State of Delaware | 26-2735737 | |
(State or other jurisdiction of | (I.R.S. Employer Identification No.) | |
incorporation or organization) |
5251 DTC Parkway, Suite 1000 | ||
Greenwood Village, Colorado | 80111 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of exchange on which registered | |
Series A Common Stock, par value $.01 per share | The Nasdaq Stock Market LLC |
Large accelerated filer x | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
(Do not check if a smaller reporting company). |
Page | ||
PART I | ||
PART II | ||
PART III | ||
PART IV | ||
• | general business conditions and industry trends; |
• | macroeconomic conditions and their effect on the general economy and on the U.S. housing market, in particular single family homes which represent Monitronics’ largest demographic; |
• | uncertainties in the development of our business strategies, including Monitronics' increased direct marketing efforts and market acceptance of new products and services; |
• | the competitive environment in which we operate, in particular increasing competition in the alarm monitoring industry from larger existing competitors and new market entrants, including telecommunications and cable companies; |
• | the development of new services or service innovations by competitors; |
• | Monitronics’ ability to acquire and integrate additional accounts, including competition for dealers with other alarm monitoring companies which could cause an increase in expected subscriber acquisition costs; |
• | integration of acquired assets and businesses; |
• | the regulatory environment in which we operate, including the multiplicity of jurisdictions, state and federal consumer protection laws and licensing requirements to which Monitronics and/or its dealers is subject and the risk of new regulations, such as the increasing adoption of "false alarm" ordinances; |
• | technological changes which could result in the obsolescence of currently utilized technology and the need for significant upgrade expenditures, including the phase-out of 2G networks by cellular carriers; |
• | the trend away from the use of public switched telephone network lines and resultant increase in servicing costs associated with alternative methods of communication; |
• | the operating performance of Monitronics’ network, including the potential for service disruptions at both the main monitoring facility and back-up monitoring facility due to acts of nature or technology deficiencies; |
• | the outcome of any pending, threatened, or future litigation, including potential liability for failure to respond adequately to alarm activations; |
• | the ability to continue to obtain insurance coverage sufficient to hedge our risk exposures, including as a result of acts of third parties and/or alleged regulatory violations; |
• | changes in the nature of strategic relationships with original equipment manufacturers, dealers and other Monitronics business partners; |
• | the reliability and creditworthiness of Monitronics’ independent alarm systems dealers and subscribers; |
• | changes in Monitronics’ expected rate of subscriber attrition; |
• | the availability and terms of capital, including the ability of Monitronics to obtain future financing to grow its business; |
• | Monitronics’ high degree of leverage and the restrictive covenants governing its indebtedness; and |
• | availability of qualified personnel. |
• | background checks on the dealer, including lien searches to the extent applicable; and |
• | a review of the dealer’s licensing status and creditworthiness. |
• | subscriber credit score reviews; |
• | telephone surveys to confirm satisfaction with the installation and security systems; |
• | an individual review of each alarm monitoring contract; |
• | confirmation that the customer is a homeowner; and |
• | confirmation that each security system is monitored by Monitronics’ central monitoring station prior to origination. |
• | opportunities that strategically align with our existing operations; |
• | potential return on investment incorporating appropriate financial leverage, including the target’s existing indebtedness and opportunities to restructure some or all of that indebtedness; |
• | maintain the high quality of its subscriber base by continuing to implement its highly disciplined account acquisition program; |
• | continue to incentivize its dealers to obtain only high-quality accounts through quality incentives built into the cost multiples and by having a performance guarantee on substantially all dealer originated accounts; |
• | provide superior customer service on the telephone and in the field; and |
• | actively identify subscribers who are relocating, the number one reason for account cancellations, and target retention of such subscribers. |
• | Monitronics provides dealers with a full range of services designed to assist them in all aspects of their business, including sales leads, sales training, technical training, comprehensive on-line account access, detailed weekly account summaries, sales support materials and discounts on security system hardware purchased through our strategic alliances with security system manufacturers; |
• | individual dealers retain local name recognition and responsibility for day-to-day sales and installation efforts, thereby supporting the entrepreneurial culture at the dealer level and allowing Monitronics to capitalize on the considerable local market knowledge, goodwill and name recognition of its dealers; and |
• | Monitronics reliably offers competitive rates for account acquisition. |
• | ADT |
• | Central Security Group, Inc. |
• | Guardian Protection Services, Inc. |
• | requiring additional verification of intrusion alarms by calling two different phone numbers prior to dispatch ("Enhanced Call Verification"); and |
• | requiring visual verification of an actual emergency at the premise before the police will respond to an alarm signal. |
• | failure to identify attractive acquisition candidates on acceptable terms; |
• | competition from other bidders; |
• | inability to raise any required financing; and |
• | antitrust or other regulatory restrictions, including any requirements that may be imposed by government agencies as a condition to any required regulatory approval. |
• | make it more difficult for Monitronics to satisfy its obligations with respect to its existing and future indebtedness, and any failure to comply with the obligations under any of the agreements governing its indebtedness could result in an event of default under such agreements; |
• | require Monitronics to dedicate a substantial portion of any cash flow from operations (which also constitutes substantially all of our cash flow) to the payment of interest and principal due under its indebtedness, which will |
• | increase its vulnerability to general adverse economic and industry conditions; |
• | limit its flexibility in planning for, or reacting to, changes in its business and the markets in which it operates; |
• | limit Monitronics’ ability to obtain additional financing required to fund future subscriber account acquisitions, working capital, capital expenditures and other general corporate requirements; |
• | expose Monitronics to market fluctuations in interest rates; |
• | place Monitronics at a competitive disadvantage compared to some of its competitors that are less leveraged; |
• | reduce or delay investments and capital expenditures; and |
• | cause any refinancing of Monitronics’ indebtedness to be at higher interest rates and require Monitronics to comply with more onerous covenants, which could further restrict its business operations. |
• | incur additional indebtedness; |
• | make certain dividends or distributions with respect to any of its capital stock; |
• | make certain loans and investments; |
• | create liens; |
• | enter into transactions with affiliates, including Ascent Capital; |
• | restrict subsidiary distributions; |
• | dissolve, merge or consolidate; |
• | annual limits on the amount of capital expenditures; |
• | transfer, sell or dispose of assets; |
• | enter into or acquire certain types of alarm monitoring contracts; |
• | enter into certain transactions with affiliates; |
• | make certain amendments to its organizational documents; |
• | make changes in the nature of its business; |
• | enter into certain burdensome agreements; |
• | make accounting changes; |
• | use proceeds of loans to purchase or carry margin stock; and |
• | allow the suspension of alarm licenses. |
• | subjecting alarm monitoring companies to fines or penalties for transmitting false alarms; |
• | imposing fines on alarm monitoring services customers for false alarms; |
• | imposing limitations on the number of times the police will respond to alarms at a particular location; and |
• | requiring further verification of an alarm signal, such as visual verification or verification to two different phone numbers, before the police will respond. |
• | a capital structure with multiple series of common stock: a Series B that entitles the holders to ten votes per share, a Series A that entitles the holders to one vote per share, and a Series C that, except in such limited circumstances as may be required by applicable law, entitles the holders to no voting rights; |
• | authorizing the issuance of “blank check” preferred stock, which could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt; |
• | classifying our board of directors with staggered three-year terms, which may lengthen the time required to gain control of our board of directors through a proxy contest or exercise of voting rights; |
• | limiting who may call special meetings of shareholders; |
• | prohibiting shareholder action by written consent (subject to certain exceptions), thereby requiring such action to be taken at a meeting of the shareholders; |
• | establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by shareholders at shareholder meetings; |
• | requiring shareholder approval by holders of at least 80% of our voting power or the approval by at least 75% of our board of directors with respect to certain extraordinary matters, such as a merger or consolidation of our company, a sale of all or substantially all of our assets or an amendment to our certificate of incorporation; |
• | requiring the consent of the holders of at least 75% of the outstanding Series B Common Stock (voting as a separate class) to certain share distributions and other corporate actions in which the voting power of the Series B Common Stock would be diluted, for example by issuing shares having multiple votes per share as a dividend to holders of Series A Common Stock; and |
• | the existence of authorized and unissued stock which would allow our board of directors to issue shares to persons friendly to current management, thereby protecting the continuity of its management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us. |
Series A | |||||
High | Low | ||||
Amounts in U.S. Dollar | |||||
2015 | |||||
First quarter | 53.09 | 38.78 | |||
Second quarter | 44.17 | 37.83 | |||
Third quarter | 43.68 | 25.96 | |||
Fourth quarter | 32.18 | 15.26 | |||
2014 | |||||
First quarter | 85.61 | 66.04 | |||
Second quarter | 79.02 | 59.80 | |||
Third quarter | 67.35 | 59.31 | |||
Fourth quarter | 64.99 | 49.22 |
Series B | |||||
High | Low | ||||
Amounts in U.S. Dollar | |||||
2015 | |||||
First quarter | 57.87 | 48.37 | |||
Second quarter | 44.37 | 41.00 | |||
Third quarter | 44.00 | 30.00 | |||
Fourth quarter | 31.13 | 20.00 | |||
2014 | |||||
First quarter | 80.96 | 67.75 | |||
Second quarter | 73.07 | 64.00 | |||
Third quarter | 65.00 | 63.37 | |||
Fourth quarter | 64.75 | 57.87 |
12/31/2011 | 12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015 | |||||||||||||||
ASCMA Series A | $ | 100.00 | $ | 122.12 | $ | 168.69 | $ | 104.36 | $ | 32.97 | |||||||||
ASCMB Series B | $ | 100.00 | $ | 146.25 | $ | 205.00 | $ | 144.68 | $ | 50.00 | |||||||||
NASDAQ Stock Market Index | $ | 100.00 | $ | 115.91 | $ | 160.32 | $ | 181.80 | $ | 192.21 |
Period | Total number of shares purchased / surrendered (1) | Average price paid per share | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) or Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |||||||||
10/1/2015 - 10/31/15 | 86,700 | $ | 28.05 | — | (1) | ||||||||
11/1/2015 - 11/30/15 | — | — | — | ||||||||||
12/1/2015 - 12/31/15 | 6,136 | (2) | 16.97 | — | |||||||||
Total | 92,836 | $ | 27.32 | — |
(2) | These shares were withheld in payment of withholding taxes by certain of our employees upon vesting of their restricted share awards in December 2015. |
December 31, | |||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||
(amounts in thousands) | |||||||||||||||
Summary Balance Sheet Data: | |||||||||||||||
Current assets | $ | 123,273 | 176,500 | 196,894 | 257,866 | 284,012 | |||||||||
Property and Equipment, net | $ | 32,440 | 36,010 | 56,528 | 56,491 | 74,697 | |||||||||
Total assets | $ | 2,173,305 | 2,163,342 | 2,191,359 | 1,677,780 | 1,619,693 | |||||||||
Current liabilities | $ | 86,211 | 91,143 | 95,568 | 72,150 | 124,807 | |||||||||
Long-term debt, excluding current portion | $ | 1,713,868 | 1,595,649 | 1,544,792 | 1,074,127 | 891,347 | |||||||||
Stockholders’ equity | $ | 324,769 | 439,688 | 514,757 | 508,603 | 550,678 |
Years ended December 31, | |||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||
(amounts in thousands, except per share amounts) | |||||||||||||||
Summary Statement of Operations Data: | |||||||||||||||
Net revenue | $ | 563,356 | 539,449 | 451,033 | 344,953 | 311,898 | |||||||||
Operating income | $ | 49,367 | 78,198 | 71,556 | 49,642 | 22,341 | |||||||||
Net loss from continuing operations | $ | (86,236 | ) | (37,448 | ) | (21,600 | ) | (25,001 | ) | (28,901 | ) | ||||
Net income (loss) (a) | $ | (83,384 | ) | (37,752 | ) | (21,471 | ) | (29,349 | ) | 19,888 | |||||
Basic and diluted net income (loss) per common share (b) | $ | (6.44 | ) | (2.77 | ) | (1.54 | ) | (2.09 | ) | 1.40 |
Twelve Months Ended December 31, | |||||||
2015 | 2014 | ||||||
Beginning balance of accounts | 1,058,962 | 1,046,155 | |||||
Accounts acquired | 188,941 | 156,225 | |||||
Accounts canceled | (147,923 | ) | (135,842 | ) | |||
Canceled accounts guaranteed by dealer and acquisition adjustments (a) | (10,445 | ) | (7,576 | ) | (b) | ||
Ending balance of accounts | 1,089,535 | 1,058,962 | |||||
Monthly weighted average accounts | 1,086,071 | 1,052,492 | |||||
Attrition rate (c) | (13.6 | )% | (12.9 | )% |
(a) | Includes canceled accounts that are contractually guaranteed to be refunded from holdback. |
(b) | Includes an increase of 1,101 subscriber accounts associated with multi-site subscribers that were considered single accounts prior to the completion of the Security Networks integration in April 2014. |
(c) | The recurring monthly revenue ("RMR") attrition rate for the twelve months ended December 31, 2015 and 2014 was 13.7% and 12.6%, respectively. The RMR of canceled accounts follows the same definition as subscriber unit attrition noted above. RMR attrition is defined as the RMR of canceled accounts in a given period, adjusted for the impact of price increases or decreases in that period, divided by the weighted average of RMR for that period. RMR attrition is a commonly used performance indicator in our industry. |
Year Ended December 31, | ||||||||||
2015 | 2014 | 2013 | ||||||||
Net revenue (a) | $ | 563,356 | 539,449 | 451,033 | ||||||
Cost of services | 110,246 | 93,600 | 74,136 | |||||||
Selling, general, and administrative, including stock-based compensation | 121,418 | 102,109 | 92,002 | |||||||
Amortization of subscriber accounts, dealer network and other intangible assets | 258,668 | 253,403 | 208,760 | |||||||
Gain on disposal of operating assets, net | (1,156 | ) | (71 | ) | (5,473 | ) | ||||
Interest expense | (123,743 | ) | (117,464 | ) | (95,836 | ) | ||||
Income tax expense from continuing operations | (6,505 | ) | (3,420 | ) | (3,270 | ) | ||||
Net loss from continuing operations | (86,236 | ) | (37,448 | ) | (21,600 | ) | ||||
Net loss | (83,384 | ) | (37,752 | ) | (21,471 | ) | ||||
Adjusted EBITDA (b) | ||||||||||
Monitronics business Adjusted EBITDA | $ | 354,807 | 362,227 | 305,250 | ||||||
Corporate Adjusted EBITDA | (7,055 | ) | (7,422 | ) | (776 | ) | ||||
Total Adjusted EBITDA | $ | 347,752 | 354,805 | 304,474 | ||||||
Adjusted EBITDA as a percentage of Revenue | ||||||||||
Monitronics business | 63.0 | % | 67.1 | % | 67.7 | % | ||||
Corporate | (1.3 | )% | (1.4 | )% | (0.2 | )% |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Adjusted EBITDA | $ | 347,752 | 354,805 | 304,474 | |||||
Amortization of subscriber accounts, dealer network and other intangible assets | (258,668 | ) | (253,403 | ) | (208,760 | ) | |||
Depreciation | (10,444 | ) | (10,145 | ) | (8,941 | ) | |||
Stock-based compensation | (7,343 | ) | (7,164 | ) | (8,174 | ) | |||
Restructuring charges | — | (952 | ) | (1,111 | ) | ||||
Radio Conversion Program costs | (14,369 | ) | (1,113 | ) | — | ||||
One-time severance expense (a) | (112 | ) | — | — | |||||
LiveWatch acquisition related costs | (946 | ) | — | — | |||||
LiveWatch acquisition contingent bonus charges | (3,930 | ) | — | — | |||||
Monitronics Headquarters relocation costs | (720 | ) | — | — | |||||
Security Networks Acquisition costs | — | — | (2,470 | ) | |||||
Security Networks Integration costs | — | (2,182 | ) | (1,264 | ) | ||||
Other-than-temporary impairment losses on marketable securities | (6,389 | ) | — | — | |||||
Refinancing expense, net of gain on extinguishment of debt | (3,723 | ) | — | — | |||||
Interest income | 2,904 | 3,590 | 3,752 | ||||||
Interest expense | (123,743 | ) | (117,464 | ) | (95,836 | ) | |||
Income tax expense from continuing operations | (6,505 | ) | (3,420 | ) | (3,270 | ) | |||
Net loss from continuing operations | $ | (86,236 | ) | (37,448 | ) | (21,600 | ) |
Payments Due by Period | |||||||||||||||
Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | Total | |||||||||||
Operating leases | $ | 5,414 | 5,905 | 5,870 | 30,905 | 48,094 | |||||||||
Long-term debt (a) | 5,500 | 548,034 | 692,775 | 518,375 | 1,764,684 | ||||||||||
Other (b) | 16,496 | 220 | 522 | 5,767 | 23,005 | ||||||||||
Total contractual obligations | $ | 27,410 | 554,159 | 699,167 | 555,047 | 1,835,783 |
(b) | Primarily represents Monitronics holdback liability whereby it withholds payment of a designated percentage of acquisition cost when it acquires subscriber accounts from dealers. The holdback is used as a reserve to cover any terminated subscriber accounts that are not replaced by the dealer during the guarantee period. At the end of the guarantee period, the dealer is responsible for any deficit or is paid the balance of the holdback. |
As of December 31, 2015 | |||||||||||||
Year of Maturity | Fixed Rate Derivative Instruments, net (a) | Variable Rate Debt | Fixed Rate Debt | Total | |||||||||
Amounts in thousands | |||||||||||||
2016 | — | 5,500 | — | 5,500 | |||||||||
2017 | — | 138,750 | — | 138,750 | |||||||||
2018 | 8,610 | 409,284 | — | 417,894 | |||||||||
2019 | — | 5,500 | — | 5,500 | |||||||||
2020 | — | 5,500 | 681,775 | 687,275 | |||||||||
2021 | — | 5,500 | — | 5,500 | |||||||||
Thereafter | 4,860 | 512,875 | — | 517,735 | |||||||||
Total | $ | 13,470 | 1,082,909 | 681,775 | 1,778,154 |
Notional | Effective Date | Maturity Date | Fixed Rate Paid | Variable Rate Received | ||||||
$ | 529,375,000 | March 28, 2013 | March 23, 2018 | 1.884% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | |||||
140,287,500 | March 28, 2013 | March 23, 2018 | 1.384% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | ||||||
109,673,367 | September 30, 2013 | March 23, 2018 | 1.959% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
109,673,367 | September 30, 2013 | March 23, 2018 | 1.850% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
191,475,002 | March 23, 2018 | April 9, 2022 | 2.924% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
250,000,000 | March 23, 2018 | April 9, 2022 | 2.810% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
50,000,000 | March 23, 2018 | April 9, 2022 | 2.504% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor |
(a) | On March 25, 2013, Monitronics negotiated amendments to the terms of these interest rate swap agreements, which were entered into in March 2012 (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, Monitronics simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. |
/s/ KPMG LLP | |
Dallas, Texas | |
February 29, 2016 |
/s/ KPMG LLP | |
Dallas, Texas | |
February 29, 2016 |
As of December 31, | |||||||
2015 | 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 5,577 | $ | 12,612 | |||
Restricted cash | 55 | 18 | |||||
Marketable securities, at fair value | 87,052 | 122,593 | |||||
Trade receivables, net of allowance for doubtful accounts of $2,762 in 2015 and $2,120 in 2014 | 13,622 | 13,796 | |||||
Prepaid and other current assets | 10,702 | 8,546 | |||||
Assets held for sale | 6,265 | 18,935 | |||||
Total current assets | 123,273 | 176,500 | |||||
Property and equipment, net of accumulated depreciation of $32,158 in 2015 and $30,030 in 2014 | 32,440 | 36,010 | |||||
Subscriber accounts, net of accumulated amortization of $975,795 in 2015 and $736,824 in 2014 | 1,423,538 | 1,373,630 | |||||
Dealer network and other intangible assets, net of accumulated amortization of $73,578 in 2015 and $54,077 in 2014 | 26,654 | 44,855 | |||||
Goodwill | 563,549 | 527,502 | |||||
Other assets, net | 3,851 | 4,845 | |||||
Total assets | $ | 2,173,305 | $ | 2,163,342 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 8,660 | $ | 6,781 | |||
Accrued payroll and related liabilities | 4,385 | 4,077 | |||||
Other accrued liabilities | 31,573 | 30,727 | |||||
Deferred revenue | 16,207 | 14,945 | |||||
Holdback liability | 16,386 | 19,046 | |||||
Current portion of long-term debt | 5,500 | 9,166 | |||||
Liabilities of discontinued operations | 3,500 | 6,401 | |||||
Total current liabilities | 86,211 | 91,143 | |||||
Non-current liabilities: | |||||||
Long-term debt | 1,713,868 | 1,595,649 | |||||
Long-term holdback liability | 3,786 | 5,156 | |||||
Derivative financial instruments | 13,470 | 5,780 | |||||
Deferred income tax liability, net | 13,646 | 9,529 | |||||
Other liabilities | 17,555 | 16,397 | |||||
Total liabilities | 1,848,536 | 1,723,654 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued | — | — | |||||
Series A common stock, $0.01 par value. Authorized 45,000,000 shares; issued and outstanding 12,301,248 and 13,162,095 shares at December 31, 2015 and December 31, 2014, respectively | 123 | 132 | |||||
Series B common stock, $0.01 par value. Authorized 5,000,000 shares; issued and outstanding 382,359 and 384,086 shares at December 31, 2015 and December 31, 2014, respectively | 4 | 4 | |||||
Series C common stock, $0.01 par value. Authorized 45,000,000 shares; no shares issued | — | — | |||||
Additional paid-in capital | 1,417,895 | 1,441,291 | |||||
Accumulated deficit | (1,078,315 | ) | (994,931 | ) | |||
Accumulated other comprehensive income (loss), net | (14,938 | ) | (6,808 | ) | |||
Total stockholders’ equity | 324,769 | 439,688 | |||||
Total liabilities and stockholders’ equity | $ | 2,173,305 | $ | 2,163,342 |
Year Ended December 31, | ||||||||||
2015 | 2014 | 2013 | ||||||||
Net revenue | $ | 563,356 | 539,449 | 451,033 | ||||||
Operating expenses: | ||||||||||
Cost of services | 110,246 | 93,600 | 74,136 | |||||||
Selling, general and administrative, including stock-based compensation | 121,418 | 102,109 | 92,002 | |||||||
Radio conversion costs | 14,369 | 1,113 | — | |||||||
Amortization of subscriber accounts, dealer network and other intangible assets | 258,668 | 253,403 | 208,760 | |||||||
Depreciation | 10,444 | 10,145 | 8,941 | |||||||
Restructuring charges | — | 952 | 1,111 | |||||||
Gain on disposal of operating assets, net | (1,156 | ) | (71 | ) | (5,473 | ) | ||||
513,989 | 461,251 | 379,477 | ||||||||
Operating income | 49,367 | 78,198 | 71,556 | |||||||
Other income (expense), net: | ||||||||||
Interest income | 2,904 | 3,590 | 3,752 | |||||||
Interest expense | (123,743 | ) | (117,464 | ) | (95,836 | ) | ||||
Refinancing expense, net of gain on extinguishment of debt | (3,723 | ) | — | — | ||||||
Other income (expense), net | (4,536 | ) | 1,648 | 2,198 | ||||||
(129,098 | ) | (112,226 | ) | (89,886 | ) | |||||
Loss from continuing operations before income taxes | (79,731 | ) | (34,028 | ) | (18,330 | ) | ||||
Income tax expense from continuing operations | (6,505 | ) | (3,420 | ) | (3,270 | ) | ||||
Net loss from continuing operations | (86,236 | ) | (37,448 | ) | (21,600 | ) | ||||
Discontinued operations: | ||||||||||
Earnings (loss) from discontinued operations | 2,852 | (304 | ) | 169 | ||||||
Income tax expense from discontinued operations | — | — | (40 | ) | ||||||
Earnings (loss) from discontinued operations, net of income tax | 2,852 | (304 | ) | 129 | ||||||
Net loss | (83,384 | ) | (37,752 | ) | (21,471 | ) | ||||
Other comprehensive income (loss): | ||||||||||
Foreign currency translation adjustments | (293 | ) | (382 | ) | 121 | |||||
Unrealized holding gains (losses) on marketable securities, net | 904 | (3,286 | ) | (1,169 | ) | |||||
Unrealized gain (loss) on derivative contracts, net | (8,741 | ) | (4,879 | ) | 12,317 | |||||
Total other comprehensive income (loss), net of tax | (8,130 | ) | (8,547 | ) | 11,269 | |||||
Comprehensive loss | $ | (91,514 | ) | (46,299 | ) | (10,202 | ) | |||
Basic and diluted earnings (loss) per share: | ||||||||||
Continuing operations | $ | (6.66 | ) | (2.75 | ) | (1.55 | ) | |||
Discontinued operations | 0.22 | (0.02 | ) | 0.01 | ||||||
Net loss | $ | (6.44 | ) | (2.77 | ) | (1.54 | ) |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Cash flows from operating activities: | |||||||||
Net loss | $ | (83,384 | ) | (37,752 | ) | (21,471 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||
Loss (earnings) from discontinued operations, net of income tax | (2,852 | ) | 304 | (129 | ) | ||||
Amortization of subscriber accounts, dealer network and other intangible assets | 258,668 | 253,403 | 208,760 | ||||||
Depreciation | 10,444 | 10,145 | 8,941 | ||||||
Stock-based compensation | 7,343 | 7,164 | 8,174 | ||||||
Deferred income tax expense (benefit) | 4,138 | (192 | ) | 203 | |||||
Gain on disposal of operating assets, net | (1,156 | ) | (71 | ) | (5,473 | ) | |||
Refinancing expense, net of gain on extinguishment | 3,725 | — | — | ||||||
Amortization of debt discount and deferred debt costs | 10,357 | 9,023 | 5,851 | ||||||
Other-than-temporary impairment of marketable securities | 6,389 | — | — | ||||||
Other non-cash activity, net | 13,366 | 7,611 | 7,479 | ||||||
Changes in assets and liabilities: | |||||||||
Trade receivables | (9,378 | ) | (8,926 | ) | (8,165 | ) | |||
Prepaid expenses and other assets | (3,857 | ) | 62 | 8,638 | |||||
Subscriber accounts - deferred contract costs | (1,773 | ) | — | — | |||||
Payables and other liabilities | (4,096 | ) | (5,862 | ) | (525 | ) | |||
Operating activities from discontinued operations, net | (49 | ) | (1,039 | ) | (50 | ) | |||
Net cash provided by operating activities | $ | 207,885 | 233,870 | 212,233 | |||||
Cash flows from investing activities: | |||||||||
Capital expenditures | (12,431 | ) | (7,769 | ) | (9,939 | ) | |||
Cost of subscriber accounts acquired | (266,558 | ) | (268,160 | ) | (234,914 | ) | |||
Cash paid for acquisition, net of cash acquired | (56,778 | ) | — | (478,738 | ) | ||||
Purchases of marketable securities | (26,934 | ) | (4,603 | ) | (21,770 | ) | |||
Proceeds from sale of marketable securities | 57,291 | 7,842 | 33,415 | ||||||
Decrease (increase) in restricted cash | (37 | ) | 22 | 2,600 | |||||
Proceeds from the disposal of operating assets | 20,175 | 241 | 12,886 | ||||||
Other investing activities | — | (436 | ) | (100 | ) | ||||
Net cash used in investing activities | $ | (285,272 | ) | (272,863 | ) | (696,560 | ) | ||
Cash flows from financing activities: | |||||||||
Proceeds from long-term debt | 778,000 | 169,000 | 639,075 | ||||||
Payments on long-term debt | (671,183 | ) | (127,166 | ) | (138,048 | ) | |||
Payments of financing costs | (6,477 | ) | — | (11,136 | ) | ||||
Stock option exercises | — | 804 | 171 | ||||||
Purchases and retirement of common stock | (29,988 | ) | (35,734 | ) | (33,436 | ) | |||
Bond hedge and warrant transactions, net | — | — | (6,107 | ) | |||||
Other financing activities | — | — | 87 | ||||||
Net cash provided by financing activities | $ | 70,352 | 6,904 | 450,606 | |||||
Net decrease in cash and cash equivalents | $ | (7,035 | ) | (32,089 | ) | (33,721 | ) | ||
Cash and cash equivalents at beginning of period | 12,612 | 44,701 | 78,422 | ||||||
Cash and cash equivalents at end of period | $ | 5,577 | 12,612 | 44,701 |
Additional | Accumulated Other | Total | |||||||||||||||||||||||||||||
Preferred | Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||
Stock | Series A | Series B | Series C | Capital | Deficit | Income (Loss) | Equity | ||||||||||||||||||||||||
Balance at December 31,2012 | $ | — | 134 | 7 | — | 1,453,700 | (935,708 | ) | (9,530 | ) | 508,603 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (21,471 | ) | — | (21,471 | ) | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 11,269 | 11,269 | |||||||||||||||||||||||
Stock issued as considerations for the Security Networks Acquisition | — | 3 | — | — | 18,720 | — | — | 18,723 | |||||||||||||||||||||||
Stock awards and option exercises | — | — | — | — | 171 | — | — | 171 | |||||||||||||||||||||||
Purchases and retirement of common stock | — | — | (3 | ) | — | (33,433 | ) | — | — | (33,436 | ) | ||||||||||||||||||||
Value of beneficial conversion option on the issuance of 4.00% Convertible Notes, net of the equity component of debt issuance costs | — | — | — | — | 29,857 | — | — | 29,857 | |||||||||||||||||||||||
Bond hedge and warrant transactions, net | — | — | — | — | (6,107 | ) | — | — | (6,107 | ) | |||||||||||||||||||||
Stock-based compensation | — | — | — | — | 8,174 | — | — | 8,174 | |||||||||||||||||||||||
Value of shares withheld for tax liability | — | — | — | — | (1,026 | ) | — | — | (1,026 | ) | |||||||||||||||||||||
Balance at December 31, 2013 | $ | — | 137 | 4 | — | 1,470,056 | (957,179 | ) | 1,739 | 514,757 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (37,752 | ) | — | (37,752 | ) | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (8,547 | ) | (8,547 | ) | |||||||||||||||||||||
Stock awards and option exercises | — | — | — | — | 804 | — | — | 804 | |||||||||||||||||||||||
Purchases and retirement of common stock | — | (5 | ) | — | — | (35,729 | ) | — | — | (35,734 | ) | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | 6,894 | — | — | 6,894 | |||||||||||||||||||||||
Value of shares withheld for tax liability | — | — | — | (734 | ) | — | — | (734 | ) | ||||||||||||||||||||||
Balance at December 31, 2014 | $ | — | 132 | 4 | — | 1,441,291 | (994,931 | ) | (6,808 | ) | 439,688 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (83,384 | ) | — | (83,384 | ) | |||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (8,130 | ) | (8,130 | ) | |||||||||||||||||||||
Stock awards and option exercises | — | 1 | — | — | (1 | ) | — | — | — | ||||||||||||||||||||||
Purchases and retirement of common stock | — | (10 | ) | — | — | (29,978 | ) | — | — | (29,988 | ) | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | 7,509 | — | — | 7,509 | |||||||||||||||||||||||
Purchase of convertible debt | — | — | — | — | (131 | ) | — | — | (131 | ) | |||||||||||||||||||||
Value of shares withheld for tax liability | — | — | — | (795 | ) | — | — | (795 | ) | ||||||||||||||||||||||
Balance at December 31, 2015 | $ | — | $ | 123 | $ | 4 | $ | — | $ | 1,417,895 | $ | (1,078,315 | ) | $ | (14,938 | ) | $ | 324,769 |
Balance Beginning of Year | Charged to Expense | Write-Offs and Other | Balance End of Year | |||||||||
2015 | $ | 2,120 | 9,735 | (9,093 | ) | 2,762 | ||||||
2014 | $ | 1,937 | 8,149 | (7,966 | ) | 2,120 | ||||||
2013 | $ | 1,436 | 7,342 | (6,841 | ) | 1,937 |
Buildings | 20 years | |
Leasehold improvements | 15 years or lease term, if shorter | |
Machinery and equipment | 5 - 7 years | |
Computer systems and software (included in Machinery and Equipment in note 7, Property and Equipment) | 3 - 5 years |
2016 | $ | 220,860 | |
2017 | $ | 186,295 | |
2018 | $ | 157,168 | |
2019 | $ | 132,735 | |
2020 | $ | 117,419 |
Year Ended December 31, | ||||||||
2015 | 2014 | 2013 | ||||||
Weighted average Series A and Series B shares | 12,947,215 | 13,611,264 | 13,926,832 |
Cash | $ | 784 | |
Trade receivables | 273 | ||
Other current assets | 706 | ||
Property and equipment | 362 | ||
Subscriber accounts | 24,900 | ||
Other intangible asset | 1,300 | ||
Goodwill | 36,047 | ||
Current liabilities | (6,810 | ) | |
Fair value of consideration transferred | $ | 57,562 |
As of December 31, 2015 | |||||||||||||||
Cost Basis (b) | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
Equity securities | $ | 4,603 | — | $ | (1,288 | ) | $ | 3,315 | |||||||
Mutual funds (a) | 83,333 | 824 | (420 | ) | 83,737 | ||||||||||
Ending balance | $ | 87,936 | 824 | $ | (1,708 | ) | $ | 87,052 | |||||||
As of December 31, 2014 | |||||||||||||||
Cost Basis | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
Equity securities | $ | 4,603 | — | $ | (398 | ) | $ | 4,205 | |||||||
Mutual funds (a) | 114,890 | 1,416 | (2,746 | ) | 113,560 | ||||||||||
Corporate bonds | $ | 4,888 | — | $ | (60 | ) | $ | 4,828 | |||||||
Ending balance | $ | 124,381 | $ | 1,416 | $ | (3,204 | ) | $ | 122,593 |
(a) | Primarily consists of corporate bond funds. |
(b) | When an other-than-temporary impairment occurs, the Company reduces the cost basis of the marketable security involved. For the year end December 31, 2015, the Company recognized non-cash charges for other-than-temporary impairments on its mutual funds of $6,389,000, which are attributable to a low interest rate environment and widening credit spreads. |
Year end December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Gross realized gains | $ | 1,256 | $ | 146 | $ | 112 | |||||
Gross realized losses | $ | 955 | $ | 524 | $ | 389 | |||||
Total Proceeds | $ | 57,291 | $ | 7,842 | $ | 33,415 |
As of December 31, | ||||||
2015 | 2014 | |||||
Property and equipment, net: | ||||||
Land | $ | 4,700 | 9,007 | |||
Buildings and leasehold improvements | 7,108 | 12,566 | ||||
Machinery and equipment | 52,790 | 44,467 | ||||
64,598 | 66,040 | |||||
Accumulated depreciation | (32,158 | ) | (30,030 | ) | ||
$ | 32,440 | 36,010 |
Balance at December 31, 2013 | $ | 527,502 | |
Period activity | — | ||
Balance at December 31, 2014 | 527,502 | ||
LiveWatch Acquisition | 36,047 | ||
Balance at December 31, 2015 | $ | 563,549 |
December 31, 2015 | December 31, 2014 | ||||||
Interest payable | $ | 15,390 | $ | 15,594 | |||
Income taxes payable | 2,665 | 3,577 | |||||
Legal accrual | 379 | 872 | |||||
Other | 13,139 | 10,684 | |||||
Total Other accrued liabilities | $ | 31,573 | $ | 30,727 |
December 31, 2015 | December 31, 2014 | ||||||
Ascent Capital 4.00% Convertible Senior Notes due July 15, 2020 with an effective rate of 7.8% | $ | 74,507 | $ | 75,774 | |||
Monitronics 9.125% Senior Notes due April 1, 2020 with an effective rate of 9.4% | 576,455 | 574,768 | |||||
Monitronics term loans, matures April 9, 2022, LIBOR plus 3.50%, subject to a LIBOR floor of 1.00% with an effective rate of 5.1% | 542,420 | — | |||||
Monitronics term loans, matures March 23, 2018, LIBOR plus 3.25%, subject to a LIBOR floor of 1.00% with an effective rate of 5.0% | 394,938 | 885,928 | |||||
Monitronics $315 million revolving credit facility, matures December 22, 2017, LIBOR plus 3.75%, subject to a LIBOR floor of 1.00% with an effective rate of 6.7% | 131,048 | 68,345 | |||||
1,719,368 | 1,604,815 | ||||||
Less current portion of long-term debt | (5,500 | ) | (9,166 | ) | |||
