Basis of Presentation and Summary of Significant Accounting Policies (Tables)
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12 Months Ended |
Dec. 31, 2017 |
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| Accounting Policies [Abstract] |
|
| Schedule of Accounts Receivable |
(in thousands):
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|
December 31, |
|
2017 |
|
2016 |
Accounts receivable, gross |
$ |
122,225 |
|
|
$ |
130,583 |
|
Less: Allowance for doubtful accounts |
(8,680 |
) |
|
(10,091 |
) |
Accounts receivable, net |
$ |
113,545 |
|
|
$ |
120,492 |
|
Movements in the balance for bad debt reserve and sales allowance for the years ended December 31, 2017, 2016, and 2015, are as follows (in thousands):
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2017 |
|
2016 |
|
2015 |
Beginning balance |
$ |
10,091 |
|
|
$ |
8,640 |
|
|
$ |
7,468 |
|
Additions charged to statements of operations |
2,788 |
|
|
2,624 |
|
|
1,172 |
|
Less: Bad debt write offs |
(4,199 |
) |
|
(1,173 |
) |
|
— |
|
Ending balance |
$ |
8,680 |
|
|
$ |
10,091 |
|
|
$ |
8,640 |
|
|
| Fair Value Measurements, Recurring and Nonrecurring |
The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2017, and 2016, respectively (in thousands, except as presented in footnotes to the tables):
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December 31, 2017 |
|
Quotes Prices in Active Markets
(Level 1)
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Significant Other Observable Inputs
(Level 2)
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Significant Other Unobservable Inputs
(Level 3)
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Liabilities: |
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|
|
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Earn-out liability (1)
|
$ |
114 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
114 |
|
Liability warrants (2)
|
20 |
|
|
— |
|
|
— |
|
|
20 |
|
Contingently issuable shares (3)
|
1,448 |
|
|
— |
|
|
— |
|
|
1,448 |
|
Total |
$ |
1,582 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,582 |
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|
December 31, 2016 |
|
Quotes Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Other Unobservable Inputs
(Level 3)
|
Liabilities: |
|
|
|
|
|
|
|
Earn-out liability (1)
|
$ |
1,987 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,987 |
|
Liability warrants (2)
|
433 |
|
|
— |
|
|
— |
|
|
433 |
|
Contingently issuable shares (3)
|
4,545 |
|
|
— |
|
|
— |
|
|
4,545 |
|
Total |
$ |
6,965 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
6,965 |
|
|
|
(1) |
Represents aggregate earn-out liabilities for the Company’s acquisitions of WOI, RMG, navAero and masFlight assumed in business combinations for the year ended December 31, 2015. |
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(2) |
Includes 6,173,228 Public SPAC Warrants at December 31, 2017 and 2016.
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(3) |
In connection with the Sound Recording Settlements, (as described below in Note 10. Commitments and Contingencies) the Company is obligated to issue to UMG (as defined in that Note) 500,000 shares of its common stock when and if the closing price of the Company's common stock exceeds $10.00 per share and an additional 400,000 shares of common stock when and if the closing price of the Company’s common stock exceeds $12.00 per share. Such contingently issuable shares are classified as liabilities and are re-measured to fair value each reporting period.
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| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation |
The following table presents information about significant unobservable inputs related to Level 3 financial liabilities as of December 31, 2017.
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Liability Warrants |
|
Contingently Issuable Shares |
Assumed liquidation company share price |
N/A |
|
|
$ |
10.00 |
|
|
$ |
12.00 |
|
Common stock price at December 31, 2017 |
$ |
2.29 |
|
|
$ |
2.29 |
|
|
$ |
2.29 |
|
Exercise price |
$ |
11.50 |
|
|
N/A |
|
|
N/A |
|
Estimated term (in years) |
0.09 |
|
|
10.25 |
|
|
11.52 |
|
Expected stock volatility |
199.4 |
% |
|
54.0 |
% |
|
54.0 |
% |
Risk free rate |
1.9 |
% |
|
N/A |
|
|
N/A |
|
Dividend yield |
— |
% |
|
— |
% |
|
— |
% |
Implied discount for lack of marketability (1)
|
— |
% |
|
29.5 |
% |
|
30.1 |
% |
|
|
(1) |
A discount for lack of marketability was applied to the resulting values as the shares, when issued, may not initially be registered with the SEC.
