Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 06, 2015 | |
Entity Registrant Name | HEMISPHERE MEDIA GROUP, INC. | |
Entity Central Index Key | 1,567,345 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Common Class A | ||
Entity Common Stock, Shares Outstanding | 15,602,725 | |
Common Class B | ||
Entity Common Stock, Shares Outstanding | 30,027,418 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $ 170,399 | $ 142,010 |
Accounts receivable, net of allowance for doubtful accounts of $1,646 and $1,072, respectively | 23,636 | 24,763 |
Due from related parties | 1,448 | 1,334 |
Programming rights | 5,512 | 5,441 |
Deferred taxes | 4,487 | 4,222 |
Prepaid taxes and other current assets | 8,917 | 8,071 |
Total current assets | 214,399 | 185,841 |
Programming rights | 7,578 | 6,652 |
Property and equipment, net | 24,870 | 23,867 |
Deferred financing costs, net | 2,381 | 2,758 |
Broadcast license | 41,356 | 41,356 |
Goodwill | 164,887 | 164,887 |
Other intangibles, net | 81,531 | 91,611 |
Other assets | 2,042 | 1,425 |
Total Assets | 539,044 | 518,397 |
Current Liabilities | ||
Accounts payable | 1,934 | 2,176 |
Due to related parties | 991 | 787 |
Accrued agency commissions | 5,665 | 6,642 |
Accrued compensation and benefits | 4,209 | 3,391 |
Accrued marketing | 3,179 | 3,245 |
Taxes payable | 3,671 | 927 |
Other accrued expenses | 7,661 | 4,385 |
Programming rights payable | 4,405 | 4,228 |
Current portion of long-term debt | 2,250 | 2,250 |
Total current liabilities | 33,965 | 28,031 |
Programming rights payable | 274 | 111 |
Long-term debt, net of current portion | 218,140 | 219,541 |
Deferred taxes | 9,889 | 11,670 |
Defined benefit pension obligation | 2,698 | 2,631 |
Total Liabilities | $ 264,966 | $ 261,984 |
Stockholders' Equity | ||
Preferred stock, $0.0001 par value; 50,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively | ||
Additional paid-in capital | $ 256,797 | $ 246,858 |
Treasury stock, at cost; 229,100 and 146,703 at September 30, 2015 and December 31, 2014, respectively | (3,040) | (1,961) |
Retained earnings | 20,903 | 12,098 |
Accumulated other comprehensive loss | (586) | (586) |
Total Stockholders' Equity | 274,078 | 256,413 |
Total Liabilities and Stockholders' Equity | 539,044 | 518,397 |
Common Class A | ||
Stockholders' Equity | ||
Common stock | 1 | 1 |
Common Class B | ||
Stockholders' Equity | ||
Common stock | $ 3 | $ 3 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accounts receivable, allowance for doubtful accounts | $ 1,646 | $ 1,072 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 229,100 | 146,703 |
Common Class A | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 15,317,441 | 14,518,734 |
Common stock, shares outstanding | 15,317,441 | 14,518,734 |
Common Class B | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 33,000,000 | 33,000,000 |
Common stock, shares issued | 30,027,418 | 30,027,418 |
Common stock, shares outstanding | 30,027,418 | 30,027,418 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements of Operations | ||||
Net revenues | $ 31,465 | $ 28,781 | $ 93,554 | $ 78,787 |
Operating Expenses: | ||||
Cost of revenues | 10,249 | 9,174 | 29,609 | 26,067 |
Selling, general and administrative | 8,907 | 8,353 | 26,816 | 23,473 |
Depreciation and amortization | 4,283 | 4,668 | 12,929 | 12,077 |
Other expenses | 75 | 972 | 381 | 1,282 |
Loss on disposition of assets | 55 | 31 | 70 | |
Total operating expenses | 23,514 | 23,222 | 69,766 | 62,969 |
Operating income | 7,951 | 5,559 | 23,788 | 15,818 |
Other Expenses: | ||||
Interest expense, net | (3,080) | (3,029) | (9,071) | (8,871) |
Loss on extinguishment of debt | (1,116) | (1,116) | ||
Total other expenses | (3,080) | (4,145) | (9,071) | (9,987) |
Income before income taxes | 4,871 | 1,414 | 14,717 | 5,831 |
Income tax (expense) benefit | (1,961) | (751) | (5,912) | 399 |
Net income | $ 2,910 | $ 663 | $ 8,805 | $ 6,230 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.07 | $ 0.02 | $ 0.21 | $ 0.15 |
Diluted (in dollars per share) | $ 0.07 | $ 0.02 | $ 0.20 | $ 0.15 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 43,103 | 42,383 | 42,748 | 42,301 |
Diluted (in shares) | 44,143 | 42,587 | 43,563 | 42,534 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statement of Comprehensive Income | ||||
Net income | $ 2,910 | $ 663 | $ 8,805 | $ 6,230 |
Comprehensive income | $ 2,910 | $ 663 | $ 8,805 | $ 6,230 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Stockholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Common StockCommon Class A | Common StockCommon Class B | Additional Paid-in Capital | Treasury StockCommon Class A | Retained Earnings | Accumulated Comprehensive Loss | Total |
Balance at the beginning of the period at Dec. 31, 2014 | $ 1 | $ 3 | $ 246,858 | $ (1,961) | $ 12,098 | $ (586) | $ 256,413 |
Balance at the beginning of the period (in shares) at Dec. 31, 2014 | 14,519 | 30,027 | |||||
Changes in Stockholders' Equity | |||||||
Net income | 8,805 | 8,805 | |||||
Stock-based compensation | 4,123 | 4,123 | |||||
Vesting of restricted stock | 250 | (1,079) | (829) | ||||
Vesting of restricted stock (in shares) | 304 | ||||||
Issuance of shares | 5,407 | 5,407 | |||||
Issuance of shares (in shares) | 479 | ||||||
Exercise of stock options | 159 | 159 | |||||
Exercise of stock options (in shares) | 15 | ||||||
Balance at the end of the period at Sep. 30, 2015 | $ 1 | $ 3 | $ 256,797 | $ (3,040) | $ 20,903 | $ (586) | $ 274,078 |
Balance at the end of the period (in shares) at Sep. 30, 2015 | 15,317 | 30,027 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of Net Income to Net Cash Provided by Operating Activities: | ||
Net income | $ 8,805 | $ 6,230 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 12,929 | 12,077 |
Program amortization | 8,430 | 7,486 |
Amortization of deferred financing costs | 377 | 380 |
Amortization of original issue discount | 287 | 214 |
Stock-based compensation | 4,123 | 4,606 |
Provision for bad debts | 777 | 767 |
Loss on disposition of assets | 31 | 70 |
Loss on extinguishment of debt | 1,116 | |
Deferred taxes | (2,046) | (2,189) |
Decrease (increase) in: | ||
Accounts receivable | 350 | (4,552) |
Due from related parties | (114) | (204) |
Programming rights | (9,427) | (6,969) |
Prepaid taxes and other current assets | (1,463) | (6,279) |
(Decrease) increase in: | ||
Accounts payable | (243) | 428 |
Due to related parties | 204 | (145) |
Accrued expenses | 5,795 | (285) |
Programming rights payable | 340 | (883) |
Income tax payable | (117) | |
Other liabilities | 67 | 111 |
Net cash provided by operating activities | 29,222 | 11,862 |
Cash Flows From Investing Activities: | ||
Acquisition of Cable Networks | (101,891) | |
Proceeds from sale of assets | 3 | 10 |
Capital expenditures | (3,885) | (2,010) |
Net cash used in investing activities | (3,882) | (103,891) |
Cash Flows From Financing Activities: | ||
Proceeds from term loan | 70,565 | |
Deferred financing fees | (756) | |
Repayments of long-term debt | (1,688) | (21,378) |
Purchase of treasury stock | (1,079) | (969) |
Proceeds from issuance of stock | 5,407 | 1 |
Exercise of stock options | 159 | |
Excess tax benefits | 250 | 106 |
Net cash provided by financing activities | 3,049 | 47,569 |
Net increase (decrease) in cash | 28,389 | (44,460) |
Cash: | ||
Beginning | 142,010 | 176,622 |
Ending | 170,399 | 132,162 |
Cash payments for: | ||
Interest | 8,466 | 8,304 |
Income taxes | $ 4,128 | $ 3,720 |
Nature of business
Nature of business | 9 Months Ended |
Sep. 30, 2015 | |
Nature of business | |
