Quarterly report pursuant to Section 13 or 15(d)

Revenue Recognition (Tables)

v3.10.0.1
Revenue Recognition (Tables)
9 Months Ended
Sep. 30, 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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2018
 
2017
 
2018
 
2017
Alarm monitoring revenue
$
125,004

 
134,317

 
$
374,689

 
407,660

Product and installation revenue
11,360

 
2,899

 
28,984

 
9,328

Other revenue
792

 
995

 
2,249

 
2,921

Total Net revenue
$
137,156

 
138,211

 
$
405,922

 
419,909

Schedule of Contract Balances and Financial Statement Impact
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):
 
September 30, 2018
 
At adoption
Trade receivables, net
$
13,162

 
12,645

Contract assets, net - current portion (a)
13,836

 
14,197

Contract assets, net - long-term portion (b)
16,621

 
10,377

Deferred revenue
12,069

 
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.
The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the three and nine months ended September 30, 2018 (in thousands):

i. Condensed consolidated balance sheets
 
Impact of changes in accounting policies
 
As reported
September 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
26,835

 

 
26,835

Restricted cash
133

 

 
133

Trade receivables, net of allowance for doubtful accounts
13,162

 

 
13,162

Prepaid and other current assets
26,794

 
(13,836
)
 
12,958

Total current assets
66,924

 
(13,836
)
 
53,088

Property and equipment, net of accumulated depreciation
36,553

 

 
36,553

Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization
1,215,831

 
47,095

 
1,262,926

Dealer network and other intangible assets, net of accumulated amortization

 

 

Goodwill
349,149

 

 
349,149

Other assets, net
36,812

 
(16,621
)
 
20,191

Total assets
$
1,705,269

 
16,638

 
1,721,907

Liabilities and Stockholder’s (Deficit) Equity
 

 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
11,636

 

 
11,636

Accrued payroll and related liabilities
6,135

 

 
6,135

Other accrued liabilities
40,289

 

 
40,289

Deferred revenue
12,069

 
1,133

 
13,202

Holdback liability
10,766

 

 
10,766

Current portion of long-term debt
11,000

 

 
11,000

Total current liabilities
91,895

 
1,133

 
93,028

Non-current liabilities:
 

 
 
 
 
Long-term debt
1,795,119

 

 
1,795,119

Long-term holdback liability
2,031

 

 
2,031

Derivative financial instruments
1,139

 

 
1,139

Deferred income tax liability, net
15,291

 

 
15,291

Other liabilities
2,701

 

 
2,701

Total liabilities
1,908,176

 
1,133

 
1,909,309

Commitments and contingencies


 

 

Stockholder’s (deficit) equity:
 
 
 
 
 
Common stock

 

 

Additional paid-in capital
440,050

 

 
440,050

Accumulated deficit
(659,383
)
 
15,505

 
(643,878
)
Accumulated other comprehensive income, net
16,426

 

 
16,426

Total stockholder’s (deficit) equity
(202,907
)
 
15,505

 
(187,402
)
Total liabilities and stockholder’s (deficit) equity
$
1,705,269

 
16,638

 
1,721,907


ii. Condensed consolidated statements of operations and comprehensive income (loss)
 
Impact of changes in accounting policies
 
As reported
three months ended
September 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Net revenue
$
137,156

 
(4,216
)
 
132,940

Operating expenses:
 
 
 
 
 
Cost of services
35,059

 
(1,774
)
 
33,285

Selling, general and administrative, including stock-based and long-term incentive compensation
34,266

 
(103
)
 
34,163

Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
52,671

 
1,870

 
54,541

Depreciation
2,880

 

 
2,880

Loss on goodwill impairment

 

 

 
124,876

 
(7
)
 
124,869

Operating loss
12,280

 
(4,209
)
 
8,071

Other expense:
 
 
 
 
 
Interest expense
39,077

 

 
39,077

Refinancing expense
5,697

 

 
5,697

 
44,774

 

 
44,774

Loss before income taxes
(32,494
)
 
(4,209
)
 
