Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | MONITRONICS INTERNATIONAL INC | |
Entity Central Index Key | 0001265107 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Smaller Reporting Company | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 22,500,000 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 28,589 | $ 2,188 |
Restricted cash | 86 | 189 |
Trade receivables, net of allowance for doubtful accounts of $912 in 2019 and $3,759 in 2018 | 12,105 | 13,121 |
Prepaid and other current assets | 24,966 | 28,178 |
Total current assets | 65,746 | 43,676 |
Property and equipment, net of accumulated depreciation of $925 in 2019 and $40,531 in 2018 | 41,215 | 36,539 |
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization of $15,322 in 2019 and $1,621,242 in 2018 | 1,089,135 | 1,195,463 |
Dealer network and other intangible assets, net of accumulated amortization of $1,980 in 2019 and $0 in 2018 | 142,719 | 0 |
Goodwill | 81,943 | 0 |
Deferred income tax asset, net | 783 | 783 |
Operating lease right-of-use asset | 19,153 | |
Other assets | 16,694 | 29,307 |
Total assets | 1,457,388 | 1,305,768 |
Current liabilities: | ||
Accounts payable | 14,416 | 12,099 |
Other accrued liabilities | 35,035 | 31,085 |
Deferred revenue | 13,309 | 13,060 |
Holdback liability | 6,148 | 11,513 |
Current portion of long-term debt | 8,225 | 1,816,450 |
Total current liabilities | 77,133 | 1,884,207 |
Non-current liabilities: | ||
Long-term debt | 985,775 | 0 |
Long-term holdback liability | 2,207 | 1,770 |
Derivative financial instruments | 0 | 6,039 |
Operating lease liabilities | 15,929 | |
Other liabilities | 7,751 | 2,727 |
Total liabilities | 1,088,795 | 1,894,743 |
Commitments and contingencies | ||
Stockholder's equity (deficit): | ||
Preferred stock | 0 | |
Common stock | 225 | 0 |
Additional paid-in capital | 379,175 | 439,711 |
Accumulated deficit | (10,807) | (1,036,294) |
Accumulated other comprehensive income, net | 7,608 | |
Total stockholder's equity (deficit) | 368,593 | (588,975) |
Total liabilities and stockholder's equity (deficit) | $ 1,457,388 | $ 1,305,768 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for doubtful accounts | $ 912 | $ 3,759 |
Property and equipment, accumulated depreciation | 925 | 40,531 |
Subscriber accounts and deferred contract acquisition costs, accumulated amortization | 15,322 | 1,621,242 |
Dealer network and other intangible assets, accumulated amortization | $ 1,980 | $ 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 45,000,000 | 1,000 |
Common stock, issued shares (in shares) | 22,500,000 | 1,000 |
Common stock, outstanding shares (in shares) | 22,500,000 | 1,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | |
Preferred stock, authorized shares (in shares) | 5,000,000 | |
Preferred stock, issued shares (in shares) | 0 | |
Preferred stock, outstanding shares (in shares) | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 | Aug. 31, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | |||||
Net revenue | $ 36,289 | $ 84,589 | $ 137,156 | $ 342,286 | $ 405,922 |
Operating expenses: | |||||
Cost of services | 8,976 | 19,986 | 35,059 | 75,286 | 100,807 |
Selling, general and administrative, including stock-based and long-term incentive compensation | 11,390 | 20,980 | 34,266 | 80,365 | 98,935 |
Radio conversion costs | 825 | 931 | 0 | 931 | 0 |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 17,302 | 32,508 | 52,671 | 130,791 | 160,973 |
Depreciation | 925 | 1,073 | 2,880 | 7,348 | 8,360 |
Loss on goodwill impairment | 0 | 0 | 214,400 | ||
Total operating expenses | 39,418 | 75,478 | 124,876 | 294,721 | 583,475 |
Operating (loss) income | (3,129) | 9,111 | 12,280 | 47,565 | (177,553) |
Other (income) expense: | |||||
Gain on restructuring and reorganization, net | 0 | (702,824) | 0 | (669,722) | 0 |
Interest expense | 7,474 | 27,112 | 39,077 | 105,081 | 114,550 |
Realized and unrealized loss, net on derivative financial instruments | 0 | 6,804 | 0 | ||
Refinancing expense | 0 | 0 | 5,697 | 5,214 | 5,697 |
Total other (income) expense | 7,474 | (675,712) | 44,774 | (552,623) | 120,247 |
(Loss) income before income taxes | (10,603) | 684,823 | (32,494) | 600,188 | (297,800) |
Income tax expense | 204 | 438 | 1,346 | 1,775 | 4,039 |
Net (loss) income | (10,807) | 684,385 | (33,840) | 598,413 | (301,839) |
Other comprehensive (loss) income: | |||||
Unrealized (loss) gain on derivative contracts, net | 0 | 0 | 3,269 | (940) | 23,196 |
Total other comprehensive (loss) income, net of tax | 0 | 0 | 3,269 | (940) | 23,196 |
Comprehensive (loss) income | $ (10,807) | $ 684,385 | $ (30,571) | $ 597,473 | $ (278,643) |
Basic and diluted income per share: | |||||
Net loss (in dollars per share) | $ (0.48) | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (10,807) | $ 598,413 | $ (301,839) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 17,302 | 130,791 | 160,973 |
Depreciation | 925 | 7,348 | 8,360 |
Stock-based and long-term incentive compensation | 26 | 912 | 751 |
Deferred income tax expense | 0 | 0 | 1,987 |
Amortization of debt discount and deferred debt costs | 0 | 0 | 5,472 |
Gain on restructuring and reorganization, net | 0 | (669,722) | 0 |
Unrealized loss on derivative financial instruments, net | 0 | 4,577 | 0 |
Refinancing expense | 0 | 5,214 | 5,697 |
Bad debt expense | 912 | 7,558 | 8,511 |
Loss on goodwill impairment | 0 | 0 | 214,400 |
Other non-cash activity, net | 117 | (462) | 2,040 |
Changes in assets and liabilities: | |||
Trade receivables | (1,183) | (6,271) | (9,028) |
Prepaid expenses and other assets | (736) | 2,760 | (9,769) |
Subscriber accounts - deferred contract acquisition costs | (162) | (2,193) | (4,529) |
Payables and other liabilities | 6,776 | 36,690 | (8,568) |
Net cash provided by operating activities | 13,170 | 115,615 | 74,458 |
Cash flows from investing activities: | |||
Capital expenditures | (1,123) | (7,100) | (11,513) |
Cost of subscriber accounts acquired | (8,012) | (83,814) | (111,531) |
Net cash used in investing activities | (9,135) | (90,914) | (123,044) |
Cash flows from financing activities: | |||
Proceeds from long-term debt | 5,000 | 253,100 | 218,950 |
Payments on long-term debt | (5,000) | (379,666) | (136,600) |
Proceeds from equity rights offering | 0 | 166,300 | 0 |
Cash contributed by Ascent Capital | 0 | 24,139 | 0 |
Payments of restructuring and reorganization costs | 0 | (53,889) | 0 |
Payments of refinancing costs | 0 | (7,404) | (5,015) |
Value of shares withheld for share-based compensation | 0 | (18) | (83) |
Dividend to Ascent Capital | 0 | (5,000) | (5,000) |
Net cash (used in) provided by financing activities | 0 | (2,438) | 72,252 |
Net increase in cash, cash equivalents and restricted cash | 4,035 | 22,263 | 23,666 |
Cash, cash equivalents and restricted cash at beginning of period | 24,640 | 2,377 | 3,302 |
Cash, cash equivalents and restricted cash at end of period | $ 28,675 | $ 24,640 | $ 26,968 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Stockholder's Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance (in shares) at Dec. 31, 2017 | 1,000 | ||||
Beginning Balance at Dec. 31, 2017 | $ 102,736 | $ 0 | $ 444,330 | $ (334,219) | $ (7,375) |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (26,207) | (26,207) | |||
Other comprehensive (loss) income | 14,406 | 14,406 | |||
Stock-based compensation | 47 | 47 | |||
Value of shares withheld for minimum tax liability | (42) | (42) | |||
Ending Balance (in shares) at Mar. 31, 2018 | 1,000 | ||||
Ending Balance at Mar. 31, 2018 | 68,220 | $ 0 | 444,335 | (383,751) | 7,636 |
Beginning Balance (in shares) at Dec. 31, 2017 | 1,000 | ||||
Beginning Balance at Dec. 31, 2017 | 102,736 | $ 0 | 444,330 | (334,219) | (7,375) |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (301,839) | ||||
Other comprehensive (loss) income | 23,196 | ||||
Ending Balance (in shares) at Sep. 30, 2018 | 1,000 | ||||
Ending Balance at Sep. 30, 2018 | (202,907) | $ 0 | 440,050 | (659,383) | 16,426 |
Beginning Balance (in shares) at Mar. 31, 2018 | 1,000 | ||||
Beginning Balance at Mar. 31, 2018 | 68,220 | $ 0 | 444,335 | (383,751) | 7,636 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (241,792) | (241,792) | |||
Other comprehensive (loss) income | 5,521 | 5,521 | |||
Stock-based compensation | 383 | 383 | |||
Value of shares withheld for minimum tax liability | (27) | (27) | |||
Ending Balance (in shares) at Jun. 30, 2018 | 1,000 | ||||
Ending Balance at Jun. 30, 2018 | (167,695) | $ 0 | 444,691 | (625,543) | 13,157 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (33,840) | (33,840) | |||
Other comprehensive (loss) income | 3,269 | 3,269 | |||
Dividend paid to Ascent Capital | (5,000) | (5,000) | |||
Stock-based compensation | 373 | 373 | |||
Value of shares withheld for minimum tax liability | (14) | (14) | |||
Ending Balance (in shares) at Sep. 30, 2018 | 1,000 | ||||
Ending Balance at Sep. 30, 2018 | $ (202,907) | $ 0 | 440,050 | (659,383) | 16,426 |
Beginning Balance (in shares) at Dec. 31, 2018 | 1,000 | 1,000 | |||
Beginning Balance at Dec. 31, 2018 | $ (588,975) | $ 0 | 439,711 | (1,036,294) | 7,608 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (31,770) | (31,770) | |||
Other comprehensive (loss) income | (468) | (468) | |||
Dividend paid to Ascent Capital | (5,000) | (5,000) | |||
Contribution from Ascent Capital | 2,250 | 2,250 | |||
Stock-based compensation | 189 | 189 | |||
Value of shares withheld for minimum tax liability | (1) | (1) | |||
Ending Balance (in shares) at Mar. 31, 2019 | 1,000 | ||||
Ending Balance at Mar. 31, 2019 | $ (623,775) | $ 0 | 437,149 | (1,068,064) | 7,140 |
Beginning Balance (in shares) at Dec. 31, 2018 | 1,000 | 1,000 | |||
Beginning Balance at Dec. 31, 2018 | $ (588,975) | $ 0 | 439,711 | (1,036,294) | 7,608 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | 598,413 | ||||
Other comprehensive (loss) income | $ (940) | ||||
Ending Balance (in shares) at Aug. 31, 2019 | 22,500,000 | 22,500,000 | |||
Ending Balance at Aug. 31, 2019 | $ 379,400 | $ 225 | 379,175 | 0 | 0 |
Beginning Balance (in shares) at Mar. 31, 2019 | 1,000 | ||||
Beginning Balance at Mar. 31, 2019 | (623,775) | $ 0 | 437,149 | (1,068,064) | 7,140 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (54,202) | (54,202) | |||
Other comprehensive (loss) income | (472) | (472) | |||
Stock-based compensation | (413) | (413) | |||
Value of shares withheld for minimum tax liability | (2) | (2) | |||
Ending Balance (in shares) at Jun. 30, 2019 | 1,000 | ||||
Ending Balance at Jun. 30, 2019 | (678,864) | $ 0 | 436,734 | (1,122,266) | 6,668 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | 684,385 | 684,385 | |||
Other comprehensive (loss) income | 0 | ||||
Stock-based compensation | 267 | 267 | |||
Value of shares withheld for minimum tax liability | (15) | (15) | |||
Cancellation of Predecessor equity (in shares) | (1,000) | ||||
Cancellation of Predecessor equity | (5,773) | (436,986) | 437,881 | (6,668) | |
Issuance of Successor common stock (in shares) | 22,500,000 | ||||
Issuance of Successor common stock | $ 379,400 | $ 225 | 379,175 | ||
Ending Balance (in shares) at Aug. 31, 2019 | 22,500,000 | 22,500,000 | |||
Ending Balance at Aug. 31, 2019 | $ 379,400 | $ 225 | 379,175 | 0 | 0 |
Increase (Decrease) in Stockholder's Equity | |||||
Net (loss) income | (10,807) | (10,807) | |||
Other comprehensive (loss) income | $ 0 | ||||
Ending Balance (in shares) at Sep. 30, 2019 | 22,500,000 | 22,500,000 | |||
Ending Balance at Sep. 30, 2019 | $ 368,593 | $ 225 | $ 379,175 | $ (10,807) | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Monitronics International, Inc. and its subsidiaries (collectively, "Monitronics" or the "Company", doing business as Brinks Home Security TM ) provide residential customers and commercial client accounts with monitored home and business security systems, as well as interactive and home automation services, in the United States, Canada and Puerto Rico. Monitronics customers are obtained through our direct-to-consumer sales channel (the "Direct to Consumer Channel"), which offers both Do-It-Yourself and professional installation security solutions and our exclusive authorized dealer network (the "Dealer Channel"), which provides product and installation services, as well as support to customers. As previously disclosed, on June 30, 2019 (the "Petition Date"), Monitronics and certain of its domestic subsidiaries (collectively, the "Debtors"), filed voluntary petitions for relief (collectively, the "Petitions" and, the cases commenced thereby, the "Chapter 11 Cases") under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). The Debtors' Chapter 11 Cases were jointly administered under the caption In re Monitronics International, Inc., et al., Case No. 19-33650 . On August 7, 2019, the Bankruptcy Court entered an order, Docket No. 199 (the "Confirmation Order"), confirming and approving the Debtors' Joint Partial Prepackaged Plan of Reorganization (including all exhibits thereto and, as modified by the Confirmation order, the "Plan") that was previously filed with the Bankruptcy Court on June 30, 2019. On August 30, 2019 (the "Effective Date"), the conditions to the effectiveness of the Plan were satisfied and the Company emerged from Chapter 11 after completing a series of transactions through which the Company and its former parent, Ascent Capital Group, Inc. ("Ascent Capital") merged (the "Merger") in accordance with the terms of the Agreement and Plan of Merger, dated as of May 24, 2019 (the "Merger Agreement"). Monitronics was the surviving corporation and, immediately following the Merger, was redomiciled in Delaware in accordance with the terms of the Merger Agreement. Upon emergence from Chapter 11 on the Effective Date, the Company has applied Accounting Standards Codification ("ASC") 852, Reorganizations ("ASC 852"), in preparing its consolidated financial statements (see Note 2, Emergence from Bankruptcy and Note 3, Fresh Start Accounting ). As a result of the application of fresh start accounting and the effects of the implementation of the Plan, a new entity for financial reporting purposes was created. The Company selected a convenience date of August 31, 2019 for purposes of applying fresh start accounting as the activity between the convenience date and the Effective Date did not result in a material difference in the financial results. References to "Successor" or "Successor Company" relate to the balance sheet and results of operations of Monitronics on and subsequent to September 1, 2019. References to "Predecessor" or "Predecessor Company" refer to the balance sheet and results of operations of Monitronics prior to September 1, 2019. With the exception of interest expense, the Company's operating results and key operating performance measures on a consolidated basis were not materially impacted by the reorganization. As such, references to the "Company" could refer to either the Predecessor or Successor periods, as defined. Subsequent to the Petition Date and before the Effective Date, all expenses, gains and losses directly associated with the restructuring and reorganization proceedings are reported as Gain on restructuring and reorganization, net in the accompanying unaudited condensed consolidated statements of operations. Additionally, Liabilities subject to compromise during the pendency of the Chapter 11 Cases are distinguished from liabilities of the Company that are not expected to be compromised, including post-petition liabilities, in the accompanying unaudited condensed consolidated balance sheets. The unaudited interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s (the "SEC") Regulation S-X. Accordingly, it does not include all of the information required by generally accepted accounting principles in the United States ("GAAP") for complete financial statements. The Company’s unaudited condensed consolidated balance sheet as of September 30, 2019 , and the unaudited condensed statements of operations and cash flows of the Successor for the period from September 1, 2019 through September 30, 2019 and of the Predecessor for the period from January 1, 2019 through August 31, 2019 and for three and nine months ended September 30, 2018 , include the results of Monitronics and all of its direct and indirect subsidiaries. The accompanying interim condensed consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the Monitronics Annual Report on Form 10-K for the year ended December 31, 2018 , filed with the SEC on April 1, 2019 . The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s condensed consolidated financial statements primarily relate to valuation of subscriber accounts and valuation of deferred tax assets. 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. Going Concern In accordance with the requirements of Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40) , and ASC 205-40, the Company has the responsibility to evaluate at each reporting period, including interim periods, whether conditions and events, considered in the aggregate, raise substantial doubt about its ability to meet its future financial obligations. During the pendency of the Chapter 11 Cases, the Company’s ability to continue as a going concern was contingent upon a variety of factors, including the Bankruptcy Court’s approval of the Plan and the Company’s ability to successfully implement the Plan. As a result of the effectiveness of the Plan and the Company’s current financial condition and liquidity sources, the Company believes it has the ability to meet its obligations for at least one year from the date of issuance of this Form 10-Q. Supplemental Cash Flow Information Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Nine Months Ended September 30, 2019 2019 2018 State taxes paid, net $ — $ 2,637 2,710 Interest paid 7,238 72,710 95,889 Accrued capital expenditures 1,471 1,405 882 |
Emergence from Bankruptcy
Emergence from Bankruptcy | 9 Months Ended |
Sep. 30, 2019 | |
Reorganizations [Abstract] | |