Long-term debt | $ | 1,713,868 | $ | 1,595,649 |
As of December 31, 2015 | As of December 31, 2014 | ||||||
Principal | $ | 96,775 | $ | 103,500 | |||
Unamortized discount | (20,857 | ) | (25,969 | ) | |||
Deferred debt costs | $ | (1,411 | ) | $ | (1,757 | ) | |
Carrying value | $ | 74,507 | $ | 75,774 |
2016 | $ | 5,500 | |
2017 | 138,750 | ||
2018 | 409,284 | ||
2019 | 5,500 | ||
2020 | 687,275 | ||
2021 | 5,500 | ||
Thereafter | 512,875 | ||
Total principal payments | $ | 1,764,684 | |
Less: | |||
Unamortized discounts, premium and deferred debt costs, net | 45,316 | ||
Total debt on consolidated balance sheet | $ | 1,719,368 |
Notional | Effective Date | Maturity Date | Fixed Rate Paid | Variable Rate Received | ||||||
$ | 529,375,000 | March 28, 2013 | March 23, 2018 | 1.884% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | |||||
140,287,500 | March 28, 2013 | March 23, 2018 | 1.384% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a) | ||||||
109,673,367 | September 30, 2013 | March 23, 2018 | 1.959% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
109,673,367 | September 30, 2013 | March 23, 2018 | 1.850% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
191,475,002 | March 23, 2018 | April 9, 2022 | 2.924% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
250,000,000 | March 23, 2018 | April 9, 2022 | 2.810% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor | ||||||
50,000,000 | March 23, 2018 | April 9, 2022 | 2.504% | 3 mo. USD-LIBOR-BBA, subject to a 1.00% floor |
(a) | On March 25, 2013, Monitronics negotiated amendments to the terms of these interest rate swap agreements,which were entered into in March 2012 (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, Monitronics simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms. The amounts previously recognized in Accumulated other comprehensive loss relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps. |
Year Ended December 31, | ||||||||||
2015 | 2014 | 2013 | ||||||||
Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) | $ | (16,041 | ) | (12,560 | ) | 7,014 | ||||
Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss (a) | $ | (7,300 | ) | (7,681 | ) | (5,303 | ) | |||
Ineffective portion of amount of gain (loss) recognized into Net loss on interest rate swaps (a) | $ | (119 | ) | (46 | ) | 24 |
• | 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. |
Level 1 | Level 2 | Level 3 | Total | |||||||||
December 31, 2015 | ||||||||||||
Money market funds (a) | $ | 2,242 | — | — | 2,242 | |||||||
Investments in marketable securities (b) | 87,052 | — | — | 87,052 | ||||||||
Derivative financial instruments - liabilities | — | (13,470 | ) | — | (13,470 | ) | ||||||
Total | 89,294 | (13,470 | ) | — | 75,824 | |||||||
December 31, 2014 | ||||||||||||
Money market funds (a) | $ | 8,492 | — | — | 8,492 | |||||||
Investments in marketable securities (b) | 117,765 | 4,828 | — | 122,593 | ||||||||
Derivative financial instruments - assets (c) | — | 1,123 | — | 1,123 | ||||||||
Derivative financial instruments - liabilities | — | (5,780 | ) | — | (5,780 | ) | ||||||
Total | 126,257 | 171 | — | 126,428 |
(a) | Included in cash and cash equivalents on the consolidated balance sheets. |
(b) | Level 1 investments primarily consist of diversified corporate bond funds. The Level 2 security represents one investment in a corporate bond which was sold in in the second quarter of 2015. All investments are classified as available-for-sale securities. |
(c) | Included in Other assets, net on the consolidated balance sheets. |
December 31, 2015 | December 31, 2014 | ||||||
Long term debt, including current portion: | |||||||
Carrying value | $ | 1,719,368 | $ | 1,604,815 | |||
Fair value (a) | 1,563,376 | 1,590,809 |
(a) | The fair value is based on valuations from third party financial institutions and is classified as Level 2 in the hierarchy. |
December 31, 2014 | Additions | Payments | Other | December 31, 2015 | |||||||||||
2013 Restructuring Plan | |||||||||||||||
Severance and retention | $ | 134 | — | (134 | ) | — | — |
December 31, 2013 | Additions | Payments | Other | December 31, 2014 | |||||||||||
2013 Restructuring Plan | |||||||||||||||
Severance and retention | $ | 1,570 | 952 | (2,388 | ) | — | 134 |
December 31, 2012 | Additions | Payments | Other | December 31, 2013 | |||||||||||
2013 Restructuring Plan | |||||||||||||||
Severance and retention | $ | — | 1,111 | (33 | ) | 492 | (a) | 1,570 |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Domestic | $ | (80,021 | ) | (34,383 | ) | (18,625 | ) | ||
Foreign | 290 | 355 | 295 | ||||||
Loss from continuing operations before taxes | $ | (79,731 | ) | (34,028 | ) | (18,330 | ) |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Current: | |||||||||
Federal | $ | — | — | — | |||||
State | (2,305 | ) | (3,527 | ) | (2,953 | ) | |||
Foreign | (62 | ) | (85 | ) | (114 | ) | |||
(2,367 | ) | (3,612 | ) | (3,067 | ) | ||||
Deferred: | |||||||||
Federal | (3,894 | ) | (3,292 | ) | 3,343 | ||||
State | (266 | ) | 3,384 | (3,596 | ) | ||||
Foreign | 22 | 100 | 50 | ||||||
(4,138 | ) | 192 | (203 | ) | |||||
Total income tax expense from continuing operations | $ | (6,505 | ) | (3,420 | ) | (3,270 | ) |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
Computed expected tax benefit | $ | 27,906 | 11,910 | 6,416 | |||||
State and local income taxes, net of federal benefit | (1,671 | ) | (93 | ) | (4,257 | ) | |||
Change in valuation allowance affecting income tax expense | (27,890 | ) | (11,232 | ) | (2,345 | ) | |||
Income (expense) not resulting in tax impact | (803 | ) | (694 | ) | (1,539 | ) | |||
Tax amortization of indefinite-lived assets | (3,890 | ) | (3,292 | ) | (1,481 | ) | |||
Other, net | (157 | ) | (19 | ) | (64 | ) | |||
Income tax expense | $ | (6,505 | ) | (3,420 | ) | (3,270 | ) |
As of December 31, | |||||||
2015 | 2014 | ||||||
Accounts receivable reserves | $ | 1,874 | 1,301 | ||||
Accrued liabilities | 10,205 | 10,085 | |||||
Net operating loss carryforwards | 192,570 | 162,994 | |||||
Derivative financial instruments | 4,997 | 1,682 | |||||
Other deferred tax assets | 11,248 | 11,410 | |||||
Valuation allowance | (90,216 | ) | (63,214 | ) | |||
Total deferred tax assets | 130,678 | 124,258 | |||||
Intangible assets | (133,339 | ) | (123,068 | ) | |||
Convertible notes | (7,694 | ) | (9,388 | ) | |||
Property, plant and equipment | (1,371 | ) | (100 | ) | |||
Other deferred tax liabilities | (1,920 | ) | (1,231 | ) | |||
Total deferred tax liabilities | (144,324 | ) | (133,787 | ) | |||
Net deferred tax liabilities | $ | (13,646 | ) | $ | (9,529 | ) |
Year Ended December 31, | |||||||||
2015 | 2014 | 2013 | |||||||
As of the beginning of the year | $ | 191 | 247 | 247 | |||||
Increases for tax positions of current years | 2 | 4 | — | ||||||
Reductions for tax positions of prior years | — | (60 | ) | — | |||||
As of the end of the year | $ | 193 | 191 | 247 |
Series A Common Stock Options | WAEP | |||||
Outstanding at January 1, 2015 | 1,262,887 | $ | 41.50 | |||
Granted | — | $ | — | |||
Exercised | — | $ | — | |||
Forfeited | (20,268 | ) | $ | 54.11 | ||
Outstanding at December 31, 2015 | 1,242,619 | $ | 41.29 | |||
Exercisable at December 31, 2015 | 922,856 | $ | 33.74 |
Series A Restricted Stock Awards | WAFV | |||||
Outstanding at January 1, 2015 | 229,644 | $ | 59.12 | |||
Granted | 118,313 | $ | 27.41 | |||
Vested | (89,202 | ) | $ | 52.44 | ||
Canceled | (15,962 | ) | $ | 53.19 | ||
Outstanding at December 31, 2015 | 242,793 | $ | 45.15 |
Series A Restricted Stock Units | WAFV | |||||
Outstanding at January 1, 2015 | — | $ | — | |||
Granted | 137,485 | $ | 38.38 | |||
Vested | — | $ | — | |||
Canceled | (22,500 | ) | $ | 26.30 | ||
Outstanding at December 31, 2015 | 114,985 | $ | 40.74 |
Series A Common Stock | Series B Common Stock | ||||
Balance at December 31, 2012 | 13,389,821 | 737,166 | |||
Conversion from Series B to Series A shares | 1,220 | (1,220 | ) | ||
Issuance of restricted stock | 42,804 | — | |||
Restricted stock canceled for forfeitures and tax withholding | (18,035 | ) | — | ||
Stock option exercises | 3,531 | — | |||
Stock issuance as consideration for Security Networks Acquisition | 253,333 | — | |||
Repurchases and retirement of Series B Shares | — | (351,734 | ) | ||
Balance at December 31, 2013 | 13,672,674 | 384,212 | |||
Conversion from Series B to Series A shares | 126 | (126 | ) | ||
Issuance of restricted stock | 36,797 | — | |||
Restricted stock canceled for forfeitures and tax withholding | (12,442 | ) | — | ||
Stock option exercises | 22,249 | — | |||
Repurchases and retirements of Series A shares | (557,309 | ) | |||
Balance at December 31, 2014 | 13,162,095 | 384,086 | |||
Conversion from Series B to Series A shares | 1,727 | (1,727 | ) | ||
Issuance of restricted stock | 118,313 | — | |||
Restricted stock canceled for forfeitures and tax withholding | (40,158 | ) | — | ||
Repurchases and retirements of Series A shares | (940,729 | ) | — | ||
Balance at December 31, 2015 | 12,301,248 | 382,359 |
Foreign Currency Translation Adjustments (a) | Unrealized Holding Gains and Losses, net (b) | Unrealized Gains and Losses on Derivative Instruments, net (c) | Accumulated Other Comprehensive Income (Loss) | |||||||||
Balance at December 31, 2012 | $ | 46 | 2,667 | (12,243 | ) | (9,530 | ) | |||||
Gain (loss) through Accumulated other comprehensive loss | 121 | (1,446 | ) | 7,014 | 5,689 | |||||||
Reclassifications of loss (gains) into net income | — | 277 | 5,303 | 5,580 | ||||||||
Balance at December 31, 2013 | 167 | 1,498 | 74 | 1,739 | ||||||||
Gain (loss) through Accumulated other comprehensive loss | (382 | ) | (3,664 | ) | (12,560 | ) | (16,606 | ) | ||||
Reclassifications of loss (gains) into net income | — | 378 | 7,681 | 8,059 | ||||||||
Balance at December 31, 2014 | (215 | ) | (1,788 | ) | (4,805 | ) | (6,808 | ) | ||||
Gain (loss) through Accumulated other comprehensive loss | (293 | ) | 6,991 | (16,041 | ) | (9,343 | ) | |||||
Reclassifications of loss (gains) into net income | — | (6,087 | ) | 7,300 | 1,213 | |||||||
Balance at December 31, 2015 | $ | (508 | ) | (884 | ) | (13,546 | ) | (14,938 | ) |
Year Ended December 31: | |||
2016 | $ | 5,414 | |
2017 | 2,974 | ||
2018 | 2,931 | ||
2019 | 2,943 | ||
2020 | 2,927 | ||
Thereafter | 30,905 | ||
Sublease income | (1,609 | ) | |
Minimum lease commitments | $ | 46,485 |
Monitronics | LiveWatch | Other | Consolidated | |||||||||||||
Net revenue | $ | 548,622 | $ | 14,734 | $ | — | $ | 563,356 | ||||||||
Depreciation and amortization | $ | 264,870 | $ | 3,864 | $ | 378 | $ | 269,112 | ||||||||
Net loss from continuing operations before income taxes | $ | (47,793 | ) | $ | (18,365 | ) | $ | (13,573 | ) | $ | (79,731 | ) |
Monitronics | LiveWatch | Other | Consolidated | |||||||||||||
Subscriber accounts, net of amortization | $ | 1,400,515 | $ | 23,023 | $ | — | $ | 1,423,538 | ||||||||
Goodwill | $ | 527,502 | $ | 36,047 | $ | — | $ | 563,549 | ||||||||
Total assets | $ | 2,033,180 | $ | 63,267 | $ | 76,858 | $ | 2,173,305 |
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||
Amounts in thousands, except per share amounts | ||||||||||||
2015: | ||||||||||||
Net revenue | $ | 138,416 | 141,543 | 141,846 | 141,551 | |||||||
Operating income | $ | 20,641 | 17,798 | 8,907 | 2,021 | |||||||
Net loss | $ | (9,835 | ) | (18,409 | ) | (24,330 | ) | (30,810 | ) | |||
Basic and diluted net loss per common share | $ | (0.74 | ) | (1.40 | ) | (1.87 | ) | (2.48 | ) | |||
2014: | ||||||||||||
Net revenue | $ | 132,864 | 134,696 | 136,027 | 135,862 | |||||||
Operating income | $ | 19,152 | 18,847 | 19,939 | 20,260 | |||||||
Net income (loss) | $ | (9,732 | ) | (10,278 | ) | (11,125 | ) | (6,617 | ) | |||
Basic and diluted net income (loss) per common share | $ | (0.70 | ) | (0.75 | ) | (0.82 | ) | (0.50 | ) |
Page No. | |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-53280), filed with the Securities and Exchange Commission (the "Commission") on June 13, 2008 (the "Form 10")). | |
3.2 | Certificate of Ownership and Merger, dated July 7, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-34176), filed with the Commission on July 8, 2011) (filed for the purpose of changing the name of the Company). | |
3.3 | Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Form 10). | |
3.4 | Certificate of Elimination, dated January 27, 2014 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-34176), filed with the Commission on January 27, 2014 (the "January 2014 8-K")). | |
4.1 | Specimen Certificate for shares of Series A common stock, par value $.01 per share, of the Company (incorporated by reference to Exhibit 4.1 to the Form 10). | |
4.2 | Specimen Certificate for shares of Series B common stock, par value $.01 per share, of the Company (incorporated by reference to Exhibit 4.2 to the Form 10). |
4.3 | Indenture, dated March 23, 2012, between Monitronics, as issuer, the guarantors party thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (File No. 001-34176), filed with the Commission on May 9, 2012 (the "March 2012 10-Q")). | |
4.4 | Credit Agreement, dated March 23, 2012, among Monitronics, as borrower, Bank of America, N.A., as administrative agent and letter of credit issuer, Citibank, N.A. and Credit Suisse AG, Cayman Islands Branch, as co-syndication agents, U.S. Bank National Association, as document agent and the lenders party thereto (the "Credit Agreement") (incorporated by reference to Exhibit 4.2 to the March 2012 10-Q). | |
4.5 | Form of Amendment No. 1 to the Credit Agreement, dated November 7, 2012, by and among Monitronics, Bank of America, N.A., individually and as administrative agent, and the other financial institutions signatory thereto (incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-34176), filed with the Commission on February 27, 2013 (the "2012 10-K")). | |
4.6 | Form of Amendment No. 2 to the Credit Agreement, dated March 25, 2013, by and among Monitronics, Bank of America, N.A., individually and as administrative agent, and other financial institutions signatory thereto (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013 (File No. 001-34176), filed with the Commission on May 10, 2013). | |
4.7 | Form of Amendment No. 3 to the Credit Agreement and Amendment No. 1 to Guaranty Agreement, dated August 16, 2013, by and among Monitronics International, Inc., Bank of America, N.A., individually and as administrative agent, and the certain lenders party thereto (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (File No. 001-34176), filed with the Commission on November 12, 2013). | |
4.8 | Form of Amendment No. 4 to the Credit Agreement, dated February 17, 2015, by and among Monitronics International, Inc., Bank of America, N.A., individually and as administrative agent, and the certain lenders party thereto (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 (File No. 001-34176), filed with the Commission on May 8, 2015). | |
4.9 | Form of Amendment No. 5 to the Credit Agreement, dated April 9, 2015, by and among Monitronics International, Inc., Bank of America, N.A., individually and as administrative agent, and the certain lenders party thereto (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-34176) filed with the Commission on April 15, 2015). | |
4.10 | Indenture, dated as of July 17, 2013, between the Company, as issuer, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 (File No. 001-34176), filed with the Commission on August 9, 2013 (the "June 2013 10-Q"). | |
4.11 | Supplemental Indenture, dated as of August 16, 2013, by and among Monitronics International, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-4 of Monitronics (File No. 333-191805), filed with the Commission on October 18, 2013 (the "S-4")). | |
4.12 | Second Supplemental Indenture, dated as of August 26, 2013, by and among Monitronics, the Guarantors named therein and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the S-4). | |
10.1 | Tax Sharing Agreement, dated as of September 17, 2008, by and among Discovery Holding Company, Discovery Communications, Inc., the Company, Ascent Media Group, LLC and CSS Studios, LLC (incorporated by reference to Exhibit 10.2 to Amendment No. 8 to the Company’s Registration Statement on Form 10 (File No. 001-34176), filed with the Commission on September 17, 2008 ("Amend. No. 8 to the Form 10")). | |
10.2 | Ascent Capital Group, Inc. 2008 Incentive Plan (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 (File No. 333-156231), filed with the Commission on December 17, 2008). | |
10.3 | Form of Indemnification Agreement between the Company and its Directors and Executive Officers (incorporated by reference to Exhibit 10.7 to Amend. No. 1 to the Form 10). | |
10.4 | Ascent Capital Group, Inc. 2008 Non-Employee Director Incentive Plan (incorporated by reference to Exhibit 10.13 to Amend. No. 8 to the Form 10). | |
10.5 | Amended and Restated Employment Agreement, dated January 25, 2013, between the Company and William R. Fitzgerald (incorporated by reference to Exhibit 10.5 to the 2012 10-K). | |
10.6 | Amended and Restated Employment Agreement, dated May 31, 2011, between the Company and William E. Niles (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 (File No. 001-34176), filed with the Commission on August 8, 2011). | |
10.7 | Employment Agreement, dated September 30, 2011, between the Company and Michael R. Meyers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (File No. 001-34176), filed with the Commission on November 7, 2011 (the "September 2011 10-Q")). | |
10.8 | Employment Agreement, dated September 30, 2011, between the Company and Michael R. Haislip (incorporated by reference to Exhibit 10.2 to the September 2011 10-Q). | |
10.9 | Form of Long-Term Restricted Stock Award Agreement under the Ascent Capital Group, Inc. 2008 Incentive Plan (the “2008 Plan”) for Non-Executive Officers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (File No. 001-34176), filed with the Commission on August 9, 2012 (the "June 2012 10-Q")). | |
