APX GROUP HOLDINGS, INC., S-4 filed on 3/27/2017
Securities Registration: Business Combination
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2016
Mar. 2, 2017
Jun. 30, 2016
Document And Entity Information [Abstract]
 
 
 
Document Type
S-4 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Dec. 31, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
FY 
 
 
Trading Symbol
ck0001584423 
 
 
Entity Registrant Name
APX Group Holdings, Inc. 
 
 
Entity Central Index Key
0001584423 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Current Reporting Status
No 
 
 
Entity Voluntary Filers
Yes 
 
 
Entity Filer Category
Non-accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
100 
 
Entity Public Float
 
 
$ 0 
Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Current Assets:
 
 
Cash and cash equivalents
$ 43,520 
$ 2,559 
Accounts receivable, net
12,891 
8,060 
Inventories
38,452 
26,321 
Prepaid expenses and other current assets
10,158 
10,626 
Total current assets
105,021 
47,566 
Property and equipment, net
63,626 
55,274 
Subscriber acquisition costs, net
1,052,434 
790,644 
Deferred financing costs, net
4,420 
6,456 
Intangible assets, net
475,392 
558,395 
Goodwill
835,233 
834,416 
Long-term investments and other assets, net
11,536 
10,893 
Total assets
2,547,662 
2,303,644 
Current Liabilities:
 
 
Accounts payable
49,119 
52,207 
Accrued payroll and commissions
46,288 
38,247 
Accrued expenses and other current liabilities
34,265 
35,573 
Deferred revenue
45,722 
34,875 
Current portion of capital lease obligations
9,797 
7,616 
Total current liabilities
185,191 
168,518 
Notes payable, net
2,486,700 
2,118,112 
Revolving line of credit
20,000 
Capital lease obligations, net of current portion
7,935 
11,171 
Deferred revenue, net of current portion
58,734 
44,782 
Other long-term obligations
47,080 
10,530 
Deferred income tax liabilities
7,204 
7,524 
Total liabilities
2,792,844 
2,380,637 
Commitments and contingencies (See Note 13)
   
   
Stockholders’ deficit:
 
 
Common stock, $0.01 par value, 100 shares authorized; 100 shares issued and outstanding
Additional paid-in capital
731,920 
627,645 
Accumulated deficit
(948,339)
(672,382)
Accumulated other comprehensive loss
(28,763)
(32,256)
Total stockholders’ deficit
(245,182)
(76,993)
Total liabilities and stockholders’ deficit
$ 2,547,662 
$ 2,303,644 
Consolidated Balance Sheets (Parenthetical) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized (in shares)
100 
100 
Common stock, issued (in shares)
100 
100 
Common stock, outstanding (in shares)
100 
100 
Consolidated Statements of Operations (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Revenues:
 
 
 
Recurring revenue
$ 724,478 
$ 624,989 
$ 537,695 
Service and other sales revenue
22,855 
22,700 
21,980 
Activation fees
10,574 
6,032 
4,002 
Total revenues
757,907 
653,721 
563,677 
Costs and expenses:
 
 
 
Operating expenses (exclusive of depreciation and amortization shown separately below)
264,865 
228,315 
202,769 
Selling expenses
131,421 
122,948 
107,370 
General and administrative expenses
143,168 
107,212 
126,083 
Depreciation and amortization
288,542 
244,724 
221,324 
Restructuring and asset impairment charges
1,013 
59,197 
Total costs and expenses
829,009 
762,396 
657,546 
Loss from operations
(71,102)
(108,675)
(93,869)
Other expenses (income):
 
 
 
Interest expense
197,965 
161,339 
147,511 
Interest income
(432)
(90)
(1,455)
Other loss (income), net
7,255 
8,832 
(1,779)
Loss before income taxes
(275,890)
(278,756)
(238,146)
Income tax expense
67 
351 
514 
Net loss
$ (275,957)
$ (279,107)
$ (238,660)
Consolidated Statements of Comprehensive Loss (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
Net loss
$ (275,957)
$ (279,107)
$ (238,660)
Other comprehensive income (loss), net of tax effects:
 
 
 
Foreign currency translation adjustment
2,482 
(13,293)
(11,333)
Unrealized gain on marketable securities
1,011 
Total other comprehensive income (loss)
3,493 
(13,293)
(11,333)
Comprehensive loss
$ (272,464)
$ (292,400)
$ (249,993)
Consolidated Statements of Changes in Equity (Deficit) (USD $)
In Thousands, unless otherwise specified
Total
Common Stock
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income (loss)
Beginning Balance at Dec. 31, 2013
$ 490,243 
$ 0 
$ 652,488 
$ (154,615)
$ (7,630)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net loss
(238,660)
 
 
(238,660)
 
Foreign currency translation adjustment
(11,333)
 
 
 
(11,333)
Unrealized gain on marketable securities
 
 
 
 
Stock-based compensation
1,936 
 
1,936 
 
 
Capital contribution
32,300 
 
32,300 
 
 
Cash dividends paid
(50,000)
 
(50,000)
 
 
Ending Balance at Dec. 31, 2014
224,486 
636,724 
(393,275)
(18,963)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net loss
(279,107)
 
 
(279,107)
 
Foreign currency translation adjustment
(13,293)
 
 
 
(13,293)
Unrealized gain on marketable securities
 
 
 
 
Stock-based compensation
3,121 
 
3,121 
 
 
Escrow adjustment
(12,200)
 
(12,200)
 
 
Ending Balance at Dec. 31, 2015
(76,993)
627,645 
(672,382)
(32,256)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
 
 
 
 
 
Net loss
(275,957)
 
 
(275,957)
 
Foreign currency translation adjustment
2,482 
 
 
 
2,482 
Unrealized gain on marketable securities
1,011 
 
 
 
1,011 
Stock-based compensation
3,868 
 
3,868 
 
 
Capital contribution
100,407 
 
100,407 
 
 
Ending Balance at Dec. 31, 2016
$ (245,182)
$ 0 
$ 731,920 
$ (948,339)
$ (28,763)
Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash flows from operating activities:
 
 
 
Net loss from operations
$ (275,957)
$ (279,107)
$ (238,660)
Adjustments to reconcile net loss to net cash used in operating activities of operations:
 
 
 
Amortization of subscriber acquisition costs
154,877 
92,994 
58,730 
Amortization of customer relationships
108,178 
125,451 
143,578 
Depreciation and amortization of other intangible assets
25,488 
26,279 
19,016 
Amortization of deferred financing costs and bond premiums and discounts
10,447 
9,844 
9,251 
Non-cash gain on settlement of Merger-related escrow
(12,200)
(Gain) Loss on sale or disposal of assets
(33)
(54)
662 
Loss on early extinguishment of debt
10,085 
Loss on asset impairment
3,116 
Stock-based compensation
3,868 
3,121 
1,936 
Provision for doubtful accounts
19,624 
14,924 
15,656 
Deferred income taxes
(478)
(41)
(265)
Restructuring and asset impairment charges
7,126 
59,197 
Changes in operating assets and liabilities, net of acquisitions:
 
 
 
Accounts receivable
(24,338)
(14,421)
(21,866)
Inventories
(11,827)
18,591 
(2,355)
Prepaid expenses and other current assets
(5,165)
1,450 
746 
Subscriber acquisition costs – deferred contract costs
(419,509)
(354,867)
(317,538)
Other assets
368 
160 
Accounts payable
(2,978)
21,842 
8,481 
Accrued expenses and other current liabilities
12,702 
18,019 
(10,895)
Restructuring liability
(2,797)
(1,515)
Deferred revenue
24,613 
15,026 
20,770 
Net cash used in operating activities
(365,706)
(255,307)
(309,637)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
(5,243)
(24,740)
(10,580)
Capital expenditures
(11,642)
(26,982)
(30,500)
Proceeds from the sale of capital assets
3,123 
480 
964 
Net cash used in acquisitions
(18,500)
Acquisition of intangible assets
(1,385)
(1,363)
(9,649)
Proceeds from insurance claims
2,984 
Purchases of short-term investments
(60,000)
Proceeds from sale of short-term investments
60,069 
Proceeds from note receivable
22,699 
Change in restricted cash
14,214 
14,375 
Investment in preferred stock
(3,000)
Acquisition of other assets
(208)
(2,162)
Net cash used in investing activities
(15,147)
(35,615)
(36,284)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
604,000 
296,250 
102,000 
Repayments of notes payable
(235,535)
Borrowings from revolving line of credit
57,000 
271,000 
20,000 
Repayments on revolving line of credit
(77,000)
(271,000)
Proceeds from sale of subscriber contracts
2,261 
Acquisition of subscriber contracts
(2,277)
Repayments of capital lease obligations
(8,315)
(6,414)
(6,300)
Financing costs
(9,036)
Deferred financing costs
(9,241)
(5,436)
(2,927)
Payments of dividends
(50,000)
Proceeds from capital contributions
100,407 
32,300 
Net cash provided by financing activities
422,280 
284,400 
95,057 
Effect of exchange rate changes on cash
(466)
(1,726)
(234)
Net increase (decrease) in cash and cash equivalents
40,961 
(8,248)
(251,098)
Cash and cash equivalents:
 
 
 
Beginning of period
2,559 
10,807 
261,905 
End of period
43,520 
2,559 
10,807 
Supplemental cash flow disclosures:
 
 
 
Income tax paid
435 
290 
196 
Interest paid
189,170 
145,647 
137,908 
Supplemental non-cash investing and financing activities:
 
 
 
Capital lease additions
8,411 
11,002 
12,040 
Intangible assets acquisitions included within accounts payable, accrued expenses and other current liabilities and other long-term obligations
31,283 
314 
185 
Capital expenditures included within accounts payable, accrued expenses and other current liabilities
2,345 
161 
1,893 
Change in fair value of marketable securities
1,011 
Property acquired under build-to-suit agreements included within other long-term obligations
4,619 
Subscriber acquisition costs – company owned assets included within accounts payable and accrued expenses and other current liabilities
$ 12 
$ 0 
$ 1,719 
Description of Business
Description of Business
DESCRIPTION OF BUSINESS
APX Group Holdings, Inc. (“Holdings” or “Parent”), and its wholly-owned subsidiaries, (collectively the “Company”), is one of the largest smart home companies in North America. The Company is engaged in the sale, installation, servicing and monitoring of smart home and security systems, primarily in the United States and Canada. Holdings, which is wholly-owned by APX Parent Holdco, Inc., which is owned by 313 Acquisition, LLC. APX Parent Holdco, Inc. and APX Group Holdings, Inc. have no operations.
Significant Accounting Policies
Significant Accounting Policies
SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company has prepared the accompanying consolidated financial statements pursuant to generally accepted accounting principles in the United States (“GAAP”). Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.
During the year ended December 31, 2015, the Company recorded certain out-of-period adjustments totaling $2.0 million, primarily associated with the timing of the recognition of deferred revenue related to 2014 recurring monitoring services. As a result of these adjustments, recurring revenues increased for the year ended December 31, 2015 and deferred revenue decreased by 2.0 million, respectively. The Company evaluated the impact of the out-of-period adjustments and determined that they are immaterial to the consolidated financial statements for the year ended December 31, 2015.
Change in Accounting Estimate —Effective April 1, 2016, the Company updated its estimate of the life of its subscriber relationships and the period and pattern used to amortize deferred activation fees and deferred subscriber acquisition costs, to better approximate the actual life of the customer attrition patterns. Prior to the change, the Company amortized deferred activation fees and subscriber acquisition costs over 12 years using a 150% declining balance method, which converted to a straight-line methodology after approximately five years. Subsequent to the change, the Company amortizes deferred activation fees and subscriber acquisition costs over 15 years using a 240% declining balance method, which converts to a straight-line methodology after approximately nine years when the resulting amortization exceeds that from the accelerated method. The effects of this change in estimate were as follows (in thousands):
 
Year ended December 31, 2016
Increase in activation fee revenues
$
1,400

Increase in depreciation and amortization
21,413

Increase to loss from operations
20,013

Increase to net loss
19,621


Restructuring and Asset Impairment Charges —Restructuring and asset impairment charges represent expenses incurred in relation to activities to exit or dispose of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 3).
Principles of Consolidation —The accompanying consolidated financial statements include the accounts of APX Group Holdings, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Changes in Presentation of Comparative Financial Statements — Certain reclassifications have been made to the Company’s consolidated financial information in order to conform to the current year presentation. These changes did not have a significant impact on the consolidated financial statements.
        Revenue Recognition —The Company recognizes revenue principally on three types of transactions: (i) recurring revenue, which includes revenues for monitoring and other smart home services of the Company’s subscriber contracts and recurring monthly revenue associated with Vivint Wireless Inc. (“Wireless Internet” or “Wireless”), (ii) service and other sales, which includes non-recurring service fees charged to subscribers provided on contracts, contract fulfillment revenues and sales of products that are not part of the Company's service offerings, and (iii) activation fees on subscriber contracts, which are amortized over the expected life of the customer.
Recurring revenue for the Company’s subscriber contracts is billed in advance, generally monthly, pursuant to the terms of subscriber contracts and recognized ratably over the service period. Costs of providing ongoing recurring services are expensed in the period incurred.

Service and other sales revenue is recognized as services are provided or when title to the products and equipment sold transfers to the customer. Contract fulfillment revenue, included in service and other sales, is recognized when payment is received from customers who cancel their contract in-term. Revenue from sales of products that are not part of the basic service offering is generally recognized upon delivery of products.

Activation fees represent upfront one-time charges billed to subscribers at the time of installation and are deferred and recognized over the expected customer life. The Company evaluates subscriber account attrition on a periodic basis, utilizing observed attrition rates for the Company’s subscriber contracts and industry information and, when necessary, makes adjustments to the estimated subscriber relationship period and amortization method.
Subscriber Acquisition Costs —Subscriber acquisition costs represent the costs related to the origination of new subscribers. A portion of subscriber acquisition costs is expensed as incurred, which includes costs associated with the direct-to-home sale housing, marketing and recruiting, certain portions of sales commissions (residuals), overhead and other costs, considered not directly and specifically tied to the origination of a particular subscriber. The remaining portion of the costs is considered to be directly tied to subscriber acquisition and consists primarily of certain portions of sales commissions, equipment, and installation costs. These costs are deferred and recognized in a pattern that reflects the estimated life of the subscriber relationships. The Company evaluates subscriber account attrition on a periodic basis, utilizing observed attrition rates for the Company’s subscriber contracts and industry information and, when necessary, makes adjustments to the estimated subscriber relationship period and amortization method.
On the consolidated statement of cash flows, subscriber acquisition costs that are comprised of equipment and related installation costs purchased for or used in subscriber contracts in which the Company retains ownership to the equipment are classified as investing activities and reported as “Subscriber acquisition costs – company owned equipment.” All other subscriber acquisition costs are classified as operating activities and reported as “Subscriber acquisition costs – deferred contract costs” on the condensed consolidated statements of cash flows as these assets represent deferred costs associated with customer contracts.
Cash and Cash Equivalents —Cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Accounts Receivable —Accounts receivable consists primarily of amounts due from customers for recurring monthly monitoring services. The accounts receivable are recorded at invoiced amounts and are non-interest bearing. The gross amount of accounts receivable has been reduced by an allowance for doubtful accounts of $4.1 million and $3.5 million at December 31, 2016 and 2015, respectively. The Company estimates this allowance based on historical collection experience and subscriber attrition rates. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. As of December 31, 2016 and 2015, no accounts receivable were classified as held for sale. Provision for doubtful accounts is included in general and administrative expenses in the accompanying consolidated statements of operations.
The changes in the Company’s allowance for accounts receivable were as follows for the periods ended (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
 
2014
Beginning balance
$
3,541

 
$
3,373

 
$
1,901

Provision for doubtful accounts
19,624

 
14,924

 
15,656

Write-offs and adjustments
(19,027
)
 
(14,756
)
 
(14,184
)
Balance at end of period
$
4,138

 
$
3,541

 
$
3,373


Inventories —Inventories, which are comprised of smart home and security system equipment and parts are stated at the lower of cost or market with cost determined under the first-in, first-out (FIFO) method. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.
Long-lived Assets and Intangibles —Property and equipment are stated at cost and depreciated on the straight-line method over the estimated useful lives of the assets or the lease term for assets under capital leases, whichever is shorter. Intangible assets with definite lives are amortized over the remaining estimated economic life of the underlying technology or relationships, which ranges from 2 to 10 years. Definite-lived intangible assets are amortized on the straight-line method over the estimated useful life of the asset or in a pattern in which the economic benefits of the intangible asset are consumed. Amortization expense associated with leased assets is included with depreciation expense. Routine repairs and maintenance are charged to expense as incurred. The Company periodically assesses potential impairment of its long-lived assets and intangibles and performs an impairment review whenever events or changes in circumstances indicate that the carrying value may not be recoverable (See Note 8). In addition, the Company periodically assesses whether events or changes in circumstance continue to support an indefinite life of certain intangible assets or warrant a revision to the estimated useful life of definite-lived intangible assets.
Effective January 1, 2016, the Company adopted guidance issued by the FASB which provides new standards to determine whether a cloud computing arrangement includes a software license. The guidance requires the Company to determine if an internal use software obtained in a cloud hosting arrangement contains a contractual right to take possession of the software and if it is feasible to either run the software on internal hardware or contract with an unrelated vendor to host the software. If both criteria are met, the company will consider the arrangement to include a software license and classify the purchase as an intangible. The Company has elected to adopt the guidance prospectively to all arrangements entered into or materially modified after the beginning of 2016. The Company did not enter into, or modify, any material cloud computing arrangements during the year ended December 31, 2016.

Wireless Spectrum Licenses—The Company has capitalized as an intangible asset wireless spectrum licenses that were acquired from third parties. The cost basis of the wireless spectrum asset includes the purchase price paid for the licenses at the time of acquisition, plus costs incurred to acquire the licenses. The asset and related liability were recorded at the net present value of future cash outflows using the Company's incremental borrowing rate at the time of acquisition.
 
The Company has determined that the wireless spectrum licenses meet the definition of indefinite-lived intangible assets because the licenses may be renewed periodically for a nominal fee, provided that the Company continues to meet the service and geographic coverage provisions. The Company has also determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these wireless spectrum licenses.
 
Long-term Investments — The Company’s long-term investments are comprised of available-for-sale securities and cost based investments in other companies. As of December 31, 2016 and 2015, cost-based investments totaled $0.4 million and $3.5 million, respectively. Available-for-sale securities as of of December 31, 2016 were $4.0 million. As of December 31, 2015, the Company held no available-for-sale securities.
The Company’s marketable equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. Marketable equity securities, are classified as either short-term or long-term, based on the nature of each security and its availability for use in current operations. The Company’s marketable equity securities are carried at fair value, with unrealized gains and losses, reported as a component of accumulated other comprehensive income (“AOCI”) in equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method.
The Company performs impairment analyses of its cost based investments when events occur or circumstances change that would, more likely than not, reduce the fair value of the investment below its carrying value. When indicators of impairment do not exist and certain accounting criteria are met, the Company evaluates impairment using a qualitative approach. As of December 31, 2016, no indicators of impairment existed associated with these cost based investments.
Deferred Financing Costs — Costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs incurred with draw downs on APX's revolving credit facility will be amortized over the amended maturity dates discussed in Note 5. If such financing is paid off or replaced prior to maturity with debt instruments that have substantially different terms, the unamortized costs are charged to expense. Deferred financing costs included in the accompanying consolidated balance sheets within deferred financing costs, net at December 31, 2016 and 2015 were $4.4 million and $6.5 million, net of accumulated amortization of $6.9 million and $4.8 million, respectively. Deferred financing costs included in the accompanying consolidated balance sheets within notes payable, net at December 31, 2016 and 2015 were $39.4 million and $40.2 million, net of accumulated amortization of $35.6 million and $26.1 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying consolidated statements of operations totaled $11.6 million, $10.9 million and $10.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Effective January 1, 2016, the Company adopted guidance issued by the FASB requiring debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company has applied this retrospectively resulting in a reduction to deferred financing costs, net by $40.2 million as of December 31, 2015 with a corresponding decrease to notes payable, net.
Residual Income Plan —The Company has a program that allows third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create. The Company calculates the present value of the expected future payments and recognizes this amount in the period the commissions are earned. Subsequent accretion and adjustments to the estimated liability are recorded as interest and operating expense respectively. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability. The amount included in accrued payroll and commissions was $1.2 million and $0.8 million as of December 31, 2016 and 2015, respectively, and the amount included in other long-term obligations was $6.6 million and $4.3 million at December 31, 2016 and 2015, respectively, representing the present value of the estimated amounts owed to third-party sales channel partners.
Stock-Based Compensation —The Company measures compensation cost based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards (See Note 12).
Advertising Expense —Advertising costs are expensed as incurred. Advertising costs were approximately $33.0 million, $25.1 million and $23.6 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Income Taxes —The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.
The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.
Contracts Sold —On March 31, 2014, the Company received approximately $2.3 million in proceeds from the sale of certain subscriber contracts to a third-party. Concurrently, the Company entered into an agreement with the buyer to continue providing billing, monitoring and support services for the contracts that were sold for a period of ten years. On November 24, 2014, the Company repurchased the subscriber contracts from this third-party for $2.3 million and the associated liability was settled. Because of the Company's continuing involvement in servicing the contracts, no material gain/loss on the transaction was recognized.
During the year ended December 31, 2016, the Company sold all of its New Zealand and Puerto Rico subscriber contracts and ceased operations in these geographical regions ("2016 Contract Sales"). As a result, during the year ended December 31, 2016 the Company recorded the impact of these transactions in restructuring and asset impairment (See Note 3).
Concentrations of Credit Risk —Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.
Concentrations of Supply Risk —As of December 31, 2016, approximately 57% of the Company’s installed panels were SkyControl panels and 40% were 2GIG Go!Control panels. In connection with the 2GIG Sale in April 2013, the Company entered into a five-year supply agreement with 2GIG, pursuant to which they will be the exclusive provider of the Company’s control panel requirements, subject to certain exceptions as provided in the supply agreement. The loss of 2GIG as a supplier could potentially impact the Company’s operating results or financial position.
Fair Value Measurement —Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:
Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.
Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the years ended December 31, 2016 and 2015.
The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.
Goodwill —The Company conducts a goodwill impairment analysis annually in the fourth fiscal quarter, as of October 1, and as necessary if changes in facts and circumstances indicate that the fair value of the Company’s reporting units may be less than its carrying amount. When indicators of impairment do not exist and certain accounting criteria are met, the Company is able to evaluate goodwill impairment using a qualitative approach. When necessary, the Company’s quantitative goodwill impairment test consists of two steps. The first step requires that the Company compare the estimated fair value of its reporting units to the carrying value of the reporting unit’s net assets, including goodwill. If the fair value of the reporting unit is greater than the carrying value of its net assets, goodwill is not considered to be impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the Company would be required to complete the second step of the test by analyzing the fair value of its goodwill. If the carrying value of the goodwill exceeds its fair value, an impairment charge is recorded. The Company found that no indicators of goodwill impairment existed during the year ended December 31, 2016, thus a qualitative approach was used and it was determined that no impairment existed for goodwill.
Foreign Currency Translation and Other Comprehensive Income —The functional currencies of Vivint Canada, Inc. and Vivint New Zealand, Ltd. are the Canadian and New Zealand dollars, respectively. Accordingly, assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive (loss) income and shown as a separate component of equity.
When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ (deficit) equity as accumulated other comprehensive loss. When intercompany transactions are deemed to be of a short term nature, translation adjustments are required to be included in the consolidated statement of operations. Beginning in July 2015, we determined that settlement of these intercompany balances was anticipated and therefore these balances are not considered to be long-term investments and any subsequent translation gains or losses are recorded in income. Translation gains related to intercompany balances were $2.1 million for the year ended December 31, 2016. Translation losses related to intercompany balances were $9.4 million for the year ended December 31, 2015. During the year ended December 31, 2014, there were no translation gains or losses.
Letters of Credit —As of December 31, 2016 and 2015, the Company had $5.7 million and $5.0 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.
New Accounting PronouncementsIn May 2014, the FASB originally issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which clarifies the principles used to recognize revenue for all entities. This guidance requires companies to recognize revenue when they transfer goods or services to a customer in an amount that reflects the consideration to which they expect to be entitled. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year to be effective for annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08 to clarify the implementation guidance on principal versus agent considerations as it relates to Topic 606. In June 2016, the FASB issued ASU 2016-10 to clarify the implementation guidance on identifying performance obligations and licensing as it relates to Topic 606. This update reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In June 2016, the FASB issued ASU 2016-12 to clarify the implementation guidance on Topic 606, which amends the guidance on transition, collectability, non-cash consideration and the presentation of sales and other similar taxes.
The Company currently plans to adopt Topic 606 using the modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. However, a final decision regarding the adoption method has not been made at this time. The Company's final determination will depend on a number of factors, such as the significance of the impact of the new standard on the Company's financial results, system readiness, including the Company's ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.
The Company is in the initial stages of evaluating the impact of the new standard on the accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of third party service providers to assist in the evaluation. Furthermore, the Company has made and will continue to make investments in systems to enable timely and accurate reporting under the new standard. The Company expects the standard to have an effect on the subscriber acquisitions costs, net and deferred revenues included in our condensed consolidated balance sheets and the recognition of revenues and amortization of subscriber acquisition costs on the consolidated statement of operations. The Company does not expect the standard to have a significant impact to the consolidated statements of changes in equity or the consolidated statements of cash flows.
While the Company continues to assess the potential impacts of the new standard, including the areas described above, and anticipate this standard could have a material impact on the consolidated financial statements, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements at this time.
In March 2016, the FASB issued ASU 2016-09 to simplify accounting for employee share-based payments. This update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and will be applied prospectively and/or retrospectively, with early adoption permitted. The Company plans to adopt this update on the effective date and the adoption is not expected to materially impact the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07 which eliminates the requirement to retroactively adopt the equity method of accounting when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and must be applied prospectively, with early adoption permitted. The Company plans to adopt this update on the effective date and the adoption is not expected to materially impact the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-06 to clarify the assessment of contingent put and call options in debt instruments as it relates to Derivatives and Hedging (Topic 815). The amendments in this update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and must be applied using a modified retrospective approach, with early adoption permitted. The Company plans to adopt this update on the effective date and it is not expected to materially impact the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability among organizations as it relates to lease assets and lease liabilities. The update requires that lease assets and lease liabilities be recognized on the balance sheet, and that key information about leasing arrangements be disclosed. Prior to this update, GAAP did not require operating leases to be recognized as lease assets and lease liabilities on the balance sheet. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and must be applied using a modified retrospective approach, with early adoption permitted. The Company is evaluating the new guidance and plans to provide additional information about its expected impact at a future date.
In January 2016, the FASB issued ASU 2016-01 to address certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The main provisions of this update require equity investments to be measured at fair value with changes in fair value recognized in earnings, allow a company to value equity investments without a readily determined fair value at cost, less any impairments, and simplify the assessment of impairments of equity investments without a readily determinable fair value by requiring a qualitative assessment. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the Update. Early adoption is permitted. The Company is evaluating the new guidance and plans to provide additional information about its expected impact upon adoption at a future date.
Restructuring and Asset Impairment Charges
Restructuring and Asset Impairment Charges
RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
During the year ended December 31, 2016, the Company sold all of its New Zealand and Puerto Rico contracts and recorded the impact of these transactions in restructuring and asset impairment. The calculation of the net loss recorded related to the 2016 Contract Sales included the expensing of all unamortized deferred subscriber acquisition costs associated with these subscriber accounts in the amount of $7.6 million, the realization of outstanding amounts of accumulated other comprehensive loss associated with the New Zealand foreign currency translation process of $1.1 million upon the substantial sale of the subsidiary, offset by cash proceeds of $6.2 million for a total net loss on the 2016 Contract Sales of $2.6 million.
During the year ended December 31, 2015, the board of directors approved a plan to transition the Company’s Wireless Internet business from a 5Ghz to a 60Ghz-based network technology (the “Wireless Restructuring”) and the Company ceased the build-out of 5Ghz networks and stopped the installation of new customers. During the year ended December 31, 2016, the Company shifted to test installations of the new 60Ghz technology. In connection with the Wireless Restructuring, the Company recorded restructuring and asset impairment charges consisting of asset impairments, the costs of employee severance, and other contract termination charges.
Restructuring and asset impairment charges were as follows (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
Wireless restructuring and asset (recoveries) impairment charges:
 
 
 
Asset (recoveries) impairments
$
(710
)
 
$
53,228

Contract termination (recoveries) costs
(751
)
 
4,767

Employee severance and termination benefits (recoveries) charges
(77
)
 
1,202

Total wireless restructuring and asset (recoveries) impairment charges
(1,538
)
 
59,197

Loss on subscriber contract sales
2,551

 

Total restructuring and asset impairment charges
$
1,013

 
$
59,197


During the year ended December 31, 2014, the Company did not incur any restructuring and asset impairment charges.
The following table presents accrued restructuring activity for the years ended December 31, 2016 and 2015.
 
