Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 12, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | MONITRONICS INTERNATIONAL INC | |
Entity Central Index Key | 1,265,107 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding (in shares) | 0 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 28,989 | $ 3,177 |
Trade receivables, net of allowance for doubtful accounts of $2,805 in 2017 and $3,043 in 2016 | 12,971 | 13,869 |
Prepaid and other current assets | 8,213 | 9,360 |
Total current assets | 50,173 | 26,406 |
Property and equipment, net of accumulated depreciation of $30,945 in 2017 and $28,825 in 2016 | 27,353 | 28,270 |
Subscriber accounts, net of accumulated amortization of $1,269,494 in 2017 and $1,212,468 in 2016 | 1,377,938 | 1,386,760 |
Dealer network and other intangible assets, net of accumulated amortization of $35,433 in 2017 and $32,976 in 2016 | 14,367 | 16,824 |
Goodwill | 563,549 | 563,549 |
Other assets | 11,332 | 11,908 |
Total assets | 2,044,712 | 2,033,717 |
Current liabilities: | ||
Accounts payable | 9,582 | 11,461 |
Accrued payroll and related liabilities | 4,285 | 4,068 |
Other accrued liabilities | 43,496 | 31,579 |
Deferred revenue | 16,168 | 15,147 |
Holdback liability | 13,768 | 13,916 |
Current portion of long-term debt | 11,000 | 11,000 |
Total current liabilities | 98,299 | 87,171 |
Non-current liabilities: | ||
Long-term debt | 1,711,584 | 1,687,778 |
Long-term holdback liability | 2,352 | 2,645 |
Derivative financial instruments | 11,828 | 16,948 |
Deferred income tax liability, net | 18,382 | 17,330 |
Other liabilities | 6,904 | 6,900 |
Total liabilities | 1,849,349 | 1,818,772 |
Commitments and contingencies | ||
Stockholder's equity: | ||
Common stock, $.01 par value. 1,000 shares authorized, issued and outstanding both at March 31, 2017 and December 31, 2016 | 0 | 0 |
Additional paid-in capital | 447,208 | 446,826 |
Accumulated deficit | (243,937) | (222,924) |
Accumulated other comprehensive loss | (7,908) | (8,957) |
Total stockholder's equity | 195,363 | 214,945 |
Total liabilities and stockholder's equity | $ 2,044,712 | $ 2,033,717 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Trade Receivables, allowance for doubtful accounts | $ 2,805 | $ 3,043 |
PP&E; Accumulated Depreciation | 30,945 | 28,825 |
Subscriber Accounts, accumulated depreciation | 1,269,494 | 1,212,468 |
Dealer network and other intangible assets, accumulated amortization | $ 35,433 | $ 32,976 |
Par value of shares issued as a consideration (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 1,000 | 1,000 |
Common stock, issued shares (in shares) | 1,000 | 1,000 |
Common stock, outstanding shares (in shares) | 1,000 | 1,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Net revenue | $ 141,200 | $ 143,268 |
Operating expenses: | ||
Cost of services | 29,969 | 29,475 |
Selling, general, and administrative, including stock-based compensation | 32,723 | 28,613 |
Radio conversion costs | 232 | 9,079 |
Amortization of subscriber accounts, dealer network and other intangible assets | 59,547 | 61,322 |
Depreciation | 2,120 | 1,975 |
Total operating expenses | 124,591 | 130,464 |
Operating income (loss) | 16,609 | 12,804 |
Other expense: | ||
Interest expense | 35,838 | 31,224 |
Total other expense | 35,838 | 31,224 |
Loss before income taxes | (19,229) | (18,420) |
Income tax expense | 1,784 | 1,790 |
Net (loss) income | (21,013) | (20,210) |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivative contracts, net of tax | 1,049 | (11,845) |
Total other comprehensive income (loss), net of tax | 1,049 | (11,845) |
Comprehensive loss | $ (19,964) | $ (32,055) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (21,013) | $ (20,210) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Amortization of subscriber accounts, dealer network and other intangible assets | 59,547 | 61,322 |
Depreciation | 2,120 | 1,975 |
Stock-based compensation | 518 | 522 |
Deferred income tax expense | 1,052 | 1,052 |
Amortization of debt discount and deferred debt costs | 1,656 | 1,742 |
Bad debt expense | 2,557 | 2,544 |
Other non-cash activity, net | 1,875 | 818 |
Changes in assets and liabilities: | ||
Trade receivables | (1,659) | (2,256) |
Prepaid expenses and other assets | 1,079 | (1,142) |
Subscriber accounts - deferred contract costs | (754) | (660) |
Payables and other liabilities | 5,222 | 9,090 |
Net cash provided by operating activities | 52,200 | 54,797 |
Cash flows from investing activities: | ||
Capital expenditures | (1,694) | (2,276) |
Cost of subscriber accounts acquired | (46,708) | (46,670) |
Decrease in restricted cash | 0 | 55 |
Net cash used in investing activities | (48,402) | (48,891) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 64,750 | 59,250 |
Payments on long-term debt | (42,600) | (38,675) |
Value of shares withheld for share-based compensation | (136) | (58) |
Net cash provided by financing activities | 22,014 | 20,517 |
Net increase (decrease) in cash and cash equivalents | 25,812 | 26,423 |
Cash and cash equivalents at beginning of period | 3,177 | 2,580 |
Cash and cash equivalents at end of period | 28,989 | 29,003 |
Supplemental cash flow information: | ||
State taxes paid, net | 3 | 19 |
Interest paid | 21,462 | 19,139 |
Accrued capital expenditures | $ 780 | $ 973 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Stockholder's Equity - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Beginning Balance (in shares) at Dec. 31, 2016 | 1,000 | 1,000 | |||
Balance at December 31, 2016 at Dec. 31, 2016 | $ 214,945 | $ 446,826 | $ (8,957) | $ (222,924) | |
Increase (Decrease) in Stockholder's Equity | |||||
Net loss | (21,013) | (21,013) | |||
Other comprehensive income | 1,049 | 1,049 | |||
Stock-based compensation | 518 | 518 | |||
Value of shares withheld for minimum tax liability | $ (136) | (136) | |||
Ending Balance (in shares) at Mar. 31, 2017 | 1,000 | 1,000 | |||
Balance at March 31, 2017 at Mar. 31, 2017 | $ 195,363 | $ 447,208 | $ (7,908) | $ (243,937) |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Monitronics International, Inc. and its subsidiaries (collectively, the "Company" or "MONI") are wholly owned subsidiaries of Ascent Capital Group, Inc. ("Ascent Capital"). MONI, and its wholly owned subsidiary LiveWatch Security, LLC ("LiveWatch"), monitor signals arising from burglaries, fires, medical alerts and other events through security systems installed at subscribers’ premises, as well as providing for interactive and home automation services. 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, 2017 , and for the three months ended March 31, 2017 and 2016 , include MONI 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 MONI Annual Report on Form 10-K for the year ended December 31, 2016 , filed with the SEC on March 13, 2017 (the "2016 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 Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). Under the update, revenue will be recognized based on a five-step model. The core principle of the model is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In the third quarter of 2015, the FASB deferred the effective date of the standard to annual and interim periods beginning after December 15, 2017. In March and April 2016, the FASB issued amendments to provide clarification on assessment of collectability criteria, presentation of sales taxes and measurement of non-cash consideration. In addition, the amendment provided clarification and included simplification to transaction guidance on contract modifications and completed contracts at transaction. In December 2016, the FASB issued amendments to provide clarification on codification and guidance application. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period. The Company currently plans to adopt ASU 2014-09 using the full retrospective approach. However, a final decision regarding the adoption method has not been made at this time. The Company's final determination will depend on the significance of the impact of the new standard on the Company's financial results. The Company is in the initial stages of evaluating the impact of ASU 2014-09 on the accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of third party service providers to assist in the evaluation. While the Company is in the process of assessing revenue recognition policies across each type of its contracts, the Company does not know or cannot reasonably estimate the impact of the adoption ASU 2014-09 on its financial position, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an amortization of the associated expense. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and becomes effective on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). Currently, the fair value of the reporting unit is compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit is lower than its carrying amount, then the implied fair value of goodwill is calculated. If the implied fair value of goodwill is lower than the carrying value of goodwill an impairment is recognized (identified as "Step 2"). ASU 2017-04 eliminates Step 2 from the impairment test; therefore, a goodwill impairment will be recognized as the difference of the fair value and the carrying value. ASU 2017-04 becomes effective on January 1, 2020 with early adoption permitted. The Company is currently evaluating the impact that ASU 2017-04 will have on its financial position, results of operations and cash flows. |
