Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 14-May-14 | |
Entity Registrant Name | 'MONITRONICS INTERNATIONAL INC | ' |
Entity Central Index Key | '0001265107 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 0 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $31,443 | $4,355 |
Restricted cash | 119 | 40 |
Trade receivables, net of allowance for doubtful accounts of $1,664 in 2014 and $1,937 in 2013 | 13,896 | 13,019 |
Deferred income tax assets, net | 8,530 | 8,530 |
Prepaid and other current assets | 6,869 | 6,319 |
Total current assets | 60,857 | 32,263 |
Property and equipment, net of accumulated depreciation of $19,893 in 2014 and $17,514 in 2013 | 24,109 | 24,561 |
Subscriber accounts, net of accumulated amortization of $560,310 in 2014 and $503,497 in 2013 | 1,336,123 | 1,340,954 |
Dealer network and other intangible assets, net of accumulated amortization of $39,242 in 2014 and $34,297 in 2013 | 59,690 | 64,635 |
Goodwill | 526,513 | 526,513 |
Other assets, net | 29,053 | 29,611 |
Total assets | 2,036,345 | 2,018,537 |
Current liabilities: | ' | ' |
Accounts payable | 5,179 | 6,895 |
Accrued payroll and related liabilities | 3,338 | 3,179 |
Other accrued liabilities | 45,224 | 33,454 |
Deferred revenue | 15,081 | 14,379 |
Holdback liability | 19,227 | 19,758 |
Current portion of long-term debt | 9,166 | 9,166 |
Total current liabilities | 97,215 | 86,831 |
Non-current liabilities: | ' | ' |
Long-term debt | 1,613,598 | 1,597,627 |
Long-term holdback liability | 6,253 | 6,698 |
Derivative financial instruments | 3,193 | 2,013 |
Deferred income tax liability, net | 18,456 | 17,579 |
Other liabilities | 15,135 | 16,065 |
Total liabilities | 1,753,850 | 1,726,813 |
Commitments and contingencies | ' | ' |
Stockholder's equity: | ' | ' |
Common stock, $.01 par value.1 share authorized, issued and outstanding at March 31, 2014 and December 31, 2013, respectively | ' | ' |
Additional paid-in capital | 337,331 | 337,038 |
Accumulated deficit | -53,239 | -45,388 |
Accumulated other comprehensive income (loss) | -1,597 | 74 |
Total stockholder's equity | 282,495 | 291,724 |
Total liabilities and stockholder's equity | $2,036,345 | $2,018,537 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheets | ' | ' |
Trade receivables, allowance for doubtful accounts (in dollars) | $1,664 | $1,937 |
Property and equipment, accumulated depreciation (in dollars) | 19,893 | 17,514 |
Subscriber accounts, accumulated amortization (in dollars) | 560,310 | 503,497 |
Dealer network and other intangible assets, accumulated amortization (in dollars) | $39,242 | $34,297 |
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 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Net revenue | $132,864 | $100,158 |
Operating expenses: | ' | ' |
Cost of services | 22,090 | 15,202 |
Selling, general, and administrative, including stock-based compensation | 22,972 | 15,903 |
Amortization of subscriber accounts, dealer network and other intangible assets | 61,780 | 44,315 |
Depreciation | 2,383 | 1,488 |
Restructuring charges | 547 | ' |
Total operating expenses | 109,772 | 76,908 |
Operating income | 23,092 | 23,250 |
Other expense: | ' | ' |
Interest expense | 29,344 | 21,127 |
Total other expense | 29,344 | 21,127 |
Income (loss) before income taxes | -6,252 | 2,123 |
Income tax expense | 1,599 | 774 |
Net income (loss) | -7,851 | 1,349 |
Other comprehensive income (loss): | ' | ' |
Unrealized gain (loss) on derivative contracts, net | -1,671 | 259 |
Total other comprehensive income (loss), net of tax | -1,671 | 259 |
Comprehensive income (loss) | ($9,522) | $1,608 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities: | ' | ' |
Net income (loss) | ($7,851) | $1,349 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ' | ' |
Amortization of subscriber accounts, dealer network and other intangible assets | 61,780 | 44,315 |
Depreciation | 2,383 | 1,488 |
Stock-based compensation | 414 | 361 |
Deferred income tax expense | 877 | 109 |
Long-term debt amortization | 263 | 192 |
Other non-cash activity, net | 2,872 | 2,406 |
Changes in assets and liabilities: | ' | ' |
Trade receivables | -2,719 | -1,876 |
Prepaid expenses and other assets | -793 | 1,233 |
Payables and other liabilities | 9,985 | 10,123 |
Net cash provided by operating activities | 67,211 | 59,700 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -1,938 | -1,265 |
Cost of subscriber accounts acquired | -53,789 | -46,043 |
Increase in restricted cash | -79 | ' |
Other investing activities | -25 | ' |
Net cash used in investing activities | -55,831 | -47,308 |
Cash flows from financing activities: | ' | ' |
Proceeds from long-term debt | 42,900 | 24,700 |
Payments on long-term debt | -27,192 | -17,738 |
Payments of financing costs | ' | -1,746 |
Net cash provided by financing activities | 15,708 | 5,216 |
Net increase in cash and cash equivalents | 27,088 | 17,608 |
Cash and cash equivalents at beginning of period | 4,355 | 3,433 |
Cash and cash equivalents at end of period | 31,443 | 21,041 |
Supplemental cash flow information: | ' | ' |
State taxes paid | 6 | ' |
Interest paid | $11,963 | $10,437 |
Condensed_Consolidated_Stateme2
Condensed 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, 2013 | $291,724 | ' | $337,038 | $74 | ($45,388) |
Balance (in shares) at Dec. 31, 2013 | 1 | 1 | ' | ' | ' |
Increase (Decrease) in Stockholder's Equity | ' | ' | ' | ' | ' |
Net loss | -7,851 | ' | ' | ' | -7,851 |
Other comprehensive income | -1,671 | ' | ' | -1,671 | ' |
Stock-based compensation | 414 | ' | 414 | ' | ' |
Value of shares withheld for tax liability | -121 | ' | -121 | ' | ' |
Balance at Mar. 31, 2014 | $282,495 | ' | $337,331 | ($1,597) | ($53,239) |
Balance (in shares) at Mar. 31, 2014 | 1 | 1 | ' | ' | ' |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Basis of Presentation | ' |
Basis of Presentation | ' |
(1) Basis of Presentation | |
Monitronics International, Inc. and its subsidiaries (collectively, the “Company” or “Monitronics”) are wholly owned subsidiaries of Ascent Capital Group, Inc. (“Ascent Capital”). On August 16, 2013, the Company acquired all of the equity interests of Security Networks LLC (“Security Networks”) and certain affiliated entities (the “Security Networks Acquisition”). The Company provides 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 at subscribers’ premises, as well as provides customer service and technical support. | |
The unaudited interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s (the “SEC”) Regulation S-X. Accordingly, it does not include all of the information required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements. The Company’s unaudited condensed consolidated financial statements as of March 31, 2014, and for the three months ended March 31, 2014 and 2013, include Monitronics and all of its direct and indirect subsidiaries. The accompanying interim condensed consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the Monitronics Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 4, 2014 (the “2013 Form 10-K”). | |
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 condensed 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. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2014 | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | ' |