10.10 | Form of Long-Term Non-Qualified Stock Option Agreement under the 2008 Plan for Non-Executive Officers (incorporated by reference to Exhibit 10.2 to the June 2012 10-Q). | |
10.11 | Form of Long-Term Restricted Stock Award Agreement under the 2008 Plan for Executive Officers of the Company and Monitronics (incorporated by reference to Exhibit 10.3 to the June 2012 10-Q). | |
10.12 | Form of Long-Term Non-Qualified Stock Option Agreement under the 2008 Plan for Executive Officers of the Company and Monitronics (incorporated by reference to Exhibit 10.4 to the June 2012 10-Q). | |
10.13 | Form of Short-Term Restricted Stock Award Agreement under the 2008 Plan for Executive Officers (incorporated by reference to Exhibit 10.5 to the June 2012 10-Q). | |
10.14 | Long-Term Restricted Stock Award Agreement under the 2008 Plan for William R. Fitzgerald, dated March 15, 2011 (incorporated by reference to Exhibit 10.6 to the June 2012 10-Q). | |
10.15 | Long-Term Restricted Stock Award Agreement under the 2008 Plan for William E. Niles, dated March 15, 2011 (incorporated by reference to Exhibit 10.7 to the June 2012 10-Q). | |
10.16 | Long-Term Restricted Stock Award Agreement under the 2008 Plan for William R. Fitzgerald, dated November 30, 2012 (incorporated by reference to Exhibit 10.16 to the 2012 10-K). | |
10.17 | Long-Term Non-Qualified Stock Option Agreement under the 2008 Plan for William R. Fitzgerald, dated November 30, 2012 (incorporated by reference to Exhibit 10.17 to the 2012 10-K). | |
10.18 | Ascent Capital Group, Inc. 2015 Omnibus Incentive Plan (the "Omnibus Incentive Plan") (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No. 333-203043) filed with the Commission on March 26, 2015). | |
10.19 | Form of Performance-Based Restricted Stock Unit Award Agreement under the Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 (File No. 001-34176), filed with the Commission on May 8, 2015). | |
10.20 | Amendment to Employment Agreement, dated July 20, 2015, by and between the Company and Michael R. Meyers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.21 | Amendment to Employment Agreement, dated July 20, 2015, by and between the Company and William E. Niles (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.22 | Amendment to Employment Agreement, dated August 25, 2015, by and between the Company and Michael R. Haislip (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.23 | Employment Agreement, dated August 25, 2015, by and between the Company and Jeffrey R. Gardner (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.24 | Performance-Based Restricted Stock Unit Award Agreement under the Omnibus Incentive Plan, effective as of June 22, 2015, by and between the Company and William E. Niles (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.25 | Performance-Based Restricted Stock Unit Award Agreement under the Omnibus Incentive Plan, effective as of March 24, 2015, by and between the Company and Michael R. Meyers (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.26 | Confirmation, dated July 11, 2013, of Base Issuer Warrant Transaction between Bank of America, N.A. and Ascent (incorporated by reference to Exhibit 10.1 to the June 2013 10-Q).** | |
10.27 | Confirmation, dated July 11, 2013, of Base Convertible Bond Hedge Transaction between Bank of America, N.A. and Ascent (incorporated by reference to Exhibit 10.2 to the June 2013 10-Q).** | |
10.28 | Confirmation, dated July 11, 2013, of Base Issuer Warrant Transaction between Credit Suisse Capital LLC and Ascent (incorporated by reference to Exhibit 10.3 to the June 2013 10-Q).** | |
10.29 | Confirmation, dated July 11, 2013, of Base Convertible Bond Hedge Transaction between Credit Suisse Capital LLC and Ascent (incorporated by reference to Exhibit 10.4 to the June 2013 10-Q).** | |
21 | List of Subsidiaries of Ascent Capital Group, Inc.* | |
23 | Consent of KPMG LLP, independent registered public accounting firm.* | |
24 | Power of Attorney dated February 29, 2016.* | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification.* | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification.* | |
32 | Section 1350 Certification.*** | |
101.INS | XBRL Instance Document.* | |
101.SCH | XBRL Taxonomy Extension Schema Document.* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.* | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document.* | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.* |
** | Pursuant to the Commission’s Orders Granting Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended, or Rule 24(b)-2 under the Securities Exchange Act of 1934, as amended, certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text. |
*** | Furnished herewith. |
ASCENT CAPITAL GROUP, INC. | ||
February 29, 2016 | By | /s/ William R. Fitzgerald |
William R. Fitzgerald | ||
Chief Executive Officer |
Signature | Title | Date | ||
/s/ William R. Fitzgerald | Chairman of the Board, Director and | February 29, 2016 | ||
William R. Fitzgerald | Chief Executive Officer | |||
/s/ Philip J. Holthouse | Director | February 29, 2016 | ||
Philip J. Holthouse | ||||
/s/ Brian Deevy | Director | February 29, 2016 | ||
Brian Deevy | ||||
/s/ Michael J. Pohl | Director | February 29, 2016 | ||
Michael J. Pohl | ||||
/s/ Charles Y. Tanabe | Director | February 29, 2016 | ||
Charles Y. Tanabe | ||||
/s/ Carl E. Vogel | Director | February 29, 2016 | ||
Carl E. Vogel | ||||
/s/ Michael R. Meyers | Senior Vice President, Chief Financial Officer | February 29, 2016 | ||
Michael R. Meyers | (Principal Accounting Officer) |
3.1 | Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 10 (File No. 000-53280), filed with the Securities and Exchange Commission (the "Commission") on June 13, 2008 (the "Form 10")). | |
3.2 | Certificate of Ownership and Merger, dated July 7, 2011 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-34176), filed with the Commission on July 8, 2011) (filed for the purpose of changing the name of the Company). | |
3.3 | Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Form 10). | |
3.4 | Certificate of Elimination, dated January 27, 2014 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-34176), filed with the Commission on January 27, 2014 (the "January 2014 8-K")). | |
4.1 | Specimen Certificate for shares of Series A common stock, par value $.01 per share, of the Company (incorporated by reference to Exhibit 4.1 to the Form 10). | |
4.2 | Specimen Certificate for shares of Series B common stock, par value $.01 per share, of the Company (incorporated by reference to Exhibit 4.2 to the Form 10). |
4.3 | Indenture, dated March 23, 2012, between Monitronics, as issuer, the guarantors party thereto, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012 (File No. 001-34176), filed with the Commission on May 9, 2012 (the “March 2012 10-Q”)). | |
4.4 | Credit Agreement, dated March 23, 2012, among Monitronics, as borrower, Bank of America, N.A., as administrative agent and letter of credit issuer, Citibank, N.A. and Credit Suisse AG, Cayman Islands Branch, as co-syndication agents, U.S. Bank National Association, as document agent and the lenders party thereto (the "Credit Agreement") (incorporated by reference to Exhibit 4.2 to the March 2012 10-Q). | |
4.5 | Form of Amendment No. 1 to the Credit Agreement, dated November 7, 2012, by and among Monitronics, Bank of America, N.A., individually and as administrative agent, and the other financial institutions signatory thereto (incorporated by reference to Exhibit 4.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 (File No. 001-34176), filed with the Commission on February 27, 2013 (the "2012 10-K")). | |
4.6 | Form of Amendment No. 2 to the Credit Agreement, dated March 25, 2013, by and among Monitronics, Bank of America, N.A., individually and as administrative agent, and other financial institutions signatory thereto (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013 (File No. 001-34176), filed with the Commission on May 10, 2013). | |
4.7 | Form of Amendment No. 3 to the Credit Agreement and Amendment No. 1 to Guaranty Agreement, dated August 16, 2013, by and among Monitronics International, Inc., Bank of America, N.A., individually and as administrative agent, and the certain lenders party thereto (incorporated by reference to Exhibit 4.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (File No. 001-34176), filed with the Commission on November 12, 2013). | |
4.8 | Form of Amendment No. 4 to the Credit Agreement, dated February 17, 2015, by and among Monitronics International, Inc., Bank of America, N.A., individually and as administrative agent, and the certain lenders party thereto (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 (File No. 001-34176), filed with the Commission on May 8, 2015). | |
4.9 | Form of Amendment No. 5 to the Credit Agreement, dated April 9, 2015, by and among Monitronics International, Inc., Bank of America, N.A., individually and as administrative agent, and the certain lenders party thereto (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-34176) filed with the Commission on April 15, 2015). | |
4.10 | Indenture, dated as of July 17, 2013, between the Company, as issuer, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 (File No. 001-34176), filed with the Commission on August 9, 2013 (the "June 2013 10-Q"). | |
4.11 | Supplemental Indenture, dated as of August 16, 2013, by and among Monitronics International, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-4 of Monitronics (File No. 333-191805), filed with the Commission on October 18, 2013 (the “S-4”)). | |
4.12 | Second Supplemental Indenture, dated as of August 26, 2013, by and among Monitronics, the Guarantors named therein and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the S-4). | |
10.1 | Tax Sharing Agreement, dated as of September 17, 2008, by and among Discovery Holding Company, Discovery Communications, Inc., the Company, Ascent Media Group, LLC and CSS Studios, LLC (incorporated by reference to Exhibit 10.2 to Amendment No. 8 to the Company’s Registration Statement on Form 10 (File No. 001-34176), filed with the Commission on September 17, 2008 ("Amend. No. 8 to the Form 10")). | |
10.2 | Ascent Capital Group, Inc. 2008 Incentive Plan (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 (File No. 333-156231), filed with the Commission on December 17, 2008). | |
10.3 | Form of Indemnification Agreement between the Company and its Directors and Executive Officers (incorporated by reference to Exhibit 10.7 to Amend. No. 1 to the Form 10). | |
10.4 | Ascent Capital Group, Inc. 2008 Non-Employee Director Incentive Plan (incorporated by reference to Exhibit 10.13 to Amend. No. 8 to the Form 10). | |
10.5 | Amended and Restated Employment Agreement, dated January 25, 2013, between the Company and William R. Fitzgerald (incorporated by reference to Exhibit 10.5 to the 2012 10-K). | |
10.6 | Amended and Restated Employment Agreement, dated May 31, 2011, between the Company and William E. Niles (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 (File No. 001-34176), filed with the Commission on August 8, 2011). | |
10.7 | Employment Agreement, dated September 30, 2011, between the Company and Michael R. Meyers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (File No. 001-34176), filed with the Commission on November 7, 2011 (the "September 2011 10-Q")). | |
10.8 | Employment Agreement, dated September 30, 2011, between the Company and Michael R. Haislip (incorporated by reference to Exhibit 10.2 to the September 2011 10-Q). | |
10.9 | Form of Long-Term Restricted Stock Award Agreement under the Ascent Capital Group, Inc. 2008 Incentive Plan (the "2008 Plan") for Non-Executive Officers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 (File No. 001-34176), filed with the Commission on August 9, 2012 (the "June 2012 10-Q")). | |
10.10 | Form of Long-Term Non-Qualified Stock Option Agreement under the 2008 Plan for Non-Executive Officers (incorporated by reference to Exhibit 10.2 to the June 2012 10-Q). | |
10.11 | Form of Long-Term Restricted Stock Award Agreement under the 2008 Plan for Executive Officers of the Company and Monitronics (incorporated by reference to Exhibit 10.3 to the June 2012 10-Q). | |
10.12 | Form of Long-Term Non-Qualified Stock Option Agreement under the 2008 Plan for Executive Officers of the Company and Monitronics (incorporated by reference to Exhibit 10.4 to the June 2012 10-Q). | |
10.13 | Form of Short-Term Restricted Stock Award Agreement under the 2008 Plan for Executive Officers (incorporated by reference to Exhibit 10.5 to the June 2012 10-Q). | |
10.14 | Long-Term Restricted Stock Award Agreement under the 2008 Plan for William R. Fitzgerald, dated March 15, 2011 (incorporated by reference to Exhibit 10.6 to the June 2012 10-Q). | |
10.15 | Long-Term Restricted Stock Award Agreement under the 2008 Plan for William E. Niles, dated March 15, 2011 (incorporated by reference to Exhibit 10.7 to the June 2012 10-Q). | |
10.16 | Long-Term Restricted Stock Award Agreement under the 2008 Plan for William R. Fitzgerald, dated November 30, 2012 (incorporated by reference to Exhibit 10.16 to the 2012 10-K). | |
10.17 | Long-Term Non-Qualified Stock Option Agreement under the 2008 Plan for William R. Fitzgerald, dated November 30, 2012 (incorporated by reference to Exhibit 10.17 to the 2012 10-K). | |
10.18 | Ascent Capital Group, Inc. 2015 Omnibus Incentive Plan (the "Omnibus Incentive Plan") (incorporated by reference to Exhibit 99.1 to the Company's Registration Statement on Form S-8 (File No. 333-203043) filed with the Commission on March 26, 2015). | |
10.19 | Form of Performance-Based Restricted Stock Unit Award Agreement under the Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015 (File No. 001-34176), filed with the Commission on May 8, 2015). | |
10.20 | Amendment to Employment Agreement, dated July 20, 2015, by and between the Company and Michael R. Meyers (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.21 | Amendment to Employment Agreement, dated July 20, 2015, by and between the Company and William E. Niles (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.22 | Amendment to Employment Agreement, dated August 25, 2015, by and between the Company and Michael R. Haislip (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.23 | Employment Agreement, dated August 25, 2015, by and between the Company and Jeffrey R. Gardner (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.24 | Performance-Based Restricted Stock Unit Award Agreement under the Omnibus Incentive Plan, effective as of June 22, 2015, by and between the Company and William E. Niles (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.25 | Performance-Based Restricted Stock Unit Award Agreement under the Omnibus Incentive Plan, effective as of March 24, 2015, by and between the Company and Michael R. Meyers (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015 (File No. 001-34176), filed with the Commission on November 9, 2015). | |
10.26 | Confirmation, dated July 11, 2013, of Base Issuer Warrant Transaction between Bank of America, N.A. and Ascent (incorporated by reference to Exhibit 10.1 to the June 2013 10-Q).** | |
10.27 | Confirmation, dated July 11, 2013, of Base Convertible Bond Hedge Transaction between Bank of America, N.A. and Ascent (incorporated by reference to Exhibit 10.2 to the June 2013 10-Q).** | |
10.28 | Confirmation, dated July 11, 2013, of Base Issuer Warrant Transaction between Credit Suisse Capital LLC and Ascent (incorporated by reference to Exhibit 10.3 to the June 2013 10-Q).** | |
10.29 | Confirmation, dated July 11, 2013, of Base Convertible Bond Hedge Transaction between Credit Suisse Capital LLC and Ascent (incorporated by reference to Exhibit 10.4 to the June 2013 10-Q).** | |
21 | List of Subsidiaries of Ascent Capital Group, Inc.* | |
23 | Consent of KPMG LLP, independent registered public accounting firm.* | |
24 | Power of Attorney dated February 29, 2016.* | |
31.1 | Rule 13a-14(a)/15d-14(a) Certification.* | |
31.2 | Rule 13a-14(a)/15d-14(a) Certification.* | |
32 | Section 1350 Certification.*** | |
101.INS | XBRL Instance Document.* | |
101.SCH | XBRL Taxonomy Extension Schema Document.* | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.* | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.* | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document.* | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.* |
** | Pursuant to the Commission’s Orders Granting Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended, or Rule 24(b)-2 under the Securities Exchange Act of 1934, as amended, certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text. |
*** | Furnished herewith. |
Subsidiary | Jurisdiction of Formation | |
Monitronics International, Inc. | Texas | |
Monitronics Canada, Inc. | Delaware | |
MI Servicer LP, LLC | Delaware | |
MIBU Servicer, Inc. | Delaware | |
Monitronics Security LP | Delaware | |
Monitronics Funding LP | Delaware | |
Platinum Security Solutions, Inc. | Delaware | |
Security Networks LLC | Florida | |
SN Puerto Rico, Inc. | Cayman Islands | |
Security Networks Acceptance LLC | Delaware | |
Ascent Media Property Holdings, LLC | Delaware | |
LiveWatch Security, LLC | Delaware | |
/s/ KPMG LLP |
Signature | Title | Date | ||
/s/ William R. Fitzgerald | Chairman of the Board, Director and Chief | February 29, 2016 | ||
William R. Fitzgerald | Executive Officer of Ascent Capital Group, Inc. | |||
/s/ Philip J. Holthouse | Director of Ascent Capital Group, Inc. | February 29, 2016 | ||
Philip J. Holthouse | ||||
/s/ Brian Deevy | Director of Ascent Capital Group, Inc. | February 29, 2016 | ||
Brian Deevy | ||||
/s/ Michael J. Pohl | Director of Ascent Capital Group, Inc. | February 29, 2016 | ||
Michael J. Pohl | ||||
/s/ Charles Y. Tanabe | Director of Ascent Capital Group, Inc. | February 29, 2016 | ||
Charles Y. Tanabe | ||||
