Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (date of earliest event reported): May 8, 2018
 
ASCENT CAPITAL GROUP, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-34176
 
26-2735737
(State or other jurisdiction of
 
(Commission
 
(I.R.S. Employer
incorporation or organization)
 
File Number)
 
Identification No.)
 
5251 DTC Parkway, Suite 1000
Greenwood Village, Colorado 80111
(Address of principal executive offices and zip code)
 
Registrant’s telephone number, including area code: (303) 628-5600
 
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02. Results of Operations and Financial Condition.
 
On May 8, 2018, Ascent Capital Group, Inc. (the “Company”) issued a press release, attached hereto as Exhibit 99.1, setting forth information, including financial information, which is intended to supplement the financial statements and related Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, which the Company filed with the Securities and Exchange Commission on May 10, 2018.
The information furnished pursuant to this Form 8-K (including the exhibit hereto) shall not be considered “filed” under the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless the Company expressly states in such filing that such information is to be considered “filed” or incorporated by reference therein.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit No.
 
Description
99.1
 

2



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: May 10, 2018
 
 
ASCENT CAPITAL GROUP, INC.
 
 
 
 
 
By:
/s/ William E. Niles
 
 
Name:
William E. Niles
 
 
Title:
Chief Executive Officer, General Counsel and Secretary



3
Exhibit


Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12246841&doc=3

ASCENT CAPITAL GROUP ANNOUNCES FINANCIAL RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2018

Englewood, CO - May 8, 2018 - Ascent Capital Group, Inc. (“Ascent” or the “Company”) (Nasdaq: ASCMA) has reported results for the three months ended March 31, 2018. Ascent is a holding company that owns MONI, one of the nation’s largest home security alarm monitoring companies.

Headquartered in the Dallas-Fort Worth area, MONI provides security alarm monitoring services to over 950,000 residential and commercial customers as of March 31, 2018. MONI’s long-term monitoring contracts provide high margin recurring revenue that results in predictable and stable cash flow.

Highlights1:
Ascent’s net revenue for the three months ended March 31, 2018 totaled $133.8 million.
Ascent’s net loss for the three months ended March 31, 2018 totaled $30.8 million. MONI’s net loss for the three months ended March 31, 2018 totaled $26.2 million.
Ascent’s Adjusted EBITDA for the three months ended March 31, 2018 totaled $68.9 million. MONI’s Adjusted EBITDA for the three months ended March 31, 2018 totaled $70.0 million.
The Company expects to formally launch the Brinks Home Security brand in May 2018.
The Company’s partnership with Nest is off to a solid start with approximately 3,000 accounts activated since the launch of professional monitoring on December 5, 2017.
The Company’s Direct Channel grew 21% year-over-year and 16% sequentially.
Consolidated creation costs totaled 34.6 times in the three months ended March 31, 2018, down 1.0 times year-over-year and down 1.4 times sequentially, due to improved efficiency in the Company’s Direct Channel.

Ascent Chief Executive Officer, Bill Niles stated, “The MONI team continues to remain focused on improving key operating metrics. MONI delivered significant year over year growth in the direct to consumer sales channel and they have positioned the business to launch all of its operations, marketing and sales efforts under the Brinks Home Security™ brand in the second quarter. We are pleased with the progress.
Jeffery Gardner, President and Chief Executive Officer of MONI said, “In the first quarter we made solid progress against several of our operational initiatives, including improvements in account growth and creation multiples. On a sequential basis, we delivered a 17% and 16% improvement in customer additions in our Dealer and Direct Channels, respectively, in the quarter. Our largest dealer, Skyline, improved performance in each month of the quarter since launching with MONI on January 1st. Our partnership with Nest is also ramping up with approximately 3,000 accounts activated since the launch of professional monitoring on December 5, 2017. Further, consolidated creation costs dropped in the first quarter to 34.6 times. While we saw some sequential improvement in RMR attrition, we still have more work to do on both unit and RMR attrition, leveraging pricing strategies while taking a balanced approach to contract extensions.
“Our efforts around the BRINKS rebrand are also progressing. We are on track to officially launch the full rebranding in May. We are excited for this new chapter in the Company’s evolution and look forward to the opportunities ahead.”


