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
|
|
|