(2) Recent Accounting Pronouncements | |
There were no new accounting pronouncements issued during the three months ended March 31, 2014 that are expected to have a material impact on the Company. |
Security_Networks_Acquisition
Security Networks Acquisition | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Security Networks Acquisition | ' | ||||
Security Networks Acquisition | ' | ||||
(3) 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 Accounting Standards Codification 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 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 the second quarter of 2014. | |||||
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. | |||||
Three months ended | |||||
March 31, 2013 | |||||
(amounts in thousands, | |||||
except per share amounts) | |||||
As reported: | |||||
Net revenue | $ | 100,158 | |||
Net income | 1,349 | ||||
Supplemental pro-forma: | |||||
Net revenue | $ | 123,414 | |||
Net loss | (5,805 | ) | |||
Other_Accrued_Liabilities
Other Accrued Liabilities | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Other Accrued Liabilities | ' | |||||||
Other Accrued Liabilities | ' | |||||||
(4) Other Accrued Liabilities | ||||||||
Other accrued liabilities consisted of the following (amounts in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Interest payable | $ | 28,945 | $ | 17,258 | ||||
Income taxes payable | 3,375 | 2,647 | ||||||
Legal accrual | 375 | 705 | ||||||
Other | 12,529 | 12,844 | ||||||
Total Other accrued liabilities | $ | 45,224 | $ | 33,454 |
LongTerm_Debt
Long-Term Debt | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Long-Term Debt | ' | |||||||
Long-Term Debt | ' | |||||||
(5) Long-Term Debt | ||||||||
Long-term debt consisted of the following (amounts in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
9.125% Senior Notes due April 1, 2020 | $ | 585,000 | $ | 585,000 | ||||
9.868% Promissory Note to Ascent Capital due October 1, 2020 | 100,000 | 100,000 | ||||||
Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% (a) | 900,264 | 902,293 | ||||||
$225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% (a) | 37,500 | 19,500 | ||||||
1,622,764 | 1,606,793 | |||||||
Less current portion of long-term debt | (9,166 | ) | (9,166 | ) | ||||
Long-term debt | $ | 1,613,598 | $ | 1,597,627 | ||||
(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 July 17, 2013, the Company closed on a $175,000,000 privately placed debt offering of 9.125% Senior Notes (the “New 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 New Senior Notes, together with the $410,000,000 “Existing Senior Notes” (the “Senior Notes”), total $585,000,000 in principal, 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. | ||||||||
The Senior Notes are guaranteed by all of the Company’s existing domestic 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 12 and July 12 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 25, 2013, the Company entered into an amendment (“Amendment No. 2”) with the lenders of its existing senior secured credit agreement dated March 23, 2012, and as amended and restated on November 7, 2012 (the “Existing Credit Agreement”). Pursuant to Amendment No. 2, the Company repriced the interest rates applicable to the Existing Credit Agreement’s facility (the “Repricing”), which is comprised of the term loans and revolving credit facility noted in the table 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 Existing 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 Existing Credit Agreement, each as set forth in Amendment No. 3 (the Existing Credit Agreement together with 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 March 31, 2014, $187,500,000 is available for borrowing under the revolving credit facility. | ||||||||
On March 31, 2014, the Company borrowed $33,000,000 on the Credit Facility revolver to fund its April 1, 2014 interest payment due under the Senior Notes of approximately $26,691,000 and other business activities. | ||||||||
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 domestic subsidiaries. Ascent Capital has not guaranteed any of the Company’s obligations under the Credit Facility. | ||||||||
As of March 31, 2014, the Company has deferred financing costs, net of accumulated amortization, of $24,251,000 related to the Senior Notes and the Credit Facility. These costs are included in Other assets, net on the accompanying consolidated balance sheet and will be amortized over the remaining term of the respective debt instruments using the effective-interest method. | ||||||||
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 has entered into interest rate swap agreements, with terms similar to the Credit Facility term loans. On March 25, 2013, the Company negotiated amendments to the terms of its existing swap agreements to coincide with the Repricing. In the third quarter of 2013, the Company entered into 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 6, 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 March 31, 2014, 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): | ||||||||
Remainder of 2014 | $ | 6,875 | ||||||
2015 | 9,166 | |||||||
2016 | 9,166 | |||||||
2017 | 46,666 | |||||||
2018 | 870,800 | |||||||
2019 | — | |||||||
Thereafter | 685,000 | |||||||
Total principal payments | 1,627,673 | |||||||
Less: | ||||||||
Unamortized discount on the Credit Facility term loans | 4,909 | |||||||
Total debt on condensed consolidated balance sheet | $ | 1,622,764 | ||||||
Derivatives
Derivatives | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Derivatives | ' | ||||||||
Derivatives | ' | ||||||||
(6) 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 7, Fair Value Measurements, for additional information about the credit valuation adjustments. | |||||||||
The Swaps’ outstanding notional balance as of March 31, 2014 and terms are noted below: | |||||||||
Notional | Effective Date | Fixed | Variable Rate Received | ||||||
Rate Paid | |||||||||
$ | 539,000,000 | March 28, 2013 | 1.884 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | ||||
142,825,000 | March 28, 2013 | 1.384 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | |||||
111,652,010 | September 30, 2013 | 1.959 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
111,652,010 | September 30, 2013 | 1.85 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
(a) On March 25, 2013, the Company 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. | |||||||||
All of the Swaps are designated and qualify as cash flow hedging instruments, with the effective portion of the Swaps change in fair value recorded in Accumulated other comprehensive income (loss). 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 income (loss) are reclassified to Interest expense when the hedged interest payments on the underlying debt are recognized. Amounts in Accumulated other comprehensive income (loss) expected to be recognized in Interest expense in the coming 12 months total approximately $6,054,000. | |||||||||
The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): | |||||||||
