UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.  20549
 
FORM 10-Q
 
ý           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017
OR
o              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to
 
Commission File Number 333-110025
 MONITRONICS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
State of Texas
 
74-2719343
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
incorporation or organization)
 
 
1990 Wittington Place
 
 
Farmers Branch, Texas
 
75234
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (972) 243-7443 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o
 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company, as defined in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
Emerging growth company o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No ý

As of August 9, 2017, Monitronics International, Inc. is a wholly owned subsidiary of Ascent Capital Group, Inc.



Table of Contents

TABLE OF CONTENTS
 
 
 
Page
 
 
 
PART I — FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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Item 1.  Financial Statements (unaudited).
MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Amounts in thousands, except share amounts
(unaudited)
 
June 30,
2017
 
December 31,
2016
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
2,827

 
$
3,177

Trade receivables, net of allowance for doubtful accounts of $2,625 in 2017 and $3,043 in 2016
12,831

 
13,869

Prepaid and other current assets
7,716

 
9,360

Total current assets
23,374

 
26,406

Property and equipment, net of accumulated depreciation of $33,070 in 2017 and $28,825 in 2016
28,999

 
28,270

Subscriber accounts, net of accumulated amortization of $1,326,947 in 2017 and $1,212,468 in 2016
1,359,721

 
1,386,760

Dealer network and other intangible assets, net of accumulated amortization of $37,891 in 2017 and $32,976 in 2016
11,909

 
16,824

Goodwill
563,549

 
563,549

Other assets
7,244

 
11,908

Total assets
$
1,994,796

 
$
2,033,717

Liabilities and Stockholder's Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
10,160

 
$
11,461

Accrued payroll and related liabilities
3,645

 
4,068

Other accrued liabilities
54,587

 
31,579

Deferred revenue
15,306

 
15,147

Holdback liability
11,204

 
13,916

Current portion of long-term debt
11,000

 
11,000

Total current liabilities
105,902

 
87,171

Non-current liabilities:
 

 
 

Long-term debt
1,704,322

 
1,687,778

Long-term holdback liability
2,251

 
2,645

Derivative financial instruments
15,624

 
16,948

Deferred income tax liability, net
19,435

 
17,330

Other liabilities
7,055

 
6,900

Total liabilities
1,854,589

 
1,818,772

Commitments and contingencies


 


Stockholder's equity:
 
 
 
Common stock, $.01 par value. 1,000 shares authorized, issued and outstanding both at June 30, 2017 and December 31, 2016

 

Additional paid-in capital
447,933

 
446,826

Accumulated deficit
(294,041
)
 
(222,924
)
Accumulated other comprehensive loss
(13,685
)
 
(8,957
)
Total stockholder's equity
140,207

 
214,945

Total liabilities and stockholder's equity
$
1,994,796

 
$
2,033,717

 

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Amounts in thousands
(unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net revenue
$
140,498

 
143,656

 
$
281,698

 
286,924

Operating expenses:
 
 
 
 
 
 
 
Cost of services
29,617

 
27,637

 
59,586

 
57,112

Selling, general, and administrative, including stock-based compensation
60,562

 
29,203

 
93,285

 
57,816

Radio conversion costs
77

 
7,596

 
309

 
16,675

Amortization of subscriber accounts, dealer network and other intangible assets
59,965

 
61,937

 
119,512

 
123,259

Depreciation
2,125

 
2,025

 
4,245

 
4,000

 
152,346

 
128,398

 
276,937

 
258,862

Operating income (loss)
(11,848
)
 
15,258

 
4,761

 
28,062

Other expense:
 
 
 
 
 
 
 
Interest expense
36,477

 
30,024

 
72,315

 
61,248

 
36,477

 
30,024

 
72,315

 
61,248

Loss before income taxes
(48,325
)
 
(14,766
)
 
(67,554
)
 
(33,186
)
Income tax expense
1,779

 
1,743

 
3,563

 
3,533

Net loss
(50,104
)
 
(16,509
)
 
(71,117
)
 
(36,719
)
Other comprehensive loss:
 
 
 
 
 
 
 
Unrealized loss on derivative contracts, net
(5,777
)
 
(4,697
)
 
(4,728
)
 
(16,542
)
Total other comprehensive loss, net of tax
(5,777
)
 
(4,697
)
 
(4,728
)
 
(16,542
)
Comprehensive loss
$
(55,881
)
 
(21,206
)
 
$
(75,845
)
 
$
(53,261
)
 
See accompanying notes to condensed consolidated financial statements.