Emergence from Bankruptcy | Emergence from Bankruptcy On August 7, 2019, the Bankruptcy Court entered the Confirmation Order confirming the Plan. On the Effective Date, the conditions to the effectiveness of the Plan were satisfied and the Company emerged from Chapter 11 after completing a series of transactions through with the Company and its former parent, Ascent Capital, merged in accordance with the terms of the Merger Agreement. Monitronics was the surviving corporation and, immediately following the Merger, was redomiciled in Delaware in accordance with the terms of the Merger Agreement. Cancellation of Certain Prepetition Obligations On the Effective Date, by operation of the Plan, all outstanding obligations under (i) the 9.125% Senior Notes due April 2020 (the "Predecessor Senior Notes") and the indenture governing the Predecessor Senior Notes and (ii) the Company’s prepetition credit facility (the "Predecessor Credit Facility") were terminated, as described in further detail below. Additional Matters Contemplated by the Plan On the Effective Date, the Company also completed a series of transactions through which the Company’s debt was restructured as follows: (i) terminating the Company’s $245,000,000 secured debtor-in-possession revolving credit facility (the "Predecessor DIP Facility") and replacing it with a $145,000,000 senior secured revolving credit facility (the "Successor Revolving Credit Facility") and $150,000,000 in senior secured term loans (the "Successor Term Loan Facility" and together with the Successor Revolving Credit Facility the "Successor Credit Facilities"), (ii) exchanging $1,072,500,000 of outstanding term loans under the Company's Predecessor Credit Facility for (A) $150,000,000 in cash received from the equity rights offering described below, (B) $100,000,000 in shares of Common Stock (as defined below), and (C) term loans under an $822,500,000 takeback term loan facility (the "Successor Takeback Loan Facility"), and (iii) cancelling the Company’s $585,000,000 outstanding Predecessor Senior Notes and exchanging the Predecessor Senior Notes for, at the option of each holder of the Predecessor Senior Notes (the "Noteholders"), (A) cash in an amount equal to 2.5% of the principal and accrued but unpaid interest due under the Senior Notes held by such Noteholder or (B) to the extent that such Noteholder elects not to receive cash, its pro rata share of 18.0% of the Common Stock (as defined below) issued and outstanding as of the Effective Date. See note 6, Debt for further information regarding these debt transactions. The Company also received $200,000,000 in cash from a combination of an equity rights offering to the Noteholders and $23,000,000 of a deemed contribution of cash on hand through a merger with Ascent Capital (as discussed below). This cash was used to repay Predecessor Term Loan debt. The foregoing description of certain matters effected pursuant to the Plan, and the transactions related to and contemplated thereunder, is not intended to be a complete description of, or a substitute for, a full and complete reading of the Plan. Ascent Capital Merger As previously announced, on May 24, 2019, the Company and Ascent Capital entered into the Merger Agreement. On August 21, 2019, in connection with, and prior to the completion of the Merger, the stockholders of Ascent Capital approved the Merger Agreement at a special meeting of the stockholders. On August 30, 2019, the Company completed the Merger with Ascent Capital in accordance with the Merger Agreement. The Company was the surviving corporation and, immediately following the Merger, was redomiciled in Delaware. The Company’s certificate of incorporation adopted in accordance with the Plan authorized the issuance of 45,000,000 shares of Common Stock, par value $0.01 per share ("Common Stock"), and 5,000,000 shares of Preferred Stock, par value $0.01 per share ("Preferred Stock"). For more information, see note 9, Stockholder's Equity . Under the terms of the Merger Agreement, the Company issued and reserved a total of 1,309,757 shares of common stock, par value $0.01 per share ("Common Stock"), to Ascent Capital's stockholders at a ratio of 0.1043086 shares of Common Stock for each share of Ascent Capital common stock (the "Exchange Ratio"). The Exchange Ratio was determined through negotiations between the Company and Ascent Capital. Immediately after the Merger, there were approximately 22,500,000 shares of Common Stock issued and outstanding. Immediately after the Merger, the former stockholders of Ascent Capital owned approximately 5.82% of the outstanding Common Stock. No fractional shares of Common Stock were issued in connection with the Merger. The Common Stock commenced trading on the OTCQX Best Market under the ticker symbol "SCTY" on September 4, 2019. Fresh Start Accounting In connection with the Company’s emergence from Chapter 11 on the Effective Date, the Company qualified for fresh start accounting under ASC 852 as (1) the holders of voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. ASC 852 requires that fresh start accounting be applied when the Bankruptcy Court enters a confirmation order confirming a plan of reorganization, or as of a later date when all material conditions precedent to the effectiveness of a plan of reorganization are resolved, which for Monitronics was August 30, 2019. The Company selected a convenience date of August 31, 2019 for purposes of applying fresh start accounting as the activity between the convenience date and the Effective Date did not result in a material difference in the financial results. Upon the application of fresh start accounting, Monitronics allocated the reorganization value to its individual assets based on their estimated fair values in conformity with ASC 805, Business Combinations (“ASC 805”). Reorganization value represents the fair value of the Successor Company’s assets before considering liabilities. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the value of amounts expected to be paid. Deferred taxes were determined in conformity with applicable accounting standards. Predecessor Company accumulated depreciation, accumulated amortization, and accumulated deficit were eliminated. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the Company’s consolidated financial statements after August 31, 2019 are not comparable to the Company’s consolidated financial statements as of or prior to that date. Reorganization Value As set forth in the Plan, the enterprise value of the Successor Company was estimated to be between $1,350,000,000 and $1,550,000,000 , which was confirmed by the Bankruptcy Court. Based on the estimates and assumptions discussed below, Monitronics estimated the enterprise value to be $1,373,400,000 . We estimated the enterprise value of the Successor Company by applying the discounted cash flow method. To estimate enterprise value applying the discounted cash flow method, we established an estimate of future cash flows for the period 2019 to 2026 with a terminal value and discounted the estimated future cash flows to present value. The expected cash flows for the period 2019 to 2026 with a terminal value were based upon certain financial projections and assumptions provided to the Bankruptcy Court. The expected cash flows for the period 2019 to 2026 were derived from revenue projections and assumptions regarding growth and profit margin, as applicable. We calculated a terminal value using an exit multiple based on subscriber monthly RMR in the terminal period. The Company’s enterprise value represents the fair value of its interest-bearing debt and equity capital, while the reorganization value is derived from the enterprise value by adding back non-interest bearing liabilities. The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date (dollars in thousands): Enterprise value $ 1,373,400 Plus: Fair value of non-interest bearing current liabilities 61,188 Plus: Fair value of non-interest bearing long-term liabilities 26,060 Reorganization value $ 1,460,648 Unaudited Condensed Consolidated Balance Sheet The adjustments set forth in the following unaudited condensed consolidated balance sheet as of August 31, 2019 reflect the consummation of the transactions contemplated by the Plan (reflected in the column "Reorganization Adjustments"), transactions recorded to complete the merger with Ascent Capital (reflected in the column "Ascent Capital Merger") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs (dollars in thousands). As of August 31, 2019 Predecessor Company Reorganization Adjustments Ascent Capital Merger Fresh Start Adjustments Successor Company Assets Current assets: Cash and cash equivalents $ 19,862 3,604 (1) 1,139 (9) — 24,605 Restricted cash 35 — — — 35 Trade receivables, net 11,834 — — — 11,834 Prepaid and other current assets 23,825 — 27 (9) — 23,852 Total current assets 55,556 3,604 1,166 — 60,326 Property and equipment, net 37,143 — — 3,808 (10) 40,951 Subscriber accounts and deferred contract acquisition costs, net 1,151,322 — — (55,936 ) (11) 1,095,386 Dealer network and other intangible assets — — — 144,700 (12) 144,700 Goodwill — — — 81,943 (13) 81,943 Deferred income tax asset, net 783 — — — 783 Operating lease right-of-use asset 19,222 — 90 (9) — 19,312 Other assets 17,932 — — (685 ) (14) 17,247 Total assets $ 1,281,958 3,604 1,256 173,830 1,460,648 Liabilities and Stockholder's Equity (Deficit) Current liabilities: Accounts payable $ 13,713 — — — 13,713 Other accrued liabilities 30,571 (1,070 ) (2) 241 (9) 4,427 (15) 34,169 Deferred revenue 12,646 — — (5,331 ) (16) 7,315 Holdback liability 12,516 — — (6,525 ) (17) 5,991 Current portion of long-term debt — 8,225 (3) — — 8,225 Total current liabilities 69,446 7,155 241 (7,429 ) 69,413 Non-current liabilities: Long-term debt 199,000 786,775 (4) — — 985,775 Long-term holdback liability 1,817 — — — 1,817 Operating lease liabilities 16,055 — — — 16,055 Other liabilities 2,175 — — 6,013 (15) 8,188 Total non-current liabilities 219,047 786,775 — 6,013 1,011,835 Liabilities subject to compromise 1,722,052 (1,722,052 ) (5) — — — Total liabilities 2,010,545 (928,122 ) 241 (1,416 ) 1,081,248 Commitments and contingencies Stockholder's equity (deficit): Predecessor additional paid-in capital 436,986 (436,986 ) (6) — — — Predecessor accumulated other comprehensive income, net 6,668 — — (6,668 ) (18) — Successor common stock — 225 (7) — — 225 Successor additional paid-in capital — 379,175 (7) — — 379,175 (Accumulated deficit) retained earnings (1,172,241 ) 989,312 (8) 1,015 (9) 181,914 (18) — Total stockholder's equity (deficit) (728,587 ) 931,726 1,015 175,246 379,400 Total liabilities and stockholder's equity (deficit) $ 1,281,958 3,604 1,256 173,830 1,460,648 Reorganization adjustments 1. Reflects cash contributions and debt principal and interest payments from the implementation to the Plan as follows (dollars in thousands): Equity rights offering proceeds from Noteholders $ 177,000 Equity rights offering proceeds from Ascent Capital 23,000 Payment of Predecessor Credit Facility principal and interest (165,619 ) Payment of Predecessor DIP Facility principal and interest (28,570 ) Payment of Predecessor Senior Notes principal and interest (2,207 ) Net cash contribution $ 3,604 2. Represents payment of Predecessor DIP Facility accrued interest. 3. Represents the Current portion of long-term debt based on the repayment terms of the Successor Takeback Loan Facility. 4. Represents the net increase in Long-term debt as follows (dollars in thousands): Long-term portion of Successor Takeback Term Loan $ 814,275 Payment of Predecessor DIP Facility principal (27,500 ) Net increase in Long-term Debt $ 786,775 5. Liabilities subject to compromise immediately prior to the Effective Date consisted of the following (dollars in thousands): Predecessor Term Loan $ 1,072,500 Predecessor Senior Notes 585,000 Predecessor Term Loan accrued interest 15,619 Predecessor Senior Notes accrued interest 48,933 Total Liabilities subject to compromise $ 1,722,052 Liabilities subject to compromise have been settled as follows in accordance with the Plan (dollars in thousands): Liabilities subject to compromise $ 1,722,052 Payment of Predecessor Term Loan principal and interest (165,619 ) Payment of Predecessor Senior Notes principal and interest (2,207 ) Issue Successor Takeback Term Loan (822,500 ) Fair value of common stock issued to Predecessor Term Loan and Predecessor Senior Notes holders (171,989 ) Gain on settlement of Liabilities subject to compromise $ 559,737 6. Pursuant to the Plan, all equity interests of the Predecessor that were issuable or issued and outstanding immediately prior to the Effective Date were cancelled. The elimination of the carrying value of the cancelled equity interests was recorded as an offset to retained earnings (accumulated deficit). 7. Pursuant to the Plan, the Company issued new common stock through an equity rights offering to the Noteholders, the exchange of Ascent Capital common shares for Monitronics common shares pursuant to the Merger, the partial equitization of the Predecessor Term Loan and the cancellation of the outstanding Predecessor Senior Notes, to the extent each Noteholder elected not to receive cash. See note 2, Emergence from Bankruptcy for further information regarding these transactions. As of the Effective Date, there were 22,500,000 common shares issued and outstanding that have a par value of $0.01 per share. 8. Adjustment made to Retained earnings (accumulated deficit) consisted of the following (dollars in thousands): Cancellation of Predecessor additional paid-in capital $ 436,986 Loss on equity rights offering discount, net (7,411 ) Gain on settlement of Liabilities subject to compromise 559,737 Total adjustment to Retained earnings (accumulated deficit) $ 989,312 Ascent Capital Merger 9. Represents the transfer of the Ascent Capital final balances to Monitronics to complete the merger. Fresh Start Adjustments 10. Reflects the increase in net book value of property and equipment to the estimated fair value as of the Effective Date. The following table summarizes the components of Property and equipment, net as of August 31, 2019, and the fair value as of the Effective Date (dollars in thousands): Estimated Useful Life Successor Company Predecessor Company Leasehold improvements 9 years $ 353 $ 771 Computer systems and software 2 to 4 years 39,320 83,238 Furniture and fixtures 5 years 1,278 2,009 40,951 86,018 Accumulated depreciation — (48,875 ) Property and equipment, net $ 40,951 $ 37,143 To estimate the fair value of property and equipment, the Company utilized an cost approach by applying the reproduction cost method. The Successor property and equipment will be depreciated using the straight-line method over the estimated useful lives of the assets. 11. Represents the fair value adjustment of the subscriber accounts. The fair value of the subscriber accounts was determined based on the excess earnings method, a derivation of the income approach, that considers cash flows to the subscriber accounts after accounting for a fair return to the other supporting assets of the business. The valuation of the subscriber accounts is based on the projected cash flows to be generated by the existing subscribers as of the Effective Date. The Successor subscriber accounts will be amortized using the 14-year 235% double-declining balance method. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. 12. The Company recorded an adjustment to dealer network and other intangible assets as follows (dollars in thousands): Dealer network $ 140,000 Leasehold interest 4,700 Total Dealer network and other intangible assets $ 144,700 The fair values of dealer network and other intangible assets were determined as follows: a. The fair value of the dealer network was determined based on the excess earnings method, a derivation of the income approach, that considers cash flows related to the dealer network after accounting for a fair return to the other supporting assets of the business. The valuation of the dealer network is based on the cash flow, net of purchase price, to be earned from subscribers purchased in the future from the current dealer network. The Successor dealer network will be amortized on a straight-line basis over the estimated useful life of six years . b. The leasehold interest was valued using an income approach by applying the discount cash flow method based on the contractual lease rate and market lease rates. The Successor leasehold interest will be amortized on a straight-line basis over the remaining life of the lease. 13. The amount recognized for goodwill represents the amount of the reorganization value, after the fresh start accounting adjustments, left over after allocating to the fair value of acquired assets and liabilities. 14. Represents the elimination of the carrying value of dealer assets. The fair value adjustment of these assets is included in the valuation of the dealer network. 15. Represents the fair value adjustment of the bonus purchase price and revenue sharing liabilities based on estimated future cash payments. 16. Represents the fair value adjustment of deferred revenue to remove gross margin costs from the balance sheet. 17. Represents the fair value adjustment of the holdback liability based on estimated future cash payments. 18. Reflects the cumulative impact of the fresh start accounting adjustments discussed above on retained earnings (accumulated deficit) as follows (dollars in thousands): Property and equipment fair value adjustment $ 3,808 Subscriber accounts fair value adjustment (55,936 ) Dealer network and other intangible assets fair value adjustment 144,700 Goodwill 81,943 Other assets and liabilities fair value adjustments 731 Predecessor accumulated other comprehensive income, net 6,668 Net gain on fresh start adjustments $ 181,914 Gain on restructuring and reorganization, net Gain on restructuring and reorganization recognized as a result of the Chapter 11 Cases is presented separately in the accompanying unaudited condensed consolidated statement of operations as follows (dollars in thousands): Predecessor Company Period from July 1, 2019 through August 31, 2019 Period from January 1, 2019 through August 31, 2019 Gain on settlement of Liabilities subject to compromise (a) $ 559,737 559,737 Gain on fresh start adjustments (b) 181,914 181,914 Loss on equity rights offering discount (c) (8,325 ) (8,325 ) Restructuring and reorganization expense (d) (30,502 ) (63,604 ) Gain on restructuring and reorganization, net $ 702,824 669,722 (a) Gain recognized primarily on Predecessor Senior Notes converted from debt to equity and Predecessor Senior Notes settled at a discount in accordance with the Plan. (b) Revaluation of certain assets and liabilities upon the adoption of fresh start accounting. (c) In accordance with the Plan, Noteholders that participated in the equity rights offering purchased Monitronics common stock at a discount. (d) Legal, financial advisory and other professional costs directly associated with the restructuring and reorganization process. |