For the three months ended March 31, | |||||||||
2014 | 2013 | ||||||||
Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) | $ | (3,371 | ) | (909 | ) | ||||
Effective portion of gain (loss) reclassified from Accumulated other comprehensive income (loss) into Net income (a) | $ | (1,700 | ) | (1,168 | ) | ||||
Ineffective portion of amount of gain (loss) recognized into Net income (loss) on interest rate swaps (a) | $ | (1 | ) | 19 | |||||
(a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). | |||||||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||
Mar. 31, 2014 | |||||||||||
Fair Value Measurements | ' | ||||||||||
Fair Value Measurements | ' | ||||||||||
(7) Fair Value Measurements | |||||||||||
According to the Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board Accounting Standards Codification, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories: | |||||||||||
· Level 1 - Quoted prices for identical instruments in active markets. | |||||||||||
· Level 2 - Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets. | |||||||||||
· Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market. | |||||||||||
The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at March 31, 2014 and December 31, 2013 (amounts in thousands): | |||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||
March 31, 2014 | |||||||||||
Derivative financial instruments — assets (a) | $ | — | 2,099 | — | 2,099 | ||||||
Derivative financial instruments - liabilities | — | (3,193 | ) | — | (3,193 | ) | |||||
Total | $ | — | (1,094 | ) | — | (1,094 | ) | ||||
December 31, 2013 | |||||||||||
Derivative financial instruments - assets (a) | $ | — | 2,495 | — | 2,495 | ||||||
Derivative financial instruments - liabilities | — | (2,013 | ) | — | (2,013 | ) | |||||
Total | $ | — | 482 | — | 482 | ||||||
(a) Included in Other assets, net on the condensed consolidated balance sheets. | |||||||||||
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 derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by their 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 March 31, 2014, 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 its derivative valuations are classified in Level 2 of the fair value hierarchy. | |||||||||||
Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): | |||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||
Long term debt, including current portion: | |||||||||||
Carrying value | $ | 1,622,764 | $ | 1,606,793 | |||||||
Fair value (a) | 1,664,568 | 1,656,797 | |||||||||
(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 other financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity. |
Restructuring_Charges
Restructuring Charges | 3 Months Ended | ||||||||||
Mar. 31, 2014 | |||||||||||
Restructuring Charges | ' | ||||||||||
Restructuring Charges | ' | ||||||||||
(8) 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 three months ended March 31, 2014, the Company recorded $547,000 of restructuring charges related to employee termination benefits. | |||||||||||
There were no restructuring charges recorded for the three months ended March 31, 2013. | |||||||||||
The following table provides the activity and balance of the Company’s restructuring plan (amounts in thousands): | |||||||||||
December 31, 2013 | Additions | Payments | March 31, 2014 | ||||||||
2013 Restructuring Plan | |||||||||||
Severance and retention | $ | 1,570 | 547 | (504 | ) | 1,613 | |||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||
(9) Accumulated Other Comprehensive Income (Loss) | |||||
The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period presented (amounts in thousands): | |||||
Accumulated | |||||
other | |||||
comprehensive | |||||
income (loss) | |||||
As of December 31, 2013 | $ | 74 | |||
Unrealized loss on derivatives recognized through Accumulated other comprehensive income (loss) | (3,371 | ) | |||
Reclassifications of unrealized loss on derivatives into net income (a) | 1,700 | ||||
As of March 31, 2014 | $ | (1,597 | ) | ||
(a) Amounts reclassified into net income are included in Interest expense on the condensed consolidated statement of operations. See note 6, Derivatives, for further information. | |||||
Commitments_Contingencies_and_
Commitments, Contingencies and Other Liabilities | 3 Months Ended |
Mar. 31, 2014 | |
Commitments, Contingencies and Other Liabilities | ' |
Commitments, Contingencies and Other Liabilities | ' |
(10) Commitments, Contingencies and Other Liabilities | |
The Company is involved in litigation and similar claims incidental to the conduct of its business. 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. | |
Consolidating_Guarantor_Financ
Consolidating Guarantor Financial Information | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Consolidating Guarantor Financial Information | ' | ||||||||||||
Consolidating Guarantor Financial Information | ' | ||||||||||||
(11) 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 domestic 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 three months ended March 31, 2013, 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 unaudited condensed consolidating financial information for the Parent Issuer, the Subsidiary Guarantors and the non-guarantors as of and for the three months ended March 31, 2014, as well as the condensed consolidated balance sheet financial information as of December 31, 2013, are as follows: | |||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Balance Sheets | |||||||||||||
(unaudited) | |||||||||||||
As of March 31, 2014 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 29,305 | 2,138 | — | — | 31,443 | |||||||
Restricted cash | 119 | — | — | — | 119 | ||||||||
Trade receivables, net | 12,418 | 1,478 | — | — | 13,896 | ||||||||
Deferred income tax assets, net | 6,763 | 1,767 | — | — | 8,530 | ||||||||
Prepaid and other current assets | 6,139 | 1,968 | — | (1,238 | ) | 6,869 | |||||||
Total current assets | 54,744 | 7,351 | — | (1,238 | ) | 60,857 | |||||||
Investment in subsidiaries | 500,660 | — | — | (500,660 | ) | — | |||||||
Property and equipment, net | 23,560 | 549 | — | — | 24,109 | ||||||||
Subscriber accounts, net | 1,021,199 | 314,924 | — | — | 1,336,123 | ||||||||
Dealer network and other intangible assets, net | 17,253 | 42,437 | — | — | 59,690 | ||||||||
Goodwill | 350,213 | 176,300 | — | — | 526,513 | ||||||||
Other assets, net | 28,956 | 97 | — | — | 29,053 | ||||||||
Total assets | $ | 1,996,585 | 541,658 | — | (501,898 | ) | 2,036,345 | ||||||
Liabilities and Stockholder’s Equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 4,229 | 950 | — | — | 5,179 | |||||||
Accrued payroll and related liabilities | 2,943 | 395 | — | — | 3,338 | ||||||||
Other accrued liabilities | 40,664 | 5,798 | — | (1,238 | ) | 45,224 | |||||||
Deferred revenue | 11,046 | 4,035 | — | — | 15,081 | ||||||||
Holdback liability | 15,973 | 3,254 | — | — | 19,227 | ||||||||
Current portion of long-term debt | 9,166 | — | — | — | 9,166 | ||||||||
Total current liabilities | 84,021 | 14,432 | — | (1,238 | ) | 97,215 | |||||||
Non-current liabilities: | |||||||||||||
Long-term debt | 1,613,598 | — | — | — | 1,613,598 | ||||||||
Long-term holdback liability | — | 6,253 | — | — | 6,253 | ||||||||