/s/ Carl E. Vogel | Director of Ascent Capital Group, Inc. | February 29, 2016 | ||
Carl E. Vogel | ||||
/s/ Michael R. Meyers | Senior Vice President, Chief Financial Officer of Ascent | February 29, 2016 | ||
Michael R. Meyers | Capital Group, Inc. (Principal Accounting Officer) | |||
Date: | February 29, 2016 | |
/s/ William R. Fitzgerald | ||
William R. Fitzgerald | ||
Chairman, President and Chief Executive Officer |
Date: | February 29, 2016 | |
/s/ Michael R. Meyers | ||
Michael R. Meyers | ||
Senior Vice President and Chief Financial Officer |
Dated: | February 29, 2016 | /s/ William R. Fitzgerald | |
William R. Fitzgerald | |||
Chairman, President and Chief Executive Officer | |||
Dated: | February 29, 2016 | /s/ Michael R. Meyers | |
Michael R. Meyers | |||
Senior Vice President and Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
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Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
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Dec. 31, 2015 |
Feb. 12, 2016 |
Jun. 30, 2015 |
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Entity registrant name | Ascent Capital Group, Inc. | ||
Entity central index key | 0001437106 | ||
Current fiscal year end date | --12-31 | ||
Entity filer category | Large Accelerated Filer | ||
Document type | 10-K | ||
Document period end date | Dec. 31, 2015 | ||
Document fiscal year focus | 2015 | ||
Document fiscal period focus | FY | ||
Amendment flag | false | ||
Entity well-known seasoned issuer | No | ||
Entity voluntary filers | No | ||
Entity current reporting status | Yes | ||
Entity public float | $ 527.7 | ||
Series A Common Stock | |||
Entity common stock, shares outstanding | 12,305,952 | ||
Series B Common Stock | |||
Entity common stock, shares outstanding | 382,359 |
Condensed Consolidated Statement of Stockholders' Equity (Parenthetical) |
Dec. 31, 2013 |
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Convertible Senior Notes 4% Due 2020 | |
Stated interest rate on debt | 4.00% |
Basis of Presentation |
12 Months Ended |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation On July 7, 2011, Ascent Media Corporation merged with its direct wholly owned subsidiary, Ascent Capital Group, Inc., for the purpose of changing its name to Ascent Capital Group, Inc. The accompanying Ascent Capital Group, Inc. ("Ascent Capital" or the "Company") consolidated financial statements represent the financial position and results of operations of Ascent Capital and its consolidated subsidiaries. Monitronics International, Inc. ("Monitronics") is the primary, wholly owned, operating subsidiary of the Company. On August 16, 2013, Monitronics acquired all of the equity interests of Security Networks LLC ("Security Networks") and certain affiliated entities (the "Security Networks Acquisition"). On February 23, 2015, Monitronics acquired LiveWatch Security, LLC ("LiveWatch"), a Do-It-Yourself home security firm, offering professionally monitored security services through a direct-to-consumer sales channel (the "LiveWatch Acquisition"). Monitronics provides security alarm monitoring and related services to residential and business subscribers throughout the United States and parts of Canada. Monitronics monitors signals arising from burglaries, fires, medical alerts and other events through security systems installed by independent dealers at subscribers’ premises. The consolidated financial statements contained in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for all periods presented. The Company has reclassified certain prior period amounts to conform to the current period's presentation including the adoption of ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30) and ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. See note 3 Recent Accounting Pronouncements for the changes in the presentation of those items. Additionally, the Company has reclassified certain prior period amounts related to Radio conversion costs to conform to the current period's presentation. These costs were previously reported in Cost of services on the Consolidated Statements of Operations and Other Comprehensive Income (Loss). Radio conversion costs represent all direct costs incurred by Monitronics during the subscribers' alarm monitoring system upgrade in relation to Monitronics' Radio Conversion Program as well as indirect retention costs for impacted subscribers. The Monitronics' Radio Conversion program was implemented in 2014 in response to one of the nation's largest carriers announcing that it does not intend to support its 2G cellular services beyond 2016. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Consolidation Principles The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. All intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers investments with original purchased maturities of three months or less when acquired to be cash equivalents. Restricted Cash Restricted cash is cash that is restricted for a specific purpose and cannot be included in the cash and cash equivalents account. Trade Receivables Trade receivables consist primarily of amounts due from customers for recurring monthly monitoring services over a wide geographical base. Monitronics performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the accounts that are acquired. Monitronics has established an allowance for doubtful accounts for estimated losses resulting from the inability of subscribers to make required payments. Factors such as historical-loss experience, recoveries and economic conditions are considered in determining the sufficiency of the allowance to cover potential losses. The allowance for doubtful accounts as of December 31, 2015 and 2014 was $2,762,000 and $2,120,000, respectively. A summary of activity in the allowance for doubtful accounts is as follows (amounts in thousands):
Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivable. Monitronics performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the subscriber accounts that are acquired. Concentrations of credit risk with respect to trade accounts receivable are generally limited due to the large number of subscribers comprising Monitronics’ customer base. Fair Value of Financial Instruments Fair values of cash equivalents, current accounts receivable and current accounts payable approximate the carrying amounts because of their short-term nature. For information related to the fair value of the Company’s convertible senior notes, see note 10, Long-Term Debt, below. The Company’s other debt instruments are recorded at amortized cost on the consolidated balance sheet. See note 12, Fair Value Measurements, for further fair value information on the Company’s debt instruments. Investments All investments in marketable securities held by the Company are classified as available-for-sale ("AFS") and are carried at fair value generally based on quoted market prices. The Company records unrealized changes in the fair value of AFS securities in Accumulated other comprehensive loss on the consolidated balance sheets. When these investments are sold, the gain or loss realized on the sale is recorded in Other income, net in the consolidated statements of operations. Property and Equipment Property and equipment are carried at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the underlying lease. Estimated useful lives by class of asset are as follows:
Management reviews the realizability of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the value and future benefits of long-term assets, their carrying value is compared to management’s best estimate of undiscounted future cash flows over the remaining economic life. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the estimated fair value of the assets. If necessary, the Company would use both the income approach and market approach to estimate fair value. Subscriber Accounts Subscriber accounts primarily relate to the cost of acquiring monitoring service contracts from independent dealers. The subscriber accounts acquired in the Monitronics, Security Networks and the LiveWatch acquisitions were recorded at fair value under the acquisition method of accounting. All other acquired subscriber accounts are recorded at cost. All direct external costs associated with the creation of subscriber accounts and certain internal direct costs, including bonus incentives for account activations at LiveWatch, are capitalized and and amortized over fifteen years using a declining balance method beginning in the month forllowing the date of acquisition. The costs of subscriber accounts acquired in the Monitronics, Security Networks and LiveWatch acquisitions as well as certain accounts acquired in bulk purchases, are amortized using the 14-year 235% declining balance method. The costs of all other subscriber accounts are amortized using the 15-year 220% declining balance method, beginning in the month following the date of acquisition. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. Amortization of subscriber accounts was $238,800,000, $233,327,000 and $195,010,000 for the fiscal years ended December 31, 2015, 2014 and 2013, respectively. Based on subscriber accounts held at December 31, 2015, estimated amortization of subscriber accounts in the succeeding five fiscal years ending December 31 is as follows (amounts in thousands):
The Company reviews the subscriber accounts at least annually for impairment or a change in amortization method and period whenever events or changes indicate that the carrying amount of the asset may not be recoverable or the life should be shortened. For purposes of recognition and measurement of an impairment loss, the Company views subscriber accounts as a single pool because of the assets’ homogeneous characteristics, and the pool of subscriber accounts is the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. Dealer Network and Other Intangible Assets Dealer network is an intangible asset that relates to the dealer relationships that were acquired as part of the Monitronics Acquisition and the Security Networks Acquisition. Other intangible assets consist of non-compete agreements signed by the seller of Security Networks and certain key Security Networks executives and the LiveWatch trade mark asset. These intangible assets will be amortized on a straight-line basis over their estimated useful lives of 5 years. Amortization of dealer network and other intangible assets was $19,501,000, $19,780,000 and $13,717,000 for the fiscal years ended December 31, 2015, 2014 and 2013, respectively. The Company reviews the dealer network and other intangible assets at least annually for impairment or a change in amortization period whenever events or changes indicate that the carrying amount of the assets may not be recoverable or the lives should be shortened. Goodwill The Company accounts for its goodwill pursuant to the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 at least annually. The Company assesses the recoverability of the carrying value of goodwill during the fourth quarter of its fiscal year or whenever events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. Recoverability is measured at the reporting unit level based on the provisions of FASB ASC Topic 350. To the extent necessary, recoverability of goodwill at a reporting unit level is measured using a discounted cash flow model incorporating discount rates commensurate with the risks involved, which is classified as a Level 3 measurement under FASB ASC Topic 820, Fair Value Measurements and Disclosures. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. If the calculated fair value is less than the current carrying value, impairment of the reporting unit may exist. When the recoverability test indicates potential impairment, the Company will calculate an implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment loss is recorded to write down the carrying value. An impairment loss cannot exceed the carrying value of goodwill assigned to the reporting unit but may indicate certain long-lived and amortizable intangible assets associated with the reporting unit may require additional impairment testing. Deferred Financing Costs Deferred financing costs are recorded as a reduction to long-term debt when the related debt is issued or when revolving credit lines increase the borrowing capacity of the Company. Deferred financing costs are amortized over the term of the related debt using the effective interest method. Holdback Liability The Company typically withholds payment of a designated percentage of the acquisition cost when it acquires subscriber accounts from dealers. The withheld funds are recorded as a liability until the guarantee period provided by the dealer has expired. The holdback is used as a reserve to cover any terminated subscriber accounts that are not replaced by the dealer during the guarantee period. At the end of the guarantee period, the dealer is responsible for any deficit or is paid the balance of the holdback. Derivative Financial Instruments The Company uses derivative financial instruments to manage exposure to movement in interest rates. The use of these financial instruments modifies the exposure of these risks with the intention of reducing the risk or cost. The Company does not use derivatives for speculative or trading purposes. The Company recognizes the fair value of all derivative instruments as either assets or liabilities at fair value on the consolidated balance sheets. Fair value is based on market quotes for similar instruments with the same duration. For derivative instruments that qualify for hedge accounting under the provisions of FASB ASC Topic 815, Derivatives and Hedging, unrealized gains and losses on the derivative instruments are reported in accumulated other comprehensive income (loss), to the extent the hedges are effective, until the underlying transactions are recognized in earnings. Derivative instruments that do not qualify for hedge accounting are marked to market at the end of each accounting period with the change in fair value recorded in earnings. Foreign Currency Translation The functional currencies of the Company’s foreign subsidiaries are their respective local currencies. Assets and liabilities of foreign operations are translated into U.S. dollars using exchange rates on the balance sheet date, and revenue and expenses are translated into U.S. dollars using average exchange rates for the period. The effects of the foreign currency translation adjustments are deferred and are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). Revenue Recognition Revenue is generated from security alarm monitoring and related services provided by Monitronics and its subsidiaries. Revenue related to alarm monitoring services is recognized ratably over the life of the contract. Revenue related to maintenance and other services is recognized as the services are rendered. Deferred revenue includes payments for monitoring services to be provided in future periods. Additionally, equipment sales are recognized as the equipment is shipped to the customer. Income Taxes The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes ("FASB ASC Topic 740"), which prescribes an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than proposed changes in the tax law or rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. FASB ASC Topic 740 specifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In instances where the Company has taken or expects to take a tax position in its tax return and the Company believes it is more likely than not that such tax position will be upheld by the relevant taxing authority, the Company records the benefits of such tax position in its consolidated financial statements. Share-Based Compensation The Company accounts for share-based awards pursuant to FASB ASC Topic 718, Compensation — Stock Compensation ("FASB ASC Topic 718"), which requires companies to measure the cost of employee services received in exchange for an award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the award, and to recognize that cost over the period during which the employee is required to provide service (usually the vesting period of the award). The grant-date fair value of the Ascent Capital stock options granted to the Company’s employees was calculated using the Black-Scholes model. The expected term of the awards was calculated using the simplified method included in FASB ASC Topic 718. The volatility used in the calculation is based on the historical volatility of peer companies and the risk-free rate is based on Treasury Bonds with a term similar to that of the subject options. A dividend rate of zero was utilized for all granted stock options. 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 Series A and Series B common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the sum of the weighted average number of Series A and Series B common shares outstanding and the effect of dilutive securities, including the Company’s outstanding stock options, unvested restricted stock, convertible notes and warrant transactions using the treasury stock method. For the years ended December 31, 2015, 2014 and 2013, diluted EPS is computed the same as basic EPS because the Company recorded a loss from continuing operations, which would make potentially dilutive securities antidilutive. Diluted shares outstanding excluded 892,851 of stock options, unvested restricted shares and performance units for the year ended December 31, 2015 because their inclusion would have been anti-dilutive. Diluted shares outstanding excluded 1,492,531 stock options and unvested restricted shares for the year ended December 31, 2014 because their inclusion would have been anti-dilutive. Diluted shares outstanding excluded 1,524,539 stock options, unvested restricted shares and rights to acquire restricted shares for the year ended December 31, 2013, because their inclusion would have been anti-dilutive.
Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s consolidated financial statements primarily relate to valuation of goodwill, other intangible assets, long-lived assets, deferred tax assets, convertible debt arrangements, derivative financial instruments, and the amount of the allowance for doubtful accounts. These estimates are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts them when facts and circumstances change. As the effects of future events cannot be determined with any certainty, actual results could differ from the estimates upon which the carrying values were based. Supplemental Cash Flow Information For the years ended December 31, 2015, 2014 and 2013, net cash paid for income taxes was $3,245,000, $2,718,000 and $2,464,000, respectively. For the years ended December 31, 2015, 2014 and 2013, net cash paid for interest was $112,282,000, $106,535,000 and $88,252,000, respectively. |
Recent Accounting Pronouncements |
12 Months Ended |
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Dec. 31, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under the update, revenue will be recognized based on a five-step model. The core principle of the model is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In the third quarter of 2015, the FASB deferred the effective date of the standard to annual and interim periods beginning after December 15, 2017. Early adoption will be permitted for annual and interim periods beginning after December 15, 2016. The Company is currently evaluating the impact that adopting this ASU will have on its financial position, results of operations and cash flows. In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30). Under this update, the cost of issuing debt will no longer be recorded as a separate asset, unless it is incurred before the receipt of the funding from the associated debt liability. Instead, debt issuance costs will be presented as a direct deduction from the debt liability, similar to the presentation of debt discounts. The costs will continue to be amortized to interest expense using the effective interest rate method. The ASU requires retrospective application to all prior periods presented in the financial statements and is effective for annual and interim periods beginning after December 15, 2015. The Company elected to early adopt the ASU for the financial statements ending December 31, 2015. The change reclassified $22,675,000 from other assets, net to long-term debt on the consolidated balance sheet for the period ending December 31, 2014. The adoption of the ASU did not impact results of operations or cash flows. In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). Under the update, an acquirer in a business combination is no longer required to account for measurement-period adjustments retrospectively, and, instead, will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The effective date of the standard is for fiscal years beginning after December 15, 2015, and interim periods within those years. The Company does not expect the impact of adopting this ASU to be material to the Company's financial statements and related disclosures. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes. Under the update, deferred taxes would be classified as noncurrent in the statement of financial position instead of being separated into current and non-current amounts. The ASU is effective for financial statements issued after January 1, 2017 with early adoption permitted. Additionally, the Company may apply the standard either prospectively or retrospectively. The Company elected to early adopt the ASU for the financial statements ending December 31, 2015 and to apply the change retrospectively. The change reclassified $6,346,000 from the current asset for Deferred income assets, net to the non-current Deferred income tax liability, net on the consolidated balance sheet for the period ending December 31, 2014. The adoption of the ASU did not impact results of operations or cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments--Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities ("ASU 2016-01"). ASU 2016-01 requires all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will be measured at fair value through earnings. The option for equities classified as available-for-sale to report changes in fair value in other comprehensive income is eliminated. Additionally, ASU 2016-01 requires deferred tax assets related to unrealized losses on securities be analyzed in combination with the Company's other deferred tax assets. The Company will adopt ASU 2016-01 beginning January 1, 2019 using a modified retrospective application to all outstanding instruments, with a cumulative effect adjustment recorded to opening accumulated retained deficit. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, the lease requires a finance lease to recognize both an interest expense and an amortization of the associated expense. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and adoption beginning on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions The Company accounts for business combinations utilizing the acquisition method in accordance with ASC Topic 805, Business Combinations. Under the acquisition method of accounting, the fair value of the consideration transferred has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimates of fair value. LiveWatch Acquisition On February 23, 2015 ("the Closing Date"), Monitronics acquired LiveWatch for a purchase price of approximately $61,550,000 (the "LiveWatch Purchase Price"). The LiveWatch Purchase Price includes approximately $3,988,000 of cash transferred directly to LiveWatch to fund transaction bonuses payable to LiveWatch employees as of the Closing Date. This cash is not included in the fair value of consideration transferred for the LiveWatch Acquisition. The LiveWatch Purchase Price also includes post-closing adjustments of $435,000 which were paid in the third quarter of 2015. The LiveWatch acquisition was funded by borrowings from Monitronics' revolving credit facility, as well as cash contributions from Ascent Capital. In connection with the LiveWatch Acquisition, Monitronics entered into employment agreements with certain key members of the LiveWatch management team which provide for retention bonuses of $5,400,000 (the "LiveWatch Retention Bonuses") to be paid on the second anniversary of the Closing Date, and performance based bonus arrangements payable on the fourth anniversary of the Close Date (the "LiveWatch Performance Bonuses"). The LiveWatch Performance Bonuses are estimated to yield an aggregate payout of approximately $7,600,000. The LiveWatch Retention Bonuses and LiveWatch Performance Bonuses (together, the "LiveWatch Acquisition Contingent Bonuses") are contingent upon the continued employment of the key members of the LiveWatch management team. As such, the LiveWatch Acquisition Contingent Bonuses are expensed ratably over the service period based on the estimated value of the payouts. For the year ended December 31, 2015, the Company recognized $3,930,000 related to the LiveWatch Acquisition Contingent Bonuses, which are included in Selling, general and administrative expense in the consolidated statements of operations and comprehensive income (loss). The table below represents the fair value of the assets and liabilities assumed in the LiveWatch Acquisition (dollars in thousands):
The preliminary estimates of the fair value of assets acquired and liabilities assumed are based on available information as of the date of this report and may be revised as additional information becomes available, which primarily includes the finalization of the valuation of assets and liabilities acquired. Goodwill in the amount of $36,047,000 was recognized in connection with the LiveWatch Acquisition and was calculated as the excess of the consideration transferred over the net assets recognized and represents the value to Monitronics for LiveWatch's recurring revenue and cash flow streams and its diversified business model and marketing channel. All of the goodwill acquired in the LiveWatch Acquisition is estimated to be deductible for tax purposes. The subscriber accounts acquired in the LiveWatch Acquisition are amortized using the 14-year 235% declining balance method. The other intangible asset acquired, which represents LiveWatch's trademark asset, is amortized on a straight-line basis over its estimated useful life of 10 years. The Company incurred $946,000 of legal and professional services expense and other costs related to the LiveWatch Acquisition, which are included in Selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive income (loss). Ascent Capital's results of operations for the period ended December 31, 2015 include the operations of LiveWatch from the Closing Date. The effect of the LiveWatch Acquisition was not material to the Company's consolidated results for the periods presented and, accordingly, proforma financial disclosures have not been presented. Security Networks Acquisition On August 16, 2013 (the "Closing Date"), Monitronics acquired all of the equity interests of Security Networks and certain affiliated entities. The purchase price (the “Security Networks Purchase Price”) of $500,557,000 consisted of $481,834,000 in cash and 253,333 shares of Ascent Capital’s Series A common stock, par value $0.01 per share, with a Closing Date fair value of $18,723,000. The Security Networks Purchase Price includes post-closing adjustments of $1,057,000. The Company recognized goodwill of $177,289,000 |
Investments in Marketable Securities |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Marketable Securities | Investments in Marketable Securities The following table presents a summary of amounts recorded on the Consolidated Balance Sheets (amounts in thousands):
The following table provides the realized investment gains and losses and the total proceeds received from the sale of marketable securities (amounts in thousands):
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Assets Held for Sale |
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Property, Plant and Equipment [Abstract] | |
Assets Held for Sale | Assets Held for Sale In the first and second quarters of 2015, the Company completed sales of assets held for sale with a total net book value of $18,935,000 for gains of approximately $1,151,000. At December 31, 2015, the Company has net assets held for sale of $6,265,000 on the consolidated balance sheet. The Company currently expects to complete the sale of these real estate properties during the next twelve months. |
Property and Equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment consist of the following (amounts in thousands):
Depreciation expense for property and equipment was $10,444,000, $10,145,000 and $8,941,000 for the years ended December 31, 2015, 2014 and 2013, respectively. |
Goodwill |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Goodwill | Goodwill The following table provides the activity and balances of goodwill (amounts in thousands):
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 if an event occurs, or circumstances change, that indicate the fair value of the entity may be below its carrying amount (a "triggering event"). In connection with the Company's annual goodwill impairment assessment, which is performed in the fourth quarter using October 31 balances, the Company did not record an impairment loss to goodwill. As of December 31, 2015, the Company determined that a triggering event had occurred due to a sustained decrease in the Company's market capitalization. In response to the triggering event, the Company performed a goodwill impairment test in accordance with FASB ASC Topic 350 and determined that there was no impairment. |
Other Accrued Liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Accrued Liabilities | Other Accrued Liabilities Other accrued liabilities consisted of the following (amounts in thousands):
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Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (amounts in thousands):
Convertible Notes In July, 2013, Ascent Capital issued $103,500,000 in aggregate principal amount of 4.00% convertible senior notes due July 15, 2020 (the "Convertible Notes") in an offering registered under the Securities Act of 1933, as amended. The Convertible Notes are convertible, under certain circumstances, into cash, shares of Series A Common Stock or any combination thereof at Ascent Capital’s election. The Convertible Notes mature on July 15, 2020 and bear interest at a rate per annum of 4.00%. Interest on the Convertible Notes is payable semi-annually on January 15 and July 15 of each year. In December 2015, the Company purchased $6,725,000 in aggregate principal amount of the Convertible Notes and retired them recognizing a gain on extinguishment of debt of $745,000. 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"). Ascent Capital is entitled to settle any such conversion by delivery of cash, shares of Series A Common Stock or any combination thereof at Ascent’s election. 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 Topic 470 Subtopic 20, Debt with Conversion and Other Options ("FASB ASC 470-20"), 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. The equity component is not remeasured as long as it continues to meet the conditions for equity classification as prescribed in FASB ASC 815 Subtopic 40, Contracts in an Entity’s Own Equity ("FASB ASC 815-40"). Accordingly, upon issuance, the Company estimated fair value of the liability component as $72,764,000, with the remaining excess amount of $30,736,000 allocated to the equity component. The Convertible Notes are presented on the consolidated balance sheet as follows (amounts in thousands):
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 $4,125,000 and $4,140,000 on the Convertible Notes for the years ended December 31, 2015 and 2014, respectively. The Company amortized $3,643,000 and $3,342,000 of the Convertible Notes debt discount into interest expense for the years ended December 31, 2015 and 2014, respectively. The Company retired $1,468,000 of unamortized debt discount and $135,000 of deferred financing costs in connection with the retirement of the Convertible Notes. 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 the 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 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. Ascent Capital purchased the bond hedge call option for $20,318,000 and received $14,211,000 in proceeds from the sale of the warrants, resulting in a net cost for the Bond Hedge Transactions and the Warrant Transactions of $6,107,000. In accordance with FASB ASC 815-40, the fair value of the Bond Hedge and Warrant Transactions was recognized in Additional paid-in capital on the consolidated balance sheet. Senior Notes The senior notes total 585,000,000 in principal, mature on April 1, 2020 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 Monitronics’ existing domestic subsidiaries. Ascent Capital has not guaranteed any of Monitronics’ obligations under the Senior Notes. As of December 31, 2015, the senior notes had deferred financing costs, net of accumulated amortization of $8,760,000. Credit Facility On February 17, 2015, Monitronics entered into an amendment ("Amendment No. 4") with the lenders of its existing senior secured credit agreement dated March 23, 2012, and amended and restated on August 16, 2013, March 25, 2013 and November 7, 2012 (the "Existing Credit Agreement"). Amendment No. 4 provided for, among other things, the increased commitment under the revolving credit facility in a principal amount of $315,000,000. On April 9, 2015, Monitronics entered into Amendment No. 5 ("Amendment No. 5") to its Existing Credit Agreement. Pursuant to Amendment No. 5, Monitronics completed the issuance of an incremental $550,000,000 senior secured Term Loan B offering at a 0.5% discount with a maturity date of April 9, 2022 (the "2022 Term Loans"). Monitronics use the net proceeds to retire approximately $492,000,000 of its existing term loans due March 2018 (the "2018 Term Loans") and repaid $49,900,000 of its revolving credit facility. Amendment No 5 (the Existing Agreement together with Amendment No. 4 and Amendment No. 5, the "Credit Facility") also incorporates certain covenant changes, including the removal of the third quarter 2015 step downs of the senior secured and total leverage ratios, both as defined in the Credit Facility. The 2018 Term Loans bear interest at LIBOR plus 3.25%, subject to a LIBOR floor of 1.00%, and mature on March 23, 2018. Interest on the 2018 Term Loans are due quarterly with the principal due at maturity. The 2022 Term Loans bear interest at LIBOR plus 3.5%, subject to a LIBOR floor of 1.00% Principal payments of approximately $1,375,000 and interest on the term loans are due quarterly on the 2022 Term Loans. The Credit Facility revolver bears interest at LIBOR plus 3.75%, subject to a LIBOR floor of 1.00%, and matures on December 22, 2017. There is an annual commitment fee of 0.5% on unused portions of the Credit Facility revolver. As of December 31, 2015, $181,750,000 is available for borrowing under the revolving credit facility. As of December 31, 2015, the Company has deferred debt costs, net of accumulated amortization, of $9,058,000 related to the Credit Facility. The Credit Facility is secured by a pledge of all of the outstanding stock of Monitronics and all of its existing subsidiaries and is guaranteed by all of Monitronics’ existing domestic subsidiaries. Ascent Capital has not guaranteed any of Monitronics’ obligations 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. In addition, failure to comply with restrictions contained in the Senior Notes could lead to an event of default under the Credit Facility. In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loans under the Credit Facility term loans, Monitronics has entered into interest rate swap agreements with terms similar to the Credit Facility term loans (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting. As a result of these interest rate swaps, Monitronics' current effective weighted average interest rate on the borrowings under the Credit Facility term loans is 5.15%. See note 11, 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 December 31, 2015, the Company was in compliance with all required covenants. Principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands):
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives The Company utilizes interest rate swap agreements to reduce the interest rate risk inherent in Monitronics’ variable rate Credit Facility term loans. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatility. The Company incorporates credit valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. See note 12, Fair Value Measurements, for additional information about the credit valuation adjustments. At December 31, 2015, derivative financial instruments include seven interest rate swaps with a fair value $13,470,000 that constitute a liability of the Company. At December 31, 2014, derivative financial instruments include one interest rate swap with a fair value of $1,123,000, that constitute an asset of the Company and three interest rate swaps with a fair value $5,780,000 that constitute a liability of the Company. The Swaps are included in Other assets, net and Derivative financial instruments on the consolidated balance sheets. As of December 31, 2015 and 2014 no amounts were offset for certain derivatives' fair value that were recognized under a master netting agreement with the same counterparty. The objective of the swap derivative instruments was to reduce the risk associated with Monitronics’ term loan variable interest rates. In effect, the swap derivative instruments convert variable interest rates into fixed interest rates on the Company’s term loan borrowings. All of the Swaps are designated and qualify as cash flow hedging instruments, with the effective portion of the Swaps' change in fair value recorded in accumulated other comprehensive income (loss). Any ineffective portions of the Swaps' change in fair value are recognized in current earnings in interest expense. Changes in the fair value of the Swaps recognized in accumulated other comprehensive income (loss) are reclassified to interest expense when the hedged interest payments on the underlying debt are recognized. Amounts in accumulated other comprehensive income (loss) expected to be recognized in Interest expense in the coming 12 months total approximately $7,092,000. The Swaps’ outstanding notional balance as of December 31, 2015 and terms are noted below:
The impact of the derivatives designated as cash flow hedges on the consolidated financial statements is depicted below (amounts in thousands):
(a) Amounts are included in Interest expense in the consolidated statements of operations and comprehensive income (loss). |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements According to the Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board Accounting Standards Codification, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories:
The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at December 31, 2015 and December 31, 2014 (amounts in thousands):
The Company has determined that the majority of the 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):
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. |
Restructuring Charges |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | Restructuring Charges In connection with the Security Networks Acquisition, management approved a restructuring plan to transition Security Networks’ operations in West Palm Beach and Kissimmee, Florida to Dallas, Texas (the "2013 Restructuring Plan"). The 2013 Restructuring Plan provided certain Security Networks' employees with a severance package that entitled them to receive benefits upon completion of the transition in 2014. Severance costs related to the 2013 Restructuring Plan were recognized ratably over the future service period. No restructuring charges were recognized during 2015. During the years ended December 31, 2014 and December 31, 2013, the Company recognized $952,000 and $1,111,000, respectively of restructuring charges related to employee termination benefits under the 2013 Restructuring Plan. The transition of Security Networks' operations to Dallas was completed in the second quarter of 2014. The following tables provide the activity and balances of the Company’s restructuring plan (amounts in thousands):
(a) Amount was recorded upon the acquisition of Security Networks. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Components of pretax income (loss) from continuing operations by jurisdiction are as follows (amounts in thousands):
The Company’s income tax benefit (expense) from continuing operations is as follows (amounts in thousands):
Total income tax expense from continuing operations differs from the amounts computed by applying the U.S. federal income tax rate of 35% as a result of the following (amounts in thousands):
Components of deferred tax assets and liabilities are as follows (amounts in thousands):
For the year ended December 31, 2015, the valuation allowance increased by $27,002,000. The change in the valuation allowance is attributable to an increase of $27,890,000 related to federal income tax expense, an increase of $901,000 related to changes in the derivative and marketable securities fair values recorded in other comprehensive income and $1,789,000 of other adjustments to deferred taxes. The excess tax benefits associated with the exercise of non-qualified stock options and vesting of restricted stock awards from the Company’s incentive plans, for 2015 and 2014 in the amount of $1,998,000 and $2,115,000, respectively, did not reduce current income taxes payable and, accordingly, are not included in the deferred tax asset relating to net operating loss ("NOL") carryforwards. The 2015 amount is included with the federal and state NOL carryforwards disclosed below. At December 31, 2015, the Company has $529,400,000, $84,519,000 and $97,636,000 in net operating loss carryforwards for federal, California and other state tax purposes, respectively. The federal net operating losses expire at various times from 2024 through 2035. The state net operating loss carryforwards will expire during the years 2016 through 2035. Approximately $129,521,000 of the Company’s net operating losses are subject to IRC Section 382 limitations. The Company has $1,064,000 of federal income tax credits, of which $638,000 will expire in 2018. The Company also has $1,012,000 of state credits that will expire through year 2026. As of December 31, 2015, the 2012 to 2015 tax years remain open to examination by the IRS and the 2011 to 2015 tax years remain open to examination by certain state tax authorities. The Company’s foreign tax returns subsequent to 2011 are open for review by the foreign taxing authorities. A reconciliation of the beginning and ending amount of uncertain tax positions, which is recorded in other long term liabilities, is as follows (amounts in thousands):
When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes interest expense from the first period the interest would begin accruing according to the relevant tax law. Any accrual of interest and penalties related to underpayment of income taxes on uncertain tax positions is included in Income tax expense from continuing operations in the accompanying consolidated statements of operations. As of December 31, 2015 accrued interest and penalties related to uncertain tax positions were approximately $69,000. The Company does not expect a significant change in uncertain tax positions in the next twelve months. |