Nature of business | Note 1. Nature of business Nature of business: The accompanying Condensed Consolidated Financial Statements include the accounts of Hemisphere Media Group, Inc. (“Hemisphere” or the “Company”), the parent holding company of Cine Latino, Inc. (“Cinelatino”), WAPA Holdings, LLC (formerly known as InterMedia Español Holdings, LLC) (“WAPA”), and HMTV Cable, Inc., the parent company of the entities for the newly acquired networks consisting of Pasiones, TV Dominicana, and Centroamerica TV (see below). The Company determines its operating segments based upon (i) financial information reviewed by the chief operating decision maker, the Chief Executive Officer, (ii) internal management and related reporting structure and (iii) the basis upon which the chief operating decision maker makes resource allocation decisions. We have one operating segment, Hemisphere. In these notes, the terms “Company,” “we,” “us” or “our” mean Hemisphere and all subsidiaries included in our Condensed Consolidated Financial Statements. Basis of presentation: The accompanying unaudited Condensed Consolidated Financial Statements for Hemisphere and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Our financial condition as of, and operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the financial condition or results that may be expected for any future interim period or for the year ending December 31, 2015. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2014 Annual Report. On April 1, 2014, we acquired the assets of three Spanish-language cable television networks for $101.9 million in cash. The three acquired cable networks include Pasiones, Centroamerica TV and Television Dominicana. Reclassification: Certain prior year amounts presented in due from related parties accounts have been reclassified to accounts receivable on the accompanying condensed consolidated balance sheet, which resulted in an increase to accounts receivable and the related allowance for doubtful accounts to conform with the fiscal 2015 presentation with no impact to current assets. Net earnings per common share: Basic earnings per share (“EPS”) are computed by dividing income attributable to common stockholders by the number of weighted-average outstanding shares of common stock. Diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted shares only in the periods in which such effect would have been dilutive. The following table sets forth the computation of the common shares outstanding used in determining basic and diluted EPS ( Dollar and share amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator for earnings per common share calculation: Net income $ $ $ $ Denominator for earnings per common share calculation: Weighted-average common shares, basic Effect of dilutive securities Stock options, restricted stock and warrants Weighted-average common shares, diluted EPS Basic $ $ $ $ Diluted $ $ $ $ We apply the treasury stock method to measure the dilutive effect of our outstanding stock options and restricted stock awards and include the respective common share equivalents in the denominator of our diluted income per common share calculation. Potentially dilutive securities representing 1.0 million shares of common stock for the three and nine months ended September 30, 2015, were excluded from the computation of diluted income per common share for this period because their effect would have been anti-dilutive. The net income per share amounts are the same for our Class A common stock, par value $0.0001 per share (“Class A common stock”) and Class B common stock, par value $0.0001 per share (“Class B common stock”), because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. Use of estimates: In preparing these financial statements, management had to make estimates and assumptions that affected the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the balance sheet dates, and the reported revenues and expenses for the three and nine months ended September 30, 2015 and 2014. Such estimates are based on historical experience and other assumptions that are considered appropriate in the circumstances. However, actual results could differ from those estimates. Recent accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which an entity has to refer. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The updated accounting guidance provides companies with alternative methods of adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements and our method of adoption. FASB has issued Accounting Standards Update (ASU) 2015-15 Interest-Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting . This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issue Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In April 2015, the FASB issued update, ASU 2015-03 Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within the ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We will adopt the guidance in the first quarter of 2016, with the impact to our consolidated statement of position to be a reduction in assets where deferred costs are currently disclosed, and a reduction to long-term debt where these costs will be recorded after the transition. |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related party transactions | |
Related party transactions | Note 2. Related party transactions The Company has various agreements with MVS Multivision Digital S. de R.L. de C.V. and its affiliates (collectively “MVS”), a Mexican media and television conglomerate, which have directors and stockholders in common with the Company as follows: · An agreement through August 1, 2017 pursuant to which MVS provides Cinelatino with satellite and support services including origination, uplinking and satellite delivery of two feeds of Cinelatino’s channel (for U.S. and Latin America), master control and monitoring, dubbing, subtitling and close captioning, and other support services (the “Satellite and Support Services Agreement”). This agreement was amended on May 20, 2015, to expand the services MVS provides to Cinelatino to include commercial insertion and editing services to support advertising sales on Cinelatino’s U.S. feed. Expenses incurred under this agreement are included in cost of revenues in the accompanying condensed consolidated statements of operations. Total expenses incurred were $0.6 million and $0.5 million for the three months ended September 30, 2015 and 2014, respectively, and $1.6 million for each of the nine months ended September 30, 2015 and 2014. · A ten-year master license agreement through July 2017, which grants MVS the non-exclusive right (except with respect to pre-existing distribution arrangements between MVS and third party distributors that are effective at the time of the consummation of the Transaction) to duplicate, distribute and exhibit Cinelatino’s service via cable, satellite or by any other means in Latin America and in Mexico to the extent that Mexico distribution is not owned by MVS. Pursuant to the agreement, Cinelatino receives revenue net of MVS’s distribution fees, which is presently equal to 13.5% of all license fees collected from distributors in Latin America and Mexico. Total revenues recognized were $1.3 million and $1.1 million for the three months ended September 30, 2015 and 2014, respectively, and $3.7 million and $3.1 million for the nine months ended September 30, 2015 and 2014, respectively. · An affiliation agreement through August 1, 2017 for the distribution and exhibition of Cinelatino’s programming service through Dish Mexico (dba Comercializadora de Frecuencias Satelitales, S. de R.L. de C.V.), an MVS affiliate that transmits television programming services throughout Mexico. Total revenues recognized were $0.5 million for each of the three months ended September 30, 2015, and 2014, and $1.5 million and $1.4 million for the nine months ended September 30, 2015 and 2014, respectively. · An affiliation agreement, effective July 2015 through January 2018 for the distribution and exhibition of Pasiones’ Latin American programming service through Dish Mexico (dba Comercializadora de Frecuencias Satelitales, S de R.L. de C.V.), an MVS affiliate that transmits television programming services throughout Mexico. Total revenues recognized were $0.0 million for the three and nine months ended September 30, 2015. · In November 2013, Cinelatino licensed six movies from MVS. Expenses incurred under this agreement are included in cost of revenues and amounted to $0 for each of the three months ended September 30, 