Fresh Start Accounting
Fresh Start Accounting | 9 Months Ended |
Sep. 30, 2019 | |
Reorganizations [Abstract] | |
Fresh Start Accounting | Emergence from Bankruptcy On August 7, 2019, the Bankruptcy Court entered the Confirmation Order confirming the Plan. On the Effective Date, the conditions to the effectiveness of the Plan were satisfied and the Company emerged from Chapter 11 after completing a series of transactions through with the Company and its former parent, Ascent Capital, merged in accordance with the terms of the Merger Agreement. Monitronics was the surviving corporation and, immediately following the Merger, was redomiciled in Delaware in accordance with the terms of the Merger Agreement. Cancellation of Certain Prepetition Obligations On the Effective Date, by operation of the Plan, all outstanding obligations under (i) the 9.125% Senior Notes due April 2020 (the "Predecessor Senior Notes") and the indenture governing the Predecessor Senior Notes and (ii) the Company’s prepetition credit facility (the "Predecessor Credit Facility") were terminated, as described in further detail below. Additional Matters Contemplated by the Plan On the Effective Date, the Company also completed a series of transactions through which the Company’s debt was restructured as follows: (i) terminating the Company’s $245,000,000 secured debtor-in-possession revolving credit facility (the "Predecessor DIP Facility") and replacing it with a $145,000,000 senior secured revolving credit facility (the "Successor Revolving Credit Facility") and $150,000,000 in senior secured term loans (the "Successor Term Loan Facility" and together with the Successor Revolving Credit Facility the "Successor Credit Facilities"), (ii) exchanging $1,072,500,000 of outstanding term loans under the Company's Predecessor Credit Facility for (A) $150,000,000 in cash received from the equity rights offering described below, (B) $100,000,000 in shares of Common Stock (as defined below), and (C) term loans under an $822,500,000 takeback term loan facility (the "Successor Takeback Loan Facility"), and (iii) cancelling the Company’s $585,000,000 outstanding Predecessor Senior Notes and exchanging the Predecessor Senior Notes for, at the option of each holder of the Predecessor Senior Notes (the "Noteholders"), (A) cash in an amount equal to 2.5% of the principal and accrued but unpaid interest due under the Senior Notes held by such Noteholder or (B) to the extent that such Noteholder elects not to receive cash, its pro rata share of 18.0% of the Common Stock (as defined below) issued and outstanding as of the Effective Date. See note 6, Debt for further information regarding these debt transactions. The Company also received $200,000,000 in cash from a combination of an equity rights offering to the Noteholders and $23,000,000 of a deemed contribution of cash on hand through a merger with Ascent Capital (as discussed below). This cash was used to repay Predecessor Term Loan debt. The foregoing description of certain matters effected pursuant to the Plan, and the transactions related to and contemplated thereunder, is not intended to be a complete description of, or a substitute for, a full and complete reading of the Plan. Ascent Capital Merger As previously announced, on May 24, 2019, the Company and Ascent Capital entered into the Merger Agreement. On August 21, 2019, in connection with, and prior to the completion of the Merger, the stockholders of Ascent Capital approved the Merger Agreement at a special meeting of the stockholders. On August 30, 2019, the Company completed the Merger with Ascent Capital in accordance with the Merger Agreement. The Company was the surviving corporation and, immediately following the Merger, was redomiciled in Delaware. The Company’s certificate of incorporation adopted in accordance with the Plan authorized the issuance of 45,000,000 shares of Common Stock, par value $0.01 per share ("Common Stock"), and 5,000,000 shares of Preferred Stock, par value $0.01 per share ("Preferred Stock"). For more information, see note 9, Stockholder's Equity . Under the terms of the Merger Agreement, the Company issued and reserved a total of 1,309,757 shares of common stock, par value $0.01 per share ("Common Stock"), to Ascent Capital's stockholders at a ratio of 0.1043086 shares of Common Stock for each share of Ascent Capital common stock (the "Exchange Ratio"). The Exchange Ratio was determined through negotiations between the Company and Ascent Capital. Immediately after the Merger, there were approximately 22,500,000 shares of Common Stock issued and outstanding. Immediately after the Merger, the former stockholders of Ascent Capital owned approximately 5.82% of the outstanding Common Stock. No fractional shares of Common Stock were issued in connection with the Merger. The Common Stock commenced trading on the OTCQX Best Market under the ticker symbol "SCTY" on September 4, 2019. Fresh Start Accounting In connection with the Company’s emergence from Chapter 11 on the Effective Date, the Company qualified for fresh start accounting under ASC 852 as (1) the holders of voting shares of the Predecessor Company received less than 50% of the voting shares of the Successor Company and (2) the reorganization value of the Company’s assets immediately prior to confirmation of the Plan was less than the post-petition liabilities and allowed claims. ASC 852 requires that fresh start accounting be applied when the Bankruptcy Court enters a confirmation order confirming a plan of reorganization, or as of a later date when all material conditions precedent to the effectiveness of a plan of reorganization are resolved, which for Monitronics was August 30, 2019. The Company selected a convenience date of August 31, 2019 for purposes of applying fresh start accounting as the activity between the convenience date and the Effective Date did not result in a material difference in the financial results. Upon the application of fresh start accounting, Monitronics allocated the reorganization value to its individual assets based on their estimated fair values in conformity with ASC 805, Business Combinations (“ASC 805”). Reorganization value represents the fair value of the Successor Company’s assets before considering liabilities. Liabilities existing as of the Effective Date, other than deferred taxes, were recorded at the value of amounts expected to be paid. Deferred taxes were determined in conformity with applicable accounting standards. Predecessor Company accumulated depreciation, accumulated amortization, and accumulated deficit were eliminated. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the Company’s consolidated financial statements after August 31, 2019 are not comparable to the Company’s consolidated financial statements as of or prior to that date. Reorganization Value As set forth in the Plan, the enterprise value of the Successor Company was estimated to be between $1,350,000,000 and $1,550,000,000 , which was confirmed by the Bankruptcy Court. Based on the estimates and assumptions discussed below, Monitronics estimated the enterprise value to be $1,373,400,000 . We estimated the enterprise value of the Successor Company by applying the discounted cash flow method. To estimate enterprise value applying the discounted cash flow method, we established an estimate of future cash flows for the period 2019 to 2026 with a terminal value and discounted the estimated future cash flows to present value. The expected cash flows for the period 2019 to 2026 with a terminal value were based upon certain financial projections and assumptions provided to the Bankruptcy Court. The expected cash flows for the period 2019 to 2026 were derived from revenue projections and assumptions regarding growth and profit margin, as applicable. We calculated a terminal value using an exit multiple based on subscriber monthly RMR in the terminal period. The Company’s enterprise value represents the fair value of its interest-bearing debt and equity capital, while the reorganization value is derived from the enterprise value by adding back non-interest bearing liabilities. The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date (dollars in thousands): Enterprise value $ 1,373,400 Plus: Fair value of non-interest bearing current liabilities 61,188 Plus: Fair value of non-interest bearing long-term liabilities 26,060 Reorganization value $ 1,460,648 Unaudited Condensed Consolidated Balance Sheet The adjustments set forth in the following unaudited condensed consolidated balance sheet as of August 31, 2019 reflect the consummation of the transactions contemplated by the Plan (reflected in the column "Reorganization Adjustments"), transactions recorded to complete the merger with Ascent Capital (reflected in the column "Ascent Capital Merger") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs (dollars in thousands). As of August 31, 2019 Predecessor Company Reorganization Adjustments Ascent Capital Merger Fresh Start Adjustments Successor Company Assets Current assets: Cash and cash equivalents $ 19,862 3,604 (1) 1,139 (9) — 24,605 Restricted cash 35 — — — 35 Trade receivables, net 11,834 — — — 11,834 Prepaid and other current assets 23,825 — 27 (9) — 23,852 Total current assets 55,556 3,604 1,166 — 60,326 Property and equipment, net 37,143 — — 3,808 (10) 40,951 Subscriber accounts and deferred contract acquisition costs, net 1,151,322 — — (55,936 ) (11) 1,095,386 Dealer network and other intangible assets — — — 144,700 (12) 144,700 Goodwill — — — 81,943 (13) 81,943 Deferred income tax asset, net 783 — — — 783 Operating lease right-of-use asset 19,222 — 90 (9) — 19,312 Other assets 17,932 — — (685 ) (14) 17,247 Total assets $ 1,281,958 3,604 1,256 173,830 1,460,648 Liabilities and Stockholder's Equity (Deficit) Current liabilities: Accounts payable $ 13,713 — — — 13,713 Other accrued liabilities 30,571 (1,070 ) (2) 241 (9) 4,427 (15) 34,169 Deferred revenue 12,646 — — (5,331 ) (16) 7,315 Holdback liability 12,516 — — (6,525 ) (17) 5,991 Current portion of long-term debt — 8,225 (3) — — 8,225 Total current liabilities 69,446 7,155 241 (7,429 ) 69,413 Non-current liabilities: Long-term debt 199,000 786,775 (4) — — 985,775 Long-term holdback liability 1,817 — — — 1,817 Operating lease liabilities 16,055 — — — 16,055 Other liabilities 2,175 — — 6,013 (15) 8,188 Total non-current liabilities 219,047 786,775 — 6,013 1,011,835 Liabilities subject to compromise 1,722,052 (1,722,052 ) (5) — — — Total liabilities 2,010,545 (928,122 ) 241 (1,416 ) 1,081,248 Commitments and contingencies Stockholder's equity (deficit): Predecessor additional paid-in capital 436,986 (436,986 ) (6) — — — Predecessor accumulated other comprehensive income, net 6,668 — — (6,668 ) (18) — Successor common stock — 225 (7) — — 225 Successor additional paid-in capital — 379,175 (7) — — 379,175 (Accumulated deficit) retained earnings (1,172,241 ) 989,312 (8) 1,015 (9) 181,914 (18) — Total stockholder's equity (deficit) (728,587 ) 931,726 1,015 175,246 379,400 Total liabilities and stockholder's equity (deficit) $ 1,281,958 3,604 1,256 173,830 1,460,648 Reorganization adjustments 1. Reflects cash contributions and debt principal and interest payments from the implementation to the Plan as follows (dollars in thousands): Equity rights offering proceeds from Noteholders $ 177,000 Equity rights offering proceeds from Ascent Capital 23,000 Payment of Predecessor Credit Facility principal and interest (165,619 ) Payment of Predecessor DIP Facility principal and interest (28,570 ) Payment of Predecessor Senior Notes principal and interest (2,207 ) Net cash contribution $ 3,604 2. Represents payment of Predecessor DIP Facility accrued interest. 3. Represents the Current portion of long-term debt based on the repayment terms of the Successor Takeback Loan Facility. 4. Represents the net increase in Long-term debt as follows (dollars in thousands): Long-term portion of Successor Takeback Term Loan $ 814,275 Payment of Predecessor DIP Facility principal (27,500 ) Net increase in Long-term Debt $ 786,775 5. Liabilities subject to compromise immediately prior to the Effective Date consisted of the following (dollars in thousands): Predecessor Term Loan $ 1,072,500 Predecessor Senior Notes 585,000 Predecessor Term Loan accrued interest 15,619 Predecessor Senior Notes accrued interest 48,933 Total Liabilities subject to compromise $ 1,722,052 Liabilities subject to compromise have been settled as follows in accordance with the Plan (dollars in thousands): Liabilities subject to compromise $ 1,722,052 Payment of Predecessor Term Loan principal and interest (165,619 ) Payment of Predecessor Senior Notes principal and interest (2,207 ) Issue Successor Takeback Term Loan (822,500 ) Fair value of common stock issued to Predecessor Term Loan and Predecessor Senior Notes holders (171,989 ) Gain on settlement of Liabilities subject to compromise $ 559,737 6. Pursuant to the Plan, all equity interests of the Predecessor that were issuable or issued and outstanding immediately prior to the Effective Date were cancelled. The elimination of the carrying value of the cancelled equity interests was recorded as an offset to retained earnings (accumulated deficit). 7. Pursuant to the Plan, the Company issued new common stock through an equity rights offering to the Noteholders, the exchange of Ascent Capital common shares for Monitronics common shares pursuant to the Merger, the partial equitization of the Predecessor Term Loan and the cancellation of the outstanding Predecessor Senior Notes, to the extent each Noteholder elected not to receive cash. See note 2, Emergence from Bankruptcy for further information regarding these transactions. As of the Effective Date, there were 22,500,000 common shares issued and outstanding that have a par value of $0.01 per share. 8. Adjustment made to Retained earnings (accumulated deficit) consisted of the following (dollars in thousands): Cancellation of Predecessor additional paid-in capital $ 436,986 Loss on equity rights offering discount, net (7,411 ) Gain on settlement of Liabilities subject to compromise 559,737 Total adjustment to Retained earnings (accumulated deficit) $ 989,312 Ascent Capital Merger 9. Represents the transfer of the Ascent Capital final balances to Monitronics to complete the merger. Fresh Start Adjustments 10. Reflects the increase in net book value of property and equipment to the estimated fair value as of the Effective Date. The following table summarizes the components of Property and equipment, net as of August 31, 2019, and the fair value as of the Effective Date (dollars in thousands): Estimated Useful Life Successor Company Predecessor Company Leasehold improvements 9 years $ 353 $ 771 Computer systems and software 2 to 4 years 39,320 83,238 Furniture and fixtures 5 years 1,278 2,009 40,951 86,018 Accumulated depreciation — (48,875 ) Property and equipment, net $ 40,951 $ 37,143 To estimate the fair value of property and equipment, the Company utilized an cost approach by applying the reproduction cost method. The Successor property and equipment will be depreciated using the straight-line method over the estimated useful lives of the assets. 11. Represents the fair value adjustment of the subscriber accounts. The fair value of the subscriber accounts was determined based on the excess earnings method, a derivation of the income approach, that considers cash flows to the subscriber accounts after accounting for a fair return to the other supporting assets of the business. The valuation of the subscriber accounts is based on the projected cash flows to be generated by the existing subscribers as of the Effective Date. The Successor subscriber accounts will be amortized using the 14-year 235% double-declining balance method. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. 12. The Company recorded an adjustment to dealer network and other intangible assets as follows (dollars in thousands): Dealer network $ 140,000 Leasehold interest 4,700 Total Dealer network and other intangible assets $ 144,700 The fair values of dealer network and other intangible assets were determined as follows: a. The fair value of the dealer network was determined based on the excess earnings method, a derivation of the income approach, that considers cash flows related to the dealer network after accounting for a fair return to the other supporting assets of the business. The valuation of the dealer network is based on the cash flow, net of purchase price, to be earned from subscribers purchased in the future from the current dealer network. The Successor dealer network will be amortized on a straight-line basis over the estimated useful life of six years . b. The leasehold interest was valued using an income approach by applying the discount cash flow method based on the contractual lease rate and market lease rates. The Successor leasehold interest will be amortized on a straight-line basis over the remaining life of the lease. 