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

3 Months Ended

Mar. 31, 2014

Consolidating Guarantor Financial Information

Consolidating Guarantor Financial Information

(11) Consolidating Guarantor Financial Information

The Senior Notes were issued and the Credit Facility was entered into by Monitronics (the “Parent Issuer”) and both are guaranteed 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 or Credit Facility.

Consolidating guarantor financial information has not been presented for the three months ended March 31, 2013, as substantially all of the Company’s operations were conducted by the Parent Issuer entity. The Company believes that disclosing such information would not provide investors with any additional information that would be material in evaluating the sufficiency of the guarantees.

The unaudited condensed consolidating financial information for the Parent Issuer, the Subsidiary Guarantors and the non-guarantors as of and for the three months ended March 31, 2014, as well as the condensed consolidated balance sheet financial information as of December 31, 2013, are as follows:

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

(unaudited)

	As of March 31, 2014
	Parent Issuer		Subsidiary Guarantors	Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)
Assets
Current assets:
Cash and cash equivalents	$	29,305	2,138	—	—		31,443
Restricted cash	119		—	—	—		119
Trade receivables, net	12,418		1,478	—	—		13,896
Deferred income tax assets, net	6,763		1,767	—	—		8,530
Prepaid and other current assets	6,139		1,968	—	(1,238	)	6,869
Total current assets	54,744		7,351	—	(1,238	)	60,857

Investment in subsidiaries	500,660		—	—	(500,660	)	—
Property and equipment, net	23,560		549	—	—		24,109
Subscriber accounts, net	1,021,199		314,924	—	—		1,336,123
Dealer network and other intangible assets, net	17,253		42,437	—	—		59,690
Goodwill	350,213		176,300	—	—		526,513
Other assets, net	28,956		97	—	—		29,053
Total assets	$	1,996,585	541,658	—	(501,898	)	2,036,345

Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	4,229	950	—	—		5,179
Accrued payroll and related liabilities	2,943		395	—	—		3,338
Other accrued liabilities	40,664		5,798	—	(1,238	)	45,224
Deferred revenue	11,046		4,035	—	—		15,081
Holdback liability	15,973		3,254	—	—		19,227
Current portion of long-term debt	9,166		—	—	—		9,166
Total current liabilities	84,021		14,432	—	(1,238	)	97,215

Non-current liabilities:
Long-term debt	1,613,598		—	—	—		1,613,598
Long-term holdback liability	—		6,253	—	—		6,253
Derivative financial instruments	3,193		—	—	—		3,193
Deferred income tax liability, net	10,655		7,801	—	—		18,456
Other liabilities	2,623		12,512	—	—		15,135
Total liabilities	1,714,090		40,998	—	(1,238	)	1,753,850

Total stockholder’s equity	282,495		500,660	—	(500,660	)	282,495
Total liabilities and stockholder’s equity	$	1,996,585	541,658	—	(501,898	)	2,036,345

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Balance Sheets

(unaudited)

	As of December 31, 2013
	Parent Issuer		Subsidiary Guarantors	Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)
Assets
Current assets:
Cash and cash equivalents	$	1,775	2,580	—	—		4,355
Restricted cash	40		—	—	—		40
Trade receivables, net	11,374		1,645	—	—		13,019
Deferred income tax assets, net	6,763		1,767	—	—		8,530
Prepaid and other current assets	9,916		1,003	—	(4,600	)	6,319
Total current assets	29,868		6,995	—	(4,600	)	32,263

Investment in subsidiaries	498,820		—	—	(498,820	)	—
Property and equipment, net	23,572		989	—	—		24,561
Subscriber accounts, net	1,025,605		315,349	—	—		1,340,954
Dealer network and other intangible assets, net	19,773		44,862	—	—		64,635
Goodwill	350,213		176,300	—	—		526,513
Other assets, net	29,611		—	—	—		29,611
Total assets	$	1,977,462	544,495	—	(503,420	)	2,018,537

Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	5,491	1,404	—	—		6,895
Accrued payroll and related liabilities	2,649		530	—	—		3,179
Other accrued liabilities	27,137		10,917	—	(4,600	)	33,454
Deferred revenue	11,037		3,342	—	—		14,379
Holdback liability	16,640		3,118	—	—		19,758
Current portion of long-term debt	9,166		—	—	—		9,166
Total current liabilities	72,120		19,311	—	(4,600	)	86,831

Non-current liabilities:
Long-term debt	1,597,627		—	—	—		1,597,627
Long-term holdback liability	—		6,698	—	—		6,698
Derivative financial instruments	2,013		—	—	—		2,013
Deferred income tax liability, net	10,577		7,002	—	—		17,579
Other liabilities	3,401		12,664	—	—		16,065
Total liabilities	1,685,738		45,675	—	(4,600	)	1,726,813

Total stockholder’s equity	291,724		498,820	—	(498,820	)	291,724
Total liabilities and stockholder’s equity	$	1,977,462	544,495	—	(503,420	)	2,018,537

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)

(unaudited)

	Three months ended March 31, 2014
	Parent Issuer			Subsidiary Guarantors	Non-Guarantors	Eliminations		Consolidated
	(amounts in thousands)

Net revenue	$	104,093		28,771	—	—		132,864

Operating expenses:
Cost of services	17,782			4,308	—	—		22,090
Selling, general, and administrative, including stock-based compensation	19,032			3,940	—	—		22,972
Amortization of subscriber accounts, dealer network and other intangible assets	45,263			16,517	—	—		61,780
Depreciation	1,908			475	—	—		2,383
Restructuring charges	—			547		—		547
	83,985			25,787	—	—		109,772

Operating income	20,108			2,984	—	—		23,092

Other expense (income):
Equity in income of subsidiaries	(1,858		)	—	—	1,858		—
Interest expense	29,046			298	—	—		29,344
	27,188			298	—	1,858		29,344

Income (loss) before income taxes	(7,080		)	2,686	—	(1,858	)	(6,252	)
Income tax expense	771			828	—	—		1,599
Net income (loss)	(7,851		)	1,858	—	(1,858	)	(7,851	)

Other comprehensive loss:
Unrealized gain (loss) on derivative contracts	(1,671		)	—	—	—		(1,671	)
Total other comprehensive loss	(1,671		)	—	—	—		(1,671	)

Comprehensive income (loss)	$	(9,522	)	1,858	—	(1,858	)	(9,522	)

MONITRONICS INTERNATIONAL, INC. AND SUBSIDIARIES

Condensed Consolidating Statement of Cash Flows

(unaudited)

	Three months ended March 31, 2014
	Parent Issuer		Subsidiary Guarantors		Non- Guarantors	Eliminations	Consolidated
	(amounts in thousands)

Net cash provided by operating activities	53,546		13,665		—	—	67,211

Investing activities:
Capital expenditures	(1,903	)	(35	)	—	—	(1,938	)
Cost of subscriber accounts acquired	(39,742	)	(14,047	)	—	—	(53,789	)
Increase in restricted cash	(79	)	—		—	—	(79	)
Other investing activities	—		(25	)	—	—	(25	)

Net cash used in investing activities	(41,724	)	(14,107	)	—	—	(55,831	)

Financing activities:
Proceeds from long-term debt	42,900		—		—	—	42,900
Payments on long-term debt	(27,192	)	—		—	—	(27,192	)

Net cash provided by financing activities	15,708		—		—	—	15,708

Net increase (decrease) in cash and cash equivalents	27,530		(442	)	—	—	27,088

Cash and cash equivalents at beginning of period	1,775		2,580		—	—	4,355

Cash and cash equivalents at end of period	29,305		2,138		—	—	31,443

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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