Stock-based and Long-Term Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based and Long-Term Compensation | Stock-based and Long-Term Compensation Ascent Capital Group, Inc. 2015 Omnibus Incentive Plan The Ascent Capital Group, Inc. 2015 Omnibus Incentive Plan (the "2015 incentive plan") was adopted, effective February 25, 2015, in part, due to the diminishing number of shares of the Company’s common stock with respect to which awards could be granted under the 2008 plans (as defined below). The 2015 incentive plan is designed to provide additional compensation to certain employees, nonemployee directors and independent contractors for services rendered, to encourage their investment in our capital stock, to attract persons of exceptional ability to become officers, nonemployee directors, and employees of the Company and/or its subsidiaries. The number of individuals who receive awards under the 2015 incentive plan will vary from year to year and is not predictable. Awards may be granted as non-qualified stock options, stock appreciation rights, restricted shares, restricted stock units, cash awards, performance awards or any combination of the foregoing (collectively, "awards"). The maximum number of shares of Ascent Capital’s common stock with respect to which awards may be granted under the 2015 incentive plan was determined based on the number of shares that remained available under the 2008 plans, resulting in an aggregate of 599,862 shares (plus any shares of our common stock subject to currently outstanding awards that become available again under the 2008 Plans) available under the 2015 incentive plan, subject to anti-dilution and other adjustment provisions of the incentive plan. The base or exercise price of a stock option or stock appreciation right may not be less than fair market value on the day it is granted. Ascent Capital Group, Inc. 2008 Incentive Plan and Ascent Capital Group, Inc. 2008 Non-Employee Director Incentive Plan The Ascent Capital Group, Inc. 2008 Incentive Plan (the "2008 incentive plan") and the Ascent Capital Group, Inc. 2008 Non-Employee Director Incentive Plan (together with the 2008 incentive plan, the "2008 plans") were adopted by the Board of Directors of the Company on September 15, 2008. The 2008 plans were designed to provide additional compensation to certain employees and independent contractors for services rendered, to attract persons of exceptional ability to become officers and employees, to compensate the non-employee Board of Director members for services rendered and to encourage investment in Ascent Capital's capital stock. Upon the adoption of the 2015 incentive plan by the Board of Directors of the Company, the Board determined to cease making any further grants under the 2008 plans. The 2008 plans permitted awards of non-qualified stock options, stock appreciation rights, restricted shares, stock units, cash awards, performance awards or any combination of the foregoing (collectively, "awards"). The 2008 plans provided that base or exercise price of a stock option or stock appreciation right may not be less than fair market value on the day it was granted. Stock Options The Company makes awards of non-qualified stock options for Ascent Capital Series A common stock to the Company’s executives and certain employees. The exercise price is typically granted as the closing share price for Ascent Capital Series A common stock as of the grant date. The awards generally have a life of five to seven years and vest over two to four years. The grant-date fair value of the Ascent Capital stock options granted to the Company’s employees was calculated using the Black-Scholes model. There were no options granted in 2015, 2014 and 2013. The following table presents the number and weighted average exercise price ("WAEP") of outstanding options to purchase Ascent Capital Series A common stock:
There was no intrinsic value for both outstanding stock option awards and exercisable stock option awards at December 31, 2015. The weighted average remaining contractual life of outstanding and exercisable awards at December 31, 2015 was 3.0 years and 2.7 years, respectively. Restricted Stock Awards and Restricted Stock Units The Company makes awards of restricted stock for its common stock to the Company’s executives and certain employees. Substantially all of these awards have been for its Series A common stock. The fair values for the restricted stock awards are the closing price of Ascent Capital Series A common stock on the applicable dates of grants. Upon the grant of the restricted stock award, the recipient receives a stock certificate that cannot be transfered or sold until the vesting criteria have been met. A restricted stock unit stock is not issued until the vesting criteria have been met. The awards generally vest over two to five years. The following table presents the number and weighted average fair value (“WAFV”) of unvested restricted stock awards:
There were no outstanding Series B restricted stock awards as of December 31, 2015. The following table presents the number and WAFV of unvested restricted stock units:
As of December 31, 2015, the total compensation cost related to unvested equity awards was approximately $14,090,000. Such amount will be recognized in the consolidated statements of operations over a period of approximately 4 years. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Preferred Stock The Company’s preferred stock is issuable, from time to time, with such designations, preferences and relative participating, optional or other rights, qualifications, limitations or restrictions thereof, as shall be stated and expressed in a resolution or resolutions providing for the issue of such preferred stock adopted by Ascent Capital’s Board of Directors. As of December 31, 2015, no shares of preferred stock were issued. Common Stock Holders of Ascent Capital Series A common stock are entitled to one vote for each share held, and holders of Ascent Capital Series B common stock are entitled to 10 votes for each share held. Holders of Ascent Capital Series C common stock are not entitled to any voting powers, except as required by Delaware law. As of December 31, 2015, 12,301,248 shares of Series A common stock were issued and outstanding and 382,359 shares of Series B common stock were issued and outstanding. Each share of the Series B common stock is convertible, at the option of the holder, into one share of Series A common stock. As of December 31, 2015, no shares of Ascent Capital Series C common stock were issued or outstanding. On June 16, 2011, the Company announced that it received authorization to implement a share repurchase program, pursuant to which it could purchase up to $25,000,000 of its shares of Series A Common Stock from time to time. On November 14, 2013, November 10, 2014 and September 4, 2015, the Company’s Board of Directors authorized, at each date, the repurchase of an incremental $25,000,000 of its Series A Common Stock (the "Share Repurchase Authorizations"). During 2015, the Company repurchased 940,729 shares of its Series A common stock at an average purchase price of $31.88 per share for a total of approximately $29,988,000 pursuant to the Share Repurchase Authorizations. During 2014, the Company repurchased 557,309 shares of its Series A common stock at an average purchase price of $64.12 per share for a total of approximately $35,734,000 pursuant to the Share Repurchase Authorizations. There were no stock repurchases pursuant to the Share Repurchase Authorizations during 2013. These repurchased shares were all canceled and returned to the status of authorized and unissued. On October 25, 2013, the Company purchased 351,734 shares of Ascent Capital’s Series B common stock (the “Purchased Shares”) from John C. Malone for aggregate cash consideration of approximately $33,436,000. The Purchased Shares were canceled and returned to the status of authorized and unissued. The following table presents the activity in Ascent Capital’s Series A and Series B common stock for the three year period ended December 31, 2015:
As of December 31, 2015, there were 1,242,619 shares of Ascent Capital Series A common stock reserved for issuance under exercise privileges of outstanding stock options. Accumulated Other Comprehensive Income (Loss)
(a) No income taxes were recorded on foreign currency translation amounts for 2015, 2014 and 2013 because the Company is subject to a full valuation allowance. (b) No income taxes were recorded on the December 31, 2015, 2014 and 2013 unrealized holding gains because the Company is subject to a full valuation allowance. Amounts reclassified into net income are included in Other income, net on the consolidated statement of operations. See note 5, Investments in Marketable Securities, for further information. (c) No income taxes were recorded unrealized loss on derivative instrument amounts for 2015, 2014 and 2013 because the Company is subject to a full valuation allowance. Amounts reclassified into net income are included in Interest expense on the consolidated statement of operations. See note 11, Derivatives, for further information. |
Employee Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Defined Contribution Plan The Company offers a 401(k) defined contribution plan covering its full-time employees. The plan is funded by employee and employer contributions. Total 401(k) plan expense for the years ended December 31, 2015, 2014 and 2013 was $132,000, $80,000 and $125,000, respectively. |
Commitments, Contingencies and Other Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Commitments, Contingencies and Other Liabilities | Commitments, Contingencies and Other Liabilities Contractual Obligations Future minimum lease payments under scheduled operating leases, which are primarily for buildings, equipment and real estate, having initial or remaining noncancelable terms in excess of one year are as follows (in thousands):
Rent expense for noncancelable operating leases for real property and equipment was $4,540,000, $3,664,000 and $2,468,000 for the years ended December 31, 2015, 2014 and 2013, respectively. Various lease arrangements contain options to extend terms and are subject to escalation clauses. Indemnifications On September 17, 2008 ("Spin-Off Date"), Ascent Capital was spun off from DHC as effected by a distribution of Ascent Capital Series A and Series B common stock holders of DHC Series A and Series B common stock (the "Spin-Off"). In connection with the Spin-Off, Ascent Capital and DHC entered into certain agreements in order to govern certain ongoing relationships between Ascent Capital and DHC after the Spin-Off and to provide mechanisms for an orderly transition. These agreements included a tax sharing agreement. Pursuant to the tax sharing agreement with DHC, Ascent Capital is responsible for all taxes attributable to it or any of its subsidiaries, whether accruing before, on or after the Spin-Off Date. The Company is responsible for and indemnifies DHC with respect to (i) certain taxes attributable to DHC or any of its subsidiaries (other than Discovery Communications, LLC) and (ii) all taxes arising as a result of the Spin-Off. The indemnification obligations under the tax sharing agreement are not limited in amount or subject to any cap. Also, pursuant to the reorganization agreement it entered into with DHC in connection with the Spin-Off, the Company assumed certain indemnification obligations designed to make it financially responsible for substantially all non-tax liabilities that may exist relating to the business of the Company's former subsidiary, Ascent Media Group, LLC, whether incurred prior to or after the Spin-Off, as well as certain obligations of DHC. The Company does not expect to incur any material obligations under such indemnification provisions. Legal The Company is 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 is 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. |
Quarterly Financial Information |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (Unaudited) | Quarterly Financial Information (Unaudited)
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Reportable Business Segments |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reportable Business Segments | Reportable Business Segments Description of Segments The Company operates through two reportable business segments according to the nature and economic characteristics of its services as well as the manner in which the information issued internally by the Company's key decision maker, who is the Company's Chief Executive Officer. The Company's business segments are as follows: Monitronics The Monitronics segment is primarily engaged in the business of providing security alarm monitoring services: monitoring signals arising from burglaries, fires, medical alerts and other events through security systems at subscribers' premises, as well as providing customer service and technical support. Monitronics outsources the sales, installation and most of its field service functions to its dealers. By outsourcing the low margin, high fixed-cost elements of its business to a large network of independent service providers, Monitronics is able to allocate capital to growing its revenue-generating account base rather than to local offices or depreciating hard assets. LiveWatch LiveWatch is a do-it-yourself ("DIY") home security provider offering professionally monitored security services through a direct-to-consumer sales channel. LiveWatch offers a differentiated go-to-market strategy through direct response TV, internet and radio advertising. When a customer initiates the process to obtain monitoring services, LiveWatch pre-configures the alarm monitoring system based on customer specifications. LiveWatch then packages and ships the equipment directly to the customer. The customer self-installs the equipment on-site and activates the monitoring service over the phone. Other Activities Other Activities primarily consists of Ascent Capital's corporate costs, including administrative and other activities not associated with the operation of the reportable segments. The business segment management reporting and controlling systems are based on the same accounting policies as those described in note 2, Summary of Significant Account Accounting Policies. As they arise, transactions between segments are recorded on a arm's length basis using relevant market prices. For the year ended December 31, 2015 (amounts in thousands):
As of December 31, 2015 (amounts in thousands):
Prior to the acquisition of LiveWatch in February 2015, Ascent Capital had one operating segment. Therefore, no segment presentation is provided for fiscal year 2014. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Consolidation Principles | Consolidation Principles The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries over which the Company exercises control. All intercompany accounts and transactions have been eliminated in consolidation. |
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers investments with original purchased maturities of three months or less when acquired to be cash equivalents. |
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Restricted Cash | Restricted Cash Restricted cash is cash that is restricted for a specific purpose and cannot be included in the cash and cash equivalents account. |
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Trade Receivables | Trade Receivables Trade receivables consist primarily of amounts due from customers for recurring monthly monitoring services over a wide geographical base. Monitronics performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the accounts that are acquired. Monitronics has established an allowance for doubtful accounts for estimated losses resulting from the inability of subscribers to make required payments. Factors such as historical-loss experience, recoveries and economic conditions are considered in determining the sufficiency of the allowance to cover potential losses. |
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Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of trade accounts receivable. Monitronics performs extensive credit evaluations on the portfolios of subscriber accounts prior to acquisition and requires no collateral on the subscriber accounts that are acquired. Concentrations of credit risk with respect to trade accounts receivable are generally limited due to the large number of subscribers comprising Monitronics’ customer base. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair values of cash equivalents, current accounts receivable and current accounts payable approximate the carrying amounts because of their short-term nature. For information related to the fair value of the Company’s convertible senior notes, see note 10, Long-Term Debt, below. The Company’s other debt instruments are recorded at amortized cost on the consolidated balance sheet. See note 12, Fair Value Measurements, for further fair value information on the Company’s debt instruments. |
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Investments | Investments All investments in marketable securities held by the Company are classified as available-for-sale ("AFS") and are carried at fair value generally based on quoted market prices. The Company records unrealized changes in the fair value of AFS securities in Accumulated other comprehensive loss on the consolidated balance sheets. When these investments are sold, the gain or loss realized on the sale is recorded in Other income, net in the consolidated statements of operations. |
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Property and Equipment | Property and Equipment Property and equipment are carried at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the underlying lease. Estimated useful lives by class of asset are as follows:
Management reviews the realizability of its property and equipment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In evaluating the value and future benefits of long-term assets, their carrying value is compared to management’s best estimate of undiscounted future cash flows over the remaining economic life. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the estimated fair value of the assets. If necessary, the Company would use both the income approach and market approach to estimate fair value. |
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Subscriber Accounts | Subscriber Accounts Subscriber accounts primarily relate to the cost of acquiring monitoring service contracts from independent dealers. The subscriber accounts acquired in the Monitronics, Security Networks and the LiveWatch acquisitions were recorded at fair value under the acquisition method of accounting. All other acquired subscriber accounts are recorded at cost. All direct external costs associated with the creation of subscriber accounts and certain internal direct costs, including bonus incentives for account activations at LiveWatch, are capitalized and and amortized over fifteen years using a declining balance method beginning in the month forllowing the date of acquisition. The costs of subscriber accounts acquired in the Monitronics, Security Networks and LiveWatch acquisitions as well as certain accounts acquired in bulk purchases, are amortized using the 14-year 235% declining balance method. The costs of all other subscriber accounts are amortized using the 15-year 220% declining balance method, beginning in the month following the date of acquisition. The amortization methods were selected to provide an approximate matching of the amortization of the subscriber accounts intangible asset to estimated future subscriber revenues based on the projected lives of individual subscriber contracts. Amortization of subscriber accounts was $238,800,000, $233,327,000 and $195,010,000 for the fiscal years ended December 31, 2015, 2014 and 2013, respectively. Based on subscriber accounts held at December 31, 2015, estimated amortization of subscriber accounts in the succeeding five fiscal years ending December 31 is as follows (amounts in thousands):
The Company reviews the subscriber accounts at least annually for impairment or a change in amortization method and period whenever events or changes indicate that the carrying amount of the asset may not be recoverable or the life should be shortened. For purposes of recognition and measurement of an impairment loss, the Company views subscriber accounts as a single pool because of the assets’ homogeneous characteristics, and the pool of subscriber accounts is the lowest level for which identifiable cash flows are largely independent of the cash flows of the other assets and liabilities. |
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Dealer Networks and Other Intangible Assets | Dealer Network and Other Intangible Assets Dealer network is an intangible asset that relates to the dealer relationships that were acquired as part of the Monitronics Acquisition and the Security Networks Acquisition. Other intangible assets consist of non-compete agreements signed by the seller of Security Networks and certain key Security Networks executives and the LiveWatch trade mark asset. These intangible assets will be amortized on a straight-line basis over their estimated useful lives of 5 years. Amortization of dealer network and other intangible assets was $19,501,000, $19,780,000 and $13,717,000 for the fiscal years ended December 31, 2015, 2014 and 2013, respectively. The Company reviews the dealer network and other intangible assets at least annually for impairment or a change in amortization period whenever events or changes indicate that the carrying amount of the assets may not be recoverable or the lives should be shortened. |
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Goodwill | Goodwill The Company accounts for its goodwill pursuant to the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 at least annually. The Company assesses the recoverability of the carrying value of goodwill during the fourth quarter of its fiscal year or whenever events or changes in circumstances indicate that the carrying amount of the goodwill of a reporting unit may not be fully recoverable. Recoverability is measured at the reporting unit level based on the provisions of FASB ASC Topic 350. To the extent necessary, recoverability of goodwill at a reporting unit level is measured using a discounted cash flow model incorporating discount rates commensurate with the risks involved, which is classified as a Level 3 measurement under FASB ASC Topic 820, Fair Value Measurements and Disclosures. The key assumptions used in the discounted cash flow valuation model include discount rates, growth rates, cash flow projections and terminal value rates. Discount rates, growth rates and cash flow projections are the most sensitive and susceptible to change as they require significant management judgment. If the calculated fair value is less than the current carrying value, impairment of the reporting unit may exist. When the recoverability test indicates potential impairment, the Company will calculate an implied fair value of goodwill for the reporting unit. The implied fair value of goodwill is determined in a manner similar to how goodwill is calculated in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment loss is recorded to write down the carrying value. An impairment loss cannot exceed the carrying value of goodwill assigned to the reporting unit but may indicate certain long-lived and amortizable intangible assets associated with the reporting unit may require additional impairment testing. |
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Deferred Financing Costs | Deferred Financing Costs Deferred financing costs are recorded as a reduction to long-term debt when the related debt is issued or when revolving credit lines increase the borrowing capacity of the Company. Deferred financing costs are amortized over the term of the related debt using the effective interest method. |
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Holdback Liability | Holdback Liability The Company typically withholds payment of a designated percentage of the acquisition cost when it acquires subscriber accounts from dealers. The withheld funds are recorded as a liability until the guarantee period provided by the dealer has expired. The holdback is used as a reserve to cover any terminated subscriber accounts that are not replaced by the dealer during the guarantee period. At the end of the guarantee period, the dealer is responsible for any deficit or is paid the balance of the holdback. |
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Derivatives Financial Instruments | Derivative Financial Instruments The Company uses derivative financial instruments to manage exposure to movement in interest rates. The use of these financial instruments modifies the exposure of these risks with the intention of reducing the risk or cost. The Company does not use derivatives for speculative or trading purposes. The Company recognizes the fair value of all derivative instruments as either assets or liabilities at fair value on the consolidated balance sheets. Fair value is based on market quotes for similar instruments with the same duration. For derivative instruments that qualify for hedge accounting under the provisions of FASB ASC Topic 815, Derivatives and Hedging, unrealized gains and losses on the derivative instruments are reported in accumulated other comprehensive income (loss), to the extent the hedges are effective, until the underlying transactions are recognized in earnings. Derivative instruments that do not qualify for hedge accounting are marked to market at the end of each accounting period with the change in fair value recorded in earnings. |