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Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Amounts in thousands
(unaudited)
 
Six Months Ended 
 June 30,
 
2017
 
2016
Cash flows from operating activities:
 
 
 
Net loss
$
(71,117
)
 
(36,719
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Amortization of subscriber accounts, dealer network and other intangible assets
119,512

 
123,259

Depreciation
4,245

 
4,000

Stock-based compensation
1,448

 
1,189

Deferred income tax expense
2,105

 
2,105

Legal settlement reserve
28,000

 

Amortization of debt discount and deferred debt costs
3,344

 
3,513

Bad debt expense
4,987

 
5,133

Other non-cash activity, net
3,539

 
1,540

Changes in assets and liabilities:
 
 
 
Trade receivables
(3,949
)
 
(5,395
)
Prepaid expenses and other assets
1,042

 
1,762

Subscriber accounts - deferred contract costs
(1,547
)
 
(1,294
)
Payables and other liabilities
(10,926
)
 
(8,109
)
Net cash provided by operating activities
80,683

 
90,984

Cash flows from investing activities:
 

 
 

Capital expenditures
(5,752
)
 
(3,100
)
Cost of subscriber accounts acquired
(88,287
)
 
(106,805
)
Decrease in restricted cash

 
55

Net cash used in investing activities
(94,039
)
 
(109,850
)
Cash flows from financing activities:
 
 
 
Proceeds from long-term debt
95,550

 
88,200

Payments on long-term debt
(82,350
)
 
(69,700
)
Value of shares withheld for share-based compensation
(194
)
 
(83
)
Net cash provided by financing activities
13,006

 
18,417

Net decrease in cash and cash equivalents
(350
)
 
(449
)
Cash and cash equivalents at beginning of period
3,177

 
2,580

Cash and cash equivalents at end of period
$
2,827

 
2,131

 
 
 
 
Supplemental cash flow information:
 
 
 
State taxes paid, net
$
3,105

 
2,745

Interest paid
69,045

 
60,031

Accrued capital expenditures
493

 
585

 

See accompanying notes to condensed consolidated financial statements.

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MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholder’s Equity
Amounts in thousands, except share amounts
(unaudited)
 
 
Common Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive Loss
 
Accumulated Deficit
 
Total
Stockholder’s Equity
 
Shares
 
Amount
 
 
 
 
Balance at December 31, 2016
1,000

 
$

 
446,826

 
(8,957
)
 
(222,924
)
 
$
214,945

Net loss

 

 

 

 
(71,117
)
 
(71,117
)
Other comprehensive income

 

 

 
(4,728
)
 

 
(4,728
)
Stock-based compensation

 

 
1,301

 

 

 
1,301

Value of shares withheld for minimum tax liability

 

 
(194
)
 

 

 
(194
)
Balance at June 30, 2017
1,000

 
$

 
447,933

 
(13,685
)
 
(294,041
)
 
$
140,207

 
See accompanying notes to condensed consolidated financial statements.


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Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
 
(1)    Basis of Presentation
 
Monitronics International, Inc. and its subsidiaries (collectively, the "Company" or "MONI") are wholly owned subsidiaries of Ascent Capital Group, Inc. ("Ascent Capital").  MONI, and its wholly owned subsidiary LiveWatch Security, LLC ("LiveWatch"), monitor signals arising from burglaries, fires, medical alerts and other events through security systems installed at subscribers' premises, as well as providing for interactive and home automation services.
 
The unaudited interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s (the "SEC") Regulation S-X. Accordingly, it does not include all of the information required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. The Company’s unaudited condensed consolidated financial statements as of June 30, 2017, and for the three and six months ended June 30, 2017 and 2016, include MONI and all of its direct and indirect subsidiaries.  The accompanying interim condensed consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year.  These condensed consolidated financial statements should be read in conjunction with the MONI Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 13, 2017 (the "2016 Form 10-K").
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses for each reporting period.  The significant estimates made in preparation of the Company’s condensed consolidated financial statements primarily relate to valuation of goodwill, other intangible assets, long-lived assets, deferred tax assets, derivative financial instruments, and the amount of the allowance for doubtful accounts. These estimates are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts them when facts and circumstances change. As the effects of future events cannot be determined with any certainty, actual results could differ from the estimates upon which the carrying values were based.

(2)    Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). Under the update, revenue will be recognized based on a five-step model. The core principle of the model is that revenue will be recognized when the transfer of promised goods or services to customers is made in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In the third quarter of 2015, the FASB deferred the effective date of the standard to annual and interim periods beginning after December 15, 2017. In March and April 2016, the FASB issued amendments to provide clarification on assessment of collectability criteria, presentation of sales taxes and measurement of non-cash consideration. In addition, the amendment provided clarification and included simplification to transaction guidance on contract modifications and completed contracts at transaction. In December 2016, the FASB issued amendments to provide clarification on codification and guidance application. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period.

The Company currently plans to adopt ASU 2014-09 using the full retrospective approach. However, a final decision regarding the adoption method has not been made at this time. The Company's final determination will depend on the significance of the impact of the new standard on the Company's financial results.

The Company is continuing its evaluation of the impact of ASU 2014-09 on the accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of a third party service provider to assist in the evaluation. While the Company is in the process of assessing revenue recognition and cost deferral policies across each type of its contracts, the Company does not know or cannot reasonably estimate the impact of the adoption ASU 2014-09 on its financial position, results of operations and cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 requires the lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. For leases with a term of twelve months or less, the Company is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Further, ASU 2016-02 requires a finance lease to be recognized as both an interest expense and an