2015 and 2014. At September 30, 2015 and December 31, 2014, $0.0 million, is included in programming rights related to this agreement. Amounts due from MVS pursuant to the agreements noted above amounted to $1.4 million and $1.3 million at September 30, 2015 and December 31, 2014, respectively, and are remitted monthly. Amounts due to MVS pursuant to the agreements noted above amounted to $0.9 million and $0.7 million at September 30, 2015 and December 31, 2014, respectively, and are remitted monthly. We entered into a three-year consulting agreement, effective April 9, 2013, with James M. McNamara, a member of the Company’s board of directors, to provide the development, production and maintenance of programming, affiliate relations, identification and negotiation of carriage opportunities, and the development, identification and negotiation of new business initiatives including sponsorship, new channels, direct-to-consumer programs and other interactive initiatives. Total expenses incurred under these agreements are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and amounted to $0.1 million for each of the three months ended September 30, 2015 and 2014, and $0.2 million for each of the nine months ended September 30, 2015 and 2014. Amounts due to this related party totaled $0.1 million at September 30, 2015 and December 31, 2014. We have entered into programming agreements with Panamax Films, LLC (“Panamax”), an entity owned by James M. McNamara for the licensing of three movie titles. Expenses incurred under this agreement are included in cost of revenues in the accompanying condensed consolidated statements of operations, and amounted to $0.0 million for each of the three and nine months ended September 30, 2015 and 2014. At September 30, 2015 and December 31, 2014, $0.2 million, is included in Programming Rights in the accompanying condensed consolidated balance sheets. During 2013, we engaged Pantelion to assist in the licensing of a feature film in the United States. Pantelion is a joint venture made up of several organizations, including Panamax Films, LLC (“Panamax”), Lions Gate Films Inc. (“Lions Gate”) and Grupo Televisa. Panamax is owned by James McNamara, who is also the Chairman of Pantelion. We agreed to pay to Pantelion, in connection with their services, up to 12.5% of all “licensing revenues”. Total licensing revenues are included in net revenues in the accompanying condensed consolidated statements of operations and amounted to $0.0 million for the three and nine months ended September 30, 2015 and 2014. Total expenses incurred are included in cost of revenues in the accompanying condensed consolidated statements of operations and amounted to $0.0 million for each of the three and nine months ended September 30, 2015 and 2014. Amounts due to this related party totaled $0.1 million at September 30, 2015 and December 31, 2014. Effective February 1, 2015, we entered into a licensing agreement to license the rights to fourteen (14) motion pictures from Lions Gate for a total license fee of $0.8 million. Some of the fourteen titles are owned by Pantelion, for which Lions Gate acts as Pantelion’s exclusive licensing agent. Fees paid by Cinelatino to Lions Gate may be remunerated to Pantelion in accordance with their financial arrangements. Expenses incurred under this agreement are included in cost of revenues in the accompanying condensed consolidated statements of operations, and amounted to $0.0 million and $0.1 million for each of the three and nine months ended September 30, 2015, respectively. At September 30, 2015, $0.3 million is included in programming rights in the accompanying condensed consolidated balance sheets related to this agreement. We entered into a services agreement with InterMedia Advisors, LLC (“IMA”), which has officers, directors and stockholders in common with the Company, services including, without limitation, office space and operational support and pursuant to a reimbursement agreement with IMA’s affiliate, InterMedia Partners VII, L.P. Amounts due to this related party amounted to $0.0 million at September 30, 2015 and December 31, 2014. Such expenses are included in selling, general and administrative expenses and amounted to $0.0 million for each of the three and nine month periods ended September 30, 2015 and 2014. |
Goodwill and intangible assets
Goodwill and intangible assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and intangible assets | |
Goodwill and intangible assets | Note 3. Goodwill and intangible assets Goodwill and intangible assets consist of the following at September 30, 2015 and December 31, 2014 ( amounts in thousands ): September 30, December 31, 2015 2014 Broadcast license $ $ Goodwill Other intangibles Total intangible assets $ $ A summary of changes in the Company’s goodwill and other indefinite-lived intangible assets, on a net basis, for the nine months ended September 30, 2015 is as follows (amounts in thousands ) : Net Balance at December 31, 2014 Additions Impairment Net Balance at September 30, 2015 Broadcast license $ $ — $ — $ Goodwill — — Brands — — Other intangibles — — Total indefinite-lived intangibles $ $ — $ — $ A summary of the changes in the Company’s other amortizable intangible assets for the nine months ended September 30, 2015 is as follows ( amounts in thousands ) : Net Balance at December 31, 2014 Additions Amortization Net Balance at September 30, 2015 Affiliate relationships $ $ — $ ) $ Advertiser Relationships — ) Non-Compete Agreement — ) Other intangibles ) Total Finite-lived intangibles $ $ $ ) $ The aggregate amortization expense of the Company’s amortizable intangible assets was $3.3 million and $3.7 million for the three months ended September 30, 2015 and 2014, respectively, and $10.1 million and $9.2 million for the nine months ended September 30, 2015 and 2014, respectively. The weighted average remaining amortization period is 5.3 years at September 30, 2015. Future estimated amortization expense is as follows (amounts in thousands): Year Ending December 31, Amount Remainder 2015 $ 2016 2017 2018 2019 2020 2021 and thereafter $ |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income taxes | |
Income taxes | Note 4. Income taxes For the nine month periods ended September 30, 2015 and 2014, our income tax expense has been computed utilizing the estimated annual effective rates of 36.6% and 38.8% respectively. The difference between the annual effective rate of 36.6% and the statutory Federal income tax rate of 35% in the nine month period in 2015, is primarily due to state and foreign income taxes. The difference between the annual effective rate of 38.8% and the actual effective rate in the nine month period in 2014, is primarily due to the reversal of the valuation allowance previously recorded of $2.5 million, as we determined that it was reasonably certain that our foreign tax credits will be realized following the Cable Networks Acquisition on April 1, 2014. In connection with the filing of our 2014 federal and state tax returns in September, we completed our return to provision true-up, which resulted in an increase in our deferred tax asset of $0.2 million and a decrease in our deferred tax liability of $1.8 million. Income tax expense for the three and nine months ended September 30, 2015, was $2.0 million and $5.9 million, respectively. Income tax expense for the three months ended September 30, 2014, was $0.8 million and the income tax benefit for the nine months ended September 30, 2014 was $0.4 million. |
Long-term debt
Long-term debt | 9 Months Ended |
Sep. 30, 2015 | |
Long-term debt | |
