Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 19, 2018 | |
Entity Registrant Name | Ascent Capital Group, Inc. | |
Entity Central Index Key | 1,437,106 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Series A Common Stock | ||
Entity Common Stock, Shares Outstanding (in shares) | 12,068,496 | |
Series B Common Stock | ||
Entity Common Stock, Shares Outstanding (in shares) | 381,528 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 137,561 | $ 10,465 | |||
Restricted cash | 133 | 0 | |||
Marketable securities, at fair value | 0 | 105,958 | |||
Trade receivables, net of allowance for doubtful accounts of $3,630 in 2018 and $4,162 in 2017 | 13,162 | $ 12,645 | 12,645 | ||
Prepaid and other current assets | 25,883 | 11,175 | |||
Total current assets | 176,739 | 140,243 | |||
Property and equipment, net of accumulated depreciation of $46,195 in 2018 and $37,915 in 2017 | 36,568 | 32,823 | |||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization of $1,570,729 in 2018 and $1,439,164 in 2017 | 1,215,831 | 1,302,028 | |||
Dealer network and other intangible assets, net of accumulated amortization of $48,500 in 2018 and $42,806 in 2017 | 0 | 6,994 | |||
Goodwill | 349,149 | 563,549 | |||
Other assets | 36,819 | 9,348 | |||
Total assets | 1,815,106 | 2,054,985 | |||
Current liabilities: | |||||
Accounts payable | 11,661 | 11,092 | |||
Accrued payroll and related liabilities | 6,513 | 3,953 | |||
Other accrued liabilities | 46,840 | 52,329 | |||
Deferred revenue | 12,069 | $ 12,892 | 13,871 | ||
Holdback liability | 10,766 | 9,309 | |||
Current portion of long-term debt | 11,000 | 11,000 | |||
Total current liabilities | 98,849 | 101,554 | |||
Non-current liabilities: | |||||
Long-term debt | 1,869,502 | 1,778,044 | |||
Long-term holdback liability | 2,031 | 2,658 | |||
Derivative financial instruments | 1,139 | 13,491 | |||
Deferred income tax liability, net | 15,298 | 13,311 | |||
Other liabilities | 2,858 | 3,255 | |||
Total liabilities | 1,989,677 | 1,912,313 | |||
Commitments and contingencies | |||||
Stockholders’ (deficit) equity: | |||||
Preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued | 0 | 0 | |||
Additional paid-in capital | 1,425,379 | 1,423,899 | |||
Accumulated deficit | (1,615,743) | (1,277,118) | |||
Accumulated other comprehensive income (loss), net | 15,668 | (4,233) | |||
Total stockholders’ (deficit) equity | (174,571) | $ (138,401) | $ 100,612 | 142,672 | |
Total liabilities and stockholders’ (deficit) equity | 1,815,106 | 2,054,985 | |||
Series A Common Stock | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 121 | 120 | |||
Series B Common Stock | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 4 | 4 | |||
Series C Common Stock | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Trade receivables, allowance for doubtful accounts | $ 3,630 | $ 4,162 |
Property and equipment, accumulated depreciation | 46,195 | 37,915 |
Subscriber accounts, accumulated amortization | 1,570,729 | 1,439,164 |
Dealer network and other intangible assets, accumulated amortization | $ 48,500 | $ 42,806 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Series A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized shares (in shares) | 45,000,000 | 45,000,000 |
Common stock, issued shares (in shares) | 12,052,703 | 11,999,630 |
Common stock, outstanding shares (in shares) | 12,052,703 | 11,999,630 |
Series B Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized shares (in shares) | 5,000,000 | 5,000,000 |
Common stock, issued shares (in shares) | 381,528 | 381,528 |
Common stock, outstanding shares (in shares) | 381,528 | 381,528 |
Series C Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, authorized shares (in shares) | 45,000,000 | 45,000,000 |
Common stock, issued shares (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net revenue | $ 137,156 | $ 138,211 | $ 405,922 | $ 419,909 |
Operating expenses: | ||||
Cost of services | 35,059 | 30,213 | 100,807 | 89,799 |
Selling, general and administrative, including stock-based and long-term incentive compensation | 38,199 | 35,793 | 109,992 | 136,809 |
Radio conversion costs | 0 | 74 | 0 | 383 |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 52,671 | 59,384 | 160,973 | 178,896 |
Depreciation | 2,886 | 2,176 | 8,378 | 6,435 |
Loss on goodwill impairment | 0 | 0 | 214,400 | 0 |
Gain on disposal of operating assets | 0 | 0 | 0 | (21,217) |
Total operating expenses | 128,815 | 127,640 | 594,550 | 391,105 |
Operating income (loss) | 8,341 | 10,571 | (188,628) | 28,804 |
Other expense (income), net: | ||||
Interest income | (624) | (617) | (1,879) | (1,575) |
Interest expense | 40,943 | 38,360 | 120,017 | 114,011 |
Refinancing expense | 6,731 | 0 | 6,731 | 0 |
Other expense (income), net | 40 | 222 | (2,236) | (242) |
Total other expense (income), net | 47,090 | 37,965 | 122,633 | 112,194 |
Loss from continuing operations before income taxes | (38,749) | (27,394) | (311,261) | (83,390) |
Income tax expense from continuing operations | 1,346 | 1,766 | 4,039 | 8,241 |
Net loss from continuing operations | (40,095) | (29,160) | (91,631) | |
Discontinued operations: | ||||
Income from discontinued operations, net of income tax of $0 | 0 | 0 | 0 | 92 |
Net loss | (40,095) | (29,160) | (315,300) | (91,539) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 0 | (16) | 0 | 626 |
Unrealized holding gain (loss) on marketable securities, net | 0 | 279 | (3,900) | 1,366 |
Unrealized gain (loss) on derivative contracts, net | 3,269 | 227 | 23,196 | (4,501) |
Total other comprehensive income (loss), net of tax | 3,269 | 490 | 19,296 | (2,509) |
Comprehensive loss | $ (36,826) | $ (28,670) | $ (296,004) | $ (94,048) |
Basic and diluted income (loss) per share: | ||||
Continuing operations (in dollars per share) | $ (3.24) | $ (2.39) | $ (25.57) | $ (7.53) |
Discontinued operations (in dollars per share) | 0 | 0 | 0 | 0.01 |
Net loss (in dollars per share) | $ (3.24) | $ (2.39) | $ (25.57) | $ (7.52) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Income tax, discontinued operations | $ 0 | $ 0 | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (315,300) | $ (91,539) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Income from discontinued operations, net of income tax | 0 | (92) |
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 160,973 | 178,896 |
Depreciation | 8,378 | 6,435 |
Stock-based and long-term incentive compensation | 1,600 | 5,968 |
Deferred income tax expense | 1,987 | 3,158 |
Gain on disposal of operating assets | 0 | (21,217) |
Legal settlement reserve | 0 | 23,000 |
Refinancing expense | 6,731 | 0 |
Amortization of debt discount and deferred debt costs | 9,108 | 8,227 |
Bad debt expense | 8,511 | 7,888 |
Loss on goodwill impairment | 214,400 | 0 |
Other non-cash activity, net | (186) | 4,887 |
Changes in assets and liabilities: | ||
Trade receivables | (9,028) | (7,225) |
Prepaid expenses and other assets | (8,359) | (3,535) |
Subscriber accounts - deferred contract acquisition costs | (4,529) | (2,299) |
Payables and other liabilities | (4,752) | 4,770 |
Operating activities from discontinued operations, net | 0 | (3,408) |
Net cash provided by operating activities | 69,534 | 113,914 |
Cash flows from investing activities: | ||
Capital expenditures | (11,513) | (9,999) |
Cost of subscriber accounts acquired | (111,531) | (119,081) |
Purchases of marketable securities | (39,022) | (22,633) |
Proceeds from sale of marketable securities | 143,316 | 1,108 |
Proceeds from the disposal of operating assets | 0 | 32,612 |
Net cash used in investing activities | (18,750) | (117,993) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 218,950 | 159,850 |
Payments on long-term debt | (136,600) | (132,500) |
Payments of financing costs | (5,734) | 0 |
Value of shares withheld for share-based compensation | (171) | (670) |
Net cash provided by financing activities | 76,445 | 26,680 |
Net increase in cash, cash equivalents and restricted cash | 127,229 | 22,601 |
Cash, cash equivalents and restricted cash at beginning of period | 10,465 | 12,319 |
Cash, cash equivalents and restricted cash at end of period | 137,694 | 34,920 |
Supplemental cash flow information: | ||
State taxes paid, net | 2,710 | 3,107 |
Interest paid | 98,260 | 93,753 |
Accrued capital expenditures | $ 882 | $ 386 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common StockSeries A Common Stock | Common StockSeries B Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Increase (Decrease) in Stockholders' Equity | ||||||
Impact of adoption of ASU 2017-12 | Impact of adoption of Topic 606 | $ (22,720) | $ (22,720) | ||||
Impact of adoption of ASU 2017-12 | Impact of adoption of ASU 2017-12 | (605) | $ 605 | ||||
Adjusted balance at January 1, 2018 | 119,952 | $ 120 | $ 4 | $ 1,423,899 | (1,300,443) | (3,628) |
Beginning Balance at Dec. 31, 2017 | 142,672 | 120 | 4 | 1,423,899 | (1,277,118) | (4,233) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (30,838) | (30,838) | ||||
Other comprehensive income | 11,329 | 11,329 | ||||
Stock-based compensation | 285 | 285 | ||||
Value of shares withheld for minimum tax liability | (116) | (116) | ||||
Ending Balance at Mar. 31, 2018 | 100,612 | 120 | 4 | 1,424,068 | (1,331,281) | 7,701 |
Beginning Balance at Dec. 31, 2017 | 142,672 | 120 | 4 | 1,423,899 | (1,277,118) | (4,233) |
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (315,300) | |||||
Other comprehensive income | 19,296 | |||||
Ending Balance at Sep. 30, 2018 | (174,571) | 121 | 4 | 1,425,379 | (1,615,743) | 15,668 |
Beginning Balance at Mar. 31, 2018 | 100,612 | 120 | 4 | 1,424,068 | (1,331,281) | 7,701 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (244,367) | (244,367) | ||||
Other comprehensive income | 4,698 | 4,698 | ||||
Stock-based compensation | 684 | 684 | ||||
Value of shares withheld for minimum tax liability | (28) | (28) | ||||
Ending Balance at Jun. 30, 2018 | (138,401) | 120 | 4 | 1,424,724 | (1,575,648) | 12,399 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (40,095) | (40,095) | ||||
Other comprehensive income | 3,269 | 3,269 | ||||
Stock-based compensation | 683 | 1 | 682 | |||
Value of shares withheld for minimum tax liability | (27) | (27) | ||||
Ending Balance at Sep. 30, 2018 | $ (174,571) | $ 121 | $ 4 | $ 1,425,379 | $ (1,615,743) | $ 15,668 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Ascent Capital Group, Inc. ("Ascent Capital" or the "Company") condensed consolidated financial statements represent the financial position and results of operations of Ascent Capital and its consolidated subsidiaries. Monitronics International, Inc. and its consolidated subsidiaries (collectively, "Brinks Home Security TM "), are the primary, wholly owned subsidiaries of the Company. Brinks Home Security provides 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. Brinks Home Security customers are obtained through its direct-to-consumer sales channel or its Authorized Dealer network, which provides product and installation services, as well as support to customers. Its direct-to-consumer channel offers both Do-It-Yourself ("DIY") and professional installation security solutions. The rollout of the Brinks Home Security brand in the second quarter of 2018 included the integration of our business model under a single brand. As part of the integration, we reorganized our business from two reportable segments, "MONI" and "LiveWatch," to one reportable segment, Brinks Home Security. Following the integration, the Company's chief operating decision maker reviews internal financial information on a consolidated Brinks Home Security basis, which excludes corporate Ascent Capital activities and consolidation eliminations not associated with the operation of Brinks Home Security. Total assets related to corporate Ascent Capital activities are $110,937,000 and $113,698,000 as of September 30, 2018 and December 31, 2017 , respectively. Net gain (loss) from continuing operations before income taxes related to corporate Ascent Capital activities was $(6,026,000) and $(13,232,000) for the three and nine months ended September 30, 2018 , as compared to $(3,628,000) and $7,932,000 for the three and nine months ended September 30, 2017 . 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 financial statements as of September 30, 2018 , and for the three and nine months ended September 30, 2018 and 2017 , include Ascent Capital and all of its direct and indirect subsidiaries. The accompanying interim condensed consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the Ascent Capital Annual Report on Form 10-K for the year ended December 31, 2017 , filed with the SEC on March 5, 2018 . The Company adopted Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("Topic 606") using the modified retrospective approach on January 1, 2018, at which time it became effective for the Company. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12") which amends the hedge accounting rules to align risk management activities and financial reporting by simplifying the application of hedge accounting guidance. The guidance expands the ability to hedge nonfinancial and financial risk components and eliminates the requirement to separately measure and report hedge ineffectiveness. Additionally, certain hedge effectiveness assessment requirements may be accomplished qualitatively instead of quantitatively. The Company early adopted ASU 2017-12 effective January 1, 2018, and as such, an opening equity adjustment of $605,000 was recognized that reduced Accumulated deficit, offset by a gain in Accumulated other comprehensive income (loss). This adjustment primarily relates to the derecognition of the cumulative ineffectiveness recorded on the Company's interest rate swap derivative instruments, as well as adjustments to cumulative dedesignation adjustments. The Company does not expect this adoption to have a material impact on its financial position, results of operations or cash flows on an ongoing basis. The Company early adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). Prior to the adoption of ASU 2017-04, the fair value of the reporting unit was compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit was lower than its carrying amount, then the implied fair value of goodwill was calculated. If the implied fair value of goodwill was lower than the carrying value of goodwill, an impairment was recognized (identified as "Step 2"). ASU 2017-04 eliminated Step 2 from the impairment test; therefore, a goodwill impairment is recognized as the difference of the fair value and the carrying value of the reporting unit. The comparative information has not been restated and continues to be reported under the accounting standards in effect during those periods. See note 4, Revenue Recognition and note 6, Goodwill , in the notes to the condensed consolidated financial statements for further discussion. 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, valuation of deferred tax assets and valuation of goodwill. 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