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Table of Contents

amortization of the associated expense. Operating leases generally recognize the associated expense on a straight line basis. ASU 2016-02 requires the Company to adopt the standard using a modified retrospective approach and becomes effective on January 1, 2019. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial position, results of operations and cash flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). Currently, the fair value of the reporting unit is compared with the carrying value of the reporting unit (identified as "Step 1"). If the fair value of the reporting unit is lower than its carrying amount, then the implied fair value of goodwill is calculated. If the implied fair value of goodwill is lower than the carrying value of goodwill an impairment is recognized (identified as "Step 2"). ASU 2017-04 eliminates Step 2 from the impairment test; therefore, a goodwill impairment will be recognized as the difference of the fair value and the carrying value. ASU 2017-04 becomes effective on January 1, 2020 with early adoption permitted. The Company is currently evaluating when to adopt the standard.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). ASU 2017-09 requires modification accounting in Topic 718 to be applied to a change to the terms or conditions of a share-based payment award unless the fair value, vesting conditions and classification of the modified award are the same immediately before and after the modification of the award. ASU 2017-09 is effective for annual and interim periods beginning after December 15, 2017, and requires a prospective approach. Early adoption is permitted. The Company plans to adopt the standard when it becomes effective. The adoption is not expected to have a material impact on the Company's financial position, results of operations and cash flows.

(3)    Other Accrued Liabilities
 
Other accrued liabilities consisted of the following (amounts in thousands): 
 
June 30,
2017
 
December 31, 2016
Interest payable
$
14,318

 
$
14,588

Income taxes payable
1,318

 
2,947

Legal accrual, including settlement reserve
28,326

(a)
271

LiveWatch acquisition retention bonus

 
4,990

Derivative financial instruments
2,634

 

Other
7,991

 
8,783

Total Other accrued liabilities
$
54,587

 
$
31,579

 
(a)        Amount includes $28,000,000 related to a legal settlement reserve. See note 8, Commitments, Contingencies and Other Liabilities, for further information.

(4)    Long-Term Debt
 
Long-term debt consisted of the following (amounts in thousands):
 
June 30,
2017
 
December 31,
2016
9.125% Senior Notes due April 1, 2020 with an effective interest rate of 9.5%
$
579,033

 
$
578,078

Promissory Note to Ascent Capital due October 1, 2020 with an effective rate of 12.5% (a)
12,000

 
12,000

Term loan, matures September 30, 2022, LIBOR plus 5.50%, subject to a LIBOR floor of 1.00% with an effective rate of 7.0%
1,062,822

 
1,066,130

$295 million revolving credit facility, matures September 30, 2021, LIBOR plus 4.00%, subject to a LIBOR floor of 1.00% with an effective rate of 6.4%
61,467

 
42,570

 
1,715,322

 
1,698,778

Less current portion of long-term debt
(11,000
)
 
(11,000
)
Long-term debt
$
1,704,322

 
$
1,687,778

 
(a)
The effective rate was 9.868% until February 29, 2016.

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Senior Notes
 
The senior notes total $585,000,000 in principal, mature on April 1, 2020 and bear interest at 9.125% per annum (the "Senior Notes").  Interest payments are due semi-annually on April 1 and October 1 of each year. The Senior Notes are guaranteed by all of the Company's existing domestic subsidiaries.  Ascent Capital has not guaranteed any of the Company's obligations under the Senior Notes. As of June 30, 2017, the Senior Notes had deferred financing costs, net of accumulated amortization of $5,967,000.

The Senior Notes are guaranteed by all of the Company's existing domestic subsidiaries. See note 10, Consolidating Guarantor Financial Information for further information.

Ascent Intercompany Loan
 
On February 29, 2016, the Company retired the existing intercompany loan with an outstanding principal amount of $100,000,000 and executed and delivered a Promissory Note to Ascent Capital in a principal amount of $12,000,000 (the "Ascent Intercompany Loan"), with the $88,000,000 remaining principal being treated as a capital contribution.  The entire principal amount under the Ascent Intercompany Loan is due on October 1, 2020.  The Company may prepay any portion of the balance of the Ascent Intercompany Loan at any time from time to time without fee, premium or penalty (subject to certain financial covenants associated with the Company’s other indebtedness).  Any unpaid balance of the Ascent Intercompany Loan bears interest at a rate equal to 12.5% per annum, payable semi-annually in cash in arrears on January 12 and July 12 of each year.  Borrowings under the Ascent Intercompany Loan constitute unsecured obligations of the Company and are not guaranteed by any of the Company’s subsidiaries.
 
Credit Facility

On September 30, 2016, the Company entered into an amendment ("Amendment No. 6") with the lenders of its existing senior secured credit agreement dated March 23, 2012, and as amended and restated on April 9, 2015, February 17, 2015, August 16, 2013, March 25, 2013, and November 7, 2012 (the "Existing Credit Agreement"). Amendment No. 6 provided for, among other things, the issuance of a $1,100,000,000 senior secured term loan at a 1.5% discount and a new $295,000,000 super priority revolver (the Existing Credit Agreement together with Amendment No. 6, the "Credit Facility").

As of June 30, 2017, the Credit Facility term loan has a principal amount of $1,091,750,000, maturing on September 30, 2022. The term loan requires quarterly interest payments and quarterly principal payments of $2,750,000. The term loan bears interest at LIBOR plus 5.5%, subject to a LIBOR floor of 1.0%. The Credit Facility revolver has a principal amount outstanding of $63,500,000 as of June 30, 2017 and matures on September 30, 2021. The Credit Facility revolver bears interest at LIBOR plus 4.0%, subject to a LIBOR floor of 1.0%. There is a commitment fee of 0.5% on unused portions of the Credit Facility Revolver. As of June 30, 2017, $231,500,000 is available for borrowing under the Credit Facility revolver.