Long-term debt | Note 5. Long-term debt Long-term debt at September 30, 2015 and 2014 consists of the following (amounts in thousands) : September 30, 2015 December 31, 2014 Senior Notes due July 2020 $ $ Less: Current portion ) ) $ $ On July 30, 2013 certain of our subsidiaries (the “Borrowers”) entered into a credit agreement providing for a $175.0 million senior secured term loan B facility (the “Term Loan Facility”), which matures on July 30, 2020. On July 31, 2014, certain of our subsidiaries amended the Term Loan Facility (the “Amended Term Loan Facility”), which provides for an aggregate principal amount of $225.0 million and matures on July 30, 2020. Pricing on the Amended Term Loan Facility was set at LIBOR plus 400 basis points (decreased from a margin of 500 basis points) subject to a LIBOR floor of 1.00% (decreased from a LIBOR floor of 1.25%), resulting in an effective interest rate of 5.00% in the current quarter and 0.5% of original issue discount (“OID”). The Amended Term Loan Facility also provides an uncommitted accordion option (the “Incremental Facility”) allowing for additional borrowings under the Term Loan Facility up to an aggregate principal amount equal to (i) $40.0 million plus (ii) an additional amount of up to 4.0x first lien net leverage. The obligations under the Amended Term Loan Facility are guaranteed by HMTV, LLC, our direct wholly-owned subsidiary, and all of our existing and future subsidiaries (subject to certain exceptions in the case of immaterial subsidiaries). Additionally, the Amended Term Loan Facility provides for an uncommitted incremental revolving loan option in an aggregate principal amount of up to $20.0 million, which shall be secured on a pari passu basis by the collateral securing the Amended Term Loan Facility. The Amended Term Loan Facility is secured by a first-priority perfected security interest in substantially all of our assets. The proceeds of the Term Loan Facility, as amended, were used to pay fees and expenses associated with the Transaction and the Cable Networks Acquisition, and for general corporate purposes including potential future acquisitions. The OID of $1.8 million, net of accumulated amortization of $0.6 million at September 30, 2015, was recorded as a reduction to the principal amount of the Term Loan Facility outstanding and will be amortized as a component of interest expense over the term of the Amended Term Loan Facility. We recorded $2.4 million of deferred financing costs associated with the Term Loan Facility, as amended, net of accumulated amortization of $0.8 million at September 30, 2015, which will be amortized utilizing the effective interest rate method over the remaining term of the Amended Term Loan Facility. The Amended Term Loan Facility principal payments are payable on quarterly due dates commencing September 30, 2014, with a final installment on July 30, 2020. In addition, pursuant to the terms of the Amended Term Loan Facility, within 90 days after the end of each fiscal year (commencing with the fiscal year ending December 31, 2015), the Borrowers are required to make a prepayment of the loan principal in an amount equal to 50% of the excess cash flow of the most recently completed fiscal year. Excess cash flow is generally defined as net income plus depreciation and amortization expense, less mandatory prepayments of the term loan, interest charges, income taxes and capital expenditures, and adjusted for the change in working capital. The percentage of the excess cash flow used to determine the amount of the prepayment of the loan declines from 50% to 25%, and again to 0% at lower leverage ratios. The carrying value of the long-term debt approximates fair value at September 30, 2015 and December 31, 2014 and was derived from quoted market prices by independent dealers (Level 2 in the fair value hierarchy under ASC 820, Fair Value Measurements and Disclosures ). The following are the maturities of our long-term debt as of September 30, 2015 ( amounts in thousands ): Year Ending December 31, 2015 $ 2016 2017 2018 2019 and thereafter $ |
Stockholders' equity
Stockholders' equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' equity | |
Stockholders' equity | Note 6. Stockholders’ equity Secondary Offering In May 2015, the Company completed a secondary offering on behalf of certain selling stockholders of 3,195,583 shares of Class A common stock at a price of $12.00 per share, less underwriting discounts and commissions. In connection with the offering, the underwriters exercised their additional share purchase option, where an additional 479,337 shares were offered by the Company at $12.00 per share, less underwriting discounts and commissions (the “Option Shares”). The Company did not receive any of the proceeds related to the sale of the 3,195,583 shares of Class A common stock from the secondary offering, and received net proceeds of approximately $5.4 million from the sale of the Option Shares. Equity incentive plans An aggregate of 4.0 million shares of our Class A common stock were authorized for issuance under the terms of the Hemisphere Media Group, Inc. 2013 Equity Incentive Plan (the “2013 Equity Incentive Plan). At September 30, 2015, 0.8 million shares remained available for issuance of stock options or other stock-based awards under our Equity Incentive Plan (including shares of restricted Class A common stock surrendered to the Company in payment of taxes required to be withheld in respect of vested shares of restricted Class A common stock and available for issuance). The expiration date of the 2013 Equity Incentive Plan, on and after which date no awards may be granted, is April 4, 2023. The Company’s board of directors administers the 2013 Equity Incentive Plan, and has the sole and plenary authority to, among other things: (i) designate participants; (ii) determine the type, size, and terms and conditions of awards to be granted; (iii) determine the method by which an award may be settled, exercised, canceled, forfeited, or suspended. The Company’s time-based restricted stock awards and option awards generally vest in three equal annual installments beginning on the first anniversary of the grant date, subject to the grantee’s continued employment or service with the Company. The Company’s event-based restricted stock awards and option awards generally vest either upon the Company’s Class A common stock attaining a $15.00 closing price per share, as quoted on the NASDAQ Global Market, on at least 10 trading days, subject to the grantee’s continued employment or service with the Company. Other event-based restricted stock awards granted to certain members of our Board vest on the day preceding the Company’s annual shareholder meeting. Stock-based compensation Stock-based compensation expense related to stock options and restricted stock was $1.4 million for each of the three months ended September 30, 2015 and 2014, respectively, and $4.1 million and $4.6 million for the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015, there was $2.6 million of total unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a weighted-average period of 2.0 years. At September 30, 2015, there was $2.3 million of total unrecognized compensation cost related to non-vested restricted stock, which is expected to be recognized over a weighted-average period of 0.9 years. Stock options The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option pricing model for time-based options and the Monte Carlo simulation model for event-based options. The expected term of options granted is derived using the simplified method under ASC 718-10-S99-1/SEC Topic 14.D for “plain vanilla” options and the Monte Carlo simulation for event-based options. Expected volatility is based on the historical volatility of the Company’s competitors given its lack of trading history. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has estimated forfeitures of 1.5%, as the awards are to management for which the Company expects lower turnover, and has assumed no dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future. Black-Scholes Option Valuation Assumptions Nine Months Ended September 30, 2015 2014 Risk-free interest rate 1.76% - 2.12% 1.76%-1.92% Dividend yield — — Volatility 26.0% - 29.5% 28.4%-30.9% Weighted-average expected term (years) 6.0-6.3 The following table summarizes stock option activity for the nine months ended September 30, 2015 (shares and intrinsic value in thousands) : Number of shares Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value Outstanding at December 31, 2014 $ $ Granted — — Exercised ) — — Forfeited ) — — Expired — — — — Outstanding at September 30, 2015 $ $ Vested at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ The weighted average grant date fair value of options granted for the nine months ended September 30, 2015 was $4.09. At September 30, 2015, 0.3 million options granted are unvested, event-based options. Restricted stock Certain employees and directors have been awarded restricted stock under the 2013 Equity Incentive Plan. The time-based restricted stock grants vest primarily over a period of three years. The fair value and expected term of event-based restricted stock grants is estimated at the grant date using the Monte Carlo simulation model. The following table summarizes restricted share activity for the nine months ended September 30, 2015 ( shares in thousands ): Number of shares Weighted-average grant date fair value Outstanding at December 31, 2014 $ Granted Vested ) Forfeited — — Outstanding at September 30, 2015 $ At September 30, 2015, 0.2 million shares of restricted stock issued were unvested, event-based shares. Warrants In connection with our capitalization noted above, we have issued 14.7 million warrants, which qualify as equity instruments. Each warrant entitles the holder to purchase one-half of one share of our Class A common stock at a price of $6.00 per half share. At September 30, 2015, 14.7 million warrants were issued and outstanding, which are exercisable into 7.3 million shares of our Class A common stock. Warrants can be exercised only through the date of expiration and are only exercisable for a whole number of shares of common stock (i.e. only an even number of warrants may be exercised at any given time by a registered holder). As a result, a holder must exercise a least two warrants, at an effective exercise price of $12.00 per share. At the option of the Company, 10.0 million warrants may be called for redemption, provided that the last sale price of our Class A common stock reported has been at least $18.00 per share on each of twenty trading days within the thirty-day period ending on the third business day prior to the date on which notice of redemption is given. The warrants expire on April 4, 2018. During the nine months ended September 30, 2015, no warrants were exercised. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Contingencies | |
Contingencies | Note 7. Contingencies We are involved in various legal actions, generally related to our operations. Management believes, based on advice from legal counsel, that the outcomes of such legal actions will not materially affect our financial condition. |
Commitments
Commitments | 9 Months Ended |
Sep. 30, 2015 | |
Commitments | |
Commitments | Note 8. Commitments We have entered into certain rental property contracts with third parties, which are accounted for as operating leases. Rental expense was $0.2 million and $0.1 million for the three months ended September 30, 2015 and 2014, respectively, and $0.4 million and $0.3 million for the nine months ended September 30, 2015 and 2014, respectively. We have certain commitments including various operating leases. Future minimum payments for these commitments and other commitments, primarily programming, are as follows (amounts in thousands) : Year Ending December 31, Operating Leases Other Commitments Total 2015 $ $ $ 2016 2017 2018 2019 and thereafter Total $ $ $ |
Nature of business (Policies)
Nature of business (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Nature of business | |
Basis of presentation: | Basis of presentation: The accompanying unaudited Condensed Consolidated Financial Statements for Hemisphere and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement have been included. Our financial condition as of, and operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the financial condition or results that may be expected for any future interim period or for the year ending December 31, 2015. These Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2014 Annual Report. On April 1, 2014, we acquired the assets of three Spanish-language cable television networks for $101.9 million in cash. The three acquired cable networks include Pasiones, Centroamerica TV and Television Dominicana. |
Reclassification: | Reclassification: Certain prior year amounts presented in due from related parties accounts have been reclassified to accounts receivable on the accompanying condensed consolidated balance sheet, which resulted in an increase to accounts receivable and the related allowance for doubtful accounts to conform with the fiscal 2015 presentation with no impact to current assets. |
Net earnings per common share: | Net earnings per common share: Basic earnings per share (“EPS”) are computed by dividing income attributable to common stockholders by the number of weighted-average outstanding shares of common stock. Diluted EPS reflects the effect of the assumed exercise of stock options and vesting of restricted shares only in the periods in which such effect would have been dilutive. The following table sets forth the computation of the common shares outstanding used in determining basic and diluted EPS ( Dollar and share amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator for earnings per common share calculation: Net income $ $ $ $ Denominator for earnings per common share calculation: Weighted-average common shares, basic Effect of dilutive securities Stock options, restricted stock and warrants Weighted-average common shares, diluted EPS Basic $ $ $ $ Diluted $ $ $ $ We apply the treasury stock method to measure the dilutive effect of our outstanding stock options and restricted stock awards and include the respective common share equivalents in the denominator of our diluted income per common share calculation. Potentially dilutive securities representing 1.0 million shares of common stock for the three and nine months ended September 30, 2015, were excluded from the computation of diluted income per common share for this period because their effect would have been anti-dilutive. The net income per share amounts are the same for our Class A common stock, par value $0.0001 per share (“Class A common stock”) and Class B common stock, par value $0.0001 per share (“Class B common stock”), because the holders of each class are legally entitled to equal per share distributions whether through dividends or in liquidation. |
Use of estimates: | Use of estimates: In preparing these financial statements, management had to make estimates and assumptions that affected the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the balance sheet dates, and the reported revenues and expenses for the three and nine months ended September 30, 2015 and 2014. Such estimates are based on historical experience and other assumptions that are considered appropriate in the circumstances. However, actual results could differ from those estimates. |
Recent accounting pronouncements: | Recent accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) and the International Accounting Standards Board updated the accounting guidance related to revenue recognition. The updated accounting guidance provides a single, contract-based revenue recognition model to help improve financial reporting by providing clearer guidance on when an entity should recognize revenue, and by reducing the number of standards to which an entity has to refer. In July 2015, the FASB voted to defer the effective date by one year to December 15, 2017 for annual reporting periods beginning after that date. The updated accounting guidance provides companies with alternative methods of adoption. We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements and our method of adoption. FASB has issued Accounting Standards Update (ASU) 2015-15 Interest-Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting . This ASU adds SEC paragraphs pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issue Task Force meeting about the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In April 2015, the FASB issued update, ASU 2015-03 Interest — Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs , which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability. ASU 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within the ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We will adopt the guidance in the first quarter of 2016, with the impact to our consolidated statement of position to be a reduction in assets where deferred costs are currently disclosed, and a reduction to long-term debt where these costs will be recorded after the transition. |