Going Concern | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Going Concern Brinks Home Security has substantial indebtedness, including $585,000,000 principal of senior notes at September 30, 2018, maturing on April 1, 2020 (the "Senior Notes"), and an existing credit facility with a term loan in principal of $1,078,000,000 as of September 30, 2018, maturing September 30, 2022, and a revolving credit facility with an outstanding balance of $159,100,000 as of September 30, 2018, maturing September 30, 2021 (the term loan and the revolver, together, the "Credit Facility"). The maturity date for each of the term loan and the revolving credit facility under the Credit Facility is subject to a springing maturity 181 days prior to the scheduled maturity date of the Senior Notes, or October 3, 2019, if Brinks Home Security is unable to refinance the Senior Notes by that date. In addition, if Brinks Home Security is unable to refinance the Senior Notes, or demonstrate the ability to meet its financial covenants for a period of twelve months after the issuance date, prior to the filing with the SEC of their Annual Report on Form 10-K for the year ended December 31, 2018, they may be subject to a going concern qualification in connection with their external audit report, which would be an event of default under the Credit Facility. At any time after the occurrence of an event of default under the Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Credit Facility immediately due and payable and terminate any commitment to make further loans under the Credit Facility. These matters raise substantial doubt regarding the Company's ability to continue as a going concern within one year from the date these financial statements are issued. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As a result, the Company’s consolidated financial statements as of September 30, 2018 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. On September 24, 2018, Ascent Capital and Brinks Home Security entered into a Transaction Support Agreement (which was amended and restated pursuant to the Amended and Restated Transaction Support Agreement, entered into on October 30, 2018 (the "Amended and Restated Support Agreement")) with certain holders collectively owning or controlling not less than $380 million aggregate principal amount of the Senior Notes, representing approximately 65% of the Senior Notes (collectively, the "Consenting Noteholders"). The Amended and Restated Support Agreement incrementally included a group of lenders for the Credit Facility term loan holding over 50% of the aggregate outstanding principal amount of the Credit Facility term loan (collectively, the "Credit Facility Lenders"). The Consenting Noteholders and Credit Facility Lenders have committed to support and fully participate in proposed agreed upon transactions that would result in the refinancing of the Senior Notes, if consummated. See Note 14, Subsequent Events , for further information. While management continues to negotiate refinancing terms with its debt holders, as of the issuance date of these financial statements, Brinks Home Security has not refinanced the Senior Notes and there can be no assurances that the negotiations management is pursuing will result in the consummation of transactions that would refinance the Senior Notes. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
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. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an amortization of the associated asset. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. ASU 2018-10, Codification Improvements to Topic 842, Leases , clarifies certain aspects of ASU 2016-12 and the two updates will be adopted concurrently. ASU 2016-02 requires leases to be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach upon adoption. However, ASU 2018-11, Leases (Topic 842): Targeted Improvements provides an alternative transition method by which leases are recognized at the date of adoption and a cumulative-effect adjustment to the opening balance of retained earnings is recognized in the period of adoption. The Company plans to adopt using this alternative and is currently evaluating the impact that these standards will have on its financial position, results of operations and cash flows. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Topic 606 amends and supersedes FASB Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition ("Topic 605"). The core principle of Topic 606 is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Accounting Policy for Periods Commencing January 1, 2018 Brinks Home Security offers its subscribers professional alarm monitoring services, as well as interactive and home automation services, through equipment at the subscriber's site that communicates with Brinks Home Security’s central monitoring station and interfaces with other equipment at the site and third party technology companies for interactive and home automation services. These services are typically provided under alarm monitoring agreements (“AMAs”) between Brinks Home Security and the subscriber. The equipment at the site is either obtained independently from Brinks Home Security’s network of third party Authorized Dealers or directly from Brinks Home Security via its direct-to-consumer sales channel. Brinks Home Security also offers equipment sales and installation services and, to its existing subscribers, maintenance services on existing alarm equipment. Brinks Home Security also collects fees for contract monitoring, which are services provided to other security alarm companies for monitoring their accounts on a wholesale basis and other fees from subscribers for late fee or insufficient fund charges. Revenue under subscriber AMAs is allocated to alarm monitoring revenue and, if applicable, product and installation revenue based on the stand alone selling prices (“SSP”) of each performance obligation as a percentage of the total SSP of all performance obligations. Allocated alarm monitoring revenue is recognized as the monthly service is provided. Allocated product and installation revenue is recognized when the product sale is complete or shipped and the installation service is provided, typically at inception of the AMA. Product and installation revenue is not applicable to AMA's acquired from Authorized Dealers in their initial term. Any cash not received from the subscriber at the time of product sale and installation is recognized as a contract asset at inception of the AMA and is subsequently amortized over the subscriber contract term as a reduction of the amounts billed for professional alarm monitoring, interactive and home automation services. If a subscriber cancels the AMA within the negotiated term, any existing contract asset is determined to be impaired and is immediately expensed in full to Selling, general and administrative expense on the condensed consolidated statement of operations. Maintenance services are billed and recognized as revenue when the services are completed in the home and agreed to by the subscriber under the subscriber AMA. Contract monitoring fees are recognized as alarm monitoring revenue as the monitoring service is provided. Other fees are recognized as other revenue when billed to the subscriber which coincides with the timing of when the services are provided. Disaggregation of Revenue Revenue is disaggregated by source of revenue as follows (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Alarm monitoring revenue $ 125,004 134,317 $ 374,689 407,660 Product and installation revenue 11,360 2,899 28,984 9,328 Other revenue 792 995 2,249 2,921 Total Net revenue $ 137,156 138,211 $ 405,922 419,909 Contract Balances The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): September 30, 2018 At adoption Trade receivables, net $ 13,162 12,645 Contract assets, net - current portion (a) 13,836 14,197 Contract assets, net - long-term portion (b) 16,621 10,377 Deferred revenue 12,069 12,892 (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. Changes in Accounting Policies The Company adopted Topic 606, effective January 1, 2018, using the modified retrospective transition method. Under the modified retrospective transition method, the Company evaluated active AMAs on the adoption date as if each AMA had been accounted for under Topic 606 from its inception. Some revenue related to AMAs originated through Brinks Home Security's direct-to-consumer channel or through extensions that would have been recognized in future periods under Topic 605 were recast under Topic 606 as if revenue had been accelerated and recognized in prior periods, as it was allocated to product and installation performance obligations. A contract asset was recorded as of the adoption date for any cash that has yet to be collected on the accelerated revenue. As this transition method requires that the Company not adjust historical reported revenue amounts, the accelerated revenue that would have been recognized under this method prior to the adoption date was recorded as an adjustment to opening retained earnings and, thus, will not be recognized as revenue in future periods as previously required under Topic 605. Therefore, the comparative information has not been adjusted and continues to be reported under Topic 605. Under Topic 605, revenue provided under the AMA was recognized as the services were provided, based on the recurring monthly revenue amount billed for each month under contract. Product, installation and service revenue generally was recognized as billed and incurred. Under Topic 606, the Company concluded that certain product and installation services sold or provided to our customers at AMA inception are capable of being distinct and are distinct within the context of the contract. As such, when Brinks Home Security initiates an AMA with a customer directly and provides equipment and installation services, each component is considered a performance obligation that must have revenue allocated accordingly. The allocation is based on the SSP of each performance obligation as a percentage of the total SSP of all performance obligations multiplied by the total consideration, or cash, expected to be received over the contract term. These AMAs may relate to new customers originated by Brinks Home Security through its direct-to-consumer channel or existing customers who agree to new contract terms through customer service offerings. For AMAs with multiple performance obligations, management notes that a certain amount of the revenue billed on a recurring monthly basis is recognized earlier under Topic 606 than it was recognized under Topic 605, as a portion of that revenue is allocated to the equipment sale and installation, which is satisfied upon delivery of the product and performance of the installation services at AMA inception. Revenue on AMAs originated through the Authorized Dealer program are not impacted by Topic 606 in their initial term, as the customer contracts for the equipment sale and installation separately with the Authorized Dealer prior to Brinks Home Security purchasing the AMA from the Authorized Dealer. Revenue on these customers is recognized as the service is provided based on the recurring monthly revenue amount billed for each month of the AMA. Maintenance service revenue for repair of existing alarm equipment at the subscribers' premises will continue to be billed and recognized based on their SSP at the time Brinks Home Security performs the services. Topic 606 also requires the deferral of incremental costs of obtaining a contract with a customer. Certain direct and incremental costs were capitalized under Topic 605, including on new AMAs obtained in connection with a subscriber move (“Moves Costs”). Under Topic 606, Moves Costs are expensed as incurred to accompany the allocated revenue recognized upon product and installation performance obligations recognized at the AMA inception. There are no other significant changes in contract costs that are capitalized or the period over which they are expensed. Impacts on Financial Statements The significant effects of adopting Topic 606 are changes to Prepaid and other current assets, Subscriber accounts, net, Other assets, net, Net revenue, Cost of services, Selling, general and administrative and Amortization of subscriber accounts for the period beginning January 1, 2018 for AMAs initiated by Brinks Home Security with the customer directly with multiple performance obligations, as a portion of that revenue is allocated to the equipment sale and installation, which is satisfied upon delivery of the product and performance of the installation services at AMA inception. The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 (in thousands): i. Condensed consolidated balance sheets Impact of changes in accounting policies As reported September 30, 2018 Adjustments Balances without adoption of Topic 606 Assets Current assets: Cash and cash equivalents $ 137,561 — 137,561 Restricted cash 133 — 133 Marketable securities, at fair value — — — Trade receivables, net of allowance for doubtful accounts 13,162 — 13,162 Prepaid and other current assets 25,883 (13,836 ) 12,047 Total current assets 176,739 (13,836 ) 162,903 Property and equipment, net of accumulated depreciation 36,568 — 36,568 Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization 1,215,831 47,095 1,262,926 Dealer network and other intangible assets, net of accumulated amortization — — — Goodwill 349,149 — 349,149 Other assets, net 36,819 (16,621 ) 20,198 Total assets $ 1,815,106 16,638 1,831,744 Liabilities and Stockholders’ (Deficit) Equity Current liabilities: Accounts payable $ 11,661 — 11,661 Accrued payroll and related liabilities 6,513 — 6,513 Other accrued liabilities 46,840 — 46,840 Deferred revenue 12,069 1,133 13,202 Holdback liability 10,766 — 10,766 Current portion of long-term debt 11,000 — 11,000 Total current liabilities 98,849 1,133 99,982 Non-current liabilities: Long-term debt 1,869,502 — 1,869,502 Long-term holdback liability 2,031 — 2,031 Derivative financial instruments 1,139 — 1,139 Deferred income tax liability, net 15,298 — 15,298 Other liabilities 2,858 — 2,858 Total liabilities 1,989,677 1,133 1,990,810 Commitments and contingencies Stockholders’ (deficit) equity: Preferred stock — — — Series A common stock 121 — 121 Series B common stock 4 — 4 Series C common stock — — — Additional paid-in capital 1,425,379 — 1,425,379 Accumulated deficit (1,615,743 ) 15,505 (1,600,238 ) Accumulated other comprehensive income, net 15,668 — 15,668 Total stockholders’ (deficit) equity (174,571 ) 15,505 (159,066 ) Total liabilities and stockholders’ (deficit) equity $ 1,815,106 16,638 1,831,744 ii. Condensed consolidated statements of operations and comprehensive income (loss) Impact of changes in accounting policies As reported three months ended September 30, 2018 Adjustments Balances without adoption of Topic 606 Net revenue $ 137,156 (4,216 ) 132,940 Operating expenses: Cost of services 35,059 (1,774 ) 33,285 Selling, general and administrative, including stock-based and long-term incentive compensation 38,199 (103 ) 38,096 Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 52,671 1,870 54,541 Depreciation 2,886 — 2,886 Loss on goodwill impairment — — — 128,815 (7 ) 128,808 Operating loss 8,341 (4,209 ) 4,132 Other expense (income), net: Interest income (624 ) — (624 ) Interest expense 40,943 — 40,943 Refinancing expense 6,731 — 6,731 Other expense, net 40 — 40 47,090 — 47,090 Loss before income taxes (38,749 ) (4,209 ) (42,958 ) Income tax expense 1,346 — 1,346 Net loss (40,095 ) (4,209 ) (44,304 ) Other comprehensive income (loss): Unrealized holding loss on marketable securities, net — — — Unrealized gain on derivative contracts, net 3,269 — 3,269 Total other comprehensive income, net of tax 3,269 — 3,269 Comprehensive loss $ (36,826 ) (4,209 ) (41,035 ) Impact of changes in accounting policies As reported nine months ended September 30, 2018 Adjustments Balances without adoption of Topic 606 Net revenue $ 405,922 (6,986 ) 398,936 Operating expenses: Cost of services 100,807 (5,292 ) 95,515 Selling, general and administrative, including stock-based and long-term incentive compensation 109,992 (112 ) 109,880 Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 160,973 5,633 166,606 Depreciation 8,378 — 8,378 Loss on goodwill impairment 214,400 — 214,400 594,550 229 594,779 Operating loss (188,628 ) (7,215 ) (195,843 ) Other expense (income), net: Interest income (1,879 ) — (1,879 ) Interest expense 120,017 — 120,017 Refinancing expense 6,731 — 6,731 Other income, net (2,236 ) — (2,236 ) 122,633 — 122,633 Loss before income taxes (311,261 ) (7,215 ) (318,476 ) Income tax expense 4,039 — 4,039 Net loss (315,300 ) (7,215 ) (322,515 ) Other comprehensive income (loss): Unrealized holding loss on marketable securities, net (3,900 ) — (3,900 ) Unrealized gain on derivative contracts, net 23,196 — 23,196 Total other comprehensive income, net of tax 19,296 — 19,296 Comprehensive loss $ (296,004 ) (7,215 ) (303,219 ) iii. Condensed consolidated statements of cash flows Impact of changes in accounting policies As reported nine months ended September 30, 2018 Adjustments Balances without adoption of Topic 606 Cash flows from operating activities: Net loss $ (315,300 ) (7,215 ) (322,515 ) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 160,973 5,633 166,606 Depreciation 8,378 — 8,378 Stock-based and long-term incentive compensation 1,600 — 1,600 Deferred income tax expense 1,987 — 1,987 Refinancing expense 6,731 — 6,731 Amortization of debt discount and deferred debt costs 9,108 — 9,108 Bad debt expense 8,511 — 8,511 Goodwill impairment 214,400 — 214,400 Other non-cash activity, net (186 ) — (186 ) Changes in assets and liabilities: Trade receivables (9,028 ) — (9,028 ) Prepaid expenses and other assets (8,359 ) 7,016 (1,343 ) Subscriber accounts - deferred contract acquisition costs (4,529 ) 89 (4,440 ) Payables and other liabilities (4,752 ) (825 ) (5,577 ) Net cash provided by operating activities 69,534 4,698 74,232 Cash flows from investing activities: Capital expenditures (11,513 ) — (11,513 ) Cost of subscriber accounts acquired (111,531 ) (4,698 ) (116,229 ) Purchases of marketable securities (39,022 ) — (39,022 ) Proceeds from sale of marketable securities 143,316 — 143,316 Net cash used in investing activities (18,750 ) (4,698 ) (23,448 ) Cash flows from financing activities: Proceeds from long-term debt 218,950 — 218,950 Payments on long-term debt (136,600 ) — (136,600 ) Payments of financing costs (5,734 ) — (5,734 ) Value of shares withheld for share-based compensation (171 ) — (171 ) Net cash provided by financing activities 76,445 — 76,445 Net increase in cash, cash equivalents and restricted cash 127,229 — 127,229 Cash, cash equivalents and restricted cash at beginning of period 10,465 — 10,465 Cash, cash equivalents and restricted cash at end of period $ 137,694 — 137,694 |
