| 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 September 30, 2019, and December 31, 2018, respectively (dollar values in thousands, other than per-share values):
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Balance Sheet Location |
September 30, 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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Other non-current liabilities |
$ |
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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Accounts payable and accrued liabilities |
440 |
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— |
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— |
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440 |
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Phantom stock options (3)
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Other non-current liabilities |
714 |
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— |
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— |
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714 |
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Total |
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$ |
1,268 |
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$ |
— |
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$ |
— |
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$ |
1,268 |
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Balance Sheet Location |
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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Other non-current liabilities |
$ |
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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Accounts payable and accrued liabilities |
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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Other non-current liabilities |
1,564 |
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— |
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— |
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1,564 |
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Total |
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$ |
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 above), 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 September 30, 2019, the aggregate estimated fair value of our cash-settled phantom stock options was $1.4 million, of which the amortized portion recognized as a liability in our condensed consolidated balance sheet was $0.7 million.
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The following table shows the carrying amounts and the fair values of our long-term debt in the condensed consolidated financial statements at September 30, 2019 and December 31, 2018, respectively (in thousands):
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September 30, 2019 |
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December 31, 2018 |
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Carrying Amount(7)
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Fair Value |
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Carrying Amount (7)
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Fair Value |
Senior secured term loan facility, due January 2023 (+)(1)
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$ |
484,947 |
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$ |
461,728 |
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$ |
455,292 |
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$ |
473,344 |
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Senior secured revolving credit facility, due January 2022 (+)(2)
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21,015 |
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21,015 |
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54,015 |
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54,015 |
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Convertible senior notes due 2035 (1)(3)
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70,948 |
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37,125 |
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70,419 |
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49,064 |
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Second Lien Notes, due June 2023(4)(5)
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149,148 |
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98,411 |
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128,178 |
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112,230 |
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Other debt (6)
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26,792 |
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26,490 |
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1,707 |
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1,707 |
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$ |
752,850 |
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$ |
644,769 |
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$ |
709,611 |
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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 September 30, 2019, and the carrying amount in the foregoing table reflects 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 $178.0 million as of September 30, 2019, and includes $28.0 million of payment-in-kind (“PIK”) interest converted to principal since debt issuance. 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 September 30, 2019, Other debts primarily consisted of (i) $6.2 million financing for transponder purchases, and (ii) $18.9 million of finance lease liability relating to an assessed right-of-use over a satellite bandwidth capacity (refer to Note 3. Leases for further details).
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(7) |
The carrying amounts presented above at September 30, 2019 and December 31, 2018 are net of $62.9 million and $65.2 million of unamortized bond discounts and issuance costs, respectively.
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