 | -2,000,000 | ' |
Net cash provided by financing activities | 507,348,000 | 95,792,000 | 19,000,000 |
Net increase in cash and cash equivalents | 922,000 | 1,323,000 | 1,944,000 |
Cash and cash equivalents at beginning of period | 3,433,000 | 2,110,000 | 166,000 |
Cash and cash equivalents at end of period | 4,355,000 | 3,433,000 | 2,110,000 |
Reportable legal entities | Parent Issuer | ' | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided by operating activities | 187,594,000 | ' | ' |
Investing activities: | ' | ' | ' |
Capital expenditures | -9,667,000 | ' | ' |
Purchases of subscriber accounts | -207,601,000 | ' | ' |
Cash paid for acquisitions, net of cash acquired | -481,834,000 | ' | ' |
Decrease in restricted cash | 2,600,000 | ' | ' |
Other, net | -98,000 | ' | ' |
Net cash used in investing activities | -696,600,000 | ' | ' |
Financing activities: | ' | ' | ' |
Proceeds from long-term debt | 630,575,000 | ' | ' |
Payments of long-term debt | -133,048,000 | ' | ' |
Payments of deferred financing costs and refinancing costs | -8,179,000 | ' | ' |
Contribution from Ascent Capital | 20,000,000 | ' | ' |
Dividend to Ascent Capital | -2,000,000 | ' | ' |
Net cash provided by financing activities | 507,348,000 | ' | ' |
Net increase in cash and cash equivalents | -1,658,000 | ' | ' |
Cash and cash equivalents at beginning of period | 3,433,000 | ' | ' |
Cash and cash equivalents at end of period | 1,775,000 | ' | ' |
Reportable legal entities | Subsidiary Guarantors | ' | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' | ' |
Net cash provided by operating activities | 27,055,000 | ' | ' |
Investing activities: | ' | ' | ' |
Capital expenditures | -258,000 | ' | ' |
Purchases of subscriber accounts | -27,313,000 | ' | ' |
Cash paid for acquisitions, net of cash acquired | 3,096,000 | ' | ' |
Net cash used in investing activities | -24,475,000 | ' | ' |
Financing activities: | ' | ' | ' |
Net increase in cash and cash equivalents | 2,580,000 | ' | ' |
Cash and cash equivalents at end of period | $2,580,000 | ' | ' |