At any time after the occurrence of an event of default under the Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Credit Facility immediately due and payable and terminate any commitment to make further loans under the Credit Facility.  In addition, failure to comply with restrictions contained in the Senior Notes could lead to an event of default under the Credit Facility.

The Credit Facility is secured by a pledge of all of the outstanding stock of the Company and all of its existing subsidiaries and is guaranteed by all of the Company’s existing domestic subsidiaries.  Ascent Capital has not guaranteed any of the Company’s obligations under the Credit Facility.

As of June 30, 2017, the Company has deferred financing costs and unamortized discounts, net of accumulated amortization, of $30,961,000 related to the Credit Facility.

In order to reduce the financial risk related to changes in interest rates associated with the floating rate term loan under the Credit Facility term loan, the Company has entered into interest rate swap agreements with terms similar to the Credit Facility term loan (all outstanding interest rate swap agreements are collectively referred to as the “Swaps”). The Swaps have been designated as effective hedges of the Company’s variable rate debt and qualify for hedge accounting.  As a result of these interest rate swaps, the Company's current effective weighted average interest rate on the borrowings under the Credit Facility term loan is 7.18%. See note 5, Derivatives, for further disclosures related to these derivative instruments. 


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The terms of the Senior Notes and the Credit Facility provide for certain financial and nonfinancial covenants.  As of June 30, 2017, the Company was in compliance with all required covenants under these financing arrangements.

As of June 30, 2017, principal payments scheduled to be made on the Company’s debt obligations are as follows (amounts in thousands):
Remainder of 2017
$
5,500

2018
11,000

2019
11,000

2020
608,000

2021
74,500

2022
1,042,250

Thereafter

Total principal payments
1,752,250

Less:
 
Unamortized deferred debt costs and discounts
36,928

Total debt on condensed consolidated balance sheet
$
1,715,322


(5)    Derivatives
 
The Company utilizes interest rate swap agreements to reduce the interest rate risk inherent in the Company's variable rate Credit Facility term loan. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatility. The Company incorporates credit valuation adjustments to appropriately reflect the respective counterparty’s nonperformance risk in the fair value measurements. See note 6, Fair Value Measurements, for additional information about the credit valuation adjustments.

As of June 30, 2017, the Swaps’ outstanding notional balances, effective dates, maturity dates and interest rates paid and received are noted below:
Notional
 
Effective Date
 
Maturity Date
 
Fixed
Rate Paid
 
Variable Rate Received
$
521,125,000

 
March 28, 2013
 
March 23, 2018
 
1.884%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a)
138,112,500

 
March 28, 2013
 
March 23, 2018
 
1.384%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a)
107,977,387

 
September 30, 2013
 
March 23, 2018
 
1.959%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor
107,977,387

 
September 30, 2013
 
March 23, 2018
 
1.850%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor
191,475,002

 
March 23, 2018
 
April 9, 2022
 
3.110%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a)
250,000,000

 
March 23, 2018
 
April 9, 2022
 
3.110%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor (a)
50,000,000

 
March 23, 2018
 
April 9, 2022
 
2.504%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor
377,000,000

 
March 23, 2018
 
September 30, 2022
 
1.833%
 
3 mo. USD-LIBOR-BBA, subject to a 1.00% floor
 
(a) 
On March 25, 2013 and September 30, 2016, MONI negotiated amendments to the terms of these interest rate swap agreements (the "Existing Swap Agreements," as amended, the "Amended Swaps").  The Amended Swaps are held with the same counterparties as the Existing Swap Agreements.  Upon entering into the Amended Swaps, MONI simultaneously dedesignated the Existing Swap Agreements and redesignated the Amended Swaps as cash flow hedges for the underlying change in the swap terms.  The amounts previously recognized in Accumulated

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other comprehensive loss relating to the dedesignation are recognized in Interest expense over the remaining life of the Amended Swaps.
 
All of the Swaps are designated and qualify as cash flow hedging instruments, with the effective portion of the Swaps' change in fair value recorded in Accumulated other comprehensive loss.  Any ineffective portions of the Swaps' change in fair value are recognized in current earnings in Interest expense.  Changes in the fair value of the Swaps recognized in Accumulated other comprehensive loss are reclassified to Interest expense when the hedged interest payments on the underlying debt are recognized.  Amounts in Accumulated other comprehensive loss expected to be recognized in Interest expense in the coming 12 months total approximately $5,216,000.
 
The impact of the derivatives designated as cash flow hedges on the condensed consolidated financial statements is depicted below (amounts in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Effective portion of loss recognized in Accumulated other comprehensive loss
$
(7,243
)
 
(6,506
)
 
$
(7,976
)
 
(20,163
)
Effective portion of loss reclassified from Accumulated other comprehensive loss into Net loss (a)
$
(1,466
)
 
(1,809
)
 
$
(3,248
)
 
(3,621
)
Ineffective portion of amount of loss recognized into Net loss (a)
$
(110
)
 
(19
)
 
$
(92
)
 
(77
)
 
(a)        Amounts are included in Interest expense in the unaudited condensed consolidated statements of operations and comprehensive income (loss).
 
