APX GROUP HOLDINGS, INC., 10-Q filed on 8/11/2016
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2016
Aug. 10, 2016
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2016 
 
Document Fiscal Year Focus
2016 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
ck0001584423 
 
Entity Registrant Name
APX Group Holdings, Inc. 
 
Entity Central Index Key
0001584423 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Non-accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
100 
Condensed Consolidated Balance Sheets (unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Current Assets:
 
 
Cash and cash equivalents
$ 121,406 
$ 2,559 
Accounts receivable, net
8,545 
8,060 
Inventories
89,496 
26,321 
Prepaid expenses and other current assets
16,860 
10,626 
Total current assets
236,307 
47,566 
Property and equipment, net
54,062 
55,274 
Subscriber acquisition costs, net
945,851 
790,644 
Deferred financing costs, net
5,434 
6,456 
Intangible assets, net
503,146 
558,395 
Goodwill
836,129 
834,416 
Long-term investments and other assets, net
10,629 
10,893 
Total assets
2,591,558 
2,303,644 
Current Liabilities:
 
 
Accounts payable
108,121 
52,207 
Accrued payroll and commissions
70,541 
38,247 
Accrued expenses and other current liabilities
36,616 
35,573 
Deferred revenue
42,621 
34,875 
Current portion of capital lease obligations
8,055 
7,616 
Total current liabilities
265,954 
168,518 
Notes payable, net
2,381,320 
2,118,112 
Revolving credit facility
0 
20,000 
Capital lease obligations, net of current portion
8,534 
11,171 
Deferred revenue, net of current portion
52,231 
44,782 
Other long-term obligations
11,849 
10,530 
Deferred income tax liabilities
8,046 
7,524 
Total liabilities
2,727,934 
2,380,637 
Commitments and contingencies (See Note 10)
   
   
Stockholders’ deficit:
 
 
Common stock, $0.01 par value, 100 shares authorized; 100 shares issued and outstanding
0 
0 
Additional paid-in capital
700,276 
627,645 
Accumulated deficit
(807,197)
(672,382)
Accumulated other comprehensive loss
(29,455)
(32,256)
Total stockholders’ deficit
(136,376)
(76,993)
Total liabilities and stockholders’ deficit
$ 2,591,558 
$ 2,303,644 
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Statement of Financial Position [Abstract]
 
 
Common stock, par value (in dollars per share)
$ 0.01 
$ 0.01 
Common stock, authorized
100 
100 
Common stock, issued
100 
100 
Common stock, outstanding
100 
100 
Condensed Consolidated Statements of Operations (unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Revenues:
 
 
 
 
Recurring revenue
$ 172,472 
$ 149,543 
$ 339,918 
$ 295,207 
Service and other sales revenue
5,826 
6,992 
10,837 
12,216 
Activation fees
2,509 
1,378 
4,305 
2,685 
Total revenues
180,807 
157,913 
355,060 
310,108 
Costs and expenses:
 
 
 
 
Operating expenses (exclusive of depreciation and amortization shown separately below)
68,943 
58,623 
126,934 
109,952 
Selling expenses
37,343 
31,244 
66,223 
56,520 
General and administrative expenses
36,109 
12,864 
66,550 
41,098 
Depreciation and amortization
72,010 
60,070 
132,581 
117,127 
Restructuring and asset impairment charges
(725)
0 
(680)
0 
Total costs and expenses
213,680 
162,801 
391,608 
324,697 
Loss from operations
(32,873)
(4,888)
(36,548)
(14,589)
Other expenses (income):
 
 
 
 
Interest expense
47,447 
38,841 
92,865 
77,101 
Interest income
(11)
0 
(23)
(2)
Other loss (income), net
9,861 
(294)
4,753 
(335)
Loss before income taxes
(90,170)
(43,435)
(134,143)
(91,353)
Income tax (benefit) expense
(448)
179 
672 
308 
Net loss
$ (89,722)
$ (43,614)
$ (134,815)
$ (91,661)
Condensed Consolidated Statements of Comprehensive Loss (unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net loss
$ (89,722)
$ (43,614)
$ (134,815)
$ (91,661)
Other comprehensive loss, net of tax effects:
 
 
 
 
Foreign currency translation adjustment
40 
2,202 
2,801 
(8,376)
Total other comprehensive gain (loss)
40 
2,202 
2,801 
(8,376)
Comprehensive loss
$ (89,682)
$ (41,412)
$ (132,014)
$ (100,037)
Condensed Consolidated Statements of Cash Flows (unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Cash flows from operating activities:
 
 
Net loss
$ (134,815)
$ (91,661)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
Amortization of subscriber acquisition costs
65,975 
41,187 
Amortization of customer relationships
54,073 
62,934 
Depreciation and amortization of other intangible assets
12,533 
13,013 
Amortization of deferred financing costs
5,243 
4,793 
Non-cash gain on settlement of Merger-related escrow
0 
(12,200)
Gain on sale or disposal of assets
70 
6 
Loss on early extinguishment of debt
9,933 
0 
Stock-based compensation
2,830 
1,759 
Provision for doubtful accounts
7,717 
7,096 
Deferred income taxes
487 
216 
Restructuring and asset impairment charges
(680)
0 
Changes in operating assets and liabilities:
 
 
Accounts receivable
(8,461)
(5,994)
Inventories
(62,785)
(21,898)
Prepaid expenses and other current assets
(6,144)
(3,954)
Subscriber acquisition costs – deferred contract costs
(214,594)
(177,071)
Other assets
265 
0 
Accounts payable
54,403 
47,943 
Accrued expenses and other current liabilities
29,270 
35,198 
Restructuring liability
(1,618)
0 
Deferred revenue
14,725 
8,943 
Net cash used in operating activities
(171,573)
(89,690)
Cash flows from investing activities:
 
 
Subscriber acquisition costs – company owned equipment
(1,791)
(15,566)
Capital expenditures
(4,526)
(18,064)
Proceeds from the sale of capital assets
1,925 
408 
Acquisition of intangible assets
(505)
(1,002)
Change in restricted cash
0 
2,984 
Acquisition of other assets
0 
(67)
Net cash used in investing activities
(4,897)
(31,307)
Cash flows from financing activities:
 
 
Proceeds from notes payable
500,000 
0 
Repayment of notes payable
(235,535)
0 
Borrowings from revolving credit facility
57,000 
149,000 
Repayments on revolving credit facility
(77,000)
(10,000)
Proceeds from capital contribution
69,800 
0 
Repayments of capital lease obligations
(3,956)
(4,047)
Financing costs
(8,274)
0 
Deferred financing costs
(6,277)
(4,233)
Net cash provided by financing activities
295,758 
130,720 
Effect of exchange rate changes on cash
(441)
(577)
Net increase in cash and cash equivalents
118,847 
9,146 
Cash and cash equivalents:
 
 
Beginning of period
2,559 
10,807 
End of period
121,406 
19,953 
Supplemental non-cash investing and financing activities:
 
 
Capital lease additions
2,199 
2,768 
Capital expenditures included within accounts payable and accrued expenses and other current liabilities
997 
466 
Subscriber acquisition costs - company owned assets included within accounts payable and accrued expenses and other current liabilities
1,641 
1,155 
Financing costs included within accounts payable and accrued expenses and other current liabilities
$ 613 
$ 0 
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim Financial Statements —The accompanying interim unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared by APX Group Holdings, Inc. and subsidiaries (the “Company”) without audit. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The information as of December 31, 2015 included in the unaudited condensed consolidated balance sheets was derived from the Company’s audited consolidated financial statements. The unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which are considered of normal recurring nature) considered necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods and dates presented. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.
These unaudited condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and related notes as set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission (“SEC”) on March 10, 2016, which is available on the SEC’s website at www.sec.gov.
Basis of Presentation —The unaudited condensed consolidated financial statements of the Company are presented for APX Group Holdings, Inc. (“Holdings") and its wholly-owned subsidiaries. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to 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 six months ended June 30, 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 six months ended June 30, 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 unaudited condensed consolidated financial statements for the six months ended June 30, 2015.
Change in Accounting Estimate —Effective as of the beginning of the second quarter of 2016, the Company updated the estimated life of its subscriber relationships and the period used to amortize deferred activation fees and deferred subscriber acquisition costs, to better approximate the related anticipated life of the customer. 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 effect of this change in estimate was to increase activation fee revenues for both the three and six months ended June 30, 2016 by $0.5 million and increase depreciation and amortization for both the three and six months ended June 30, 2016 by $7.6 million, resulting in an increase to loss from operations for both the three and six months ended June 30, 2016 of $7.1 million and an increase to net loss for both the three and six months ended June 30, 2016 of $6.9 million.
All pertinent factors, including actual customer attrition data, demand, competition, and the estimated technological life of the installed equipment, will continue to be reviewed by the Company, to assess the continued appropriateness of methods and estimated subscriber relationship period.
Restructuring and Asset Impairment Charges —Restructuring and asset impairment charges represent expenses incurred in connection with the transition of the Company’s wireless internet business from a 5Ghz to a 60Ghz-based network technology (the “Wireless Restructuring”) that occurred during the three months ended September 30, 2015 (See Note 13). These expenses consist of asset impairments, the costs of employee severance, and other contract termination charges. A liability for costs associated with the Wireless Restructuring is measured at its fair value when the liability is incurred. Expenses for one-time termination benefits were recognized at the date the Company notified the employee, unless the employee was required to provide future service, in which case the benefits were 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.
Use of Estimates —The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates.
Changes in Presentation of Comparative Financial Statements —Certain reclassifications have been made to the Company's prior period condensed consolidated financial information in order to conform to the current period presentation. These changes did not have a significant impact on the condensed 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 equipment package 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. 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 condensed 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.
Capital Contribution— On April 25, 2016, APX Parent Holdco, Inc. (“Parent”), the parent company of the Company, completed the issuance and sale to certain investors of a series of preferred stock in a private placement exempt from registration under the Securities Act. On April 29, 2016, Parent contributed the net proceeds of $69.8 million from such issuance and sale to the Company as an equity contribution.
Cash and Cash Equivalents— Cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Restricted Cash and Cash Equivalents —Restricted cash and cash equivalents is restricted for a specific purpose and cannot be included in the general cash account. Restricted cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less. As of June 30, 2016 and December 31, 2015 the Company had no restricted cash.
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 $3.1 million and $3.5 million at June 30, 2016 and December 31, 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 June 30, 2016 and December 31, 2015, no accounts receivable were classified as held for sale. Provision for doubtful accounts is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
The changes in the Company’s allowance for accounts receivable were as follows for the periods ended (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Beginning balance
$
3,022

 
$
2,908

 
$
3,541

 
$
3,373

Provision for doubtful accounts
3,736

 
3,538

 
7,717

 
7,096

Write-offs and adjustments
(3,661
)
 
(3,203
)
 
(8,161
)
 
(7,226
)
Balance at end of period
$
3,097

 
$
3,243

 
$
3,097

 
$
3,243


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 records an allowance for excess and obsolete inventory 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 two to ten 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. 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.
During the fiscal quarter ended March 31, 2016, the Company adopted guidance issued by the Financial Accounting Standards Board ("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 fiscal quarter ended June 30, 2016.
Long-term Investments —The Company’s long-term investments are comprised of cost based investments in other companies (See Note 3). The Company performs impairment analyses of its cost based investments annually, as of October 1, or more often 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 June 30, 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 Group, Inc.’s (“APX”) revolving credit facility will be amortized over the amended maturity dates discussed in Note 2. 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 unaudited condensed consolidated balance sheets within deferred financing costs, net and notes payable, net at June 30, 2016 and December 31, 2015 were $46.9 million and $46.7 million, net of accumulated amortization of $36.5 million and $30.9 million, respectively. Amortization expense on deferred financing costs recognized and included in interest expense in the accompanying unaudited condensed consolidated statements of operations, totaled $2.8 million for both the three months ended June 30, 2016 and 2015, respectively and $5.6 million and $5.3 million for the six months ended June 30, 2016 and 2015, respectively (See Note 2).
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 $1.0 million and $0.8 million at June 30, 2016 and December 31, 2015, respectively, and the amount included in other long-term obligations was $5.4 and $4.3 million at June 30, 2016 and December 31, 2015, respectively, representing the present value of the estimated amounts owed to third-party sales channel partners.
Stock-Based Compensation —The Company measures compensation costs based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards (See Note 9).
Advertising Expense —Advertising costs are expensed as incurred. Advertising costs were $8.5 million and $6.2 million for the three months ended June 30, 2016 and 2015, respectively and $17.0 million and $11.5 million for the six months ended June 30, 2016 and 2015, 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.
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 June 30, 2016, approximately 50% of the Company’s installed panels were 2GIG Go!Control panels and 50% were SkyControl 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 six months ended June 30, 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. As of June 30, 2016, no indicators of impairment existed.
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 income (loss) 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 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 condensed consolidated statement of operations. Translation gains related to intercompany balances were $0.2 million and $0 for the three months ended June 30, 2016 and 2015, respectively and $4.9 million and $0 for the six months ended June 30, 2016 and 2015, respectively.
Letters of Credit —As of June 30, 2016 and December 31, 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 Pronouncements —In May 2014, the FASB originally issued Accounting Standard Update ("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. 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 is evaluating all new Topic 606 guidance and plans to provide additional information about its expected impact at a future date.

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 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, allows a company to value equity investments without a readily determined fair value at cost, less any impairments, and simplifies 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 at a future date.
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 $925.0 million aggregate principal amount of 6.375% senior secured notes due 2019 (the “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% senior notes due 2020 (the “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, the Company 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%.
During 2014, APX issued an additional $100.0 million of 2020 notes at a price of 102.00%.

In October 2015, APX issued $300.0 million aggregate principal amount of 8.875% senior secured notes due 2022 (the “2022 private placement notes”), pursuant to a note purchase agreement dated as of October 19, 2015 in a private placement exempt from registration under the U.S. Securities Act of 1933, as amended (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% senior secured notes due 2022 (the “2022 notes” and, together with the 2019 notes, the 2020 notes and the 2022 private placement notes, the “notes”), 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 offering 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 accordance with ASC 470-50 Debt – Modifications and Extinguishments, the Company performed an analysis on a creditor-by-creditor basis to determine if the debt instruments were substantially different. As a result of this analysis, during the three and six months ended June 30, 2016, the Company recorded $9.9 million of other expense and loss on extinguishment, consisting of $1.1 million of original issue discount and deferred financing costs associated with the 2019 notes and 2022 private placement notes, and $8.9 million of the $15.4 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 six months ended June 30, 2016 (in thousands):
 
Unamortized Deferred Financing Costs
 
Balance 12/31/2015
 
Additions
 
Rolled Over
 
Early Extinguishment
 
Amortized
 
Balance 6/30/2016
Revolving Credit Facility
$
6,456

 
$
—

 
$
—

 
$
—

 
$
(1,022
)
 
$
5,434

6.375% Senior Secured
Notes due 2019
20,182

 
—

 
(3,423
)
 
(585
)
 
(2,477
)
 
13,697

8.75% Senior Notes due
2020
18,892

 
—

 
—

 
—

 
(1,919
)
 
16,973

8.875% Senior Secured
Notes Due 2022
1,170

 
—

 
—

 
(110
)
 
(82
)
 
978

7.875% Senior Secured
Notes Due 2022
—

 
6,526

 
3,423

 
—

 
(128
)
 
9,821

Total Deferred Financing Costs
$
46,700

 
$
6,526

 
$
—

 
$
(695
)
 
$
(5,628
)
 
$
46,903



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. In addition, APX may request one or more term loan facilities, increased commitments under the revolving credit facility or new revolving credit commitments, in an aggregate amount not to exceed $225.0 million. Availability of such incremental facilities and/or increased or new commitments will be subject to certain customary conditions.
On June 28, 2013, APX amended and restated the credit agreement to provide for a new repriced tranche of revolving credit commitments with a lower interest rate. Nearly all of the existing tranches of revolving credit commitments was terminated and converted into the repriced tranche, with the unterminated portion of the existing tranche continuing to accrue interest at the original rate.