 
1. Comparisons are year-over-year unless otherwise specified.


1



Results for the Three Months Ended March 31, 20182 

For the three months ended March 31, 2018, Ascent reported net revenue of $133.8 million, a decrease of 5.3%. The reduction in revenue for the three months ended March 31, 2018 is due to the lower average number of subscribers in the first quarter of 2018 as a result of lower production in the dealer channel leading to fewer subscriber additions than cancellations. This decrease was partially offset by an increase in average recurring monthly revenue (“RMR”) per subscriber to $44.76 due to certain price increases enacted during the past twelve months.

Ascent’s total cost of services for the three months ended March 31, 2018 increased 9.1% to $32.7 million. The increase for the three months ended March 31, 2018 is primarily attributable to expensing subscriber moves costs of $2.4 million which were previously capitalized on the balance sheet in periods prior to January 1, 2018. This was principally the result of adoption of the new revenue recognition standard, Topic 606. An increase in subscriber acquisition costs, which include certain equipment costs and MONI labor expenditures associated with the creation of new subscribers, also contributed to the increase in total cost of services. Subscriber acquisition costs recognized in cost of services were $3.6 million for the three months ended March 31, 2018 as compared to $2.7 million for the three months ended March 31, 2017.

Ascent’s selling, general & administrative ("SG&A") costs for the three months ended March 31, 2018, increased 3.2% to $37.4 million. The increase is attributable to $3.0 million in severance and related costs in conjunction with transitioning executive leadership at Ascent and increases in direct marketing and other SG&A subscriber acquisition costs associated with the creation of new subscribers. Subscriber acquisition costs in SG&A increased to $8.1 million for the three months ended March 31, 2018, as compared to $6.4 million for the three months ended March 31, 2017. These increases were offset by decreases in stock based compensation expense and LiveWatch acquisition contingent bonus charges due to recent settlements or renegotiations of certain key agreements governing these costs. Furthermore, there was $713,000 and $641,000 of software impairment charges and consulting fees on integration and implementation of company initiatives, respectively, that were recognized in the three months ended March 31, 2017 with no corresponding costs being incurred in the three months ended March 31, 2018.

Ascent reported a net loss from continuing operations for the three months ended March 31, 2018 of $30.8 million, compared to net loss from continuing operations of $18.9 million in the prior year period.

MONI reported a net loss for the three months ended March 31, 2018 of $26.2 million, as compared to a net loss of $21.0 million in the prior year period.

Ascent’s Adjusted EBITDA decreased 13.9% to $68.9 million for the three months ended March 31, 2018, as compared to $80 million in the three months ended March 31, 2017. MONI’s Adjusted EBITDA decreased 14.8% to $70.0 million during the three months ended March 31, 2018, as compared to $82.2 million in the three months ended March 31, 2017. The decrease for the three months ended March 31, 2018 is primarily the result of lower revenues, the expensing of subscriber moves costs, and an increase in total subscriber acquisition costs, net of related revenue. Total subscriber acquisition costs, net of related revenue, increased to $10.2 million for the three months ended March 31, 2018 as compared to $7.6 million for the three months ended March 31, 2017. The increase is primarily the result of increased production in our direct-to-consumer sales channel year over year. MONI's Adjusted EBITDA as a percentage of net revenue for the three months ended March 31, 2018 was 52.4%, compared to 58.2% in the prior year period.

For a reconciliation of net loss from continuing operations to Adjusted EBITDA, please see the Appendix of this release.




 
2. On January 1, 2018, Ascent adopted the new revenue recognition standard, FASB ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”) using the modified retrospective approach, which means the standard is applied only to the current period. Any significant impact to results of operations is discussed here.