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The following tables present the fair value roll-forward reconciliation of Level 3 assets and liabilities measured at fair value for the years ended December 31, 2017, 2016 and 2015, respectively (in thousands):
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Liability Warrants (Level 1) |
|
Liability Warrants (Level 3) |
|
Contingently Issuable Shares
(Level 3)
|
|
Earn-Out Liabilities (Level 3) |
Balance, December 31, 2015 |
$ |
24,076 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,652 |
|
Fair value of contingently issuable shares associated with sound recording litigation settlement |
— |
|
|
— |
|
|
6,417 |
|
|
— |
|
Payments of earn-out liability |
— |
|
|
— |
|
|
— |
|
|
(4,127 |
) |
Transfer-in |
— |
|
|
6,235 |
|
|
— |
|
|
— |
|
Transfer-out |
(6,235 |
) |
|
— |
|
|
— |
|
|
— |
|
Change in value |
(17,841 |
) |
|
(5,802 |
) |
|
(1,872 |
) |
|
(3,538 |
) |
Balance, December 31, 2016 |
— |
|
|
433 |
|
|
4,545 |
|
|
1,987 |
|
Payments of earn-out liability |
— |
|
|
— |
|
|
— |
|
|
(1,937 |
) |
Change in value |
— |
|
|
(413 |
) |
|
(3,097 |
) |
|
64 |
|
Balance, December 31, 2017 |
$ |
— |
|
|
$ |
20 |
|
|
$ |
1,448 |
|
|
$ |
114 |
|
|
| Fair Value, by Balance Sheet Grouping |
The following table shows the carrying amounts of the Company’s long-term debt in the consolidated financial statements (in thousands):
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December 31, 2017 |
|
December 31, 2016 |
|
Carrying Amount |
|
Fair Value |
|
Carrying Amount |
|
Fair Value |
Senior secured first lien term loan facility, due July 2021 (*)(1)
|
$ |
— |
|
|
$ |
— |
|
|
$ |
263,980 |
|
|
$ |
260,020 |
|
Senior secured revolving credit facility, due July 2020 (*)(1)
|
— |
|
|
— |
|
|
55,500 |
|
|
52,932 |
|
Senior secured second lien term loan facility, due July 2022 (*)(1)
|
— |
|
|
— |
|
|
92,000 |
|
|
88,780 |
|
Senior secured term loan facility, due January 2023 (+)(1)
|
490,625 |
|
|
486,945 |
|
|
— |
|
|
— |
|
Senior secured revolving credit facility, due January 2022 (+)(3)
|
78,000 |
|
|
78,000 |
|
|
— |
|
|
— |
|
2.75% convertible senior notes due 2035 (1) (2) (4)
|
82,500 |
|
|
43,313 |
|
|
82,500 |
|
|
67,444 |
|
Other debt (3)
|
9,075 |
|
|
9,075 |
|
|
3,299 |
|
|
3,299 |
|
Unamortized bond discounts and issue costs |
(41,136 |
) |
|
— |
|
|
(26,979 |
) |
|
— |
|
|
$ |
619,064 |
|
|
$ |
617,333 |
|
|
$ |
470,300 |
|
|
$ |
472,475 |
|
(*) In connection with the EMC Acquisition, the Company assumed legacy EMC credit agreement indebtedness, including this facility. This legacy EMC indebtedness was subsequently replaced by the 2017 Credit Agreement (as described in Note 10. Financing Arrangements).
(+) This facility is a component of the 2017 Credit Agreement
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(1) |
The estimated fair value is classified as Level 2 financial instrument and was determined based on the quoted prices of the instrument in an over-the-counter market. |
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(2) |
The fair value of the 2.75% convertible senior notes due 2035 is exclusive of the conversion feature therein, which was originally allocated for reporting purposes at $13.0 million, and is included in the consolidated balance sheets within “Additional paid-in capital” (see Note 13. Common Stock, Stock-Based Awards and Warrants).
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(3) |
The estimated fair value is considered to approximate carrying value given the short-term maturity and is classified as Level 3 financial instruments. |
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(4) |
The principal amount outstanding of the 2.75% convertible senior notes due 2035 as set forth in the foregoing table was $82.5 million as of December 31, 2017, and is not the carrying amount of this indebtedness (i.e., outstanding principal amount net of debt issuance costs and discount associated with the equity component). The carrying value of this indebtedness as of December 31, 2017 was $69.7 million.
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