Asset impairments
 
Contract
termination costs
 
Employee severance and
termination benefits
 
Total
Accrued restructuring balance as of December 31, 2014
$

 
$

 
$

 
$

Restructuring and impairment charges
53,228

 
4,767

 
1,202

 
59,197

Cash payments
(10
)
 
(623
)
 
(881
)
 
(1,514
)
Non-cash settlements
(53,218
)
 
(190
)
 

 
(53,408
)
Accrued restructuring balance as of December 31, 2015

 
3,954

 
321

 
4,275

Restructuring and impairment recoveries
(710
)
 
(751
)
 
(77
)
 
(1,538
)
Cash payments

 
(2,554
)
 
(244
)
 
(2,798
)
Non-cash settlements
710

 

 

 
710

Accrued restructuring balance as of December 31, 2016
$

 
$
649

 
$

 
$
649


The wireless restructuring and impairment recoveries during the year ended December 31, 2016 resulted primarily from a vendor settlement for amounts less than previously estimated. The Company recorded a non-cash asset impairment charge of $53.2 million during the year ended December 31, 2015. The Company also recorded cash-based restructuring charges of $6.0 million during the year ended December 31, 2015 related to employee severance and termination benefits as well as the write off of certain vendor contracts. Accrued restructuring at December 31, 2016 is included in current liabilities within accrued expenses and other current liabilities of $0.1 million and in long-term liabilities within other long-term obligations of $0.6 million.
Additional charges may be incurred in the future for facility-related or other restructuring activities as the Company continues to align resources to meet the needs of the business.
Business Combinations
Business Combinations
BUSINESS COMBINATIONS
Space Monkey Acquisition
On August 25, 2014, the Company’s parent purchased Space Monkey, Inc. (“Space Monkey”), a distributed cloud storage technology solution company, then merged Space Monkey with a wholly-owned subsidiary of the Company. Pursuant to the terms of the merger the Company paid aggregate cash consideration of $15.0 million, of which $1.5 million was held in escrow for indemnification obligations and was settled during 2015. This strategic acquisition was made to support the growth and development of the Company’s smart home platform.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the time of acquisition (in thousands):
 
 
 
Net assets acquired from Space Monkey
$
404

Deferred tax liability
(1,106
)
Intangible assets (See Note 8)
8,300

Goodwill
7,402

Total estimated fair value of the assets acquired and liabilities assumed
$
15,000


During the year ended December 31, 2014, the Company incurred costs associated with the Space Monkey acquisition, which were not material, consisting of accounting, legal and professional fees and payments to employees directly associated with the acquisition. These costs are included in general and administrative expenses in the accompanying consolidated statements of operations. During the year ended December 31, 2016 and 2015, the Company did not incur any costs associated with the Space Monkey acquisition. The associated goodwill is deductible for income tax purposes.
Wildfire Acquisition
On January 31, 2014, a wholly-owned subsidiary of the Company completed the purchase of certain assets, and assumed certain liabilities, of Wildfire Broadband, LLC (“Wildfire”). Pursuant to the terms of the asset purchase agreement the Company paid aggregate cash consideration of $3.5 million, of which $0.4 million was held in escrow for indemnification obligations and was settled in early 2015. This strategic acquisition was made to provide the Company access to Wildfire’s existing customers, wireless internet infrastructure and know-how. The associated goodwill is deductible for income tax purposes.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the time of acquisition (in thousands):
 
 
 
Net assets acquired from Wildfire
$
96

Intangible assets (See Note 8)
2,900

Goodwill
504

Total cash consideration
$
3,500


During the year ended December 31, 2014, the Company incurred costs associated with the Wildfire acquisition, which were not material, consisting of accounting, legal and professional fees and payments to employees directly associated with the acquisition. These costs are included in general and administrative expenses in the accompanying audited consolidated statements of operations. During the year ended December 31, 2015, the Company impaired all assets of the Wildfire acquisition as part of the Company’s wireless internet business restructuring (see Note 3). During the year ended December 31, 2016, the Company did not incur any costs associated with the Wildfire acquisition.
Long-Term Debt
Long-Term Debt
LONG-TERM DEBT
On November 16, 2012, APX issued $1.3 billion aggregate principal amount of notes, of which $719.5 million aggregate principal amount of 6.375% 2019 notes mature on December 1, 2019 and are secured on a first-priority lien basis by substantially all of the tangible and intangible assets whether now owned or hereafter acquired by the Company, subject to permitted liens and exceptions, and $380.0 million aggregate principal amount of 8.75% 2020 notes mature on December 1, 2020.
During 2013, APX completed two offerings of additional 2020 notes under the indenture dated November 16, 2012. On May 31, 2013, APX issued $200.0 million of 2020 notes at a price of 101.75% and on December 13, 2013, APX issued an additional $250.0 million of 2020 notes at a price of 101.50%.
On July 1, 2014, APX issued an additional $100.0 million of 2020 notes at a price of 102.00%.
On October 19, 2015, APX issued $300.0 million aggregate principal amount of 8.875% 2022 private placement notes at a price of 98%, pursuant to a note purchase agreement dated as of October 19, 2015 in a private placement exempt from registration under the Securities Act. The 2022 private placement notes will mature on December 1, 2022, unless on September 1, 2020 (the 91st day prior to the maturity of the 2020 notes) more than an aggregate principal amount of $190.0 million of such 2020 notes remain outstanding or have not been refinanced as permitted under the note purchase agreement for the 2022 private placement notes, in which case the 2022 private placement notes will mature on September 1, 2020. The 2022 private placement notes are secured, on a pari passu basis, by the collateral securing obligations under the 2019 notes, the 2022 private placement notes, and the 2022 notes (as defined below) and the revolving credit facilities, in each case, subject to certain exceptions and permitted liens.
In May 2016, APX issued $500.0 million aggregate principal amount of 7.875% 2022 notes at par, pursuant to an indenture dated as of May 26, 2016 among APX, the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent. The 2022 notes will mature on December 1, 2022, or on such earlier date when any outstanding pari passu lien indebtedness matures as a result of the operation of any “Springing Maturity” provision set forth in the agreements governing such pari passu lien indebtedness. The 2022 notes are secured, on a pari passu basis, by the collateral securing obligations under the 2019 notes and 2022 private placement notes and the revolving credit facilities, in all cases, subject to certain exceptions and permitted liens. APX used a portion of the net proceeds from the issuance of the 2022 notes to repurchase approximately $235 million aggregate principal amount of the outstanding 2019 notes and 2022 private placement notes in privately negotiated transactions and repaid borrowings under the existing revolving credit facility.
In August 2016, APX issued an additional $100.0 million aggregate principal amount of the 2022 notes at a price of 104.00%.
In accordance with ASC 470-50 Debt – Modifications and Extinguishments, the Company performed an analysis on a creditor-by-creditor basis to determine if the repurchased 2019 notes and 2022 private placement notes were substantially
different than the 2022 notes issued in May 2016. As a result of this analysis, during the year ended December 31, 2016, the Company recorded $10.1 million of other expense and loss on extinguishment, consisting of $1.0 million of original
issue discount and deferred financing costs associated with the 2019 notes and 2022 private placement notes, and $9.0 million
of the $15.7 million of total costs incurred in conjunction with issuance of the 2022 notes. The original unamortized portion of
deferred financing costs associated with new creditors and creditors under both the 2019 notes and the 2022 notes, whose debt
instruments were not deemed to be substantially different, will be amortized to interest expense over the life of the 2022 notes.
The following table presents deferred financing activity for the year ended December 31, 2016 (in thousands):

 
Unamortized Deferred Financing Costs
 
Balance 12/31/2015
 
Additions
 
Refinances
 
Early Extinguishment
 
Amortized
 
Balance 12/31/2016
Revolving Credit Facility
$
6,456

 
$

 
$

 
$

 
$
(2,036
)
 
$
4,420

2019 Notes
20,182

 

 
(3,423
)
 
(585
)
 
(4,481
)
 
11,693

2020 Notes
18,892

 

 

 

 
(3,839
)
 
15,053

2022 Private Placement Notes
1,170

 

 

 
(110
)
 
(157
)
 
903

2022 Notes

 
9,337

 
3,423

 

 
(1,046
)
 
11,714

Total Deferred Financing Costs
$
46,700

 
$
9,337

 
$

 
$
(695
)
 
$
(11,559
)
 
$
43,783


The notes are fully and unconditionally guaranteed, jointly and severally by APX and each of APX’s existing restricted subsidiaries that guarantee indebtedness under APX’s revolving credit facility or our other indebtedness. Interest accrues at the rate of 6.375% per annum for the 2019 notes, 8.75% per annum for the 2020 notes, 8.875% per annum for the 2022 private placement notes, and 7.875% per annum for the 2022 notes. Interest on the notes is payable semiannually in arrears on each June 1 and December 1. APX may redeem the notes at the prices and on the terms specified in the applicable indenture or note purchase agreement.
Revolving Credit Facility
On November 16, 2012, APX entered into a $200.0 million senior secured revolving credit facility, with a five year maturity. On March 6, 2015, APX amended and restated the credit agreement governing the revolving credit facility to provide for, among other things, (1) an increase in the aggregate commitments previously available to APX thereunder from $200.0 million to $289.4 million (“Revolving Commitments”) and (2) the extension of the maturity date with respect to certain of the previously available commitments.
Borrowings under the amended and restated revolving credit facility bear interest at a rate per annum equal to an applicable margin plus, at APX’s option, either (1) the base rate determined by reference to the highest of (a) the Federal Funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) the LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for an interest period of one month, plus 1.00% or (2) the LIBOR rate determined by reference to the London interbank offered rate for dollars for the interest period relevant to such borrowing. The applicable margin for base rate-based borrowings (1)(a) under the Series A Revolving Commitments of approximately $247.5 million and Series C Revolving Commitments of approximately $20.8 million is currently 2.0% per annum and (b) under the Series B Revolving Commitments of approximately $21.2 million is currently 3.0% and (2)(a) the applicable margin for LIBOR rate-based borrowings (a) under the Series A Revolving Commitments and Series C Revolving Commitments is currently 3.0% per annum and (b) under the Series B Revolving Commitments is currently 4.0%. The applicable margin for borrowings under the revolving credit facility is subject to one step-down of 25 basis points based on APX meeting a consolidated first lien net leverage ratio test at the end of each fiscal quarter. Outstanding borrowings under the amended and restated revolving credit facility are allocated on a pro-rata basis between each Series based on the total Revolving Commitments.
In addition to paying interest on outstanding principal under the revolving credit facility, APX is required to pay a quarterly commitment fee (which will be subject to one interest rate step-down of 12.5 basis points, based on APX meeting a consolidated first lien net leverage ratio test) to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder. As of December 31, 2016 the commitment fee percentage was 0.50%. APX also pays customary letter of credit and agency fees.
APX is not required to make any scheduled amortization payments under the revolving credit facility. The principal amount outstanding under the revolving credit facility will be due and payable in full on (1) with respect to the non-extended commitments under the Series C Revolving Credit Facility, November 16, 2017 and (2) with respect to the extended commitments under the Series A Revolving Credit Facility and Series B Revolving Credit Facility, March 31, 2019.
As of December 31, 2016 there were no outstanding borrowings under the credit facility. As of December 31, 2015 the outstanding borrowings under the credit facility were $20.0 million.
The Company’s debt at December 31, 2016 consisted of the following (in thousands):
 
 
Outstanding
Principal
 
Unamortized
Premium
(Discount)
 
Unamortized Deferred Financing Costs
 
Net Carrying
Amount
6.375% Senior Secured Notes due 2019
$
719,465

 
$

 
$
(11,693
)
 
$
707,772

8.75% Senior Notes due 2020
930,000

 
5,848

 
(15,053
)
 
920,795

8.875% Senior Secured Notes Due 2022
270,000

 
(2,960
)
 
(903
)
 
266,137

7.875% Senior Secured Notes Due 2022
600,000

 
3,710

 
(11,714
)
 
591,996

Total Notes payable
$
2,519,465

 
$
6,598

 
$
(39,363
)
 
$
2,486,700

The Company’s debt at December 31, 2015 consisted of the following (in thousands):
 
 
Outstanding
Principal
 
Unamortized
Premium
 
Unamortized Deferred Financing Costs
 
Net Carrying
Amount
Series C Revolving Credit Facility Due 2017
$
1,440

 
$

 
$

 
$
1,440

Series A, B Revolving Credit Facilities Due 2019
18,560

 

 

 
18,560

6.375% Senior Secured Notes due 2019
925,000

 

 
(20,182
)
 
904,818

8.75% Senior Notes due 2020
930,000

 
7,060

 
(18,892
)
 
918,168

8.875% Senior Secured Notes due 2022
300,000

 
(3,704
)
 
(1,170
)
 
295,126

Total Notes payable
$
2,175,000

 
$
3,356

 
$
(40,244
)
 
$
2,138,112

Balance Sheet Components
Balance Sheet Components
BALANCE SHEET COMPONENTS
The following table presents material balance sheet component balances as of December 31, 2016 and December 31, 2015 (in thousands):
 
 
December 31,
 
2016
 
2015
Subscriber acquisition costs
 
Subscriber acquisition costs
$
1,373,080

 
$
958,261

Accumulated amortization
(320,646
)
 
(167,617
)
Subscriber acquisition costs, net
$
1,052,434

 
$
790,644

Accrued payroll and commissions
 
Accrued payroll
$
24,101

 
$
18,071

Accrued commissions
22,187

 
20,176

Total accrued payroll and commissions
$
46,288

 
$
38,247

Accrued expenses and other current liabilities
 
Accrued interest payable
$
16,944

 
$
17,153

Accrued payroll taxes and withholdings
4,793

 
3,938

Accrued taxes
3,376

 
2,683

Wireless restructuring costs
91

 
4,275

Loss contingencies
2,571

 
2,504

Other
6,490

 
5,020

Total accrued expenses and other current liabilities
$
34,265

 
$
35,573

Property Plant and Equipment
Property Plant and Equipment
PROPERTY PLANT AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
 
December 31,
 
Estimated
Useful Lives
 
2016
 
2015
 
Vehicles
$
31,416

 
$
26,935

 
3-5 years
Computer equipment and software
27,006

 
21,702

 
3-5 years
Leasehold improvements
17,717

 
17,434

 
2-15 years
Office furniture, fixtures and equipment
13,508

 
11,776

 
7 years
Buildings
702

 
702

 
39 years
Construction in process
9,908

 
3,837

 
 
Build-to-suit lease asset under construction
5,004

 

 
 
 
105,261

 
82,386

 
 
Accumulated depreciation and amortization
(41,635
)
 
(27,112
)
 
 
Property plant and equipment, net
$
63,626

 
$
55,274

 
 

Property plant and equipment includes approximately $21.2 million and $20.4 million of assets under capital lease obligations, net of accumulated amortization of $10.9 million and $7.0 million at December 31, 2016 and 2015, respectively. Depreciation and amortization expense on all property plant and equipment was $16.8 million, $16.9 million and $11.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. Amortization expense relates to assets under capital leases as included in depreciation and amortization expense.
Because of its involvement in certain aspects of the construction of a new sales recruiting and training facility in Logan, UT, the Company is deemed to be the owner of the building for accounting purposes during the construction period. Accordingly, the Company recorded a build-to-suit asset of $5.0 million as of December 31, 2016. See Note 13-Commitments and Contingencies for more information on build-to-suit arrangements.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015, were as follows (in thousands):
 
 
 
Balance as of January 1, 2015
$
841,522

Goodwill Impaired due to Wireless Restructuring (see Note 3)
(2,270
)
Effect of Foreign Currency Translation
(4,836
)
Balance as of December 31, 2015
834,416

Effect of Foreign Currency Translation
817

Balance as of December 31, 2016
$
835,233



As of December 31, 2016 and December 31, 2015, the Company had a goodwill balance of $835.2 million and $834.4 million, respectively. Foreign currency translation adjustments were $0.8 million and $4.8 million for the years ended December 31, 2016 and December 31, 2015, respectively. In connection with the Wireless Restructuring (See Note 3), the Company fully impaired goodwill related to its Wireless Internet business. The resulting impairment charge of $2.3 million is included in restructuring and asset impairment charges on the consolidated statement of operations during the year ended December 31, 2015. Accumulated impairment losses were $2.3 million as of December 31, 2016 and 2015, respectively.
Intangible assets, net
The following table presents intangible asset balances as of December 31, 2016 and 2015 (in thousands):

 
December 31, 2016
 
December 31, 2015
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated
Useful Lives
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer contracts
$
965,179

 
$
(539,910
)
 
$
425,269

 
$
962,842

 
$
(430,803
)
 
$
532,039

 
10 years
2GIG 2.0 technology
17,000

 
(10,479
)
 
6,521

 
17,000

 
(7,064
)
 
9,936

 
8 years
Other technology
7,067

 
(4,984
)
 
2,083

 
7,067

 
(3,438
)
 
3,629

 
5 - 7 years
Space Monkey technology
7,100

 
(2,268
)
 
4,832

 
7,100

 
(761
)
 
6,339

 
6 years
Patents
8,724

 
(3,913
)
 
4,811

 
7,524

 
(2,094
)
 
5,430

 
5 years
Non-compete agreements
1,200

 
(1,200
)
 

 
1,200

 
(800
)
 
400

 
2 - 3 years
Total definite-lived intangible assets:
1,006,270

 
(562,754
)
 
443,516

 
1,002,733

 
(444,960
)
 
557,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Spectrum licenses
31,253

 

 
31,253

 

 

 

 
 
IP addresses
564

 

 
564

 
564

 

 
564

 
 
Domain names
59

 

 
59

 
58

 

 
58

 
 
Total Indefinite-lived intangible assets
31,876

 

 
31,876

 
622

 

 
622

 
 
Total intangible assets, net
$
1,038,146

 
$
(562,754
)
 
$
475,392

 
$
1,003,355


$
(444,960
)
 
$
558,395

 
 



During the year ended December 31, 2016, the Company entered into leasing agreements with a third party for designated radio frequency spectrum in 40 mid-sized metropolitan markets. The initial lease term is for seven years, with an option to obtain title of the applicable spectrum licenses at the end of this initial term for a nominal fee. The Company acquired $31.3 million of spectrum licenses, measured using the present value of the lease payments, and recorded an intangible asset and a corresponding liability within other long-term obligations. While licenses are issued for only a fixed time, such licenses are subject to renewal by the Federal Communications Commission. The Company intends to renew the licenses at the end of the initial term. License renewals within the industry have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the licenses. As a result, the Company treats the wireless licenses as an indefinite-lived intangible asset.

Identifiable intangible assets acquired by the Company in connection with the Wildfire acquisition were $2.1 million of customer contracts and $0.8 million associated with non-compete agreements entered into by certain former members of Wildfire management. In connection with the Wireless Restructuring (See Note 3), the Company fully impaired the remaining unamortized definite-lived intangible assets related to its Wireless Internet business. The resulting impairment charge of $2.9 million is included in restructuring and asset impairment charges on the consolidated statement of operations during the year ended December 31, 2015.
Identifiable intangible assets acquired by the Company in connection with the Space Monkey acquisition were $7.1 million of Space Monkey technology and $1.2 million associated with non-compete agreements entered into by certain former members of Space Monkey management.
During the year ended December 31, 2016, the Company acquired $1.3 million of intangibles related to patents. During the year ended December 31, 2015, the Company acquired $1.4 million of intangibles related to patents, domain names and Internet Protocol (“IP”) addresses.
The Company recognized amortization expense related to capitalized software development costs of $1.1 million, $1.3 million and $1.3 million during the years ended December 31, 2016, 2015, and 2014, respectively. Amortization expense related to intangible assets was approximately $116.9 million, $134.8 million and $151.3 million for the years ended December 31, 2016, 2015, and 2014, respectively.

As of December 31, 2016, the remaining weighted-average amortization period for definite-lived intangible assets was 3.8 years. Estimated future amortization expense of intangible assets, excluding approximately $0.3 million in patents currently in process, is as follows as of December 31, 2016 (in thousands):
 
 
 
2017
$
101,296

2018
89,736

2019
78,082

2020
67,288

2021
58,288

Thereafter
48,548

Total estimated amortization expense
$
443,238

Fair Value Measurements
Fair Value Measurements
FAIR VALUE MEASUREMENTS
Cash equivalents and available-for-sale securities are classified as level 1 assets, as they have readily available market prices in an active market. As of December 31, 2016 the Company held $42.3 million of money market funds and $4.0 million of corporate securities classified as level 1 investments. As of December 31, 2015, the Company held an immaterial amount of money market funds classified as level 1 investments.
The following tables show the Company’s cash and cash equivalents and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or long-term investments and other assets, net as of December 31, 2016 (in thousands):
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Long-Term Investments and Other Assets, net
Cash
$
1,191

 
$

 
$

 
$
1,191

 
$
1,191

 
$

 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
42,329

 

 

 
42,329

 
42,329

 

Corporate securities
3,007

 
1,011

 

 
4,018

 

 
4,018

Subtotal
45,336

 
1,011

 

 
46,347

 
42,329

 
4,018

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
46,527

 
$
1,011

 
$

 
$
47,538

 
$
43,520

 
$
4,018


On February 19, 2014, the Company invested $3.0 million in preferred stock of a privately held company ("investee") not affiliated with the Company. On October 28, 2016 the investee began trading shares publicly and the Company's preferred stock was converted to public stock. As a result, the Company classified the investment as an available for sale security.
The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.
Components of long-term debt including the associated interest rates and related fair values (in thousands, except interest rates) are as follows:
 
Issuance
 
December 31, 2016
 
December 31, 2015
 
Stated Interest
Rate
 
Face Value
 
Estimated Fair Value
 
Face Value
 
Estimated Fair Value
 
2019 Notes
 
$
719,465

 
$
743,783

 
$
925,000

 
$
879,906

 
6.375
%
2020 Notes
 
930,000

 
946,275

 
930,000

 
756,788

 
8.75
%
2022 Notes Private Placement Notes
 
270,000

 
280,372

 
300,000

 
296,296

 
8.875
%
2022 Notes
 
600,000

 
655,140

 

 

 
7.875
%
Total
 
$
2,519,465

 
$
2,625,570

 
$
2,155,000

 
$
1,932,990

 



The fair value of the 2019 notes, 2020 notes, 2022 private placement notes and the 2022 notes was considered a Level 2 measurement as the value was determined using observable market inputs, such as current interest rates as well as prices observable from less active markets.
Facility Fire
Facility Fire
FACILITY FIRE
On March 18, 2014, a fire occurred at a facility leased by the company in Lindon, Utah. This facility contained the Company’s primary inventory warehouse and call center operations. The Company recognized gross expenses related to the fire of $8.3 million, which were primarily related to impairment of damaged assets and recovery costs to maintain business continuity. The Company also received insurance recoveries of $8.8 million, related to the fire damage, $3.0 million of which related to the reconstruction of the facility damaged by the fire, and is included within the Company’s cash flows from investing activities in the consolidated statement of cash flows for the year ended December 31, 2015. Insurance recoveries associated with the reconstruction of the damaged facility exceeded its net book value by $0.5 million. These excess insurance recoveries were included in other income as of December 31, 2014. All insurance recoveries have been received as of December 31, 2016. Expenses in excess of insurance recoveries during the year ended December 31, 2016 and 2015 were immaterial.
Income Taxes
Income Taxes
INCOME TAXES
APX Group files a consolidated federal income tax return with its wholly-owned subsidiaries.
Income tax provision consisted of the following (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
 
2014
Current income tax:
 
 
 
Federal
$

 
$

 
$

State
545

 
392

 
779

Foreign
95

 
(1
)
 

Total
640

 
391

 
779

Deferred income tax:
 
 
 
Federal

 

 
(925
)
State

 

 
(181
)
Foreign
(573
)
 
(40
)
 
841

Total
(573
)
 
(40
)
 
(265
)
Provision for income taxes
$
67

 
$
351

 
$
514


The following reconciles the tax expense computed at the statutory federal rate and the Company’s tax expense (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
 
2014
Computed expected tax expense
$
(93,770
)
 
$
(94,737
)
 
$
(81,107
)
State income taxes, net of federal tax effect
360

 
259

 
395

Foreign income taxes
(949
)
 
202

 
1,645

Other reconciling items
666

 

 

Permanent differences
1,688

 
1,980

 
2,261

Change in valuation allowance
92,072

 
92,647

 
77,320

Provision for income taxes
$
67

 
$
351

 
$
514



The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands):
 
 
December 31,
 
2016
 
2015
Gross deferred tax assets:
 
Net operating loss carryforwards
$
799,302

 
$
642,391

Deferred subscriber income
19,866

 
13,722

Accrued expenses and allowances
15,452

 
15,415

Purchased intangibles
14,776

 
10,576

Inventory reserves
6,999

 
9,333

Property and Equipment
3,482

 
3,257

Alternative minimum tax credit and research and development credit
41

 
41

Valuation allowance
(328,991
)
 
(234,771
)
 
530,927

 
459,964

Gross deferred tax liabilities:
 
Deferred subscriber acquisition costs
(537,387
)
 
(466,783
)
Property and equipment

 

Prepaid expenses
(744
)
 
(705
)
 
(538,131
)
 
(467,488
)
Net deferred tax liabilities
$
(7,204
)
 
$
(7,524
)

The long-term portion of the net deferred tax liability was approximately $7.2 million and $7.5 million at December 31, 2016 and 2015, respectively. The current portion of the net deferred tax liability was immaterial at December 31, 2016 and 2015, respectively.
The Company had net operating loss carryforwards as follows (in thousands):
 
 
December 31,
 
2016
 
2015
Net operating loss carryforwards:
 
 
 
United States
$
2,084,897

 
$
1,695,386

State
1,553,812

 
1,338,742

Canada
33,526

 
28,629

New Zealand

 
5,518


U.S. and state net operating loss carryforwards will begin to expire in 2026, if not used. Included in both the U.S. and state net operating loss carryforwards are approximately $11.5 million at December 31, 2016 and 2015, respectively of net operating loss carryforwards for which a benefit will be recorded in Additional Paid in Capital when realized. The Company had United States research and development credits of approximately $41,000 at December 31, 2016, and December 31, 2015, which begin to expire in 2030.
Canadian net operating loss carryforwards will begin to expire in 2029.
Realization of the Company’s net operating loss carryforwards and tax credits is dependent on generating sufficient taxable income prior to their expiration. Although a portion of these carryforwards are subject to the provisions of Internal Revenue Code Section 382, the Company has not performed a formal study to determine the amount of the limitation. The use of the net operating loss carryforwards may have additional limitations resulting from future ownership changes or other factors under Section 382 of the Internal Revenue Code.
The Company has considered and weighed the available evidence, both positive and negative, to determine whether it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Based on available information, management does not believe it is more likely than not that its deferred tax assets will be utilized. Accordingly, the Company has established a valuation allowance to the extent of and equal to the net deferred tax assets. The Company recorded a valuation allowance for U.S. deferred tax assets of approximately $329.0 million and $234.8 million at December 31, 2016 and 2015, respectively. In addition to the change in valuation allowance from operations, the valuation allowance changes include impact of acquisition and disposition related items.