2



 
Twelve Months Ended March 31,
 
2018
 
2017
Beginning balance of accounts
1,036,794

 
1,080,726

Accounts acquired
87,957

 
125,457

Accounts canceled (b)
(159,845
)
 
(162,086
)
Canceled accounts guaranteed by dealer and other adjustments (a) (b)
(6,187
)
 
(7,303
)
Ending balance of accounts
958,719

 
1,036,794

Monthly weighted average accounts
998,137

 
1,059,526

Attrition rate - Unit (b)
16.0
%
 
15.3
%
Attrition rate - RMR (b) (c)
13.9
%
 
13.4
%
 
(a)
Includes canceled accounts that are contractually guaranteed to be refunded from holdback.
(b)
Accounts canceled for the twelve months ending March 31, 2017 were recast to include an estimated 9,522 accounts included in MONI’s Radio Conversion Program that canceled in excess of their expected attrition.
(c)
The Recurring Monthly Revenue (“RMR”) of canceled accounts follows the same definition as subscriber unit attrition as noted above. RMR attrition is defined as the RMR of canceled accounts in a given period, adjusted for the impact of price increases or decreases in that period, divided by the weighted average of RMR for that period.

Unit attrition increased from 15.3% for the twelve months ended March 31, 2017 to 16.0% for the twelve months ended March 31, 2018. Contributing to the increase in unit attrition was the number of subscriber accounts with 5-year contracts reaching the end of their initial contract term in the period, the relative proportion of the number of new customers under contract or in the dealer guarantee period and the Company’s more aggressive price increase strategy. There was also a modest increase to attrition attributed to subscriber losses related to the impacts of Hurricane Maria on MONI’s Puerto Rico customer base.

RMR attrition for the twelve months ended March 31, 2018 increased to 13.9% from 13.4% for the twelve months ended March 31, 2017, reflecting price decreases related to the Company’s efforts to secure contract extensions from existing customers.

During the three months ended March 31, 2018 and 2017, MONI acquired 21,547 and 29,376 subscriber accounts, respectively.

Ascent Liquidity and Capital Resources

At March 31, 2018, on a consolidated basis, Ascent had $137.5 million of cash, cash equivalents and marketable securities. A portion of these assets may be used to decrease debt obligations or fund stock repurchases, strategic acquisitions or investment opportunities.

At March 31, 2018, the existing long-term debt includes the principal balance of $1.8 billion under the MONI Senior Notes, Credit Facility term loan, Credit Facility revolver and Ascent’s Convertible Notes. The Convertible Notes have an outstanding principal balance of $96.8 million as of March 31, 2018 and mature July 15, 2020. The Senior Notes have an outstanding principal balance of $585.0 million as of March 31, 2018 and mature on April 1, 2020. The Credit Facility term loan has an outstanding principal balance of $1.1 billion as of March 31, 2018 and requires principal payments of approximately $2.8 million per quarter with the remaining amount becoming due on September 30, 2022. As of March 31, 2018, the Credit Facility revolver has an outstanding balance of $73.5 million and becomes due on September 30, 2021. The maturity date for both the Credit Facility term loan and the Credit Facility revolver are subject to a springing maturity 181 days prior to the scheduled maturity date of the Senior Notes. Accordingly, if MONI is unable to refinance the Senior Notes by October 3, 2019, both the Credit Facility term loan and the Credit Facility revolver would become due and payable.

Conference Call

Ascent will host a call today, Tuesday, May 8, 2018 at 5:00 pm ET. To access the call please dial (888) 462-5915 from the United States, or (760) 666-3831 from outside the U.S. The conference call I.D. number is 1095147. Participants should dial in 5 to 10 minutes before the scheduled time and must be on a touch-tone telephone to ask questions.

3




A replay of the call can be accessed through May 22, 2018 by dialing (800) 585-8367 from the U.S., or (404) 537-3406 from outside the U.S. The conference call I.D. number is 1095147.

This call will also be available as a live webcast which can be accessed at Ascent’s Investor Relations Website at http://ir.ascentcapitalgroupinc.com/index.cfm.

Forward Looking Statements

This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential and expansion, launch of the Brinks Home Security brand and the anticipated benefits of the rebranding, the success of new products and services, account creation and related costs, subscriber attrition, anticipated account generation in our Direct Channel, the anticipated benefits from our partnership with Nest, future financial performance, and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, possible changes in market acceptance of our services, technological innovations in the alarm monitoring industry, competitive issues, continued access to capital on terms acceptable to Ascent and/or MONI, our ability to capitalize on acquisition opportunities, general market and economic conditions and changes in law and government regulations. These forward-looking statements speak only as of the date of this press release, and Ascent expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Ascent's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents of Ascent, including the most recent Forms 10-K and 10-Q for additional information about Ascent and about the risks and uncertainties related to Ascent's business which may affect the statements made in this press release.