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. 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.
The Company’s debt at June 30, 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

 
$
—

 
$
(13,697
)
 
$
705,768

8.75% Senior Notes due 2020
930,000

 
6,478

 
(16,973
)
 
919,505

8.875% Senior Secured Notes Due 2022
270,000

 
(3,154
)
 
(978
)
 
265,868

7.875% Senior Secured Notes Due 2022
500,000

 
—

 
(9,821
)
 
490,179

Total Long-Term Debt
$
2,419,465

 
$
3,324

 
$
(41,469
)
 
$
2,381,320


The Company’s debt at December 31, 2015 consisted of the following (in thousands):
 
 
Outstanding
Principal
 
Unamortized
Premium (Discount)
 
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 Long-Term Debt
$
2,175,000

 
$
3,356

 
$
(40,244
)
 
$
2,138,112

Cost Based Investments
Cost Based Investments
COST BASED INVESTMENTS
During the year ended December 31, 2014, the Company entered into a project agreement with a privately-held company (the “Investee”), whereby the Investee will develop technology for the Company. The Company is not required to make any payments to the Investee for developing the above technology, however, the Company is required to pay the Investee a royalty for any sales of product that include the technology once developed. In connection with the project agreement, the Company also entered into an investment agreement with the Investee, whereby the Company will purchase up to a predetermined number of shares of the Investee. The amount of the investment by the Company in the Investee was $0.3 million as of June 30, 2016. The Company could make up to $1.6 million in additional investments in the Investee, subject to the achievement of certain technology development milestones. The Company has determined that the arrangement with the Investee constitutes a variable interest. The Company is not required to consolidate the results of the Investee as the Company is not the primary beneficiary.

On February 19, 2014, the Company invested $3.0 million in preferred stock of a privately held company not affiliated with the Company.
Balance Sheet Components
Balance Sheet Components
BALANCE SHEET COMPONENTS
The following table presents material balance sheet component balances (in thousands):

 
June 30, 2016
 
December 31, 2015
Subscriber acquisition costs
 
 
 
Subscriber acquisition costs
$
1,180,390

 
$
958,261

Accumulated amortization
(234,539
)
 
(167,617
)
Subscriber acquisition costs, net
$
945,851

 
$
790,644

Accrued payroll and commissions
 
 
 
Accrued commissions
49,213

 
20,176

Accrued payroll
21,328

 
18,071

Total accrued payroll and commissions
$
70,541

 
$
38,247

Accrued expenses and other current liabilities
 
 
 
Accrued interest payable
$
16,520

 
$
17,153

Accrued payroll taxes and withholdings
3,543

 
3,938

Accrued taxes
3,396

 
2,683

Wireless restructuring costs
2,570

 
4,275

Loss contingencies
2,545

 
2,504

Other
8,042

 
5,020

Total accrued expenses and other current liabilities
$
36,616

 
$
35,573

Property and Equipment
Property and Equipment
PROPERTY AND EQUIPMENT
Property and equipment consisted of the following (in thousands):
 
 
June 30, 2016
 
December 31, 2015
 
Estimated Useful
Lives
Vehicles
$
27,296

 
$
26,935

 
3 - 5 years
Computer equipment and software
25,047

 
21,702

 
3 - 5 years
Leasehold improvements
17,714

 
17,434

 
2 - 15 years
Office furniture, fixtures and equipment
13,046

 
11,776

 
7 years
Buildings
702

 
702

 
39 years
Construction in process
4,425

 
3,837

 
 
Property and equipment, gross
88,230

 
82,386

 
 
Accumulated depreciation and amortization
(34,168
)
 
(27,112
)
 
 
Property and equipment, net
$
54,062

 
$
55,274

 
 


Property and equipment includes approximately $19.1 million and $20.4 million of assets under capital lease obligations at June 30, 2016 at December 31, 2015, respectively net of accumulated amortization of $8.8 million and $7.0 million at June 30, 2016 and December 31, 2015, respectively. Depreciation and amortization expense on all property and equipment was $4.1 million and $4.4 million for the three months ended June 30, 2016 and 2015, respectively and 8.1 million and 8.1 million for the six months ended June 30, 2016 and 2015, respectively. Amortization expense relates to assets under capital leases and is included in depreciation and amortization expense.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
GOODWILL AND INTANGIBLE ASSETS
Goodwill
As of June 30, 2016 and December 31, 2015, the Company had a goodwill balance of $836.1 million and $834.4 million, respectively. The change in the carrying amount of goodwill during the six months ended June 30, 2016 was the result of foreign currency translation adjustments.
Intangible assets, net
The following table presents intangible asset balances (in thousands):
 
 
June 30, 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
$
967,741

 
$
(487,169
)
 
$
480,572

 
$
962,842

 
$
(430,803
)
 
$
532,039

 
10 years
2GIG 2.0 technology
17,000

 
(8,772
)
 
8,228

 
17,000

 
(7,064
)
 
9,936

 
8 years
Other technology
7,067

 
(4,262
)
 
2,805

 
7,067

 
(3,438
)
 
3,629

 
5 years
Space Monkey technology
7,100

 
(1,515
)
 
5,585

 
7,100

 
(761
)
 
6,339

 
6 years
Patents
8,143

 
(2,910
)
 
5,233

 
7,524

 
(2,094
)
 
5,430

 
5 years
Non-compete agreements
1,200

 
(1,100
)
 
100

 
1,200

 
(800
)
 
400

 
2-3 years
Total definite-lived intangible assets:
$
1,008,251

 
$
(505,728
)
 
$
502,523

 
$
1,002,733

 
$
(444,960
)
 
$
557,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
IP addresses
$
564

 
$
—

 
$
564

 
$
564

 
$
—

 
$
564

 
 
Domain names
59

 
—

 
59

 
58

 
—

 
58

 
 
Total Indefinite-lived intangible assets
623

 
—

 
623

 
622

 
—

 
622

 
 
Total intangible assets, net
$
1,008,874

 
$
(505,728
)
 
$
503,146

 
$
1,003,355

 
$
(444,960
)
 
$
558,395

 
 


The Company recognized amortization expense related to the capitalized software development costs of $0.3 million during each of the three months ended June 30, 2016 and 2015 and $0.6 million during each of the six months ended June 30, 2016 and 2015. Amortization expense related to intangible assets was approximately $29.3 million and $33.9 million for the three months ended June 30, 2016 and 2015, respectively and $58.5 million and $67.9 million during the six months ended June 30, 2016 and 2015, respectively.
Estimated future amortization expense of intangible assets, excluding approximately $0.3 million in patents currently in process, is as follows as of June 30, 2016 (in thousands):
 
 
 
2016 - Remaining Period
$
58,289

2017
101,423

2018
89,834

2019
78,177

2020
67,396

Thereafter
107,082

Total estimated amortization expense
$
502,201

Fair Value Measurements
Fair Value Measurements
FAIR VALUE MEASUREMENTS
Cash equivalents and restricted cash equivalents are classified as Level 1 as they have readily available market prices in an active market. As of June 30, 2016 the Company held $110.0 million of Money market funds 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 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 are as follows (in thousands, except interest rates):
 
 
June 30, 2016
 
December 31, 2015
 
Stated Interest Rate
Issuance
 
Face Value
 
Estimated Fair Value
 
Face Value
 
Estimated Fair Value
 
2019 Notes
 
$
719,465

 
$
715,868

 
$
925,000

 
$
879,906

 
6.375
%
2020 Notes
 
930,000

 
843,696

 
930,000

 
756,788

 
8.75
%
2022 Private Placement Notes
 
270,000

 
272,351

 
300,000

 
296,296

 
8.875
%
2022 Notes
 
500,000

 
500,000

 
—

 
—

 
7.875
%
Total
 
$
2,419,465

 
$
2,331,915

 
$
2,155,000

 
$
1,932,990

 
 

The fair values of the 2019 notes, the 2020 notes, the 2022 private placement notes and the 2022 notes were considered Level 2 measurements as the values were determined using observable market inputs, such as current interest rates, prices observable from less active markets, as well as prices observable from comparable securities.
Income Taxes
Income Taxes
INCOME TAXES
In order to determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
The Company’s effective income tax rate for the six months ended June 30, 2016 was approximately negative 0.52%. In computing income tax expense, the Company estimates its annual effective income tax rate jurisdiction by jurisdiction and entity by entity for which tax attributes must be separately considered for the calendar year ending December 31, 2015, excluding discrete items. Each jurisdictional or entity estimated annual tax rate is applied to actual year-to-date pre-tax book income (loss) of each jurisdiction or entity. Income tax expense for the six months ended June 30, 2016 was affected by discrete items resulting from the finalization of an audit by Revenue Canada of the 2008 and 2009 tax years; prior year return to provision true-ups on the Canadian tax return; and a change to the tax rate at which the Canadian net deferred tax liabilities are expected to reverse. Both the 2016 and 2015 effective tax rates are less than the statutory rate primarily due to the combination of not recognizing benefit for expected pre-tax losses of the US jurisdiction and recognizing current state income tax expense for minimum state taxes.
For 2016, the Company expects to realize a loss before income taxes and expects to record a full valuation allowance against the net deferred tax assets of the consolidated group within the US, Canadian and New Zealand jurisdictions. The Company has recorded tax expense for state and local taxes. A valuation allowance is required when there is significant uncertainty as to the ability to realize the deferred tax assets. Because the realization of the deferred tax assets related to the Company’s net operating losses (NOLs) is dependent upon future income related to domestic and foreign jurisdictional operations that have historically generated losses, management determined that the Company continues to not meet the “more likely than not” threshold that those NOLs will be realized. Accordingly, a valuation allowance is required. A similar history of losses is present in the Company’s Canadian and New Zealand jurisdictions. However, as of June 30, 2016, the deferred tax assets related to the Company’s Canadian and New Zealand jurisdictions’ NOLs are offset by existing deferred income tax liabilities resulting in a net deferred tax liability position in both jurisdictions.
Stock-Based Compensation
Stock-Based Compensation
STOCK-BASED COMPENSATION
313 Incentive Units
The Company’s indirect parent, 313 Acquisition LLC (“313”), which is owned by Blackstone, 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 June 30, 2016, 73,562,836 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 outstanding 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 65%; expected exercise term between 3.96 and 6.21 years; and risk-free rates between 0.62% and 2.03%.

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, pursuant to an omnibus incentive plan. 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, 17,260,184 SARs were outstanding as of June 30, 2016. In addition, 53,621,143 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 75%, expected dividends of 0%; expected exercise term between 1.91 and 6.50 years; and risk-free rates between 0.65% and 1.81%. 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.
Wireless Stock Appreciation Rights
The Company’s subsidiary, Vivint Wireless, has awarded SARs to various key employees, pursuant to an omnibus incentive plan. 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 June 30, 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 6.0 and 6.5 years; and risk-free rates between 1.51% and 1.81%. 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.
Stock-based compensation expense in connection with all stock-based awards is presented as follows (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Operating expenses
$
14

 
$
26

 
$
31

 
$
40

Selling expenses
43

 
357

 
(239
)
 
389

General and administrative expenses
2,691

 
588

 
3,038

 
1,330

Total stock-based compensation
$
2,748

 
$
971

 
$
2,830

 
$
1,759



Stock-based compensation expense presented in selling expenses was negative for the six months ended June 30, 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 both the three and six months ended June 30, 2016 included $2.2 million of compensation related to an equity repurchase by 313 from one of the Company's executives.
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 $2.5 million and $2.5 million as of June 30, 2016 and December 31, 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, 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
 
Rent Expense
 
 
For the three months ended,
 
For the six months ended,
 
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Lease Term
Arrangement
 
 
 
 
 
 
 
 
Warehouse, office space and other
$
2,781

 
$
2,915

 
$
5,593

 
$
5,838

11 - 15 years
Wireless towers and spectrum
1,205

 
819

 
2,367

 
1,482

1 - 10 years
Total Rent Expense
$
3,986

 
$
3,734

 
$
7,960

 
$
7,320

 

Capital Leases —The Company also enters into certain capital leases with expiration dates through July 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 20 months as of June 30, 2016. As of June 30, 2016 and December 31, 2015, the capital lease obligation balance was $16.6 million and $18.8 million, respectively.
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 three months ended June 30, 2016 and 2015, the Company charged $1.4 and $1.8 million, respectively, and during the six months ended June 30, 2016 and 2015 the Company charged $2.8 and $3.5 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 $0.5 million and $1.9 million at June 30, 2016 and December 31, 2015, respectively, and is included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.
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.
Other Related-party Transactions
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 June 30, 2016 and December 31, 2015, amounted to approximately $0.3 million. As of June 30, 2016 and December 31, 2015, this amount was fully reserved.
Prepaid expenses and other current assets at June 30, 2016 and December 31, 2015 included a receivable for $0.2 million and $0.2 million, respectively, from certain members of management in regards to their personal use of the corporate jet.
The Company incurred additional expenses during the three months ended June 30, 2016 and 2015, respectively, of $0.6 million and $0.4 million, and $1.2 million and $0.8 million during the six months ended June 30, 2016 and 2015, respectively, for other related-party transactions including contributions to the charitable organization Vivint Gives Back, legal fees, and services. Accrued expenses and other current liabilities at June 30, 2016 and December 31, 2015, included a payable to Vivint Gives Back for $1.3 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”). In connection with the Merger, the Company engaged Blackstone Management Partners L.L.C. (“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 $1.1 million and $0.7 million during the three months ended June 30, 2016 and 2015, and approximately $1.9 million and $1.4 million during the six months ended June 30, 2016 and 2015. Accounts payable at June 30, 2016 included a liability for $0.8 million to BMP in regards to the payment of the 2016 base monitoring fee during the quarter ended March 31, 2016.
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 three months ended June 30, 2016 and 2015 the Company incurred no costs associated with such services.
Blackstone Advisory Partners L.P. participated as one of the initial purchasers of the 2022 notes and received approximately $0.4 million in fees at the time of closing.
On May 2, 2016, the Company and David Bywater, its 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 April 25, 2016, Parent completed the issuance and sale to certain investors of a series of preferred stock in a private placement exempt from registration under the Securities Act. On April 29, 2016, Parent contributed the net proceeds of $69.8 million from such issuance and sale to the Company as an equity contribution.