As of December 31, 2016, the Company's income tax returns for the tax years 2013 through 2016, remain subject to examination by the Internal Revenue Service and state authorities.
Stock-Based Compensation and Equity
Stock-Based Compensation and Equity
STOCK-BASED COMPENSATION AND EQUITY
313 Incentive Units
The Company’s indirect parent, 313 Acquisition LLC (“313”), which is wholly owned by the Investors, has authorized the award of profits interests, representing the right to share a portion of the value appreciation on the initial capital contributions to 313 (“Incentive Units”). In March 2015, a total of 4,315,106 Incentive Units previously issued to the Company’s Chief Executive Officer and President were voluntarily relinquished. The Company recorded all unrecognized stock-based compensation associated with such Incentive Units at the time the Incentive Units were relinquished. As of December 31, 2016, a total of 85,882,836 Incentive Units had been awarded, and were outstanding, to current and former members of senior management and a board member, of which 42,169,456 were issued to the Company’s Chief Executive Officer and President. The Incentive Units are subject to time-based and performance-based vesting conditions, with one-third subject to ratable time-based vesting over a five year period and two-thirds subject to the achievement of certain investment return thresholds by The Blackstone Group, L.P. and its affiliates (“Blackstone”). The Company has not recorded any expense related to the performance-based portion of the awards, as the achievement of the vesting condition is not yet deemed probable. The fair value of stock-based awards is measured at the grant date and is recognized as expense over the employee’s requisite service period. The grant date fair value was determined using a Monte Carlo simulation valuation approach with the following assumptions: expected volatility varies from 55% to 125%; expected exercise term between 3.96 and 6.00 years; and risk-free rate between 0.62% and 1.18%.
A summary of the Incentive Unit activity for the years ended December 31, 2016 and 2015 is presented below:
 
 
Incentive Units
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic Value
Outstanding, December 31, 2014
74,527,942

 
$
1.03

 
8.19
 
$
20,145,882

Granted
3,850,000

 
2.40

 
 
 
 
Forfeited
(4,415,106
)
 
1.03

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2015
73,962,836

 
1.06

 
7.31
 
104,562,869

Granted
12,825,000

 
1.93

 
 
 
 
Forfeited
(905,000
)
 
1.09

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2016
85,882,836

 
1.19

 
6.81
 

Unvested shares expected to vest after December 31, 2016
66,186,360

 
1.23

 
6.99
 

Exercisable at December 31, 2016
19,696,476

 
$
1.03

 
6.21
 
$


As of December 31, 2016, there was $1.8 million of unrecognized compensation expense related to outstanding Incentive Units, which will be recognized over a weighted-average period of 1.57 years. As of December 31, 2016 and 2015, the weighted average grant date fair value of the outstanding incentive units was $0.30 and $0.38, respectively.
Vivint Stock Appreciation Rights
The Company’s subsidiary, Vivint Group, Inc. (“Vivint Group”), has awarded Stock Appreciation Rights (“SARs”) to various levels of key employees. The purpose of the SARs is to attract and retain personnel and provide an opportunity to acquire an equity interest of Vivint Group. The SARs are subject to time-based and performance-based vesting conditions, with one-third subject to ratable time-based vesting over a five year period and two-thirds subject to the achievement of certain investment return thresholds by 313. The Company has not recorded any expense related to the performance-based portion of the awards, as the achievement of the vesting condition is not yet deemed probable. In connection with this plan, 21,993,158 SARs were outstanding as of December 31, 2016. In addition, 53,621,891 SARs have been set aside for funding incentive compensation pools pursuant to long-term incentive plans established by the Company. On April 1, 2015, a new plan was created and all issued and outstanding Vivint, Inc. (“Vivint”) SARs were re-granted and all reserved SARs were converted under the new Vivint Group plan. The Company assessed the conversion of the SARs as a modification of equity instruments. The restructuring did not change the fair value of the existing awards and as such, no incremental compensation expense was incurred as a result of the restructuring.
The fair value of the Vivint Group awards is measured at the grant date and is recognized as expense over the employee’s requisite service period. The fair value is determined using a Black-Scholes option valuation model with the following assumptions: expected volatility varies from 55% to 125%, expected dividends of 0%; expected exercise term between 6.00 and 6.47 years; and risk-free rates between 0.61% and 1.77%. Due to the lack of historical exercise data, the Company used the simplified method in determining the estimated exercise term, for all Vivint Group awards.

A summary of the SAR activity for the years ended December 31, 2016 and 2015 is presented below:
 
 
Stock Appreciation
Rights
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic Value
Outstanding, December 31, 2014
6,696,660

 
$
1.04

 
8.62
 
$
1,734,748

Converted
3,259,934

 
0.70

 
8.62
 
 
Granted
11,186,936

 
1.03

 
 
 
 
Forfeited
(2,307,172
)
 
0.80

 
 
 
 
Exercised
(172,221
)
 
0.68

 
 
 
 
Outstanding, December 31, 2015
18,664,137

 
0.87

 
8.66
 
3,628,498

Granted
5,649,573

 
1.22

 
 
 
 
Forfeited
(2,320,552
)
 
0.92

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2016
21,993,158

 
0.96

 
8.23
 

Unvested shares expected to vest after December 31, 2016
19,334,407

 
0.98

 
8.37
 

Exercisable at December 31, 2016
2,658,751

 
$
0.78

 
7.20
 
$


As of December 31, 2016, there was $0.9 million of unrecognized compensation expense related to outstanding Vivint awards, which will be recognized over a weighted-average period of 2.81 years. As of December 31, 2016 and 2015, the weighted average grant date fair value of the outstanding SARs was $0.22 and $0.25, respectively.
Wireless Stock Appreciation Rights
The Company’s subsidiary, Vivint Wireless, has awarded SARs to various key employees. The purpose of the SARs is to attract and retain personnel and provide an opportunity to acquire an equity interest of Vivint Wireless. The SARs are subject to a five year time-based ratable vesting period. In connection with this plan, 17,500 SARs were outstanding as of December 31, 2016. The Company does not intend to issue any additional Wireless SARs.
The fair value of the Vivint Wireless awards is measured at the grant date and is recognized as expense over the employee’s requisite service period. The fair value is determined using a Black-Scholes option valuation model with the following assumptions: expected volatility of 65%, expected dividends of 0%; expected exercise term between 6.00 and 6.50 years; and risk-free rates between 1.51% and 1.77%. Due to the lack of historical exercise data, the Company used the simplified method in determining the estimated exercise term, for all Vivint Wireless awards.
A summary of the SAR activity for the year ended December 31, 2016 and 2015 is presented below:
 
 
Stock Appreciation
Rights
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic Value
Outstanding, December 31, 2014
70,000

 
$
5.00

 
8.41
 

Granted
11,000

 
65.84

 
 
 
 
Forfeited

 

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2015
81,000

 
13.26

 
7.66
 

Granted

 

 
 
 
 
Forfeited
(63,500
)
 
15.54

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2016
17,500

 
5.00

 
6.41
 

Unvested shares expected to vest after December 31, 2016
7,000

 
5.00

 
6.41
 

Exercisable, December 31, 2016
10,500

 
$
5.00

 
6.41
 



As of December 31, 2016, there was an immaterial amount of unrecognized compensation expense related to all Vivint Wireless awards. As of December 31, 2016 and 2015, the weighted average grant date fair value of the outstanding SARs was $2.30 and $6.02, respectively.

Stock-based compensation expense in connection with all stock-based awards for the years ended December 31, 2016, 2015 and 2014 is allocated as follows (in thousands):
 
Year ended December 31,
 
2016
 
2015
 
2014
Operating expenses
$
68

 
$
71

 
$
63

Selling expenses
(127
)
 
578

 
185

General and administrative expenses
3,927

 
2,472

 
1,688

Total stock-based compensation
$
3,868

 
$
3,121

 
$
1,936



Stock-based compensation expense presented in selling expenses was negative for the year ended December 31, 2016 due to a retrospective adjustment in the grant-date fair value of a series of stock-based awards. Stock-based compensation expense included in general and administrative expenses for the year ended December 31, 2016 included $2.2 million of compensation related to an equity repurchase by 313 from one of the Company's executives.

Capital Contribution

In April 2016, Parent completed the first installment of an issuance and sale to certain investors of a series of preferred stock and contributed the net proceeds from such issuance of $69.8 million to the Company as an equity contribution. In July 2016, Parent completed the final installment of the issuance and sale to certain investors of such series of preferred stock and, in August 2016, contributed the net proceeds from such issuance of $30.6 million to the Company as an equity contribution. Both issuances were private placements exempt from registration under the Securities Act.
Commitments and Contingencies
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES
Indemnification —Subject to certain limitations, the Company is obligated to indemnify its current and former directors, officers and employees with respect to certain litigation matters and investigations that arise in connection with their service to the Company. These obligations arise under the terms of its certificate of incorporation, its bylaws, applicable contracts, and Delaware and California law. The obligation to indemnify generally means that the Company is required to pay or reimburse the individuals’ reasonable legal expenses and possibly damages and other liabilities incurred in connection with these matters.
Legal —The Company is named from time to time as a party to lawsuits arising in the ordinary course of business related to its sales, marketing, the provision of its services and equipment claims. Actions filed against the Company include commercial, intellectual property, customer, and labor and employment related claims, including complaints of alleged wrongful termination and potential class action lawsuits regarding alleged violations of federal and state wage and hour and other laws. In general, litigation can be expensive and disruptive to normal business operations. Moreover, the results of legal proceedings are difficult to predict, and the costs incurred in litigation can be substantial. The Company believes the amounts provided in its financial statements are adequate in light of the probable and estimated liabilities. Factors that the Company considers in the determination of the likelihood of a loss and the estimate of the range of that loss in respect of legal matters include the merits of a particular matter, the nature of the matter, the length of time the matter has been pending, the procedural posture of the matter, how the Company intends to defend the matter, the likelihood of settling the matter and the anticipated range of a possible settlement. Because such matters are subject to many uncertainties, the ultimate outcomes are not predictable and there can be no assurances that the actual amounts required to satisfy alleged liabilities from the matters described above will not exceed the amounts reflected in the Company’s financial statements or that the matters will not have a material adverse effect on the Company’s results of operations, financial condition or cash flows.
The Company regularly reviews outstanding legal claims and actions to determine if reserves for expected negative outcomes of such claims and actions are necessary. The Company had reserves for all such matters of approximately $2.6 million and $2.5 million as of December 31, 2016 and 2015, respectively. In conjunction with one of the settlements, the Company is obligated to pay certain future royalties, based on sales of future products.
Operating Leases —The Company leases office and warehouse space, certain equipment, towers, wireless spectrum, software and an aircraft under operating leases with related and unrelated parties expiring in various years through 2028. The leases require the Company to pay additional rent for increases in operating expenses and real estate taxes and contain renewal options. The Company's operating lease arrangements and related terms consisted of the following (in thousands):
 
Rent Expense
 
 
 
Years ended December 31,
 
 
 
2016
 
2015
 
Lease Term
Warehouse, office space and other
$
11,222

 
$
11,632

 
1 - 15 years
Wireless towers, spectrum and other
4,732

 
3,509

 
1 - 10 years
Total Rent Expense
$
15,954

 
$
15,141

 
 

Capital Leases —The Company also enters into certain capital leases with expiration dates through October 2020. On an ongoing basis, the Company enters into vehicle lease agreements under a Fleet Lease Agreement. The lease agreements are typically 36 months leases for each vehicle and the average remaining life for the fleet is 19 months as of December 31, 2016. As of December 31, 2016 and 2015, the capital lease obligation balance was $17.7 million and $18.8 million, respectively.
Spectrum Licenses —During the year ended December 31, 2016, the Company entered into leasing agreements with a third party for designated radio frequency spectrum in 40 mid-sized metropolitan markets. The initial lease term is for seven years, with an option to obtain title of the applicable spectrum licenses at the end of the initial term for a nominal fee. While licenses are issued for only a fixed time, such licenses are subject to renewal by the Federal Communications Commission (FCC). The Company intends to renew the licenses at the end of the initial term. License renewals within the industry have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of the licenses. As a result, the Company treats these Spectrum licenses as an indefinite-lived intangible asset.

As of December 31, 2016, future minimum lease payments were as follows (in thousands):
 
 
Operating
 
Capital
 
Total
2017
$
17,452

 
$
10,513

 
$
27,965

2018
15,322

 
6,117

 
21,439

2019
14,998

 
2,049

 
17,047

2020
13,521

 
17

 
13,538

2021
13,086

 

 
13,086

Thereafter
47,634

 

 
47,634

Amounts representing interest

 
(963
)
 
(963
)
Total lease payments
$
122,013

 
$
17,733

 
$
139,746


Build-to-Suit Lease Arrangements —In June 2016, the Company entered into a non-cancellable lease, whereby the Company will occupy a new building being constructed in Logan, UT as a location to further sales recruitment and training, as well as research and development. Because of its involvement in certain aspects of the construction per the terms of the lease, the Company is deemed the owner of the building for accounting purposes during the construction period. Accordingly, as of December 31, 2016, the Company recorded a build-to-suit lease asset of $5.0 million included in property and equipment, net, and a corresponding $4.6 million build-to-suit lease liability included in other long-term obligations and building costs paid by the Company of $0.4 million. Construction on the new building is expected to be completed during the first quarter of 2017.
In addition to the commitments mentioned above, the Company had other off-balance sheet obligations of $61.4 million as of December 31, 2016 that consisted of commitments related to software licenses, marketing activities, and other goods and services.
Related Party Transactions
Related Party Transactions
RELATED PARTY TRANSACTIONS
Transactions with Vivint Solar
The Company and Vivint Solar, Inc. (“Solar”) have entered into agreements under which the Company subleased corporate office space through October 2014, and provides certain other ongoing administrative services to Solar. During the year ended December 31, 2016, 2015 and 2014 the Company charged $4.6 million, $7.1 million and $8.5 million, respectively of general and administrative expenses to Solar in connection with these agreements. The balance due from Solar in connection with these agreements and other expenses paid on Solar’s behalf was $0.2 million and $1.9 million at December 31, 2016 and December 31, 2015, respectively, and is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets.
On December 27, 2012, the Company executed a Subordinated Note and Loan Agreement with Solar. The terms of the agreement stated that Solar may borrow up to $20.0 million, bearing interest on the outstanding balance at an annual rate of 7.5%, which interest was due and payable semi-annually on June 1 and December 1 of each year commencing on June 1, 2013. On October 10, 2014, in connection with the completion of its initial public offering, Solar repaid loans to APX, the Company’s wholly-owned subsidiary, and to the Company’s parent entity. The Company’s parent entity, in turn, returned a portion of such proceeds to APX as a capital contribution. These transactions resulted in the receipt by APX of an aggregate amount of $55.0 million. These variable interests represent the Company’s maximum exposure to loss from direct involvement with Solar.
Also in connection with Solar’s initial public offering, the Company entered into a number of agreements with Solar related to services and other support that it has provided and will provide to Solar including:
 
A Master Intercompany Framework Agreement which establishes a framework for the ongoing relationship between the Company and Solar and contains master terms regarding the protection of each other’s confidential information, and master procedural terms, such as notice procedures, restrictions on assignment, interpretive provisions, governing law and dispute resolution;
A Non-Competition Agreement in which the Company and Solar each define their current areas of business and their competitors, and agree not to directly or indirectly engage in the other’s business for three years;
A Transition Services Agreement pursuant to which the Company will provide to Solar various enterprise services, including services relating to information technology and infrastructure, human resources and employee benefits, administration services and facilities-related services;
A Product Development and Supply Agreement pursuant to which one of Solar’s wholly owned subsidiaries will, for an initial term of three years, subject to automatic renewal for successive one-year periods unless either party elects otherwise, collaborate with the Company to develop certain monitoring and communications equipment that will be compatible with other equipment used in Solar’s energy systems and will replace equipment Solar currently procures from third parties;
A Marketing and Customer Relations Agreement which governs various cross-marketing initiatives between the Company and Solar, in particularly the provision of sales leads from each company to the other; and
A Trademark License Agreement pursuant to which the licensor, a special purpose subsidiary majority-owned by the Company and minority-owned by Solar, will grant Solar a royalty-free exclusive license to the trademark “VIVINT SOLAR” in the field of selling renewable energy or energy storage products and services.
In November 2016, the Company amended the Marketing and Customer Relations Agreement with Solar to update certain terms and conditions governing existing cross-marketing initiatives and to implement new cross-marketing initiatives including a three-month pilot program with the purpose of exploring potential opportunities for each company to offer, sell and integrate the other company’s respective products and services with its standard product offering.
Other Related-party Transactions
On September 3, 2014, APX paid a dividend in the amount of $50.0 million to Holdings, its sole stockholder, which in turn paid a dividend in the amount of $50.0 million to its stockholders.
The Company incurred additional expenses during the years ended December 31, 2016, 2015 and 2014 of approximately $4.2 million, $2.5 million, $3.1 million, respectively, for other related-party transactions including contributions to the charitable organization Vivint Gives Back, legal fees, and other services. Accrued expenses and other current liabilities at December 31, 2016 and 2015 included payables of $2.5 million and $1.7 million, respectively.
On November 16, 2012, the Company was acquired by an investor group comprised of certain investment funds affiliated with Blackstone Capital Partners VI L.P., and certain co-investors and management investors through certain mergers and related reorganization transactions (collectively, the “Merger”). At the time of the Merger, a portion of the purchase price was placed in escrow to cover potential adjustments to the total purchase consideration associated with certain indemnities and adjustments to tangible net worth. In April 2015, the parties to the Merger reached an agreement regarding the amount to be paid from escrow. As the Company had previously recorded expenses related to these pre-merger costs, this agreement resulted in a reduction to general and administrative expenses of $12.2 million, with the offset to additional paid-in capital.
In connection with the Merger, the Company entered into a support and services agreement with Blackstone Management Partners L.L.C. (“BMP”), an affiliate of Blackstone. Under the support and services agreement, the Company paid BMP, at the closing of the Merger, a transaction fee of approximately $20 million as consideration for BMP’s performance of due diligence investigations, financial and structural analysis, providing corporate strategy and other advice and negotiation assistance in connection with the Merger. In addition, the Company engaged BMP to provide monitoring, advisory and consulting services on an ongoing basis. In consideration for these services, the Company agreed to pay an annual monitoring fee equal to the greater of (i) a minimum base fee of $2.7 million subject to adjustments if the Company engages in a business combination or disposition that is deemed significant and (ii) the amount of the monitoring fee paid in respect of the immediately preceding fiscal year, without regard to any post-fiscal year “true-up” adjustments as determined by the agreement. The Company incurred expenses of approximately $3.7 million, $3.6 million and 3.2 million during the years ended December 31, 2016, 2015 and 2014, respectively, in connection with this agreement.
Under the support and services agreement, the Company also engaged BMP to arrange for Blackstone’s portfolio operations group to provide support services customarily provided by Blackstone’s portfolio operations group to Blackstone’s private equity portfolio companies of a type and amount determined by such portfolio services group to be warranted and appropriate. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period but in no event shall the Company be obligated to pay more than $1.5 million during any calendar year. During the years ended December 31, 2016, 2015 and 2014 the Company incurred no costs associated with such services.
Blackstone Advisory Partners L.P. (“BAP”), an affiliate of Blackstone, participated as one of the initial purchasers of the 2020 notes in each of the May 2013, December 2013 and July 2014 offerings and received fees at the time of closing of such issuances aggregating approximately $0.6 million.
BAP participated as one of the initial purchasers of the 2022 notes in each of the May 2016 and August 2016 offerings and received fees at the time of closing of such issuances aggregating approximately $0.5 million.
On May 2, 2016, the Company and David Bywater, its former Chief Operating Officer, agreed that in connection with the appointment of Mr. Bywater as interim Chief Executive Officer of Vivint Solar, Inc., Mr. Bywater would take a leave of absence from the Company. On December 15, 2016, the Board of Directors (the “Board”) of the Company appointed Scott Hardy to serve as the Company’s Chief Operating Officer effective December 15, 2016. Mr. Hardy will succeed David Bywater, who notified the Company on December 15, 2016 of his intent to resign as the Company’s Chief Operating Officer.

In April 2016, Parent completed the first installment of an issuance and sale to certain investors of a series of preferred stock and contributed the net proceeds from such issuance of $69.8 million to the Company as an equity contribution. In July 2016, Parent completed the final installment of the issuance and sale to certain investors of such series of preferred stock and, in August 2016, contributed the net proceeds from such issuance of $30.6 million to the Company as an equity contribution. Both issuances were private placements exempt from registration under the Securities Act.
The company incurred stock-based compensation expense of $2.2 million included in general and administrative expenses for the year ended December 31, 2016 related to an equity repurchase by 313 from one of the Company's executives.
Long-term investments and other assets, includes amounts due for non-interest bearing advances made to employees that are expected to be repaid in excess of one year. Amounts due from employees as of both December 31, 2016 and 2015, amounted to approximately $0.3 million. As of December 31, 2016 and 2015, this amount was fully reserved.
Prepaid expenses and other current assets at December 31, 2016 and 2015 included a receivable for $0.4 million and $0.2 million, respectively, from certain members of management in regards to their personal use of the corporate jet.
From time to time, the Company does business with a number of other companies affiliated with Blackstone.
Transactions involving related parties cannot be presumed to be carried out at an arm’s-length basis.
Segment Reporting and Business Concentrations
Segment Reporting and Business Concentrations
SEGMENT REPORTING AND BUSINESS CONCENTRATIONS

For the years ended December 31, 2016 and 2015, the Company conducted business through one operating segment, Vivint. Historically, the Company primarily operated in three geographic regions: United States, Canada and New Zealand. During the year ended December 31, 2016, the Company completed the 2016 Contract Sales and ceased operations in New Zealand. Historically, the Company's operations in New Zealand were considered immaterial and reported in conjunction with the United States. Revenues and long-lived assets by geographic region were as follows (in thousands):

 
United States
 
Canada
 
Total
As of and for the
 
 
 
 
 
Year ended December 31, 2016
 
 
 
 
 
Revenue from external customers
$
700,471

 
$
57,436

 
$
757,907

Property and equipment, net
62,781

 
845

 
63,626

Year ended December 31, 2015
 
 
 
 
 
Revenue from external customers
$
602,418

 
$
51,303

 
$
653,721

Property and equipment, net
55,103

 
171

 
55,274

Year ended December 31, 2014
 
 
 
 
 
Revenue from external customers
$
529,521

 
$
34,156

 
$
563,677

Property and equipment, net
62,368

 
422

 
62,790

Employee Benefit Plan
Employee Benefit Plan
EMPLOYEE BENEFIT PLAN
The Company offers eligible employees the opportunity to defer a percentage of their earned income into company-sponsored 401(k) plans. No matching contributions were made to the plans for the years ended December 31, 2016 and 2015.
Guarantor and Non-Guarantor Supplemental Financial Information
Guarantor and Non-Guarantor Supplemental Financial Information
GUARANTOR AND NON-GUARANTOR SUPPLEMENTAL FINANCIAL INFORMATION
The 2019 notes, 2020 notes, 2022 private placement notes and the 2022 notes were issued by APX. The 2019 notes, 2020 notes, 2022 private placement notes and the 2022 notes are fully and unconditionally guaranteed, jointly and severally by Holdings and each of APX’s existing and future material wholly-owned U.S. restricted subsidiaries. APX’s existing and future foreign subsidiaries are not expected to guarantee the notes.
Presented below is the consolidating financial information of APX, subsidiaries of APX that are guarantors (the “Guarantor Subsidiaries”), and APX’s subsidiaries that are not guarantors (the “Non-Guarantor Subsidiaries”) as of and for the years ended December 31, 2016, 2015 and 2014. The audited consolidating financial information reflects the investments of APX in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries using the equity method of accounting.