About Ascent Capital Group, Inc.

Ascent Capital Group, Inc., (NASDAQ: ASCMA) is a holding company that owns 100 percent of its operating subsidiary, MONI, and through MONI, LiveWatch Security, LLC. MONI, headquartered in the Dallas Fort-Worth area, secures approximately one million residential customers and commercial client accounts with monitored home and business security system services. MONI is supported by one of the nation’s largest networks of independent Authorized Dealers, providing products and support to customers in the U.S., Canada and Puerto Rico. LiveWatch Security, LLC ®, is a Do-It-Yourself (“DIY”) home security firm, offering professionally monitored security services through a direct-to-consumer sales channel. For more information on Ascent, see http://ascentcapitalgroupinc.com/.

Contact:
Erica Bartsch
Sloane & Company
212-446-1875
ebartsch@sloanepr.com




















4



ASCENT CAPITAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Amounts in thousands, except share amounts
 
March 31, 2018
 
December 31, 2017
Assets
 
 
 
Current assets:
 

 
 

Cash and cash equivalents
$
30,087

 
10,465

Restricted cash
93

 

Marketable securities, at fair value
107,450

 
105,958

Trade receivables, net of allowance for doubtful accounts of $3,632 in 2018 and $4,162 in 2017
12,300

 
12,645

Prepaid and other current assets
23,498

 
11,175

Total current assets
173,428

 
140,243

Property and equipment, net of accumulated depreciation of $40,537 in 2018 and $37,915 in 2017
34,070

 
32,823

Subscriber accounts and deferred contract acquisition costs, net of accumulated amortization of $1,468,359 in 2018 and $1,439,164 in 2017
1,224,937

 
1,302,028

Dealer network and other intangible assets, net of accumulated amortization of $45,859 in 2018 and $42,806 in 2017
3,941

 
6,994

Goodwill
563,549

 
563,549

Other assets
27,633

 
9,348

Total assets
$
2,027,558

 
2,054,985

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
12,910

 
11,092

Accrued payroll and related liabilities
6,145

 
3,953

Other accrued liabilities
66,584

 
52,329

Deferred revenue
13,477

 
13,871

Holdback liability
7,601

 
9,309

Current portion of long-term debt
11,000

 
11,000

Total current liabilities
117,717

 
101,554

Non-current liabilities:
 

 
 

Long-term debt
1,783,253

 
1,778,044

Long-term holdback liability
2,191

 
2,658

Derivative financial instruments
6,553

 
13,491

Deferred income tax liability, net
13,973

 
13,311

Other liabilities
3,259

 
3,255

Total liabilities
1,926,946

 
1,912,313

Commitments and contingencies
 
 
 
Stockholders’ equity:
 

 
 

Preferred stock, $0.01 par value. Authorized 5,000,000 shares; no shares issued

 

Series A common stock, $.01 par value. Authorized 45,000,000 shares; issued and outstanding 12,002,103 and 11,999,630 shares at March 31, 2018 and December 31, 2017, respectively
120

 
120

Series B common stock, $.01 par value. Authorized 5,000,000 shares; issued and outstanding 381,528 shares at both March 31, 2018 and December 31, 2017
4

 
4

Series C common stock, $0.01 par value. Authorized 45,000,000 shares; no shares issued

 

Additional paid-in capital
1,424,068

 
1,423,899

Accumulated deficit
(1,331,281
)
 
(1,277,118
)
Accumulated other comprehensive income (loss), net
7,701

 
(4,233
)
Total stockholders’ equity
100,612

 
142,672

Total liabilities and stockholders’ equity
$
2,027,558

 
2,054,985


See accompanying notes to condensed consolidated financial statements.