Investments in Marketable Secur
Investments in Marketable Securities | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments in Marketable Securities | Investments in Marketable Securities In the third quarter of 2018, Ascent Capital divested of all marketable securities, which primarily consisted of diversified corporate bond funds. The following table presents a summary of amounts recorded on the condensed consolidated balance sheets (amounts in thousands): As of September 30, 2018 Cost Basis Unrealized Gains Unrealized Losses Total Mutual funds $ — — — — Ending balance $ — — — — As of December 31, 2017 Cost Basis Unrealized Gains Unrealized Losses Total Equity securities $ 3,432 2,039 — 5,471 Mutual funds (a) 98,628 1,859 — 100,487 Ending balance $ 102,060 3,898 — 105,958 (a) Primarily consists of corporate bond funds. The following table provides the realized and unrealized investment gains and losses recognized in the condensed consolidated statements of operations (amounts in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net gains and (losses) recognized during the period on trading securities $ (40 ) (2 ) $ 2,234 1 Less: Net gains and (losses) recognized during the period on trading securities sold during the period (40 ) (2 ) 2,234 1 Unrealized gains and (losses) recognized during the reporting period on trading securities still held at the reporting date $ — — $ — — |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following table provides the activity and balances of goodwill by reporting unit (amounts in thousands): MONI LiveWatch Brinks Home Security Total Balance at 12/31/2017 $ 527,502 $ 36,047 $ — $ 563,549 Goodwill impairment (214,400 ) — — (214,400 ) Reporting unit reallocation (313,102 ) (36,047 ) 349,149 — Balance at 9/30/2018 $ — $ — $ 349,149 $ 349,149 The Company accounts for its goodwill pursuant to the provisions of FASB ASC Topic 350, Intangibles - Goodwill and Other ("FASB ASC Topic 350"). In accordance with FASB ASC Topic 350, goodwill is not amortized, but rather tested for impairment annually, or earlier if an event occurs, or circumstances change, that indicate the fair value of a reporting unit may be below its carrying amount. As of May 31, 2018, the Company determined that a triggering event had occurred due to a sustained decrease in the Company's share price. In response to the triggering event, the Company performed a quantitative impairment test for both the MONI and LiveWatch reporting units. Fair value was determined using a combination of the income-based approach (using a discount rate of 8.50% ) and market-based approach for the MONI reporting unit and an income-based approach (using a discount rate of 8.50% ) for the LiveWatch reporting unit. Based on the analysis, the fair value of the LiveWatch reporting unit substantially exceeded its carrying value, while the carrying amount for the MONI reporting unit exceeded its estimated fair value, which indicated an impairment at the MONI reporting unit. The Company early adopted ASU 2017-04, which eliminated Step 2 from the goodwill impairment test, and as such, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. Applying this methodology, we recorded an impairment charge of $214,400,000 for the MONI reporting unit during the three months ended June 30, 2018. Factors leading to the impairment are primarily the experience of overall lower account acquisition in recent periods. Using this information, we adjusted the growth outlook for this reporting unit, which resulted in reductions in future cash flows and a lower fair value calculation under the income-based approach. Additionally, decreases in observable market share prices for comparable companies in the quarter reduced the fair value calculated under the market-based approach. In early June 2018, the reportable segments known as MONI and LiveWatch were combined and presented as Brinks Home Security. Refer to Note 1, Basis of Presentation , for further discussion on the change in reportable segments. As a result of the change in reportable segments, goodwill assigned to these former reporting units of $313,102,000 and $36,047,000 , for MONI and LiveWatch, respectively, have been reallocated and combined as of June 30, 2018 under the Brinks Home Security reporting unit. |
Other Accrued Liabilities
Other Accrued Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities | Other Accrued Liabilities Other accrued liabilities consisted of the following (amounts in thousands): September 30, December 31, Interest payable $ 28,403 $ 15,927 Income taxes payable 2,289 2,950 Legal settlement reserve (a) — 23,000 Other 16,148 10,452 Total Other accrued liabilities $ 46,840 $ 52,329 (a) See note 13, Commitments, Contingencies and Other Liabilities , for further information. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (amounts in thousands): September 30, December 31, Ascent Capital 4.00% Convertible Senior Notes due July 15, 2020 with an effective rate of 9.1% $ 86,285 $ 82,614 Brinks Home Security 9.125% Senior Notes due April 1, 2020 with an effective rate of 9.5% 581,686 580,159 Brinks Home Security term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00%, with an effective rate of 8.2% 1,054,933 1,059,598 Brinks Home Security $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 3.5% 157,598 66,673 1,880,502 1,789,044 Less current portion of long-term debt (11,000 ) (11,000 ) Long-term debt $ 1,869,502 $ 1,778,044 Ascent Capital Convertible Senior Notes The Ascent Capital convertible senior notes total $96,775,000 in aggregate principal amount, mature on July 15, 2020 and bear interest at 4.00% per annum (the "Convertible Notes"). Interest on the Convertible Notes is payable semi-annually on January 15 and July 15 of each year. On August 30, 2018, Ascent Capital entered into a Supplemental Indenture in which the Company surrendered its right to elect to deliver shares of common stock or a combination of cash and shares of common stock upon conversion of the Convertible Notes (the "Convertible Notes Supplemental Indenture"). Following the execution of the Supplemental Indenture, the Company may satisfy its conversion obligation solely in cash. Under certain circumstances, holders of the Convertible Notes ("Noteholders") have the right, at their option, to convert all or any portion of such Convertible Notes, subject to the satisfaction of certain conditions, at an initial conversion rate of 9.7272 shares of Series A Common Stock per $1,000 principal amount of Convertible Notes (subject to adjustment in certain situations), which represents an initial conversion price per share of Series A Common Stock of approximately $102.804 (the "Conversion Price"). In addition, Noteholders have the right to submit Convertible Notes for conversion, subject to the satisfaction of certain conditions, in the event of certain corporate transactions. In the event of a fundamental change (as such term is defined in the indenture governing the Convertible Notes) at any time prior to the maturity date, each Noteholder shall have the right, at such Noteholder’s option, to require Ascent Capital to repurchase for cash any or all of such Noteholder’s Convertible Notes on the repurchase date specified by Ascent Capital at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, including unpaid additional interest, if any, unless the repurchase date occurs after an interest record date and on or prior to the related interest payment date, as specified in the indenture. The Convertible Notes are within the scope of FASB ASC Subtopic 470-20, Debt with Conversion and Other Options , and as such are required to be separated into a liability and equity component. The carrying amount of the liability component is calculated by measuring the fair value of a similar liability (including any embedded features other than the conversion option) that does not have an associated conversion option. The carrying amount of the equity component is determined by deducting the fair value of the liability component from the initial proceeds ascribed to the Convertible Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, treated as a debt discount, is amortized to interest cost over the expected life of a similar liability that does not have an associated conversion option using the effective interest method. Upon the execution of the Convertible Notes Supplemental Indenture, the conversion option no longer meets the conditions for equity classification as prescribed in FASB ASC Subtopic 815-40, Contracts in an Entity’s Own Equity . As such, the conversion option is bifurcated as a separate derivative and recorded as a liability. Given the significant variance in the Conversion Price and the current market price per share of the Series A Common Stock, the conversion option derivative liability is immaterial. The Convertible Notes are presented on the consolidated balance sheet as follows (amounts in thousands): As of As of Principal $ 96,775 $ 96,775 Unamortized discount (9,825 ) (13,263 ) Deferred debt costs (665 ) (898 ) Carrying value $ 86,285 $ 82,614 The Company is using an effective interest rate of 14.0% to calculate the accretion of the debt discount, which is being recorded as interest expense over the expected remaining term to maturity of the Convertible Notes. The Company recognized contractual interest expense of $967,000 and $2,903,000 for both of the three and nine months ended September 30, 2018 and 2017 . The Company amortized $1,266,000 and $3,671,000 of the Convertible Notes debt discount and deferred debt costs into interest expense for the three and nine months ended September 30, 2018 , compared to $1,102,000 and $3,194,000 for the three and nine months ended September 30, 2017 . Hedging Transactions Relating to the Offering of the Convertible Notes In connection with the issuance of the Convertible Notes, Ascent Capital entered into separate privately negotiated purchased call options (the "Bond Hedge Transactions"). The Bond Hedge Transactions require the counterparties to offset Series A Common Stock deliverable or cash payments made by Ascent Capital upon conversion of the Convertible Notes in the event that the volume-weighted average price of Series A Common Stock on each trading day of the relevant valuation period is greater than the strike price of $102.804 , which corresponds to the Conversion Price of the Convertible Notes. The Bond Hedge Transactions cover, subject to anti-dilution adjustments, approximately 1,007,000 shares of Series A Common Stock, which is equivalent to the number of shares initially issuable upon conversion of the Convertible Notes, and are expected to reduce the potential dilution with respect to the Series A Common Stock, and/or offset potential cash payments Ascent Capital is required to make in excess of the principal amount of the Convertible Notes upon conversion. Concurrently with the Bond Hedge Transactions, Ascent Capital also entered into separate privately negotiated warrant transactions with each of the call option counterparties (the "Warrant Transactions"). The warrants are European options, and are exercisable in tranches on consecutive trading days starting after the maturity of the Convertible Notes. The warrants cover the same initial number of shares of Series A Common Stock, subject to anti-dilution adjustments, as the Bond Hedge Transactions. The Warrant Transactions require Ascent Capital to deliver Series A Common Stock or make cash payments to the counterparties on each expiration date with a value equal to the number of warrants exercisable on that date times the excess of the volume-weighted average price of the Series A Common Stock over the strike price of $118.62 , which effectively reflects a 50% conversion premium on the Convertible Notes. As such, the Warrant Transactions may have a dilutive effect with respect to the Series A Common Stock to the extent the Warrant Transactions are settled with shares of Series A Common Stock. Ascent Capital may elect to settle its delivery obligation under the Warrant Transactions in cash. The Bond Hedge Transactions and Warrant Transactions are separate transactions entered into by Ascent Capital, are not part of the terms of the Convertible Notes and will not affect the Noteholders’ rights under the Convertible Notes. The Noteholders will not have any rights with respect to the Bond Hedge Transactions or the Warrant Transactions. Brinks Home Security Senior Notes The Brinks Home Security Senior Notes total $ 585,000,000 in principal, mature on April 1, 2020 and bear interest at 9.125% per annum. Interest payments are due semi-annually on April 1 and October 1 of each year. The Senior Notes are guaranteed by all of Brinks Home Security’s existing domestic subsidiaries. Ascent Capital has not guaranteed any of Brinks Home Security's obligations under the Senior Notes. As of September 30, 2018 , the Senior Notes had deferred financing costs and unamortized premium, net of accumulated amortization of $ 3,314,000 . Brinks Home Security Credit Facility On September 30, 2016, Brinks Home Security entered into an amendment ("Amendment No. 6") with the lenders of its existing senior secured credit agreement dated March 23, 2012, and as amended and restated on April 9, 2015, February 17, 2015, August 16, 2013, March 25, 2013, and November 7, 2012 (the "Existing Credit Agreement"). Amendment No. 6 provided for, among other things, the issuance of a $1,100,000,000 senior secured term loan at a 1.5% discount and a new $ 295,000,000 super priority revolver (the Existing Credit Agreement together with Amendment No. 6, the "Credit Facility"). On September 27, 2018, Brinks Home Security borrowed an incremental $26,691,000 on its Credit Facility revolver to fund its October 1, 2018 interest payment due under the Senior Notes. As of September 30, 2018 , the Credit Facility term loan has a principal amount of $ 1,078,000,000 , maturing on September 30, 2022. The term loan requires quarterly interest payments and quarterly principal payments of $2,750,000 . The term loan bears interest at LIBOR plus 5.5% , subject to a LIBOR floor of 1.0% . The Credit Facility revolver has a principal amount outstanding of $ 159,100,000 as of September 30, 2018 and matures on September 30, 2021. The Credit Facility revolver bears interest at LIBOR plus 4.0% , subject to a LIBOR floor of 1.0% . There is a commitment fee of 0.5% on unused portions of the Credit Facility revolver. As of September 30, 2018 , $ 135,900,000 is available for borrowing under the Credit Facility revolver subject to certain financial covenants. The maturity date for each of the term loan and the revolving credit facility under the Credit Facility is subject to a springing maturity 181 days prior to the scheduled maturity date of the Senior Notes, or October 3, 2019 (the "Springing Maturity"), if Brinks Home Security is unable to refinance the Senior Notes by that date. In addition, if Brinks Home Security is unable to refinance the Senior Notes, or demonstrate the ability to meet its financial covenants for a period of twelve months after the issuance date, prior to the filing with the SEC of their Annual Report on Form 10-K for the year ended December 31, 2018, they may be subject to a going concern qualification in connection with their external audit report, which would be an event of default under the Credit Facility. At any time after the occurrence of an event of default under the Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Credit Facility immediately due and payable and terminate any commitment to make further loans under the Credit Facility. Also, failure to comply with restrictions contained in the Senior Notes could lead to an event of default under the Credit Facility. The Credit Facility is secured by a pledge of all of the outstanding stock of Brinks Home Security and all of its existing subsidiaries and is guaranteed by all of Brinks Home Security's existing domestic subsidiaries. Ascent Capital has not guaranteed any of Brinks Home Security's obligations under the Credit Facility. As of September 30, 2018 , Brinks Home Security has deferred financing costs and unamortized discounts, net of accumulated amortization, of $ 24,569,000 related to the Credit Facility. In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loan under the Credit Facility term loan, Brinks Home Security has 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”). The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting. As a result of these interest rate swaps, Brinks Home Security's effective weighted average interest rate (excluding the impacts of non-cash amortization of deferred debt costs and discounts) on the borrowings under the Credit Facility term loan was 7.99% as of September 30, 2018 . See note 9, Derivatives , for further disclosures related to these derivative instruments. The terms of the Convertible Notes, the Senior Notes and the Credit Facility provide for certain financial and nonfinancial covenants. As of September 30, 2018 , the Company was in compliance with all required covenants under these financing arrangements. As of September 30, 2018 , principal payments scheduled to be made on the Company’s debt obligations, assuming no Springing Maturity of the Credit Facility, are as follows (amounts in thousands): Remainder of 2018 $ 2,750 2019 11,000 2020 692,775 2021 170,100 2022 1,042,250 2023 — Thereafter — Total principal payments 1,918,875 Less: Unamortized deferred debt costs, discounts and premium, net 38,373 Total debt on condensed consolidated balance sheet $ 1,880,502 |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives Brinks Home Security utilizes Swaps to reduce the interest rate risk inherent in Brinks Home Security's variable rate Credit Facility term loan. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatility. The Company incorporates credit valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. See note 10, Fair Value Measurements , for additional information about the credit valuation adjustments. All of the Swaps are designated and qualify as cash flow hedging instruments, with the effective portion of the Swaps' change in fair value recorded in Accumulated other comprehensive income (loss). Changes in the fair value of the Swaps recognized in Accumulated other comprehensive income (loss) are reclassified to Interest expense when the hedged interest payments on the underlying debt are recognized. Amounts in Accumulated other comprehensive income (loss) expected to be recognized as a reduction of Interest expense in the coming 12 months total approximately $1,810,000 . As of September 30, 2018 , the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below: Notional Effective Date Maturity Date Fixed Rate Paid Variable Rate Received $ 189,998,331 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 248,125,000 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 49,625,000 March 23, 2018 April 9, 2022 2.504% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 374,172,500 March 23, 2018 September 30, 2022 1.833% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) On September 30, 2016, Brinks Home Security negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the "Amended Swaps"). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, Brinks Home Security simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive income (loss) relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) $ 3,165 (914 ) $ 21,929 (8,890 ) Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss (a) $ (104 ) (1,141 ) $ (1,267 ) (4,389 ) Ineffective portion of amount of loss recognized into Net loss (a) $ — (65 ) $ — (157 ) (a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Upon the adoption of ASU 2017-12 on January 1, 2018, ineffectiveness is no longer measured or recognized. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
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, 2018 and December 31, 2017 (amounts in thousands): Level 1 Level 2 Level 3 Total September 30, 2018 Interest rate swap agreements - assets (a) $ — 17,564 — 17,564 Interest rate swap agreements - liabilities (a) — (1,139 ) — (1,139 ) Total $ — 16,425 — 16,425 December 31, 2017 Investments in marketable securities (b) $ 105,958 — — 105,958 Interest rate swap agreements - assets (a) — 7,058 — 7,058 Interest rate swap agreements - liabilities (a) — (13,817 ) — (13,817 ) Total $ 105,958 (6,759 ) — 99,199 (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. (b) Level 1 investments primarily consist of diversified corporate bond funds. 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): September 30, 2018 December 31, 2017 Long term debt, including current portion: Carrying value $ 1,880,502 1,789,044 Fair value (a) 1,707,626 1,709,342 (a) The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. Ascent Capital’s other financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The following table presents the activity in Series A Common Stock and Ascent Capital's Series B Common Stock, par value $0.01 per share (the "Series B Common Stock"), for the nine months ended September 30, 2018 : Series A Common Stock Series B Common Stock Balance at December 31, 2017 11,999,630 381,528 Issuance of stock awards 13,153 — Restricted stock canceled for tax withholding (10,680 ) — Balance at March 31, 2018 12,002,103 381,528 Issuance of stock awards 51,036 — Restricted stock canceled for tax withholding (20,769 ) — Balance at June 30, 2018 12,032,370 381,528 Issuance of stock awards 29,591 — Restricted stock canceled for tax withholding (9,258 ) — Balance at September 30, 2018 12,052,703 381,528 Accumulated Other Comprehensive Income (Loss) The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period presented (amounts in thousands): Foreign Currency Translation Adjustments Unrealized Holding Gains and Losses on Marketable Securities, net Unrealized Gains and Losses on Derivative Instruments, net (a) Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ (758 ) 3,900 (7,375 ) (4,233 ) Impact of adoption of ASU 2017-12 — — 605 605 Adjusted balance at January 1, 2018 $ (758 ) 3,900 (6,770 ) (3,628 ) Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 — (1,014 ) 13,668 12,654 Reclassifications of loss (gain) into Net loss, net of income tax of $0 — (2,063 ) 738 (1,325 ) Net period Other comprehensive income (loss) — (3,077 ) 14,406 11,329 Balance at March 31, 2018 $ (758 ) 823 7,636 7,701 Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 — (611 ) 5,096 4,485 Reclassifications of loss (gain) into Net loss, net of income tax of $0 — (212 ) 425 213 Net period Other comprehensive income (loss) — (823 ) 5,521 4,698 Balance at June 30, 2018 $ (758 ) — 13,157 12,399 Gain through Accumulated other comprehensive income (loss), net of income tax of $0 — — 3,165 3,165 Reclassifications of loss into Net loss, net of income tax of $0 — — 104 104 Net period Other comprehensive income — — 3,269 3,269 Balance at September 30, 2018 $ (758 ) — 16,426 15,668 (a) Amounts reclassified into net loss are included in Interest expense on the condensed consolidated statement of operations. See note 9, Derivatives , for further information. |
Basic and Diluted Earnings (Los
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B | Basic and Diluted Earnings (Loss) Per Common Share—Series A and Series B Basic earnings (loss) per common share ("EPS") is computed by dividing net income (loss) by the weighted average number of shares of Series A and Series B Common Stock outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the sum of the weighted average number of shares of Series A and Series B Common Stock outstanding and the effect of dilutive securities, including the Company's outstanding stock options, unvested restricted stock and restricted stock units. For all periods presented, diluted EPS is computed the same as basic EPS because the Company recorded a loss from continuing operations, which would make potentially dilutive securities anti-dilutive. Diluted shares outstanding excluded an aggregate of 581,891 unvested restricted shares and performance units for the three and nine months ended September 30, 2018 because their inclusion would have been anti-dilutive. Diluted shares outstanding excluded an aggregate of 247,148 unvested restricted shares and performance units for the three and nine months ended September 30, 2017 because their inclusion would have been anti-dilutive. Three Months Ended Nine Months Ended 2018 2017 2018 2017 Weighted average number of shares of Series A and Series B Common Stock 12,361,495 12,207,649 12,329,497 12,170,367 |
Commitments, Contingencies and
Commitments, Contingencies and Other Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Contingencies and Other Liabilities | Commitments, Contingencies and Other Liabilities Brinks Home Security 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) of 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 Brinks Home Security Authorized Dealer, or any Authorized Dealer’s lead generator or sub-dealer. In the second quarter of 2017, Brinks Home Security and the plaintiffs agreed to settle this litigation for $28,000,000 ("the Settlement Amount"). In the third quarter of 2017, Brinks Home Security paid $5,000,000 of the Settlement Amount pursuant to the settlement agreement with the plaintiffs. In the third quarter of 2018, Brinks Home Security paid the remaining $23,000,000 of the Settlement Amount. Brinks Home Security is actively seeking to recover the Settlement Amount under its insurance policies held with multiple carriers. On November 1, 2018, Brinks Home Security settled its claim against one such carrier in which the carrier agreed to pay Brinks Home Security $9,750,000 in the fourth quarter of 2018. This amount will be recognized in the consolidated statement of operations at such time. Brinks Home Security continues to seek to recover additional funds under its insurance policies from the remaining carriers. 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. Other Legal Proceedings On August 27, 2018, holders purporting to own approximately 68% of the Convertible Notes filed a complaint in the Court of Chancery in the State of Delaware against Ascent Capital and each of its directors and executive officers. On September 5, 2018, holders purporting to own approximately 69% of the Convertible Notes filed an amended complaint in the Court of Chancery of the State of Delaware against Ascent Capital and each of its directors and executive officers, and a motion for a preliminary injunction seeking to prevent Ascent Capital from consummating the exchange offer related to the Senior Notes of Brinks Home Security announced by Ascent Capital and Brinks Home Security on August 30, 2018. On October 1, 2018, holders purporting to own approximately 78% of the Convertible Notes filed a second amended complaint in the Court of Chancery of the State of Delaware against Ascent Capital and each of its directors and executive officers, and an amended motion for a preliminary injunction seeking to prevent Ascent Capital from consummating the transactions announced by Ascent Capital and Brinks Home Security on September 25, 2018. On October 22, 2018, the Court of Chancery of the State of Delaware entered a Third Scheduling Order Governing Plaintiffs’ Motion for Preliminary Injunction (“the Scheduling Order”). The Scheduling Order provides, among other things, that the preliminary injunction hearing will be held on December 5, 2018. On November 2, 2018, holders purporting to own approximately 53% of the Convertible Notes (the “Plaintiffs”) filed a third amended complaint (the “Third Amended Complaint”) in the Court of Chancery of the State of Delaware against Ascent Capital and each of its directors and executive officers. The Third Amended Complaint alleges that Ascent Capital’s participation in the transactions announced by Ascent Capital and Brinks Home Security on October 30, 2018 (the “October 30th Transactions”) would be detrimental to Ascent Capital and, if consummated, would result in Ascent Capital becoming insolvent. The Third Amended Complaint further alleges that the October 30th Transactions would (i) result in a breach of Ascent Capital’s directors’ fiduciary duties to Ascent Capital and (ii) constitute a constructive or intentional fraudulent transfer by using assets of Ascent Capital necessary for the repayment of the Notes for other purposes. The Third Amended Complaint seeks (i) injunctive relief to prevent Ascent Capital from engaging in the October 30th Transactions, which would allegedly dissipate Ascent Capital’s assets, and (ii) a declaratory judgment that approval of the October 30th Transactions constitutes a breach of fiduciary duty by Ascent Capital’s directors and that consummation of the October 30th Transactions would constitute a fraudulent transfer by Ascent Capital. Also on November 2, 2018, the Plaintiffs filed an amended motion for a preliminary injunction seeking to prevent Ascent Capital from consummating the October 30th Transactions. The Third Amended Complaint could be amended, or similar claims could be brought, challenging the October 30th Transactions, and we cannot assure you that such claims will be unsuccessful, will not require us to pay damages (including costs and expenses of the action) or will not have a material effect on any such October 30th Transactions. Ascent Capital believes that the claims in the Third Amended Complaint are meritless, and Ascent Capital intends to vigorously defend against this action. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 30, 2018, Ascent Capital and Brinks Home Security entered into the Amended and Restated Support Agreement. Under the agreement, Brinks Home Security will commence an Exchange Offer for its Senior Notes (the "Exchange Offer") and commence a consent solicitation for certain proposed amendments to its Credit Facility (the "Bank Amendments"), both described in the Amended and Restated Support Agreement. Ascent Capital will contribute $75 million in cash to Brinks Home Security under the terms of the Amended and Restated Support Agreement. Pursuant to the Bank Amendments, the interest rate per annum payable in respect of the Credit Facility term loan shall be increased by 100 basis points and the interest rate per annum payable in respect of the Credit Facility revolver shall be increased by 75 basis points . In addition, Brinks Home Security would seek to amend certain restrictive covenants in the Credit Facility as described in the Amended and Restated Support Agreement, including the ability for Brinks Home Security to issue second lien notes. Additionally, the total availability under the Credit Facility revolver would be permanently decreased from $295 million to $250 million . Pursuant to the Exchange Offer, Brinks Home Security would make an offer to eligible holders of its Senior Notes to exchange them for new Second Lien Notes due 2023 (the "Second Lien Notes") and solicit the consent of such holders to eliminate or waive all or substantially all restrictive covenants and events of default in the indenture governing the Senior Notes. The interest payable in respect of the new Second Lien Notes will be paid 5.5% per annum in cash and 6.5% per annum in kind. If the Bank Amendments are not completed by a certain date, Brinks Home Security will commence an alternative exchange offer of new unsecured notes and cash in exchange for the existing Senior Notes. Ascent Capital, Brinks Home Security, the Consenting Noteholders and the Credit Facility Lenders all have certain termination rights as defined in the Amended and Restated Support Agreement. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an amortization of the associated asset. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. ASU 2018-10, Codification Improvements to Topic 842, Leases , clarifies certain aspects of ASU 2016-12 and the two updates will be adopted concurrently. ASU 2016-02 requires leases to be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach upon adoption. However, ASU 2018-11, Leases (Topic 842): Targeted Improvements provides an alternative transition method by which leases are recognized at the date of adoption and a cumulative-effect adjustment to the opening balance of retained earnings is recognized in the period of adoption. The Company plans to adopt using this alternative and is currently evaluating the impact that these standards will have on its financial position, results of operations and cash flows. |
Revenue Recognition | Brinks Home Security offers its subscribers professional alarm monitoring services, as well as interactive and home automation services, through equipment at the subscriber's site that communicates with Brinks Home Security’s central monitoring station and interfaces with other equipment at the site and third party technology companies for interactive and home automation services. These services are typically provided under alarm monitoring agreements (“AMAs”) between Brinks Home Security and the subscriber. The equipment at the site is either obtained independently from Brinks Home Security’s network of third party Authorized Dealers or directly from Brinks Home Security via its direct-to-consumer sales channel. Brinks Home Security also offers equipment sales and installation services and, to its existing subscribers, maintenance services on existing alarm equipment. Brinks Home Security also collects fees for contract monitoring, which are services provided to other security alarm companies for monitoring their accounts on a wholesale basis and other fees from subscribers for late fee or insufficient fund charges. Revenue under subscriber AMAs is allocated to alarm monitoring revenue and, if applicable, product and installation revenue based on the stand alone selling prices (“SSP”) of each performance obligation as a percentage of the total SSP of all performance obligations. Allocated alarm monitoring revenue is recognized as the monthly service is provided. Allocated product and installation revenue is recognized when the product sale is complete or shipped and the installation service is provided, typically at inception of the AMA. Product and installation revenue is not applicable to AMA's acquired from Authorized Dealers in their initial term. Any cash not received from the subscriber at the time of product sale and installation is recognized as a contract asset at inception of the AMA and is subsequently amortized over the subscriber contract term as a reduction of the amounts billed for professional alarm monitoring, interactive and home automation services. If a subscriber cancels the AMA within the negotiated term, any existing contract asset is determined to be impaired and is immediately expensed in full to Selling, general and administrative expense on the condensed consolidated statement of operations. Maintenance services are billed and recognized as revenue when the services are completed in the home and agreed to by the subscriber under the subscriber AMA. Contract monitoring fees are recognized as alarm monitoring revenue as the monitoring service is provided. Other fees are recognized as other revenue when billed to the subscriber which coincides with the timing of when the services are provided. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue Disaggregated by Source | Revenue is disaggregated by source of revenue as follows (in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Alarm monitoring revenue $ 125,004 134,317 $ 374,689 407,660 Product and installation revenue 11,360 2,899 28,984 9,328 Other revenue 792 995 2,249 2,921 Total Net revenue $ 137,156 138,211 $ 405,922 419,909 |
Schedule of Contract Balances and Financial Statement Impact | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands): September 30, 2018 At adoption Trade receivables, net $ 13,162 12,645 Contract assets, net - current portion (a) 13,836 14,197 Contract assets, net - long-term portion (b) 16,621 10,377 Deferred revenue 12,069 12,892 (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. The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 (in thousands): i. Condensed consolidated balance sheets Impact of changes in accounting policies As reported September 30, 2018 Adjustments Balances without adoption of Topic 606 Assets Current assets: Cash and cash equivalents $ 137,561 — 137,561 Restricted cash 133 — 133 Marketable securities, at fair value — — — Trade receivables, net of allowance for doubtful accounts 13,162 — 13,162 Prepaid and other current assets 25,883 (13,836 ) 12,047 Total current assets 176,739 (13,836 ) 162,903 Property and equipment, net of accumulated depreciation 36,568 — 36,568 Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization 1,215,831 47,095 1,262,926 Dealer network and other intangible assets, net of accumulated amortization — — — Goodwill 349,149 — 349,149 Other assets, net 36,819 (16,621 ) 20,198 Total assets $ 1,815,106 16,638 1,831,744 Liabilities and Stockholders’ (Deficit) Equity Current liabilities: Accounts payable $ 11,661 — 11,661 Accrued payroll and related liabilities 6,513 — 6,513 Other accrued liabilities 46,840 — 46,840 Deferred revenue 12,069 1,133 13,202 Holdback liability 10,766 — 10,766 Current portion of long-term debt 11,000 — 11,000 Total current liabilities 98,849 1,133 99,982 Non-current liabilities: Long-term debt 1,869,502 — 1,869,502 Long-term holdback liability 2,031 — 2,031 Derivative financial instruments 1,139 — 1,139 Deferred income tax liability, net 15,298 — 15,298 Other liabilities 2,858 — 2,858 Total liabilities 1,989,677 1,133 1,990,810 Commitments and contingencies Stockholders’ (deficit) equity: Preferred stock — — — Series A common stock 121 — 121 Series B common stock 4 — 4 Series C common stock — — — Additional paid-in capital 1,425,379 — 1,425,379 Accumulated deficit (1,615,743 ) 15,505 (1,600,238 ) Accumulated other comprehensive income, net 15,668 — 15,668 Total stockholders’ (deficit) equity (174,571 ) 15,505 (159,066 ) Total liabilities and stockholders’ (deficit) equity $ 1,815,106 16,638 1,831,744 ii. Condensed consolidated statements of operations and comprehensive income (loss) Impact of changes in accounting policies As reported three months ended September 30, 2018 Adjustments Balances without adoption of Topic 606 Net revenue $ 137,156 (4,216 ) 132,940 Operating expenses: Cost of services 35,059 (1,774 ) 33,285 Selling, general and administrative, including stock-based and long-term incentive compensation 38,199 (103 ) 38,096 Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 52,671 1,870 54,541 Depreciation 2,886 — 2,886 Loss on goodwill impairment — — — 128,815 (7 ) 128,808 Operating loss 8,341 (4,209 ) 4,132 Other expense (income), net: Interest income (624 ) — (624 ) Interest expense 40,943 — 40,943 Refinancing expense 6,731 — 6,731 Other expense, net 40 — 40 47,090 — 47,090 Loss before income taxes (38,749 ) (4,209 ) (42,958 ) Income tax expense 1,346 — 1,346 Net loss (40,095 ) (4,209 ) (44,304 ) Other comprehensive income (loss): Unrealized holding loss on marketable securities, net — — — Unrealized gain on derivative contracts, net 3,269 — 3,269 Total other comprehensive income, net of tax 3,269 — 3,269 Comprehensive loss $ (36,826 ) (4,209 ) (41,035 ) Impact of changes in accounting policies As reported nine months ended September 30, 2018 Adjustments Balances without adoption of Topic 606 Net revenue $ 405,922 (6,986 ) 398,936 Operating expenses: Cost of services 100,807 (5,292 ) 95,515 Selling, general and administrative, including stock-based and long-term incentive compensation 109,992 (112 ) 109,880 Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 160,973 5,633 166,606 Depreciation 8,378 — 8,378 Loss on goodwill impairment 214,400 — 214,400 594,550 229 594,779 Operating loss (188,628 ) (7,215 ) (195,843 ) Other expense (income), net: Interest income (1,879 ) — (1,879 ) Interest expense 120,017 — 120,017 Refinancing expense 6,731 — 6,731 Other income, net (2,236 ) — (2,236 ) 122,633 — 122,633 Loss before income taxes (311,261 ) (7,215 ) (318,476 ) Income tax expense 4,039 — 4,039 Net loss (315,300 ) (7,215 ) (322,515 ) Other comprehensive income (loss): Unrealized holding loss on marketable securities, net (3,900 ) — (3,900 ) Unrealized gain on derivative contracts, net 23,196 — 23,196 Total other comprehensive income, net of tax 19,296 — 19,296 Comprehensive loss $ (296,004 ) (7,215 ) (303,219 ) iii. Condensed consolidated statements of cash flows Impact of changes in accounting policies As reported nine months ended September 30, 2018 Adjustments Balances without adoption of Topic 606 Cash flows from operating activities: Net loss $ (315,300 ) (7,215 ) (322,515 ) Adjustments to reconcile net loss to net cash provided by operating activities: Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets 160,973 5,633 166,606 Depreciation 8,378 — 8,378 Stock-based and long-term incentive compensation 1,600 — 1,600 Deferred income tax expense 1,987 — 1,987 Refinancing expense 6,731 — 6,731 Amortization of debt discount and deferred debt costs 9,108 — 9,108 Bad debt expense 8,511 — 8,511 Goodwill impairment 214,400 — 214,400 Other non-cash activity, net (186 ) — (186 ) Changes in assets and liabilities: Trade receivables (9,028 ) — (9,028 ) Prepaid expenses and other assets (8,359 ) 7,016 (1,343 ) Subscriber accounts - deferred contract acquisition costs (4,529 ) 89 (4,440 ) Payables and other liabilities (4,752 ) (825 ) (5,577 ) Net cash provided by operating activities 69,534 4,698 74,232 Cash flows from investing activities: Capital expenditures (11,513 ) — (11,513 ) Cost of subscriber accounts acquired (111,531 ) (4,698 ) (116,229 ) Purchases of marketable securities (39,022 ) — (39,022 ) Proceeds from sale of marketable securities 143,316 — 143,316 Net cash used in investing activities (18,750 ) (4,698 ) (23,448 ) Cash flows from financing activities: Proceeds from long-term debt 218,950 — 218,950 Payments on long-term debt (136,600 ) — (136,600 ) Payments of financing costs (5,734 ) — (5,734 ) Value of shares withheld for share-based compensation (171 ) — (171 ) Net cash provided by financing activities 76,445 — 76,445 Net increase in cash, cash equivalents and restricted cash 127,229 — 127,229 Cash, cash equivalents and restricted cash at beginning of period 10,465 — 10,465 Cash, cash equivalents and restricted cash at end of period $ 137,694 — 137,694 |
Investments in Marketable Sec_2
Investments in Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Activity of Investments Classified as Available-For-Sale Securities | The following table presents a summary of amounts recorded on the condensed consolidated balance sheets (amounts in thousands): As of September 30, 2018 Cost Basis Unrealized Gains Unrealized Losses Total Mutual funds $ — — — — Ending balance $ — — — — As of December 31, 2017 Cost Basis Unrealized Gains Unrealized Losses Total Equity securities $ 3,432 2,039 — 5,471 Mutual funds (a) 98,628 1,859 — 100,487 Ending balance $ 102,060 3,898 — 105,958 (a) Primarily consists of corporate bond funds. |
Schedule of Realized and Unrealized Gains and Losses Recognized | The following table provides the realized and unrealized investment gains and losses recognized in the condensed consolidated statements of operations (amounts in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Net gains and (losses) recognized during the period on trading securities $ (40 ) (2 ) $ 2,234 1 Less: Net gains and (losses) recognized during the period on trading securities sold during the period (40 ) (2 ) 2,234 1 Unrealized gains and (losses) recognized during the reporting period on trading securities still held at the reporting date $ — — $ — — |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table provides the activity and balances of goodwill by reporting unit (amounts in thousands): MONI LiveWatch Brinks Home Security Total Balance at 12/31/2017 $ 527,502 $ 36,047 $ — $ 563,549 Goodwill impairment (214,400 ) — — (214,400 ) Reporting unit reallocation (313,102 ) (36,047 ) 349,149 — Balance at 9/30/2018 $ — $ — $ 349,149 $ 349,149 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Other Accrued Liabilities | Other accrued liabilities consisted of the following (amounts in thousands): September 30, December 31, Interest payable $ 28,403 $ 15,927 Income taxes payable 2,289 2,950 Legal settlement reserve (a) — 23,000 Other 16,148 10,452 Total Other accrued liabilities $ 46,840 $ 52,329 (a) See note 13, Commitments, Contingencies and Other Liabilities , for further information. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Long-term debt consisted of the following (amounts in thousands): September 30, December 31, Ascent Capital 4.00% Convertible Senior Notes due July 15, 2020 with an effective rate of 9.1% $ 86,285 $ 82,614 Brinks Home Security 9.125% Senior Notes due April 1, 2020 with an effective rate of 9.5% 581,686 580,159 Brinks Home Security term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00%, with an effective rate of 8.2% 1,054,933 1,059,598 Brinks Home Security $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 3.5% 157,598 66,673 1,880,502 1,789,044 Less current portion of long-term debt (11,000 ) (11,000 ) Long-term debt $ 1,869,502 $ 1,778,044 |