The company incurred stock-based compensation expense of $2.2 million included in general and administrative expenses for both the three and six months ended June 30, 2016 related to an equity repurchase by 313 from one of the Company's executives.
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.
Employee Benefit Plan
Employee Benefit Plan
EMPLOYEE BENEFIT PLAN
The Company offers eligible employees the opportunity to contribute a percentage of their earned income into company-sponsored 401(k) plans. No matching contributions were made to the plans for the three and six months ended June 30, 2016 and 2015.
Restructuring and Asset Impairment Charges
Restructuring and Asset Impairment Charges
RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
On September 21, 2015, the board of directors of the Company approved a plan to transition the Company’s wireless internet business from a 5Ghz to a 60Ghz-based network technology that provides higher data transmission speeds. The Company will continue to service its existing 5Ghz subscribers. As a result of this transition, the Company discontinued the build-out of additional 5Ghz networks and the installation of new 5Ghz customers. The Company expects the shift to the new technology will begin with a set of 60Ghz test installations in 2016.
Restructuring and asset impairment charges and recoveries for the three and six months ended June 30, 2016 were as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2016
Recoveries of impaired assets
$
(709
)
 
(710
)
Contract termination (recoveries) costs
(16
)
 
4

Employee severance and termination benefits
—

 
26

Total restructuring and asset impairment recoveries
$
(725
)
 
$
(680
)


The following table presents accrued restructuring activity for the six months ended June 30, 2016 (in thousands):

 
Asset Impairments
 
Contract
termination
costs
 
Employee severance
and termination
benefits
 
Total
Accrued restructuring balance as of December 31, 2015
$
—

 
$
3,954

 
$
321

 
$
4,275

Restructuring and impairment (recoveries) charges
(710
)
 
4

 
26

 
(680
)
Cash payments
—

 
(1,455
)
 
(163
)
 
(1,618
)
Non-cash settlements
710

 
(93
)
 
(24
)
 
593

Accrued restructuring balance as of June 30, 2016
$
—

 
$
2,410

 
$
160

 
$
2,570


The restructuring and impairment recoveries during the three and six months ended June 30, 2016 resulted primarily from a vendor settlement for amounts less than previously estimated. The Company did not have any restructuring and asset impairment charges during the three and six months ended June 30, 2015.
The unpaid portion of the restructuring charge is expected to be paid within 12 months and is recorded in accrued expenses and other current liabilities on the consolidated balance sheets as of June 30, 2016.
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.
Segment Reporting and Business Concentrations
Segment Reporting and Business Concentrations
SEGMENT REPORTING AND BUSINESS CONCENTRATIONS
For the three and six months ended June 30, 2016 and 2015, the Company conducted business through one operating segment, Vivint. The Company primarily operates in three geographic regions: United States, Canada and New Zealand. The operations in New Zealand are 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
Revenue from external customers
  
 
 
 
 
 
Three months ended June 30, 2016
  
$
171,255

 
$
9,552

 
$
180,807

Three months ended June 30, 2015
  
149,647

 
8,266

 
157,913

Six months ended June 30, 2016
 
337,161

 
17,899

 
355,060

Six months ended June 30, 2015
 
294,026

 
16,082

 
310,108

 
 
 
 
 
 
 
Property and equipment, net
 
 
 
 
 
 
As of June 30, 2016
  
$
53,971

 
$
91

 
$
54,062

As of December 31, 2015
  
55,103

 
171

 
55,274

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 2022 notes were issued by APX. The 2019 notes, 2020 notes, 2022 private placement notes and 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 condensed 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 June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015. The unaudited condensed consolidating financial information reflects the investments of APX in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries using the equity method of accounting.





Supplemental Condensed Consolidating Balance Sheet
June 30, 2016
(In thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$
—

 
$
115,259

 
$
180,815

 
$
7,088

 
$
(66,855
)
 
$
236,307

Property and equipment, net
—

 
—

 
53,888

 
174

 
—

 
54,062

Subscriber acquisition costs, net
—

 
—

 
865,629

 
80,222

 
—

 
945,851

Deferred financing costs, net
—

 
5,434

 
—

 
—

 
—

 
5,434

Investment in subsidiaries
—

 
2,141,534

 
—

 
—

 
(2,141,534
)
 
—

Intercompany receivable
—

 
—

 
15,777

 
—

 
(15,777
)
 
—

Intangible assets, net
—

 
—

 
465,578

 
37,568

 
—

 
503,146

Goodwill
—

 
—

 
809,678

 
26,451

 
—

 
836,129

Long-term investments and other assets
—

 
106

 
10,615

 
14

 
(106
)
 
10,629

Total Assets
$
—

 
$
2,262,333

 
$
2,401,980

 
$
151,517

 
$
(2,224,272
)
 
$
2,591,558

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
—

 
$
17,389

 
$
237,270

 
$
78,150

 
$
(66,855
)
 
$
265,954

Intercompany payable
—

 
—

 
—

 
15,777

 
(15,777
)
 
—

Notes payable and revolving credit facility, net of current portion
—

 
2,381,320

 
—

 
—

 
—

 
2,381,320

Capital lease obligations, net of current portion
—

 
—

 
8,533

 
1

 
—

 
8,534

Deferred revenue, net of current portion
—

 
—

 
47,511

 
4,720

 
—

 
52,231

Other long-term obligations
—

 
—

 
11,849

 
—

 
—

 
11,849

Accumulated losses of investee
136,376

 
 
 
 
 
 
 
(136,376
)
 
—

Deferred income tax liability
—

 
—

 
106

 
8,046

 
(106
)
 
8,046

Total (deficit) equity
(136,376
)
 
(136,376
)
 
2,096,711

 
44,823

 
(2,005,158
)
 
(136,376
)
Total liabilities and stockholders’ (deficit) equity
$
—

 
$
2,262,333

 
$
2,401,980

 
$
151,517

 
$
(2,224,272
)
 
$
2,591,558
















Supplemental 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 credit facility, 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











Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2016
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
171,315

 
$
10,168

 
$
(676
)
 
$
180,807

Costs and expenses
—

 
—

 
203,030

 
11,326

 
(676
)
 
213,680

Loss from operations
—

 
—

 
(31,715
)
 
(1,158
)
 
—

 
(32,873
)
Loss from subsidiaries
(89,722
)
 
(32,449
)
 
—

 
—

 
122,171

 
—

Other expense (income), net
—

 
57,273

 
236

 
(212
)
 
—

 
57,297

Loss before income tax expenses
(89,722
)
 
(89,722
)
 
(31,951
)
 
(946
)
 
122,171

 
(90,170
)
Income tax expense (benefit)
—

 
—

 
121

 
(569
)
 
—

 
(448
)
Net loss
$
(89,722
)
 
$
(89,722
)
 
$
(32,072
)
 
$
(377
)
 
$
122,171

 
$
(89,722
)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net loss
$
(89,722
)
 
$
(89,722
)
 
$
(32,072
)
 
$
(377
)
 
$
122,171

 
$
(89,722
)
Foreign currency translation adjustment
—

 
40

 
—

 
40

 
(40
)
 
40

Total other comprehensive income
—

 
40

 
—

 
40

 
(40
)
 
40

Comprehensive loss
$
(89,722
)
 
$
(89,682
)
 
$
(32,072
)
 
$
(337
)
 
$
122,131

 
$
(89,682
)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income
For the Three Months Ended June 30, 2015
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
149,770

 
$
8,823

 
$
(680
)
 
$
157,913

Costs and expenses
—

 
—

 
154,904

 
8,577

 
(680
)
 
162,801

(Loss) income from operations
—

 
—

 
(5,134
)
 
246

 
—

 
(4,888
)
Loss from subsidiaries
(43,614
)
 
(4,923
)
 
—

 
—

 
48,537

 
—

Other expense, net
—

 
38,691

 
(171
)
 
27

 
—

 
38,547

(Loss) income before income tax expenses
(43,614
)
 
(43,614
)
 
(4,963
)
 
219

 
48,537

 
(43,435
)
Income tax expense
—

 
—

 
53

 
126

 
—

 
179

Net (loss) income
$
(43,614
)
 
$
(43,614
)
 
$
(5,016
)
 
$
93

 
$
48,537

 
$
(43,614
)
Other comprehensive loss, net of tax effects:

 

 

 

 

 
—

Net (loss) income
$
(43,614
)
 
$
(43,614
)
 
$
(5,016
)
 
$
93

 
$
48,537

 
$
(43,614
)
Foreign currency translation adjustment
—

 
2,202

 
5,240

 
(3,038
)
 
(2,202
)
 
2,202

Total other comprehensive (loss) income
—

 
2,202

 
5,240

 
(3,038
)
 
(2,202
)
 
2,202

Comprehensive (loss) income
$
(43,614
)
 
$
(41,412
)
 
$
224

 
$
(2,945
)
 
$
46,335

 
$
(41,412
)



Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income
For the Six Months Ended June 30, 2016
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
337,256

 
$
19,155

 
$
(1,351
)
 
$
355,060

Costs and expenses
—

 
—

 
373,319

 
19,640

 
(1,351
)
 
391,608

Loss from operations
—

 
—

 
(36,063
)
 
(485
)
 
—

 
(36,548
)
Loss from subsidiaries
(134,815
)
 
(32,494
)
 
—

 
—

 
167,309

 
—

Other expense (income), net
—

 
102,321

 
(1,428
)
 
(3,298
)
 
—

 
97,595

(Loss) income before income tax expenses
(134,815
)
 
(134,815
)
 
(34,635
)
 
2,813

 
167,309

 
(134,143
)
Income tax expense
—

 
—

 
185

 
487

 
—

 
672

Net (loss) income
$
(134,815
)
 
$
(134,815
)
 
$
(34,820
)
 
$
2,326

 
$
167,309

 
$
(134,815
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
—

Net (loss) income
$
(134,815
)
 
$
(134,815
)
 
$
(34,820
)
 
$
2,326

 
$
167,309

 
$
(134,815
)
Foreign currency translation adjustment
—

 
2,801

 
—

 
2,801

 
(2,801
)
 
2,801

Total other comprehensive loss
—

 
2,801

 
—

 
2,801

 
(2,801
)
 
2,801

Comprehensive (loss) income
$
(134,815
)
 
$
(132,014
)
 
$
(34,820
)
 
$
5,127

 
$
164,508

 
$
(132,014
)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income
For the Six Months Ended June 30, 2015
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
294,505

 
$
17,053

 
$
(1,450
)
 
$
310,108

Costs and expenses
—

 
—

 
309,804

 
16,343

 
(1,450
)
 
324,697

(Loss) income from operations
—

 
—

 
(15,299
)
 
710

 
—

 
(14,589
)
Loss from subsidiaries
(91,661
)
 
(15,016
)
 
—

 
—

 
106,677

 
—

Other expense, net
—

 
76,645

 
76

 
43

 
—

 
76,764

(Loss) income before income tax expenses
(91,661
)
 
(91,661
)
 
(15,375
)
 
667

 
106,677

 
(91,353
)
Income tax expense
—

 
—

 
92

 
216

 
—

 
308

Net (loss) income
$
(91,661
)
 
$
(91,661
)
 
$
(15,467
)
 
$
451

 
$
106,677

 
$
(91,661
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
$
(91,661
)
 
$
(91,661
)
 
$
(15,467
)
 
$
451

 
$
106,677

 
$
(91,661
)
Foreign currency translation adjustment
—

 
(8,376
)
 
(1,096
)
 
(7,280
)
 
8,376

 
(8,376
)
Total other comprehensive loss
—

 
(8,376
)
 
(1,096
)
 
(7,280
)
 
8,376

 
(8,376
)
Comprehensive loss
$
(91,661
)
 
$
(100,037
)
 
$
(16,563
)
 
$
(6,829
)
 
$
115,053

 
$
(100,037
)



Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2016
(In thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
—

 
$
—

 
$
(176,661
)
 
$
5,088

 
$
—

 
$
(171,573
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment
—

 
—

 
(1,791
)
 
—

 
—

 
(1,791
)
Capital expenditures
—

 
—

 
(4,526
)
 
—

 
—

 
(4,526
)
Proceeds from sale of assets
—

 
—

 
1,925

 
—

 
—

 
1,925

Investment in subsidiary
(69,800
)
 
(187,004
)
 
—

 
—

 
256,804

 
—

Acquisition of intangible assets
—

 
—

 
(505
)
 
—

 
—

 
(505
)
Net cash used in investing activities
(69,800
)
 
(187,004
)
 
(4,897
)
 
—

 
256,804

 
(4,897
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable
—

 
500,000

 
—

 
—

 
—

 
500,000

Repayment on notes payable
—

 
(235,535
)
 
—

 
—

 
—

 
(235,535
)
Borrowings from revolving credit facility
—

 
57,000

 
—

 
—

 
—

 
57,000

Repayments on revolving credit facility
—

 
(77,000
)
 
—

 
—

 
—

 
(77,000
)
Proceeds from capital contribution
69,800

 
69,800

 
—

 
—

 
(69,800
)
 
69,800

Intercompany receivable
—

 
—

 
6,621

 
—

 
(6,621
)
 
—

Intercompany payable
—

 
—

 
187,004

 
(6,621
)
 
(180,383
)
 
—

Repayments of capital lease obligations
—

 
—

 
(3,955
)
 
(1
)
 
—

 
(3,956
)
Financing costs
—

 
(8,274
)
 
—

 
—

 
—

 
(8,274
)
Deferred financing costs
—

 
(6,277
)
 
—

 
—

 
—

 
(6,277
)
Net cash provided by (used in) financing activities
69,800

 
299,714

 
189,670

 
(6,622
)
 
(256,804
)
 
295,758

Effect of exchange rate changes on cash
—

 
—

 
—

 
(441
)
 
—

 
(441
)
Net increase (decrease) in cash and cash equivalents
—

 
112,710

 
8,112

 
(1,975
)
 
—

 
118,847

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
2,299

 
(1,941
)
 
2,201

 
—

 
2,559

End of period
$
—

 
$
115,009

 
$
6,171

 
$
226

 
$
—

 
$
121,406




Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2015
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
—

 
$
(538
)
 
$
(98,773
)
 
$
9,621

 
$
—

 
$
(89,690
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment
—

 
—

 
(14,922
)
 
(644
)
 
—

 
(15,566
)
Capital expenditures
—

 
—

 
(18,023
)
 
(41
)
 
—

 
(18,064
)
Investment in subsidiary
—

 
(140,640
)
 
—

 
—

 
140,640

 
—

Acquisition of intangible assets
—

 
—

 
(1,002
)
 
—

 
—

 
(1,002
)
Proceeds from sale of assets
—

 
—

 
408

 
—

 
—

 
408

Proceeds from insurance claims
—

 
—

 
2,984

 
—

 
—

 
2,984

Acquisition of other assets
—

 
—

 
(67
)
 
—

 
—

 
(67
)
Net cash used in investing activities
—

 
(140,640
)
 
(30,622
)
 
(685
)
 
140,640

 
(31,307
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Borrowings from revolving credit facility
—

 
149,000

 
—

 
—

 
—

 
149,000

Repayments on revolving credit facility
—

 
(10,000
)
 
—

 
—

 
—

 
(10,000
)
Intercompany receivable
—

 
—

 
(8,423
)
 
—

 
8,423

 
—

Intercompany payable
—

 
—

 
140,640

 
8,423

 
(149,063
)
 
—

Repayments of capital lease obligations
—

 
—

 
(4,045
)
 
(2
)
 
—

 
(4,047
)
Deferred financing costs
—

 
(4,233
)
 
—

 
—

 
—

 
(4,233
)
Net cash (used in) provided by financing activities
—

 
134,767

 
128,172

 
8,421

 
(140,640
)
 
130,720

Effect of exchange rate changes on cash
—

 
—

 
—

 
(577
)
 
—

 
(577
)
Net (decrease) increase in cash and cash equivalents
—

 
(6,411
)
 
(1,223
)
 
16,780

 
—

 
9,146

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
9,432

 
(2,233
)
 
3,608

 
—

 
10,807

End of period
$
—

 
$
3,021

 
$
(3,456
)
 