5



ASCENT CAPITAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Amounts in thousands, except shares and per share amounts
 
Three Months Ended March 31,
 
2018
 
2017
Net revenue
$
133,753

 
141,200

Operating expenses:
 

 
 

Cost of services
32,701

 
29,969

Selling, general and administrative, including stock-based and long-term incentive compensation
37,406

 
36,245

Radio conversion costs

 
232

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

 
59,547

Depreciation
2,621

 
2,127

Gain on disposal of operating assets

 
(6,638
)
 
127,139

 
121,482

Operating income
6,614

 
19,718

Other expense (income), net:
 

 
 

Interest income
(481
)
 
(395
)
Interest expense
38,652

 
37,486

Other income, net
(2,065
)
 
(242
)
 
36,106

 
36,849

Loss from continuing operations before income taxes
(29,492
)
 
(17,131
)
Income tax expense from continuing operations
1,346

 
1,814

Net loss from continuing operations
(30,838
)
 
(18,945
)
Discontinued operations:
 

 
 

Income from discontinued operations, net of income tax of $0

 
92

Net loss
(30,838
)
 
(18,853
)
Other comprehensive income (loss):
 

 
 

Foreign currency translation adjustments

 
58

Unrealized holding gain (loss) on marketable securities, net
(3,077
)
 
551

Unrealized gain on derivative contracts, net
14,406

 
1,049

Total other comprehensive income, net of tax
11,329

 
1,658

Comprehensive loss
$
(19,509
)
 
(17,195
)
 
 
 
 
Basic and diluted income (loss) per share:
 

 
 

Continuing operations
$
(2.51
)
 
(1.56
)
Discontinued operations

 
0.01

Net loss
$
(2.51
)
 
(1.55
)
 
 
 
 
Weighted average Series A and Series B shares - basic and diluted
12,298,922

 
12,134,061

Total issued and outstanding Series A and Series B shares at period end
12,383,631

 
12,353,681


See accompanying notes to condensed consolidated financial statements.


6



ASCENT CAPITAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Amounts in thousands
 
Three Months Ended March 31,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net loss
$
(30,838
)
 
(18,853
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 
Income from discontinued operations, net of income tax

 
(92
)
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
54,411

 
59,547

Depreciation
2,621

 
2,127

Stock-based and long-term incentive compensation
226

 
1,576

Deferred income tax expense
662

 
1,052

Gain on disposal of operating assets

 
(6,638
)
Amortization of debt discount and deferred debt costs
2,959

 
2,673

Bad debt expense
3,017

 
2,557

Other non-cash activity, net
41

 
1,872

Changes in assets and liabilities:
 

 
 
Trade receivables
(2,672
)
 
(1,659
)
Prepaid expenses and other assets
851

 
1,506

Contract asset, net
(70
)
 

Subscriber accounts - deferred contract acquisition costs
(898
)
 
(754
)
Payables and other liabilities
17,644

 
4,491

Operating activities from discontinued operations, net

 
(3,408
)
Net cash provided by operating activities
$
47,954

 
45,997

Cash flows from investing activities:
 

 
 
Capital expenditures
(3,310
)
 
(1,693
)
Cost of subscriber accounts acquired
(24,560
)
 
(46,708
)
Purchases of marketable securities
(7,998
)
 
(2,627
)
Proceeds from sale of marketable securities
5,495

 
997

Proceeds from the disposal of operating assets

 
12,090

Decrease in restricted cash
(93
)
 

Net cash used in investing activities
$
(30,466
)
 
(37,941
)
Cash flows from financing activities:
 

 
 
Proceeds from long-term debt
50,000

 
64,750

Payments on long-term debt
(47,750
)
 
(42,600
)
Value of shares withheld for share-based compensation
(116
)
 
(268
)
Net cash provided by financing activities
$
2,134

 
21,882

Net increase in cash and cash equivalents
$
19,622

 
29,938

Cash and cash equivalents at beginning of period
10,465

 
12,319

Cash and cash equivalents at end of period
$
30,087

 
42,257

Supplemental cash flow information:
 

 
 
State taxes paid, net
$

 
3

Interest paid
22,920

 
22,643

Accrued capital expenditures
830

 
780


See accompanying notes to condensed consolidated financial statements.