Nature of business (Tables)
Nature of business (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Nature of business | |
Schedule of the computation of the common shares outstanding used in determining basic and diluted EPS | The following table sets forth the computation of the common shares outstanding used in determining basic and diluted EPS ( Dollar and share amounts in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Numerator for earnings per common share calculation: Net income $ $ $ $ Denominator for earnings per common share calculation: Weighted-average common shares, basic Effect of dilutive securities Stock options, restricted stock and warrants Weighted-average common shares, diluted EPS Basic $ $ $ $ Diluted $ $ $ $ |
Goodwill and intangible assets
Goodwill and intangible assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and intangible assets | |
Schedule of goodwill and intangible assets | Goodwill and intangible assets consist of the following at September 30, 2015 and December 31, 2014 ( amounts in thousands ): September 30, December 31, 2015 2014 Broadcast license $ $ Goodwill Other intangibles Total intangible assets $ $ |
Summary of the changes in goodwill and other indefinite-lived intangible assets | A summary of changes in the Company’s goodwill and other indefinite-lived intangible assets, on a net basis, for the nine months ended September 30, 2015 is as follows (amounts in thousands ) : Net Balance at December 31, 2014 Additions Impairment Net Balance at September 30, 2015 Broadcast license $ $ — $ — $ Goodwill — — Brands — — Other intangibles — — Total indefinite-lived intangibles $ $ — $ — $ |
Summary of the changes in other amortizable intangible assets | A summary of the changes in the Company’s other amortizable intangible assets for the nine months ended September 30, 2015 is as follows ( amounts in thousands ) : Net Balance at December 31, 2014 Additions Amortization Net Balance at September 30, 2015 Affiliate relationships $ $ — $ ) $ Advertiser Relationships — ) Non-Compete Agreement — ) Other intangibles ) Total Finite-lived intangibles $ $ $ ) $ |
Schedule of future estimated amortization expense | Future estimated amortization expense is as follows (amounts in thousands): Year Ending December 31, Amount Remainder 2015 $ 2016 2017 2018 2019 2020 2021 and thereafter $ |
Long-term debt (Tables)
Long-term debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Long-term debt | |
Schedule of long-term debt | Long-term debt at September 30, 2015 and 2014 consists of the following (amounts in thousands) : September 30, 2015 December 31, 2014 Senior Notes due July 2020 $ $ Less: Current portion ) ) $ $ |
Schedule of maturities of long-term debt | The following are the maturities of our long-term debt as of September 30, 2015 ( amounts in thousands ): Year Ending December 31, 2015 $ 2016 2017 2018 2019 and thereafter $ |
Stockholders' equity (Tables)
Stockholders' equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' equity | |
Summary of stock option activity | The following table summarizes stock option activity for the nine months ended September 30, 2015 (shares and intrinsic value in thousands) : Number of shares Weighted-average exercise price Weighted-average remaining contractual term Aggregate intrinsic value Outstanding at December 31, 2014 $ $ Granted — — Exercised ) — — Forfeited ) — — Expired — — — — Outstanding at September 30, 2015 $ $ Vested at September 30, 2015 $ $ Exercisable at September 30, 2015 $ $ |
Summary of restricted share activity | The following table summarizes restricted share activity for the nine months ended September 30, 2015 ( shares in thousands ): Number of shares Weighted-average grant date fair value Outstanding at December 31, 2014 $ Granted Vested ) Forfeited — — Outstanding at September 30, 2015 $ |
Time Based Stock Option | Black Scholes Pricing Model | |
Equity incentive plans | |
Schedule of valuation assumptions | Black-Scholes Option Valuation Assumptions Nine Months Ended September 30, 2015 2014 Risk-free interest rate 1.76% - 2.12% 1.76%-1.92% Dividend yield — — Volatility 26.0% - 29.5% 28.4%-30.9% Weighted-average expected term (years) 6.0-6.3 |
Commitments (Tables)
Commitments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments | |
Schedule of future minimum payments for operating leases and other commitments, primarily programming | Future minimum payments for these commitments and other commitments, primarily programming, are as follows (amounts in thousands) : Year Ending December 31, Operating Leases Other Commitments Total 2015 $ $ $ 2016 2017 2018 2019 and thereafter Total $ $ $ |
Nature of business (Details)
Nature of business (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Apr. 01, 2014USD ($)item | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($)$ / sharesshares | Sep. 30, 2015USD ($)segment$ / sharesshares | Sep. 30, 2014USD ($)$ / sharesshares | Dec. 31, 2014$ / shares |
Nature of business | ||||||
Number of operating segments | segment | 1 | |||||
Nature of business | ||||||
Assets acquired in cash | $ | $ 101,891 | |||||
Numerator for earnings per common share calculation: | ||||||
Net income | $ | $ 2,910 | $ 663 | $ 8,805 | $ 6,230 | ||
Denominator for earnings per common share calculation: | ||||||
Weighted-average common shares, basic | shares | 43,103 | 42,383 | 42,748 | 42,301 | ||
Effect of dilutive securities: | ||||||
Stock options, restricted stock and warrants | shares | 1,040 | 204 | 815 | 233 | ||
Weighted-average common shares, diluted | shares | 44,143 | 42,587 | 43,563 | 42,534 | ||
EPS | ||||||
Basic (in dollars per share) | $ 0.07 | $ 0.02 | $ 0.21 | $ 0.15 | ||
Diluted (in dollars per share) | $ 0.07 | $ 0.02 | $ 0.20 | $ 0.15 | ||
Shares excluded from the computation of diluted income (loss) per common share | shares | 1,000 | 1,000 | ||||
Common Class A | ||||||
EPS | ||||||
Par value of common stock (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common Class B | ||||||
EPS | ||||||
Par value of common stock (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Cable Networks Acquisition | ||||||
Nature of business | ||||||
Number of Spanish-language cable television networks whose assets are acquired | item | 3 | |||||
Assets acquired in cash | $ | $ 101,900 |
Related party transactions (Det
Related party transactions (Details) $ in Millions | Apr. 09, 2013 | Nov. 30, 2013item | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) |
MVS Multivision Digital Sde RLde CV and Affiliates | |||||||
Related party transactions | |||||||
Due from related parties, net of allowance for doubtful accounts | $ 1.4 | $ 1.4 | $ 1.3 | ||||
Due to related parties | 0.9 | $ 0.9 | 0.7 | ||||
MVS Multivision Digital Sde RLde CV and Affiliates | Satellite and Support Services Agreement | Cinelatino | |||||||
Related party transactions | |||||||
Number of channel feeds delivered through satellite | item | 2 | ||||||
Total expense | 0.6 | $ 0.5 | $ 1.6 | $ 1.6 | |||
MVS Multivision Digital Sde RLde CV and Affiliates | Master License Agreement | Cinelatino | |||||||
Related party transactions | |||||||
Term of agreement | 10 years | ||||||
Revenue as a percentage of license fees collected from distributors in Latin America and Mexico | 13.50% | ||||||
Revenue recognized from related party | 1.3 | 1.1 | $ 3.7 | 3.1 | |||