(36,703
)
Income tax expense
1,346

 

 
1,346

Net loss
(33,840
)
 
(4,209
)
 
(38,049
)
Other comprehensive income (loss):
 
 
 
 
 
Unrealized gain on derivative contracts, net
3,269

 

 
3,269

Total other comprehensive income, net of tax
3,269

 

 
3,269

Comprehensive loss
$
(30,571
)
 
(4,209
)
 
(34,780
)


 
Impact of changes in accounting policies
 
As reported
nine months ended
September 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Net revenue
$
405,922

 
(6,986
)
 
398,936

Operating expenses:
 
 
 
 
 
Cost of services
100,807

 
(5,292
)
 
95,515

Selling, general and administrative, including stock-based and long-term incentive compensation
98,935

 
(112
)
 
98,823

Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
160,973

 
5,633

 
166,606

Depreciation
8,360

 

 
8,360

Loss on goodwill impairment
214,400

 

 
214,400

 
583,475

 
229

 
583,704

Operating loss
(177,553
)
 
(7,215
)
 
(184,768
)
Other expense:
 
 
 
 
 
Interest expense
114,550

 

 
114,550

Refinancing expense
5,697

 

 
5,697

 
120,247

 

 
120,247

Loss before income taxes
(297,800
)
 
(7,215
)
 
(305,015
)
Income tax expense
4,039

 

 
4,039

Net loss
(301,839
)
 
(7,215
)
 
(309,054
)
Other comprehensive income (loss):
 

 
 
 
 
Unrealized gain on derivative contracts, net
23,196

 

 
23,196

Total other comprehensive income, net of tax
23,196

 

 
23,196

Comprehensive loss
$
(278,643
)
 
(7,215
)
 
(285,858
)

iii. Condensed consolidated statements of cash flows
 
Impact of changes in accounting policies
 
As reported
nine months ended
September 30, 2018
 
Adjustments
 
Balances without adoption of Topic 606
Cash flows from operating activities:
 
 
 
 
 
Net loss
$
(301,839
)
 
(7,215
)
 
(309,054
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 
 
 
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
160,973

 
5,633

 
166,606

Depreciation
8,360

 

 
8,360

Stock-based and long-term incentive compensation
751

 

 
751

Deferred income tax expense
1,987

 

 
1,987

Refinancing expense
5,697

 

 
5,697

Amortization of debt discount and deferred debt costs
5,472

 

 
5,472

Bad debt expense
8,511

 

 
8,511

Goodwill impairment
214,400

 

 
214,400

Other non-cash activity, net
2,040

 

 
2,040

Changes in assets and liabilities:
 
 
 
 
 
Trade receivables
(9,028
)
 

 
(9,028
)
Prepaid expenses and other assets
(9,769
)
 
7,016

 
(2,753
)
Subscriber accounts - deferred contract acquisition costs
(4,529
)
 
89

 
(4,440
)
Payables and other liabilities
(8,568
)
 
(825
)
 
(9,393
)
Net cash provided by operating activities
74,458

 
4,698

 
79,156

Cash flows from investing activities:
 

 
 
 
 
Capital expenditures
(11,513
)
 

 
(11,513
)
Cost of subscriber accounts acquired
(111,531
)
 
(4,698
)
 
(116,229
)
Net cash used in investing activities
(123,044
)
 
(4,698
)
 
(127,742
)
Cash flows from financing activities:
 

 
 
 
 
Proceeds from long-term debt
218,950

 

 
218,950

Payments on long-term debt
(136,600
)
 

 
(136,600
)
Payments of financing costs
(5,015
)
 

 
(5,015
)
Value of shares withheld for share-based compensation
(83
)
 

 
(83
)
Dividend to Ascent Capital
(5,000
)
 

 
(5,000
)
Net cash provided by financing activities
72,252

 

 
72,252

Net increase in cash, cash equivalents and restricted cash
23,666

 

 
23,666

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

 

 
3,302

Cash, cash equivalents and restricted cash at end of period
$
26,968

 

 
26,968