13. The amount recognized for goodwill represents the amount of the reorganization value, after the fresh start accounting adjustments, left over after allocating to the fair value of acquired assets and liabilities. 14. Represents the elimination of the carrying value of dealer assets. The fair value adjustment of these assets is included in the valuation of the dealer network. 15. Represents the fair value adjustment of the bonus purchase price and revenue sharing liabilities based on estimated future cash payments. 16. Represents the fair value adjustment of deferred revenue to remove gross margin costs from the balance sheet. 17. Represents the fair value adjustment of the holdback liability based on estimated future cash payments. 18. Reflects the cumulative impact of the fresh start accounting adjustments discussed above on retained earnings (accumulated deficit) as follows (dollars in thousands): Property and equipment fair value adjustment $ 3,808 Subscriber accounts fair value adjustment (55,936 ) Dealer network and other intangible assets fair value adjustment 144,700 Goodwill 81,943 Other assets and liabilities fair value adjustments 731 Predecessor accumulated other comprehensive income, net 6,668 Net gain on fresh start adjustments $ 181,914 Gain on restructuring and reorganization, net Gain on restructuring and reorganization recognized as a result of the Chapter 11 Cases is presented separately in the accompanying unaudited condensed consolidated statement of operations as follows (dollars in thousands): Predecessor Company Period from July 1, 2019 through August 31, 2019 Period from January 1, 2019 through August 31, 2019 Gain on settlement of Liabilities subject to compromise (a) $ 559,737 559,737 Gain on fresh start adjustments (b) 181,914 181,914 Loss on equity rights offering discount (c) (8,325 ) (8,325 ) Restructuring and reorganization expense (d) (30,502 ) (63,604 ) Gain on restructuring and reorganization, net $ 702,824 669,722 (a) Gain recognized primarily on Predecessor Senior Notes converted from debt to equity and Predecessor Senior Notes settled at a discount in accordance with the Plan. (b) Revaluation of certain assets and liabilities upon the adoption of fresh start accounting. (c) In accordance with the Plan, Noteholders that participated in the equity rights offering purchased Monitronics common stock at a discount. (d) Legal, financial advisory and other professional costs directly associated with the restructuring and reorganization process. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. The Company adopted ASU 2016-02 using a modified retrospective approach at January 1, 2019, as outlined in ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method of adoption, there is no impact to the comparative condensed consolidated statements of operations and condensed consolidated balance sheets. The Company determined that there was no cumulative effect adjustment to beginning Accumulated deficit on the condensed consolidated balance sheets. The Company will continue to report periods prior to January 1, 2019 in its financial statements under prior guidance as outlined in Accounting Standards Codification Topic 840, "Leases". In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carry forward of historical lease classifications. Adoption of this standard had no impact on the Company's Loss before income taxes and the condensed consolidated statements of cash flows. Upon adoption as of January 1, 2019, the Company recognized an Operating lease right-of-use asset of $20,240,000 and a total Operating lease liability of $20,761,000 . The difference between the two amounts were due to decreases in prepaid rent and deferred rent recorded under prior lease accounting in Prepaid and other current assets and Other accrued liabilities, respectively, on the condensed consolidated balance sheets. See note 13, Leases for further information. |
Other Accrued Liabilities
Other Accrued Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | Other Accrued Liabilities Other accrued liabilities consisted of the following (amounts in thousands): Successor Company Predecessor Company September 30, December 31, Accrued payroll and related liabilities $ 6,075 $ 4,459 Interest payable 283 14,446 Income taxes payable 2,080 2,742 Operating lease liabilities 3,836 — Contingent dealer liabilities 4,630 — Accrued reorganization costs 9,715 — Other 8,416 9,438 Total Other accrued liabilities $ 35,035 $ 31,085 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consisted of the following (amounts in thousands): Successor Company Predecessor Company September 30, December 31, Successor Takeback Loan Facility, matures March 29, 2024, LIBOR plus 6.50%, subject to a LIBOR floor of 1.25%, with an effective rate of 9.2% $ 822,500 $ — Successor Term Loan Facility, matures July 3, 2024, LIBOR plus 5.00%, subject to a LIBOR floor of 1.50%, with an effective rate of 7.6% 150,000 — Successor Revolving Credit Facility, matures July 3, 2024, LIBOR plus 5.00%, subject to a LIBOR floor of 1.50%, or base rate (with a floor of 4.5%) plus 4.0%, with an effective rate of 12.7% 21,500 — 9.125% Senior Notes due April 1, 2020 with an effective interest rate of 9.1% — 585,000 Ascent Intercompany Loan due October 1, 2020 with an effective rate of 12.5% — 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 8.6% — 1,075,250 $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 7.5% — 144,200 $ 994,000 $ 1,816,450 Less: Current portion of long-term debt (8,225 ) (1,816,450 ) Long-term debt $ 985,775 $ — Successor Takeback Loan Facility On the Effective Date, pursuant to the terms of the Plan, the Debtors entered into the Successor Takeback Loan Facility with the lenders party thereto, and Cortland Capital Market Services, LLC. as administrative agent. In exchange for its Predecessor Credit Facility term loans under the Company's Predecessor Credit Facility, each term lender thereunder (other than term lenders equitizing their term loans) received, pursuant to the terms of the Plan, its pro rata share of (i) $150,000,000 in cash from the proceeds of a rights offering (which, together with the equitization of $100,000,000 of the Predecessor Credit Facility term loans, resulted in an aggregate reduction of term loans by $250,000,000 in principal amount) and (ii) term loans under the $822,500,000 Successor Takeback Loan Facility. The maturity date of the Successor Takeback Loan Facility is March 29, 2024 and requires quarterly interest payments and, beginning December 31, 2019, quarterly principal payments of $2,056,250 . Interest on loans made under the Successor Takeback Loan Facility accrues at an interest rate per year equal to the LIBOR rate (with a floor of 1.25% ) plus 6.5% or base rate plus 5.5% . The Successor Takeback Loan Facility, subject to certain exceptions, is guaranteed by each of the Company's existing and future domestic subsidiaries and is secured by substantially all the assets of the Company and such subsidiary guarantors. See note 14, Consolidating Guarantor Financial Information for further information. The Successor Takeback Loan Facility contains customary representations, warranties, covenants and events of default and related remedies. Successor Credit Facilities On the Effective Date, pursuant to the terms of the Plan, the Debtors entered into Successor Credit Facilities with the lenders party thereto, KKR Capital Markets LLC as lead arranger and bookrunner, KKR Credit Advisors (US) LLC as Structuring Advisor and Encina Private Credit SPV, LLC as administrative agent, swingline lender and L/C issuer. Under the Successor Credit Facilities, the Company has access to $295,000,000 which includes $150,000,000 in term loans under the Successor Term Loan Facility and up to $145,000,000 under the Successor Revolving Credit Facility (including a $10,000,000 swingline loan). As of September 30, 2019, $123,500,000 is available for borrowing under the Successor Revolving Credit Facility, subject to certain financial covenants. The maturity date of loans made under the Successor Credit Facilities is July 3, 2024, subject to a springing maturity of March 29, 2024, or earlier, depending on any repayment, refinancing or changes in the maturity date of the Successor Takeback Term Loan. Interest on loans made under the Successor Credit Facilities accrues at an interest rate per year equal to the LIBOR rate (with a floor of 1.5% ) plus 5.0% or base rate (with a floor of 4.5% ) plus 4.0% , dependent upon the type of borrowing requested by the Company. There is a commitment fee of 0.75% on unused portions of the Successor Revolving Credit Facility. The Successor Credit Facilities, subject to certain exceptions, are guaranteed by each of the Company's existing and future domestic subsidiaries and are secured by substantially all the assets of the Company and such subsidiary guarantors. See note 14, Consolidating Guarantor Financial Information for further information. The Successor Credit Facilities contain customary representations, warranties, covenants and events of default and related remedies. The terms of the Successor Takeback Loan Facility and the Successor Credit Facilities provide for certain financial and nonfinancial covenants. As of September 30, 2019 , the Company was in compliance with all required covenants under these financing arrangements. Predecessor Senior Notes The Predecessor Senior Notes totaled $585,000,000 in principal, were scheduled to mature on April 1, 2020 and bore interest at 9.125% per annum. Interest payments were due semi-annually on April 1 and October 1 of each year. On the Effective Date, by operation of the Plan, the Company cancelled all outstanding obligations under the Predecessor Senior Notes and exchanged the Predecessor Senior Notes, at the option of each Noteholder, (A) cash in an amount equal to 2.5% of the principal and accrued but unpaid interest due under the Senior Notes held by such Noteholder or (B) to the extent that such Noteholder elects not to receive cash, its pro rata share of 18.0% of the Common Stock to be issued and outstanding as of the Effective Date. See note 2, Emergence from Bankruptcy for further information. Predecessor 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 would have been due on October 1, 2020. The Ascent Intercompany Loan bore 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 constituted unsecured obligations of the Company and were not guaranteed by any of the Company’s subsidiaries. In January 2019, the Company repaid $9,750,000 of the Ascent Intercompany Loan and $2,250,000 was contributed to our stated capital. Predecessor Credit Facility The Predecessor Credit Facility term loan had an outstanding prepetition principal balance of $1,072,500,000 and was scheduled to mature on September 30, 2022. The Credit Facility term loan required quarterly interest payments and quarterly principal payments of $2,750,000 . The Credit Facility term loan bore interest at LIBOR plus 5.5% , subject to a LIBOR floor of 1.0% . On the Effective Date, by operation of the Plan, the Company cancelled all outstanding obligations under the Predecessor Credit Facility and exchanged the outstanding principal balance for (A) $150,000,000 in cash, (B) $100,000,000 in shares of Common Stock and (C) new term loans under an $822,500,000 takeback term loan facility (the Successor Takeback Loan Facility discussed above). See note 2, Emergence from Bankruptcy and note 9, Stockholder's Equity for further information. The Predecessor Credit Facility revolver had a prepetition principal amount outstanding of $181,400,000 and an aggregate of $1,000,000 available under two standby letters of credit issued and was scheduled to mature on September 30, 2021. The Credit Facility revolver typically bore interest at LIBOR plus 4.0% , subject to a LIBOR floor of 1.0% . There was a commitment fee of 0.5% on unused portions of the Predecessor Credit Facility revolver. In conjunction with negotiations around certain defaults under the Predecessor Credit Facility in the first quarter of 2019, the Predecessor Credit Facility revolver lenders allowed us to continue to borrow under the revolving credit facility for up to $195,000,000 at an alternate base rate plus 3.0% and the Predecessor Credit Facility term loan lenders allowed the term loan to renew with interest due on an alternate base rate plus 4.5% . Additionally, for the period of April 24, 2019 through May 20, 2019, an additional 2.0% default interest rate was accrued and paid on the Predecessor Credit Facility term loan and revolver. On July 3, 2019, with approval from the Bankruptcy Court, the Predecessor Credit Facility revolver principal and interest was repaid in full with proceeds from the Predecessor DIP Facility. On the Effective Date, the Predecessor DIP Facility was replaced with the Successor Credit Facilities (as discussed above). See note 2, Emergence from Bankruptcy for further information. In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loan under the Credit Facility term loan, the Company had entered into interest rate swap agreements with terms similar to the Credit Facility term loan (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). Prior to December of 2018, all of the Swaps were designated as effective hedges of the Company's variable rate debt and qualified for hedge accounting. However, in December of 2018, given the potential for changes in the Company's future expected interest payments that the Swap hedged, all of the Swaps no longer qualified as a cash flow hedge and were de-designated as such. In April of 2019, all of the outstanding Swaps were settled and terminated with their respective counterparties. See note 7, Derivatives for further disclosures related to the settlement of these derivative instruments. As of September 30, 2019 , principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands): Remainder of 2019 $ 2,056 2020 8,225 2021 8,225 2022 8,225 2023 8,225 2024 959,044 Thereafter — Total debt principal payments $ 994,000 |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Historically, the Company utilized Swaps to reduce the interest rate risk inherent in the Company's variable rate Credit Facility term loan. The valuation of these instruments was determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including interest rate curves and implied volatility. The Company incorporated credit valuation adjustments to appropriately reflect the respective counterparty's nonperformance risk in the fair value measurements. See note 8, Fair Value Measurements for additional information about the credit valuation adjustments. Prior to December of 2018, all of the Swaps were designated and qualified as cash flow hedging instruments, with the effective portion of the Swaps' change in fair value recorded in Accumulated other comprehensive income (loss). However, in December of 2018, given the potential for changes in the Company's future expected interest payments that these Swaps hedged, all of the Swaps no longer qualified as a cash flow hedge and were de-designated as such. Before the de-designation, changes in the fair value of the Swaps were recognized in Accumulated other comprehensive income (loss) and were reclassified to Interest expense when the hedged interest payments on the underlying debt were recognized. After the de-designation, changes in the fair value of the Swaps are recognized in Unrealized loss on derivative financial instruments on the condensed consolidated statements of operations and comprehensive income (loss). For the period from January 1, 2019 through August 31, 2019, the Company recorded an Unrealized loss on derivative financial instruments of $4,577,000 . On April 30, 2019, the various counterparties and the Company agreed to settle and terminate all of the outstanding swap agreements, which required us to pay $8,767,000 in termination amount to certain counterparties and required a certain counterparty to pay $6,540,000 in termination amount to us, resulting in a Realized net loss on derivative financial instruments of $2,227,000 . There are no derivatives outstanding as of September 30, 2019 . Amounts recognized in Accumulated other comprehensive income (loss) as of the de-designation date were to be amortized to Interest expense on the condensed consolidated statements of operations and comprehensive income (loss) over the remaining term of the hedged forecasted transactions of the Swaps which were 3 month LIBOR interest payments. The remaining amount recognized in Accumulated other comprehensive income (loss) was evaluated to have no fair value upon the application of fresh start accounting pursuant to the Plan. The carrying value of this amount was expensed to Gain on restructuring and reorganization, net in the Predecessor period. The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from July 1, 2019 through August 31, Three Months Ended September 30, 2019 2019 2018 Effective portion of gain recognized in Accumulated other comprehensive income (loss) $ — $ — 3,165 Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net income (loss) (a) — — (104 ) (a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Nine Months Ended September 30, 2019 2019 2018 Effective portion of gain recognized in Accumulated other comprehensive income (loss) $ — $ — 21,929 Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net income (loss) (a) — (940 ) (1,267 ) (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 | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 and December 31, 2018 (amounts in thousands): Level 1 Level 2 Level 3 Total September 30, 2019 (Successor) Interest rate swap agreements - assets (a) $ — — — — Interest rate swap agreements - liabilities (a) — — — — Total $ — — — — December 31, 2018 (Predecessor) Interest rate swap agreements - assets (a) $ — 10,552 — 10,552 Interest rate swap agreements - liabilities (a) — (6,039 ) — (6,039 ) Total $ — 4,513 — 4,513 (a) Swap asset values are included in non-current Other assets and Swap liability values are included in non-current Derivative financial instruments on the condensed consolidated balance sheets. The Company has determined that the significant inputs used to value the Swaps fall within Level 2 of the fair value hierarchy. As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy. Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): Successor Company Predecessor Company September 30, 2019 December 31, 2018 Long term debt, including current portion: Carrying value 994,000 1,816,450 Fair value (a) 925,660 1,218,606 (a) The 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, restricted cash, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholder's Equity | Stockholder's Equity Pursuant to the Company's certificate of incorporation adopted in accordance with the Plan, the Company is authorized to issue an aggregate of 50,000,000 shares of stock consisting of: (i) 45,000,000 shares of Common Stock and (ii) 5,000,000 shares of Preferred Stock. Successor Common Stock Holders of Common Stock are entitled to one vote for each share held. Common Stock will vote as a single class on all matters on which stockholders are entitled to vote, except as otherwise provided in the certificate of incorporation or as required by law. Generally, all matters to be voted on by stockholders, other than the election of directors, must be approved by a majority of the Common Stock, then-issued and outstanding. Subject to the rights of the holders of any series of Preferred Stock to elect directors under certain circumstances, directors shall be elected by a plurality of the voting power present in person or represented by proxy and entitled to vote generally in the election of directors. No stockholder shall be entitled to exercise the right of cumulative voting. In connection with the Company’s emergence from Chapter 11 and in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 1145 of the Bankruptcy Code, the Company issued a total of 22,500,000 shares of Common Stock on August 30, 2019. As of September 30, 2019 , the Company had 22,500,000 issued and outstanding shares of Common Stock. Successor Preferred Stock The board of directors of the Company has the authority, without action by its stockholders, to designate and issue preferred stock of the Company in one or more series and to designate the rights, powers, preferences and privileges of each series and any qualifications, limitations or restrictions thereof, which may be greater or less than the rights of the Common Stock. As of September 30, 2019, no shares of preferred stock were issued. Predecessor Accumulated Other Comprehensive Income (Loss) The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period from January 1, 2019 through August 31, 2019 (amounts in thousands): Predecessor Company Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2018 $ 7,608 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) (468 ) Balance at March 31, 2019 $ 7,140 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) (472 ) Balance at June 30, 2019 $ 6,668 Fresh start adjustment (b) (6,668 ) Balance at August 31, 2019 $ — (a) Amounts reclassified into Net loss are included in Interest expense on the condensed consolidated statements of operations. See note 7, Derivatives for further information. (b) The remaining amount recognized in Accumulated other comprehensive income (loss) was evaluated to have no fair value upon the application of fresh start accounting pursuant to the Plan. See note 3, Fresh Start Accounting for further information. The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the nine months ended September 30, 2018 (amounts in thousands): Predecessor Company Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ (7,375 ) Impact of adoption of ASU 2017-12 605 Adjusted balance at January 1, 2018 (6,770 ) Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 13,668 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) 738 Net period Other comprehensive income 14,406 Balance at March 31, 2018 $ 7,636 Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 5,096 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) 425 Net period Other comprehensive income 5,521 Balance at June 30, 2018 $ 13,157 Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 3,165 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) 104 Net period Other comprehensive income 3,269 Balance at September 30, 2018 $ 16,426 (a) Amounts reclassified into Net loss are included in Interest expense on the condensed consolidated statements of operations. |
Basic and Diluted Earnings Per
Basic and Diluted Earnings Per Common Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings Per Common Share | Basic and Diluted Earnings Per Common Share Basic earnings per common share ("EPS") is computed by dividing net income by the weighted average number of shares of Common Stock outstanding for the period. Diluted EPS is computed by dividing net income by the sum of the weighted average number of shares of Common Stock outstanding and the effect of dilutive securities. For the period from September 1, 2019 through September 30, 2019, there were no anti-dilutive securities outstanding. The weighted average number of basic and diluted shares of Common Stock was 22,500,000 for the period from September 1, 2019 through September 30, 2019. |
Commitments, Contingencies and
Commitments, Contingencies and Other Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Liabilities | Commitments, Contingencies and Other Liabilities The Company was named as a defendant in multiple putative class actions consolidated in U.S. District Court (Northern District of West Virginia) on behalf of purported class(es) for persons who claim to have received telemarketing calls in violation of various state and federal laws. The actions were brought by plaintiffs seeking monetary damages on behalf of all plaintiffs who received telemarketing calls made by a Monitronics Authorized Dealer, or any Authorized Dealer's lead generator or sub-dealer. In the second quarter of 2017, the Company and the plaintiffs agreed to settle this litigation for $28,000,000 ("the Settlement Amount"). In the third quarter of 2017, the Company paid $5,000,000 of the Settlement Amount pursuant to the settlement agreement with the plaintiffs. In the third quarter of 2018, the Company paid the remaining $23,000,000 of the Settlement Amount. The Company recovered a portion of the Settlement Amount under its insurance policies held with multiple carriers. In the fourth quarter of 2018, we settled our claims against two such carriers in which those carriers paid us an aggregate of $12,500,000 . In April of 2019, Monitronics settled a claim against one such carrier in which that carrier paid the Company $4,800,000 . In addition to the above, the Company is also involved in litigation and similar claims incidental to the conduct of its business, including from time to time, contractual disputes, claims related to alleged security system failures and claims related to alleged violations of the U.S. Telephone Consumer Protection Act. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, management's estimate of the outcomes of such matters and experience in contesting, litigating and settling similar matters. In management's opinion, none of the pending actions are likely to have a material adverse impact on the Company's financial position or results of operations. The Company accrues and expenses legal fees related to loss contingency matters as incurred. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregation of Revenue Revenue is disaggregated by source of revenue as follows (in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from July 1, 2019 through August 31, Three Months Ended September 30, 2019 2019 2018 Alarm monitoring revenue $ 33,594 $ 78,608 125,004 Product and installation revenue 2,224 4,993 11,360 Other revenue 471 988 792 Total Net revenue $ 36,289 $ 84,589 137,156 Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Nine Months Ended September 30, 2019 2019 2018 Alarm monitoring revenue $ 33,594 $ 319,172 374,689 Product and installation revenue 2,224 19,111 28,984 Other revenue 471 4,003 2,249 Total Net revenue $ 36,289 $ 342,286 405,922 Contract Balances The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): Successor Company Predecessor Company September 30, December 31, Trade receivables, net $ 12,105 13,121 Contract assets, net - current portion (a) 10,952 13,452 Contract assets, net - long-term portion (b) 12,600 16,154 Deferred revenue 13,309 13,060 (a) Amount is included in Prepaid and other current assets in the unaudited condensed consolidated balance sheets. (b) Amount is included in Other assets in the unaudited condensed consolidated balance sheets. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company primarily leases buildings and equipment. The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Certain real estate leases contain lease and non-lease components, which are accounted for separately. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. Lease expense for these leases is recognized on a straight-line basis over the lease term. All of the Company's leases are currently determined to be operating leases. Components of Lease Expense The components of lease expense were as follows (in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from July 1, 2019 through August 31, Operating lease cost (a) $ 34 $ 70 Operating lease cost (b) 320 624 Total operating lease cost $ 354 $ 694 (a) Amount is included in Cost of services in the unaudited condensed consolidated statements of operations. (b) Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations. Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Operating lease cost (a) $ 34 $ 321 Operating lease cost (b) 320 2,595 Total operating lease cost $ 354 $ 2,916 (a) Amount is included in Cost of services in the unaudited condensed consolidated statements of operations. (b) Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations. Remaining Lease Term and Discount Rate The following table presents the weighted-average remaining lease term and the weighted-average discount rate: As of September 30, 2019 Weighted-average remaining lease term for operating leases (in years) 9.9 Weighted-average discount rate for operating leases 11.8 % All of the Company's lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company's estimated incremental borrowing rate is based on information available either upon adoption of ASU 2016-02 or at the inception of the lease. Supplemental Cash Flow Information The following is the supplemental cash flow information associated with the Company's leases (in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, 2019 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 345 $ 2,804 Maturities of Lease Liabilities As of September 30, 2019 , maturities of lease liabilities were as follows: Remainder of 2019 $ 758 2020 3,980 2021 3,195 2022 3,069 2023 3,087 Thereafter 20,329 Total lease payments $ 34,418 Less: Interest (14,653 ) Total lease obligations $ 19,765 Disclosures Related to Periods Prior to Adoption of ASU 2016-02 The Company adopted ASU 2016-02 using a modified retrospective method at January 1, 2019 as described in note 4, Recent Accounting Pronouncements . As required, the following disclosure is provided for periods prior to adoption. Minimum lease commitments as of December 31, 2018 that have initial or remaining noncancelable lease terms in excess of one year are as follows (in thousands): Year Ended December 31: 2019 $ 4,628 2020 4,207 2021 3,093 2022 3,068 2023 3,087 Thereafter 20,329 Minimum lease commitments $ 38,412 |
Consolidating Guarantor Financi
Consolidating Guarantor Financial Information | 9 Months Ended |
Sep. 30, 2019 | |
Condensed Financial Information Disclosure [Abstract] | |
Consolidating Guarantor Financial Information | Consolidating Guarantor Financial Information Monitronics (the "Parent Issuer") entered into the Successor Takeback Loan Facility and the Successor Credit Facilities and both are guaranteed by all of the Company's existing domestic subsidiaries. Consolidating guarantor financial information has not been presented in this Form 10-Q as substantially all of the Company's operations are now conducted by the Parent Issuer entity. The Company believes that disclosing such information would not provide investors with any additional information that would be material in evaluating the sufficiency of the guarantees. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. The Company adopted ASU 2016-02 using a modified retrospective approach at January 1, 2019, as outlined in ASU 2018-11, Leases (Topic 842): Targeted Improvements. Under this method of adoption, there is no impact to the comparative condensed consolidated statements of operations and condensed consolidated balance sheets. The Company determined that there was no cumulative effect adjustment to beginning Accumulated deficit on the condensed consolidated balance sheets. The Company will continue to report periods prior to January 1, 2019 in its financial statements under prior guidance as outlined in Accounting Standards Codification Topic 840, "Leases". In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed carry forward of historical lease classifications. Adoption of this standard had no impact on the Company's Loss before income taxes and the condensed consolidated statements of cash flows. Upon adoption as of January 1, 2019, the Company recognized an Operating lease right-of-use asset of $20,240,000 and a total Operating lease liability of $20,761,000 . The difference between the two amounts were due to decreases in prepaid rent and deferred rent recorded under prior lease accounting in Prepaid and other current assets and Other accrued liabilities, respectively, on the condensed consolidated balance sheets. See note 13, Leases for further information. |
Basis of Presentation Basis of
Basis of Presentation Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Supplemental Cash Flow Information | Supplemental Cash Flow Information Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Nine Months Ended September 30, 2019 2019 2018 State taxes paid, net $ — $ 2,637 2,710 Interest paid 7,238 72,710 95,889 Accrued capital expenditures 1,471 1,405 882 |
Fresh Start Accounting (Tables)
Fresh Start Accounting (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Reorganizations [Abstract] | |
Reconciliation of Reorganization Value | The following table reconciles the enterprise value to the estimated reorganization value as of the Effective Date (dollars in thousands): Enterprise value $ 1,373,400 Plus: Fair value of non-interest bearing current liabilities 61,188 Plus: Fair value of non-interest bearing long-term liabilities 26,060 Reorganization value $ 1,460,648 |
Schedule of Fresh-Start Adjustments | The adjustments set forth in the following unaudited condensed consolidated balance sheet as of August 31, 2019 reflect the consummation of the transactions contemplated by the Plan (reflected in the column "Reorganization Adjustments"), transactions recorded to complete the merger with Ascent Capital (reflected in the column "Ascent Capital Merger") as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column "Fresh Start Adjustments"). The explanatory notes highlight methods used to determine fair values or other amounts of the assets and liabilities as well as significant assumptions or inputs (dollars in thousands). As of August 31, 2019 Predecessor Company Reorganization Adjustments Ascent Capital Merger Fresh Start Adjustments Successor Company Assets Current assets: Cash and cash equivalents $ 19,862 3,604 (1) 1,139 (9) — 24,605 Restricted cash 35 — — — 35 Trade receivables, net 11,834 — — — 11,834 Prepaid and other current assets 23,825 — 27 (9) — 23,852 Total current assets 55,556 3,604 1,166 — 60,326 Property and equipment, net 37,143 — — 3,808 (10) 40,951 Subscriber accounts and deferred contract acquisition costs, net 1,151,322 — — (55,936 ) (11) 1,095,386 Dealer network and other intangible assets — — — 144,700 (12) 144,700 Goodwill — — — 81,943 (13) 81,943 Deferred income tax asset, net 783 — — — 783 Operating lease right-of-use asset 19,222 — 90 (9) — 19,312 Other assets 17,932 — — (685 ) (14) 17,247 Total assets $ 1,281,958 3,604 1,256 173,830 1,460,648 Liabilities and Stockholder's Equity (Deficit) Current liabilities: Accounts payable $ 13,713 — — — 13,713 Other accrued liabilities 30,571 (1,070 ) (2) 241 (9) 4,427 (15) 34,169 Deferred revenue 12,646 — — (5,331 ) (16) 7,315 Holdback liability 12,516 — — (6,525 ) (17) 5,991 Current portion of long-term debt — 8,225 (3) — — 8,225 Total current liabilities 69,446 7,155 241 (7,429 ) 69,413 Non-current liabilities: Long-term debt 199,000 786,775 (4) — — 985,775 Long-term holdback liability 1,817 — — — 1,817 Operating lease liabilities 16,055 — — — 16,055 Other liabilities 2,175 — — 6,013 (15) 8,188 Total non-current liabilities 219,047 786,775 — 6,013 1,011,835 Liabilities subject to compromise 1,722,052 (1,722,052 ) (5) — — — Total liabilities 2,010,545 (928,122 ) 241 (1,416 ) 1,081,248 Commitments and contingencies Stockholder's equity (deficit): Predecessor additional paid-in capital 436,986 (436,986 ) (6) — — — Predecessor accumulated other comprehensive income, net 6,668 — — (6,668 ) (18) — Successor common stock — 225 (7) — — 225 Successor additional paid-in capital — 379,175 (7) — — 379,175 (Accumulated deficit) retained earnings (1,172,241 ) 989,312 (8) 1,015 (9) 181,914 (18) — Total stockholder's equity (deficit) (728,587 ) 931,726 1,015 175,246 379,400 Total liabilities and stockholder's equity (deficit) $ 1,281,958 3,604 1,256 173,830 1,460,648 Reorganization adjustments 1. Reflects cash contributions and debt principal and interest payments from the implementation to the Plan as follows (dollars in thousands): Equity rights offering proceeds from Noteholders $ 177,000 Equity rights offering proceeds from Ascent Capital 23,000 Payment of Predecessor Credit Facility principal and interest (165,619 ) Payment of Predecessor DIP Facility principal and interest (28,570 ) Payment of Predecessor Senior Notes principal and interest (2,207 ) Net cash contribution $ 3,604 2. Represents payment of Predecessor DIP Facility accrued interest. 