(6)    Fair Value Measurements
 
According to the FASB ASC Topic 820, Fair Value Measurement, fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following three categories:

Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are observable in active markets.
Level 3 - Valuations derived from valuation techniques in which one or more significant inputs are unobservable in any market.

The following summarizes the fair value level of assets and liabilities that are measured on a recurring basis at June 30, 2017 and December 31, 2016 (amounts in thousands): 
 
Level 1
 
Level 2
 
Level 3
 
Total
June 30, 2017
 
 
 
 
 
 
 
Interest rate swap agreement - assets (a)

 
5,006

 

 
5,006

Interest rate swap agreements - liabilities (b)

 
(18,258
)
 

 
(18,258
)
Total
$

 
(13,252
)
 

 
$
(13,252
)
December 31, 2016
 
 
 
 
 
 
 
Interest rate swap agreement - assets (a)

 
8,521

 

 
8,521

Interest rate swap agreements - liabilities (b)

 
(16,948
)
 

 
(16,948
)
Total
$

 
(8,427
)
 

 
$
(8,427
)
 
(a)
Included in Other assets on the consolidated balance sheets
(b)
Interest rate swap agreement liability values are included in current Other accrued liabilities or non-current Derivative financial instruments on the consolidated balance sheets depending on the maturity date of the swap.
 
The Company has determined that the significant inputs used to value the Swaps fall within Level 2 of the fair value hierarchy.  As a result, the Company has determined that its derivative valuations are classified in Level 2 of the fair value hierarchy.

10

Table of Contents

 
Carrying values and fair values of financial instruments that are not carried at fair value are as follows (amounts in thousands):
 
June 30, 2017
 
December 31, 2016
Long term debt, including current portion:
 
 
 
Carrying value
$
1,715,322

 
$
1,698,778

Fair value (a)
1,731,090

 
1,716,385

 
(a) 
The fair value is based on market quotations from third party financial institutions and is classified as Level 2 in the hierarchy.
 
The Company’s other financial instruments, including cash and cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of their short-term maturity.

(7)    Accumulated Other Comprehensive Loss
 
The following table provides a summary of the changes in Accumulated other comprehensive loss for the period presented (amounts in thousands):
 
Accumulated
other
comprehensive
loss
Balance at December 31, 2016
(8,957
)
Unrealized loss on derivatives recognized through Accumulated other comprehensive loss, net of income tax of $0
(7,976
)
Reclassifications of unrealized loss on derivatives into Net loss, net of income tax of $0 (a)
3,248

Net current period other comprehensive loss
(4,728
)
Balance at June 30, 2017
(13,685
)
 
(a)
 Amounts reclassified into net loss are included in Interest expense on the condensed consolidated statement of operations.  See note 5, Derivatives, for further information.
 
(8)    Commitments, Contingencies and Other Liabilities
 
The Company was named as a defendant in multiple putative class actions consolidated in U.S. District Court (Northern District of West Virginia) on behalf of purported class(es) of persons who claim to have received telemarketing calls in violation of various state and federal laws. The actions were brought by plaintiffs seeking monetary damages on behalf of all plaintiffs who received telemarketing calls made by a Monitronics Authorized Dealer, or any Authorized Dealer’s lead generator or sub-dealer. During the three months ended June 30, 2017, the Company and the plaintiffs agreed to settle this litigation, and the Company has set up a legal reserve for $28,000,000. The Company is actively seeking to recover $28,000,000 under its insurance policies in connection with the settlement. The settlement remains subject to court approval and the court’s entry of a final order dismissing the actions.

In addition to the above, the Company is also involved in litigation and similar claims incidental to the conduct of its business, including from time to time, contractual disputes, claims related to alleged security system failures and claims related to alleged violations of the U.S. Telephone Consumer Protection Act. Matters that are probable of unfavorable outcome to the Company and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, management's estimate of the outcomes of such matters and experience in contesting, litigating and settling similar matters. In management's opinion, none of the pending actions are likely to have a material adverse impact on the Company's financial position or results of operations. The Company accrues and expenses legal fees related to loss contingency matters as incurred.


11

Table of Contents

(9)     Reportable Business Segments

Description of Segments

The Company operates through two reportable business segments according to the nature and economic characteristics of its services as well as the manner in which the information issued internally by the Company's key decision maker, who is the Company's Chief Executive Officer. The Company's business segments are as follows:

MONI

The MONI segment is engaged in the business of providing security alarm monitoring services: monitoring signals arising from burglaries, fires, medical alerts and other events through security systems at subscribers' premises, as well as providing customer service and technical support. MONI primarily outsources the sales, installation and most of its field service functions to its dealers.
    
LiveWatch

LiveWatch is a Do-It-Yourself home security provider offering professionally monitored security services through a direct-to-consumer sales channel. LiveWatch offers a differentiated go-to-market strategy through direct response TV, internet and radio advertising. When a customer initiates the process to obtain monitoring services, LiveWatch pre-configures the alarm monitoring system based on customer specifications. LiveWatch then packages and ships the equipment directly to the customer. The customer self-installs the equipment on-site and activates the monitoring service over the phone.

