Brinks Home Security Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Consolidating Guarantor Financial Information

Consolidating Guarantor Financial Information

6 Months Ended

Jun. 30, 2018

Condensed Financial Information Disclosure [Abstract]

Consolidating Guarantor Financial Information

The Senior Notes were issued by Brinks Home Security (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:

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

(unaudited)



	As of June 30, 2018
	Parent Issuer			Subsidiary Guarantors		Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)
Assets
Current assets:
Cash and cash equivalents	$	1,282		821		—	—		2,103
Restricted cash	104			—		—	—		104
Trade receivables, net	11,817			639		—	—		12,456
Prepaid and other current assets	97,842			3,059		—	(77,942	)	22,959
Total current assets	111,045			4,519		—	(77,942	)	37,622

Property and equipment, net	34,513			2,069		—	—		36,582
Subscriber accounts and deferred contract acquisition costs, net	1,186,868			35,617		—	—		1,222,485
Dealer network and other intangible assets, net	1,213			—		—	—		1,213
Goodwill	313,102			36,047		—	—		349,149
Other assets, net	30,795			904		—	—		31,699
Total assets	$	1,677,536		79,156		—	(77,942	)	1,678,750

Liabilities and Stockholder's (Deficit) Equity
Current liabilities:
Accounts payable	$	11,068		1,662		—	—		12,730
Accrued payroll and related liabilities	4,251			683		—	—		4,934
Other accrued liabilities	47,641			82,212		—	(77,942	)	51,911
Deferred revenue	11,284			1,681		—	—		12,965
Holdback liability	9,579			161		—	—		9,740
Current portion of long-term debt	11,000			—		—	—		11,000
Total current liabilities	94,823			86,399		—	(77,942	)	103,280

Non-current liabilities:
Long-term debt	1,720,235			—		—	—		1,720,235
Long-term holdback liability	2,031			—		—	—		2,031
Derivative financial instruments	3,313			—		—	—		3,313
Deferred income tax liability, net	12,731			1,897		—	—		14,628
Other liabilities	12,098			—		—	(9,140	)	2,958
Total liabilities	1,845,231			88,296		—	(87,082	)	1,846,445

Total stockholder's (deficit) equity	(167,695		)	(9,140	)	—	9,140		(167,695	)
Total liabilities and stockholder's (deficit) equity	$	1,677,536		79,156		—	(77,942	)	1,678,750

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheet

(unaudited)



	As of December 31, 2017
	Parent Issuer		Subsidiary Guarantors	Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)
Assets
Current assets:
Cash and cash equivalents	$	2,705	597	—	—		3,302
Trade receivables, net	12,082		563	—	—		12,645
Prepaid and other current assets	74,613		2,396	—	(66,341	)	10,668
Total current assets	89,400		3,556	—	(66,341	)	26,615

Investment in subsidiaries	4,554		—	—	(4,554	)	—
Property and equipment, net	30,727		2,062	—	—		32,789
Subscriber accounts and deferred contract acquisition costs, net	1,265,519		36,509	—	—		1,302,028
Dealer network and other intangible assets, net	6,063		931	—	—		6,994
Goodwill	527,191		36,358	—	—		563,549
Other assets, net	9,311		29	—	—		9,340
Total assets	$	1,932,765	79,445	—	(70,895	)	1,941,315

Liabilities and Stockholder's Equity
Current liabilities:
Accounts payable	$	9,705	1,368	—	—		11,073
Accrued payroll and related liabilities	2,648		810	—	—		3,458
Other accrued liabilities	47,800		68,567	—	(66,341	)	50,026
Deferred revenue	12,332		1,539	—	—		13,871
Holdback liability	9,035		274	—	—		9,309
Current portion of long-term debt	11,000		—	—	—		11,000
Total current liabilities	92,520		72,558	—	(66,341	)	98,737

Non-current liabilities:
Long-term debt	1,707,297		—	—	—		1,707,297
Long-term holdback liability	2,658		—	—	—		2,658
Derivative financial instruments	13,491		—	—	—		13,491
Deferred income tax liability, net	11,684		1,620	—	—		13,304
Other liabilities	2,379		713	—	—		3,092
Total liabilities	1,830,029		74,891	—	(66,341	)	1,838,579