MVS Multivision Digital Sde RLde CV and Affiliates | Affiliation Agreement | Cinelatino | |||||||
Related party transactions | |||||||
Revenue recognized from related party | 0.5 | 0.5 | 1.5 | 1.4 | |||
MVS Multivision Digital Sde RLde CV and Affiliates | Affiliation Agreement | Pasiones | |||||||
Related party transactions | |||||||
Revenue recognized from related party | 0 | 0 | |||||
MVS Multivision Digital Sde RLde CV and Affiliates | Movie License Agreement | Cinelatino | |||||||
Related party transactions | |||||||
Total expense | 0 | 0 | |||||
Number of movies licensed | item | 6 | ||||||
Programming rights | 0 | 0 | 0 | ||||
Director | Consulting Agreement with Director | |||||||
Related party transactions | |||||||
Total expense | 0.1 | 0.1 | 0.2 | 0.2 | |||
Term of agreement | 3 years | ||||||
Due to related parties | 0.1 | 0.1 | 0.1 | ||||
Panamax Films, LLC | Programming Agreements | |||||||
Related party transactions | |||||||
Total expense | 0 | 0 | $ 0 | 0 | |||
Number of movies licensed | item | 3 | ||||||
Programming rights | 0.2 | $ 0.2 | 0.2 | ||||
Pantelion Films | Movie License Agreement | Cinelatino | |||||||
Related party transactions | |||||||
Total expense | 0 | 0 | 0 | 0 | |||
Revenue recognized from related party | 0 | 0 | 0 | 0 | |||
Due to related parties | 0.1 | $ 0.1 | 0.1 | ||||
Pantelion Films | Movie License Agreement | Cinelatino | Maximum | |||||||
Related party transactions | |||||||
Percentage of rentals agreed to be paid | 12.50% | ||||||
Lions Gate | Movie License Agreement | Cinelatino | |||||||
Related party transactions | |||||||
Total expense | 0 | $ 0.1 | |||||
Number of movies licensed | item | 14 | ||||||
Programming rights | 0.3 | $ 0.3 | |||||
License fee under agreement with related party | 0.8 | 0.8 | |||||
Inter Media Advisors LLC | Services Agreement [Member] | |||||||
Related party transactions | |||||||
Total expense | 0 | $ 0 | 0 | $ 0 | |||
Due to related parties | $ 0 | $ 0 | $ 0 |
Goodwill and intangible asset24
Goodwill and intangible assets (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Goodwill and intangible assets | ||
Broadcast license | $ 41,356 | $ 41,356 |
Goodwill | 164,887 | 164,887 |
Other intangibles | 81,531 | 91,611 |
Total intangible assets | $ 287,774 | $ 297,854 |
Goodwill and intangible asset25
Goodwill and intangible assets (Details 2) $ in Thousands | Sep. 30, 2015USD ($) |
Changes in the goodwill | |
Net balance at the beginning of the period | $ 164,887 |
Net balance at the end of the period | 164,887 |
Changes in the goodwill and other indefinite lived intangible assets, on a net basis | |
Net balance at the beginning of the period | 222,929 |
Net balance at the end of the period | 222,929 |
Broadcast license | |
Changes in other indefinite-lived intangible assets | |
Net balance at the beginning of the period | 41,356 |
Net balance at the end of the period | 41,356 |
Brands | |
Changes in other indefinite-lived intangible assets | |
Net balance at the beginning of the period | 15,986 |
Net balance at the end of the period | 15,986 |
Other intangibles | |
Changes in other indefinite-lived intangible assets | |
Net balance at the beginning of the period | 700 |
Net balance at the end of the period | $ 700 |
Goodwill and intangible asset26
Goodwill and intangible assets (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | |
Changes in other amortizable intangible assets | |||||
Balance at the beginning of the period | $ 74,925 | ||||
Additions | 53 | ||||
Amortization | $ (3,300) | $ (3,700) | (10,133) | $ (9,200) | |
Net balance at the end of the period | 64,845 | 64,845 | |||
Future estimated amortization expense | |||||
Remainder 2,015 | $ 3,350 | ||||
2,016 | 13,417 | ||||
2,017 | 13,244 | ||||
2,018 | 13,187 | ||||
2,019 | 8,432 | ||||
2,020 | 6,027 | ||||
2021 and thereafter | 7,188 | ||||
Total | 64,845 | $ 74,925 | 64,845 | ||
Weighted Average | |||||
Changes in other amortizable intangible assets | |||||
Remaining amortization period | 5 years 3 months 18 days | ||||
Affiliate Relationships | |||||
Changes in other amortizable intangible assets | |||||
Balance at the beginning of the period | $ 69,064 | ||||
Amortization | (9,224) | ||||
Net balance at the end of the period | 59,840 | 59,840 | |||
Future estimated amortization expense | |||||
Total | 59,840 | 69,064 | 59,840 | ||
Advertiser Relationships | |||||
Changes in other amortizable intangible assets | |||||
Balance at the beginning of the period | 2,896 | ||||
Amortization | (414) | ||||
Net balance at the end of the period | 2,482 | 2,482 | |||
Future estimated amortization expense | |||||
Total | 2,482 | 2,896 | 2,482 | ||
Non-Compete Agreements | |||||
Changes in other amortizable intangible assets | |||||
Balance at the beginning of the period | 2,882 | ||||
Amortization | (412) | ||||
Net balance at the end of the period | 2,470 | 2,470 | |||
Future estimated amortization expense | |||||
Total | 2,470 | 2,882 | 2,470 | ||
Other intangibles | |||||
Changes in other amortizable intangible assets | |||||
Balance at the beginning of the period | 83 | ||||
Additions | 53 | ||||
Amortization | (83) | ||||
Net balance at the end of the period | 53 | 53 | |||
Future estimated amortization expense | |||||
Total | $ 53 | $ 83 | $ 53 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | Apr. 01, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Income taxes | ||||||
Annual income tax rate (as a percent) | 36.60% | 38.80% | ||||
Statutory federal income tax rate (as a percent) | 35.00% | 35.00% | ||||
Income tax (expense) benefit | $ 1,961 | $ 751 | $ 5,912 | $ (399) | ||
Income taxes | ||||||
Adjustment to deferred tax asset for true-up of provision | $ 200 | |||||
Adjustment to deferred tax liability for true-up of provision | $ 1,800 | |||||
Cable Networks Acquisition | Foreign Tax Credits | ||||||
Income taxes | ||||||
Change in valuation allowance for deferred tax asset | $ 2,500 |
Long-term debt (Details)
Long-term debt (Details) $ in Thousands | Jul. 31, 2014USD ($) | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Jul. 30, 2013USD ($)item |
Long-term debt | ||||
Less: current portion | $ (2,250) | $ (2,250) | ||
Long-term debt less current portion | 218,140 | 219,541 | ||
Maturities of long-term debt | ||||
2,015 | 563 | |||
2,016 | 2,250 | |||
2,017 | 2,250 | |||
2,018 | 2,250 | |||
2019 and thereafter | 214,875 | |||
Total maturities | 222,188 | |||
Senior Secured Term Loan B Facility | ||||
Long-term debt | ||||
Long-term Debt | 220,390 | 221,791 | ||
Less: current portion | (2,250) | (2,250) | ||
Long-term debt less current portion | 218,140 | $ 219,541 | ||
Amount of term loan | $ 225,000 | $ 175,000 | ||
Uncommitted accordion option base amount | $ 40,000 | |||
Uncommitted accordion option multiplier of 1st lien net leverage | item | 4 | |||
Interest rate margin (as a percent) | 4.00% | |||
Effective interest rate (as a percent) | 5.00% | |||
OID (as a percent) | 0.50% | |||
OID | $ 1,800 | |||
Deferred financing costs | 2,400 | |||
Accumulated amortization of original issue discount | 600 | |||
Accumulated amortization | $ 800 | |||
Maximum period after each fiscal year for prepayment of debt | 90 days | |||
Prepayment of debt as a percentage of excess cash flow | 50.00% | |||
First prepayment of debt as a percentage of excess cash flow, if lower leverage ratio is maintained | 25.00% | |||
Second prepayment of debt as a percentage of excess cash flow, if lower leverage ratio is maintained | 0.00% | |||
Borrowing capacity | $ 20,000 | |||
Senior Secured Term Loan B Facility | LIBOR | ||||
Long-term debt | ||||
Reference rate basis | LIBOR | |||
Interest rate floor (as a percent) | 1.00% | |||
Term Loan | ||||
Long-term debt | ||||
Interest rate margin (as a percent) | 5.00% | |||
Term Loan | LIBOR | ||||
Long-term debt | ||||
Interest rate floor (as a percent) | 1.25% |
Stockholders' equity (Details)
Stockholders' equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |
May. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Sale of stock | |||