Other Accrued Liabilities
Other Accrued Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | Other Accrued Liabilities Other accrued liabilities consisted of the following (amounts in thousands): March 31, 2017 December 31, 2016 Interest payable $ 27,267 $ 14,588 Income taxes payable 3,681 2,947 Legal accrual 183 271 LiveWatch acquisition retention bonus — 4,990 Derivative financial instruments 3,660 — Other 8,705 8,783 Total Other accrued liabilities $ 43,496 $ 31,579 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (amounts in thousands): March 31, December 31, 9.125% Senior Notes due April 1, 2020 with an effective interest rate of 9.4% $ 578,552 $ 578,078 Promissory Note to Ascent Capital due October 1, 2020 with an effective rate of 12.5% (a) 12,000 12,000 Term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00% with an effective rate of 7.2% 1,064,465 1,066,130 $295 million revolving credit facility, matures September 30, 2021, LIBOR plus 4.00%, subject to a LIBOR floor of 1.00% with an effective rate of 5.3% 67,567 42,570 1,722,584 1,698,778 Less current portion of long-term debt (11,000 ) (11,000 ) Long-term debt $ 1,711,584 $ 1,687,778 (a) The effective rate was 9.868% until February 29, 2016. Senior Notes The senior notes total $585,000,000 in principal, mature on April 1, 2020 and bear interest at 9.125% per annum (the "Senior Notes"). Interest payments are due semi-annually on April 1 and October 1 of each year. The Senior Notes are guaranteed by all of the Company's existing domestic subsidiaries. Ascent Capital has not guaranteed any of the Company's obligations under the Senior Notes. As of March 31, 2017 , the Senior Notes had deferred financing costs, net of accumulated amortization of $6,448,000 . The Senior Notes are guaranteed by all of the Company's existing domestic subsidiaries. See note 10, Consolidating Guarantor Financial Information for further information. Ascent Intercompany Loan On February 29, 2016, the Company retired the existing intercompany loan with an outstanding principal amount of $100,000,000 and executed and delivered a Promissory Note to Ascent Capital in a principal amount of $12,000,000 (the "Ascent Intercompany Loan"), with the $88,000,000 remaining principal being treated as a capital contribution. 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 12.5% per annum, payable semi-annually in cash in arrears on January 12 and July 12 of each year. 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 September 30, 2016, the Company entered into an amendment ("Amendment No. 6") with the lenders of its existing senior secured credit agreement dated March 23, 2012, and as amended and restated on April 9, 2015, February 17, 2015, August 16, 2013, March 25, 2013, and November 7, 2012 (the "Existing Credit Agreement"). Amendment No. 6 provided for, among other things, the issuance of a $1,100,000,000 senior secured term loan at a 1.5% discount and a new $295,000,000 super priority revolver (the Existing Credit Agreement together with Amendment No. 6, the "Credit Facility"). On March 30, 2017, the Company borrowed $41,800,000 on the new Credit Facility revolver to fund its April 1, 2017 interest payment due under the Senior Notes of $26,691,000 and other business activities. As of March 31, 2017, the Credit Facility term loan has a principal amount of $1,094,500,000 maturing on September 30, 2022. The term loan requires quarterly interest payments and quarterly principal payments of $2,750,000 . The term loan bears interest at LIBOR plus 5.5% , subject to a LIBOR floor of 1.0% . The Credit Facility revolver has a principal amount outstanding of $69,700,000 as of March 31, 2017 and matures on September 30, 2021. The Credit Facility revolver bears interest at LIBOR plus 4.0% , subject to a LIBOR floor of 1.0% . There is a commitment fee of 0.5% on unused portions of the Credit Facility Revolver. As of March 31, 2017, $225,300,000 is available for borrowing under the Credit Facility revolver. 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, 2017 , the Company has deferred financing costs and unamortized discounts, net of accumulated amortization, of $32,168,000 related to the Credit Facility. In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loan under the Credit Facility term loans, the Company has entered into interest rate swap agreements with terms similar to the Credit Facility term loans (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting. As a result of these interest rate swaps, the Company's current effective weighted average interest rate on the borrowings under the Credit Facility term loan is 7.18% . See note 5, Derivatives, for further disclosures related to these derivative instruments. The terms of the Senior Notes and the Credit Facility provide for certain financial and nonfinancial covenants. As of March 31, 2017 , the Company was in compliance with all required covenants. As of March 31, 2017 , principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands): Remainder of 2017 $ 8,250 2018 11,000 2019 11,000 2020 608,000 2021 80,700 2022 1,042,250 Thereafter — Total principal payments 1,761,200 Less: Unamortized deferred debt costs and discounts 38,616 Total debt on condensed consolidated balance sheet $ 1,722,584 |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | 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 6, Fair Value Measurements, for additional information about the credit valuation adjustments. As of March 31, 2017 the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below: Notional Effective Date Maturity Date Fixed Rate Paid Variable Rate Received $ 522,500,000 March 28, 2013 March 23, 2018 1.884% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 138,475,000 March 28, 2013 March 23, 2018 1.384% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 108,260,050 September 30, 2013 March 23, 2018 1.959% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 108,260,050 September 30, 2013 March 23, 2018 1.850% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 191,475,002 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 250,000,000 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 50,000,000 March 23, 2018 April 9, 2022 2.504% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 377,000,000 March 23, 2018 September 30, 2022 1.833% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) On March 25, 2013 and September 30, 2016, MONI negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the “Amended Swaps”). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, MONI simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation are 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 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 $4,304,000 . The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): Three Months Ended 2017 2016 Effective portion of loss recognized in Accumulated other comprehensive loss $ (733 ) (13,657 ) Effective portion of loss reclassified from Accumulated other comprehensive loss into Net loss (a) $ (1,782 ) (1,812 ) Ineffective portion of amount of gain (loss) recognized into Net loss (a) $ 18 (58 ) (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, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements According to the FASB ASC Topic 820, Fair Value Measurement , fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories: • Level 1 - Quoted prices for identical instruments in active markets. • Level 2 - Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets. • Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market. The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at March 31, 2017 and December 31, 2016 (amounts in thousands): Level 1 Level 2 Level 3 Total March 31, 2017 Interest rate swap agreement - assets (a) $ — 8,124 — $ 8,124 Interest rate swap agreements - liabilities (b) $ — (15,488 ) — $ (15,488 ) Total $ — (7,364 ) — $ (7,364 ) December 31, 2016 Interest rate swap agreement - assets (a) $ — 8,521 — $ 8,521 Interest rate swap agreements - liabilities (b) $ — (16,948 ) — $ (16,948 ) Total $ — (8,427 ) — $ (8,427 ) (a) Included in Other assets on the consolidated balance sheets (b) Interest rate swap agreement liability values are included in current Other accrued liabilities or non-current Derivative financial instruments on the consolidated balance sheets depending on the maturity date of the swap. The Company has determined that the significant inputs used to value the Swaps fall within Level 2 of the fair value hierarchy. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy. Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): March 31, 2017 December 31, 2016 Long term debt, including current portion: Carrying value $ 1,722,584 $ 1,698,778 Fair value (a) 1,754,595 1,716,385 (a) T he fair value is based on market quotations 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following table provides a summary of the changes in Accumulated other comprehensive loss for the period presented (amounts in thousands): Accumulated other comprehensive loss Balance at December 31, 2016 (8,957 ) Unrealized loss on derivatives recognized through Accumulated other comprehensive loss, net of income tax of $0 (733 ) Reclassifications of unrealized loss on derivatives into net income, net of income tax of $0 (a) 1,782 Net current period other comprehensive income 1,049 Balance at March 31, 2017 (7,908 ) (a) Amounts reclassified into net income are included in Interest expense on the condensed consolidated statement of operations. See note 5, Derivatives, for further information. |