$
20,388

 
$
—

 
$
19,953

Subsequent Events
Subsequent Events
SUBSEQUENT EVENTS

In July 2016, Parent completed the final issuance and sale of shares of preferred stock in a private placement exempt from registration under the Securities Act. Parent contributed the net proceeds of $30.6 million from such issuance and sale to the Company in August 2016 as an equity contribution. This offering was the final installment of an issuance and sale of Parent’s preferred stock to certain investors and to certain co-investors that was originally announced in April 2016.
Basis of Presentation and Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation —The unaudited condensed consolidated financial statements of the Company are presented for APX Group Holdings, Inc. (“Holdings") and its wholly-owned subsidiaries. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to 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 six months ended June 30, 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 six months ended June 30, 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 unaudited condensed consolidated financial statements for the six months ended June 30, 2015.
Change In Accounting Estimate 
Change in Accounting Estimate —Effective as of the beginning of the second quarter of 2016, the Company updated the estimated life of its subscriber relationships and the period used to amortize deferred activation fees and deferred subscriber acquisition costs, to better approximate the related anticipated life of the customer. 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 effect of this change in estimate was to increase activation fee revenues for both the three and six months ended June 30, 2016 by $0.5 million and increase depreciation and amortization for both the three and six months ended June 30, 2016 by $7.6 million, resulting in an increase to loss from operations for both the three and six months ended June 30, 2016 of $7.1 million and an increase to net loss for both the three and six months ended June 30, 2016 of $6.9 million.
All pertinent factors, including actual customer attrition data, demand, competition, and the estimated technological life of the installed equipment, will continue to be reviewed by the Company, to assess the continued appropriateness of methods and estimated subscriber relationship period.
Restructuring and Asset Impairment Charges 
Restructuring and Asset Impairment Charges —Restructuring and asset impairment charges represent expenses incurred in connection with the transition of the Company’s wireless internet business from a 5Ghz to a 60Ghz-based network technology (the “Wireless Restructuring”) that occurred during the three months ended September 30, 2015 (See Note 13). These expenses consist of asset impairments, the costs of employee severance, and other contract termination charges. A liability for costs associated with the Wireless Restructuring is measured at its fair value when the liability is incurred. Expenses for one-time termination benefits were recognized at the date the Company notified the employee, unless the employee was required to provide future service, in which case the benefits were 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.
Use of Estimates 
Use of Estimates —The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates.
Changes in Presentation of Comparative Financial Statements 
Changes in Presentation of Comparative Financial Statements —Certain reclassifications have been made to the Company's prior period condensed consolidated financial information in order to conform to the current period presentation. These changes did not have a significant impact on the condensed consolidated financial statements.
Revenue Recognition 
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 equipment package 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. 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 —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 condensed 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— Cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Restricted Cash and Cash Equivalents 
Restricted Cash and Cash Equivalents —Restricted cash and cash equivalents is restricted for a specific purpose and cannot be included in the general cash account. Restricted cash and cash equivalents consists of highly liquid investments with remaining maturities when purchased of three months or less.
Accounts Receivable 
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 $3.1 million and $3.5 million at June 30, 2016 and December 31, 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 June 30, 2016 and December 31, 2015, no accounts receivable were classified as held for sale. Provision for doubtful accounts is included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
Inventories 
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 records an allowance for excess and obsolete inventory based on anticipated obsolescence, usage and historical write-offs.
Long-lived Assets and Intangibles 
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 two to ten 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. 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.
During the fiscal quarter ended March 31, 2016, the Company adopted guidance issued by the Financial Accounting Standards Board ("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.
Long-term Investments 
Long-term Investments —The Company’s long-term investments are comprised of cost based investments in other companies (See Note 3). The Company performs impairment analyses of its cost based investments annually, as of October 1, or more often 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 June 30, 2016, no indicators of impairment existed associated with these cost based investments.
Deferred Financing Costs 
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 Group, Inc.’s (“APX”) revolving credit facility will be amortized over the amended maturity dates discussed in Note 2. 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.
Residual Income Plan 
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 
Stock-Based Compensation —The Company measures compensation costs based on the grant-date fair value of the award and recognizes that cost over the requisite service period of the awards (See Note 9).
Advertising Expense 
Advertising Expense —Advertising costs are expensed as incurred.
Income Taxes 
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.
Concentrations of Credit Risk 
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 
Concentrations of Supply Risk —As of June 30, 2016, approximately 50% of the Company’s installed panels were 2GIG Go!Control panels and 50% were SkyControl 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 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 six months ended June 30, 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 
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. As of June 30, 2016, no indicators of impairment existed.
Foreign Currency Translation and Other Comprehensive Income 
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 income (loss) 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 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 condensed consolidated statement of operations.
Letters of Credit 
Letters of Credit —As of June 30, 2016 and December 31, 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 Pronouncements 
New Accounting Pronouncements —In May 2014, the FASB originally issued Accounting Standard Update ("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. 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 is evaluating all new Topic 606 guidance and plans to provide additional information about its expected impact at a future date.

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 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, allows a company to value equity investments without a readily determined fair value at cost, less any impairments, and simplifies 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 at a future date.
Basis of Presentation and Significant Accounting Policies (Tables)
Changes in Company's Allowance for Accounts Receivable
The changes in the Company’s allowance for accounts receivable were as follows for the periods ended (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Beginning balance
$
3,022

 
$
2,908

 
$
3,541

 
$
3,373

Provision for doubtful accounts
3,736

 
3,538

 
7,717

 
7,096

Write-offs and adjustments
(3,661
)
 
(3,203
)
 
(8,161
)
 
(7,226
)
Balance at end of period
$
3,097

 
$
3,243

 
$
3,097

 
$
3,243

Long-Term Debt (Tables)
Schedule Of Deferred Financing Activity 
The following table presents deferred financing activity for the six months ended June 30, 2016 (in thousands):
 
Unamortized Deferred Financing Costs
 
Balance 12/31/2015
 
Additions
 
Rolled Over
 
Early Extinguishment
 
Amortized
 
Balance 6/30/2016
Revolving Credit Facility
$
6,456

 
$
—

 
$
—

 
$
—

 
$
(1,022
)
 
$
5,434

6.375% Senior Secured
Notes due 2019
20,182

 
—

 
(3,423
)
 
(585
)
 
(2,477
)
 
13,697

8.75% Senior Notes due
2020
18,892

 
—

 
—

 
—

 
(1,919
)
 
16,973

8.875% Senior Secured
Notes Due 2022
1,170

 
—

 
—

 
(110
)
 
(82
)
 
978

7.875% Senior Secured
Notes Due 2022
—

 
6,526

 
3,423

 
—

 
(128
)
 
9,821

Total Deferred Financing Costs
$
46,700

 
$
6,526

 
$
—

 
$
(695
)
 
$
(5,628
)
 
$
46,903

Summary of Debt 
The Company’s debt at June 30, 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

 
$
—

 
$
(13,697
)
 
$
705,768

8.75% Senior Notes due 2020
930,000

 
6,478

 
(16,973
)
 
919,505

8.875% Senior Secured Notes Due 2022
270,000

 
(3,154
)
 
(978
)
 
265,868

7.875% Senior Secured Notes Due 2022
500,000

 
—

 
(9,821
)
 
490,179

Total Long-Term Debt
$
2,419,465

 
$
3,324

 
$
(41,469
)
 
$
2,381,320


The Company’s debt at December 31, 2015 consisted of the following (in thousands):
 
 
Outstanding
Principal
 
Unamortized
Premium (Discount)
 
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 Long-Term Debt
$
2,175,000

 
$
3,356

 
$
(40,244
)
 
$
2,138,112

Balance Sheet Components (Tables)
Schedule of Company's Balance Sheet Component Balances
The following table presents material balance sheet component balances (in thousands):

 
June 30, 2016
 
December 31, 2015
Subscriber acquisition costs
 
 
 
Subscriber acquisition costs
$
1,180,390

 
$
958,261

Accumulated amortization
(234,539
)
 
(167,617
)
Subscriber acquisition costs, net
$
945,851

 
$
790,644

Accrued payroll and commissions
 
 
 
Accrued commissions
49,213

 
20,176

Accrued payroll
21,328

 
18,071

Total accrued payroll and commissions
$
70,541

 
$
38,247

Accrued expenses and other current liabilities
 
 
 
Accrued interest payable
$
16,520

 
$
17,153

Accrued payroll taxes and withholdings
3,543

 
3,938

Accrued taxes
3,396

 
2,683

Wireless restructuring costs
2,570

 
4,275

Loss contingencies
2,545

 
2,504

Other
8,042

 
5,020

Total accrued expenses and other current liabilities
$
36,616

 
$
35,573

Property and Equipment (Tables)
Components of Property and Equipment
Property and equipment consisted of the following (in thousands):
 
 
June 30, 2016
 
December 31, 2015
 
Estimated Useful
Lives
Vehicles
$
27,296

 
$
26,935

 
3 - 5 years
Computer equipment and software
25,047

 
21,702

 
3 - 5 years
Leasehold improvements
17,714

 
17,434

 
2 - 15 years
Office furniture, fixtures and equipment
13,046

 
11,776

 
7 years
Buildings
702

 
702

 
39 years
Construction in process
4,425

 
3,837

 
 
Property and equipment, gross
88,230

 
82,386

 
 
Accumulated depreciation and amortization
(34,168
)
 
(27,112
)
 
 
Property and equipment, net
$
54,062

 
$
55,274

 
 
Goodwill and Intangible Assets (Tables)
Schedule of Intangible Asset Balances 
The following table presents intangible asset balances (in thousands):
 
 
June 30, 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
$
967,741

 
$
(487,169
)
 
$
480,572

 
$
962,842

 
$
(430,803
)
 
$
532,039

 
10 years
2GIG 2.0 technology
17,000

 
(8,772
)
 
8,228

 
17,000

 
(7,064
)
 
9,936

 
8 years
Other technology
7,067

 
(4,262
)
 
2,805

 
7,067

 
(3,438
)
 
3,629

 
5 years
Space Monkey technology
7,100

 
(1,515
)
 
5,585

 
7,100

 
(761
)
 
6,339

 
6 years
Patents
8,143

 
(2,910
)
 
5,233

 
7,524

 
(2,094
)
 
5,430

 
5 years
Non-compete agreements
1,200

 
(1,100
)
 
100

 
1,200

 
(800
)
 
400

 
2-3 years
Total definite-lived intangible assets:
$
1,008,251

 
$
(505,728
)
 
$
502,523

 
$
1,002,733

 
$
(444,960
)
 
$
557,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
IP addresses
$
564

 
$
—

 
$
564

 
$
564

 
$
—

 
$
564

 
 
Domain names
59

 
—

 
59

 
58

 
—

 
58

 
 
Total Indefinite-lived intangible assets
623

 
—

 
623

 
622

 
—

 
622

 
 
Total intangible assets, net
$
1,008,874

 
$
(505,728
)
 
$
503,146

 
$
1,003,355

 
$
(444,960
)
 
$
558,395

 
 
Schedule of Estimated Future Amortization Expense of Intangible Assets Excluding Patents Currently in Process 
Estimated future amortization expense of intangible assets, excluding approximately $0.3 million in patents currently in process, is as follows as of June 30, 2016 (in thousands):
 
 
 
2016 - Remaining Period
$
58,289

2017
101,423

2018
89,834

2019
78,177

2020
67,396

Thereafter
107,082

Total estimated amortization expense
$
502,201

Fair Value Measurements (Tables)
Financial Instruments at Fair Value Based on Valuation Approach Applied to Each Class of Security
Components of long-term debt including the associated interest rates and related fair values are as follows (in thousands, except interest rates):
 
 
June 30, 2016
 
December 31, 2015
 
Stated Interest Rate
Issuance
 
Face Value
 
Estimated Fair Value
 
Face Value
 
Estimated Fair Value
 
2019 Notes
 
$
719,465

 
$
715,868

 
$
925,000

 
$
879,906

 
6.375
%
2020 Notes
 
930,000

 
843,696

 
930,000

 
756,788

 
8.75
%
2022 Private Placement Notes
 
270,000

 
272,351

 
300,000

 
296,296

 
8.875
%
2022 Notes
 
500,000

 
500,000

 
—

 
—

 
7.875
%
Total
 
$
2,419,465

 
$
2,331,915

 
$
2,155,000

 
$
1,932,990

 
 
Stock-Based Compensation (Tables)
Stock-Based Compensation Expense
Stock-based compensation expense in connection with all stock-based awards is presented as follows (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Operating expenses
$
14

 
$
26

 
$
31

 
$
40

Selling expenses
43

 
357

 
(239
)
 
389

General and administrative expenses
2,691

 
588

 
3,038

 
1,330

Total stock-based compensation
$
2,748

 
$
971

 
$
2,830

 
$
1,759

Commitments and Contingencies (Tables)
Operating Leases of Lessee Disclosure
The Company's operating lease arrangements and related terms consisted of the following (in thousands):
 
Rent Expense
 
Rent Expense
 
 
For the three months ended,
 
For the six months ended,
 
 
June 30, 2016
 
June 30, 2015
 
June 30, 2016
 
June 30, 2015
Lease Term
Arrangement
 
 
 
 
 
 
 
 
Warehouse, office space and other
$
2,781

 
$
2,915

 
$
5,593

 
$
5,838

11 - 15 years
Wireless towers and spectrum
1,205

 
819

 
2,367

 
1,482

1 - 10 years
Total Rent Expense
$
3,986

 
$
3,734

 
$
7,960

 
$
7,320

 
Restructuring and Asset Impairment Charges (Tables)
Schedule of Restructuring and Asset Impairment Charges 
Restructuring and asset impairment charges and recoveries for the three and six months ended June 30, 2016 were as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
June 30, 2016
 
June 30, 2016
Recoveries of impaired assets
$
(709
)
 
(710
)
Contract termination (recoveries) costs
(16
)
 
4

Employee severance and termination benefits
—

 
26

Total restructuring and asset impairment recoveries
$
(725
)
 
$
(680
)
Summary of Restructuring Activity 
The following table presents accrued restructuring activity for the six months ended June 30, 2016 (in thousands):

 
Asset Impairments
 
Contract
termination
costs
 
Employee severance
and termination
benefits
 
Total
Accrued restructuring balance as of December 31, 2015
$
—

 
$
3,954

 
$
321

 
$
4,275

Restructuring and impairment (recoveries) charges
(710
)
 
4

 
26

 
(680
)
Cash payments
—

 
(1,455
)
 
(163
)
 
(1,618
)
Non-cash settlements
710

 
(93
)
 
(24
)
 
593

Accrued restructuring balance as of June 30, 2016
$
—

 
$
2,410

 
$
160

 
$
2,570

Segment Reporting and Business Concentrations (Tables)
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas
Revenues and long-lived assets by geographic region were as follows (in thousands):

 
  
United States
 
Canada
 
Total
Revenue from external customers
  
 
 
 
 
 
Three months ended June 30, 2016
  
$
171,255

 
$
9,552

 
$
180,807

Three months ended June 30, 2015
  
149,647

 
8,266

 
157,913

Six months ended June 30, 2016
 
337,161

 
17,899

 
355,060

Six months ended June 30, 2015
 
294,026

 
16,082

 
310,108

 
 
 
 
 
 
 
Property and equipment, net
 
 
 
 
 
 
As of June 30, 2016
  
$
53,971

 
$
91

 
$
54,062

As of December 31, 2015
  
55,103

 
171

 
55,274

Guarantor and Non-Guarantor Supplemental Financial Information (Tables)
Supplemental Condensed Consolidating Balance Sheet 
Supplemental Condensed Consolidating Balance Sheet
June 30, 2016
(In thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
 
