Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition (Tables)

v3.10.0.1
Revenue Recognition (Tables)
6 Months Ended
Jun. 30, 2018
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue Disaggregated by Source
Revenue is disaggregated by source of revenue as follows (in thousands):
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Alarm monitoring revenue
$
124,844

 
136,453

 
$
249,685

 
273,343

Product and installation revenue
9,477

 
3,136

 
17,624

 
6,430

Other revenue
692

 
909

 
1,457

 
1,925

Total Net revenue
$
135,013

 
140,498

 
$
268,766

 
281,698

Schedule of Contract Balances and Financial Statement Impact
The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the three and six months ended June 30, 2018 (in thousands):

i. Condensed consolidated balance sheets
 
Impact of changes in accounting policies
 
As reported
June 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
2,103

 

 
2,103

Restricted cash
104

 

 
104

Trade receivables, net of allowance for doubtful accounts
12,456

 

 
12,456

Prepaid and other current assets
22,959

 
(13,528
)
 
9,431

Total current assets
37,622

 
(13,528
)
 
24,094

Property and equipment, net of accumulated depreciation
36,582

 

 
36,582

Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization
1,222,485

 
47,452

 
1,269,937

Dealer network and other intangible assets, net of accumulated amortization
1,213

 

 
1,213

Goodwill
349,149

 

 
349,149

Other assets, net
31,699

 
(12,908
)
 
18,791

Total assets
$
1,678,750

 
21,016

 
1,699,766

Liabilities and Stockholder’s (Deficit) Equity
 

 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
12,730

 

 
12,730

Accrued payroll and related liabilities
4,934

 

 
4,934

Other accrued liabilities
51,911

 

 
51,911

Deferred revenue
12,965

 
1,302

 
14,267

Holdback liability
9,740

 

 
9,740

Current portion of long-term debt
11,000

 

 
11,000

Total current liabilities
103,280

 
1,302

 
104,582

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
14,628

 

 
14,628

Other liabilities
2,958

 

 
2,958

Total liabilities
1,846,445

 
1,302

 
1,847,747

Commitments and contingencies


 

 

Stockholder’s (deficit) equity:
 
 
 
 
 
Common stock

 

 

Additional paid-in capital
444,691

 

 
444,691

Accumulated deficit
(625,543
)
 
19,714

 
(605,829
)
Accumulated other comprehensive income, net
13,157

 

 
13,157

Total stockholder’s (deficit) equity
(167,695
)
 
19,714

 
(147,981
)
Total liabilities and stockholder’s (deficit) equity
$
1,678,750

 
21,016

 
1,699,766


ii. Condensed consolidated statements of operations and comprehensive income (loss)
 
Impact of changes in accounting policies
 
As reported
three months ended
June 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Net revenue
$
135,013

 
(2,445
)
 
132,568

Operating expenses:
 
 
 
 
 
Cost of services
33,047

 
(1,596
)
 
31,451

Selling, general and administrative, including stock-based and long-term incentive compensation
32,655

 
(30
)
 
32,625

Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
53,891

 
1,880

 
55,771

Depreciation
2,865

 

 
2,865

Loss on goodwill impairment
214,400

 

 
214,400

 
336,858

 
254

 
337,112

Operating loss
(201,845
)
 
(2,699
)
 
(204,544
)
Other expense:
 
 
 
 
 
Interest expense
38,600

 

 
38,600

 
38,600

 

 
38,600

Loss before income taxes
(240,445
)
 
(2,699
)
 
(243,144
)
Income tax expense
1,347

 

 
1,347

Net loss
(241,792
)
 
(2,699
)
 
(244,491
)
Other comprehensive income (loss):
 
 
 
 
 
Unrealized gain on derivative contracts, net
5,521

 

 
5,521

Total other comprehensive income, net of tax
5,521

 

 
5,521

Comprehensive loss
$
(236,271
)
 
(2,699
)
 
(238,970
)


 
Impact of changes in accounting policies
 
As reported
six months ended
June 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Net revenue
$
268,766

 
(2,770
)
 
265,996

Operating expenses:
 
 
 
 
 
Cost of services
65,748

 
(3,518
)
 
62,230

Selling, general and administrative, including stock-based and long-term incentive compensation
64,669

 
(9
)
 
64,660

Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
108,302

 
3,763

 
112,065

Depreciation
5,480

 

 
5,480

Loss on goodwill impairment
214,400

 

 
214,400

 
458,599

 
236

 
458,835

Operating loss
(189,833
)
 
(3,006
)
 
(192,839
)
Other expense:
 
 
 
 
 
Interest expense
75,473

 

 
75,473

 
75,473

 

 
75,473

Loss before income taxes
(265,306
)
 
(3,006
)
 
(268,312
)
Income tax expense
2,693

 

 
2,693

Net loss
(267,999
)
 
(3,006
)
 
(271,005
)
Other comprehensive income (loss):
 

 
 
 
 
Unrealized gain on derivative contracts, net
19,927

 

 
19,927

Total other comprehensive income, net of tax
19,927

 

 
19,927

Comprehensive loss
$
(248,072
)
 
(3,006
)
 
(251,078
)

iii. Condensed consolidated statements of cash flows
 
Impact of changes in accounting policies
 
As reported
six months ended
June 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Cash flows from operating activities:
 
 
 
 
 
Net loss
$
(267,999
)
 
(3,006
)
 
(271,005
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 
 
 
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
108,302

 
3,763

 
112,065

Depreciation
5,480

 

 
5,480

Stock-based and long-term incentive compensation
406

 

 
406

Deferred income tax expense
1,324

 

 
1,324

Amortization of debt discount and deferred debt costs
3,613

 

 
3,613

Bad debt expense
5,623

 

 
5,623

Goodwill impairment
214,400

 

 
214,400

Other non-cash activity, net
1,463

 

 
1,463

Changes in assets and liabilities:
 
 
 
 
 
Trade receivables
(5,434
)
 

 
(5,434
)
Prepaid expenses and other assets
(2,276
)
 
3,164

 
888

Subscriber accounts - deferred contract acquisition costs
(2,586
)
 
89

 
(2,497
)
Payables and other liabilities
5,181

 
(783
)
 
4,398

Net cash provided by operating activities
67,497

 
3,227

 
70,724

Cash flows from investing activities:
 

 
 
 
 
Capital expenditures
(8,928
)
 

 
(8,928
)
Cost of subscriber accounts acquired
(69,695
)
 
(3,227
)
 
(72,922
)
Net cash used in investing activities
(78,623
)
 
(3,227
)
 
(81,850
)
Cash flows from 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 decrease in cash, cash equivalents and restricted cash
(1,095
)
 

 
(1,095
)
Cash, cash equivalents and restricted cash at beginning of period
3,302

 

 
3,302

Cash, cash equivalents and restricted cash at end of period
$
2,207

 

 
2,207



The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
 
June 30, 2018
 
At adoption
Trade receivables, net
$
12,456

 
12,645

Contract assets, net - current portion (a)
13,528

 
14,197

Contract assets, net - long-term portion (b)
12,908

 
10,377

Deferred revenue
12,965

 
12,892

 
(a)        Amount is included in Prepaid and other current assets in the unaudited condensed consolidated balance sheets.
(b)        Amount is included in Other assets in the unaudited condensed consolidated balance sheets.