As they arise, transactions between segments are recorded on an arm's length basis using relevant market prices. The following table sets forth selected data from the accompanying condensed consolidated statements of operations for the periods indicated (amounts in thousands):
 
 
MONI
 
LiveWatch
 
Consolidated
 
 
Three Months Ended June 30, 2017
Net revenue
 
$
133,536

 
$
6,962

 
$
140,498

Depreciation and amortization
 
$
60,975

 
$
1,115

 
$
62,090

Net loss before income taxes
 
$
(43,480
)
 
$
(4,845
)
 
$
(48,325
)
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016
Net revenue
 
$
138,174

 
$
5,482

 
$
143,656

Depreciation and amortization
 
$
62,877

 
$
1,085

 
$
63,962

Net loss before income taxes
 
$
(9,703
)
 
$
(5,063
)
 
$
(14,766
)
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2017
Net revenue
 
$
267,944

 
$
13,754

 
$
281,698

Depreciation and amortization
 
$
121,483

 
$
2,274

 
$
123,757

Net loss before income taxes
 
$
(56,779
)
 
$
(10,775
)
 
$
(67,554
)
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
Net revenue
 
$
276,270

 
$
10,654

 
$
286,924

Depreciation and amortization
 
$
125,029

 
$
2,230

 
$
127,259

Net loss before income taxes
 
$
(22,854
)
 
$
(10,332
)
 
$
(33,186
)








12

Table of Contents

The following table sets forth selected data from the accompanying condensed consolidated balance sheets for the periods indicated (amounts in thousands):
 
 
MONI
 
LiveWatch
 
Eliminations
 
Consolidated
 
 
Balance at June 30, 2017
Subscriber accounts, net of amortization
 
$
1,338,117

 
$
21,604

 
$

 
$
1,359,721

Goodwill
 
$
527,502

 
$
36,047

 
$

 
$
563,549

Total assets
 
$
2,038,719

 
$
63,719

 
$
(107,642
)
 
$
1,994,796

 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
Subscriber accounts, net of amortization
 
$
1,364,804

 
$
21,956

 
$

 
$
1,386,760

Goodwill
 
$
527,502

 
$
36,047

 
$

 
$
563,549

Total assets
 
$
2,062,838

 
$
63,916

 
$
(93,037
)
 
$
2,033,717


(10)    Consolidating Guarantor Financial Information

The Senior Notes were issued by MONI (the “Parent Issuer”) and are fully and unconditionally guaranteed, on a joint and several basis, by all of the Company’s existing domestic subsidiaries (“Subsidiary Guarantors”).  Ascent Capital has not guaranteed any of the Company’s obligations under the Senior Notes. The unaudited condensed consolidating financial information for the Parent Issuer, the Subsidiary Guarantors and the non-guarantors are as follows:


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Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Balance Sheet
(unaudited)
 
 
As of June 30, 2017
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,636

 
1,191

 

 

 
2,827

Trade receivables, net
12,291

 
540

 

 

 
12,831

Prepaid and other current assets
63,096

 
1,930

 

 
(57,310
)
 
7,716

Total current assets
77,023

 
3,661

 

 
(57,310
)
 
23,374

 
 
 
 
 
 
 
 
 
 
Investment in subsidiaries
12,337

 

 

 
(12,337
)
 

Property and equipment, net
27,048

 
1,951

 

 

 
28,999

Subscriber accounts, net
1,322,397

 
37,324

 

 

 
1,359,721

Dealer network and other intangible assets, net
10,912

 
997

 

 

 
11,909

Goodwill
527,191

 
36,358

 

 

 
563,549

Other assets, net
7,218

 
26

 

 

 
7,244

Total assets
$
1,984,126

 
80,317

 

 
(69,647
)
 
1,994,796

 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholder's Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
8,356

 
1,804

 

 

 
10,160

Accrued payroll and related liabilities
3,097

 
548

 

 

 
3,645

Other accrued liabilities
53,987

 
57,910

 

 
(57,310
)
 
54,587

Deferred revenue
13,881

 
1,425

 

 

 
15,306

Holdback liability
10,688

 
516

 

 

 
11,204

Current portion of long-term debt
11,000

 

 

 

 
11,000

Total current liabilities
101,009

 
62,203

 

 
(57,310
)
 
105,902

 
 
 
 
 
 
 
 
 
 
Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt
1,704,322

 

 

 

 
1,704,322

Long-term holdback liability
2,251

 

 

 

 
2,251

Derivative financial instruments
15,624

 

 

 

 
15,624

Deferred income tax liability, net
17,312

 
2,123

 

 

 
19,435

Other liabilities
3,401

 
3,654

 

 

 
7,055

Total liabilities
1,843,919

 
67,980

 

 
(57,310
)
 
1,854,589

 
 
 
 
 
 
 
 
 
 
Total stockholder's equity
140,207

 
12,337

 

 
(12,337
)
 
140,207

Total liabilities and stockholder's equity
$
1,984,126

 
80,317

 

 
(69,647
)
 
1,994,796


14

Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Balance Sheet
(unaudited)
 
 
As of December 31, 2016
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,739