Net proceeds received on sale | $ 5,407 | $ 1 | |
Secondary Offering | Common Class A | |||
Sale of stock | |||
Number of shares sold | 3,195,583 | ||
Share price (in dollars per share) | $ 12 | ||
Over-Allotment Option | Common Class A | |||
Sale of stock | |||
Share price (in dollars per share) | $ 12 | ||
Shares issued on sale | 479,337 | ||
Net proceeds received on sale | $ 5,400 |
Stockholders' equity (Details 2
Stockholders' equity (Details 2) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015USD ($)item$ / sharesshares | Sep. 30, 2015USD ($)item$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item$ / sharesshares | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($)$ / sharesshares | |
Stock-based compensation | ||||||
Stock-based compensation expense (in dollars) | $ | $ 1,400 | $ 1,400 | $ 4,100 | $ 4,600 | ||
Common Class A | ||||||
Equity incentive plans | ||||||
Shares authorized for issuance | 4,000 | 4,000 | 4,000 | |||
Employee and Directors Stock Options | ||||||
Stock-based compensation | ||||||
Unrecognized compensation cost related to non-vested stock options (in dollars) | $ | $ 2,600 | $ 2,600 | $ 2,600 | |||
Weighted-average periods over which unrecognized compensation cost recognized | 2 years | |||||
Estimated forfeitures (as a percent) | 1.50% | 1.50% | 1.50% | |||
Number of shares | ||||||
Outstanding at the beginning of the period (in shares) | 1,870 | |||||
Granted (in shares) | 175 | |||||
Outstanding at the end of the period (in shares) | 2,003 | 2,003 | 2,003 | 1,870 | ||
Vested at the end of the period (in shares) | 1,032 | 1,032 | 1,032 | |||
Exercisable at the end of the period (in shares) | 1,032 | 1,032 | 1,032 | |||
Exercised (in shares) | (15) | |||||
Forfeited (in shares) | (27) | |||||
Weighted-average exercise price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 11.23 | |||||
Granted (in dollars per share) | $ / shares | 13.35 | |||||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 11.43 | $ 11.43 | 11.43 | $ 11.23 | ||
Vested at the end of the period (in dollars per share) | $ / shares | 11.32 | 11.32 | 11.32 | |||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 11.32 | $ 11.32 | 11.32 | |||
Exercised (in dollars per share) | $ / shares | 10.60 | |||||
Forfeited (in dollars per share) | $ / shares | $ 10.60 | |||||
Weighted-average remaining contractual term | ||||||
Outstanding at the beginning of the period | 7 years 9 months 18 days | 8 years 4 months 24 days | ||||
Outstanding at the end of the period | 7 years 9 months 18 days | 8 years 4 months 24 days | ||||
Vested at the end of the period | 7 years 6 months | |||||
Exercisable at the end of the period | 7 years 6 months | |||||
Aggregate intrinsic value | ||||||
Outstanding at the beginning of the period (in dollars) | $ | $ 4,721 | |||||
Outstanding at the end of the period (in dollars) | $ | $ 4,810 | $ 4,810 | 4,810 | $ 4,721 | ||
Vested at the end of the period (in dollars) | $ | 2,657 | 2,657 | 2,657 | |||
Exercisable at the end of the period (in dollars) | $ | 2,657 | 2,657 | $ 2,657 | |||
Weighted average grant date fair value of options granted (in dollars per share) | $ / shares | $ 4.09 | |||||
Valuation assumptions | ||||||
Dividend yield (as a percent) | 0.00% | |||||
Restricted Stock | ||||||
Equity incentive plans | ||||||
Granted (in shares) | 99 | |||||
Stock-based compensation | ||||||
Unrecognized compensation cost related to non-vested restricted stock (in dollars) | $ | $ 2,300 | $ 2,300 | $ 2,300 | |||
Weighted-average periods over which unrecognized compensation cost recognized | 10 months 24 days | |||||
Number of shares | ||||||
Outstanding at the beginning of the period (in shares) | 719 | |||||
Granted (in shares) | 99 | |||||
Vested (in shares) | (304) | |||||
Outstanding at the end of the period (in shares) | 514 | 514 | 514 | 719 | ||
Weighted-average grant date fair value | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 9.82 | |||||
Granted (in dollars per share) | $ / shares | 12.42 | |||||
Vested (in dollars per share) | $ / shares | 10.53 | |||||
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 9.89 | $ 9.89 | $ 9.89 | $ 9.82 | ||
Restricted Stock | Common Class A | ||||||
Equity incentive plans | ||||||
Shares available for issuance | 800 | 800 | 800 | |||
Time Based Restricted Stock and Stock Option | ||||||
Equity incentive plans | ||||||
Number of equal annual installments for vesting of awards | item | 3 | 3 | 3 | |||
Time Based Stock Option | Black Scholes Pricing Model | ||||||
Valuation assumptions | ||||||
Risk-free interest rate, minimum (as a percent) | 1.76% | 1.76% | ||||
Risk-free interest rate, maximum (as a percent) | 2.12% | 1.92% | ||||
Volatility, minimum (as a percent) | 26.00% | 28.40% | ||||
Volatility, maximum (as a percent) | 29.50% | 30.90% | ||||
Weighted-average expected term | 6 years 3 months 18 days | |||||
Time Based Stock Option | Minimum | Black Scholes Pricing Model | ||||||
Valuation assumptions | ||||||
Weighted-average expected term | 6 years | |||||
Time Based Stock Option | Maximum | Black Scholes Pricing Model | ||||||
Valuation assumptions | ||||||
Weighted-average expected term | 6 years 3 months 18 days | |||||
Time Based Restricted Stock | ||||||
Valuation assumptions | ||||||
Vesting period | 3 years | |||||
Event Based Restricted Stock and Stock Option | Common Class A | ||||||
Equity incentive plans | ||||||
Closing price per share to be attained for vesting of awards to begin (in dollars per share) | $ / shares | $ 15 | |||||
Event Based Restricted Stock and Stock Option | Common Class A | Minimum | ||||||
Equity incentive plans | ||||||
Number of trading days on which the closing price per share should attain the specified price per share for vesting of awards to begin | item | 10 | 10 | 10 | |||
Event Based Stock Option | ||||||
Aggregate intrinsic value | ||||||
Unvested options | 300 | 300 | 300 | |||
Event Based Restricted Stock | ||||||
Number of shares | ||||||
Outstanding at the end of the period (in shares) | 200 | 200 | 200 |
Stockholders' equity (Details 3
Stockholders' equity (Details 3) - 9 months ended Sep. 30, 2015 | item$ / sharesshares | $ / shares$ / itemshares |
Warrants | ||
Issued (in shares) | 14,700,000 | |
Exercise price of warrants per half share | $ / item | 6 | |
Outstanding (in shares) | 14,700,000 | |
Minimum number of warrants exercisable by holder (in shares) | 2 | |
Exercise price of warrants (in dollars per share) | $ / shares | $ 12 | |
Number of warrants that may be called for redemption (in shares) | 10,000,000 | |
Number of warrants exercised | 0 | |
Common Class A | ||
Warrants | ||
Number of shares entitled to warrant holders (as a percent) | 0.5 | |
Warrants exercisable into number of shares | 7,300,000 | 7,300,000 |
Trigger price of stock in order to provide for redemption of warrants at option of the Company (in dollars per share) | $ / shares | $ 18 | |
Number of trading days through which last sales price of common stock is reported for warrant redemption | item | 20 | |
Period of aggregate number of trading days through which last sales price of common stock is reported for warrant redemption | 30 days | |
Number of shares | ||
Outstanding at the end of the period (in shares) | 7,300,000 |
Commitments (Details)
Commitments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Commitments | ||||
Rental expense | $ 200 | $ 100 | $ 400 | $ 300 |
Future minimum payments for operating leases | ||||
2,015 | 19 | 19 | ||
2,016 | 87 | 87 | ||
2,017 | 78 | 78 | ||
2,018 | 77 | 77 | ||
2019 and thereafter | 29 | 29 | ||
Total | 290 | 290 | ||
Future minimum payments for other commitments | ||||
2,015 | 3,794 | 3,794 | ||
2,016 | 6,239 | 6,239 | ||
2,017 | 2,911 | 2,911 | ||
2,018 | 2,049 | 2,049 | ||
2019 and thereafter | 925 | 925 | ||
Total | 15,918 | 15,918 | ||
Future minimum payments for operating leases and other commitments | ||||
2,015 | 3,813 | 3,813 | ||
2,016 | 6,326 | 6,326 | ||
2,017 | 2,989 | 2,989 | ||
2,018 | 2,126 | 2,126 | ||
2019 and thereafter | 954 | 954 | ||
Total | $ 16,208 | $ 16,208 |