Annual report pursuant to Section 13 and 15(d)

Revenue Recognition (Tables)

v3.19.1
Revenue Recognition (Tables)
12 Months Ended
Dec. 31, 2018
Revenue from Contract with Customer [Abstract]  
Schedule of Revenue Disaggregated by Source
Revenue is disaggregated by source of revenue as follows (in thousands):
 
Year Ended December 31,
 
2018
 
2017
 
2016
Alarm monitoring revenue
$
498,236

 
537,399

 
552,590

Product and installation revenue
38,455

 
12,308

 
13,264

Other revenue
3,667

 
3,748

 
4,518

Total Net revenue
$
540,358

 
553,455

 
570,372

Schedule of Receivables, Contract Assets and Contract Liabilities
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
 
December 31, 2018
 
At adoption
Trade receivables, net
$
13,121

 
12,645

Contract assets, net - current portion (a)
13,452

 
14,197

Contract assets, net - long-term portion (b)
16,154

 
10,377

Deferred revenue
13,060

 
12,892

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

Schedule of Financial Statement Impact
The following tables summarize the impacts of adopting Topic 606 on the Company’s consolidated financial statements as of and for the year ended December 31, 2018 (in thousands):




i. Consolidated balance sheets
 
Impact of changes in accounting policies
 
As reported
December 31, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
2,188

 

 
2,188

Restricted cash
189

 

 
189

Trade receivables, net of allowance for doubtful accounts
13,121

 

 
13,121

Prepaid and other current assets
28,178

 
(13,452
)
 
14,726

Total current assets
43,676

 
(13,452
)
 
30,224

Property and equipment, net of accumulated depreciation
36,539

 

 
36,539

Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization
1,195,463

 
45,970

 
1,241,433

Deferred income tax asset, net
783

 

 
783

Other assets, net
29,307

 
(16,154
)
 
13,153

Total assets
$
1,305,768

 
16,364

 
1,322,132

Liabilities and Stockholders’ (Deficit) Equity
 

 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
12,099

 

 
12,099

Other accrued liabilities
31,085

 

 
31,085

Deferred revenue
13,060

 
1,347

 
14,407

Holdback liability
11,513

 

 
11,513

Current portion of long-term debt
1,816,450

 

 
1,816,450

Total current liabilities
1,884,207

 
1,347

 
1,885,554

Non-current liabilities:
 

 
 
 
 
Long-term debt

 

 

Long-term holdback liability
1,770

 

 
1,770

Derivative financial instruments
6,039

 

 
6,039

Other liabilities
2,727

 

 
2,727

Total liabilities
1,894,743

 
1,347

 
1,896,090

Commitments and contingencies


 


 


Stockholders’ (deficit) equity:
 
 
 
 
 
Common stock

 

 

Additional paid-in capital
439,711

 

 
439,711

Accumulated deficit
(1,036,294
)
 
15,017

 
(1,021,277
)
Accumulated other comprehensive income, net
7,608

 

 
7,608

Total stockholders’ (deficit) equity
(588,975
)
 
15,017

 
(573,958
)
Total liabilities and stockholders’ (deficit) equity
$
1,305,768

 
16,364

 
1,322,132


ii. Consolidated statements of operations and comprehensive income (loss)
 
Impact of changes in accounting policies
 
As reported
year ended
December 31, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Net revenue
$
540,358

 
(8,149
)
 
532,209

Operating expenses:
 

 
 
 
 
Cost of services
128,939

 
(6,263
)
 
122,676

Selling, general and administrative, including stock-based and long-term incentive compensation
118,940

 
(1,670
)
 
117,270

Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
211,639

 
7,487

 
219,126

Depreciation
11,434

 

 
11,434

Loss on goodwill impairment
563,549

 

 
563,549

 
1,034,501

 
(446
)
 
1,034,055

Operating loss
(494,143
)
 
(7,703
)
 
(501,846
)
Other expense, net:
 

 
 
 
 
Interest expense
180,770

 

 
180,770

Unrealized loss on derivative financial instruments
3,151

 

 
3,151

Refinancing expense
12,238

 

 
12,238

 
196,159

 

 
196,159

Loss before income taxes
(690,302
)
 
(7,703
)
 
(698,005
)
Income tax expense
(11,552
)
 

 
(11,552
)
Net loss
(678,750
)
 
(7,703
)
 
(686,453
)
Other comprehensive income (loss):
 
 
 
 
 
Unrealized gain on derivative contracts, net
14,378

 

 
14,378

Total other comprehensive income, net of tax
14,378

 

 
14,378

Comprehensive loss
$
(664,372
)
 
(7,703
)
 
(672,075
)

iii. Consolidated statements of cash flows
 
Impact of changes in accounting policies
 
As reported
year ended
December 31, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Cash flows from operating activities:
 
 
 
 
 
Net loss
$
(678,750
)
 
(7,703
)
 
(686,453
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 
 
 
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
211,639

 
7,487

 
219,126

Depreciation
11,434

 

 
11,434

Stock-based and long-term incentive compensation
310

 

 
310

Deferred income tax expense
(14,087
)
 

 
(14,087
)
Non-cash legal settlement reserve (related insurance recovery)
(2,750
)
 

 
(2,750
)
Amortization of debt discount and deferred debt costs
33,452

 

 
33,452

Refinancing expense
12,238

 

 
12,238

Unrealized loss on derivative financial instruments
3,151

 

 
3,151

Bad debt expense
12,300

 

 
12,300

Goodwill impairment
563,549

 

 
563,549

Other non-cash activity, net
24

 

 
24

Changes in assets and liabilities:
 
 
 
 
 
Trade receivables
(12,776
)
 

 
(12,776
)
Prepaid expenses and other assets
(11,046
)
 
6,379

 
(4,667
)
Subscriber accounts - deferred contract acquisition costs
(5,418
)
 
89

 
(5,329
)
Payables and other liabilities
(18,767
)
 
(581
)
 
(19,348
)
Net cash provided by operating activities
104,503

 
5,671

 
110,174

Cash flows from investing activities:
 

 
 
 
 
Capital expenditures
(14,903
)
 

 
(14,903
)
Cost of subscriber accounts acquired
(140,450
)
 
(5,671
)
 
(146,121
)
Net cash used in investing activities
(155,353
)
 
(5,671
)
 
(161,024
)
Cash flows from financing activities:
 

 
 
 
 
Proceeds from long-term debt
248,800

 

 
248,800

Payments on long-term debt
(184,100
)
 

 
(184,100
)
Payments of financing costs
(9,682
)
 

 
(9,682
)
Value of shares withheld for share-based compensation
(93
)
 

 
(93
)
Dividend to Ascent Capital
(5,000
)
 

 
(5,000
)
Net cash provided by financing activities
49,925

 

 
49,925

Net decrease in cash, cash equivalents and restricted cash
(925
)
 

 
(925
)
Cash, cash equivalents and restricted cash at beginning of period
3,302

 

 
3,302

Cash, cash equivalents and restricted cash at end of period
$
2,377

 

 
2,377