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Foreign Currency Translations | Foreign Currency Translation The functional currencies of the Company’s foreign subsidiaries are their respective local currencies. Assets and liabilities of foreign operations are translated into U.S. dollars using exchange rates on the balance sheet date, and revenue and expenses are translated into U.S. dollars using average exchange rates for the period. The effects of the foreign currency translation adjustments are deferred and are included in stockholders’ equity as a component of accumulated other comprehensive income (loss). |
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Revenue Recognition | Revenue Recognition Revenue is generated from security alarm monitoring and related services provided by Monitronics and its subsidiaries. Revenue related to alarm monitoring services is recognized ratably over the life of the contract. Revenue related to maintenance and other services is recognized as the services are rendered. Deferred revenue includes payments for monitoring services to be provided in future periods. Additionally, equipment sales are recognized as the equipment is shipped to the customer. |
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Income Taxes | Income Taxes The Company accounts for income taxes under FASB ASC Topic 740, Income Taxes ("FASB ASC Topic 740"), which prescribes an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than proposed changes in the tax law or rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. FASB ASC Topic 740 specifies the accounting for uncertainty in income taxes recognized in a company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In instances where the Company has taken or expects to take a tax position in its tax return and the Company believes it is more likely than not that such tax position will be upheld by the relevant taxing authority, the Company records the benefits of such tax position in its consolidated financial statements. |
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Stock-Based Compensation | Share-Based Compensation The Company accounts for share-based awards pursuant to FASB ASC Topic 718, Compensation — Stock Compensation ("FASB ASC Topic 718"), which requires companies to measure the cost of employee services received in exchange for an award of equity instruments (such as stock options and restricted stock) based on the grant-date fair value of the award, and to recognize that cost over the period during which the employee is required to provide service (usually the vesting period of the award). The grant-date fair value of the Ascent Capital stock options granted to the Company’s employees was calculated using the Black-Scholes model. The expected term of the awards was calculated using the simplified method included in FASB ASC Topic 718. The volatility used in the calculation is based on the historical volatility of peer companies and the risk-free rate is based on Treasury Bonds with a term similar to that of the subject options. A dividend rate of zero was utilized for all granted stock options. |
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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 Series A and Series B common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the sum of the weighted average number of Series A and Series B common shares outstanding and the effect of dilutive securities, including the Company’s outstanding stock options, unvested restricted stock, convertible notes and warrant transactions using the treasury stock method. |
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Estimates | Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period. The significant estimates made in preparation of the Company’s consolidated financial statements primarily relate to valuation of goodwill, other intangible assets, long-lived assets, deferred tax assets, convertible debt arrangements, derivative financial instruments, and the amount of the allowance for doubtful accounts. These estimates are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts them when facts and circumstances change. As the effects of future events cannot be determined with any certainty, actual results could differ from the estimates upon which the carrying values were based. |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information For the years ended December 31, 2015, 2014 and 2013, net cash paid for income taxes was $3,245,000, $2,718,000 and $2,464,000, respectively. For the years ended December 31, 2015, 2014 and 2013, net cash paid for interest was $112,282,000, $106,535,000 and $88,252,000, respectively. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses on Financing Receivables | A summary of activity in the allowance for doubtful accounts is as follows (amounts in thousands):
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Property, Plant and Equipment | Estimated useful lives by class of asset are as follows:
Property and equipment consist of the following (amounts in thousands):
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Based on subscriber accounts held at December 31, 2015, estimated amortization of subscriber accounts in the succeeding five fiscal years ending December 31 is as follows (amounts in thousands):
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Schedule of Earnings Per Share, Basic and Diluted |
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Acquisitions (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The table below represents the fair value of the assets and liabilities assumed in the LiveWatch Acquisition (dollars in thousands):
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Investments in Marketable Securities (Tables) |
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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 Consolidated Balance Sheets (amounts in thousands):
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Schedule realized investment gains and losses and the total proceeds received from the sale of marketable securities | The following table provides the realized investment gains and losses and the total proceeds received from the sale of marketable securities (amounts in thousands):
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Property and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Estimated useful lives by class of asset are as follows:
Property and equipment consist of the following (amounts in thousands):
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Goodwill | The following table provides the activity and balances of goodwill (amounts in thousands):
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Other Accrued Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of other accrued liabilities | Other accrued liabilities consisted of the following (amounts in thousands):
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-term debt | Long-term debt consisted of the following (amounts in thousands):
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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):
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Schedule of maturities of long-term debt including short term borrowings | Principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands):
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Derivatives (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Swaps' outstanding notional balance and terms | The Swaps’ outstanding notional balance as of December 31, 2015 and terms are noted below:
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Schedule of impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements | The impact of the derivatives designated as cash flow hedges on the consolidated financial statements is depicted below (amounts in thousands):
(a) Amounts are included in Interest expense in the consolidated statements of operations and comprehensive income (loss). |
Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value level of assets and liabilities that are measured on a recurring basis | The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at December 31, 2015 and December 31, 2014 (amounts in thousands):
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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):
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Restructuring Charges (Tables) |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity and balances of the restructuring plans | The following tables provide the activity and balances of the Company’s restructuring plan (amounts in thousands):
(a) Amount was recorded upon the acquisition of Security Networks. |
Income Taxes (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | Components of pretax income (loss) from continuing operations by jurisdiction are as follows (amounts in thousands):
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Schedule of Components of Income Tax Expense (Benefit) | The Company’s income tax benefit (expense) from continuing operations is as follows (amounts in thousands):
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Schedule of Effective Income Tax Rate Reconciliation | Total income tax expense from continuing operations differs from the amounts computed by applying the U.S. federal income tax rate of 35% as a result of the following (amounts in thousands):
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Schedule of Deferred Tax Assets and Liabilities | Components of deferred tax assets and liabilities are as follows (amounts in thousands):
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Schedule of Unrecognized Tax Benefits Roll Forward | A reconciliation of the beginning and ending amount of uncertain tax positions, which is recorded in other long term liabilities, is as follows (amounts in thousands):
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Stock-based and Long-Term Compensation (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Stock Option Activity | The following table presents the number and weighted average exercise price ("WAEP") of outstanding options to purchase Ascent Capital Series A common stock:
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Schedule of Restricted Stock Awards | The following table presents the number and weighted average fair value (“WAFV”) of unvested restricted stock awards:
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Schedule Restricted Stock Units | The following table presents the number and WAFV of unvested restricted stock units:
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of activity in the Series A and Series B common stock | The following table presents the activity in Ascent Capital’s Series A and Series B common stock for the three year period ended December 31, 2015:
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Summary of the changes in Accumulated other comprehensive loss | Accumulated Other Comprehensive Income (Loss)
(a) No income taxes were recorded on foreign currency translation amounts for 2015, 2014 and 2013 because the Company is subject to a full valuation allowance. (b) No income taxes were recorded on the December 31, 2015, 2014 and 2013 unrealized holding gains because the Company is subject to a full valuation allowance. Amounts reclassified into net income are included in Other income, net on the consolidated statement of operations. See note 5, Investments in Marketable Securities, for further information. (c) No income taxes were recorded unrealized loss on derivative instrument amounts for 2015, 2014 and 2013 because the Company is subject to a full valuation allowance. Amounts reclassified into net income are included in Interest expense on the consolidated statement of operations. See note 11, Derivatives, for further information. |
Commitments, Contingencies and Other Liabilities (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity Schedule | Future minimum lease payments under scheduled operating leases, which are primarily for buildings, equipment and real estate, having initial or remaining noncancelable terms in excess of one year are as follows (in thousands):
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Quarterly Financial Information (Tables) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information |
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Reportable Business Segments Schedule of Reportable Business Segments, By Segment (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | For the year ended December 31, 2015 (amounts in thousands):
As of December 31, 2015 (amounts in thousands):
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Summary of Significant Accounting Policies - Roll Forward of Receivable Allowance (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance Beginning of Year | $ 2,120 | $ 1,937 | $ 1,436 |
Charged to Expense | 9,735 | 8,149 | 7,342 |
Write-Offs and Other | (9,093) | (7,966) | (6,841) |
Balance End of Year | $ 2,762 | $ 2,120 | $ 1,937 |
Summary of Significant Accounting Policies - Expected Subscriber Fees (Details) - Subscriber Accounts $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
2016 | $ 220,860 |
2017 | 186,295 |
2018 | 157,168 |
2019 | 132,735 |
2020 | $ 117,419 |
Summary of Significant Accounting Policies - Weighted Average Shares (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Accounting Policies [Abstract] | |||
Weighted average Series A and Series B shares - basic (in shares) | 12,947,215 | 13,611,264 | 13,926,832 |
Summary of Significant Accounting Policies - Property Plant and Equipment (Details) |
12 Months Ended |
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Dec. 31, 2015 | |
Building | |
Property, Plant and Equipment [Line Items] | |
Useful life | 20 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life | 15 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 7 years |
Computer Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Computer Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Recent Accounting Pronouncements Narrative (Details) - New Accounting Pronouncement, Early Adoption, Effect $ in Thousands |
Dec. 31, 2014
USD ($)
|
---|---|
New Accounting Pronouncement, Early Adoption [Line Items] | |
Deferred tax assets, net of valuation allowance, current | $ 6,346 |
Deferred tax liabilities, net, noncurrent | 6,346 |
Other Assets, Noncurrent | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
Deferred finance costs | (22,675) |
Long-Term Debt, Excluding Current Maturities | |
New Accounting Pronouncement, Early Adoption [Line Items] | |
Deferred finance costs | $ 22,675 |
Acquisitions - Schedule of Pro Forma Information (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Feb. 23, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|---|
Business Acquisition [Line Items] | ||||
Goodwill | $ 563,549 | $ 527,502 | $ 527,502 | |
LiveWatch | ||||
Business Acquisition [Line Items] | ||||
Cash | $ 784 | |||
Trade receivables | 273 | |||
Other current assets | 706 | |||
Property and equipment | 362 | |||
Goodwill | 36,047 | |||
Current liabilities | (6,810) | |||
Fair value of consideration transferred | 57,562 | |||
Subscriber Accounts | LiveWatch | ||||
Business Acquisition [Line Items] | ||||
Business combination, recognized identifiable assets acquired and liabilities assumed, intangible assets, other than goodwill | 24,900 | |||
Other Intangible Assets | LiveWatch | ||||
Business Acquisition [Line Items] | ||||
Business combination, recognized identifiable assets acquired and liabilities assumed, intangible assets, other than goodwill | $ 1,300 |
Investments in Marketable Securities - Net of Tax Unrealized and Realized Gain(Loss) On Investments (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Investments, Debt and Equity Securities [Abstract] | |||
Gross realized gains | $ 1,256,000 | $ 146,000 | $ 112,000 |
Gross realized losses | 955,000 | 524,000 | 389,000 |
Total Proceeds | $ 57,291,000 | $ 7,842,000 | $ 33,415,000 |
Investments in Marketable Securities Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Schedule of Available-for-sale Securities [Line Items] | |||
Other-than-temporary impairment of marketable securities | $ 6,389 | $ 0 | $ 0 |
Mutual fund | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Other-than-temporary impairment of marketable securities | $ 6,389 |
Assets Held for Sale (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Line Items] | |||
Disposal Group, Including Discontinued Operation, Assets, Net Book Value of Assets Disposed During Period | $ 18,935 | ||
Gain (loss) on disposition of assets | $ 1,151 | ||
Assets held for sale | $ 6,265 | $ 18,935 |
Property and Equipment (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 64,598 | $ 66,040 |
Accumulated depreciation | (32,158) | (30,030) |
Property, plant and equipment, net | 32,440 | 36,010 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,700 | 9,007 |
Buildings and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 7,108 | 12,566 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 52,790 | $ 44,467 |
Property and Equipment - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Property, Plant and Equipment [Abstract] | |||
Depreciation | $ 10,444 | $ 10,145 | $ 8,941 |
Goodwill (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Goodwill [Roll Forward] | ||
Goodwill, Beginning Balance | $ 527,502,000 | $ 527,502,000 |
Period activity | 0 | |
LiveWatch Acquisition | 36,047,000 | |
Goodwill, Ending Balance | 563,549,000 | $ 527,502,000 |
Goodwill impairment | $ 0 |
Other Accrued Liabilities - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Payables and Accruals [Abstract] | ||
Interest payable | $ 15,390 | $ 15,594 |
Income taxes payable | 2,665 | 3,577 |
Legal accrual | 379 | 872 |
Other | 13,139 | 10,684 |
Total Other accrued liabilities | $ 31,573 | $ 30,727 |
Long-Term Debt - Schedule of Convertible Notes (Details) - USD ($) |
Dec. 31, 2015 |
Dec. 31, 2014 |
Jul. 31, 2013 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Carrying value | $ 1,719,368,000 | $ 1,604,815,000 | |
Convertible Debt | |||
Debt Instrument [Line Items] | |||
Unamortized discount | (1,468,000) | ||
Convertible Senior Notes 4% Due 2020 | Convertible Debt | |||
Debt Instrument [Line Items] | |||
Principal | 96,775,000 | 103,500,000 | $ 103,500,000 |
Unamortized discount | (20,857,000) | (25,969,000) | |
Deferred Finance Costs, Gross | (1,411,000) | (1,757,000) | |
Carrying value | $ 74,507,000 | $ 75,774,000 |
Long-Term Debt - Maturities of Long and Short Term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Debt Instrument [Line Items] | ||
Carrying value | $ 1,719,368 | $ 1,604,815 |
Monitronics | ||
Debt Instrument [Line Items] | ||
2016 | 5,500 | |
2017 | 138,750 | |
2018 | 409,284 | |
2019 | 5,500 | |
2020 | 687,275 | |
2021 | 5,500 | |
Thereafter | 512,875 | |
Total principal payments | 1,764,684 | |
Unamortized discounts, premium and deferred debt costs, net | 45,316 | |
Carrying value | $ 1,719,368 |
Derivatives - Summary of Cash Flow Hedges (Details) - Cash Flow Hedging - Interest Rate Swap - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Derivative [Line Items] | |||
Effective portion of gain (loss) recognized in Accumulated other comprehensive income (loss) | $ (16,041) | $ (12,560) | $ 7,014 |
Effective portion of loss reclassified from Accumulated other comprehensive income (loss) into Net loss (a) | (7,300) | (7,681) | (5,303) |
Ineffective portion of amount of gain (loss) recognized into Net loss on interest rate swaps (a) | $ (119) | $ (46) | $ 24 |
Derivatives - Narrative (Details) |
Dec. 31, 2015
USD ($)
interest_rate_swap
|
Dec. 31, 2014
USD ($)
interest_rate_swap
|
---|---|---|
Derivative [Line Items] | ||
Derivative Fair Value of Derivative Instruments Amount Not Offset Against Collateral | $ 0 | $ 0 |
Cash Flow Hedging | Interest Rate Swap | ||
Derivative [Line Items] | ||
Interest rate cash flow hedge gain (loss) to be reclassified during next 12 months, net | 7,092,000 | |
Recurring | ||
Derivative [Line Items] | ||
Derivative financial instruments - liabilities | $ (13,470,000) | (5,780,000) |
Derivative Asset | $ 1,123,000 | |
Level 2 | Recurring | ||
Derivative [Line Items] | ||
Derivative Liability, Number of Instruments Held | interest_rate_swap | 7 | 3 |
Derivative financial instruments - liabilities | $ (13,470,000) | $ (5,780,000) |
Derivative Asset | $ 1,123,000 | |
Derivative Asset, Number of Instruments Held | interest_rate_swap | 1 |
Fair Value Measurements - Schedule of Fair Value Not Measured on Recurring Basis (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Carrying value | $ 1,719,368 | $ 1,604,815 |
Fair value | $ 1,563,376 | $ 1,590,809 |
Restructuring Charges - Schedule of Restructuring Charges (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Change in activity of restructuring reserves during the period | |||
Additions | $ 0 | $ 952,000 | $ 1,111,000 |
2013 Restructuring Plan | Severance and retention | |||
Change in activity of restructuring reserves during the period | |||
Opening balance | 134,000 | 1,570,000 | 0 |
Additions | 0 | 952,000 | 1,111,000 |
Payments | (134,000) | (2,388,000) | (33,000) |
Other | 0 | 0 | 492,000 |
Ending balance | $ 0 | $ 134,000 | $ 1,570,000 |
Restructuring Charges - Narrative (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Restructuring Charges | |||
Restructuring charges | $ 0 | $ 952,000 | $ 1,111,000 |
Severance and retention | 2013 Restructuring Plan | |||
Restructuring Charges | |||
Restructuring charges | $ 0 | $ 952,000 | $ 1,111,000 |
Income Taxes - Schedule of Income Before Income Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Domestic | $ (80,021) | $ (34,383) | $ (18,625) |
Foreign | 290 | 355 | 295 |
Loss from continuing operations before income taxes | $ (79,731) | $ (34,028) | $ (18,330) |
Income Taxes - Components of Income Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | (2,305) | (3,527) | (2,953) |
Foreign | (62) | (85) | (114) |
Current Income Tax Expense (Benefit) | (2,367) | (3,612) | (3,067) |
Deferred: | |||
Federal | (3,894) | (3,292) | 3,343 |
State | (266) | 3,384 | (3,596) |
Foreign | 22 | 100 | 50 |
Deferred Income Tax Expense (Benefit) | (4,138) | 192 | (203) |
Income tax expense | $ (6,505) | $ (3,420) | $ (3,270) |
Income Taxes - Reconciliation of Effective Income Tax (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Computed expected tax benefit | $ 27,906 | $ 11,910 | $ 6,416 |
State and local income taxes, net of federal benefit | (1,671) | (93) | (4,257) |
Change in valuation allowance affecting income tax expense | (27,890) | (11,232) | (2,345) |
Income (expense) not resulting in tax impact | (803) | (694) | (1,539) |
Tax amortization of indefinite-lived assets | (3,890) | (3,292) | (1,481) |
Other, net | (157) | (19) | (64) |
Income tax expense | $ (6,505) | $ (3,420) | $ (3,270) |
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred Tax Assets, Net [Abstract] | ||
Accounts receivable reserves | $ 1,874 | $ 1,301 |
Accrued liabilities | 10,205 | 10,085 |
Net operating loss carryforwards | 192,570 | 162,994 |
Derivative financial instruments | 4,997 | 1,682 |
Other deferred tax assets | 11,248 | 11,410 |
Valuation allowance | (90,216) | (63,214) |
Total deferred tax assets | 130,678 | 124,258 |
Deferred Tax Liabilities, Net [Abstract] | ||
Intangible assets | (133,339) | (123,068) |
Convertible notes | (7,694) | (9,388) |
Property, plant and equipment | (1,371) | (100) |
Other deferred tax liabilities | (1,920) | (1,231) |
Total deferred tax liabilities | (144,324) | (133,787) |
Net deferred tax liabilities | $ (13,646) | $ (9,529) |
Income Taxes - Roll Forward of Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
As of the beginning of the year | $ 191 | $ 247 | $ 247 |
Increases for tax positions of current years | 2 | 4 | 0 |
Reductions for tax positions of prior years | 0 | (60) | 0 |
As of the end of the year | $ 193 | $ 191 | $ 247 |
Employee Benefit Plans -Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Compensation and Retirement Disclosure [Abstract] | |||
Defined Contribution Plan, Cost Recognized | $ 132 | $ 80 | $ 125 |
Commitments, Contingencies and Other Liabilities - Schedule of Future Lease Payments (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2016 | $ 5,414 |
2017 | 2,974 |
2018 | 2,931 |
2019 | 2,943 |
2020 | 2,927 |
Thereafter | 30,905 |
Sublease income | (1,609) |
Minimum lease commitments | $ 46,485 |
Commitments, Contingencies and Other Liabilities - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Operating Leases, Rent Expense, Net | $ 4,540 | $ 3,664 | $ 2,468 |
Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net revenue | $ 141,551 | $ 141,846 | $ 141,543 | $ 138,416 | $ 135,862 | $ 136,027 | $ 134,696 | $ 132,864 | $ 563,356 | $ 539,449 | $ 451,033 |
Operating income | 2,021 | 8,907 | 17,798 | 20,641 | 20,260 | 19,939 | 18,847 | 19,152 | 49,367 | 78,198 | 71,556 |
Net income (loss) | $ (30,810) | $ (24,330) | $ (18,409) | $ (9,835) | $ (6,617) | $ (11,125) | $ (10,278) | $ (9,732) | $ (86,236) | $ (37,448) | $ (21,600) |
Basic and diluted net income (loss) per common share | $ (2.48) | $ (1.87) | $ (1.40) | $ (0.74) | $ (0.50) | $ (0.82) | $ (0.75) | $ (0.70) | $ (6.66) | $ (2.75) | $ (1.55) |
Reportable Business Segments (Details) - segment |
12 Months Ended | |
---|---|---|
Jan. 31, 2015 |
Dec. 31, 2015 |
|
Segment Reporting [Abstract] | ||
Number of reportable segments | 1 | 2 |
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