Current assets
$
—

 
$
115,259

 
$
180,815

 
$
7,088

 
$
(66,855
)
 
$
236,307

Property and equipment, net
—

 
—

 
53,888

 
174

 
—

 
54,062

Subscriber acquisition costs, net
—

 
—

 
865,629

 
80,222

 
—

 
945,851

Deferred financing costs, net
—

 
5,434

 
—

 
—

 
—

 
5,434

Investment in subsidiaries
—

 
2,141,534

 
—

 
—

 
(2,141,534
)
 
—

Intercompany receivable
—

 
—

 
15,777

 
—

 
(15,777
)
 
—

Intangible assets, net
—

 
—

 
465,578

 
37,568

 
—

 
503,146

Goodwill
—

 
—

 
809,678

 
26,451

 
—

 
836,129

Long-term investments and other assets
—

 
106

 
10,615

 
14

 
(106
)
 
10,629

Total Assets
$
—

 
$
2,262,333

 
$
2,401,980

 
$
151,517

 
$
(2,224,272
)
 
$
2,591,558

Liabilities and Stockholders’ (Deficit) Equity
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
$
—

 
$
17,389

 
$
237,270

 
$
78,150

 
$
(66,855
)
 
$
265,954

Intercompany payable
—

 
—

 
—

 
15,777

 
(15,777
)
 
—

Notes payable and revolving credit facility, net of current portion
—

 
2,381,320

 
—

 
—

 
—

 
2,381,320

Capital lease obligations, net of current portion
—

 
—

 
8,533

 
1

 
—

 
8,534

Deferred revenue, net of current portion
—

 
—

 
47,511

 
4,720

 
—

 
52,231

Other long-term obligations
—

 
—

 
11,849

 
—

 
—

 
11,849

Accumulated losses of investee
136,376

 
 
 
 
 
 
 
(136,376
)
 
—

Deferred income tax liability
—

 
—

 
106

 
8,046

 
(106
)
 
8,046

Total (deficit) equity
(136,376
)
 
(136,376
)
 
2,096,711

 
44,823

 
(2,005,158
)
 
(136,376
)
Total liabilities and stockholders’ (deficit) equity
$
—

 
$
2,262,333

 
$
2,401,980

 
$
151,517

 
$
(2,224,272
)
 
$
2,591,558
















Supplemental 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 credit facility, 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

Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income 
Supplemental Condensed Consolidating Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2016
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
171,315

 
$
10,168

 
$
(676
)
 
$
180,807

Costs and expenses
—

 
—

 
203,030

 
11,326

 
(676
)
 
213,680

Loss from operations
—

 
—

 
(31,715
)
 
(1,158
)
 
—

 
(32,873
)
Loss from subsidiaries
(89,722
)
 
(32,449
)
 
—

 
—

 
122,171

 
—

Other expense (income), net
—

 
57,273

 
236

 
(212
)
 
—

 
57,297

Loss before income tax expenses
(89,722
)
 
(89,722
)
 
(31,951
)
 
(946
)
 
122,171

 
(90,170
)
Income tax expense (benefit)
—

 
—

 
121

 
(569
)
 
—

 
(448
)
Net loss
$
(89,722
)
 
$
(89,722
)
 
$
(32,072
)
 
$
(377
)
 
$
122,171

 
$
(89,722
)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net loss
$
(89,722
)
 
$
(89,722
)
 
$
(32,072
)
 
$
(377
)
 
$
122,171

 
$
(89,722
)
Foreign currency translation adjustment
—

 
40

 
—

 
40

 
(40
)
 
40

Total other comprehensive income
—

 
40

 
—

 
40

 
(40
)
 
40

Comprehensive loss
$
(89,722
)
 
$
(89,682
)
 
$
(32,072
)
 
$
(337
)
 
$
122,131

 
$
(89,682
)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income
For the Three Months Ended June 30, 2015
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
149,770

 
$
8,823

 
$
(680
)
 
$
157,913

Costs and expenses
—

 
—

 
154,904

 
8,577

 
(680
)
 
162,801

(Loss) income from operations
—

 
—

 
(5,134
)
 
246

 
—

 
(4,888
)
Loss from subsidiaries
(43,614
)
 
(4,923
)
 
—

 
—

 
48,537

 
—

Other expense, net
—

 
38,691

 
(171
)
 
27

 
—

 
38,547

(Loss) income before income tax expenses
(43,614
)
 
(43,614
)
 
(4,963
)
 
219

 
48,537

 
(43,435
)
Income tax expense
—

 
—

 
53

 
126

 
—

 
179

Net (loss) income
$
(43,614
)
 
$
(43,614
)
 
$
(5,016
)
 
$
93

 
$
48,537

 
$
(43,614
)
Other comprehensive loss, net of tax effects:

 

 

 

 

 
—

Net (loss) income
$
(43,614
)
 
$
(43,614
)
 
$
(5,016
)
 
$
93

 
$
48,537

 
$
(43,614
)
Foreign currency translation adjustment
—

 
2,202

 
5,240

 
(3,038
)
 
(2,202
)
 
2,202

Total other comprehensive (loss) income
—

 
2,202

 
5,240

 
(3,038
)
 
(2,202
)
 
2,202

Comprehensive (loss) income
$
(43,614
)
 
$
(41,412
)
 
$
224

 
$
(2,945
)
 
$
46,335

 
$
(41,412
)



Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income
For the Six Months Ended June 30, 2016
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
337,256

 
$
19,155

 
$
(1,351
)
 
$
355,060

Costs and expenses
—

 
—

 
373,319

 
19,640

 
(1,351
)
 
391,608

Loss from operations
—

 
—

 
(36,063
)
 
(485
)
 
—

 
(36,548
)
Loss from subsidiaries
(134,815
)
 
(32,494
)
 
—

 
—

 
167,309

 
—

Other expense (income), net
—

 
102,321

 
(1,428
)
 
(3,298
)
 
—

 
97,595

(Loss) income before income tax expenses
(134,815
)
 
(134,815
)
 
(34,635
)
 
2,813

 
167,309

 
(134,143
)
Income tax expense
—

 
—

 
185

 
487

 
—

 
672

Net (loss) income
$
(134,815
)
 
$
(134,815
)
 
$
(34,820
)
 
$
2,326

 
$
167,309

 
$
(134,815
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
—

Net (loss) income
$
(134,815
)
 
$
(134,815
)
 
$
(34,820
)
 
$
2,326

 
$
167,309

 
$
(134,815
)
Foreign currency translation adjustment
—

 
2,801

 
—

 
2,801

 
(2,801
)
 
2,801

Total other comprehensive loss
—

 
2,801

 
—

 
2,801

 
(2,801
)
 
2,801

Comprehensive (loss) income
$
(134,815
)
 
$
(132,014
)
 
$
(34,820
)
 
$
5,127

 
$
164,508

 
$
(132,014
)

Supplemental Condensed Consolidating Statements of Operations and Comprehensive (Loss) Income
For the Six Months Ended June 30, 2015
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
—

 
$
—

 
$
294,505

 
$
17,053

 
$
(1,450
)
 
$
310,108

Costs and expenses
—

 
—

 
309,804

 
16,343

 
(1,450
)
 
324,697

(Loss) income from operations
—

 
—

 
(15,299
)
 
710

 
—

 
(14,589
)
Loss from subsidiaries
(91,661
)
 
(15,016
)
 
—

 
—

 
106,677

 
—

Other expense, net
—

 
76,645

 
76

 
43

 
—

 
76,764

(Loss) income before income tax expenses
(91,661
)
 
(91,661
)
 
(15,375
)
 
667

 
106,677

 
(91,353
)
Income tax expense
—

 
—

 
92

 
216

 
—

 
308

Net (loss) income
$
(91,661
)
 
$
(91,661
)
 
$
(15,467
)
 
$
451

 
$
106,677

 
$
(91,661
)
Other comprehensive loss, net of tax effects:
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
$
(91,661
)
 
$
(91,661
)
 
$
(15,467
)
 
$
451

 
$
106,677

 
$
(91,661
)
Foreign currency translation adjustment
—

 
(8,376
)
 
(1,096
)
 
(7,280
)
 
8,376

 
(8,376
)
Total other comprehensive loss
—

 
(8,376
)
 
(1,096
)
 
(7,280
)
 
8,376

 
(8,376
)
Comprehensive loss
$
(91,661
)
 
$
(100,037
)
 
$
(16,563
)
 
$
(6,829
)
 
$
115,053

 
$
(100,037
)
Supplemental Condensed Consolidating Statements of Cash Flows 
Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2016
(In thousands)
(unaudited)

 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
—

 
$
—

 
$
(176,661
)
 
$
5,088

 
$
—

 
$
(171,573
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment
—

 
—

 
(1,791
)
 
—

 
—

 
(1,791
)
Capital expenditures
—

 
—

 
(4,526
)
 
—

 
—

 
(4,526
)
Proceeds from sale of assets
—

 
—

 
1,925

 
—

 
—

 
1,925

Investment in subsidiary
(69,800
)
 
(187,004
)
 
—

 
—

 
256,804

 
—

Acquisition of intangible assets
—

 
—

 
(505
)
 
—

 
—

 
(505
)
Net cash used in investing activities
(69,800
)
 
(187,004
)
 
(4,897
)
 
—

 
256,804

 
(4,897
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Proceeds from notes payable
—

 
500,000

 
—

 
—

 
—

 
500,000

Repayment on notes payable
—

 
(235,535
)
 
—

 
—

 
—

 
(235,535
)
Borrowings from revolving credit facility
—

 
57,000

 
—

 
—

 
—

 
57,000

Repayments on revolving credit facility
—

 
(77,000
)
 
—

 
—

 
—

 
(77,000
)
Proceeds from capital contribution
69,800

 
69,800

 
—

 
—

 
(69,800
)
 
69,800

Intercompany receivable
—

 
—

 
6,621

 
—

 
(6,621
)
 
—

Intercompany payable
—

 
—

 
187,004

 
(6,621
)
 
(180,383
)
 
—

Repayments of capital lease obligations
—

 
—

 
(3,955
)
 
(1
)
 
—

 
(3,956
)
Financing costs
—

 
(8,274
)
 
—

 
—

 
—

 
(8,274
)
Deferred financing costs
—

 
(6,277
)
 
—

 
—

 
—

 
(6,277
)
Net cash provided by (used in) financing activities
69,800

 
299,714

 
189,670

 
(6,622
)
 
(256,804
)
 
295,758

Effect of exchange rate changes on cash
—

 
—

 
—

 
(441
)
 
—

 
(441
)
Net increase (decrease) in cash and cash equivalents
—

 
112,710

 
8,112

 
(1,975
)
 
—

 
118,847

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
2,299

 
(1,941
)
 
2,201

 
—

 
2,559

End of period
$
—

 
$
115,009

 
$
6,171

 
$
226

 
$
—

 
$
121,406




Supplemental Condensed Consolidating Statements of Cash Flows
For the Six Months Ended June 30, 2015
(In thousands)
(unaudited)
 
 
Parent
 
APX
Group, Inc.
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
$
—

 
$
(538
)
 
$
(98,773
)
 
$
9,621

 
$
—

 
$
(89,690
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
 
Subscriber acquisition costs – company owned equipment
—

 
—

 
(14,922
)
 
(644
)
 
—

 
(15,566
)
Capital expenditures
—

 
—

 
(18,023
)
 
(41
)
 
—

 
(18,064
)
Investment in subsidiary
—

 
(140,640
)
 
—

 
—

 
140,640

 
—

Acquisition of intangible assets
—

 
—

 
(1,002
)
 
—

 
—

 
(1,002
)
Proceeds from sale of assets
—

 
—

 
408

 
—

 
—

 
408

Proceeds from insurance claims
—

 
—

 
2,984

 
—

 
—

 
2,984

Acquisition of other assets
—

 
—

 
(67
)
 
—

 
—

 
(67
)
Net cash used in investing activities
—

 
(140,640
)
 
(30,622
)
 
(685
)
 
140,640

 
(31,307
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
 
Borrowings from revolving credit facility
—

 
149,000

 
—

 
—

 
—

 
149,000

Repayments on revolving credit facility
—

 
(10,000
)
 
—

 
—

 
—

 
(10,000
)
Intercompany receivable
—

 
—

 
(8,423
)
 
—

 
8,423

 
—

Intercompany payable
—

 
—

 
140,640

 
8,423

 
(149,063
)
 
—

Repayments of capital lease obligations
—

 
—

 
(4,045
)
 
(2
)
 
—

 
(4,047
)
Deferred financing costs
—

 
(4,233
)
 
—

 
—

 
—

 
(4,233
)
Net cash (used in) provided by financing activities
—

 
134,767

 
128,172

 
8,421

 
(140,640
)
 
130,720

Effect of exchange rate changes on cash
—

 
—

 
—

 
(577
)
 
—

 
(577
)
Net (decrease) increase in cash and cash equivalents
—

 
(6,411
)
 
(1,223
)
 
16,780

 
—

 
9,146

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
 
Beginning of period
—

 
9,432

 
(2,233
)
 
3,608

 
—

 
10,807

End of period
$
—

 
$
3,021

 
$
(3,456
)
 
$
20,388

 
$
—

 
$
19,953

Basis of Presentation and Significant Accounting Policies - Additional Information (Detail) (USD $)
0 Months Ended 3 Months Ended 6 Months Ended
Apr. 29, 2016
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Mar. 31, 2015
Dec. 31, 2014
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Out-of-period adjustments
 
 
 
 
 
$ 2,000,000 
 
 
 
Recurring revenues increased
 
172,472,000 
 
149,543,000 
339,918,000 
295,207,000 
 
 
 
Deferred revenue decrease
 
 
 
 
(14,725,000)
(8,943,000)
 
 
 
Amortization duration of costs period
 
 
12 years 
 
 
 
 
 
 
Amortization percentage on subscriber contract costs over estimated useful life
 
 
150.00% 
 
 
 
 
 
 
Period after declining balance method converts to straight-line
 
 
5 years 
 
 
 
 
 
 
Proceeds from capital contribution
69,800,000 
 
 
 
69,800,000 
0 
 
 
 
Restricted cash and cash equivalents
 
0 
 
 
0 
 
0 
 
 
Allowance for doubtful accounts
 
3,097,000 
3,022,000 
3,243,000 
3,097,000 
3,243,000 
3,541,000 
2,908,000 
3,373,000 
Accounts receivable classified as held for sale
 
0 
 
 
0 
 
0 
 
 
Deferred financing cost, accumulated amortization
 
36,500,000 
 
 
36,500,000 
 
30,900,000 
 
 
Amortization expenses included in interest expense
 
 
 
 
5,243,000 
4,793,000 
 
 
 
Reduction to deferred financing costs
 
46,903,000 
 
 
46,903,000 
 
46,700,000 
 
 
Sales commission included in accrued expenses and other liabilities
 
1,000,000 
 
 
1,000,000 
 
800,000 
 
 
Other long-term obligations
 
5,400,000 
 
 
5,400,000 
 
4,300,000 
 
 
Advertising expenses incurred
 
8,500,000 
 
6,200,000 
17,000,000 
11,500,000 
 
 
 
Uncertain income tax position
 
 
 
 
50.00% 
 
 
 
 
Intercompany translation gains
 
200,000 
 
0 
4,900,000 
0 
 
 
 
Issued and unused letters of credit
 
5,700,000 
 
 
5,700,000 
 
5,000,000 
 
 
New Accounting Pronouncement, Early Adoption, Effect
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Reduction to deferred financing costs
 
