| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2019, and December 31, 2018, respectively (dollar values in thousands, other than per-share values):
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March 31, 2019 |
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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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Earn-out liability (1)
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$ |
114 |
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$ |
— |
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$ |
— |
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$ |
114 |
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Contingently issuable shares (2)
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432 |
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— |
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— |
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432 |
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Phantom stock options (3)
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348 |
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— |
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— |
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348 |
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Total |
$ |
894 |
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$ |
— |
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$ |
— |
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$ |
894 |
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December 31, 2018 |
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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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Earn-out liability (1)
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$ |
114 |
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$ |
— |
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$ |
— |
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$ |
114 |
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Contingently issuable shares (2)
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1,371 |
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— |
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— |
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1,371 |
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Phantom stock options (3)
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1,564 |
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— |
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— |
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1,564 |
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Total |
$ |
3,049 |
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$ |
— |
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$ |
— |
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$ |
3,049 |
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(1) |
Represents aggregate earn-out liabilities assumed in business combinations for the year ended December 31, 2015. |
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(2) |
In connection with the Sound-Recording Settlements (as described in Note 10. Commitments and Contingencies to our 2018 Form 10-K), 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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(3) |
Our cash-settled phantom stock options are accounted for as liability awards and are re-measured at fair value each reporting period with changes flowing through statement of operations. As of March 31, 2019, the aggregate estimated fair value of our cash-settled phantom stock options was $1.1 million for which the amortized portion recognized as a liability in our condensed consolidated balance sheet was $348,000.
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The following table shows the carrying amounts and the fair values of our long-term debt in the condensed consolidated financial statements at March 31, 2019 and December 31, 2018, respectively (in thousands):
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March 31, 2019 |
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December 31, 2018 |
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Carrying Amount(7)
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Fair Value |
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Carrying Amount (7)
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Fair Value |
Senior secured term loan facility, due January 2023 (+)(1)
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$ |
475,000 |
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$ |
467,875 |
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$ |
478,125 |
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$ |
473,344 |
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Senior secured revolving credit facility, due January 2022 (+)(2)
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50,915 |
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50,915 |
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54,015 |
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54,015 |
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2.75% convertible senior notes due 2035 (1)(3)
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82,500 |
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33,413 |
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82,500 |
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49,064 |
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Second Lien Notes, due June 2023(4)(5)
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167,957 |
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90,307 |
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158,450 |
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112,230 |
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Other debt (6)
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17,380 |
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17,380 |
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1,707 |
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1,707 |
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$ |
793,752 |
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$ |
659,890 |
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$ |
774,797 |
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$ |
690,360 |
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(+) |
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 quoted prices of the instrument in a similar over-the-counter market. |
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(2) |
The estimated fair value is considered to approximate carrying value and is classified as Level 3 financial instruments. We expect to draw on the 2017 Revolving Loans from time to time to fund our working capital needs and for other general corporate purposes. |
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(3) |
The fair value of the 2.75% Convertible Notes is exclusive of the conversion feature therein, which was originally allocated for reporting purposes at $13.0 million, and is included in the condensed consolidated balance sheets within “Additional paid-in capital”. The principal amount outstanding of the Convertible Notes was $82.5 million as of March 31, 2019, and the carrying amounts in the foregoing table reflect this outstanding principal amount net of debt issuance costs and discount associated with the equity component.
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(4) |
The principal amount outstanding of the Second Lien Notes, due June 2023 as set forth in the foregoing table was $168.0 million as of March 31, 2019, and is not the carrying amount of the indebtedness (i.e. outstanding principal amount net of debt issuance costs and discount associated with the equity component and includes approximately $9.5 million of payment-in-kind (“PIK”) interest converted to principal during the three months ended March 31, 2019). The value allocated to the attached penny warrants and market warrants for financial reporting purposes was $14.9 million and $9.3 million, respectively. These qualify for classification in stockholders’ equity and are included in the condensed consolidated balance sheets within “Additional paid-in capital” (see Note 8. Financing Arrangements).
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(5) |
The fair value of the Second Lien Notes was determined based on a Black-Derman-Toy interest rate Lattice model. The key inputs of the valuation model contain certain Level 3 inputs. |
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(6) |
The estimated fair value is considered to approximate carrying value given the short-term maturity and is classified as Level 3 financial instruments. For March 31, 2019, Other debts primarily consisted of (i) $8.5 million financing for transponder purchases; and (ii) $7.4 million advance against future dividends from relate party (refer to Note 9. Related Party Transactions for further details).
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(7) |
The carrying amounts presented above at March 31, 2019 and December 31, 2018 exclude $63.2 million and $65.2 million of unamortized bond discounts and issuance costs, respectively.
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