Condensed Consolidating Balance Sheet
December 31, 2016
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$

 
$
25,136

 
$
143,954

 
$
3,730

 
$
(67,799
)
 
$
105,021

Property and equipment, net

 

 
62,781

 
845

 

 
63,626

Subscriber acquisition costs, net

 

 
974,975

 
77,459

 

 
1,052,434

Deferred financing costs, net

 
4,420

 

 

 

 
4,420

Investment in subsidiaries

 
2,228,903

 

 

 
(2,228,903
)
 

Intercompany receivable

 

 
9,492

 

 
(9,492
)
 

Intangible assets, net

 

 
443,189

 
32,203

 

 
475,392

Goodwill

 

 
809,678

 
25,555

 

 
835,233

Long-term investments and other assets

 
106

 
11,523

 
13

 
(106
)
 
11,536

Total Assets
$

 
$
2,258,565

 
$
2,455,592

 
$
139,805

 
$
(2,306,300
)
 
$
2,547,662

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$

 
$
17,047

 
$
160,956

 
$
74,987

 
$
(67,799
)
 
$
185,191

Intercompany payable

 

 

 
9,492

 
(9,492
)
 

Notes payable and revolving line of credit, net of current portion

 
2,486,700

 

 

 

 
2,486,700

Capital lease obligations, net of current portion

 

 
7,368

 
567

 

 
7,935

Deferred revenue, net of current portion

 

 
53,991

 
4,743

 

 
58,734

Accumulated losses of investee
245,182

 


 


 


 
(245,182
)
 

Other long-term obligations

 

 
47,080

 

 

 
47,080

Deferred income tax liability

 

 
106

 
7,204

 
(106
)
 
7,204

Total (deficit) equity
(245,182
)
 
(245,182
)
 
2,186,091

 
42,812

 
(1,983,721
)
 
(245,182
)
Total liabilities and stockholders’ (deficit) equity
$

 
$
2,258,565

 
$
2,455,592

 
$
139,805

 
$
(2,306,300
)
 
$
2,547,662

















Condensed Consolidating Balance Sheet
December 31, 2015
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$

 
$
2,537

 
$
91,555

 
$
6,540

 
$
(53,066
)
 
$
47,566

Property and equipment, net

 

 
55,012

 
262

 

 
55,274

Subscriber acquisition costs, net

 

 
728,547

 
62,097

 

 
790,644

Deferred financing costs, net

 
6,456

 

 

 

 
6,456

Investment in subsidiaries

 
2,070,404

 

 

 
(2,070,404
)
 

Intercompany receivable

 

 
22,398

 

 
(22,398
)
 

Intangible assets, net

 

 
519,301

 
39,094

 

 
558,395

Goodwill

 

 
809,678

 
24,738

 

 
834,416

Long-term investments and other assets

 
106

 
10,880

 
13

 
(106
)
 
10,893

Total Assets
$

 
$
2,079,503

 
$
2,237,371

 
$
132,744

 
$
(2,145,974
)
 
$
2,303,644

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$

 
$
18,384

 
$
143,896

 
$
59,304

 
$
(53,066
)
 
$
168,518

Intercompany payable

 

 

 
22,398

 
(22,398
)
 

Notes payable and revolving line of credit, net of current portion

 
2,138,112

 

 

 

 
2,138,112

Capital lease obligations, net of current portion

 

 
11,169

 
2

 

 
11,171

Deferred revenue, net of current portion

 

 
40,960

 
3,822

 

 
44,782

Accumulated losses of investee
76,993

 

 

 

 
(76,993
)
 

Other long-term obligations

 

 
10,530

 

 

 
10,530

Deferred income tax liability

 

 
106

 
7,524

 
(106
)
 
7,524

Total (deficit) equity
(76,993
)
 
(76,993
)
 
2,030,710

 
39,694

 
(1,993,411
)
 
(76,993
)
Total liabilities and stockholders’ (deficit) equity
$

 
$
2,079,503

 
$
2,237,371

 
$
132,744

 
$
(2,145,974
)
 
$
2,303,644



Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Year ended December 31, 2016
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$

 
$
715,072

 
$
45,539

 
$
(2,704
)
 
$
757,907

Costs and expenses

 

 
787,138

 
44,575

 
(2,704
)
 
829,009

(Loss) income from operations

 

 
(72,066
)
 
964

 

 
(71,102
)
Loss from subsidiaries
(275,957
)
 
(69,637
)
 

 

 
345,594

 

Other expense (income), net

 
206,320

 
(1,207
)
 
(325
)
 

 
204,788

(Loss) income before income tax expenses
(275,957
)
 
(275,957
)
 
(70,859
)
 
1,289

 
345,594

 
(275,890
)
Income tax expense (benefit)

 

 
545

 
(478
)
 

 
67

Net (loss) income
$
(275,957
)
 
$
(275,957
)
 
$
(71,404
)
 
$
1,767

 
$
345,594

 
$
(275,957
)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment

 
2,482

 

 
2,482

 
(2,482
)
 
2,482

Unrealized gain on marketable securities


 
1,011

 
1,011

 

 
(1,011
)
 
1,011

Comprehensive (loss) income
$
(275,957
)
 
$
(272,464
)

$
(70,393
)
 
$
4,249

 
$
342,101

 
$
(272,464
)


Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Year ended December 31, 2015
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$

 
$
622,507

 
$
34,022

 
$
(2,808
)
 
$
653,721

Costs and expenses

 

 
730,322

 
34,882

 
(2,808
)
 
762,396

Loss from operations

 

 
(107,815
)
 
(860
)
 

 
(108,675
)
Loss from subsidiaries
(279,107
)
 
(118,885
)
 

 

 
397,992

 

Other expense, net

 
160,222

 
9,763

 
96

 

 
170,081

Loss before income tax expenses
(279,107
)
 
(279,107
)
 
(117,578
)
 
(956
)
 
397,992

 
(278,756
)
Income tax expense (benefit)

 

 
392

 
(41
)
 

 
351

Net loss
$
(279,107
)
 
$
(279,107
)
 
$
(117,970
)
 
$
(915
)
 
$
397,992

 
$
(279,107
)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment

 
(13,293
)
 
2

 
(13,294
)
 
13,292

 
(13,293
)
Comprehensive loss
$
(279,107
)
 
$
(292,400
)
 
$
(117,968
)
 
$
(14,209
)
 
$
411,284

 
$
(292,400
)


Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Year ended December 31, 2014
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$

 
$
530,888

 
$
35,911

 
$
(3,122
)
 
$
563,677

Costs and expenses

 

 
623,124

 
37,544

 
(3,122
)
 
657,546

(Loss) income from operations

 

 
(92,236
)
 
(1,633
)
 

 
(93,869
)
(Loss) income from subsidiaries
(238,660
)
 
(93,850
)
 

 

 
332,510

 

Other expense (income), net

 
145,917

 
(1,676
)
 
36

 

 
144,277

Loss from operations before income tax expense
(238,660
)
 
(239,767
)
 
(90,560
)
 
(1,669
)
 
332,510

 
(238,146
)
Income tax (benefit) expense

 
(1,107
)
 
779

 
842

 

 
514

Net loss
$
(238,660
)
 
$
(238,660
)
 
$
(91,339
)
 
$
(2,511
)
 
$
332,510

 
$
(238,660
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 

Foreign currency translation adjustment

 
(11,333
)
 
(6,895
)
 
(4,438
)
 
11,333

 
(11,333
)
Comprehensive loss
$
(238,660
)
 
$
(249,993
)
 
$
(98,234
)
 
$
(6,949
)
 
$
343,843

 
$
(249,993
)


Condensed Consolidating Statements of Cash Flows
For the Year ended December 31, 2016
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$

 
$

 
$
(380,508
)
 
$
14,802

 
$

 
$
(365,706
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment

 

 
(5,243
)
 

 

 
(5,243
)
Capital expenditures

 

 
(11,642
)
 

 

 
(11,642
)
Proceeds from sale of capital assets

 

 
3,080

 
43

 

 
3,123

Investment in subsidiary
(100,407
)
 
(408,214
)
 

 

 
508,621

 

Acquisition of intangible assets

 

 
(1,385
)
 

 

 
(1,385
)
Net cash (used in) provided by investing activities
(100,407
)
 
(408,214
)
 
(15,190
)
 
43

 
508,621

 
(15,147
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable

 
604,000

 

 

 

 
604,000

Repayment on notes payable

 
(235,535
)
 

 

 

 
(235,535
)
Borrowings from revolving line of credit

 
57,000

 

 

 

 
57,000

Repayment of revolving line of credit

 
(77,000
)
 

 

 

 
$
(77,000
)
Proceeds from capital contribution
100,407

 
100,407

 

 

 
(100,407
)
 
100,407

Payment of intercompany settlement

 

 
3,000

 
(3,000
)
 

 

Intercompany receivable

 

 
12,906

 

 
(12,906
)
 

Intercompany payable

 

 
408,214

 
(12,906
)
 
(395,308
)
 

Repayments of capital lease obligations

 

 
(8,295
)
 
(20
)
 

 
(8,315
)
Financing costs

 
(9,036
)
 

 

 

 
(9,036
)
Deferred financing costs

 
(9,241
)
 

 

 

 
(9,241
)
Net cash provided by (used in) provided by financing activities
100,407

 
430,595

 
415,825

 
(15,926
)
 
(508,621
)
 
422,280

Effect of exchange rate changes on cash

 

 

 
(466
)
 

 
(466
)
Net increase (decrease) in cash

 
22,381

 
20,127

 
(1,547
)
 

 
40,961

Cash:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period

 
2,299

 
(1,941
)
 
2,201

 

 
2,559

End of period
$

 
$
24,680

 
$
18,186

 
$
654

 
$

 
$
43,520


Condensed Consolidating Statements of Cash Flows
For the Year ended December 31, 2015
(In thousands)
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$

 
$
(1,052
)
 
$
(267,327
)
 
$
13,072

 
$

 
$
(255,307
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment

 

 
(23,641
)
 
(1,099
)
 

 
(24,740
)
Capital expenditures

 

 
(26,941
)
 
(41
)
 

 
(26,982
)
Proceeds from sale of capital assets

 

 
480

 

 

 
480

Investment in subsidiary

 
(296,895
)
 

 

 
296,895

 

Acquisition of intangible assets

 

 
(1,363
)
 

 

 
(1,363
)
Proceeds from insurance claims

 

 
2,984

 

 

 
2,984

Change in restricted cash

 

 
14,214

 

 

 
14,214

Investment in convertible note

 

 

 

 

 

Other assets

 

 
(208
)
 

 

 
(208
)
Net cash used in investing activities

 
(296,895
)
 
(34,475
)
 
(1,140
)
 
296,895

 
(35,615
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable

 
296,250

 

 

 

 
296,250

Borrowings from revolving line of credit

 
271,000

 

 

 

 
271,000

Repayment of revolving line of credit

 
(271,000
)
 

 

 

 
$
(271,000
)
Intercompany receivable

 
 
 
11,601

 

 
(11,601
)
 

Intercompany payable

 

 
296,895

 
(11,601
)
 
(285,294
)
 

Repayments of capital lease obligations

 

 
(6,402
)
 
(12
)
 

 
(6,414
)
Deferred financing costs

 
(5,436
)
 

 

 

 
(5,436
)
Net cash provided by (used in) provided by financing activities

 
290,814

 
302,094

 
(11,613
)
 
(296,895
)
 
284,400

Effect of exchange rate changes on cash

 

 

 
(1,726
)
 

 
(1,726
)
Net increase (decrease) in cash

 
(7,133
)
 
292

 
(1,407
)
 

 
(8,248
)
Cash:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period

 
9,432

 
(2,233
)
 
3,608

 

 
10,807

End of period
$

 
$
2,299

 
$
(1,941
)
 
$
2,201

 
$

 
$
2,559


Condensed Consolidating Statements of Cash Flows
For the Year ended December 31, 2014
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
50,000

 
$
(894
)
 
$
(318,734
)
 
$
9,991

 
$
(50,000
)
 
$
(309,637
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment

 

 
(10,580
)
 

 

 
(10,580
)
Capital expenditures

 

 
(30,315
)
 
(185
)
 

 
(30,500
)
Proceeds from sale of capital assets

 

 
964

 

 

 
964

Investment in subsidiary
(32,300
)
 
(340,024
)
 

 

 
372,324

 

Acquisition of intangible assets

 

 
(9,649
)
 

 

 
(9,649
)
Net cash used in acquisitions

 

 
(18,500
)
 

 

 
(18,500
)
Investment in marketable securities

 
(60,000
)
 

 

 

 
(60,000
)
Proceeds from marketable securities

 
60,069

 

 

 

 
60,069

Proceeds from note receivable

 

 
22,699

 

 

 
22,699

Change in restricted cash

 

 
14,375

 

 

 
14,375

Investment in convertible note

 

 
(3,000
)
 

 

 
(3,000
)
Other assets

 

 
(2,153
)
 
(9
)
 

 
(2,162
)
Net cash used in investing activities
(32,300
)
 
(339,955
)
 
(36,159
)
 
(194
)
 
372,324

 
(36,284
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable

 
102,000

 

 

 

 
102,000

Borrowings from revolving line of credit

 
20,000

 

 

 

 
20,000

Proceeds from capital contribution
32,300

 
32,300

 

 

 
(32,300
)
 
32,300

Intercompany receivable

 

 
10,658

 

 
(10,658
)
 

Intercompany payable

 

 
340,024

 
(10,658
)
 
(329,366
)
 

Proceeds from contract sales

 

 
2,261

 

 

 
2,261

Acquisition of contracts

 

 
(2,277
)
 

 

 
(2,277
)
Repayments of capital lease obligations

 

 
(6,297
)
 
(3
)
 

 
(6,300
)
Deferred financing costs

 
(2,927
)
 

 

 

 
(2,927
)
Payment of dividends
(50,000
)
 
(50,000
)
 

 

 
50,000

 
(50,000
)
Net cash (used in) provided by financing activities
(17,700
)
 
101,373

 
344,369

 
(10,661
)
 
(322,324
)
 
95,057

Effect of exchange rate changes on cash

 

 

 
(234
)
 

 
(234
)
Net increase (decrease) in cash

 
(239,476
)
 
(10,524
)
 
(1,098
)
 

 
(251,098
)
Cash:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period

 
248,908

 
8,291

 
4,706

 

 
261,905

End of period
$

 
$
9,432

 
$
(2,233
)
 
$
3,608

 
$

 
$
10,807

Subsequent Events
Subsequent Events
SUBSEQUENT EVENTS
Vivint Flex Pay
On January 3, 2017, the Company announced the introduction of the Vivint Flex Pay plan. Under the Vivint Flex Pay plan, the Company (i) will launch a Consumer Financing Program in the first quarter of 2017, pursuant to which it will offer to qualified customers in the United States an opportunity to finance the purchase of Products used in connection with Vivint’s smart home and security services through a third party financing provider and (ii) has begun offeing retail installment contracts (“RICs”) with respect to the purchase of Products to certain of the Company's customers who do not qualify to participate in the Consumer Financing Program, but qualify under Vivint’s historical underwriting criteria. Vivint may also establish credit programs either directly or through an affiliate or pursuant to an agreement with a third party to provide installment loans or similar products to customers that do not qualify to participate in the Consumer Financing Program. Alternatively, customers may purchase the Products with cash or credit card.
Under the Vivint Flex Pay plan, customers pay separately for the Products and Vivint’s smart home and security services. Under the Consumer Financing Program, qualified customers will be eligible for installment loans provided by a third party financing provider of up to $4,000 for either 42 or 60 months. In connection with the Consumer Financing Program, a subsidiary of the Company entered into an agreement (the “CFP Agreement”) with Citizens Bank, N.A. ("Citizens") pursuant to which Citizens is the exclusive provider of installment loans under the Consumer Financing Program for Vivint’s customers who are eligible for such loans. Pursuant to the CFP Agreement, Vivint pays a monthly fee to Citizens based on the average daily balance of the loans provided by Citizens outstanding and Citizens and Vivint share liability for credit losses, with Vivint being responsible for approximately 5% to 100% of lost principal balances, depending on factors specified in the CFP Agreement. The initial term of the CFP Agreement is five years, subject to automatic, one-year renewals unless terminated by either party in accordance with its terms.
2022 Notes
On February 1, 2017, APX issued an additional $300.0 million aggregate principal amount of the 2022 notes at a price of 108.250%. The Company used the net proceeds from the offering of these 2022 notes to to redeem $300.0 million aggregate principal amount of the existing 2019 notes and pay the related redemption premium, and to pay all fees and expenses related thereto and will use any remaining proceeds for general corporate purposes.
Significant Accounting Policies (Policies)
Basis of Presentation
The Company has prepared the accompanying consolidated financial statements pursuant to generally accepted accounting principles in the United States (“GAAP”). Preparing financial statements requires the Company to make estimates and assumptions that affect the amounts that are reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on the Company’s best knowledge of current events and actions that the Company may undertake in the future, actual results may be different from the Company’s estimates. The results of operations presented herein are not necessarily indicative of the Company’s results for any future period.
Change in Accounting Estimate —Effective April 1, 2016, the Company updated its estimate of the life of its subscriber relationships and the period and pattern used to amortize deferred activation fees and deferred subscriber acquisition costs, to better approximate the actual life of the customer attrition patterns. Prior to the change, the Company amortized deferred activation fees and subscriber acquisition costs over 12 years using a 150% declining balance method, which converted to a straight-line methodology after approximately five years. Subsequent to the change, the Company amortizes deferred activation fees and subscriber acquisition costs over 15 years using a 240% declining balance method, which converts to a straight-line methodology after approximately nine years when the resulting amortization exceeds that from the accelerated method.
Restructuring and Asset Impairment Charges —Restructuring and asset impairment charges represent expenses incurred in relation to activities to exit or dispose of portions of the Company's business that do not qualify as discontinued operations. Liabilities associated with restructuring are measured at their fair value when the liability is incurred. Expenses for related termination benefits are recognized at the date the Company notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the future service period. Liabilities related to termination of a contract are measured and recognized at fair value when the contract does not have any future economic benefit to the entity and the fair value of the liability is determined based on the present value of the remaining obligation. The Company expenses all other costs related to an exit or disposal activity as incurred (See Note 3).
Principles of Consolidation —The accompanying consolidated financial statements include the accounts of APX Group Holdings, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Changes in Presentation of Comparative Financial Statements — Certain reclassifications have been made to the Company’s consolidated financial information in order to conform to the current year presentation. These changes did not have a significant impact on the consolidated financial statements.
Revenue Recognition —The Company recognizes revenue principally on three types of transactions: (i) recurring revenue, which includes revenues for monitoring and other smart home services of the Company’s subscriber contracts and recurring monthly revenue associated with Vivint Wireless Inc. (“Wireless Internet” or “Wireless”), (ii) service and other sales, which includes non-recurring service fees charged to subscribers provided on contracts, contract fulfillment revenues and sales of products that are not part of the Company's service offerings, and (iii) activation fees on subscriber contracts, which are amortized over the expected life of the customer.
Recurring revenue for the Company’s subscriber contracts is billed in advance, generally monthly, pursuant to the terms of subscriber contracts and recognized ratably over the service period. Costs of providing ongoing recurring services are expensed in the period incurred.

Service and other sales revenue is recognized as services are provided or when title to the products and equipment sold transfers to the customer. Contract fulfillment revenue, included in service and other sales, is recognized when payment is received from customers who cancel their contract in-term. Revenue from sales of products that are not part of the basic service offering is generally recognized upon delivery of products.

Activation fees represent upfront one-time charges billed to subscribers at the time of installation and are deferred and recognized over the expected customer life. The Company evaluates subscriber account attrition on a periodic basis, utilizing observed attrition rates for the Company’s subscriber contracts and industry information and, when necessary, makes adjustments to the estimated subscriber relationship period and amortization method.
Subscriber Acquisition Costs —Subscriber acquisition costs represent the costs related to the origination of new subscribers. A portion of subscriber acquisition costs is expensed as incurred, which includes costs associated with the direct-to-home sale housing, marketing and recruiting, certain portions of sales commissions (residuals), overhead and other costs, considered not directly and specifically tied to the origination of a particular subscriber. The remaining portion of the costs is considered to be directly tied to subscriber acquisition and consists primarily of certain portions of sales commissions, equipment, and installation costs. These costs are deferred and recognized in a pattern that reflects the estimated life of the subscriber relationships. The Company evaluates subscriber account attrition on a periodic basis, utilizing observed attrition rates for the Company’s subscriber contracts and industry information and, when necessary, makes adjustments to the estimated subscriber relationship period and amortization method.
On the consolidated statement of cash flows, subscriber acquisition costs that are comprised of equipment and related installation costs purchased for or used in subscriber contracts in which the Company retains ownership to the equipment are classified as investing activities and reported as “Subscriber acquisition costs – company owned equipment.” All other subscriber acquisition costs are classified as operating activities and reported as “Subscriber acquisition costs – deferred contract costs” on the condensed consolidated statements of cash flows as these assets represent deferred costs associated with customer contracts.
Cash and Cash Equivalents —Cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Accounts Receivable —Accounts receivable consists primarily of amounts due from customers for recurring monthly monitoring services. The accounts receivable are recorded at invoiced amounts and are non-interest bearing. The gross amount of accounts receivable has been reduced by an allowance for doubtful accounts of $4.1 million and $3.5 million at December 31, 2016 and 2015, respectively. The Company estimates this allowance based on historical collection experience and subscriber attrition rates. When the Company determines that there are accounts receivable that are uncollectible, they are charged off against the allowance for doubtful accounts. As of December 31, 2016 and 2015, no accounts receivable were classified as held for sale. Provision for doubtful accounts is included in general and administrative expenses in the accompanying consolidated statements of operations.
Inventories —Inventories, which are comprised of smart home and security system equipment and parts are stated at the lower of cost or market with cost determined under the first-in, first-out (FIFO) method. The Company adjusts the inventory balance based on anticipated obsolescence, usage and historical write-offs.
Long-lived Assets and Intangibles —Property and equipment are stated at cost and depreciated on the straight-line method over the estimated useful lives of the assets or the lease term for assets under capital leases, whichever is shorter. Intangible assets with definite lives are amortized over the remaining estimated economic life of the underlying technology or relationships, which ranges from 2 to 10 years. Definite-lived intangible assets are amortized on the straight-line method over the estimated useful life of the asset or in a pattern in which the economic benefits of the intangible asset are consumed. Amortization expense associated with leased assets is included with depreciation expense. Routine repairs and maintenance are charged to expense as incurred. The Company periodically assesses potential impairment of its long-lived assets and intangibles and performs an impairment review whenever events or changes in circumstances indicate that the carrying value may not be recoverable (See Note 8). In addition, the Company periodically assesses whether events or changes in circumstance continue to support an indefinite life of certain intangible assets or warrant a revision to the estimated useful life of definite-lived intangible assets.
Effective January 1, 2016, the Company adopted guidance issued by the FASB which provides new standards to determine whether a cloud computing arrangement includes a software license. The guidance requires the Company to determine if an internal use software obtained in a cloud hosting arrangement contains a contractual right to take possession of the software and if it is feasible to either run the software on internal hardware or contract with an unrelated vendor to host the software. If both criteria are met, the company will consider the arrangement to include a software license and classify the purchase as an intangible. The Company has elected to adopt the guidance prospectively to all arrangements entered into or materially modified after the beginning of 2016. The Company did not enter into, or modify, any material cloud computing arrangements during the year ended December 31, 2016.
Wireless Spectrum Licenses—The Company has capitalized as an intangible asset wireless spectrum licenses that were acquired from third parties. The cost basis of the wireless spectrum asset includes the purchase price paid for the licenses at the time of acquisition, plus costs incurred to acquire the licenses. The asset and related liability were recorded at the net present value of future cash outflows using the Company's incremental borrowing rate at the time of acquisition.
 