 
 
 
 
 
(40,200,000)
 
 
2GIG Sale
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Percentage of installed panels
 
 
 
 
50.00% 
 
 
 
 
Supply agreement period
 
 
 
 
5 years 
 
 
 
 
Vivint Sky Control Panels
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Percentage of installed panels
 
 
 
 
50.00% 
 
 
 
 
Out-of-Period Adjustment
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Recurring revenues increased
 
 
 
 
 
2,000,000 
 
 
 
Deferred revenue decrease
 
 
 
 
 
2,000,000 
 
 
 
Interest Expense
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Amortization expenses included in interest expense
 
2,800,000 
 
2,800,000 
5,600,000 
5,300,000 
 
 
 
Minimum
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Estimated useful life of intangible assets
 
 
 
 
2 years 
 
 
 
 
Maximum
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Estimated useful life of intangible assets
 
 
 
 
10 years 
 
 
 
 
Other Notes Payable |
New Accounting Pronouncement, Early Adoption, Effect
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Reduction to deferred financing costs
 
 
 
 
 
 
40,200,000 
 
 
Estimated Life Of Subscriber Relationships
 
 
 
 
 
 
 
 
 
Basis Of Presentation And Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
Amortization duration of costs period
 
15 years 
 
 
 
 
 
 
 
Amortization percentage on subscriber contract costs over estimated useful life
 
240.00% 
 
 
 
 
 
 
 
Period after declining balance method converts to straight-line
 
9 years 
 
 
 
 
 
 
 
Increase in activation fee revenue
 
500,000 
 
 
500,000 
 
 
 
 
Increase in depreciation and amortization
 
(7,600,000)
 
 
(7,600,000)
 
 
 
 
Increase in operating loss
 
(7,100,000)
 
 
(7,100,000)
 
 
 
 
Increase in net loss
 
$ (6,900,000)
 
 
$ (6,900,000)
 
 
 
 
Basis of Presentation and Significant Accounting Policies - Changes in Company's Allowance for Accounts Receivable (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Allowance for Doubtful Accounts Receivable [Roll Forward]
 
 
 
 
Beginning balance
$ 3,022 
$ 2,908 
$ 3,541 
$ 3,373 
Provision for doubtful accounts
3,736 
3,538 
7,717 
7,096 
Write-offs and adjustments
(3,661)
(3,203)
(8,161)
(7,226)
Balance at end of period
$ 3,097 
$ 3,243 
$ 3,097 
$ 3,243 
Long-Term Debt - Additional Information (Detail) (USD $)
6 Months Ended 6 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 0 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Jun. 30, 2016
Revolving Credit Facility
Mar. 6, 2015
Revolving Credit Facility
Nov. 16, 2012
Revolving Credit Facility
Jun. 30, 2016
Revolving Credit Facility
Federal Funds Rate
Jun. 30, 2016
Revolving Credit Facility
LIBOR
Jun. 30, 2016
6.375% Senior Secured Notes due 2019
Dec. 31, 2015
6.375% Senior Secured Notes due 2019
Nov. 16, 2012
6.375% Senior Secured Notes due 2019
Jun. 30, 2016
8.75% Senior Notes due 2020
Dec. 31, 2015
8.75% Senior Notes due 2020
Nov. 16, 2012
8.75% Senior Notes due 2020
Jun. 30, 2016
Series A Revolving Commitments
Revolving Credit Facility
Jun. 30, 2016
Series A Revolving Commitments
Revolving Credit Facility
LIBOR
Jun. 30, 2016
Series A Revolving Commitments
Revolving Credit Facility
Base Rate-based Borrowings
Jun. 30, 2016
Series C Revolving Commitments
Revolving Credit Facility
Jun. 30, 2016
Series C Revolving Commitments
Revolving Credit Facility
LIBOR
Jun. 30, 2016
Series C Revolving Commitments
Revolving Credit Facility
Base Rate-based Borrowings
Jun. 30, 2016
Series B Revolving Commitments
Revolving Credit Facility
Jun. 30, 2016
Series B Revolving Commitments
Revolving Credit Facility
LIBOR
Jun. 30, 2016
Series B Revolving Commitments
Revolving Credit Facility
Base Rate-based Borrowings
Jun. 30, 2016
Senior Notes
Jun. 30, 2016
Senior Notes
Nov. 16, 2012
Senior Notes
Jun. 30, 2016
Senior Notes
6.375% Senior Secured Notes due 2019
Dec. 31, 2015
Senior Notes
6.375% Senior Secured Notes due 2019
Dec. 13, 2013
Senior Notes
8.75% Senior Notes due 2020
May 31, 2013
Senior Notes
8.75% Senior Notes due 2020
Jun. 30, 2016
Senior Notes
8.75% Senior Notes due 2020
Dec. 31, 2014
Senior Notes
8.75% Senior Notes due 2020
Dec. 31, 2015
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
Offerings
Jun. 30, 2016
Senior Notes
8.875% Senior Secured Notes Due 2022
Dec. 31, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Oct. 31, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Jun. 30, 2016
Senior Notes
7.875% Senior Secured Notes Due 2022
May 31, 2016
Senior Notes
7.875% Senior Secured Notes Due 2022
Jun. 30, 2016
Senior Notes
2019 Senior Notes and 2022 Private Placement Notes
Jun. 30, 2016
Senior Notes
2019 Senior Notes and 2022 Private Placement Notes
May 31, 2016
Senior Notes
2019 Senior Notes and 2022 Private Placement Notes
Jun. 30, 2016
Senior Notes
8.875% and 7.875% Senior Notes Due 2022
Jun. 30, 2016
Senior Notes
8.875% and 7.875% Senior Notes Due 2022
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Face amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 1,300,000,000.0 
$ 925,000,000.0 
 
 
 
 
$ 100,000,000.0 
 
$ 250,000,000.0 
$ 200,000,000.0 
$ 380,000,000 
 
 
$ 300,000,000.0 
 
$ 500,000,000 
 
 
 
 
 
Debt instrument interest rate
 
 
 
 
 
 
 
 
6.375% 
6.375% 
6.375% 
8.75% 
8.75% 
8.75% 
 
 
 
 
 
 
 
 
 
 
 
 
6.375% 
 
 
 
8.75% 
 
 
 
 
 
8.875% 
 
8.875% 
7.875% 
7.875% 
 
 
 
 
 
Number of offerings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
Debt instrument, redemption price, percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
101.50% 
101.75% 
 
102.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount outstanding threshold for accelerated maturity (on September 1, 2020)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
190,000,000.0 
 
 
 
 
 
 
 
 
 
Repurchase amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
235,000,000 
 
 
Losses on extinguishment of debt
9,933,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,900,000 
9,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Original issue discount and deferred finance costs
695,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
585,000 
 
 
 
0 
 
 
 
 
 
110,000 
 
 
0 
 
1,100,000 
1,100,000 
 
8,900,000 
8,900,000 
Debt issuance cost
41,469,000 
 
40,244,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13,697,000 
20,182,000 
 
 
16,973,000 
 
18,892,000 
 
 
 
978,000 
1,170,000 
 
9,821,000 
 
 
 
 
15,400,000 
15,400,000 
Credit facility, aggregate principal amount
 
 
 
 
289,400,000 
200,000,000 
 
 
 
 
 
 
 
 
247,500,000 
 
 
20,800,000 
 
 
21,200,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt maturity term
 
 
 
5 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Potential maximum borrowing capacity
 
 
 
 
 
$ 225,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable Interest rate percentage
 
 
 
 
 
 
0.50% 
1.00% 
 
 
 
 
 
 
 
3.00% 
2.00% 
 
3.00% 
2.00% 
 
4.00% 
3.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Aggregate principal amount of the credit agreement, description
 
 
 
The aggregate commitments previously available to APX thereunder from $200.0 million to $289.4 million 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable Interest rate description
 
 
 
 
 
 
 
One month, plus 1.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Step down
 
 
 
0.25% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitment fee
 
 
 
0.125% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit facility, due date
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mar. 31, 2019 
 
 
Nov. 16, 2017 
 
 
Mar. 31, 2019 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument maturity date
 
 
 
 
 
 
 
 
Dec. 01, 2019 
Dec. 01, 2019 
 
Dec. 01, 2020 
Dec. 01, 2020 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Term Debt - Deferred Financing Activity (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
$ 46,700 
Additions
6,526 
Rolled Over
0 
Early Extinguishment
(695)
Amortization of deferred financing costs
(5,628)
Balance 6/30/2016
46,903 
Senior Notes |
6.375% Senior Secured Notes due 2019
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
20,182 
Additions
0 
Rolled Over
(3,423)
Early Extinguishment
(585)
Amortization of deferred financing costs
(2,477)
Balance 6/30/2016
13,697 
Senior Notes |
8.75% Senior Notes due 2020
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
18,892 
Additions
0 
Rolled Over
0 
Early Extinguishment
0 
Amortization of deferred financing costs
(1,919)
Balance 6/30/2016
16,973 
Senior Notes |
8.875% Senior Secured Notes Due 2022
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
1,170 
Additions
0 
Rolled Over
0 
Early Extinguishment
(110)
Amortization of deferred financing costs
(82)
Balance 6/30/2016
978 
Senior Notes |
7.875% Senior Secured Notes Due 2022
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
0 
Additions
6,526 
Rolled Over
3,423 
Early Extinguishment
0 
Amortization of deferred financing costs
(128)
Balance 6/30/2016
9,821 
Revolving Credit Facility |
Line of Credit
 
Deferred Financing Activity [Roll Forward]
 
Balance 12/31/2015
6,456 
Additions
0 
Rolled Over
0 
Early Extinguishment
0 
Amortization of deferred financing costs
(1,022)
Balance 6/30/2016
$ 5,434 
Long-Term Debt - Summary of Debt (Detail) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Debt Instrument [Line Items]
 
 
Outstanding Principal
$ 2,419,465,000 
$ 2,175,000,000 
Unamortized Premium (Discount)
3,324,000 
3,356,000 
Unamortized Deferred Financing Costs
(41,469,000)
(40,244,000)
Net Carrying Amount
2,381,320,000 
2,138,112,000 
Series C Revolving Credit Facility Due 2017
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
 
1,440,000 
Unamortized Premium (Discount)
 
0 
Unamortized Deferred Financing Costs
 
0 
Net Carrying Amount
 
1,440,000 
Series A, B Revolving Credit Facilities Due 2019
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
 
18,560,000 
Unamortized Premium (Discount)
 
0 
Unamortized Deferred Financing Costs
 
0 
Net Carrying Amount
 
18,560,000 
Senior Notes |
6.375% Senior Secured Notes due 2019
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
719,465,000 
925,000,000 
Unamortized Premium (Discount)
0 
0 
Unamortized Deferred Financing Costs
(13,697,000)
(20,182,000)
Net Carrying Amount
705,768,000 
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)
6,478,000 
7,060,000 
Unamortized Deferred Financing Costs
(16,973,000)
(18,892,000)
Net Carrying Amount
919,505,000 
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)
(3,154,000)
(3,704,000)
Unamortized Deferred Financing Costs
(978,000)
(1,170,000)
Net Carrying Amount
265,868,000 
295,126,000 
Senior Notes |
7.875% Senior Secured Notes Due 2022
 
 
Debt Instrument [Line Items]
 
 
Outstanding Principal
500,000,000 
 
Unamortized Premium (Discount)
0 
 
Unamortized Deferred Financing Costs
(9,821,000)
 
Net Carrying Amount
$ 490,179,000 
 
Cost Based Investments (Detail) (Privately-held Company, USD $)
In Millions, unless otherwise specified
Jun. 30, 2016
Jun. 30, 2016
Maximum
Feb. 19, 2014
Convertible Debt Securities
Schedule of Cost-method Investments [Line Items]
 
 
 
Cost-based investment
$ 0.3 
 
$ 3.0 
Potential additional investment
 
$ 1.6 
 
Balance Sheet Components (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2016
Dec. 31, 2015
Subscriber acquisition costs
 
 
Subscriber acquisition costs
$ 1,180,390 
$ 958,261 
Accumulated amortization
(234,539)
(167,617)
Subscriber acquisition costs, net
945,851 
790,644 
Accrued payroll and commissions
 
 
Accrued commissions
49,213 
20,176 
Accrued payroll
21,328 
18,071 
Total accrued payroll and commissions
70,541 
38,247 
Accrued expenses and other current liabilities
 
 
Accrued interest payable
16,520 
17,153 
Accrued payroll taxes and withholdings
3,543 
3,938 
Accrued taxes
3,396 
2,683 
Wireless restructuring costs
2,570 
4,275 
Loss contingencies
2,545 
2,504 
Other
8,042 
5,020 
Total accrued expenses and other current liabilities
$ 36,616 
$ 35,573 
Property and Equipment - Components of Property and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 88,230 
$ 82,386 
Accumulated depreciation and amortization
(34,168)
(27,112)
Property and equipment, net
54,062 
55,274 
Vehicles
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
27,296 
26,935 
Vehicles |
Minimum
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated Useful Lives
3 years 
3 years 
Vehicles |
Maximum
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated Useful Lives
5 years 
5 years 
Computer equipment and software
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
25,047 
21,702 
Computer equipment and software |
Minimum
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated Useful Lives
3 years 
3 years 
Computer equipment and software |
Maximum
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated Useful Lives
5 years 
5 years 
Leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
17,714 
17,434 
Leasehold improvements |
Minimum
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated Useful Lives
2 years 
2 years 
Leasehold improvements |
Maximum
 
 
Property, Plant and Equipment [Line Items]
 
 
Estimated Useful Lives
15 years 
15 years 
Office furniture, fixtures and equipment
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
13,046 
11,776 
Estimated Useful Lives
7 years 
7 years 
Buildings
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
702 
702 
Estimated Useful Lives
39 years 
39 years 
Construction in process
 
 
Property, Plant and Equipment [Line Items]
 
 
Property and equipment, gross
$ 4,425 
$ 3,837 
Property and Equipment - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and equipment, gross
$ 88,230,000 
 
$ 88,230,000 
 
$ 82,386,000 
Accumulated amortization
34,168,000 
 
34,168,000 
 
27,112,000 
Depreciation and amortization expense
4,100,000 
4,400,000 
8,100,000 
8,100,000 
 
Assets Under Capital Lease Obligations
 
 
 
 
 
Property, Plant and Equipment [Line Items]
 
 
 
 
 
Property and equipment, gross
19,100,000 
 
19,100,000 
 
20,400,000 
Accumulated amortization
$ 8,800,000 
 
$ 8,800,000 
 
$ 7,000,000 
Goodwill and Intangible Assets - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Goodwill
$ 836,129,000 
 
$ 836,129,000 
 
$ 834,416,000 
Amortization expense
 
 
54,073,000 
62,934,000 
 
Amortization expense related to intangible assets
29,300,000 
33,900,000 
58,500,000 
67,900,000 
 
Patents
300,000 
 
300,000 
 
 
Capitalized Software Development Costs
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Amortization expense
$ 300,000 
$ 300,000 
$ 600,000 
$ 600,000 
 
Goodwill and Intangible Assets - Schedule of Intangible Asset Balances (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2016
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
$ 1,008,251 
$ 1,002,733 
Accumulated amortization
(505,728)
(444,960)
Finite-lived intangible assets
502,523 
557,773 
Indefinite-lived intangible assets
623 
622 
Total intangible assets, gross
1,008,874 
1,003,355 
Total intangible assets, net
503,146 
558,395 
Customer contracts
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
967,741 
962,842 
Accumulated amortization
(487,169)
(430,803)
Finite-lived intangible assets
480,572 
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
(8,772)
(7,064)
Finite-lived intangible assets
8,228 
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
(4,262)
(3,438)
Finite-lived intangible assets
2,805 
3,629 
Estimated useful lives of intangible asset
5 years 
 