Commitments, Contingencies and
Commitments, Contingencies and Other Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Liabilities | 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. |
Reportable Business Segments
Reportable Business Segments | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Reportable Business Segments | Reportable Business Segments Description of Segments The Company operates through two reportable business segments according to the nature and economic characteristics of its services as well as the manner in which the information issued internally by the Company's key decision maker, who is the Company's Chief Executive Officer. The Company's business segments are as follows: MONI The MONI segment is engaged in the business of providing security alarm monitoring services: monitoring signals arising from burglaries, fires, medical alerts and other events through security systems at subscribers' premises, as well as providing customer service and technical support. MONI primarily outsources the sales, installation and most of its field service functions to its dealers. LiveWatch LiveWatch is a Do-It-Yourself home security provider offering professionally monitored security services through a direct-to-consumer sales channel. LiveWatch offers a differentiated go-to-market strategy through direct response TV, internet and radio advertising. When a customer initiates the process to obtain monitoring services, LiveWatch pre-configures the alarm monitoring system based on customer specifications. LiveWatch then packages and ships the equipment directly to the customer. The customer self-installs the equipment on-site and activates the monitoring service over the phone. As they arise, transactions between segments are recorded on an arm's length basis using relevant market prices. The following table sets forth selected data from the accompanying condensed consolidated statements of operations for the periods indicated (amounts in thousands): MONI LiveWatch Consolidated Three Months Ended March 31, 2017 Net revenue $ 134,408 $ 6,792 $ 141,200 Depreciation and amortization $ 60,508 $ 1,159 $ 61,667 Net loss before income taxes $ (13,299 ) $ (5,930 ) $ (19,229 ) Three Months Ended March 31, 2016 Net revenue $ 138,096 $ 5,172 $ 143,268 Depreciation and amortization $ 62,152 $ 1,145 $ 63,297 Net loss before income taxes $ (13,151 ) $ (5,269 ) $ (18,420 ) The following table sets forth selected data from the accompanying condensed consolidated balance sheets for the periods indicated (amounts in thousands): MONI LiveWatch Eliminations Consolidated Balance at March 31, 2017 Subscriber accounts, net of amortization $ 1,356,211 $ 21,727 $ — $ 1,377,938 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 2,084,719 $ 63,321 $ (103,328 ) $ 2,044,712 Balance at December 31, 2016 Subscriber accounts, net of amortization $ 1,364,804 $ 21,956 $ — $ 1,386,760 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 2,062,838 $ 63,916 $ (93,037 ) $ 2,033,717 |
Consolidating Guarantor Financi
Consolidating Guarantor Financial Information | 3 Months Ended |
Mar. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Consolidating Guarantor Financial Information | Consolidating Guarantor Financial Information The Senior Notes were issued by MONI (the “Parent Issuer”) and are fully and unconditionally guaranteed, on a joint and several basis, 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. The unaudited condensed consolidating financial information for the Parent Issuer, the Subsidiary Guarantors and the non-guarantors are as follows: MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Balance Sheet (unaudited) As of March 31, 2017 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Assets Current assets: Cash and cash equivalents $ 27,741 1,248 — — 28,989 Trade receivables, net 12,451 520 — — 12,971 Prepaid and other current assets 60,222 1,563 — (53,572 ) 8,213 Total current assets 100,414 3,331 — (53,572 ) 50,173 Investment in subsidiaries 16,852 — — (16,852 ) — Property and equipment, net 25,532 1,821 — — 27,353 Subscriber accounts, net 1,340,628 37,310 — — 1,377,938 Dealer network and other intangible assets, net 13,338 1,029 — — 14,367 Goodwill 527,191 36,358 — — 563,549 Other assets, net 11,311 21 — — 11,332 Total assets $ 2,035,266 79,870 — (70,424 ) 2,044,712 Liabilities and Stockholder's Equity Current liabilities: Accounts payable $ 8,420 1,162 — — 9,582 Accrued payroll and related liabilities 3,765 520 — — 4,285 Other accrued liabilities 42,792 54,276 — (53,572 ) 43,496 Deferred revenue 14,756 1,412 — — 16,168 Holdback liability 13,288 480 — — 13,768 Current portion of long-term debt 11,000 — — — 11,000 Total current liabilities 94,021 57,850 — (53,572 ) 98,299 Non-current liabilities: Long-term debt 1,711,584 — — — 1,711,584 Long-term holdback liability 2,352 — — — 2,352 Derivative financial instruments 11,828 — — — 11,828 Deferred income tax liability, net 16,480 1,902 — — 18,382 Other liabilities 3,638 3,266 — — 6,904 Total liabilities 1,839,903 63,018 — (53,572 ) 1,849,349 Total stockholder's equity 195,363 16,852 — (16,852 ) 195,363 Total liabilities and stockholder's equity $ 2,035,266 79,870 — (70,424 ) 2,044,712 MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Balance Sheet (unaudited) As of December 31, 2016 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Assets Current assets: Cash and cash equivalents $ 1,739 1,438 — — 3,177 Trade receivables, net 13,265 604 — — 13,869 Prepaid and other current assets 51,251 2,171 — (44,062 ) 9,360 Total current assets 66,255 4,213 — (44,062 ) 26,406 Investment in subsidiaries 22,533 — — (22,533 ) — Property and equipment, net 26,652 1,618 — — 28,270 Subscriber accounts, net 1,349,285 37,475 — — 1,386,760 Dealer network and other intangible assets, net 15,762 1,062 — — 16,824 Goodwill 527,191 36,358 — — 563,549 Other assets, net 11,889 19 — — 11,908 Total assets $ 2,019,567 80,745 — (66,595 ) $ 2,033,717 Liabilities and Stockholder's Equity Current liabilities: Accounts payable $ 9,919 1,542 — — 11,461 Accrued payroll and related liabilities 3,731 337 — — 4,068 Other accrued liabilities 25,951 49,690 — (44,062 ) 31,579 Deferred revenue 13,807 1,340 — — 15,147 Holdback liability 13,434 482 — — 13,916 Current portion of long-term debt 11,000 — — — 11,000 Total current liabilities 77,842 53,391 — (44,062 ) 87,171 Non-current liabilities: Long-term debt 1,687,778 — — — 1,687,778 Long-term holdback liability 2,645 — — — 2,645 Derivative financial instruments 16,948 — — — 16,948 Deferred income tax liability, net 15,649 1,681 — — 17,330 Other liabilities 3,760 3,140 — — 6,900 Total liabilities 1,804,622 58,212 — (44,062 ) 1,818,772 Total stockholder's equity 214,945 22,533 — (22,533 ) 214,945 Total liabilities and stockholder's equity $ 2,019,567 80,745 — (66,595 ) 2,033,717 MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (unaudited) Three Months Ended March 31, 2017 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Net revenue $ 133,118 8,082 — — 141,200 0 Operating expenses: 0 Cost of services 26,307 3,662 — — 29,969 Selling, general, and administrative, including stock-based compensation 24,717 8,006 — — 32,723 Radio conversion costs 187 45 — — 232 Amortization of subscriber accounts, dealer network and other intangible assets 57,903 1,644 — — 59,547 Depreciation 1,976 144 — — 2,120 111,090 13,501 — — 124,591 Operating income (loss) 22,028 (5,419 ) — — 16,609 Other expense: Equity in loss of subsidiaries 5,682 — — (5,682 ) — Interest expense 35,833 5 — — 35,838 41,515 5 — (5,682 ) 35,838 (Loss) income before income taxes (19,487 ) (5,424 ) — 5,682 (19,229 ) Income tax expense 1,526 258 — — 1,784 Net (loss) income (21,013 ) (5,682 ) — 5,682 (21,013 ) Other comprehensive income (loss): Unrealized gain on derivative contracts 1,049 — — — 1,049 Total other comprehensive income 1,049 — — — 1,049 Comprehensive loss $ (19,964 ) (5,682 ) — 5,682 (19,964 ) MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (unaudited) Three Months Ended March 31, 2016 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Net revenue $ 137,307 5,961 — — 143,268 0 Operating expenses: 0 Cost of services 26,242 3,233 — — 29,475 Selling, general, and administrative, including stock-based compensation 22,531 6,082 — — 28,613 Radio conversion costs 9,079 — — — 9,079 Amortization of subscriber accounts, dealer network and other intangible assets 59,828 1,494 — — 61,322 Depreciation 1,910 65 — — 1,975 119,590 10,874 — — 130,464 Operating income (loss) 17,717 (4,913 ) — — 12,804 Other expense: Equity in loss of subsidiaries 5,141 — — (5,141 ) — Interest expense 31,220 4 — — 31,224 36,361 4 — (5,141 ) 31,224 (Loss) income before income taxes (18,644 ) (4,917 ) — 5,141 (18,420 ) Income tax expense 1,566 224 — — 1,790 Net (loss) income (20,210 ) (5,141 ) — 5,141 (20,210 ) Other comprehensive income (loss): Unrealized loss on derivative contracts (11,845 ) — — — (11,845 ) Total other comprehensive loss (11,845 ) — — — (11,845 ) Comprehensive loss $ (32,055 ) (5,141 ) — 5,141 (32,055 ) MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Statement of Cash Flows (unaudited) Three Months Ended March 31, 2017 Parent Issuer Subsidiary Guarantors Non- Guarantors Eliminations Consolidated (amounts in thousands) Net cash provided by operating activities $ 51,338 862 — — 52,200 Investing activities: Capital expenditures (1,347 ) (347 ) — — (1,694 ) Cost of subscriber accounts acquired (46,003 ) (705 ) — — (46,708 ) Net cash used in investing activities (47,350 ) (1,052 ) — — (48,402 ) Financing activities: Proceeds from long-term debt 64,750 — — — 64,750 Payments on long-term debt (42,600 ) — — — (42,600 ) Value of shares withheld for share-based compensation (136 ) — — — (136 ) Net cash provided by financing activities 22,014 — — — 22,014 Net increase (decrease) in cash and cash equivalents 26,002 (190 ) — — 25,812 Cash and cash equivalents at beginning of period 1,739 1,438 — — 3,177 Cash and cash equivalents at end of period $ 27,741 1,248 — — 28,989 Three Months Ended March 31, 2016 Parent Issuer Subsidiary Guarantors Non- Guarantors Eliminations Consolidated (amounts in thousands) Net cash provided by operating activities $ 53,690 1,107 — — 54,797 Investing activities: Capital expenditures (1,877 ) (399 ) — — (2,276 ) Cost of subscriber accounts acquired (45,791 ) (879 ) — — (46,670 ) Increase in restricted cash 55 — — — 55 Net cash used in investing activities (47,613 ) (1,278 ) — — (48,891 ) Financing activities: Proceeds from long-term debt 59,250 — — 59,250 Payments on long-term debt (38,675 ) — — — (38,675 ) Value of shares withheld for share-based compensation (58 ) — — — (58 ) Net cash provided by financing activities 20,517 — — — 20,517 Net increase (decrease) in cash and cash equivalents 26,594 (171 ) — — 26,423 Cash and cash equivalents at beginning of period 1,513 1,067 — — 2,580 Cash and cash equivalents at end of period $ 28,107 896 — — 29,003 |
Recent Accounting Pronounceme17
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). Under the update, revenue will be recognized based on a five-step model. The core principle of the model is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In the third quarter of 2015, the FASB deferred the effective date of the standard to annual and interim periods beginning after December 15, 2017. In March and April 2016, the FASB issued amendments to provide clarification on assessment of collectability criteria, presentation of sales taxes and measurement of non-cash consideration. In addition, the amendment provided clarification and included simplification to transaction guidance on contract modifications and completed contracts at transaction. In December 2016, the FASB issued amendments to provide clarification on codification and guidance application. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period. The Company currently plans to adopt ASU 2014-09 using the full retrospective approach. However, a final decision regarding the adoption method has not been made at this time. The Company's final determination will depend on the significance of the impact of the new standard on the Company's financial results. The Company is in the initial stages of evaluating the impact of ASU 2014-09 on the accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of third party service providers to assist in the evaluation. While the Company is in the process of assessing revenue recognition policies across each type of its contracts, the Company does not know or cannot reasonably estimate the impact of the adoption ASU 2014-09 on its financial position, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an amortization of the associated expense. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and becomes effective on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). Currently, the fair value of the reporting unit is compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit is lower than its carrying amount, then the implied fair value of goodwill is calculated. If the implied fair value of goodwill is lower than the carrying value of goodwill an impairment is recognized (identified as "Step 2"). ASU 2017-04 eliminates Step 2 from the impairment test; therefore, a goodwill impairment will be recognized as the difference of the fair value and the carrying value. ASU 2017-04 becomes effective on January 1, 2020 with early adoption permitted. The Company is currently evaluating the impact that ASU 2017-04 will have on its financial position, results of operations and cash flows. |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accrued Liabilities | Other accrued liabilities consisted of the following (amounts in thousands): March 31, 2017 December 31, 2016 Interest payable $ 27,267 $ 14,588 Income taxes payable 3,681 2,947 Legal accrual 183 271 LiveWatch acquisition retention bonus — 4,990 Derivative financial instruments 3,660 — Other 8,705 8,783 Total Other accrued liabilities $ 43,496 $ 31,579 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following (amounts in thousands): March 31, December 31, 9.125% Senior Notes due April 1, 2020 with an effective interest rate of 9.4% $ 578,552 $ 578,078 Promissory Note to Ascent Capital due October 1, 2020 with an effective rate of 12.5% (a) 12,000 12,000 Term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00% with an effective rate of 7.2% 1,064,465 1,066,130 $295 million revolving credit facility, matures September 30, 2021, LIBOR plus 4.00%, subject to a LIBOR floor of 1.00% with an effective rate of 5.3% 67,567 42,570 1,722,584 1,698,778 Less current portion of long-term debt (11,000 ) (11,000 ) Long-term debt $ 1,711,584 $ 1,687,778 (a) The effective rate was 9.868% until February 29, 2016. |
Schedule of Maturities of Long-Term Debt Including Short Term Borrowings | As of March 31, 2017 , principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands): Remainder of 2017 $ 8,250 2018 11,000 2019 11,000 2020 608,000 2021 80,700 2022 1,042,250 Thereafter — Total principal payments 1,761,200 Less: Unamortized deferred debt costs and discounts 38,616 Total debt on condensed consolidated balance sheet $ 1,722,584 |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Swaps' Outstanding Notional Balance and Terms | As of March 31, 2017 the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below: Notional Effective Date Maturity Date Fixed Rate Paid Variable Rate Received $ 522,500,000 March 28, 2013 March 23, 2018 1.884% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 138,475,000 March 28, 2013 March 23, 2018 1.384% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 108,260,050 September 30, 2013 March 23, 2018 1.959% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 108,260,050 September 30, 2013 March 23, 2018 1.850% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 191,475,002 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 250,000,000 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 50,000,000 March 23, 2018 April 9, 2022 2.504% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 377,000,000 March 23, 2018 September 30, 2022 1.833% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) On March 25, 2013 and September 30, 2016, MONI negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the “Amended Swaps”). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, MONI simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. |
Schedule of Impact of the Derivatives Designated as Cash Flow Hedges 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): Three Months Ended 2017 2016 Effective portion of loss recognized in Accumulated other comprehensive loss $ (733 ) (13,657 ) Effective portion of loss reclassified from Accumulated other comprehensive loss into Net loss (a) $ (1,782 ) (1,812 ) Ineffective portion of amount of gain (loss) recognized into Net loss (a) $ 18 (58 ) (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, 2017 | |
Fair Value Disclosures [Abstract] | |
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, 2017 and December 31, 2016 (amounts in thousands): Level 1 Level 2 Level 3 Total March 31, 2017 Interest rate swap agreement - assets (a) $ — 8,124 — $ 8,124 Interest rate swap agreements - liabilities (b) $ — (15,488 ) — $ (15,488 ) Total $ — (7,364 ) — $ (7,364 ) December 31, 2016 Interest rate swap agreement - assets (a) $ — 8,521 — $ 8,521 Interest rate swap agreements - liabilities (b) $ — (16,948 ) — $ (16,948 ) Total $ — (8,427 ) — $ (8,427 ) (a) Included in Other assets on the consolidated balance sheets (b) Interest rate swap agreement liability values are included in current Other accrued liabilities or non-current Derivative financial instruments on the consolidated balance sheets depending on the maturity date of the swap. |
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, 2017 December 31, 2016 Long term debt, including current portion: Carrying value $ 1,722,584 $ 1,698,778 Fair value (a) 1,754,595 1,716,385 (a) T he fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. |
Accumulated Other Comprehensi22