The Company has determined that the wireless spectrum licenses meet the definition of indefinite-lived intangible assets because the licenses may be renewed periodically for a nominal fee, provided that the Company continues to meet the service and geographic coverage provisions. The Company has also determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of these wireless spectrum licenses.
Long-term Investments — The Company’s long-term investments are comprised of available-for-sale securities and cost based investments in other companies. As of December 31, 2016 and 2015, cost-based investments totaled $0.4 million and $3.5 million, respectively. Available-for-sale securities as of of December 31, 2016 were $4.0 million. As of December 31, 2015, the Company held no available-for-sale securities.
The Company’s marketable equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the classifications at each balance sheet date. Marketable equity securities, are classified as either short-term or long-term, based on the nature of each security and its availability for use in current operations. The Company’s marketable equity securities are carried at fair value, with unrealized gains and losses, reported as a component of accumulated other comprehensive income (“AOCI”) in equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method.
The Company performs impairment analyses of its cost based investments when events occur or circumstances change that would, more likely than not, reduce the fair value of the investment below its carrying value. When indicators of impairment do not exist and certain accounting criteria are met, the Company evaluates impairment using a qualitative approach. As of December 31, 2016, no indicators of impairment existed associated with these cost based investments.
Deferred Financing Costs — Costs incurred in connection with obtaining debt financing are deferred and amortized utilizing the straight-line method, which approximates the effective-interest method, over the life of the related financing. Deferred financing costs incurred with draw downs on APX's revolving credit facility will be amortized over the amended maturity dates discussed in Note 5. If such financing is paid off or replaced prior to maturity with debt instruments that have substantially different terms, the unamortized costs are charged to expense. Deferred financing costs included in the accompanying consolidated balance sheets within deferred financing costs, net at December 31, 2016 and 2015 were $4.4 million and $6.5 million, net of accumulated amortization of $6.9 million and $4.8 million, respectively. Deferred financing costs included in the accompanying consolidated balance sheets within notes payable, net at December 31, 2016 and 2015 were $39.4 million and $40.2 million, net of accumulated amortization of $35.6 million and $26.1 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying consolidated statements of operations totaled $11.6 million, $10.9 million and $10.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Effective January 1, 2016, the Company adopted guidance issued by the FASB requiring debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company has applied this retrospectively resulting in a reduction to deferred financing costs, net by $40.2 million as of December 31, 2015 with a corresponding decrease to notes payable, net.
Residual Income Plan —The Company has a program that allows third-party sales channel partners to receive additional compensation based on the performance of the underlying contracts they create. The Company calculates the present value of the expected future payments and recognizes this amount in the period the commissions are earned. Subsequent accretion and adjustments to the estimated liability are recorded as interest and operating expense respectively. The Company monitors actual payments and customer attrition on a periodic basis and, when necessary, makes adjustments to the liability.
Stock-Based Compensation —The Company measures compensation cost based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards (See Note 12).
Advertising Expense —Advertising costs are expensed as incurred.
Income Taxes —The Company accounts for income taxes based on the asset and liability method. Under the asset and liability method, deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets when it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.
The Company recognizes the effect of an uncertain income tax position on the income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company’s policy for recording interest and penalties is to record such items as a component of the provision for income taxes.
Contracts Sold —On March 31, 2014, the Company received approximately $2.3 million in proceeds from the sale of certain subscriber contracts to a third-party. Concurrently, the Company entered into an agreement with the buyer to continue providing billing, monitoring and support services for the contracts that were sold for a period of ten years. On November 24, 2014, the Company repurchased the subscriber contracts from this third-party for $2.3 million and the associated liability was settled. Because of the Company's continuing involvement in servicing the contracts, no material gain/loss on the transaction was recognized.
During the year ended December 31, 2016, the Company sold all of its New Zealand and Puerto Rico subscriber contracts and ceased operations in these geographical regions ("2016 Contract Sales"). As a result, during the year ended December 31, 2016 the Company recorded the impact of these transactions in restructuring and asset impairment (See Note 3).
Concentrations of Credit Risk —Financial instruments that potentially subject the Company to concentration of credit risk consist principally of receivables and cash. At times during the year, the Company maintains cash balances in excess of insured limits. The Company is not dependent on any single customer or geographic location. The loss of a customer would not adversely impact the Company’s operating results or financial position.
Concentrations of Supply Risk —As of December 31, 2016, approximately 57% of the Company’s installed panels were SkyControl panels and 40% were 2GIG Go!Control panels. In connection with the 2GIG Sale in April 2013, the Company entered into a five-year supply agreement with 2GIG, pursuant to which they will be the exclusive provider of the Company’s control panel requirements, subject to certain exceptions as provided in the supply agreement. The loss of 2GIG as a supplier could potentially impact the Company’s operating results or financial position.
Fair Value Measurement —Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities subject to on-going fair value measurement are categorized and disclosed into one of three categories depending on observable or unobservable inputs employed in the measurement. These two types of inputs have created the following fair value hierarchy:
Level 1: Quoted prices in active markets that are accessible at the measurement date for assets and liabilities.
Level 2: Observable prices that are based on inputs not quoted in active markets, but corroborated by market data.
Level 3: Unobservable inputs are used when little or no market data is available.
This hierarchy requires the Company to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. The Company recognizes transfers between levels of the hierarchy based on the fair values of the respective financial measurements at the end of the reporting period in which the transfer occurred. There were no transfers between levels of the fair value hierarchy during the years ended December 31, 2016 and 2015.
The carrying amounts of the Company’s accounts receivable, accounts payable and accrued and other liabilities approximate their fair values due to their short maturities.
Goodwill —The Company conducts a goodwill impairment analysis annually in the fourth fiscal quarter, as of October 1, and as necessary if changes in facts and circumstances indicate that the fair value of the Company’s reporting units may be less than its carrying amount. When indicators of impairment do not exist and certain accounting criteria are met, the Company is able to evaluate goodwill impairment using a qualitative approach. When necessary, the Company’s quantitative goodwill impairment test consists of two steps. The first step requires that the Company compare the estimated fair value of its reporting units to the carrying value of the reporting unit’s net assets, including goodwill. If the fair value of the reporting unit is greater than the carrying value of its net assets, goodwill is not considered to be impaired and no further testing is required. If the fair value of the reporting unit is less than the carrying value of its net assets, the Company would be required to complete the second step of the test by analyzing the fair value of its goodwill. If the carrying value of the goodwill exceeds its fair value, an impairment charge is recorded. The Company found that no indicators of goodwill impairment existed during the year ended December 31, 2016, thus a qualitative approach was used and it was determined that no impairment existed for goodwill.
Foreign Currency Translation and Other Comprehensive Income —The functional currencies of Vivint Canada, Inc. and Vivint New Zealand, Ltd. are the Canadian and New Zealand dollars, respectively. Accordingly, assets and liabilities are translated from their respective functional currencies into U.S. dollars at period-end rates and revenue and expenses are translated at the weighted-average exchange rates for the period. Adjustments resulting from this translation process are classified as other comprehensive (loss) income and shown as a separate component of equity.
When intercompany foreign currency transactions between entities included in the consolidated financial statements are of a long term investment nature (i.e., those for which settlement is not planned or anticipated in the foreseeable future) foreign currency translation adjustments resulting from those transactions are included in stockholders’ (deficit) equity as accumulated other comprehensive loss. When intercompany transactions are deemed to be of a short term nature, translation adjustments are required to be included in the consolidated statement of operations. Beginning in July 2015, we determined that settlement of these intercompany balances was anticipated and therefore these balances are not considered to be long-term investments and any subsequent translation gains or losses are recorded in income.
Letters of Credit —As of December 31, 2016 and 2015, the Company had $5.7 million and $5.0 million, respectively, of letters of credit issued in the ordinary course of business, all of which are undrawn.
New Accounting PronouncementsIn May 2014, the FASB originally issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) which clarifies the principles used to recognize revenue for all entities. This guidance requires companies to recognize revenue when they transfer goods or services to a customer in an amount that reflects the consideration to which they expect to be entitled. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year to be effective for annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08 to clarify the implementation guidance on principal versus agent considerations as it relates to Topic 606. In June 2016, the FASB issued ASU 2016-10 to clarify the implementation guidance on identifying performance obligations and licensing as it relates to Topic 606. This update reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In June 2016, the FASB issued ASU 2016-12 to clarify the implementation guidance on Topic 606, which amends the guidance on transition, collectability, non-cash consideration and the presentation of sales and other similar taxes.
The Company currently plans to adopt Topic 606 using the modified retrospective approach with the cumulative effect of initially applying the new standard recognized at the date of initial application and providing certain additional disclosures. However, a final decision regarding the adoption method has not been made at this time. The Company's final determination will depend on a number of factors, such as the significance of the impact of the new standard on the Company's financial results, system readiness, including the Company's ability to accumulate and analyze the information necessary to assess the impact on prior period financial statements, as necessary.
The Company is in the initial stages of evaluating the impact of the new standard on the accounting policies, processes, and system requirements. The Company has assigned internal resources in addition to the engagement of third party service providers to assist in the evaluation. Furthermore, the Company has made and will continue to make investments in systems to enable timely and accurate reporting under the new standard. The Company expects the standard to have an effect on the subscriber acquisitions costs, net and deferred revenues included in our condensed consolidated balance sheets and the recognition of revenues and amortization of subscriber acquisition costs on the consolidated statement of operations. The Company does not expect the standard to have a significant impact to the consolidated statements of changes in equity or the consolidated statements of cash flows.
While the Company continues to assess the potential impacts of the new standard, including the areas described above, and anticipate this standard could have a material impact on the consolidated financial statements, the Company does not know or cannot reasonably estimate quantitative information related to the impact of the new standard on the financial statements at this time.
In March 2016, the FASB issued ASU 2016-09 to simplify accounting for employee share-based payments. This update involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and will be applied prospectively and/or retrospectively, with early adoption permitted. The Company plans to adopt this update on the effective date and the adoption is not expected to materially impact the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07 which eliminates the requirement to retroactively adopt the equity method of accounting when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and must be applied prospectively, with early adoption permitted. The Company plans to adopt this update on the effective date and the adoption is not expected to materially impact the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-06 to clarify the assessment of contingent put and call options in debt instruments as it relates to Derivatives and Hedging (Topic 815). The amendments in this update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and must be applied using a modified retrospective approach, with early adoption permitted. The Company plans to adopt this update on the effective date and it is not expected to materially impact the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability among organizations as it relates to lease assets and lease liabilities. The update requires that lease assets and lease liabilities be recognized on the balance sheet, and that key information about leasing arrangements be disclosed. Prior to this update, GAAP did not require operating leases to be recognized as lease assets and lease liabilities on the balance sheet. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 and must be applied using a modified retrospective approach, with early adoption permitted. The Company is evaluating the new guidance and plans to provide additional information about its expected impact at a future date.
In January 2016, the FASB issued ASU 2016-01 to address certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The main provisions of this update require equity investments to be measured at fair value with changes in fair value recognized in earnings, allow a company to value equity investments without a readily determined fair value at cost, less any impairments, and simplify the assessment of impairments of equity investments without a readily determinable fair value by requiring a qualitative assessment. This update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. An entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the Update. Early adoption is permitted. The Company is evaluating the new guidance and plans to provide additional information about its expected impact upon adoption at a future date.
Significant Accounting Policies (Tables)
The effects of this change in estimate were as follows (in thousands):
 
Year ended December 31, 2016
Increase in activation fee revenues
$
1,400

Increase in depreciation and amortization
21,413

Increase to loss from operations
20,013

Increase to net loss
19,621

The changes in the Company’s allowance for accounts receivable were as follows for the periods ended (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
 
2014
Beginning balance
$
3,541

 
$
3,373

 
$
1,901

Provision for doubtful accounts
19,624

 
14,924

 
15,656

Write-offs and adjustments
(19,027
)
 
(14,756
)
 
(14,184
)
Balance at end of period
$
4,138

 
$
3,541

 
$
3,373

Restructuring and Asset Impairment Charges (Tables)
Restructuring and asset impairment charges were as follows (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
Wireless restructuring and asset (recoveries) impairment charges:
 
 
 
Asset (recoveries) impairments
$
(710
)
 
$
53,228

Contract termination (recoveries) costs
(751
)
 
4,767

Employee severance and termination benefits (recoveries) charges
(77
)
 
1,202

Total wireless restructuring and asset (recoveries) impairment charges
(1,538
)
 
59,197

Loss on subscriber contract sales
2,551

 

Total restructuring and asset impairment charges
$
1,013

 
$
59,197

The following table presents accrued restructuring activity for the years ended December 31, 2016 and 2015.
 
Asset impairments
 
Contract
termination costs
 
Employee severance and
termination benefits
 
Total
Accrued restructuring balance as of December 31, 2014
$

 
$

 
$

 
$

Restructuring and impairment charges
53,228

 
4,767

 
1,202

 
59,197

Cash payments
(10
)
 
(623
)
 
(881
)
 
(1,514
)
Non-cash settlements
(53,218
)
 
(190
)
 

 
(53,408
)
Accrued restructuring balance as of December 31, 2015

 
3,954

 
321

 
4,275

Restructuring and impairment recoveries
(710
)
 
(751
)
 
(77
)
 
(1,538
)
Cash payments

 
(2,554
)
 
(244
)
 
(2,798
)
Non-cash settlements
710

 

 

 
710

Accrued restructuring balance as of December 31, 2016
$

 
$
649

 
$

 
$
649

Business Combination (Tables)
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the time of acquisition (in thousands):
 
 
 
Net assets acquired from Space Monkey
$
404

Deferred tax liability
(1,106
)
Intangible assets (See Note 8)
8,300

Goodwill
7,402

Total estimated fair value of the assets acquired and liabilities assumed
$
15,000

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the time of acquisition (in thousands):
 
 
 
Net assets acquired from Wildfire
$
96

Intangible assets (See Note 8)
2,900

Goodwill
504

Total cash consideration
$
3,500

Long-Term Debt (Tables)
The following table presents deferred financing activity for the year ended December 31, 2016 (in thousands):

 
Unamortized Deferred Financing Costs
 
Balance 12/31/2015
 
Additions
 
Refinances
 
Early Extinguishment
 
Amortized
 
Balance 12/31/2016
Revolving Credit Facility
$
6,456

 
$

 
$

 
$

 
$
(2,036
)
 
$
4,420

2019 Notes
20,182

 

 
(3,423
)
 
(585
)
 
(4,481
)
 
11,693

2020 Notes
18,892

 

 

 

 
(3,839
)
 
15,053

2022 Private Placement Notes
1,170

 

 

 
(110
)
 
(157
)
 
903

2022 Notes

 
9,337

 
3,423

 

 
(1,046
)
 
11,714

Total Deferred Financing Costs
$
46,700

 
$
9,337

 
$

 
$
(695
)
 
$
(11,559
)
 
$
43,783

The Company’s debt at December 31, 2016 consisted of the following (in thousands):
 
 
Outstanding
Principal
 
Unamortized
Premium
(Discount)
 
Unamortized Deferred Financing Costs
 
Net Carrying
Amount
6.375% Senior Secured Notes due 2019
$
719,465

 
$

 
$
(11,693
)
 
$
707,772

8.75% Senior Notes due 2020
930,000

 
5,848

 
(15,053
)
 
920,795

8.875% Senior Secured Notes Due 2022
270,000

 
(2,960
)
 
(903
)
 
266,137

7.875% Senior Secured Notes Due 2022
600,000

 
3,710

 
(11,714
)
 
591,996

Total Notes payable
$
2,519,465

 
$
6,598

 
$
(39,363
)
 
$
2,486,700

The Company’s debt at December 31, 2015 consisted of the following (in thousands):
 
 
Outstanding
Principal
 
Unamortized
Premium
 
Unamortized Deferred Financing Costs
 
Net Carrying
Amount
Series C Revolving Credit Facility Due 2017
$
1,440

 
$

 
$

 
$
1,440

Series A, B Revolving Credit Facilities Due 2019
18,560

 

 

 
18,560

6.375% Senior Secured Notes due 2019
925,000

 

 
(20,182
)
 
904,818

8.75% Senior Notes due 2020
930,000

 
7,060

 
(18,892
)
 
918,168

8.875% Senior Secured Notes due 2022
300,000

 
(3,704
)
 
(1,170
)
 
295,126

Total Notes payable
$
2,175,000

 
$
3,356

 
$
(40,244
)
 
$
2,138,112

Balance Sheet Components (Tables)
Schedule of Balance Sheet Component Balances
The following table presents material balance sheet component balances as of December 31, 2016 and December 31, 2015 (in thousands):
 
 
December 31,
 
2016
 
2015
Subscriber acquisition costs
 
Subscriber acquisition costs
$
1,373,080

 
$
958,261

Accumulated amortization
(320,646
)
 
(167,617
)
Subscriber acquisition costs, net
$
1,052,434

 
$
790,644

Accrued payroll and commissions
 
Accrued payroll
$
24,101

 
$
18,071

Accrued commissions
22,187

 
20,176

Total accrued payroll and commissions
$
46,288

 
$
38,247

Accrued expenses and other current liabilities
 
Accrued interest payable
$
16,944

 
$
17,153

Accrued payroll taxes and withholdings
4,793

 
3,938

Accrued taxes
3,376

 
2,683

Wireless restructuring costs
91

 
4,275

Loss contingencies
2,571

 
2,504

Other
6,490

 
5,020

Total accrued expenses and other current liabilities
$
34,265

 
$
35,573

Property Plant and Equipment (Tables)
Components of Property and Equipment
Property and equipment consisted of the following (in thousands):
 
December 31,
 
Estimated
Useful Lives
 
2016
 
2015
 
Vehicles
$
31,416

 
$
26,935

 
3-5 years
Computer equipment and software
27,006

 
21,702

 
3-5 years
Leasehold improvements
17,717

 
17,434

 
2-15 years
Office furniture, fixtures and equipment
13,508

 
11,776

 
7 years
Buildings
702

 
702

 
39 years
Construction in process
9,908

 
3,837

 
 
Build-to-suit lease asset under construction
5,004

 

 
 
 
105,261

 
82,386

 
 
Accumulated depreciation and amortization
(41,635
)
 
(27,112
)
 
 
Property plant and equipment, net
$
63,626

 
$
55,274

 
 
Goodwill and Intangible Assets (Tables)
The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015, were as follows (in thousands):
 
 
 
Balance as of January 1, 2015
$
841,522

Goodwill Impaired due to Wireless Restructuring (see Note 3)
(2,270
)
Effect of Foreign Currency Translation
(4,836
)
Balance as of December 31, 2015
834,416

Effect of Foreign Currency Translation
817

Balance as of December 31, 2016
$
835,233

The following table presents intangible asset balances as of December 31, 2016 and 2015 (in thousands):

 
December 31, 2016
 
December 31, 2015
 
 
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Estimated
Useful Lives
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Customer contracts
$
965,179

 
$
(539,910
)
 
$
425,269

 
$
962,842

 
$
(430,803
)
 
$
532,039

 
10 years
2GIG 2.0 technology
17,000

 
(10,479
)
 
6,521

 
17,000

 
(7,064
)
 
9,936

 
8 years
Other technology
7,067

 
(4,984
)
 
2,083

 
7,067

 
(3,438
)
 
3,629

 
5 - 7 years
Space Monkey technology
7,100

 
(2,268
)
 
4,832

 
7,100

 
(761
)
 
6,339

 
6 years
Patents
8,724

 
(3,913
)
 
4,811

 
7,524

 
(2,094
)
 
5,430

 
5 years
Non-compete agreements
1,200

 
(1,200
)
 

 
1,200

 
(800
)
 
400

 
2 - 3 years
Total definite-lived intangible assets:
1,006,270

 
(562,754
)
 
443,516

 
1,002,733

 
(444,960
)
 
557,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Spectrum licenses
31,253

 

 
31,253

 

 

 

 
 
IP addresses
564

 

 
564

 
564

 

 
564

 
 
Domain names
59

 

 
59

 
58

 

 
58

 
 
Total Indefinite-lived intangible assets
31,876

 

 
31,876

 
622

 

 
622

 
 
Total intangible assets, net
$
1,038,146

 
$
(562,754
)
 
$
475,392

 
$
1,003,355


$
(444,960
)
 
$
558,395

 
 
Estimated future amortization expense of intangible assets, excluding approximately $0.3 million in patents currently in process, is as follows as of December 31, 2016 (in thousands):
 
 
 
2017
$
101,296

2018
89,736

2019
78,082

2020
67,288

2021
58,288

Thereafter
48,548

Total estimated amortization expense
$
443,238

Fair Value Measurements (Tables)
The following tables show the Company’s cash and cash equivalents and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as cash and cash equivalents or long-term investments and other assets, net as of December 31, 2016 (in thousands):
 
Adjusted Cost
 
Unrealized Gains
 
Unrealized Losses
 
Fair Value
 
Cash and Cash Equivalents
 
Long-Term Investments and Other Assets, net
Cash
$
1,191

 
$

 
$

 
$
1,191

 
$
1,191

 
$

 
 
 
 
 
 
 
 
 
 
 
 
Level 1:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
42,329

 

 

 
42,329

 
42,329

 

Corporate securities
3,007

 
1,011

 

 
4,018

 

 
4,018

Subtotal
45,336

 
1,011

 

 
46,347

 
42,329

 
4,018

 
 
 
 
 
 
 
 
 
 
 
 
Total
$
46,527

 
$
1,011

 
$

 
$
47,538

 
$
43,520

 
$
4,018

Components of long-term debt including the associated interest rates and related fair values (in thousands, except interest rates) are as follows:
 
Issuance
 
December 31, 2016
 
December 31, 2015
 
Stated Interest
Rate
 
Face Value
 
Estimated Fair Value
 
Face Value
 
Estimated Fair Value
 
2019 Notes
 
$
719,465

 
$
743,783

 
$
925,000

 
$
879,906

 
6.375
%
2020 Notes
 
930,000

 
946,275

 
930,000

 
756,788

 
8.75
%
2022 Notes Private Placement Notes
 
270,000

 
280,372

 
300,000

 
296,296

 
8.875
%
2022 Notes
 
600,000

 
655,140

 

 

 
7.875
%
Total
 
$
2,519,465

 
$
2,625,570

 
$
2,155,000

 
$
1,932,990

 


Income Taxes (Tables)
Income tax provision consisted of the following (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
 
2014
Current income tax:
 
 
 
Federal
$

 
$

 
$

State
545

 
392

 
779

Foreign
95

 
(1
)
 

Total
640

 
391

 
779

Deferred income tax:
 
 
 
Federal

 

 
(925
)
State

 

 
(181
)
Foreign
(573
)
 
(40
)
 
841

Total
(573
)
 
(40
)
 
(265
)
Provision for income taxes
$
67

 
$
351

 
$
514

The following reconciles the tax expense computed at the statutory federal rate and the Company’s tax expense (in thousands):
 
 
Year ended December 31,
 
2016
 
2015
 
2014
Computed expected tax expense
$
(93,770
)
 
$
(94,737
)
 
$
(81,107
)
State income taxes, net of federal tax effect
360

 
259

 
395

Foreign income taxes
(949
)
 
202

 
1,645

Other reconciling items
666

 

 

Permanent differences
1,688

 
1,980

 
2,261

Change in valuation allowance
92,072

 
92,647

 
77,320

Provision for income taxes
$
67

 
$
351

 
$
514

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities were as follows (in thousands):
 
 
December 31,
 
2016
 
2015
Gross deferred tax assets:
 
Net operating loss carryforwards
$
799,302

 
$
642,391

Deferred subscriber income
19,866

 
13,722

Accrued expenses and allowances
15,452

 
15,415

Purchased intangibles
14,776

 
10,576

Inventory reserves
6,999

 
9,333

Property and Equipment
3,482

 
3,257

Alternative minimum tax credit and research and development credit
41

 
41

Valuation allowance
(328,991
)
 
(234,771
)
 
530,927

 
459,964

Gross deferred tax liabilities:
 
Deferred subscriber acquisition costs
(537,387
)
 
(466,783
)
Property and equipment

 

Prepaid expenses
(744
)
 
(705
)
 
(538,131
)
 
(467,488
)
Net deferred tax liabilities
$
(7,204
)
 
$
(7,524
)
The Company had net operating loss carryforwards as follows (in thousands):
 
 
December 31,
 
2016
 
2015
Net operating loss carryforwards:
 
 
 
United States
$
2,084,897

 
$
1,695,386

State
1,553,812

 
1,338,742

Canada
33,526

 
28,629

New Zealand

 
5,518

Stock-Based Compensation and Equity (Tables)
A summary of the Incentive Unit activity for the years ended December 31, 2016 and 2015 is presented below:
 
 
Incentive Units
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic Value
Outstanding, December 31, 2014
74,527,942

 
$
1.03

 
8.19
 
$
20,145,882

Granted
3,850,000

 
2.40

 
 
 
 
Forfeited
(4,415,106
)
 
1.03

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2015
73,962,836

 
1.06

 
7.31
 
104,562,869

Granted
12,825,000

 
1.93

 
 
 
 
Forfeited
(905,000
)
 
1.09

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2016
85,882,836

 
1.19

 
6.81
 

Unvested shares expected to vest after December 31, 2016
66,186,360

 
1.23

 
6.99
 

Exercisable at December 31, 2016
19,696,476

 
$
1.03

 
6.21
 
$

Stock-based compensation expense in connection with all stock-based awards for the years ended December 31, 2016, 2015 and 2014 is allocated as follows (in thousands):
 
Year ended December 31,
 
2016
 
2015
 
2014
Operating expenses
$
68

 
$
71

 
$
63

Selling expenses
(127
)
 
578

 
185

General and administrative expenses
3,927

 
2,472

 
1,688

Total stock-based compensation
$
3,868

 
$
3,121

 
$
1,936

A summary of the SAR activity for the years ended December 31, 2016 and 2015 is presented below:
 
 
Stock Appreciation
Rights
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic Value
Outstanding, December 31, 2014
6,696,660

 
$
1.04

 
8.62
 
$
1,734,748

Converted
3,259,934

 
0.70

 
8.62
 
 
Granted
11,186,936

 
1.03

 
 
 
 
Forfeited
(2,307,172
)
 
0.80

 
 
 
 
Exercised
(172,221
)
 
0.68

 
 
 
 
Outstanding, December 31, 2015
18,664,137

 
0.87

 
8.66
 
3,628,498

Granted
5,649,573

 
1.22

 
 
 
 
Forfeited
(2,320,552
)
 
0.92

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2016
21,993,158

 
0.96

 
8.23
 

Unvested shares expected to vest after December 31, 2016
19,334,407

 
0.98

 
8.37
 

Exercisable at December 31, 2016
2,658,751

 
$
0.78

 
7.20
 
$

A summary of the SAR activity for the year ended December 31, 2016 and 2015 is presented below:
 
 
Stock Appreciation
Rights
 
Weighted Average
Exercise Price
Per Share
 
Weighted Average
Remaining
Contractual
Life (Years)
 
Aggregate
Intrinsic Value
Outstanding, December 31, 2014
70,000

 
$
5.00

 
8.41
 

Granted
11,000

 
65.84

 
 
 
 
Forfeited

 

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2015
81,000

 
13.26

 
7.66
 

Granted

 

 
 
 
 
Forfeited
(63,500
)
 
15.54

 
 
 
 
Exercised

 

 
 
 
 
Outstanding, December 31, 2016
17,500

 
5.00

 
6.41
 

Unvested shares expected to vest after December 31, 2016
7,000

 
5.00

 
6.41
 

Exercisable, December 31, 2016
10,500

 
$
5.00

 
6.41
 

Commitments and Contingencies (Tables)
The Company's operating lease arrangements and related terms consisted of the following (in thousands):
 
Rent Expense
 
 
 
Years ended December 31,
 
 
 
2016
 
2015
 
Lease Term
Warehouse, office space and other
$
11,222

 
$
11,632

 
1 - 15 years
Wireless towers, spectrum and other
4,732

 
3,509

 
1 - 10 years
Total Rent Expense
$
15,954

 
$
15,141

 
 
As of December 31, 2016, future minimum lease payments were as follows (in thousands):
 
 
Operating
 
Capital
 
Total
2017
$
17,452

 
$
10,513

 
$
27,965

2018
15,322

 
6,117

 
21,439

2019
14,998

 
2,049

 
17,047

2020
13,521

 
17

 
13,538

2021
13,086

 

 
13,086

Thereafter
47,634

 

 
47,634

Amounts representing interest

 
(963
)
 
(963
)
Total lease payments
$
122,013

 
$
17,733

 
$
139,746

Segment Reporting and Business Concentrations (Tables)
Revenues and Long-Lived Assets by Geographic Region
Revenues and long-lived assets by geographic region were as follows (in thousands):

 
United States
 
Canada
 
Total
As of and for the
 
 
 
 
 
Year ended December 31, 2016
 
 
 
 
 
Revenue from external customers
$
700,471

 
$
57,436

 
$
757,907

Property and equipment, net
62,781

 
845

 
63,626

Year ended December 31, 2015
 
 
 
 
 
Revenue from external customers
$
602,418

 
$
51,303

 
$
653,721

Property and equipment, net
55,103

 
171

 
55,274

Year ended December 31, 2014
 
 
 
 
 
Revenue from external customers
$
529,521

 
$
34,156

 
$
563,677

Property and equipment, net
62,368

 
422

 
62,790

Guarantor and Non-Guarantor Supplemental Financial Information (Tables)
Condensed Consolidating Balance Sheet
December 31, 2016
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$

 
$
25,136

 
$
143,954

 
$
3,730

 
$
(67,799
)
 
$
105,021

Property and equipment, net

 

 
62,781

 
845

 

 
63,626

Subscriber acquisition costs, net

 

 
974,975

 
77,459

 

 
1,052,434

Deferred financing costs, net

 
4,420

 

 

 

 
4,420

Investment in subsidiaries

 
2,228,903

 

 

 
(2,228,903
)
 

Intercompany receivable

 

 
9,492

 

 
(9,492
)
 

Intangible assets, net

 

 
443,189

 
32,203

 

 
475,392

Goodwill

 

 
809,678

 
25,555

 

 
835,233

Long-term investments and other assets

 
106

 
11,523

 
13

 
(106
)
 
11,536

Total Assets
$

 
$
2,258,565

 
$
2,455,592

 
$
139,805

 
$
(2,306,300
)
 
