Quarterly report pursuant to Section 13 or 15(d)

Reportable Business Segments

v3.5.0.2
Reportable Business Segments
6 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Reportable Business Segments
Reportable Business Segments

Description of Segments

The Company operates through two reportable business segments according to the nature and economic characteristics of its services as well as the manner in which the information issued internally by the Company's key decision maker, who is the Company's Chief Executive Officer. The Company's business segments are as follows:

Monitronics

The Monitronics segment is primarily engaged in the business of providing security alarm monitoring services: monitoring signals arising from burglaries, fires, medical alerts and other events through security systems at subscribers' premises, as well as providing customer service and technical support. Monitronics outsources the sales, installation and most of its field service functions to its dealers. By outsourcing the low margin, high fixed-cost elements of its business to a large network of independent service providers, Monitronics is able to allocate capital to growing its revenue-generating account base rather than to local offices or depreciating hard assets.

LiveWatch

LiveWatch is a do-it-yourself ("DIY") home security provider offering professionally monitored security services through a direct-to-consumer sales channel. LiveWatch offers a differentiated go-to-market strategy through direct response TV, internet and radio advertising. When a customer initiates the process to obtain monitoring services, LiveWatch pre-configures the alarm monitoring system based on customer specifications. LiveWatch then packages and ships the equipment directly to the customer. The customer self-installs the equipment on-site and activates the monitoring service over the phone.

As they arise, transactions between segments are recorded on a arm's length basis using relevant market prices. Prior to the acquisition of LiveWatch in February 2015, Ascent Capital had one operating segment. Therefore, the LiveWatch segment only includes amounts incurred from the purchase date. The following table sets forth selected data from the accompanying condensed consolidated statements of operations for the periods indicated (amounts in thousands):

 
 
Monitronics
 
LiveWatch
 
Consolidated
 
 
Three months ended June 30, 2016
Net revenue
 
$
138,174

 
$
5,482

 
$
143,656

Depreciation and amortization
 
$
62,877

 
$
1,085

 
$
63,962

Net loss before income taxes
 
$
(9,703
)
 
$
(5,063
)
 
$
(14,766
)
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2015
Net revenue
 
$
137,436

 
$
4,107

 
$
141,543

Depreciation and amortization
 
$
64,902

 
$
1,108

 
$
66,010

Net loss before income taxes
 
$
(9,306
)
 
$
(4,670
)
 
$
(13,976
)
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2016
Net revenue
 
$
276,270

 
$
10,654

 
$
286,924

Depreciation and amortization
 
$
125,029

 
$
2,230

 
$
127,259

Net loss before income taxes
 
$
(22,854
)
 
$
(10,332
)
 
$
(33,186
)
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2015
Net revenue
 
$
274,337

 
$
5,622

 
$
279,959

Depreciation and amortization
 
$
129,898

 
$
1,550

 
$
131,448

Net loss before income taxes
 
$
(13,943
)
 
$
(6,406
)
 
$
(20,349
)


The following table sets forth selected data from the accompanying condensed consolidated balance sheets for the periods indicated (amounts in thousands):

 
 
Monitronics
 
LiveWatch
 
Eliminations
 
Consolidated
 
 
Balance at June 30, 2016
Subscriber accounts, net of amortization
 
$
1,388,366

 
$
22,303

 
$

 
$
1,410,669

Goodwill
 
$
527,502

 
$
36,047

 
$

 
$
563,549

Total assets
 
$
2,069,519

 
$
62,983

 
$
(82,494
)
 
$
2,050,008

 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
Subscriber accounts, net of amortization
 
$
1,400,515

 
$
23,023

 
$

 
$
1,423,538

Goodwill
 
$
527,502

 
$
36,047

 
$

 
$
563,549

Total assets
 
$
2,033,180

 
$
63,267

 
$
(26,180
)
 
$
2,070,267