Derivative financial instruments | 3,193 | — | — | — | 3,193 | ||||||||
Deferred income tax liability, net | 10,655 | 7,801 | — | — | 18,456 | ||||||||
Other liabilities | 2,623 | 12,512 | — | — | 15,135 | ||||||||
Total liabilities | 1,714,090 | 40,998 | — | (1,238 | ) | 1,753,850 | |||||||
Total stockholder’s equity | 282,495 | 500,660 | — | (500,660 | ) | 282,495 | |||||||
Total liabilities and stockholder’s equity | $ | 1,996,585 | 541,658 | — | (501,898 | ) | 2,036,345 | ||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Balance Sheets | |||||||||||||
(unaudited) | |||||||||||||
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) | |||||||||||||
(unaudited) | |||||||||||||
Three months ended March 31, 2014 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Net revenue | $ | 104,093 | 28,771 | — | — | 132,864 | |||||||
Operating expenses: | |||||||||||||
Cost of services | 17,782 | 4,308 | — | — | 22,090 | ||||||||
Selling, general, and administrative, including stock-based compensation | 19,032 | 3,940 | — | — | 22,972 | ||||||||
Amortization of subscriber accounts, dealer network and other intangible assets | 45,263 | 16,517 | — | — | 61,780 | ||||||||
Depreciation | 1,908 | 475 | — | — | 2,383 | ||||||||
Restructuring charges | — | 547 | — | 547 | |||||||||
83,985 | 25,787 | — | — | 109,772 | |||||||||
Operating income | 20,108 | 2,984 | — | — | 23,092 | ||||||||
Other expense (income): | |||||||||||||
Equity in income of subsidiaries | (1,858 | ) | — | — | 1,858 | — | |||||||
Interest expense | 29,046 | 298 | — | — | 29,344 | ||||||||
27,188 | 298 | — | 1,858 | 29,344 | |||||||||
Income (loss) before income taxes | (7,080 | ) | 2,686 | — | (1,858 | ) | (6,252 | ) | |||||
Income tax expense | 771 | 828 | — | — | 1,599 | ||||||||
Net income (loss) | (7,851 | ) | 1,858 | — | (1,858 | ) | (7,851 | ) | |||||
Other comprehensive loss: | |||||||||||||
Unrealized gain (loss) on derivative contracts | (1,671 | ) | — | — | — | (1,671 | ) | ||||||
Total other comprehensive loss | (1,671 | ) | — | — | — | (1,671 | ) | ||||||
Comprehensive income (loss) | $ | (9,522 | ) | 1,858 | — | (1,858 | ) | (9,522 | ) | ||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Statement of Cash Flows | |||||||||||||
(unaudited) | |||||||||||||
Three months ended March 31, 2014 | |||||||||||||
Parent Issuer | Subsidiary | Non- | Eliminations | Consolidated | |||||||||
Guarantors | Guarantors | ||||||||||||
(amounts in thousands) | |||||||||||||
Net cash provided by operating activities | 53,546 | 13,665 | — | — | 67,211 | ||||||||
Investing activities: | |||||||||||||
Capital expenditures | (1,903 | ) | (35 | ) | — | — | (1,938 | ) | |||||
Cost of subscriber accounts acquired | (39,742 | ) | (14,047 | ) | — | — | (53,789 | ) | |||||
Increase in restricted cash | (79 | ) | — | — | — | (79 | ) | ||||||
Other investing activities | — | (25 | ) | — | — | (25 | ) | ||||||
Net cash used in investing activities | (41,724 | ) | (14,107 | ) | — | — | (55,831 | ) | |||||
Financing activities: | |||||||||||||
Proceeds from long-term debt | 42,900 | — | — | — | 42,900 | ||||||||
Payments on long-term debt | (27,192 | ) | — | — | — | (27,192 | ) | ||||||
Net cash provided by financing activities | 15,708 | — | — | — | 15,708 | ||||||||
Net increase (decrease) in cash and cash equivalents | 27,530 | (442 | ) | — | — | 27,088 | |||||||
Cash and cash equivalents at beginning of period | 1,775 | 2,580 | — | — | 4,355 | ||||||||
Cash and cash equivalents at end of period | 29,305 | 2,138 | — | — | 31,443 | ||||||||
Security_Networks_Acquisition_
Security Networks Acquisition (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
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 | ' | ||||
Three months ended | |||||
March 31, 2013 | |||||
(amounts in thousands, | |||||
except per share amounts) | |||||
As reported: | |||||
Net revenue | $ | 100,158 | |||
Net income | 1,349 | ||||
Supplemental pro-forma: | |||||
Net revenue | $ | 123,414 | |||
Net loss | (5,805 | ) | |||
Other_Accrued_Liabilities_Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Other Accrued Liabilities | ' | |||||||
Schedule of other accrued liabilities | ' | |||||||
Other accrued liabilities consisted of the following (amounts in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
Interest payable | $ | 28,945 | $ | 17,258 | ||||
Income taxes payable | 3,375 | 2,647 | ||||||
Legal accrual | 375 | 705 | ||||||
Other | 12,529 | 12,844 | ||||||
Total Other accrued liabilities | $ | 45,224 | $ | 33,454 |
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Long-Term Debt | ' | |||||||
Schedule of long-term debt | ' | |||||||
Long-term debt consisted of the following (amounts in thousands): | ||||||||
March 31, | December 31, | |||||||
2014 | 2013 | |||||||
9.125% Senior Notes due April 1, 2020 | $ | 585,000 | $ | 585,000 | ||||
9.868% Promissory Note to Ascent Capital due October 1, 2020 | 100,000 | 100,000 | ||||||
Term loans, mature March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% (a) | 900,264 | 902,293 | ||||||
$225 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% (a) | 37,500 | 19,500 | ||||||
1,622,764 | 1,606,793 | |||||||
Less current portion of long-term debt | (9,166 | ) | (9,166 | ) | ||||
Long-term debt | $ | 1,613,598 | $ | 1,597,627 | ||||
(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 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): | ||||||||
Remainder of 2014 | $ | 6,875 | ||||||
2015 | 9,166 | |||||||
2016 | 9,166 | |||||||
2017 | 46,666 | |||||||
2018 | 870,800 | |||||||
2019 | — | |||||||
Thereafter | 685,000 | |||||||
Total principal payments | 1,627,673 | |||||||
Less: | ||||||||
Unamortized discount on the Credit Facility term loans | 4,909 | |||||||
Total debt on condensed consolidated balance sheet | $ | 1,622,764 | ||||||
Derivatives_Tables
Derivatives (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Derivatives | ' | ||||||||
Schedule of Swaps' outstanding notional balance and terms | ' | ||||||||
The Swaps’ outstanding notional balance as of March 31, 2014 and terms are noted below: | |||||||||
Notional | Effective Date | Fixed | Variable Rate Received | ||||||
Rate Paid | |||||||||
$ | 539,000,000 | March 28, 2013 | 1.884 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | ||||
142,825,000 | March 28, 2013 | 1.384 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | |||||
111,652,010 | September 30, 2013 | 1.959 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
111,652,010 | September 30, 2013 | 1.85 | % | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | |||||
(a) On March 25, 2013, the Company 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 condensed consolidated financial statements | ' | ||||||||
The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): | |||||||||
For the three months ended March 31, | |||||||||
2014 | 2013 | ||||||||
Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) | $ | (3,371 | ) | (909 | ) | ||||
Effective portion of gain (loss) reclassified from Accumulated other comprehensive income (loss) into Net income (a) | $ | (1,700 | ) | (1,168 | ) | ||||