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Summary of the changes in Accumulated other comprehensive loss | The following table provides a summary of the changes in Accumulated other comprehensive loss for the period presented (amounts in thousands): Accumulated other comprehensive loss Balance at December 31, 2016 (8,957 ) Unrealized loss on derivatives recognized through Accumulated other comprehensive loss, net of income tax of $0 (733 ) Reclassifications of unrealized loss on derivatives into net income, net of income tax of $0 (a) 1,782 Net current period other comprehensive income 1,049 Balance at March 31, 2017 (7,908 ) (a) Amounts reclassified into net income are included in Interest expense on the condensed consolidated statement of operations. See note 5, Derivatives, for further information. |
Reportable Business Segments (T
Reportable Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | The following table sets forth selected data from the accompanying condensed consolidated statements of operations for the periods indicated (amounts in thousands): MONI LiveWatch Consolidated Three Months Ended March 31, 2017 Net revenue $ 134,408 $ 6,792 $ 141,200 Depreciation and amortization $ 60,508 $ 1,159 $ 61,667 Net loss before income taxes $ (13,299 ) $ (5,930 ) $ (19,229 ) Three Months Ended March 31, 2016 Net revenue $ 138,096 $ 5,172 $ 143,268 Depreciation and amortization $ 62,152 $ 1,145 $ 63,297 Net loss before income taxes $ (13,151 ) $ (5,269 ) $ (18,420 ) The following table sets forth selected data from the accompanying condensed consolidated balance sheets for the periods indicated (amounts in thousands): MONI LiveWatch Eliminations Consolidated Balance at March 31, 2017 Subscriber accounts, net of amortization $ 1,356,211 $ 21,727 $ — $ 1,377,938 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 2,084,719 $ 63,321 $ (103,328 ) $ 2,044,712 Balance at December 31, 2016 Subscriber accounts, net of amortization $ 1,364,804 $ 21,956 $ — $ 1,386,760 Goodwill $ 527,502 $ 36,047 $ — $ 563,549 Total assets $ 2,062,838 $ 63,916 $ (93,037 ) $ 2,033,717 |
Consolidating Guarantor Finan24
Consolidating Guarantor Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Condensed Financial Information of Parent Company Only Disclosure [Abstract] | |
Condensed Balance Sheet | MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Balance Sheet (unaudited) As of March 31, 2017 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Assets Current assets: Cash and cash equivalents $ 27,741 1,248 — — 28,989 Trade receivables, net 12,451 520 — — 12,971 Prepaid and other current assets 60,222 1,563 — (53,572 ) 8,213 Total current assets 100,414 3,331 — (53,572 ) 50,173 Investment in subsidiaries 16,852 — — (16,852 ) — Property and equipment, net 25,532 1,821 — — 27,353 Subscriber accounts, net 1,340,628 37,310 — — 1,377,938 Dealer network and other intangible assets, net 13,338 1,029 — — 14,367 Goodwill 527,191 36,358 — — 563,549 Other assets, net 11,311 21 — — 11,332 Total assets $ 2,035,266 79,870 — (70,424 ) 2,044,712 Liabilities and Stockholder's Equity Current liabilities: Accounts payable $ 8,420 1,162 — — 9,582 Accrued payroll and related liabilities 3,765 520 — — 4,285 Other accrued liabilities 42,792 54,276 — (53,572 ) 43,496 Deferred revenue 14,756 1,412 — — 16,168 Holdback liability 13,288 480 — — 13,768 Current portion of long-term debt 11,000 — — — 11,000 Total current liabilities 94,021 57,850 — (53,572 ) 98,299 Non-current liabilities: Long-term debt 1,711,584 — — — 1,711,584 Long-term holdback liability 2,352 — — — 2,352 Derivative financial instruments 11,828 — — — 11,828 Deferred income tax liability, net 16,480 1,902 — — 18,382 Other liabilities 3,638 3,266 — — 6,904 Total liabilities 1,839,903 63,018 — (53,572 ) 1,849,349 Total stockholder's equity 195,363 16,852 — (16,852 ) 195,363 Total liabilities and stockholder's equity $ 2,035,266 79,870 — (70,424 ) 2,044,712 MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Balance Sheet (unaudited) As of December 31, 2016 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Assets Current assets: Cash and cash equivalents $ 1,739 1,438 — — 3,177 Trade receivables, net 13,265 604 — — 13,869 Prepaid and other current assets 51,251 2,171 — (44,062 ) 9,360 Total current assets 66,255 4,213 — (44,062 ) 26,406 Investment in subsidiaries 22,533 — — (22,533 ) — Property and equipment, net 26,652 1,618 — — 28,270 Subscriber accounts, net 1,349,285 37,475 — — 1,386,760 Dealer network and other intangible assets, net 15,762 1,062 — — 16,824 Goodwill 527,191 36,358 — — 563,549 Other assets, net 11,889 19 — — 11,908 Total assets $ 2,019,567 80,745 — (66,595 ) $ 2,033,717 Liabilities and Stockholder's Equity Current liabilities: Accounts payable $ 9,919 1,542 — — 11,461 Accrued payroll and related liabilities 3,731 337 — — 4,068 Other accrued liabilities 25,951 49,690 — (44,062 ) 31,579 Deferred revenue 13,807 1,340 — — 15,147 Holdback liability 13,434 482 — — 13,916 Current portion of long-term debt 11,000 — — — 11,000 Total current liabilities 77,842 53,391 — (44,062 ) 87,171 Non-current liabilities: Long-term debt 1,687,778 — — — 1,687,778 Long-term holdback liability 2,645 — — — 2,645 Derivative financial instruments 16,948 — — — 16,948 Deferred income tax liability, net 15,649 1,681 — — 17,330 Other liabilities 3,760 3,140 — — 6,900 Total liabilities 1,804,622 58,212 — (44,062 ) 1,818,772 Total stockholder's equity 214,945 22,533 — (22,533 ) 214,945 Total liabilities and stockholder's equity $ 2,019,567 80,745 — (66,595 ) 2,033,717 |
Condensed Income Statement | MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (unaudited) Three Months Ended March 31, 2017 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Net revenue $ 133,118 8,082 — — 141,200 0 Operating expenses: 0 Cost of services 26,307 3,662 — — 29,969 Selling, general, and administrative, including stock-based compensation 24,717 8,006 — — 32,723 Radio conversion costs 187 45 — — 232 Amortization of subscriber accounts, dealer network and other intangible assets 57,903 1,644 — — 59,547 Depreciation 1,976 144 — — 2,120 111,090 13,501 — — 124,591 Operating income (loss) 22,028 (5,419 ) — — 16,609 Other expense: Equity in loss of subsidiaries 5,682 — — (5,682 ) — Interest expense 35,833 5 — — 35,838 41,515 5 — (5,682 ) 35,838 (Loss) income before income taxes (19,487 ) (5,424 ) — 5,682 (19,229 ) Income tax expense 1,526 258 — — 1,784 Net (loss) income (21,013 ) (5,682 ) — 5,682 (21,013 ) Other comprehensive income (loss): Unrealized gain on derivative contracts 1,049 — — — 1,049 Total other comprehensive income 1,049 — — — 1,049 Comprehensive loss $ (19,964 ) (5,682 ) — 5,682 (19,964 ) MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (unaudited) Three Months Ended March 31, 2016 Parent Issuer Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (amounts in thousands) Net revenue $ 137,307 5,961 — — 143,268 0 Operating expenses: 0 Cost of services 26,242 3,233 — — 29,475 Selling, general, and administrative, including stock-based compensation 22,531 6,082 — — 28,613 Radio conversion costs 9,079 — — — 9,079 Amortization of subscriber accounts, dealer network and other intangible assets 59,828 1,494 — — 61,322 Depreciation 1,910 65 — — 1,975 119,590 10,874 — — 130,464 Operating income (loss) 17,717 (4,913 ) — — 12,804 Other expense: Equity in loss of subsidiaries 5,141 — — (5,141 ) — Interest expense 31,220 4 — — 31,224 36,361 4 — (5,141 ) 31,224 (Loss) income before income taxes (18,644 ) (4,917 ) — 5,141 (18,420 ) Income tax expense 1,566 224 — — 1,790 Net (loss) income (20,210 ) (5,141 ) — 5,141 (20,210 ) Other comprehensive income (loss): Unrealized loss on derivative contracts (11,845 ) — — — (11,845 ) Total other comprehensive loss (11,845 ) — — — (11,845 ) Comprehensive loss $ (32,055 ) (5,141 ) — 5,141 (32,055 ) |
Condensed Cash Flow Statement | MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES Condensed Consolidating Statement of Cash Flows (unaudited) Three Months Ended March 31, 2017 Parent Issuer Subsidiary Guarantors Non- Guarantors Eliminations Consolidated (amounts in thousands) Net cash provided by operating activities $ 51,338 862 — — 52,200 Investing activities: Capital expenditures (1,347 ) (347 ) — — (1,694 ) Cost of subscriber accounts acquired (46,003 ) (705 ) — — (46,708 ) Net cash used in investing activities (47,350 ) (1,052 ) — — (48,402 ) Financing activities: Proceeds from long-term debt 64,750 — — — 64,750 Payments on long-term debt (42,600 ) — — — (42,600 ) Value of shares withheld for share-based compensation (136 ) — — — (136 ) Net cash provided by financing activities 22,014 — — — 22,014 Net increase (decrease) in cash and cash equivalents 26,002 (190 ) — — 25,812 Cash and cash equivalents at beginning of period 1,739 1,438 — — 3,177 Cash and cash equivalents at end of period $ 27,741 1,248 — — 28,989 Three Months Ended March 31, 2016 Parent Issuer Subsidiary Guarantors Non- Guarantors Eliminations Consolidated (amounts in thousands) Net cash provided by operating activities $ 53,690 1,107 — — 54,797 Investing activities: Capital expenditures (1,877 ) (399 ) — — (2,276 ) Cost of subscriber accounts acquired (45,791 ) (879 ) — — (46,670 ) Increase in restricted cash 55 — — — 55 Net cash used in investing activities (47,613 ) (1,278 ) — — (48,891 ) Financing activities: Proceeds from long-term debt 59,250 — — 59,250 Payments on long-term debt (38,675 ) — — — (38,675 ) Value of shares withheld for share-based compensation (58 ) — — — (58 ) Net cash provided by financing activities 20,517 — — — 20,517 Net increase (decrease) in cash and cash equivalents 26,594 (171 ) — — 26,423 Cash and cash equivalents at beginning of period 1,513 1,067 — — 2,580 Cash and cash equivalents at end of period $ 28,107 896 — — 29,003 |