 
1,438

 

 

 
3,177

Trade receivables, net
13,265

 
604

 

 

 
13,869

Prepaid and other current assets
51,251

 
2,171

 

 
(44,062
)
 
9,360

Total current assets
66,255

 
4,213

 

 
(44,062
)
 
26,406

 
 
 
 
 
 
 
 
 
 
Investment in subsidiaries
22,533

 

 

 
(22,533
)
 

Property and equipment, net
26,652

 
1,618

 

 

 
28,270

Subscriber accounts, net
1,349,285

 
37,475

 

 

 
1,386,760

Dealer network and other intangible assets, net
15,762

 
1,062

 

 

 
16,824

Goodwill
527,191

 
36,358

 

 

 
563,549

Other assets, net
11,889

 
19

 

 

 
11,908

Total assets
$
2,019,567

 
80,745

 

 
(66,595
)
 
$
2,033,717

 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholder's Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$
9,919

 
1,542

 

 

 
11,461

Accrued payroll and related liabilities
3,731

 
337

 

 

 
4,068

Other accrued liabilities
25,951

 
49,690

 

 
(44,062
)
 
31,579

Deferred revenue
13,807

 
1,340

 

 

 
15,147

Holdback liability
13,434

 
482

 

 

 
13,916

Current portion of long-term debt
11,000

 

 

 

 
11,000

Total current liabilities
77,842

 
53,391

 

 
(44,062
)
 
87,171

 
 
 
 
 
 
 
 
 
 
Non-current liabilities:
 
 
 
 
 
 
 
 
 
Long-term debt
1,687,778

 

 

 

 
1,687,778

Long-term holdback liability
2,645

 

 

 

 
2,645

Derivative financial instruments
16,948

 

 

 

 
16,948

Deferred income tax liability, net
15,649

 
1,681

 

 

 
17,330

Other liabilities
3,760

 
3,140

 

 

 
6,900

Total liabilities
1,804,622

 
58,212

 

 
(44,062
)
 
1,818,772

 
 
 
 
 
 
 
 
 
 
Total stockholder's equity
214,945

 
22,533

 

 
(22,533
)
 
214,945

Total liabilities and stockholder's equity
$
2,019,567

 
80,745

 

 
(66,595
)
 
2,033,717



15

Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
(unaudited)
 
Three Months Ended June 30, 2017
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Net revenue
$
132,223

 
8,275

 

 

 
140,498

 
 
 
 
 
 
 
 
 
0

Operating expenses:
 

 
 

 
 

 
 

 
0

Cost of services
25,956

 
3,661

 

 

 
29,617

Selling, general, and administrative, including stock-based compensation
53,453

 
7,109

 

 

 
60,562

Radio conversion costs
72

 
5

 

 

 
77

Amortization of subscriber accounts, dealer network and other intangible assets
58,373

 
1,592

 

 

 
59,965

Depreciation
1,960

 
165

 

 

 
2,125

 
139,814

 
12,532

 

 

 
152,346

Operating loss
(7,591
)
 
(4,257
)
 

 

 
(11,848
)
Other expense:
 

 
 

 
 

 
 

 
 

Equity in loss of subsidiaries
4,515

 

 

 
(4,515
)
 

Interest expense
36,477

 

 

 

 
36,477

 
40,992

 

 

 
(4,515
)
 
36,477

Loss before income taxes
(48,583
)
 
(4,257
)
 

 
4,515

 
(48,325
)
Income tax expense
1,521

 
258

 

 

 
1,779

Net loss
(50,104
)
 
(4,515
)
 

 
4,515

 
(50,104
)
Other comprehensive loss:
 

 
 

 
 

 
 

 
 

Unrealized loss on derivative contracts
(5,777
)
 

 

 

 
(5,777
)
Total other comprehensive loss
(5,777
)
 

 

 

 
(5,777
)
Comprehensive loss
$
(55,881
)
 
(4,515
)
 

 
4,515

 
(55,881
)



16

Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
(unaudited)
 
 
Three Months Ended June 30, 2016
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Net revenue
$
137,212

 
6,444

 

 

 
143,656

 
 
 
 
 
 
 
 
 
0

Operating expenses:
 
 
 
 
 
 
 
 
0

Cost of services
24,504

 
3,133

 

 

 
27,637

Selling, general, and administrative, including stock-based compensation
22,857

 
6,346

 

 

 
29,203

Radio conversion costs
7,542

 
54

 

 

 
7,596

Amortization of subscriber accounts, dealer network and other intangible assets
60,482

 
1,455

 

 

 
61,937

Depreciation
1,939

 
86

 

 

 
2,025

 
117,324

 
11,074

 

 

 
128,398

Operating income (loss)
19,888

 
(4,630
)
 

 

 
15,258

Other expense:
 

 
 
 
 
 
 
 
 
Equity in loss of subsidiaries
4,860

 

 

 
(4,860
)
 

Interest expense
30,019

 
5

 

 

 
30,024

 
34,879

 
5

 

 
(4,860
)
 
30,024

Loss before income taxes
(14,991
)
 
(4,635
)
 

 
4,860

 
(14,766
)
Income tax expense
1,518

 
225

 

 

 
1,743

Net loss
(16,509
)
 