Space Monkey technology
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
7,100 
7,100 
Accumulated amortization
(1,515)
(761)
Finite-lived intangible assets
5,585 
6,339 
Estimated useful lives of intangible asset
6 years 
 
Patents
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Definite-lived intangible assets, gross
8,143 
7,524 
Accumulated amortization
(2,910)
(2,094)
Finite-lived intangible assets
5,233 
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
(1,100)
(800)
Finite-lived intangible assets
100 
400 
Minimum
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
2 years 
 
Minimum |
Non-compete agreements
 
 
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 
 
Maximum |
Non-compete agreements
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Estimated useful lives of intangible asset
3 years 
 
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 
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
Jun. 30, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
 
2016 - Remaining Period
$ 58,289 
2017
101,423 
2018
89,834 
2019
78,177 
2020
67,396 
Thereafter
107,082 
Total estimated amortization expense
$ 502,201 
Fair Value Measurements - Financial Instruments at Fair Value Based on Valuation Approach Applied to Each Class of Security (Detail) (Money Market Funds, Level 1, USD $)
In Millions, unless otherwise specified
Jun. 30, 2016
Money Market Funds |
Level 1
 
Assets:
 
Cash equivalents
$ 110.0 
Fair Value Measurements - Additional Information (Detail) (USD $)
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2016
6.375% Senior Secured Notes due 2019
Dec. 31, 2015
6.375% Senior Secured Notes due 2019
Nov. 16, 2012
6.375% Senior Secured Notes due 2019
Jun. 30, 2016
8.75% Senior Notes due 2020
Dec. 31, 2015
8.75% Senior Notes due 2020
Nov. 16, 2012
8.75% Senior Notes due 2020
Jun. 30, 2016
Senior Notes
6.375% Senior Secured Notes due 2019
Dec. 31, 2015
Senior Notes
6.375% Senior Secured Notes due 2019
Jun. 30, 2016
Senior Notes
8.75% Senior Notes due 2020
Dec. 31, 2015
Senior Notes
8.75% Senior Notes due 2020
Jun. 30, 2016
Senior Notes
8.875% Senior Secured Notes Due 2022
Dec. 31, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Oct. 31, 2015
Senior Notes
8.875% Senior Secured Notes Due 2022
Jun. 30, 2016
Senior Notes
7.875% Senior Secured Notes Due 2022
May 31, 2016
Senior Notes
7.875% Senior Secured Notes Due 2022
Jun. 30, 2016
Level 2
Dec. 31, 2015
Level 2
Jun. 30, 2016
Level 2
Senior Notes
6.375% Senior Secured Notes due 2019
Dec. 31, 2015
Level 2
Senior Notes
6.375% Senior Secured Notes due 2019
Jun. 30, 2016
Level 2
Senior Notes
8.75% Senior Notes due 2020
Dec. 31, 2015
Level 2
Senior Notes
8.75% Senior Notes due 2020
Jun. 30, 2016
Level 2
Senior Notes
8.875% Senior Secured Notes Due 2022
Dec. 31, 2015
Level 2
Senior Notes
8.875% Senior Secured Notes Due 2022
Jun. 30, 2016
Level 2
Senior Notes
7.875% Senior Secured Notes Due 2022
Dec. 31, 2015
Level 2
Senior Notes
7.875% Senior Secured Notes Due 2022
Fair Value, Estimate Not Practicable, Financial Statement Captions [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Face Value
$ 2,381,320,000 
$ 2,138,112,000 
 
 
 
 
 
 
$ 705,768,000 
$ 904,818,000 
$ 919,505,000 
$ 918,168,000 
$ 265,868,000 
$ 295,126,000 
 
$ 490,179,000 
 
$ 2,419,465,000 
$ 2,155,000,000 
$ 719,465,000 
$ 925,000,000 
$ 930,000,000 
$ 930,000,000 
$ 270,000,000 
$ 300,000,000 
$ 500,000,000 
$ 0 
Estimated Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,331,915,000 
$ 1,932,990,000 
$ 715,868,000 
$ 879,906,000 
$ 843,696,000 
$ 756,788,000 
$ 272,351,000 
$ 296,296,000 
$ 500,000,000 
$ 0 
Stated Interest Rate
 
 
6.375% 
6.375% 
6.375% 
8.75% 
8.75% 
8.75% 
6.375% 
 
8.75% 
 
8.875% 
 
8.875% 
7.875% 
7.875% 
 
 
 
 
 
 
 
 
 
 
Income Taxes (Detail)
6 Months Ended
Jun. 30, 2016
Income Tax Disclosure [Abstract]
 
Effective income tax rate
(0.52%)
Stock-Based Compensation - Additional Information (Detail)
6 Months Ended 1 Months Ended 6 Months Ended
Jun. 30, 2016
Incentive Units Time Based Awards
Jun. 30, 2016
Stock Appreciation Rights (SARs)
Jun. 30, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Jun. 30, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Tranche One
Jun. 30, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Senior Management and Board Member
Mar. 31, 2015
313 Acquisition LLC
Incentive Units Time Based Awards
Chief Executive Officer and President
Jun. 30, 2016
313 Acquisition LLC
Incentive Units Time Based Awards
Chief Executive Officer and President
Jun. 30, 2016
313 Acquisition LLC
Incentive Units Performance Based Awards
Tranche One
Jun. 30, 2016
313 Acquisition LLC
Incentive Units
Minimum
Jun. 30, 2016
313 Acquisition LLC
Incentive Units
Maximum
Jun. 30, 2016
Vivint
Stock Appreciation Rights (SARs)
Jun. 30, 2016
Vivint
Stock Appreciation Rights (SARs)
Minimum
Jun. 30, 2016
Vivint
Stock Appreciation Rights (SARs)
Maximum
Jun. 30, 2016
Vivint
Stock Appreciation Rights Time Based Awards
Jun. 30, 2016
Vivint
Stock Appreciation Rights Time Based Awards
Tranche One
Jun. 30, 2016
Vivint
Stock Appreciation Rights Performance Based Awards
Tranche One
Jun. 30, 2016
Vivint Wireless
Stock Appreciation Rights (SARs)
Jun. 30, 2016
Vivint Wireless
Stock Appreciation Rights (SARs)
Minimum
Jun. 30, 2016
Vivint Wireless
Stock Appreciation Rights (SARs)
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incentive units relinquished
 
 
 
 
 
4,315,106 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incentive units issued as share-based compensation awards
 
 
 
 
73,562,836 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incentive units issued as share-based compensation awards, outstanding
 
 
 
 
 
 
42,169,456 
 
 
 
17,260,184 
 
 
 
 
 
17,500 
 
 
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 
 
 
 
 
 
 
 
 
 
 
5 years 
 
 
5 years 
 
 
Stock compensation award, method of measurement
Monte Carlo simulation valuation approach 
Black-Scholes option valuation model 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected volatility
 
 
 
 
 
 
 
 
55.00% 
65.00% 
 
55.00% 
75.00% 
 
 
 
65.00% 
 
 
Expected exercise term
 
 
 
 
 
 
 
 
3 years 11 months 16 days 
6 years 2 months 16 days 
 
1 year 10 months 29 days 
6 years 6 months 
 
 
 
 
6 years 
6 years 6 months 
Risk-free rate
 
 
 
 
 
 
 
 
0.62% 
2.03% 
 
0.65% 
1.81% 
 
 
 
 
1.51% 
1.81% 
Shares reserved for issuance
 
53,621,143 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected dividends
 
 
 
 
 
 
 
 
 
 
0.00% 
 
 
 
 
 
0.00% 
 
 
Stock-Based Compensation - Stock-Based Compensation Expense (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Total stock-based compensation
$ 2,748 
$ 971 
$ 2,830 
$ 1,759 
Operating expenses
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Total stock-based compensation
14 
26 
31 
40 
Selling expenses
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Total stock-based compensation
43 
357 
(239)
389 
General and administrative expenses
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Total stock-based compensation
2,691 
588 
3,038 
1,330 
Executive Officers |
General and administrative expenses
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Total stock-based compensation
$ 2,200 
 
$ 2,200 
 
Commitments and Contingencies (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Commitments And Contingencies [Line Items]
 
 
 
 
 
Loss contingency accrual
$ 2,500,000 
 
$ 2,500,000 
 
$ 2,500,000 
Operating leases with related and unrelated parties expiring year
 
 
2028 
 
 
Rent Expense
3,986,000 
3,734,000 
7,960,000 
7,320,000 
 
Capital lease obligation
16,600,000 
 
16,600,000 
 
18,800,000 
Vehicles
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Lease agreements term
 
 
36 months 
 
 
Average remaining life for fleet
 
 
20 months 
 
 
Warehouse, office space and other
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Rent Expense
2,781,000 
2,915,000 
5,593,000 
5,838,000 
 
Warehouse, office space and other |
Minimum
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Lease Term
 
 
11 years 
 
 
Warehouse, office space and other |
Maximum
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Lease Term
 
 
15 years 
 
 
Wireless towers and spectrum
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Rent Expense
$ 1,205,000 
$ 819,000 
$ 2,367,000 
$ 1,482,000 
 
Wireless towers and spectrum |
Minimum
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Lease Term
 
 
1 year 
 
 
Wireless towers and spectrum |
Maximum
 
 
 
 
 
Commitments And Contingencies [Line Items]
 
 
 
 
 
Lease Term
 
 
10 years 
 
 
Related Party Transactions - Additional Information (Detail) (USD $)
0 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended
Apr. 29, 2016
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Dec. 31, 2015
Jun. 30, 2016
Vivint
Dec. 31, 2015
Vivint
Jun. 30, 2016
Solar
Jun. 30, 2015
Solar
Jun. 30, 2016
Solar
Jun. 30, 2015
Solar
Dec. 31, 2015
Solar
Jun. 30, 2016
Blackstone Management Partners L.L.C.
Jun. 30, 2015
Blackstone Management Partners L.L.C.
Jun. 30, 2016
Blackstone Management Partners L.L.C.
Jun. 30, 2015
Blackstone Management Partners L.L.C.
Jun. 30, 2016
Blackstone Management Partners L.L.C.
Minimum
Jun. 30, 2016
Blackstone Management Partners LLC Support and Services Agreement
Blackstone Management Partners L.L.C.
Jun. 30, 2015
Blackstone Management Partners LLC Support and Services Agreement
Blackstone Management Partners L.L.C.
Jun. 30, 2016
Senior Notes
Blackstone Advisory Partners L.P.
Jun. 30, 2016
General and administrative expenses
Jun. 30, 2015
General and administrative expenses
Jun. 30, 2016
General and administrative expenses
Jun. 30, 2015
General and administrative expenses
Jun. 30, 2016
General and administrative expenses
Executive Officers
Jun. 30, 2016
General and administrative expenses
Executive Officers
Related Party Transaction [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sublease and other administrative expenses
 
 
 
 
 
 
 
 
$ 1,400,000 
$ 1,800,000 
$ 2,800,000 
$ 3,500,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expenses
 
 
 
 
 
 
 
 
 
 
500,000 
 
1,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected repayment period
 
 
 
1 year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amounts due from employees
 
300,000 
 
300,000 
 
300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets
 
200,000 
 
200,000 
 
200,000 
 
 
 
 
 
 
 
800,000 
 
800,000 
 
 
 
 
 
 
 
 
 
 
 
Additional expenses incurred for other related-party transactions
 
600,000 
400,000 
1,200,000 
800,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued expenses and other current liabilities
 
36,616,000 
 
36,616,000 
 
35,573,000 
1,300,000 
1,700,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual monitoring base fee, minimum
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,700,000 
 
 
 
 
 
 
 
 
 
Payment of annual monitoring fee description
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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. 
 
 
 
 
 
 
 
 
 
 
 
Expenses related to agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
1,100,000 
700,000 
1,900,000 
1,400,000 
 
0 
0 
 
 
 
 
 
 
 
Maximum advisory fee obligation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,500,000.0 
 
 
 
 
 
 
 
 
Additions
 
 
 
6,526,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
400,000 
 
 
 
 
 
 
Proceeds from capital contribution
69,800,000 
 
 
69,800,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation expense
 
$ 2,748,000 
$ 971,000 
$ 2,830,000 
$ 1,759,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 2,691,000 
$ 588,000 
$ 3,038,000 
$ 1,330,000 
$ 2,200,000 
$ 2,200,000 
Employee Benefit Plan - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Postemployment Benefits [Abstract]
 
 
 
 
Matching contributions to the plan
$ 0 
$ 0 
$ 0 
$ 0 
Restructuring and Asset Impairment Charges - Schedule of Restructuring and Asset Impairment Charges (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Total restructuring and asset impairment charges
$ (725)
$ 0 
$ (680)
$ 0 
Asset Impairments
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Total restructuring and asset impairment charges
(709)
 
(710)
 
Contract termination (recoveries) costs
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Total restructuring and asset impairment charges
(16)
 
4 
 
Employee severance and termination benefits
 
 
 
 
Restructuring Cost and Reserve [Line Items]
 
 
 
 
Total restructuring and asset impairment charges
$ 0 
 
$ 26 
 
Restructuring and Asset Impairment Charges - Summary of Restructuring Activity (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Restructuring Reserve [Roll Forward]
 
 
 
 
Accrued restructuring, beginning balance
 
 
$ 4,275 
 
Restructuring and impairment charges
(725)
0 
(680)
0 
Cash payments
 
 
(1,618)
 
Non-cash settlements
 
 
593 
 
Accrued restructuring, ending balance
2,570 
 
2,570 
 
Asset Impairments
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
Accrued restructuring, beginning balance
 
 
0 
 
Restructuring and impairment charges
 
 
(710)
 
Cash payments
 
 
0 
 
Non-cash settlements
 
 
710 
 
Accrued restructuring, ending balance
0 
 
0 
 
Contract termination (recoveries) costs
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
Accrued restructuring, beginning balance
 
 
3,954 
 
Restructuring and impairment charges
(16)
 
4 
 
Cash payments
 
 
(1,455)
 
Non-cash settlements
 
 
(93)
 
Accrued restructuring, ending balance
2,410 
 
2,410 
 
Employee severance and termination benefits
 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
Accrued restructuring, beginning balance
 
 
321 
 
Restructuring and impairment charges
0 
 
26 
 
Cash payments
 
 
(163)
 
Non-cash settlements
 
 
(24)
 
Accrued restructuring, ending balance
$ 160 
 
$ 160 
 
Segment Reporting and Business Concentrations (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
segment
Jun. 30, 2015
segment
Jun. 30, 2016
segment
regions
Jun. 30, 2015
segment
Dec. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Number of operating segments
1 
1 
1 
1 
 
Number of geographic regions
 
 
3 
 
 
Revenue from external customers
$ 180,807 
$ 157,913 
$ 355,060 
$ 310,108 
 
Property and equipment, net
54,062 
 
54,062 
 
55,274 
United States
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Revenue from external customers
171,255 
149,647 
337,161 
294,026 
 
Property and equipment, net
53,971 
 
53,971 
 
55,103 
Canada
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
Revenue from external customers
9,552 
8,266 
17,899 
16,082 
 