Total stockholder's equity	102,736		4,554	—	(4,554	)	102,736
Total liabilities and stockholder's equity	$	1,932,765	79,445	—	(70,895	)	1,941,315

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

(unaudited)



	Three Months Ended June 30, 2018
	Parent Issuer			Subsidiary Guarantors		Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)
Net revenue	$	124,126		10,887		—	—		135,013

Operating expenses:
Cost of services	27,865			5,182		—	—		33,047
Selling, general, and administrative, including stock-based compensation	22,616			10,039		—	—		32,655
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets	52,091			1,800		—	—		53,891
Depreciation	2,622			243		—	—		2,865
Loss on goodwill impairment	214,089			311		—	—		214,400
	319,283			17,575		—	—		336,858
Operating loss	(195,157		)	(6,688	)	—	—		(201,845	)
Other expense:
Equity in loss of subsidiaries	6,870			—		—	(6,870	)	—
Interest expense	38,600			—		—	—		38,600
	45,470			—		—	(6,870	)	38,600
Loss before income taxes	(240,627		)	(6,688	)	—	6,870		(240,445	)
Income tax expense	1,165			182		—	—		1,347
Net loss	(241,792		)	(6,870	)	—	6,870		(241,792	)
Other comprehensive income (loss):
Unrealized gain on derivative contracts	5,521			—		—	—		5,521
Total other comprehensive income	5,521			—		—	—		5,521
Comprehensive loss	$	(236,271	)	(6,870	)	—	6,870		(236,271	)

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

Operating expenses:
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, deferred contract acquisition costs 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	)

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

(unaudited)



	Six Months Ended June 30, 2018
	Parent Issuer			Subsidiary Guarantors		Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)
Net revenue	$	248,421		20,345		—	—		268,766

Operating expenses:
Cost of services	56,164			9,584		—	—		65,748
Selling, general, and administrative, including stock-based compensation	45,419			19,250		—	—		64,669
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets	104,328			3,974		—	—		108,302
Depreciation	5,007			473		—	—		5,480
Loss on goodwill impairment	214,089			311		—	—		214,400
	425,007			33,592		—	—		458,599
Operating loss	(176,586		)	(13,247	)	—	—		(189,833	)
Other expense:
Equity in loss of subsidiaries	13,610			—		—	(13,610	)	—
Interest expense	75,473			—		—	—		75,473
	89,083			—		—	(13,610	)	75,473
Loss before income taxes	(265,669		)	(13,247	)	—	13,610		(265,306	)
Income tax expense	2,330			363		—	—		2,693
Net loss	(267,999		)	(13,610	)	—	13,610		(267,999	)
Other comprehensive income (loss):
Unrealized gain on derivative contracts	19,927			—		—	—		19,927
Total other comprehensive income	19,927			—		—	—		19,927
Comprehensive loss	$	(248,072	)	(13,610	)	—	13,610		(248,072	)

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

Operating expenses:
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, deferred contract acquisition costs 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	)

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

(unaudited)



	Six Months Ended June 30, 2018
	Parent Issuer			Subsidiary Guarantors		Non-Guarantors	Eliminations	Consolidated
	(amounts in thousands)
Net cash provided by operating activities	$	66,082		1,415		—	—	67,497
Investing activities:
Capital expenditures	(8,449		)	(479	)	—	—	(8,928	)
Cost of subscriber accounts acquired	(68,983		)	(712	)	—	—	(69,695	)
Net cash used in investing activities	(77,432		)	(1,191	)	—	—	(78,623	)
Financing activities:
Proceeds from long-term debt	105,300			—		—	—	105,300
Payments on long-term debt	(95,200		)	—		—	—	(95,200	)
Value of shares withheld for share-based compensation	(69		)	—		—	—	(69	)
Net cash provided by financing activities	10,031			—		—	—	10,031
Net increase (decrease) in cash, cash equivalents and restricted cash	(1,319		)	224		—	—	(1,095	)
Cash, cash equivalents and restricted cash at beginning of period	2,705			597		—	—	3,302
Cash, cash equivalents and restricted cash at end of period	$	1,386		821		—	—	2,207



	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, cash equivalents and restricted cash	(103		)	(247	)	—	—	(350	)
Cash, cash equivalents and restricted cash at beginning of period	1,739			1,438		—	—	3,177
Cash, cash equivalents and restricted cash at end of period	$	1,636		1,191		—	—	2,827