3. Represents the Current portion of long-term debt based on the repayment terms of the Successor Takeback Loan Facility. 4. Represents the net increase in Long-term debt as follows (dollars in thousands): Long-term portion of Successor Takeback Term Loan $ 814,275 Payment of Predecessor DIP Facility principal (27,500 ) Net increase in Long-term Debt $ 786,775 5. Liabilities subject to compromise immediately prior to the Effective Date consisted of the following (dollars in thousands): Predecessor Term Loan $ 1,072,500 Predecessor Senior Notes 585,000 Predecessor Term Loan accrued interest 15,619 Predecessor Senior Notes accrued interest 48,933 Total Liabilities subject to compromise $ 1,722,052 Liabilities subject to compromise have been settled as follows in accordance with the Plan (dollars in thousands): Liabilities subject to compromise $ 1,722,052 Payment of Predecessor Term Loan principal and interest (165,619 ) Payment of Predecessor Senior Notes principal and interest (2,207 ) Issue Successor Takeback Term Loan (822,500 ) Fair value of common stock issued to Predecessor Term Loan and Predecessor Senior Notes holders (171,989 ) Gain on settlement of Liabilities subject to compromise $ 559,737 6. Pursuant to the Plan, all equity interests of the Predecessor that were issuable or issued and outstanding immediately prior to the Effective Date were cancelled. The elimination of the carrying value of the cancelled equity interests was recorded as an offset to retained earnings (accumulated deficit). 7. Pursuant to the Plan, the Company issued new common stock through an equity rights offering to the Noteholders, the exchange of Ascent Capital common shares for Monitronics common shares pursuant to the Merger, the partial equitization of the Predecessor Term Loan and the cancellation of the outstanding Predecessor Senior Notes, to the extent each Noteholder elected not to receive cash. See note 2, Emergence from Bankruptcy for further information regarding these transactions. As of the Effective Date, there were 22,500,000 common shares issued and outstanding that have a par value of $0.01 per share. 8. Adjustment made to Retained earnings (accumulated deficit) consisted of the following (dollars in thousands): Cancellation of Predecessor additional paid-in capital $ 436,986 Loss on equity rights offering discount, net (7,411 ) Gain on settlement of Liabilities subject to compromise 559,737 Total adjustment to Retained earnings (accumulated deficit) $ 989,312 Ascent Capital Merger 9. Represents the transfer of the Ascent Capital final balances to Monitronics to complete the merger. Fresh Start Adjustments 10. Reflects the increase in net book value of property and equipment to the estimated fair value as of the Effective Date. The following table summarizes the components of Property and equipment, net as of August 31, 2019, and the fair value as of the Effective Date (dollars in thousands): Estimated Useful Life Successor Company Predecessor Company Leasehold improvements 9 years $ 353 $ 771 Computer systems and software 2 to 4 years 39,320 83,238 Furniture and fixtures 5 years 1,278 2,009 40,951 86,018 Accumulated depreciation — (48,875 ) Property and equipment, net $ 40,951 $ 37,143 To estimate the fair value of property and equipment, the Company utilized an cost approach by applying the reproduction cost method. The Successor property and equipment will be depreciated using the straight-line method over the estimated useful lives of the assets. 11. Represents the fair value adjustment of the subscriber accounts. The fair value of the subscriber accounts was determined based on the excess earnings method, a derivation of the income approach, that considers cash flows to the subscriber accounts after accounting for a fair return to the other supporting assets of the business. The valuation of the subscriber accounts is based on the projected cash flows to be generated by the existing subscribers as of the Effective Date. The Successor subscriber accounts will be amortized using the 14-year 235% double-declining balance method. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. 12. The Company recorded an adjustment to dealer network and other intangible assets as follows (dollars in thousands): Dealer network $ 140,000 Leasehold interest 4,700 Total Dealer network and other intangible assets $ 144,700 The fair values of dealer network and other intangible assets were determined as follows: a. The fair value of the dealer network was determined based on the excess earnings method, a derivation of the income approach, that considers cash flows related to the dealer network after accounting for a fair return to the other supporting assets of the business. The valuation of the dealer network is based on the cash flow, net of purchase price, to be earned from subscribers purchased in the future from the current dealer network. The Successor dealer network will be amortized on a straight-line basis over the estimated useful life of six years . b. The leasehold interest was valued using an income approach by applying the discount cash flow method based on the contractual lease rate and market lease rates. The Successor leasehold interest will be amortized on a straight-line basis over the remaining life of the lease. 13. The amount recognized for goodwill represents the amount of the reorganization value, after the fresh start accounting adjustments, left over after allocating to the fair value of acquired assets and liabilities. 14. Represents the elimination of the carrying value of dealer assets. The fair value adjustment of these assets is included in the valuation of the dealer network. 15. Represents the fair value adjustment of the bonus purchase price and revenue sharing liabilities based on estimated future cash payments. 16. Represents the fair value adjustment of deferred revenue to remove gross margin costs from the balance sheet. 17. Represents the fair value adjustment of the holdback liability based on estimated future cash payments. 18. Reflects the cumulative impact of the fresh start accounting adjustments discussed above on retained earnings (accumulated deficit) as follows (dollars in thousands): Property and equipment fair value adjustment $ 3,808 Subscriber accounts fair value adjustment (55,936 ) Dealer network and other intangible assets fair value adjustment 144,700 Goodwill 81,943 Other assets and liabilities fair value adjustments 731 Predecessor accumulated other comprehensive income, net 6,668 Net gain on fresh start adjustments $ 181,914 Gain on restructuring and reorganization, net Gain on restructuring and reorganization recognized as a result of the Chapter 11 Cases is presented separately in the accompanying unaudited condensed consolidated statement of operations as follows (dollars in thousands): Predecessor Company Period from July 1, 2019 through August 31, 2019 Period from January 1, 2019 through August 31, 2019 Gain on settlement of Liabilities subject to compromise (a) $ 559,737 559,737 Gain on fresh start adjustments (b) 181,914 181,914 Loss on equity rights offering discount (c) (8,325 ) (8,325 ) Restructuring and reorganization expense (d) (30,502 ) (63,604 ) Gain on restructuring and reorganization, net $ 702,824 669,722 (a) Gain recognized primarily on Predecessor Senior Notes converted from debt to equity and Predecessor Senior Notes settled at a discount in accordance with the Plan. (b) Revaluation of certain assets and liabilities upon the adoption of fresh start accounting. (c) In accordance with the Plan, Noteholders that participated in the equity rights offering purchased Monitronics common stock at a discount. (d) Legal, financial advisory and other professional costs directly associated with the restructuring and reorganization process. |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accrued Liabilities | Other accrued liabilities consisted of the following (amounts in thousands): Successor Company Predecessor Company September 30, December 31, Accrued payroll and related liabilities $ 6,075 $ 4,459 Interest payable 283 14,446 Income taxes payable 2,080 2,742 Operating lease liabilities 3,836 — Contingent dealer liabilities 4,630 — Accrued reorganization costs 9,715 — Other 8,416 9,438 Total Other accrued liabilities $ 35,035 $ 31,085 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Debt consisted of the following (amounts in thousands): Successor Company Predecessor Company September 30, December 31, Successor Takeback Loan Facility, matures March 29, 2024, LIBOR plus 6.50%, subject to a LIBOR floor of 1.25%, with an effective rate of 9.2% $ 822,500 $ — Successor Term Loan Facility, matures July 3, 2024, LIBOR plus 5.00%, subject to a LIBOR floor of 1.50%, with an effective rate of 7.6% 150,000 — Successor Revolving Credit Facility, matures July 3, 2024, LIBOR plus 5.00%, subject to a LIBOR floor of 1.50%, or base rate (with a floor of 4.5%) plus 4.0%, with an effective rate of 12.7% 21,500 — 9.125% Senior Notes due April 1, 2020 with an effective interest rate of 9.1% — 585,000 Ascent Intercompany Loan due October 1, 2020 with an effective rate of 12.5% — 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 8.6% — 1,075,250 $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 7.5% — 144,200 $ 994,000 $ 1,816,450 Less: Current portion of long-term debt (8,225 ) (1,816,450 ) Long-term debt $ 985,775 $ — |
Schedule of Maturities of Long-Term Debt | As of September 30, 2019 , principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands): Remainder of 2019 $ 2,056 2020 8,225 2021 8,225 2022 8,225 2023 8,225 2024 959,044 Thereafter — Total debt principal payments $ 994,000 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
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): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from July 1, 2019 through August 31, Three Months Ended September 30, 2019 2019 2018 Effective portion of gain recognized in Accumulated other comprehensive income (loss) $ — $ — 3,165 Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net income (loss) (a) — — (104 ) (a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Nine Months Ended September 30, 2019 2019 2018 Effective portion of gain recognized in Accumulated other comprehensive income (loss) $ — $ — 21,929 Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net income (loss) (a) — (940 ) (1,267 ) (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) | 9 Months Ended |
Sep. 30, 2019 | |
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 September 30, 2019 and December 31, 2018 (amounts in thousands): Level 1 Level 2 Level 3 Total September 30, 2019 (Successor) Interest rate swap agreements - assets (a) $ — — — — Interest rate swap agreements - liabilities (a) — — — — Total $ — — — — December 31, 2018 (Predecessor) Interest rate swap agreements - assets (a) $ — 10,552 — 10,552 Interest rate swap agreements - liabilities (a) — (6,039 ) — (6,039 ) Total $ — 4,513 — 4,513 (a) Swap asset values are included in non-current Other assets and Swap liability values are included in non-current Derivative financial instruments on the condensed consolidated balance sheets. |
Schedule of Carrying Values and Fair Values of Financial Instruments that are Not Carried at Fair Value | Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands): Successor Company Predecessor Company September 30, 2019 December 31, 2018 Long term debt, including current portion: Carrying value 994,000 1,816,450 Fair value (a) 925,660 1,218,606 (a) The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Loss | The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period from January 1, 2019 through August 31, 2019 (amounts in thousands): Predecessor Company Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2018 $ 7,608 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) (468 ) Balance at March 31, 2019 $ 7,140 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) (472 ) Balance at June 30, 2019 $ 6,668 Fresh start adjustment (b) (6,668 ) Balance at August 31, 2019 $ — (a) Amounts reclassified into Net loss are included in Interest expense on the condensed consolidated statements of operations. See note 7, Derivatives for further information. (b) The remaining amount recognized in Accumulated other comprehensive income (loss) was evaluated to have no fair value upon the application of fresh start accounting pursuant to the Plan. See note 3, Fresh Start Accounting for further information. The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the nine months ended September 30, 2018 (amounts in thousands): Predecessor Company Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ (7,375 ) Impact of adoption of ASU 2017-12 605 Adjusted balance at January 1, 2018 (6,770 ) Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 13,668 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) 738 Net period Other comprehensive income 14,406 Balance at March 31, 2018 $ 7,636 Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 5,096 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) 425 Net period Other comprehensive income 5,521 Balance at June 30, 2018 $ 13,157 Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 3,165 Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a) 104 Net period Other comprehensive income 3,269 Balance at September 30, 2018 $ 16,426 (a) Amounts reclassified into Net loss are included in Interest expense on the condensed consolidated statements of operations. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue Disaggregated by Source | Revenue is disaggregated by source of revenue as follows (in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from July 1, 2019 through August 31, Three Months Ended September 30, 2019 2019 2018 Alarm monitoring revenue $ 33,594 $ 78,608 125,004 Product and installation revenue 2,224 4,993 11,360 Other revenue 471 988 792 Total Net revenue $ 36,289 $ 84,589 137,156 Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Nine Months Ended September 30, 2019 2019 2018 Alarm monitoring revenue $ 33,594 $ 319,172 374,689 Product and installation revenue 2,224 19,111 28,984 Other revenue 471 4,003 2,249 Total Net revenue $ 36,289 $ 342,286 405,922 |
Schedule of Receivables, Contract Assets and Contract Liabilities from Contracts with Customers | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): Successor Company Predecessor Company September 30, December 31, Trade receivables, net $ 12,105 13,121 Contract assets, net - current portion (a) 10,952 13,452 Contract assets, net - long-term portion (b) 12,600 16,154 Deferred revenue 13,309 13,060 (a) Amount is included in Prepaid and other current assets in the unaudited condensed consolidated balance sheets. (b) Amount is included in Other assets in the unaudited condensed consolidated balance sheets. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Components of Lease Expense and Supplemental Cash Flow Information | Supplemental Cash Flow Information The following is the supplemental cash flow information associated with the Company's leases (in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, 2019 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 345 $ 2,804 The components of lease expense were as follows (in thousands): Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from July 1, 2019 through August 31, Operating lease cost (a) $ 34 $ 70 Operating lease cost (b) 320 624 Total operating lease cost $ 354 $ 694 (a) Amount is included in Cost of services in the unaudited condensed consolidated statements of operations. (b) Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations. Successor Company Predecessor Company Period from September 1, 2019 through September 30, Period from January 1, 2019 through August 31, Operating lease cost (a) $ 34 $ 321 Operating lease cost (b) 320 2,595 Total operating lease cost $ 354 $ 2,916 (a) Amount is included in Cost of services in the unaudited condensed consolidated statements of operations. (b) Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations. Remaining Lease Term and Discount Rate The following table presents the weighted-average remaining lease term and the weighted-average discount rate: As of September 30, 2019 Weighted-average remaining lease term for operating leases (in years) 9.9 Weighted-average discount rate for operating leases 11.8 % |
Maturities of Lease Liabilities | As of September 30, 2019 , maturities of lease liabilities were as follows: Remainder of 2019 $ 758 2020 3,980 2021 3,195 2022 3,069 2023 3,087 Thereafter 20,329 Total lease payments $ 34,418 Less: Interest (14,653 ) Total lease obligations $ 19,765 |
Maturities of Lease Liabilities, Prior to Adoption of ASU | Minimum lease commitments as of December 31, 2018 that have initial or remaining noncancelable lease terms in excess of one year are as follows (in thousands): Year Ended December 31: 2019 $ 4,628 2020 4,207 2021 3,093 2022 3,068 2023 3,087 Thereafter 20,329 Minimum lease commitments $ 38,412 |
Basis of Presentation - Supplem
Basis of Presentation - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
State taxes paid, net | $ 0 | $ 2,637 | $ 2,710 |
Interest paid | 7,238 | 72,710 | 95,889 |
Accrued capital expenditures | $ 1,471 | $ 1,405 | $ 882 |
Emergence from Bankruptcy - Nar
Emergence from Bankruptcy - Narrative (Details) | Sep. 01, 2019USD ($) | Aug. 31, 2019USD ($)$ / sharesshares | May 24, 2019USD ($) | Sep. 02, 2019USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Aug. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares |
Line of Credit Facility [Line Items] | |||||||
Cash received from equity rights offering | $ 150,000,000 | ||||||
Common stock received, equity rights offering | $ 100,000,000 | ||||||