Schedule of Convertible Notes Presented on the Consolidated Balance Sheet | The Convertible Notes are presented on the consolidated balance sheet as follows (amounts in thousands): As of As of Principal $ 96,775 $ 96,775 Unamortized discount (9,825 ) (13,263 ) Deferred debt costs (665 ) (898 ) Carrying value $ 86,285 $ 82,614 |
Schedule of Principal Payments | As of September 30, 2018 , principal payments scheduled to be made on the Company’s debt obligations, assuming no Springing Maturity of the Credit Facility, are as follows (amounts in thousands): Remainder of 2018 $ 2,750 2019 11,000 2020 692,775 2021 170,100 2022 1,042,250 2023 — Thereafter — Total principal payments 1,918,875 Less: Unamortized deferred debt costs, discounts and premium, net 38,373 Total debt on condensed consolidated balance sheet $ 1,880,502 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Swaps' Outstanding Notional Balance and Terms | As of September 30, 2018 , the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below: Notional Effective Date Maturity Date Fixed Rate Paid Variable Rate Received $ 189,998,331 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 248,125,000 March 23, 2018 April 9, 2022 3.110% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) 49,625,000 March 23, 2018 April 9, 2022 2.504% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor 374,172,500 March 23, 2018 September 30, 2022 1.833% 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) On September 30, 2016, Brinks Home Security negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the "Amended Swaps"). The Amended Swaps are held with the same counterparties as the Existing Swap Agreements. Upon entering into the Amended Swaps, Brinks Home Security simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive income (loss) relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. |
Schedule of Impact of the Derivatives Designated as Cash Flow Hedges | The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands): Three Months Ended Nine Months Ended 2018 2017 2018 2017 Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) $ 3,165 (914 ) $ 21,929 (8,890 ) Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss (a) $ (104 ) (1,141 ) $ (1,267 ) (4,389 ) Ineffective portion of amount of loss recognized into Net loss (a) $ — (65 ) $ — (157 ) (a) Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Upon the adoption of ASU 2017-12 on January 1, 2018, ineffectiveness is no longer measured or recognized. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Level of Assets and Liabilities 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, 2018 and December 31, 2017 (amounts in thousands): Level 1 Level 2 Level 3 Total September 30, 2018 Interest rate swap agreements - assets (a) $ — 17,564 — 17,564 Interest rate swap agreements - liabilities (a) — (1,139 ) — (1,139 ) Total $ — 16,425 — 16,425 December 31, 2017 Investments in marketable securities (b) $ 105,958 — — 105,958 Interest rate swap agreements - assets (a) — 7,058 — 7,058 Interest rate swap agreements - liabilities (a) — (13,817 ) — (13,817 ) Total $ 105,958 (6,759 ) — 99,199 (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. (b) Level 1 investments primarily consist of diversified corporate bond funds. |
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): September 30, 2018 December 31, 2017 Long term debt, including current portion: Carrying value $ 1,880,502 1,789,044 Fair value (a) 1,707,626 1,709,342 (a) The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Activity in the Series A and Series B Common Stock | The following table presents the activity in Series A Common Stock and Ascent Capital's Series B Common Stock, par value $0.01 per share (the "Series B Common Stock"), for the nine months ended September 30, 2018 : Series A Common Stock Series B Common Stock Balance at December 31, 2017 11,999,630 381,528 Issuance of stock awards 13,153 — Restricted stock canceled for tax withholding (10,680 ) — Balance at March 31, 2018 12,002,103 381,528 Issuance of stock awards 51,036 — Restricted stock canceled for tax withholding (20,769 ) — Balance at June 30, 2018 12,032,370 381,528 Issuance of stock awards 29,591 — Restricted stock canceled for tax withholding (9,258 ) — Balance at September 30, 2018 12,052,703 381,528 |
Summary of the Changes in Accumulated Other Comprehensive Income (Loss) | The following table provides a summary of the changes in Accumulated other comprehensive income (loss) for the period presented (amounts in thousands): Foreign Currency Translation Adjustments Unrealized Holding Gains and Losses on Marketable Securities, net Unrealized Gains and Losses on Derivative Instruments, net (a) Accumulated Other Comprehensive Income (Loss) Balance at December 31, 2017 $ (758 ) 3,900 (7,375 ) (4,233 ) Impact of adoption of ASU 2017-12 — — 605 605 Adjusted balance at January 1, 2018 $ (758 ) 3,900 (6,770 ) (3,628 ) Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 — (1,014 ) 13,668 12,654 Reclassifications of loss (gain) into Net loss, net of income tax of $0 — (2,063 ) 738 (1,325 ) Net period Other comprehensive income (loss) — (3,077 ) 14,406 11,329 Balance at March 31, 2018 $ (758 ) 823 7,636 7,701 Gain (loss) through Accumulated other comprehensive income (loss), net of income tax of $0 — (611 ) 5,096 4,485 Reclassifications of loss (gain) into Net loss, net of income tax of $0 — (212 ) 425 213 Net period Other comprehensive income (loss) — (823 ) 5,521 4,698 Balance at June 30, 2018 $ (758 ) — 13,157 12,399 Gain through Accumulated other comprehensive income (loss), net of income tax of $0 — — 3,165 3,165 Reclassifications of loss into Net loss, net of income tax of $0 — — 104 104 Net period Other comprehensive income — — 3,269 3,269 Balance at September 30, 2018 $ (758 ) — 16,426 15,668 (a) Amounts reclassified into net loss are included in Interest expense on the condensed consolidated statement of operations. See note 9, Derivatives , for further information. |
Basic and Diluted Earnings (L_2
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Number of Shares Used in Calculation of Basic and Diluted Earnings (Loss) Per Share | Three Months Ended Nine Months Ended 2018 2017 2018 2017 Weighted average number of shares of Series A and Series B Common Stock 12,361,495 12,207,649 12,329,497 12,170,367 |
Basis of Presentation - Narrati
Basis of Presentation - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2018USD ($) | Jun. 30, 2018segment | Mar. 31, 2018segment | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($) | |
New Accounting Pronouncement, Early Adoption [Line Items] | ||||||||
Reportable segments | segment | 1 | 2 | ||||||
Total assets | $ 1,815,106 | $ 1,815,106 | $ 2,054,985 | |||||
Net gain (loss) from continuing operations, before income taxes | (38,749) | $ (27,394) | (311,261) | $ (83,390) | ||||
Accumulated Deficit | Accounting Standards Update 2017-12 | ||||||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||||||
Impact of adoption of ASU 2017-12 | (605) | |||||||
Accumulated Other Comprehensive Income (Loss) | Accounting Standards Update 2017-12 | ||||||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||||||
Impact of adoption of ASU 2017-12 | 605 | |||||||
New Accounting Pronouncement, Early Adoption, Effect | Accumulated Deficit | Accounting Standards Update 2017-12 | ||||||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||||||
Impact of adoption of ASU 2017-12 | $ (605) | |||||||
Adjustments for New Accounting Principle, Early Adoption | Accumulated Other Comprehensive Income (Loss) | Accounting Standards Update 2017-12 | ||||||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||||||
Impact of adoption of ASU 2017-12 | $ 605 | |||||||
Ascent Capital | ||||||||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||||||
Total assets | 110,937 | 110,937 | $ 113,698 | |||||
Net gain (loss) from continuing operations, before income taxes | $ (6,026) | $ (3,628,000) | $ (13,232) | $ 7,932 |
Going Concern - Narrative (Deta
Going Concern - Narrative (Details) - Brinks Home Security - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 24, 2018 | Sep. 30, 2016 | |
Senior Notes | Senior Notes 9.125 Percent Due 2020 | |||
Debt Instrument [Line Items] | |||
Principal | $ 585,000,000 | ||
Senior Notes | Senior Notes 9.125 Percent Due 2020 | Certain Holders | |||
Debt Instrument [Line Items] | |||
Debt, ownership value (not less than) | $ 380,000,000 | ||
Debt, ownership percentage | 65.00% | ||
Term Loan | Term Loan Due September 2022 | |||
Debt Instrument [Line Items] | |||
Principal | $ 1,078,000,000 | $ 1,100,000,000 | |
Springing maturity period | 181 days | ||
Debt, ownership percentage | 50.00% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Line of credit | $ 159,100,000 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Revenue by Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation of Revenue [Line Items] | ||||
Total Net revenue | $ 137,156 | $ 138,211 | $ 405,922 | $ 419,909 |
Alarm monitoring revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net revenue | 125,004 | 134,317 | 374,689 | 407,660 |
Product and installation revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net revenue | 11,360 | 2,899 | 28,984 | 9,328 |
Other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Net revenue | $ 792 | $ 995 | $ 2,249 | $ 2,921 |
Revenue Recognition - Contract
Revenue Recognition - Contract Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Revenue from Contract with Customer [Abstract] | |||
Trade receivables, net | $ 13,162 | $ 12,645 | $ 12,645 |
Contract assets, net - current portion | 13,836 | 14,197 | |
Contract assets, net - long-term portion | 16,621 | 10,377 | |
Deferred revenue | $ 12,069 | $ 12,892 | $ 13,871 |
Revenue Recognition - Impact on
Revenue Recognition - Impact on Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 137,561 | $ 10,465 | |||
Restricted cash | 133 | 0 | |||
Marketable securities, at fair value | 0 | 105,958 | |||
Trade receivables, net of allowance for doubtful accounts | 13,162 | $ 12,645 | 12,645 | ||
Prepaid and other current assets | 25,883 | 11,175 | |||
Total current assets | 176,739 | 140,243 | |||
Property and equipment, net of accumulated depreciation | 36,568 | 32,823 | |||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization | 1,215,831 | 1,302,028 | |||
Dealer network and other intangible assets, net of accumulated amortization | 0 | 6,994 | |||
Goodwill | 349,149 | 563,549 | |||
Other assets, net | 36,819 | 9,348 | |||
Total assets | 1,815,106 | 2,054,985 | |||
Current liabilities: | |||||
Accounts payable | 11,661 | 11,092 | |||
Accrued payroll and related liabilities | 6,513 | 3,953 | |||
Other accrued liabilities | 46,840 | 52,329 | |||
Deferred revenue | 12,069 | $ 12,892 | 13,871 | ||
Holdback liability | 10,766 | 9,309 | |||
Current portion of long-term debt | 11,000 | 11,000 | |||
Total current liabilities | 98,849 | 101,554 | |||
Non-current liabilities: | |||||
Long-term debt | 1,869,502 | 1,778,044 | |||
Long-term holdback liability | 2,031 | 2,658 | |||
Derivative financial instruments | 1,139 | 13,491 | |||
Deferred income tax liability, net | 15,298 | 13,311 | |||
Other liabilities | 2,858 | 3,255 | |||
Total liabilities | 1,989,677 | 1,912,313 | |||
Commitments and contingencies | |||||
Stockholders’ (deficit) equity: | |||||
Preferred stock | 0 | 0 | |||
Additional paid-in capital | 1,425,379 | 1,423,899 | |||
Accumulated deficit | (1,615,743) | (1,277,118) | |||
Accumulated other comprehensive income, net | 15,668 | (4,233) | |||
Total stockholders’ (deficit) equity | (174,571) | $ (138,401) | $ 100,612 | 142,672 | |
Total liabilities and stockholders’ (deficit) equity | 1,815,106 | 2,054,985 | |||
Adjustments | Accounting Standards Update 2014-09 | |||||
Current assets: | |||||
Cash and cash equivalents | 0 | ||||
Restricted cash | 0 | ||||
Marketable securities, at fair value | 0 | ||||
Trade receivables, net of allowance for doubtful accounts | 0 | ||||
Prepaid and other current assets | (13,836) | ||||
Total current assets | (13,836) | ||||
Property and equipment, net of accumulated depreciation | 0 | ||||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization | 47,095 | ||||
Dealer network and other intangible assets, net of accumulated amortization | 0 | ||||
Goodwill | 0 | ||||
Other assets, net | (16,621) | ||||
Total assets | 16,638 | ||||
Current liabilities: | |||||
Accounts payable | 0 | ||||
Accrued payroll and related liabilities | 0 | ||||
Other accrued liabilities | 0 | ||||
Deferred revenue | 1,133 | ||||
Holdback liability | 0 | ||||
Current portion of long-term debt | 0 | ||||
Total current liabilities | 1,133 | ||||
Non-current liabilities: | |||||
Long-term debt | 0 | ||||
Long-term holdback liability | 0 | ||||
Derivative financial instruments | 0 | ||||
Deferred income tax liability, net | 0 | ||||
Other liabilities | 0 | ||||
Total liabilities | 1,133 | ||||
Commitments and contingencies | |||||
Stockholders’ (deficit) equity: | |||||
Preferred stock | 0 | ||||
Additional paid-in capital | 0 | ||||
Accumulated deficit | 15,505 | ||||
Accumulated other comprehensive income, net | 0 | ||||
Total stockholders’ (deficit) equity | 15,505 | ||||
Total liabilities and stockholders’ (deficit) equity | 16,638 | ||||
Balances without adoption of Topic 606 | |||||
Current assets: | |||||
Cash and cash equivalents | 137,561 | ||||
Restricted cash | 133 | ||||
Marketable securities, at fair value | 0 | ||||
Trade receivables, net of allowance for doubtful accounts | 13,162 | ||||
Prepaid and other current assets | 12,047 | ||||
Total current assets | 162,903 | ||||
Property and equipment, net of accumulated depreciation | 36,568 | ||||
Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization | 1,262,926 | ||||
Dealer network and other intangible assets, net of accumulated amortization | 0 | ||||
Goodwill | 349,149 | ||||
Other assets, net | 20,198 | ||||
Total assets | 1,831,744 | ||||
Current liabilities: | |||||
Accounts payable | 11,661 | ||||
Accrued payroll and related liabilities | 6,513 | ||||
Other accrued liabilities | 46,840 | ||||
Deferred revenue | 13,202 | ||||
Holdback liability | 10,766 | ||||
Current portion of long-term debt | 11,000 | ||||
Total current liabilities | 99,982 | ||||
Non-current liabilities: | |||||
Long-term debt | 1,869,502 | ||||
Long-term holdback liability | 2,031 | ||||
Derivative financial instruments | 1,139 | ||||
Deferred income tax liability, net | 15,298 | ||||
Other liabilities | 2,858 | ||||
Total liabilities | 1,990,810 | ||||
Commitments and contingencies | |||||
Stockholders’ (deficit) equity: | |||||
Preferred stock | 0 | ||||
Additional paid-in capital | 1,425,379 | ||||
Accumulated deficit | (1,600,238) | ||||
Accumulated other comprehensive income, net | 15,668 | ||||
Total stockholders’ (deficit) equity | (159,066) | ||||
Total liabilities and stockholders’ (deficit) equity | 1,831,744 | ||||
Series A Common Stock | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 121 | 120 | |||
Series A Common Stock | Adjustments | Accounting Standards Update 2014-09 | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 0 | ||||
Series A Common Stock | Balances without adoption of Topic 606 | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 121 | ||||
Series B Common Stock | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 4 | 4 | |||
Series B Common Stock | Adjustments | Accounting Standards Update 2014-09 | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 0 | ||||