Property and equipment, net
$ 91 
 
$ 91 
 
$ 171 
Guarantor and Non-Guarantor Supplemental Financial Information - Balance Sheet (Detail) (USD $)
Jun. 30, 2016
Dec. 31, 2015
ASSETS
 
 
Current assets
$ 236,307,000 
$ 47,566,000 
Property and equipment, net
54,062,000 
55,274,000 
Subscriber acquisition costs, net
945,851,000 
790,644,000 
Deferred financing costs, net
5,434,000 
6,456,000 
Intangible assets, net
503,146,000 
558,395,000 
Goodwill
836,129,000 
834,416,000 
Long-term investments and other assets
10,629,000 
10,893,000 
Total assets
2,591,558,000 
2,303,644,000 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
Current liabilities
265,954,000 
168,518,000 
Notes payable and revolving line of credit, net of current portion
2,381,320,000 
2,138,112,000 
Capital lease obligations, net of current portion
8,534,000 
11,171,000 
Deferred revenue, net of current portion
52,231,000 
44,782,000 
Other long-term obligations
11,849,000 
10,530,000 
Deferred income tax liability
8,046,000 
7,524,000 
Total (deficit) equity
(136,376,000)
(76,993,000)
Total liabilities and stockholders’ deficit
2,591,558,000 
2,303,644,000 
Eliminations
 
 
ASSETS
 
 
Current assets
(66,855,000)
(53,066,000)
Investment in subsidiaries
(2,141,534,000)
(2,070,404,000)
Intercompany receivable
(15,777,000)
(22,398,000)
Long-term investments and other assets
(106,000)
(106,000)
Total assets
(2,224,272,000)
(2,145,974,000)
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
Current liabilities
(66,855,000)
(53,066,000)
Intercompany payable
(15,777,000)
(22,398,000)
Accumulated losses of investee
(136,376,000)
(76,993,000)
Deferred income tax liability
(106,000)
(106,000)
Total (deficit) equity
(2,005,158,000)
(1,993,411,000)
Total liabilities and stockholders’ deficit
(2,224,272,000)
(2,145,974,000)
Parent |
Reportable Legal Entities
 
 
ASSETS
 
 
Current assets
0 
 
Investment in subsidiaries
0 
0 
Total assets
0 
0 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
Current liabilities
0 
 
Accumulated losses of investee
136,376,000 
76,993,000 
Total (deficit) equity
(136,376,000)
(76,993,000)
Total liabilities and stockholders’ deficit
0 
0 
APX Group, Inc. |
Reportable Legal Entities
 
 
ASSETS
 
 
Current assets
115,259,000 
2,537,000 
Deferred financing costs, net
5,434,000 
6,456,000 
Investment in subsidiaries
2,141,534,000 
2,070,404,000 
Long-term investments and other assets
106,000 
106,000 
Total assets
2,262,333,000 
2,079,503,000 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
Current liabilities
17,389,000 
18,384,000 
Notes payable and revolving line of credit, net of current portion
2,381,320,000 
2,138,112,000 
Total (deficit) equity
(136,376,000)
(76,993,000)
Total liabilities and stockholders’ deficit
2,262,333,000 
2,079,503,000 
Guarantor Subsidiaries |
Reportable Legal Entities
 
 
ASSETS
 
 
Current assets
180,815,000 
91,555,000 
Property and equipment, net
53,888,000 
55,012,000 
Subscriber acquisition costs, net
865,629,000 
728,547,000 
Intercompany receivable
15,777,000 
22,398,000 
Intangible assets, net
465,578,000 
519,301,000 
Goodwill
809,678,000 
809,678,000 
Long-term investments and other assets
10,615,000 
10,880,000 
Total assets
2,401,980,000 
2,237,371,000 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
Current liabilities
237,270,000 
143,896,000 
Capital lease obligations, net of current portion
8,533,000 
11,169,000 
Deferred revenue, net of current portion
47,511,000 
40,960,000 
Other long-term obligations
11,849,000 
10,530,000 
Deferred income tax liability
106,000 
106,000 
Total (deficit) equity
2,096,711,000 
2,030,710,000 
Total liabilities and stockholders’ deficit
2,401,980,000 
2,237,371,000 
Non-Guarantor Subsidiaries |
Reportable Legal Entities
 
 
ASSETS
 
 
Current assets
7,088,000 
6,540,000 
Property and equipment, net
174,000 
262,000 
Subscriber acquisition costs, net
80,222,000 
62,097,000 
Intangible assets, net
37,568,000 
39,094,000 
Goodwill
26,451,000 
24,738,000 
Long-term investments and other assets
14,000 
13,000 
Total assets
151,517,000 
132,744,000 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
Current liabilities
78,150,000 
59,304,000 
Intercompany payable
15,777,000 
22,398,000 
Capital lease obligations, net of current portion
1,000 
2,000 
Deferred revenue, net of current portion
4,720,000 
3,822,000 
Other long-term obligations
0 
0 
Deferred income tax liability
8,046,000 
7,524,000 
Total (deficit) equity
44,823,000 
39,694,000 
Total liabilities and stockholders’ deficit
$ 151,517,000 
$ 132,744,000 
Guarantor and Non-Guarantor Supplemental Financial Information - Statements of Operations and Comprehensive (Loss) Income (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
Jun. 30, 2015
Condensed Income Statements, Captions [Line Items]
 
 
 
 
Revenues
$ 180,807 
$ 157,913 
$ 355,060 
$ 310,108 
Costs and expenses
213,680 
162,801 
391,608 
324,697 
Loss from operations
(32,873)
(4,888)
(36,548)
(14,589)
Other expense (income), net
57,297 
38,547 
97,595 
76,764 
Loss before income taxes
(90,170)
(43,435)
(134,143)
(91,353)
Income tax (benefit) expense
(448)
179 
672 
308 
Net loss
(89,722)
(43,614)
(134,815)
(91,661)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
Net loss
(89,722)
(43,614)
(134,815)
(91,661)
Foreign currency translation adjustment
40 
2,202 
2,801 
(8,376)
Total other comprehensive (loss) income
40 
2,202 
2,801 
(8,376)
Comprehensive loss
(89,682)
(41,412)
(132,014)
(100,037)
Eliminations
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
Revenues
(676)
(680)
(1,351)
(1,450)
Costs and expenses
(676)
(680)
(1,351)
(1,450)
Loss from subsidiaries
122,171 
48,537 
167,309 
106,677 
Other expense (income), net
 
0 
0 
0 
Loss before income taxes
122,171 
48,537 
167,309 
106,677 
Net loss
122,171 
48,537 
167,309 
106,677 
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
Net loss
122,171 
48,537 
167,309 
106,677 
Foreign currency translation adjustment
(40)
(2,202)
(2,801)
8,376 
Total other comprehensive (loss) income
(40)
(2,202)
(2,801)
8,376 
Comprehensive loss
122,131 
46,335 
164,508 
115,053 
Parent |
Reportable Legal Entities
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
Revenues
 
 
0 
 
Costs and expenses
 
 
0 
 
Loss from operations
 
 
0 
 
Loss from subsidiaries
(89,722)
(43,614)
(134,815)
(91,661)
Other expense (income), net
 
0 
0 
0 
Loss before income taxes
(89,722)
(43,614)
(134,815)
(91,661)
Net loss
(89,722)
(43,614)
(134,815)
(91,661)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
Net loss
(89,722)
(43,614)
(134,815)
(91,661)
Comprehensive loss
(89,722)
(43,614)
(134,815)
(91,661)
APX Group, Inc. |
Reportable Legal Entities
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
Revenues
 
 
0 
 
Costs and expenses
 
 
0 
 
Loss from operations
 
 
0 
 
Loss from subsidiaries
(32,449)
(4,923)
(32,494)
(15,016)
Other expense (income), net
57,273 
38,691 
102,321 
76,645 
Loss before income taxes
(89,722)
(43,614)
(134,815)
(91,661)
Net loss
(89,722)
(43,614)
(134,815)
(91,661)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
Net loss
(89,722)
(43,614)
(134,815)
(91,661)
Foreign currency translation adjustment
40 
2,202 
2,801 
(8,376)
Total other comprehensive (loss) income
40 
2,202 
2,801 
(8,376)
Comprehensive loss
(89,682)
(41,412)
(132,014)
(100,037)
Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
Revenues
171,315 
149,770 
337,256 
294,505 
Costs and expenses
203,030 
154,904 
373,319 
309,804 
Loss from operations
(31,715)
(5,134)
(36,063)
(15,299)
Other expense (income), net
236 
(171)
(1,428)
76 
Loss before income taxes
(31,951)
(4,963)
(34,635)
(15,375)
Income tax (benefit) expense
121 
53 
185 
92 
Net loss
(32,072)
(5,016)
(34,820)
(15,467)
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
Net loss
(32,072)
(5,016)
(34,820)
(15,467)
Foreign currency translation adjustment
0 
5,240 
0 
(1,096)
Total other comprehensive (loss) income
0 
5,240 
0 
(1,096)
Comprehensive loss
(32,072)
224 
(34,820)
(16,563)
Non-Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
 
Condensed Income Statements, Captions [Line Items]
 
 
 
 
Revenues
10,168 
8,823 
19,155 
17,053 
Costs and expenses
11,326 
8,577 
19,640 
16,343 
Loss from operations
(1,158)
246 
(485)
710 
Other expense (income), net
(212)
27 
(3,298)
43 
Loss before income taxes
(946)
219 
2,813 
667 
Income tax (benefit) expense
(569)
126 
487 
216 
Net loss
(377)
93 
2,326 
451 
Other comprehensive (loss) income, net of tax effects:
 
 
 
 
Net loss
(377)
93 
2,326 
451 
Foreign currency translation adjustment
40 
(3,038)
2,801 
(7,280)
Total other comprehensive (loss) income
40 
(3,038)
2,801 
(7,280)
Comprehensive loss
$ (337)
$ (2,945)
$ 5,127 
$ (6,829)
Guarantor and Non-Guarantor Supplemental Financial Information - Cash Flows (Detail) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 6 Months Ended
Apr. 29, 2016
Jun. 30, 2016
Jun. 30, 2015
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
$ (171,573)
$ (89,690)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs
 
(1,791)
(15,566)
Capital expenditures
 
(4,526)
(18,064)
Proceeds from the sale of capital assets
 
1,925 
408 
Acquisition of intangible assets
 
(505)
(1,002)
Proceeds from insurance claims
 
 
2,984 
Acquisition of other assets
 
0 
(67)
Net cash used in investing activities
 
(4,897)
(31,307)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
500,000 
0 
Repayment of notes payable
 
(235,535)
0 
Borrowings from revolving credit facility
 
57,000 
149,000 
Repayments on revolving credit facility
 
(77,000)
(10,000)
Proceeds from capital contribution
69,800 
69,800 
0 
Repayments of capital lease obligations
 
(3,956)
(4,047)
Financing costs
 
(8,274)
0 
Deferred financing costs
 
(6,277)
(4,233)
Net cash provided by financing activities
 
295,758 
130,720 
Effect of exchange rate changes on cash
 
(441)
(577)
Net (decrease) increase in cash
 
118,847 
9,146 
Cash and cash equivalents:
 
 
 
Beginning of period
 
2,559 
10,807 
End of period
 
121,406 
19,953 
Eliminations
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
 
0 
Cash flows from investing activities:
 
 
 
Investment in subsidiary
 
256,804 
140,640 
Net cash used in investing activities
 
256,804 
140,640 
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
0 
 
Repayment of notes payable
 
0 
 
Proceeds from capital contribution
 
(69,800)
 
Intercompany receivable
 
(6,621)
8,423 
Intercompany payable
 
(180,383)
(149,063)
Financing costs
 
0 
 
Net cash provided by financing activities
 
(256,804)
(140,640)
Parent |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
0 
0 
Cash flows from investing activities:
 
 
 
Investment in subsidiary
 
(69,800)
0 
Net cash used in investing activities
 
(69,800)
0 
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
0 
 
Repayment of notes payable
 
0 
 
Borrowings from revolving credit facility
 
 
0 
Repayments on revolving credit facility
 
 
0 
Proceeds from capital contribution
 
69,800 
 
Financing costs
 
0 
 
Net cash provided by financing activities
 
69,800 
0 
Cash and cash equivalents:
 
 
 
Beginning of period
 
0 
0 
End of period
 
0 
0 
APX Group, Inc. |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
0 
(538)
Cash flows from investing activities:
 
 
 
Proceeds from the sale of capital assets
 
 
0 
Investment in subsidiary
 
(187,004)
(140,640)
Proceeds from insurance claims
 
 
0 
Net cash used in investing activities
 
(187,004)
(140,640)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
500,000 
 
Repayment of notes payable
 
(235,535)
 
Borrowings from revolving credit facility
 
57,000 
149,000 
Repayments on revolving credit facility
 
(77,000)
(10,000)
Proceeds from capital contribution
 
69,800 
 
Financing costs
 
(8,274)
 
Deferred financing costs
 
(6,277)
(4,233)
Net cash provided by financing activities
 
299,714 
134,767 
Net (decrease) increase in cash
 
112,710 
(6,411)
Cash and cash equivalents:
 
 
 
Beginning of period
 
2,299 
9,432 
End of period
 
115,009 
3,021 
Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
(176,661)
(98,773)
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs
 
(1,791)
(14,922)
Capital expenditures
 
(4,526)
(18,023)
Proceeds from the sale of capital assets
 
1,925 
408 
Acquisition of intangible assets
 
(505)
(1,002)
Proceeds from insurance claims
 
 
2,984 
Acquisition of other assets
 
 
(67)
Net cash used in investing activities
 
(4,897)
(30,622)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
0 
 
Repayment of notes payable
 
0 
 
Proceeds from capital contribution
 
0 
 
Intercompany receivable
 
6,621 
(8,423)
Intercompany payable
 
187,004 
140,640 
Repayments of capital lease obligations
 
(3,955)
(4,045)
Financing costs
 
0 
 
Net cash provided by financing activities
 
189,670 
128,172 
Net (decrease) increase in cash
 
8,112 
(1,223)
Cash and cash equivalents:
 
 
 
Beginning of period
 
(1,941)
(2,233)
End of period
 
6,171 
(3,456)
Non-Guarantor Subsidiaries |
Reportable Legal Entities
 
 
 
Cash flows from operating activities:
 
 
 
Net cash (used in) provided by operating activities
 
5,088 
9,621 
Cash flows from investing activities:
 
 
 
Subscriber acquisition costs
 
0 
(644)
Capital expenditures
 
0 
(41)
Acquisition of other assets
 
 
0 
Net cash used in investing activities
 
0 
(685)
Cash flows from financing activities:
 
 
 
Proceeds from notes payable
 
0 
 
Repayment of notes payable
 
0 
 
Proceeds from capital contribution
 
0 
 
Intercompany payable
 
(6,621)
8,423 
Repayments of capital lease obligations
 
(1)
(2)
Financing costs
 
0 
 
Net cash provided by financing activities
 
(6,622)
8,421 
Effect of exchange rate changes on cash
 
(441)
(577)
Net (decrease) increase in cash
 
(1,975)
16,780 
Cash and cash equivalents:
 
 
 
Beginning of period
 
2,201 
3,608 
End of period
 
$ 226 
$ 20,388 
Subsequent Events (Details) (Preferred Stock, Parent, Subsequent Event, USD $)
In Millions, unless otherwise specified
1 Months Ended
Jul. 31, 2016
Preferred Stock |
Parent |
Subsequent Event
 
Subsequent Event [Line Items]
 
Proceeds from issuance of private placement
$ 30.6