Other Accrued Liabilities - Sch
Other Accrued Liabilities - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Interest payable | $ 27,267 | $ 14,588 |
Income taxes payable | 3,681 | 2,947 |
Legal accrual | 183 | 271 |
LiveWatch acquisition retention bonus | 0 | 4,990 |
Derivative financial instruments | 3,660 | 0 |
Other | 8,705 | 8,783 |
Total Other accrued liabilities | $ 43,496 | $ 31,579 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2017 | Dec. 31, 2016 | Feb. 29, 2016 | ||
Debt Instrument [Line Items] | ||||
Total debt on condensed consolidated balance sheet | $ 1,722,584,000 | $ 1,698,778,000 | ||
Less current portion of long-term debt | (11,000,000) | (11,000,000) | ||
Long-term debt | 1,711,584,000 | 1,687,778,000 | ||
Senior Notes | Senior Notes 9.125 Percent Due 2020 | ||||
Debt Instrument [Line Items] | ||||
Total debt on condensed consolidated balance sheet | $ 578,552,000 | 578,078,000 | ||
Debt interest rate | 9.125% | |||
Debt instrument, interest rate, effective percentage | 9.40% | |||
Promissory Note | Promissory Note Due to Ascent Capital due October 2020 | ||||
Debt Instrument [Line Items] | ||||
Total debt on condensed consolidated balance sheet | $ 12,000,000 | 12,000,000 | [1] | $ 12,000,000 |
Debt instrument, interest rate, effective percentage | 12.50% | 9.868% | ||
Term Loan | Term Loan Due September 2022 | ||||
Debt Instrument [Line Items] | ||||
Total debt on condensed consolidated balance sheet | $ 1,064,465,000 | 1,066,130,000 | ||
Debt instrument, interest rate, effective percentage | 7.20% | |||
Term Loan | Term Loan Due September 2022 | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable debt | 5.50% | |||
Floor on variable debt | 1.00% | |||
Revolving Credit Facility | Revolving Credit Facility Due 2021 | ||||
Debt Instrument [Line Items] | ||||
Total debt on condensed consolidated balance sheet | $ 67,567,000 | $ 42,570,000 | ||
Debt instrument, interest rate, effective percentage | 5.30% | |||
Maximum borrowing on line | $ 295,000,000 | |||
Revolving Credit Facility | Revolving Credit Facility Due 2021 | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable debt | 4.00% | |||
Floor on variable debt | 1.00% | |||
[1] | The effective rate was 9.868% until February 29, 2016. |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) | Apr. 01, 2017 | Sep. 30, 2016 | Feb. 29, 2016 | Mar. 31, 2017 | Mar. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 1,722,584,000 | $ 1,698,778,000 | |||||
Principal Owner | |||||||
Debt Instrument [Line Items] | |||||||
Related party, approved principal amount contribution | $ 88,000,000 | ||||||
MONI | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit | 69,700,000 | ||||||
Line of credit facility, remaining borrowing capacity | $ 225,300,000 | ||||||
MONI | LIBOR | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Unused capacity fee for line of credit | 0.50% | ||||||
Senior Notes | MONI | Subsequent Event | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, periodic payment, interest | $ 26,691,000 | ||||||
Term Loan | MONI | Interest Rate Swap | Designated as Hedging Instrument | |||||||
Debt Instrument [Line Items] | |||||||
Fixed rate paid | 7.18% | ||||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, unamortized discount (premium) and debt issuance costs, net | $ 32,168,000 | ||||||
Senior Notes 9.125 Percent Due 2020 | Senior Notes | |||||||
Debt Instrument [Line Items] | |||||||
Principal | $ 585,000,000 | ||||||
Debt interest rate | 9.125% | ||||||
Long-term debt | $ 578,552,000 | 578,078,000 | |||||
Senior Notes 9.125 Percent Due 2020 | Senior Notes | MONI | |||||||
Debt Instrument [Line Items] | |||||||
Accumulated amortization, debt issuance costs | 6,448,000 | ||||||
Promissory Note Due 2020 | Promissory Note | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 12,000,000 | 12,000,000 | 12,000,000 | [1] | |||
Promissory Note Due 2020 | Promissory Note | Parent Company | |||||||
Debt Instrument [Line Items] | |||||||
Debt interest rate | 12.50% | ||||||
Extinguishment of debt, amount | $ 100,000,000 | ||||||
Term Loan Due September 2022 | Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 1,064,465,000 | 1,066,130,000 | |||||
Term Loan Due September 2022 | Term Loan | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable debt | 5.50% | ||||||
Floor on variable debt | 1.00% | ||||||
Term Loan Due September 2022 | Term Loan | MONI | |||||||
Debt Instrument [Line Items] | |||||||
Principal | $ 1,100,000,000 | $ 1,094,500,000 | |||||
Debt discount on purchase price, percentage | 1.50% | ||||||
Line of credit facility, periodic payment | $ 2,750,000 | ||||||
Term Loan Due September 2022 | Term Loan | MONI | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable debt | 5.50% | ||||||
Floor on variable debt | 1.00% | ||||||
Revolving Credit Facility Due 2021 | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 67,567,000 | $ 42,570,000 | |||||
Maximum borrowing on line | $ 295,000,000 | ||||||
Revolving Credit Facility Due 2021 | Revolving Credit Facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable debt | 4.00% | ||||||
Floor on variable debt | 1.00% | ||||||
Revolving Credit Facility Due 2021 | Revolving Credit Facility | MONI | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing on line | $ 295,000,000 | ||||||
Line of credit | $ 41,800,000 | ||||||
Basis spread on variable debt | 4.00% | ||||||
Revolving Credit Facility Due 2021 | Revolving Credit Facility | MONI | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Floor on variable debt | 1.00% | ||||||
[1] | The effective rate was 9.868% until February 29, 2016. |
Long-Term Debt - Schedule of 28
Long-Term Debt - Schedule of Long Term Debt Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Remainder of 2017 | $ 8,250 | |
2,018 | 11,000 | |
2,019 | 11,000 | |
2,020 | 608,000 | |
2,021 | 80,700 | |
2,022 | 1,042,250 | |
Thereafter | 0 | |
Total principal payments | 1,761,200 | |
Less: | ||
Unamortized deferred debt costs and discounts | 38,616 | |
Total debt on condensed consolidated balance sheet | $ 1,722,584 | $ 1,698,778 |
Derivatives - Summary of Outsta
Derivatives - Summary of Outstanding Swaps (Details) | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
1.884% interest rate swaps | ||
Derivatives | ||
Notional | $ 522,500,000 | |
Fixed Rate Paid | 1.884% | [1] |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
1.384% interest rate swaps | ||
Derivatives | ||
Notional | $ 138,475,000 | |
Fixed Rate Paid | 1.384% | [1] |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
1.959% interest rate swaps | ||
Derivatives | ||
Notional | $ 108,260,050 | |
Fixed Rate Paid | 1.959% | |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
1.850% interest rate swaps | ||
Derivatives | ||
Notional | $ 108,260,050 | |
Fixed Rate Paid | 1.85% | |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
3.110% interest rate swaps | ||
Derivatives | ||
Notional | $ 191,475,002 | |
Fixed Rate Paid | 3.11% | [1] |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
3.110% interest rate swaps | ||
Derivatives | ||
Notional | $ 250,000,000 | |
Fixed Rate Paid | 3.11% | [1] |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
2.504% interest rate swaps | ||
Derivatives | ||
Notional | $ 50,000,000 | |
Fixed Rate Paid | 2.504% | |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
1.833% interest rate swaps | ||
Derivatives | ||
Notional | $ 377,000,000 | |
Fixed Rate Paid | 1.833% | |
Variable interest rate base floor | 1.00% | |
Variable interest rate base | 3 mo.USD-LIBOR-BBA | |
[1] | On March 25, 2013 and September 30, 2016, MONI negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the “Amended Swaps”). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, MONI simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. |
Derivatives - Summary of Deriva
Derivatives - Summary of Derivatives Designated as Cash Flow Hedges (Details) - Interest Rate Swap - Cash flow hedge - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Impact of the Swap on the consolidated financial statements | |||
Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months, net | $ (4,304) | ||
Effective portion of loss recognized in Accumulated other comprehensive loss | (733) | $ (13,657) | |
Effective portion of loss reclassified from Accumulated other comprehensive loss into Net loss | [1] | (1,782) | (1,812) |
Ineffective portion of amount of gain (loss) recognized into Net loss | [1] | $ 18 | $ (58) |
[1] | Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Measured On Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Fair value measurements | |||
Interest rate swap agreement - assets | [1] | $ 8,124 | $ 8,521 |
Interest rate swap agreements - liabilities | [2] | (15,488) | (16,948) |
Total | (7,364) | (8,427) | |
Level 1 | |||
Fair value measurements | |||
Interest rate swap agreement - assets | [1] | 0 | 0 |
Interest rate swap agreements - liabilities | [2] | 0 | 0 |
Total | 0 | 0 | |
Level 2 | |||