Series B Common Stock | Balances without adoption of Topic 606 | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 4 | ||||
Series C Common Stock | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 0 | $ 0 | |||
Series C Common Stock | Adjustments | Accounting Standards Update 2014-09 | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | 0 | ||||
Series C Common Stock | Balances without adoption of Topic 606 | |||||
Stockholders’ (deficit) equity: | |||||
Common stock | $ 0 |
Revenue Recognition - Impact _2
Revenue Recognition - Impact on Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||||
Net revenue | $ 137,156 | $ 138,211 | $ 405,922 | $ 419,909 | ||
Operating expenses: | ||||||
Cost of services | 35,059 | 30,213 | 100,807 | 89,799 | ||
Selling, general and administrative, including stock-based and long-term incentive compensation | 38,199 | 35,793 | 109,992 | 136,809 | ||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 52,671 | 59,384 | 160,973 | 178,896 | ||
Depreciation | 2,886 | 2,176 | 8,378 | 6,435 | ||
Loss on goodwill impairment | 0 | 0 | 214,400 | 0 | ||
Total operating expenses | 128,815 | 127,640 | 594,550 | 391,105 | ||
Operating income (loss) | 8,341 | 10,571 | (188,628) | 28,804 | ||
Other expense (income), net: | ||||||
Interest income | (624) | (617) | (1,879) | (1,575) | ||
Interest expense | 40,943 | 38,360 | 120,017 | 114,011 | ||
Refinancing expense | 6,731 | 0 | 6,731 | 0 | ||
Other expense, net | 40 | 222 | (2,236) | (242) | ||
Total other expense (income), net | 47,090 | 37,965 | 122,633 | 112,194 | ||
Loss from continuing operations before income taxes | (38,749) | (27,394) | (311,261) | (83,390) | ||
Income tax expense | 1,346 | 1,766 | 4,039 | 8,241 | ||
Net loss | (40,095) | $ (244,367) | $ (30,838) | (29,160) | (315,300) | (91,539) |
Other comprehensive income (loss): | ||||||
Unrealized holding loss on marketable securities, net | 0 | 279 | (3,900) | 1,366 | ||
Unrealized gain (loss) on derivative contracts, net | 3,269 | 227 | 23,196 | (4,501) | ||
Total other comprehensive income (loss), net of tax | 3,269 | $ 4,698 | $ 11,329 | 490 | 19,296 | (2,509) |
Comprehensive loss | (36,826) | $ (28,670) | (296,004) | $ (94,048) | ||
Adjustments | Accounting Standards Update 2014-09 | ||||||
Income Statement [Abstract] | ||||||
Net revenue | (4,216) | (6,986) | ||||
Operating expenses: | ||||||
Cost of services | (1,774) | (5,292) | ||||
Selling, general and administrative, including stock-based and long-term incentive compensation | (103) | (112) | ||||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 1,870 | 5,633 | ||||
Depreciation | 0 | 0 | ||||
Loss on goodwill impairment | 0 | 0 | ||||
Total operating expenses | (7) | 229 | ||||
Operating income (loss) | (4,209) | (7,215) | ||||
Other expense (income), net: | ||||||
Interest income | 0 | 0 | ||||
Interest expense | 0 | 0 | ||||
Refinancing expense | 0 | 0 | ||||
Other expense, net | 0 | 0 | ||||
Total other expense (income), net | 0 | 0 | ||||
Loss from continuing operations before income taxes | (4,209) | (7,215) | ||||
Income tax expense | 0 | 0 | ||||
Net loss | (4,209) | (7,215) | ||||
Other comprehensive income (loss): | ||||||
Unrealized holding loss on marketable securities, net | 0 | 0 | ||||
Unrealized gain (loss) on derivative contracts, net | 0 | 0 | ||||
Total other comprehensive income (loss), net of tax | 0 | 0 | ||||
Comprehensive loss | (4,209) | (7,215) | ||||
Balances without adoption of Topic 606 | ||||||
Income Statement [Abstract] | ||||||
Net revenue | 132,940 | 398,936 | ||||
Operating expenses: | ||||||
Cost of services | 33,285 | 95,515 | ||||
Selling, general and administrative, including stock-based and long-term incentive compensation | 38,096 | 109,880 | ||||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 54,541 | 166,606 | ||||
Depreciation | 2,886 | 8,378 | ||||
Loss on goodwill impairment | 0 | 214,400 | ||||
Total operating expenses | 128,808 | 594,779 | ||||
Operating income (loss) | 4,132 | (195,843) | ||||
Other expense (income), net: | ||||||
Interest income | (624) | (1,879) | ||||
Interest expense | 40,943 | 120,017 | ||||
Refinancing expense | 6,731 | 6,731 | ||||
Other expense, net | 40 | (2,236) | ||||
Total other expense (income), net | 47,090 | 122,633 | ||||
Loss from continuing operations before income taxes | (42,958) | (318,476) | ||||
Income tax expense | 1,346 | 4,039 | ||||
Net loss | (44,304) | (322,515) | ||||
Other comprehensive income (loss): | ||||||
Unrealized holding loss on marketable securities, net | 0 | (3,900) | ||||
Unrealized gain (loss) on derivative contracts, net | 3,269 | 23,196 | ||||
Total other comprehensive income (loss), net of tax | 3,269 | 19,296 | ||||
Comprehensive loss | $ (41,035) | $ (303,219) |
Revenue Recognition - Impact _3
Revenue Recognition - Impact on Condensed Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||||||
Net loss | $ (40,095) | $ (244,367) | $ (30,838) | $ (29,160) | $ (315,300) | $ (91,539) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 52,671 | 59,384 | 160,973 | 178,896 | ||
Depreciation | 2,886 | 2,176 | 8,378 | 6,435 | ||
Stock-based and long-term incentive compensation | 1,600 | 5,968 | ||||
Deferred income tax expense | 1,987 | 3,158 | ||||
Refinancing expense | 6,731 | 0 | 6,731 | 0 | ||
Amortization of debt discount and deferred debt costs | 9,108 | 8,227 | ||||
Bad debt expense | 8,511 | 7,888 | ||||
Loss on goodwill impairment | 0 | 0 | 214,400 | 0 | ||
Other non-cash activity, net | (186) | 4,887 | ||||
Changes in assets and liabilities: | ||||||
Trade receivables | (9,028) | (7,225) | ||||
Prepaid expenses and other assets | (8,359) | (3,535) | ||||
Subscriber accounts - deferred contract acquisition costs | (4,529) | (2,299) | ||||
Payables and other liabilities | (4,752) | 4,770 | ||||
Net cash provided by operating activities | 69,534 | 113,914 | ||||
Cash flows from investing activities: | ||||||
Capital expenditures | (11,513) | (9,999) | ||||
Cost of subscriber accounts acquired | (111,531) | (119,081) | ||||
Purchases of marketable securities | (39,022) | (22,633) | ||||
Proceeds from sale of marketable securities | 143,316 | 1,108 | ||||
Net cash used in investing activities | (18,750) | (117,993) | ||||
Cash flows from financing activities: | ||||||
Proceeds from long-term debt | 218,950 | 159,850 | ||||
Payments on long-term debt | (136,600) | (132,500) | ||||
Payments of financing costs | (5,734) | 0 | ||||
Value of shares withheld for share-based compensation | (171) | (670) | ||||
Net cash provided by financing activities | 76,445 | 26,680 | ||||
Net increase in cash, cash equivalents and restricted cash | 127,229 | 22,601 | ||||
Cash, cash equivalents and restricted cash at beginning of period | 10,465 | 10,465 | 12,319 | |||
Cash, cash equivalents and restricted cash at end of period | 137,694 | $ 34,920 | 137,694 | $ 34,920 | ||
Adjustments | Accounting Standards Update 2014-09 | ||||||
Cash flows from operating activities: | ||||||
Net loss | (4,209) | (7,215) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 1,870 | 5,633 | ||||
Depreciation | 0 | 0 | ||||
Stock-based and long-term incentive compensation | 0 | |||||
Deferred income tax expense | 0 | |||||
Refinancing expense | 0 | 0 | ||||
Amortization of debt discount and deferred debt costs | 0 | |||||
Bad debt expense | 0 | |||||
Loss on goodwill impairment | 0 | 0 | ||||
Other non-cash activity, net | 0 | |||||
Changes in assets and liabilities: | ||||||
Trade receivables | 0 | |||||
Prepaid expenses and other assets | 7,016 | |||||
Subscriber accounts - deferred contract acquisition costs | 89 | |||||
Payables and other liabilities | (825) | |||||
Net cash provided by operating activities | 4,698 | |||||
Cash flows from investing activities: | ||||||
Capital expenditures | 0 | |||||
Cost of subscriber accounts acquired | (4,698) | |||||
Purchases of marketable securities | 0 | |||||
Proceeds from sale of marketable securities | 0 | |||||
Net cash used in investing activities | (4,698) | |||||
Cash flows from financing activities: | ||||||
Proceeds from long-term debt | 0 | |||||
Payments on long-term debt | 0 | |||||
Payments of financing costs | 0 | |||||
Value of shares withheld for share-based compensation | 0 | |||||
Net cash provided by financing activities | 0 | |||||
Net increase in cash, cash equivalents and restricted cash | 0 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 0 | 0 | ||||
Cash, cash equivalents and restricted cash at end of period | 0 | 0 | ||||
Balances without adoption of Topic 606 | ||||||
Cash flows from operating activities: | ||||||
Net loss | (44,304) | (322,515) | ||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets | 54,541 | 166,606 | ||||
Depreciation | 2,886 | 8,378 | ||||
Stock-based and long-term incentive compensation | 1,600 | |||||
Deferred income tax expense | 1,987 | |||||
Refinancing expense | 6,731 | 6,731 | ||||
Amortization of debt discount and deferred debt costs | 9,108 | |||||
Bad debt expense | 8,511 | |||||
Loss on goodwill impairment | 0 | 214,400 | ||||
Other non-cash activity, net | (186) | |||||
Changes in assets and liabilities: | ||||||
Trade receivables | (9,028) | |||||
Prepaid expenses and other assets | (1,343) | |||||
Subscriber accounts - deferred contract acquisition costs | (4,440) | |||||
Payables and other liabilities | (5,577) | |||||
Net cash provided by operating activities | 74,232 | |||||
Cash flows from investing activities: | ||||||
Capital expenditures | (11,513) | |||||
Cost of subscriber accounts acquired | (116,229) | |||||
Purchases of marketable securities | (39,022) | |||||
Proceeds from sale of marketable securities | 143,316 | |||||
Net cash used in investing activities | (23,448) | |||||
Cash flows from financing activities: | ||||||
Proceeds from long-term debt | 218,950 | |||||
Payments on long-term debt | (136,600) | |||||
Payments of financing costs | (5,734) | |||||
Value of shares withheld for share-based compensation | (171) | |||||
Net cash provided by financing activities | 76,445 | |||||
Net increase in cash, cash equivalents and restricted cash | 127,229 | |||||
Cash, cash equivalents and restricted cash at beginning of period | $ 10,465 | 10,465 | ||||
Cash, cash equivalents and restricted cash at end of period | $ 137,694 | $ 137,694 |
Investments in Marketable Sec_3
Investments in Marketable Securities - Schedule of Investment Activity (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Debt Securities, Available-for-sale, Cost Basis | $ 0 | |
Debt Securities, Available-for-sale, Unrealized Gains | 0 | |
Debt Securities, Available-for-sale, Unrealized Losses | 0 | |
Debt Securities, Available-for-sale, Total | 0 | |
Available-for-sale Equity Securities, Cost Basis | $ 3,432 | |
Available-for-sale Equity Securities, Unrealized Gains | 2,039 | |
Available-for-sale Equity Securities, Unrealized Losses | 0 | |
Available-for-sale Securities, Equity Securities, Total | 5,471 | |
Cost Basis | 102,060 | |
Unrealized Gains | 3,898 | |
Unrealized Losses | 0 | |
Total | 105,958 | |
Mutual funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt Securities, Available-for-sale, Cost Basis | 0 | 98,628 |
Debt Securities, Available-for-sale, Unrealized Gains | 0 | 1,859 |
Debt Securities, Available-for-sale, Unrealized Losses | 0 | 0 |
Debt Securities, Available-for-sale, Total | $ 0 | $ 100,487 |
Investments in Marketable Sec_4
Investments in Marketable Securities - Realized Gain (Loss) On Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | ||||
Net gains and (losses) recognized during the period on trading securities | $ (40) | $ (2) | $ 2,234 | $ 1 |
Less: Net gains and (losses) recognized during the period on trading securities sold during the period | (40) | (2) | 2,234 | 1 |
Unrealized gains and (losses) recognized during the reporting period on trading securities still held at the reporting date | $ 0 | $ 0 | $ 0 | $ 0 |
Goodwill - Schedule of Goodwill
Goodwill - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Goodwill [Roll Forward] | ||||||
Goodwill, Beginning Balance | $ 563,549 | |||||
Goodwill impairment | $ 0 | $ 0 | (214,400) | $ 0 | ||
Reporting unit reallocation | 0 | |||||
Goodwill, Ending Balance | 349,149 | 349,149 | ||||
MONI | ||||||
Goodwill [Roll Forward] | ||||||
Goodwill, Beginning Balance | 527,502 | |||||
Goodwill impairment | $ (214,400) | (214,400) | ||||
Reporting unit reallocation | $ (313,102) | (313,102) | ||||
Goodwill, Ending Balance | 0 | 0 | ||||
LiveWatch | ||||||
Goodwill [Roll Forward] | ||||||
Goodwill, Beginning Balance | 36,047 | |||||
Goodwill impairment | 0 | |||||
Reporting unit reallocation | $ (36,047) | (36,047) | ||||
Goodwill, Ending Balance | 0 | 0 | ||||
Brinks Home Security | ||||||
Goodwill [Roll Forward] | ||||||
Goodwill, Beginning Balance | 0 | |||||
Goodwill impairment | 0 | |||||
Reporting unit reallocation | 349,149 | |||||
Goodwill, Ending Balance | $ 349,149 | $ 349,149 |
Goodwill - Narrative (Details)
Goodwill - Narrative (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | May 31, 2018 |
Goodwill [Line Items] | |||||||
Reporting unit reallocated from segment | $ 0 | ||||||
Loss on goodwill impairment | $ 0 | $ 0 | 214,400 | $ 0 | |||
MONI | |||||||
Goodwill [Line Items] | |||||||
Reporting unit reallocated from segment | $ 313,102 | 313,102 | |||||
Loss on goodwill impairment | $ 214,400 | 214,400 | |||||
MONI | Measurement Input, Discount Rate | Valuation, Income Approach | |||||||
Goodwill [Line Items] | |||||||
Percentage of fair value in excess of carrying amount | 8.50% | ||||||
LiveWatch | |||||||
Goodwill [Line Items] | |||||||
Reporting unit reallocated from segment | $ 36,047 | 36,047 | |||||
Loss on goodwill impairment | $ 0 | ||||||
LiveWatch | Measurement Input, Discount Rate | Valuation, Income Approach | |||||||
Goodwill [Line Items] | |||||||
Percentage of fair value in excess of carrying amount | 8.50% |
Other Accrued Liabilities - Sch
Other Accrued Liabilities - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Interest payable | $ 28,403 | $ 15,927 |
Income taxes payable | 2,289 | 2,950 |
Legal settlement reserve | 0 | 23,000 |
Other | 16,148 | 10,452 |
Total Other accrued liabilities | $ 46,840 | $ 52,329 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long Term Debt (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | |||
Carrying value | $ 1,880,502,000 | $ 1,789,044,000 | |
Less current portion of long-term debt | (11,000,000) | (11,000,000) | |
Long-term debt | 1,869,502,000 | 1,778,044,000 | |
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 86,285,000 | 82,614,000 | |
Interest rate on debt | 4.00% | ||
Effective interest rate | 9.10% | ||
Senior Notes 9.125 Percent Due 2020 | Brinks Home Security | Senior Notes | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 581,686,000 | 580,159,000 | |
Interest rate on debt | 9.125% | ||
Effective interest rate | 9.50% | ||
Term Loan Due September 2022 | Brinks Home Security | Term Loan | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 1,054,933,000 | 1,059,598,000 | |
Effective interest rate | 8.20% | ||
Term Loan Due September 2022 | Brinks Home Security | Term Loan | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate index | 5.50% | ||
Variable rate basis floor | 1.00% | ||
Revolving Credit Facility Due 2021 | Brinks Home Security | Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Carrying value | $ 157,598,000 | $ 66,673,000 | |
Effective interest rate | 3.50% | ||
Borrowing capacity | $ 295,000,000 | $ 295,000,000 | |
Revolving Credit Facility Due 2021 | Brinks Home Security | Revolving Credit Facility | LIBOR | |||
Debt Instrument [Line Items] | |||
Spread on variable rate index | 4.00% | ||
Variable rate basis floor | 1.00% |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands | Sep. 30, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 27, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||||||