Ineffective portion of amount of gain (loss) recognized into Net income (loss) on interest rate swaps (a) | $ | (1 | ) | 19 | |||||
(a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2014 | |||||||||||
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 March 31, 2014 and December 31, 2013 (amounts in thousands): | |||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||
March 31, 2014 | |||||||||||
Derivative financial instruments — assets (a) | $ | — | 2,099 | — | 2,099 | ||||||
Derivative financial instruments - liabilities | — | (3,193 | ) | — | (3,193 | ) | |||||
Total | $ | — | (1,094 | ) | — | (1,094 | ) | ||||
December 31, 2013 | |||||||||||
Derivative financial instruments - assets (a) | $ | — | 2,495 | — | 2,495 | ||||||
Derivative financial instruments - liabilities | — | (2,013 | ) | — | (2,013 | ) | |||||
Total | $ | — | 482 | — | 482 | ||||||
(a) Included in Other assets, net on the condensed consolidated balance sheets. | |||||||||||
Schedule of Carrying values and fair values of financial instruments that are not carried at fair value | ' | ||||||||||
Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): | |||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||
Long term debt, including current portion: | |||||||||||
Carrying value | $ | 1,622,764 | $ | 1,606,793 | |||||||
Fair value (a) | 1,664,568 | 1,656,797 | |||||||||
(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) | 3 Months Ended | ||||||||||
Mar. 31, 2014 | |||||||||||
Restructuring Charges | ' | ||||||||||
Schedule of activity and balance of the restructuring plan | ' | ||||||||||
The following table provides the activity and balance of the Company’s restructuring plan (amounts in thousands): | |||||||||||
December 31, 2013 | Additions | Payments | March 31, 2014 | ||||||||
2013 Restructuring Plan | |||||||||||
Severance and retention | $ | 1,570 | 547 | (504 | ) | 1,613 | |||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended | ||||
Mar. 31, 2014 | |||||
Accumulated Other Comprehensive Income (Loss) | ' | ||||
Summary of the changes in Accumulated other comprehensive income (loss) | ' | ||||
The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period presented (amounts in thousands): | |||||
Accumulated | |||||
other | |||||
comprehensive | |||||
income (loss) | |||||
As of December 31, 2013 | $ | 74 | |||
Unrealized loss on derivatives recognized through Accumulated other comprehensive income (loss) | (3,371 | ) | |||
Reclassifications of unrealized loss on derivatives into net income (a) | 1,700 | ||||
As of March 31, 2014 | $ | (1,597 | ) | ||
(a) Amounts reclassified into net income are included in Interest expense on the condensed consolidated statement of operations. See note 6, Derivatives, for further information. | |||||
Consolidating_Guarantor_Financ1
Consolidating Guarantor Financial Information (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Consolidating Guarantor Financial Information | ' | ||||||||||||
Condensed Consolidating Balance Sheets | ' | ||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Balance Sheets | |||||||||||||
(unaudited) | |||||||||||||
As of March 31, 2014 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 29,305 | 2,138 | — | — | 31,443 | |||||||
Restricted cash | 119 | — | — | — | 119 | ||||||||
Trade receivables, net | 12,418 | 1,478 | — | — | 13,896 | ||||||||
Deferred income tax assets, net | 6,763 | 1,767 | — | — | 8,530 | ||||||||
Prepaid and other current assets | 6,139 | 1,968 | — | (1,238 | ) | 6,869 | |||||||
Total current assets | 54,744 | 7,351 | — | (1,238 | ) | 60,857 | |||||||
Investment in subsidiaries | 500,660 | — | — | (500,660 | ) | — | |||||||
Property and equipment, net | 23,560 | 549 | — | — | 24,109 | ||||||||
Subscriber accounts, net | 1,021,199 | 314,924 | — | — | 1,336,123 | ||||||||
Dealer network and other intangible assets, net | 17,253 | 42,437 | — | — | 59,690 | ||||||||
Goodwill | 350,213 | 176,300 | — | — | 526,513 | ||||||||
Other assets, net | 28,956 | 97 | — | — | 29,053 | ||||||||
Total assets | $ | 1,996,585 | 541,658 | — | (501,898 | ) | 2,036,345 | ||||||
Liabilities and Stockholder’s Equity | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 4,229 | 950 | — | — | 5,179 | |||||||
Accrued payroll and related liabilities | 2,943 | 395 | — | — | 3,338 | ||||||||
Other accrued liabilities | 40,664 | 5,798 | — | (1,238 | ) | 45,224 | |||||||
Deferred revenue | 11,046 | 4,035 | — | — | 15,081 | ||||||||
Holdback liability | 15,973 | 3,254 | — | — | 19,227 | ||||||||
Current portion of long-term debt | 9,166 | — | — | — | 9,166 | ||||||||
Total current liabilities | 84,021 | 14,432 | — | (1,238 | ) | 97,215 | |||||||
Non-current liabilities: | |||||||||||||
Long-term debt | 1,613,598 | — | — | — | 1,613,598 | ||||||||
Long-term holdback liability | — | 6,253 | — | — | 6,253 | ||||||||
Derivative financial instruments | 3,193 | — | — | — | 3,193 | ||||||||
Deferred income tax liability, net | 10,655 | 7,801 | — | — | 18,456 | ||||||||
Other liabilities | 2,623 | 12,512 | — | — | 15,135 | ||||||||
Total liabilities | 1,714,090 | 40,998 | — | (1,238 | ) | 1,753,850 | |||||||
Total stockholder’s equity | 282,495 | 500,660 | — | (500,660 | ) | 282,495 | |||||||
Total liabilities and stockholder’s equity | $ | 1,996,585 | 541,658 | — | (501,898 | ) | 2,036,345 | ||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Balance Sheets | |||||||||||||
(unaudited) | |||||||||||||
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) | |||||||||||||
(unaudited) | |||||||||||||
Three months ended March 31, 2014 | |||||||||||||
Parent Issuer | Subsidiary | Non-Guarantors | Eliminations | Consolidated | |||||||||
Guarantors | |||||||||||||
(amounts in thousands) | |||||||||||||
Net revenue | $ | 104,093 | 28,771 | — | — | 132,864 | |||||||
Operating expenses: | |||||||||||||
Cost of services | 17,782 | 4,308 | — | — | 22,090 | ||||||||
Selling, general, and administrative, including stock-based compensation | 19,032 | 3,940 | — | — | 22,972 | ||||||||
Amortization of subscriber accounts, dealer network and other intangible assets | 45,263 | 16,517 | — | — | 61,780 | ||||||||
Depreciation | 1,908 | 475 | — | — | 2,383 | ||||||||
Restructuring charges | — | 547 | — | 547 | |||||||||
83,985 | 25,787 | — | — | 109,772 | |||||||||
Operating income | 20,108 | 2,984 | — | — | 23,092 | ||||||||
Other expense (income): | |||||||||||||
Equity in income of subsidiaries | (1,858 | ) | — | — | 1,858 | — | |||||||
Interest expense | 29,046 | 298 | — | — | 29,344 | ||||||||
27,188 | 298 | — | 1,858 | 29,344 | |||||||||
Income (loss) before income taxes | (7,080 | ) | 2,686 | — | (1,858 | ) | (6,252 | ) | |||||
Income tax expense | 771 | 828 | — | — | 1,599 | ||||||||
Net income (loss) | (7,851 | ) | 1,858 | — | (1,858 | ) | (7,851 | ) | |||||
Other comprehensive loss: | |||||||||||||
Unrealized gain (loss) on derivative contracts | (1,671 | ) | — | — | — | (1,671 | ) | ||||||
Total other comprehensive loss | (1,671 | ) | — | — | — | (1,671 | ) | ||||||
Comprehensive income (loss) | $ | (9,522 | ) | 1,858 | — | (1,858 | ) | (9,522 | ) | ||||
Condensed Consolidating Statement of Cash Flows | ' | ||||||||||||
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||