Long-term debt | $ 994,000,000 | $ 1,816,450,000 | |||||
Senior note exchange, cash option, percentage of principal and accrued unpaid interest due | 2.50% | ||||||
Senior note exchange, noncash option, percentage of common stock issued and outstanding | 18.00% | ||||||
Cash received, equity rights offering and other | $ 200,000,000 | ||||||
Deemed contribution of cash on hand received through merger | $ 23,000,000 | $ 23,000,000 | |||||
Common stock, authorized shares (in shares) | shares | 45,000,000 | 45,000,000 | 1,000 | ||||
Common stock, outstanding shares (in shares) | shares | 22,500,000 | 22,500,000 | 1,000 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||
Preferred stock, authorized shares (in shares) | shares | 5,000,000 | 5,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Common stock, issued shares (in shares) | shares | 22,500,000 | 22,500,000 | 22,500,000 | 1,000 | |||
Percentage of former shareholder ownership after reorganization | 5.82% | ||||||
Ascent Capital Former Shareholders | |||||||
Line of Credit Facility [Line Items] | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||
Common stock, issued shares (in shares) | shares | 1,309,757 | ||||||
Conversion ratio | 0.1043086 | ||||||
DIP Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Extinguishment of debt | $ 245,000,000 | ||||||
Senior Notes | |||||||
Line of Credit Facility [Line Items] | |||||||
Extinguishment of debt | $ 585,000,000 | ||||||
Liabilities subject to compromise, debt | $ 585,000,000 | ||||||
Senior Notes | Senior Notes 9.125 Percent Due 2020 | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate on debt | 9.125% | 9.125% | |||||
Long-term debt | $ 585,000,000 | ||||||
Line of Credit | Revolving Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Borrowing capacity | $ 145,000,000 | ||||||
Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, face amount | 150,000,000 | ||||||
Liabilities subject to compromise, debt | 1,072,500,000 | $ 1,072,500,000 | |||||
Takeback Loan Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 822,500,000 |
Fresh Start Accounting - Narrat
Fresh Start Accounting - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 01, 2019 | Sep. 30, 2019 | Aug. 31, 2019 | Aug. 30, 2019 | Dec. 31, 2018 |
Fresh-Start Adjustment [Line Items] | |||||
Enterprise value | $ 1,373,400 | ||||
Common stock, issued shares (in shares) | 22,500,000 | 22,500,000 | 22,500,000 | 1,000 | |
Common stock, outstanding shares (in shares) | 22,500,000 | 22,500,000 | 1,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |
Successor Dealer Network | |||||
Fresh-Start Adjustment [Line Items] | |||||
Successor dealer network, useful life | 6 years | ||||
Minimum | |||||
Fresh-Start Adjustment [Line Items] | |||||
Enterprise value | $ 1,350,000 | ||||
Maximum | |||||
Fresh-Start Adjustment [Line Items] | |||||
Enterprise value | $ 1,550,000 |
Fresh Start Accounting - Reconc
Fresh Start Accounting - Reconciliation of Reorganization Value (Details) $ in Thousands | Sep. 01, 2019USD ($) |
Reorganizations [Abstract] | |
Enterprise value | $ 1,373,400 |
Plus: Fair value of non-interest bearing current liabilities | 61,188 |
Plus: Fair value of non-interest bearing long-term liabilities | 26,060 |
Reorganization value | $ 1,460,648 |
Fresh Start Accounting - Schedu
Fresh Start Accounting - Schedule of Balance Sheet Adjustments (Details) - USD ($) $ in Thousands | Sep. 01, 2019 | Aug. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 19,862 | |
Restricted cash | 35 | |
Trade receivables, net | 11,834 | |
Prepaid and other current assets | 23,825 | |
Total current assets | 55,556 | |
Property and equipment, net | 37,143 | |
Subscriber accounts and deferred contract acquisition costs, net | 1,151,322 | |
Deferred income tax asset, net | 783 | |
Operating lease right-of-use asset | 19,222 | |
Other assets | 17,932 | |
Total assets | 1,281,958 | |
Current liabilities: | ||
Accounts payable | 13,713 | |
Other accrued liabilities | 30,571 | |
Deferred revenue | 12,646 | |
Holdback liability | 12,516 | |
Current portion of long-term debt | 0 | |
Total current liabilities | 69,446 | |
Non-current liabilities: | ||
Long-term debt | 199,000 | |
Long-term holdback liability | 1,817 | |
Operating lease liabilities | 16,055 | |
Other liabilities | 2,175 | |
Total non-current liabilities | 219,047 | |
Liabilities subject to compromise | 1,722,052 | |
Total liabilities | 2,010,545 | |
Stockholder's equity (deficit): | ||
Predecessor additional paid-in capital | 436,986 | |
Predecessor accumulated other comprehensive income, net | 6,668 | |
(Accumulated deficit) retained earnings | (1,172,241) | |
Total stockholder's equity (deficit) | (728,587) | |
Total liabilities and stockholder's equity (deficit) | 1,281,958 | |
Reorganization Adjustments | ||
(Accumulated deficit) retained earnings | $ 989,312 | |
Current assets: | ||
Cash and cash equivalents | 1,139 | |
Prepaid and other current assets | 27 | |
Total current assets | 1,166 | |
Operating lease right-of-use asset | 90 | |
Total assets | 1,256 | |
Current liabilities: | ||
Other accrued liabilities | 241 | |
Total current liabilities | 241 | |
Total liabilities | 241 | |
Stockholder's equity (deficit): | ||
(Accumulated deficit) retained earnings | 1,015 | |
Total stockholder's equity (deficit) | 1,015 | |
Total liabilities and stockholder's equity (deficit) | 1,256 | |
Fresh Start Adjustments, Assets | ||
Dealer network and other intangible assets | 144,700 | |
Fresh Start Adjustments, Liabilities and Stockholders' Equity (Deficit) | ||
(Accumulated deficit) retained earnings | 989,312 | |
Current assets: | ||
Cash and cash equivalents | 24,605 | |
Restricted cash | 35 | |
Trade receivables, net | 11,834 | |
Prepaid and other current assets | 23,852 | |
Total current assets | 60,326 | |
Property and equipment, net | 40,951 | |
Subscriber accounts and deferred contract acquisition costs, net | 1,095,386 | |
Dealer network and other intangible assets | 144,700 | |
Goodwill | 81,943 | |
Deferred income tax asset, net | 783 | |
Operating lease right-of-use asset | 19,312 | |
Other assets | 17,247 | |
Total assets | 1,460,648 | |
Current liabilities: | ||
Accounts payable | 13,713 | |
Other accrued liabilities | 34,169 | |
Deferred revenue | 7,315 | |
Holdback liability | 5,991 | |
Current portion of long-term debt | 8,225 | |
Total current liabilities | 69,413 | |
Non-current liabilities: | ||
Long-term debt | 985,775 | |
Long-term holdback liability | 1,817 | |
Operating lease liabilities | 16,055 | |
Other liabilities | 8,188 | |
Total non-current liabilities | 1,011,835 | |
Total liabilities | 1,081,248 | |
Stockholder's equity (deficit): | ||
Successor common stock | 225 | |
Successor additional paid-in capital | 379,175 | |
Total stockholder's equity (deficit) | 379,400 | |
Total liabilities and stockholder's equity (deficit) | 1,460,648 | |
Reorganization Adjustments | ||
Reorganization Adjustments | ||
Cash and cash equivalents | 3,604 | |
Total current assets | 3,604 | |
Other accrued liabilities | (1,070) | |
Current portion of long-term debt | 8,225 | |
Long-term debt | 786,775 | |
Liabilities subject to compromise | (1,722,052) | |
Additional paid-in capital | 379,175 | $ (436,986) |
Successor common stock | 225 | |
(Accumulated deficit) retained earnings | 989,312 | |
Fresh Start Adjustments, Assets | ||
Total assets | 3,604 | |
Fresh Start Adjustments, Liabilities and Stockholders' Equity (Deficit) | ||
Other accrued liabilities | (1,070) | |
Total current liabilities | 7,155 | |
Total non-current liabilities | 786,775 | |
Total liabilities | (928,122) | |
(Accumulated deficit) retained earnings | 989,312 | |
Total stockholder's equity (deficit) | 931,726 | |
Total liabilities and stockholder's equity (deficit) | 3,604 | |
Fresh Start Adjustments | ||
Reorganization Adjustments | ||
Other accrued liabilities | 4,427 | |
(Accumulated deficit) retained earnings | 181,914 | |
Fresh Start Adjustments, Assets | ||
Property and equipment, net | 3,808 | |
Subscriber accounts and deferred contract acquisition costs, net | (55,936) | |
Dealer network and other intangible assets | 144,700 | |
Goodwill | 81,943 | |
Other assets | (685) | |
Total assets | 173,830 | |
Fresh Start Adjustments, Liabilities and Stockholders' Equity (Deficit) | ||
Other accrued liabilities | 4,427 | |
Deferred revenue | (5,331) | |
Holdback liability | (6,525) | |
Total current liabilities | (7,429) | |
Other liabilities | 6,013 | |
Total non-current liabilities | 6,013 | |
Total liabilities | (1,416) | |
Predecessor accumulated other comprehensive income, net | (6,668) | |
(Accumulated deficit) retained earnings | 181,914 | |
Total stockholder's equity (deficit) | 175,246 | |
Total liabilities and stockholder's equity (deficit) | $ 173,830 |
Fresh Start Accounting - Net Ca
Fresh Start Accounting - Net Cash Contribution (Details) - USD ($) $ in Thousands | Sep. 01, 2019 | May 24, 2019 |
Fresh-Start Adjustment [Line Items] | ||
Equity rights offering proceeds from Noteholders | $ 177,000 | |
Equity rights offering proceeds from Ascent Capital | 23,000 | $ 23,000 |
Net cash contribution | 3,604 | |
Predecessor Credit Facility | ||
Fresh-Start Adjustment [Line Items] | ||
Payment of Predecessor principal and interest | (165,619) | |
Predecessor DIP Facility | ||
Fresh-Start Adjustment [Line Items] | ||
Payment of Predecessor principal and interest | (28,570) | |
Predecessor Senior Notes | ||
Fresh-Start Adjustment [Line Items] | ||
Payment of Predecessor principal and interest | $ (2,207) |
Fresh Start Accounting - Net Re
Fresh Start Accounting - Net Reduction Long-Term Debt (Details) $ in Thousands | Sep. 01, 2019USD ($) |
Fresh-Start Adjustment [Line Items] | |
Net increase in Long-term Debt | $ 786,775 |
Takeback Loan Facility | |
Fresh-Start Adjustment [Line Items] | |
Long-term portion of Successor Takeback Term Loan | 814,275 |
Predecessor DIP Facility | |
Fresh-Start Adjustment [Line Items] | |
Payment of Predecessor DIP Facility principal | $ (27,500) |
Fresh Start Accounting - Liabil
Fresh Start Accounting - Liabilities Subject To Compromise, Prior to Effective Date (Details) - USD ($) $ in Thousands | Aug. 31, 2019 | Aug. 30, 2019 |
Fresh-Start Adjustment [Line Items] | ||
Total Liabilities subject to compromise | $ 1,722,052 | $ 1,722,052 |
Predecessor Term Loan | ||
Fresh-Start Adjustment [Line Items] | ||
Liabilities subject to compromise, debt | $ 1,072,500 | 1,072,500 |
Liabilities subject to compromise, accrued interest | 15,619 | |
Predecessor Senior Notes | ||
Fresh-Start Adjustment [Line Items] | ||
Liabilities subject to compromise, debt | 585,000 | |
Liabilities subject to compromise, accrued interest | $ 48,933 |
Fresh Start Accounting - Liab_2
Fresh Start Accounting - Liabilities Subject to Comprise, Settled (Details) - USD ($) $ in Thousands | Sep. 01, 2019 | Aug. 31, 2019 | Aug. 30, 2019 |
Fresh-Start Adjustment [Line Items] | |||
Liabilities subject to compromise | $ 1,722,052 | $ 1,722,052 | |
Fair value of common stock issued to Predecessor Term Loan and Predecessor Senior Notes holders | (171,989) | ||
Gain on settlement of Liabilities subject to compromise | $ 559,737 | 559,737 | |
Predecessor Term Loan | |||
Fresh-Start Adjustment [Line Items] | |||
(Payment) Issue Long-term debt | 165,619 | ||
Predecessor Senior Notes | |||
Fresh-Start Adjustment [Line Items] | |||
(Payment) Issue Long-term debt | 2,207 | ||
Takeback Loan Facility | |||
Fresh-Start Adjustment [Line Items] | |||
(Payment) Issue Long-term debt | $ 822,500 |
Fresh Start Accounting - Adjust
Fresh Start Accounting - Adjustment Retained Earnings (Accumulated Deficit) (Details) - USD ($) $ in Thousands | Sep. 01, 2019 | Aug. 31, 2019 |
Reorganizations [Abstract] | ||
Cancellation of Predecessor additional paid-in capital | $ 436,986 | |
Loss on equity rights offering discount, net | (7,411) | |
Gain on settlement of Liabilities subject to compromise | 559,737 | $ 559,737 |
Total adjustment to Retained earnings (accumulated deficit) | $ 989,312 |
Fresh Start Accounting - Proper
Fresh Start Accounting - Property, Plant, and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 01, 2019 | Aug. 31, 2019 |
Successor Company | ||
Leasehold improvements | $ 353 | |
Computer systems and software | 39,320 | |
Furniture and fixtures | 1,278 | |
Property and equipment, gross | 40,951 | |
Accumulated depreciation | 0 | |
Property and equipment, net | $ 40,951 | |
Predecessor Company | ||
Leasehold improvements | $ 771 | |
Computer systems and software | 83,238 | |
Furniture and fixtures | 2,009 | |
Property and equipment, gross | 86,018 | |
Accumulated depreciation | (48,875) | |
Property and equipment, net | $ 37,143 | |
Leasehold improvements | ||
Estimated Useful Life | ||
Estimated Useful Life | 9 years | |
Computer systems and software | Minimum | ||
Estimated Useful Life | ||
Estimated Useful Life | 2 years | |
Computer systems and software | Maximum | ||
Estimated Useful Life | ||
Estimated Useful Life | 4 years | |
Furniture and fixtures | ||
Estimated Useful Life | ||
Estimated Useful Life | 5 years |
Fresh Start Accounting - Dealer
Fresh Start Accounting - Dealer Networks and Other Intangible Assets (Details) $ in Thousands | Sep. 01, 2019USD ($) |
Reorganizations [Abstract] | |
Dealer network | $ 140,000 |
Leasehold interest | 4,700 |
Total Dealer network and other intangible assets | $ 144,700 |
Fresh Start Accounting - Cumula
Fresh Start Accounting - Cumulative Impact Retained Earnings (Accumulated Deficit) Adjustments (Details) $ in Thousands | Sep. 01, 2019USD ($) |
Fresh-Start Adjustment [Line Items] | |
Dealer network and other intangible assets fair value adjustment | $ 144,700 |
Net gain on fresh start adjustments | 989,312 |
Fresh Start Adjustments | |
Fresh-Start Adjustment [Line Items] | |
Property and equipment fair value adjustment | 3,808 |
Subscriber accounts fair value adjustment | (55,936) |
Dealer network and other intangible assets fair value adjustment | 144,700 |
Goodwill | 81,943 |
Other assets and liabilities fair value adjustments | 731 |
Predecessor accumulated other comprehensive income, net | 6,668 |
Net gain on fresh start adjustments | $ 181,914 |
Fresh Start Accounting - Gain o
Fresh Start Accounting - Gain on Restructuring and Reorganizations, Net (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 | Aug. 31, 2019 | Sep. 30, 2018 | ||
Reorganizations [Abstract] | ||||||
Gain on settlement of Liabilities subject to compromise | [1] | $ 559,737 | $ 559,737 | |||
Gain on fresh start adjustments | [2] | 181,914 | 181,914 | |||
Loss on equity rights offering discount | [3] | (8,325) | (8,325) | |||
Restructuring and reorganization expense | [4] | (30,502) | (63,604) | |||
Gain on restructuring and reorganization, net | $ 0 | $ 702,824 | $ 0 | $ 669,722 | $ 0 | |
[1] | Gain recognized primarily on Predecessor Senior Notes converted from debt to equity and Predecessor Senior Notes settled at a discount in accordance with the Plan. | |||||
[2] | Revaluation of certain assets and liabilities upon the adoption of fresh start accounting. | |||||
[3] | In accordance with the Plan, Noteholders that participated in the equity rights offering purchased Monitronics common stock at a discount. | |||||
[4] | Legal, financial advisory and other professional costs directly associated with the restructuring and reorganization process. |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use asset | $ 19,153 | |
Operating lease liabilities | $ 15,929 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use asset | $ 20,240 | |
Operating lease liabilities | $ 20,761 |
Other Accrued Liabilities - Sch
Other Accrued Liabilities - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued payroll and related liabilities | $ 6,075 | $ 4,459 |
Interest payable | 283 | 14,446 |
Income taxes payable | 2,080 | 2,742 |
Operating lease liabilities | 3,836 | |
Contingent dealer liabilities | 4,630 | |
Accrued reorganization costs | 9,715 | |
Other | 8,416 | 9,438 |
Total Other accrued liabilities | $ 35,035 | $ 31,085 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Details) - USD ($) | Aug. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | Mar. 31, 2019 | Feb. 29, 2016 |
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 994,000,000 | $ 1,816,450,000 | |||
Less: Current portion of long-term debt | (8,225,000) | (1,816,450,000) | |||
Long-term debt | 985,775,000 | 0 | |||
Takeback Loan Facility | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 822,500,000 | ||||
Takeback Loan Facility | Takeback Loan Facility Due March 2024 | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 822,500,000 | $ 822,500,000 | |||
Effective interest rate | 9.20% | ||||
Takeback Loan Facility | Takeback Loan Facility Due March 2024 | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 6.50% | 6.50% | |||
Floor on variable debt | 1.25% | 1.25% | |||
Takeback Loan Facility | Takeback Loan Facility Due March 2024 | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 5.50% | ||||
Term Loan | Term Loan Due July 2024 | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 150,000,000 | ||||
Effective interest rate | 7.60% | ||||
Borrowing capacity | $ 150,000,000 | ||||
Term Loan | Term Loan Due July 2024 | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 5.00% | ||||
Floor on variable debt | 1.50% | ||||
Term Loan | Term Loan Due September 2022 | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 1,075,250,000 | ||||
Effective interest rate | 8.60% | ||||
Term Loan | Term Loan Due September 2022 | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 5.50% | 5.50% | |||
Floor on variable debt | 1.00% | 1.00% | |||
Line of Credit | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Borrowing capacity | $ 145,000,000 | ||||
Line of Credit | Revolving Credit Facility Due July 2024 | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 21,500,000 | ||||
Effective interest rate | 12.70% | ||||
Borrowing capacity | $ 145,000,000 | ||||