Interest expense | $ 40,943,000 | $ 38,360,000 | $ 120,017,000 | $ 114,011,000 | |||
Brinks Home Security | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit | 159,100,000 | 159,100,000 | |||||
Remaining borrowing capacity | 135,900,000 | 135,900,000 | |||||
Brinks Home Security | Secured Debt | |||||||
Debt Instrument [Line Items] | |||||||
Deferred financing costs and unamortized discounts | $ 24,569,000 | $ 24,569,000 | |||||
Brinks Home Security | LIBOR | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Unused capacity commitment fee percentage | 0.50% | ||||||
Series A Common Stock | |||||||
Debt Instrument [Line Items] | |||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Convertible Senior Notes 4 Percent Due 2020 | Warrant | |||||||
Debt Instrument [Line Items] | |||||||
Strike price (in dollars per share) | $ 118.62 | $ 118.62 | |||||
Warrant strike price, conversion premium, percentage | 50.00% | ||||||
Convertible Debt | Convertible Senior Notes 4 Percent Due 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Principal | $ 96,775,000 | $ 96,775,000 | |||||
Interest rate on debt | 4.00% | 4.00% | |||||
Principal amount for conversion ratio | $ 1,000 | $ 1,000 | |||||
Redemption price percentage | 100.00% | ||||||
Effective interest rate to calculate accretion | 14.00% | 14.00% | |||||
Interest expense | $ 967,000 | 967,000 | $ 2,903,000 | 2,903,000 | |||
Amortization of debt discount and deferred debt costs | $ 1,266,000 | $ 1,102,000 | $ 3,671,000 | $ 3,194,000 | |||
Convertible Debt | Convertible Senior Notes 4 Percent Due 2020 | Series A Common Stock | |||||||
Debt Instrument [Line Items] | |||||||
Conversion ratio on debt | 9.7272 | ||||||
Conversion price (in dollars per share) | $ 102.804 | $ 102.804 | |||||
Convertible Debt | Convertible Senior Notes 4 Percent Due 2020 | Series A Common Stock | Call Option | |||||||
Debt Instrument [Line Items] | |||||||
Shares attributable to dilutive effect of debt conversion (in shares) | 1,007 | ||||||
Senior Notes Due April 2020 | Senior Notes 9.125 Percent Due 2020 | Brinks Home Security | |||||||
Debt Instrument [Line Items] | |||||||
Principal | $ 585,000,000 | $ 585,000,000 | |||||
Interest rate on debt | 9.125% | 9.125% | |||||
Accumulated amortization, debt issuance costs | $ 3,314,000 | $ 3,314,000 | |||||
Term Loan | Interest Rate Swap | Brinks Home Security | Designated as Hedging Instrument | |||||||
Debt Instrument [Line Items] | |||||||
Fixed Rate Paid | 7.99% | 7.99% | |||||
Term Loan | Term Loan Due September 2022 | Brinks Home Security | |||||||
Debt Instrument [Line Items] | |||||||
Principal | $ 1,100,000,000 | $ 1,078,000,000 | $ 1,078,000,000 | ||||
Debt discount on purchase price, percentage | 1.50% | ||||||
Periodic payment of principal and interest | $ 2,750,000 | ||||||
Springing maturity period | 181 days | ||||||
Term Loan | Term Loan Due September 2022 | Brinks Home Security | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Spread on variable rate index | 5.50% | ||||||
Variable rate basis floor | 1.00% | ||||||
Revolving Credit Facility | Revolving Credit Facility Due 2021 | Brinks Home Security | |||||||
Debt Instrument [Line Items] | |||||||
Borrowing capacity | $ 295,000,000 | $ 295,000,000 | $ 295,000,000 | ||||
Line of credit | $ 26,691,000 | ||||||
Revolving Credit Facility | Revolving Credit Facility Due 2021 | Brinks Home Security | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Spread on variable rate index | 4.00% | ||||||
Variable rate basis floor | 1.00% |
Long-Term Debt - Schedule of Co
Long-Term Debt - Schedule of Convertible Notes (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Principal | $ 1,918,875 | |
Carrying value | 1,880,502 | $ 1,789,044 |
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Principal | 96,775 | 96,775 |
Unamortized discount | (9,825) | (13,263) |
Deferred debt costs | (665) | (898) |
Carrying value | $ 86,285 | $ 82,614 |
Long-Term Debt - Maturities of
Long-Term Debt - Maturities of Long and Short Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Remainder of 2018 | $ 2,750 | |
2,019 | 11,000 | |
2,020 | 692,775 | |
2,021 | 170,100 | |
2,022 | 1,042,250 | |
2,023 | 0 | |
Thereafter | 0 | |
Total principal payments | 1,918,875 | |
Less: | ||
Unamortized deferred debt costs, discounts and premium, net | 38,373 | |
Carrying value | $ 1,880,502 | $ 1,789,044 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Cash Flow Hedging | Interest Rate Swap | |
Derivatives | |
Amounts in accumulated other comprehensive loss expected to be reclassified during next twelve months | $ (1,810) |
Derivatives - Summary of Deriva
Derivatives - Summary of Derivative Instruments (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
3.110 % interest rate swaps | |
Derivatives | |
Notional | $ 189,998,331 |
Fixed Rate Paid | 3.11% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
3.110 % interest rate swaps | |
Derivatives | |
Notional | $ 248,125,000 |
Fixed Rate Paid | 3.11% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
2.504 % Interest rate swaps | |
Derivatives | |
Notional | $ 49,625,000 |
Fixed Rate Paid | 2.504% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
1.833 % interest rate swaps | |
Derivatives | |
Notional | $ 374,172,500 |
Fixed Rate Paid | 1.833% |
Variable interest rate base | 3 mo.USD-LIBOR-BBA |
Base Rate | 3.110 % interest rate swaps | |
Derivatives | |
Variable interest rate base floor | 1.00% |
Base Rate | 3.110 % interest rate swaps | |
Derivatives | |
Variable interest rate base floor | 1.00% |
Base Rate | 2.504 % Interest rate swaps | |
Derivatives | |
Variable interest rate base floor | 1.00% |
Base Rate | 1.833 % interest rate swaps | |
Derivatives | |
Variable interest rate base floor | 1.00% |
Derivatives - Summary of Cash F
Derivatives - Summary of Cash Flow Hedges (Details) - Cash Flow Hedging - Interest Rate Swap - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Derivatives | ||||
Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) | $ 3,165 | $ (914) | $ 21,929 | $ (8,890) |
Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss | $ (104) | (1,141) | $ (1,267) | (4,389) |
Ineffective portion of amount of loss recognized into Net loss | $ (65) | $ (157) |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Measurements | ||
Investments in marketable securities | $ 105,958 | |
Recurring | ||
Fair Value Measurements | ||
Investments in marketable securities | 105,958 | |
Total | $ 16,425 | 99,199 |
Recurring | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 17,564 | 7,058 |
Interest rate swap agreements - liabilities | (1,139) | (13,817) |
Recurring | Level 1 | ||
Fair Value Measurements | ||
Investments in marketable securities | 105,958 | |
Total | 0 | 105,958 |
Recurring | Level 1 | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 0 | 0 |
Interest rate swap agreements - liabilities | 0 | 0 |
Recurring | Level 2 | ||
Fair Value Measurements | ||
Investments in marketable securities | 0 | |
Total | 16,425 | (6,759) |
Recurring | Level 2 | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 17,564 | 7,058 |
Interest rate swap agreements - liabilities | (1,139) | (13,817) |
Recurring | Level 3 | ||
Fair Value Measurements | ||
Investments in marketable securities | 0 | |
Total | 0 | 0 |
Recurring | Level 3 | Interest Rate Swap | ||
Fair Value Measurements | ||
Interest rate swap agreements - assets | 0 | 0 |
Interest rate swap agreements - liabilities | $ 0 | $ 0 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Fair Value Not Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Long term debt, including current portion: | ||
Carrying value | $ 1,880,502 | $ 1,789,044 |
Level 2 | ||
Long term debt, including current portion: | ||
Carrying value | 1,880,502 | 1,789,044 |
Fair value | $ 1,707,626 | $ 1,709,342 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Series B Common Stock | ||
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Stockholders' Equity - Activity
Stockholders' Equity - Activity in Common Stock Roll Forward (Details) - shares | 3 Months Ended | ||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
Series A Common Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Balance, beginning of period (in shares) | 12,032,370 | 12,002,103 | 11,999,630 |
Issuance of stock awards (in shares) | 29,591 | 51,036 | 13,153 |
Restricted stock canceled for tax withholding (in shares) | (9,258) | (20,769) | (10,680) |
Balance, end of period (in shares) | 12,052,703 | 12,032,370 | 12,002,103 |
Series B Common Stock | |||
Increase (Decrease) in Stockholders' Equity | |||
Balance, beginning of period (in shares) | 381,528 | 381,528 | 381,528 |
Issuance of stock awards (in shares) | 0 | 0 | 0 |
Restricted stock canceled for tax withholding (in shares) | 0 | 0 | 0 |
Balance, end of period (in shares) | 381,528 | 381,528 | 381,528 |
Stockholders' Equity - Changes
Stockholders' Equity - Changes in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Changes in accumulated other comprehensive loss | |||||||
Beginning Balance | $ (138,401) | $ 100,612 | $ 142,672 | $ 142,672 | |||
Adjusted balance at January 1, 2018 | $ 119,952 | ||||||
Net period Other comprehensive income | 3,269 | 4,698 | 11,329 | $ 490 | 19,296 | $ (2,509) | |
Ending Balance | (174,571) | (138,401) | 100,612 | (174,571) | |||
Gain (loss) through Accumulated other comprehensive income (loss), income tax | 0 | 0 | 0 | ||||
Reclassifications of loss (gain) into Net loss, income tax | 0 | 0 | 0 | ||||
Foreign Currency Translation Adjustments | |||||||
Changes in accumulated other comprehensive loss | |||||||
Beginning Balance | (758) | (758) | (758) | (758) | |||
Adjusted balance at January 1, 2018 | (758) | ||||||
Gain through Accumulated other comprehensive income (loss), net of income tax of $0 | 0 | 0 | 0 | ||||
Reclassifications of loss into Net loss, net of income tax of $0 | 0 | 0 | 0 | ||||
Net period Other comprehensive income | 0 | 0 | 0 | ||||
Ending Balance | (758) | (758) | (758) | (758) | |||
Unrealized Holding Gains and Losses on Marketable Securities, net | |||||||
Changes in accumulated other comprehensive loss | |||||||
Beginning Balance | 0 | 823 | 3,900 | 3,900 | |||
Adjusted balance at January 1, 2018 | 3,900 | ||||||
Gain through Accumulated other comprehensive income (loss), net of income tax of $0 | 0 | (611) | (1,014) | ||||
Reclassifications of loss into Net loss, net of income tax of $0 | 0 | (212) | (2,063) | ||||
Net period Other comprehensive income | 0 | (823) | (3,077) | ||||
Ending Balance | 0 | 0 | 823 | 0 | |||
Unrealized Gains and Losses on Derivative Instruments, net | |||||||
Changes in accumulated other comprehensive loss | |||||||
Beginning Balance | 13,157 | 7,636 | (7,375) | (7,375) | |||
Adjusted balance at January 1, 2018 | (6,770) | ||||||
Gain through Accumulated other comprehensive income (loss), net of income tax of $0 | 3,165 | 5,096 | 13,668 | ||||
Reclassifications of loss into Net loss, net of income tax of $0 | 104 | 425 | 738 | ||||
Net period Other comprehensive income | 3,269 | 5,521 | 14,406 | ||||
Ending Balance | 16,426 | 13,157 | 7,636 | 16,426 | |||
Accumulated Other Comprehensive Income (Loss) | |||||||
Changes in accumulated other comprehensive loss | |||||||
Beginning Balance | 12,399 | 7,701 | (4,233) | (4,233) | |||
Adjusted balance at January 1, 2018 | (3,628) | ||||||
Gain through Accumulated other comprehensive income (loss), net of income tax of $0 | 3,165 | 4,485 | 12,654 | ||||
Reclassifications of loss into Net loss, net of income tax of $0 | 104 | 213 | (1,325) | ||||
Net period Other comprehensive income | 3,269 | 4,698 | 11,329 | ||||
Ending Balance | $ 15,668 | $ 12,399 | $ 7,701 | $ 15,668 | |||
Impact of adoption of ASU 2017-12 | Foreign Currency Translation Adjustments | |||||||
Changes in accumulated other comprehensive loss | |||||||
Impact of adoption of ASU 2017-12 | 0 | ||||||
Impact of adoption of ASU 2017-12 | Unrealized Holding Gains and Losses on Marketable Securities, net | |||||||
Changes in accumulated other comprehensive loss | |||||||
Impact of adoption of ASU 2017-12 | 0 | ||||||
Impact of adoption of ASU 2017-12 | Unrealized Gains and Losses on Derivative Instruments, net | |||||||
Changes in accumulated other comprehensive loss | |||||||
Impact of adoption of ASU 2017-12 | 605 | ||||||
Impact of adoption of ASU 2017-12 | Accumulated Other Comprehensive Income (Loss) | |||||||
Changes in accumulated other comprehensive loss | |||||||
Impact of adoption of ASU 2017-12 | $ 605 |
Basic and Diluted Earnings (L_3
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B - Narrative (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Excluded stock options, unvested restricted stock awards and performance units (in shares) | 581,891 | 247,148 | 624,024 | 344,037 |
Basic and Diluted Earnings (L_4
Basic and Diluted Earnings (Loss) Per Common Share-Series A and Series B - Schedule of Weighted Average Number of Shares (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Weighted average number of shares of Series A and Series B Common Stock (in shares) | 12,361,495 | 12,207,649 | 12,329,497 | 12,170,367 |
Commitments, Contingencies an_2
Commitments, Contingencies and Other Liabilities - Narrative (Details) - USD ($) $ in Thousands | Nov. 01, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Nov. 02, 2018 | Oct. 01, 2018 | Sep. 05, 2018 | Aug. 27, 2018 | Jun. 30, 2017 |
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | Holders of Convertible Notes Versus Ascent Capital | ||||||||
Loss Contingencies [Line Items] | ||||||||
Debt, ownership percentage | 68.00% | |||||||
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | Holders of Convertible Notes versus Ascent Capital, Amended Complaint | ||||||||
Loss Contingencies [Line Items] | ||||||||
Debt, ownership percentage | 69.00% | |||||||
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | Subsequent Event | Holders of Convertible Notes Versus Ascent Capital, Second Amended Complaint | ||||||||
Loss Contingencies [Line Items] | ||||||||
Debt, ownership percentage | 78.00% | |||||||
Convertible Senior Notes 4 Percent Due 2020 | Convertible Debt | Subsequent Event | Holders of Convertible Notes Versus Ascent Capital, Third Amended Complaint | ||||||||
Loss Contingencies [Line Items] | ||||||||
Debt, ownership percentage | 53.00% | |||||||
Brinks Home Security | ||||||||
Loss Contingencies [Line Items] | ||||||||
Legal reserve | $ 28,000 | |||||||
Settlement amount paid | $ 23,000 | $ 5,000 | ||||||
Brinks Home Security | Subsequent Event | ||||||||
Loss Contingencies [Line Items] | ||||||||
Litigation settlement awarded | $ 9,750 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) | Oct. 30, 2018 | Oct. 29, 2018 | Sep. 30, 2018 | Sep. 30, 2016 |
Revolving Credit Facility Due 2021 | Brinks Home Security | Revolving Credit Facility | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing on line | $ 295,000,000 | $ 295,000,000 | ||
Amended and Restated Support Agreement | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Payment to Brinks Home Security | $ 75,000,000 | |||
Amended and Restated Support Agreement | Term Loan Due September 2022 | Brinks Home Security | Term Loan | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Interest rate increase | 1.00% | |||
Amended and Restated Support Agreement | Revolving Credit Facility Due 2021 | Brinks Home Security | Revolving Credit Facility | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Interest rate increase | 0.75% | |||
Maximum borrowing on line | $ 250,000,000 | $ 295,000,000 | ||
Amended and Restated Support Agreement | Senior Notes, Second Lien Notes Due 2023 | Brinks Home Security | Senior Notes | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Interest rate on debt | 5.50% | |||
Interest rate on debt, paid in kind | 6.50% |