(4,860
)
 

 
4,860

 
(16,509
)
Other comprehensive loss:
 
 
 
 
 
 
 
 
 
Unrealized loss on derivative contracts
(4,697
)
 

 

 

 
(4,697
)
Total other comprehensive loss
(4,697
)
 

 

 

 
(4,697
)
Comprehensive loss
$
(21,206
)
 
(4,860
)
 

 
4,860

 
(21,206
)







17

Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
(unaudited)
 
Six Months Ended June 30, 2017
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Net revenue
$
265,341

 
16,357

 

 

 
281,698

 
 
 
 
 
 
 
 
 
0

Operating expenses:
 

 
 

 
 

 
 

 
0

Cost of services
52,263

 
7,323

 

 

 
59,586

Selling, general, and administrative, including stock-based compensation
78,170

 
15,115

 

 

 
93,285

Radio conversion costs
259

 
50

 

 

 
309

Amortization of subscriber accounts, dealer network and other intangible assets
116,276

 
3,236

 

 

 
119,512

Depreciation
3,936

 
309

 

 

 
4,245

 
250,904

 
26,033

 

 

 
276,937

Operating income (loss)
14,437

 
(9,676
)
 

 

 
4,761

Other expense:
 

 
 

 
 

 
 

 
 

Equity in loss of subsidiaries
10,197

 

 

 
(10,197
)
 

Interest expense
72,310

 
5

 

 

 
72,315

 
82,507

 
5

 

 
(10,197
)
 
72,315

Loss before income taxes
(68,070
)
 
(9,681
)
 

 
10,197

 
(67,554
)
Income tax expense
3,047

 
516

 

 

 
3,563

Net loss
(71,117
)
 
(10,197
)
 

 
10,197

 
(71,117
)
Other comprehensive loss:
 

 
 

 
 

 
 

 
 

Unrealized loss on derivative contracts
(4,728
)
 

 

 

 
(4,728
)
Total other comprehensive loss
(4,728
)
 

 

 

 
(4,728
)
Comprehensive loss
$
(75,845
)
 
(10,197
)
 

 
10,197

 
(75,845
)



18

Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
(unaudited)
 
 
Six Months Ended June 30, 2016
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Net revenue
$
274,519

 
12,405

 

 

 
286,924

 
 
 
 
 
 
 
 
 
0

Operating expenses:
 
 
 
 
 
 
 
 
0

Cost of services
50,746

 
6,366

 

 

 
57,112

Selling, general, and administrative, including stock-based compensation
45,388

 
12,428

 

 

 
57,816

Radio conversion costs
16,621

 
54

 

 

 
16,675

Amortization of subscriber accounts, dealer network and other intangible assets
120,310

 
2,949

 

 

 
123,259

Depreciation
3,849

 
151

 

 

 
4,000

 
236,914

 
21,948

 

 

 
258,862

Operating income (loss)
37,605

 
(9,543
)
 

 

 
28,062

Other expense:
 

 
 
 
 
 
 
 
 
Equity in loss of subsidiaries
10,001

 

 

 
(10,001
)
 

Interest expense
61,239

 
9

 

 

 
61,248

 
71,240

 
9

 

 
(10,001
)
 
61,248

Loss before income taxes
(33,635
)
 
(9,552
)
 

 
10,001

 
(33,186
)
Income tax expense
3,084

 
449

 

 

 
3,533

Net loss
(36,719
)
 
(10,001
)
 

 
10,001

 
(36,719
)
Other comprehensive loss:
 
 
 
 
 
 
 
 
 
Unrealized loss on derivative contracts
(16,542
)
 

 

 

 
(16,542
)
Total other comprehensive loss
(16,542
)
 

 

 

 
(16,542
)
Comprehensive loss
$
(53,261
)
 
(10,001
)
 

 
10,001

 
(53,261
)


19

Table of Contents

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES
Condensed Consolidating Statement of Cash Flows
(unaudited)
 
 
Six Months Ended June 30, 2017
 
Parent Issuer
 
Subsidiary
Guarantors
 
Non-
Guarantors
 
Eliminations
 
Consolidated
 
(amounts in thousands)
Net cash provided by operating activities
$
78,832

 
1,851

 

 

 
80,683

Investing activities:
 
 
 
 
 
 
 
 
 
Capital expenditures
(5,110
)
 
(642
)
 

 

 
(5,752
)
Cost of subscriber accounts acquired
(86,831
)
 
(1,456
)
 

 

 
(88,287
)
Net cash used in investing activities
(91,941
)
 
(2,098
)
 

 

 
(94,039
)
Financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from long-term debt
95,550

 

 

 

 
95,550

Payments on long-term debt
(82,350
)
 

 

 

 
(82,350
)
Value of shares withheld for share-based compensation
(194
)
 

 

 

 
(194
)
Net cash provided by financing activities
13,006

 

 

 

 
13,006

Net decrease in cash and cash equivalents
(103
)
 
(247
)
 

 

 
(350
)
Cash and cash equivalents at beginning of period
1,739

 
1,438

 

 

 
3,177

Cash and cash equivalents at end of period
$
1,636

 
1,191

 

 

 
2,827


 
Six Months Ended June 30, 2016