Line of Credit | Revolving Credit Facility Due July 2024 | Revolving Credit Facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 5.00% | 5.00% | |||
Floor on variable debt | 1.50% | 1.50% | |||
Line of Credit | Revolving Credit Facility Due July 2024 | Revolving Credit Facility | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 4.00% | 4.00% | |||
Floor on variable debt | 4.50% | 4.50% | |||
Line of Credit | Revolving Credit Facility Due 2021 | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 181,400,000 | $ 144,200,000 | |||
Effective interest rate | 7.50% | ||||
Borrowing capacity | $ 295,000,000 | $ 195,000,000 | |||
Line of Credit | Revolving Credit Facility Due 2021 | Revolving Credit Facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Basis spread on variable debt | 4.00% | 4.00% | |||
Floor on variable debt | 1.00% | 1.00% | |||
Senior Notes | Senior Notes 9.125 Percent Due 2020 | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 585,000,000 | ||||
Debt interest rate | 9.125% | 9.125% | |||
Effective interest rate | 9.10% | ||||
Ascent Intercompany Loan | Promissory Note Due to Ascent Capital due October 2020 | |||||
Debt Instrument [Line Items] | |||||
Total debt carrying value | $ 12,000,000 | $ 12,000,000 | |||
Effective interest rate | 12.50% |
Debt - Narrative (Details)
Debt - Narrative (Details) | Aug. 31, 2019USD ($)letters_of_credit | Feb. 29, 2016USD ($) | Sep. 30, 2019USD ($) | May 20, 2019 | Jan. 31, 2019USD ($) | Mar. 31, 2019USD ($) | Aug. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Debt Instrument [Line Items] | ||||||||||
Cash received from equity rights offering | $ 150,000,000 | $ 150,000,000 | ||||||||
Debt equitization | $ 100,000,000 | $ 100,000,000 | ||||||||
Long-term debt | $ 994,000,000 | $ 994,000,000 | $ 1,816,450,000 | |||||||
Senior note exchange, cash option, percentage of principal and accrued unpaid interest due | 2.50% | 2.50% | ||||||||
Senior note exchange, noncash option, percentage of common stock issued and outstanding | 18.00% | 18.00% | ||||||||
Payments on long-term debt | 5,000,000 | $ 379,666,000 | $ 136,600,000 | |||||||
Principal Owner | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal being treated as a capital contribution | $ 88,000,000 | $ 2,250,000 | ||||||||
Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt reduction of principal amount | $ 250,000,000 | 250,000,000 | ||||||||
Debt instrument, face amount | 150,000,000 | 150,000,000 | ||||||||
Term Loan | Term Loan Due July 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | 150,000,000 | $ 150,000,000 | ||||||||
Maximum borrowing, amount | 150,000,000 | 150,000,000 | ||||||||
Term Loan | Term Loan Due July 2024 | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Floor on variable debt | 1.50% | |||||||||
Basis spread on variable debt | 5.00% | |||||||||
Term Loan | Term Loan Due September 2022 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | $ 1,075,250,000 | |||||||||
Debt instrument, face amount | 1,072,500,000 | 1,072,500,000 | ||||||||
Line of credit facility, periodic payment | $ 2,750,000 | |||||||||
Additional default interest rate | 2.00% | |||||||||
Term Loan | Term Loan Due September 2022 | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Floor on variable debt | 1.00% | 1.00% | ||||||||
Basis spread on variable debt | 5.50% | 5.50% | ||||||||
Term Loan | Term Loan Due September 2022 | Alternate Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable debt | 4.50% | |||||||||
Takeback Loan Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | $ 822,500,000 | 822,500,000 | ||||||||
Takeback Loan Facility | Takeback Loan Facility Due March 2024 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | 822,500,000 | 822,500,000 | 822,500,000 | $ 822,500,000 | ||||||
Quarterly principal payments | $ 2,056,250 | |||||||||
Takeback Loan Facility | Takeback Loan Facility Due March 2024 | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Floor on variable debt | 1.25% | 1.25% | ||||||||
Basis spread on variable debt | 6.50% | 6.50% | ||||||||
Takeback Loan Facility | Takeback Loan Facility Due March 2024 | Base Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable debt | 5.50% | |||||||||
Line of Credit | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing, amount | $ 145,000,000 | 145,000,000 | ||||||||
Line of Credit | Swingline Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing, amount | 10,000,000 | 10,000,000 | ||||||||
Line of Credit | Letter of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing, amount | $ 1,000,000 | 1,000,000 | ||||||||
Number of letters of credit | letters_of_credit | 2 | |||||||||
Line of Credit | Term Loan and Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing, amount | $ 295,000,000 | 295,000,000 | ||||||||
Line of Credit | Revolving Credit Facility Due July 2024 | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | $ 21,500,000 | $ 21,500,000 | ||||||||
Maximum borrowing, amount | 145,000,000 | 145,000,000 | ||||||||
Available for borrowing, amount | $ 123,500,000 | 123,500,000 | ||||||||
Commitment fee on unused portion of line of credit | 0.75% | |||||||||
Line of Credit | Revolving Credit Facility Due July 2024 | LIBOR | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Floor on variable debt | 1.50% | 1.50% | ||||||||
Basis spread on variable debt | 5.00% | 5.00% | ||||||||
Line of Credit | Revolving Credit Facility Due July 2024 | Base Rate | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Floor on variable debt | 4.50% | 4.50% | ||||||||
Basis spread on variable debt | 4.00% | 4.00% | ||||||||
Line of Credit | Revolving Credit Facility Due 2021 | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | $ 181,400,000 | $ 181,400,000 | $ 144,200,000 | |||||||
Maximum borrowing, amount | $ 195,000,000 | $ 295,000,000 | ||||||||
Commitment fee on unused portion of line of credit | 0.50% | |||||||||
Additional default interest rate | 2.00% | |||||||||
Line of Credit | Revolving Credit Facility Due 2021 | LIBOR | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Floor on variable debt | 1.00% | 1.00% | ||||||||
Basis spread on variable debt | 4.00% | 4.00% | ||||||||
Line of Credit | Revolving Credit Facility Due 2021 | Alternate Base Rate | Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Basis spread on variable debt | 3.00% | |||||||||
Senior Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Extinguishment of debt | $ 585,000,000 | |||||||||
Senior Notes | Senior Notes 9.125 Percent Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | $ 585,000,000 | |||||||||
Debt interest rate | 9.125% | 9.125% | 9.125% | |||||||
Promissory Note, Intercompany | Promissory Note Due October 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | $ 12,000,000 | $ 12,000,000 | ||||||||
Payments on long-term debt | $ 9,750,000 | |||||||||
Promissory Note, Intercompany | Promissory Note Due October 2020 | Parent Company | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt interest rate | 12.50% | |||||||||
Extinguishment of debt | $ 100,000,000 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Remainder of 2019 | $ 2,056 | |
2020 | 8,225 | |
2021 | 8,225 | |
2022 | 8,225 | |
2023 | 8,225 | |
2024 | 959,044 | |
Thereafter | 0 | |
Total debt carrying value | $ 994,000 | $ 1,816,450 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) $ in Thousands | Apr. 30, 2019 | Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Unrealized loss on derivatives | $ 0 | $ 4,577 | $ 0 | |
Interest Rate Swap | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Termination amount | $ 8,767 | |||
Realized loss on derivatives | 2,227 | |||
Interest Rate Swap | Counterparty | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Termination amount | $ 6,540 |
Derivatives - Summary of Deriva
Derivatives - Summary of Derivatives Designated as Cash Flow Hedges (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2019 | Sep. 30, 2018 | ||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||
Effective portion of gain recognized in Accumulated other comprehensive income (loss) | $ 3,165 | $ 5,096 | $ 13,668 | |||||||||
Interest Rate Swap | Cash flow hedge | ||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||||||||
Effective portion of gain recognized in Accumulated other comprehensive income (loss) | $ 0 | $ 0 | 3,165 | $ 0 | $ 21,929 | |||||||
Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net income (loss) | $ 0 | [1],[2] | $ 0 | [1] | $ (104) | [1] | $ (940) | [2] | $ (1,267) | [2] | ||
[1] | Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). | |||||||||||
[2] | 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 | Sep. 30, 2019 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap agreements - assets | [1] | $ 0 | $ 10,552 |
Interest rate swap agreements - liabilities | [1] | 0 | (6,039) |
Total | 0 | 4,513 | |
Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap agreements - assets | [1] | 0 | 0 |
Interest rate swap agreements - liabilities | [1] | 0 | 0 |
Total | 0 | 0 | |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap agreements - assets | [1] | 0 | 10,552 |
Interest rate swap agreements - liabilities | [1] | 0 | (6,039) |
Total | 0 | 4,513 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate swap agreements - assets | [1] | 0 | 0 |
Interest rate swap agreements - liabilities | [1] | 0 | 0 |
Total | $ 0 | $ 0 | |
[1] | Swap asset values are included in non-current Other assets and Swap liability values are included in non-current Derivative financial instruments on the condensed consolidated balance sheets. |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Instruments Not Carried at Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Long term debt, including current portion: | |||
Carrying value | $ 994,000 | $ 1,816,450 | |
Level 2 | |||
Long term debt, including current portion: | |||
Carrying value | 994,000 | 1,816,450 | |
Fair value | [1] | $ 925,660 | $ 1,218,606 |
[1] | The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. |
Stockholder's Equity - Narrativ
Stockholder's Equity - Narrative (Details) - shares | Sep. 30, 2019 | Aug. 31, 2019 | Aug. 30, 2019 | Dec. 31, 2018 |
Equity [Abstract] | ||||
Common and preferred stock, authorized shares (in shares) | 50,000,000 | |||
Common stock, authorized shares (in shares) | 45,000,000 | 45,000,000 | 1,000 | |
Preferred stock, authorized shares (in shares) | 5,000,000 | 5,000,000 | ||
Common stock, issued shares (in shares) | 22,500,000 | 22,500,000 | 22,500,000 | 1,000 |
Common stock, outstanding shares (in shares) | 22,500,000 | 22,500,000 | 1,000 |
Stockholder's Equity - Summary
Stockholder's Equity - Summary of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||||||||||
Sep. 30, 2019 | Aug. 31, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Aug. 31, 2019 | Sep. 30, 2018 | Jan. 01, 2018 | |||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||||||||||
Beginning Balance | $ 379,400 | $ (678,864) | $ (623,775) | $ (588,975) | $ (167,695) | $ 68,220 | $ 102,736 | $ (588,975) | $ 102,736 | |||||||
Adjusted balance at January 1, 2018 | $ 80,016 | |||||||||||||||
Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), net of income tax of $0 | 3,165 | 5,096 | 13,668 | |||||||||||||
Fresh start adjustment | [1] | (6,668) | ||||||||||||||
Net period Other comprehensive income | 0 | 0 | (472) | (468) | 3,269 | 5,521 | 14,406 | (940) | 23,196 | |||||||
Ending Balance | 368,593 | 379,400 | (678,864) | (623,775) | (202,907) | (167,695) | 68,220 | 379,400 | (202,907) | |||||||
Unrealized gain on derivatives recognized through Accumulated other comprehensive income (loss), tax | 0 | 0 | 0 | |||||||||||||
Accounting Standards Update 2017-12 | ||||||||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||||||||||
Impact of adoption of ASU 2017-12 | 605 | |||||||||||||||
AOCI Attributable to Parent | ||||||||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||||||||||
Beginning Balance | 0 | 6,668 | 7,140 | 7,608 | 13,157 | 7,636 | (7,375) | 7,608 | (7,375) | |||||||
Adjusted balance at January 1, 2018 | (6,770) | |||||||||||||||
Net period Other comprehensive income | (472) | (468) | 3,269 | 5,521 | 14,406 | |||||||||||
Ending Balance | $ 0 | $ 0 | 6,668 | 7,140 | 16,426 | 13,157 | 7,636 | $ 0 | $ 16,426 | |||||||
AOCI Attributable to Parent | Accounting Standards Update 2017-12 | ||||||||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||||||||||
Impact of adoption of ASU 2017-12 | $ 605 | |||||||||||||||
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent | ||||||||||||||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||||||||||||||
Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 | (472) | [2] | (468) | [2] | 104 | [3] | 425 | [3] | 738 | [3] | ||||||
Reclassifications of unrealized loss on derivatives into Net loss, tax | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | |||||||||||
[1] | The remaining amount recognized in Accumulated other comprehensive income (loss) was evaluated to have no fair value upon the application of fresh start accounting pursuant to the Plan. See note 3, Fresh Start Accounting for further information. | |||||||||||||||
[2] | Amounts reclassified into Net loss are included in Interest expense on the condensed consolidated statements of operations. See note 7, Derivatives for further information. | |||||||||||||||
[3] | Amounts reclassified into Net loss are included in Interest expense on the condensed consolidated statements of operations. |
Basic and Diluted Earnings Pe_2
Basic and Diluted Earnings Per Common Share - Narrative (Details) | 1 Months Ended |
Sep. 30, 2019shares | |
Earnings Per Share [Abstract] | |
Antidilutive securities (in shares) | 0 |
Weighted average shares of common stock, basic and diluted (in shares) | 22,500,000 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Liabilities - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 30, 2017 | |
Loss Contingencies [Line Items] | |||||
Legal settlement reserve | $ 28 | ||||
Damages paid | $ 23 | $ 5 | |||
Settled Litigation | |||||
Loss Contingencies [Line Items] | |||||
Proceeds from legal settlements | $ 4.8 | $ 12.5 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Revenue by Source (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Aug. 31, 2019 | Sep. 30, 2018 | Aug. 31, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | |||||
Total Net revenue | $ 36,289 | $ 84,589 | $ 137,156 | $ 342,286 | $ 405,922 |
Alarm monitoring revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Total Net revenue | 33,594 | 78,608 | 125,004 | 319,172 | 374,689 |
Product and installation revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Total Net revenue | 2,224 | 4,993 | 11,360 | 19,111 | 28,984 |
Other revenue | |||||
Disaggregation of Revenue [Line Items] | |||||
Total Net revenue | $ 471 | $ 988 | $ 792 | $ 4,003 | $ 2,249 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |||
Trade receivables, net | $ 12,105 | $ 13,121 | |
Contract assets, net - current portion | [1] | 10,952 | 13,452 |
Contract assets, net - long-term portion | [2] | 12,600 | 16,154 |
Deferred revenue | $ 13,309 | $ 13,060 | |
[1] | Amount is included in Prepaid and other current assets in the unaudited condensed consolidated balance sheets. | ||
[2] | Amount is included in Other assets in the unaudited condensed consolidated balance sheets. |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 8 Months Ended | |||
Sep. 30, 2019 | Aug. 31, 2019 | Aug. 31, 2019 | ||||
Lessee, Lease, Description [Line Items] | ||||||
Total operating lease cost | $ 354 | $ 694 | $ 2,916 | |||
Cost of Services | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Total operating lease cost | 34 | [1],[2] | 70 | [2] | 321 | [1] |
Selling, General and Administrative Expenses | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Total operating lease cost | $ 320 | [3],[4] | $ 624 | [4] | $ 2,595 | [3] |
[1] | Amount is included in Cost of services in the unaudited condensed consolidated statements of operations. | |||||
[2] | Amount is included in Cost of services in the unaudited condensed consolidated statements of operations. | |||||
[3] | Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations. | |||||
[4] | Amount is included in Selling, general and administrative, including stock-based and long-term incentive compensation in the unaudited condensed consolidated statements of operations. |
Leases - Remaining Lease Term a
Leases - Remaining Lease Term and Discount Rate (Details) | Sep. 30, 2019 |
Leases [Abstract] | |
Weighted-average remaining lease term for operating leases (in years) | 9 years 10 months 25 days |
Weighted-average discount rate for operating leases | 11.80% |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 8 Months Ended |
Sep. 30, 2019 | Aug. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ 345 | $ 2,804 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 758 |
2020 | 3,980 |
2021 | 3,195 |
2022 | 3,069 |
2023 | 3,087 |
Thereafter | 20,329 |
Total lease payments | 34,418 |
Less: Interest | (14,653) |
Total lease obligations | $ 19,765 |
Leases - Disclosures Related to
Leases - Disclosures Related to Periods Prior to Adoption of ASU 2016-02 (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 4,628 |
2020 | 4,207 |
2021 | 3,093 |
2022 | 3,068 |
2023 | 3,087 |
Thereafter | 20,329 |
Minimum lease commitments | $ 38,412 |
Uncategorized Items - mtii-2019
Label | Element | Value |
Retained Earnings [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ (357,544,000) |
Additional Paid-in Capital [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | 444,330,000 |
Common Stock [Member] | ||
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Adjusted Balance | us-gaap_StockholdersEquityIncludingPortionAttributableToNoncontrollingInterestAdjustedBalance1 | $ 0 |
Common Stock, Shares, Outstanding | us-gaap_CommonStockSharesOutstanding | 1,000 |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (22,720,000) |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (22,720,000) |
Accounting Standards Update 2017-12 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (605,000) |