Condensed Consolidating Statement of Cash Flows | |||||||||||||
(unaudited) | |||||||||||||
Three months ended March 31, 2014 | |||||||||||||
Parent Issuer | Subsidiary | Non- | Eliminations | Consolidated | |||||||||
Guarantors | Guarantors | ||||||||||||
(amounts in thousands) | |||||||||||||
Net cash provided by operating activities | 53,546 | 13,665 | — | — | 67,211 | ||||||||
Investing activities: | |||||||||||||
Capital expenditures | (1,903 | ) | (35 | ) | — | — | (1,938 | ) | |||||
Cost of subscriber accounts acquired | (39,742 | ) | (14,047 | ) | — | — | (53,789 | ) | |||||
Increase in restricted cash | (79 | ) | — | — | — | (79 | ) | ||||||
Other investing activities | — | (25 | ) | — | — | (25 | ) | ||||||
Net cash used in investing activities | (41,724 | ) | (14,107 | ) | — | — | (55,831 | ) | |||||
Financing activities: | |||||||||||||
Proceeds from long-term debt | 42,900 | — | — | — | 42,900 | ||||||||
Payments on long-term debt | (27,192 | ) | — | — | — | (27,192 | ) | ||||||
Net cash provided by financing activities | 15,708 | — | — | — | 15,708 | ||||||||
Net increase (decrease) in cash and cash equivalents | 27,530 | (442 | ) | — | — | 27,088 | |||||||
Cash and cash equivalents at beginning of period | 1,775 | 2,580 | — | — | 4,355 | ||||||||
Cash and cash equivalents at end of period | 29,305 | 2,138 | — | — | 31,443 | ||||||||
Security_Networks_Acquisition_1
Security Networks Acquisition (Details) (USD $) | 3 Months Ended | 0 Months Ended | 0 Months Ended | ||||||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Jul. 17, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | Aug. 16, 2013 | |
New Senior Notes | New Senior Notes | 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 | ||||
Promissory note | Promissory note | Subscriber accounts | Dealer network and other intangible assets | New Senior Notes | Incremental term loan | Promissory note | Ascent Capital Group, Inc. | ||||||||
Series A common stock | |||||||||||||||
Security networks acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price | ' | ' | ' | ' | ' | ' | ' | ' | $500,557,000 | ' | ' | ' | ' | ' | ' |
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 |
Fair value of shares issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18,723,000 |
Amount of post-closing adjustments | ' | ' | ' | ' | ' | ' | ' | ' | 1,057,000 | ' | ' | ' | ' | ' | ' |
Proceeds from issuance of debt | 42,900,000 | 24,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 175,000,000 | 225,000,000 | 100,000,000 | ' |
Interest rate (as a percent) | ' | ' | ' | 9.13% | 9.13% | 9.13% | 9.87% | 9.87% | ' | ' | ' | 9.13% | ' | ' | ' |
Purchase price allocation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | ' | ' | ' | ' | ' | ' | ' | ' | 3,096,000 | ' | ' | ' | ' | ' | ' |
Trade receivables | ' | ' | ' | ' | ' | ' | ' | ' | 1,305,000 | ' | ' | ' | ' | ' | ' |
Other current assets | ' | ' | ' | ' | ' | ' | ' | ' | 1,677,000 | ' | ' | ' | ' | ' | ' |
Property and equipment | ' | ' | ' | ' | ' | ' | ' | ' | 1,404,000 | ' | ' | ' | ' | ' | ' |
Intangible assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | 307,800,000 | 48,500,000 | ' | ' | ' | ' |
Goodwill | 526,513,000 | ' | 526,513,000 | ' | ' | ' | ' | ' | 176,300,000 | ' | ' | ' | ' | ' | ' |
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 | ' | ' | ' | ' | ' | ' |
Fair value of consideration | ' | ' | ' | ' | ' | ' | ' | ' | 500,557,000 | ' | ' | ' | ' | ' | ' |
Pro forma information | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reported net revenue | 132,864,000 | 100,158,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reported net income | ' | 1,349,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net revenue | ' | 123,414,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Pro forma net loss | ' | ($5,805,000) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other_Accrued_Liabilities_Deta
Other Accrued Liabilities (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Other Accrued Liabilities | ' | ' |
Interest payable | $28,945 | $17,258 |
Income taxes payable | 3,375 | 2,647 |
Legal accrual | 375 | 705 |
Other | 12,529 | 12,844 |
Total Other accrued liabilities | $45,224 | $33,454 |
LongTerm_Debt_Details
Long-Term Debt (Details) (USD $) | 3 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||||||||||||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Jul. 17, 2013 | Mar. 23, 2012 | Aug. 16, 2013 | Aug. 16, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 25, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Aug. 16, 2013 | Mar. 31, 2014 | Mar. 25, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Aug. 16, 2013 | |
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 | 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% | $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% | ||||
Security Networks Acquisition | Security Networks Acquisition | Ascent Capital | Ascent Capital | Security Networks Acquisition | Security Networks Acquisition | |||||||||||||||
Long-term debt instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of debt instrument | ' | ' | ' | 9.13% | 9.13% | 9.13% | ' | 9.13% | ' | 9.87% | 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 | ' | $225,000,000 | ' | $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 | 1,622,764,000 | ' | 1,606,793,000 | 585,000,000 | 585,000,000 | ' | ' | ' | ' | 100,000,000 | 100,000,000 | ' | 900,264,000 | 902,293,000 | ' | 37,500,000 | ' | 37,500,000 | 19,500,000 | ' |
Less current portion of long-term debt | -9,166,000 | ' | -9,166,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Long-term debt | 1,613,598,000 | ' | 1,597,627,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instruments issued | ' | ' | ' | 585,000,000 | ' | 175,000,000 | 410,000,000 | ' | ' | ' | ' | ' | ' | ' | 225,000,000 | ' | ' | ' | ' | ' |
Proceeds from issuance of debt | 42,900,000 | 24,700,000 | ' | ' | ' | ' | ' | 175,000,000 | 100,000,000 | ' | ' | ' | ' | ' | 225,000,000 | ' | ' | ' | ' | ' |
Discount rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' | ' | ' | ' |
Principal payments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,292,000 | ' | ' | ' | ' | ' | ' | ' |
Commitment fees on unused portion of facility (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.50% | ' | ' |
Increase in maximum borrowing capacity under the facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 |
Remaining balance on the Credit Facility Revolver | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 187,500,000 | ' | 187,500,000 | ' | ' |
Amount borrowed on credit facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33,000,000 | ' | ' | ' | ' |
Interest payment due | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $26,691,000 | ' | $26,691,000 | ' | ' |
LongTerm_Debt_Details_2
Long-Term Debt (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Long-Term Debt | ' | ' |
Deferred financing costs | $24,251,000 | ' |
Scheduled maturities of long-term debt | ' | ' |
Remainder of 2014 | 6,875,000 | ' |
2015 | 9,166,000 | ' |
2016 | 9,166,000 | ' |
2017 | 46,666,000 | ' |
2018 | 870,800,000 | ' |
Thereafter | 685,000,000 | ' |
Total principal payments | 1,627,673,000 | ' |