Fair value measurements | |||
Interest rate swap agreement - assets | [1] | 8,124 | 8,521 |
Interest rate swap agreements - liabilities | [2] | (15,488) | (16,948) |
Total | (7,364) | (8,427) | |
Level 3 | |||
Fair value measurements | |||
Interest rate swap agreement - assets | [1] | 0 | 0 |
Interest rate swap agreements - liabilities | [2] | 0 | 0 |
Total | $ 0 | $ 0 | |
[1] | Included in Other assets on the consolidated balance sheets | ||
[2] | Interest rate swap agreement liability values are included in current Other accrued liabilities or non-current Derivative financial instruments on the consolidated balance sheets depending on the maturity date of the swap. |
Fair Value Measurements - Sch32
Fair Value Measurements - Schedule of Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Long term debt, including current portion: | |||
Carrying value | $ 1,722,584 | $ 1,698,778 | |
Fair value | [1] | $ 1,754,595 | $ 1,716,385 |
[1] | T he fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Loss - Summary of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at December 31, 2016 | $ 214,945 | ||
Total other comprehensive income (loss), net of tax | 1,049 | $ (11,845) | |
Balance at March 31, 2017 | 195,363 | ||
Other comprehensive income (loss) before reclassifications, tax | 0 | ||
Other comprehensive income (loss), reclassification adjustment from AOCI on derivatives, tax | 0 | ||
AOCI Attributable to Parent | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance at December 31, 2016 | (8,957) | ||
Total other comprehensive income (loss), net of tax | 1,049 | ||
Balance at March 31, 2017 | (7,908) | ||
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Unrealized loss on derivatives recognized through Accumulated other comprehensive loss, net of income tax of $0 | (733) | ||
Reclassifications of unrealized loss on derivatives into net income, net of income tax of $0 | [1] | $ 1,782 | |
[1] | Amounts reclassified into net income are included in Interest expense on the condensed consolidated statement of operations. See note 5, Derivatives, for further information. |
Reportable Business Segments -
Reportable Business Segments - Narrative (Details) | 3 Months Ended |
Mar. 31, 2017segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Reportable Business Segments 35
Reportable Business Segments - Schedule of Reporting Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Net revenue | $ 141,200 | $ 143,268 | |
Depreciation and amortization | 61,667 | 63,297 | |
Net loss before income taxes | (19,229) | (18,420) | |
Subscriber accounts, net of amortization | 1,377,938 | $ 1,386,760 | |
Goodwill | 563,549 | 563,549 | |
Total assets | 2,044,712 | 2,033,717 | |
Operating Segments | MONI | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 134,408 | 138,096 | |
Depreciation and amortization | 60,508 | 62,152 | |
Net loss before income taxes | (13,299) | (13,151) | |
Subscriber accounts, net of amortization | 1,356,211 | 1,364,804 | |
Goodwill | 527,502 | 527,502 | |
Total assets | 2,084,719 | 2,062,838 | |
Operating Segments | LiveWatch | |||
Segment Reporting Information [Line Items] | |||
Net revenue | 6,792 | 5,172 | |
Depreciation and amortization | 1,159 | 1,145 | |
Net loss before income taxes | (5,930) | $ (5,269) | |
Subscriber accounts, net of amortization | 21,727 | 21,956 | |
Goodwill | 36,047 | 36,047 | |
Total assets | 63,321 | 63,916 | |
Eliminations | |||
Segment Reporting Information [Line Items] | |||
Subscriber accounts, net of amortization | 0 | 0 | |
Goodwill | 0 | 0 | |
Total assets | $ (103,328) | $ (93,037) |
Condensed Consolidating Balance
Condensed Consolidating Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||||
Cash and cash equivalents | $ 28,989 | $ 3,177 | $ 29,003 | $ 2,580 |
Trade receivables, net | 12,971 | 13,869 | ||
Prepaid and other current assets | 8,213 | 9,360 | ||
Total current assets | 50,173 | 26,406 | ||
Investment in subsidiaries | 0 | 0 | ||
Property and equipment, net | 27,353 | 28,270 | ||
Subscriber accounts, net | 1,377,938 | 1,386,760 | ||
Dealer network and other intangible assets, net | 14,367 | 16,824 | ||
Goodwill | 563,549 | 563,549 | ||
Other assets | 11,332 | 11,908 | ||
Total assets | 2,044,712 | 2,033,717 | ||
Current liabilities: | ||||
Accounts payable | 9,582 | 11,461 | ||
Accrued payroll and related liabilities | 4,285 | 4,068 | ||
Other accrued liabilities | 43,496 | 31,579 | ||
Deferred revenue | 16,168 | 15,147 | ||
Holdback liability | 13,768 | 13,916 | ||
Current portion of long-term debt | 11,000 | 11,000 | ||
Total current liabilities | 98,299 | 87,171 | ||
Non-current liabilities: | ||||
Long-term debt | 1,711,584 | 1,687,778 | ||
Long-term holdback liability | 2,352 | 2,645 | ||
Derivative financial instruments | 11,828 | 16,948 | ||
Deferred income tax liability, net | 18,382 | 17,330 | ||
Other liabilities | 6,904 | 6,900 | ||
Total liabilities | 1,849,349 | 1,818,772 | ||
Stockholder's equity: | ||||
Total stockholder's equity | 195,363 | 214,945 | ||
Total liabilities and stockholder's equity | 2,044,712 | 2,033,717 | ||
Eliminations | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | 0 | 0 |
Trade receivables, net | 0 | 0 | ||
Prepaid and other current assets | (53,572) | (44,062) | ||
Total current assets | (53,572) | (44,062) | ||
Investment in subsidiaries | (16,852) | (22,533) | ||
Property and equipment, net | 0 | 0 | ||
Subscriber accounts, net | 0 | 0 | ||
Dealer network and other intangible assets, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other assets | 0 | 0 | ||
Total assets | (70,424) | (66,595) | ||
Current liabilities: | ||||
Accounts payable | 0 | 0 | ||
Accrued payroll and related liabilities | 0 | 0 | ||
Other accrued liabilities | (53,572) | (44,062) | ||
Deferred revenue | 0 | 0 | ||
Holdback liability | 0 | 0 | ||
Current portion of long-term debt | 0 | 0 | ||
Total current liabilities | (53,572) | (44,062) | ||
Non-current liabilities: | ||||
Long-term debt | 0 | 0 | ||
Long-term holdback liability | 0 | 0 | ||
Derivative financial instruments | 0 | 0 | ||
Deferred income tax liability, net | 0 | 0 | ||
Other liabilities | 0 | 0 | ||
Total liabilities | (53,572) | (44,062) | ||
Stockholder's equity: | ||||
Total stockholder's equity | (16,852) | (22,533) | ||
Total liabilities and stockholder's equity | (70,424) | (66,595) | ||
Parent Issuer | ||||
Current assets: | ||||
Cash and cash equivalents | 27,741 | 1,739 | 28,107 | 1,513 |
Trade receivables, net | 12,451 | 13,265 | ||
Prepaid and other current assets | 60,222 | 51,251 | ||
Total current assets | 100,414 | 66,255 | ||
Investment in subsidiaries | 16,852 | 22,533 | ||
Property and equipment, net | 25,532 | 26,652 | ||
Subscriber accounts, net | 1,340,628 | 1,349,285 | ||
Dealer network and other intangible assets, net | 13,338 | 15,762 | ||
Goodwill | 527,191 | 527,191 | ||
Other assets | 11,311 | 11,889 | ||
Total assets | 2,035,266 | 2,019,567 | ||
Current liabilities: | ||||
Accounts payable | 8,420 | 9,919 | ||
Accrued payroll and related liabilities | 3,765 | 3,731 | ||
Other accrued liabilities | 42,792 | 25,951 | ||
Deferred revenue | 14,756 | 13,807 | ||
Holdback liability | 13,288 | 13,434 | ||
Current portion of long-term debt | 11,000 | 11,000 | ||
Total current liabilities | 94,021 | 77,842 | ||
Non-current liabilities: | ||||
Long-term debt | 1,711,584 | 1,687,778 | ||
Long-term holdback liability | 2,352 | 2,645 | ||
Derivative financial instruments | 11,828 | 16,948 | ||
Deferred income tax liability, net | 16,480 | 15,649 | ||
Other liabilities | 3,638 | 3,760 | ||
Total liabilities | 1,839,903 | 1,804,622 | ||
Stockholder's equity: | ||||
Total stockholder's equity | 195,363 | 214,945 | ||
Total liabilities and stockholder's equity | 2,035,266 | 2,019,567 | ||
Subsidiary Guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | 1,248 | 1,438 | 896 | 1,067 |
Trade receivables, net | 520 | 604 | ||
Prepaid and other current assets | 1,563 | 2,171 | ||
Total current assets | 3,331 | 4,213 | ||
Investment in subsidiaries | 0 | 0 | ||
Property and equipment, net | 1,821 | 1,618 | ||
Subscriber accounts, net | 37,310 | 37,475 | ||
Dealer network and other intangible assets, net | 1,029 | 1,062 | ||
Goodwill | 36,358 | 36,358 | ||
Other assets | 21 | 19 | ||
Total assets | 79,870 | 80,745 | ||
Current liabilities: | ||||
Accounts payable | 1,162 | 1,542 | ||
Accrued payroll and related liabilities | 520 | 337 | ||
Other accrued liabilities | 54,276 | 49,690 | ||
Deferred revenue | 1,412 | 1,340 | ||
Holdback liability | 480 | 482 | ||
Current portion of long-term debt | 0 | 0 | ||
Total current liabilities | 57,850 | 53,391 | ||
Non-current liabilities: | ||||
Long-term debt | 0 | 0 | ||
Long-term holdback liability | 0 | 0 | ||
Derivative financial instruments | 0 | 0 | ||
Deferred income tax liability, net | 1,902 | 1,681 | ||
Other liabilities | 3,266 | 3,140 | ||
Total liabilities | 63,018 | 58,212 | ||
Stockholder's equity: | ||||
Total stockholder's equity | 16,852 | 22,533 | ||
Total liabilities and stockholder's equity | 79,870 | 80,745 | ||
Non-Guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 |
Trade receivables, net | 0 | 0 | ||
Prepaid and other current assets | 0 | 0 | ||
Total current assets | 0 | 0 | ||
Investment in subsidiaries | 0 | 0 | ||
Property and equipment, net | 0 | 0 | ||