7



Adjusted EBITDA

We evaluate the performance of our operations based on financial measures such as revenue and "Adjusted EBITDA." Adjusted EBITDA is defined as net income (loss) before interest expense, interest income, income taxes, depreciation, amortization (including the amortization of subscriber accounts, dealer network and other intangible assets), restructuring charges, stock-based compensation, and other non-cash or non-recurring charges. Ascent Capital believes that Adjusted EBITDA is an important indicator of the operational strength and performance of its business, including the business' ability to fund its ongoing acquisition of subscriber accounts, its capital expenditures and to service its debt. In addition, this measure is used by management to evaluate operating results and perform analytical comparisons and identify strategies to improve performance. Adjusted EBITDA is also a measure that is customarily used by financial analysts to evaluate the financial performance of companies in the security alarm monitoring industry and is one of the financial measures, subject to certain adjustments, by which MONI's covenants are calculated under the agreements governing its debt obligations. Adjusted EBITDA does not represent cash flow from operations as defined by generally accepted accounting principles in the United States ("GAAP"), should not be construed as an alternative to net income or loss and is indicative neither of our results of operations nor of cash flows available to fund all of our cash needs. It is, however, a measurement that Ascent Capital believes is useful to investors in analyzing its operating performance. Accordingly, Adjusted EBITDA should be considered in addition to, but not as a substitute for, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Adjusted EBITDA is a non-GAAP financial measure. As companies often define non-GAAP financial measures differently, Adjusted EBITDA as calculated by Ascent Capital should not be compared to any similarly titled measures reported by other companies.


8



The following table provides a reconciliation of Ascent's Net loss from continuing operations to total Adjusted EBITDA for the periods indicated (amounts in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
Net loss from continuing operations
$
(30,838
)
 
(18,945
)
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
54,411

 
59,547

Depreciation
2,621

 
2,127

Stock-based compensation
285

 
1,576

Radio conversion costs

 
232

Severance expense (a)
2,955

 
27

LiveWatch acquisition contingent bonus charges
62

 
968

Rebranding marketing program
892

 
847

Integration / implementation of company initiatives

 
641

Impairment of capitalized software

 
713

Gain on disposal of operating assets

 
(6,638
)
Interest income
(481
)
 
(395
)
Interest expense
38,652

 
37,486

Reversal of other-than-temporary impairment losses on sale of marketable securities
(1,036
)
 

Income tax expense from continuing operations
1,346

 
1,814

Adjusted EBITDA
$
68,869

 
80,000

 
 
 
 
Expensed subscriber acquisition costs, net
 
 
 
Gross subscriber acquisition costs
$
11,690

 
9,033

Revenue associated with subscriber acquisition costs
(1,512
)
 
(1,392
)
Expensed Subscriber acquisition costs, net
10,178

 
7,641

 
(a) 
Severance expense related to transitioning executive leadership at Ascent in 2018 and MONI in 2017.


9



The following table provides a reconciliation of MONI’s Net loss to total Adjusted EBITDA for the periods indicated (amounts in thousands):
 
Three Months Ended March 31,
 
2018
 
2017
Net loss
$
(26,207
)
 
(21,013
)
Amortization of subscriber accounts, deferred contract acquisition costs and other intangible assets
54,411

 
59,547

Depreciation
2,615

 
2,120

Stock-based compensation
47

 
518

Radio conversion costs

 
232

Severance expense (a)

 
27

LiveWatch acquisition contingent bonus charges
62

 
968

Rebranding marketing program
892

 
847

Integration / implementation of company initiatives

 
641

Impairment of capitalized software

 
713

Interest expense
36,873

 
35,838

Income tax expense (benefit)
1,346

 
1,784

Adjusted EBITDA
$
70,039

 
82,222

 
 
 
 
Expensed subscriber acquisition costs, net
 
 
 
Gross subscriber acquisition costs
$
11,690

 
9,033

Revenue associated with subscriber acquisition costs
(1,512
)
 
(1,392
)
Expensed Subscriber acquisition costs, net
10,178

 
7,641

 
(a) 
Severance expense related to transitioning executive leadership at MONI.

10