Less: Unamortized discount on the Credit Facility term loans | 4,909,000 | ' |
Total debt on condensed consolidated balance sheet | $1,622,764,000 | $1,606,793,000 |
Interest rate swap | Designated as hedging | ' | ' |
Effective interest rate swap on term loan | ' | ' |
Weighted average fixed rate (as a percent) | 5.06% | ' |
Derivatives_Details
Derivatives (Details) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Interest rate swaps (Swaps) | Cash flow hedge | ' |
Derivatives | ' |
Amount in Accumulated other comprehensive income (loss) expected to recognize in interest expense in coming 12 months | $6,054,000 |
1.884 % interest rate swaps | ' |
Derivatives | ' |
Notional | 539,000,000 |
Rate Paid (as a percent) | 1.88% |
Variable interest rate base | '3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
1.384 % interest rate swaps | ' |
Derivatives | ' |
Notional | 142,825,000 |
Rate Paid (as a percent) | 1.38% |
Variable interest rate base | '3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
1.959 % interest rate swaps | ' |
Derivatives | ' |
Notional | 111,652,010 |
Rate Paid (as a percent) | 1.96% |
Variable interest rate base | '3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
1.850 % interest rate swaps | ' |
Derivatives | ' |
Notional | $111,652,010 |
Rate Paid (as a percent) | 1.85% |
Variable interest rate base | '3 mo.USD-LIBOR-BBA |
Variable interest rate base floor | 1.00% |
Derivatives_Details_2
Derivatives (Details 2) (Interest rate swaps (Swaps), Cash flow hedge, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
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 income (loss) | ($3,371) | ($909) |
Effective portion of gain (loss) reclassified from Accumulated other comprehensive income (loss) into Net income | -1,700 | -1,168 |
Ineffective portion of amount of gain (loss) recognized into Net income (loss) on interest rate swaps | ($1) | $19 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring, USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Level 2 | ' | ' |
Fair value measurements | ' | ' |
Derivative financial instruments - assets | $2,099 | $2,495 |
Derivative financial instruments - liabilities | -3,193 | -2,013 |
Total | -1,094 | 482 |
Total | ' | ' |
Fair value measurements | ' | ' |
Derivative financial instruments - assets | 2,099 | 2,495 |
Derivative financial instruments - liabilities | -3,193 | -2,013 |
Total | ($1,094) | $482 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Long term debt, including current portion: | ' | ' |
Carrying value | $1,622,764 | $1,606,793 |
Fair value | $1,664,568 | $1,656,797 |
Restructuring_Charges_Details
Restructuring Charges (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Restructuring Charges | ' |
Restructuring charges | $547 |
Change in activity of restructuring reserves during the period | ' |
Additions | 547 |
2013 Restructuring Plan | Severance and retention | ' |
Restructuring Charges | ' |
Restructuring charges | 547 |
Change in activity of restructuring reserves during the period | ' |
Opening balance | 1,570 |
Additions | 547 |
Payments | -504 |
Ending balance | $1,613 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Loss) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2014 |
Changes in Accumulated other comprehensive income (loss) | ' |
Balance at the beginning of the period | $74 |
Unrealized loss on derivatives recognized through Accumulated other comprehensive income (loss) | -3,371 |
Reclassifications of unrealized loss on derivatives into net income | 1,700 |
Balance at the end of the period | ($1,597) |
Consolidating_Guarantor_Financ2
Consolidating Guarantor Financial Information (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||||
Current assets: | ' | ' | ' | ' |
Cash and cash equivalents | $31,443 | $4,355 | $21,041 | $3,433 |
Restricted cash | 119 | 40 | ' | ' |
Trade receivables, net | 13,896 | 13,019 | ' | ' |
Deferred income tax assets, net | 8,530 | 8,530 | ' | ' |
Prepaid and other current assets | 6,869 | 6,319 | ' | ' |
Total current assets | 60,857 | 32,263 | ' | ' |
Property and equipment, net | 24,109 | 24,561 | ' | ' |
Subscriber accounts, net | 1,336,123 | 1,340,954 | ' | ' |
Dealer network and other intangible assets, net | 59,690 | 64,635 | ' | ' |
Goodwill | 526,513 | 526,513 | ' | ' |
Other assets, net | 29,053 | 29,611 | ' | ' |
Total assets | 2,036,345 | 2,018,537 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 5,179 | 6,895 | ' | ' |
Accrued payroll and related liabilities | 3,338 | 3,179 | ' | ' |
Other accrued liabilities | 45,224 | 33,454 | ' | ' |
Deferred revenue | 15,081 | 14,379 | ' | ' |
Holdback liability | 19,227 | 19,758 | ' | ' |
Current portion of long-term debt | 9,166 | 9,166 | ' | ' |
Total current liabilities | 97,215 | 86,831 | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Long-term debt | 1,613,598 | 1,597,627 | ' | ' |
Long-term holdback liability | 6,253 | 6,698 | ' | ' |
Derivative financial instruments | 3,193 | 2,013 | ' | ' |
Deferred income tax liability, net | 18,456 | 17,579 | ' | ' |
Other liabilities | 15,135 | 16,065 | ' | ' |
Total liabilities | 1,753,850 | 1,726,813 | ' | ' |
Total stockholder's equity | 282,495 | 291,724 | ' | ' |
Total liabilities and stockholder's equity | 2,036,345 | 2,018,537 | ' | ' |
Reportable legal entities | Parent Issuer | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and cash equivalents | 29,305 | 1,775 | ' | ' |
Restricted cash | 119 | 40 | ' | ' |
Trade receivables, net | 12,418 | 11,374 | ' | ' |
Deferred income tax assets, net | 6,763 | 6,763 | ' | ' |
Prepaid and other current assets | 6,139 | 9,916 | ' | ' |
Total current assets | 54,744 | 29,868 | ' | ' |
Investment in subsidiaries | 500,660 | 498,820 | ' | ' |
Property and equipment, net | 23,560 | 23,572 | ' | ' |
Subscriber accounts, net | 1,021,199 | 1,025,605 | ' | ' |
Dealer network and other intangible assets, net | 17,253 | 19,773 | ' | ' |
Goodwill | 350,213 | 350,213 | ' | ' |
Other assets, net | 28,956 | 29,611 | ' | ' |
Total assets | 1,996,585 | 1,977,462 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 4,229 | 5,491 | ' | ' |
Accrued payroll and related liabilities | 2,943 | 2,649 | ' | ' |
Other accrued liabilities | 40,664 | 27,137 | ' | ' |
Deferred revenue | 11,046 | 11,037 | ' | ' |
Holdback liability | 15,973 | 16,640 | ' | ' |
Current portion of long-term debt | 9,166 | 9,166 | ' | ' |
Total current liabilities | 84,021 | 72,120 | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Long-term debt | 1,613,598 | 1,597,627 | ' | ' |
Derivative financial instruments | 3,193 | 2,013 | ' | ' |
Deferred income tax liability, net | 10,655 | 10,577 | ' | ' |
Other liabilities | 2,623 | 3,401 | ' | ' |
Total liabilities | 1,714,090 | 1,685,738 | ' | ' |
Total stockholder's equity | 282,495 | 291,724 | ' | ' |
Total liabilities and stockholder's equity | 1,996,585 | 1,977,462 | ' | ' |
Reportable legal entities | Subsidiary Guarantors | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Cash and cash equivalents | 2,138 | 2,580 | ' | ' |
Trade receivables, net | 1,478 | 1,645 | ' | ' |
Deferred income tax assets, net | 1,767 | 1,767 | ' | ' |
Prepaid and other current assets | 1,968 | 1,003 | ' | ' |