Subscriber accounts, net | 0 | 0 | ||
Dealer network and other intangible assets, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other assets | 0 | 0 | ||
Total assets | 0 | 0 | ||
Current liabilities: | ||||
Accounts payable | 0 | 0 | ||
Accrued payroll and related liabilities | 0 | 0 | ||
Other accrued liabilities | 0 | 0 | ||
Deferred revenue | 0 | 0 | ||
Holdback liability | 0 | 0 | ||
Current portion of long-term debt | 0 | 0 | ||
Total current liabilities | 0 | 0 | ||
Non-current liabilities: | ||||
Long-term debt | 0 | 0 | ||
Long-term holdback liability | 0 | 0 | ||
Derivative financial instruments | 0 | 0 | ||
Deferred income tax liability, net | 0 | 0 | ||
Other liabilities | 0 | 0 | ||
Total liabilities | 0 | 0 | ||
Stockholder's equity: | ||||
Total stockholder's equity | 0 | 0 | ||
Total liabilities and stockholder's equity | $ 0 | $ 0 |
Condensed Consolidating Stateme
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | $ 141,200 | $ 143,268 |
Operating expenses: | ||
Cost of services | 29,969 | 29,475 |
Selling, general, and administrative, including stock-based compensation | 32,723 | 28,613 |
Radio conversion costs | 232 | 9,079 |
Amortization of subscriber accounts, dealer network and other intangible assets | 59,547 | 61,322 |
Depreciation | 2,120 | 1,975 |
Total operating expenses | 124,591 | 130,464 |
Operating income (loss) | 16,609 | 12,804 |
Other expense: | ||
Equity in income (loss) of subsidiaries | 0 | 0 |
Interest expense | 35,838 | 31,224 |
Total other expense | 35,838 | 31,224 |
(Loss) income before income taxes | (19,229) | (18,420) |
Income tax expense | 1,784 | 1,790 |
Net (loss) income | (21,013) | (20,210) |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivative contracts, net of tax | 1,049 | (11,845) |
Total other comprehensive income (loss), net of tax | 1,049 | (11,845) |
Comprehensive loss | (19,964) | (32,055) |
Eliminations | ||
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | 0 | 0 |
Operating expenses: | ||
Cost of services | 0 | 0 |
Selling, general, and administrative, including stock-based compensation | 0 | 0 |
Radio conversion costs | 0 | 0 |
Amortization of subscriber accounts, dealer network and other intangible assets | 0 | 0 |
Depreciation | 0 | 0 |
Total operating expenses | 0 | 0 |
Operating income (loss) | 0 | 0 |
Other expense: | ||
Equity in income (loss) of subsidiaries | (5,682) | (5,141) |
Interest expense | 0 | 0 |
Total other expense | (5,682) | (5,141) |
(Loss) income before income taxes | 5,682 | 5,141 |
Income tax expense | 0 | 0 |
Net (loss) income | 5,682 | 5,141 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivative contracts, net of tax | 0 | 0 |
Total other comprehensive income (loss), net of tax | 0 | 0 |
Comprehensive loss | 5,682 | 5,141 |
Parent Issuer | ||
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | 133,118 | 137,307 |
Operating expenses: | ||
Cost of services | 26,307 | 26,242 |
Selling, general, and administrative, including stock-based compensation | 24,717 | 22,531 |
Radio conversion costs | 187 | 9,079 |
Amortization of subscriber accounts, dealer network and other intangible assets | 57,903 | 59,828 |
Depreciation | 1,976 | 1,910 |
Total operating expenses | 111,090 | 119,590 |
Operating income (loss) | 22,028 | 17,717 |
Other expense: | ||
Equity in income (loss) of subsidiaries | 5,682 | 5,141 |
Interest expense | 35,833 | 31,220 |
Total other expense | 41,515 | 36,361 |
(Loss) income before income taxes | (19,487) | (18,644) |
Income tax expense | 1,526 | 1,566 |
Net (loss) income | (21,013) | (20,210) |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivative contracts, net of tax | 1,049 | (11,845) |
Total other comprehensive income (loss), net of tax | 1,049 | (11,845) |
Comprehensive loss | (19,964) | (32,055) |
Subsidiary Guarantors | ||
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | 8,082 | 5,961 |
Operating expenses: | ||
Cost of services | 3,662 | 3,233 |
Selling, general, and administrative, including stock-based compensation | 8,006 | 6,082 |
Radio conversion costs | 45 | 0 |
Amortization of subscriber accounts, dealer network and other intangible assets | 1,644 | 1,494 |
Depreciation | 144 | 65 |
Total operating expenses | 13,501 | 10,874 |
Operating income (loss) | (5,419) | (4,913) |
Other expense: | ||
Equity in income (loss) of subsidiaries | 0 | 0 |
Interest expense | 5 | 4 |
Total other expense | 5 | 4 |
(Loss) income before income taxes | (5,424) | (4,917) |
Income tax expense | 258 | 224 |
Net (loss) income | (5,682) | (5,141) |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivative contracts, net of tax | 0 | 0 |
Total other comprehensive income (loss), net of tax | 0 | 0 |
Comprehensive loss | (5,682) | (5,141) |
Non-Guarantors | ||
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | 0 | 0 |
Operating expenses: | ||
Cost of services | 0 | 0 |
Selling, general, and administrative, including stock-based compensation | 0 | 0 |
Radio conversion costs | 0 | 0 |
Amortization of subscriber accounts, dealer network and other intangible assets | 0 | 0 |
Depreciation | 0 | 0 |
Total operating expenses | 0 | 0 |
Operating income (loss) | 0 | 0 |
Other expense: | ||
Equity in income (loss) of subsidiaries | 0 | 0 |
Interest expense | 0 | 0 |
Total other expense | 0 | 0 |
(Loss) income before income taxes | 0 | 0 |
Income tax expense | 0 | 0 |
Net (loss) income | 0 | 0 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on derivative contracts, net of tax | 0 | 0 |
Total other comprehensive income (loss), net of tax | 0 | 0 |
Comprehensive loss | $ 0 | $ 0 |
Condensed Consolidating State38
Condensed Consolidating Statement of Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net cash provided by operating activities | $ 52,200 | $ 54,797 |
Investing activities: | ||
Capital expenditures | (1,694) | (2,276) |
Cost of subscriber accounts acquired | (46,708) | (46,670) |
Increase in restricted cash | 0 | 55 |
Net cash used in investing activities | (48,402) | (48,891) |
Financing activities: | ||
Proceeds from long-term debt | 64,750 | 59,250 |
Payments on long-term debt | (42,600) | (38,675) |
Value of shares withheld for share-based compensation | (136) | (58) |
Net cash provided by financing activities | 22,014 | 20,517 |
Net increase (decrease) in cash and cash equivalents | 25,812 | 26,423 |
Cash and cash equivalents at beginning of period | 3,177 | 2,580 |
Cash and cash equivalents at end of period | 28,989 | 29,003 |
Eliminations | ||
Cash flows from operating activities: | ||
Net cash provided by operating activities | 0 | 0 |
Investing activities: | ||
Capital expenditures | 0 | 0 |
Cost of subscriber accounts acquired | 0 | 0 |
Increase in restricted cash | 0 | |
Net cash used in investing activities | 0 | 0 |
Financing activities: | ||
Proceeds from long-term debt | 0 | 0 |
Payments on long-term debt | 0 | 0 |
Value of shares withheld for share-based compensation | 0 | 0 |
Net cash provided by financing activities | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 |
Cash and cash equivalents at end of period | 0 | 0 |
Parent Issuer | ||
Cash flows from operating activities: | ||
Net cash provided by operating activities | 51,338 | 53,690 |
Investing activities: | ||
Capital expenditures | (1,347) | (1,877) |
Cost of subscriber accounts acquired | (46,003) | (45,791) |
Increase in restricted cash | 55 | |
Net cash used in investing activities | (47,350) | (47,613) |
Financing activities: | ||
Proceeds from long-term debt | 64,750 | 59,250 |
Payments on long-term debt | (42,600) | (38,675) |
Value of shares withheld for share-based compensation | (136) | (58) |
Net cash provided by financing activities | 22,014 | 20,517 |
Net increase (decrease) in cash and cash equivalents | 26,002 | 26,594 |
Cash and cash equivalents at beginning of period | 1,739 | 1,513 |
Cash and cash equivalents at end of period | 27,741 | 28,107 |
Subsidiary Guarantors | ||
Cash flows from operating activities: | ||
Net cash provided by operating activities | 862 | 1,107 |
Investing activities: | ||
Capital expenditures | (347) | (399) |
Cost of subscriber accounts acquired | (705) | (879) |
Increase in restricted cash | 0 | |
Net cash used in investing activities | (1,052) | (1,278) |
Financing activities: | ||
Proceeds from long-term debt | 0 | 0 |
Payments on long-term debt | 0 | 0 |
Value of shares withheld for share-based compensation | 0 | 0 |
Net cash provided by financing activities | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | (190) | (171) |
Cash and cash equivalents at beginning of period | 1,438 | 1,067 |
Cash and cash equivalents at end of period | 1,248 | 896 |
Non-Guarantors | ||
Cash flows from operating activities: | ||
Net cash provided by operating activities | 0 | 0 |
Investing activities: | ||
Capital expenditures | 0 | 0 |
Cost of subscriber accounts acquired | 0 | 0 |
Increase in restricted cash | 0 | |
Net cash used in investing activities | 0 | 0 |
Financing activities: | ||
Proceeds from long-term debt | 0 | |
Payments on long-term debt | 0 | 0 |
Value of shares withheld for share-based compensation | 0 | 0 |
Net cash provided by financing activities | 0 | 0 |
Net increase (decrease) in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents at beginning of period | 0 | 0 |
Cash and cash equivalents at end of period | $ 0 | $ 0 |