$
2,547,662

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$

 
$
17,047

 
$
160,956

 
$
74,987

 
$
(67,799
)
 
$
185,191

Intercompany payable

 

 

 
9,492

 
(9,492
)
 

Notes payable and revolving line of credit, net of current portion

 
2,486,700

 

 

 

 
2,486,700

Capital lease obligations, net of current portion

 

 
7,368

 
567

 

 
7,935

Deferred revenue, net of current portion

 

 
53,991

 
4,743

 

 
58,734

Accumulated losses of investee
245,182

 


 


 


 
(245,182
)
 

Other long-term obligations

 

 
47,080

 

 

 
47,080

Deferred income tax liability

 

 
106

 
7,204

 
(106
)
 
7,204

Total (deficit) equity
(245,182
)
 
(245,182
)
 
2,186,091

 
42,812

 
(1,983,721
)
 
(245,182
)
Total liabilities and stockholders’ (deficit) equity
$

 
$
2,258,565

 
$
2,455,592

 
$
139,805

 
$
(2,306,300
)
 
$
2,547,662

















Condensed Consolidating Balance Sheet
December 31, 2015
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$

 
$
2,537

 
$
91,555

 
$
6,540

 
$
(53,066
)
 
$
47,566

Property and equipment, net

 

 
55,012

 
262

 

 
55,274

Subscriber acquisition costs, net

 

 
728,547

 
62,097

 

 
790,644

Deferred financing costs, net

 
6,456

 

 

 

 
6,456

Investment in subsidiaries

 
2,070,404

 

 

 
(2,070,404
)
 

Intercompany receivable

 

 
22,398

 

 
(22,398
)
 

Intangible assets, net

 

 
519,301

 
39,094

 

 
558,395

Goodwill

 

 
809,678

 
24,738

 

 
834,416

Long-term investments and other assets

 
106

 
10,880

 
13

 
(106
)
 
10,893

Total Assets
$

 
$
2,079,503

 
$
2,237,371

 
$
132,744

 
$
(2,145,974
)
 
$
2,303,644

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$

 
$
18,384

 
$
143,896

 
$
59,304

 
$
(53,066
)
 
$
168,518

Intercompany payable

 

 

 
22,398

 
(22,398
)
 

Notes payable and revolving line of credit, net of current portion

 
2,138,112

 

 

 

 
2,138,112

Capital lease obligations, net of current portion

 

 
11,169

 
2

 

 
11,171

Deferred revenue, net of current portion

 

 
40,960

 
3,822

 

 
44,782

Accumulated losses of investee
76,993

 

 

 

 
(76,993
)
 

Other long-term obligations

 

 
10,530

 

 

 
10,530

Deferred income tax liability

 

 
106

 
7,524

 
(106
)
 
7,524

Total (deficit) equity
(76,993
)
 
(76,993
)
 
2,030,710

 
39,694

 
(1,993,411
)
 
(76,993
)
Total liabilities and stockholders’ (deficit) equity
$

 
$
2,079,503

 
$
2,237,371

 
$
132,744

 
$
(2,145,974
)
 
$
2,303,644

Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Year ended December 31, 2016
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$

 
$
715,072

 
$
45,539

 
$
(2,704
)
 
$
757,907

Costs and expenses

 

 
787,138

 
44,575

 
(2,704
)
 
829,009

(Loss) income from operations

 

 
(72,066
)
 
964

 

 
(71,102
)
Loss from subsidiaries
(275,957
)
 
(69,637
)
 

 

 
345,594

 

Other expense (income), net

 
206,320

 
(1,207
)
 
(325
)
 

 
204,788

(Loss) income before income tax expenses
(275,957
)
 
(275,957
)
 
(70,859
)
 
1,289

 
345,594

 
(275,890
)
Income tax expense (benefit)

 

 
545

 
(478
)
 

 
67

Net (loss) income
$
(275,957
)
 
$
(275,957
)
 
$
(71,404
)
 
$
1,767

 
$
345,594

 
$
(275,957
)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment

 
2,482

 

 
2,482

 
(2,482
)
 
2,482

Unrealized gain on marketable securities


 
1,011

 
1,011

 

 
(1,011
)
 
1,011

Comprehensive (loss) income
$
(275,957
)
 
$
(272,464
)

$
(70,393
)
 
$
4,249

 
$
342,101

 
$
(272,464
)


Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Year ended December 31, 2015
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$

 
$
622,507

 
$
34,022

 
$
(2,808
)
 
$
653,721

Costs and expenses

 

 
730,322

 
34,882

 
(2,808
)
 
762,396

Loss from operations

 

 
(107,815
)
 
(860
)
 

 
(108,675
)
Loss from subsidiaries
(279,107
)
 
(118,885
)
 

 

 
397,992

 

Other expense, net

 
160,222

 
9,763

 
96

 

 
170,081

Loss before income tax expenses
(279,107
)
 
(279,107
)
 
(117,578
)
 
(956
)
 
397,992

 
(278,756
)
Income tax expense (benefit)

 

 
392

 
(41
)
 

 
351

Net loss
$
(279,107
)
 
$
(279,107
)
 
$
(117,970
)
 
$
(915
)
 
$
397,992

 
$
(279,107
)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment

 
(13,293
)
 
2

 
(13,294
)
 
13,292

 
(13,293
)
Comprehensive loss
$
(279,107
)
 
$
(292,400
)
 
$
(117,968
)
 
$
(14,209
)
 
$
411,284

 
$
(292,400
)


Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Year ended December 31, 2014
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$

 
$

 
$
530,888

 
$
35,911

 
$
(3,122
)
 
$
563,677

Costs and expenses

 

 
623,124

 
37,544

 
(3,122
)
 
657,546

(Loss) income from operations

 

 
(92,236
)
 
(1,633
)
 

 
(93,869
)
(Loss) income from subsidiaries
(238,660
)
 
(93,850
)
 

 

 
332,510

 

Other expense (income), net

 
145,917

 
(1,676
)
 
36

 

 
144,277

Loss from operations before income tax expense
(238,660
)
 
(239,767
)
 
(90,560
)
 
(1,669
)
 
332,510

 
(238,146
)
Income tax (benefit) expense

 
(1,107
)
 
779

 
842

 

 
514

Net loss
$
(238,660
)
 
$
(238,660
)
 
$
(91,339
)
 
$
(2,511
)
 
$
332,510

 
$
(238,660
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 

Foreign currency translation adjustment

 
(11,333
)
 
(6,895
)
 
(4,438
)
 
11,333

 
(11,333
)
Comprehensive loss
$
(238,660
)
 
$
(249,993
)
 
$
(98,234
)
 
$
(6,949
)
 
$
343,843

 
$
(249,993
)
Condensed Consolidating Statements of Cash Flows
For the Year ended December 31, 2016
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$

 
$

 
$
(380,508
)
 
$
14,802

 
$

 
$
(365,706
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment

 

 
(5,243
)
 

 

 
(5,243
)
Capital expenditures

 

 
(11,642
)
 

 

 
(11,642
)
Proceeds from sale of capital assets

 

 
3,080

 
43

 

 
3,123

Investment in subsidiary
(100,407
)
 
(408,214
)
 

 

 
508,621

 

Acquisition of intangible assets

 

 
(1,385
)
 

 

 
(1,385
)
Net cash (used in) provided by investing activities
(100,407
)
 
(408,214
)
 
(15,190
)
 
43

 
508,621

 
(15,147
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable

 
604,000

 

 

 

 
604,000

Repayment on notes payable

 
(235,535
)
 

 

 

 
(235,535
)
Borrowings from revolving line of credit

 
57,000

 

 

 

 
57,000

Repayment of revolving line of credit

 
(77,000
)
 

 

 

 
$
(77,000
)
Proceeds from capital contribution
100,407

 
100,407

 

 

 
(100,407
)
 
100,407

Payment of intercompany settlement

 

 
3,000

 
(3,000
)
 

 

Intercompany receivable

 

 
12,906

 

 
(12,906
)
 

Intercompany payable

 

 
408,214

 
(12,906
)
 
(395,308
)
 

Repayments of capital lease obligations

 

 
(8,295
)
 
(20
)
 

 
(8,315
)
Financing costs

 
(9,036
)
 

 

 

 
(9,036
)
Deferred financing costs

 
(9,241
)
 

 

 

 
(9,241
)
Net cash provided by (used in) provided by financing activities
100,407

 
430,595

 
415,825

 
(15,926
)
 
(508,621
)
 
422,280

Effect of exchange rate changes on cash

 

 

 
(466
)
 

 
(466
)
Net increase (decrease) in cash

 
22,381

 
20,127

 
(1,547
)
 

 
40,961

Cash:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period

 
2,299

 
(1,941
)
 
2,201

 

 
2,559

End of period
$

 
$
24,680

 
$
18,186

 
$
654

 
$

 
$
43,520


Condensed Consolidating Statements of Cash Flows
For the Year ended December 31, 2015
(In thousands)
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$

 
$
(1,052
)
 
$
(267,327
)
 
$
13,072

 
$

 
$
(255,307
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment

 

 
(23,641
)
 
(1,099
)
 

 
(24,740
)
Capital expenditures

 

 
(26,941
)
 
(41
)
 

 
(26,982
)
Proceeds from sale of capital assets

 

 
480

 

 

 
480

Investment in subsidiary

 
(296,895
)
 

 

 
296,895

 

Acquisition of intangible assets

 

 
(1,363
)
 

 

 
(1,363
)
Proceeds from insurance claims

 

 
2,984

 

 

 
2,984

Change in restricted cash

 

 
14,214

 

 

 
14,214

Investment in convertible note

 

 

 

 

 

Other assets

 

 
(208
)
 

 

 
(208
)
Net cash used in investing activities

 
(296,895
)
 
(34,475
)
 
(1,140
)
 
296,895

 
(35,615
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable

 
296,250

 

 

 

 
296,250

Borrowings from revolving line of credit

 
271,000

 

 

 

 
271,000

Repayment of revolving line of credit

 
(271,000
)
 

 

 

 
$
(271,000
)
Intercompany receivable

 
 
 
11,601

 

 
(11,601
)
 

Intercompany payable

 

 
296,895

 
(11,601
)
 
(285,294
)
 

Repayments of capital lease obligations

 

 
(6,402
)
 
(12
)
 

 
(6,414
)
Deferred financing costs

 
(5,436
)
 

 

 

 
(5,436
)
Net cash provided by (used in) provided by financing activities

 
290,814

 
302,094

 
(11,613
)
 
(296,895
)
 
284,400

Effect of exchange rate changes on cash

 

 

 
(1,726
)
 

 
(1,726
)
Net increase (decrease) in cash

 
(7,133
)
 
292

 
(1,407
)
 

 
(8,248
)
Cash:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period

 
9,432

 
(2,233
)
 
3,608

 

 
10,807

End of period
$

 
$
2,299

 
$
(1,941
)
 
$
2,201

 
$

 
$
2,559


Condensed Consolidating Statements of Cash Flows
For the Year ended December 31, 2014
(In thousands)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
50,000

 
$
(894
)
 
$
(318,734
)
 
$
9,991

 
$
(50,000
)
 
$
(309,637
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment

 

 
(10,580
)
 

 

 
(10,580
)
Capital expenditures

 

 
(30,315
)
 
(185
)
 

 
(30,500
)
Proceeds from sale of capital assets

 

 
964

 

 

 
964

Investment in subsidiary
(32,300
)
 
(340,024
)
 

 

 
372,324

 

Acquisition of intangible assets

 

 
(9,649
)
 

 

 
(9,649
)
Net cash used in acquisitions

 

 
(18,500
)
 

 

 
(18,500
)
Investment in marketable securities

 
(60,000
)
 

 

 

 
(60,000
)
Proceeds from marketable securities

 
60,069

 

 

 

 
60,069

Proceeds from note receivable

 

 
22,699

 

 

 
22,699

Change in restricted cash

 

 
14,375

 

 

 
14,375

Investment in convertible note

 

 
(3,000
)
 

 

 
(3,000
)
Other assets

 

 
(2,153
)
 
(9
)
 

 
(2,162
)
Net cash used in investing activities
(32,300
)
 
(339,955
)
 
(36,159
)
 
(194
)
 
372,324

 
(36,284
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable

 
102,000

 

 

 

 
102,000

Borrowings from revolving line of credit

 
20,000

 

 

 

 
20,000

Proceeds from capital contribution
32,300

 
32,300

 

 

 
(32,300
)
 
32,300

Intercompany receivable

 

 
10,658

 

 
(10,658
)
 

Intercompany payable

 

 
340,024

 
(10,658
)
 
(329,366
)
 

Proceeds from contract sales

 

 
2,261

 

 

 
2,261

Acquisition of contracts

 

 
(2,277
)
 

 

 
(2,277
)
Repayments of capital lease obligations

 

 
(6,297
)
 
(3
)
 

 
(6,300
)
Deferred financing costs

 
(2,927
)
 

 

 

 
(2,927
)
Payment of dividends
(50,000
)
 
(50,000
)
 

 

 
50,000

 
(50,000
)
Net cash (used in) provided by financing activities
(17,700
)
 
101,373

 
344,369

 
(10,661
)
 
(322,324
)
 
95,057

Effect of exchange rate changes on cash

 

 

 
(234
)
 

 
(234
)
Net increase (decrease) in cash

 
(239,476
)
 
(10,524
)
 
(1,098
)
 

 
(251,098
)
Cash:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period

 
248,908

 
8,291

 
4,706

 

 
261,905

End of period
$

 
$
9,432

 
$
(2,233
)
 
$
3,608

 
$

 
$
10,807

Significant Accounting Policies - Additional Information (Detail) (USD $)
0 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 9 Months Ended 12 Months Ended
Nov. 24, 2014
Mar. 31, 2014
Mar. 31, 2016
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2015
New Accounting Pronouncement, Early Adoption, Effect
Dec. 31, 2016
SkyControl Panels
Apr. 30, 2013
2GIG Sale
Dec. 31, 2016
2GIG Sale
Dec. 31, 2015
Out-of-Period Adjustment
Dec. 31, 2016
Minimum
Dec. 31, 2016
Maximum
Dec. 31, 2016
Service Life
Dec. 31, 2016
Service Life
Dec. 31, 2016
Interest Expense
Dec. 31, 2015
Interest Expense
Dec. 31, 2014
Interest Expense
Dec. 31, 2016
Notes Payable
Dec. 31, 2015
Notes Payable
Dec. 31, 2015
Notes Payable
New Accounting Pronouncement, Early Adoption, Effect
Dec. 31, 2016
Revolving Credit Facility
Line of Credit
Dec. 31, 2015
Revolving Credit Facility
Line of Credit
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Out-of-period adjustments
 
 
 
 
$ 2,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring revenues increased
 
 
 
724,478,000 
624,989,000 
537,695,000 
 
 
 
 
 
2,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization duration of costs period
 
 
12 years 
 
 
 
 
 
 
 
 
 
 
 
15 years 
 
 
 
 
 
 
 
 
 
Amortization percentage on subscriber contract costs over estimated useful life
 
 
150.00% 
 
 
 
 
 
 
 
 
 
 
 
240.00% 
 
 
 
 
 
 
 
 
 
Period after declining balance method converts to straight line
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
9 years 
 
 
 
 
 
 
 
 
 
Increase in activation fee revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,400,000 
 
 
 
 
 
 
 
 
Increase in depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,413,000 
 
 
 
 
 
 
 
 
Increase to loss from operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,013,000 
 
 
 
 
 
 
 
 
Increase to net loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,621,000 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
 
 
 
4,100,000 
3,541,000 
3,373,000 
1,901,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable classified as held for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life of intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
2 years 
10 years 
 
 
 
 
 
 
 
 
 
 
Cost method investments
 
 
 
400,000 
3,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities, noncurrent
 
 
 
4,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred financing cost, net
 
 
 
(43,783,000)
(46,700,000)
 
 
40,200,000 
 
 
 
 
 
 
 
 
 
 
 
(39,400,000)
(40,200,000)
40,200,000 
(4,420,000)
(6,456,000)
Deferred financing cost, accumulated amortization
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35,600,000 
26,100,000 
 
6,900,000 
4,800,000 
Amortization of deferred financing costs and bond premiums and discounts
 
 
 
10,447,000 
9,844,000 
9,251,000 
 
 
 
 
 
 
 
 
 
 
11,600,000 
10,900,000 
10,100,000 
 
 
 
 
 
Sales commission included in accrued payroll and commissions
 
 
 
1,200,000 
800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other long-term obligations
 
 
 
6,600,000 
4,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Advertising expenses incurred
 
 
 
33,000,000 
25,100,000 
23,600,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncertain income tax position
 
 
 
50.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from sale of contracts
 
2,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agreement with buyer to provide services for the contracts sold, period
 
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments to repurchase subscriber contracts
2,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of installed panels
 
 
 
 
 
 
 
 
57.00% 
 
40.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supply agreement period
 
 
 
 
 
 
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intercompany translation gains (losses)
 
 
 
2,100,000 
(9,400,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issued and unused letters of credit
 
 
 
$ 5,700,000 
$ 5,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant Accounting Policies - Changes in Company's Allowance for Accounts Receivable (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Allowance for Doubtful Accounts Receivable [Roll Forward]
 
 
 
Beginning balance
$ 3,541 
$ 3,373 
$ 1,901 
Provision for doubtful accounts
19,624 
14,924 
15,656 
Write-offs and adjustments
(19,027)
(14,756)
(14,184)
Balance at end of period
$ 4,100 
$ 3,541 
$ 3,373 
Restructuring and Asset Impairment Charges - Schedule of Restructuring and Asset Impairment Charges (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Restructuring Cost and Reserve [Line Items]
 
 
 
Amortization of subscriber acquisition costs
$ 154,877,000 
$ 92,994,000 
$ 58,730,000 
Restructuring, settlement and impairment provisions
1,013,000 
59,197,000 
 
Wireless Restructuring
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring, settlement and impairment provisions
(1,538,000)
59,197,000 
 
Wireless Restructuring |
Other Restructuring
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring, settlement and impairment provisions
(710,000)
53,228,000 
 
Wireless Restructuring |
Contract termination costs
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring, settlement and impairment provisions
(751,000)
4,767,000 
 
Wireless Restructuring |
Employee severance and termination benefits
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring, settlement and impairment provisions
(77,000)
1,202,000 
 
Subscriber Contracts
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Restructuring, settlement and impairment provisions
2,551,000 
 
New Zealand And Puerto Rico |
Subscriber Contracts
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
Amortization of subscriber acquisition costs
7,600,000 
 
 
Loss on translation adjustment
1,100,000 
 
 
Proceeds from sale of subscriber contracts
$ 6,200,000 
 
 
Restructuring and Asset Impairment Charges - Summary of Restructuring Activity (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Restructuring Reserve [Roll Forward]
 
 
Accrued restructuring, beginning balance
$ 4,275 
$ 0 
Restructuring and impairment charges
(1,538)
59,197 
Cash payments
(2,798)
(1,514)
Non-cash settlements
710 
(53,408)
Accrued restructuring, ending balance
649 
4,275 
Asset impairments
 
 
Restructuring Reserve [Roll Forward]
 
 
Accrued restructuring, beginning balance
Restructuring and impairment charges
(710)
53,228 
Cash payments
(10)
Non-cash settlements
710 
(53,218)
Accrued restructuring, ending balance
Contract termination costs
 
 
Restructuring Reserve [Roll Forward]
 
 
Accrued restructuring, beginning balance
3,954 
Restructuring and impairment charges
(751)
4,767 
Cash payments
(2,554)
(623)
Non-cash settlements
(190)
Accrued restructuring, ending balance
649 
3,954 
Employee severance and termination benefits
 
 
Restructuring Reserve [Roll Forward]
 
 
Accrued restructuring, beginning balance
321 
Restructuring and impairment charges
(77)
1,202 
Cash payments
(244)
(881)
Non-cash settlements
Accrued restructuring, ending balance
$ 0 
$ 321 
Restructuring and Asset Impairment Charges - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2016
Restructuring Cost and Reserve [Line Items]
 
 
Non-cash asset impairment charge
$ 53,200,000 
 
Wireless restructuring costs
4,275,000 
91,000 
Restructuring reserve, noncurrent
 
600,000 
Employee severance and termination benefits
 
 
Restructuring Cost and Reserve [Line Items]
 
 
Cash-based restructuring charges
$ 6,000,000 
 
Business Combinations - Additional Information (Detail) (USD $)
12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Aug. 25, 2014
Space Monkey Acquisition
Subsidiaries
Dec. 31, 2016
Space Monkey Acquisition
Subsidiaries
Dec. 31, 2015
Space Monkey Acquisition
Subsidiaries
Aug. 25, 2014
Space Monkey Acquisition
Subsidiaries
Jan. 31, 2014
Wildfire Acquisition
Subsidiaries
Dec. 31, 2016
Wildfire Acquisition
Subsidiaries
Dec. 31, 2015
Wildfire Acquisition
Subsidiaries
Jan. 31, 2014
Wildfire Acquisition
Subsidiaries
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Cash consideration paid
$ 0 
$ 0 
$ 2,277,000 
$ 15,000,000 
 
 
 
$ 3,500,000 
 
 
 
Escrow for indemnification obligations
 
 
 
 
 
 
1,500,000 
 
 
 
400,000 
Business combination acquisition costs
 
 
 
 
$ 0 
$ 0 
 
 
$ 0 
$ 0 
 
Business Combinations - Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Aug. 25, 2014
Space Monkey Acquisition
Subsidiaries
Jan. 31, 2014
Wildfire Acquisition
Subsidiaries
Business Acquisition [Line Items]
 
 
 
 
 
Net assets acquired
 
 
 
$ 404 
$ 96 
Deferred tax liability
 
 
 
(1,106)
 
Intangible assets (See Note 8)
 
 
 
8,300 
2,900 
Goodwill
835,233 
834,416 
841,522 
7,402 
504 
Total estimated fair value of the assets acquired and liabilities assumed
 
 
 
15,000 
 
Total cash consideration
 
 
 
 
$ 3,500 
Long-Term Debt - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2016
Senior Notes
Nov. 16, 2012
Senior Notes
Dec. 31, 2016
Senior Notes
6.375% Senior Secured Notes Due 2019
Dec. 31, 2015
Senior Notes
6.375% Senior Secured Notes Due 2019
Nov. 16, 2012
Senior Notes
6.375% Senior Secured Notes Due 2019
Jul. 1, 2014
Senior Notes
8.75% Senior Notes Due 2020
Dec. 13, 2013
Senior Notes
8.75% Senior Notes Due 2020
May 31, 2013
Senior Notes
8.75% Senior Notes Due 2020
Dec. 31, 2016
Senior Notes
8.75% Senior Notes Due 2020
Dec. 31, 2015
Senior Notes
8.75% Senior Notes Due 2020
Jul. 1, 2014
Senior Notes
8.75% Senior Notes Due 2020
Dec. 13, 2013
Senior Notes
8.75% Senior Notes Due 2020
May 31, 2013
Senior Notes
8.75% Senior Notes Due 2020
Nov. 16, 2012
Senior Notes
8.75% Senior Notes Due 2020
offering
Oct. 19, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Dec. 31, 2016
Senior Notes
8.875% Senior Secured Notes Due 2022
Dec. 31, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Oct. 19, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Dec. 31, 2016
Senior Notes
7.875% Senior Secured Notes Due 2022
May 31, 2016
Senior Notes
7.875% Senior Secured Notes Due 2022
Dec. 31, 2016
Senior Notes
2019 Senior Notes And 2022 Private Placement Notes
May 31, 2016
Senior Notes
2019 Senior Notes And 2022 Private Placement Notes
Aug. 31, 2016
Senior Notes
7.875 Senior Notes Due August 2022
Dec. 31, 2016
Senior Notes
8.875 and 7.875% Senior Notes Due 2022
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount
 
 
 
 
$ 1,300,000,000 
 
 
$ 719,465,000 
 
 
 
 
 
$ 100,000,000.0 
$ 250,000,000 
$ 200,000,000 
$ 380,000,000 
 
 
 
$ 300,000,000.0 
 
$ 500,000,000.0 
 
 
$ 100,000,000.0 
 
Debt instrument interest rate
 
 
 
 
 
6.375% 
 
6.375% 
 
 
 
8.75% 
 
 
 
 
8.75% 
 
8.875% 
 
8.875% 
7.875% 
7.875% 
 
 
104.00% 
 
Number of offerings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption price, percentage
 
 
 
 
 
 
 
 
102.00% 
101.50% 
101.75% 
 
 
 
 
 
 
98.00% 
 
 
 
 
 
 
 
 
 
Principal amount outstanding threshold for accelerated maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
190,000,000.0 
 
 
 
 
 
 
 
 
Repurchased face amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
235,000,000 
 
 
Loss on early extinguishment of debt
10,085,000 
10,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Original issue discount and deferred finance costs
695,000 
 
 
 
 
585,000 
 
 
 
 
 
 
 
 
 
 
 
110,000 
 
 
 
1,000,000 
 
 
9,000,000 
Unamortized debt issuance expense
$ 39,363,000 
$ 40,244,000 
 
 
 
$ 11,693,000 
$ 20,182,000 
 
 
 
 
$ 15,053,000 
$ 18,892,000 
 
 
 
 
 
$ 903,000 
$ 1,170,000 
 
$ 11,714,000 
 
 
 
 
$ 15,700,000 
Long-Term Debt - Deferred Financing Activity (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
$ 46,700 
Additions
9,337 
Refinances
Early Extinguishment
(695)
Amortized
(11,559)
Balance 12/31/2016
43,783 
Senior Notes |
6.375% Senior Secured Notes Due 2019
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
20,182 
Additions
Refinances
(3,423)
Early Extinguishment
(585)
Amortized
(4,481)
Balance 12/31/2016
11,693 
Senior Notes |
8.75% Senior Notes Due 2020
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
18,892 
Additions
Refinances
Early Extinguishment
Amortized
(3,839)
Balance 12/31/2016
15,053 
Senior Notes |
8.875% Senior Secured Notes Due 2022
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
1,170 
Additions
Refinances
Early Extinguishment
(110)
Amortized
(157)
Balance 12/31/2016
903 
Senior Notes |
7.875% Senior Secured Notes Due 2022
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
Additions
9,337 
Refinances
3,423 
Early Extinguishment
Amortized
(1,046)
Balance 12/31/2016
11,714 
Revolving Credit Facility |
Line of Credit
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
6,456 
Additions
Refinances
Early Extinguishment
Amortized
(2,036)
Balance 12/31/2016
$ 4,420 
Long-Term Debt - Revolving Credit Facility (Details) (Revolving Credit Facility, USD $)
0 Months Ended 12 Months Ended
Nov. 16, 2012
Dec. 31, 2016
Dec. 31, 2015
Mar. 6, 2015
Nov. 16, 2012
Debt Instrument [Line Items]
 
