Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition (Tables)

v3.8.0.1
Revenue Recognition (Tables)
3 Months Ended
Mar. 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):
 
Three Months Ended 
 March 31,
 
2018
 
2017
Alarm monitoring revenue
$
124,840

 
136,891

Product and installation revenue
8,147

 
3,294

Other revenue
766

 
1,015

Total Net revenue
$
133,753

 
141,200

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 months ended March 31, 2018 (in thousands):

i. Condensed consolidated balance sheets
 
Impact of changes in accounting policies
 
As reported
March 31, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
27,901

 

 
27,901

Restricted cash
93

 

 
93

Trade receivables, net of allowance for doubtful accounts
12,300

 

 
12,300

Prepaid and other current assets
23,193

 
(13,543
)
 
9,650

Total current assets
63,487

 
(13,543
)
 
49,944

Property and equipment, net of accumulated depreciation
34,043

 

 
34,043

Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization
1,224,937

 
48,249

 
1,273,186

Dealer network and other intangible assets, net of accumulated amortization
3,941

 

 
3,941

Goodwill
563,549

 

 
563,549

Other assets, net
27,627

 
(11,101
)
 
16,526

Total assets
$
1,917,584

 
23,605

 
1,941,189

Liabilities and Stockholder’s Equity
 

 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
12,858

 

 
12,858

Accrued payroll and related liabilities
5,556

 

 
5,556

Other accrued liabilities
61,728

 

 
61,728

Deferred revenue
13,477

 
1,192

 
14,669

Holdback liability
7,601

 

 
7,601

Current portion of long-term debt
11,000

 

 
11,000

Total current liabilities
112,220

 
1,192

 
113,412

Non-current liabilities:
 

 
 
 
 
Long-term debt
1,711,336

 

 
1,711,336

Long-term holdback liability
2,191

 

 
2,191

Derivative financial instruments
6,553

 

 
6,553

Deferred income tax liability, net
13,966

 

 
13,966

Other liabilities
3,098

 

 
3,098

Total liabilities
1,849,364

 
1,192

 
1,850,556

Commitments and contingencies


 

 

Stockholder’s equity:
 
 
 
 
 
Common stock

 

 

Additional paid-in capital
444,335

 

 
444,335

Accumulated deficit
(383,751
)
 
22,413

 
(361,338
)
Accumulated other comprehensive income, net
7,636

 

 
7,636

Total stockholder’s equity
68,220

 
22,413

 
90,633

Total liabilities and stockholder’s equity
$
1,917,584

 
23,605

 
1,941,189


ii. Condensed consolidated statements of operations and comprehensive income (loss)
 
Impact of changes in accounting policies
 
As reported three months ended
March 31, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Net revenue
$
133,753

 
(325
)
 
133,428

Operating expenses:
 

 
 
 
 
Cost of services
32,701

 
(1,922
)
 
30,779

Selling, general and administrative, including stock-based and long-term incentive compensation
32,014

 
21

 
32,035

Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
54,411

 
1,883

 
56,294

Depreciation
2,615

 

 
2,615

 
121,741

 
(18
)
 
121,723

Operating income
12,012

 
(307
)
 
11,705

Other expense:
 

 
 
 
 
Interest expense
36,873

 

 
36,873

 
36,873

 

 
36,873

Loss before income taxes
(24,861
)
 
(307
)
 
(25,168
)
Income tax expense
1,346

 

 
1,346

Net loss
(26,207
)
 
(307
)
 
(26,514
)
Other comprehensive income (loss):
 

 
 
 
 
Unrealized gain on derivative contracts, net
14,406

 

 
14,406

Total other comprehensive income, net of tax
14,406

 

 
14,406

Comprehensive loss
$
(11,801
)
 
(307
)
 
(12,108
)

iii. Condensed consolidated statements of cash flows
 
Impact of changes in accounting policies
 
As reported three months ended
March 31, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Cash flows from operating activities:
 
 
 
 
 
Net loss
$
(26,207
)
 
(307
)
 
(26,514
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 
 
 
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
54,411

 
1,883

 
56,294

Depreciation
2,615

 

 
2,615

Stock-based and long-term incentive compensation
(12
)
 

 
(12
)
Deferred income tax expense
662

 

 
662

Amortization of debt discount and deferred debt costs
1,789

 

 
1,789

Bad debt expense
3,017

 

 
3,017

Other non-cash activity, net
(852
)
 

 
(852
)
Changes in assets and liabilities:
 
 
 
 
 
Trade receivables
(2,672
)
 

 
(2,672
)
Prepaid expenses and other assets
650

 

 
650

Contract asset, net
(70
)
 
70

 

Subscriber accounts - deferred contract acquisition costs
(898
)
 
63

 
(835
)
Payables and other liabilities
17,921

 
388

 
18,309

Net cash provided by operating activities
50,354

 
2,097

 
52,451

Cash flows from investing activities:
 

 
 
 
 
Capital expenditures
(3,310
)
 

 
(3,310
)
Cost of subscriber accounts acquired
(24,560
)
 
(2,097
)
 
(26,657
)
Increase in restricted cash
(93
)
 

 
(93
)
Net cash used in investing activities
(27,963
)
 
(2,097
)
 
(30,060
)
Cash flows from financing activities:
 

 
 
 
 
Proceeds from long-term debt
50,000

 

 
50,000

Payments on long-term debt
(47,750
)
 

 
(47,750
)
Value of shares withheld for share-based compensation
(42
)
 

 
(42
)
Net cash provided by financing activities
2,208

 

 
2,208

Net increase in cash and cash equivalents
24,599

 

 
24,599

Cash and cash equivalents at beginning of period
3,302

 

 
3,302

Cash and cash equivalents at end of period
$
27,901

 

 
27,901



The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
 
March 31, 2018
 
At adoption
Trade receivables, net
$
12,300

 
12,645

Contract assets, net - current portion (a)
13,543

 
14,197

Contract assets, net - long-term portion (b)
11,101

 
10,377

Deferred revenue
13,477

 
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.