Total current assets | 7,351 | 6,995 | ' | ' |
Property and equipment, net | 549 | 989 | ' | ' |
Subscriber accounts, net | 314,924 | 315,349 | ' | ' |
Dealer network and other intangible assets, net | 42,437 | 44,862 | ' | ' |
Goodwill | 176,300 | 176,300 | ' | ' |
Other assets, net | 97 | ' | ' | ' |
Total assets | 541,658 | 544,495 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Accounts payable | 950 | 1,404 | ' | ' |
Accrued payroll and related liabilities | 395 | 530 | ' | ' |
Other accrued liabilities | 5,798 | 10,917 | ' | ' |
Deferred revenue | 4,035 | 3,342 | ' | ' |
Holdback liability | 3,254 | 3,118 | ' | ' |
Total current liabilities | 14,432 | 19,311 | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Long-term holdback liability | 6,253 | 6,698 | ' | ' |
Deferred income tax liability, net | 7,801 | 7,002 | ' | ' |
Other liabilities | 12,512 | 12,664 | ' | ' |
Total liabilities | 40,998 | 45,675 | ' | ' |
Total stockholder's equity | 500,660 | 498,820 | ' | ' |
Total liabilities and stockholder's equity | 541,658 | 544,495 | ' | ' |
Eliminations | ' | ' | ' | ' |
Current assets: | ' | ' | ' | ' |
Prepaid and other current assets | -1,238 | -4,600 | ' | ' |
Total current assets | -1,238 | -4,600 | ' | ' |
Investment in subsidiaries | -500,660 | -498,820 | ' | ' |
Total assets | -501,898 | -503,420 | ' | ' |
Current liabilities: | ' | ' | ' | ' |
Other accrued liabilities | -1,238 | -4,600 | ' | ' |
Total current liabilities | -1,238 | -4,600 | ' | ' |
Non-current liabilities: | ' | ' | ' | ' |
Total liabilities | -1,238 | -4,600 | ' | ' |
Total stockholder's equity | -500,660 | -498,820 | ' | ' |
Total liabilities and stockholder's equity | ($501,898) | ($503,420) | ' | ' |
Consolidating_Guarantor_Financ3
Consolidating Guarantor Financial Information (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ' |
Net revenue | $132,864 | $100,158 |
Operating expenses: | ' | ' |
Cost of services | 22,090 | 15,202 |
Selling, general, and administrative, including stock-based compensation | 22,972 | 15,903 |
Amortization of subscriber accounts, dealer network and other intangible assets | 61,780 | 44,315 |
Depreciation | 2,383 | 1,488 |
Restructuring charges | 547 | ' |
Total operating expenses | 109,772 | 76,908 |
Operating income | 23,092 | 23,250 |
Other expense (income): | ' | ' |
Interest expense | 29,344 | 21,127 |
Total other expense | 29,344 | 21,127 |
Income (loss) before income taxes | -6,252 | 2,123 |
Income tax expense | 1,599 | 774 |
Net income (loss) | -7,851 | 1,349 |
Other comprehensive loss: | ' | ' |
Unrealized gain (loss) on derivative contracts | -1,671 | 259 |
Total other comprehensive income (loss), net of tax | -1,671 | 259 |
Comprehensive income (loss) | -9,522 | 1,608 |
Reportable legal entities | Parent Issuer | ' | ' |
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ' |
Net revenue | 104,093 | ' |
Operating expenses: | ' | ' |
Cost of services | 17,782 | ' |
Selling, general, and administrative, including stock-based compensation | 19,032 | ' |
Amortization of subscriber accounts, dealer network and other intangible assets | 45,263 | ' |
Depreciation | 1,908 | ' |
Total operating expenses | 83,985 | ' |
Operating income | 20,108 | ' |
Other expense (income): | ' | ' |
Equity in income of subsidiaries | -1,858 | ' |
Interest expense | 29,046 | ' |
Total other expense | 27,188 | ' |
Income (loss) before income taxes | -7,080 | ' |
Income tax expense | 771 | ' |
Net income (loss) | -7,851 | ' |
Other comprehensive loss: | ' | ' |
Unrealized gain (loss) on derivative contracts | -1,671 | ' |
Total other comprehensive income (loss), net of tax | -1,671 | ' |
Comprehensive income (loss) | -9,522 | ' |
Reportable legal entities | Subsidiary Guarantors | ' | ' |
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss) | ' | ' |
Net revenue | 28,771 | ' |
Operating expenses: | ' | ' |
Cost of services | 4,308 | ' |
Selling, general, and administrative, including stock-based compensation | 3,940 | ' |
Amortization of subscriber accounts, dealer network and other intangible assets | 16,517 | ' |
Depreciation | 475 | ' |
Restructuring charges | 547 | ' |
Total operating expenses | 25,787 | ' |
Operating income | 2,984 | ' |
Other expense (income): | ' | ' |
Interest expense | 298 | ' |
Total other expense | 298 | ' |
Income (loss) before income taxes | 2,686 | ' |
Income tax expense | 828 | ' |
Net income (loss) | 1,858 | ' |
Other comprehensive loss: | ' | ' |
Comprehensive income (loss) | 1,858 | ' |
Eliminations | ' | ' |
Other expense (income): | ' | ' |
Equity in income of subsidiaries | 1,858 | ' |
Total other expense | 1,858 | ' |
Income (loss) before income taxes | -1,858 | ' |
Net income (loss) | -1,858 | ' |
Other comprehensive loss: | ' | ' |
Comprehensive income (loss) | ($1,858) | ' |
Consolidating_Guarantor_Financ4
Consolidating Guarantor Financial Information (Details 3) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Condensed Consolidating Statement of Cash Flows | ' | ' |
Net cash provided by operating activities | $67,211,000 | $59,700,000 |
Investing activities: | ' | ' |
Capital expenditures | -1,938,000 | -1,265,000 |
Cost of subscriber accounts acquired | -53,789,000 | -46,043,000 |
Increase in restricted cash | -79,000 | ' |
Other investing activities | -25,000 | ' |
Net cash used in investing activities | -55,831,000 | -47,308,000 |
Financing activities: | ' | ' |
Proceeds from long-term debt | 42,900,000 | 24,700,000 |
Payments on long-term debt | -27,192,000 | -17,738,000 |
Net cash provided by financing activities | 15,708,000 | 5,216,000 |
Net increase in cash and cash equivalents | 27,088,000 | 17,608,000 |
Cash and cash equivalents at beginning of period | 4,355,000 | 3,433,000 |
Cash and cash equivalents at end of period | 31,443,000 | 21,041,000 |
Reportable legal entities | Parent Issuer | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' |
Net cash provided by operating activities | 53,546,000 | ' |
Investing activities: | ' | ' |
Capital expenditures | -1,903,000 | ' |
Cost of subscriber accounts acquired | -39,742,000 | ' |
Increase in restricted cash | -79,000 | ' |
Net cash used in investing activities | -41,724,000 | ' |
Financing activities: | ' | ' |
Proceeds from long-term debt | 42,900,000 | ' |
Payments on long-term debt | -27,192,000 | ' |
Net cash provided by financing activities | 15,708,000 | ' |
Net increase in cash and cash equivalents | 27,530,000 | ' |
Cash and cash equivalents at beginning of period | 1,775,000 | ' |
Cash and cash equivalents at end of period | 29,305,000 | ' |
Reportable legal entities | Subsidiary Guarantors | ' | ' |
Condensed Consolidating Statement of Cash Flows | ' | ' |
Net cash provided by operating activities | 13,665,000 | ' |
Investing activities: | ' | ' |
Capital expenditures | -35,000 | ' |
Cost of subscriber accounts acquired | -14,047,000 | ' |
Other investing activities | -25,000 | ' |
Net cash used in investing activities | -14,107,000 | ' |
Financing activities: | ' | ' |
Net increase in cash and cash equivalents | -442,000 | ' |
Cash and cash equivalents at beginning of period | 2,580,000 | ' |
Cash and cash equivalents at end of period | $2,138,000 | ' |