 
 
 
 
Maximum borrowing capacity
 
 
 
$ 289,400,000.0 
$ 200,000,000.0 
Debt instrument, term
5 years 
 
 
 
 
Step down margin percentage
 
0.25% 
 
 
 
Commitment fee, step-down percent
 
0.125% 
 
 
 
Commitment fee
 
0.50% 
 
 
 
Outstanding borrowings
 
20,000,000 
 
 
Federal Funds Effective Swap Rate
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Variable Interest rate percentage
 
0.50% 
 
 
 
LIBOR
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Variable Interest rate percentage
 
1.00% 
 
 
 
Series A- Revolving Commitments
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Maximum borrowing capacity
 
247,500,000 
 
 
 
Series A- Revolving Commitments |
LIBOR
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Variable Interest rate percentage
 
3.00% 
 
 
 
Series A- Revolving Commitments |
Base Rate
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Variable Interest rate percentage
 
2.00% 
 
 
 
Series B- Revolving Commitments
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Maximum borrowing capacity
 
21,200,000 
 
 
 
Series B- Revolving Commitments |
LIBOR
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Variable Interest rate percentage
 
4.00% 
 
 
 
Series B- Revolving Commitments |
Base Rate
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Variable Interest rate percentage
 
3.00% 
 
 
 
Series C- Revolving Commitments
 
 
 
 
 
Debt Instrument [Line Items]
 
 
 
 
 
Maximum borrowing capacity
 
$ 20,800,000 
 
 
 
Long-Term Debt - Summary of Debt (Detail) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Debt Instrument [Line Items]
 
 
Outstanding Principal
$ 2,519,465,000 
$ 2,175,000,000 
Unamortized Premium (Discount)
6,598,000 
3,356,000 
Unamortized Deferred Financing Costs
(39,363,000)
(40,244,000)
Net Carrying Amount
2,486,700,000 
2,138,112,000 
Senior Notes |
6.375% Senior Secured Notes due 2019
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
719,465,000 
925,000,000 
Unamortized Premium (Discount)
Unamortized Deferred Financing Costs
(11,693,000)
(20,182,000)
Net Carrying Amount
707,772,000 
904,818,000 
Senior Notes |
8.75% Senior Notes due 2020
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
930,000,000 
930,000,000 
Unamortized Premium (Discount)
5,848,000 
7,060,000 
Unamortized Deferred Financing Costs
(15,053,000)
(18,892,000)
Net Carrying Amount
920,795,000 
918,168,000 
Senior Notes |
8.875% Senior Secured Notes Due 2022
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
270,000,000 
300,000,000 
Unamortized Premium (Discount)
(2,960,000)
(3,704,000)
Unamortized Deferred Financing Costs
(903,000)
(1,170,000)
Net Carrying Amount
266,137,000 
295,126,000 
Senior Notes |
7.875% Senior Secured Notes Due 2022
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
600,000,000 
 
Unamortized Premium (Discount)
3,710,000 
 
Unamortized Deferred Financing Costs
(11,714,000)
 
Net Carrying Amount
591,996,000 
 
Revolving Credit Facility |
Series C Revolving Credit Facility Due 2017
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
 
1,440,000 
Unamortized Premium (Discount)
 
Unamortized Deferred Financing Costs
 
Net Carrying Amount
 
1,440,000 
Revolving Credit Facility |
Series A, B Revolving Credit Facilities Due 2019
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
 
18,560,000 
Unamortized Premium (Discount)
 
Unamortized Deferred Financing Costs
 
Net Carrying Amount
 
$ 18,560,000 
Balance Sheet Components - Schedule of Balance Sheet Component Balances (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Subscriber acquisition costs
 
 
Subscriber acquisition costs
$ 1,373,080 
$ 958,261 
Accumulated amortization
(320,646)
(167,617)
Subscriber acquisition costs, net
1,052,434 
790,644 
Accrued payroll and commissions
 
 
Accrued payroll
24,101 
18,071 
Accrued commissions
22,187 
20,176 
Total accrued payroll and commissions
46,288 
38,247 
Accrued expenses and other current liabilities
 
 
Accrued interest payable
16,944 
17,153 
Accrued payroll taxes and withholdings
4,793 
3,938 
Accrued taxes
3,376 
2,683 
Wireless restructuring costs
91 
4,275 
Loss contingencies
2,571 
2,504 
Other
6,490 
5,020 
Total accrued expenses and other current liabilities
$ 34,265 
$ 35,573 
Property Plant and Equipment - Components of Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2016
Vehicles
Dec. 31, 2015
Vehicles
Dec. 31, 2016
Vehicles
Minimum
Dec. 31, 2016
Vehicles
Maximum
Dec. 31, 2016
Computer equipment and software
Dec. 31, 2015
Computer equipment and software
Dec. 31, 2016
Computer equipment and software
Minimum
Dec. 31, 2016
Computer equipment and software
Maximum
Dec. 31, 2016
Leasehold improvements
Dec. 31, 2015
Leasehold improvements
Dec. 31, 2016
Leasehold improvements
Minimum
Dec. 31, 2016
Leasehold improvements
Maximum
Dec. 31, 2016
Office furniture, fixtures and equipment
Dec. 31, 2015
Office furniture, fixtures and equipment
Dec. 31, 2016
Buildings
Dec. 31, 2015
Buildings
Dec. 31, 2016
Construction in process
Dec. 31, 2015
Construction in process
Dec. 31, 2016
Build-to-suit lease asset under construction
Dec. 31, 2015
Build-to-suit lease asset under construction
Property, Plant and Equipment [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, gross
$ 105,261 
$ 82,386 
 
$ 31,416 
$ 26,935 
 
 
$ 27,006 
$ 21,702 
 
 
$ 17,717 
$ 17,434 
 
 
$ 13,508 
$ 11,776 
$ 702 
$ 702 
$ 9,908 
$ 3,837 
$ 5,004 
$ 0 
Accumulated depreciation and amortization
(41,635)
(27,112)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property plant and equipment, net
$ 63,626 
$ 55,274 
$ 62,790 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Estimated Useful Lives
 
 
 
 
 
3 years 
5 years 
 
 
3 years 
5 years 
 
 
2 years 
15 years 
7 years 
 
39 years 
 
 
 
 
 
Property Plant and Equipment - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 105,261,000 
$ 82,386,000 
 
Accumulated amortization
41,635,000 
27,112,000 
 
Depreciation and amortization expense
16,800,000 
16,900,000 
11,300,000 
Assets Under Capital Lease Obligations
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
21,200,000 
20,400,000 
 
Accumulated amortization
10,900,000 
7,000,000 
 
Build-to-suit lease asset under construction
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
Property and equipment, gross
$ 5,004,000 
$ 0 
 
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Goodwill [Roll Forward]
 
 
Goodwill beginning balance
$ 834,416 
$ 841,522 
Goodwill Impaired due to Wireless Restructuring (see Note 3)
 
(2,270)
Effect of Foreign Currency Translation
817 
(4,836)
Goodwill ending balance
$ 835,233 
$ 834,416 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
Goodwill
$ 835,233,000 
$ 834,416,000 
$ 841,522,000 
Foreign currency translation adjustments
817,000 
(4,836,000)
 
Impairment charge of goodwill
 
2,270,000 
 
Accumulated impairment losses
2,300,000 
2,300,000 
 
Indefinite-lived intangible assets
31,876,000 
622,000 
 
Impairment charge of definite-lived intangible assets
2,900,000 
 
 
Amortization expense
108,178,000 
125,451,000 
143,578,000 
Amortization expense related to intangible assets
116,900,000 
134,800,000 
151,300,000 
Definite-lived intangible assets, remaining amortization period
3 years 10 months 
 
 
Finite-lived patents, gross
300,000 
 
 
Spectrum licenses
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Number of mid-sized metropolitan markets
40 
 
 
Lease agreements term
7 years 
 
 
Indefinite-lived intangible assets
31,253,000 
 
Customer contracts |
Wildfire Acquisition
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Acquisition of intangible assets
2,100,000 
 
 
Space Monkey technology |
Space Monkey Acquisition
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Acquisition of intangible assets
7,100,000 
 
 
Non-compete agreements |
Wildfire Acquisition
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Acquisition of intangible assets
800,000 
 
 
Non-compete agreements |
Space Monkey Acquisition
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Acquisition of intangible assets
1,200,000 
 
 
Patents
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Acquisition of intangible assets
1,300,000 
 
 
Patents |
Domain Names And Internet Protocol Addresses
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Acquisition of intangible assets
 
1,400,000 
 
Capitalized Software Development Costs
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Amortization expense
$ 1,100,000 
$ 1,300,000 
$ 1,300,000 
Goodwill and Intangible Assets - Schedule of Intangible Asset Balances (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
$ 1,006,270 
$ 1,002,733 
Accumulated amortization
(562,754)
(444,960)
Definite-lived intangible assets, net
443,516 
557,773 
Indefinite-lived intangible assets
31,876 
622 
Total intangible assets, gross
1,038,146 
1,003,355 
Total intangible assets, net
475,392 
558,395 
Minimum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
2 years 
 
Maximum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
10 years 
 
Spectrum licenses
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Indefinite-lived intangible assets
31,253 
IP addresses
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Indefinite-lived intangible assets
564 
564 
Domain names
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Indefinite-lived intangible assets
59 
58 
Customer contracts
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
965,179 
962,842 
Accumulated amortization
(539,910)
(430,803)
Definite-lived intangible assets, net
425,269 
532,039 
Estimated useful lives of intangible asset
10 years 
 
2GIG 2.0 technology
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
17,000 
17,000 
Accumulated amortization
(10,479)
(7,064)
Definite-lived intangible assets, net
6,521 
9,936 
Estimated useful lives of intangible asset
8 years 
 
Other technology
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
7,067 
7,067 
Accumulated amortization
(4,984)
(3,438)
Definite-lived intangible assets, net
2,083 
3,629 
Other technology |
Minimum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
5 years 
 
Other technology |
Maximum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
7 years 
 
Space Monkey technology
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
7,100 
7,100 
Accumulated amortization
(2,268)
(761)
Definite-lived intangible assets, net
4,832 
6,339 
Estimated useful lives of intangible asset
6 years 
 
Patents
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
8,724 
7,524 
Accumulated amortization
(3,913)
(2,094)
Definite-lived intangible assets, net
4,811 
5,430 
Estimated useful lives of intangible asset
5 years 
 
Non-compete agreements
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
1,200 
1,200 
Accumulated amortization
(1,200)
(800)
Definite-lived intangible assets, net
$ 0 
$ 400 
Non-compete agreements |
Minimum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
2 years 
 
Non-compete agreements |
Maximum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
3 years 
 
Goodwill and Intangible Assets - Schedule of Estimated Future Amortization Expense of Intangible Assets Excluding Patents Currently in Process (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
2017
$ 101,296 
2018
89,736 
2019
78,082 
2020
67,288 
2021
58,288 
Thereafter
48,548 
Total estimated amortization expense
$ 443,238 
Fair Value Measurements - Additional Information (Detail) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2016
Level 1:
Dec. 31, 2016
Money market funds
Level 1:
Feb. 19, 2014
Convertible Debt Securities
Privately Held Company
Fair Value, Estimate Not Practicable, Financial Statement Captions [Line Items]
 
 
 
 
 
Available-for-sale securities
$ 47,538,000 
 
$ 46,347,000 
$ 42,300,000 
 
Cost method investments
$ 400,000 
$ 3,500,000 
 
 
$ 3,000,000 
Fair Value Measurements - Financial Instruments at Fair Value Based on Valuation Approach Applied to Each Class of Security (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Cash
$ 1,191 
Adjusted Cost
46,527 
Unrealized Gains
1,011 
Unrealized Losses
Fair Value
47,538 
Cash and Cash Equivalents
43,520 
Long-Term Investments and Other Assets, net
4,018 
Level 1:
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Adjusted Cost
45,336 
Unrealized Gains
1,011 
Unrealized Losses
Fair Value
46,347 
Cash and Cash Equivalents
42,329 
Long-Term Investments and Other Assets, net
4,018 
Money market funds |
Level 1:
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Adjusted Cost
42,329 
Unrealized Gains
Unrealized Losses
Fair Value
42,329 
Cash and Cash Equivalents
42,329 
Long-Term Investments and Other Assets, net
Corporate securities |
Level 1:
 
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
 
Adjusted Cost
3,007 
Unrealized Gains
1,011 
Unrealized Losses
Fair Value
4,018 
Cash and Cash Equivalents
Long-Term Investments and Other Assets, net
$ 4,018 
Facility Fire - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Mar. 18, 2014
Dec. 31, 2015
Dec. 31, 2014
Other Income
Dec. 31, 2015
Reconstruction of Facility
Loss Contingencies [Line Items]
 
 
 
 
Fire damage, recognized gross expenses
$ 8.3 
 
 
 
Insurance recoveries
 
8.8 
 
3.0 
Insurance recoveries in excess of net book value
 
 
$ 0.5 
 
Income Taxes - Income Tax Provision (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Current income tax:
 
 
 
Federal
$ 0 
$ 0 
$ 0 
State
545 
392 
779 
Foreign
95 
(1)
Total
640 
391 
779 
Deferred income tax:
 
 
 
Federal
(925)
State
(181)
Foreign
(573)
(40)
841 
Total
(573)
(40)
(265)
Provision for income taxes
$ 67 
$ 351 
$ 514 
Income Taxes - Reconciliation of Tax Expense Computed at Statutory Federal Rate and Company's Tax Expense (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Income Tax Disclosure [Abstract]
 
 
 
Computed expected tax expense
$ (93,770)
$ (94,737)
$ (81,107)
State income taxes, net of federal tax effect
360 
259 
395 
Foreign income taxes
(949)
202 
1,645 
Other reconciling items
666 
Permanent differences
1,688 
1,980 
2,261 
Change in valuation allowance
92,072 
92,647 
77,320 
Provision for income taxes
$ 67 
$ 351 
$ 514 
Income Taxes - Significant Portions of Deferred Tax Assets and Liabilities (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Gross deferred tax assets:
 
 
Net operating loss carryforwards
$ 799,302 
$ 642,391 
Deferred subscriber income
19,866 
13,722 
Accrued expenses and allowances
15,452 
15,415 
Purchased intangibles
14,776 
10,576 
Inventory reserves
6,999 
9,333 
Property and Equipment
3,482 
3,257 
Alternative minimum tax credit and research and development credit
41 
41 
Valuation allowance
(328,991)
(234,771)
Deferred tax assets, net of valuation allowance
530,927 
459,964 
Gross deferred tax liabilities:
 
 
Deferred subscriber acquisition costs
(537,387)
(466,783)
Property and equipment
Prepaid expenses
(744)
(705)
Deferred tax liabilities, net
(538,131)
(467,488)
Net deferred tax liabilities
$ (7,204)
$ (7,524)
Income Taxes - Summary of Net Operating Loss Carryforwards (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Internal Revenue Service (IRS) |
United States
 
 
Operating Loss Carryforwards [Line Items]
 
 
Net operating loss carry forwards
$ 2,084,897 
$ 1,695,386 
Internal Revenue Service (IRS) |
State
 
 
Operating Loss Carryforwards [Line Items]
 
 
Net operating loss carry forwards
1,553,812 
1,338,742 
Canada Revenue Agency |
Foreign Tax Authority
 
 
Operating Loss Carryforwards [Line Items]
 
 
Net operating loss carry forwards
33,526 
28,629 
Inland Revenue Department (New Zealand) |
Foreign Tax Authority
 
 
Operating Loss Carryforwards [Line Items]
 
 
Net operating loss carry forwards
$ 0 
$ 5,518 
Income Taxes - Additional Information (Detail) (USD $)
Dec. 31, 2016
Dec. 31, 2015
Income Taxes And Tax Related [Line Items]
 
 
Net deferred tax liability
$ (7,204,000)
$ (7,524,000)
Amount of net operating loss carryforwards to be recorded in additional paid in capital when realized
11,500,000 
11,500,000 
Valuation allowance
328,991,000 
234,771,000 
United States
 
 
Income Taxes And Tax Related [Line Items]
 
 
Research and development credits
$ 41,000 
$ 41,000 
Stock-Based Compensation and Equity - Additional Information (Detail) (USD $)
1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended
Aug. 31, 2016
Apr. 30, 2016
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2016
Incentive Units Time Based Awards
Dec. 31, 2016
Stock Appreciation Rights (SARs)
Dec. 31, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Dec. 31, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Share-based Compensation Award, Tranche One
Mar. 31, 2015
313 Acquisition LLC
Incentive Units Time Based Awards
Chief Executive Officer and President
Dec. 31, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Chief Executive Officer and President
Dec. 31, 2016
313 Acquisition LLC
Incentive Units Performance Based Awards
Share-based Compensation Award, Tranche One
Dec. 31, 2016
313 Acquisition LLC
Incentive Units
Dec. 31, 2015
313 Acquisition LLC
Incentive Units
Dec. 31, 2016
313 Acquisition LLC
Incentive Units
Minimum
Dec. 31, 2016
313 Acquisition LLC
Incentive Units
Maximum
Dec. 31, 2016
Vivint
Dec. 31, 2015
Vivint
Dec. 31, 2016
Vivint
Stock Appreciation Rights Time Based Awards
Share-based Compensation Award, Tranche One
Dec. 31, 2016
Vivint
Stock Appreciation Rights Performance Based Awards
Share-based Compensation Award, Tranche One
Dec. 31, 2016
Vivint
Stock Appreciation Rights (SARs)
Dec. 31, 2015
Vivint
Stock Appreciation Rights (SARs)
Dec. 31, 2016
Vivint
Stock Appreciation Rights (SARs)
Minimum
Dec. 31, 2016
Vivint
Stock Appreciation Rights (SARs)
Maximum
Dec. 31, 2016
Vivint Wireless
Stock Appreciation Rights (SARs)
Dec. 31, 2015
Vivint Wireless
Stock Appreciation Rights (SARs)
Dec. 31, 2016
Vivint Wireless
Stock Appreciation Rights (SARs)
Minimum
Dec. 31, 2016
Vivint Wireless
Stock Appreciation Rights (SARs)
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Voluntarily relinquished (shares)
 
 
 
 
 
 
 
 
 
4,315,106 
 
 
905,000 
4,415,106 
 
 
2,320,552 
2,307,172 
 
 
 
 
 
 
63,500 
 
 
Incentive units issued as share-based compensation awards (shares)
 
 
 
 
 
 
 
 
85,882,836 
 
42,169,456 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation awards, description
 
 
 
 
 
 
 
The Incentive Units are subject to time-based and performance-based vesting conditions, with one-third subject to ratable time-based vesting over a five year period and two-thirds subject to the achievement of certain investment return thresholds by The Blackstone Group, L.P. and its affiliates 
 
 
 
 
 
 
 
 
 
 
 
 
The SARs are subject to time-based and performance-based vesting conditions, with one-third subject to ratable time-based vesting over a five year period and two-thirds subject to the achievement of certain investment return thresholds by 313. 
 
 
 
 
 
 
 
Stock compensation award, vesting percentage
 
 
 
 
 
 
 
 
33.33% 
 
 
66.67% 
 
 
 
 
 
 
33.33% 
66.67% 
 
 
 
 
 
 
 
 
Stock appreciation rights ("SARs"), vesting period
 
 
 
 
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock compensation award, method of measurement
 
 
 
 
 
Monte Carlo simulation valuation approach 
Black-Scholes option valuation model 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected volatility
 
 
 
 
 
 
 
 
 
 
 
 
55.00% 
 
 
125.00% 
 
 
 
 
 
 
55.00% 
125.00% 
 
 
65.00% 
 
Expected exercise term
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3 years 11 months 15 days 
6 years 0 months 0 days 
 
 
 
 
 
 
6 years 0 months 0 days 
6 years 5 months 18 days 
 
 
6 years 0 months 0 days 
6 years 6 months 0 days 
Risk-free rate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.62% 
1.18% 
 
 
 
 
 
 
0.61% 
1.77% 
 
 
1.51% 
1.77% 
Unrecognized compensation expense
 
 
$ 1,800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 900,000 
 
 
 
 
 
 
 
Compensation expense related to outstanding Incentive Units, recognized over a weighted-average period
 
 
1 year 6 months 24 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 years 9 months 23 days 
 
 
 
 
 
 
 
Weighted average grant date fair value of the outstanding units (in dollars per share)
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.30 
$ 0.38 
 
 
 
 
 
 
$ 0.22 
$ 0.25 
 
 
$ 2.30 
$ 6.02 
 
 
Incentive units issued as share-based compensation awards, outstanding (shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,993,158 
 
 
 
17,500 
 
 
 
Shares reserved for issuance
 
 
 
 
 
 
53,621,891 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected dividends
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
 
 
 
0.00% 
 
 
 
Share-based compensation
 
 
3,868,000 
3,121,000 
1,936,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from contributed capital
$ 30,600,000 
$ 69,800,000 
$ 100,407,000 
 
$ 32,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-Based Compensation and Equity - Summary of Incentive Unit Activity (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
 
Weighted Average Exercise Price Per Share, Granted (in dollars per share)
$ 1.93 
 
 
313 Acquisition LLC |
Incentive Units
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Outstanding, Beginning Balance (shares)
73,962,836.000 
74,527,942 
 
Granted (shares)
12,825,000 
3,850,000 
 
Forfeited (shares)
(905,000)
(4,415,106)
 
Exercised (shares)
 
Outstanding, Ending Balance (shares)
85,882,836.000 
73,962,836.000 
74,527,942 
Unvested shares expected to vest (shares)
66,186,360 
 
 
Exercisable (shares)
19,696,476 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
 
Weighted Average Exercise Price Per Share, Outstanding, Beginning Balance (in dollars per share)
$ 1.06 
$ 1.03 
 
Weighted Average Exercise Price Per Share, Granted (in dollars per share)
 
$ 2.40 
 
Weighted Average Exercise Price Per Share, Forfeited (in dollars per share)
$ 1.09 
$ 1.03 
 
Weighted Average Exercise Price Per Share, Exercised (in dollars per share)
$ 0.00 
$ 0.00 
 
Weighted Average Exercise Price Per Share, Outstanding, Ending Balance (in dollars per share)
$ 1.19 
$ 1.06 
$ 1.03 
Weighted Average Exercise Price Per Share, Unvested shares expected to vest (in dollars per share)
$ 1.23 
 
 
Weighted Average Exercise Price Per Share, Exercisable (in dollars per share)
$ 1.03 
 
 
Outstanding, Weighted Average Remaining Contractual Life
6 years 9 months 23 days 
7 years 3 months 22 days 
8 years 2 months 9 days 
Unvested shares expected to vest, Weighted Average Remaining Contractual Life
6 years 11 months 28 days 
 
 
Exercisable at End of Period, Weighted Average Remaining Contractual Life
6 years 2 months 16 days 
 
 
Outstanding, Aggregate Intrinsic Value
$ 0 
$ 104,562,869 
$ 20,145,882 
Unvested shares expected to vest, Aggregate Intrinsic Value
 
 
Exercisable, Aggregate Intrinsic Value
$ 0 
 
 
Stock-Based Compensation and Equity - Summary of the SAR Activity (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
 
Weighted Average Exercise Price Per Share, Granted (in dollars per share)
$ 1.93 
 
 
Vivint
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Outstanding, Beginning Balance (shares)
18,664,137.000 
6,696,660 
 
Converted (shares)
 
3,259,934 
 
Granted (shares)
5,649,573 
11,186,936 
 
Forfeited (shares)
(2,320,552)
(2,307,172)
 
Exercised (shares)
(172,221)
 
Outstanding, Ending Balance (shares)
21,993,158.000 
18,664,137.000 
6,696,660 
Unvested shares expected to vest (shares)
19,334,407 
 
 
Exercisable (shares)
2,658,751 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
 
Weighted Average Exercise Price Per Share, Outstanding, Beginning Balance (in dollars per share)
$ 0.87 
$ 1.04 
 
Weighted Average Exercise Price Per Share, Converted (in dollars per share)
 
$ 0.70 
 
Weighted Average Exercise Price Per Share, Granted (in dollars per share)
$ 1.22 
$ 1.03 
 
Weighted Average Exercise Price Per Share, Forfeited (in dollars per share)
$ 0.92 
$ 0.80 
 
Weighted Average Exercise Price Per Share, Exercised (in dollars per share)
$ 0.00 
$ 0.68 
 
Weighted Average Exercise Price Per Share, Outstanding, Ending Balance (in dollars per share)
$ 0.96 
$ 0.87 
$ 1.04 
Weighted Average Exercise Price Per Share, Unvested shares expected to vest (in dollars per share)
$ 0.98 
 
 
Weighted Average Exercise Price Per Share, Exercisable (in dollars per share)
$ 0.78 
 
 
Outstanding, Weighted Average Remaining Contractual Life
8 years 2 months 22 days 
8 years 7 months 28 days 
8 years 7 months 13 days 
Converted, Weighted Average Remaining Contractual Life
 
8 years 7 months 13 days 
 
Unvested shares expected to vest, Weighted Average Remaining Contractual Life
8 years 4 months 13 days 
 
 
Exercisable at End of Period, Weighted Average Remaining Contractual Life
7 years 2 months 12 days 
 
 
Outstanding, Aggregate Intrinsic Value
$ 0 
$ 3,628,498 
$ 1,734,748 
Unvested shares expected to vest, Aggregate Intrinsic Value
 
 
Exercisable, Aggregate Intrinsic Value
$ 0 
 
 
Vivint Wireless |
Stock Appreciation Rights (SARs)
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
 
 
 
Outstanding, Beginning Balance (shares)
81,000 
70,000 
 
Granted (shares)
11,000 
 
Forfeited (shares)
(63,500)
 
Exercised (shares)
 
Outstanding, Ending Balance (shares)
17,500.0 
81,000 
70,000 
Unvested shares expected to vest (shares)
7,000 
 
 
Exercisable (shares)
10,500 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
 
 
 
Weighted Average Exercise Price Per Share, Outstanding, Beginning Balance (in dollars per share)
$ 13.26 
$ 5.00 
 
Weighted Average Exercise Price Per Share, Granted (in dollars per share)
$ 0.00 
$ 65.84 
 
Weighted Average Exercise Price Per Share, Forfeited (in dollars per share)
$ 15.54 
$ 0.00 
 
Weighted Average Exercise Price Per Share, Exercised (in dollars per share)
$ 0.00 
$ 0.00 
 
Weighted Average Exercise Price Per Share, Outstanding, Ending Balance (in dollars per share)
$ 5.00 
$ 13.26 
$ 5.00 
Weighted Average Exercise Price Per Share, Unvested shares expected to vest (in dollars per share)
$ 5.00 
 
 
Weighted Average Exercise Price Per Share, Exercisable (in dollars per share)
$ 5.00 
 
 
Outstanding, Weighted Average Remaining Contractual Life
6 years 4 months 28 days 
7 years 7 months 27 days 
8 years 4 months 28 days 
Unvested shares expected to vest, Weighted Average Remaining Contractual Life
6 years 4 months 28 days 
 
 
Exercisable at End of Period, Weighted Average Remaining Contractual Life
6 years 4 months 28 days 
 
 
Stock-Based Compensation and Equity - Stock-Based Compensation Expense (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Total stock-based compensation
$ 3,868 
$ 3,121 
$ 1,936 
Operating expenses
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Total stock-based compensation
68 
71 
63 
Selling expenses
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Total stock-based compensation
(127)
578 
185 
General and administrative expenses
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Total stock-based compensation
3,927 
2,472 
1,688 
Executive Officer |
General and administrative expenses
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Total stock-based compensation
$ 2,200 
 
 
Commitments and Contingencies - Additional Information (Detail) (USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Commitments And Contingencies [Line Items]
 
 
 
Loss contingency accrual
$ 2,600,000 
$ 2,500,000 
 
Rent Expense
15,954,000 
15,141,000 
 
Capital lease obligation
17,700,000 
18,800,000 
 
Property and equipment, gross
105,261,000 
82,386,000 
 
Capital lease obligations, net of current portion
7,935,000 
11,171,000 
 
Capital expenditure
11,642,000 
26,982,000 
30,500,000 
Software Licenses, Marketing Activities, and Other Goods and Services
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Other off-balance sheet obligations
61,400,000 
 
 
Vehicles
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Lease agreements term
36 months 
 
 
Average remaining life for fleet
19 months 
 
 
Property and equipment, gross
31,416,000 
26,935,000 
 
Build-to-suit lease asset under construction
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Property and equipment, gross
5,004,000 
 
Capital lease obligations, net of current portion
4,600,000 
 
 
Capital expenditure
400,000 
 
 
Warehouse, office space and other
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Rent Expense
11,222,000 
11,632,000 
 
Warehouse, office space and other |
Minimum
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Lease Term
1 year 
 
 
Warehouse, office space and other |
Maximum
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Lease Term
15 years 
 
 
Wireless towers, spectrum and other
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Rent Expense
$ 4,732,000 
$ 3,509,000 
 
Wireless towers, spectrum and other |
Minimum
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Lease Term
1 year 
 
 
Wireless towers, spectrum and other |
Maximum
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Lease Term
10 years 
 
 
Spectrum licenses
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
Lease agreements term
7 years 
 
 
Number of mid-sized metropolitan markets
40 
 
 
Commitments and Contingencies - Future Minimum Lease Payments (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Operating
 
2017
$ 17,452 
2018
15,322 
2019
14,998 
2020
13,521 
2021
13,086 
Thereafter
47,634 
Amounts representing interest
Total lease payments
122,013 
Capital
 
2017
10,513 
2018
6,117 
2019
2,049 
2020
17 
2021
Thereafter
Amounts representing interest
(963)
Total lease payments
17,733 
Total
 
2017
27,965 
2018
21,439 
2019
17,047 
2020
13,538 
2021
13,086 
Thereafter
47,634 
Amounts representing interest
(963)
Total lease payments
$ 139,746 
Related Party Transactions (Detail) (USD $)
0 Months Ended 1 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended
Oct. 10, 2014
Sep. 3, 2014
Aug. 31, 2016
Apr. 30, 2016
Apr. 30, 2015
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2016
Vivint
Dec. 31, 2015
Vivint
Sep. 3, 2014
APX Group, Inc.
Dec. 27, 2012
Solar
Dec. 31, 2016
Solar
Dec. 31, 2015
Solar
Dec. 31, 2014
Solar
Dec. 31, 2016
Blackstone Management Partners L.L.C.
Dec. 31, 2015
Blackstone Management Partners L.L.C.
Dec. 31, 2014
Blackstone Management Partners L.L.C.
Dec. 31, 2016
Blackstone Management Partners L.L.C.
Minimum
Dec. 31, 2016
General and administrative expenses
Dec. 31, 2015
General and administrative expenses
Dec. 31, 2014
General and administrative expenses
Dec. 31, 2016
General and administrative expenses
Executive Officer
Dec. 31, 2016
8.75% Senior Notes Due 2020
Senior Notes
Dec. 31, 2016
8.75% Senior Notes Due 2020
Senior Notes
Blackstone Advisory Partners L.P.
Dec. 31, 2016
7.875% Senior Secured Notes Due 2022
Senior Notes
Dec. 31, 2016
7.875% Senior Secured Notes Due 2022
Senior Notes
Blackstone Advisory Partners L.P.
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sublease and other administrative expenses
 
 
 
 
 
 
 
 
 
 
 
 
$ 4,600,000 
$ 7,100,000 
$ 8,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
Other expenses
 
 
 
 
 
 
 
 
 
 
 
 
200,000 
1,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit, financing receivable, maximum borrowing capacity
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on outstanding balance
 
 
 
 
 
 
 
 
 
 
 
7.50% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital contribution received
55,000,000 
 
 
 
 
100,407,000 
32,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-competition agreement, term
 
 
 
 
 
 
 
 
 
 
 
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product development and supply agreement term
 
 
 
 
 
 
 
 
 
 
 
3 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product development and supply agreement renewal term
 
 
 
 
 
 
 
 
 
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marketing and Customer Relations Agreement, pilot program term
 
 
 
 
 
 
 
 
 
 
 
 
3 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividend paid to stockholders
 
50,000,000 
 
 
 
50,000,000 
 
 
50,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional expenses incurred for other related-party transactions
 
 
 
 
 
4,200,000 
2,500,000 
3,100,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued expenses and other current liabilities
 
 
 
 
 
34,265,000 
35,573,000 
 
2,500,000 
1,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cash loss on settlement of Merger-related escrow
 
 
 
 
12,200,000 
(12,200,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transaction fees paid
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000,000 
 
 
 
 
 
 
 
 
 
 
 
Annual monitoring base fee, minimum
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,700,000 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets
 
 
 
 
 
400,000 
200,000 
 
 
 
 
 
 
 
 
3,700,000 
3,600,000 
3,200,000 
 
 
 
 
 
 
 
 
 
Fee paid for support services by BMP to Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,500,000 
 
 
 
 
 
 
 
 
 
 
 
Additions
 
 
 
 
 
9,337,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
600,000 
9,337,000 
500,000 
Proceeds from contributed capital
 
 
30,600,000 
69,800,000 
 
100,407,000 
 
32,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
 
 
 
 
 
3,868,000 
3,121,000 
1,936,000 
 
 
 
 
 
 
 
 
 
 
 
3,927,000 
2,472,000 
1,688,000 
2,200,000 
 
 
 
 
Expected repayment period
 
 
 
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts due from employees
 
 
 
 
 
$ 300,000 
$ 300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting and Business Concentrations - Additional Information (Detail)
12 Months Ended
Dec. 31, 2016
Country
Segment
Dec. 31, 2015
Segment
Segment Reporting [Abstract]
 
 
Number of operating segments
Primarily operations in geographic regions
 
Segment Reporting and Business Concentrations - Revenues and Long-Lived Assets by Geographic Region (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Segment Reporting Information [Line Items]
 
 
 
Revenue from external customers
$ 757,907 
$ 653,721 
$ 563,677 
Property and equipment, net
63,626 
55,274 
62,790 
United States
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenue from external customers
700,471 
602,418 
529,521 
Property and equipment, net
62,781 
55,103 
62,368 
Canada
 
 
 
Segment Reporting Information [Line Items]
 
 
 
Revenue from external customers
57,436 
51,303 
34,156 
Property and equipment, net
$ 845 
$ 171 
$ 422 
Employee Benefit Plan (Detail) (2GIG, USD $)
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
2GIG
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Matching contributions to the plan
$ 0 
$ 0 
Guarantor and Non-Guarantor Supplemental Financial Information - Condensed Consolidating Balance Sheet (Detail) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Dec. 31, 2013
ASSETS
 
 
 
 
Current assets
$ 105,021 
$ 47,566 
 
 
Property and equipment, net
63,626 
55,274 
62,790 
 
Subscriber acquisition costs, net
1,052,434 
790,644 
 
 
Deferred financing costs, net
4,420 
6,456 
 
 
Intangible assets, net
475,392 
558,395 
 
 
Goodwill
835,233 
834,416 
841,522 
 
Long-term investments and other assets
11,536 
10,893 
 
 
Total assets
2,547,662 
2,303,644 
 
 
Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
Current liabilities
185,191 
168,518 
 
 
Notes payable and revolving line of credit, net of current portion
2,486,700 
2,138,112 
 
 
Capital lease obligations, net of current portion
7,935 
11,171 
 
 
Deferred revenue, net of current portion
58,734 
44,782 
 
 
Other long-term obligations
47,080 
10,530 
 
 
Deferred income tax liability
7,204 
7,524 
 
 
Total (deficit) equity
(245,182)
(76,993)
224,486 
490,243 
Total liabilities and stockholders’ deficit
2,547,662 
2,303,644 
 
 
Eliminations
 
 
 
 
ASSETS
 
 
 
 
Current assets
(67,799)
(53,066)
 
 
Investment in subsidiaries
(2,228,903)
(2,070,404)
 
 
Intercompany receivable
(9,492)
(22,398)
 
 
Long-term investments and other assets
(106)
(106)
 
 
Total assets
(2,306,300)
(2,145,974)
 
 
Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
Current liabilities
(67,799)
(53,066)
 
 
Intercompany payable
(9,492)
(22,398)
 
 
Accumulated losses of investee
(245,182)
(76,993)
 
 
Deferred income tax liability
(106)
(106)
 
 
Total (deficit) equity
(1,983,721)
(1,993,411)
 
 
Total liabilities and stockholders’ deficit
(2,306,300)
(2,145,974)
 
 
Parent |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Current assets
 
 
 
Investment in subsidiaries
 
 
 
Total assets
 
 
Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
Accumulated losses of investee
245,182 
76,993 
 
 
Total (deficit) equity
(245,182)
(76,993)
 
 
Total liabilities and stockholders’ deficit
 
 
APX Group, Inc. |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Current assets
25,136 
2,537 
 
 
Deferred financing costs, net
4,420 
6,456 
 
 
Investment in subsidiaries
2,228,903 
2,070,404 
 
 
Long-term investments and other assets
106 
106 
 
 
Total assets
2,258,565 
2,079,503 
 
 
Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
Current liabilities
17,047 
18,384 
 
 
Notes payable and revolving line of credit, net of current portion
2,486,700 
2,138,112 
 
 
Total (deficit) equity
(245,182)
(76,993)
 
 
Total liabilities and stockholders’ deficit
2,258,565 
2,079,503 
 
 
Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Current assets
143,954 
91,555 
 
 
Property and equipment, net
62,781 
55,012 
 
 
Subscriber acquisition costs, net
974,975 
728,547 
 
 
Intercompany receivable
9,492 
22,398 
 
 
Intangible assets, net
443,189 
519,301 
 
 
Goodwill
809,678 
809,678 
 
 
Long-term investments and other assets
11,523 
10,880 
 
 
Total assets
2,455,592 
2,237,371 
 
 
Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
Current liabilities
160,956 
143,896 
 
 
Capital lease obligations, net of current portion
7,368 
11,169 
 
 
Deferred revenue, net of current portion
53,991 
40,960 
 
 
Other long-term obligations
47,080 
10,530 
 
 
Deferred income tax liability
106 
106 
 
 
Total (deficit) equity
2,186,091 
2,030,710 
 
 
Total liabilities and stockholders’ deficit
2,455,592 
2,237,371 
 
 
Non-Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
 
ASSETS
 
 
 
 
Current assets
3,730 
6,540 
 
 
Property and equipment, net
845 
262 
 
 
Subscriber acquisition costs, net
77,459 
62,097 
 
 
Intangible assets, net
32,203 
39,094 
 
 
Goodwill
25,555 
24,738 
 
 
Long-term investments and other assets
13 
13 
 
 
Total assets
139,805 
132,744 
 
 
Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
Current liabilities
74,987 
59,304 
 
 
Intercompany payable
9,492 
22,398 
 
 
Capital lease obligations, net of current portion
567 
 
 
Deferred revenue, net of current portion
4,743 
3,822 
 
 
Other long-term obligations
 
 
 
Deferred income tax liability
7,204 
7,524 
 
 
Total (deficit) equity
42,812 
39,694 
 
 
Total liabilities and stockholders’ deficit
$ 139,805 
$ 132,744 
 
 
Guarantor and Non-Guarantor Supplemental Financial Information - Condensed Consolidating Statements of Operations and Comprehensive Loss (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Condensed Income Statements, Captions [Line Items]
 
 
 
Revenues
$ 757,907 
$ 653,721 
$ 563,677 
Costs and expenses
829,009 
762,396 
657,546 
Loss from operations
(71,102)
(108,675)
(93,869)
Other expense (income), net
204,788 
170,081 
144,277 
Loss before income taxes
(275,890)
(278,756)
(238,146)
Income tax expense (benefit)
67 
351 
514 
Net loss
(275,957)
(279,107)
(238,660)
Other comprehensive (loss) income, net of tax effects:
 
 
 
Net loss
(275,957)
(279,107)
(238,660)
Foreign currency translation adjustment
2,482 
(13,293)
(11,333)
Unrealized gain on marketable securities
1,011 
Comprehensive loss
(272,464)
(292,400)
(249,993)
Eliminations
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
Revenues
(2,704)
(2,808)
(3,122)
Costs and expenses
(2,704)
(2,808)
(3,122)
(Loss) income from subsidiaries
345,594 
397,992 
332,510 
Loss before income taxes
345,594 
397,992 
332,510 
Net loss
345,594 
397,992 
332,510 
Other comprehensive (loss) income, net of tax effects:
 
 
 
Net loss
345,594 
397,992 
332,510 
Foreign currency translation adjustment
(2,482)
13,292 
11,333 
Unrealized gain on marketable securities
(1,011)
 
 
Comprehensive loss
342,101 
411,284 
343,843 
Parent |
Reportable Legal Entities
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
(Loss) income from subsidiaries
(275,957)
(279,107)
(238,660)
Loss before income taxes
(275,957)
(279,107)
(238,660)
Net loss
(275,957)
(279,107)
(238,660)
Other comprehensive (loss) income, net of tax effects:
 
 
 
Net loss
(275,957)
(279,107)
(238,660)
Comprehensive loss
(275,957)
(279,107)
(238,660)
APX Group, Inc. |
Reportable Legal Entities
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
(Loss) income from subsidiaries
(69,637)
(118,885)
(93,850)
Other expense (income), net
206,320 
160,222 
145,917 
Loss before income taxes
(275,957)
(279,107)
(239,767)
Income tax expense (benefit)
 
(1,107)
Net loss
(275,957)
(279,107)
(238,660)
Other comprehensive (loss) income, net of tax effects:
 
 
 
Net loss
(275,957)
(279,107)
(238,660)
Foreign currency translation adjustment
2,482 
(13,293)
(11,333)
Unrealized gain on marketable securities
1,011 
 
 
Comprehensive loss
(272,464)
(292,400)
(249,993)
Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
Revenues
715,072 
622,507 
530,888 
Costs and expenses
787,138 
730,322 
623,124 
Loss from operations
(72,066)
(107,815)
(92,236)
Other expense (income), net
(1,207)
9,763 
(1,676)
Loss before income taxes
(70,859)
(117,578)
(90,560)
Income tax expense (benefit)
545 
392 
779 
Net loss
(71,404)
(117,970)
(91,339)
Other comprehensive (loss) income, net of tax effects:
 
 
 
Net loss
(71,404)
(117,970)
(91,339)
Foreign currency translation adjustment
(6,895)
Unrealized gain on marketable securities
1,011 
 
 
Comprehensive loss
(70,393)
(117,968)
(98,234)
Non-Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
Revenues
45,539 
34,022 
35,911 
Costs and expenses
44,575 
34,882 
37,544 
Loss from operations
964 
(860)
(1,633)
Other expense (income), net
(325)
96 
36 
Loss before income taxes
1,289 
(956)
(1,669)
Income tax expense (benefit)
(478)
(41)
842 
Net loss
1,767 
(915)
(2,511)
Other comprehensive (loss) income, net of tax effects:
 
 
 
Net loss
1,767 
(915)
(2,511)
Foreign currency translation adjustment
2,482 
(13,294)
(4,438)
Unrealized gain on marketable securities
 
 
Comprehensive loss
$ 4,249 
$ (14,209)
$ (6,949)
Guarantor and Non-Guarantor Supplemental Financial Information - Condensed Consolidating Statements of Cash Flows (Detail) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2016
Dec. 31, 2015
Dec. 31, 2014
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
$ (365,706)
$ (255,307)
$ (309,637)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
(5,243)
(24,740)
(10,580)
Capital expenditures
(11,642)
(26,982)
(30,500)
Proceeds from sale of capital assets
3,123 
480 
964 
Investment in subsidiary
 
Acquisition of intangible assets
(1,385)
(1,363)
(9,649)
Proceeds from insurance claims
2,984 
Net cash used in acquisitions
(18,500)
Investment in marketable securities
 
 
(60,000)
Proceeds from marketable securities
 
 
60,069 
Proceeds from note receivable
22,699 
Change in restricted cash
14,214 
14,375 
Investment in convertible note
(3,000)
Other assets
 
(208)
(2,162)
Net cash used in investing activities
(15,147)
(35,615)
(36,284)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
604,000 
296,250 
102,000 
Repayments of notes payable
(235,535)
Borrowings from revolving line of credit
57,000 
271,000 
20,000 
Repayment of revolving line of credit
(77,000)
(271,000)
Proceeds from capital contribution
100,407 
 
32,300 
Intercompany receivable
 
Intercompany payable
 
Proceeds from contract sales
2,261 
Acquisition of contracts
(2,277)
Repayments of capital lease obligations
(8,315)
(6,414)
(6,300)
Financing costs
(9,036)
Deferred financing costs
(9,241)
(5,436)
(2,927)
Payment of dividends
(50,000)
Net cash provided by financing activities
422,280 
284,400 
95,057 
Effect of exchange rate changes on cash
(466)
(1,726)
(234)
Net increase (decrease) in cash and cash equivalents
40,961 
(8,248)
(251,098)
Cash and cash equivalents:
 
 
 
Beginning of period
2,559 
10,807 
261,905 
End of period
43,520 
2,559 
10,807 
Eliminations
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
(50,000)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
 
Capital expenditures
 
Proceeds from sale of capital assets
 
Investment in subsidiary
508,621 
296,895 
372,324 
Acquisition of intangible assets
 
Proceeds from insurance claims
 
 
Net cash used in acquisitions
 
 
Investment in marketable securities
 
 
Proceeds from marketable securities
 
 
Proceeds from note receivable
 
 
Change in restricted cash
 
Investment in convertible note
 
Other assets
 
Net cash used in investing activities
508,621 
296,895 
372,324 
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
Repayments of notes payable
 
 
Borrowings from revolving line of credit
 
Repayment of revolving line of credit
 
 
Proceeds from capital contribution
(100,407)
 
(32,300)
Intercompany receivable
(12,906)
(11,601)
(10,658)
Intercompany payable
(395,308)
(285,294)
(329,366)
Proceeds from contract sales
 
 
Acquisition of contracts
 
 
Repayments of capital lease obligations
 
Financing costs
 
 
Deferred financing costs
 
Payment of dividends
 
 
50,000 
Net cash provided by financing activities
(508,621)
(296,895)
(322,324)
Effect of exchange rate changes on cash
 
Net increase (decrease) in cash and cash equivalents
 
Cash and cash equivalents:
 
 
 
Beginning of period
End of period
Parent |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
50,000 
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
 
Capital expenditures
 
Proceeds from sale of capital assets
 
Investment in subsidiary
(100,407)
(32,300)
Acquisition of intangible assets
 
Proceeds from insurance claims
 
 
Net cash used in acquisitions
 
 
Investment in marketable securities
 
 
Proceeds from marketable securities
 
 
Proceeds from note receivable
 
 
Change in restricted cash
 
Investment in convertible note
 
Other assets
 
Net cash used in investing activities
(100,407)
(32,300)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
Repayments of notes payable
 
 
Borrowings from revolving line of credit
 
Repayment of revolving line of credit
 
 
Proceeds from capital contribution
100,407 
 
32,300 
Intercompany receivable
 
Intercompany payable
 
Proceeds from contract sales
 
 
Acquisition of contracts
 
 
Repayments of capital lease obligations
 
Financing costs
 
 
Deferred financing costs
 
Payment of dividends
 
 
(50,000)
Net cash provided by financing activities
100,407 
(17,700)
Effect of exchange rate changes on cash
 
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents:
 
 
 
Beginning of period
End of period
APX Group, Inc. |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
(1,052)
(894)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
 
Capital expenditures
 
Proceeds from sale of capital assets
 
Investment in subsidiary
(408,214)
(296,895)
(340,024)
Acquisition of intangible assets
 
Proceeds from insurance claims
 
 
Net cash used in acquisitions
 
 
Investment in marketable securities
 
 
(60,000)
Proceeds from marketable securities
 
 
60,069 
Proceeds from note receivable
 
 
Change in restricted cash
 
Investment in convertible note
 
Other assets
 
Net cash used in investing activities
(408,214)
(296,895)
(339,955)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
604,000 
296,250 
102,000 
Repayments of notes payable
(235,535)
 
 
Borrowings from revolving line of credit
57,000 
271,000 
20,000 
Repayment of revolving line of credit
(77,000)
(271,000)
 
Proceeds from capital contribution
100,407 
 
32,300 
Intercompany receivable
 
 
Intercompany payable
 
Proceeds from contract sales
 
 
Acquisition of contracts
 
 
Repayments of capital lease obligations
 
Financing costs
(9,036)
 
 
Deferred financing costs
(9,241)
(5,436)
(2,927)
Payment of dividends
 
 
(50,000)
Net cash provided by financing activities
430,595 
290,814 
101,373 
Effect of exchange rate changes on cash
 
Net increase (decrease) in cash and cash equivalents
22,381 
(7,133)
(239,476)
Cash and cash equivalents:
 
 
 
Beginning of period
2,299 
9,432 
248,908 
End of period
24,680 
2,299 
9,432 
Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
(380,508)
(267,327)
(318,734)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
(5,243)
(23,641)
(10,580)
Capital expenditures
(11,642)
(26,941)
(30,315)
Proceeds from sale of capital assets
3,080 
480 
964 
Investment in subsidiary
 
Acquisition of intangible assets
(1,385)
(1,363)
(9,649)
Proceeds from insurance claims
 
2,984 
 
Net cash used in acquisitions
 
 
(18,500)
Investment in marketable securities
 
 
Proceeds from marketable securities
 
 
Proceeds from note receivable
 
 
22,699 
Change in restricted cash
 
14,214 
14,375 
Investment in convertible note
 
(3,000)
Other assets
 
(208)
(2,153)
Net cash used in investing activities
(15,190)
(34,475)
(36,159)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
Repayments of notes payable
 
 
Borrowings from revolving line of credit
 
Repayment of revolving line of credit
 
 
Proceeds from capital contribution
 
Payment of intercompany settlement
3,000 
 
 
Intercompany receivable
12,906 
11,601 
10,658 
Intercompany payable
408,214 
296,895 
340,024 
Proceeds from contract sales
 
 
2,261 
Acquisition of contracts
 
 
(2,277)
Repayments of capital lease obligations
(8,295)
(6,402)
(6,297)
Financing costs
 
 
Deferred financing costs
 
Payment of dividends
 
 
Net cash provided by financing activities
415,825 
302,094 
344,369 
Effect of exchange rate changes on cash
 
Net increase (decrease) in cash and cash equivalents
20,127 
292 
(10,524)
Cash and cash equivalents:
 
 
 
Beginning of period
(1,941)
(2,233)
8,291 
End of period
18,186 
(1,941)
(2,233)
Non-Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
14,802 
13,072 
9,991 
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs – company owned equipment
(1,099)
Capital expenditures
(41)
(185)
Proceeds from sale of capital assets
43 
Investment in subsidiary
 
Acquisition of intangible assets
 
Proceeds from insurance claims
 
 
Net cash used in acquisitions
 
 
Investment in marketable securities
 
 
Proceeds from marketable securities
 
 
Proceeds from note receivable
 
 
Change in restricted cash
 
Investment in convertible note
 
Other assets
 
(9)
Net cash used in investing activities
43 
(1,140)
(194)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
Repayments of notes payable
 
 
Borrowings from revolving line of credit
 
Repayment of revolving line of credit
 
 
Proceeds from capital contribution
 
Payment of intercompany settlement
(3,000)
 
 
Intercompany receivable
 
Intercompany payable
(12,906)
(11,601)
(10,658)
Proceeds from contract sales
 
 
Acquisition of contracts
 
 
Repayments of capital lease obligations
(20)
(12)
(3)
Financing costs
 
 
Deferred financing costs
 
Payment of dividends
 
 
Net cash provided by financing activities
(15,926)
(11,613)
(10,661)
Effect of exchange rate changes on cash
(466)
(1,726)
(234)
Net increase (decrease) in cash and cash equivalents
(1,547)
(1,407)
(1,098)
Cash and cash equivalents:
 
 
 
Beginning of period
2,201 
3,608 
4,706 
End of period
$ 654 
$ 2,201 
$ 3,608 
Subsequent Events (Details) (USD $)
0 Months Ended 0 Months Ended
Jan. 3, 2017
Subsequent Event
Nov. 16, 2012
Senior Notes
May 31, 2016
7.875% Senior Secured Notes Due 2022
Senior Notes
Feb. 1, 2017
7.875% Senior Secured Notes Due 2022
Senior Notes
Subsequent Event
Feb. 1, 2017
7.875% Senior Secured Notes Due 2022
Senior Notes
Subsequent Event
Jan. 3, 2017
Minimum
Subsequent Event
Jan. 3, 2017
Maximum
Subsequent Event
Jan. 3, 2017
Citizens
Subsequent Event
Jan. 3, 2017
Citizens
Minimum
Subsequent Event
Jan. 3, 2017
Citizens
Maximum
Subsequent Event
Subsequent Event [Line Items]
 
 
 
 
 
 
 
 
 
 
Installment loans provided by a third party financing provider
$ 4,000 
 
 
 
 
 
 
 
 
 
Term of loan
 
 
 
 
 
42 months 
60 months 
 
 
 
Percent of credit losses
 
 
 
 
 
 
 
 
5.00% 
100.00% 
Consumer financing program, term of agreement
 
 
 
 
 
 
 
5 years 
 
 
Consumer financing program, term of agreement renewal
 
 
 
 
 
 
 
1 year 
 
 
Principal amount
 
$ 1,300,000,000 
$ 500,000,000.0 
 
$ 300,000,000.0 
 
 
 
 
 
Debt instrument, redemption price, percentage
 
 
 
108.25%